[Stage Direction]
Fifth report of standing committee on miscellaneous private bills.-Mr. Donnelly.

Mr. J. P. HOWDEN (St. Boniface) moved:: That the third report of the standing committee on railways and shipping owned, operated and controlled by the government, presented to the house on June 2, be now concurred in.


[Stage Direction]
Motion agreed to.

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

Mr. SOPER:: 1.	Is Edwin Eli Spencer, K.C., an examining officer in the civil service commission?
2.	If so, when was he appointed, on whose recommendation, and what is his salary?
3.	What was his occupation prior to the civil service appointment, and how long did he serve in such capacity?
4.	What was his previous civilian occupation?


Mr. McLARTY:: 1.	Yes.
2.	He was appointed on January 26, 1942, at a salary of $3,120 per annum. When it became
necessary to secure an examiner having certain qualifications, such as legal training and! experience in connection with current and! post-war problems of rehabilitation, the Department of National Defence was approached! by the commission with a view to securing the services of Captain Spencer, a veteran of the great war, who was a staff officer with the Canadian army overseas.
3.	He served as staff captain, auxiliary services, M.D. No. 10, Winnipeg, December 5, 1939 to June 7, 1940, whence he proceeded overseas with a similar appointment at headquarters, 2nd Canadian Division, arriving in England June 21, 1940, and was attached to headquarters, 1st Canadian Division, to July 5, 1940. He was posted to the same duties with headquarters Canadian forces in Iceland arriving there July 12, 1940, and served on that command' to October 31, 1940. From September 23 to' October 31, 1940, he served as Staff Captain, Q., under Major-General L. F. Page, D.S.O., in Iceland. His duties as Staff Captain, Auxiliary Services, headquarters 2nd Canadian Division, were resumed November 3, 1940, where he continued until his recall from overseas by National Defence Headquarters to the appointment he now holds.
4.	Barrister and solicitor.


DIRECTOR OF RATIONING, PROVINCE OF QUEBEC
Mr. GINGUES:: 1.	Has Mr. Jean Peloquin, director of rationing for the province of Quebec, resigned from his position?
2.	If so, for what reasons?
3.	What was the previous position of Mr. S.	D. Millen in this office and what is his present position?4.	What was the previous position of Mr. O.	W. Rodomar, assistant to Mr. Millen in the rationing department?5.	Is Mr. Antonio Girard director of rationing at Sherbrooke, Quebec?6.	If so, are his services satisfactory?


Mr. ILSLEY:: 1.	Mr. Jean Peloquin, director of rationing for the province of Quebec, is being relieved' of his duties on July 31, 1942.
2.	General incapacity to perform the duties required in that position.
3.	Mr. S. Boyd Millen is supervisor of the ration section. Prior to his appointment to the wartime prices and trade board Mr. Millen was managing director of John Millen and' Son, Limited, Montreal. Mr. Millen is serving the board without any remuneration.
4.	Mr. O. W. Rodomar, deputy supervisor of the ration section, has, for the last fourteen years, been an employee of the Chrysler

Questions as Orders for Returns
Corporation in the province of Quebec, occupying the position of assistant regional manager for eastern Canada. Mr. Rodomar is on loan to the government from the Chrysler Corporation.
5.	Yes, as a temporary appointment.
6.	Yes.
interest rates


Mr. CHURCH:: Will the government consider holding a conference with the Canadian Bankers' Association and chartered banks of Canada, with a view of asking them to reduce their interest rates during the remainder of the war, (a) on call loans, (b) on loans on current accounts, (c) on loans of customers who borrow to help pay part of their income tax?


Mr. ILSLEY:: This question relates to matters of policy, and it is not the practice of the government to disclose policy in giving answers to questions. The question may be regarded as being answered, and that is the answer.


CHARGES AGAINST COLONEL DREW-PAYMENTS TO D. L. MCCARTHY, K.C.
Mr. TUSTIN:: What is the total amount paid to D. L. McCarthy, Esquire, K.C., for his services as special prosecutor in the action against Colonel George A. Drew?
Mr. ST. LAURENT: No account has yet been received from Mr. McCarthy.


INCOME TAX RETURNS-MANITOBA
Mr. ROSS (Souris):: 1.	How many people in Manitoba filed income tax returns or paid income tax for 1941?
2.	How many people in rural Manitoba filed income tax returns or paid income tax in 1941?
3.	How many farmers in Manitoba filed income tax returns or paid income tax in 1941?


Mr. ROSS (Souris):: Since it is so late in the session I ask that this question be dropped.
Question dropped.


QUESTION PASSED AS ORDER FOR RETURN
Mr. HANSELL:: .
1.	What was the total amount of money in circulation in Canada at March 31, 1939, and at March 31, 1942, of (a) copper, (b) silver, (c) other coins?
2.	What was the total amount of Bank of Canada notes in circulation as at March 31, 1939, and March 31, 1942?
3.	What was the total amount of chartered bank notes in circulation in Canada on each of the above dates?
(Mr Ilsley.]
4.	What was the total amount of monetary gold possessed by the government of Canada as at March 31, 1939 and 1942, (a) Bank of Canada, (b) chartered banks, (c) foreign exchange control board?
5.	What was the total amount of bank deposits in Canadian banks as at each of the above-mentioned dates?
6.	What was the total number of depositors having accounts in the chartered banks of Canada as at March 31, 1939 and 1942?
7.	What was the total public debt of Canada on the above-mentioned dates, (a) municipal, (b) provincial, (c) dominion?


James Lorimer Ilsley: Return tabled.


MOTIONS FOR PAPERS
Thomas Langton Church: For a return showing-1. The cost of operating, during the fiscal periods ending March 31, in each of the years, 1938, 1939, 1940, 1941, 1942, the following departments and branches of government:	Agriculture, Auditor General's
office, Chief Electoral Officer's office, Civil Service Commission, External Affairs, Finance, Fisheries, Governor General and Lieutenant Governor, Insurance, Justice, Labour, Mines and Resources, National Defence, National Revenue, Pensions and National Health, Post Office, Prime Minister's office, Privy Council office, Public Archives, Public Printing and Stationery, Public Works, Royal Canadian Mounted Police, Secretary of State, and Munitions and Supply, including salaries and wages paid to executives and clerical staffs.
2.	The number of employees in each of the above departments, in the years 1938, 1939, 1940, 1941 and 1942, and the total salaries paid.
3.	The number of employees engaged by permanent commissions under the federal government, (a) civil-for the above years; (b) war -by years since established.
4.	The total number of staff and employees of all departments and commissions in existence in 1938, 1939, 1940, 1941 and 1942.


Thomas Langton Church: Mr. Speaker, I would ask that this motion be dropped, in accordance with the terms of the letter which the Minister of Finance (Mr. Ilsley) has written to me. Some of the details asked for here in part with respect to the departments appear in the estimates and appendix and in the auditor general's report, and improvements will be made for this fiscal year. The minister has also drafted for me a motion which appears on Tuesday's Votes and Proceedings asking for details, which he will table, of the cost of control boards and commissions for the fiscal year ending March 31, 1943. In view of this and the fact that the house will soon be adjourning, I ask that the motion be dropped.
Motion dropped.

Merchant Marine


HONG KONG COMMISSION-LETTER FROM COLONEL DREW
Thomas Langton Church: For a copy of a letter written by George A. Drew, K.C., to the Prime Minister, regarding the Hong Kong situation, and handed to a press agency for distribution to the Canadian daily and weekly press last week and then cancelled?


Thomas Langton Church: Mr. Speaker, I would ask that this motion be dropped, because we have had a two-day debate on this subject in which I raised this very question; in my opinion the matter herein was given, and you gave your ruling. As a sportsman and an old member of the house I know that one should not argue with the referee or umpire, and I think Your Honour has always been very fair. I have found the House of Commons to be a place of much kindness all session.
Motion dropped.


TORONTO NAVAL HEADQUARTERS AND FORT YORK NAVAL BARRACKS
Thomas Langton Church: For a return showing:-1. The names, rank, salaries and other emoluments of the officers, petty and minor officers, of the navy headquarters and the Fort York naval barracks at Toronto.
2.	The number of civilians employed, their names, salaries and other emoluments, who appointed them and by what authority.
3.	Names of officers who have served overseas or at sea during this war, and for what period.
4.	Any changes made recently in the headquarters staff, the new positions created, for what purposes, and whether they will go to sea as officers.
5.	The actual naval experience in this war of the above mentioned headquarters staff.


MERCHANT MARINE
[Stage Direction]
On the orders of the day:
Hon. R. B. HANSON (Leader of the Opposition):: Mr. Speaker, I should like to direct some questions to the Minister of Munitions and Supply, either in his capacity as minister of supply or in his capacity as acting minister of transport.
First, by whom will the new Canadian merchant marine be operated? Second, what steps are being taken to see that these ships are manned by Canadian sailors under Canadian standards of wages and working conditions? Third, is it not a fact that there is available an ample supply of Canadian officers, engineers and men to man these ships? Is it not also a fact that certain organizations in Canada have supplied crews to ships of other
nations and are prepared to undertake the task of manning these new ships?


Hon. C. D. HOWE (Minister of Munitions and Supply):: Mr. Speaker, the ships now being built, the standard 10,000-ton merchant ships, are being placed under the control of a crown company which has as its directors a representative of each of the principal shipping lines in Canada.


Richard Burpee Hanson: What are the names?


Mr. HAZEN:: What is the name of the company?


Clarence Decatur Howe: The name of the company is the Park Steamship company. The ships are to be handled as ships are being handled in Britain and in very much the same way as ships are being handled by the maritime commission in the United States. The ships are being taken over by a shipping company for the operation of a single voyage at a nominal fee, all profits and expenses of the voyage being charged to the operation of the ship, and any profit being returned to the government. The shipping company that will handle a particular voyage depends upon the destination of the voyage, which in turn depends upon the particular requirements of the Canadian shipping board, which board controls the routing of all these ships.
The hon. member's next question was whether the ships are manned by Canadian crews.


Richard Burpee Hanson: Under
Canadian standards.


Clarence Decatur Howe: These ships will be and are being operated by Canadian crews; the wages have been worked out in cooperation with the Department of Labour, and the standards are Canadian standards.


Richard Burpee Hanson: Does that include working conditions, hours, and so forth?


Clarence Decatur Howe: I assume so. I know of no reason why a Canadian ship operated by a Canadian company would not have Canadian standards. I am quite certain it would have.
The next question was, are there plenty of Canadian officers, engineers, firemen and men. The answer is, decidedly not. We have schools that are training officers, but our great difficulty in putting ships to sea as Canadian ships is the lack of experienced deep-sea officers. We have had great trouble in putting out the ships that are at sea to-day, and they would have sailed earlier had it been possible to get together Canadian crews capable of taking them out.
Merchant Marine

My hon. friend's next question was about organization. I hope my hon. friend is not competing with the Cooperative Commonwealth Federation in this regard, but I can tell him that the Minister of Labour and myself met with the organization he mentions. I explained to the organization the reason we could not build up our Canadian service faster than we are doing-because of lack of experienced officers and experienced men. I explained to the organization what was being done in training officers and training men, and I asked the fullest cooperation of that organization in helping the work along. I told the organization that the size of the Canadian merchant marine would depend entirely on the extent we are able to furnish crews. I said that we are building far more boats than we are able to man, and that if they would help us man the boats we would have just as large a merchant marine operated by Canadians as is possible.


Richard Burpee Hanson: I mentioned no organization, but I indicated in the question which I asked that a certain organization had offered to supply crews for these ships, and I was asking if they were not prepared to do so. Am I to understand that the minister's answer is in the negative?


Clarence Decatur Howe: No. On the contrary. The Canadian Seamen's Union called upon the Minister of Labour and myself. As I say, we discussed the problem at great length, and I told the officers who were present representing the Canadian Seamen's Union that if they would furnish the crews, we would furnish the ships, and that we would build just as large a Canadian merchant marine as the supply of officers and men would permit.


Richard Burpee Hanson: Did the minister ever see the National Maritime Federation in regard to this matter?


Clarence Decatur Howe: No.


Mr. J. J. KINLEY (Queens-Lunenburg):: Is the shortage of seamen in the merchant marine a Canadian condition only?


Clarence Decatur Howe: Oh, no; every country is short of personnel in its merchant marine. There is no question about it that all are short of crews. There has been great loss of life among the crews, and of course the dropping out of foreign crews has affected the situation. A great many Norwegian and Swedish sailors have dropped out of the service. The shortage of crews is a condition which, I believe, applies all around the world.


John James Kinley: May I suggest that in the interests of the industry and of the men,
[Mr Howe.]
those who serve in the merchant marine should get more recognition for their war-time effort?


Clarence Decatur Howe: Hear, hear. I entirely agree. HOUSING


FINANCING OF CONSTRUCTION IN CONGESTED URBAN AREAS-EXTENSION OF HOME IMPROVEMENT PLAN
[Stage Direction]
On the orders of the day:
James Lorimer Ilsley: I desire on the orders of the day to make a statement with regard to housing.
Some time ago I promised that I would make a statement to the house outlining the housing policy which the government will follow in future, particularly in regard to the National Housing Act. In arriving at a decision as to what our future policy should be, many factors had to be taken into consideration. On the one side, we have an acute and growing shortage of certain materials, particularly of metals, which are used both for building and for war purposes. On the other side, there appears to be undoubtedly an increasing shortage of housing accommodation, particularly in those urban areas where munitions work and other war activity have been rapidly expanded. There has also been the difficult question as to how far the shortage of housing accommodation should be met by emergency war-time housing and how far by the construction of permanent houses; in answering this question one must consider not only the extent to which an existing housing shortage in a given area is likely to continue into the post-war years, but also the extent to which permanent housing on the one hand and temporary housing, including the essential supplying of civic services, on the other hand, made demands upon the supply of the scarcer building materials. Finally, we had to remember that to the extent permanent housing construction can be deferred until after the war, we shall be building up an excellent safeguard against post-war unemployment and depression.
I think the house will' agree that it has not been easy to resolve these conflicting claims and reach a decision that would be the soundest possible in the national interest. Fortunately, we have been greatly assisted by the report of the committee on war expenditures, which was published in the Votes and Proceedings of the house on July 16. The subcommittee of this committee which was inquiring into the operations of Wartime Housing Limited made an extensive investigation of the housing situation throughout the dominion, and its report, as the house knows,

Housing
includes certain recommendations in regard to the supply of permanent housing accommodation. My colleague the Minister of Munitions and Supply (Mr. Howe) will make a statement to the house in regard to the operations of Wartime Housing Limited and the recommendations made by the committee on that subject. In so far as the report relates to permanent housing I am accepting its recommendations.
In other words, I have recommended an increase in the appropriation available for the National Housing Act in order to assist in financing the construction of small permanent houses in congested urban areas where a serious housing shortage exists and where permanent houses can be built without threatening to create a post-war surplus and where it can be shown that "by the use of building materials which are non-essential for war purposes, or by the use of building lots already serviced by local improvements, an actual saving in labour and essential war materials can be effected through the construction of permanent honjes rather than those built by Wartime Housing." The supplementary estimates which are about to be brought down will contain an appropriation of $1,000,000 for this purpose.
In addition, we propose to carry out the recommendation of the committee for an extension or revival of the home improvement plan in order to increase the supply of housing units by the conversion of existing large houses into two and three family apartments. The supplementary estimates will include an item which will authorize me to guarantee loans made by approved lending institutions to finance such conversion operations in congested urban areas. The giving of these guarantees will be subject to regulations approved by the governor in council generally along the lines of the provisions of the Home Improvement Loans Guarantee Act and the regulations made thereunder. The aggregate of these loans will be limited to $2,000,000 and the guarantee to be given to each approved lending institution will be limited to 15 per cent of the loans made by such lending institution.
I may add that I have had certain requests made to me that we should amend that provision of the National Housing Act which limits 90 per cent loans to loans on houses costing not over $2,500 to, say, $3,000 or $3,200 or $3,500, depending on those making the representation. We have given the most careful consideration to this suggestion but the decision we have reached is that no change should be made in this provision of the legislation. However, I want to draw to the attention of 44561-310
the house a policy already in operation by the housing branch of this department which will, I believe, meet the situation. This policy permits a borrower to take advantage of the 90 per cent loan provision even if his house is eventually to cost an amount in excess of $2,500. In order to reduce the first cost he may omit some of the equipment; he may leave certain parts of the house unfinished; or he may avoid other items of expense which may be incurred later when the necessary building materials and equipment become available. We believe this to be a sound policy, particularly where the items omitted involve the use of some of the scarcer metals. The operation of this policy will reduce the first cost of a small house to the point where it may be eligible for a 90 per cent loan, thus conserving scarce materials and labour and making it possible for the family of small income to finance the construction of a small house.


Mr. H. C. GREEN (Vancouver South):: I understood the Minister of Finance to say that the Minister of Munitions and Supply would be making a statement concering Wartime Housing. When will that statement be made, and will it deal with the question of extending the provisions to help the dependents of men in the forces?


Clarence Decatur Howe: I will make the statement tomorrow or the next day and try to make it as complete as possible.


TAXATION
[Stage Direction]
On the orders of the day:
James Lorimer Ilsley: I should like to make a brief statement regarding instalment payments of corporation income and excess profits tax by corporations.
The house will recall that under this year's budget resolutions corporations are to be required to start paying in the middle of the taxation year the estimated taxes for that current year. For example, companies whose fiscal periods coincide with the calendar year will be required to pay in July, this month, one-twelfth of the estimated tax for 1942. The law was to have called for interest at the rate of 8 per cent on any deficiency in these payments. Since the budget it has been represented to me that the requirements just mentioned will cause a stringency in the cash position of many companies, particularly in the case of those who adopted the voluntary instalment plan for the payment of 1941 taxes, since the two final payments under it will not

Taxation

have been completed before the time for making payments in respect of 1942 taxes. There is an overlap of two months. To afford some relief from this situation I have decided that in respect of any deficiency in the first two instalments of taxes for 1942 the rate of interest charged on such deficiency shall be only 2 per cent instead of the 8 per cent which will apply in the case of any default in the remaining ten instalments. Under this arrangement corporations, if they find it necessary, may postpone the payment of the whole or any part of the first two instalments and pay them at any later time within the twelvemonth instalment period by paying 3 per cent interest on delayed payments.
This does not meet the requests of certain members, but forms have all gone out and it would be practically impossible to change the system as requested by the member for Lincoln (Mr. Lockhart), the member for Waterloo South (Mr. Homuth) and others.


Thomas Langton Church: Why not continue the general housing act until after the war and a year after? Building is two-thirds over for this year.


James Lorimer Ilsley: When the hon. gentleman reads my statement he will see that I have dealt with the matter.
There are two other subjects on which I promised to give information to the house, but I am not in a position to do so to-day. I was asked at one stage of the session to make a statement regarding the parliamentary control of expenditures of crown companies. I will do that before the session ends. I was also asked to make a statement regarding a form of public accounts. I will make that statement.


HALIFAX DOCKYARD
[Stage Direction]
On the orders of the day:
Mr. JEAN-FRANCO IS POULIOT (Temis-couata): Owing to the fact that several persons have been found guilty of theft at the stores in the dockyard at Halifax, which contain a very large amount of stock, is it possible for the government to make an investigation, through the Royal Canadian Mounted Police or otherwise, in order to find out who have been or who are the receivers of these stolen goods, so that the practice may be stopped?
Hon. L. S. ST. LAURENT (Minister of Justice): The hon. member mentioned to me a few moments ago that he intended to submit this question this morning. I can assure him that a full investigation will be carried

out in order to protect as completely as possible the interests of the government and of the public.
Hon. ANGUS L. MACDONALD (Minister of National Defence for Naval Services): Inasmuch as this concerns my department as well as the Department of Justice I can tell the hon. member for Temiseouata that the Department of National Defence for Naval Services will cooperate in every way with the Department of Justice in order to determine the identity of the culprits and the identity of those who may have received stolen goods.

[Stage Direction]
On the orders of the day:
Thomas Langton Church: I wish to ask the Minister of Finance (Mr. Ilsley) a question. It relates to question No. 13 on to-day's order paper, regarding which the minister says it is a matter of government policy. In a very few hours we shall be closing, and as this matter concerns some of the working people of the country I would ask the minister, before the house closes, if he would make a statement. Will the government consider the question of 6 per cent, 6i per cent and 7 per cent interest rate being charged to persons in difficulties, when the same agencies, the chartered banks, are lending money at j of 1 per cent to the government and other large customers? We should have some statement of government policy before the session closes. Everyone seems to be afraid to mention the word "bank"-both the press and the house-except in a whisper.


James Lorimer Ilsley: I cannot undertake to make any statement on the subject -before the house closes. This is simply a matter on which a statement will be made when a decision is arrived at.


Thomas Langton Church: It has been regulated in the United States. The interest rates which are being charged represent nothing but usury. How do you expect people to pay such income taxes?


CARRIER PIGEONS
[Stage Direction]
On the orders of the day:
Mr. G. K. FRASER (Peterborough West):: May I ask the Secretary of State if he would kindly have my question- of April 20 iD

War Risk Insurance
regard to carrier pigeons answered by the Minister of National Defence for Air? The British government have issued a full page on carrier pigeons and. the war work they are doing, and I do not see why this government cannot do the same.


Hon. N. A. McLARTY (Secretary of State):: Of course I have no authority over the Minister of National Defence for Air, and at the [DOT] time the question was raised that department took the attitude that to answer it was not in the public interest. I have no objection to mentioning it again to the Department of National Defence for Air, but I have little hope of getting them to change their view on the question, on which an answer has already been tabled as a return.


Gordon Knapman Fraser: I
would add that I have had dozens of letters from fanciers throughout Canada in regard to the matter.


BUSINESS OF PARLIAMENT
[Stage Direction]
On the orders of the day:
Thomas Langton Church: In view of the fact that the house will shortly be closing I would ask the Prime Minister whether he has any statement to make about giving more war work to the other branch of the legislature, and a readjustment of work. The right hon. gentleman said he was sorry he could not give me an answer "to-day." That was sixty days ago, and I think we ought to give that branch some more war work. They would do better war expenditure work than the war expenditures committee do gallivanting all over Canada without any authority.


Some hon. MEMBERS:: Order.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: If my hon. friend has
followed the proceedings of the senate in the last few weeks he must be filled with amazement at the way in which its members have been working every day so far as I can see. Certainly the government will continue to gi\re consideration to my hon. friend's question.


Thomas Langton Church: Oh be a sportsman and
give them some decent additional war work.


MILITARY SERVICE
[Stage Direction]
On the orders of the day:
Mr. J. G. DIEFENBAKER (Lake Centre):: I wish to ask a question of the Minister of 44561-3101
National War Services. The press carries an item to the effect that the nineteen-year-old class is about to be called and that some-alteration is being made to reduce the age-limit at which young men are called fromi twenty years to nineteen years. Would the minister be prepared at this time to make a statement?


Hon. J. T. THORSON (Minister of National War Services):: There is no truth in the
report.


WAR RISK INSURANCE
[Stage Direction]
The house proceeded to the consideration of the amendments made by the senate to Bill No. 56-Mr. Usley-to make provision with respect to insurance of property against war risks and the payment of compensation for Avar damages.
Hon. J. L. ILSLEY (Minister of Finance) r Mr. Speaker, the motion I desire to make with regard to this order is this:
That a message be sent to the Senate to acquaint their Honours that this house disagrees with their amendment to section 26 of Bill No. 56, for the following reasons:
Because the said amendment extends the scope of the bill as passed by the House of Commons.
I have an opinion from the Clerk of the House of Commons to the effect that this amendment contravenes constitutional usage and practice in that it extends the scope of Avhat is essentially a money bill. I have here a note of the respects in which it does extend the scope of the bill and in such a way as in all probability to impose an added burden on the taxpayers. But I do not think it necessary for me to give these reasons to the House of Commons. In essence this is a financial scheme by which Ave shall be taking in large sums of money from the public of Canada and under which we shall be paying out large sums of money to those whose property we insure, in the event of that property suffering damage. The alteration of that scheme in an important particular, by greatly expanding the number of companies and altering the character of the companies with which the government has power to enter into agreements, is the alteration of what is essentially and soundly considered a financial bill. For that reason I am moving that this message be sent.
Richard Burpee Hanson: If I interpreted the minister's
remarks correctly, he based his original objection to the Senate amendments on a matter
Succession Duty Act

of principle, namely, that the Senate amendment sought to include within the scope of section 26 such other companies as might satisfy the minister with regard to their financial standing and ability to perform the obligations required of them under such an agreement. He expressly referred to certain provincial companies which, up to the moment at all events, have not yielded to the jurisdiction of the federal authority. That was the basis, as I understood him, upon which he objected to this amendment. Apparently since that time an additional reason has been brought forward, namely, the constitutionality of the amendment proposed by the senate. Of course the government could waive that, if it so desired, by accepting the amendment. I think the minister was on much stronger ground on his first objection. I would prefer to base my opinion on that rather than on the other, although I recognize the validity of much of what he has said.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of Bill No. 123, to amend the Dominion Succession Duty Act.
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Vien in the chair.
On section 1-Definitions.
Richard Burpee Hanson: The minister had previously introduced a bill which received its second reading on July 22. Last evening he withdrew the bill and reintroduced it in its present form. It would assist the committee if the minister would explain what the changes are in the bill as reintroduced. I have just received a copy of the bill and have not had time to read it. Then I assume we shall take it up section by section.


James Lorimer Ilsley: Yes, I can do that. Unfortunately the previous bill was not examined by me in any real sense before it was introduced. I was very busy on the resolutions, and I assumed that the 'bill would follow the *resolutions and that all the real work was done. But when I saw the bill I discovered that there were a number of provisions in it with which I did not agree, and which, as I thought, extended or altered the resolutions.
I have put a lot of work on the bill since, and while I do not expect that it is perfect yet, from my point of view it is much better than it was before.
With regard to section 1, it was designed to provide that grandchildren should not *qualify automatically as children within the

succession duty act, but that there should be a dependency in regard to grandchildren. That should not be the case in regard to children but certainly should be in regard to grandchildren. That is the object of the amendment and is what was designed to be done. But included in the bill as drawn before was the provision that in the province of Quebec the provisions of the paragraph would apply to persons whose support and education had been actually undertaken 'by the deceased, while such person was under the age of twelve years, and any lineal descendant of such person. It was quite obvious that that provision should either be general for all provinces or should not be in the section. I had to decide which of those alternatives was preferable. In our income tax legislation and our succession duty legislation so far we have consistently recognized as children, children by blood or adoption only, and I think it is important to continue that principle. I would not care to depart from it. Therefore I have taken that provision out. The draftsman inserted the provision on the assumption, I believe, that there was no adoption law in the province of Quebec. If there were not, of course some provision would have to be made for that, but it has been brought to my attention that there is an adoption law in the province of Quebec, and if there is such a law there is no justification for making a different provision for one province from that made for another. No difference is made in the Income War Tax Act. The statement in the old explanatory notes that this simply brought the provision into line with those of the Income War Tax Act was a mistake.


Richard Burpee Hanson: Subsection (b) of section 2 of the present act provides that:
"Child" means any child of the deceased including any person lawfully adopted while under the age of twelve years by the deceased as his child and any lineal descendant of any such child, provided that such child was under eighteen years, of age at the date of the death of the deceased or, at the said date, was dependent upon the deceased for support on account of mental or physical infirmity.
That, I think, follows the more or less general rule, although my recollection of the succession duty acts in the provinces is that a grandchild usually stood in the same position as a child, without any limitation, on the theory that being a lineal descendant of the testator he was entitled to some consideration.
Under the present law any grandchild who is under eighteen years of age is considered to be a child, and any grandchild dependent upon the deceased for support on account of

Succession Duty Act
mental or physical infirmity, irrespective of age, is considered to be a child. As I understand it, the effect of the proposal now is to limit very substantially the definition of a child, and practically to cut out the grandchildren altogether, unless perhaps they are legally adopted.


James Lorimer Ilsley: Or dependent.


Richard Burpee Hanson: Or dependent; that is to say a grandchild, even under the age of eighteen, now gets no consideration.


James Lorimer Ilsley: Unless dependent.


Richard Burpee Hanson: Unless
dependent.


James Lorimer Ilsley: Then it does.


Richard Burpee Hanson: The mere fact of being a grandchild is not in itself sufficient to bring about any exemption?


James Lorimer Ilsley: No.


Richard Burpee Hanson: That of course is strictly limiting the class of children. Why did the minister decide to impose that strict limitation? Does he think the nation will lose a great deal of money if this change is not made? What other jurisdiction restricts it so far?


James Lorimer Ilsley: The widow gets an exemption of $5,000 for each child, and I do not think it would be reasonable for a widow who is a grandmother to get an exemption of $5,000 for each of her grandchildren who are not dependent upon her at all.


Richard Burpee Hanson: The minister was of the opposite frame of mind last year.	[DOT]


James Lorimer Ilsley: I do not think we thought of it.


Richard Burpee Hanson: Well, that just shows how hastily this legislation was drawn. The action the minister is now taking lends support to the proposal I advanced last week with respect to the consideration of these taxation proposals by some committee of this house before they are brought do-wn. The care of grandchildren very often devolves upon the grandparents, and I suppose the minister contends that he has dealt with that point under the dependency provision. I have always thought that lineal descendants or progenitors of the testator should be in a privileged position, and we should not be too exacting with them. The answer of the minister is that the $5,000 provision with respect to the grandmother is sufficient. I submit that it is not. I would much prefer to have the original provision adhered to.


[Stage Direction]
Section agreed to.
On section 2-"Dutiable value."
James Lorimer Ilsley: There is no change in this from the first draft. It is an important provision, however.


Richard Burpee Hanson: Was this passed previously?


James Lorimer Ilsley: No, it was not passed, but there is no change from the bill that I introduced previously. This is an important provision, and sections 2 and 4 should be taken, together.


The CHAIRMAN:: Is it the pleasure of the committee that sections 2 and 4 be taken together? Carried.
On section 4-Exemptions to be deducted from dutiable value.


James Lorimer Ilsley: The rates of duty in the-schedule to the act were intended to be based1 on the definition of "dutiable value" as now amended. By reason of the wording of the-original definition, under section 11 of the act widows and dependent children would receive not only the exemptions of $20,000 and $5,000 referred to in section 7 of the act, but an additional $5,000. This was not intended. Furthermore, it was the original intention that the rate which should apply to the portion actually to be taxed should be the rate in the schedule set opposite the figure for the succession before the exemptions were taken off. For example, if a widow receives $24,000, under the present law there would be no tax at all though it was intended that $4,000 would be taxed; that is, that she should have an exemption of only $20,000. Furthermore, the rate which should apply to the $4,000 was to be the rate in the schedule set opposite $24,000, the total succession, rather than the rate set opposite $4,000, the sum remaining after deducting the exemption. The amendment will bring the law into line with the original intention.


Richard Burpee Hanson: If that was the original intention, very inept words were used. I think the original intention was liberal, and this is a narrowing of the position, having regard to the fact that this same money now has to bear a substantial tax by the provincial authorities. The minister, innarrowing the provisions of the statute so as to exact more money, seems to ignore the fact that this money is now being heavily taxed by the province, and in some cases possibly by two provinces, depending upon the character of the property passing. I protest against three imposts of succession duty, two at least, upon the same dollar's worth of property passing. It is confiscation pure and simple, and cannot be justified except on one ground.
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namely the need for money. This is a capital levy, which may be made three times over under the guise of securing revenue for the crown.
What is the effect of all this? Capital values are just tumbling in this country; there is no question about that. Soon there will be nothing to tax. Above all let me point out to the committee that if this thing is carried to the nth degree, what will be left for post-war reconstruction in this country? Has the government given any consideration to that? There must be some nest-egg left for post-war reconstruction. Is the government to do it all, or is private enterprise to do its share? I submit that private enter-arise should not be wiped out. It will be willing to do its share in the reconstruction period if it has anything to work with, but there will be nothing left to work with after we put through legislation of this kind.
Sections 2 and 4 agreed to.
On section 3-Annuities, superannuation, pensions.


Richard Burpee Hanson: The old paragraph (g) of subsection 1 of section 3 provided:
-any annuity or other interest purchased or provided by the deceased, either by himself alone or in concert or by arrangement with any other person, to the extent of the beneficial interest accruing or arising by survivorship or otherwise on the death of the deceased.
That is included in the term "succession" under section 3 (1). According to the marginal note the amendment is intended to clarify the law that superannuation benefits or allowances payable or granted to the relatives of a deceased person are dutiable. The question I want to ask the minister is this. Is there any other jurisdiction in Canada that treats these superannuation benefits as dutiable? I have gone through some of those acts in eastern Canada, but I was not able to cover the whole field. I am told that in only one case, namely the province of Alberta, are these superannuation benefits or .allowances taxed as succession. I am further informed, and a study of the statutes appears [DOT]to bear out the information, that this provision was inserted in the. Ontario act at one time, but that when the position was presented to the treasury officials of the province the section was repealed. I believe it was a very onerous provision. How onerous it was by comparison with this section, I do not know. I am certain that this will come as a great shock to the civil servants. It imperils their position and the position of those who have nothing left to rely upon after they have *completed their service. In certain cases
{Mr. R. B. Hanson.]
which I could instance, it will constitute the taking away of a substantial part of the succession. I have heard of a case where a woman will have nothing for three or four years because her husband's estate consisted largely of superannuation allowance.
Take the case of a civil servant who marries late in life. He may have been in the service, say for forty-five years, and be in receipt of a substantial salary as deputy head of a department. He has several children, and should he die they, along with his widow, would qualify for an allowance. But he has no other estate. I assume the capital value of the superannuation allowance will be estimated on the basis of the widow's expectation of life. If she is only forty years of age, her expectation would be substantial. I do not know what rate of interest will be applied-it used to be 5 per cent in New Brunswick; that was the standard rate, but possibly interest rates have come down-but assuming it is 5, 4, 3 per cent, it will represent a large capital sum. The lower the rate of interest and the greater the expectation of life of the widow, the larger the capital sum. The fact is that this woman would have nothing to live on. She would have to pay not only succession duty but income tax, if I appreciate rightly the other act. She could not possibly get any income from the superannuation fund. Is that British justice for an old public servant. Have I overstated the case? I leave it to hon. members.
This is to be made applicable to civil servants who have been in the service heretofore, who are working under what the minister has termed, in another connection, a contract. I have seen the correspondence between the minister and retired civil servants who have applied for a cost-of-living bonus on their superannuation or retiring allowances. I have not that correspondence here, and I am not *going to go into it. The minister took a most decided position in that matter. He contended in his letter that they were not entitled to a bonus because they were being paid under a contract which they had entered into, which contract was still in effect and which was being carried out by the government. It does not automatically follow from that statement that superannuated civil servants are not entitled to a cost-of-living bonus. At the moment I am not arguing any case for them. I am merely showing the position the minister took in that regard. I am applying it to this case.
I submit that this provision to capitalize the superannuation allowance of a widow and children of a civil servant should not apply to those who entered the service previously. Furthermore, this superannuation allowance is to be taxed not only for succession duty purposes

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under this law, but as income for the duration of the recipient's life. Is that fair? Have I made myself clear? I should like to hear the opinion of hon. members. Did the minister' consider the effect this provision would have upon the present civil service? I would not object so much if it applied only to those who enter the service hereafter, because they would know what to expect. It would be part oi their contract. But I submit it must come as a great shock to these people, some of whom have been in the service for many years, working under what they considered to be a contract, to find now that that contract is being varied by law.
There is a substantial amount of injustice being done by the inclusion of these people in these provisions. The minister is carrying his desire to get revenue away beyond the financial structure that has been deliberately set up by the nation for the benefit of the servants of the nation. I suggest there will be tremendous difficulty on the part of dependents of civil servants who have looked forward to this as their only source of revenue in the future. The future of their children is gone. As I am reminded, the killing thing about this taxation is the pace of the taxation, not so much the rate itself. This thing is being put on the civil service of this country without any notice, and the effect upon their morale, upon their future, upon the future of their families, is just killing.
I do not think that I should argue this any further. I have made my objection as logically as I know how. Perhaps I have used strong terms, but this is a distinct breach of contract with civil servants who have worked for years and who have been induced to stay in the service by the security offered. Many of them have stayed in the service at lower rates of salary than they could have obtained in private enterprise or across the line. In the days before the war we lost many of our best civil servants because we were not paying them adequately; we did not pay them in proportion to the service they rendered or the compensation they could have received in private employment. I think we will all admit that. As I say, we induced them to stay in the public service because of the security it offered, but that security is now being impaired and imperilled. I do not think this is proper legislation.


James Lorimer Ilsley: I cannot admit the principle that wre are prevented by contract from taxing the employees of the government. The hon. gentleman's argument would apply to the income tax just as directly as it would to the succession duty, and it would apply to judges and public servants of that kind and to members of parliament. It would never do to exempt from our taxation statutes the employees of the government. When Lord Bennett was Prime Minister of Canada he introduced a measure to cut the salaries of civil servants by 10 per cent. He did not find any difficulty in doing that, although the agreement was, I assume, to pay them 100 per cent instead of 90 per cent. He thought he should not do it in connection with judges.


Richard Burpee Hanson: He changed his mind, did he not?


James Lorimer Ilsley: He stuck to his position, but he switched to a tax of 10 per cent on judges' salaries. He recognized, and if I remember correctly he expressly recognized, the validity of the position that parliament may tax anybody at any time regardless of any contract which the crown may have with the person taxed. Civil servants cannot come in and say, "I have an agreement with the crown which gives me so much money and therefore the tax cannot be levied on that because it would leave me with less money." That would be setting employees of the government in a privileged class. I have received representations from the Professional Institute of the Civil Service and I have replied that apart from the rights of the matter altogether, we should be very careful not to treat persons connected with the government in a better way than we treat the rest of the people of the country. If we do, the charge will be made that civil servants are drawing up statutes in their own favour. I remember a remark which the member for Vancouver East made in another debate, referring to the salary-ceiling order. He said that there were all kinds of loopholes in that order, and why? Because it was drawn up by the salaried class who were in sympathy with the salaried class.


Richard Burpee Hanson: I am not making that suggestion.


James Lorimer Ilsley: No; the hon. gentleman does not, because here it is obvious that is not so. Here the justice is recognized of treating civil servants the same as other classes. I do not see how we could defend taxing annuities and pensions which are payable by private employers if we let off those in receipt of superannuation. I do not think we could defend it.	*


Richard Burpee Hanson: You did it last year. That is the answer.


James Lorimer Ilsley: Not knowingly. We thought we had covered it, but apparently it did not, or at least there is some opinion that it does not.	.
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The hon. gentleman asks about the provinces. My information is that the amount received in the way of superannuation benefits in the provinces is taxable under the succession duty acts of every province except Ontario. I may be wrong about that, but that is the information I get.


Richard Burpee Hanson: I do not think it is correct.


James Lorimer Ilsley: And it was taxahle in Ontario until 1937, when an amendment was passed which exempted civil servants of Ontario and employees of municipal, provincial and dominion governments from the succession duties payable to the province. But why, I do not know. I do not know whether there were some particularly cogent reasons in that case, but from what I know of that amendment, I disagree with it. I do not see how it can be defended.


Mr. HARRIS (Danforth):: Mr. Chairman, I appreciate the remarks of the minister, and any remarks I make I hope will be of a constructive nature and not construed as of a kind that would bring less revenue into the treasury. Undoubtedly succession duties and income tax have now reached the point where it is a conscription of wealth. The steady increase in taxation in these two forms in the last few years has reached the point where it is beyond the income received not only by civil service annuitants but other annuitants to pay the taxes levied. I am in accord with what the leader of the opposition had to say on that, and I think the minister realizes the position these people are in.
I am going to suggest that the Minister of Finance and those charged with the administration of succession duties in the provinces should have a conference to see what they could do about this problem. I would like to see them come out honestly and flat-footedly and say: So far as estates are concerned, we will conscript, leaving the dependents on those estates, particularly widows and children, in a position where they can at least live and have some little income left, that their entire income will not be taxed for the first four years after the decease of the person whose estate is being distributed. My understanding is that we do not follow the practice in England, where they have an inheritance tax and an estate tax. I suggest that when this matter is reviewed, we have on the one hand an estate tax, and separate that from the inheritance tax.
The last time we discussed this matter I put on the record the case of a widow left an income of $10,000 a year. Although it looked as though there might be some fallacy

in the case I presented at that time, I have been able to find no fallacy in it. It was the case of a widow left an income of $10,000 a year, who for the first four years after succession duties and income taxes had been paid, amounting to $10,102, found herself with absolutely nothing to live on.
Take the case of a person once removed from direct lineage with the deceased, say a niece. In that case the succession duties are higher in the province and higher under the Dominion Succession Duty Act, which follows along provincial lines. A niece, aged thirty-five, receiving an annuity of $3,000 a year, must pay income tax on that amounting to $1,335. The next tax is the dominion succession duty. The annuity capitalizes at $54,307; the succession duty is $5,050, and in Ontario, the annuity being capitalized at $47,646, a succession duty of $9,116 must be paid. That is a total of $14,166 in succession duties, spread over a four-year period, or an annual tax of $3,541, while the annuity she receives is $3,000 per year. Add to that $3,541, the income tax, amounting to $1,335, and you have a total of $4,876 which she must pay for the first four years in order that she might be for life the annual recipient of the $3,000.
On the other hand, if the estate tax were placed definitely against the estate, you would conscript the wealth that is in that estate to the extent that the taxation will bear heavily upon those who are receiving annuities or incomes from that estate. Let us be honest and say that we are conscripting wealth, so far as that goes, and then those who are left to pay the taxes will have some little income left.
Let me put on the record another case. A niece receives an annuity from two uncles, and perhaps in the same amount, say an annuity of $5,000 from Uncle Tom and an annuity of $5,000 from Uncle Bill. The $5,000 would be capitalized in order to arrive at the capital value of Uncle Bill's estate and would 'be assessed for succession duties. The annuity would also be capitalized in respect of Uncle Tom's estate and an assessment would be made. Uncle Bill's estate, we will say, is worth twice what Uncle Tom's estate is worth, and therefore the rate of succession duty in the case of Uncle Bill is much higher on the capital sum which is providing the annuity for the niece than the rate on the capital sum of Uncle Tom, whose estate is worth only half the amount of Uncle Bill's with the result that the niece finds herself paying different amounts of taxation for different annuities of the same amount. In normal times I strongly favour the principle of

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carefully avoiding any dissipation of the capital sum of an estate, but having regard to the nature of present-day taxation, the estate portion should be conscripted to pay its full portion so far as the estate tax itself is concerned, and let the recipient of the annuity pay inheritance tax. That is just a constructive suggestion.
I have given the case as I understand it of a relative once removed. Now consider the position of an individual who is no blood relation at all. For example, it may be that the head of your organization, or some assistant, has served faithfully for many years, and you wish to provide an annuity for him, in the distribution of your estate, which he may enjoy for the rest of his life. In that case, as the beneficiary is not a blood relation, the amount of the annuity would be capitalized and taxed against the estate. Here is one case affecting a secretary who at the age of forty-five receives an annuity of $2,000 a year. This person is still working, earning $50 a week or $2,500 a year. The first taxation is the normal tax on an income of $2,500; in the case of a lady secretary the amount would be $1,090. Including the tax on the increased income, totalling $4,500, the income tax would be $2,155. The increased income tax by reason of the annuity of $2,000 is $1,065. That is to say, in order to receive the annuity of $2,000 from the employer who is deceased, the individual pays $1,065 more than she would have paid had she not received the annuity.
In the case of the person who is no relation of the deceased, the annuity of $2,000 is capitalized at $31,365. The succession duty on that amount is $3,465. The Ontario succession duty, capitalized on $28,976, is $12,664. In other words, the total succession duty on that portion of the estate which is lifted out from the capital sum of the estate to provide an annuity of $2,000 amounts over a four-year period to $16,129. One-quarter of that, or the annual payment for each of the four years, is $4,032. The increased income tax resulting from the receipt of that $2,000 is $1,065, with the net result that the individual, in order to accept a $2,000 annuity for the balance of her life, as from the age of forty-five, has to make four annual payments of $5,097, because she receives a salary of $2,500 and an annuity of $2,000. Of course that is just for the first four years, after which there is no more succession duty.
To my mind this constitutes a real hardship. It is on a parity with other cases which I have recited to-day and previously. Some method should be devised-and I can well visualize that it would cover the point raised
by the leader of the opposition-of revamping the entire act in such a way that an estate tax would be considered separately from an inheritance tax, the whole matter to be worked out in conjunction with the provinces. With some arrangement of that kind, I would be in accord with heavy taxation during these difficult times. I say again that this is conscription of wealth. If there is wealth in estates and Canada needs the money, let us go and get it from these estates. It seems to me that often the beneficiaries would be better off if they received somewhat less from estates, especially those in the higher categories. I am not socialistic in this at all, but I want to be sensible about it and assist the minister in some way to avoid the hardship on four classes of people: those who find themselves left in sole charge of estates, blood relations who receive annuities, those once removed in relationship who receive annuities, and faithful servants or others who for some cause are the recipients of annuities.
I am satisfied that, with the powers conferred on the government and the Minister of Finance at this time, something more equitable could be worked out.


Richard Burpee Hanson: I should like to make it clear that I have never argued against the principle of civil servants paying income tax. That is based on an entirely different principle from the principle in this act. Civil servants are in receipt of incomes or profits, and they should be liable to taxation just as any other subject of his majesty. I do not understand that anyone has ever taken the attitude that they should not pay income tax, nor do I believe that they have taken that attitude themselves. They are willing to share the burden. But they are apprehensive as to the security of those who come after them, and, on the basis of the case I have mentioned, they feel that their dependents, wives and' young children, who have looked all these years on these funds as their security, are going to find themselves in necessitous circumstances and without decent provision for their maintenance, and certainly without very much provision for education. I therefore ask the minister to review this situation. There is a distinction between different classes in the civil service: those who come under one category, and those who come under another category after the act of 1924 was passed. I just do not appreciate what it is: the minister and his officers will know it better than I do. Those in these categories feel that this is a very strong discrimination against them. I am not going to labour the point further. I have a number of other points
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which I could urge but I have tried as succinctly as possible to state the main objections to this provision.


Mr. JACKMAN:: Any point I wish to
make on this is because of the two factors of succession duties coupled with income tax on the repayment of the principal sum during the lifetime of the annuitant. I should not object particularly to the capitalization of annuity or superannuation payment because I believe it is a form of wealth which should be capitalized, the same as any other body of assets. But when that fund is distributed throughout the life of the annuitant and the whole amount is taxable as income, and now in higher brackets each succeeding year, some consideration should be given to that fact either in the income tax brackets or under the succession duty provisions. I should like to ask the minister whether any cases have been formulated or any hypothesis made up showing the effect, from the point of view of taxation, on a person who is left a capital sum represented by an annuity and the person receiving the amount of the annuity which is the basis of that capital sum. It seems to me that a person would be much better off to have the capital sum and use the interest or income derived from that sum, and then draw on capital, which would be tax free, to make up any difference between the annuity amount and the interest on the capital sum, and the process would result in the capital sum being reduced somewhat when that person passed on. But there would still be something left-I am certain the tables would indicate that-and there would be a great saving in taxation to the beneficiary during his or her life, by reason of the fact that part of the money w'hich he or she spent to live on would be capital and therefore tax free. The administration here is surely putting a double tax, one in the form of succession duties, and the other in the form of a tax on capital repayments, under the guise of income, on annuitants and people who benefit under superannuation contracts. The whole status of annuity payments should be considered by the income tax department in order that all our people may be treated fairly. But if we cannot rectify that just now, the minister should give every consideration to throwing the weight, in order to get a more equitable balance, a little more in favour of the annuitant or the person benefiting under a superannuation contract when it comes to succession duties.


James Lorimer Ilsley: Of course, the person who
gets an annuity gets a larger succession than

a person who gets interest on a capital bequest, and therefore he should pay a higher succession duty.


Harry Rutherford Jackman: I do not agree with the minister. It is true that the person receiving an annuity does get a higher current income, all of which is taxable, than the person who has a capital sum represented by the capitalization of an annuity. But that is no reason why the former should pay higher succession duties.


James Lorimer Ilsley: Yes; someone else is paying succession duty too on the capital sum that is left to trustees in trust to pay the widow interest throughout, and at her death to pay the principal to her children, and in that case the widow merely gets a life interest and the remainder man pays succession duty on the principal. .


Mr. WOOD:: I am a layman so far as finance is concerned, but I find myself in harmony with my friends in the opposition in regard to this question. I have taken considerable interest in government annuities and any social security plan that has been mooted, and I am inclined to think that the government would be wise to give some consideration to the encouragement of these forms of social security, of thrift and of saving even to the extent that they might err in charity from the point of view of taxation. As the member for Rosedale (Mr. Jackman) has pointed out, it is extremely unfair to tax annuities. After all, the income from an annuity is partly capital, and you are not taxing income only but capital as well. It seems to me that it is a determined effort to destroy the capital wealth of the country. So far as government superannuation or even company superannuation funds are concerned, we are somewhat in the same position as we argued a year ago with reference to the withholding tax, which was considered a breach of contract when Canadian government bonds were taxed in foreign countries. It was then considered a breach of contract in extending that withholding tax to them. I suggest that we have a parallel case here. If you are going to take a man's savings in his superannuation fund and say to him, "We will take 5 per cent of your savings for your own social security," and then decide to take some of that away from him, there is a strong argument as to breach of contract. It is a parallel to the case of the withholding tax last year and the argument that was advanced with reference to Canadian government bonds as they were taxed in foreign countries. In view of our standard of living and the high taxation to which we are now subject, it will

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henceforth be difficult to create estates, so that it will be necessary for us to set aside a certain portion of our income each year in a social security plan of some kind, such as government annuities, and I am. of the opinion that the time is coming when it will be extended.
I have never had a great deal of faith in the new order which, some people tell us, will, when it comes, take the struggle out of existence. But there are certain things which I believe it will be necessary for the government to do. It will be necessary for them to set aside some machinery by which it will be possible to have compulsory savings. The initiative has been taken in superannuation funds, government annuities and many other schemes, and we ought not to kill the attempt immediately, or even while this war is on, in our desire to have money to pay for the war. The object is an excellent one but I suggest that we should nurse this particular form of security and saving. I am afraid however that in our desire to pay for the war at the present time there is a danger of killing the very thing which in my opinion we must prepare for in the very near future. If the disaster should overtake this dominion, of our radical-minded friends in the far corner attaining the seats of the mighty, I say to the government: You would be giving them a wonderful opportunity to say that you started this. I have listened to their arguments many times, and it seems to me that in their opinion if a man is frugal enough to save by sacrifice and has created an estate which he can reinvest and thus develop the country and provide employment for men, he is not regarded as having a very high status. I am afraid that some time they will be throwing that back to us. Of course I hope that disaster will never come upon us; nevertheless there is always the danger of people liking to try something once. The public mind might be taken unawares, and with the risk of that condition of affairs existing I think we should be very cautious not to open the gate or to destroy thrift or private enterprise.


Harry Rutherford Jackman: I suggested to the minister that a widow would be better off with the capital sum rather than with the annuity which that sum would represent. He answered by saying that the widow had a life interest, and the sum would be taxable in the hands of the remainder man. That is a valid contention to allege against my original proposition, but I do not think it would hold as well where the widow had power to encroach on the capital and therefore carry out my original suggestion that the widow have some income from the
capital sum and be able to live partly on capital to equal the amount of the annuity.
I do not think the minister's contention is valid at all where there is an outright gift of the estate to the widow. Has any hypothetical case been worked out by the minister's officials showing whether it would be more worth while to a testator to leave a sum outright than to leave it in the form of an annuity or build up a superannuation fund during his lifetime? Without having worked it out, I feel that the person who gets the annuity is in a much worse position, perhaps even apart from the fact that the annuity is wholly taxable each year whereas if she were living partly on her principal she would be paying tax on perhaps only half the amount she would have to live on.
The minister will realize the difficulty which private members have in coming to conclusions on these amendments, some of which we have never seen before. While I do not wish to labour the point of adopting a committee system, it is most difficult for us .to be of any value or to perform the service for which we are sent here if we are to have amendments flashed upon us almost at the last moment without any opportunity to give them the consideration they deserve. A question like this requires mathematical calculations and the use of tables which would take at least a morning if not a whole day. I can only say that as long as the minister refuses to adopt the committee system rather than bringing down his budget at the last moment and insisting on the adoption of the budget as a whole without amendments, we have a system which calls for improvement. The minister has asked what is wrong with parliament. He realizes that something is wrong. My contention is that he makes it absolutely impossible for private members to be of any assistance to him or to bring to bear upon the matters to be considered any background of knowledge that they have of the conditions of our people, so that his department may make use of it. He is in effect substituting bureaucracy for democracy.


James Lorimer Ilsley: I do not think my answer to the hon. gentleman a while ago was quite apropos. 1 see now that the alternative to which he wishes me to address my mind is the question which is the most advantageous- the bequest of a capital sum, or the bequest of an annuity the value of which is that same capital sum. So far as succession duty is concerned there would be no advantage one way or the other. But so far as income tax is concerned there is an advantage, I presume, in getting the capital sum.
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Harry Rutherford Jackman: The two are inseparable. In order to balance the sections I believe that the minister in imposing this new taxation or succession duty should endeavour to rectify a condition which bears unduly on a particular class in the community.


Mr. McCUAIG:: A few days ago the hon. member for Danforth (Mr. Harris) was discussing this question, and he was followed to-day by the hon. member for Rosedale (Mr. Jackman). I have rather felt that there is a certain amount of injustice to the person receiving an annuity. He is taxed for income on money that he does not receive. If I am an executor of an estate and the beneficiary is entitled to the revenue from certain buildings, before paying over the rent I deduct taxes, insurance, repairs, et cetera, and give to the beneficiary the residue. That beneficiary then pays income tax only on that residue. Whereas when you come to annuities the executor deducts from the payment going to the beneficiary the succession duty which he has to pay, and then the beneficiary has to pay income tax, not on the amount which he receives but on the total amount plus succession duty. In other words the beneficiary is paying income tax on the succession duty which is paid by the executors of the estate. It seems to me the beneficiary should be charged income only on the net amount received after the deduction of the succession duty.


James Lorimer Ilsley: No doubt the hon. gentleman has given this more thought than I have. But in the case of the real estate the value is determined by the net rentals, I suppose, and the succession duty is leviable upon that value. In the case of the annuity the value is determined by the amount of the annual payments, which are comparable to the net rentals. I am unable to see why the two situations are not comparable. Where is there any injustice? How does the subtraction of repairs, taxes and insurance have anything to do with it? Because in arriving at the value of the real estate one merely takes the net rentals into account, and in the other case the annuities are annual payments comparable to the net rentals, and the capital value is taxed. Is not that exactly the same basis?


Duncan Fletcher McCuaig: In the one case the beneficiary, who has received the money, looks at his bank account at the end of the year and finds that he has received say 13,000 from the executor. In making out his income tax he puts that in.	In the other case the
executor has retained probably $1,500 for succession duty and he pays over to the beneficiary only $1,500 instead of $3,000 as [Mr. Hsley.l
provided in the will. But the beneficiary at the end of the year, when making out his income tax, has to show an income of $3,000 when he received only $1,500.


James Lorimer Ilsley: In the first case, that of the devise of the real estate, to whom does the real estate eventually go? To the life tenant? No; to a remainder man. Therefore the succession duty payable by the life tenant should be less than the succession duty payable by an annuitant who gets everything, principal and interest. There is no corpus left to go to anyone else; therefore the succession duty should be greater. That is the case that I thought the hon. member for Rosedale was putting to me a while ago, although he was putting it a little differently. One cannot compare the case of a devise of real estate to a tenant for life and upon the death of the tenant to a remainder man, with the provision of an annuity which ceases with the death. If the amounts are equal to begin with, the succession duty payable should be smaller in the case of the person who gets a life tenancy, because more succession duty will be coming from the remainder man.


Harry Rutherford Jackman: Will the minister agree that the whole position with regard to annuities and superannuation payments, because of the two taxes, the income tax and the succession duty, while perhaps not in a muddle because it is clear enough where the incidence of the tax falls, does bear heavily, and that the whole matter should be reviewed?


James Lorimer Ilsley: There is only one possible anomaly in the English rule, which we have adopted here, and that is that annuities are not split into capital payments and interest payments. It is arguable that this is anomalous. It is arguable that when a person dies and leaves an annuity to be paid year by year, part of that annuity should be regarded as interest and part as principal, and that only the part regarded as interest should be taxed. That is not the case under the English decisions, nor is it the rule in Canada, and it is arguable that this is unjust and anomalous. The question has been considered time after time, and it has been discussed in this house, but that is the only feature of the situation that appears to me as being even arguably anomalous.


Harry Rutherford Jackman: Well, that is the chief point, the return of capital in the form of income, which is taxed at very high rates.


Mr. ABBOTT:: The chief difficulty is that which was raised by the hon. member for Rosedale, that we are putting the man who

Succession Duty Act
leaves an annuity to his wife and children at a disadvantage as compared with the man who estimates what they will need and leaves them, say $25,000 or $30,000 outright. It is true that in leaving them an annuity he probably does so in order to guard against the possibility that they may waste or dissipate the capital, and he is protecting them to that extent. On the other hand, if he has confidence in them and leaves the capital sum, as the hon. member for Rosedale suggests, they can use the interest on that sum, and that is the only portion which would be taxable for income tax purposes. Then they could draw on the capital for further requirements, so that they are definitely in a more advantageous position. In my province at any rate it is open to a man to leave $50,000 in trust to his executors, with instructions to pay the revenue to his wife or children, with the discretion to the executors to make capital payments in case of need. I never thought capital payments of that kind would be taxable. It seems to me that if we definitely adopt this policy of taxing annuities for succession duty purposes, including government annuities or annuities created under wills, we shall deter testators from leaving bequests in that form, and encourage the leaving of capital bequests, either with some string attached such as I have mentioned, or outright, and I have some doubt whether that is entirely desirable, particularly in the case of small estates. I think the suggestion of the hon. member for Rosedale is a good one, that consideration be given in preparing succession duty legislation to the point that under the new rule which we adopted last year annuity payments should be taken to include the return of capital, because under the income tax rates in force this year, which probably will be increased another year, the tax is very substantial, so that in effect you are taxing capital in two places. Some consideration should be given to what I feel is an anomaly.
Mr. ILSLEY": I ffeel that this is an income tax question, not a succession duty question.


Harry Rutherford Jackman: I hope the minister will not feel that it is a succession duty question when we come to the income tax provision.


James Lorimer Ilsley: I have said what is our policy so far as income tax is concerned. Consideration can be given to changing that policy, but that has been our policy heretofore, and it has been considered repeatedly.


Harry Rutherford Jackman: So long as we get fair treatment for the people, that is all we ask; but consideration should be given to it at some time, and I hope it will be in connection with the income tax act.


Joseph Henry Harris: With regard to the actual payments themselves, section 27 provides that they shall be made within six months, but it also provides that the minister shall have some discretion. I should like to place on record this observation, which I do not think the minister will deny, that the exercise of this discretion by the minister in this very difficult problem is something which has the full endorsation of the Canadian House of Commons. And while I am on my feet I reiterate that the people of Canada who made their wills ten years or more ago, long before this heavy taxation system came into effect, had better review the position with regard to their estates.


James Lorimer Ilsley: I agree.


[Stage Direction]
Section agreed to.
On section 5-Charitable gifts.
Harry Rutherford Jackman: When this section was
drafted originally, owing to inadvertence or to the fact that the committee last year did not embody its intentions in the legislation, the minister suggested that he would give consideration to making it retroactive.


James Lorimer Ilsley: It is retroactive.


[Stage Direction]
Section agreed to.
Section 6 agreed to.
On section 7-Residential property of foreign officials.
James Lorimer Ilsley: It may be that I shall have to propose an amendment in line 37 of this section. I should like to have it stand until after one o'clock.
Section stands.
Sections 8 and 9 agreed to.
On section 10-Insurance and benevolent and friendly society and superannuation payments to $1,500 payable without consent.


Richard Burpee Hanson: Would the minister outline the change in this section?


James Lorimer Ilsley: Important changes have
been made, though the amounts are small. The present section provides that any insurance company may pay up to $1,500 without the consent of the. minister. It also provides that so far as joint bank accounts are con-erned, any branch of a bank may pay the survivor one-half of the account or $500, whichever is the lesser, without the, consent of the minister. Those were the only two provisions. This section gives more freedom. With regard to life insurance companies the provision is the same.
Succession Duty Act


Richard Burpee Hanson: It includes "property" here, as a generic term.


James Lorimer Ilsley: That is true, but that includes life insurance; so that the provision with regard to life insurance has not been changed. That same privilege of paying up to $1,500 has been extended to benevolent and friendly societies, under section 2 (b). This also has been extended to the trustees of superannuation and pension funds, so there is not much change there; it is just an extension of the old life insurance principle to two other classes of institutions. The next section makes another extension. This does not deal with joint accounts, nor is it confined to joint accounts; it provides that any branch of a bank may pay out up to $500 without the consent of the minister.


Richard Burpee Hanson: I think the amount is too small. It is not to be supposed that there will be both life insurance or superannuation benefits and bank accounts. In most cases people do not have superannuation, but most people who have any property have bank accounts. I think $1,000 should be the minimum from a bank account.


James Lorimer Ilsley: It must be noted that quite a wide latitude is being given the bank. If a person had three accounts, and $1,000 could be withdrawn from each one, it would mean
that a total of $3,000 could be paid out without the consent of the minister.


Richard Burpee Hanson: Even that would not be a violation of any principle. The estate would still be liable, the people who got the money would still be liable, and certain estates might need $3,000. I mentioned $1,000 because I was afraid to ask for any more. I doubt very much if many people carry three or four bank accounts. Most of us are satisfied if we have one, and probably that has an overdraft.


James Lorimer Ilsley: There is not much inconvenience in getting the consent of the minister.


Richard Burpee Hanson: It will not be as easy to get the consent of the minister as it is to get the consent of the provincial treasurers with whom one is in closer touch.
At one o'clock the committee took recess.
The committee resumed at three o'clock.


Thomas Vien: Section 7 was allowed to stand this morning.


Richard Burpee Hanson: What was the difficulty?


James Lorimer Ilsley: The difficulty was with the words "which was an ally of His Majesty" in lines 36 and 37, in that no period is fixed at which the country must be an ally of His Majesty. It is proposed to amend section 7 by adding in line 37, after the words "His Majesty," the following words, "at the time of such war service."


Mr. GIBSON:: I move accordingly, Mr. Chairman.


Richard Burpee Hanson: Then the reference is not to the present war?


James Lorimer Ilsley: It may be the present war or the last war.


Richard Burpee Hanson: Or any
other war?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: I think that is all right.


[Stage Direction]
Amendment agreed to.
Richard Burpee Hanson: Section 9 was passed, but we went over it very hurriedly, and I wanted to ask one question. The explanatory note on subsection 4 of section 9 says that this subsection enables a caution to be registered to protect the lien. Does that mean what we call a caveat?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: I have never heard the term "caution" used in matters of this sort.


James Lorimer Ilsley: It is an Ontario term.


Richard Burpee Hanson: Does that give it any better endorsation?
On section 10-Insurance and benevolent and friendly society and superannuation payments to $1,500 payable without consent.


Harry Rutherford Jackman: Is the drafting of this clause adequate to carry out the intention of the minister, that if there is more than one bank account or insurance policy a minimum amount may be drawn from each? There is a difference of wording between the original drafting and the present one. It seems to me on reading it, perhaps rather hurriedly, that it might be open to the suggestion that any insurance company or branch of a bank which advanced the minimum amount of money would have to check with the others. I know the intention; it is just a question of the draftsmanship.


James Lorimer Ilsley: 
Richard Burpee Hanson: That is the intention all right.


[Stage Direction]
Section agreed to.
Section 11 agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of Bill No. 122, to amend the Excess Profits Tax Act, 1940.
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Vien in the chair.
On section 1-"Profits" in the case of a corporation.
Richard Burpee Hanson: What is meant by the explanatory note with respect to the phrase "constructive dividends"? Just what is a constructive dividend? My hon. friend suggests I should further ask if a man or a company could operate on constructive dividends. What are they?


James Lorimer Ilsley: The proviso provides-[DOT]
that standard profits shall not include for the purposes of this act property in any form received by a taxpayer deemed to be the payment of a dividend under section nineteen of the Income War Tax Act.


Richard Burpee Hanson: What is that?


James Lorimer Ilsley: Section 19 is an important and far-reaching section of the Income War Tax Act. In my own words I would say that it relates to the distribution of earned surpluses. Section 19 provides:
On the winding-up, discontinuance or reorganization of the business of any incorporated company, the distribution in any form of the property of the company shall be deemed to be the payment of a dividend to the extent that the company has on hand undistributed income.


Richard Burpee Hanson: That has been the law for some time.


James Lorimer Ilsley: Yes. I think that the term used currently is "earned surpluses".


Richard Burpee Hanson: Earned
undistributed surpluses.


James Lorimer Ilsley: Yes. It is "undistributed income" in the act, but in ordinary parlance it is referred to as earned surplus. This
proviso makes it clear that if there was a distribution of earned surplus in the base period, that distribution of earned surplus to a company shall not be taken into account in estimating its standard profits.


Richard Burpee Hanson: So that they could not build up their standard profits by taking that into account?


James Lorimer Ilsley: Yes. It might be, just by accident, that a company would have so high a standard profit, by reason of the distribution of the earned surplus between 1936 and 1939, that they would never have any excess profits at all as long as the excess profits tax is in existence.


Richard Burpee Hanson: That is conceivable, but improbable.


James Lorimer Ilsley: Oh, no. Most amazing things happen in this connection. There is a companion provision in this act somewhere which deals with the question of undistributed surpluses in the taxation year. There again, if a distribution takes place in the taxation year of a heavy earned surplus, the company might be pushed right into the 100 per cent class to a very large extent; it might find a very large sum of money being subject to the 100 per cent profits tax, and that would be equally unfair. So that there are other sections in this act which provide that the 100 per cent rate shall not apply to the distribution of this earned surplus in the taxation year, but the 40 per cent rate does, and the 100 per cent rate may in certain circumstances apply-that is when there is a distribution as between closely held companies. It is a complicated matter. I remember one particular instance where there was the distribution of the earned surplus in the taxation year, and we had quite a time about the thing. I think some settlement was made. But if it is all one happy family, so to speak,, the distribution in the taxation year is subject to taxation at the 100 per cent rate. All that is provided for in the old act. That was fought out and adopted in the house here last year.


Richard Burpee Hanson: This of course is to prevent-shall I say-shuffling of the assets as between closely interrelated companies?


James Lorimer Ilsley: The provision was made a year ago, and that is not changed, except that the 100 per cent rate applies now instead of 75 per cent.


John George Diefenbaker: Does the Excess-Profits Tax Act apply to the elementary flying training schools operating under the
Excess Profits Tax Act

Department of National Defence for Air. I should like an answer, because the opportunity-will not come elsewhere to reply to this *question.


James Lorimer Ilsley: Yes, it does.


John George Diefenbaker: At the present time there are a number of elementary flying training schools all over the dominion which are financed by the people locally. Many of them are sponsored by the local flying clubs. Many of them are operating on the basis that those who advanced the money in order to finance these schools receive a return of 5 per cent; over and above that, any surplus or profit which is made remains with the operating company until the conclusion of hostilities, when the profits then on hand will be turned *over to the sponsoring flying club. There are [DOT]exceptions to that arrangement; all the schools .are not in that position. For instance, there is one operating in this province at the city *of Windsor, and I mention that so that no one will misunderstand and assume that I have it in mind. In that city a number of patriotic citizens came together and raised the necessary .money, $35,000, without desiring and unwilling to accept any profit to themselves or any interest rate or other financial return, but merely for the purpose of patriotically assisting as best they could. Many of the other flying schools allow a 5 per cent interest rate, which, too, is fair. What I have in mind is this-


Mr. MARTIN:: The hon. member might add that Windsor not only provided for the oper-[DOT]ating expenses but took care of a tremendous liability which was in existence.


John George Diefenbaker: Yes. When the hon. member mentions that, may I say I paid my tribute to the patriotic citizens of Windsor, in operating that school, as an example of men who put up a large sum of money without the promise of any return, and have refused to accept any profit or return, therefor.


Mr. GOLDING:: And St. Catharines, too.


John George Diefenbaker: 
James Lorimer Ilsley: Yes. If they are profits of the operating company they are subject to excess profits tax.


John George Diefenbaker: The operating company is sponsored by the flying club. Does the minister say that from the beginning of operations of all these elementary flying schools sponsored by flying clubs-and not as at Windsor-excess profits tax has been levied and collected?


James Lorimer Ilsley: I do not know whether the standard profits have been ascertained. It may be difficult to ascertain standard profits.


Richard Burpee Hanson: They are new companies.


James Lorimer Ilsley: The board of referees has the power to fix fair standard profits in the case of new companies, and any excess over that would be subject to excess profits tax. The total profits would be subject to the minimum excess profits tax, 40 per cent in any event, and 75 per cent or 100 per cent on any excess over standard profits.


John George Diefenbaker: I should like the minister to look into this matter, because the operators of some of these elementary schools are piling up tremendous surpluses. I do not know what the position of affairs is now, but I do know that prior to August, 1941, the excess profits tax was not being applied. The result is that there are a few flying clubs in Canada which have to their credit tremendous surpluses which after the war will be used by the sponsoring clubs. While every consideration should be given to flying clubs to have money available when the war is over for the furthering of aviation, certainly the excess profits tax should be applied.


James Lorimer Ilsley: I am very much obliged to the hon. gentleman for bringing that class of company to my attention, and in turn I will bring them to the attention of the Minister of National Revenue. But it may be that these companies have paid 30 per cent or 40 per cent. It was 40 per cent this last year. I am sure they must have done that. That is the minimum. A great many companies have paid on that basis and are awaiting the determination of their standard profits so that they will know whether any more is payable or not and how much.


Mr. HANSON (York-Sunbuiy):: I think that is true.


Harry Rutherford Jackman: Do I understand that in section 1 the principle is entirely contrary to the ordinary principle that dividends from one Canadian corporation to another Canadian corporation are free of tax? This refers to the winding up of a company, and I may give

Excess Profits Tax Act
a case to the minister, so that he can tell me whether I am thinking along the right lines. If a corporation has a subsidiary which has an earned surplus and the subsidiary is wound up, on the transference of funds to the parent company, which would include the earned surplus, is that earned surplus taxable to the parent company?


James Lorimer Ilsley: There is an apparent anomaly there, and the reason is that the money that moved from the subsidiary to the parent never appears as income of the individual. There is an anomaly, but it is only apparent. In the case of payment of dividend by the subsidiary to the parent, the payment to the parent comes out again as dividend to the shareholder in the parent and is taxable in the hands of the individual.


Richard Burpee Hanson: When it comes out.


James Lorimer Ilsley: Yes, when it comes out. But in the case of an earned surplus moving from the subsidiary to the parent on winding up, it is an addition to the capital of the parent and never goes to the individual in the shape of taxable income.


Harry Rutherford Jackman: It does not go through the earnings account of the parent? The earned surplus from the subsidiary, on winding up, does not go through the earnings account of the parent company. Is that it?


James Lorimer Ilsley: Yes.


Harry Rutherford Jackman: If that is so, I see no objection to it.


Joseph Henry Harris: The parent company would not be permitted to distribute its surplus capital without paying taxation.


James Lorimer Ilsley: Yes; it can distribute capital without taxation.


Joseph Henry Harris: If it is earned
surplus and is transferred to the parent company?


James Lorimer Ilsley: This is not earned surplus; it is an addition to the capital of the company.


Joseph Henry Harris: It is earned surplus in the hands of the subsidiary company and goes into the capital account of the parent company.


James Lorimer Ilsley: Yes.


Joseph Henry Harris: It is in the capital account of the parent company, and if the parent company wanted to distribute their excess capital-


Richard Burpee Hanson: May I see if I can understand it. A parent company has a wholly-owned subsidiary company which -egularly pays dividends to the parent company. These are taken into the earnings of the parent company but are not taxable at that point?


James Lorimer Ilsley: That is correct.


Richard Burpee Hanson: When these earnings are received and again paid out to the individual shareholders of the parent company they are taxable?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: That is
correct. Now the subsidiary company has an undistributed surplus and it is wound up. That undistributed surplus represents earnings of the subsidiary company. It is paid into the parent company and it therefore goes to increase the assets of the parent company, but it is not an increase in the capital of the parent company.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: It has that effect? Is that the interpretation?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: If that in turn is paid out as dividends to the shareholders of the parent company, does not that pay taxation then?


James Lorimer Ilsley: No.


Richard Burpee Hanson: Would
there not be taxation twice under the scheme? Of course, the capital of the subsidiary company being returned to the parent company would obviously be a return of capital and therefore would not be taxable; but the discussion revolves around the surplus being paid to the parent company. I am asking for information. That is taxable under the law as income of the parent company and is-paid out again to the shareholders and is taxable again.


James Lorimer Ilsley: No. It is only taxed twice.


Richard Burpee Hanson: That is
what I am saying.


James Lorimer Ilsley: No; as the hon. gentleman argues it is taxed three times.


Richard Burpee Hanson: I did not think it went that far. What is the first taxation stage?


James Lorimer Ilsley: When the subsidiary earned' it. That was the first time.


Richard Burpee Hanson: And then it paid taxation.


James Lorimer Ilsley: Yes.


Harry Rutherford Jackman: In other words, if there is a hardship in this case at all the subsidiary-
Excess Profits Tax Act

company on dissolution can declare a dividend to the parent company which would go into the parent company as income and if distributed by the parent company it would be taxable.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: If it did it in the form of dividends it would not be taxed three times?


James Lorimer Ilsley: Twice.


Richard Burpee Hanson: But not three times?


James Lorimer Ilsley: No.


Mr. WRIGHT:: I should like to ask the minister a question with regard to the excess profits tax as applied to farmers. It may seem strange that the farmer should pay any excess profits tax, but there is a group in western Canada who come within this act because they thought it was their duty to withhold their crop two years ago when there was a large crop and great difficulty in marketing it. These people therefore felt it was their duty to carry their crop over to the spring. Last year's being a short crop, they disposed of two crops in one year and so found themselves liable to excess profits tax. It seems hardly fair, as they had no income the year before.


James Lorimer Ilsley: They can apply to the board of referees for an adjustment of their standard profits. I do not know how much adjustment, if any, would be granted. The hon. member is putting the case where they had no profits whatever in one year?


Percy Ellis Wright: No; where they had a very good crop in one year but did not market it that year because marketing conditions then were difficult. In the fall there was a quota, and the government was asking any farmers who could do so to hold the crop in their *own granaries rather than congest the storage facilities. These people held their crop during that year and disposed of it the following spring. This meant that they disposed of two crops in the one year, which brought them within the act. It seems hardly fair that they should be taxed under that act when they had really no income the previous year, although they had a crop, It should apply to the two years; their expenses were for two years although they disposed of the two crops in the one year.


James Lorimer Ilsley: That is a variation of a situation which applies to some businesses. Borne amelioration of that condition is provided for in this budget, but not for past
fMr. Jackman.]
years. The Excess Profits Tax Act amendments and the Income War Tax Act amendments will include one provision to the effect that losses in one year may be carried forward to the next year. That provision was not in existence when the farmers had the losses, in the year in which they held their crop rather than selling it. I do not know of any way in which they can be relieved from paying taxes on the abnormally swollen profits for the year in which they sold two crops.
Ever since the Income War Tax Act was enacted, businesses have been making representations to the effect that they should not be taxed year by year, but that an average of three years should be taken, or something of the kind-a carry-over or a carry-backward of losses, which would involve refunds. We have never departed from the principle of taxing taxpayers year by year. It means of course that a taxpayer in a year of loss pays no taxes; he gets no relief from the government even though next year he may have very high profits, in which event he pays taxes on those high profits. Now the taxes are getting so high that we felt that hereafter we should grant some amelioration by providing for the carry-forward of losses.


Richard Burpee Hanson: In other wrords, the man who gambled heretofore has no protection, but the man who gambles hereafter may have it?


James Lorimer Ilsley: Yes.


Percy Ellis Wright: In these cases it was no gamble. They simply thought it was their duty to assist the government by not crowding the facilities for marketing their crop, and now they find themselves penalized.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
On section 3-Ascertainment of profits by board of referees.
Richard Burpee Hanson: This
makes a change in the procedure with respect to depressed industries and is a departure from the methods previously in force, if I appreciate correctly the language of the new section. There is a proviso which I think changes the method of dealing with it after the taxpayer has filed his statement as provided by subsection 1 of section 5. The difference is the placing of the matter in the discretion of the minister rather than making it imperative upon him to direct that standard profits be ascertained by the board of referees, in other words, leaving it wholly to the minister whether he shall state a case to the

Excess Profits Tax Act
board of referees or determine it himself. Therefore he is taking away from the board a large measure of jurisdiction which I think should remain in the board. It is the difference between administration of a debatable condition by a judicial body or by a purely administrative body which is judge, jury and taxing master. I think the old provision was better and I ask that it be left as it was.


James Lorimer Ilsley: The trouble was that a
company might have had say 8 per cent return on its capital in the taxation year, and it might contend that 8 per cent was not enough, that it ought to be 9 or 10 per cent. If it were in a position to demand that the matter go to the board, the company would have everything to gain and nothing to lose. The result would be a large number of applications which pretty clearly were not justified.


Richard Burpee Hanson: In that
case the board would not grant them. Is it not a denial to the subject of a right, in the interest of narrowing the administration down to purely departmental administration?- especially in face of the fact that the government has set up this board to deal with just such problems. I understand it will be a continuing board as long as we have this act. I have always thought it was a highly desirable thing that there should be a judicial body which would get away-I say this without any reflection-from what for lack of a better term I shall call the departmental mind. The departmental mind very properly seeks to protect the revenues of the crown. The departmental mind is usually very fair. I want to pay that tribute to the taxing authorities. I have no complaint to make. But there is always the danger that you may get into the hands of an arbitrary administrator. The taxpayer has not many rights left under these laws. If he had a judicial body to which he could go if he thought he really had a bona fide case, why should that right be denied to him? It seems to me that is an elementary principle of justice which we ought not lightly to invade, and I hope the minister will reverse the position he is taking in this section. I do not know that I can say any more than that.


James Lorimer Ilsley: There are various classes of cases. Under one class, which is provided for in the first paragraph at the top of page 3, it is within the discretion of the minister as to whether the company may go before the board as a depressed business. The next class is referred to at the middle of the page, at about line 27; these are businesses commenced between December 31, 1937, and January 1, 1939.
Those, on application of the taxpayer, shall be sent to the board. The third class is referred to a little later on in that second paragraph and those cases must go to the board without application. That is the case of businesses which were commenced after January 1, 1939, and they must be sent to the board. It is only in the first class that there is any discretion. The department have always contended that they had this right anyway, but they did not want to swamp the board with applications from all kinds of companies which would have everything to gain and nothing to lose by making the application. They could not possibly lose, because they were entitled to their actual experience. If they wanted to get something a little better than their actual experience they might make an application; for they could not get anything worse. The board is merely advisory to the minister, in any case.


Richard Burpee Hanson: But the minister said he usually confirmed the findings of the board.


James Lorimer Ilsley: Yes, the minister has always accepted them. This is a matter of administrative convenience, in cases where the minister is of opinion that they are not really depressed at all, that they just say they are with a view to getting something off their taxes if they can. They cannot lose, and they are not even out any costs. With the law as it was interpreted by the companies, the prudent general manager or board of directors I think would always go before the board, unless their standard profits were more than 10 per cent. If they were only 9 per cent they would go, because otherwise the shareholders might say: Why didn't you go? You might have convinced the board that you should get 10 per cent.


Richard Burpee Hanson: There is nothing wrong with that, ethically.


James Lorimer Ilsley: Oh, well; it is an impossible situation. These are complicated inquiries, requiring the services of chartered accountants and everything else. They are simply required to establish a prima facie case in the opinion of the minister before they may go to the board. That is why the minister is making it clear that he does not have to permit them to go in any case where he thinks the business was not really depressed.


Richard Burpee Hanson: Then what is the experience of the department? Has this privilege of going before the board been abused? Is the board swamped? From the figures the minister gave us a while ago it would not seem that the board is swamped
Excess Profits Tax Act

with cases. I had an idea that the number of cases was very much higher. I suggest that the reason given by the minister in this discussion is not convincing. He is seeking to change the law so that a man who had a right last year is deprived of that right this year, and the onus is upon him to establish why that right is being taken away. I do not think he has discharged that onus.


James Lorimer Ilsley: It just means that the word may" is being interpreted as discretionary:


Richard Burpee Hanson: Further down on the page you use the word "shall" twice.


James Lorimer Ilsley: If it were clear, as the department has always contended, that the word "may" in the fourth line of the section, is not a directive word but is a word that gives the minister discretion, that is all that is needed in this section. If the minister may or may not direct that the standard profits be ascertained by the board of referees, that is all the minister wants to make clear.


Richard Burpee Hanson: I realize what you are trying to do, but I am asking about the change in the law. Is it not a fact that if we enact this section a discretion will be vested in the minister which is not now there?


James Lorimer Ilsley: No, the minister has always contended that the discretion is there now.


Richard Burpee Hanson: I know his contention, but what is the law?


James Lorimer Ilsley: The discretion is there now.


Richard Burpee Hanson: Then what is the practice?


James Lorimer Ilsley: The practice is to treat it as though the discretion were there now, and all kinds of cases are kept away from the board on the theory that the discretion is there. But it is contended by the companies that there is not a discretion, that this is an imperative word which should mean "shall", and this section is to make clear that it does not, that it means "may" in the popular sense. That is all there is to the amendment.


Richard Burpee Hanson: If that is so; if the minister has placed his interpretation upon it and the interpretation of the companies is to the contrary, why should it not have been judicially determined before the statute was changed, in fairness to the subject who is being taxed? It is a principle of taxation law, which is laid down in all the authorities that I have ever read, that the subject may not be taxed by the crown without clear and express authority from parlia-[Mr R. B. Hanson.]
ment or the legislative body enacting the legislation; and if there is a doubt, that doubt under the authorities-and I am in the judgment of members of the legal profession here-usually is resolved in favour of the taxpayer. It must be strictly within the jurisdiction of the taxing authority to impose a tax before that tax attaches, in the language of the act itself. These, of course, are elementary principles upon which I think we all agree. But here is the case of a taxpayer, a company which thought it had a right and believed it had a right, having that right taken away by parliament on the theory that it has not made out a prima facie case and that therefore it has no right to be heard by the judicial body. I suggest that there is a principle at stake and that parliament should not disturb the position in order to strengthen the hands of the administrative officers. If a company cannot make out a prima facie case for relief, the board of referees is not going to treat the company any better than the minister would treat it. It has to make out a prima facie case, and if it does so, by the same token it should be able to go to the board and fight it out or debate it with the minister or the commissioner, or whoever may be handling the matter. I suggest that the minister has not made a case for this change.


James Lorimer Ilsley: There ought to be some penalty imposed upon the company for making an unreasonable application to the board.


Richard Burpee Hanson: I would not agree with that at all. That is the departmental mind, wanting to get rid of trouble.


James Lorimer Ilsley: No, it is not. The rule in ordinary life is that I do not go to law with a man unless I am prepared to pay the costs if I lose.


Richard Burpee Hanson: That is
not universal, though it is the general rule.


James Lorimer Ilsley: That is a salutary deterrent to my litigiousness. On the other hand, there is a certain class of director or general manager who thinks that his shareholders come first, who has a deep sense of trusteeship toward his shareholders. That is an ingrained attitude of mind in the country, and I do not know that it is altogether to be censured. But in time of war it comes in conflict with other more important obligations. It is pretty hard to convince such a general manager that he should not do his best for his shareholders.


Richard Burpee Hanson: Within
reason.


James Lorimer Ilsley: Considering the law as it stands now, when the general manager reckons

Excess Profits Tax Act
his profits for the base period he comes to 8 per cent, and he has an excess profits tax to pay. There is a chance that if he could get to the board of referees and convince them that it ought to be 9 or 10 per cent he will be able to save his shareholders a substantial sum year after year during the whole currency of the Excess Profits Tax Act. It will cost him nothing; all he needs to do is to employ a lawyer to come before the board and he can charge the lawyer's expenses to his excess profits as an expense of doing business. Granted a certain type of mind, which I say I do not want to condemn too much, they will all come to the board of referees. There is something wrong with that. The minister must have some curb; otherwise they will all run there.


Richard Burpee Hanson: Of course that is not the primary consideration that governs a general managef. He is not going to try to do something he knows he cannot get away with because he either fears his shareholders or wants to please them. What he will do is to consult either his auditors or his lawyer. He will weigh the chances of success against the chances of failure. They have to make out a case. His legal and accounting advisers will tell him what to do, and that will be his defence before his shareholders, against criticism by his shareholders. However, I am not going to labour this any further.


Percy Ellis Wright: What about the farmer I was speaking of who disposes of two crops in one year, who carried the one crop over in order to assist the government in marketing? Will he be allowed to appeal to the board of referees?


James Lorimer Ilsley: Such farmers can appeal as a depressed industry; they can go to the minister and if he considers that they are a depressed industry, their case can be referred to the board of referees to determine the proper standard profits for the base period. While the government probably could do ii under the War Measures Act and the Consolidated Revenue and Audit Act, under normal conditions it would not give any relief from taxation on profits in that year of high profit. That is an element in our taxation system, that the man who makes large profits in a particular year shall be taxed on those profits although he may have sustained a loss the year before and may sustain a loss the year after. He does not get any help from the government. I am glad the hon. gentleman has brought this up because I am talking quite a bit of the time to his group who think we are running the country in the
interests of the profit-makers, and so on. I am just pointing out some of the features of this system which are not so favourable to people who are making profits. It is when farmers get to be profit-makers that they realize the essential features of the system.


Percy Ellis Wright: I agree with that, but these men held the crop off the market deliberately in order to assist the government. There were no marketing facilities that year; the elevators were all blocked, and the government appealed to the farmers who had granaries to hold the crop and not block the facilities that were already overloaded. In order to assist the government these people retained the crop in their granaries until after the new year, until the facilities were available for marketing, and now they find themselves in the position of having to market two crops in the one year and pay an excess profits tax. They are not in the same position as the companies. This is their entire business for the two years; their entire assets for two years are being disposed of in one year-not because they wished it, but because the government asked them to do it.


Harry Rutherford Jackman: I rise to support the contention of the hon. member for Melfort (Mr. Wright). As I understand it, the agricultural industry is on an entirely different footing from industry generally. In this case you have two crops being marketed in the one year so that your receipts all come in in the one taxing period whereas your costs of producing are spread over two taxing periods. I cannot think of a situation in industry which would be on all fours with the situation obtaining in such cases as the hon. member has brought before the committee. It seems to me that in the case mentioned the farmer will lose the entire benefit, not only of the profit but of the whole selling price, which will include the cost of production of the second crop, if the effect of this provision is as I take it to be. If the case is examined and found to be as presented by the hon. member, then I believe undue hardship will be imposed the like of which will not be found in the whole corporation taxation structure.


Percy Ellis Wright: If an appeal is made this year to farmers to withhold their crops, I can assure the minister that there is going to be some difficulty. Having had this experience, they will market their crops if they possibly can in order not to be caught again. The government should take this matter under consideration, because they might find themselves in difficulty this year.


James Lorimer Ilsley: It must apply to only a few.
Excess Profits Tax Act


Percy Ellis Wright: Yes, it is not a large number.


James Lorimer Ilsley: There is a minimum standard profit of $5,000. The hon. gentleman knows that, does he not? Even if the standard profits are actually only $1,000, they are deemed to be $5,000. So that the taxpayer must make a net profit of more than $5,000 before he is taxable under the Excess Profits Tax Act. Surely that would eliminate the great majority of farmers. If there are some large operators who would like to make representations to the government to try to get some relief, their representations would be considered. I do not know what could be done; perhaps something could be done by order in council, but we would have to be very careful.


Thomas Langton Church: This section 5 constitutes a conscription of wealth. There is a lot of talk about conscription of wealth, but there is no wealth to be conscripted. It is all very well for some people to talk about taxing others and conscripting wealth which was conscripted long ago, but the only business that I know of that will not be depressed is the undertaking business. As I told the minister the other day, under this budget he will have to get the undertaker to take care of a large number of the people of the country before he gets through with them. We are going to close in a few hours and during the recess of six months many people will have to admit deficiencies in payment. Because of this section 3 the minister will have to assist the taxpayer. I do not know of anyone who is going to have any excess profits. There is certainly no profit attending parliament, and there are no profits in any retail or wholesale business. There will be no profits under the policy of my hon. friends to my left and of the policy announced at their convention or parliament [DOT]they are having, about which I read in the papers to-day. Before wTe have another chance of considering the effect of this section and the whole bill we may have to move the parliament buildings to Toronto or another place because in the meantime the enemy may have arrived here ahead of us. As compared with other countries we are the highest taxed country in the world. I venture to say that when the returns come in my hon. friends on the front benches will find that there is much less revenue than they have had from any other budget under these confiscatory bills. This budget may suit certain members, and a section of the press, but it does not appeal to any man in business. It is going

to drive lots of people, lots of retailers and wholesalers to the wall so that they will not be able to make any return under this section.
Mr. MaoNICOL:	Subsection 5A refers to
taxpayers engaged in the operation of gold mines or oil wells. Would this section apply to the oil sands which certain companies are now operating on the Athabaska river? I am told that a very large company has gone up there to try to develop these sands. Would the oil sands production companies come under "taxpayers engaged in the operation of oil wells"?


James Lorimer Ilsley: That is an interesting
point, and one I had never thought of before -whether oil wells would include tar sands.
Mr. MaoNICOL:	The right name is oil!
sands.


James Lorimer Ilsley: My offhand opinion would
be that they are within the spirit and intent of the section. It is the production of oil that we desire to encourage by the enactment of this section. The section is not new. It is the same old section which has been in for two or three years, except that the words-"provided that" are taken out from the first of the paragraph because it was not, strictly speaking, a proviso. It is now a separate provision, but is of exactly the same effect. I do not think there were any other sources of oil except wells at the time the section was originally passed, but I think we would have to extend it to oil producing enterprises of any kind.


Mr. MacNICOL:: The reason I ask is that I expect to be on the Athabaska within four or five weeks, and I might be asked that question.


Harry Rutherford Jackman: The minister did not see fit to include new natural gas wells that might be brought into production during the period. That is something which should be encouraged. I know of enterprises which might go forward if they received such encouragement. Gas is used in war industry, particularly in southern Ontario, and is taken in large quantities by the big industries in Hamilton and the surrounding areas.


James Lorimer Ilsley: The problems connected
with the framing of this section were difficult, for the reason that at the time this assistance- that is what it amounts to, a sort of tax concession to these particular enterprises-was in contemplation, the whole question was whether we would carry it beyond gold, and it was finally decided that we should include oil with gold. Everybody else naturally wants to come in-the base metal mines,

Excess Profits Tax Act
timber, and other producers of natural resources, but we have always held it to gold and oil, and I do not think I should like to extend it now.


Mr. ROWE:: Is any consideration to be
given to the research departments that many companies have established to meet post-war conditions and for more efficient production to-day?


James Lorimer Ilsley: I do not know what kind
of consideration the hon. gentleman has in mind.


William Earl Rowe: A company may go to a very considerable expense in setting up a research department.


James Lorimer Ilsley: A reasonable amount of
research is regarded as a productive expenditure, but if it became excessive it probably would not be.


William Earl Rowe: It is left to the board of
referees?


James Lorimer Ilsley: No, to the minister.


Richard Burpee Hanson: It is
administered by the department?


James Lorimer Ilsley: Yes.	[DOT]


Richard Burpee Hanson: It is
necessary that allowance should be made for that kind of thing. In the early stages of the history of certain companies in the pulp and paper industry there were difficulties in making bond paper. They had to get their pulp and paper clean to achieve quality. That was the experience of companies that I know of, and they had to spend a large amount of money on research work, go out into the world and hire chemists at huge salaries before the task was accomplished. These companies therefore established laboratories; and the expenses in that connection have gone on increasing, and the difficulties of operation, of getting the necessary personnel in war time, have also increased. Could the minister give me an assurance that a reasonable extension of these facilities will be allowed? I think that is all that anybody could ask for.


Colin William George Gibson: Yes, I can give that assurance.


Mr. ROSS (Calgary East):: The production of gold and the production of oil are two entirely different things, and I do not see just how this section can be fairly applied. As a gold mine is developed and you get more into the seams of gold, the production tends to increase, but with oil your production is best when the well is first struck; the second
year your production is a little less, the third year a little less, and it continues to decline. I do not see how you can work out this principle on a fair basis. Would the minister be good enough to explain?


James Lorimer Ilsley: This is a complicated matter, and if the hon. gentleman prefers I can give him a private explanation. I am afraid I may get it mixed up. The practical effect of this provision is to confine the tax to the 40 per cent. That has been the effect both in the production of oil and in the production of gold. But this is the reason it takes effect even in the class of enterprise where production is decreasing: the standard profits are adjusted year by year to the production. That is, if the production diminishes, the standard profits diminish proportionately, and there should be something to offset that. The net effect of this is that there can be no 100 per cent rate effective in the case of oil wells unless the price of oil increases, under these new provisions, by more than 16f per cent. That is the effect of it, but perhaps I had better give the hon. gentleman an extended explanation later. It is extremely complicated, and it works differently in the case of oil wells from what it does in the case of gold mines, if the production normally decreases instead of, as in the case of gold, normally increases.


Harry Rutherford Jackman: Referring again to the matter of gas wells, I hope the minister will bear in mind when he is making his decision on these matters that the first objective which he, as well as every other hon. member of this house, must have in mind is the winning of this war, and if the production of gas or of any other natural commodity will help in the winning of it, taxation measures or regard for finance must not be given any consideration if it is going to interfere with the production of essential war material. I sometimes feel that the Department of Finance and the Department of National Revenue are so much concerned with the integrity of their own laws and so unwilling to make arbitrary decisions in some cases that they prevent as much war material such as natural gas being brought to the market as would otherwise be the case.
I cannot help but think of a particular instance, and from it I am generalizing to some extent. At lake Erie there is supposed to be gas underneath the water as well as on the land near the shore, and if this proposed syndicate or company is allowed the chance of making some return in consideration of the risk it undertakes, it may be that we shall have a substantial amount of gas produced to help in the steel industry. But if the
Excess Profits Tax Act

taxation is such a burden that it will not begin to offset the risk, much less permit of any return on the capital which is put into the venture, probably no interest will be engendered in the project, the whole thing will fall by the way, and the war effort will be that much handicapped. I feel that the minister should make finance the handmaiden of the war rather than the mistress of it.


[Stage Direction]
Section agreed to.
On section 4-Proportion of income tax and tax under third part of second schedule.
Richard Burpee Hanson: This is the section which implements the second resolution. It is reasonably clear to me, having read the explanation on the opposite page, but I suggest to the minister that when it gets out to the public, elaborate explanations will have to go to the taxpayers before they realize what this formula is.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: I hope special attention will be given by the department to educating the people as to just what this section now implies.


James Lorimer Ilsley: Yes. We will do that.


[Stage Direction]
Section agreed to.
On section 5-Depreciation and depletion- Interest-Donations.
George Henry Ross: We know what has been allowed in the past in the case of oil wells for depletion and depreciation and amortization. Will these figures be revised by the department so as to allow the production costs to be written off more quickly than they have been hitherto?


James Lorimer Ilsley: The commissioner tells me that this is a matter of constant negotiation. That is about all I can say.


Richard Burpee Hanson: According to the explanatory note, this amendment corrects the reference to the section of the Income War Tax Act under which the minister may allow as a deduction from profits an amount for depreciation. What is the reference, and what is the implication of the change? It may have been explained fully on the previous occasion, but I do not recall, and I have not the reference under my hand.


James Lorimer Ilsley: It does not change the law at all.


Richard Burpee Hanson: There is a new paragraph (a), is there not, or a new section?


James Lorimer Ilsley: In 1940 the provision for depreciation was moved out of section 5 and put into section 6 of the Income War Tax Act, and the Excess Profits Tax Act mistakenly referred to section 5.


Richard Burpee Hanson: It is only a matter of mechanics?


James Lorimer Ilsley: Yes.


[Stage Direction]
Section agreed to.
On section 6-Revenue losses.
Mr. NOSEWORTHY:: Provision is made here for the deduction of losses in the previous year. In the case of an unincorporated taxpayer carrying on more than one business, is it possible to absorb the losses of one, to offset the losses on one business against the profits of another? What is the situation?


James Lorimer Ilsley: Is the hon. gentleman talking about setting off the loss in one department of a business carried on by an unincorporated taxpayer against profits made in another department of his business?


Joseph William Noseworthy: Possibly different businesses. We have around Toronto a great many what are sometimes referred to as playboy farmers, persons who have large estates and farms which are reputedly worked at a loss, and, I understand, a considerable loss. Can the loss on these be set off against profits, provided that it is an unincorporated business?


Colin William George Gibson: No. Several cases of the kind have arisen and these losses have not been allowed as a deduction from income. The reason is that such farms are not regarded as a business of the taxpayer. It is the use of his income in maintaining an establishment like that.


Richard Burpee Hanson: The minister says they have never been allowed. Is that actually true? I have heard of a case where it was allowed, very unfairly. I will not mention the case but I could tell the minister.


Colin William George Gibson: I shall be glad to hear it.


Richard Burpee Hanson: I do not want to be personal about anything but I do happen to know about a case. It came to me with fair authenticity, where it was allowed to one taxpayer, and another taxpayer in the same year and in the same circumstances was disallowed.


Colin William George Gibson: The one that came to my attention was probably the one that was disallowed.

Excess Projits Tax Act


Richard Burpee Hanson: Is it not a fact that if a joint stock company operates a factory in Montreal in one line of goods and another factory in Toronto or Saint John in another, it files a consolidated return? They pay a higher rate, that is all. What is the position there? One loses and the other gains.


James Lorimer Ilsley: On the case put up by the leader of the opposition, if they are related, if they are such that they can consolidate, they have the option of consolidating.


Richard Burpee Hanson: In which event they pay a higher tax.


James Lorimer Ilsley: I am speaking of cases
where they are separate companies but owned by the same interests. One might be a subsidiary. I believe there are other tests as to whether they are substantially owned by the same interests. They have an option to consolidate and to pay a higher rate. It may be a privilege to consolidate because-


Richard Burpee Hanson: It is the law.


James Lorimer Ilsley: Yes, and one may be taking a loss.


Richard Burpee Hanson: But take the case of one company, not a subsidiary but one company operating one plant at a loss and another at a gain. Surely the losses are offset by the gains. I am speaking of a company owmed by the same people that is the same legal entity.


James Lorimer Ilsley: The only question on which I was trying to get information was whether, if the types of businesses are widely divergent, that makes any difference. I do not think it does.


Richard Burpee Hanson: I do not see why it should.


[Stage Direction]
Section agreed to.
On section 7-Professional activities.
Richard Burpee Hanson: What
change is there as between the present bill and the old one?


James Lorimer Ilsley: Is the hon. gentleman asking about a difference in the bills?


Richard Burpee Hanson: Yes.


James Lorimer Ilsley: There is no difference in
the bills.


Richard Burpee Hanson: This is
the same section.


James Lorimer Ilsley: Yes.


[Stage Direction]
Section agreed to.
On section 8-Profits not liable to tax.
John Ritchie MacNicol: This section provides that the profits of any corporation or joint stock company derived from the operation of any base metal or strategic-mineral mine which comes into production, and so on. During the present war the metal known as magnesium is being or will be produced in Canada. Perhaps it cannot be classed as a base metal or as coming from a strategic-mineral mine because it is used for flares or any sort of explosive. But when it is made into magnesium metal it becomes a metal. Would the production of magnesium metal come under this section?


James Lorimer Ilsley: The practice would be for the Minister of National Revenue to ascertain from the Department of Mines and Resources whether they considered it a strategic mineral or not and then make a ruling accordingly. The minister may make regulations under this section.


John Ritchie MacNicol: But it is decidedly a strategic metal in this war, and we are away behind in Canada and perhaps in the United States. One reason why the Germans are doing so well is that they are using so much of this metal. Once we start producing it in Canada I would consider it a metal.


[Stage Direction]
Section agreed to.
On section 9-Small corporation profits.
Howard Charles Green: I notice the minister left the date the 1st of January, 1943. Will the section of the Income War Tax which provides for relief for this type of mine until January 1, 1943, be interpreted by the department in such a way that the mine will get practically the same relief if it is opened now as it would if it were opened after the first of January, 1943?


James Lorimer Ilsley: The relief is greater under this section for those coming into production after the 1st of January, 1943, than for those that come into production before that date, because under the Income War Tax Act the relief is from income tax and under this section it is from excess profits tax. Under the Excess Profits Tax Act the minimum is 22 per cent and under the Income War Tax Act it is 18 per cent. Twenty-two per cent would be the effective rate.


Howard Charles Green: There is a difference of 4 per cent.


James Lorimer Ilsley: Twenty-two per cent is the minimum. It might possibly be greater, but normally it would be 22 per cent.

Excess Profits Tax Act


Howard Charles Green: The definition of minerals is a little broader in this section than in the Income War Tax Act.


James Lorimer Ilsley: Yes, and gold is taken out.


Howard Charles Green: Will the Income War Tax Act be interpreted to cover as wide a range of minerals as this?


James Lorimer Ilsley: No, and it does not make any difference because there is a six-months period of tuning up. Therefore anyone who starts a strategic-mineral mining enterprise after the budget, or after the first of July at any rate, would not have his mine in production until after the first of January; therefore he would get the protection of this act. For those who started before the budget, there is no advantage; but they were not induced to go into the enterprise by the legislation.


Howard Charles Green: In some cases it might not take six months to get the mine opened up.


James Lorimer Ilsley: It is a tricky thing to discuss, but six months is the period for gold. Conceivably it might be shorter for something that was nearer the surface.


Howard Charles Green: Particularly in the case of an old mine.


James Lorimer Ilsley: I do not know about that; I think it would depend upon the mineral rather than the nature of the enterprise. I think there would be a uniform provision. But let us say three months was the period fixed for magnesium, and someone started an enterprise just after the budget. He reads the budget and he says: That is pretty good encouragement; I will start. He would not be protected, because he is not within the Income War Tax Act. He had got his mine started before this came into force.


Howard Charles Green: Does the minister not think that is unwise? The main purpose of this provision is to get these mines opened up and into production quickly. Would it not be wiser to take this back say to July 1, 1942?


James Lorimer Ilsley: I think the commissioner might make six months the tuning up period. No one ever thought of anything but six months. That is the answer.


Howard Charles Green: That will be covered then, by the department?


James Lorimer Ilsley: The hon. gentleman is asking me for an undertaking that six months will apply to all mines, so that no one will miss the encouragement of this act. I do not know about that. I do not think the problem he has raised has any magnitude. I think ordinarily

six months would be the tuning up period, and then there is no difficulty. He has evolved a case-with my assistance-in which three months might be the tuning up period and in which a mine might miss out. But if they did they would probably be down here wanting an order in council or something.


Richard Burpee Hanson: With regard to these small businesses, is the position of an independent proprietor, an owner-managed business, changed by this? I take it it is not, but there is a distinct change with respect to small corporations.


James Lorimer Ilsley: That is right.


Richard Burpee Hanson: They are being deprived of a position which they occupied heretofore to the extent of the $5,000 limitation?


James Lorimer Ilsley: That is correct.


Richard Burpee Hanson: But it does not affect the owner-managed business?


James Lorimer Ilsley: The $5,000 limitation is just the same as it always was to everyone.


Richard Burpee Hanson: Then what is changed?


James Lorimer Ilsley: Thirty per cent instead of 18 per cent.


Richard Burpee Hanson: Only the rate. I do not quite follow that.


Harry Rutherford Jackman: This change in the rate is very difficult to understand. The ordinary corporation tax, I understand, is 18 per cent. Now the effect of the excess profits tax is to change it, and we have 12 per cent, making it 30, and then 10 per cent additional. Are companies operating under section 8 subject to 18 or 30 per cent?


James Lorimer Ilsley: The metals?


Harry Rutherford Jackman: Yes. It is difficult to clarify without going back to the original statute.


James Lorimer Ilsley: The tax on companies under section 8 is 18 per cent. They are relieved of all excess profits tax.


Harry Rutherford Jackman: The 30 per cent applies to what type of company?


James Lorimer Ilsley: I was not talking about mines; I was talking about the general range of small corporations. Last year they were taxable at 18 per cent. They had a very happy year in regard to taxation last year,

C.N.R.-Guarantee of Securities
because prior to 1941 they were paying 18 per cent to the dominion and anything from 2| to 10 per cent to the provinces. In British Columbia for example it was 10 per cent. By a fortunate series of events for them they got the provincial tax taken off and nothing put on in its place. This corrects that.


Richard Burpee Hanson: This is to level it up.


James Lorimer Ilsley: This puts another 12 per cent excess profits tax on under the Excess Profits Tax Act. It is arguable what it ought to be. The more you make it the greater the discrimination between them and proprietorships, and the less you make it the greater the discrimination between them and companies earning more than $5,000.


[Stage Direction]
Section agreed to.
Sections 10 and 11 agreed to.
Second schedule agreed to.
Section 12 agreed to.
Bill reported, read the third time and passed. CANADIAN NATIONAL RAILWAYS

[Stage Direction]
Lion. J. L. ILS'LEY (Minister of Finance) moved that the house go info committee to consider the following resolution:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to issue securities not exceeding $22,360,000 in principal amount to provide the moneys necessary to meet capital expenditures made or capital indebtedness incurred during the calendar year 1942; to make provision for the purchase or refunding of capital obligations of the company, or of any company comprised of the Canadian National railways system, during the said calendar year and for the issue of substituted securities for such purpose; to authorize the governor in council to guarantee the principal, interest and sinking funds of securities issued by the company for the purpose aforesaid; to authorize the making of temporary loans to the said company secured by such securities and not exceeding $22,360,000 in principal amount to enable the said company to meet such expenditures and indebtedness; with authority to give financial aid and assistance to other companies of the said national system.
Motion agreed to and the house went into committee, Mr. Vien in the chair.
Richard Burpee Hanson: This resolution is in the usual terms. If I recall aright the minister made some reference to it on a previous occasion., showing how the $22,360,000 was made up, and I think it was explained in the railway committee. Perhaps the minister would make a brief statement 44561-3XXJ
now. Does not the whole necessity for this measure arise from the fact that the Canadian National Railways must have government endorsation or guarantee of any securities it may issue in order that it may get a lower rate of interest? Is not that the real reason for this annual resolution? Has the company ever considered financing on its own without government guarantee? Have we ever reached a stage in the history of the Canadian National Railways when that would be possible? They are not allowed to make capital expenditures without the concurrence of the government.
This is very largely limited to refunding, is it not? Capital expenditure must be a very limited part of it, although of necessity there is always capital expenditure, for rolling stock. Under the Philadelphia plan it seems to me it would not be necessary for them to come to the government. However, the fundamental reason for this resolution is the government guarantee, is it not?


James Lorimer Ilsley: I was under the impression
that they had to have authorization of the governor in council for borrowing anyway, but I am not sure about that. This is more than an order in council, I will admit.


Richard Burpee Hanson: I do not want to hold up this resolution, because I believe it is absolutely necessary that it go through, and in this form. Apparently the minister has not the information at the present time. Perhaps he would arrange to have it on the second reading of the bill, which might be brought on to-morrow; that would be satisfactory to me.


James Lorimer Ilsley: I will have it by then.


Harry Rutherford Jackman: Do I understand that all the operating profit of the Canadian National Railways goes to the government? If so, will the minister tell me where I may find in the appendix to his budget address the amount of the operating profit which the railway paid over to the government, which I understand was about $5,000,000?


James Lorimer Ilsley: I will have to look that up. Could I do that on the bill, too?


Harry Rutherford Jackman: If the minister will give us the assurance that it is taken into account, that will be satisfactory.


James Lorimer Ilsley: The hon. gentleman wants the reference to the place where the amount of operating profit brought into the consolidated revenue fund is shown?
M,r. JACKMAN: Yes. We can leave it for the time being. I just want the assurance that any operating profit goes into the revenues of the country during the year.
C.N.R.-Guarantee of Securities


Richard Burpee Hanson: There is a further question. Assuming that an operating profit of between $4,000,000 and $5,000,000, was transferred to the government by the railway company, of course the actual money goes into the consolidated revenue fund, but how is it applied in the government books? It would be credited to the debits charged against the railway, but is it applied on interest owed by the company to the country, or is it in reduction of previous deficit accounts in respect of which so far as I know the railway now does not pay any interest? Is it applied to previous loans made by the country to the railway; is it applied to the interest on railway debts to the country, or how is it applied? This is the first time in twenty years I have heard of a payment of that kind being made.


James Lorimer Ilsley: Could we deal with some of these matters on the bill? I have sent for some of the information.


Richard Burpee Hanson: If it is convenient to the minister I shall be glad to do that. I think that is fair.
Resolution reported, read the second time and concurred in. Mr. Ilsley thereupon moved for leave to introduce Bill No. 124. to authorize the provision of moneys to meet certain capital expenditures made and capital indebtedness incurred by the Canadian National Railway System during the calendar year 1942, to provide for the refunding of financial obligations and to authorize the guarantee by his majesty of certain securities to be issued by the Canadian National Railway company.
Motion agreed to and bill read the first time.



JAPANESE IN BRITISH COLUMBIA-STATEMENT OF MR. GREEN ON MOTION OF MINISTER OF FINANCE

[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of supply.
Howard Charles Green: Mr. Speaker, before the house goes into committee of supply I should like to say a few words with regard to the question of evacuating the people of Japanese origin from the protected area on the Pacific coast. I do so because the house will be adjourning within the next two or three days, and apparently we are to be away for six months. At the present time the situation is distinctly unsatisfactory. There are indications that the plans for evacuating these people from the protected area are breaking down, and I think the

house should have some assurance from the Minister of Labour (Mr. Mitchell) on this whole question before the British Columbia members go home.
I suggest to the minister in the first place that the time has come when there should be a deadline set by which time all the people of Japanese origin will be moved out of the protected area on the coast of British Columbia; and I suggest that this deadline should be not later than August 15. This protected area was set up, I believe, on or about February 2, and on February 26 provision was made by order in council that all people of Japanese origin must be evacuated forthwith. But although several months have elapsed, nearly half of them are still there.
The other day the minister gave us the figures as of July 18. They showed that as of that date there were still in the protected area 9,191 people of Japanese origin, out of a total when the evacuation was first ordered of 23,480. Of this number, as of July 18, there were 2,990 in the exhibition grounds in Vancouver.


Mr. MACKENZIE (Vancouver Centre):: Was it not July 8?


Howard Charles Green: July 18.
Mr. MACKENZIE, (Vancouver Centre): If my recollection is correct the dispatch was dated July 18, but the actual date was July 8.


Howard Charles Green: It was July 9; that is correct. There were 2,990 in the manning pool, which is really the exhibition grounds, and 157 in the immigration building, apparently about to be sent to an internment camp, while there were in the city of Vancouver proper some 6,044. Recently Vancouver was made the headquarters for the Pacific command. Our staff is there; it is the headquarters for the defence forces on the Pacific coast; yet these Japanese people are allowed to remain. Further, I have before me the issue of the Vancouver Sun for July 24, upon the front page of which is a photograph of a Japanese net-maker. The title over the photograph is "Harbour's an open book to him," and then below is "E. Hiraga, net maker." The article reads:
Two Japanese, one shown above, are working on Vancouver's waterfront beside a chemical factory, shipyard, large terminal and railway right of way. They are fish-net makers. They have worked in coastal waters for years, know the cargoes and ships. Above Jap knows all about newly launched freighters, calibre of guns on them and says: "A ship of that type doesn't need heavier guns, it needs more of them." B.C. security commission said to-day that all Japs would be prohibited from working in Vancouver from now on.

Japanese in British Columbia
That position is intolerable and is causing bad feeling on the Pacific coast. There will be trouble if these Japanese are not removed from the protected area without further delay. Information given by the Minister of Labour is to the effect that it is expected the Japanese will be away from the protected area not later than the end of October. A few days ago the officials of the British Columbia security commission were quoted as saying that it would be by the end of November. I understand the United States have already moved all people of Japanese origin from- the state of California. It is not right that Canada should be so slow in getting this problem settled.


Mr. MITCHELL:: Where does my hon. friend get his information about the United States?


Howard Charles Green: From a newspaper dispatch.


Mr. ROSS (Moose Jaw):: Did the hon. member say from the state of California or from the coast of California?


Howard Charles Green: It says from, the state of California, but it may only be from the coast. I wonder if there is not a frame of mind developing that says, "Oh, well, there are only a few thousand; why worry about it? They are nearly all women and children, why not let them stay there?" I am afraid that is the attitude which is developing in Ottawa. I warn the ministry that it is not good enough, that that is not going to satisfy the people on the Pacific coast. In some parts of the interior to which Japanese have been moved they have gained the upper hand. The hon. member for Kamloops (Mr. O'Neill) told us the story some time ago, the substance of which was that the Japanese working on the highway from Blue River to the Yellowhead pass-by the way these are Japanese nationals, not Canadian nationals of Japanese origin- had gained the upper hand and had been able to force the British Columbia security commission to promise to send them back to their families.


Humphrey Mitchell: Not to send them back; to unite them.


Howard Charles Green: They were supposed to be doing road work; now they are to be united with their families and the roadwork is to be stopped. I agree that they should be moved from that strategic point astride the railway, but this action does not fit in very well with what our men in the fighting forces have to face. They cannot stage a strike and demand that they be sent back to their families; yet that is just what these Japanese have accomplished.
The government should take over direct control at once of the whole evacuation project. As members of the house know, months ago this was handed over to the British Columbia security commission which is really a group of civilians. The government passed the buck to that commission and it is still in control. I have said before and I repeat that the time has come for the government to step in and take control of this movement.
The government should set up a town or towns, say in Wainwright national park, to house those who have not yet been moved from the protected area. The United States have removed their Japanese to towns which have been built to house them. In my opinion that will have to be done by Canada soon or later, and the sooner we get it started the easier it will be. I understand the main objection is in connection with the cost, but it will be interesting to see what the British Columbia security commission is going to cost before it is through. I will be surprised if the cost does not run into many millions of dollars. The present policy of the security commission is to scatter these people all through the interior of British Columbia, but I think our best plan would be to follow the United States plan and set up a town or towns.
There should be some explanation by the minister as to why the government did not go ahead with its original plan to recruit a Canadian Japanese construction corps. On February 17 of this year an order in council was passed providing for such a corps. The plan was to allow Canadian nationals of Japanese origin to enlist in this construction corps which would be like a work battalion. Nothing has been heard of that plan since, and I cannot understand why it should have been dropped. If it were carried out it should be possible to get many of the younger men into a service where they could feel they were doing something for the country, and at the same time they would be taken away from the protected area on the Pacific coast.
I ask the minister to explain the whole situation to the house. As a member for one of the ridings on the Pacific coast, for one of the Vancouver city ridings, I must insist that the protected area be made a really protected area and that the people of Japanese origin be moved out. This matter should not be allowed to drag on month after month until finally we find that we are left with several thousands of them still in the coastal area.


Hon. GROTE STIRLING (Yale):: Mr. Speaker, the hon. member for Vancouver South (Mr. Green) has approached this question once more from the point of view of
Japanese in British Columbia

evacuation from the protected area, but there are a few words I should like to say from the point of view of what I might call the receiving end of this question. I represent a part of the interior of British Columbia into which these people have been allowed to seep during the past few months. I have little to add to the information I was able to give the house on the last occasion this matter came up except to say that there is more evidence that this seeping is going on. Quite recently a party of Japanese received permits from the security commission to go to the small mining town of Beaverdell in the Kettle valley, which is the valley to the east of the Okanagan. They left the train at Penticton and found their way up to Kelowna. Fortunately they were intercepted there, and the matter was dealt with by the commission. These people happened to be caught, and this, in my opinion, is evidence that this seepage into the interior is still going on. The hon. member, quoting from figures recently given us, says that there are six thousand odd Japanese still loose in Vancouver. That figure is arrived at by deduction. I maintain that included in that figure of six thousand are all those who foot-loose were allowed to seep into the interior of the country where they have squatted.
At the very beginning of this controversy, a very few days after the Minister of Justice (Mr. St. Laurent) had taken his seat in this house, I had occasion to talk over with him certain of the orders in council of whose administration he would have had charge, and I learned from him that the view he inclined to at that time was that this was a British Columbia problem. I demurred strongly to that view and advanced reasons why in my opinion it certainly could not be looked upon as a British Columbia problem. It was a Canadian problem. I am not aware whether the minister, having since been in closer touch with the problem, still holds that view or not. But I was somewhat shocked the other day when I heard the Minister of Agriculture (Mr. Gardiner) advance similar views. He went so far as to express sympathy for the vegetable growers of Ontario who were not particularly anxious that the Japanese should come in and help them in their work lest, after the trouble is all over, they should find them transplanted there. That is precisely the view that we in southern British Columbia take. Further than that, we have a considerable number of hundreds of Japanese there already. They have been resident there for some time, and we do not want them to be looked upon as the nest to which all these others will be attracted.

I do not know how the government divides on this question of whether this is a provincial problem or a national problem. I do, however, wonder whether, when settlement takes place eventually, the dominion government will then be ready to accept the view of British Columbia with regard to what some people regard as a provincial problem. If they do permit British Columbia to effect a settlement of this matter there will no longer be any trouble with the Japanese in Canada.


Mr. A. W. NEILL (Comox-Alberni):: Mr. Speaker, nothing but a very strong sense of obligation would lead me to prolong debate in these dying hours of a session that died about four months ago, or should have, but I feel it is necessary to take this last chance to put oneself on record in trying to stir up the dead ashes of that section of the government which is dealing with this matter. We are going to adjourn for six months, after having sat here for seven or eight months, and if the same apathy which has characterized the government in dealing with this problem in the past is intensified I am afraid that when we meet in January next we shall be no further forward than now. We might reasonably expect to be worse off because the British Columbia members will not be here to stir up action.
It is perhaps unfortunate that under the rules and traditions of parliament, no matter who is to blame or what section is to blame for any ministerial or governmental action or inaction, there is always some minister who is ostensibly to be held responsible and to take the blame although he may be perfectly and entirely innocent. I have had and still have the greatest respect for the Minister of Labour (Mr. Mitchell), and I so expressed myself a few months ago; yet he is the man ostensibly with whom we must find fault and whom we must criticize in matters with regard to which he may be entirely innocent of blame. There is some element in the officials or in the government or in that other body called the British Columbia security commission-by some people called the "Japanese security commission"-which has resulted in unnecessary and unexplainable delay in handling this Japanese situation. The hon. member for Victoria, B.C. (Mr. Mayhew) and myself coming from Vancouver island need not, it might be said, interfere because we have discovered by investigations of our own that the Japanese have been almost entirely removed from Vancouver island. Yet we are members from British Columbia as well as members on the island, and we are not so far away but what we must as British Columbia men visualize the

Japanese in British Columbia
situation and what might happen if an attack were made on British Columbia, with all these thousands of Japanese already there to welcome them with open arms and afford most valuable local information as to where the guns are, where the place of attack should be and so forth. Therefore it is up to us to take some interest in the matter even if it obtains outside Vancouver island.
The other day I had occasion to advertise for a maid in a Vancouver paper, and therefore I came to look up its columns. I found that in the biggest paper in British Columbia 30 per cent of the advertisements from female help seeking work were by Japanese-Japanese maids, Japanese housekeepers, Japanese Canadians seeking work, and so on-and this is the place that we are trying to get them out of! This is the place from which it was decided to evacuate them. I should say that some of the trouble was on account of the fact that it was proposed originally to keep a large number of the Japanese women in Vancouver, in Hastings park. Later it was decided to change that policy, reunite these women *with their families and put them in the towns. All these thousands of Japanese men and women are now in Vancouver conducting their businesses or working in stores, and displaying a more or less arrogant air whenever a Japanese victory is reported. Naturally that stirs up the people of Vancouver and they are very sore on the subject.
Vancouver is entitled to be considered, because in that town reside some 25 to 28 per cent of the whole population of British Columbia. The government have now changed their policy and decided to evacuate Vancouver as speedily as possible. Perhaps they are trying to do it rapidly. I doubt it myself, and the man on the street has got it into his head that there is a darned sight too much delay in doing anything. He is thoroughly convinced that the blame rests somewhere and is inclined to put it in the first place on this security commission, and after that, of course, to blame the government. That is what makes the people of Vancouver sore and' makes them demand immediate action.
There is another set of facts which influences them. The government decided at the start to send a number of these Japanese to work on roads in the interior. They started some in the neighbourhood of Blue River and between Jasper and Kamloops. Unfortunately it was a road alongside a railway. The idea was good and seemed to be one that would get work out of the Japanese and at the same time allow them to keep themselves, and it would take them away from the coast, the danger zone. What happened? I blame the government or
the commission. I suppose it was the commission because they were given a free hand to do what they liked. They acted, I will not say in a reprehensible manner but in an inappropriate manner, at all events. Would not common sense teach anybody who was putting two or three hundred of these Japanese into a camp, when you knew their characteristics and record, to put some kind of guard over them that would be at least reasonably effective? But what did they do? They put two or three men in charge of a camp. What was the result? The Japanese, not the white men, ran the camp. There were three men to guard a camp of three hundred Japanese. These men had, each of them, one rifle, and I suppose they all went to bed at night, or if they did not, there was only one man on duty. As I said when I spoke here before, it would be all right if it were a penitentiary, with a guard walking on the balcony; he could fire at a prisoner trying to escape and that would bring a host of guards around. But that could not be done in a camp where all these men are together; they might gather around the guard to see what time it was, or to light a pipe, and then stick a knife in him, and that would be the end of control there.
We made a fuss about the matter. Protests were made by members from British Columbia, and we were promised an investigation, which took place. In that regard distinct changes were recommended which were all to the good. It was proposed to put on more police, to have the mounted police there, and to put guards on a railway car which could run along the railroad and drop off at any camp where they were required. But there was one fault; they did not take these steps soon enough. The Japanese got complete moral control, and the most fatal thing you can do with regard to an oriental native race is to lose face. We were allowed to lose face. The guards arrested some ringleaders and proceeded to take them to the station, and a mob went down there and took the prisoners away from them. The police had to submit or there would have been bloodshed. Once get that idea in the oriental's head and you might as well retire from the scene altogether. Here is a news report:
Jap Strikes Bog Highway Construction.
Construction of a road from Jasper, Alta., to Blue River, B.C., is being discontinued and will not be resumed unless the federal government decides the highway is a matter of national necessity, a spokesman for the Department of Labour said Monday.
He said the discontinuance was forced by strikes and slowdowns among Japanese labourers who were protesting against being separated from their families.
Japanese in British Columbia

The Japanese did not like the foreman; they did not approve the way he spoke to them, and therefore they had him fired. He could not get along with the Japanese, and accordingly the government fired him. Then these men staged a strike. The cooking was not to their taste. Then they staged a strike because they wanted to have their wives and it was decided that that could not be allowed. That was the government's policy, which I approve, but the Japs organized these strikes, and the government said: all right; we will turn you loose and put you among your friends; and the camps are to be closed. In one way the idea had merit, because it prevented sabotage on the railways, which were right alongside. But that was not the way the matter should have been dealt with. The law should have been enforced to begin with, and after we had proved that we were in charge, and not they, a change could have been made if it were considered to be wise. At any rate they are to be taken away and put in these ghost towns. It is rather difficult to know what they would do there, because after a town has been closed down since mining days, there remains nothing to do, there is no demand for labour, and it is difficult to see how they can employ themselves. In any event it would have this effect: it would take them out of the danger zone of Vancouver; it would remove them from the protected area, and it would not be any worse to have them in, say, Slocan, than in Vancouver, with the additional advantage that they were away from a danger zone where, in case of enemy attacks, they might communicate with their friends.
A good deal of the trouble comes from something which has been going on in British Columbia for fifty years. I refer to the total misapprehension and utter ignorance in eastern Canada of conditions in British Columbia as regards orientals, and several other questions as well. Some of the newspapers run columns headed "Forty Years Ago" or "Fifty Years Ago", as the case may be. Here is an excerpt which I picked out a few days ago, on July 23, taken from the records of a leading newspaper forty years ago:
Ottawa reported that the federal government was expected to disallow the act recently passed by the B.C. legislature providing for barring of Japanese immigrants who could not pass an educational test. A somewhat similar act had been disallowed a year before.
I was in the provincial house at that time- it is a long way to look back-and voted for that bill. As far as I can recall, it passed unanimously, because it represented the outstanding wish of British Columbia. But although the province, through its legislature,

expressed itself in that way, the dominion government disallowed it. Had that bill become law, there would have not been any issue to-day in British Columbia on this vital question. Time went on and I came here; and as opportunity afforded, I advocated this point of view here and have been doing so for the past twenty years. As recently as May, 1938, I introduced what was almost a copy of the bill which was passed by the British Columbia legislature. I headed it, "Exclusion of Japanese Immigration by Providing an Educational Test". This is the same law as they have in New Zealand and as they have now in Australia, and, I believe, in south Africa. It has been successful and not at all provocative. The bill was brought up in this house, and the record is there for anyone to see, on May 31. The British Columbia members, as usual, divided their allegiance on political grounds, rather than provincial grounds as they should have done, and I got very little support from the Liberal members in this house, although two or three rallied round. Had the bill passed then, the situation would have been not quite so bad as it is now. But the time to have passed the bill was forty years ago, before the trouble began, or when at any rate there was very little trouble, and we would not have all these difficulties on our hands now.
I always have had the idea that if anyone rises in his place in this chamber and complains of conditions, it is up to him to suggest a remedy; it is not sufficient to say, "I don't like this", and "It is bad", and to damn the government. Anyone can do that. If things are not right, it is up to the member to make practical suggestions whereby such conditions may be improved. I should like to make some suggestions in this regard.
We do not want a British Columbia Hong Kong. We have heard enough on that disaster lately. I would urge the government not to allow a single moment's delay in clearing these people out of Vancouver. The hon. member for Vancouver South (Mr. Green) spoke about their being turned out in September and October. Yes, but I have a newspaper cutting in which it is stated that the government are going to get them out by December-next December.


Howard Charles Green: Every month it is one
month later.


Alan Webster Neill: It always keeps ahead a
month or six weeks. "Man never is, but always to 'be blest". We are always going to get them turned out, but if the members from British Columbia go home where we cannot do any more, except by writing protesting letters and receiving stereotyped replies, what will

Japanese in British Columbia
happen in the next six months? It will be atrung out for another three months longer, and then another three months. The hon. member for Vancouver South mentioned, I believe, August 15. Without any collusion with him I was going to say, three weeks from now, but I have some doubt about how it can be done. If it takes from last December until now to turn out 3,000 how long will it take to get rid of the rest? My suggestion is, take it out of the hands of Mr. Austin Taylor and his confreres and put it in the hands of the military people, then it will be done. The military men are keen to go at it, in view of the present conditions. Therefore, I urge, take it out of the hands of the people who at least, no matter what reason they can give, have fallen down on the job, and put it in the hands of the military. Then it will be done; I do not think there is any doubt about that.
Let me make another suggestion. As hon. members have mentioned, a good deal of the trouble arises from the fact that these people are supremely unwelcome, wherever your propose to put them. I believe the minister said on one occasion that it is all very well to talk about moving them out, but where are you going to move them to, when every part of British Columbia, even perfectly safe places, objected to receiving them, and other provinces objected, for the first thing they said to themselves was, "If we"-in Manitoba or Ontario, or as the case may be-"accept this bunch of orientals, how are we ever going to get rid of them?", and the first thing they demanded was that the British Columbia security commission guarantee that these Japs would be taken back to British Columbia. But that is not what we want.
The remedy is a simple one: Let the government announce that it is the settled policy of the dominion government that it will use all the influence-the heavy influence-which it must possess at the peace settlement talks to provide that all these orientals from Japan shall be repatriated at the close of the war, whether they were born in Japan or in Canada, because those who were bom in Canada have proved to be the more aggressive and the more dangerous. Let the government announce that that is their settled policy, and all the objections raised, even by the hon. member for Yale (Mr. Stirling) and by the people in Ontario, will disappear.
They do not mind their coming here because labour is needed and they would be glad to get them. These people have common sense enough to look ahead and to realize that once the Japanese settled in Manitoba or Ontario they might have a terrible job getting rid 44561-312
of them. But let them know that there is a government guarantee that the Japanese will be taken away; let the people of British Columbia know that the Japanese will be expatriated after the war, and ive shall be much more satisfied. If that were done, the difficulty would be much reduced. It may be said that we are only one nation, only one of twenty-six nations; how, therefore, can we be sure that any arrangement made will be carried out, or how do we know what arrangement will be made. Well, I am prepared to take a chance. If the Dominion of Canada-leader of all the dominions-declares it to be its avowed and pledged policy to strive by every lawful means in its power, when the terms of the peace settlement are being considered, to bring about the expatriation of these people, I will take a chance.
Another policy which I suggest would be most effective, looking at the scheme in its broader aspects, is this. It has been said in this house, and said most unfairly, that we must not talk like this. We must handle the Japs with kid gloves and not say anything harsh about them, or do anything harsh to them, because they might retaliate on our prisoners in Japan. Let me say that no one wants to do anything harsh to the Japanese in British Columbia. The diplomat representing the Japanese-he came from Spain, I believe-went through British Columbia the other day accompanied by a Jap who acted as interpreter, and they expressed themselves as being satisfied with the manner in which we were treating the Japanese. We do not want to hurt them, and I say that for their own sakes the wisest thing would be for the government to move them out of that area, because if some atrocity took place in Japan and stories got back here about prisoners being bayoneted and that sort of thing, there might be a riot in Vancouver and fifty or a couple of hundred Japs might be killed. That would have a very serious effect not only on our own men but on the Japanese themselves
Next let it be known through the regulai official channels that after the war these men -whether high or low-not only the individual man who does it, but those who instigate him, those who are really responsible for these atrocities of which we have heard, or may hear-will be given a fair trial. Let there be no suggestion of vengeance or retaliation, but let it be known that they will be tried for whatever crime they commit, murder or rape, as the case might be, just the same as we try Canadians for the same offences. Let it be officially made known to the Japanese government that at the end of the war anyone responsible for these bar-

Japanese in British Columbia

barities, cruelties and bestialities will be held responsible-not only the ordinary man, the ignorant soldier with his bayonet, but the men higher up who countenance these crimes. Let them all know that they will have to share the responsibility, and that will be apt to make them pause a while and think before perpetrating any of these crimes.
Lastly I have another suggestion to offer. Let the members from British Columbia get together on this question. There are sixteen of us, and though numerically we are not of great importance in a house of 245 members, nevertheless we are capable of bringing pressure to bear. Let us get together and in defiance of political affiliations, in forgetfulness of party, let us pledge ourselves to unite on this one subject alone and make it known that we will not rest until the problem is solved and the Japs are taken away from that war area. Let us pledge ourselves to see to it that their expatriation is assured. Let us stick together on that one thing and we shall not lose any votes. Rather, we shall have the good-will and the support of our respective followings, and we shall have done something worthy for the whole province of British Columbia.
To summarize, let it be the determination, the object of the members from British Columbia to put pressure upon the government to clean out that area of Japanese, all Japanese in the protected area on the coast, within three weeks, and to remove the British Columbia security commission. As a matter of fact, the chairman says that he wants to give up his position; he says he has a nobler job to go to. Let him go to it; all hail to him. Let us put a military man in charge, a man determined to do his job and not to swap platitudes with the other members of his staff. Let us also announce a policy, not of punishment or of vengeance, but of expatriation. The laws of nations are well known. One of the laws of nations says that you shall not treat prisoners in such and such a manner. Let it be known that those who encourage or allow their populace to break those laws will be held responsible, either as regards captured soldiers or as affecting civilians. Those are the points that I would press upon the government in all friendliness.
This is somethng bjgger than a mere local issue. We are often told that it is petty and local. The minister said that it was British Columbia's funeral or British Columbia's responsibility. It is not. It is something away beyond that. It is a national consideration. The day may come; in fact the time is here now, when the situation is pregnant with difficulty '?.r the whole national 
life, because British Columbia lies open to attack, and 23,000 Japs are right there to give the most valuable information to the enemy. They know who's who and what's what, and they can give that information in detail. It becomes us, not as politicians from British Columbia, but as men aspiring to act like statesmen, to deal with this question from a broad national point of view in order to get something done and to get it done quickly.


Mr. J. G. TURGEON (Cariboo):: I wish
to speak on this question of the Japanese in British Columbia largely from the same position as that taken by the member for Yale (Mr. Stirling). The Japanese are being moved from what has been declared the protected area of the coast into the southern portion of the Cariboo electoral district, particularly in the Bridge river country, in Lil-looet, along the Cariboo highway as well as along the Pacific Great Eastern railway. I agree entirely that the first duty relating to the evacuation of Japanese is to take them out of that portion of Canada which has been declared by the military to be a protected area. I am not rising to criticize; I am rising rather to give publicly a warning to the minister which I have given him in personal conversations and in letters, both to himself and to the deputy minister.
These Japanese are being moved from a protected area into another part of Canada, which before very long will itself be declared a protected area. They must be moved; I agree with that, and that is one reason why I have not made any loud protests. They have all, I am told, been moved from Vancouver island, which I think was the first action indicated by the presence of the Japanese on the outbreak of war with Japan. They should next be moved from Vancouver city, and they must be moved somewhere. But we have to-day the danger of attack across Alaska and the Aleutian islands and the danger of attack across Prince Rupert, and when these points become nearer to absolute battlefields than they are to-day, then the task will have to be undertaken of moving from that area all the Japanese who are now being permitted to go into it.
I personally am a little afraid that some of the men talked of to-day by two hon. members, men who were taken from roadwork because they did not like the conditions surrounding that work, are being joined with their families in that interior portion of British Columbia which is soon going to be considered a militarily strategic area. There is great talk of building by the United States military authorities of the railway from Prince George to

Japanese in British Columbia
Alaska. If they build that railway from Prince George, the Pacific Great Eastern will be only eighty miles from it, at Quesnel. That railway runs to salt water at Squamish, and these Japanese are being planted right along the railway and along the Cariboo highway, the two routes that lead to Prince George and that military area on the north and west.
I agree with the hon. member for Comox-Alberni (Mr. Neill) that this is a national question. Possibly we from British Columbia are largely to blame for the fact that in general the people of Canada do not regard it as a national question, because we have always insisted on looking at it as a purely British Columbia problem. It is a national problem;
I know the Minister of Labour (Mr. Mitchell) regards it as a national problem, but I am warning him that the people of British Columbia, those who are dissatisfied with the way the work of handling the Japanese has been carried out, are not to-day blaming the British Columbia security commission, they are blaming this government, and particularly the Minister of Labour. I am calling that to his attention publicly to make certain that he knows it, although I think he does.
I have nothing further to say except to reiterate that this is a national problem, that however you scatter the Japanese around different parts of British Columbia, you are going to find-at least I am very much afraid you are-that wherever they are put in that province within the next thirty days, you are going to find them in a battle area or a potential battle area. Therefore I urge on this government, on the British Columbia security commission and on all the people of Canada who are giving thought to the Japanese question that these Japanese be moved, not only to points in British Columbia away from the actual coastline, but into various parts of Canada wherever they can be. taken.
I wish to joih heartily with the hon. member for Comox-Alberni in what he said concerning what ought to be the attitude of Canada when we have won the war. We do not see much sign of winning it yet; but when we have won the war, what ought to be the attitude of Canada towards the Japanese now resident in this country? I agree with him wholeheartedly that one of the terms of peace imposed upon our enemies of to-day should be the taking away from Canada of all the Japanese who are here, and, of course, refusal to permit any more of them to migrate to our shores.


Mr. R. W. MAYHEW (Victoria, B.C.):: A few weeks ago I received some correspondence from Victoria regarding the presence of Japan-44561-312|
ese on Vancouver island. At that time I took the trouble to inquire from the mayor of Victoria and the mayors of other cities and towns in Nanaimo riding, and with the hon. member for Comox-Alberni (Mr. Neill) we found that as far as Vancouver island is concerned there appear-I say "appear" advisedly-to be only five Japanese left on Vancouver island, and that those five are married to white men. That statement has been given some publicity. In itself it is dangerous, because the authorities on Vancouver island may take it for granted that those are all the Japanese we have. I should be surprised-I should also be delighted-if that were the case, because there is ample opportunity for them to cache themselves away and to be of use when the time comes. I send out that word of warning at the present time.
As far as the handling of the Japanese is concerned it should be taken out of the hands of the security commission. It should never have been in their hands. It should never have been anything but the responsibility of this government to see that that situation was taken care of properly, and of course as humanely as possible. Speaking in this house some time ago I suggested that as far as possible the Japanese should be moved from their present places of abode in units of families, so as to keep their families together as much as possible.
I maintain that it is not a British Columbia problem only; it is a problem of all of Canada. It will never be settled until the other provinces are willing to take their full share and to admit the Japanese. Ten thousand or fifteen thousand Japanese in the city of Toronto would not be noticed there.


John Ritchie MacNicol: The hon. member is very kind to Toronto.


Robert Wellington Mayhew: Well, you people in eastern Canada have been very keen to trade with the Japanese; you wished to cultivate their good-will so that you might sell your merchandise in Japan, and while you were doing that we in British Columbia had them as competitors-and they are not bad competitors at that; there are lots worse.


John Ritchie MacNicol: The scrap iron went to
them from British Columbia.


Mr. McGEER:: Just as much went from Ontario. It went out through the St. Lawrence by the boatload.


Robert Wellington Mayhew: I do not interrupt others very often when they are speaking, and I should like to continue. I say it is definitely a Canadian problem. Let me give credit to the Hon. Mitchell Hepburn, he showed the right
Japanese in British Columbia

spirit; he was willing to take some Japanese on his own place to work for him and found them good workers, and anyone who takes them will find them good workers. Certainly they are loyal to Japan. Would anyone of us who had lived for forty years in Japan be anything but Canadian? Do we expect more of them than we do of ourselves? We must accept that as a straight, hard fact and live up to it. The people of Canada must not say that there is an area into which the Japanese are not to come and another area into which they may come. Must we draw a line and say they can live on this side but not on that? It is absolutely silly. Scatter them through the whole of Canada as widely as possible and we shall not have any trouble. Some hon. members who have sons who may probably be fighting on the western coast of Canada before very long will then realize that it is their own problem, if these Japanese prove to be the fifth columnists who are the means of destroying those members' sons while they are fighting the Japanese. This is more than a British Columbia problem; it is a Canadian national problem, and this government should shoulder the total responsibility. It should not be on the shoulders of the Minister of Labour. He has enough to do with other problems. It is something far beyond that. It should be dealt with as something apart from anything else, a separate problem, and dealt with in a proper manner.
Mr, T. J. O'NEILL (Kamloops): I am fairly well in agreement with most of the things that have been said this afternoon, and more especially with the hon. member for Comox-Alberni (Mr. Neill) and the hon. member for Victoria, B.C. (Mr. Mayhew). In order to size up this situation properly as it exists, we should go back to last winter. Last January it became quite apparent that the Japanese must be moved out of the protected area of British Columbia, and certain regulations were drawn up. The Japanese were not to have automobiles or trucks or radios or cameras or firearms, and so on; and in addition there was a curfew set up, under which they were supposed to be in their place of domicile each day between sunset and sunrise. Many of us overlooked the fact that these regulations applied only to the protected area, but now we find that they are not being lived up to even in that area. A commission was set up, and I did not hear any violent objection to that commission on the part of any hon. member. Personally I was of the opinion that this was the proper way to handle the Japanese. I thought you would have British Columbia men right there on the job, and naturally I supposed they 
would be just as much interested in having these Japanese moved out of that protected area in the shortest possible time as I would be if I were on that commission. Apparently it has not worked out in that way, and now I am in agreement with the hon. member for Victoria, B.C., that we should have some different system of handling these people than the British Columbia security commission, because they have not done the job; they have not moved the Japanese within anything like the time during which they were supposed to be moved.
Like the hon. member for Yale (Mr. Stirling), I come from a constituency which has been more or less on the receiving end of this movement. Some two thousand of these Japanese have been moved into the Kamloops district. I had no objection to their being moved into that district, because they were to be engaged on road building projects which I thought were in the interests of British Columbia and of the country as a whole. But in two different areas they are being handled in two different ways. In the Jasper-Blue River area they have had sit-down strikes and all the rest of it; they have done very little work and have caused no end of trouble. The principal reason for these demonstrations was that the men objected to being away from their families. Well, that is quite a natural feeling and is not confined to the Japanese. But as a locomotive engineer connected with railway construction in British Columbia, I spent many a summer away from my wife and family, not because I liked it but because there was no place for them in the district where the construction was being carried on; and it seems to me that at a time like this' when people, whether they are Japanese or white, are privileged to live in a country like Canada, they should have sense enough to realize that they are living in the best country on the face of the earth. Apparently the Japanese do not realize that. No one has ever suggested that the Japanese should be treated in anything but a British way:	No
one has ever suggested that we should ill-treat them, but certainly the Japanese should have to obey the law like everyone else in this country. AVhat would we say of a man in a munitions factory who was always stirring up trouble, trying to bring about strikes and all the rest of it? We would put him in an internment camp, or in gaol, and why should we give any different treatment to a Japanese who will not obey the laws of this country?
That is the condition which has obtained in the Jasper-Blue River area, and what are the commission or the government going to

Japanese in British Columbia
do about it? In my opinion they are taking exactly the wrong step; the Japanese are going to run the camp now. I understand they are going to move those fellows out of there and take them back to their families. That is what they have been asking; now it is going to be done, and the work will be shut down.


Paul Joseph James Martin: How many have been interned?
Mr. O'NEILL: I do not know.


Humphrey Mitchell: About six hundred.
Mr. O'NEILL: In the Revelstoke-Sicamous area there are 502 Japanese on road work, but they are doing an excellent job in fixing and straightening the trans-Canada highway. There has been no trouble at all, and the mayor of Revelstoke says they are just as law-abiding as any citizen anywhere in Canada. Why can we not have that situation in the Jasper-Blue River area? It is all a question of management. If you can have proper conditions in one camp, under proper foremen, then I say, if you cannot have the same conditions in another camp it is up to you to change the management. The British Columbia security commission have been responsible for the difficulty. They have permitted these conditions to go on.. They have taken the line of least resistance, anything at all to get by, Like the hon. member for Victoria, B.C., I say now that the matter should be taken out of the hands of this commission and that it cannot be taken out of their hands too soon. Last spring we were told that every one of these Japanese would be moved out of the protected area by the end of April. Then we were told it would be done by July. Now the government say it will be October, while the British Columbia security commission say it will be November. I am. told that those men who objected to doing any work in the Jasper-Blue River area have been moved back to Vancouver and reunited with their families. I do not know whether or not that information is correct, but that is what I ami told.
I do not think there is very much more I could usefully add to this discussion, but I do believe something must be done. As the hon. member for Victoria, B.C., has said, in the last analysis the government must take the blame for what has happened, and unfortunately the blame is going to fall upon the Minister of Labour (Mr, Mitchell). I do not want to have that happen, because I believe the minister is honestly trying to make a success of his job, and I do not wish to see him saddled with something for which
he really is not to blame. But he will have to stand1 the blame, and I think the government is very foolish to allow the Japanese to dictate the manner in which they are going to be handled in this country.


Gerald Grattan McGeer: Mr. Speaker, I am not in agreement with the policy of the government in dealing with the Japanese situation, nor can I subscribe to all the respresentations that have been made by British Columbia members to-day. From the very beginning my representation to the government has been that our attitude toward the Japanese in Canada should be exactly the same as the attitude ofi the Japanese toward Canadians in Japan. I cannot bring myself to believe that there are any Canadians or Britishers running free in Japan to-day; and you are not going to solve this problem to the satisfaction of the people of British Columbia or for the safety of the people of Canada until you put all the Japanese under proper control, which in my humble opinion means under proper internment camp supervision. You may save a little money by having them work on the roads; you may save a little money by letting them go free in the communities in the interior of British Columbia, but it is nearly time that we began to think of all phases of this war, not in terms of saving money but in terms of establishing security at home and getting on to victory abroad.
This is just another instance of what has gone before. It is another instance of the government putting money first, things next and the security of the people last. There is no more unfortunate example of this kind of thing than taking Japanese from the coast of British Columbia and distributing them to points where in my opinion they are even a greater menace than they were when on the coast. I have made these representations before, and I make them now in all seriousness to the minister. This is one problem which is not a British Columbia problem, it is a Canadian problem and a much more serious Canadian problem than the government of the day seems to acknowledge.


Humphrey Mitchell: Mr. Speaker, first of all I want to acknowledge the kindly references to myself which have been made by hon. members. With all the sincerity of which I am capable I wish to say that I believe we have done a good job in the removal of Japanese from the coast of British Columbia. It is not the easiest thing in the world to move 25,000 people from one part of this dominion to another. The British Columbia security com-
Japanese in British Columbia

mission, is composed entirely of British Columbians of all political stripes. It was approved by this parliament, and I think it received the general approval of the people of British Columbia. I am going to say what I have said before; it is a wonder that we have been able to move a single Japanese from the coastal areas of British Columbia because of the attitude taken in certain quarters toward the Japanese themselves. There may be something in the argument of the hon. member (Mr. McGeer) who has just spoken, that these people should be interned, and there may be something in what the hon. member for Vancouver South (Mr. Green) said, that we should establish a ghost town on the prairies.


Howard Charles Green: It would not be a ghost town.


Humphrey Mitchell: It would be almost a ghost town.


Mr. NICHOLSON:: How many Japanese would there be?


Humphrey Mitchell: About 24,000. That would mean a city almost as large as Brantford or Saskatoon or many other cities in this dominion. I do not need to tell this house that such a plan would not be free from complications. It would probably create problems which would be more difficult than the ones with which we are. dealing at present.
We have already removed nearly 16,000 from this area. All have been removed from Vancouver island, and those left in Vancouver at the moment are mainly women and children, children under the age of eighteen years. I do not think we have reached the stage where the Canadian people, or the people of Vancouver, consider that a serious problem exists because they are confronted with women and children, whether they be Japanese or any other race. I should like to pay a tribute to the Royal Canadian Mounted Police. It is not only people of Japanese origin who are roaming through the country, but the fact remains that to date there has not been a single instance of sabotage that I know of.


Howard Charles Green: Not time yet.


Humphrey Mitchell: I appreciate that, and I was going to cover myself by saying that.
I am not holding any brief for these people, but it must be remembered that many of them are Canadians, in fact perhaps more Canadian than myself. I was born in Great Britain, whereas many of these people were born in Canada and went to school here. The
police say that they are the most difficult to deal with, more difficult than those born in Japan who are largely of the peasant type.


Gerald Grattan McGeer: The Japanese who were born here are worse than those born in Japan.


Humphrey Mitchell: I have just said that.


Gerald Grattan McGeer: More loyal to Japan.


Humphrey Mitchell: I do not know about that, but they are proving more difficult to deal with. The hon. member for Kamloops (Mr. O'Neill) has referred to the Jasper-Blue River highway. These people were put in there because a demand was made for the completion of that highway. During the last six months I have had a good deal to do with industrial matters in many areas. I am not going to suggest to this house, nor do I think any hon. member would suggest that large industrial undertakings can be carried on without some degree of friction, even when carried on by free men. These particular people stand in a different position from that of men who are employed by a contractor. If a man who is employed by a contractor does not behave himself he can be fired and he goes on his way. But you cannot fire these people. It is quite true that in the early days of the construction of this highway there was some difficulty, but you have difficulty everywhere. There was no greater difficulty than would be encountered in the average construction undertaking. It is true they staged a sit-down strike and I believe about 400 odd have been interned, but if you want a highway built, and apparently the people in these localities ^wanted this one built, you must be prepared to put up with the type of inconvenience that sometimes occurs on construction jobs whether they are being done by Japanese nationals, by Canadians of Japanese origin or by people of the other racial groups that go to make, up this great dominion. I have received protests from city councils against the stopping of this highway work in which these Japanese are engaged. I should like to quote an editorial which appeared in the Revelstoke Peview of July 23, 1942, as follows:
West Road Camps
Disturbing rumours that the Japanese camps on the west road are to be closed down were aired at Monday night's joint meeting of the city council, board of trade, junior board of trade, and Canadian legion and the unanimous opinion was held that the work was proceeding well, that there was no dissatisfaction over the conduct of the Japanese and that the camps should remain in operation until the end of the war or until such time as the Japanese can be employed on some more productive undertaking.	[DOT]

Japanese in British Columbia
The Japanese are doing an urgent piece of work well. The government has established camps at considerable expense. At the same time the provincial department of public works has provided ample machinery to make possible a high class road improvement job.
There does not appear any logical reason for the removal of the camps from this district, but many good reasons why the money already spent should be utilized to the fullest extent by keeping the men on the job.
Incidentally if the Hope-Princeton project is unable to absorb all the men from the North Thompson, several camps could be located on the Arrowhead-Nakusp highway route to speed the construction of a highly important road link.
You see you get these different opinions. You must decide whether you want to construct one of these towns referred to by the hon. member for Vancouver South, or whether you are going to disperse this labour force across the country in order to assist in the acute labour situation that now exists. They have done an excellent job in the beet fields of Alberta and the minister of agriculture of Manitoba has made the statement that if it had not been for Japanese labour, they would not have been able to harvest their crop. Reference has already been made to the fact that the premier of Ontario has a number of Japanese farm workers in his employ. Until the present policy is changed I think we shall have to continue with what has been established and use these people in the most productive types of employment it is possible to procure for them. I think in that regard we have made a positive approach to the problem because we have moved from fifteen to sixteen thousand Japanese with very little difficulty, and with credit I think to those responsible for this movement.


Alan Webster Neill: Would the minister give us his views on expatriation?


Humphrey Mitchell: I shall be glad to do that.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Humphrey Mitchell: Mr. Speaker, just before the dinner recess I said that I would endeavour to answer some of the questions put by hon. members with respect to the removal of Japanese from British Columbia.
Two days ago I met all the hon. members from that province and gave them a statement with respect to the numbers already removed and the anticipated policies of the government to clean up the situation. I do not know
that it is necessary for me to place that statement on record, but if it is thought advisable, with the permission of the house I will do so. It is fairly well up to date, although since it was prepared the figure has been reduced to 8,827, some 300-odd additional people having been moved.


Howard Charles Green: Up to what date is that?


Humphrey Mitchell: That is up until yesterday. Of the 8,827 yet to be evacuated, approximately 3,000 are in Hastings park, leaving 5,800 in the city of Vancouver, practically all of whom are women and children.


Howard Charles Green: According to the minister's own figures, about 1,000 are men.


Humphrey Mitchell: But 800 of those are physically infirm and unemployable. Only 154 over the age of eighteen are employable; they have been left because of conditions in their own homes, whether because they have invalids there or for other reasons, and so far it has not been felt necessary that they should be removed.


Mr. CRUICKSHANK:: Will the minister permit a question? Do I understand him to say that all the men over that age are cripples?


Humphrey Mitchell: Yes-unemployed.


George Alexander Cruickshank: No, but are they unemployable? What does the minister mean by "unemployable"?


Humphrey Mitchell: I think an unemployable man is one who cannot follow gainful employment, be it on a farm or in a road construction camp. That is how the word is generally understood. There are 154 employables in the group.


Howard Charles Green: Those men would have that much more time to do fifth column work.


Humphrey Mitchell: That may be true, but I say frankly to my hon. friend that I am not afraid of the situation in Vancouver.


Howard Charles Green: That is why we are worried.


Humphrey Mitchell: So is everybody else worried. Let us be realistic about this matter. As I have said many times before in this house, you want these people evacuated. Your own commission of your own people in British Columbia-


Howard Charles Green: Your commission, not ours.


Humphrey Mitchell: Well, it is a commission of British Columbians, made up of people of every political party, approved by this parliament and by the people of British Columbia.
[DOT] 4948
Japanese in British Columbia

They have moved with as much expedition, in my judgment, as is humanly possible in removing these people from British Columbia.


Howard Charles Green: When will the last Japanese be out?


Humphrey Mitchell: I do not know. I am not a prophet. I should like to be able to say when the war will be over.


Howard Charles Green: That has nothing to do with the matter..


George Alexander Cruickshank: Will the minister permit a question?


Humphrey Mitchell: If my hon. friend will
wait until I am through I shall be at his disposal for just as long as he likes.
Families have been settled in Greenwood, Slocan, Sandon, Kaslo, and on a ranch fourteen miles from Hope, British Columbia. The four places first named were abandoned mining towns. Abandoned buildings are being used, and in addition a thousand tents are being erected which, it is estimated, will be able to accommodate 6,000 people. In addition, frame houses are being put up. In fact we are utilizing some of these mining towns 'nhich an hon. member from Vancouver spoke about this afternoon. It is felt that those who have families could be moved as family units on to farms in other provinces east of the Rockies. We have removed all ablebodied Japanese from points considered especially vulnerable, and when I say "all able-bodied Japanese" I might also include many others. The evacuations to the interior towns of British Columbia the commission hope to accomplish in the not very distant future.
This, I would say, constitutes what might be called the first two steps in the movement. The next step is to complete the placement of the man and woman power represented by these people where it will be of use. I do not intend to rest content with a plan which simply means moving them to a new location and letting them live there at the expense of the rest of the population of this dominion. We have been urged to intern all the enemy aliens. This would mean the establishment of internment camps for 23,000 people, of which I spoke this afternoon. I think I may say that this would be contrary to the policy of the government at the present moment. We do not intend to intern these people unless some action on the part of a particular individual makes it necessary to intern him. To date it has been necessary to intern some 465 males who had a part in some of the strikes mentioned by hon. members this afternoon. In addition to the fact 
that internment is entirely contrary to the government's policy, such action on our part would result in harsher treatment of our own people who happen to be prisoners of the Japanese. The cost of internment, as my hon. friends will understand, would be almost staggering, notwithstanding the opinions of one of Vancouver's representatives this afternoon.
What, then, is the policy? It is simply to move these people into other parts of Canada where they can be used to advantage as productive man-power. Recently we had sent out by the labour department through the mailing list of the Winnipeg Grain Grower's Guide a circular letter to 150,000 farmers in western Canada making available to them these Japanese farmers of whom I have just spoken. I do not intend to read the letter, but if any hon. members wish to see it I shall be glad to show it to them. I think that as a matter of record, to point out what these people can do, if it were not for the pressure under which we are working at the moment it would have been well to place it on Hansard.
Criticisms this afternoon and at other times have been voiced with regard to the delay in getting all these aliens out of the areas spoken of by my hon. friends. We have been told this afternoon that we have not done as quick or as thorough a job as has been done in the United States. In the United States the problem is very much greater than our own. The estimate given before the select committee investigating the matter at Washington was that there is a population of 384,000 Japanese to be dealt with in that country.


Howard Charles Green: That is not correct.


Humphrey Mitchell: That is the record; let
it speak for itself.


Howard Charles Green: What record is that?


Humphrey Mitchell: I have not seen any official figures as to the numbers evacuated. The leader of the opposition (Mr. Hanson) mentioned that 100,000 have already been moved, and I have no doubt that those figures are reasonably correct.
Might I say, in passing, with regard to the movement in the United States that it was not undertaken without some criticism. To those hon. members who voiced criticism this afternoon-and they have a perfect right to do so; that is the basis of this institution- I say that the criticism in the United States has been far more vigorous than criticism in this country, and I believe, although this is a matter of opinion, that it has been largely brought about because of the fact that the

Japanese in British Columbia
United States authorities have attempted, at enormous cost, to establish towns in certain states of the union. One hon. member spoke this afternoon of the expense of these operations. Of course it is expensive to move people; this movement has been expensive, in spite of the very economical way in which we have proceeded. If we put our expenses against the amounts spent by the United States, the cost of moving this body of people will bear favourable comparison with theirs. The figures I have given would indicate that the evacuation of Japanese in the United States is about one-third completed. We have fewer than 9,000 out of 23,000 to evacuate.


Howard Charles Green: On that point, I do not think the minister should quote figures without telling us his authority, because I understand that there are only slightly over 100,000 Japanese in the United States.


Humphrey Mitchell: We got the figures from the select committee in Washington, and I do not know of anything more authoritative than that. I believe there are 3S4,000 there, but if my figures are incorrect I will not quarrel. I believe someone says 60,000. Well, I will not quarrel about the figures. I believe the British Columbia security commission has dealt with a difficult problem very well indeed. All the criticism comes from British Columbia members; yet the men who are handling the affairs of the British Columbia security commission are prominent citizens of that province, and when British Columbia members criticize them they are criticizing citizens of their own province.


Alan Webster Neill: We did not appoint them.


George Alexander Cruickshank: It does not necessarily follow.


Howard Charles Green: The minister's statement is pretty far-fetched.


Humphrey Mitchell: You have to choose your weapon. You cannot switch from the British Columbia security commission to some other authority when it comes to responsibility.


Howard Charles Green: That is what the government has been doing.


Humphrey Mitchell: I shall come to that in due course. I will not let that pass by either.


Grote Stirling: Perhaps the minister will permit this observation, that those who have made representations to the British Columbia security commission are also citizens, and responsible citizens, of British Columbia.


Robert Wellington Mayhew: May I say that one of our complaints is that the people in the rest of Canada are not taking any interest in the matter.


Humphrey Mitchell: Perhaps I can put the matter in reverse. What the hon. member for Yale (Mr. Stirling) says is quite true. Many of the representations made to the British Columbia security commission have been made by British Columbia citizens. May I say with all due respect to those who made the representations that in my opinion the commission showed some courage in undertaking to deal with what everybody admits is a very difficult situation. I may say frankly, as far as I am concerned, I do not think I sought the job of removing 23,000 people from British Columbia. Let us be fair to these people and give them the credit that is their due for having, first, assumed the responsibility and, second, for having undertaken a very difficult task and carried it out in so humane a way.


Howard Charles Green: Do I understand that the government is declining to take over direct responsibility for this evacuation, that it insists on leaving it with the British Columbia security commission?


Humphrey Mitchell: I cannot speak for the government at the moment. At present the British Columbia security commission is in charge of the evacuation, subject to certain qualifications as to decisions made by me with respect to expenditures and other matters of that kind.


Gordon Knapman Fraser: Surely the minister, who is at the head of it-


Humphrey Mitchell: You do not need to worry. I will take responsibility.


Gordon Knapman Fraser: But you said you did not know.


Humphrey Mitchell: If you are worried about who should be responsible in the final analysis, I may say that I will take the responsibility.


Gordon Knapman Fraser: That is what \ve want to know.


Humphrey Mitchell: It has been suggested to me that the department could have handled the matter more expeditiously as a departmental affair. I do not know whether this was intended as a compliment or not. The British Columbia security commission was appointed largely to satisfy the demands of British Columbia. Those who criticize the commission because of delays have not given sufficient study to the matter, nor do they realize that some of the steps taken are simply progressive steps. First we moved the male adults to boarding cars. Hon. members will remember the incident when we first undertook the job, when the snow was on the
Japanese in British Columbia

ground. We moved the males out in order to satisfy opinion in British Columbia. Second, we moved the women and children and the families from vulnerable points to Hastings park, and, next, the families to interior housing towns; and lastly we proposed to move the families to the farms.
I do not intend to take up any more of the time of the house. I reiterate what I said at the opening of my remarks. I know this is a difficult operation, and by the very nature of things, when we are pulling up by the roots people who are not only of the first but of the second and perhaps the third generation in any community, we are faced with a considerable problem. I will voice the opinion I expressed before, that as far as I am personally concerned, while I am charged with this responsibility, it is going to be carried out in the British way and these people will be treated as human beings.


Alan Webster Neill: Nobody suggested otherwise.


Howard Charles Green: No one has suggested anything else.


Humphrey Mitchell: Let me finish. Other hon. members have expressed the opinion, and so have I, that whatever action we may take we should be careful not in any way to endanger the position of our own flesh and blood who are at present prisoners in Singapore and Hong Kong. I was gratified after leaving the house this evening to read in the evening newspapers a report with respect to the 1,577 Canadian prisoners at present in Hong Kong. I quote:
A total of 1,577 Canadians of all ranks in internment camps in Hong Kong are in good health, according to a press statement issued by the Department of External Affairs to-day.
A telegram outlining conditions in prisoners of war camps at Hong Kong has been received from Geneva by E. L. Maag, delegate of the International Red Cross Committee. It states that conditions regarding housing, food, clothing, hospitalization, dental care, recreation, library and religious life, appear to be satisfactory.
Of the total of 1,577 Canadians in camps, 65 were officers, 310 non-commissioned officers and 1,202 other ranks.
Camp Northpoint, where many Canadian prisoners are interned, particularly gives the impression of order, cleanliness, discipline and good humour, according to the telegram. Many of the prisoners show appreciation of good treatment.
At a hospital at Bownroad, containing 248 hospitalized, and at the St. Therese, where 69 are hospitalized, it is reported excellent conditions exist as well as competent medical personnel.
Clothing furnished by Japanese authorities is now plentiful, according to the telegram. For needs in winter, clothing could probably be bought locally.
Officers in the camps receive pay according to their rank, and furniture, food and clothing

provided by authorities make life easier. Noncommissioned officers have need of subsidies of 20 yen per month, the telegram said.
There is another item with reference to Shamshuipo. The thought I want to leave with hon. members is this. I am sure they all appreciate the difficulty of this undertaking. The hon. member for Vancouver South (Mr. Green) asked why we had dropped the idea of a Canadian construction corps. We did so because we felt that in moving these men to the Blue River-Jasper highway, that was in effect a corps in itself. We felt that, owing co the fact that w'e moved the able-bodied men so expeditiously to road camps and other productive employment, it would be unnecessary to establish that corps.
It has been said by someone that the government passed the buck. That, I think, is not a fair observation. I have already stated that there is no indication of that. It has been said that the plans have broken down. There is absolutely no substantiation of breakdown of the movement of these people from the coastal areas of British Columbia. This news item, which I sincerely hope is true, indicates that we have at least approached this policy in a manner that will produce the most good to our own people and in Hong Kong and that when this war is over it will be said about us that we acted decently in a very difficult situation in dealing with these Japanese nationals and people of Japanese origin.


Alan Webster Neill: The minister promised to deal with repatriation.


Humphrey Mitchell: Of course I cannot speak for the government. As an individual I share the view of my hon. friend. But remember this, we must win the war first, and then we can decide what we are going to do with this very difficult problem.


Howard Charles Green: Has any attempt been made to arrange for the exchange of Canadian and Japanese nationals? There are many Canadians in Asia under Japanese control, and we have many Japanese nationals in Canada. Why is it not possible to arrange some exchange?


Humphrey Mitchell: I think my hon. friend asked the same question of the Prime Minister, and he said that might be dealt with under external affairs. I am not close enough to the subject to answer for the Prime Minister.


George Alexander Cruickshank: I am sorry I was not here this afternoon. In spite of what the leader of the opposition (Mr. Hanson) might say about going home to-night there were things I had to do on that account.

Japanese in British Columbia
There are a few things I should like to take up with the minister. He remarked to-night that a commission was appointed composed of responsible British Columbia citizens. With that I have no quarrel, but I would ask the minister whether any British Columbia members who are familiar with the Japanese situation made any recommendation as to the composition of that committee. I know they did not.
I will point out how important this matter is to that province. I have here a couple of files on the matter, and I could bring many more that I have as a British Columbia member in connection with the Japanese situation. Just to-night one hon. member said that we are wasting time on the Japs. Another remark was that the member for Fraser Valley wanted to get his name in the papers. I do not have to worry about getting my name in the papers. If you stick up for your riding and for your dominion and for your empire, your name will get in the papers. As for wasting time on Japs, we talked for two or three days about something that did not amount to a hill of beans, an inquiry about something that happened in the past. It may be that mistakes were made, maybe not. Any hon. member who speaks of wasting time on the Japs should read the headlines or listen to the radio. What happened this morning to the Japs off Australia? We were told in this house, particularly from the Cooperative Commonwealth Federation, that when we from British Columbia brought up the Japanese situation we were stirring up racial hatred. We were told that it did not amount to anything. Where are the Japs on the Aleutian islands to-day? What advances did the Japs make yesterday? Read your headlines in this morning's papers or listen to your radio. Then we are told we are wasting time.
This is one thing I cannot understand. To-day we are fighting for our very existence, but we can waste a great deal of time in talking about wheat, or about Hong Kong after it is over, but we cannot spare any time to speak about the Japanese when they are advancing every day in the Aleutian islands and elsewhere. Here is something from the Vancouver Province, one of the largest newspapers in Canada, under date of April 27 last: "Japs stage food strike at Hastings". The same day that was brought up in the house by the member for Fraser Valley who pointed out that the chairman of this so-called British Columbia security commission said, "Just a playful gesture". And the Minister of Labour (Mr. Mitchell) accepted it. It was a gesture on the part of our most
dastardly enemy. I am not criticizing the Minister of Labour. In my opinion the two ministers who have the worst jobs at the present time are, first, the Minister of Finance (Mr. Usley), because no matter whom he taxes he is taxing the wrong man, and, second, the Minister of Labour. I am not criticizing the Minister of Labour with regard to this matter, but I am pointing out as a British Columbia member that only about half a dozen British Columbia members brought this question up on the floor of this house and only the same number forced this government and this house to make the slightest move in connection with the Japanese. Make no mistake about that. I do not need to mention their names; I must say that they were not all Liberal members, but there were certainly no Cooperative Commonwealth Federation members among this number.
I wish to read from the February 23 issue of the Vancouver Suji, another responsible newspaper, from a writer who is known not only in Canada but in the United States and the British empire, Bruce Hutchison:
Sit down, Nero, and be comfortable!
Ottawa, Feb. 23.-Nero would be quite at home in this capital to-day. He should bring his fiddle with him.
The capital is about to debate in secret session the question whether Canada should defend itself. This, while Japan is sweeping across the Pacific world and for mere selfprotection must soon strike northward towTard Alaska.
Yes, parliament is about to ask the government whether it wouldn't be a good idea to do something on the Pacific coast, whether we might not use our idle army to repel attacks on Alaska, which is the 3tepping-stone into British Columbia.
I could go on, but one thing I want the minister to tell me. I have to tell the people of my riding and the people of British Columbia. I spent three days here, stayed over to listen to a useless and endless debate on something that happened in Hong Kong. There is no part of Canada more vitally concerned with Hong Kong or the orient than British Columbia. I have to go home to my people and explain why these people are allowed there. It is all very well for some hon. members from the maritimes to smile; I have no objection to their wanting everything possible done to defend their coast, but how would they like ten thousand potential fifth columnists in their district?
According to a letter I have from the timber controller, one of our greatest shortages in Canada is in timber. It is all very well for an hon. member from the maritimes again to smile. He was put in his place the other night by a Conservative; and if a Conservative can put him in his place, certainly a
Japanese in British Columbia

Liberal can. We in British Columbia do not grow these little toothpicks of trees; we produce 75 per cent of the timber going to Great Britain to-day; but according to a letter I have in my office from the timber controller, there is a great shortage of timber, and I do not know how they are going to meet the requirements of Great Britain. Yet under this so-called security commission we have Japanese working in sawmills in the city of Vancouver, right in the heart of the lumber district. Apparently nothing is being done to remedy that situation by this commission, for which the government must accept responsibility.


Humphrey Mitchell: If the hon. member has any information of that kind I should like to have it, and the matter will be looked after.


George Alexander Cruickshank: I did not want to take time to go into all this, but if the minister wants this information I can give it to him. I have here a picture in the Vancouver Sun. What about this? This is the second largest paper in British Columbia, and this photograph shows two Japanese. Underneath, it says:
Working in an important Canadian war industry are these two Japanese caught by the Vancouver Sun camera man, Friday. They are piling lumber in a big mill in the heart of Vancouver's industrial centre. The Canadian workers at the plant resent the presence of the Japanese-
I want to bring out that point particularly. We say we do not need conscription; that we can get all the recruits we need by the voluntary method. What am I to say; what is any other member from British Columbia to say now, in the face of this situation?


Gordon Knapman Fraser: What is the date of that newspaper?


George Alexander Cruickshank: July 18.
The Canadian workers at the plant resent the presence of the Japanese and in one department the men have threatened to walk out if any Nipponese are allowed in. In this picture Susumu Kozai helps his father, Tomi Kazai, place some lumber on a pile. There are a number of Japanese families still living in this industrial district.
It is the duty of the government to take steps in this matter. What if there should be fires in the great lumber districts of British Columbia, while we as a parliament have permitted the Japanese to remain in those districts? As a private member from British Columbia I want to support what was said by the hon. member for Vancouver-Burrard (Mr. McGeer), in what I think was the best and greatest speech made in this

house, since I have been here, by anyone coming from that province or elsewhere. What will be our responsibility not only to British Columbia, not only to Canada but to the empire if we sit back and permit Japanese to work right in our lumber industry? I could go on and give a great many more details, but I do not want to take the time. I do not want to say that I did not intend to take part in this debate, because that is said by almost every speaker who rises in his place. But everyone would think something was wrong if the member for Fraser Valley did not have something to say when the Japanese situation was under discussion. I do not wish to give free advertising to any particular newspaper, but this is something else from the Vancouver Sun:
The British Columbia security commission charged with the removal of all Japanese from this area, to-day refused to divulge information as to whether the Japanese reported working in this city were still at their jobs or if they had been removed.
When called by the Vancouver Sun, one of the employees of the commission stated that in future "all press information will be in the order of a written release."
"We will not give out information when telephoned for it," he added.
The point is that while I do not know who is responsible, or why it was done, I know definitely that the Japanese have been permitted to keep on working in the sawmills of British Columbia. The minister cannot deny that. The war news has been bad during the last few days. If we have not been able to move 25,000 people in the months since Japan went to war with Great Britain, how in the name of heaven are we ever going to win this war? From what was said by one minister of this government,
I understood this to be his position; if we move the Japanese into the vegetable-growing districts of Ontario, they will gradually take over until eventually they will have control. Read Hansard to-morrow and see if that is not what was said. Well, Mr. Speaker, if the defence of Canada means no more than the selfish interests of any individual part of this country, we have a long way to go.
We are not asking the government to move the Japanese on account of the province of British Columbia. We do not need to worry; we are, or at least we think we are, a part of Canada, though we do not get many war contracts out there. But to me it seems ridiculous that the government should refuse to move the Japanese. I know the minister from British Columbia has been doing his utmost to have this Japanese problem handled properly. He may be more limited than I am in what he can say-

Japanese in British Columbia


Mr. BENCE:: That is quite definite.


George Alexander Cruickshank: Yes, that is definite; nevertheless he has worked tooth and nail in an endeavour to solve the Japanese question properly. But a minister of this crown has asked: Why should we move the Japanese? Why should they be brought to Ontario? That is a British Columbia problem; you brought them in. Those words were uttered by a minister of the crown. If I am not mistaken, they were uttered by the Minister of Labour (Mr. Mitchell), but I may be corrected if I am wrong. It is said that we brought them in, but since when has British Columbia had anything to do with the immigration laws of the Dominion of Canada?


Humphrey Mitchell: I never said anything of the sort.


George Alexander Cruickshank: All right; then I am corrected. The Minister of Labour did not say that, but another minister did. If we only had to worry about the ultimate disposition of this Japanese problem by the Minister of Labour we would not have any worries at all. He thinks exactly as the member for Fraser Valley thinks, and I think the hon. member for Vancouver Centre (Mr. Mackenzie) thinks the same. I think he would say what I am saying if he were not in his responsible position, and naturally unable to speak as freely as a private member.
I have to go back to the people in my riding and tell them what is going to happen as far as the Japanese are concerned. We have dawdled around about the Japanese the same as some hon. gentlemen have dawdled around about the war. We cannot dawdle any longer. For the last two or three days we have listened to an exhibition of politics; we have had legal advice from some from the city of Toronto, but I do not know what is to be done with the Japs on the coast. I have to go back to my riding and tell the people what the government is going to do, and I am not satisfied to wait until November for the Japs to be removed. Will the Japs wait to move until they tell us?
Mr. DOUGLAS G. ROSS (St. Paul's): Mr. Speaker, we have been told that Ontario will not take these Japanese. If there is any province in Canada that is in the war, it is Ontario. We will do anything to win the war.


An hon. MEMBER:: Are you all alone?


Mr. ROSS (St. Paul's):: The hon. gentleman may say something later if he wants to; I do not know what he has to say. We have heard of the terrible difficulty in which British Columbia finds itself. First, we heard from
the hon. member for Vancouver South (Mr. Green); then from the hon. member for Yale (Mr. Stirling); then from the hon. member for Comox-Alberni (Mr. Neill), and just now we have heard from the hon. member for Fraser Valley (Mr. Cruickshank). We know that the situation is serious, far more serious than the government seem to think it is. We are told that British Columbia has been told that it is a provincial matter. Is this war a provincial matter. It is a direct responsibility of the government of Canada to see that these Japanese are taken out of British Columbia and put wherever they are to go. No province can refuse to have them as far as that is concerned. We have not refused to have German internees who were brought here from Great Britain. There are plenty of them in Canada. Let us have a little action in this matter. We in Ontario are just as much worried about this situation as are the people in British Columbia. We know what has happened in this world, We know that the defeat of many countries has been brought about by the infiltration that has taken place, by leaving such people where you are likely to have your invasion and making it easy for the enemy. We should profit by the disasters which have taken place in other countries of the world. It makes me tired to hear such stuff from the government benches as that this is a provincial matter.
We will take these Japanese in Ontario, but we will take them under supervision. We are facing a labour shortage, and I know Ontario will take all the Japanese that we have to take. We shall not have a situation like they had in Malaya or Burma or other places. The government of this country are trying to shelve the responsibility on some commission. They are afraid to take the responsibility on themselves because they are afraid of offending some leader in some province. It is about time we got down to brass tacks and faced this situation. It has been before us for years. I can remember when I first came to this house years ago I heard the hon. member for Vancouver South speak about the Japanese and the difficulties we were going to get into because of them. We have had this problem all this time, and the government are still shilly-shallying. Let us get something done; let us get these Japanese moved out of this area.


Gerald Grattan McGeer: Mr. Speaker-


Mr. SPEAKER:: The hon. gentleman has spoken already. We are not in committee.


Gerald Grattan McGeer: I want to ask the minister if he will permit a question.
: 1
Japanese in British Columbia


Georges Parent: The minister has spoken also.


Gerald Grattan McGeer: Surely it is not out of order to ask the minister in charge of the subject under debate if he will permit a question, whether he has spoken or not.


Georges Parent: We are not in committee of the whole; we are now debating the motion to go into committee of supply on which a discussion has taken place. If we were in committee the question would be entirely correct. The hon. gentleman who desires to ask a question has spoken already and the minister has spoken also. Neither the hon. gentleman nor the minister has the right to speak again in this debate.


Mr. W. K. ESLING (Kootenay West):: Mr. Speaker, I am interested in this matter because there are three Japanese communities in my district. I should like to preface my remarks with an acknowledgment to the Minister of Labour (Mr. Mitchell) and his deputy for their courtesy in meeting every situation that I have taken up with the department. There is one community in the old mining town of Sandon. There were many buildings there suitable for this purpose. The strange part of it is that I have not received a single letter from this community by way of objection. The second community is at Slocan city, from which there was no complaint.
If there was one community from which there might have been reasons for complaint it was the community at Ivaslo. At times Kaslo has been referred to as a ghost town, but let me tell hon. members that if they ever visit Kootenay lake I know they will pronounce it the most beautiful summer resort in the interior of British Columbia. The choicest and largest cherries are grown there. Much of this trouble was probably on account of the fact that the chairman of the security commission issued a statement that Japanese would not be placed anywhere unless there was unanimous consent. A request was made by the mayor and council of Kaslo that a community be established, and there are now located in this place 1,000 Japanese women and children and elderly men. The best representative of local opinion is the local paper. If the minister will read the local paper, he will find that it voices the opinion that there is full cooperation from this Japanese community in Kaslo and that the relations with the rest of the community are the best.
There has never been any particular resentment against their coming. But what the people do object to-and I think this would

apply to other communities too-is the lack of proper policing, which is the government's responsibility. To have only one policeman to guard a Japanese community of 1,000 people is all nonsense. There should be policemen on duty three shifts of eight hours each to see that order is maintained and that there is no occasion for concern. Additional light and additional water supply are also required. All these matters are the responsibility of the government, and I think it is up to the government to see that these communities are relieved of any financial responsibility for these necessities. To date I have not received a single letter from any one of these three communities since matters were amicably settled between the government and the Kaslo citizens.
It is to be regretted that these Japanese had to be sent into the interior of British Columbia, but the people on the coast cannot be blamed for feeling as they do. If hon. members here only realized how vulnerable are various points along our coast-line, I am sure they would feel that the fears of the British Columbia members were amply justified, and there could be no better example of cooperation between the various provinces throughout this dominion than for each to be willing to accept its full share of responsibility for placing these Japanese throughout various districts in Canada.


Thomas Langton Church: Mr. Speaker, inasmuch as I have supported the stand of the British Columbia members on this Japanese question during the sessions of 1935, 1936, 1937, 1938 and 1939, I should like to say a few words. British Columbia has a very long coast-line. From Puget sound to Queen Charlotte islands there is a coast-line of 600 miles with practically no defence except the British fleet. I referred to that in the debate on external affairs in this house during the session of 1937, and the hon. member for Comox-Alberni (Mr. Neill), and the members for Vancouver and other British Columbia constituencies participated in that discussion. I predicted then, that there would be war between the United States and Japan, and I urged that preparations be made for our own defence. True it is that the then Minister of National Defence, now Minister of Pensions and National Health (Mr. Mackenzie), at the insistent demand of the legislature and one or two members from Ontario, in 1938 brought down a government policy regarding the Pacific in the event of war, the danger of which was very grave even then. The new defence policy of the government regarding the Pacific was based on two

Japanese in British Columbia
cardinal principles: One was home defence, and the other was to protect Canada's neutrality. The minister, who is at present in the chamber, in 1938 gave a very fine statement of the proposals of the government and of the proposed expenditures for that year.
What was the situation then? The United States, which had vast interests in trade and commerce in the far east, brought down a new policy for the Pacific by which the United States undertook to equal the navy of Britain within three years. As a result, the government here brought down its policy of having six hundred miles of coast-line protected and a naval base established on the Pacific coast. That coast-line is somewhat like Norway's, and up to then it was almost unprotected. According to a return that was brought down to the house, Canada at that time was spending only about $1,25 a head on defence. We were spending $28,000,000 on postage stamps and $14,000,000 on defence-only one-half on defence of what we spent on postage stamps. But our expenditures for defence were doubled in 1938. There were 40,000 Japanese in British Columbia then, engaged in the fishing industry and other industries, and they were aggressive in business and belligerent. There was some activity about that time in the northern Aleutian islands and the result was that President Roosevelt, after some insults from Japan, said, "We will defend our territory," and he gave notice to the nations of the Pacific accordingly.
What was the policy of the government of Canada at that time? I was very much surprised at it. Canada had been very much criticized the year before at the imperial conferences of 1937 and 1938, when we knew this war was coming, when Hitler was about to cross the Rhine and had threatened to invade Czechoslovakia, and when the people of Britain, Australia and New Zealand were alarmed at the aggression in the Pacific, because Canada said at the imperial conference, "We have no commitments. Parliament will decide." That was a very sad spectacle for the people of Canada and of the mother country. Our then Minister of National Defence in 1938 doubled the defence estimates, which then amounted to $1.25 a head. He was opposed by a great many members on his own side, but he was right. True, even then, he was proposing to spend only one-fifth of what was required, but he did double our expenditure that year on defence. Some of those who opposed his estimates said: "What is the use of doubling our expenditures in the militia estimates?" I warned the house that if war came, Britain would have to withdraw her fleet to home waters, to the Mediterranean and the Atlantic. Yet even some government members said we could depend on Washington for Pacific defence because it is now their preserve. Those were the reasons given by some of those who then opposed this increased defence expenditure. I was very much surprised because if one country gained by the Ottawa agreements it was Canada, and Canada was criticized in Britain and the United States for depending on the mother country to protect our shores after we had gained so much from the Ottawa agreements, and there was grave danger in the Pacific at that time from Japanese insults and aggression. Furthermore, the people of the United States had then more than enough to do to look after themselves. Then what happened. The worst blow to America's prestige came when the United States embassy was moved from Nanking at the behest of Japan, while Britain refused to move and warned Japan she would be held to account for any injury or damage to British nationals or British property. The evacuation of refugees from Shanghai was carried out by British warships and British liners, and the British navy won the high praise of every American who returned from the far east.
Four days before the house rose in June of last year, I asked what the policy of the government would be in the event of war with Japan. I said that we did not want any more appeasement policies in connection with the wheat trade. This was on June 5, 1941. The Prime Minister said during the recess that he was not an appeaser; he was a conciliator.
What	happened? .	A return was brought	down on May 6, 1942	, in reply to	my question as	to the tonnage of copper,	aluminum,nickel,	scrap iron, pig	iron and coal exported	from Canada to Japan for the	five yearsbefore	the war. The	question was	; answeredby the	Minister of	Trade and	Commerce(Mr. MacKinnon), w	ho gave the	followingfigures:	Year	Item	Quantity1935	Copper 	3,526Aluminum ..	126,483Nickel	17,546Scrap iron .	39,186193G	Copper 	8,348Aluminum ..	88,872Nickel	28,821Scrap iron .	68,0111937	Copper 	69,175Aluminum ..	178,405Nickel	101,342Scrap iron .	46,948
Japanese in British Columbia

Observe how these exports increased in the
very year that the	government	announced
its policy:		
Year Item		Quantity
1938 Copper 			311,875
Aluminum ..		cwt.	312,250
Nickel			153,992
Scrap iron .		41,033
Copper, aluminum	and nickel	shipments
went sky-high.		
Year Item		Quantity
1939 Copper 			378,396
Aluminum ..		cwt.	421,173
Nickel 			233,107
Scrap iron .		46.866
In this manner we assisted Japan to build her fleet and produce her armaments.
In connection with this matter, I may say that I was very much surprised to see the way in which the government dealt with the very serious, insolent encroachments of the Japanese in British Columbia. I have already referred to the fishing trade off the coast. Everywhere along the Pacific, from the Panama right up to the Aleutian islands, everyone knew Japan intended to go to war and	would	be the	aggressor. There	werepersistent reports for years about what she was	going	to do.	She had become	verythreatening. The hon. member for Comox-Alberni (Mr. Neill) was then referring to the	way in which	the Japanese fishingboats would come within three miles of the	shore	and fish	and take their	hauloff	under	the protection of a	manof-war. Through her newspapers and university professors Japan predicted war, and what did Canada do to prevent further aggression? The Japanese population of British Columbia was 40,000, while the Chinese population was decreasing. Japanese were allowed to bring in 150 labourers each year, and they evaded the regulations all along the line. Complaints were made in this house-* at that time there were more Conservatives from British Columbia than there are now- complaints which were resumed year after year, concerning the immigration laws and the aggression of these people in the fisheries. It was stated at that time that fish were taken on board a mother ship and there canned and frozen. This was denied, but the United States authorities made a survey and took photographs of the proceedings out in the Pacific and sent them to Tokyo. Protests were lodged, but without effect. Here is a quotation from the National Review of 1938- I will read one or two paragraphs, and that is all I shall have to say-concerning the encroachments of the Japanese in British Columbia:

Japan has been buying up the whole of the output of British Columbia's base metal mines; one company shipped 14,000 tons within a month. Japanese interests are endeavouring to acquire properties on the coast for the supply of iron ores, timber and metals. Japanese now control the wholesale and retail distribution of vegetables in Vancouver-frequently they are in conflict with the marketing board in "'bootlegging" vegetables to the market, without securing the endorsement of the board that its price rule is being observed. Inland, a growing number of orientals are engaged in fruit-growing, dairying and mixed farming. It is estimated that Japanese will one day oust the whites from the fishing industry. Japanese were issued 2,232 fishing licences in a single year. No white man can get a licence in Japan for fishing or operating a cannery or saltery. Orientals are extending their efforts to embrace general stores and manufacturing. One by one, secondary industries are being invaded-clothing, dressmaking, boots and shoes, shipbuilding. Since 1921, the British origin of the population of British Columbia has declined from 73 to 67 per cent. At the present rate, it will be less than half in twenty years. A comparison between it and the neighbouring state of Washington, in defence and racial purity, throws a garish light on a problem that threatens the continuance of British Columbia in the Canadian confederation.
All along we have not been sufficiently mindful of what a great military power Japan is. Its navy ranks, next to that of Great Britain and the United States, as the best in the world. We never should have lost these people as allies. Undoubtedly they are difficult to get along with. They shot the British ambassador in the streets, acted disgracefully and had been most insulting, but sentiment is one thing and diplomacy another. The atrocities they committed against the Chinese in 1933 shocked the whole civilized world; yet we should have been wary of losing them as an ally. I believe this country is in grave danger from their nationals, and I think the hon. member for Vancouver South has done his duty in bringing the matter to the attention of the house.


Olof Hanson: Mr. Speaker, I should be lacking in my duty if I did not say a few words on a matter which seems so vital to British Columbia and also to the rest of Canada. I do not think it has been realized in the east what the Japanese menace means to the people of British Columbia; certainly the people of Canada in general have not realized it; and when war was declared by Japan last year, it naturally increased those fears and those feelings which have been held in our province toward the Japanese for a number of years. We who live on the coast knew that some of the fishermen who were Japanese were members of the Japanese navy.

Japanese in British Columbia
Since this question has been brought up about evacuating the Japanese from the coast,
I am happy to say that a few months after the war was declared the district north of Vancouver island, approximately three hundred miles of wliich is in the constituency which I represent, was cleared of Japanese. However, as a member from British Columbia, I naturally realize the feeling which still remains there against the Japanese, and I join with those who have expressed the view that this is a problem for all Canadians, not for British Columbia alone.
Some figures were quoted here this afternoon by the Minister of Labour (Mr. Mitchell) and the hon. member for Vancouver South (Mr. Green), as to the correctness of which I should like to be informed. The United States Year Book of 1941, quoting the 1940 census, gives the total number of persons of Japanese origin in the continental United States as 126,947; in California, 93,717; in United States territory excluding the Philippines, 158,905. If these figures are correct, there is approximately the same percentage of Japanese in the United States in proportion to population as there is in Canada. It was stated this afternoon that the United States authorities had taken steps to move Japanese from restricted areas, and I see no reason why we in Canada could not do the same. I urge this upon the minister. I appreciate what has been done, but I am bound to join with those who have already expressed themselves to the effect that the handling of the situation has not been carried out to the satisfaction of the people of British Columbia by the British Columbia security commission, and if there is any other way of getting quicker action it would not only satisfy the people of the province but would help British Columbia members and save both them and the house a good deal of worry and time.


Mr. GORDON GRAYDON (Peel):: In support of the remarks made by the hon. member for Vancouver South (Mr. Green) and at his suggestion I should like to place on the record a report of our own dominion bureau of statistics of January 29, 1942, with reference to the population of Japanese and the total population in the three Pacific coast states of the union to the south. These figures are all for 1940. In the state of Washington the total number of Japanese is 14,565, or a little more than half of the Japanese population of British Columbia, while in Washington state itself the total population is 1,736,191, or about twice the population of British Columbia. In Oregon the Japanese population in 1940 was 4,071, or about one-sixth of
the Japanese population of British Columbia; yet the total population of Oregon was 1,089,684, or about 200,000 more than that of British Columbia. The figures for California were given by the hon. member for Skeena (Mr. Hanson), showing the Japanese about four times the number in British Columbia, namely, 93,717, with a total population of about eight times that of British Columbia, namely, 6,907,387. In the Vancouver Sun of July 22 this news items appears with respect to the evacuation of Japanese from the Pacific coast area in the United States:
San Francisco, July 22.-Orders for the exclusion of all remaining Japanese in California were posted by the army to-day, affecting about 6,150 persons in Fresno and Tulare counties. Registration was set for July 27 and 28 and completion of evacuation is scheduled by noon of August 11.
I want to put this on Hansard* so that the record will be as complete as possible.


Humphrey Mitchell: I think I should say, in view of the figures placed on Hansard by the hon. member for Skeena-


Georges Parent: Order. The hon. member has spoken.


Olof Hanson: I ask the minister a question in regard to this matter, Mr. Speaker, and I should like to know whether my information is correct or not.


Humphrey Mitchell: The figures are right. Possibly my officials supplied me with bulk figures rather than with a breakdown.


Howard Charles Green: You have included the Japanese in the Hawaiian islands.


Humphrey Mitchell: Yes, in the United States possessions.
Motion agreed to and the house went into committee of supply, Mr. Vien in the chair.



DEPARTMENT OF THE SECRETARY OF STATE

[Stage Direction]
327. Departmental administration, $99,528.
Item stands.

[Stage Direction]
39. To provide for hospitality in connection with visitors from abroad, $5,000.
Item stands.
[Stage Direction]
361. Departmental administration, $393,122.
Item stands.
[Stage Direction]
2J/S. Departmental administration, $743,650.
2H. Post offices, including salaries and other expenses of headquarters and staff post offices
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[Stage Direction]
and supplies and equipment for revenue post offices, 117,170,411.
Hon. W. P. MULOCK (Postmaster General) :: We are considering items 243 and 244 together.


Thomas Vien: Shall the items carry?


Howard Charles Green: Before these items carry,
there are two matters to which I would call the attention of the Postmaster General. First I would show him these advertisements-


William Pate Mulock: We are not on that item.
If the hon. member will deal with that on item 247, air and land mail services, I shall have the appropriate officials here at that time.


Howard Charles Green: I am dealing with a waste
of money.


William Pate Mulock: That is a matter of
opinion.


Howard Charles Green: Another matter about
which I should like to question the minister is the policy of the department with regard to extending mail delivery service in centres where there is great growth in population. For example, there is one district in the riding I represent, lying between Cambie and Manitoba streets, and 26th and 29th avenues, which is almost in the centre of the city of Vancouver geographically. It is only thirteen blocks from the city hall. There is delivery, I believe, on all sides of that area, and yet for many months now it has been impossible to get a delivery in that district. There are fifty or a hundred houses in the district and the residents have to go about two miles to get mail at a sub-postoffice. It is closed at six o'clock on ordinary days and one o'clock on Saturdays, so that men coming home from work quite often cannot get to the post office, and there is the utmost inconvenience. The post office has a monopoly in the handling of mail. It prides itself on being efficient and up-to-date, as a model of what public ownership can be, but it seems to me that this is just plain inefficiency. In many of the centres there has been growth in population-new houses going up and so on-and yet the post office organization seems to be such that they cannot change to meet these changing conditions. That is absurd. The confidence of the people of Canada in the post office cannot be maintained if it cannot meet conditions more efficiently than that. Would the Postmaster General explain why such conditions exist?


William Pate Mulock: I am not sure whether the hon. member was in the house when these
tMr. Mitchell.]
estimates were being dealt with last and the question of the shortage of man-power was discussed and the rearrangements of routes. Is this a business district or residential?


Howard Charles Green: Residential.


William Pate Mulock: My officials have no information on the matter-


Howard Charles Green: They should have, because they have known about it for months.


William Pate Mulock: I do not think the hon. member has communicated with me about it. I shall be glad to go into the matter and see what the facts are. He will understand that where there is growth on the borders of cities under present conditions-


Howard Charles Green: This is in the centre of the
city.


William Pate Mulock: I shall be glad to have the matter looked into and advise my hon. friend.


Howard Charles Green: I do not blame the officials here; I do not think they are responsible. Either the policy of the government is wrong, or the officials in Vancouver are wrong-perhaps both. In any event, it should be remedied.


William Pate Mulock: My hon. friend will. I am sure, agree that it could not possibly be the policy of the government that was wrong.


Howard Charles Green: No, I am not so gullible.


John Ritchie MacNicol: What is the allowance
per year to the ordinary postie on the beat?


William Pate Mulock: From SI,020 to SI,500,
together with uniform and boots.


John Ritchie MacNicol: Do they get cost of
living allowance?


William Pate Mulock: Yes; the cost of living
bonus applies to post office employees.
When we were dealing with the estimates last night, one matter dealt with was the appointment of a postmaster at Bruno, Saskatchewan, which the hon. member for Saskatoon City brought to the attention of the committee. I would advise the hon. member that this matter was carefully considered over a period of many months. He can see from examining the correspondence that there was no desire to make any hasty appointment or to put into the service any person who was not loyal to this country;
I want to make that quite clear. In that connection I would advise the hon. member and the committee that I received from the Minister of Justice the following report addressed to me as Postmaster General:

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My dear Colleague,
With reference to your telephone inquiry of the 14th instant respecting William F. Hargarten, postmaster at Bruno, Saskatchewan, I may say that the Royal Canadian Mounted Police advise that no concrete evidence has been adduced which would show that Hargarten's sympathies or leanings are disloyal to the British empire.
I might point out to the hon. member that this post office of Bruno is in the riding of Humboldt. In that district as of the 1931 census figures-the more recent figures are not yet available, I am advised-the total population is shown as 44,977, made up as
follows:
British extraction	 12,575
French extraction	 3,055
German extraction	 14,202
All other races	 15,145
We received, as I know the hon. member for Saskatoon City received, representations, or rather in the nature of inquiries, from certain veterans' organizations in Saskatoon City. These representations were given most careful consideration. As he knows, the transfer of the duties to the postmaster was held up pending investigation. The postmaster did not take over the duties of the post office until that investigation was completed. This matter was discussed fully with the officials of the Post Office Department and others, and I am satisfied from the evidence that a great injustice would have been done to Mr. Hargarten if he had not received this appointment.


Mr. MARSHALL:: I crave the patience of the minister and of the committee for a few minutes while I bring to the attention of the members of this house, and more particularly those who served in world war No. 1, a certain matter. On April 7 of this year I received a communication from one of my constituents whom I shall designate as Mr. C. In his letter he said that he understood a vacancy had occurred in the position of postmaster in his local post office. He asked me to inquire from the authorities in Ottawa if such were the case and to send him whatever information I could obtain. I telephoned the department and verified the fact that the postmastership was vacant. I replied to Mr. C on April 25, telling him he should make application to the office in Edmonton and to be sure to list his qualifications, particularly any qualifications with respect to his service during the war. He did this, and a short time later I again got in touch with the department in Ottawa and discovered that a temporary appointment was made to this post office.
I would direct the attention of hon. members to the qualifications of the individual
who received the temporary appointment, and make a comparison between the qualifications of the present appointee and those of the other applicant. I shall call the gentleman who received the appointment Mr. P.
This gentleman is twenty-five years of age, single, Canadian born, a British citizen. He moved into the district in March of this year. He enlisted in the Canadian postal corps from which he was invalided out after four months service on account of an arthritis condition. He passed grade 11 in high school, and has the necessary educational qualifications to fill the position. This is the gentleman who received the appointment as postmaster, in a temporary capacity.
I should now like to direct the attention of hon. members to the qualifications of the other applicant. Mr. C was born in Ireland fifty-two years ago. He entered the British army at an early age, and from 1910 to 1914, a period of four years and 254 days, served his country in India. He was in France for two years and 343 days, from 1914 to 1917, and was in the middle east from 1917 to 1918. He was then in the British expeditionary force for one year and 229 days, that is, from January 15, 1918, to May 23, 1919. Then from 1920 to 1922 he was back in India, for two years and 75 days. We are told in his discharge certificate that he rose to the rank of sergeant and that he obtained a second class certificate of education in February, 1908. We are told, too, that he was a most reliable and trustworthy non-commissioned officer of exceptionally good character; a hard worker and good disciplinarian, tactful with his men and who had his commands respected. In addition to that, in a letter to me dated May 2, 1942, he says:
In 1925, when i applied for a disability pension, this record was taken from the files and a copy given to me, but unfortunately the top part got torn off by someone taking it out of a file, but it only contained my disability, which was deafness of the left ear caused by being buried in a trench at Ypres for five hours.
This man offered his services to his country in this war, on December 2, 1941, but was unable to meet the military physical standards and was given his discharge. Finally, his son, who is eighteen years of age, has enlisted in'the Canadian army.
These were the only two men who applied for the position of postmaster in this instance. I suggested to the authorities in Ottawa that in view of the situation they should send an inspector to interview both these men. My suggestion was accepted, and I should like to place upon Hansard part of the report of the acting district superintendent:
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In compliance with instructions I visited . . . district on May 29 for the purpose of interviewing the two applicants for the postmastership at that point, namely Mr. P and Mr. C, and beg to submit the following information.


Mr.   P@: Age 25 years, single, Canadian born British citizen of Ukrainian extraction, was formerly assistant postmaster at . . . later enlisting in the Canadian postal corps, from which he was invalided out after about four months service, on account of an arthritis condition. He moved to ... in March last, . . . Mr. P passed the eleventh grade of high school and has the necessary educational qualifications and ability to fill the position.
Then the inspector submitted his report on Mr. C:
Age 52 years, married, was born in Ireland and is a British imperial army pensioner, being in receipt of a service pension, but he has no disability. Mr. C has lived seven and a half miles from . . . and fourteen miles from . . . since 1926, "where he has been farming. . . . He served in the imperial army from 1907 until 1922. He states that on account of "there being no bank . . .
That part is of no importance.
It simply gives the reason why he had the small pension which he received from the British government sent to a certain address. This is the significant part of the inspector's report:
After completing seven years' tuition in public school in Ireland, he claims to have taken an educational course covering five years in the army, in respect to which he has received a second class certificate. It is considered that he has the necessary educational qualifications to fill the position and possibly has the ability, but he is a pugnacious type of individual and my canvass of the business people and persons familiar with the situation revealed that he would be entirely unacceptable on these grounds.
Pugnacity is an inestimable trait of character when shown by a man defending the hides of politicians and their henchmen. It was pugnacity coupled with indomitable courage which enabled Brigadier Lawson and his two battalions of Canadians to hold Hong Kong so that we might be given some precious time. It was this trait of pugnacity that enabled the Russians to stem the onward rush of the nazis to the Caucasus, but we find that this same trait was a distinct hindrance to a returned soldier in his endeavour to obtain such a small position as postmaster of his local post office. To me this smacks of politics. We are evincing almost indecent haste to show the men who serve in the armed forces during this war that their future is of some concern to us, but in my judgment this is a raw deal given to a man who had a very honourable record in the first war. I suggest to the minister that he get the file, go into the matter very carefully, and see that justice is done this individual.


William Pate Mulock: While we are dealing with this matter I should like to advise the hon. member that this question was dealt with as a matter of ordinary routine by the officials of the department, and so far as I know was never brought to my attention. I should like him to check one or two of the statements he has made. I am advised that Mr. C received his mail at Viking post office, not at Bruce post office. I believe that is the case to which the hon. gentleman is referring.


James Alexander Marshall: Yes.


William Pate Mulock: I would advise the hon. member that no permanent appointment has been made to the postmastership. In justice to the man to whom my hon. friend has referred, I must say that he enlisted for overseas service but was invalided because of arthritis, as the hon. member has stated. I understand from this note that a petition was forwarded to the department signed by 137 names asking for the appointment of Mr. P. I understand a copy of this report and the petition was sent to the hon. member for Camrose (Mr. Marshall). However, I shall be glad to review the case and make inquiries. Until I see the file I cannot say anything as to the fitness and suitability of either men to fill the position. There is no question about preference for returned soldiers, but the returned soldier must be suitable and able to fill the position. This is not a large post office, because the revenue in 1941-42 was a little under $1,100.


Mr. FLEMING:: The hon. member for Saskatoon City (Mr. Bence) has raised a question in connection with the appointment of the postmaster at Bruno, Saskatchewan. I welcome very much the entry of this hon. member into the affairs of Humboldt constituency. This case has been of long standing. It was not a partisan political appointment, because the present postmaster, Mr. Hargarten, has never been what we would put down as partisan in politics. In my long career I have knpwn of his belonging to practically every political party. He is a man of splendid education and has lived in the district for some forty years. It is true he is of German racial origin, but 95 per cent of the people of that district are of German racial origin.
He was recommended by men of the type of Surgeon-Lieutenant R. G. Yoerger, a veteran of the last war, now of the Royal Canadian Navy; a member of the Humboldt branch of the Canadian Legion. He was recommended by Mr. A. J. Simmons, former secretary-treasurer of the Humboldt branch of the Canadian Legion. He was recommended by the Hon. A. Doiron, K.C., judge of the superior court

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of Saskatchewan. He was recommended by the Right Reverend Severin Gertken, Bishop of Muenster, Saskatchewan. He was recommended by Reverend Father Bernard of Bruno, Saskatchewan, a well known Canadian cleric. When these facts were brought to my attention they gave me the authority necessary to make the recommendation I did to the Postmaster General.
Certain accusations were made, not from within the district of Humboldt but from outside, that the postmaster at Bruno was a fascist, a nazi, and I do not know how many other isms. Every charge was carefully investigated. I do not know how many investigations were made by the Royal Canadian Mounted Police, but it got to be almost a laughable situation. He was given a clean bill of health on every charge. When this case was mentioned to me by anyone I always said that I would not have recommended Hargar-ten if I had not known he was a loyal Canadian citizen. In the face of the findings of the Royal Canadian Mounted Police and the other recommendations, I had no alternative but to recommend this particular man.
I would point out also that there were no eligible returned soldiers capable of taking this position. I would point out something which is perhaps well known to the hon. member for Saskatoon City, that certain individuals, especially one whom I think is well known to the hon. member, came and rented boxes for a year in order to be eligible for the position.


Alfred Henry Bence: The references made by the hon. gentlemen are absolutely unknown to me.


James Alexander Marshall: I do not know whether the Postmaster General intended to do it, but he has rather left the impression that Mr. C was a patron of the Viking post office. I should like to draw his attention to the fact, which he can verify, that Mr. C's name will be found on the postal directory of the post office in question. The reason why he gets his cheque sent to Viking, as I mentioned earlier, is that there is a bank there and there is none at the other point. The inspector id the report of June 12 said:
There being no bank at B. he directed that his pension cheques be addressed to Viking, Alberta, at which post office he has received them for some years, but the bulk of his mail comes to D. where he receives it and has done, for practically the whole of the time he has resided on the farm. He still receives mail at B. and considers himself a bona fide patron of that office.
While it is true that a petition has been received signed by a large number of residents in that particular part of the country, I assure
the Postmaster General that I shall have some interesting facts to disclose to him privately with respect to this same position when the time is opportune. That is all I have to say, and I am glad the Postmaster General has said that he will give the matter his attention.


Mr. STOKES:: I should like to refer to the closing of a branch post office in Belleville known as Belleville station, after it had been in existence for many years. The impression was general throughout the city that it was impossible to find any person to carry on this post office, but later I learned that the reason why the man retired or refused to act as postmaster any longer was that the rental for his building had been reduced. That was the information I received. This post office was quite a convenience. It was situated in the northerly limits of the city, adjacent to the Canadian National railway station. True, those living within the city limits got a delivery of mail, but this particular post office was a great convenience to many people living across the tracks and to some of the city residents, who used to buy postal notes and money orders there. Some of that business has been diverted to the express office at the station. May I ask why the convenience of this post office was taken away from the people of that section of the city?


William Pate Mulock: I presume it was a subpost office.


George Henry Stokes: Y'es.


William Pate Mulock: While I have no information on the case, I do not think there was any question of reduction of rent involved. It was rather a case where no rent at all was paid. Many people are glad to obtain a subpost office and, as the hon. member knows, they are frequently located in drug stores and other stores in the larger cities and towns, but the department does not pay rent for them. That may have had something to do with the matter. I shall be glad to take it up with the officials and look into the facts.


George Henry Stokes: My information was given to me by the gentleman who was in charge of this post office for a number of years.


Alfred Henry Bence: The hon. member for
Humboldt said that the Royal Canadian Mounted Police had sent in reports in favour of the appointment of this man to the Bruno post office, and in view of that-


John Gordon Ross: He said they had given him a clean bill of health.


Alfred Henry Bence: I have forgotten his exact words, but if the Royal Canadian Mounted Police have made reports on this case, would the minister file those reports?
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William Pate Mulock: I thought I had made the matter quite clear last night and to-day.


Alfred Henry Bence: I did not follow the minister to-day.


William Pate Mulock: I read a report from the Minister of Justice, under whose jurisdiction the mounted police come, and I am sure the hon. member will agree that the Minister of Justice would not submit a communication of that kind if it were not correct.


Alfred Henry Bence: I am merely asking that these police reports be tabled.


William Pate Mulock: Reports received from the mounted police which are marked "secret" cannot be divulged.


Mr. MAYBANK:: I want to make just a few remarks which have occurred to me by reason of the comment made by the hon. member for Hastings South (Mr. Stokes) relative to the closing of a post office. In the city of Winnipeg I find a large number of people coming forward from time to time asking that a sub-post office be established in their particular district. It often happens that there is a post office not very far away. True, if a new sub-post office were opened, it would be more convenient for the people in the immediate neighbourhood. I find that a great many people have been coming to me and making representations of the sort I have mentioned, but I will say in truth that there are fewer people coming to me in these days than was the case a few years ago, and that I think is owing to the practice I have adopted in dealing with all such requests.
At first when such requests came to me I thought it was only reasonable to support them, and I did so on several occasions; but after I came to understand"-not fully, because I do not think that I could ever fully understand the intricacies of post office life-somewhat better the problems that beset the Post Office Department I adopted a completely different attitude toward all such requests. I did not understand for a long time that when a new sub-post office is opened there is grave danger of the Post Office Department losing money, 'but after a while I found that a great many people were asking for a subpost office to be opened or to be continued because they counted on making money through commissions upon the sale of stamps. Frequently a man who got a sub-post office would canvass his friends in businesses which bought a great many stamps to purchase then-requirements at his post office and in that way he would make more money. Of course, the Post Office Department did not make any more money because

the sales of stamps which are made at subpost office A are lost at sub-post office B. In other words, the total number of stamps sold remains the same and the king gets no more money by reason of the new sub-post office being opened. In fact, he is likely to lose money, because if the postmaster can bring his sale of stamps up to a certain point-I cannot remember the exact number of stamps they have to sell to get into a higher class- he gets $50 or $75 a month for being in that higher classification, which is enough at any rate to pay the rent of his store. Naturally the man who had a sub-post office would put pressure on his friends in businesses that bought stamps in large volume to give him a part of their patronage. The net result was that the Postmaster General, representing His Majesty, had to pay out $50 or $75 certain of His Majesty's money to these new vendors of stamps.
When I came to realize that situation I adopted a much more wary attitude with respect to recommending applicants for subpost offices, and I am sure that anyone in the Post Office Department, the Postmaster General or anyone else, will bear me out when I say that although I come from one of the chief cities of the dominion, where one would expect a considerable number of post offices, I have refrained, except in a very few instances, from recommending the opening up of post offices. I have made such recommendations only when I was certain that there was a good-sized area to be served.
I make no particular reference to the case at Belleville because naturally I am ignorant of the facts, but I do wish to commend the Postmaster General and his officials generally for the attitude they take with reference to opening up sub-post offices and I commend them particularly for the number of times they have refused rather than granted such applications. I am sure that it must be a very difficult matter with all the number of good persuaders there are bound to be in the House of Commons to say, no, we cannot open a post office there.
I fancy that every art of which a member is capable is used on the post office officials, and on the Postmaster General himself. They want to be accommodating as much as possible, and I know it is not easy to say "no". I know also it is not very often that a person will be commended for saying "no"; in fact I must plead guilty to the charge, if it were made, that I do not very often myself commend a person for giving a negative answer. Or perhaps I do not commend anybody as often as I should. But I thought I would take this opportunity of saying, from

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such experience as I have had in these matters-and for a few years I had a good deal- I think the Post Office Department is following the right course in being, if I may use the expression, as tight as possible regarding the opening of sub-post offices, because to open a sub-post office is to run the danger of losing money. In fact it is more than a danger; it is almost a certainty, and heaven knows this is no time for any officers of His Majesty to be losing money anywhere; we need to be saving money, not losing it.
In closing, I would say that of course my remarks have no reference to the particular problem of Belleville, of which I am entirely ignorant.


Mr. GILLIS:: It amuses me to listen to the estimates of the Post Office Department being discussed from the viewpoint of dollars and cents. I always visualize this department as a service to the people and to be measured in terms of service, but evidently a large number of hon. members do not take that view.
What I have in mind in making that observation is the matter of rural post offices. Canada is a nation, and every citizen is entitled to the same service regardless of whether he lives in a city or fifteen miles outside it, so far as the duty of the department to the nation as a whole is concerned. It must give service to the best of its ability, without any regard to the making of one, or two, or three million dollars. The maximum amount of service should be the principle.
I mention this because I have been corresponding with the department for a considerable time with respect to two small post offices, one at Catalone, on Cape Breton island, the other at Marion Bridge. They are about eighteen miles from the city of Sydney, and approximately that distance from a Canadian National railway station, and they receive their mail twice a week. The newspaper which circulates in Sydney is received by them only twice a week. I think that is a reflection on the Post Office Department.
The minister has admitted that financially the department is not doing so badly; it has a surplus of about $4,000,000. But to my mind a person who is farming fifteen or eighteen miles from a city and is denied in many cases even the convenience of electric light is not a citizen of Canada at all. He is living out in a wilderness; he gets his mail twice a week, or maybe once a month during the winter: I do not blame the officials whom I have corresponded with, because they are working for the Canadian government and the government lays down the rules. They
cannot provide a better service, because an inspector who went there found that it would cost $260 a year to maintain the post office. A large number of families live there. It is no fault of theirs that they are living there; they are making their contribution as best they know how, but they are living back a hundred years, and it is a reflection on the government.
I do not think the service of the Post Office Department should be measured in terms of dollars and cents. I trust that, at some time, someone in that department will have sufficient authority to give every citizen of Canada the best service possible consistent with the material and machinery with which they have to work. A man in the country is entitled to what a man in the city has. In the city your mail is delivered to your door. In the two places I speak of they get their mail twice a week and they walk miles for it. I want to bring this matter to the minister's attention. I have corresponded to some extent with the department, but I know they cannot do anything about it unless the rules are changed.
I have another complaint to bring forward similar to the Toronto case which was discussed last night. The minister's statement in the Toronto case was that there is lack of man-power; that it is not possible to get the labour. This answer is given pretty frequently ; whenever an awkward question comes up, we are told there is a shortage of manpower. The mail carriers at Sydney, Nova Scotia, of whom there are seventeen, complain that they have not a spare carrier, and any time a clerk on the inside of the post office is off duty, carriers are placed inside, and as a result another carrier on the walk has to take a double load of mail and deliver it. The same thing applies when a carrier is away sick. In that city there is no shortage of labour; approximately 500 girls have left that area and come into Ontario to work in the factories because there is no employment locally. Many of them are capable of working as clerks inside the post office. The carrier who has a walk has plenty of work without relieving clerks on the inside. Their contention is that there should be a spare carrier; that where there are seventeen walks and only seventeen carriers, one or another is sure to be sick occasionally, and every carrier has to take a double load. I believe this is a pretty general complaint from the post offices in Nova Scotia. There should be an extra carrier and some relieving clerks employed instead of carriers being taken in off the walks. I strongly urge the minister to make a check of
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the Sydney situation. I know most of the boys employed there, and certainly they would not make a kick if there were not a legitimate complaint.


William Pate Mulock: If the hon. member has no objection I will deal with the latter case first. Usually there are extra carriers in the post offices, and in the case of Sydney that is a matter which should be dealt with by the local postmaster. Colonel Underwood, who is in charge of post offices, has had the matter drawn to his attention and will have inquiries made.
As regards the two places he has mentioned, he says, unless "the rule" has been changed. It is not a question of rule; it is a question of fact in each individual case. Cases are decided on their merits. Perhaps I had better not mention names, but I know of one place in Nova Scotia where they had absolutely no revenue in a year. Well, that office was closed.
There is another one where in the whole year the revenue amounted to $19.25, and the cost was $100 for the postmaster plus the cost of service. That was closed. In another one the revenue was $2.84 and the postmaster had to be paid and the service maintained, and still another one where the revenue was $4. These small offices should be closed. In the two cases mentioned it is a question of fact, and I shall be glad to see that they are inquired into. I can assure the hon. member that they will be treated with fairness, and if a proper case is made out and there is a reasonable number of people to be served they will be given serious consideration.


Clarence Gillis: I do not know the cases mentioned by the minister, but is not the principle of the postal department based on service? There are some post offices where there are large surpluses. Should not such offices carry a group of citizens where there is not sufficient revenue to keep the office open?


William Pate Mulock: They do. There are 12,500 post offices, and 5,000 of them do not carry themselves but are carried by the other 7,500. There must be some downward limit.


Harry Rutherford Jackman: May I call the attention of the minister to page 270 of the auditor general's report under (g):
According to the provisions of the Civil Service Act, postmasters of revenue offices, where the revenues exceed $3,000 per annum, are to be appointed by the civil service commission, but in the following cases the postmasters at such offices were employed by the department without the approval of the commission for the periods indicated: Mont Joli, Quebec, December 16, 1936-March 31, 1941; Riviere du Loup,
[Mr. Gillis.l
Quebec, May 18, 1937-March 31, 1941; and Strathmore, Alberta, August 22, 1939-March 31, 1941-
The latter date, of course, is the last which the auditor general covers. Would the minister explain how these conditions arise, where there is apparently a defiance of the civil service commission.


William Pate Mulock: My officials think it is on account of the fact that there was difficulty in finding suitable postmasters in these cases.


Harry Rutherford Jackman: Did the commission
advertise for postmasters for these various offices?


William Pate Mulock: They will be filled by the commission if they have not already been filled.


Harry Rutherford Jackman: But some of these periods extend over some years, and I cannot believe that in a constituency such as Temiseouata, for instance, there are not a great many people who are quite eligible to fill the position of postmaster.


William Pate Mulock: That brings up something which I had better mention now. As the war continues, the situation may become more difficult and many post offices will probably be left with acting postmasters until the conclusion of hostilities, so that returned soldiers will have an opportunity of being placed in these positions. I feel rather strongly about the matter, and I do not think it is fair to fill all these offices with permanent employees while men are on service in the navy, army and air force. Perhaps by next year the hon. member will see a large addition to that list.


Harry Rutherford Jackman: I would point out that no fewer than two of the three antedate the declaration of war.


William Pate Mulock: I believe the hon. member referred to one that started in 1936.


Clarence Gillis: Are there not hundreds and thousands of ex-service men in the country who would be eligible? It looks like political bait held out.	,


William Pate Mulock: That is not correct. If the committee wants the positions filled I suppose they can be filled, but I do not see any political bait about the matter. It is the very opposite. I would go farther than that. There are certain temporaries-and I am not referring to the temporaries about whom hon. members were speaking, 90 and 10 per cent. I am talking about taking on increased numbers in permanent positions. As far as possible we should use temporaries where we can. Under the order in council the govern-

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ment cannot take men on who are physically fit and within the service regulations. At the end of the war there will be a substantial number of vacancies available for competition, and returned men will have the preference for these positions.


Clarence Gillis: Is that government policy right now? Are the men who fought in the last war and came back, and who have a preference under the commission, to lie in abeyance until the conclusion of this war?


William Pate Mulock: No, but there are cases in which there are no suitable returned soldiers resident in the district. There are many such cases.


John Ritchie MacNicol: In what I am about to say I am not criticizing the minister. What I am going to discuss has been regulated by the department for some time, but the minister said something about temporaries, and they are receiving only $1,020 a year.


William Pate Mulock: The word "temporaries" is rather confusing. There are temporaries on full-time employment who have not yet been taken on the permanent list whereby they would receive the benefits of increased salary and superannuation.


John Ritchie MacNicol: There were temporaries taken on in 1936, six years ago. As the minister has said, they draw $1,020 a year, and yet they are doing a full-time job and trying to exist on an inadequate salary. I often think of the pay of the postman on the permanent list, receiving $1,500 a year. He has a most responsible position, and he is among the poorest paid men in the civil service. But these men have to do work that calls for as much care and anxiety, work that is as hard as that done by any other class in the service, and in all seasons and weathers, and yet their remuneration is altogether too small. When you come to the temporary man doing the same work and receiving $1,020, he is certainly treated far less fairly than even the permanent man. When the minister has a chance, I hope he will look into the whole question of adequate remuneration not only for the temporary but for the permanent posties.


William Pate Mulock: I will look and I have looked into it, and I have made a recommendation to the treasury board with regard to these temporaries. I absolutely agree with what the hon. member has said about them and have asked for the situation to be corrected. If I did not agree I would not have made the recommendation I did to the treasury board.


John Ritchie MacNicol: I am pleased to hear the minister say that.


Joseph William Noseworthy: As a newcomer here I have been very much amused at the attempt by hon. members on this side to charge the minister with the use of political patronage in the appointment of postmasters in rural districts and towns and in the appointment of temporary employees. The use of political patronage in these appointments is as old as Canadian history, and as well established as anything we have. I ran up against it thirty years ago. As an undergraduate I applied for a temporary position at Christmas time in the Toronto post office. I was told to consult the government patronage committee in the riding. I found the patronage committee at that time to be the defeated candidate of the party in power. My political affiliations were unsatisfactory and I did not get the job. From that day to this there has seldom been a Christmas season in which pupils from the schools I have taught in have not come to me and asked how to go about getting a job in the post office at Christmas time. I have invariably told them, if the riding was represented by a government member to go and see that member; or if the riding was not represented by a member of the government party, to see the defeated candidate. Over those years I have found it worked much more satisfactorily than in the case of my own application thirty years ago.
Only two days ago in a sessional paper brought down in the house there was a letter from an official of the postal department written to an applicant for a position of this kind, stating that overseas service does not count in such appointments.


William Pate Mulock: Does that relate to a position or a contract?


Joseph William Noseworthy: A contract.


William Pate Mulock: That is different.


Joseph William Noseworthy: In the same record where the offer of the applicant recommended by the government member was a little higher than that of another applicant, the member is notified to ask his friend to reduce his offer in order to get the contract.
I think it is an established fact, and we are only wasting time in discussing whether or not these appointments are political appointments.
As to the matter referred to by the last speaker, those temporary-permanent employees at $1,020 a year, I find on page 165 of the estimates three groups of these employees, totalling over three hundred. These, I understand, are in many cases married men, many

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of them great war veterans. Apparently it is the policy of the government to employ large numbers of these men at $19.50 or $19.60 a week. It is the same government that has been telling us and telling the country within the past few weeks that we are building or beginning to build now a new social order.
Could the minister tell us something about where these people are working? Are they city workers where the cost of living is high, or are they in small towns where the cost of living is low? Are they married men?


William Pate Mulock: These are men employed in cities. The salaries are not set by the department; they are set by the civil service commission. In an effort to rectify this situation, to some extent, the recommendation was made to which I referred a few minutes ago in answering the hon. member for Davenport.


Mr. HATFIELD:: Is any consideration being given to rural mail carriers?


William Pate Mulock: Would the hon. member be good enough to wait until the item dealing with that is called? I think it is item 21,7.


Douglas Gooderham Ross: What is the item, publicity and advertising, $15,000, on page 164 of the estimates, for? Does the post office need publicity?


William Pate Mulock: Since the outbreak of the war, economy has been exercised in the matter of advertising postal facilities. The expenditures of 1939-40 and 1940-41 were much less than the amounts voted. At the same time it is essential to keep before the public the regular postal facilities accorded, and a state of war creates new problems which must be given special consideration. Changes in postal services and methods of handling mail in wartime must be brought to the attention of the general public and business concerns. This accounts for an increase in expenditure in 1941-42 over the two previous years. The vote for 1942-43 has been reduced from $20,000 to $15,000, and the department will endeavour to keep within that amount. I am dealing now with departmental administration, advertising. There are other items of advertising under other branches of the department.


Douglas Gooderham Ross: With regard to the temporary employees, I have had a great many letters, and have had correspondence with the minister. It is a great pity that these men should have to work for such small pay. Some of them have been working for many years but are still on the temporary staff and have not the benefits enjoyed by perman-

ent employees. I remember we brought this matter up last year, and the minister promised to see what could be done. I think it should have attention, and I support the hon. member for Davenport in what he said about it.


Harry Rutherford Jackman: I think all parties in this house will be in agreement on that. I hope the minister will be able to bring sufficient pressure on the treasury board to have these men, some 10 per cent in every post office, who are now on the temporary list, placed on the permanent list. I understand that during the time they are on the temporary list, although they are married and getting only $19.50 a week there are no increases in their pay. That is a situation which, particularly in these times, should not be tolerated by the government. I should also like to ask the minister whether on the pay roll of the Post Office Department there are any employees who give all or part of their time to other departments of the government.


William Pate Mulock: Oh, yes; quite a large
number. There are the employees in the postal censorship branch; they are all employees of the Post Office Department, and we paid their salaries until the end of June. From now on I presume they will be paid by the national war services department. There may be some other individuals, but I cannot think of them at the moment.


Harry Rutherford Jackman: It would seem that the
Post Office Department has been made the butt of nearly every other department of the government, the reason of course being that the Post Office Department has a very good revenue, and that notwithstanding all these extra expenses which have little or nothing to do with the Post Office Department itself, it is still able to show a bookkeeping profit, though in reality there may be no profit at all, I think this committee is entitled to know what officers or servants are paid by the Post Office Department and lent during all or part of the time to other departments of the government.


William Pate Mulock: I can get that list for the hon. member, but he will understand that I do not have it at the moment.


[Stage Direction]
Items agreed to.
2J,7. Air and land mail services, $12,957,363.
Gordon Graydon: I have just a word
to say with respect to rural mail carriers.
I believe that in October or November last an increase of some 5 per cent was given those who carry the rural mail. I have had

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a number of complaints, as I think most hon. members of the committee have, from rural mail carriers generally in connection with the higher cost of living that now obtains throughout the country. Speaking from memory, I believe the figures show that since war broke out, the cost of living has gone up some 15 per cent. Many of these rural mail carriers, for reasons well known to most hon. members so that perhaps I need not dwell upon them at this time, not only were working at a rate which would barely give them a living return, but in many instances were paid at an even lower rate. The question of who was responsible for that is another matter, with which I have no intention of dealing at the moment. Certainly, however, at this time the rural mail carriers throughout Canada are confronted with a situation which is well-nigh intolerable. Not only did they have a low rate before the cost of living increased; they have a higher operating cost now, and the two together have placed many rural mail carriers in a position where they are no longer able to carry on.
Perhaps in his reply the minister will say that in connection with a large number of rural mail contracts which perhaps normally would not expire for a year or two, the rural mail carriers have had to give them up and ask that tenders be invited again. Therefore I would ask the minister one question. First of all, I favour a different system of awarding rural mail contracts, and I know the minister must have given serious consideration to this suggestion. If that is not possible in the opinion of the department at the moment, I submit that at least the rural mail carriers should be given a substantial bonus to take care of the increased cost of living and the increased cost of operating. Is the minister prepared to give sympathetic consideration and attention to these points?


John Gordon Ross: I should like to
have a word or two to say on this matter of rural mail delivery before the minister replies. I do not suppose a suggestion such as I am about to offer has ever before been made in this house. Generally everyone who rises in this chamber and speaks about rural mail delivery asks for more rural mail routes, or more money to be paid to rural mail carriers. At one time there might have been great necessity for rural mail delivery in this country, but certainly to-day that necessity has disappeared, at least in large part. It
44561-313|
seems to me that if rural mail delivery were justified in Canada, it would be in the sparsely settled parts of the country rather than in those parts which are more heavily settled. I have taken the trouble to look up the figures with regard to the cost of rural mail delivery in Canada, and I find that the total cost last year was about $2,966,000. Of that total, some $1,507,000 was spent in Ontario, or a little more than half the total for the entire dominion. I find that in the four western provinces, which are more sparsely settled and which should need this sort of service if it were needed anywhere, only some $377,000 was spent. I find that there are four postal districts in Ontario, at Toronto, Ottawa, London and North Bay. I find that in the Toronto district some $408,000 was spent for rural mail delivery; in the Ottawa district, some $445,000, and in the London district, some $588,000. In other words, rural mail delivery in each of these three districts cost more than it did in the four western provinces together.


Gordon Graydon: Is the hon. member's
point that the people are paid too much in Ontario?


John Gordon Ross: No. My point
is that we are continuing a service which has become almost unnecessary in this country. Why do I say that? In these heavily populated areas the post offices are close together; there are good roads by which to reach them, and with the news one gets over the radio and the number of people who pass the farm day after day on their way to the post office, there is no real reason why we should have rural mail delivery at all. In addition, we are going to find that in the very near future we shall have to stop this service because we shall not be able to get tires for the automobiles used for rural mail delivery; we shall not be able to get gasoline to operate them, and the mailmen cannot go back to the horse and buggy because you cannot get the buggy and there are not enough horses in this part of the country.
This same question comes up each year and is debated. Rural mail carriers and organizations of rural mail carriers send letters to every hon. member asking that they be taken into the civil service; that they be made permanent, although the system is that they tender for the contract and set their own price. After having got the price set by cutting it down below somebody else, they come along and say that the price is not enough; that they want more. This goes on year after
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year when the estimates of the Postmaster General come up for discussion. I have some rural mail routes in my constituency-not many I will adimit-but-


Mr. BLACKMORE:: Hear, hear.
Mr. ROSS (Moose Jaw)): My hon. friend says "hear, hear," but I imagine he has not done what I have in regard to this matter. When 1 came here seventeen years ago I went to the Post Office Department and said, "You will do me a great favour if you will never allow another rural mail route in my constituency." There has never been one put in since. Just a few days ago I got a letter from the Post Office Department, the type that often comes through, informing me that a contract for a rural mail route would be up for tender on a certain date. I replied to the Post Office Department asking that they make an investigation to see if it would not be possible to cut out the rural mail routes in my constituency. I do not believe in them. What is the use of having rural mail routes out of one or two towns in a constituency and none out of the others?


Gordon Graydon: Are you on a rural mail route?


John Gordon Ross: No, I am not.


Gordon Graydon: That is the answer.


John Gordon Ross: No, it is not; I live in the city.


Gordon Graydon: Do all city people want them taken off?


John Gordon Ross: When I want my mail at the farm I go and1 get it, like all the other farmers in that district.


An hon. MEMBER:: You are never there.


John Gordon Ross: Yes, I am often there.


John Ritchie MacNicol: Do you ever farm?


John Gordon Ross: Yes, I have farmed, and my hon. friend does not need to say anything about that. He does not know the difference between a farm and a block in the city.


John Ritchie MacNicol: I imagine I know a great deal more about farming than my hon. friend. I have done everything that needs to be done on the farm. My hon. friend lives in Moose Jaw.


John Gordon Ross: Yes, I admit that; everybody knows it. I do not see anything wrong with it.


John Ritchie MacNicol: I wager I can shock two sheaves to my hon. friend's one.


Gordon Graydon: Perhaps we can continue this next year when the agriculutral estimates are before the committee. I do not think this comes under post office. Is there any door-to-door delivery in Moose Jaw?


John Gordon Ross: Yes.


Gordon Graydon: Are you asking that that be done away with?


John Gordon Ross: I do not say that, no. You are not going to run up against the same trouble with door-to-door deliveries that you will with rural mail service. Many rural mail carriers are having difficulty in getting tires; they are finding that there is not enough money in their contracts for them to carry on. You are going to have to cut out a lot of them anyway. Conditions have been changing in this country in the last few years. My farm is nine miles from the post office, and there is no difficulty about getting the mail and never has been. Many of the farmers in our part of the country have to go that distance for their mail. I am not talking about the farmers in Ontario who may have to go a half a mile or a mile for their mail. The farms in Ontario are much smaller than those in our part of the country, and distances are not as great. This rural mail business has been a matter of political push for some time. It is a system of mass patronage. I am going to suggest to the Postmaster General that he cut out the whole thing as soon as possible and get rid of an expensive and unnecessary service in this country.


Mr. POULIOT:: The hon. member for Moose Jaw (Mr. Ross), our esteemed colleague, is one of the brightest members of the house. He is qualified to hold several of the portfolios, but not that of the Postmaster General (Mr. Mulock). The hon. member is a farmer, but he is a gentleman farmer. He does not seem to know that in some parts of the country there are farmers who have no motor cars, who still use the old horse and buggy. The mail is carried express, but it is not railway express, and it is a great convenience to all the owners of rural mail boxes along the way. There are provinces which are a little behind the great province of Ontario; they do not have electricity all through the back country. Therefore it is a trouble for the farmers to keep batteries for their radios, and many of them do without.
As has been mentioned by the Minister of Agriculture (Mr. Gardiner) and others, there is a great scarcity of labour on the farm. It

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would be difficult for many farmers to go nine miles, the distance mentioned by the hon. member for Moose Jaw, to the post office to get their mail. As I say, many of these farmers do not have motor cars or radios, and if they want to get news of their children who are in the army or know what is happening in the world they must get their daily newspapers. The farmers in my province get up early; they work from the rising of the sun to dusk. They do not work only from spring to the end of summer; their work goes on all year. Their horses may be worked all day, and it would be pretty hard to drive them to the post office and then perhaps arrive after it was closed.
I do not see why rural mail deliveries should be dispensed with, especially when we consider the facilities that are made available to people who live in cities. There are five daily air mail services between Ottawa and Toronto, between Ottawa and Montreal and between Montreal and Toronto. We are told that the revenue which is considerable covers the expense, but it is pretty hard to prove that that is the fact. These services are carried on at tremendous cost to the country. Several departments, especially the war departments, use the air mail more than their franking privileges, and this means that money comes out of one pocket of the government to go into another. If we compare our farmers with the urban population, we must say that Virgil, who lived 2,000 years ago, was wrong when he said, "O fortunatos nimium agricolas," "0 happy people."
The city people are more fortunate than the majority of farmers when it comes to the delivery of mail. The hon. member for Moose Jaw has made a wonderful proposition. He had all the figures at his finger-tips and gave them to us, but it is a long time since there were representations from the rural mail carriers. I remember that the old superintendent was very angry at some people who were at the head of that movement, and quite properly so, because among those who were corresponding with the members there were, I admit, some promoters or fakers who were working mostly for themselves and not for the mail carriers. But when we think of the farmers in the back country who are anxious to get the news, the newspapers and their mail, and letters from their children who may be scattered here and there, I think we shall all agree that it is a good thing to provide them with these facilities and to help the farmer not only at the time of an agricultural fair. It is a great comfort to a
farmer, after a long day's work in the fields, to sit quietly at home smoking his pipe and reading the newspaper he has found in the mail box near his home. Therefore I hope the minister will not follow the interesting but untimely advice of the hon. member for Moose Jaw but will think of the old-timers on the farm. The minister is a farmer himself and just as good a farmer-perhaps not better-as the hon. member for Moose Jaw. He knows that what I am telling him is true, and therefore I appeal to him now kindly to forget what the hon. member for Moose Jaw has said, and think rather of his own experience, of the satisfaction he himself derives from receiving newspapers and letters on his farm in the country. I know he enjoys that and appreciates that other farmers enjoy it too. Of course, I know he does not live in the back country, but only in the back country of the great city of Toronto; but let him think of those poor farmers who live far away from the city and need some of the small comforts of life and the pleasure which letters and newspapers give. I see the minister is smiling. I am sure he will leave these mail contracts in force.


William Pate Mulock: The hon. member for Temiscouata and the hon. member for Peel can judge by the item itself that there is no intention to follow the very interesting and in many ways constructive suggestions of the hon. member for Moose Jaw. He drew attention to one difficulty which I think all members appreciate, that of maintaining the rural mail services particularly with motor vehicles, which in many places will have to give way to horses and buggies, and in the winter, to horses and cutters.


Gordon Graydon: Can they not get higher rationing?


William Pate Mulock: So far as gasoline is concerned, arrangements have been made for that for some time, but you cannot do anything about tires. If the rubber is not available, it is not available.


Mr. MacKENZIE (Lambton-Kent):: I am surprised at the remarks of the hon. member for Moose Jaw. They only demonstrate once more his peculiar viewpoint that if something does not appeal to his riding it is no good for the rest of the country. He talks about this service being uneconomical and referred particularly to Ontario, but I think he will find that rural mail in Ontario is paid much better pro rata for the amount of work done than in western Canada. He wants rural
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mail done away with entirely because people do not read papers any more; the people in the country do not need to be well informed, or he does not want them to be well informed, and therefore there is no reason for rural mail delivery! But when the question was put to him about mail delivery in Moose Jaw it was quite all right that Moose Jaw should have mail delivery.
Then he found fault with the tender system because the tenderers set the price themselves. If that were true of everybody in the country we would have a funny state of affairs here.
Rural mail carriers should also be done away with, he said, because there is not much rubber and gasoline to carry on the service. That is true of almost every line of business. Therefore I say, "sufficient to the day is the evil thereof". People employed in government service as a rule are paid fairly well, or they should be. There are perhaps one or two exceptions. The civil servants in the lower grades are not getting paid enough, but as a general rule people doing government service are paid fairly well. The rural mail carrier is one exception. On the whole the rural mail carrier gives splendid service. To be sure, they are on the tender system, and there is no justice or fairness in that because contracts which were made three or four years ago have to be renewed on the old basis although the cost of operations has risen very considerably within that time. The contracts that have been awarded recently, in this last year, have been, I am glad to say, probably 20 per cent higher than the old contracts. The officials of the Post Office Department are well aware of the plight of the rural mail carriers which has been brought before the officials of the department many times in the past. I myself have sat in with four or five different delegations which have visited the officials, and the department has promised to work out something that will put the rural mail carriers on a more fair and equitable basis, because they appreciate the splendid service that these carriers are giving throughout the dominion. This question has also been before the civil service commission and different departments, but I think it is now time that the Post Office Department came forward with some concrete system to give a fairer rate of remuneration to the rural mail carriers and put the work on a mQre equitable basis.


Alexander Malcolm Nicholson: It is eleven o'clock, Mr. Chairman.


Gordon Graydon: Can we not finish this item?


Thomas Langton Church: I have just one question to ask.


Thomas Vien: I would suggest to hon. members that if it were possible to dispose of this item-there are only three items left over and we have been on the post office estimates for more than two days-


Alexander Malcolm Nicholson: I have tried several times to get the floor, Mr. Chairman, and have listened to members speaking from the other side.


Thomas Langton Church: The question I wish to ask is the one I asked last year. What is the cost of distributing second-class mail, newspapers? The minister gave an estimate last year. I appreciate the great work which the newspapers are doing. They are doing war work. I think much of the work which is being done by our publicity bureau might be handed over to the newspapers because I realize what it costs to run a newspaper. They are having a tough time, and I think the government should help them out with publicity work. YThat was the cost of this second-class mail?


William Pate Mulock: About $4,500,000.


Grote Stirling: Mr. Chairman, I draw your attention to the fact that it is eleven o'clock.
Item stands.
Progress reported.


[Stage Direction]
It being five minutes after eleven o'clock the house adjourned, without question put, pursuant to standing order.
Thursday, July 30, 1942