[Stage Direction]
Second report of standing committee on banking and commerce.-Mr. Moore.
Second report of standing committee on standing orders.-Mr. Golding.

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

Mr. NICHOLSON:: 1.	Were there cargoes of liquor on the boats which were recently torpedoed in the St. Lawrence ?
2.	If so, who were the shippers and what were the quantities carried?


Mr. GIBSON:: The answer to the first
part of the question is no, but I should like to make it clear that in replying as to liquor I include beer and wine as well as spirits.
AIR FORCE-ORDER AS TO PLAYING OF "o CANADA"
Mr. LaCROIX (Quebee-Montmorency):
1.	Has the headquarters staff for air issued an order that men of all ranks in the air force shall not come to attention when the national anthem, O Canada, is played?
2.	If so, why has such an order been issued?
3.	Is it the intention to rescind such order?


Mr. POWER:: The status of "0 Canada" is at present being discussed at defence council.


JOHN A. GREEN
Mr. ISNOR:: 1.	Is John A. Green employed by any branch of the government in connection with work being carried on at the port of Halifax, Nova Scotia?
2.	If so, when was he appointed?
3.	Is he a Canadian?
4.	What are his duties?
5.	What salary is he receiving?
6.	In addition to his salary is he allowed any
other expenses?	-
7.	What was he doing prior to liis appointment?
8.	What experience or special qualifications has he for his present duties?


Mr. MITCHELL:: 1.	Yes, Mr. John A. Green, Department of Labour.
2.	Effective from April 20, 1942.
3.	No, American citizen.
4.	Port loading superintendent.
5.	None.
6.	Living allowance of $300 per month.
7.	In the employ of the Eastern Canadian Stevedoring Company, Montreal, P.Q.
8.	Many years experience in eastern Canadian ports in the organizing of labour for the loading and unloading of ships.


HALIFAX WARTIME ADMINISTRATOR
Mr. ISNOR:: 1.	Has a wartime administrator been appointed for the port of Halifax?
2.	If so, what is the name of said administrator ?
3.	What are his duties?
4.	What are his special qualifications for such work?
5.	Where was he employed before his appointment to his present position and what was his salary?
0.	What salary will he receive as w'artime administrator at Halifax?
7.	Will he receive any allowances such as living or expense allowances? If so, what?
8.	Was lie allowed any transportation expenses to Halifax? If so, what amount?
9.	What were the reasons for the appointment of such a person to the port of Halifax, (a) was there a lack of proper supervision of harbour facilities; (b) was there a loss of time in the docking of ships; (c) was there inefficiency in the directing of traffic through the port?
10.	Will the administrator's authority rank higher than that of the navy in respect to control and direction of traffic?
11.	What, if any, experience has he had in shipbuilding and ship repairs?


Mr. MITCHELL:: 1.	Yes, controller of loading operations at the port of Halifax, N.S.
2.	Vincent C. MacDonald.
3.	Indicated in detail in order in council P.C. 3511, of April 30, 1942, copy attached.
4.	Experience as arbitrator for the port of Halifax under the Department of Labour. He

Questions
also made a complete investigation of shiploading conditions at Halifax at the request of the Minister of Labour.
5.	Dalhousie university, dean of the faculty of law; salary not known.
6.	$300 per month for period May 1 to August 31, 1942, and at such salary thereafter as the governor in council may fix.
7.	Actual travelling expenses when absent from place of residence in connection with his work as controller.
8.	No.
9.	Appointed because of constant demands that loading operations should be speeded up. In particular, the reasons for the appointment were not those implied in question 9 (a), (b) and (c). Investigation revealed (1) the need of greater effort to regularize the volume of ocean traffic in order to secure better adjustment of the demand for and supply of longshore labour, (2) insufficient advance notice of ship arrivals to permit securing the numbers and categories of workers required in time, (3) lack of a proper system of call and hiring, (4) insufficient supply of longshore labour at various times, (5) various defects in working practices, (6) lack of coordination of the loading and unloading operations throughout the port as a whole, (7) priority of union members over non-union employees in employment.
10.	The controller is concerned with the loading and unloading of ships and not with the direction of traffic.
11.	None. His duties are not concerned with shipbuilding and ship repairs.


P.C. 3511
[Stage Direction]
At the Government House at Ottawa Thursday, the 30th day of April, 1942.
Present:
His Excellency the Governor General in
Council:
Whereas the Minister of Labour reports that as directed by Order in Council P.C. 1758 of 9th March, 1942, and after consultation with representatives of the shipping and stevedoring companies and the longshoremen's union of the port of Halifax, he has prepared a wartime plan for the reorganization of ship loadt-ing and unloading operations in that port embodying in substance the basic elements set forth in said order in council with such variations as now seem expedient to him and that it is desirable that this wartime plan be incorporated in a new order in council;
Now, therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Labour, and under authority of the War Measures Act (Chapter 206 of
the Revised Statutes of Canada, 1927) and of the National Resources Mobilization Act, 1940 (Chapter 13 of the Statutes of Canada, 1940), is pleased to make and doth hereby make the following order:
Order
1.	There shall be a controller of loading operations; a port loading superintendent; and a chief dispatcher for the port of Halifax, Nova Scotia, to be appointed by the governor in council.
2.	It shall be the duty of the controller of loading operations (hereinafter referred to as the controller) to coordinate the activities of all persons, companies, organizations, associations and agencies directly or indirectly em-gaged or concerned in ship loading and unloading operations in the port of Halifax, and to carry out all duties assigned to him by the governor in council by this or subsequent orders for the purpose of improving the wartime efficiency of such operations.
3.	The controller shall have, exercise and enjoy all powers and authority necessary for the effective execution of the duties and the attainment of the objects in this order mentioned; and in particular (but not so as to restrict the generality of the foregoing) the controller shall have power and authority:
(a)	To give directions to, and to make orders, andl decisions binding upon, all persons, companies, organizations, associations and agencies -engaged or concerned in ship loading or unloading at the port of Halifax with respect to all matters, whether general or special, other than wage rates, affecting working and hiring conditions, practices and methods in connection with ship loading and unloading operations.
(b)	To decide any dispute arising in connection with such conditions, practices and methods, or generally concerning any matters arising out of the provisions of this order or any direction, order, or decision given or made by the controller, his decision thereon shall be final and conclusive.
(c)	To supervise and control the establishment, operation and administration of the central dispatching agency and to give directions, make orders and decide questions relating to same.
(d)	To require applicants for employment as longshoremen to register in such manner as he may prescribe and to classify such applicants and determine their eligibility for employment; to prescribe what shall constitute an active longshoreman for hiring purposes; from time to time to prescribe the eligibility for employment of different classes of longshoremen; to determine the total number of
[Stage Direction]
Questions
[Stage Direction]
longshoremen of all classes required from time to time for the efficient operation of the port and to arrange for their recruitment and orderly employment through the central dispatching agency.
(e)	When he deems it necessary, to require the longshoremen's association of Halifax to admit to temporary membership such classes of men and in such numbers and for such periods as he may direct or order; provided that men so admitted to temporary membership shall have no right to be regarded as union members beyond the period for which they were so admitted; and also provided that during such period such men shall have no share in or right to benefit from the funds of the association.
(f)	To give directions and make orders as to when and under what circumstances ships shall be worked at night or upon holidays.
(g)	To appoint such advisory committees as he may deem desirable to advise him upon any general or special phases of loading operations.
(h)	To recommend to the Minister of Labour any major changes or improvements in ship loading methods and facilities which may seem expedient.
(i)	Subject to the approval of the governor in council, to appoint such other officers, clerks, and other assistants and acquire such office facilities as may be necessary to carry out the duties assigned to him.
4.	In the exercise of his powers and authority under this order the controller shall not be restricted by the terms of any contract or agreement made between the shipping and stevedoring companies and the Halifax longshoremen's union other than as the same may relate to wage rates.
5.	The controller shall appoint a personnel committee composed of the port loading superintendent, the chief dispatching officer and representatives of the shipping and stevedoring companies and of the Halifax longshoremen's union to divide the present active working personnel of the port into gangs, and to allot bosses to such gangs; and from time to time as directed by the controller to revise such division and allocation.
6.	The port loading superintendent shall inspect and supervise the loading operations of the port as a whole, advise the controller and other loading agencies upon technical loading problems, and generally perform such duties as the controller may assign to him.
7.	The chief dispatcher, under the supervision and control of the controller, shall administer the central dispatching agency and generally perform such duties as the controller may assign to him.

8.	The present practice popularly known as "have-a-look" is hereby abolished and longshoremen shall be called out only at regular calling hours (except in the case of emergency) and in all cases when men have reported for work upon proper call they shall be paid as from the regular hour of call.
9.	Whenever a stevedoring or shipping company is loading a number of ships simultaneously it shall have the loading operations of the same under the general supervision of an experienced man of the rank of assistant marine superintendent so far as practicable, in the ratio of one for every three ships.
10.	All longshoremen who have heretofore been admitted to temporary membership in the Halifax longshoremen's union under order in council P.C. 744 of 13th January, 1941, and all longshoremen who may hereafter be admitted to temporary membership in the union pursuant to the direction or order of the controller, shall enjoy complete equality with permanent members of the union as to hiring and working privileges.
11.	The controller may extend the period of the temporary membership in the union now enjoyed by the longshoremen who have heretofore been admitted into the union pursuant to said order in council P.C. 744 provided the controller deems this desirable as preliminary to the establishment of the central dispatching agency and the new method of hiring referred to in Section 12 of this Order.
12.	The present system of daily hiring of individuals working at the site of the work is hereby abolished and there shall be substituted therefor a new system of hiring which, subject to such alterations as the controller may deem expedient, shall embody the following principles.
(a) A central dispatching agency shall be established and shall be administered by the chief dispatcher;
lb) The .present active working personnel of the port shall be divided into fixed gangs with named gang bosses;
(c)	Longshoremen shall hereafter be hired in gangs and exclusively through the dispatching agency;
(d)	Companies desiring gangs shall notify the dispatching agency at certain fixed hours of the number of gangs required;
(e)	The dispatching agency shall keep a roster of gang bosses and shall be responsible for notifying the requisite number of gang bosses upon receipt of such notification from any company.
(f)	Upon receipt of such notice from the dispatching agency each gang boss shall be

Questions
responsible for producing his gang at the required time and place; and the members of each gang when notified of work by their gang boss must appear for the work in question under penalty of loss of their dock permits, unless within three days of such failure to appear they give to the chief dispatcher a satisfactory explanation therefor.
(g)	The dispatching agency shall call out gangs by some system of rotation designed to ensure equality of work; provided that if the controller considers it feasible the stevedoring companies shall each be given the privilege of calling for a certain number of specified gangs.
(h)	Gangs shall be required to work at night when called upon through their bosses by the dispatching agency to do so; but the dispatching agency shall adopt some system of rotation of day and night work designed to ensure the equitable distribution of day and night work so far as practicable.
13.	The controller and any person acting for or under his authority shall not be liable to any person for anything done or omitted in the exercise or purported exercise of any power or authority from time to time vested in the controller.
14.	All persons, companies, organizations, associations, or agencies directly or indirectly engaged or concerned in ship-loading operations in the port shall in all matters act upon and in accordance with the directions, orders and decisions given or made by the controller under this order.
15.	It shall be the duty of the controller to
maintain a record of the suspension pursuant to this order of any existing condition of work established by practice or agreement, and such condition shall be fully restored, if the employees so desire, on the termination of the present war.
16.	Any person, company, organization, association or agency as aforesaid who, or which, contravenes or fails to comply with any provision of this order or with any direction, order or decision given or made by the controller under this order shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding $500 or to imprisonment for a term not exceeding three months or to both such fine and such imprisonment.
17.	The controller, the port loading superintendent, the chief dispatcher and such other officers, clerks and assistants as may be appointed hereunder shall receive such remuneration as the governor in council may fix.
18.	Order in council P.C. 1758 of 9th March, 1942, and order in council P.C. 744 of 13th
44561-192*
January, 1941, are hereby revoked; and order in council P.C. 1706 of 10th March, 1941, so far as it refers to the appointment of an arbitrator is hereby revoked.
19.	This order shall be effective on the first day of May, 1942, except section 1 hereof which shall be effective as of April 13, 1942, and section 12 hereof which shall be effective upon written notice by the controller to the longshoremen's association of Halifax and the chairman of the shipping committee of the Halifax board of trade.
A. D. P. Heeney,
Clerk of the Privy Council.
c. w. TRAIN
Mr. ISNOR:: 1.	Is C. W. Train employed by any branch of the government in eon aection with work being carried on at the port of Halifax, Nova Scotia?
2.	If so, when was he -ippointed?
3.	Where was he t aployed prior to his appointment?
4.	What are his pres ut duties?
5.	What salary is he receiving?
6.	In addition to his I llary is he allowed any other expenses?
7.	Did he receive anj travelling transportation or accommodation expenses from the time he accepted position and up to the present time?


Mr. MITCHELL:: 1.	Mr. C. W. Train, V.C., is employed by the Department of Labour in connection with the reorganization of loading and unloading operations at the port of Halifax, NJ3.
2.	Effective from April 11, 1942.
3.	Employed with the Shipping Federation of Canada in Vancouver, B.C.
4.	Consultant to the Minister of Labour in connection with the reorganization of shiploading and unloading operations at the port of Halifax.
5.	$235.00 per month.
6.	$5.00 per day living allowance plus transportation expenses.
7.	Yes, from date of appointment to April 30, 1942, $296.60.


BRITISH COLUMBIA SHIPYARDS
Mr. MacINNIS:: 1.	Are the shipyards in British Columbia operating on a continuous production programme?
2.	If so, how many yards are operating on the continuous production plan?
3.	What percentage of the total employees are working on, (a) 1st, or day shift, (b) 2nd, or afternoon shift, (c) 3rd, or "graveyard" shift?
4.	Who proposed the continuous production plan, employers, employees or government?

Questions as Orders for Returns
5.	Was the continuous production plan put into effect by an agreement negotiated by employers and employees, or by order in council?
6. If by order in council, (a) what is the number and date of said order; (b) was the order printed in the Canada Gazette?


Mr. MITCHELL:: 1.	Yes.
2.	Six.
3.	(a) 60 per cent; (b) 30 per cent; (c) 10 per cent.
4 and 5. The production plan was put into effect by agreements between the managements and the different unions concerned, these being supplementary to existing agreements.
6. (a) The agreements were confirmed by order in council P.C. 3636 dated May 1, 1942, (b) the order has not been printed in the Canada Gazette.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. LACOMBE:: 1.	Have the professional services of Mr. Francois Leduc, C.E., of Montreal, and his associates, been employed by the government in connection with analyses of certain chemical products?
2.	If so, when and for what period?
3.	What payments have meen made to date for such services?


CONTROL OF TRANSPORT
Mr. LACOMBE:: 1.	Does the wartime prices and trade board control transportation in Canada?
2.	Has a controller general of transport been appointed? If so, what.is his name?
3.	Have any regional controllers been named? If so, for what provinces?
4.	Has a regional controller been named for the province of Quebec?
5.	If so, what is his name, residence and occupation, and is he a French Canadian by origin ?
6.	Have representations been made to the authorities by any public bodies, urging the appointment of a French Canadian as regional controller of transport for the province of Quebec ?
7.	If so, has any attention been paid to such representations ?
8.	Does the government propose to give further consideration to them?


MILITARY CAMPS-FACILITIES FOR WORSHIP
Mr. CHURCH:: 1.	Are chapels or other facilities of worship provided in each of Canada's military camps, and what is the custom in relation thereto?
2.	Are there such chapels in the larger air force camps and depots?
3.	Will a survey be made in Canada on this matter with a view to providing facilities for worship in each camp?



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Hon. R. B. HANSON (Leader of the Opposition):: I should like to ask the Prime Minister when he proposes to proceed with the second reading of Bill No. 80. I ask this question notwithstanding the fact that the 82,000,000,000 war appropriation resolution is still under discussion. According to the opinion I expressed here last week that discussion should have been well over by this time, but I am not attributing blame to anyone. I do think, however, that we ought to get on with this very important mobilization measure immediately.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: May I say to my hon.
friend that it is entirely in the hands of the house as to how rapidly we shall get on with the different government orders. My hon. friend the leader of the opposition I think agreed with me that it was desirable to have the war appropriation measure disposed of in this house before taking up another measure.


Richard Burpee Hanson: Yes, but I had no idea then that we would spend another week on it.


William Lyon Mackenzie King: I know, but I think in the long run the time of parliament will be saved by concluding at once the war appropriation measure rather than having the whole matter opened up again at a later stage. I share my hon. friend's desire to get on with the measure that he has referred to relating to the amendment of the National Resources Mobilization Act, and personally I would very much hope that this discussion on the present bill might conclude this week and that there would be opportunity to go on with the other measure on Monday or Tuesday next. But until to-morrow night I cannot say just when. However, I feel that we should conclude this present discussion as rapidly as possible.



THE BUDGET


[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: A report came over the broadcasting corporation's news service, I think last Tuesday, to the effect that the budget would probably be brought down before we proceeded with the amendment to the National Resources Mobilization Act. Has the minister any statement to make on this matter?


Hon. J. L. ILSLEY (Minister of Finance) :: Mr. Speaker, that is not the plan.

Dutch Harbour



MILITARY SERVICE


[Stage Direction]
On the orders of the day:
Mr. N. J. M. LOCKHART (Lincoln):: A press dispatch which was released to-day indicates that trainees are now to be called daily instead of monthly. Seven centres are excluded, and military district No. 2 is not included. I have already had inquiries in this connection. Would the Minister of National Defence make a brief statement to clarify this matter for the sake of those who are inquiring? There seems to be some confusion.


Hon. J. L. RALSTON (Minister of National Defence):: In the matter of calling up trainees, what we are doing is to call them up in shorter periods in order that we may have an opportunity of better medical examination than occurs if we call them all up at once and if they go to the training centre at one time only, once a month. What we are doing now is calling them up and having them report on successive days at depots. From the depots they are sent every two weeks instead of every month to the training centres after having had the benefit of perhaps the more thorough medical examination made possible by less congestion and more time.


Norman James Macdonald Lockhart: In that connection, it was noted by one of my correspondents that military district No. 2 is deleted from that list and other military districts were included. They were rather upset about that.


James Layton Ralston: I had forgotten that
military district No. 2 was excepted. As a matter of fact I have not seen the exact list. There are some cases in which, on account of the very long distances to be travelled and the remoteness of the training centres from the depot, it might be a serious inconvenience, for instance, to have a man travel from the northern part of Ontario to the depot in Toronto and back to a northern Ontario camp.


Norman James Macdonald Lockhart: That is not so with military district No. 2.


James Layton Ralston: I shall be glad to look into the matter.



DUTCH HARBOUR


[Stage Direction]
On the orders of the day:
James Layton Ralston: Mr. Speaker, the house may be interested in having a brief-I am sorry it
cannot be a very detailed-statement with regard to the reported raids on Dutch Harbour.
As already indicated in the press, two aerial raids were made on Dutch Harbour which were participated in by a number of Japanese fighter and bomber planes. No further details have been received as to the extent of damage except those already published in the press.
The reports received indicate that there were some casualties, but few, and that a few warehouses were set on fire but no serious damage was suffered.
A further report received indicates that there was a third aerial attack last night. No further details are yet available as to this attack.
Raids of this kind were not unexpected, and plans previously made by Canada and the United States for such a contingency are in actual operation. Certain additional dispositions have been made. The Canadian commander in chief, west coast defences, is operating in conjunction with the commander of the United States forces on the west coast in accordance with the joint plans.
I might add regarding the army that the chief of the general staff has been for some days on the west coast and is supervising army dispositions on the ground.


James Layton Ralston: I should like to make a statement with regard to what I said earlier this afternoon respecting raids on Dutch Harbour. A message has been received from the Pacific command-and hon. members will be glad to know this-to the effect that a further report or further message which they have received indicates that the reports which came, purporting to be from official sources, regarding the second and third raids on Dutch Harbour, are unfounded, and that there was only one attack.



CANADIAN FORCES


[Stage Direction]
On the orders of the day:
Mr. JEAN-FRANQOIS POULIOT (Temis-couata): Referring to Hansard, pages 2292, 2806 and 2919, where I inquired if it is possible to get from the government the number of men who are listed in the telephone directory of the Department of National Defence, naval services and army, the number who have been in this country for more than five years, and the number who are bilingual in the Department of National Defence: I already have the information from the Department of National Defence for Naval Services, and I wonder
Japanese Nationals
[Stage Direction]
whether it is not possible to get it for the Department of National Defence, and how long it will take.	.
Mr. HOMUTH:: It is not necessary to have that information.


James Layton Ralston: On my return to the house on Tuesday I found that my hon. friend had referred to the matter when I was away. The question was raised when my colleague the Minister of National Defence for Naval Services (Mr. Macdonald) was dealing with his portion of the war appropriation resolution. I gave instructions immediately on my return to have this information obtained as soon as possible. I learned just before I came in that returns have yet to be made by seventeen directorates in the department. I hope that the information will be available very shortly.



HONG KONG COMMISSION


[Stage Direction]
On the orders of the day:
Major James William Coldwell: I should like to ask the Minister of National Defence a question I have asked several times before. Is there any possibility of expediting the presentation of the Hong Kong report to this house? I have all respect for the chief justice, but I feel that we have waited a very long time for this report. Perhaps some steps could be taken to expedite it.


James Layton Ralston: I may say to my hon. friend that I know of no way from the point of view of the government of expediting the presentation of the report. I have indicated my anticipation and expectation that it would be received in due course after what I understood to be the final hearing, I think last week or the week before, but I have not heard anything with regard to the matter. I have no doubt that there is voluminous evidence to be gone over and probably considerable time has been taken in connection with the preparation of the report. I again assure my hon. friend that the government is just as desirous as he or anybody else is to have the report presented as soon as the chief justice finds it convenient to complete it.


Richard Burpee Hanson: With regard to this very important matter, I think that certain other facts could be pointed out to the public which account in part at least for the delay. A certain portion of the evidence was taken, I understand, in England under commission, and that delayed the submission of arguments by
CMr. Pouliot.]
counsel. Had that evidence been on hand- and I am blaming no one; it was not physically possible, I suppose, to have it here-the argument would have been over long ago and before Colonel Drew was taken ill.
The submission of counsel in writing was filed at a time anterior to the middle of May, and the oral argument was concluded on May 22. That is not a very long time having regard to the volume of evidence that was taken and the multitudinous number of questions of fact that had to be decided. I think that explanation may help to keep some people quiet for a little while.



JAPANESE NATIONALS


[Stage Direction]
On the orders of the day:
Hon. HUMPHREY MITCHELL (Minister of Labour):: For the information of hon. members, and particularly for the information of the members for British Columbia who are, I know, much interested in the progress in connection with evacuation of Japanese from the British Columbia coastal area, I thought I should make a short announcement.
Through the good offices of my colleague, the Minister of Mines and Resources (Mr. Crerar), and through the cooperation of the Indian Affairs branch, a very satisfactory arrangement has been made for housing of Japanese, particularly women and children, in a number of the residential schools which have been used for Indian children.
The plan is to have the same staff, as far as possible, which has been employed at the schools, operate them for occupancy of the Japanese. Conferences have been held with the various church organizations which have been conducting a number of the schools under consideration, and at the request of the department it has been indicated to us that the church organizations will continue to maintain the institutions for the use of the Japanese.
It has been practically decided to take over the Edmonton residential school which is owned by the Department of Indian Affairs; the school operated at St. Albert by the Sisters of Charity, known as the Youville school; a school at Elkhorn, Manitoba, and one in the province of British Columbia. It will be seen to that the education of the Indian children will not be neglected, and, if necessary, additional day schools will be provided for the continuance of their education.

War Appropriation-Finance
This arrangement will enable a more rapid movement of the Japanese women and children from Vancouver, including those housed in Hastings park, and will also avoid the necessity of a large expenditure for buildings, which would be necessary under any other plan contemplated.
I might say for the further information of hon. members that the total moved to date is somewhat over 12,000.


Mr. GREEN:: How many women and
children will be accommodated in these schools?


Humphrey Mitchell: About 6,000.


Mr. STIRLING:: What is the name of the Indian school in British Columbia that will be so used?


Humphrey Mitchell: I thought the hon. member would ask that question. I cannot say at the moment.


Karl Kenneth Homuth: Can't you pronounce it?


Humphrey Mitchell: There may be something in that.


Howard Charles Green: The minister says that he does not know the name of the Indian school in British Columbia. Does he know the district in which the school is situated?


Humphrey Mitchell: I am not as well
acquainted with the province as my hon. friend, but he can rest assured it will be outside a vulnerable area.



SCARCITY OF BEEF


[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Broadview):: Has the minister any statement to make to-day on the beef situation and the collapse of ceilings in Toronto? Surely the government has had time to make up a policy. This is a very serious matter and I should like to have a reply.


James Lorimer Ilsley: If the hon. member is directing his question to me-he did not make himself clear-I have no statement to make to-day.


Thomas Langton Church: It is like the housing situation, you have it in cold storage.



WAR APPROPRIATION BILL


[Stage Direction]
The house resumed from Wednesday, June 3, consideration in committee of a resolution to provide sums not exceeding $2,000,000,000 for the year ending March 31, 1943, for granting to his majesty aid for national defence and security-Mr. Ilsley-Mr. Vien in the chair.

Mr. MacNICOL:: When the house rose at
6 o'clock yesterday I was about to ask one or two questions, and I will now put them briefly. I believe it was the member for Temiscouata (Mr. Pouliot) who first brought up the question of the auditor general's report, and he was supported by the leader of the opposition and myself. I want to ask two or three questions in reference to the item that we are now discussing, amounting to $196,000 having to do with the auditing and checking of war accounts. I should like to have a break-down of the item when the minister replies and at the same time the amount of the similar item for 1941-42, because we have not yet received the auditor general's statement for 1941-42. Comparing this amount with the amount for 1940-41 I notice that in 1940-41 the similar item was $52,202.61. Therefore the present item is $143,707.39 more than the amount for 1940-41. Of course, it is natural to expect that it should be larger because the work of the auditor general's department has vastly increased over the last two years. In the auditor general's report of 1941 I notice at page 430 a statement from the auditor general, preceding his report on the Department of Agriculture, in which he writes:
These accounts have been examined and audited under my direction, in accordance with the provisions of the Consolidated Revenue and Audit Act, and subject to the observations in this report, I certify that in my opinion they are correct.
At page 435, referring to the travelling expenses of P. Dupuy, $1,693.20, these words follow: "Advances not accounted for, $465.70." I have been wondering how the auditor general can certify that the amount is correct if he has not the vouchers for this amount, and how many more amounts there are for which vouchers have not been presented. I often wonder if it is not possible to apply to government business the methods that county and township councils use in the conduct of their business. I am not speaking politically, because all governments have been the same so far as checking and inquiring into public accounts is concerned. But the
War Appropriation-Finance

ordinary township council could never conduct its affairs if its business were done the way we conduct ours. I know township councils that not only have no debt but have substantial amounts in the bank and large assets. They have to conduct their affairs in a business manner. I often look at these public accounts rather hopelessly. They are so hard to dig into, one reason being that they are always a year late. For instance, we have not yet the accounts for 1941-42, and yet the heading of this item we are now considering is, war appropriation 1942-43. Not much wonder the hon. member for Temis-couata has so persistently brought up the question of the public accounts; he deserves credit for it. The same is true of the leader of the opposition; he has been a very good second-perhaps I should say first, but I know that the hon. member for Temiscouata brought the matter up first. The leader of the opposition probably went him one better; at any rate between them they deserve credit.
I invite the minister to give a break-down of this amount of $196,000 and to tell us why the amount referred to on page 435 of the auditor general's report was paid without the vouchers being submitted, at any rate without their having been submitted in time. Let me give an example of something which I think the auditor general should refer to very strongly in a recommendation to the government as to how business should be conducted. I am not blaming the government; I am not saying this by way of criticism of the minister's department. On page 438-39 there are complete details of a transaction which took place a couple of years ago-I believe it was referred to on a previous occasion by the leader of the opposition, and I am not sure that I did not refer to it myself. I refer to the purchase by the government of 5,365 cases of lobsters. If one examines the figures in the auditor general's statement pertaining to this transaction he cannot help being amazed. If this is an example of how government business is conducted, then something should be done about it. I have no complaint to make as to what the fishermen got for their lobsters; if there is one class of people who deserve good returns for their hard and dangerous work it is the fishermen. I hope they really got more than they are entitled to, if anything-it would suit me just as well; but I am sure they did not. This transaction concerned 5,365 cases of lobsters. I believe the cases contain 48 one-pound tins. The total 
cost, including the lobsters and all expenses associated with their disposal, was $168,379.18, made up as follows:
Purchase of lobsters	 $ 88,043 83
Governmental salaries and
wages	
9,794	38Travelling expenses	
3,782	42Advertising	
50,244	73Sundries	
16,513	82

I am not making any comment on those expenses, nor would I say that anyone got a cent more than he was entitled to. But the returns received by the government for the lobsters totalled $97,137.02, making a loss of $71,242.16, if my figures are correct. If this is representative of government transactions it is no wonder the country is in the financial boat that it is. I am wondering what the complete duties of the auditor general are. Should he have made a report to parliament, not only in connection with a case like this but in connection with many others, directing parliament's attention to an apparently improvident transaction?
There is another item that I checked. It has to do with a motor car used in a government department.-it does not matter which-and indicates what the country is up against. In 1935 $154.94 was spent on repairs on a small car, a Ford or a Chevrolet; then immediately the car was turned in on another, plus an additional cash payment of $488.85. Then in 1936, $44.85 was spent on that car in repairs; $116.72 in 1937; $333.07 in 1938, and $175.82 in 1939, a total for repairs in those four years of $670.46. The car was then turned in for another with an additional amount of $610.22. The bank of Montreal could not afford to carry on business in that way. I should think it is the duty of the auditor general, no matter how much time it takes, to notify parliament of all such improvident transactions. That is what an auditor does in business concerns. The auditor of the company I was associated with would advise the directors of such matters. It may not be an auditor's duty, but we had a very excellent auditor and if he found anything that he thought was not as it should be he would inquire into it and notify us. He would look into every voucher submitted to him that he thought was too high.
Is that the procedure followed by the auditor general's department? Does his staff inquire into every single voucher before they pass it? I know it takes competent men to do this, but there are competent men in the department. I look upon the minister as the

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watch-dog of the treasury, and I know that so far as he is concerned he will do his duty. Yesterday someone said something about cost-plus contracts. Personally I am wholly opposed to such contracts. There are cases in which contracts have to be let on a cost-plus basis; but I have had a great deal to do with contracting, and I can say without fear of contradiction that by far the greater proportion of contracts let on a cost-plus basis generally cost much more than they would if they were let on a regular contract bid basis.


Mr. POULIOT:: Mr. Chairman-


James Lorimer Ilsley: If the hon. member for Temiscouata will permit me, the hon. member for Davenport asked a few questions which he requested me to answer immediately. First he asked for a break-down of the sum required, $196,000. That is made up as follows:
Temporary assistance	 $160,000
Cost of living bonus	 8,000
Stationery and equipment	 10,000
Travelling expenses	 18,000

The item of $160,000 for temporary assistance is made up as follows:
1 unclassified	 $ 1,620
1 audit accountant grade 2	 3,000
1 audit accountant grade 1	 1,920
27 war audit accountants	 72,400
14 clerks grade 4	 22,680
1 clerk grade 3	 1,380
22 clerks grade 2	 23,760
21 clerks grade 1	 16,290
1	stenographer grade 2	
1,0802	stenographers grade 1	
1,5601	typist grade 1	
7202	office boys	
885

To this has been added for proposed additional assistance the sum of S12.705, making $160,000 in all. This amount is larger than the amount required for 1940-41 because of the expanding requirements of the war. The amount estimated for 1941-42 was $151,000. The exact amount spent is not available; the accounts are not all closed.
With regard to the item of $465.70, which appears to have been the amount of an advance to an employee or official of the government not accounted for, as I gather it, I have no knowledge of the individual transaction, but I presume that was an accountable advance made near the end of the fiscal year which would be accounted for in the next fiscal year and which therefore has to be reported in the manner in which the auditor general reported it. In reporting that transaction in that manner there would be nothing inconsistent with the general words of the auditor general's report, because he made it
subject to the qualifying words which appear in the report. It would not be possible for him to do anything more than he did with regard to checking that transaction, if the facts are as I assume them to be.
Now with regard to the lobster transaction, if the merits are to be considered that is a matter for the Minister of Fisheries; but with regard to the question, which was whether it ought not to be the duty of the auditor general to express opinions as to whether or not transactions are improvident, I can only say that the duties of the auditor general in this regard are set forth in section 60 of the Consolidated Revenue and Audit Act. The specific duties are numerous, and then at the end there are general words to this effect, that the auditor general shall call attention to every case which he considers should be brought to the notice of parliament. Whether the auditor general should project himself into the operation of departments in such a way as to pass upon the providence or improvidence of the agreements they enter into and the policies they adopt, is very questionable. Personally I have no reason for thinking that there was anything improvident about this transaction. I cannot argue the matter, except that I know in a general way that the Department of Fisheries saved the market for Canadian lobsters, at a time when the English market had disappeared, by an extensive advertising campaign. That, of course, is a matter for the Department of Fisheries. But once the government by order in council, on the recommendation of the minister, who acts on the advice of the competent officials of his department, passes an order in council adopting a certain policy, I question whether the auditor general should review that question from the point of view of whether or not it is a provident transaction. He may do so in some cases, but in this case I do not think there was anything even prima facie improvident about it.


John Ritchie MacNicol: I did not mean necessarily that there was anything wrong, but that perhaps it was not good business.


James Lorimer Ilsley: The word "improvident" is moderate, and whether or not a transaction is improvident is a matter on which people have differences of opinion. I have knowledge of transactions in which there was far greater loss than in this case, in connection with other natural products, but those transactions had to be entered into in order to serve certain situations.
I believe the last item had to do with the automobile, and I think that is a case in regard to which a person should say nothing

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without having special knowledge. It is an individual transaction, and naturally I cannot answer it at all. I admit that it looks as though there were a great many repairs to that car, but I am convinced that the manner in which the government handle the purchase and sale of automobiles, the turning in of second-hand cars and the purchase of new ones, is pretty efficient. There is a committee of civil servants who keep very close watch and very tight rein on these automobile transactions.


Mr. MICHAUD:: Lest a wrong impression should go abroad with regard to the transaction referred to by the hon. member for Davenport, and mentioned in the auditor general's report, with respect to the steps taken to aid the lobster fishermen of the Atlantic coast, I think it well that I should bring to the attention of the committee what I believe was placed on record last year also.
The venture of 1940 into tlie lobster purchase and disposal operations was not intended to be an ordinary business transaction with a view to making a profit, or with a view even to breaking even. The committee will recall that shortly after the declaration of war the British government prohibited the importation of canned or tinned lobster into Great Britain, by making the declaration that canned lobster was classed among luxuries the importation of which was forbidden.
Up to the autumn of 1940 Great Britain took about 85 per cent of our annual packs of canned lobster. Over night this market, which had been built up over a hundred years, and which had well taken care of the output of the Canadian canned lobster industry, was wiped out. A large portion of our population had depended on that industry for its livelihood, and as a result of that stoppage there was a real panic among lobster fishermen. They appealed to the government, pointing out that 85 per cent of their market had disappeared, and emphasizing the fact that there was no possibility or reasonable expectation that the Canadian market could absorb the high percentage which had heretofore gone to the British market.
The department availed itself of the best brains possible. We consulted those who were interested in the business and it was decided that rather than abandon the industry the government would encourage lobster fishermen and packers by assuring them that the government would make it its duty to find a market for the spring pack of 1941.


John Ritchie MacNicol: I think the government
was right in doing that, too.


Joseph Enoil Michaud: We explored the possibilities of developing the domestic market to the limit, and considered an advertising campaign the best possible method of appealing to the sentiment of Canadian consumers. It was felt that at the same time we would educate the Canadian housewife and consumer concerning the quality of Canadian canned lobster. The sum of 150,000 was spent as a contribution to help develop the home market for this commodity. It was found however that the home market could not possibly absorb the whole pack, with the result that we had to develop a market in the United States which heretofore had been held by the producers of Russian and Japanese crab meats. We had to displace those products, or fight them in the United States market; and I must say that through the cooperation of good Canadian citizens who were in the business, and who established relations with large chain store distributors in the United States, we succeeded in establishing a market for the whole output of 1941.
This however necessitated organization. We had to convince the fishermen that they should continue to fish rather than ask for relief. We undertook to merchandise and market their output, and for that purpose had to hire help, establish an organization and the necessary machinery. We established an inspection board, because United States buyers would not accept any of our catch unless a guarantee of inspection was given by the government.
We purchased from the fishermen lobster to the value of $88,043.83, making it a condition that the packers should pay the primary producer a reasonable price. We considered it advisable to step up the price considerably, and felt that we had carried out that principle by establishing a minimum price of 51 cents per pound for live lobster. Prices had previously ranged between 24 and 4 cents, the latter price being the maximum which in very special cases had been paid to fishermen supplying lobsters sold for canning. Before the year was over the price had risen considerably above 5 cents. We had no difficulty therefore in this respect. The price to the primary producer was doubled at the start, and before the season was over it had increased considerably. Through the difference between the amount we paid the canner and the price we received in the market, we derived a profit of about $9,000. The amounts we actually expended went for inspection, administration, machinery, labels, and a labelling machine we had to buy to label the cans with the government certificate. Those operations had to be carried on in the following year.

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The actual deficit in the whole transaction during the year was $27,000; but the inventory showed that we had to carry an over-supply of labels and a certain amount of machinery, and we had to pay rent for a warehouse. We thought it was not fair to make that charge to the producers, because this was in the nature of an experiment, something which was undertaken for the first time, and should not be charged to the primary producer or the packer, who has shown a willingness to cooperate. It was not felt that in the first year they should be asked to absorb the whole of the overhead and cost of establishing the industry. It is not altogether fair, therefore, to say that this was an improvident transaction.


John Ritchie MacNicol: Had the auditor general's report included what -the minister has said it would not have looked so bad.


Joseph Enoil Michaud: It was found to be a profitable venture. We have succeeded in establishing on this continent a market for the product of a Canadian industry. For a hundred years prior to 1940 producers as well as processors never thought that was possible of accomplishment. This year it was found necessary to buy scarcely any canned lobster from the packers, because the invasion of the United States market was continued. The government continued its assistance in improving the market situation, and, as hon. members know, the whole of last year's pack was sold at a high price.
I will give some figures which will enable the committee to understand the situation. In the spring of 1941 we established a minimum price of 5j cents a pound to the fishermen for the raw material. Before the season was over last year, the price was up to 10 cents a pound, and this year the opening price is 12 cents a pound. Now they are complaining that the price is too high. We set a price for canned lobster in 1941 of $18 per forty-eight pounds net weight of lobster, and $16 for a lower grade. Last year the price went from $20 to $30, and this year the price control board has established a maximum price of $28. But already American buyers are offering more to the packers than the ceiling price, although the packing season has been open for only one month. So that at the present time fishermen are getting from 12 to 13 cents a pound for their raw material and the packers are being offered from $28 to $30 a case for lobster.
The $100,000 which the government has invested within the last two years to help create a home market and a north American market for this valuable industry has been a good investment, and it is one that will not
have to be repeated this year. I think it is the best thing that has ever been done for the lobster industry.


Mr. BLACK (Yukon):: We have just been listening to observations on the lobster industry and lobster cans, and on methods of government expenditure. I am going to call the minister's attention to an item which he will probably never find in the auditor general's report and which he and the auditor general will probably never hear about, but it is really too good not to be told.
At the magnificent airport at White Horse in Yukon, the government has established, very properly, a meteorological station. There has been some delay in getting the necessary instruments for that station, but a short time ago a big package arrived at the airport by air express, which is probably the most expensive method of transportation known. The manager called in the staff to see these wonderful instruments unpacked. Mind you, they were sent by air express from eastern Canada away up to northern Yukon. What do you suppose was in that package?


Some hon. MEMBERS:: Lobsters.


George Black: No. Two perfectly good garbage cans! Can you imagine that? Two garbage cans which could have been bought up there at that village for an infinitesimal fraction of the cost of transporting them there by air express. I say this to the minister and to the government: if the officials responsible for that have not been liquidated, as they would have been so efficiently in Russia, they ought at least to be consigned to one of those garbage cans.


Jean-François Pouliot: Mr. Chairman, first I must express my sympathy with the minister. I am sorry for him over what is going on now. At the present time it seems that everything is cooked in the Rideau club, that the council room in the east block is just a pantry, and that this chamber is a cafeteria for the queer ideas of our intelligentsia. Everything that was done in years past has changed. Now we have a different kind of government. A decision is very seldom made nowadays by the government. It is made before the matter ever reaches the government. The decision is made by experts.
Last winter the door of my office was open and I heard a queer noise downstairs. I did not know at all what it was, so I went down there and discovered that it was being made by the intelligentsia of our country, professors of economics from our Canadian universities who had gathered do\yn there to draft a financial policy. Judging by the size of their
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heads I thought I was in a vegetable garden. They were all there, taking themselves so seriously. Members may laugh, but they cannot realize how grieved I was to think that these people had been asked to assume such responsibility.
Of course the duty of the government is just to act as a pendulum between consumers and producers, and to try to redress all wrongs so that the social life of our Canadian citizens may be as good as possible. When we discuss matters the way they were discussed in years gone by, people who are for the newer fashion in government business find it strange and consider us out of date. I am amongst those who are thus out of date, as are other members both on this side and on the other side of the house.
I take this opportunity to congratulate very warmly the hon. member for Broadview (Mr. Church) upon the excellent remarks he made yesterday afternoon. I have met several of our colleagues who said that he expressed views that were very generally held by his colleagues. I thank my hon. friend the member for Davenport (Mr. MacNieol) for his kind remarks this afternoon, and I also congratulate him. I do not pretend to take any credit for having brought that matter up several times. It seems to be of no use, and yet these are most important matters. In a democratic system the people are told that they are the ones who govern; in fact, once every four or five years they are called upon to express their views about candidates and to vote for one or the other. That is the only opportunity they have to speak. True, they have representatives; they elect members of parliament who are supposed to check government expenditures, and of course the checking of government expenditures by members of parliament is one of their main duties. But how is it possible for us to check expenditures when the auditor general says that there is no record? It is impossible to check the expenditure because at times there are no records and no vouchers of expenditure, and the personnel of the auditor general's branch is numerically less than one-tenth that of the treasury board. It is pretty hard for one person in the auditor general's branch to check expenditures for all cheques prepared and made by ten officials.
When I think of all this I recall what happened when the branch of comptroller of the treasury was created by no less a genius than R. B. Bennett. He is the one who changed the whole picture, not for the public good, not for improving the accounting of dominion finances, but just on the spur of the moment because he was displeased at not having got some information right away. He said in
TMr Pouliot.l
one of his outbursts, "I will change the whole system because one employee did not answer me as soon as I asked him for some information." And then the change was made not by legislation, but by order in council. That was done by Mr. Bennett, with the agreement of most of his supporters. About the same time, perhaps a little earlier, he saw someone who had come from the United States and who said to him, "Mr. Bennett, you are a very great man. What is to be regretted is that you are not recognized as you should be by American universities; they should confer degrees honoris causa upon you." Mr. Bennett said, "What a bright idea," and he began to have a kind of soft spot for that fellow. He said, "Here is one who appreciates my great personality and my great genius. I will make him my deputy minister of finance." It happened that afterwards Mr. Bennett left the house very often to go to the United States to receive these degrees which were being conferred upon him by universities that had ignored him-all of them-until they were told by that person that he was a great man. And now, sir, we are in the hands of this very same official. I have been told often that it is a bad thing for us to complain of certain officials when they are not here. This was his opportunity to be here, so that hon. members could have another opportunity to see him. Hon. members who are listening to me now will understand why for years I have been fighting a junta of the Department of Finance, those who have been installed there by Mr. Bennett when he decided to change the face of dominion politics. It will take a very long time to forget all the evil that R. B. Bennett did to the Canadian people just on account of his ill-temper and his vanity.
I wonder whether it is of any use to remember the errors of the past now, when they cannot be corrected. It is impossible to alter the state of things which existed during that dark period when R. B. Bennett was leader of the government and when the present leader of the opposition was one of his colleagues. It was a very dark period. All these people were put into high functions by this gentleman, and those who supported him have the responsibility for it. I except the hon. member for Broadview, who was not sitting in the house all the time during that period, and I admit that many other hon. members acted in good faith, believing that the thing was done for the best. But now we see where we are. Is it possible to have any reform made? I doubt it; but it is time to apply the brake.
I have complained many a time about those who are professors of economics, social science, political science and who have no experience of the world. They know nothing

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of applied psychology. They do not meet the people, they do not see the effects of their schemes on the people. They are here in their offices and they think all the time of new schemes, most of the time to improve their own positions.
Who are those who work in the public interest in the civil service? There are some, but they are fewer and fewer compared to what there were when I entered politics years ago. At that time when we had the other audit, we had Mr. Fraser, we had Mr. Gonthier, we had others; things were not so bad. There were civil servants who had been trained under the fathers of confederation, who had taught young men to use their time for the benefit of the state, and they were doing an excellent work. They were quiet, unassuming, trustworthy, modest, sincere. They were not thinking of themselves at all; they considered that it was an honour to occupy a position in the federal government and they served their country to the best of their ability. Of course they took advantage of raises in salary and other improvements which are legitimate, but they were not thinking only of that. Now it is very sad to think that there is not the same spirit among all high officials in the service. There are exceptions, I admit. There are some civil servants who still have that spirit, but it is not as general as it was. What is the result? The result is that the little fellow tries to find a scheme that will give him an opportunity to have two maids instead of one, and, when it was not so difficult to exchange automobiles, to have a new car each year. Then he had great ideas.
Now how does it work in having new legislation introduced? Everyone knows. The Prime Minister meets his colleagues and tells them that the session will open on such a day. He says, "If you have suggestions to offer for the speech from the throne, please let me have them." And then the minister meets his deputy and says the same thing to him. He says, "My dear deputy, the session will start on such a day; have you any suggestions for a new policy?" Then the deputy calls all the chiefs of branches and makes the same little speech. Who of them has an idea? But the chiefs of branches may ask the little fellows, promising young men, bright graduates from universities, whether they have anything to offer. They say, "Have you not something to suggest to us as an idea for the next speech from the throne?" Then some young man scratches his head and says, "Yes, I have an idea. I have been thinking of it." And the idea is to surround himself with a
staff; because, as you know, sir, and as everybody knows, in the civil service, and according to the principles of the civil service commission, a man is not paid according to his worth; he is paid according to the size of his staff. Therefore what is important to a young man who gets into the service is to have a large staff around him, and when he has it, he becomes himself the chief of a branch with a chance of promotion. Therefore there may be a slight amendment to a statute or the suggestion is made that there should be created a new organism which will give this bright, promising young man an opportunity to show his ability by being surrounded by a larger staff and getting a higher salary, which will permit him to have two maids instead of one, and, if not to change his car for a new one, at least to make a nice trip to British Columbia or Halifax or somewhere else.


The CHAIRMAN:: 
Jean-François Pouliot: Yes, sir. It may seem strange in a certain respect, but I understand that the $2,000,000,000 appropriation is for war departments and it seems that this is altogether different. It is the overdraft of departments that are not war departments and it is in excess of the estimates that have been voted for the year 1941-42.


Thomas Vien: The hon. member will find it at page 2920.


Jean-François Pouliot: Yes, I have it.


Thomas Vien: He will see that the war appropriation is for the period 1942-43 and is to cover expenditures of various departments connected with the war effort. There will be the ordinary current budget for the year 1942-43, but we are now dealing with the appropriation for war purposes for 1942-43.


Jean-François Pouliot: Yes, sir; but in this appropriation departments are mentioned that are not war departments.


Thomas Vien: There is a break-down and we are now on the item relating to the auditor general's office.
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Jean-François Pouliot: Yes, sir; and of course the duty of the auditor general's office is to check expenditures in all departments. I have the report of the auditor general for the year ended March, 1941. It is trhe last report I have, and, as I say, the duty of the auditor general is to check the expenditures of all departments. If there is an item under which it should be permissible for a' member of parliament to discuss matters such as those I have mentioned, it should be the auditor general's report, especially when, at page 540, the auditor general has this to say:
The status of those who serve without remuneration is indefinite for executive travel regulations purposes. The audit disclosed cases of travel expenses being paid, although the records do not establish that the individual holds any public appointment. The trend of policy now is to have such individuals certified as appointed without remuneration. More generally, appointments without salary are made by an executive order which stipulates, as a rule, a per diem allowance which may be claimed in lieu of a detailed accounting for subsistence and shelter. But cases were noted of accountings being made without employing the permissive per diem rates. Neither departments nor the treasury insisted on non-salaried officers submitting claims in the detail required from salaried officers. Likewise, the standards of travel to be observed by salaried officers were not strictly applied to those who serve without remuneration.
When you called me to order, Mr. Chairman, I was talking of young men who tried to improve their condition in order to travel around. I wonder if they do not fall into that category. As you know, the auditor general's report covers the expenses of all departments, and it covers expenses in the war departments. However, I will summarize what I have to say and try and make it as brief as possible.
This is one of the most important matters we may have to discuss during any session, and when taxes increase, the constituents of any one of us will have the right to ask us why they are paying more in taxes. It is a legitimate question for any of them to ask. This is a most serious matter, and it cannot be treated with indifference. I have exposed some cases of intrigue, but they are not important; it is the whole system that is important. And the whole system of government responsibility to parliament and parliament's responsibility to the people we cannot cut out. At any meeting held by a member of parliament or a candidate during an election campaign, or at other than election times, the electors have a right to ask the speakers, or any speaker: "What have you done or what has been done with the money you have gathered in taxes?" In years gone by it
[The Chairman.]
was possible to answer that question by referring to the auditor general's report. Now in many cases-in most cases-it is impossible. It is impossible for two reasons. We have no estimates for the war departments; what is called an estimate is a very broad headline for hundreds of millions of dollars. Besides, we have no public accounts for less than $35,000, which means that as to those who are clever enough to have many contracts, even several hundred, of less than $35,000 each, nothing will appear in the auditor general's report. That is bad. It is bad for the reason that it is the people who give us the authority to sit here as their representatives. The government is a committee of parliament, a little different from the committees which are appointed each year; nevertheless it is a committee of parliament to which parliament delegates part of its powers, under this proviso, that a check be made by the members of parliament, who are representatives of the people. When we have no information before the expenditure is made and no information after it is made, unfortunately but inevitably it leads to abuse. I am not in a bitterly critical mood; I am trying to offer constructive criticism. When a traveller is on the wrong road, going the wrong way, the thing for him to do is not to go further on the wrong way, but to return to the right way and then proceed in that way.
Why should we be afraid and ashamed to go back to an honourable past when there was less abuse than there is to-day, for the very reason that parliament and governments respected British parliamentary traditions more than we do now? Mr. Churchill, who has a high respect for parliament, would not stand for it for five minutes; neither would Mr. Roosevelt. The other day I had in my hand the budget of the United States, containing the report of Mr. Roosevelt to the congress. Opinions are free. One might think that affairs of expenditure for our war effort should not be disclosed to the public. Mr. Roosevelt thinks differently. So does Mr. Churchill; so does Mr. Hepburn; so does Mr. Godbout; so do premiers of all the other provinces of Canada.
Many times I have made the suggestion that civil servants should have respect for parliament. I was unsuccessful most of the time. But in my humble view all those who are in the employ of the dominion government should have respect for parliament. They may not care about this and that hon. member; that is of no importance, but

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they must respect parliament as an institution. And parliament can be respected only to the extent that it remains true to the honourable traditions of the past.
One may say: Well, it is pretty hard to do something unpleasant to one or two or four or five or ten high officials; it would hurt them; it would be embarrassing to them. But what is one man in a crowd of a hundred thousand?


Mr. MARTIN:: Why a hundred thousand?


Jean-François Pouliot: Or ten in a hundred
thousand; perhaps my hon. friend is right. What is said is that a man shall be allowed to stay in office because he is such a nice fellow, or it would be hard for his family if he were not. No one thinks of the hundreds of thousands, perhaps millions of Canadian citizens who suffer perhaps on account of that very individual, who suffer on account of the weakness that is shown in not firing him at once. I name nobody in particular. But it is rather hard to discharge one you work with, because you know him, you know his family, you know his past-


Thomas Vien: Order. I must again draw the attention of the hon. member to. the fact that he is wandering too far afield. The item before the committee is the special vote ' for the expenditures incurred by the auditor general's office on account of war. The hon. member is not addressing the committee on that point at all.


Major James William Coldwell: Mr. Chairman-


James Lorimer Ilsley: I should like to say something if the hon. gentleman is finished.
The hon. member for Temiscouata seems to object to the form of the public accounts.
I wish to make a distinction clear. The statement of the public accounts is one document; the auditor general's report is another. The public accounts are published on October 31, the same day as that on which the auditor general's report must be issued. The public accounts are presented to the Minister of Finance by the deputy minister of finance, for issue and publication. The auditor general's report is tabled through the Minister of Finance. The deputy minister of finance is the permanent head of the Department of Finance; he is a civil servant, an official of the government, in the employ of the government. The auditor general on the other hand is an officer of this parliament and answerable to this parliament.
I have made inquiries as to the form of the public accounts. I find that the public
accounts are in the same form and practically of the same dimensions as they have been for a great many years. I think when hon. gentlemen talk about the public accounts, in many instances they have in mind the auditor general's report. That certainly was true of the remarks of the hon. member for Davenport this afternoon. He referred several times to the volume which he held in his hands, as the "public accounts." That volume was the auditor general's report. If hon. members of the house are criticizing the form of the auditor general's report, it is something they have a right to do. I think it is true that in the auditor general's report he does not give a detailed statement of individual expenditures of less than $25,000. I also believe it to be true that he does give a statement of civilian expenditures in greater detail. At the present time the question whether the form, the amount of detail, in both the public accounts and the auditor general's report should not be changed is under active consideration, and it may be that we can make changes which will be beneficial. It may be that parts of the material now published in the auditor general's report should be incorporated in the public accounts, to let the Minister of Finance take direct responsibility for it as head of the Department of Finance. That is under consideration at the present time, and a little later I think I may be able to make some recommendations to the house in that regard, which the house may debate if it wishes to do so. I do not mean within a week or so, or even within a few weeks, but I just want to tell the committee that this matter is under active consideration.
I do not want to say very much more about the speech of the hon. member for Temiscouata, but I do think I ought to say something about the deputy minister of finance. I do not need to do this for the sake of the general public or the great mass of people who deal with the Department of Finance. I am not saying this out of any sense of loyalty or sentiment, or anything like that; but if hon. members of this house are interested in my views I want to give it as my opinion that in respect of ability, in respect of character and in respect of devotion to duty I have never met anyone who ranked higher, and I have met very few who ranked as high. I want to say that about the deputy minister of finance. I have no personal knowledge as to the circumstances of his coming here, but I believe he was sought after, and almost anxiously sought after, because of his high reputation. I did not work with him, of course, when the previous
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government was in. power, when the Bank of Canada was established, when the housing legislation was launched, or when any of those important measures-and they were important measures, which have proved beneficial during the course of the years-were gotten under way. I know that he had a great deal to do in assisting, and probably in suggesting, that those measures be undertaken. But in recent years, since the outbreak of war, both as acting Minister of Finance and as Minister of Finance, naturally I have worked in very close association with my deputy. We have gone through some very serious times; we have undertaken some very large and comprehensive measures. You cannot set up a great organization such as the national war finance committee, or the foreign exchange control board, or the wartime prices and trade board, without doing an enormous amount of work, when you must have good advice and when you must have with you a clear thinker, a hard worker and a patriotic citizen. The deputy minister of finance is all of that.
Consider some of the things that have been done by the Department of Finance-and I am not saying this to pat that department on the back but rather to give hon. members of the committee some idea of the magnitude of the work. In our financial arrangements with Britain we broke entirely new ground and did an unprecedented thing which I feel sure has the approval of this and other countries. We undertook a comprehensive programme of getting foreign exchange into this country and of conserving foreign exchange by making scores of agreements, some of them involving very large sums of money, under the War Exchange Conservation Act-a most trying kind of work; meeting individuals and companies from all over the dominion and making agreements with them for amortization, depreciation, and so on. We have been dealing with the provinces for the last year, negotiating agreements with them resulting in the provinces vacating the income and corporation tax fields, something in which a sister dominion is now attempting to follow us, as the United States followed us in regard to our price ceiling policy. You cannot do things like these without the help of a person who is a good man. I am willing to give some scope to hon. members of this house in what they say about civil servants, but in regard to this particular civil servant, even though it may not be strictly in order I feel that I owe it to him to state what I have stated, for what my opinion is worth.
I do not think any comment is necessary with regard to the other things mentioned by
[Mr. Ilsley.3
the hon. member for Temiscouata, such as the passage of the Consolidated Revenue and Audit Act, and so on.


Thomas Vien: At this stage I should like to point out to hon. members paragraph 305 of Beauchesne's Parliamentary Rules and Forms, which states:
All references to judges and courts of justice and to personages of high official station, of the nature of personal attack and censure, have always been considered unparliamentary, and the Speakers of the British and Canadian houses have always treated them as breaches of order.
In the remarks of the hon. member for Temiscouata I did not find any direct attack, but certainly there were indirect insinuations affecting the character of these high officials. I should like to draw the attention of the committee to the fact that attacks of this kind are out of order.


Major James William Coldwell: I do not propose to break the rules, Mr. Chairman, though I think some of the criticisms offered this afternoon by the hon. member for Temiscouata with regard to the public accounts were well taken. The public accounts committee should be functioning; there should be a thorough investigation by parliament of the expenditures made by the government. I do not think we are doing our duty in this parliament when we fail to examine the public accounts in committee. May I say, too, that if this procedure were followed I believe we would facilitate the business of this house. I think we all feel that the business of the house has been dragging along during the last couple of weeks in a way that is a reflection upon all of us, and I should like to see a speeding up of the business. Therefore, Mr. Chairman, with your permission I am going to say everything I have to say on this matter at the present time.
I rose primarily this afternoon to speak of the staff in the auditor general's office and of the personnel under the civil service commission, which is covered in. the next item. I have been greatly alarmed by the influx of young people from western Canada into Ottawa, and the lack of accommodation for them. I have before me at this time-and I will not give the authority, although I shall be glad to give it to the minister-a report which has been prepared by a reputable social service organization in this city, outlining some of the conditions found here. The war has brought a very large number of people into this city. I suppose each one of us, irrespective of where he sits in the house, knows a number of young men and young girls who have come in from his own constituency, many of them from rural communities, and have found work in

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the various government departments under the civil service commission. Most hon. members know that the conditions under which many of these girls have to live at the present time are deplorable. For example, we hear about the high prices charged for board and room, about the overcrowding and even in some instances about the poor board these girls are getting.
I shall give only one or two examples of many I have before me. Let us first take the ease of three girls-and may I say that each one of these I am about to mention can be thoroughly substantiated. These three girls share a bedroom, and each pays $35 a month for room and board. The landlady is thus getting $105 a month for one room, and board for the three girls.


Richard Burpee Hanson: Disgraceful.


Major James William Coldwell: Another woman has a room for which she wants $55 a month, without meals, if one person occupies it. If two girls take it she will give them breakfast and evening dinner if they pay her $45 a month each. It will be realized at once that with the salaries paid in this city at the present time neither the auditor general's office nor the civil service generally can be doing other than exploiting these girls. I will not say the officials are exploiting them, but they are being exploited jointly by ourselves and by the landladies. In some instances girls are not permitted even to entertain friends in rooms for which they have paid these high prices. I repeat that these cases are authentic. Some girls have been taken to places which were not fit for girls to live in. Something needs to be done by the government immediately to cope with this situation in Ottawa. A few days ago I noticed in a local paper a report of a discussion in the local council. This newspaper, dated May 22, 1942-


Thomas Vien: Would the hon. member indicate to what item he refers?


Major James William Coldwell: I am talking about the stall of the auditor general's office, and about the personnel under the civil service commission, which is next. I was directing my remarks to the two items, but if you wish me to make two speeches, Mr. Chairman, I will do so.


Thomas Vien: The item which comes next is "supply of personnel for war services." The hon. member is now discussing the housing accommodation for that personnel?


Major James William Coldwell: I am discussing the supply of personnel for war services, with special reference to the housing accommodation in this city for that personnel. And may
I say to you, Mr. Chairman, with all due respect, that unless these girls are provided with proper remuneration and proper accommodation we shall not be able to get girls to come to this city to form part of the personnel of the civil service. Therefore I suggest I am within the bounds of these items.
This matter has been before the council of the city of Ottawa. The city has made representations to the government asking that it provide accommodation for the lower paid female help, which is included in the personnel mentioned in the item. The reply from the Prime Minister to the approach by the controllers of the city was most unsatisfactory. This letter, from Mr. Henry, Mr. King's private secretary, states:
Mr. King wishes me to say that the government is not unmindful of the need in this respect, and has been giving a great deal of consideration to the matter. There are of course a number of circumstances which must be taken into consideration. One difficulty has been that some of the controllers of war-materials and building supplies have found it very difficult, if not impossible, to release certain supplies at this time which are required for war purposes.
Yet at the same council meeting it was reported that a brewers' warehouse is being erected on Catherine street, that a permit therefor has been issued, and that the necessary building materials had been released for the purpose. I submit if materials can be found for a brewers' warehouse we ought to be able to find materials to provide decent accommodation in Ottawa for our employees.
As I have said, many of the girls come from constituencies far away. Some come from my own constituency in western Canada,. I know that many of them are suffering in health, and the loss in days by the departments is really a reflection of the conditions under which they live. I am not going to give figures, but if the Minister of Finance and the Minister of Munitions and Supply will look into the health records in their departments they will find that an enormous number of days are being lost because of ill health among young girls working in Ottawa.
If we are to appropriate the large sum of money mentioned in the item to the supply of personnel for war services, and if we are bringing into this city girls from outside points, then it is our bounden duty to see to it that proper accommodation is afforded.
The same condition existed in Washington. In that city the government is erecting hostels for the girls. Under date line of May 12 a dispatch from Washington states that the girls working there for the government, who will live in a new federally-financed hostel for
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women, will pay $34.50 a mouth for a single room, without bath. However, they may entertain. That rate of course is too high for the girls employed in Ottawa under the present salary schedule.


Mr. MACDONALD (Brantford City):: And that is also without meals.


Mr. COLD WELL:: Yes. But it does show that in Washington, where they are paying higher salaries, some attempt is being made by the government to deal with a similar situation. When we look around the city and see huge temporary office buildings going up, we must realize that if we are going to bring people to this city to work in government offices we ought to make provision whereby they may have decent accommodation during the hours they are not employed.
I know how difficult it is to find accommodation. I have in mind at the moment a gentleman who for over a week has been looking for a single room in which he may sleep. In some places landladies exact conditions which are neither right nor just. For example, a case I have before me indicates that girls who were paying a high price for a room were told, "You may sleep there, but you must be out of this room all day."
It seems to me it is the duty of the government and of parliament-because after all parliament is the expression of the will of the people, or ought to be-to do their utmost to remedy this situation. I have taken this opportunity to bring the matter to the attention of the Minister of Finance and the committee. I do not know whether he is aware of it or not, but I may say to the minister that quite often it is said, "Not only can we not get building supplies, but even if we could get them the Minister of Finance or the treasury board would not let us erect these buildings." Indeed the Minister of Finance and the treasury board sometimes have to bear the brunt of criticism of the lack of social services and social amenities in this dominion. The stumbling block, we are told is, that the Minister of Finance or the treasury board is not seized of the need for improvements, but that is no excuse for parliament, and it is, I think, a bad excuse for the government. I urge the minister and the government to give consideration to this problem which so nearly affects the lives of a large number of young people in this city, particularly those who may in after years be the wives of the men who will return from overseas and become the mothers of the future generations of Canadians.


Richard Burpee Hanson: I desire to say a word about this problem. The condition of the young girls who have arrived in Ottawa

to take war-time positions was called to my attention very soon after I had assumed the responsibility of this position. On that occasion the question was the rate of salary paid to these young girls, and I felt it incumbent upon me to urge upon the treasury board or the civil service commission or whoever was seized with authority a revision of their salaries. I am glad to be able to say that that has been done. As to whether or not it has been done adequately,-1 do not at the moment desire to express any opinion.
Recently there has been borne in upon me other aspects of their conditions, as presented by the hon. gentleman who has just taken his seat. I do not know whether the experience of other hon. members is the same as mine, but frequently some young girl whom perhaps I know personally from my own community calls upon me for assistance in this respect. I certainly know that my colleague the hon. member for Victoria-Carleton (Mr. Hatfield) is called upon every week to go out and find a boarding place for some young girl who has come to the city to take war work, and he is often driven to his wit's end to accomplish that which he desires to do. I have had the same experience of being appealed to, but fortunately I have had the cooperation of a good staff, which has, to a large extent, relieved me of responsibility.
There is a distinct governmental responsibility in this matter. The government has centralized war services in Ottawa, and when it does that it must assume responsibility for the housing of these young girls, and not leave the responsibility to the community. The government may say: "That is all very well, but the city of Ottawa is reaping some benefit from having these government employees here." That just begs the question. We are inviting these young people to come to Ottawa to help carry on the national war effort, and we are centralizing all these war services in this city. But we do not do a thing to provide decent accommodation for these employees, especially for these young girls, many of whom are away from home for the first time. The same problem with respect to war workers moving from one state to another has arisen in the United States. I recall reading last winter an article in the Atlantic Monthly which put the case very fairly for the municipalities, saying that since the government had created the condition, the government must assume the responsibility, not only for the housing of these people but for sanitary services, for school services, and for their hospitalization if these services became beyond the capacity of the local community.

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We ask these people to come to Ottawa. They come, many of them not knowing what the situation is here. When they get here they find themselves at the mercy of a lot of people who make their living by this means- and I am casting no aspersions on the landlords or landladies of Ottawa because I do not know enough about the circumstances. But I do know that there is a responsibility on the government to deal with this problem.
I do not think the letter of the Prime Minister's secretary to the municipal officials is satisfactory. I think the government has to grapple with this problem, and the sooner it grapples with it, the better. I make this concrete suggestion. I ask the government to set up a representative committee of civil servants to meet with the council of the city of Ottawa with a view to coming to a conclusion as to what shall be done. Let there be cooperation on both sides.
I think the suggestion of a women's hostel is perhaps the most satisfactory suggestion that [DOT]can be made. Of this I am certain, that something must be done to relieve the shortage of accommodation. The government must deal with the situation, and my suggestion is that they appoint a committee to meet with the city council and grapple with the situation with a view to building a hostel. The government can build offices on Wellington street and furnish them at the rate of $500 a room, as we have heard has been done. I have heard of a man wanting to move in his own mahogany furniture, but that was stopped as likely to give rise to great scandal. Some man was furnishing his room with an $800 carpet, but in that case the government was not paying for the carpet but the man himself.
To allow these girls just to look after themselves is not good enough. Let us deal with the situation with humanity, even if we are at war. I do not want it to be thought that the socialist party has any monopoly in the consideration of the humanitarian aspects of this problem. Other people are thinking about it too. The government can put up two buildings at great expense on Cartier square to house the navy. I am not critical of that, but they are just temporary buildings to be torn down after the war. Is not the welfare of these young girls who are brought to Ottawa a matter of paramount importance to us all and to the future welfare of this nation? Then let the government set up a committee right away and get in touch with the city council with a view to building hostels and providing other necessary services too. They will be doing a good job for which they will be acclaimed, I believe, by the people of Canada.


James Lorimer Ilsley: I will see that that suggestion is given most respectful and serious consideration. It is not primarily my responsibility; I am not the minister, to see to the housing of civil servants, but naturally I take an interest in the matter. Although I do not know too much about it I have some idea of what the situation has been, and I think the appointment of a committee or board or commission is a good idea. I believe that will have to be done. I think the composition of that board, its representative nature, will have to be given serious consideration, because the operation by the government of a girls' hostel will be a difficult and responsible task. I know that when the question was discussed last fall as to whether a hostel should not be built then to accommodate five or six hundred girls, the very suggestion almost was getting us into trouble because this interest and that interest were starting out to insist that they must have representation on any board that had charge of an enterpise of that kind. So far as the time to do this is concerned, we should pursue the same rule that we try to observe with our war effort generally; that is, that so long as persons coming here can find accommodation in the houses which are available at the present time, they should do so, even at some considerable inconvenience. If anyone thinks the people of this country in the next two or three years are going to escape inconvenience in housing, he is entirely wrong.
The construction programme of the government this year for military purposes, I am told is larger-I was going, to say twice as large, but I may be wrong in my proportions -than in any previous year. That may be surprising to members of this committee, but that is what I was told by my colleague the Minister of Munitions and Supply the other day. There is going to be the most terrific scramble for materials for housing in all parts of Canada, and we must keep it down to the very minimum.


Richard Burpee Hanson: Well, the same crowd gave priority for a beer warehouse.


James Lorimer Ilsley: All right, now. Every hon. member will be able to think of something for which he would not have given a permit if he had been director of construction. Certainly anyone is able to do that. The controller of construction is in the Department of Munitions and Supply. He has a very difficult task to perform, and, no doubt, is discharging it as best he can. He has certain rules applicable to residential construction, certain rules applicable to industrial construction, and so forth. He has kept construction down much better than private construction would have
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been restrained had there been no control. There must be rigid and severe control over construction, which will entail a considerable amount of inconvenience. Of course, that inconvenience cannot pass a certain stage. All I want hon. members to understand is that there is likely to be some, and that the government is keeping an eye on that situation and will give it serious consideration. My understanding-and here I may simply be provoking controversy, for I do not know very much about the matter-is that the situation in Ottawa eases in the spring and becomes a little harder in the fall, because in the spring people move out to various country cottages in the vicinity; and I do not think there will be an impossible situation or a very inconvenient situation during the summer and early fall months.


Richard Burpee Hanson: That possibility is going to be wiped out on account of the gasoline restrictions.


An hon. MEMBER:: What about next fall?


James Lorimer Ilsley: I understand that; the
obvious answer is that we should be thinking of the situation next fall, and I may say that we are thinking of it. The suggestion of a board or a commission is a very good one.


George Black: As regards these temporary buildings which are being erected in Ottawa: Canada is growing; the public service of Canada is growing; accommodation is needed to house government employees. Canada has now been at war for nearly three years, and there has been plenty of opportunity and time to build a few more permanent buildings. I believe the government would have been better advised to construct a few permanent buildings, instead of temporary buildings, at a great expense, which will have to be destroyed after the war. Take the Lord Elgin hotel: it was built inside a year. There is no reason why the government cannot erect permanent office buildings right here in the city. They will be available for all time to come, and the expense in the long run will be less than the cost of putting up these mushroom buildings and afterwards tearing them down.


Mr. HANSON (York-Sunbuiy):: And it would avoid the fire risk.


Mr. ROY (Translation):: Mr. Chairman, in reply to certain remarks made earlier, I believe, by the hon. member for Davenport (Mr. MacNicol), the Minister of Fisheries (Mr. Michaud) gave us the trade history of that delicious seafood known as the lobster. This 
statement interested me very much, although there remain a great many things to be said on the subject, for my constituency and more particularly the Magdalen islands produce a great deal of lobster, in fact, a large percentage of our entire Canadian output.


Thomas Vien: I wish to remind the hon. member that we are now considering the auditor general's report. No one has objected to the hon. member's remarks, but it is incumbent upon me to direct the debate according to the rules of the house. I merely wish to draw the hon. member's attention to the item now under consideration, and to say that I do not believe there is a sufficiently close connection between it and the situation with regard to fisheries in Gaspe or the lower St. Lawrence, to warrant the latter's discussion.


Joseph Sasseville Roy: Begging your pardon, Mr. Chairman, I was under the impression that the S3,000 item which I notice here had brought about, earlier in the day, a discussion on this subject, and the remarks I have to make are directly related to the state of war.


Thomas Vien: If I am not mistaken, the hon. Minister of Fisheries' remarks were intended to correct an unfair criticism of the auditor general's report. It had been alleged that in his report, the auditor general might have been more explicit with regard to the expenditures incurred by the fisheries department. The minister then explained the scope of the auditor general's report with regard to fisheries. Any remarks made in this connection must be directly related to the report under consideration.


Joseph Sasseville Roy: Can I not make certain observations at the moment, Mr. Chairman, provided they are directly concerned with the state of war?


Thomas Vien: No, not unless they are related to the auditor general's report.


Joseph Sasseville Roy: Very well.


Thomas Langton Church: May I briefly supplement the remarks I made last evening to offer some suggestions to the minister about what I think should be done with regard to auditing and checking these war accounts, the item of $196,000.
In the first place I want to point out to the minister that it is not an audit at all; it is just a checking system. Those of us who have come up from the municipalities have had some experience in this work. The system we have to-day of auditing and checking with relation to war expenditures

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is just a village system; it is not and never was designed for such a great war as this, where in one year we are going to spend $2,200 millions. There are twenty-five of these various bodies which are called corporate instrumentalities. Many of these bodies are themselves spending bodies, and they have their own auditors. I contend that we should have a new consolidated revenue and audit act; there should be a committee of the house which would be known as the audit committee, and they might be a ways and means or finance committee. It would greatly help the minister, who is bearing a very heavy burden at this time. I regret to have to bring this matter up, but I believe the discussion will do a great deal of good and strengthen the government in the end. As one goes about the country he finds that everybody is aware of this or that condition of waste or duplication, and there is nobody to stop it. The auditor general is responsible to parliament. All he does is get out a great big book, the auditor general's annual report, which I doubt if anybody ever reads; I know I have not read it since 1926 or 1927, till last year. For the auditing and checking of war work, there should be a standard system of audit to apply to the government and all outside boards. No bank or insurance company could keep open its doors a month if it were to run on the kind of village system of checking accounts we have. No county council could discharge its duties and no public utility could carry on with such an antiquated system.
I suggest that we should adopt the practice which prevails in England. First, there should be a standard form of audit; second, there should be a committee of the house known as the ways and means and audit committee to which the minister could send the auditor general's report for revision.
I looked over some of the work here. I may say that I was told away back in 1926-27 that the audit system was all right, when I first had the matter up with the late Mr. Robb who was then Minister of Finance. Mr. Robb was an able minister who knew a great deal about business, and competitive business too. At that time I took exception to the audit system, but everyone said that the audit was all right. Of course, every audit is all right until there is an explosion and it is discovered that money has been squandered. There are a good many business men both in this house and in the other place who have impressive financial names, and they know that one of the greatest necessities to-day, at Washington, in London and in Canada, in connection with our various large institutions,
is the conservation of money and capital through a proper up-to-date system of checking and auditing and retrenchment, concentration, and the elimination of waste and duplication. But what have we here? There is no system at all, as far as I can see. In the first place, what is an audit? A modern, up-to-date audit must recommend changes; it must eliminate waste, and it must find out if there is coordination and cooperation among the various departments that go to make up the minister's budget. Here we have, according to page 541 of the auditor general's report, twenty-five of these outside boards under the department, and yet there is no control over most of them. Apart from two or three cases, what the government should do is to take over all these various outside boards, the whole twenty-five of them and audit the whole system. Toronto had to do that very thing with its outside boards. Toronto's financial affairs are much larger than the finances of the province of Ontario, with its outside boards, and the city had to adopt a new audit system and1 a new system for the sale of bonds and for capital levies. There had been no protection in the old days for the taxpayers from duplicate systems of handling loans, and the city decided to appoint Mr. Bradshaw to look after all the work, to make provision in connection with bonds, capital charges, and so on, dealing with thousands of employees and very large public utilities engaged in the handling of money running into a hundred million dollars and more. The result of that new system was a great economy, coupled with efficiency. There could be a great deal of saving to-day if the minister would adopt a new audit system, with a veto power.
When I first came into this house in 1926 and 1927, I was told that, for instance, the banks were solvent, that no bank had failed. But what happened? The Home bank closed its doors because the system of inspection was a myth. Some of the directors and others took millions of dollars out of the till, and invested the money in the United States, putting it into other pockets. Yet we were told at the time that the bank inspection and audit and checking system were all right. We were told that it could not happen here, but it did. When Mr. Robb was Minister of Finance I brought this whole question up in the house because I could foresee the explosion. I knew there was going to be trouble in connection with the insurance companies, and I brought in a bill in relation to audit and checking in reference to the large insurance companies, to provide that no insurance company should be allowed to invest trust
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funds, that is insurance funds, extra-territorially in common stocks. An investigation by the auditor general and others, disclosed in the insurance report submitted by the inspector of insurance, showed that hundreds of millions of trust funds were taken out of the country and invested in South Sea bubbles the world over, in what are known as common stocks of these companies, with the result that the money was lost. My bill to prevent these investments in such common stocks outside Canada went before the banking and commerce committee, but the proposed amendment was defeated and millions and millions were lost and squandered at that time. But they said that the system was perfect. Well, no system is perfect, and certainly we have not a proper system. It is all very well to check up a pay sheet with 181 names on it, but nobody knows how they got there.
I can tell the committee something about these outside federal government boards. In Toronto I see a good deal of waste about the streets in war expenditures, and anyone who travels over the country on our trains, visiting different places, will observe war waste all along the line. Of course there will be waste. There was waste in the days of Napoleon and in the days of Pitt, and it is only to be expected that there will be waste in the conduct of a war like this. But when the government is expending two billion dollars^vhen it is dealing with astronomical figuiro, it should put on the brakes and see that the money is well spent. In England the war expenditures committee has recommended changes, according to the report which has arrived to-day and which I have seen. It has recommended changes in auditing and checking of accounts, coordination, revision and veto power, with the result that in the old country they have saved hundreds of thousands of pounds by means of their up-to-date system. They have had a house-cleaning, and we should have the same. That is one thing that can be said to the credit of the late auditor-general, Mr. McDougall, whose name was an influence in the Victorian era here, and an influence with those that came after him. He vetoed hundreds of items.
But what do we find here? Here I can find only one item vetoed last year from the treasury board. I contend that the auditor-general, who has to report to parliament, should have power to veto any expenditure he sees fit. Look at the five or six departments in which there is so much duplication and waste at the present time. There is utter waste in these departments, for the simple reason that five different bodies have been spending money like water. They have been putting up duplicate billboards such as the one that says

"No loyal citizen hoards". They have put out billboards, advertisements, booklets, the height of the parliament building; there has been no equal to it since the tower of Babel in waste paper and talk. There would be no place in which to house the billboards and publicity material if we wanted to.
The tax-payers are getting sick and tired of this sort of thing. The government is all the time taking more money from the taxpayer than he can afford to pay. We are supposed to have a comptroller of the treasury, but all he does is to have a few clerks look up and check accounts. As for the checking system we have, I would not give five cents for it. I have seen some of these accounts, and I know there is duplication and waste. For example, there are two bodies in Toronto, one military and the other under the civil service commission, and for two years now there has been conflict between the civil body and the air force. The commission claim the power to appoint bookkeepers, stenographers, clerks, checkers and so on, and yet there is the Royal Air Force over their head with a duplicate staff spending more money, and making these appointments illegally.
Again, there is the Department of Munitions and Supply. I admire the minister, and I am fair enough to admit that he has done splendid work. There is, however, some waste in the department in the camp established. It cannot continue much longer. Take these outside boards; we have pages and pages of publicity material in the newspapers every day coming from these various boards. There is hardly a small retailer who can carry on with the interference of those bureaucrats, mostly untrained in business. One the other day said at a meeting that the small retailer may have to close up for lack of materials.
I submit that we shall have to change our way of doing business; otherwise this high court of parliament may as well be abolished for all the control we have over these war expenditures and over outside commissions and boards after the money is spent, and they are all postmortems. You have here, largely for civil government, an amount of $146,000,000, some overdraft, and there are draft estimates that came out a few days after parliament met, but the committee of supply has not yet sat one day. There has never been any committee of supply to pass upon one dollar of these estimates. We are supposed to have a break-down here. Well, it is a break-down because you cannot get any detailed information on each item from the minister. There are no details of expenditures, no details of these large items running into millions of dollars. I repeat, we shall have to change the whole system.

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I suggest that the Minister of Finance should have a fixed day for bringing down his budget; there should be a fixed day for the annual submission of his budget and for audits and accounting. How can you provide a proper audit and checking system when one person, the Minister of Finance, can say, "I will produce my budget, if I choose, in June." The accounts should be balanced up to the end of December and a proper audit made at that time and the financial year end with the calendar year. The date for the submission of the auditor general's report is fixed by statute, and there should be a similar provision applying to the Minister of Finance in the bringing down of his budget. Here we have two-thirds of the budget before us in connection with war expenditures nearly spent. It means that the budget speech is brought down afterwards as a sort of postmortem. Now are we going to have half a dozen budget speeches instead of coordinating them into one? The country is heading for national bankruptcy. These are strenuous days for the poor retailer and wholesaler; they are driven to the wall with artificial controls. I do not wish to embarrass the minister, far from it, but I believe that this discussion will strengthen his hands and do a great deal of good, and that it will be discussed in the country. It will not be possible to increase the income tax or obtain any further money unless we retrench and get value for our money-either income taxes or death duties or anything else, and the government may never collect any proposed increases.


James Lorimer Ilsley: The next item is "comptroller of the treasury."


Joseph Enoil Michaud: After external affairs.


James Lorimer Ilsley: We will skip external affairs for the moment.


Mr. NOSEWORTHY:: Are we including the item mentioned in the same line, "dependents' allowance office"?


James Lorimer Ilsley: Yes; the item is:
Comptroller of the treasury, dependents' allowance office and outside establishments, $4,979,617.


Joseph William Noseworthy: When the Minister of National Defence for Air (Mr. Power) brought his estimates before the house I called attention to the condition of the dependents of our men in the forces as I had observed them in the riding from which I come. The Minister of National Defence for Air then informed us that he would discuss with his colleagues the question of granting a cost of living bonus to these dependents. I understand that this dependents' board was set up
on November 14 last. Four days before that board was set up a deputation came to the Minister of Finance from Toronto representing certain organizations interested in our men in the forces and overseas. It was the considered opinion of those representatives that the cost of living bonus was a much more satisfactory solution of this problem than that proposed by the minister at the time. I am further informed that the minister asked that deputation to give his plan a fair trial. I have here correspondence from the ladies auxiliary of the Royal Canadian Engineers, and am assured by that organization that after having given the minister's plan a trial they are convinced that this board and the granting of dependents' allowances to the wives and families of men in the forces do not constitute a solution of the problem.
In the first place it has the appearance of charity. These wives must admit to their homes social service workers, who are required to check the family budget to discover whether they can advise the soldier's wife where and-how she can make her budget go further. Then application is made through the social service representative; if approved, it is sent on to Ottawa, and, if it is approved by Ottawa, the dependents in the course of two or three months receive a cheque. While this board was set up in November, I understand that the first payments did not reach the families in Toronto until the winter months had passed; it was along some time in March or April before many of the dependents were receiving any allowances from this board.
I understand that the stock argument in favour of this board and against the cost of living bonus is that some of these wives are unable to manage their own affairs, unable to manage their budget economically. That may be true of a small percentage of them. Social service workers have estimated that it is true of probably two per cent of the dependents. The fact remains that these families managed their own affairs while their husbands were in Canada. They are asking to-day why it is that they should be the one class of citizens to be discriminated against in this respect. Practically every other group of citizens below certain wage levels are granted the cost of living bonus. In the great majority of these cases if the men had remained at home and gone to work in war or other industries the families would be receiving cost of living bonus to-day. They and their families are being penalized because they showed sufficient patriotism to enlist in the forces. I maintain that one of the great deterrents to enlistment to-day is the sight across the road of a
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soldier's wife and family who have to depend upon what to all intents and purposes is charity to secure sufficient money to get by.
I should like to read to the committee one or two short extracts from letters from the officials of the ladies auxiliary to the Royal Canadian Engineers on this question. It is pointed out here that social service workers came into twelve typical homes in Toronto and tried to find ways and means whereby these wives could do better than they were doing with the income at their disposal. Matters came to such a strait that a number of these wives offered to turn over their homes, their children, the management of their homes to social service workers in order that the wives themselves might work out and earn something for their own subsistence. There is a standing offer made to these social service workers to come in and manage a dozen of these homes to see if it can be done any better than it is being done by the women in charge. So far no offer of that kind has bee.n accepted.
I have one paragraph here which expresses the feeling of those people. They say:
Just because possibly 2 per cent of dependents are indiscreet, poor managers, unable to handle funds to the best advantage, does that mean that we must all be "assisted" by social service workers or starve and freeze; failing that we can "make application" humbly I suppose for "assistance"-they don't like it called "charity", and if the committee gives favourable consideration the "award is recommended." Do the powers that be feel that all dependents are unable to manage their own affairs? Do they feel that all dependents should be shoved and bandied about in this way? Is their contribution to the war effort not great enough without being subjected to this indignity?
I am sure this matter has been taken up with the minister on a number of occasions, but I should like to direct his attention also to one case history which has been brought to my notice. It is pointed out here that in many of these families there is a sickness allowance. The regional committee in Toronto has on record cases of sickness, particularly of children, caused through nothing but insufficient food of the proper kind, or in fact food of any kind; lack of warmth in the home because of insufficient coal, and so on. One woman with four children had seven cases of measles in the home last summer and two cases of tonsilitis. During the winter the children were continually ill with colds. At the present time three children in that family are so underweight that the authorities have put them in the open-air school, while the fourth is being given extra milk at school in order to provide the child with sufficient strength to carry on the school work. I made the statement formerly that there were families 
in my riding worse off to-day than they were when the father was at home on relief. Since making that statement I have received letters from social workers in that riding assuring me that this is an actual fact. I have here a statement signed by certain teachers in a school in a district adjoining Toronto. They say:
It has been brought to our attention through charity organizations that there are instances in York township where a soldier's pay is inadequate to keep the family. It has been stated there are cases where the family received more on relief than it now receives in the armed forces.
We, the undersigned, as citizens in your riding, feel that the wives of the armed forces and the children, regardless of their number, should receive adequate financial compensation to relieve them from accepting charity. It is the least that can be done for families of men standing between the enemy and ourselves.
That is signed by thirty teachers in one of the schools attended by some of these children. I think it is generally agreed that the dependents' allowance serves a good purpose, in cases of sickness, where hospitalization is needed, and in the case of families with more than four children, since the government grants allowance for only four. But the point about which these dependents are concerned, the question they are asking, is why the family of the industrial worker should get a cost of living bonus while the family of the soldier cannot get it. I have been told by social workers in that district that they have great difficulty in restraining these women from mass demonstrations of their indignation against the government for its refusal to grant them this cost of living bonus. So I would seriously ask the Minister of Finance to consider the possibility of giving the soldier's dependents a cost of living bonus similar to that being given others in this country.


James Lorimer Ilsley: I believe this matter was taken up on the defence estimates; at least I am so informed. At any rate that is the place where it should be taken up. The only reason why the dependents' allowance office appears in here is because part of the vote of 84,979,617 is for the expenses of the officers of the comptroller of the treasury who pay the accounts that are payable through that office.
Mr. HANSON (York-Sunbury); Administration.


James Lorimer Ilsley: Yes. Any matter of policy, so far as the amount that should be paid is concerned, is for another department, not for the Department of Finance. Probably the hon. gentleman has in mind that last November, when dealing with a large number of demands on the government for cost of living

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bonuses, it fell to my lot to deal with those demands because a statement could not be made by each of a number of ministers. It was essentially one matter, and I dealt with all the demands. Last fall we were confronted with demands for cost of living bonuses from old age pensioners, from those receiving war veterans' allowances, from superannuated civil servants and others whom I do not seem to remember. Some hon. member says "mothers' allowances." I do not think they applied to this government, because mothers' allowances are paid by the provincial governments. At any rate, at that time we had to decide what policy we were going to follow in reference to the payment of cost of living allowances; whether everyone in the country whose position w7as worsened by the increased cost of living was to receive a cost of living allowance, or whether we were to stick to the original intention of our cost of living allowance policy, which was part of our wage policy and nothing else. We decided we would do that. In regard to these dependents' allowances, I do not understand that the hon. gentleman wishes to drop our present system and turn to the cost of living allowance system.


Joseph William Noseworthy: No.


James Lorimer Ilsley: The hon. member wants both systems; he says that this system is of value in case of sickness, where there are more than four children in the family, and so on. We do not think both systems are necessary.
With regard to dependents' allowances, it must be remembered that the experience we had to go on was the experience of the last war, when wives received a separation allowance of $25, during a period such as this, and at the end received a separation allowance of $30, at a time when the cost of living was far higher than it is at the present time. That is, it was only at the end of the war that it went up to $30. There was no allowance at all for the children. They were provided for out of what was called the Patriotic fund, which fund was administered by public-spirited citizens who voluntarily contributed money. At the beginning of this war what was normally to be expected was an increase in the cost of living, so at the outset we made the wife's allowance $35, which was $5 more than it was at the end of the last war, when the cost of living was much higher. We also provided allowances for children as of right, and in November we increased those allowances to cover up to four instead of only two children. There is a group-I will not say it is entirely confined to Toronto, but it centres in that city-which has written a great many letters,
has come to see us several times, and has conducted a very earnest agitation-and I do not say that in any invidious sense-for the extension of the cost of living bonus to these dependents' allowances on principle, and that has been joined in by several members of this house. I was in the house one day when the hon. member for Peel (Mr. Graydon) was making a very earnest plea to the government to add to this cost of living bonus; that is, since it was $35 at the beginning of the war, and the'cost of living had gone up 15 per cent, it should be $40 now. Apparently his argument was that, once having set the amount at $35, the government was-I will not say "hooked"-but committed to that amount, and that it should increase according to the increased cost of living.
I am not the one to whom the agitation was directed, although I received the delegation on one or two occasions. In addition, I have received many letters from the delegation in language very much like the language the hon. member has just used. But I am sure that in many parts of the country the system we have adopted is regarded as, if not completely, at least reasonably satisfactory. This perpetual harping on what they call charity-and the hon. member has identified himself with that group-is entirely unwarranted and entirely unjustifiable. There is no charity about the matter at all.
The government has come into this, very much the same as the Patriotic fund came in. But after making much wider and more binding provisions as of right for the wives and children, the government has put up a fund, where money is needed. In some localities the cost of living is much higher than in others. Rents may be higher in one place than another.
However, I have talked to people around the country who think the present provision is reasonably satisfactory. Of course that will not satisfy those hon. members who think money does not make any difference at all, and that we can pay unlimited amounts. But I do suggest that the government ought not to be accused of being indifferent, careless or unintelligent in the way it has handled this problem.


Richard Burpee Hanson: I was
rather startled to hear the hon. member make the assertion that the amount paid to the wife and children of a man on service was less than would have been received had he been on relief. I can scarcely credit that. From memory I have put down some figures respecting the amount paid to a soldier with a wife and four children, and if my premises are correct that amounts to $113 a month, made
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up as follows: pay, $39; allowances, $35; $12 for the first child, $12 for the second, $9 for the third and $6 for the fourth. Twelve times that amount would be $1,356. I wonder if any municipality in this country ever paid that much in relief. If it did not, then that just shows an exaggeration which is not justified by the facts.
Further than that, my understanding of the policy of the government was that it would make the allowance from the very beginning, thereby doing away with a patriotic fund such as we had in the last war, under which some people gave a great deal and others gave very little. I understood the purpose was to spread it among the taxpayers of -the country, where it belonged as a matter of business and not as a matter of charity.
Is there anything to the suggestion that the family to which reference has been made received more by way of relief than under present circumstances?


Joseph William Noseworthy: That statement was made to me by reliable social service workers, and I believe it applied to the case of very large families. In York South men, with eight or ten children at home, have joined the army. I can well believe they would be worse off under the allowance they are getting now-or were getting a few months ago, because I do not know what arrangements have been made since-than they were when they were on relief.


Richard Burpee Hanson: Did the hon. member check up, or is this hearsay?


Joseph William Noseworthy: As to charity, may I point out that these women object strenuously to having social service workers come into their homes, checking their budgets and checking their outlay in connection with home management, and then making applications for allowances. To them this looks like charity- whether it is or not. That is one objectionable feature.


Thomas Langton Church: This is an item of about $21,000 less than $5,000,000, to the comptroller of the treasury for dependents' allowance, and it is made available to the dependents' allowance board. I am reminded of the provision made last fall with respect to men having more than two children. The minister surprises me very much, because all the time he seems to be offering special pleading against benefits for soldiers. For instance, there was the high cost of living bonus I supported, with an allowance for those with more than two children; then there was the matter of soldiers' insurance, free fares, and other matters of that kind.
This department is spending vast sums of money, but I have never seen anything in my

life like the way it is using returned soldiers, their wives and children. I believe if the minister had attached to his department a few soldiers who had served in the great war, it would be a much better department, and they would give the soldier and his dependents a break.
The public is not objecting to these war expenditures, if they are made in an all-out war effort and the soldiers given better treatment. But when we look at this list of payments we immediately see one for $50,000,000 to pay for subsidies under the priceceiling order. While this large sum is made available for that purpose, there is not a cent for the soldier who is fighting our battles and his dependents. History will deal with those who have been responsible for that kind of work. I ask the minister to come down out of the clouds, and let something be done for our soldiers who are fighting our battles. I am sick and tired of hearing special pleading by the government when any matter of this kind comes up. Despite all the boards there are around the country, the soldier is getting little or nothing. Not many of them are even remembered in connection with the amendment the minister made of a small insignificant grant, just charity, instead of a real cost of living bonus.
The provision made for those with more than two children was just a sop; it did not amount to a snap of the fingers. Very few benefited by going before a board. All over the country the government is setting up these new boards, but very few of the soldiers, if any, get one red cent out of it.
I am not going to vote for any more of these things until we have a fair and square deal for the soldier who is fighting our battles and his dependents. He is not getting it at the present time.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


Jean-François Pouliot: I have in my hand
Beauchesne's "Parliamentary Rules and Forms, Second Edition", and I find that citation 502 reads:
The estimates for the year are submitted to the committee of supply by the finance minister bringing them down in the house with a message from the governor general which is read in English and French, the house standing, by the Speaker or by the clerk at the table. The minister then moves "that the said message, together with the estimates, be referred to the committee of supply." The estimates are after-v-ards taken up at any time the government thinks proper.

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According to the explanation that was given by the minister this afternoon, these estimates are part of the $2,000,000,000 appropriation for war purposes, and so I ask, why is the procedure different in this case?


James Lorimer Ilsley: Because this money is not to be voted item by item. This appropriation is part of a bill, and this is the procedure that is followed by parliament in all appropriations of money by bills. If, for instance, we were to pass a bill, as we are doing, to set up a scheme of war risk insurance, and the bill provides that $5,000,000 shall be appropriated and placed in the hands of an insurance organization to be set up by the government for the purpose, the consideration of that appropriation of $5,000,000 goes, not to the committee of supply but to the committee of the whole house. That is the uniform rule applied to appropriations provided by statute. When we have estimates, whioh are submitted to the House of Commons by His Excellency the Governor General, the committee of supply procedure applies, the procedure which the hon. gentleman has just mentioned, and the committee of supply deals with those estimates item by item. But we do not go to the committee of supply with a bill of this kind.


Jean-François Pouliot: I am sorry I cannot agree with the minister. There is, of course, a difference between estimates and grants; they are not the same thing at all. The kind of expenditure we are now discussing is called an appropriation, but simply because it is called an appropriation I do not believe that the procedure should be changed. The procedure should be the same as when the appropriations are just the ordinary estimates. A grant is something special, something out of the ordinary. But when we come to consider the expenditures of a department, even if there is some increase, they still remain estimates, and so I submit that the procedure should be the same and that this appropriation should come before the house in the usual way that estimates come. I know very well that if Mr. Bennett or Mr. Meighen or Mr. King or Sir Wilfrid Laurier or Sir Robert Borden had been the leader of the opposition at this time, he would have protested strongly against this procedure.


Richard Burpee Hanson: I am to blame, I suppose.


Jean-François Pouliot: My hon. friend the leader of the opposition may strike his bosom; nevertheless he has a responsibility in this
matter-


Richard Burpee Hanson: Mea culpa.


Jean-François Pouliot: I cannot understand this procedure at all. This appropriation should have been brought before the committee of supply in the usual way, with a message from the governor general.


Thomas Vien: Does the hon. gentleman raise a point of order?


Jean-François Pouliot: I am just submitting a
question, Mr. Chairman.


Thomas Vien: The resolution was
introduced into the house by the minister, and the minister stated that it had' received the approval of the governor general and that it was recommended by his excellency to the house. That is the usual procedure with money bills. The resolution has been referred by the house to the committee of the whole. The point raised by the hon. member might have been raised and discussed in the house at the time when the motion was made to refer the resolution. I do not believe it is within the jurisdiction of the committee now to discuss the question on a point of order.


Jean-François Pouliot: If you will permit me,
Mr. Chairman, in the first place the whole matter was put on record by the Minister of Finance when nobody knew what was involved. Of course, the minister made a few preliminary remarks, and it was just because the members were not at all familiar with what had been put on Hansard that discussion was postponed. What the minister put on record was not submitted by way of a special motion.
It was just put on record when the Chairman was in the Chair, not yourself, Mr. Chairman, but an acting chairman, and I had just started to ask a question of the Minister of National War Services when I was told that we were going to proceed with finance.


Thomas Vien: Order. The resolution
was placed on the order paper. When it had been on the order paper for the prescribed period, it was taken up by the house, with His Honour the Speaker in the Chair. A motion was made that this resolution be read a first time, and, then, that it be referred to the committee of the whole. If some hon. members did not notice it, the matter can no longer be discussed here. This committee has been properly seized, without protest, of this resolution, and the action taken by the house is not subject to review by this committee at this stage.
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Mr. WRIGHT:: I do not know, Mr. Chairman, whether I am in order after your ruling in raising a question respecting the administration of the dependents' allowance legislation which I wish to bring to the attention of the minister. Am I in order in doing that?


James Lorimer Ilsley: May I say a word on that? If the hon. gentleman is proposing to discuss a decision of the dependents' allowance board, that should have been discussed under national defence. If he has in mind some administrative action of the comptroller of the treasury, who is merely in this case a cheque-signing and sending officer, it is in order under this. But I think it is important to keep that distinction in mind, because this is an item to pay the expenses of the comptroller of the treasury for sending out money for various war departments, and this is one of them. I would ask hon. members, having fully discussed the subject of dependents' allowances when national defence was before the committee, to refrain from discussing it under this finance item.


Richard Burpee Hanson: As a matter of expediency and convenience, what the minister is suggesting is correct, but under an administrative item I think a member of the House of Commons has the right to discuss any matter that requires redress of grievances.


James Lorimer Ilsley: I would just point out that if the position taken by the leader of the opposition is correct, there is no limit whatever to any part of our war expenditure that can be discussed now, because the comptroller of the treasury pays all the bills-


Richard Burpee Hanson: I expect that is true.


James Lorimer Ilsley: -and under this item the whole field can be ranged over. For the sake of expediency, if for no other reason, I do not think we should go over these matters time after time. There would be no need to call in any other minister if this could be done.


Percy Ellis Wright: The matter I wish to discuss is directly connected with the administration as it applies to outlying districts in our province. At the present time apparently the dependents' allowance board have no way of deciding-


Thomas Vien: Order. Does the hon. gentleman address his remarks to a special item relative to the war, or is he discussing the general administration of the dependents' allowance legislation?


Percy Ellis Wright: No, it all has to do with the war, and this has to do particularly with the administration of this legislation in the

outlying districts of Canada where the dependents' allowance board have no representative to interview people who are coming under the legislation, and therefore send out to postmasters or to various parties who hold government positions in those parts, asking them to convene boards to interview people to see whether .they come under the legislation. That is the point I wished to discuss.


James Lorimer Ilsley: From my point of view that is purely a national defence matter. The Minister of National Defence, not the Minister of Finance, is the minister responsible for the operation of the dependents' allowance board, and I submit that the matter should not be taken up under finance estimates.


Mr. MacINNIS:: Am I right in assuming that this item has to do with accounting only?


James Lorimer Ilsley: That is correct.


Mr. ROSS (St. Paul's):: I was going to say something about this dependents' allowance, but I do not see any reason for kicking a dead horse. The point is, I was here last year in connection with this matter; a delegation came from Toronto, and we had a nice hearing, but we did not get any place on the question of a bonus to dependents. The government will do nothing. What I do wish to discuss is a question in connection with the administration, not only under this one item, but regarding the hiring of clerical help by the government at the present time. What have we? We have at the present time private enterprise, large institutions of one kind and another which are not war industries but are essential to the country even in time of war. The salaries which have been paid to clerical help, mostly women, may be considered in this way: take a girl earning $70 a month; she is allowed a cost of living bonus; but we cannot go any higher; we may not give her more than that.


James Lorimer Ilsley: On a point of order, can we not keep to some rule of discussion here? Otherwise, I again say, there will be no end to this discussion. The hon. gentleman is apparently discussing the matter of salaries of civil servants as compared with salaries paid outside, salary restrictions, and so forth. That does not come under this item, whatever other item the hon. gentleman can discuss it under. I suppose it would be under the salary ceiling order of the Minister of National Defence; he has the administration of that order. Unless we are going to cast all system to the winds, the matter should not be discussed under this item.

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Douglas Gooderham Ross: Surely the people of this country, who are putting up the money-


Thomas Vien: Is the hon. gentleman speaking to the point of order?


Douglas Gooderham Ross: Yes. Surely the people of this country are putting up the money to pay these people and they have the right to say something about how it is paid. If we are to vote the money, we certainly have the right to know what will be done with it, how it is going to be expended, and we are entitled to express our views with respect to what we think are grievances on the part of people whom we represent.


Thomas Vien: That is not a point of order.


Douglas Gooderham Ross: Just at the present time when this-


Thomas Vien: Just a moment, please. Does any hon. member desire to speak on the point of order raised by the Minister of Finance?


Douglas Gooderham Ross: Mr. Chairman, I should like to finish my discussion-


Thomas Vien: The hon. member was not addressing himself to the point of order; he was addressing himself to the merits of a question that he raised. There is a point of order raised by the minister, and I must dispose of it.


Douglas Gooderham Ross: Mr. Chairman, I suggest that on the point of order I, as a member of this house, have a right to discuss just what I am saying.


Thomas Vien: The minister did not challenge the right of any hon. member to discuss public expenditures. The point of order is that we are not in committee of supply, but in committee of the whole house on a special resolution, for war appropriations, and the general administration of the dependents' allowances legislation does not come under the resolution now before the committee. I must rule that the committee must limit its discussion strictly to the matter now before us. The general administration of the legislation will be a proper subject of discussion on the estimates, in committee of supply.


Richard Burpee Hanson: On a point of order, Mr. Chairman, if any hon. member is not allowed under this $4,979,000 item to discuss the operation of outside establishments, "dependents' allowance office and outside establishments," which is under the control of the treasury, I fail to see where he will have an opportunity to do so at all hereafter,
having regard to the fact that the defence estimates are through. This is not part of the defence estimates, but the fact that the minister chose to go into a discussion at that time under that, does not wipe out the opportunity hon. members have of discussing the administration of the "dependents' allowance office and outside establishments." That means the whole service, because they are all paid out of this vote, this administration, and surely we can discuss under this item anything relevant to the operations of the dependents' allowance board.


Thomas Vien: I shall quote May on "Parliamentary Practice," at page 521:
The committee of supply controls the public expenditure by considering the grants of money that will be required for the army, navy, air force, and civil services (including revenue departments) during the current year.
That is to say, the proposed expenditures submitted in the annual budget. The item now before us covers special expenses attributed to the war and to be incurred by the comptroller of the treasury, in checking certain expenditures. I repeat that we are not in committee of supply but in committee of the whole. Any question with respect to the expenditure of this sum of $4,979,000 is in order. Any question with reference to general administration and other proposed expenses submitted with the annual budget is outside the scope of this resolution.


Richard Burpee Hanson: The annual budget, to which the Chairman refers, is not in the estimates submitted; it is in the war appropriation measure for the dependents' allowance. There is nothing in the annual budget to pay dependents' allowance. It is all under this two billion dollars, is it not? If I am correct in that premise, then I submit with great respect that the Chair is wrong.


Mr. MACKENZIE (Vancouver Centre):: Surely the question of dependents' allowance was discussed by the Minister of National Defence (Mr. Ralston).


Richard Burpee Hanson: I am discussing the technical aspect of it.


Thomas Vien: In the first place, we are not in committee of supply, and in the second place we are concerned only with an item of $4,979,000. Questions regarding this expenditure of $4,979,000 are in order. Questions with reference to other expenditures are outside the scope of this resolution. I so rule. Of course, my ruling is subject to appeal.


Douglas Gooderham Ross: May I submit, on a point of order-
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Thomas Vien: No; my ruling has been given and is not debatable.


Douglas Gooderham Ross: Surely I have the right-


Richard Burpee Hanson: The hon. member for Melfort would be in order if he wanted to talk about outside staff.


Thomas Vien: Any information sought with respect to the expenditure of $4,979,000 is in order. Anything outside is not in order.


James Lorimer Ilsley: I will give the items making up the $4,979,617 and perhaps the hon. gentleman can bring his remarks under one of these. If he can, I have no objection, but I would ask members to confine their remarks to the items as we take them up; otherwise we shall ramble all over the whole field. This amount is made up as follows: Salaries, temporary, $3,901,752; cost of living bonus, $217,865; travelling expenses and subsistence allowance, $200,000; printing and stationery, $350,000; rental of equipment, $135,000; sundries, $175,000. This makes a total of $4,979,617. It will be remembered that the salaries to which I have referred are salaries of employees and officials of the comptroller of the treasuiy.


Douglas Gooderham Ross: Salaries are what I wish to discuss, and I want to compare the situation. I can do it within the department itself or within any one of many departments. In the earlier days of the war we had people coming to Ottawa and offering their services, and they got into one position so that the only increases in salaries they can get now are increases which are due to promotion. In the city of Ottawa to-day a young woman getting only $70 a month and having to pay her board is having a pretty tough time, and the next thing she knows, a new and inexperienced girl is taken on. She is taken on because they cannot get them at less than $90 or $100 or $120. We know this is so. Moreover, they have not the experience of the girls who have been in for some time, but because of the wage ceiling these older girls cannot get anything but the cost of living bonus. The same situation exists in private enterprise. We must preserve certain of these essential industries, and we find all over the place that girls are leaving because the company itself cannot raise salaries to the level being paid for girls in the service. There exist therefore these two classes: girls who have been in the service for some time who cannot get an increase, and girls in private industry who also are unable to get any increase. All I have to say is this.

There never was anything in the world that called so much for compulsory national selective service as this very situation.


Thomas Vien: The hon. gentleman is discussing the classification of civil servants and the salaries attached to various employments under the Civil Service Act. I must rule such discussion out of order as not covered by this item.


Richard Burpee Hanson: What the hon. member is complaining of, if I apprehend it rightly, is that the government is competing against private industry and paying wages which private industry cannot pay, and that of course is true all over the country. The government is draining away from private industry some of their best employees because it is competing for them. The government is going into the professions and taking lawyers and so on. That is what the hon. member is arguing against. Certainly that is relevant.


Mr. REID:: What are the duties of officials of the treasury board? Can they override decisions and judgments handed down by the dependents' allowance board? When one applies for dependents' allowance investigators are sent out, and a complete investigation is made of every individual case, both in regard to the papers sent in and on the ground by an investigator. A decision is made, and the treasury board officials have in some instances, I believe, overridden the decision of the board. We did not always have treasury board officials. All auditing used to be done by the auditor general's department, but from 1933 on we have had these officials, and there are many of them. I do not know whether they are double-checking, but I should like the minister to give an explanation. Can these officials or can that board override decisions of the dependents' allowance board?


James Lorimer Ilsley: Let me make this clear:
many hon. members, I am sure, confuse the treasury board and its organization with the comptroller of the treasury. We are discussing now the comptroller of the treasury and his officials.
Waiving the point of order with the consent of the committee, may I say that there is a section of the dependents' allowance regulations, No. 119, which allows certain discretionary grants to be made with the approval of the treasury board, and the treasury board sometimes refuses that approval.


Angus MacInnis: Will the minister explain
the item, "premium for the purchase of Dominion of Canada registered stock"?

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James Lorimer Ilsley: The Canadian government
agreed to the redemption of certain securities held abroad. We refer to it often as repatriation of securities held in the United Kingdom. The procedure is as follows: The United Kingdom government obtained these securities, paying the market price for them. Some of those securities-I am talking about Dominion of Canada bonds-were at a premium; the United Kingdom government had to pay more than par for them. We paid to the United Kingdom government what it paid for them. There is no authority under any of our war loan acts or appropriation acts to pay a premium in that way, so we had to use the War Appropriation Act. And the premium up to a certain date was $725,000.


Angus MacInnis: In other words, -this transaction would not be on a purely business basis?


James Lorimer Ilsley: Yes; we paid the market
price that the United Kingdom had paid to the holders.


Richard Burpee Hanson: The government is carrying out an obligation?


James Lorimer Ilsley: Yes.


William Ross Macdonald: On the item "wartime prices and trade board", on Monday and Tuesday when the estimates of the Minister of Finance were before the committee certain hon. members made reference to the so-called price-ceiling regulations. The Minister of Finance is responsible to the house for the administration of those regulations. I have been wondering if hon. members realize what a great responsibility is on the shoulders of the Minister of Finance at this time. It has been necessary for him to arrange the financial structure of this dominion so that the war can be carried on successfully so far as money is required for that purpose. Canada has had many great ministers of finance, but I do not think there has been any minister who has had a clearer understanding of our financial structure, or who has been better informed on finance generally, or who has been more industrious and capable, than the present Minister of Finance.


Some hon. MEMBERS:: Order.


William Ross Macdonald: I am satisfied that all hon. members will agree with me when I say that in the long line of great ministers of finance Canada has had the present minister stands with the greatest of those great ministers.


Richard Burpee Hanson: I suppose this is all in order under the Chairman's ruling?


Mr. GRAYDON:: What item is this on?


Richard Burpee Hanson: This
eulogy of the Minister of Finance I am sure must be obnoxious to him, and I think it is contrary to the ruling you, sir, have just given.


Thomas Vien: No; I do not see that there is any conflict between the ruling given and what the hon. member is now saying. We are on the wartime prices and trade board administration, and any hon. member has the right either to eulogize or criticize that administration.


Douglas Gooderham Ross: I was ruled out of order because I criticized the administration.


Some hon. MEMBERS:: No, no.


Thomas Vien: In the first place the hon. gentleman cannot at this time discuss a former ruling. Further, the hon. gentleman was called to order because he was discussing something which was not before the committee. We are now discussing the administration of the wartime prices and trade board. The hon. gentleman who has the floor is saying that he finds it very much to his liking.


Gordon Graydon: Is there a subsidy on molasses?


William Ross Macdonald: I would point out that in former wars the enormous sums of money involved in this war were not then involved. Where previous ministers of finance dealt with thousands of dollars, our present minister is dealing with hundreds of thousands; where they dealt with hundreds of thousands, he is dealing with millions; and where they dealt with millions, he is dealing with billions. I would remind hon. members that it was his department that arranged the gift of a billion dollars to Great Britain.


Mr. DOUGLAS (Weyburn):: Is that included in this item?


William Ross Macdonald: Not only did he arrange that gift to Great Britain, but he also arranged a loan of $700,000,000 to that country.


Thomas Clement (Tommy) Douglas: Has that anything to do with this item?


Richard Burpee Hanson: Nothing whatever. According to the Chairman's ruling it is entirely unwarranted.
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William Ross Macdonald: If hon. members will bear with me, I shall soon come to the item under discussion.


Thomas Vien: There is a point of order. It is that the gift of a billion dollars to Great Britain is not related to the item before the committee. I must rule that it is not; and further, that item of a billion dollars to Britain was the subject of a previous debate during the present session.


Richard Burpee Hanson: It is only the debate that cannot be referred to, not the item. Let us have a little consistency.


Thomas Vien: For the purpose of the point of order, there is no difference between the debate and the item. The debate arises out of the item.


William Ross Macdonald: I shall not refer further either to the item or the debate. I bow to your ruling, Mr. Chairman, I always do. As far as my memory serves me, I have always found your rulings to be correct.
I am further satisfied that all hon. members agree with me when I say that our present Minister of Finance has had a very heavy burden to bear, that he has borne it well, and that he has given Canada great service during the time he has been Minister of Finance.
Among the various boards administered by this department is the wartime prices and trade board. In another place I said there were three great problems facing Canada at this time. There was the problem of supplying armaments of all kinds to our armed forces. There was the problem of securing men to produce those armaments and also to maintain, reinforce and increase our armed forces. There was also the problem of preventing a devastating period of inflation in this country. I will deal only with the last-mentioned problem to-night. To me, inflation is a cancerous growth gnawing at the body politic which, if not checked, will develop into a galloping disease that will leave only misery and disaster in its train. Inflation affects injuriously all classes of our citizens. First, it affects the poor. It affects the workingman and the farmer, bringing misery to all. For that reason this government should do all in its power to prevent a devastating period of inflation from taking place either at the present time or when this war is concluded. I believe all members of this house are opposed to inflation, though a number of hon. members have opposed the method chosen to control our money and credit. The hon. member for Ontario (Mr. Moore), who is one of the outstanding economists of this continent, has opposed the 
method which was adopted by the government in bringing in that legislation. Speaking in this house in a previous debate-


Thomas Clement (Tommy) Douglas: What date?


William Ross Macdonald: Perhaps I am not absolutely in order; it was in a debate which was in progress on February 9 of this year. I need not quote his words, but he referred to inflation as illusive. During the present debate the leader of the opposition said, as reported at page 2925 of Hansard:
I am in favour of control in war time to prevent inflation, if it can be done by any kind of decent method.
It was the method to which the hon. gentleman objected, not the control of inflation itself. Then on Monday of this week the hon. member for Rosetown-Biggar (Mr. Coldwell) said, as appears at page 2926 of Hansard:
I am not complaining that the government did attempt to control prices. I think it was the proper thing to do under the existing circumstances.
So, Mr. Chairman, practically all hon. members are in accord with the policy of the government in its attempt to control prices. What has the government attempted to do? It has endeavoured to keep prices within reasonable bounds. In his speech on September 20, 1941, the Prime Minister said:
By its policy the government hopes to avoid the fears, the sense of insecurity, the suffering and the profiteering which the inflation of price inevitably brings in its train. The measures now announced should help in winning the war, facilitate recovery and reconstruction.
I ask, was the government properly alarmed with respect to the rise in prices? Already there has been placed upon Hansard a record of the cost of living index. I propose to place it upon Hansard again, in order to impress upon hon. members the serious situation toward which this country was drifting in October last. The base figure is 100, being the average from 1935 to 1939, and the rise is shown as follows:
August, 1939	 100-8
November, 1939	 103-8
February, 1940	 103-8
August, 1940	 105-9
February, 1941	 108-2
March, 1941	 108-2
April, 1941	 108-6
May, 1941	 109-4
June, 1941	 110-5
July, 1941	 111-9
August, 1941	 113-7
September, 1941	 114-7
October, 1941	 115-5
Hon. members will see that there was a rise of almost six points in the first year of the war and that within a little over two years the

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cost of living index had risen by more than fifteen points. At that time the government, in a masterly stroke, passed regulations which it hoped would stabilize prices, wages and salaries. Never before had such drastic legislation been attempted in this or any other democratic country. In making the announcement the Prime Minister stated:
The action I am about to explain represents an experiment hitherto untried on this continent, and perhaps, having regard to its breadth and variety, hitherto untried ... by any free country anywhere.
Then Mr. James S. Duncan, who for some time was deputy minister of national defence for air, which position he held when the commonwealth air training plan was established in Canada; a man who gave freely of his ability in the establishment of that plan in Canada, speaking before a meeting in the city of Toronto, is reported as follows:
Mr. Duncan congratulated Mr. Ilsley "for the courage and vision you have shown" in introducing price and wage ceilings legislation -"the boldest economic measures which have ever been taken under similar circumstances in any country throughout the world."
If Canada has stopped an undue rise in prices; if Canada has prevented inflation, the credit for that belongs to those who have been responsible for bringing in and administering this legislation. I should refer to Mr. Donald Gordon, who is head of the wartime prices and trade board which, as we know, administers the regulations. Some hon. members may consider that he has too much power. Nevertheless I think we must all agree that he has had a difficult task, and that he has done it very well indeed. Also credit for what success has been attained is to a large extent due to the people of Canada who have been willing to accept the drastic regulations which have been imposed upon them.
I would refer particularly to the women of this country. They have accepted the regulations and have endeavoured to prevent a rise in prices. As hon. members have heard before, the women do 80 per cent of the retail purchasing in this dominion. The regulations could not be a success unless they had the support and endorsation of the people.
In making his announcement the Prime Minister further stated:
In a democratic country price control cannot succeed without the active support and cooperation of the masses of the people. It will require the cooperation and the support of all. Its success will depend not alone upon the government but equally upon the willingness of all who are affected to accept, and to accept cheerfully, the limitations imposed upon them as a necessary contribution to Canada's war effort.
I asked a moment ago if these regulations had succeeded. My answer to that question is that they definitely have succeeded, and that the imposition of these regulations has prevented inflation and has maintained price stability. It was never intended that these regulations should be a panacea or a cure-all for all the evils of rapidly rising prices. The Prime Minister himself stated it was not hoped that they would be such a panacea.
According to the cost of living index, six months prior to the bringing in of the regulations the cost of living had risen approximately seven points. Six months have now passed since the regulations were brought in, and I am happy to say that the cost of living index has not risen even one point. That is indeed a great credit to those who conceived and to those who are carrying out the regulations.
We have heard a great deal about what is being done in the United States. I, along with all other hon. members in the committee, am indeed happy to know that the United States is doing such great things toward successfully prosecuting the war. However, in the house from time to time we have heard of the lack of what should be done by this country, and in many instances we have heard nothing but fault-finding with what has been done here. Indeed at times I feel that we are developing an inferiority complex with respect to our great war effort.
I am not going to quote further at this time from what people in Canada think about our price-fixing regulations. I would, however, draw the attention of the committee to a leading article which appears in this week's issue of the Saturday Evening Post, a magazine published in the United States. By the way, while this magazine sells for ten cents in the United States, due to price regulations in Canada it sells for only seven cents here.
The article is headed "Canada Did It." That is something new to hear in this committee. It is written by Congressman Albert Gore, and with the indulgence of the committee I should like to read these extracts from the article which I believe hon. members will find most refreshing. The opening paragraph is in these words:
One crisp Sunday morning last October, quite early, three men in a flurry boarded a Washington plane for Ottawa, Canada. The night before, Prime Minister Mackenzie King had announced the Canadian government's adoption of an over-all ceiling over prices, wages, salaries, services and rents-practically everything. And this was positively disturbing to the three agitated gentlemen and their chief, U.S. price boss Leon Henderson, for it came at a time when Mr. Henderson was marshalling arguments and strength to prevent a congressional committee from adopting a similar over-all-price-control bill.

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Then the article goes on to state that a certain time intervened, following which representatives of the United States came to Canada. The article continues:
In recent weeks, aides of price administrator Henderson had been shuttling back and forth between Washington and Ottawa. This time, it has not been to find reasons why the over-all plan should not be adopted, but to decide how much of Canada's plan the United States can copy.
The reason for this shift in attitude can be told in a few figures. In Canada, the cost of living index has remained constant since last November. In the United States, living costs have continued their relentless rise. The official Canadian cost-of-living index actually shows a slight decrease from a high of 115-4 in November to 115 in February. In the United States, despite all piecemeal-selective-[DOT] controls, it rose 2-4 points from November to February.
Canada stopped prices from rising. Her composite index of wholesale prices remained virtually fixed from November to February, rising only eight-tenths of one point in this time. During the same period wholesale prices in the United States rose 4-3 points. But more significant than index figures, the United States plan had failed.


Thomas Clement (Tommy) Douglas: What is that published in?


William Ross Macdonald: In the Saturday Evening Post of June 6, 1942, and it is written by Congressman Albert Gore.


Thomas Clement (Tommy) Douglas: Is that not an anti-British, isolationist paper?


William Ross Macdonald: I would say that this article is anything but anti-Canadian. It is a boost for Canada, and I think we should all be happy to hear a boost for Canada, from the United States, read in this chamber.
Mr. MacIN'NIS: Even though the Saturday Evening Post wrote it?


William Ross Macdonald: The article continues:
In adopting over-all controls, Canadians fully realized they were attempting a difficult undertaking. Prime Minister Mackenzie King called it an "experiment hitherto untried on this continent and perhaps .	. . hitherto untried
by the will and consent of free people anywhere."
Then the article refers to the reluctance and misgivings we had with respect to bringing these regulations into effect. The article then goes on to say:
The official Canadian cost-of-living index had risen 7 points in the 21 months from August, 1939, to April, 1941. It jumped approximately 8 points higher in the 7 months from April to November. Price rises were coming thick and fast. Wholesale prices rose approximately 12 per cent in the 7 months from March to October, 1941.

I would ask hon. members to mark these words:
Bold and effective action was necessary if Canada was to be saved from a wild runaway inflation. It was a hard choice, but Canada chose action-daring, adequate action.
That is what the United States thinks of the action which this country took to avoid inflation.


Richard Burpee Hanson: That is
the opinion of only one man. That is not the United States.


William Ross Macdonald: It
is the opinion of a congressman in the United States, which appears in a magazine read widely throughout the whole United States.


Richard Burpee Hanson: And which has been extremely antagonistic to this country.


William Ross Macdonald: The article goes on-


Mr. JOHNSTON (Bow River):: Put it on
Hansard.


William Ross Macdonald: I
am taking the liberty of reading part of the article to hon. members because I feel it should be good for the morale of the members of the committee to know what other countries are thinking about Canada. I will read one more sentence:
Now, despite its well-nigh incredible success to date, the programme has some hard tests in the months immediately ahead.
Yes; this legislation has hard tests in the months immediately ahead. During the last few days members from every part of this house have asked for increased prices. So far as I am concerned my sympathy is with those who are asking for increased prices. I would like to see all the farmers of this country get increased prices for their products where the price is not now adequate, and I would like to see all men who are working and receiving inadequate pay receive adequate pay. I am satisfied, I can say with confidence, that our government and our Minister of Finance are just as anxious as anyone else in this house that fair prices, fair wages and fair salaries should be given to all. But I would remind hon. members that if prices are increased and salaries and wages are increased, it serves little if the prices of the commodities they have to buy are also proportionately increased. There would be little gain for them in that. We cannot afford to have inflation in this country, even as we had it in the last war. It would not benefit the working man or the farmer to have increased wages and increased prices, if he at the same time had to pay

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such prices as 25 cents a pound for sugar as he had to do in the last war. It must be the object of our government and of parliament- and I think we should help the government in doing so-to keep prices down.
Every time there is an increase in prices it is a string on the present effort of the government to prevent inflation and to keep prices on a reasonable basis. We cannot stand too great a strain. If the Minister of Finance granted increases on all the products which have been mentioned in this house in the last few days, I am satisfied that our whole price structure would break down and we would start on that terrible course of inflation which in the end would bring only misery to all. My plea, Mr. Chairman, to members of this house is to support the Minister of Finance in his great effort to prevent inflation, to stabilize prices, wages and salaries. Let us try to make adjustments as soon as possible where adjustments must be made. Let us do what we can to provide labour for the farm at reasonable prices. But let us keep in mind that we must maintain our ceiling; we must not let it get out of bounds, and if we will give the Minister of Finance the support he deserves in this great undertaking, I am satisfied that when peace dawns it will bring prosperity and happiness to all.


Richard Burpee Hanson: We have just listened to a paean of praise from the hon. member for Brantford City for the policy of the government and to some fulsome flattery for the person of the Minister of Finance himself which I am sure he, with all his modesty, would have wished the member had not given utterance to, and incidentally thereby saved the time of the house.
At the risk of detaining the committee I wish to deal with this policy, which is a very important matter to the taxpayers of this country who are to be invited to pay to certain importers and producers next year in the way of subsidies in connection with the administration of this policy no less a sum than $50,000,000.
I should like to review a little the history of war finance in Canada, and then come back to discuss this policy. It will be recalled that in the first war budget which was brought down in September, 1939, the present Minister of Finance, then Minister of National Revenue, who delivered the war budget, laid down the broad principle of the government's policy of war finance, which was briefly the principle of "pay as you go". He elaborated that policy as consisting - of two things: (1) An initial period of quietness and hesitation. Well, there was quietness and hesitation in the government's war effort; there is no doubt
about that, and anybody who doubts it need only cast his mind back over the history of the first nine months of the war. There was quietness and hesitation not only in the government's financial effort, but in every effort of this government. Then (2) there would be a second period in which rising business activity and expanding income had acquired momentum. The minister laid down the principles which were in his judgment suitable for these two periods. I am not going to recapitulate them, save and except to say that the question of freezing wages and the question of a price ceiling on commodities was not part of the programme.
Then in the budget speech of 1940 the Minister of National Defence, then Minister of Finance, in a discussion of national income and financial policy laid down the principle that by far the greater portion of the increase of the national income should be used for war purposes, and I think we are all in agreement with that. That policy has been extended from time to time, and if I read the signs of the times aright it will be still further extended in the forthcoming budget. The Minister of Finance of that day went on to make the following statement, as reported at page 1014 of Hansard of 1940:
If an appropriate financial policy is not followed the ultimate result will inevitably be that the government will be frustrated in its attempt to procure goods for war purposes by the competition of consumers who seek to spend their increased buying power to satisfy civilian wants. In that event, also, the familiar spiral of rising prices, then rising wages and costs, and then prices rising still further would begin to work. Prices would rise more rapidly than wages and salaries, and, by this indirect, hidden and most inequitable process the civilian population, and particularly the wage and salary earners and the receivers of fixed incomes, would be forced to curtail their consumption not only of luxuries but of comforts and necessaries as well. Eventually in such a process our entire economic life would be disorganized; a hectic period characterized by feverish speculation, waste and extravagance would develop; and a collapse of the inflationary structure would be as inevitable as it was at the close of the last war.
There he was picturing the spiral of rising prices and of wages and a collapse at the end of the inflationary period. That picture is not a pretty one. It is a condition that we should seek, if possible, to avoid. But the method of avoiding that situation visualized at that time was taxation and a transfer of the buying power of the consuming public to the war effort, which is a perfectly proper method and has been resorted to in this country, in England, and in other places where this question has been uppermost in the minds of those who have these responsibilities.
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That was the method, one of the main methods adopted to prevent this inflationary tendency. There was always the consciousness, of course, that the old economic law of supply and demand was difficult to counteract or defeat. I have never understood that you can ever beat the law of supply and demand even if you have 100 per cent cooperation of the public. There is such a thing as scarcity and there is such a thing as plenty; when there is scarcity and there is a buying power, inevitably there will be a rise in prices, and we have it to-day in this country. No government can control this underlying law of supply and demand except by setting up new controls day in and day out, involving regimentation of the people. Even then you cannot fully control it. That is a condition which attaches to war time, and you cannot possibly wholly escape it. I will say that you can do this, you can escape it in large measure, not so much by a system of control alone, but by a system of control plus the cooperation of the people. Without that cooperation of the people you cannot make it effective.
As I tried to indicate a moment ago, after painting that picture of inflation the then Minister of Finance said that the government's financial and economic policies had been designed to try to safeguard against that type of situation, mainly by taxation; adding that that had been evolved with the aim of avoiding unjustifiable price increases or speculative excesses. Clearly the then Minister of Finance at that date, June, 1940, visualized a period of inflation in the price of consumer goods as well as in other lines of business activity. What was his remedy then? It was, as I have said not only once but twice, taxation, and that is the orthodox manner, as I understand it, of preventing this sort of thing. That was the position which the then Minister of Finance took in June, 1940.
We now come to the opening of parliament in the fall of 1940, after the mantle of the Minister of Finance had fallen on the shoulders of my hon. friend opposite. He took part in the discussion on the debate on the address, and his speech was delivered on November 21, 1940. At pages 316 and 317 of Hansard of that ' date he was answering a speech in this chamber of the leader of the Social Credit group, who had challenged the principle upon which the government's monetary policy had been based, and if I recollect aright, had moved a subamendment reflecting upon the monetary policy of the administration. In the course of his speech the present Minister of Finance discussed the policy of the Social Credit system, and contrasted it with the government policy (a) of taxation and (b) of

borrowing, which he was defending. He also referred to the dangers of inflation and the methods of controlling inflation, dealing, as I remember from reading his speech, with the Social Credit proposals for credit restriction, universal bonusing, and other suggested monetary policies. The minister than referred, as reported at page 317 of Hansard of that date, to the method of counteracting inflation by means-


Mr. BLACKMORE:: I wonder whether the leader of the opposition did not use "credit restriction" where it should be "credit expansion".


Richard Burpee Hanson: Possibly I did.


John Horne Blackmore: Credit restriction is so contrary to our ideas.


Richard Burpee Hanson: Maybe that is my misinterpretation of the hon. member's position. I must say that I really do not understand what his position is, and I have to give the best interpretation I can.


John Horne Blackmore: It is expansion.
Mr. HANSON (York-Sunbury); It is mea culpa if I do not understand him. I am not going to blame him. The minister then referred, as reported at page 317, to the method of counteracting inflation by means of pricefixing on a universal scale as being the only alternative to taxation or borrowing out of savings, which was the government's announced policy. I propose to read at some length from what the minister said at that time. He said that if price-fixing on a universal scale were adopted, it would have to be accompanied by rationing and regimentation also on a universal scale. He gave the reasons. He said it was obvious that to fix prices without limiting the amount that any one person could buy would mean that only the first comers would be served. He was right in his reasoning. Therefore there would be rationing as a corollary of price fixing. In his mind-and I agree with him-the one is the complement of the other. If that method of control were to be adopted without the corollary, the first method would fall to the ground. What was the attitude of the minister then toward the entire policy of price fixing? I am reminded of a story told of the late President Coolidge. As hon. members all know, he was a man of few words. He went to church one day; as the story goes, his wife asked him what the minister preached about, and he said: "sin". "What did he say about it?" "Well, he is against it." The minister was against price fixing on the 21st day of November, 1940; there is no doubt about that.

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Charles Edward Johnston: He has been converted since then.


Richard Burpee Hanson: Well, I do not know what has happened.


An hon. MEMBER:: He was "against sin".


Richard Burpee Hanson: He was definitely against it, and he gave then the reasons for the faith that was in him. First, that there would have to be rationing along with price fixing, and that price fixing would fail without rationing. Price fixing of a few commodities and rationing of those few commodities was possible and would be fairly easy and need not have a very serious effect. But he said this, and I call the attention of members of this committee to this statement:
But price fixing and rationing on a general scale-
Mark you; he couples the two together; one could not succeed without the other.
-have at least two disadvantages.
I give you the minister's own words:
In the first place, this would call for bureaucratic interference in the private affairs of all Canadian citizens. . . .
And he was against that.
Perhaps I am speaking a little bit figuratively here, but generally speaking there would have to be a government spy in every grocery store. The Germans did this with some success, but the Germans are experts as spies.
These are the minister's own words, and then he proceeded:
The second objection is that-
He was dealing, hon. members will recall, with monetary theories; that was the basis of his whole statement.
-to issue quantities of money and then sterilize a large part of it by rendering it useless for buying purposes so that it will not come into competition with the money used by the government in its buying, and thereby cause prices to rise, leaves the holder of the money no better off than if he did not have it. This is equivalent to taxation or a forced loan.
I agree with the reasoning of the minister, but the hon. member for Lethbridge may not agree with it.


John Horne Blackmore: Hear, hear.


Richard Burpee Hanson: I expected that.


John Horne Blackmore: The hon. member has several things to learn yet.


Richard Burpee Hanson: Well, we all learn. The older we get, the more we know we have to learn; but for heaven's sake, if anybody is to teach us let it be
intelligent teaching, so that the man in the street can understand it. I would observe this. The older we get, the more sensible we are, and we are not apt to take up new isms and fads. At least I am not, in my old age.


Angus MacInnis: That does not necessarily
indicate sense.


Richard Burpee Hanson: I want the committee to note this reference, and I want the hon. member for Lethbridge to note it.


John Horne Blackmore: I am listening.


Richard Burpee Hanson: I quote.
It is true that the nazis in Germany have gone nearly as far as this with their price fixing and rationing, but even they with a dictatorship and with years of experience before the war, have had to combine this price fixing with very heavy war taxation and with borrowing enormous sums at interest rates higher than we pay in Canada.
This will be found at page 287, the second column of Hansard of November 21, 1940. The minister adds this testimony against the policy of price fixing:
Furthermore, if we did succeed, by price fixing in preventing inflation resulting from the financing of the war by creating new money, we would in the end only reach the same result that we shall reach by sounder methods.
I put emphasis on the words "sounder methods", for the benefit of both the minister and the member for Lethbridge.


James Lorimer Ilsley: Sounder than the creation of unlimited sums of new money.


Richard Burpee Hanson: The minister is just reversing the statement here. I have quoted correctly, have I not?


James Lorimer Ilsley: Absolutely, yes.


Richard Burpee Hanson: -we would in the end only reach the same result that we shall reach by sounder methods; for if war production is to be the same in each ease there will only be the same remainder of resources left over for civilian purposes. The new money dammed up in the public's pockets would be useless to it during the war, and after the war it would come bursting forth in a flood that would create inflation as soon as the rigid wartime price controls were once relaxed.
I am in more or less agreement with that. He is answering the hon. member for Lethbridge, but it is one argument against price fixing.


James Lorimer Ilsley: No.


Richard Burpee Hanson: I put my own interpretation on the minister's words.
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I suggest, however, that the crowning position taken by the minister is that found in the same speech:
There is another, and, from a war point of view,-
This was an argument against price ceilings.
*-more fundamental point.


James Lorimer Ilsley: If the hon. member will permit me, let me make clear what I was arguing. I was arguing against the financing of the war by the unlimited creation of money, and I said that under those conditions general price ceilings or price fixing would be virtually impossible and would have tremendous disadvantages. Those two things must be taken together. I was answering the hon. member for Lethbridge.


Richard Burpee Hanson: The minister can make his argument. I am putting my interpretation on his words. In part he is correct.


Mr. BLACK MORE:: May I interpose for a moment-


Richard Burpee Hanson: I know the hon. member is going to make a long speech after I have finished, so I say to him, please let me proceed.


John Horne Blackmore: Just a moment-


Richard Burpee Hanson: I hope we can avoid such interruptions. I object to the hon. member making a speech in my speech. I am not agreeable. If it is a question I do not mind.


John Horne Blackmore: Courtesy would allow me to make a statement.


Richard Burpee Hanson: I think
I am pretty courteous to most people, and I find most people courteous to me; but if the hon. member wants to make a speech while I am making my speech, I object. The minister said he was only answering one point of view. I submit that the whole reasoning of his speech was an argument against price fixing, and at times he was directing his attention against inflation by the issue of new money. That is only one feature of it, but his speech is directly against price ceilings and fixings by regimentation, and he admitted right off that you could not have stabilization unless you had the two factors-not only the ceiling but the rationing system as well. Yes, and as I am reminded, by the spy system, which is nauseating to the Canadian people. They may do it in Germany, but the Canadian people do not like it, and the minister was cognizant of that fact.


An hon. MEMBER:: We have control.
,


Richard Burpee Hanson: We have control, and I am not surprised at the list of employees that this board is setting up. It is setting up a number of young lawyers all over the country and a number of inspectors, and before this system is through we may get right down to the spy system. I am like the late President of the United States-I am "agin" the method, I am opposed to the method. I am going to say something about the objective in a moment, but I should like to continue. The minister can interpret it as he likes. I read the whole speech together:
There is another, and, from a war point of view, more fundamental point. It is suggested that we should finance by issuing new money so that we can bring all useful resources into production and avoid curtailing civilian demand. But if we are really to put forth the maximum effort in the war we must not only bring all our resources into use, but, in addition, restrict as far as possible civilian use of all those resources which can be used for war.
I am in agreement with the minister, on that point and against the hon. member for Lethbridge, on that specific point.


John Horne Blackmore: The hon. member for Lethbridge never stood for that point.


Richard Burpee Hanson: I admit that I made a dogmatic statement, perhaps without proper premises.
What does the hon. member for Lethbridge stand for? Is there anyone in this house outside of himself who knows? Nobody knows. The minister, I think, thought he knew what he was standing for. This was a prepared speech made in answer to the hon. member for Lethbridge, and I am sure the minister thought he knew what the hon. member for Lethbridge meant. Possibly, like myself, he was mistaken. Possibly his intellect is not sufficiently developed to understand what the hon. member for Lethbridge does mean. That may be my fault; it may be the minister's fault, but that seems to be the position.


John Horne Blackmore: He is improving all the time anyway.


Richard Burpee Hanson: I do not know whether he is. I do not think he will make any admissions along that line.
As I emphasized in the budget speech in the first week of war, it is necessary to increase employment and production to the maximum; but that is only part of our task; we must also divert all we can from civilian to war use.
We agree with that. But we certainly shall not be doing so if we refrain from borrowing and taxation. There the minister was coming back to the orthodox method of meeting this situation. That was the declared policy of

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this government. Such was the attitude of the Minister of Finance and of the government towards price fixing as a policy to control inflation on November 21, 1940; such was the fiscal policy of the government. The minister opposed the policy advocated by the Social Credit party as being wrong from every point of view, not only from the point of view of monetary inflation, but on the basis of sound reason and sound business principles. He opposed it as being odious to the habits and thoughts and ideas of freedom of the Canadian people, and it is just as odious to-day.


John Horne Blackmore: Does the leader of the opposition oppose price fixing?


Richard Burpee Hanson: I oppose the method. I am coming to what I propose in a moment. The minister condemned the regimentation of the people. He said that every detail of our economic life would have to be controlled by someone sitting here in Ottawa. He condemned it not only on the grounds that I have indicated but on the ground that the public policy which he advocated was sounder and better adapted to the purpose the government had in view.
That was the position of the minister and his party in the autumn of 1940. That was the position which obtained when the next budget was delivered. In the budget of 1941 we got our tremendous first dose of heavy taxation, and when we witnessed some of the largest loans ever issued by a government to the Canadian people that was a continuation of that policy.
Then, because prices began to rise, because there was a period of scarcity, the government suddenly, overnight, in the face of parliament meeting within a few days, brought into effect this policy and "froze" commodity prices on an uneven level. They have been tinkering with that level ever since.


Mr. McLARTY:: Do prices ever get even?


Richard Burpee Hanson: Well, I think the government could have used the powers it had to put them on an even level. They could have established even prices. But what did they do? They took a given period of time, between September 15 and October 11 and froze everything at that point.


Norman Alexander McLarty: Do you not have to have some basic period in which to fix prices, or would the hon. member never fix them unless they did the impossible and became even all along the line?


Richard Burpee Hanson: I agree that you must have a base, but it does not necessarily have to be fixed overnight by order in
council. The price-ceiling level can be related back to a given period of time. That is what should have been done.


James Lorimer Ilsley: That is what was done.


Richard Burpee Hanson: I am not going to elaborate this much further; I do not want to hold up this resolution. This is the longest speech I have made on this resolution since it came before the committee. Other hon. members have spoken at length. The hon. member for Temiscouata occupied more time than any other three members of the committee-I might say any five.


William Ross Macdonald: Is the leader of the opposition trying to beat that record?


Richard Burpee Hanson: No; I am not, and I am not making any fulsome eulogy to constitute myself the official back-scratcher of the administration.


William Ross Macdonald: I have to say that I can look across at the opposition and see no one sitting there whose back is worthy of being scratched.


Richard Burpee Hanson: That is a cheap remark. That does not let the hon. member out. If he has a question to ask I am willing to answer, but, if not, he had better contain himself, because, after all, he is through as I understand.


William Ross Macdonald: The future will show that.


Richard Burpee Hanson: The evils following inflation I am willing to admit. It is not the principle of inflation itself that is so bad, it is the results that follow in the deflationary period. That is what I think most of us fear. That is what we experienced in 1929. The minister's party were in power at that time, but they refused to read the signs of the times. That is what this country experienced after the last war when we had not much experience regarding the matter to guide us. I have said on more than one occasion that I do not want to see the evils of inflation come upon this country. But we want some plan or system adopted. There has never been a plan.


William Ross Macdonald: Let us have your plan.


Richard Burpee Hanson: It is not my responsibility. It is the responsibility of the government that put this policy into force; let them produce a plan. We have a system of
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hit-or-miss, hit-and-run, trial-and-error. That is what it has been all the way through. Let me give a concrete illustration.


An hon. MEMBER:: Oh, nowl


Richard Burpee Hanson: I would not go. to the back-benchers over there to get anything, because I do not think the hon. gentleman who interrupted me has a thought in the world about the matter.


William Ross Macdonald: Then there are two in the house in that position.


Richard Burpee Hanson: The hon. member can speak for himself. I do not want to criticize the hon. member. If I said anything that hurt his feelings, I will take it back. I do not want to hurt anyone's feelings.
Let me give an illustration of this hit-and-run, trial-and-error system. We all know that instalment buying in times of rising wages, increasing national income, especially among the wage-earning population, rapidly develops into a very bad situation. I personally have always been against this system of instalment buying. But it has been encouraged, and it is legal. There is a way to cure it absolutely; just put an order through under the War Measures Act declaring that no conditional sale of chattels shall be legal, and you will not have any more instalment buying. The people who do the selling will not sell under those circumstances; such a sale would not be enforceable.
What happened when this ceiling was put on? Very properly, I thought, they insisted upon one-third down as the initial payment, one-third in so many months, and the other one-third in so many more months. Payments were required within three periods. If the board had adhered to that, a great many of the evils resulting from instalment buying would have been avoided. Instalment buying, of course, is inflationary; it is part and parcel of the whole inflationary system of the buying of consumer goods. If the board had adhered to that system of three payments, much of the danger and many of the improper things that go with instalment buying would have been avoided. I assumed that the order had been brought into effect after consultation with the large instalment houses. I do not know whether that was true. But one day I received a letter from three firms in my city who deal in these consumer goods and who have to compete with some of the bigger houses from upper Canada, who have branches in my city. This letter protested against a change in the system of instalment buying. Apparently we were back to the old 10 per cent initial payment on furniture. In other words the board had gone back on what I

thought was a salutary proposal; and these three firms in my city, all substantial firms, protested and asked that the situation be put back where it was before. I wrote a courteous letter to the head of the board pointing out their arguments and making them my own. I received in reply a letter which, according to my interpretation, though I may be wrong, was to the effect that I did not know what I was talking about.


Angus MacInnis: Did you?


Richard Burpee Hanson: I thought I did. One should know his own limitations, and perhaps I know mine better than anyone else could know them. I thought I knew what I was talking about. Well, I gave it up. The chairman of the board was in the driver's seat; I was just a lone champion of the people. That position is maintained to-day. I could go on and illustrate it in a dozen different spheres. There are constant changes of rules and policies; and I say to the minister that this programme cannot be 100 per cent complete unless, in addition to the freezing of prices, we also have the rationing method. I am not going to oppose the policy; the objective I have always thought was good, but I am dead against the method adopted.
Before I sit down I should like to say this. Here we have $50,000,000 in subsidies, which may be only a starter. That is a very substantial sum of money to be taken out of the people by taxation. This is not fiat money, I would have the hon. member for Lethbridge understand. This is not printing press money. This is real, good, hard cash paid by the taxpayers of Canada, and it is going to be paid to certain persons. In due course the minister will tell us what the proposals are.


James Lorimer Ilsley: I have done so.


Richard Burpee Hanson: Possibly the minister has done so, but in any event we are informed or are to be informed to whom this $50,000,000 is to be paid. This is a policy of robbing Peter to pay Paul.
Mr, MARTIN: And Paul should be paid.


Richard Burpee Hanson: Well, I should say that Paul should not be paid any subsidy. Oh, I did not appreciate for a moment from whom that interruption had come. Well, I hope I will get a little support from Paul; but I am rather doubtful about it because apparently, if I judge appearances correctly, he is in the same category as the hon. member for Brantford City; he is looking for something.


William Ross Macdonald: Mr. Chairman, I resent that.

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Richard Burpee Hanson: Well, I will take that back. I do not want to hurt the hon. member's feelings.


William Ross Macdonald: I do not mind my feelings being hurt, but it is not
true.


Richard Burpee Hanson: If it is not true, I accept the hon. member's statement. I may be mistaken. It would not be the first time I have been mistaken, and I do not suppose it will be the last. Have I made the amende honorable?


Gordon Graydon: It is no crime to be ambitious.


Richard Burpee Hanson: No; it is not. When the hon. member for Brantford City made his speech in seconding the address in reply, I commended the manner of the speech, though not all the matter. I suggested to the Prime Minister that the speech was at least worthy of consideration for a seat in the cabinet or, if that was too high a reward for the hon. member for Brantford City, then at least-


William Ross Macdonald: Order. I do not think the hon. member should refer to a debate which took place this session.


Richard Burpee Hanson: I am not quoting from the debate. I suggested that if that was too high a reward for him, then certainly he was entitled to consideration for a judgeship, or, at the very least, a senatorship.
Now let us be serious. I should like the minister to justify this vote of $50,000,000. Are we to pay any more subsidies on grapefruit juice brought in from the United States? We have provided that as a part of the diet of our armed forces, while the humble tomato, which contains many more vitamins than grapefruit juice, is not even prescribed for our men.


An hon. MEMBER:: Potatoes.


Richard Burpee Hanson: Well,
potatoes are a great food, a great energy food, beyond any question. I will tell the hon. member for Brantford City that I would recommend a potato diet for him. If he were on a potato diet, he would not be so slim; he would have a little more fat on his frame, because it is a starchy food. Perhaps I am a good example of it myself. Potatoes are an energy producing food, and so is Manitoba hard wheat.
I think we should have some justification for this expenditure of $50,000,000. We must have that justification. I tell the committee that this is just another corollary of this whole question of a price ceiling. It may go even to $100,000,000 in another year, before we know where we are going. I have spoken much longer than I had intended. I thank the committee for a courteous hearing, and I hope I have made some contribution to the debate.


James Lorimer Ilsley: I am afraid that I cannot answer the leader of the opposition in the vein in which he has addressed the committee to-night. Members of the wartime prices and trade board and their organization are working day and night to prevent what they think would be a terrible evil, that is, inflation; and in that belief I think they have the concurrence of the people of this country and the members of this house. To-night I was most interested in the attitude of the leader of the opposition. He placed himself, if not his party, unequivocally against the price-ceiling policy of the Dominion of Canada.


Richard Burpee Hanson: The
methods adopted; I was careful to distinguish between objectives and methods. You cannot put words in my mouth.


James Lorimer Ilsley: Let us get this straight. The hon. member said to-night that he was against inflation. He was in favour of the objective of preventing inflation. Then he took up the method of preventing inflation which the government had adopted as its policy, a universal or general price-ceiling policy, and said that he was against that method. Am I wrong about that? I think that is correct.
I would not like any better issue, if we were talking about an issue at the present time, than that issue. I would like the people of the Dominion of Canada to know that the Conservative opposition is opposed to this policy of the federal government to prevent inflation. I would be prepared to go before the people of this country or of any other country-the people of any country with intelligent citizens, and defend what we have done.
Just consider the position-and if members of this committee do not remember anything else I say, I want them to remember these simple figures. During the first twenty-six months of the last war, known as world war No. 1, the cost of living rose 15 per cent. During the first twenty-six months of this war, world war No. 2, the cost of living

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in the Dominion of Canada rose by 15 per cent. During the next seven months of the first war the cost of living rose by 13 per cent.


Norman Alexander McLarty: Additional.


James Lorimer Ilsley: Thirteen points over and above the first fifteen points, making a 28 per cent increase in the total period of twenty-six plus seven months. But during the next seven months of this war the price level has risen less than one per cent. I want to say that in the last war-


Mr. ROSS (Souris):: At whose expense?


Richard Burpee Hanson: The
expense of the producer, of course.


An hon. MEMBER:: The farmer.
Mr. ILSiLEY: Oh, on every side we hear that. We knew that when we brought it in anybody who was hurt or who could get a better	price	than	the price	he would	getunder	the	control would	complain.	Weknew	that.	We	expected	that, and	wedoubted whether a policy such as this, a thorough-going policy such as this, was within the capacity of	democracy. But nevertheless we put it in, tried it, and we have been amazed at the response of the Canadian people. We have been amazed at their willingness to assume sacrifices for a common end. Of course it would be easy for members of this house-any member of the house-to listen to a constituent who would say, "If it were not for this vicious, unjust, bureaucratic board I would be getting a little more for my goods." Oh, you will hear that on every side. But you cannot control prices without keeping prices below what they would otherwise be, and you cannot fight a painless or costless war, and win it.
The leader of the opposition has no policy. He has no alternative policy to offer. I have said in this house that in a time like this it is not good enough to do what would have been all right a few years ago, or probably before the war. It is not good enough merely to indulge in destructive criticism. It is not enough to say that the government has no policy, or that its policy is defective in this respect, or that it is defective in that respect. It is not enough to say, "If you ask me what my policy is, I say it is not my responsibility to say anything about it."
That is old-fashioned politics. That is not the kind of cooperation an opposition should give the government in a time of war, and the hon. gentleman knows that. I think we are entitled to something better than that. Criticism-yes; but not this negative, destructive criticism of the type we have heard to-night.

The leader of the opposition said something about a speech I made in 1940, and he made a very good argument, on the face of it, for the proposition that I have changed my mind. Well, if I have changed my mind, that is not a very great crime. No; it is not a very great crime.


Mrs. NIELSEN:: It shows you have a
mind to change.


James Lorimer Ilsley: But I do want to point out exactly what I was arguing on that occasion. The hon. member for Lethbridge, as the leader of the Social Credit party, had introduced an amendment to the address in reply to the speech from the throne. His amendment was in these words:
And this house further regrets the failure of the government to adopt a monetary policy that would permit a maximum war effort without either increasing debt or reducing the standards of living below that necessary for maintaining maximum efficiency;
Furthermore this house is of the opinion that a continuation of the present financial policy will further destroy the precious liberties so essential to, and recognized as being inherent in a true democracy.
And in part of his speech, he said:
Social Credit proposes to use the national credit to provide money without additional debt, without additional taxation.
I interpreted that to mean-and I think it could mean only this-that be would have financed our war expenditures, which that year were estimated to be one billion dollars- this year they will be three billion dollars or more, but that year they were only one billion dollars-not by borrowing, not by taxation, but by the creation of new money. I interpreted his speech in that way. That is how I interpreted it, and that is what he said. I argued that if we' were to issue a billion dollars of new money or credit with the Bank of Canada, or to issue Bank of Canada notes, that we would have wild inflation. I said that nothing in the world could stop inflation under those circumstances. In considering the remedies which the hon. member himself had proposed, I pointed out that one of the remedies was price fixing-universal price fixing. It was in that connection, in connection with price fixing under those circumstances, and not under present circumstances at all, when we are taxing and when we are borrowing to a terrific level, that I said that you could not have these conditions. If the hon. member will read my speech particularly in that situation, and in the light of those facts, he will find that an entirely different complexion will be put upon it.
I say that if we were now to try to finance this war, not by borrowing $150,000,000 a month, as we shall probably have to do, not

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by taxing to the extent of seventeen or eighteen hundred million a year, as we shall probably have to do, but by placing three billions of money to our credit in the Bank of Canada, or by the issue of that much money in notes, so that everybody in the country would have a great big bank account, or their pockets full of money, and if then we were to try to enforce a price ceiling to keep prices down-I say we would not do it without a spy in every groceiy store, a spy on every corner. It would be impossible to do it, because of the pressure of purchasing power, and prices would be terrific.
It is for this reason that we have taken, not one method to prevent inflation, but two methods to prevent inflation. During the first year or two of the war we resorted to both remedies. We tried to relieve the pressure on prices by taxation and borrowing. In the summer of 1941 the price level was jumping from one to two points a month. It was going up so much that every month I was almost afraid to look at the cost of living index. It was terrifying to see how that cost of living index was jumping. That showed that our fiscal remedies were not sufficient. The only kind of fiscal remedy which would be sufficient would be the kind they resorted to in the middle ages, when they went into people's houses and searched their mattresses and their cellars and took nearly all the money they had. You cannot do that in a democracy. You cannot impose taxes so heavy that a great many people will not accumulate money. You cannot pile them on sufficiently so that people will not still have left a lot of purchasing power, and so you have to supplement your financial remedies with direct control. Therefore we instituted the price-fixing system.
What I was arguing against in that speech was against price fixing alone. But with the two lines of approach, marching against inflation on two fronts, we can beat inflation- if we do not tear the effort to pieces, if we do not bring up small individual cases, if we do not have to listen sympathetically to every person who says, "I could make more money if it were not for this price-fixing policy." If you are going to sympathize with everybody who has a complaint and at the same time attack the policy of the government, never advancing any alternative policy, you are not helping much. Bear in mind that our policy has worked and has been copied by the' greatest democracy in the world. We are taking a course which we believe will prevent inflation. Eon. gentlemen may say: 44561-195J
"Give them enough rope and they will hang themselves," so that my hon. friends will, then be in a position later on to say: "I told you so."
I said that the law of supply and demand could not be defeated, that it was all a matter of scarcity. My hon. friend may think that is going to happen. It may happen. But I have been amazed at the success of this policy so far. It has succeeded so far. Compare conditions to-day with conditions in the last war, when we were spending on the war only 10 per cent of our national income as compared with 40 per cent to-day and when there was, therefore, far less severe pressure on prices than there is to-day. When one compares the two periods and what took place in the last war, I am confident that this is immeasurably the better policy.
The leader of the opposition said something about subsidies and that I would have to justify the payment of this $50,000,000. About a week ago I made a speech forty or fifty or sixty minutes long on subsidies, a most carefully prepared speech, in which I argued the whole matter out. I said that the total might not be limited to $50,000,000 but might be much higher, and I gave facts and figures which I think are sufficient to show that the expenditure of that money is a good investment. The hon. member for Rosetown-Biggar (Mr. Coldwell) interjected at the time, "an insurance premium," and I said, "exactly," -an insurance premium against evils which otherwise would overtake us. I am not going to say anything more to-night. I am going to listen to others if they have anything to say. I do not think the burden is on me to justify this policy any further.


Angus MacInnis: I am not going to take up the time of the committee in going over the past policy of the Minister of Finance and his party. I believe that every hon. member of this house is agreed that the Minister of Finance is doing a very good job in a very difficult time, and there is no reason why any hon. member, no matter which side of the house he is on, should not make that statement. It is a plain statement of fact, but again that is no reason why we should not criticize the minister on points where we feel there is room for criticism. After all, criticism must of necessity be a matter of difference of opinion.
It is a rather strange trick of fate that the advocates of laissez-faire should have been put into the position where they have been compelled to use controls to meet a crisis. We were in a crisis in this country from 1930
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to 1939, a crisis in which hundreds of thousands, almost millions, of the people of Canada were starving.


Norman Alexander McLarty: No.


Humphrey Mitchell: That is not true, and you know it.


Angus MacInnis: It is true, and if my hon. friend does not know it he ought to know it, because in 1936, 1937 and 1938 he was in control of the slave camps in British Columbia where the unemployed were congregated. There were at one time in that period 1,500,000 people on relief in Canada. Will anyone tell me that people on relief are not starving? They are not starving outright so that they drop on their feet, but over a period of time they die of malnutrition. Everyone knows that.


Humphrey Mitchell: That is not fair. Point to one case where a person died of malnutrition during the depression.


Angus MacInnis: That question is not worthy of an answer. Does my hon. friend maintain that the allowance received by those on relief between 1930 and 1939 was sufficient to provide them with an adequate diet that would build up health?


Humphrey Mitchell: That is not what my hon. friend said. Let us be fair.


Angus MacInnis: Will my hon. friend sit down?


Humphrey Mitchell: My hon. friend said that people in this country died of malnutrition.


Angus MacInnis: I still say that.


Humphrey Mitchell: Name a person who died of malnutrition.


Angus MacInnis: They were starving.


The ACTING CHAIRMAN (Mr. Roebuck):: Order. Please understand that this is a debate in the House of Commons, and hon. members should address the Chair. The hon. member for Vancouver East has the floor, and if he does not wish to allow a question he does not need to.


Angus MacInnis: I have no objection to a question, Mr. Chairman, but I do not want to be interrupted by what is merely an expression of opinion which is no better than my opinion. I made a statement of fact, and anyone who disagrees with it takes the position that the relief allowance of the people of Canada during that period was sufficient to provide an adequate diet.


Humphrey Mitchell: I did not say that.


Angus MacInnis: Well, then, the hon.
member said that they were not dying of malnutrition. Read what the doctors are saying about the recruits examined for military service. I think the leader of the opposition stated that because of the poor conditions in New Brunswick during that period a large number of men were being rejected to-day for military service. Everyone knows that is true.


Mr. DOUGLAS (Weybum):: To-day's
Montreal Gazette says that an epidemic of malnutrition exists in Montreal.


Angus MacInnis: Yes.


Mr. GRANT:: Everybody is not starving that looks that way.


Angus MacInnis: What I was going on to say was that we could have used controls in that period just as well as now. The Minister of Finance says that he is amazed at how the people of Canada are cooperating, but the government would never allow the people of Canada to cooperate with the government at the time I mentioned. I remember listening to the Minister of Finance addressing a gathering in the depression days and his slogan was: "Retrenchment before reform." I am satisfied that when this war is over he will no more think of a return to that policy than he would to-day accept the policy of no controls advocated in 1941.
My objection to the wartime prices and trade board is that its administration is put in the hands of big business, as is every other phase of Canada's war effort, and that in my opinion it is being used to crush the small merchant. The people who have control of the board have not the slightest sympathy with the small business man. On this subject I would like to read an item from Saturday Night, a good Canadian paper, comparable anyway with the Saturday Evening Post. In its issue of April 4, 1942, after referring to how the economy of Canada was being drastically made over by Mr. Donald Gordon, it said this:
We are merely noting a tendency in our current political life and wondering where it will land us before it stops. Mr. Gordon, no doubt with the approval of the government, has adopted the principle

Note this.
-of letting industry regiment itself through the agency of top men in the various particular industries, each functioning for his own industry; and he expresses himself as being very well pleased with the results. He is no doubt animated in this decision by the desire to interfere as little as possible with the existing set-up in the industries, and so far he is probably right in thinking that the method has

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worked well. But it is putting too much faith in human nature to believe that it will work perfectly in every instance; and if it leads to serious trouble in certain industries and in certain aspects the government will not be able to transfer any of its responsibility to the elected representatives of the people. It will have to shoulder the whole blame itself. And there may be a lot.
In that regard I think the editor of Saturday Night is right. The statement has been made in this chamber on numerous occasions, and was made by the Prime Minister in his radio broadcasts, that this was the greatest experiment ever attempted with the will and consent of the people. But the people had nothing at all to say about instituting these controls. The first they heard about them was when they were imposed on the people by order in council which they heard through their radios. The editor of Saturday Night continues:
It must be remembered that the men in charge of Canadian industry, from whom these self-regimenters are picked, do not include any representatives of, and do not owe any responsibility to, the workers employed in those industries. They do not include any representatives of, and do not owe any responsibility to, the consuming public, but this is less serious, because the government itself may be assumed to hold at least a watching brief for that public.
He goes on to mention what parliament has to do with it:
As for the Conservative party, with its more than 40 per cent of the electorate, the C.C.F. party and the New Democracy they have as little responsibility in these matters as the pages in the House of Commons or the animals in the Toronto zoo.
That would be bad enough; but when the whole of this control, the whole of this regimentation, is placed in the hands of the top business men of this country, without any representatives of organized labour, or of the smaller business men, it can have only one end, the complete domination of the people of Canada by big business.


An hon. MEMBER:: That is politics.


Angus MacInnis: Who said "politics"? If it is politics, let it be politics. If it is politics to speak for the common people of Canada, for the working people of Canada, I am proud of being accused of playing politics.
The leader of the opposition referred to the orders made with regard to instalment buying. Earlier in the session I put some questions on the order paper on this subject. They were these:
1.	On what grounds was the minimum down payment on the purchase of furniture and household goods reduced from 33J per cent to
10 per cent?
2.	Was the retail trade throughout Canada consulted before the change was made?
3.	If so, is there statistical information available to show, (a) the number of retailers favouring the minimum cash down payment of 33J per cent; (b) the number of retailers favouring the minimum cash down payment of 10 per cent; (c) the number of retailers favouring the minimum cash down payment of more than 10 per cent but less than 33J per cent?
4.	Why was the interest on deferred payments raised from 6 per cent to 9 per cent?
The answers were these, and they are most peculiar:
1.	The minimum down payment on the purchase of furniture, bed-springs and mattresses was reduced from 33J per cent to 10 per cent but no change was made in the requirement that the balance of the purchase price must be paid in full in twelve monthly instalments. The reduction in the down payment with consequent increase in monthly instalment payments was made because the former requirement had resulted in a substantial reduction in total sales.
It is my opinion that the purpose of raising the down payment to 33J per cent was to bring about a reduction in sales. Continuing the answer to question 1:
It seemed to be operating to prevent people of small incomes from furnishing their households and with particular severity in respect of newly established homes. The cost of furnishing a home represents a heavy capital expenditure which many people are unable to finance on the basis of a down payment of one-third of the total sum. In addition, the reduction in total sales reduced the operating margins of retailers and manufacturers and coincided with an increase in costs amounting to as much as 12 per cent which was being shared equally by retailers and manufacturers. The decision to reduce the down payment was made with a view to these circumstances and for an experimental period pending further investigation and reconsideration in the light of its results.
We come to the next answer:
2.	Individual retailers throughout Canada were not circularized or otherwise consulted before the change was made. The decision was made by the board after discussion with board officials administering these matters and representatives of retailers and manufacturers.
I have here excerpts from Furniture and Furnishings, February, 1942, issued in Toronto. The magazine states:
Prior to the announcement of the original order restricting credit last Thanksgiving, the Ontario Retail Furniture Dealers' Association polled its members to secure their opinion on down payments. The answers were as follows: a total of 871 per cent voted for down payments of 20 per cent or more; 72 per cent went further and proposed 25 per cent payments and 24i per cent favoured payments of at least one-third down. Only 10 per cent favoured down payments of 10 per cent.
I imagine that was the 10 per cent who were consulted, along with those administering the board.
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The "Retailer", a trade paper published in Vancouver, in its issue of February, 1942, goes on record to the same effect:
A questionnaire was sent out to the retail furniture dealers throughout the province, and the returns reveal that retailers are not in sympathy with such a move,-
That is, a reduction from 33J to 10 per cent. -and strongly object to the amendment having been made without the retail trade having been given any opportunity of expressing its opinion. Many retailers say that such a move is not consistent with the regulations that were drawn for the purpose of discouraging spending.
At a joint meeting held in the Georgia Hotel, Vancouver, of various classifications selling commodities on the deferred payment, it was unanimously agreed to request the wartime prices and trade board to make the minimum down payment on furniture and other articles in class 2, subect to a minimum down payment of 25 per cent.
We come now to the the answer to question No. 4:
Why was the interest on deferred payments raised from 6 per cent to 9 per cent?
The answer was:
The interest on deferred payments was not increased from 6 per cent to 9 per cent. A minimum rate of three-quarters of 1 per cent per month or 9 per cent per annum was fixed by the board as a reasonable estimate of the cost of doing instalment business.
They tell me in the first sentence that the rate was not increased from 6 per cent to 9 per cent, and in the second sentence they tell me that the "minimum rate of three-quarters of 1 per cent per month or 9 per cent per annum was fixed by the board as a reasonable estimate of the cost of doing instalment business, and primarily to ensure to the consumer a definite and reasonable spread between cash prices and time prices with a view to encouraging cash sales." They first increased minimum instalment buying to reduce sales, and when the thing they set out to do was accomplished, they reduced it in order to increase sales. Then they increased the interest rate in order to encourage cash payments. Can anyone justify or explain that sort of manipulation; far-reaching changes made, not only without consultation with the retailers, but against the wish of 75 per cent or more of the retailers; perhaps against the wish of 90 per cent of the retailers?
I have a letter from a merchant in Vancouver who sells on the instalment plan. Referring to this change, raising the minimum to 33i per cent, he says it had certain objectives:
1.	It, to a large extent, curtailed indiscriminate buying, which was the government's prime objective.
2.	It permitted smaller traders to compete with large transcontinental companies who had

previously sold on terms that the smaller trader could not possibly meet on account of his limited capital.
3.	It taught the public that in making a purchase a reasonable sum of money was necessary and only a limited space of time would be allowed for completing payment.
The writer then gives an example of the way in which the system worked after the reduction to 10 per cent:
By taking a concrete example of a very composite furniture sale of $300 under the original government terms, the buyer was obligated to pay $100 down, leaving a balance of $200 which had to be paid within twelve months, with an addition of 6 per cent, or $12 for interest. Now, for the same sale, the down payment is $30, leaving a balance of $270 to be paid in one year, with an addition of 9 per cent, or $24.30. The result is _ that the purchaser pays more than twice the interest to obtain ownership and loses his buying power for merchandise and other necessities in the same period, and the financier of the transaction receives $12.30 more in revenue.
Let me tell the minister that such things are creating lack of confidence in the minds of the people. I think it was Ernest Bevin who said: "Let doubt enter into the minds of my workers, and, my God, we have lost the war." Let doubt enter into the minds of the people, that they are being fleeced for the benefit of a few large industrialists or chain stores or department stores in this country, and we are preparing for trouble.
I was told-I do not know whether it is true or not-that another reason, that is, for lowering the minimum payment from 33J to 10 per cent, besides the one I have already stated-that is, putting the big transcontinental stores in a better position-is this. The curtailment of the sale of automobile and other metal appliances, due to war needs, had drastically reduced their sale. The sales of such commodities being reduced, the finance corporations that used to finance these purchases, corporations which had existed by lending money, found themselves in the position where they had considerable money on hand and no one to whom to lend it because people were no longer buying in that way.


An hon. MEMBER:: Victory bonds.


Angus MacInnis: You cannot get 9 per
cent on victory bonds, so that in order to enable these people to find a place where they could profitably lend their money, the sale of goods was encouraged by the reduction of the instalment payment from 33^ to 10 per cent.
I have enough material, from people who feel that they are being gypped in this way, people who feel that this government have sold them out to big business, that I could keep the committee going for days. I am not

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going to do that. I thought I would bring this one glaring example to the attention of the committee and of the minister because I think something should be done to give the consumers, the common ordinary people of the country, representation on these boards.
I had a letter from Vancouver a few days ago complaining that in an outlying business part of the city, a large wholesale hardware firm was building a new retail hardware store. I wrote to the chairman of the wartime prices and trade board for an explanation of this, and as to the policy of the board, and he told me that the board had as yet no policy in the matter.
A person cannot get material to build a house without the greatest difficulty. But evidently another person can build a store where no store is needed and can stock it. Mr. Gordon also told me they were sending their representative out there, E. J. Burton, I think, of the Robert Simpson Company Limited, who would look into the matter and report. I am not so sure that any investigation Mr. Burton may make will be accepted with much confidence by the people concerned. I was in Montreal in November, and I saw people working in a big department store putting in a 8400,000 escalator system when the material used was needed for war work. An escalator at this time is about as needful as a fifth wheel on an automobile. But these people have been making so much money since the war began that they have to cover it up somewhere. That is something for the wartime prices and trade board to look into, if they are going to get the confidence and build the morale of the people of this country.


James Lorimer Ilsley: With regard to the controller of construction, that is not within the jurisdiction of the wartime prices and trade board. There is a controller of construction. He is in another department. I am not responsible. I presume, if I were, there would be some explanation for the incident the hon. member mentions. I am disposed to agree that there should not be large expenditures of that kind at a time like this if they can be avoided.
With regard to the other main points the hon. member made, first the complaint that the 33 j per cent requirement had been relaxed in the case of furniture and reduced to 10 per cent, the hon. member has picked out the only instance in the whole range of commodities where there has been any relaxation.


Angus MacInnis: If that is the only one, certainly I could not take any other, could I?


James Lorimer Ilsley: No; I do not blame the hon. gentleman; but I want to make that clear,
otherwise the committee might think that was just representative of many relaxations, especially as my hon. friend in the latter part of his speech seemed to be building up a serious superstructure on that foundation that the war was already lost, or something of that kind.


Angus MacInnis: I do not think the minister has any reason to say that.


John Ritchie MacNicol: That escalator would be installed for the saving of fuel in any event and would be a proper investment for that purpose.


Angus MacInnis: We should not be thinking of profitable investments at this time.


John Ritchie MacNicol: More money for the
government.


James Lorimer Ilsley: I do not think we should be going on that basis at this time.
With regard to what the hon. member for Vancouver East said about furniture, as I say he has taken the one instance in the whole range of commodities where the requirement of a down payment of one-third was relaxed. The reason for that-it may have been a mistake-was that the board was most anxious to see that the price of furniture was held .at the level at which it was during the base period, and also to avoid paying subsidies. Costs had increased approximately 12 per cent. The board asked the retail trade to assume 6 per cent of that and the manufacturers to assume 6 per cent. The answer of one or both was that under normal conditions and volume they would be able to take the squeeze, but a reduction in the volume would increase their overhead and increase rather than decrease the necessity for margins. Whether rightly or wrongly, the board then said to them that for a temporary period the requirement would be reduced to 10 per cent and they take the squeeze of 12 per cent and divide it. I do not think there was anything sinister about that; I know there was not. It was not done in regard to any other commodity. There may be arguments against doing it, but that is the reason why it was done in that instance.
With regard to the other point, what the hon. gentleman referred to as the raising of the interest rate from one-half to three-quarters of one per cent a month, there was no such raise. The original order provided that the cash price should be lower than the time price by a reasonable amount. I am informed that the usual amount for carrying charges and interest on these instalment purchases is about one per cent a month. In this case the board fixed three-quarters of one per cent a
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month as a reasonable amount to cover carrying charges and interest. What there is wrong with that I do not yet know.


Angus MacInnis: If the minister will allow me, the answer is that the rate in the first place was set at 6 per cent a year. When the down payment was reduced from one-third to 10 per cent the interest rate was raised. There is no doubt about that; it is in the answer to the question that I received. I imagine that answer was formulated by the wartime prices and trade board.


James Lorimer Ilsley: Would the hon. gentleman read it again? I must say I understood it as he says it, but I am told that is not what it says, nor is that what happened.


Angus MacInnis: I cannot find it at the moment.


James Lorimer Ilsley: We can come back to that.


Mr. McNEVIN:: I rise to supplement my remarks of yesterday in connection with an item in that portion of the war appropriation bill relating to the Minister of Agriculture under the heading of the dairy boards when I raised the question of the necessity of providing for some increase in the price of butter. I gave two reasons: first, to bring the butter producer to a more equitable position in relation to the other three branches of the dairy industry, namely, fluid milk, cheese, and milk for manufacturing purposes; second, to avert an extreme shortage of butter next winter.
To-night I want to preface my remarks by stating that I believe the general price level of agricultural products is on a satisfactory basis. I do not think much complaint could be offered with respect to the present set-up for beef, cheese, fluid milk, manufactured milk, bacon and so forth. Butter is an exception. I want to commend the wartime prices and trade board for the recent regulations, which were designed to correct a difficult situation as regards beef. I raise this question in order that provision may be made before the butter situation becomes difficult. The arrangement with regard to beef has revealed the flexibility in the set-up as far as the price ceiling is concerned. It has been suggested in some quarters that there is a possibility of the cheese quota being filled late this summer and that, therefore, large quantities of milk could be released for butter production. I cannot visualize that situation becoming a reality.
In the first five months of this year we produced about 26,000,000 pounds of cheese, and I would estimate that in December we produced about 10,000,000 pounds, so that

thus far we have about 36,000,000 pounds toward a quota of 125,000,000 pounds for overseas and perhaps forty or fifty million pounds for Canadian consumption. It would appear to me that it will take the rest of the season to fill that cheese quota, and I think I am correct in stating that the British food import board have agreed to take even more than the 125,000,000 pounds contracted for.
The next three months are those in which large quantities of butter go into storage. The figures for last year show that in May 9,000,000 pounds were in storage; in June, which is the heaviest month of production, that figure rose to 17,000,000 pounds. In July it almost held its own, at 15,000,000 pounds, but in August it dropped to 11,000,000 pounds and in September to 6,000,000 pounds, after which it became necessary to run on' an even keel before beginning to use up the butter held in storage to supply the need during the short season. Recently, as was pointed out yesterday by the Minister of Agriculture, there has been a slight decrease in the price of butter. That is to be expected; it is a seasonal decline almost impossible to avoid during June, when production is at the very highest point of the year. But I would point out that had it not been for the price ceiling, butter would have gone substantially above the thirty-five cent limit. Therefore a seasonal decline would not have brought it down to the present level. The government is giving substantial aid to the cheese industry. I am not saying that is wrong; I think it is necessary to encourage the cheese industry in order that we may obtain the very large quantity of cheese required. But I maintain that there is discrimination as far as the butter producer is concerned; and if we are to avoid an extreme shortage next winter, I think action should be taken now to encourage the butter producer to increase his output.
I do not want to labour this point at any great length. I want to renew my request that provision be made to increase the price of butter by about five cents a pound, in order to put the butter producer on a more equitable basis in comparison with other branches of the dairy industry, as I said yesterday. The producers of butter represent about half of the dairy farmers in Canada, and I think that is .too large a section of the agricultural industry to leave in a position where they are not receiving returns on a comparable basis with the other branches of that industry. All I ask is equality of treatment and a fair deal for the butter producers of Canada, and I believe the circumstances warrant most serious consideration of this very important matter by the wartime prices and trade board.

War Appropriation-Finance


John Horne Blackmore: I am sorry I was unable to get the floor immediately after the leader of the opposition and the Minister of Finance had made some remarks with regard *to what I had advocated. I will grant that a new system may be difficult for orthodox minds to comprehend, but that is no evidence, by any means, that the new system is wrong. It was very difficult for men to understand the radio, but the radio was right. It was next to impossible for Edison to understand alternating current, but alternating current was right. This new system is right, too; there is no doubt about that.
I am sorry the leader of the opposition has left the chamber. I suppose he is weary, but I should have liked to ask him whether or not during the last war $26,000,000 of money was printed by the dominion treasury and used as part of the revenues of Canada. He would have to acknowledge that this was done. He sneered about fiat money. That was fiat money, but that money could have been used to give a fair price for wheat; that money could have been used for any kind of war work that was necessary in Canada during the first world war. The leader of the opposition, and the minister as well, would do well to look at the report of the royal commission on banking and currency in Canada, published in 1933. Let them turn to page 22 and read paragraph 47, and then stop making fun of the people who know this thing can be done.
The minister said he favoured taxation and borrowing. I should like to tell the minister that I never, under any circumstances, said that taxation and borrowing were not sound. I do not oppose taxation and borrowing, as the minister will find if he turns up my speech and every other speech I have made. I have never suggested we should not follow those methods, in moderation. The minister said he needed a third measure in addition to borrowing and taxation. When the war started he thought he could run the war successfully with just taxation and borrowing. He discovered he was wrong, that he had to have a third measure, namely price control, and in addition to price control he has used price subsidies. That is completely sound. Now I want to tell the minister and the members of this committee that as sure as he is in this house, he will have to adopt a fourth measure, if he is to succeed; and that fourth measure is going to be the power of the state to create money based on the real credit of the country. There is a great deal of nonsensical talk about state money, even though the most enlightened men are advocating it. When a person advocates this
creation of money, one would think he was advocating nonsense. I know the minister is a busy man, but I would mention a book that he really should get and read; it would do him good. The book is "Economic Tribulation"-


James Lorimer Ilsley: I have all I need of that.


John Horne Blackmore: -by Vincent C.
Vickers. I am going to read three or four short quotations from this book, and I am going to ask the friends of the leader of the opposition to tell him to read the book and then "laugh that off". First I turn to page 74, and read No. 1:
1.	State control and state issue of currency and credit through a central organization managed and controlled by the state.
The minister may say he has that now in the Bank of Canada. If-he has, let him use it. I shall have something more to say about that later on, but I doubt very much that in the Bank of Canada he has such an instrument as is envisaged by Vincent Vickers in this statement. Now I come to No. 2, and this is the point to which I was referring:
2.	Stabilization of the wholesale price level of commodities. That is to say, a fixed and constant internal purchasing power of money; so that a pound will buy to-morrow what it bought yesterday; an honest pound, not a fluctuating pound.
Note these words:
And this can be done by so issuing and regulating the volume of available credit and currency that it shall at all times be adequate to permit of the purchasing power of the consumer being equated with the volume of production; not by limiting the purchasing power-
That is what taxation does, or borrowing.
-but by firstly increasing purchasing power more in proportion to the productive capacity of industry.
I do not hope that the leader of the opposition will understand that. Bless his heart; he has become too old to learn new tricks. Now may I read No. 4:
4.	Any additional supply of money should be issued as a clear asset to the state; so that the money will be spent into existence, and not lent into existence.
And now, No. 7:
The abolition of the debt system, where all credit is created by the banks and hired cut at interest to the country.
Those four points alone line this man up, with all his experience, prestige and reputation, right along with the Social Crediters.


An hon. MEMBER:: Who is he?


John Horne Blackmore: Mr. Vincent Cartwright Vickers, of Vickers-Armstrong, the great
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munitions manufacturers, and director for years of the Bank of England. He is one of the best authorities in the world.


Angus MacInnis: Because he was a director of the Bank of England?


John Horne Blackmore: I am not saying the fact that he w'as a director of the Bank of England makes him an authority, but a man who is a director of the Bank of England is likely to know as much as you do, and just about as much as the minister does, or the leader of the opposition.


Angus MacInnis: Evidently he did not know it; otherwise he would not be a director of the Bank of England-because that was not the policy of the Bank of England.


John Horne Blackmore: He withdrew from
his directorship in the Bank of England when he became convinced that there had to be a change in the system. And I declare before this committee that there must be a change in the system in this country-and a change which is a change!
The minister spoke as though I advocated creating the whole billion dollars. I did no such thing. If social credit is so palpably wrong, it is not necessary to misrepresent it in order to condemn it. The minister will find, if he reads my speech on that occasion, that I never said the whole billion dollars had been created.


James Lorimer Ilsley: This was what the hon.
member said in his speech:
Social credit proposes to use the national credit to provide money without additional debt, without additional taxation.
There would be no more borrowing and no more taxation, would there?


John Horne Blackmore: But the minister at that time was freely borrowing and freely taxing.


Norman Alexander McLarty: That is not an answer.


John Horne Blackmore: He has increased the revenue of this country tremendously since the war broke out. He has come before us each budget speech and pointed out how greatly the revenues have increased. Those revenues have increased largely because of the increased income of the dominion; the increased income has developed as the result of increased production of the dominion; increased production in the dominion has come as the result of increased investments in the dominion; in many instances those investments have come from loans, and in many instances they have been loans from the dominion government. The loans have resulted in greater production, the greater production [Mr. Blackmore.l
has resulted in greater income; and the greater income has resulted in greater revenue, without unnecessarily raising the rate of taxation.


Mr. CRERAR:: Will the hon. member
permit a question? If he would neither tax the people nor borrow from them-


John Horne Blackmore: I did not say I would not tax. I said, "without additional borrowing".*


Thomas Alexander Crerar: But, Mr. Chairman, the extract from the hon. member's speech, quoted by the Minister of Finance, if I understood it correctly definitely opposed taxation and opposed borrowing. If taxation and borrowing are ruled out, how will my hon. friend finance the war?


John Horne Blackmore: I was just explaining, if the minister had listened. Perhaps he was listening attentively, but I know this is new to him. I pointed out that since this war broke out, the national income of Canada has increased tremendously, and that the income has increased because of the increased production in Canada.


An hon. MEMBER:: The production of
what?


John Horne Blackmore: A wide variety of things. Mr. Chairman, I am going to finish these few remarks to-night, and I shall reopen the question to-morrow, when hon. members may ask me any questions they wish in the matter. There is not time to-night. This social credit is no fly-by-night idea; this is a sound and scientific system.
The minister spoke as though I had intended to issue the whole billion from the government. That is not so. If the minister had borrowed a certain amount, taxed what was reasonable, and then in addition to that had created what could be created, and used without causing inflation, then his economy in Canada would have been in a far sounder condition than it is to-day, and people would have been far happier.
Here is what he could have done. He could have used new money, like the $26,000,000 created in the last war, to subsidize the prices of primary products. That is, he could have given higher prices for wheat; he could have given higher prices for wool; he could have given higher prices for meat, and for any and every primary product.
The leader of the opposition's sneer as to fiat money would not have applied. You could have bought wool, or meat, or anything else, with the $26,000,000 created in the last war- fiat money, pure and simple. And it was just as good money as any money in the Dominion
(*See also page 3105.)

Hong Kong Commission
of Canada. That kind of money could have been used up to the point at which there would be danger of inflation through scarcity of goods. That could have been used to pay fair and just prices on all primary products. The difference that would have made to the agricultural population throughout this dominion is next to inconceivable, had it been applied for two or three years in this war. You would have had a contented and happy people who were getting out of debt, whereas to-day in Saskatchewan the doleful story is that they have gone into debt $50,000,000 deeper since the war broke out.


Arthur Wentworth Roebuck: May I point out that it is now eleven o'clock?
Progress reported.



BUSINESS OF THE HOUSE

[Stage Direction]
Mr, McNIVEN:	May I ask the Minister
of Mines and Resources if it is the intention of the government to sit to-morrow night and, if not, why not? There are some of us who come from distant points, who are getting pretty tired of staying around here with comparatively little to do. The other day the Minister of Finance stated that there was something wrong with the House of Commons. The other afternoon he further stated that it was high time we were having some regard for the time. I suggest to the minister he might well consider sitting on Friday nights-
An hon. MEMBER:: Saturday mornings.


Mr. McNIYEN:: Yes, Saturday mornings,
and Wednesday nights; yes, and even Sundays. I say that for this reason:	The House of
Commons is sitting only twenty-four hours a week. We are asking labour in this country, in munitions, shipyards and aeroplane factories, to work seven days a week. Some of those men are working as long as sixty hours a week, and some, sixty-five hours. No attempt has been made to go into supply; the estimates have not been considered as yet. There is no reason in the world why some of the ministers should not be able to sit on Wednesday and Friday evenings, Saturday morning and possibly Saturday afternoons as well. Let us try to make some progress. We would be advancing the war effort by expediting the business of the house and bringing the session to a close, permitting the government to get on with its war work and the members to go back to their homes.


James Arthur Ross: It is all a matter of
government procedure.


Thomas Alexander Crerar: The house has been adjourning on Friday evening at six o'clock by common agreement this session, and I do not think that arrangement should be disturbed without the leader of the opposition, the
Prime Minister and the leader of the Cooperative Commonwealth Federation party being present. There is a good deal of merit in the suggestion of my hon. friend the member for Regina City, and I would suggest that if he still feels the same way about it he might bring the matter up in the early part of next week so that we might consider sitting on Friday nights. At any rate it would allow the feeling of the house to be ascertained.


Donald Alexander McNiven: Can it be
brought up to-morrow on the orders of the day?


Thomas Alexander Crerar: My hon. friend might bring it up to-morrow on the orders of the day.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Friday, June 5, 1942