QUESTIONS

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

Mr. BOUCHER:: 1.	Did the government send a man to England to examine and report back on shoes for army purposes ?
2.	If so, who w'as sent?
3.	Was a report made? If so, of what nature was this report?


Mr. MACDONALD (Halifax):: 1.	Yes. A committee was appointed and by the terms of reference the committee was to investigate and bring in a recommendation for the information of the Department of National Defence as to which was the best type of boot for the army and to advise in respect of any other matters regarding army boots referred to the committee.
2.	A committee of three men consisting of Mr. A. O. T. Beardmore, president of the
Canadian Tanners Association; Mr. Louis Daoust, footwear administrator for Canada; Captain M. B. Steinkopf, R.C.O.C. chief supervisor of non-technical workshops (army boots are repaired and rebuilt in these workshops) .
3.	Yes. The principal subject dealt with was the merit of high ankle as compared with low ankle boots for military use.
Final consideration of the report of the committee is deferred pending further trials now being conducted overseas.
Among other subjects dealt with are: (a) the merits of a stitched welt constructed boot as compared with boots of nailed construction; (b) the usefulness of clump soles; (c) the usefulness of heel plates and toe caps; (d) the advantages of leather soles as distinguished from rubber soles; (e) army boot repair systems; (f) salvage of used army boots; (g) the advantages of having uniform boot construction for allied nations.


QUESTION PASSED AS ORDER FOR RETURN
Mr. BLACK (Cumberland):: 1.	What is the number and percentage of rejections on medical grounds, and the total number of applicants for enlistment in the army in each military district since the beginning of the war?
2.	What is the number and percentage of rejections and exemptions on medical grounds, of those called up under the National Resources Mobilization Act, and responding, in each military district, administrative district, or province?
3.	What is the . number who have responded to such call-up in each military district, administrative district, or province?



MOBILIZATION ACT


[Stage Direction]
On the orders of the day:
Hon. HUMPHREY MITCHELL (Minister of Labour):: Mr. Speaker, yesterday the hon. member for York-Sunbury (Mr. Hanson) asked if there had been any change in the regulations under the National Resources Mobilization Act with respect to the definition of students, or if not, whether any change was contemplated. May I say to the hon. member that there has been no change in the definition in question since the passing of P.C. 10924 of December 1, 1942. I shall be glad to send to the hon. member a copy of the regulation.
War Appropriation-Supplies


Hon. R. B. HANSON (York-Sunbuiy):: Did the minister answer the second part of my question, as to whether any change in the definition of students had been contemplated? I do not think he answered that.


Humphrey Mitchell: At the moment the answer is no.



RATIONING-WESTMOUNT AND DISTRICT

[Stage Direction]
On the orders of the day:
Mr. SARTO FOURNIER (Maisonneuve-Rosemont):: Mr. Speaker, before the orders of the day are called I should like to ask a question of the Minister of Finance (Mr. Ilsley) or, in his absence, of his parliamentary secretary, who is also the hon. member for St. Antoine-Westmount (Mr. Abbott). Is it true that the people living within the limits of the city of Westmount are entitled to receive thirteen pounds of sugar, while those living outside the limits of that city receive only ten pounds?


Mr. SPEAKER:: Order; this question
should not be asked on the orders of the day.


Mr. GRAYDON:: It is a very important question.



WAR APPROPRIATION BILL


[Stage Direction]
The house resumed from Wednesday, June 16, consideration in committee of a resolution to grant to his majesty certain sums of money for the carrying out of measures consequent upon the existence of a state of war.- Mr. Ilsley-Mr. Bradette in the chair.

[Stage Direction]
1. Additions and extensions to plants, $195,000,000.
Mr. ESLING:: What did the -company do in this war? It said to the British government: We wall supply you with all the lead and zinc you need in excess of the requirements of the Canadian consumer. The company supplies that lead and zinc to-day to the British government at a price for zinc, for instance, which is less.than the average price in the five years prior to the war. In other words this company is supplying the allies -with zinc at S3.60 per hundred pounds as against what? As against the New York quotation of S9.25. Is that not something to be proud of? Is that not something w'hich the members of this parliament should consider-3-6 cents per pound as against 9-25 cents per pound in the United States? The price of their lead is also proportionately low. These prices-and I would just like the members to listen to this to see that there is no grasping or profiteering by one company- these prices mean that the British government is receiving its lead and zinc from the Consolidated Mining and Smelting company at a saving of $22,000,000 every year. There is no grasping or profiteering there.
May I add this one iword. Responsible for all this loyalty and this endeavour to participate in the war effort is Mr. S. G. Blaylock, the president and managing director of the company. He did not come there as a high-priced official. I happened to be a resident of the city of Trail before the Consolidated Mining and Smelting company came into existence. I saw Mr. Blaylock come to Trail as a student from McGill to take employment in the assay office. He grew up with the plant. He was in daily contact with his fellow workers. He saw their problems, and! he made it his purpose in life to solve those problems, and he is solving them to-day. I do hope that these few words may commend the industrial policy of the Trail plant to other industrial institutions in the Dominion of Canada.


Mr. NOSEWORTHY:: I was personally very much impressed yesterday afternoon by the minister's defence of the dollar-a-year men upon whom he has relied for production. I am not at all critical of these gentlemen as individuals. I feel as I am sure the house does that the minister, intent as he was on securing the maximum possible production, chose the men that in his opinion would give that result. There are, however, many people across this country, and they are not by any means all C.C.F.'ers, who are critical of that policy and who fear that the minister, intent on getting production during the war, has paid too little regard to the ultimate result in terms of the post-war period of the policy he is following. There are many people in this country who

have good reason to remember that these very men who were eulogized here yesterday must take their share of responsibility for what happened in this country in the pre-war years, and a great many people across this country are fearful of a recurrence of those conditions if these same gentlemen are left in control of our economy when the war ends. Certain it is- I think there can be no question in any one's mind-that the policy being followed by the government to-day inevitably affords to big business an opportunity to entrench itself in the economy of this country, and in almost every instance large corporations will come out of this war in a much stronger position than they were in when the war began.
I listened with interest to what the minister had to say of the qualifications of the directors of Polymer. With all due respect to the minister and the admiration which he as a professional man has for the business man, I fail to see why, because a man is president and director of a long string of mining companies, he has by reason of that fact any special qualifications to be a director of a firm the purpose of which is to construct a plant for the production of synthetic rubber. The same applies to the president and director of a yeast company or to the directors of a bank or the directors of a financial institution. I fail to see where these positions give them any special qualifications for this particular position. I was rather surprised that on that list of directors there was not the name of one single construction man. There must have been outstanding men in the business in which the minister himself was interested and it seems to me that would have been the logical place to look for a man of experience of that kind.
As to capital control, I referred on Tuesday to the extent to which the Aluminum company is gaining control over our water powers in this country. There are people in this country, and again they are not confined to the ranks of the Cooperative Commonwealth Federation-there are many in Ontario-who are vitally interested in the publicly-owned Ontario hydro-electric system, who are wondering what will be the effect upon publicly-owned hydro in this province of this cost-free governmental war-time financing of the Aluminum company and its Shipshaw plant. I have correspondence from the mayors of a number of municipalities in Ontario who are very much alarmed at the prospect of the Aluminum company being in a position, because of its low capital charges, to produce after the war electric power more cheaply than any other concern on this continent. They are alarmed at the prospect in the post-

War Appropriation-Supplies
war period of that company being able to block as they have done in the past the further development of publicly-owned enterprises. I do not know to what extent the minister or the members of the house are aware of the powerful international hook-up in connection with the development of the St. Lawrence watershed. I have before me the seventh annual report of the power authority, which on page 44 gives the names of seventeen directors, among them Mr. Arthur B. Davis, Mr. Edward K. Davis, Mr. Geoffrion, and Mr. Leighton McCarthy. Between them in one way or another these seventeen directors control Aluminium Limited, Saguenay Power, Aluminum Company of America, Montreal Light, Heat and Power, Beauharnois Power, Niagara Hudson Power, Shawinigan Water and Power, Quebec Power, International Power Securities, Gatineau Power, and a number of others such as security companies, which are mere holding companies. I have a further table, on page 42 of the same report, showing the international power hook-ups. Heading the list is the Mellon aluminum interests. There are twenty-seven companies in that hook-up. Pully half of them operate in Canada. One of the companies in that hookup itself controls fifty-seven other companies, which between them produce and distribute 90 per cent of the power which is used in the state of New York to-day.


Richard Burpee Hanson: International Power has been ordered to be dissolved, has it not?


Joseph William Noseworthy: But that was the situation at the time of the investigation and at the time this report was made up. Our Ontario hydro system to-day is contracting with private companies, all tied up in one way or another with the aluminum interests, for about as much power as it is developing from its publicly-owned plants. I pointed out that the development of Shipshaw was the culmination of a policy which has been followed very definitely through the years, a policy to block the development of publicly-owned water powers, a policy to get control of these, to ring them about. I am sure the minister will agree that we can ill afford in this country to allow the water flowing down our rivers to pass into the control of an international monopoly. That is a menace.


Mr. HOWE:: Mr. Chairman, I am sure I do not know under what item the present discussion is taking place. Certainly it is not under item 1, because there is not a dollar of government funds being given to Aluminum company or to any water-power company as capital assistance. However, since the hon. 72537-236
member has said that Aluminum company has been blocking water power for years, and grabbing control of water power for years, perhaps he will tell us what powers have been blocked and what powers are controlled.


Joseph William Noseworthy: I wanted to show that from 1921 to 1924, for instance, the hydro electric commission and the government of Canada were committed to the policy of developing a publicly owned development on the St. Lawrence. I pointed out on Tuesday-


Clarence Decatur Howe: We are still committed, are we not?


Joseph William Noseworthy: Just a moment. I pointed out on Tuesday that the aluminum interests had engaged a very highly-paid counsel in Canada-


Clarence Decatur Howe: Mr. Chairman, are there no rules at all for this committee? On what item is the hon. member speaking?


Mr. COLD WELL:: I thought I heard the minister say a few minutes ago that he would be glad if the hon. member for York South (Mr. Noteworthy) would show in what manner the Aluminum company had blocked development of water power.


Clarence Decatur Howe: I should like to hear him speak on that, but I do not see why he should discuss it on this item.


Mr. COLDWELL:: The minister will find that the reference which the hon. member is about to make does bring into the picture
the Frontier corporation, which was used by the Aluminum company to block power.


Clarence Decatur Howe: There is no appropriation under this item for the Frontier Corporation.


Major James William Coldwell: But the minister
challenged the hon. member to show how this involved the Aluminum company, and the hon. member is doing so.


The CHAIRMAN:: The hon. member for York South is for the most part out of order, but in this instance he is replying to a question asked by the minister himself. I cannot see, however, that there is any relation between hydro development, or Shipshaw, and the item under discussion. So far we have made no progress in the consideration of this item, and while I do not know what the temper of the committee may be at the moment, I venture to say that every hon. member is anxious to have some progress made. I would ask hon. members therefore to comply with the rules from now on and to stick to the item before the committee.

War Appropriation-Supplies


Richard Burpee Hanson: The minister invited this.


Joseph William Noseworthy: In answer to the minister's question as to how Aluminum company had blocked the development of the publicly owned enterprise on the St. Lawrence, I was pointing out that from 1921 to 1924 both the Ontario government and the federal government favoured the development of that project. In the meantime, I have already shown, the aluminum: interests had engaged the services of a very highly-paid counsel to look after their interests in this country. Following that, I find that in 1926 the Ontario government, the Ontario hydro-electric power commission and the federal government had changed their policy with regard to the development of that project as a publicly owned concern. In 1927 the Canadian government, in reply to an invitation from the United States to participate in negotiating for the St. Lawrence treaty, replied that the government's policy must wait on the report of its national advisory committee. Just prior to that the Ontario hydro oommission had informed the international commission that they too would be forced to contract for private power. Two months before they made that statement they had already entered into a contract with the Gatineau Power company, and when the national advisory committee reported to the federal government they recommended the development of the all-Canadian section which was to be developed by private ownership. The following is a quotation from their report:
We believe that if a reasonable time were permitted in which to enable the resulting power to be economically absorbed the development of this national section would be undertaken by private agencies able and willing to finance the entire work, including the necessary canalization in return for the right to develop the power.
That point of view was embodied in the government's report to the international committee in the following year. The interesting feature of that report is that the chairman of that national advisory committee, Doctor McDougald, was one of the men who were first interested in the organization of Beauharnois, and Aluminum company was present and represented.


Joseph-Arthur Bradette: Order. I should like to know whether the hon. member is still replying to the question which the minister asked, because I fail to see how the development of the St. Lawrence can have any bearing on the item before the committee. I cannot see any connection whatever.
[The Chairman.]


Major James William Coldwell: If I might speak to the point of order, the minister asked the hon. member to state specifically how the Aluminum company was involved in the blocking of the St. Lawrence project. In the second place, perhaps I might call the attention of the committee to Hansard at page 3555, in which the minister, in the very able statement he gave on Friday last, referring to the subject, made this observation:
Our great resources of electrical power provide one of the basic reasons why Canada now holds fourth place among the united nations as a war producer.
And so on. The minister himself pointed out the importance of power in connection with the munitions programme in the war effort, and it seems to me that from both points of view the hon. member is in order.


Mr. CHEVRIER:: The item under discussion is, "1. Additions and extensions to
plants."


Richard Burpee Hanson: Is that
quite so? Are we not on a general discussion?


Lionel Chevrier: If the hon. member
will allow me to raise a point of order, the item under discussion is additions and extensions to plants. There is no provision in this item for any money being advanced to Shipshaw or Aluminum or any power company. Therefore under standing order 58, any discussion is out of order as that in which, the hon. member is now engaged. My submission is that the discussion should be ruled out of order.


Richard Burpee Hanson: If the point which the minister is making-pardon me, not quite so soon; I meant, the parliamentary assistant.


An hon. MEMBER:: Later on.


Richard Burpee Hanson: If the major premise of the under-secretary is correct, then of course his conclusion is correct, but his major premise is wrong. The minister made a general statement on this and all other items; and in that situation the membership of this house are entitled as of right, not as of grace from the government benches, to deal with that statement. Then when that discussion is exhausted I submit we get down to the particular items in question. We have not yet reached that stage, much as I should like to see that happen. Furthermore the minister himself invited this very discussion, foolishly I thought; but he brought it on his own head under the general order of business covering all items relating to this huge sum of more than three and a half

War Appropriation-Supplies
billion dollars. I want to reserve the rights of hon. members though at times they may be carried to extremes. I suggest to my hon. friend on my left, however, that going back to the McDougald report is referring to ancient history. Perhaps he will come down to earth and be a little more modern.


Mr. HANSELL:: I think it is generally conceded that the little programme we have been given, setting out nine points, pretty well covers the minister's department. I believe it is generally understood by all that, as in connection with the regular estimates, on the first item anything not included in the others may be discussed. I appreciate, Mr. Chairman, that you have allowed a fairly free discussion of the minister's department under the first item, as I think you should, and I suggest that the hon. member be permitted to conclude his speech.


Joseph William Noseworthy: I repeat my major
contention, that this discussion has arisen because of the aid given by the government to the aluminum interests-


Clarence Decatur Howe: On a point of order, Mr. Chairman, this government has never given one dollar of government aid to the Aluminum company or any of its subsidiaries.


Joseph William Noseworthy: To my mind the
accelerated depreciation given this .company is a form of financial assistance. Furthermore, Canada is interested in the assistance that other members of the united nations have given this company, inasmuch as that assistance enables the company to be a competitor of our publicly-owned enterprises in this country.
At the time I was interrupted I was speaking of the Beauharnois contract. I need not remind the committee that this was a very significant contract as far as Ontario was concerned; that the contract the Ontario hydro entered into with that company figured largely in the flotation of the bonds of that corporation. There we had an instance of a publicly-owned enterprise thwarted in its efforts to secure the development of its own resources and placed in a position where it was forced to underwrite the private development of power resources in the Quebec section of the St. Lawrence. My contention is that this reversal of policy was due in part at least to the effective work done by the counsel for the Aluminum company in Canada, engaged for that purpose. I have one item which I think will illustrate that, from the accounts I was quoting yesterday covering the years 1921 to 1926:
Fee on interview with Messrs. Davis, Bishop and others in New York, Pittsburgh and. Toronto discussing, considering and advising; interviews and attendances in connection with the appointment of Mr. Charles A. Magrath as chairman for the hydro electric power commission; fee in preparation for and on special, interview with Mr. Charles A. Magrath and Mr. Bishop in Toronto on March 29, 1926. . . . fee covering interviews with Prime Minister of Canada and other members of the government discussing developments of St. Lawrence river and reporting thereon. . . .
Incidentally the bill rendered for fees during these five years amounted to $26,678, and I have no doubt the Aluminum company received good value for this money.
Coming down to a later incident I should like to direct attention to an agreement signed by the governments of Canada and the United States in 1932. After that international agreement had been signed it was discovered by the power authority of New York state that it contained a clause calling for the expenditure of over a million dollars to provide a dam and gates at the entrance of the Aluminum company's canal at Lachine. That clause had escaped public notice until after the signing of the agreement. The matter was so serious that it necessitated a revision of that agreement by the governments of both countries. Had that clause remained in the agreement it would have meant that the aluminum company could have diverted one-quarter of the United States share of that water, which would have amounted to a free gift to the Aluminum company of two and a half million dollars.
The Aluminum company has figured in every application that has come before this-house for the exploitation of power. The Prime Minister himself recognized that when discussing bill N-o. 21, to amend the Electricity and Fluid Exportation Act, which was given third reading on March 27, 1938. A white paper which the Prime Minister tabled on that occasion contains an admission that the exportation was required solely for the use of the Aluminum company. .
I shall not give numerous other instances which I had intended to mention, since the government does not want this discussion carried on and apparently there is some-dispute as to whether it is in order. To me-, however, these are clear indications that, throughout the years the Aluminum company has carried on a campaign to defeat the public development of that great waterway system. And I am not so sure as the minister seems to be that when the war is over we shall be free to go on with that great enterprise which, in the natural course of events, should provide much employment in that post-war period. For twenty-five years the Aluminum company-
War Appropriation-Supplies

has succeeded in persuading the government, either on the other side or this side, that it was not in the interests of this or that country to proceed with the development. With the strategic position they now hold by reason of the assistance they have received in the development of their new plant I am not so sure that they will not still, and for a long time, be able to block that publicly-owned enterprise.


Ernest George Hansell: Mr. Chairman, may I return to yesterday's discussion of the rubber situation. I shall not take a great deal of time in discussing the matter generally, but shall ask the minister a question in respect of one matter which does not seem to have been touched upon. I refer to reclaimed rubber. What is being done in respect of this commodity? I ask the question because in several communities people have spoken to me about their supply of reclaimed rubber, and I have seen huge piles of old rubber tires. I remember one particular pile which must have amounted to many tons, and that pile to my knowledge has been lying there for at least two years. The salvage committee in that community are asking why it is that they cannot dispose of this pile of old tires, because it is an eyesore in the community.
Most of us found on our desks this morning a little booklet called "Canada at War". It is published, I believe, by the king's printer, and issued by the wartime information board. At page 31 of this June issue I find this paragraph:
Salvage material most urgently needed now is fats and bones to produce glycerine, old tires and tubes, scrap brass, bronze, and copper and rags.
If these old tires are needed, why is it that these piles are allowed to accumulate and to lie for a number of years? The pile I have in mind has been there to my knowledge for at least tjvo years, and there must be a good many tons in it. This is not an isolated incident; I think we would find the same condition throughout the country. Could the minister throw some light on what is being done in respect of reclaimed rubber?
Mr. HOWE; The supply of reclaimed rubber is very good indeed. In fact, collections of old tires have exceeded the capacity to reclaim their rubber content. Reclaiming plants have a limited capacity, and we had a tremendous response to our campaign for the collection of old rubber in the form of tires and other goods. Our stocks of reclaim are high. It is true that we have a considerable stock of old tires waiting to be processed, but I can say that the reclaimed rubber situation is in a very satisfactory condition.
I Mr. Noseworthy.]
Mr. JOHNSTON (Bow River); Are we getting any raw rubber from outside Canada- from Russia, or any other place?


Clarence Decatur Howe: Only a trickle. Most of our crude rubber comes from the united nations' stock pile. We are allocated our war needs from that pile. That is sufficient to make up the deficit in our own stocks, which have been spread over a period sufficiently long so that artificial rubber may take the place of the crude.


Mr. JOHNSTON (Bow River):: The minister is referring to that which is already on this continent?


Clarence Decatur Howe: Yes.


Charles Edward Johnston: Are any imports of crude rubber coming from Russia or Great Britain?


Clarence Decatur Howe: There are trickles, but I do not know how much. All imports are pooled and go into the stock pile.which is held in the United States. A certain amount comes in from South America, a little from India and Ceylon, and a certain amount from South Africa. Whether any comes from Russia at the moment I cannot say.


Mr. PERLEY:: What is the percentage of rubber in old tires which can be reclaimed?


Clarence Decatur Howe: I think a very large percentage of the rubber that is left. The amount reclaimed would depend of course on how badly the tread is worn. But I believe the reclaiming process takes practically all the rubber that is left in an old tire.


Ernest George Hansell: Does the reclaiming of rubber require a specially equipped plant?


Clarence Decatur Howe: Yes.


Ernest George Hansell: And are our reclaiming processes running at full capacity?


Clarence Decatur Howe: Yes; we have two plants in Canada, and we send a good deal of scrap rubber to Akron, where it is reclaimed and sent back to Canada.


Mr. BENCE:: Yesterday I could not help feeling that a discouraging picture was given by the minister respecting the utilization of agricultural products in the manufacture of synthetic rubber. I feel that possibly the worst side of the picture was presented by the minister. As one who is keenly interested in this subject, which I believe to be of the utmost importance to the part of the country from which I come, I should like to obtain from the minister certain information before

War Appropriation-Supplies
I am prepared to accept in my own. mind the conclusion that the use of agricultural surpluses is not feasible.
Yesterday the minister gave some figures respecting the costs of manufacturing synthetic rubber from wheat. He stated it had been estimated1 that wheat to be used for this purpose would have to be purchased at 25 to 30 cents a bushel. I believe, his w.ords were "it is estimated"; and I also note that in the article he put on the record, which purported to be an answer to Dyson Carter, the same figures are given. Would the minister tell the committee who made the estimate? Was it made by an individual or a group of individuals? Who were they, and what had been their experience along these lines?
Apparently the determination of costs is a difficult matter. Mr. D. G. McKenzie, to whom I referred in my observations the other night, has stated that he discussed this matter with various research scientists, including some of the research foundations and the national research council, and found that he could not get any of these experts to express an opinion as to costs in terms of commercial production. The report made by the national committee of the Canadian chamber of commerce in a booklet called "A Survey of Canadian Research on the Utilization of Farm Products" states this at page 44 of its report, in connection with industrial alcohol:
There is no such thing as "the cost" of making alcohol, since it may vary with the size of plant, cost of raw materials, process used and utilization of by-products. The approximate cost figures under pre-war conditions were estimated to be 35 to 40 cents per gallon of alcohol at the distillery, if wheat at 60 cents per bushel is used.
These figures are somewhat lower than those given yesterday by the minister, and in a moment or two I shall have some questions to ask in that connection. For the information of hon. members and the public generally may I point out that this matter is by no means considered a hopeless one so far as the national research council is concerned. These questions were asked in the house by the hon. member for Souris (Mr. Ross) on April 15:
1.	Have scientific investigations been carried on by national research council as to possibility of utilizing Canadian-grown cereals to produce butadiene which is used in manufacturing scientific rubber?
2.	Has the department made scientific research into the possibility of producing alcohol, rubber, starch and other commodities, from certain foreign products?
3.	If so, what have been the results?
4.	What is the cost per pound of rubber made from wheat alcohol as compared to petroleum?
The answers given were as follows:
1.	Yes.
2.	Yes.
3.	(a) Ethyl alcohol. No experimental work is being done on alcohol production from farm products since the general processes are already well established in industry. Information obtained from the wheat-alcohol commitee of the United States war production board is available to the national research council.
(b)	Rubber. Promising results have been obtained from laboratory investigations on the production of butylene glycol from wheat and its conversion to butadiene. A pilot plant scheduled to operate in early summer is under construction. The purpose of this plant is to provide necessary data for the proper design of a full scale industrial plant.
(c)	Starch. An improved process for the separation of starch and gluten from wheat flour has been developed on a large laboratory scale. Starch of high purity is obtained by this process without greatly changing the natural properties of the gluten.
4.	Actual production costs are not at present available to the national research council.
This indicates that the question of cost is hard to determine. As Mr. McKenzie put it, so far as rubber production is concerned the research scientists are not in position to give an accurate estimate. From the discussion yesterday it would appear that there is a misconception in connection with the use of wheat. Reference was made to eighty cent and ninety cent wheat, and one member talked about dollar wheat. The position in this country is that we have a great deal of poor grade wheat which would cost considerably less than the price paid for No. 1 northern. There also seems to be a misconception in the minds of some hon. members of the house as to the amount of money obtained from the sale of wheat. We do not get ninety cents for our wheat because we are entitled to sell only 280,000,000 bushels.


Mr. REID:: In past years have the lower grades of wheat not been in greater demand on the coast than No. 1? In British Columbia for many years inferior wheat has cost more than the better grades.


Alfred Henry Bence: I only wish we could obtain more money for the poorer grades of wheat than we do for No. 1. I can assure the hon. member that considerable quantities of the poorer grades of wheat in Saskatchewan would be available to British Columbia if they were ready to pay the No. I price for it.


Thomas Reid: We cannot always afford to pay that.


Alfred Henry Bence: I do not think the poorer grade costs more.


An hon. MEMBER:: It is a question of freight.


Alfred Henry Bence: The freight costs might bring the cost of the poorer grades of wheat in British Columbia above what is paid for
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No. 1 grade .in Saskatchewan. However if you transported No. 1 wheat along with other grades to British Columbia, the No. 1 wheat would cost more. We are capable of producing in western Canada much more wheat than the 280,000,000 bushels we are allowed to sell. Even though we may be able to get rid of all our wheat for a short time after the war, it may be that after a time we shall not again be able to dispose of all the wheat that we can produce. This is what has happened in past years. Therefore we may have to find something else to do with it. Then we may grow other agricultural products. Experiments are being made in the growing of the Russian dandelion- I do not know its technical name-out of which synthetic rubber is being produced in Russia. It may not be that this product can be grown on the western plains, but the fact is that we have a lot of land there and we are in position to grow many agricultural products that could be used.
Yesterday the minister suggested that the total production of the alcohol distilling plants in this country was sufficient to produce only one-third of the alcohol which would be required to produce the amount of rubber which will be manufactured from petroleum. This alcohol now being manufactured is produced from seven million bushels of wheat, consequently I take it that from 21,000,000 to 25,000,000 bushels would be required to produce sufficient alcohol to manufacture the same amount of rubber as will be made from petroleum. We have an ample supply of poor grade wheat to meet this demand and it seems to me that it could be used for this purpose.
Of course the Sarnia plant is established and will be a going concern this summer. However, the investigations that were carried on before the plant was established are matters with which we are all concerned when we consider whether we can have an alternative process. I do not think anything should be done to discourage the use of agricultural products until we have come to a definite conclusion that it is not possible to work out some feasible and economical scheme for the production of synthetic rubber from this base. In order to assist my understanding of the position I should like the minister to tell the committee at what time it was decided that the construction of the Sarnia plant should be proceeded with. What length of time before that was it that these men to whom he has referred were consulted as to the best process that should be used? Can he give us the names of those men? How many of them were consulted? Who consulted with them, so far as our administra-

tion is concerned? Were members of the national research council brought into the matter? Generally speaking I should like to have a clear picture of the whole discussion that took place before it was decided to go ahead. I should like to know also whether the representatives of the agricultural interests, that is on the scientific side, were called into consultation. Was this matter discussed with men in the United States who have been actually engaged in the production of this product from agricultural products? Who approached w'ho, if I can put it that way? Did the Canadian administration go to the United States and search out these men to obtain their advice, or were they approached from the outside with the suggestion as to what was the best thing that should be done? When he gave his statement yesterday the minister said, as reported on page 3701 of Hansard:
Taking grain at, say, eighty cents a bushel, the cost of production for industrial alcohol from grain would run. from fifty cents to sixty cents a gallon.


Clarence Decatur Howe: I said from 72 to 78 cents a gallon.


Alfred Henry Bence: I am quoting the minister's
exact words as they appear on page 3701, but on the next page he is. reported as saying:
As I say, we bought some alcohol from our plants which cost us eighty-eight cents per gallon laid down at. Sarnia, but I believe the price at the distillery is somewhere between seventy-two to seventy-eight cents a gallon.
I should like an explanation of the disparity between those two statements. Is the fifty to sixty cent price based on eighty cent wheat, or is it the seventy-two to seventy-eight cent price that is based on that wheat? It is possible that the difference may be made up by the fact that the distilleries are selling alcohol which they are producing in their own plants and offering for sale to the government, while the other figure may have been an estimate of what it would cost in a plant established by the government. I should like to know whether a recent process known as the Park and Telford process was brought to the attention of the administration. I understand that a new process has been developed in the United States within the last four or five months which it is claimed will effect a saving of around ten cents per gallon in the production of alcohol from wheat, I believe this process eliminates the use of malt barley. Can the minister give us any information in connection with the plant which is being established at Thorold, Ontario, other than the information that was contained in the reply given to this house the other day, which merely was to the effect

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that it would be operated by a company known as the Ontario Paper company; I think the name of the manager or president was also given. I would like to know what the approximate capacity of this plant will be, whether it is producing alcohol from wheat, and whether it is the kind of plant that can be turned over to the use and production of industrial alcohol from other products, such as molasses, when the war is over.


Clarence Decatur Howe: The Polymer corporation
was formed in February 1942, which fixes the approximate date when the studies of the rubber situation were in progress.	Mr. Nicholson, who was at that time assistant controller of supplies, was directed by my department to organize the study. He associated with himself a board of scientists of the research laboratories, and one or two other competent scientists were added to it, of whom the head of the Ontario research laboratories was one, and also one or two industrial practising free lance chemists in Canada were added. It was as strong a board as could be obtained to go into all phases of the situation. This board or delegates from it went to the United States and obtained all the information available there. The United States at the same time was making similar studies. Anything which has been done in Canada has been based on the recommendations of that board.
The facts as set out by the board at that time have been confirmed by a number of recent studies. My hon. friend will remember the Baruch committee of the United States went very fully into the subject. That committee as I recall, was made up of Bernard Baruch, the chairman, president Conant of Harvard, and, I believe, Doctor Karl Compton, the president of the Massachusetts Institute of Technology. That committee reviewed the situation, and while it recommended that alcohol plants be built as an immediate source of butadiene to avoid delay in the programme, it confirmed the fact that the cheapest source of butadiene is petroleum.
' My hon. friend has asked me about the alcohol plant which is being opened this week. That was a private venture of the Ontario Paper company. The process is to recover the alcohol.content of the waste sulphate from a mill making sulphite paper and pulp. I believe the process came from Europe. It has now been worked out for the first time on this continent, and there is no doubt that it will produce alcohol; but until the process is in actual commercial operation, which it will be shortly, it is impossible to get any very accurate data on costs or other phases of that
method of producing alcohol. The production of alcohol from wood has, of course, been going on for a good many years.
What were the other questions?


Alfred Henry Bence: I asked for an explanation of the difference in the figures given yesterday-


Clarence Decatur Howe: Oh, yes. When we are talking of 80 cent wheat, I think probably my hon. friend is thinking of 80 cent wheat at Fort William and I am thinking of 80 cent wheat at the plant. As my hon. friend knows, recent prices for wheat have been around $1 Fort William for No. 1 northern, plus the freight to Sarnia, and I presume that the 88 cent alcohol which we bought laid down at Sarnia involved at least a dollar for low grade wheat at the distilleries, plus the freight on the alcohol to Sarnia.


Alfred Henry Bence: It seems pretty high for lower grade wheat.


Clarence Decatur Howe: Well, lower grade wheat is bringing a very good price. As my hon. friend knows, spreads are not very great these days.


Alfred Henry Bence: Seventy cents basis Fort William.


Clarence Decatur Howe: Seventy cents at Fort William, plus freight to Toronto, plus freight to the nearest distillery; and1 after the alcohol is made it must be railed back to Sarnia in tank cars.


Major James William Coldwell: Does the minister think we in this country are quite safe in relying on petroleum as a basis for synthetic rubber?


Clarence Decatur Howe: Yes.


Major James William Coldwell: As a matter of fact I have before me an extract from the report of the Petroleum Industry War Council to the United States government, which was made quite lately, and perhaps I may put a few items before the minister. Here are some figures on the oil supply:
Maximum	Minimum	Surplus (S)Year	efficient	essential	orcapacity	demands	deficit (D)1943....	... 4,421,500	4,100,000	S 321,5001944....	,.. 4,212,000	4,400,000	D 188,0001945...,	... 4,022,500	4,400,000	D 387,500


Clarence Decatur Howe: That is the production in the United States?


Major James William Coldwell: Yes. The report on petroleum production for the week ended May 22 this year is given as follows:
Oil production in the United States had decreased in the amount of 17,285 barrels, or a total output of 3,996,700 barrels per day.
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Each of the production figures I have given relates, of course, to per diem production. Canada, I believe, imports around eighty per cent of our requirements.


Clarence Decatur Howe: Eighty-five per cent.


Major James William Coldwell: About eighty-five per cent of our requirements. If it is the fact that the United States is facing growing deficits in the production of petroleum in that country, even although we are increasing our own output, with our tremendous usage of oil in this country, and the difficulties of transportation, obtaining tankers and so on, we seem to be skating on pretty thin ice from that standpoint.	-
While I am on my feet there is another question which I should like to put to the minister. Are we sufficiently well informed to be able to decide that petroleum is so much better than alcohol? What do we know about it? How long an experience have we had in this matter? I have before me a question and an answer given before the Gillette committee in the United States on January 6, 1943. The counsel for the committee, Mr. Hadlick, put this question to Mr. Brown, who is assistant deputy petroleum administrator, office of petroleum administrator for war, and formerly director in charge of research and development activities, and patent activities of the Standard Oil company of Indiana:
You perhaps are not familiar with it, but there was considerable testimony, as the chairman will recall, as to the allocation of the funds in January of 1942 to the petroleum companies, and at that time no consideration was given to the method of producing butadiene from alcohol, which was considered in the chemical knowledge of the day as a practical, feasible method of making it, and we are interested particularly in having you confirm that at that time, aside from the small amount that Phillips was making-
That is the Phillips Petroleum company.
-and the Shell process, the petroleum companies did not have a process-in other words, the money was allocated to go out and find the process.
Mr. Brown's reply is very interesting. He said this:
I would not care to go on record to that extent, although I will agree readily enough that the process of producing butadiene from alcohol had been operated in other countries on a large scale, and very successfully, and at the same time that the processes which eventually were selected by which butadiene would be made from petroleum were not ones which had been commercially operated, so far as I know, prior to Pearl Harbor, with the exception mentioned.
I know the minister is depending on his advisers, and that advisers must rely on the information which they are able to secure. But
'Mr. Coldwell.]
before we rule out the possibility of using alcohol as a base, a much more thorough inquiry should be made.
In answer to the hon. member for Saskatoon, the minister referred to the freight charges to Fort William and on to Toronto and back to Sarnia-or back to Windsor, because there are distilleries at Toronto and Windsor. Our contention would be, of course, that if the alcohol process is feasible and the use of grain is economical, distilleries to distil industrial alcohol should be located on the prairies. There would then be no freight rate except in so far as it is necessary to take the alcohol to the place at which it is used as a base for rubber, and that too might be adjacent to the distilleries. I think a far more careful inquiry should be made into this whole matter than we are able to make in the house in committee. I am satisfied that the minister is giving us the benefit of the advice he is getting, but as a member of this house I am not satisfied that that advice is what would ultimately be given after careful inquiry into all phases of this very important matter. It is important from the point of view of the prairies from which some of us come, and that is why we are so persistent in asking that more consideration should be given to this alcohol process.


Clarence Decatur Howe: Of course Canada obtains in peace time a very large part of its imports of petroleum from other than the United States, and the United States also imports largely in peace time. The reason that our two countries have been driven to depending almost wholly on United States production at the moment is the difficulty of the submarine menace and the desire to reduce to the minimum the demands on tanker capacity. The world position in petroleum, assuming normal transportation, is quite satisfactory. My hon. friend will remember that before the war there was surplus petroleum and distress petroleum all over the world, and I believe that that condition will return.
Regarding the information on which we based our plan to make butadiene from a petroleum base, of course we examined the information which, was available from time to time, but the encouraging factor to me is that various other inquiries made subsequently, both by Canadian and United States committees of scientists, have confirmed the wisdom of the decision we made based on the data we had at the time.
I think a discussion of this is futile at the moment. Whether we are light or -wrong, a decision has been made, anil a plant- is nearly

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built and ready to operate. After that plant has been in operation for some months, we shall know exactly the cost position of butadiene from petroleum, and of rubber from the present process. We shall then have a base from which to examine the wheat situation, and if a cheaper way of making butadiene is developed immediately afterwards, or at any subsequent time, we shall want the cheapest butadiene we can obtain, and plants will be built in due course and the butadiene supplied at the lower cost.


Mr. McIVOR:: I am not going to speak about alcohol, how it may be made, or where secured, or how disposed of. But I have been listening closely to this debate and I have my own practical suggestions to make. I heard the discussion on aluminum, and the reasons why this subject was brought to the front are, perhaps, three: one, to show that too much was paid for the aluminum; two, that some people were making too big a profit from it; three, to add, perhaps, another industrial organization to the number now controlled by the government. My answers to these points are very simple. I do not know a great deal about aircraft, but when I see men sitting and waiting for aluminum I am disposed to tell the Minister of Munitions and Supply to get aluminum if it is possible to get it. What has emerged from this discussion is that the minister has aluminum, and that he is paying, not seventeen cents but fifteen cents a pound, which according to the statements produced in the committee is the lowest price paid anywhere in the world. I think therefore that the minister is to be commended. In the next place, if it be true that the Aluminum company is making a lot of money, presumably the shares would soar sky high. Instead of that, prices have gone the other way. Further, I do not think we should ask the Minister of Munitions and Supply to keep a tab on all those who are making money out of the manufacture of munitions. The eagle eye of the Minister of National Revenue will look after them; and I take this opportunity of paying my tribute to his deputy minister, Mr. Fraser Elliott, who will get revenue from anybody who ought to pay. Therefore why lay this burden on the Minister of Munitions and Supply?
As regards public ownership, I know of no minister in Canada, either in this or in any previous government, who has ever put so many industries under government control as the present minister has done. I am afraid that if he extended his control to the Aluminum company and a few other industrial
concerns the Cooperative Commonwealth Federation would not have very much to fight on.


Major James William Coldwell: That would be fine.


Daniel (Dan) McIvor: I agree with the minister in the statement he made yesterday that he wanted to get, to use his own words, the best brains of Canada. I know he has tried. I have suggested to him men from the head of the lakes who I thought and still think are clever men, but they did not get positions in the Department of Munitions and Supply, because he had other men who in his opinion had better brains and were more efficient. Of course I said, "Well, all right, we will just keep on trying."
Again, as to his relations with labour: if there is any minister who has done a great deal to prevent strikes it is the present minister. We know the times when workers have struck; we do not know the times when strikes have been avoided. It is analogous to the case of a man who takes a drink; we know the tames when he gets too much; we do not know the times when he is tempted to take too much but refrains.
I can see the Minister of Munitions and Supply sitting with a group of trade union men around' him, and if there was a grievance they would go back to work and there would be no strike. I know too that some credit is due the Minister of Labour, where a certain man was dismissed for union activities. The corporation said they had dismissed him for other reasons but he is back at iwork, and that industry is simply humming with management and union men working together to produce up to the hilt. I think we should state these facts.
Someone said that the small man should be taken care of. I would ask, where is there any industry in Canada, or where is there any work in Canada, where the small man has been so well taken care of as he had been in this department in connection with what is called the bits-and-pieces contracts. In Montreal, Toronto, Port Arthur, Winnipeg, et cetera, there were machine shops where the men were working very busily. They could not get a job, but this department has taken care of them, and the work done has been commendable.
The hon. member for New Westminster (Mr. Reid) stated that when we are trying to produce steel we should carry on the manufacturing as close as possible to the source of production. I do not agree with him when he says that the best quality ore is to be found in British Columbia, because in my opinion the

3736

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hematite ore that will soon be flowing through the lakes from Steep Rock will compare favourably with the 'best in Canada. I give the minister notice now that if we can prevent it we will not allow that ore to be carried down lake Superior in boats in the form of ore, but we will try to influence or perhaps to interest even members of the opposition, who are supposed' to be moneyed men, to invest their money in the big smelter concern at the head of the lakes. I believe that the steel produced at the head of the lakes would be much more easily shipped than the ore.
I know that the minister is capable of doing great things and in this discussion it was assumed that he could find oil and steel, fabrics and tools, and could break combines. I heard at one time that he was pretty well loaded-


Some hon. MEMBERS:: Oh, oh.


Daniel (Dan) McIvor: -with work. I am glad to see that the opposition has a sense of humour. Very often, however, though the minister has done a great job and we are glad to see him in such fine humour, I have wondered that he could take as much as he did.


Some hon. MEMBERS:: Oh, oh.


Daniel (Dan) McIvor: It illustrates the old
proverb, when I see him sitting and listening patiently, as he does-a proverb which I came across the other day and which was new to me: "You can tell the calibre of a man from the size of the thing that gets his goat:"


Mr. ADAMSON:: There is one question I want to ask the minister in regard to rubber. Some time ago a great deal of publicity was given the Russian manufacture of rubber from some of the dandelion families. I believe the names were guayule and crypto-stegia. This was supposed to have solved the rubber problem in Russia and it received a great deal of publicity. I remember reading an article in the New York Times. Is there anything in that, or has it been tried?


Clarence Decatur Howe: I know very little about the rubber situation in Russia, and few people do. The Russians are not very communicative of their secret processes. However, the milkweed is used in the rubber process as a .polymerizer and Canada is growing a bit of milkweed experimentally for that purpose and possibly will increase the quantity. I would hesitate to suggest how many hundreds of square miles of milkweed would be

required tt>
produce a ton of artificial rubber; it would be a great many. However, it happens that the milkweed is useful in the rubber process. .


Mr. FRASER (Peterborough West):: You want 700 acres planted in Peterborough?


Clarence Decatur Howe: Yes; we are arranging for the planting of 700 acres.


Gordon Knapman Fraser: Is
the department putting up a plant?


Clarence Decatur Howe: No. It will go into the Sarnia plant as a polymerizer with other ingredients.


Gordon Knapman Fraser: It
will be shipped to Sarnia?


Clarence Decatur Howe: Yes.


Charles Edward Johnston: With
reference to the manufacture of rubber, it has been pointed out that there is likely to be a scarcity of oil products, such as gasoline and lubricating oils, and therefore greater attention should be paid to the distillation of alcohol from wheat. Of course we on the prairies are interested in that particular phase of the subject from the standpoint of disposing of our wheat. The minister thinks that would be impracticable at the moment. When speaking, he said that the time was not now opportune to discuss that phase of the matter because there was a plant already nearing completion in Sarnia and if that demonstrated that he could not get enough it might be necessary to start a plant in the prairies. But once the plant is completed at Sarnia and members from the prairies start pressing to have a plant put up in the west the minister will be one of the first to tell us that, having gone to all the expense of putting up a plant at Sarnia, while it might be more expensive to process the product there, nevertheless it would not be feasible to start another plant at tremendous cost in the west.
I would point out that there is great danger of our becoming extremely short in petroleum products. In fact, there is a danger that we may have to depend upon our own sources of supply. I think I am safe in saying that as regards increased production of petroleum products as a result of drilling wells, what has been obtained since the war started is almost negligible. We have not made progress in that field. A number of wells have been drilled but there is not very much production from that source. What astonishes me is this. We know definitely that we have oil in the tar sands. The minister has given his view on this question on many occasions but the fact remains that no one

War Appropriation-Supplies
can deny that a supply is there. We know definitely that it is there in unlimited quantities, to the extent of over one hundred billion barrels. That is a huge supply and. there is no guesswork about it. We know that it can be procured from the tar sands because they are doing it. The question, therefore resolves itself into one of expense in the process of separating the oil from the sand. There is a distillery there in which they are producing 400 barrels a day now.


Clarence Decatur Howe: No, they are producing nothing.


Charles Edward Johnston: Well,
before the fire they were producing 400 barrels a day.


Clarence Decatur Howe: I do not know; I guess so.


Charles Edward Johnston: I believe it was something like that; it was not a large amount; but the main point is that they were doing it. Now, if we are to face a shortage of rubber, and in fact we are facing such a shortage, why do we not go ahead, even though we have a plant at Sarnia which is going to produce rubber from petroleum products? Why do we not go ahead and separate the oil from those tar sands thus assuring ourselves of both oil and rubber? I am sure if the minister would put his genius to work-because I am not questioning that he has ability-and would get his department on the job in earnest, the production of oil from the tar sands could be accomplished, and I think he is the man to do it. He is not so much concerned, as he said the other day in referring to aluminum, about the price of the product; I think he pointed out that his job is production. I agree with him in that respect ; that is the main thing. If profits are being made that matter can be attacked from a different angle; nor am I suggesting that it should not be attacked. In all seriousness, however, I think the minister should review the situation in regard to the tar sands, to see if something cannot be done in this connection. Only a few weeks ago I learned from an authoritative source that at the present time American interests are up in the northern part of Alberta trying to estimate the possibility of bringing about this production; that they are determined it can be done and that they are going to approach or have approached the provincial government to see if there is any possibility of carrying on that work with American capital, because, as they say, they could not get anywhere with the dominion government. There may or may not be something to it, but the point is that people are much interested in this matter. The last time I dealt with this subject I read from an
article which appeared in a United States newspaper pointing out the urgent need for Canada to do something in regard to the tar sands in the Athabaska district, saying that this was an essential project for the defence of Alaska and in connection with the hard surfacing of those roads. I believe the minister pointed out some days ago that the sale of the byproducts of that process would almost pay for the cost of development. That is a. consideration also.
However, that is just incidental to what I was going to talk about. The other day the hon. member for Macleod had something to say in regard to the supply of water at various airports. I do not know whether the minister is aware of the fact, but we are spending a great deal of money on these airports owing to the fact that greater precautions were not taken in regard to locating water before the sites were definitely decided upon. I remember asking some questions in regard to the Shepard airport, which is just a few miles away from Calgary; those questions were made an order for return, which order was brought down as sessional paper No. 166 on Wednesday, February 24 of this year. I was inquiring about the cost of drilling wells and transporting the water from Calgary. It appears that two wells were drilled at the Shepard airport after the site had been decided upon and construction was fairly well advanced. The return did not give the cost of drilling the two wells; no doubt the minister could supply that information, but at the moment it is not material. After drilling these wells, which I believe gave a sufficient supply of water, according to the report the mineral content of the water was such that it could not be used, so that they had to pipe water from the city of Calgary. That was done because proper attention was not paid to the matter of the water supply before the site was decided upon. The cost of piping that water was $22,019.44, and the rates paid for the water are given in the return. To me they seem exceedingly high. The answer to question 7(b) was as follows:
The water obtained from the city of Calgary has not been provided for a full year and is on a graduated scale, payable monthly at command:
Cents per
thousand
First 5,000 gallons	 40
Next 5,000 gallons	 36
Next 20,000 gallons	 33
Next 30,000 gallons	 26
Next 90,000 gallons	 18
Next 350,000 gallons	 16
Next 500,000 gallons	 14
Over 1,000,000 gallons	 13%
According to the return it is estimated that 40,000 gallons per day would be required at the
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airport, which figures at about $403 per month or about $13.30 per day for water alone. When you put that on a yearly basis it runs to about $4,892. If you consider the cost of piping, $22,000, and spread that over a period of say four years, which will give it another three years to go

supposing the war is over in three years-it means that the cost is about $6,000 a year for the piping and roughly about $5,000 for the water, or some $11,000 a year for the water supply alone. That is a tremendous price, all because proper attention was not paid to locating a supply of water before definitely deciding upon the site.
I can quite see that occasions may arise when it may be necessary to locate an airport at a particular point whether or not water is available, in which case it might be necessary to pipe the water to that spot. I do not think that was the case here, however. In the instance mentioned by the hon. member for Macleod the other day, water was located at a distance of about six miles from the airfield. Surely it would have been comparatively easy to move the site another four, five or six miles, especially when you consider that the water supply may cost up to $11,000 per year. I believe that is one thing the minister would do well to take in hand, in case other fields should be constructed in future.
The other day the minister made reference to the production of coal. I am extremely interested in this question; I believe everything possible should be done to increase the production of this commodity. Everything points to the fact that this coming winter we are going to find ourselves worse off, so far as supplies of coal are concerned, than we were last year; yet so far not a great deal has been done to increase our supplies. I believe this matter has come under the control of the minister only recently, and we hope he will be able to do something about it. At page 3551 of Hansard for June 11, 1943, the minister said:
Coal is one of our most pressing supply problems. Consumption has increased by more than forty-five per cent since the war began.
Then further down:
The result is that we have relied to an increasing extent on imports from the United States. . . . All of this means that Canada faces a possible shortage of 4,000,000 short tons during the current year.
That is quite a shortage. Then he went on to say:
I appeal to all those who are working in our coal mines to do their utmost to help us obtain increased production.

I think I can speak for the miners when I say they are just as anxious to increase the production of coal as anyone in this house. In all my meetings with the miners I have not found one who was not just as desirous as we are for increased production. But they do have their problems. And unless some effort is made to solve this problem, the minister will have a bigger job on his hands, as time goes on, than he has at present.
There is no question about supply, particularly where Alberta is concerned. The other day the hon. member for Cape Breton South (Mr. Gillis) spoke with regard to his part of the country. It is estimated, I believe, that fourteen per cent of the world's supply lies in Canada, and that eighty-five per cent of that fourteen per cent lies in Alberta. There is a tremendous volume of coal in that province. The big question is:	How are we to get it out? So far as
Alberta is concerned, whether or not the minister desires to open up more mines in that area, I can say to him that there is certainly plenty of coal there, if he wishes to go after it. There is an unlimited amount. Why, you can drive down the Drumheller valley and see the coal on the face of the hills. You can go into the Rocky mountains, and in one place you will find a mine with a million tons in it, which has been abandoned entirely. Oh, there is no difficulty there. The difficulty will be to get the supply of labour.
The minister has said that so far as manufacturing industries are concerned he will be able to take care of all the labour that will be moved from one plant to another. So that we shall not get many miners from that. Then, we shall not get many out of the army, because my experience is that when you try to get anyone out of the army you have a difficult proposition. And as time goes on you will necessarily have a more difficult task to obtain a release from the army. I say that because the time is coming when all who are in the army will be needed.
There is a great deal of loss of production through absenteeism, and that applies not only in the mining industry but in other industries as well. We saw it last year when we were travelling across this country, and we knew there was some loss of production in all branches as a result of absenteeism.
It has always been my contention, so far as coal mining is concerned, that a great deal of that absenteeism could be overcome if we modified our method of taxation, to same extent. The hon. member for Cape Breton

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South pointed that out the other day, and I did the same on another occasion when I spoke on this question. The hon. member was right when he said that when it comes to increasing production, through overtime, there should be some modification in the tax structure. When a man has worked for seven or eight hours in a mine, and then for patriotic purposes, because the press is appealing to his patriotism, and because the minister himself is appealing to his patriotism, increases his production, and then because he may work another shift loses five or six dollars, I think he is just a fool to do it. And I make no apology for that statement. I would not do it, and you would not do it. I never ran across a business in Canada which would produce more, and be penalized because they did it.


An hon. MEMBER:: Yes.


Charles Edward Johnston: Where is it? Name one industry which does.


Clarence Decatur Howe: There is no possible combination of circumstances under the present tax laws which penalizes a man, or which makes him earn less for working more. He earns more toy working more, and I defy the hon. member to show any other result. I am sure the Minister of National Revenue will support me in that. It is impossible for a man to work more hours and earn less money in his week's pay.	.


Charles Edward Johnston: I will give one instance. A lady wrote me the other day-and I have the letter in my office- stating that she received $100 a month for the work she was doing, and received a bonus of $17.45. Because she got the bonus she was taxed. She had to pay more because she got the bonus. That is one instance. Certainly if you raise a man's income from a certain field to a point where it gets into another field of taxation, just at that moment, while he may earn only a dollar more in the new field, he will have to pay more taxes.


Clarence Decatur Howe: No. My hon. friend does
not understand the tax structure, and it is destructive for him to talk about something he does not understand. I can assure him I know positively whereof I speak when I say that no possible circumstances can arise under which a man who works for forty-eight hours will get more money than the man who works for fifty hours or forty-nine hours, provided they both get the same rate of pay. I wish my hon. friend would not put on Hansard any other story, because he
is misleading, and dangerously misleading, the workmen of the country. There are too many destructive stories abroad now without having them spread from this House of Commons.


Charles Edward Johnston: All right; I will give the minister another question. He says he knows all about taxation. If he does, then I say he is one of the few people in this country who do, because we have been trying to make out our income tax returns in the last two or three weeks, and I have information that some have had to send their tax papers to an expert, or have him come and simplify the simplified form. But if the minister knows all about the tax structure-and of course I am not suggesting that he does not-then I say he is one of the few in Canada who do.


An hon. MEMBER:: You should not talk about it unless you do.


Charles Edward Johnston: Here is another question: If a married lady is receiving $660, I understand she is subject to taxation. If she earns one dollar more she is going to be taxed, and she will lose in the process.


Mr. GIBSON:: No; she is not going to lose in the process. The income tax law provides that where a person is taxable, no tax will reduce her down to or below the exemption level.


Ernest George Hansell: Is there not a case where a coal miner might-


Joseph-Arthur Bradette: Perhaps the hon. member for Bow River should complete his statement.


Ernest George Hansell: I was just trying to
help him out. But I imagine he does not need my help.


Charles Edward Johnston: In this case he does not, no. But when a miner is producing coal and works another extra shift, he does not get paid in the same proportion, and therefore he loses money in the process.


Some hon. MEMBERS:: No, no.


Charles Edward Johnston: Oh, yes, he does, because he is not entitled to the regular scale to which he would be entitled if there were no tax on it.


Colin William George Gibson: May I make one correction? There seems to be some misapprehension that when a man increases his earnings he may get into a higher tax bracket, and that his whole earnings will be taxed at
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a higher rate. That is not so. When a man increases his earnings the increased portion may be charged a higher percentage of tax, but the original earnings continue to bear the same rate of tax as the man was paying before. Consequently the earning of an increased amount of money may, as I say, bring such increased earnings into a higher scale of taxation, but the rate of tax on the original earnings is not affected.


Mr. GILLIS:: Has that change been made since the budget was presented, because that was not the arrangement when the Minister of Finance presented the budget to the house.


Colin William George Gibson: It has always been the basis of taxation in this country.


Clarence Gillis: It has not been administered in that way, then.


Colin William George Gibson: Of course it has, always.


Clarence Gillis: Where deductions are made at the source, and where the worker is employed weeldy, as are the great majority in this country the entire earnings are taxed in a higher bracket, by virtue of overtime worked.


Some hon. MEMBERS:: No.


Clarence Gillis: Yes; and hon. members may examine any section of industry in Canada, and they wilFfind that that is the main complaint, so far as the taxation laws are -concerned.


Colin William George Gibson: I should like to clear that up. My hon. friend is referring to a tax deduction at the source. The amounts deducted are based on what the taxpayer is earning, or is presumed to be earning, throughout the year. If he works at a given rate of wage, certain deductions are made. They are made on the basis of a percentage of the tax-ninety-five per cent of the tax-that he will have to pay throughout the year. If his earnings increase, then he is presumed to be earning throughout the year at a higher rate, and naturally the deductions for each pay period would increase as well. But those deductions are only on account of the tax that will be payable at the end of the year. When the man has completed the year, filled out his income tax return, shown all the earnings he has made throughout the year and worked out his tax, what has been deducted at the source is applied against that tax. The first $100 over the $660 exemption is taxed at a definite rate, no matter whether a man makes $1,000, $2,000 or $3,000. The tax rate for the entire income does not vary according to the total that a man earns.

That is, on the first $1,000 everybody pays at the same rate; then for the second $1,000 they pay a higher rate of tax, but getting into a higher income tax bracket does not raise the taxation scale on the entire income.


Clarence Gillis: I agree with what the minister has said, but he is merely confirming what the hon. member for Bow River (Mr. Johnston) has been saying. It is no use saying you can get a refund if it means that you have to hire one or two lawyers to fill in the form for you.


Colin William George Gibson: Only if you have overpaid.


Clarence Gillis: There is a great deal of absenteeism in our plants and factories and mines on account of this. If a man is working a forty-eight hour week and his earnings bring him into the thirty-one per cent bracket, then when he works for seventy-two hours or seventy-six hours as many of them do, he finds he is brought up into the forty-five per cent bracket. Then that rate is assessed against his whole weekly earnings. I have discussed this matter with the minister and have based my arguments upon his own tables to show how the rate changes and is applied to the weekly earnings. He said he was going to look into it to see if something could not be done. This works against our whole war effort. The average man does not understand that he can get it back, and even then it may take a year or two. If the minister will go into his department he will find that people have made applications for refunds two years ago and have not yet received them.


Colin William George Gibson: I quite agree that there may be cases where a man could work a large amount of overtime for a short period and raise his deduction into a higher bracket for that period than he will eventually have to pay. This is causing some concern to the department, and a committee is now studying the problem to see if some other method of deduction can be devised to cover overtime earnings, so that they will equalize the tax and not cause the dissatisfaction that exists in some of these cases.


Joseph-Arthur Bradette: I have allowed a great deal of latitude in this discussion, but I believe I heard the same discussion when we were considering the budget. I cannot see how the Minister of Munitions and Supply can do anything about the budget. I think we should come down to earth at some time in this discussion.


Charles Edward Johnston: I wish to abide by your ruling, Mr. Chairman, but with all due deference may I say that the Minister

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of Munitions and Supply is directly responsible for production. In my estimation one of the things reducing our production is absenteeism. The matter we are discussing is the cause of considerable absenteeism; this in turn reduces production, and the Minister of Munitions and Supply definitely has to do with production. This condition is to be found not only in the coal industry but in others as well. These men may be able to get a refund of their taxes later on, but that does not satisfy them now. They are staying away from work because they feel that if they put in more hours they will be penalized. This should be sufficient, not only for the Minister of National Revenue but for the Minister of Munitions and Supply to warrant some attempt being made to solve this taxation problem.
There is another matter the minister will have to deal with if he wants greater production. Labour-management boards must be set up, and these boards should have a fifty-fifty representation. It may be said that this has nothing to do with production, but in my opinion it has everything to do with production. Not long ago there was a strike in the Drumheller district when seventeen mines were closed and over 2,000 miners were out and thousands of tons of coal were not produced that could have been produced if there had been proper labour-management representation. It is not correct to say that labour is always to blame. I have evidence right here which I think will convince hon. members that the judge erred when making some of the statements he made in rendering his decision. I have not talked to one of these fellows who was not absolutely disgusted with the whole affair because he felt there had been obvious discrimination. Those men were fighting for a principle, and I have no hesitancy in saying here, as I said to some of the officials, "I think you are right and you should hold out for it."
Some of the actions of some mine managers have not been in the best interests of coal production during war time, but there are others who acted just the opposite. Do not think that it was the decision handed down by the board that settled this strike. The manager of the Red Deer Valley mine hired this man, and the rest of them went back to work. That is one mine in the district where the men get along with the management because an endeavour has been made to have proper labour-management relations. This cannot be said of the Star mine. I do not intend to go into the details of this strike, although I have the evidence right here, because this would come under another department.
I should like to say a few words about the manufacture of guns, to which the minister made reference the other day. On page 3545 of Hansard the minister is reported as having said:
We are now engaged in revising some of our gun schedules downwards. The items most likely to be affected are the 3-7 and Bofors anti-aircraft guns and the 6-pounder anti-tank gun. The scheduled production of 3-7 and 40 mm. Bofors AA guns will carry on at a reduced scale to the end of 1944.
This brings me back to the Ogden shops at Calgary. Not so long ago fifty men were laid off at these shops, and then because they did not have sufficient work, they had to lay off another 200 men. In a return I asked for it was stated that of the 200 laid off, fifty-three had been placed in positions by the selective service, not necessarily in positions in the Ogden shops; sixty-five were receiving unemployment insurance and the others had scattered. The point is that although the minister stated that all would be taken back, to date they have not been taken back and the production of this plant is reduced to that extent. If the schedule of production is to be cut down still more-I am not saying it is not necessary to do so because I realize that once you have sufficient guns manufactured you must change over to something else-something will have to be done. Is any plan under way by which the Ogden shops will be converted to some other type of production so that they will continue to run? As I pointed out on another occasion-I think I drew this to the minister's attention -I was informed not long ago by one of the responsible persons at that plant that unless they got more contracts they would have to fire more men. That is a situation which should be given consideration by the minister.


Clarence Decatur Howe: May I ask my hon. friend if the unemployment situation in the Calgary area is acute?


Charles Edward Johnston: Of 200 men laid off from the Ogden shops, sixty-five were drawing unemployment insurance. That does not speak very well for the labour situation there. These men were all experienced mechanics. The manager of the plant-I think his name is Mr. Gubbins, from Montreal, and a very fine man-told me it was a shame that these 200 men should have been laid off, because they were some of the finest mechanics he had in that place. But that had to take place under the agreement which the company made with the unions. When I consider that sixty-five of these experienced mechanics were drawing unemployment insurance and that the remainder were still not
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placed in positions, I would say in reply to the minister's question that there was a serious unemployment situation there which should be looked into.
I wish to say a few words about ships. I know the minister has gone quite a long way in producing ships. I have seen some of these ships, and they are extremely good ones. But our big concern at this time is to win the war. While the minister has done well in the production of ships, I think we can do still better, and we must not idly sit back and be content with things as they are. The minister, when he was speaking of ships, had this to say, as reported at page 3548 of Hansard:
Recently the Burrard Dry Dock Company set a record by delivering the Fort Wedderburne in 89 days from the laying of the keel. At West Coast Ship Builders a ship has been launched forty-five days after the laying of the keel.
I think it would be wrong for us to assume that the second ship mentioned was completed and delivered in forty-five days. While the Burrard Dry Dock company completed a ship in eighty-nine days, I wonder how long it took them to launch it. That would not take eighty-nine days by any manner of means; it would be launched in much less time than that. It may be that the West Coast Ship Builders launched a boat forty-five days after the laying of the keel, but do not let us be misled by that statement into thinking that these 10,000-ton cargo ships are being launched in forty-five days. While the Fort Wedderburne was delivered in eighty-nine days from the laying of the keel, that was one ship which [DOT] set a record. I was rather amused by that statement because it at once came to my mind, if we can launch one ship in forty-five days, why do we not go right ahead and keep on launching them as fast as that? It would be a dangerous impression for the public to get that we are launching these 10,000-ton cargo ships in forty-five days and that therefore all is well with our shipbuilding programme.
I think the minister himself would be the last one to say that these ships are being launched at this time at anything like that rate of speed. I think the truth is that they are not being launched in anything like forty-five days. I believe that they could be launched much faster than they are being launched, but the companies are not allowed to produce them faster. The minister may excuse that on the ground of a shortage of material, but I remember reading a statement in the Vancouver Sun that 200 men were being laid off at one Vancouver shipyard because the increased efficiency of the workers in that plant permitted that lay-off. That is one of the shipyards we visited, Mr. Chairman, and 
in my opinion that statement in the Vancouver Sun was definitely wrong. That is not the reason why these men were laid off, and a statement like that should not be given out to the public. We are not, except in the odd case, launching 10,000-ton cargo ships in anything like forty-five days. Perhaps the minister would tell us what the reason is for our not launching these ships faster. The hon. member for Port William suggested a little while ago that we should produce steel at the head of the lakes, and with that I am in perfect agreement. If we are not producing ships as fast as we can through lack of steel or some other material, our attention should be turned to speeding the production of these other materials. I recall that the hon. member for New Westminster when he spoke the other day said that five berths at the Star Ship Building Company's plant were not being used, and yet the minister, as reported at page 3548 of Hansard, spoke of:
. . . new shipyards yet to be built and equipped hurriedly.
Why are we not using these five idle berths mentioned by the hon. member for New Westminster? Perhaps the minister would tell us why. He might also tell us if the two shipbuilding companies he mentioned, the Burrard Dry Dock company and the West Coast Ship Builders, are launching their ships regularly every forty-five days after the laying of the keel. That is a good speed. That is the best record yet made. I venture to say it is not the average time in which these ships are built-or anywhere near it. I hope the minister will explain just what the position is so that we may do everything we can to see that our war production is carried on with the maximum speed.


Mr. DIEFENBAKER:: I am going to return to a subject -with which I dealt the other day, namely, aircraft and aircraft production in this country. I think it is particularly appropriate to do so to-day following the visit of Madame Chiang Kai-shek and the interview she gave to the press to-day in which she said that the greatest contribution Canada could make to China in pursuing the war to a victorious conclusion was aircraft.
The other day I asked a number of questions which I realize the minister has not yet had time to answer, 'because a variety of other matters have since been brought up. I am going to give a few more details to the end that the minister may be able in his reply to explain the situation in our aircraft industry in Canada.
I believe it can be said without fear of serious contradiction that the war production by this dominion in many phases has been

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wonderful. I think in fairness that should be said. But so far as aircraft production is concerned our record has been a lamentable one to date. I feel that at this time, in view of the increasing importance of aircraft production, a larger proportion of the expenditure to be made by the Department of Munitions and Supply this year should be devoted to aircraft production. We have the aluminum. The production of the Mosquito bomber is a matter of plastics. All we in Canada require, having the man-power with the necessary qualifications-to which the minister paid [DOT]high tribute the other day-is a reorganization of the aircraft production to achieve a greater output. The minister has fifteen controllers in his department, and in each and every case those who have responsible duties to perform have also advisory committees. The only exceptions are those of the coal controller, the power controller, and one other. But from the very beginning, since the appointment of the controller, Mir. Bell, he has been the boss of his branch

of course, under the minister-and he has operated without a committee.
One thing which strikes me as passing strange is that while across the line in the United States very full information regarding production is given, the information which is published by the Department of Munitions and Supply is not as complete and has been on more than one occasion not in accordance with the facts. I wish to refer to one publication in particular of the department, entitled "The Industrial Front," revised to January 1, 1943, and apparently designed to show what a wonderful expansion there has been of aircraft production in Canada. At page 33 it states:
Prior to this war, less than 40 aircraft were produced each year.
That statement is not a fact.


Clarence Decatur Howe: Make it 240.


John George Diefenbaker: Yes.


Clarence Decatur Howe: Make it large enough.


John George Diefenbaker: The minister says, "make it 240," and that would be approximately the truth.


Clarence Decatur Howe: Probably about 140.


John George Diefenbaker: Yet an official document issued by the department contains this statement, which is not in accordance with the facts. The minister quite frankly admits it now. As a matter of fact, as regards 1938, the year before the war, the minister's own statement in 1940 was that the production was 282. Things like this undermine confidence in official statistics. Official documents published
under government authority making statements so far removed from the truth as that only forty planes were produced prior to the war, while the minister frankly says now that the figure should have been 240, undermines confidence in official publications.
In United States one-fourth of the war expenditure of the nation this year is being devoted to aircraft production. The United States realizes that when the war is over, a gigantic aeroplane industry will be of tremendous importance. The war information board of the United States recently stated that when this war is over seventy per cent of civilian overnight travel will be by air.
Canada should augment her aircraft production now. What is the record? All of us admit that idle machines and idle men in aircraft factories or any other type of war industry mean wasted lives. Take the Malton plant. A change was made recently in this plant. There has been something seriously wrong with the production of aircraft in this plant right from the beginning of the war. And the minister acted. In November last he had the plant expropriated and the government obtained outright ownership from that date. The men who operated this plant were paid $4,000,000 therefor, and the government assumed the liabilities in connection with the plant as of that date, liabilities which are estimated at $1,760,000. The sessional paper states:
All amounts allowed or allowable to the company by way of depreciation .	.	. will be
absorbed in the costs of production of planes manufactured and delivered up to that date.
Special depreciation was taken into consideration in the amount of $2,253,597, and normal depreciation of $791,856.
To-day I think we are entitled to information as to how many planes ever came out of this plant. What is the record? What was the cost per plane? What are the comparative unit costs in this particular plant as compared with plants in the United States?
Let me point out furthermore that this company, the National Steel Car company, made profits during the period it was in operation. The net profits from June 30, 1942, to November 5, 1942, were estimated at $513,665. The return continues:
. . . that was partly the company's estimate of the profit it hoped would be allowed on contracts providing for audited cost plus a profit mutually acceptable to the government and the company as a fair and reasonable profit.
The question I should like to ask in that connection is, what was the percentage of profit that was finally agreed upon as mutually acceptable to the government and the company?
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Clarence Decatur Howe: That is set out in the order in council. It has been tabled.


John George Diefenbaker: Yes; those details are set out, but not the particulars I have asked for.


Clarence Decatur Howe: Oh, yes.


John George Diefenbaker: If my understanding is correct, the only particulars that are set out in the order in council are those giving the information I have already mentioned. The total cost of the work received by this plant from the inception to November 5, 1942, was $18,935,472, or almost $19,000,000. It will be a very simple matter, if the minister informs the committee how many planes have been turned out of the different types, to compute whether this plant was efficiently operated.


Clarence Decatur Howe: And deduct the stocks on
hand.


John George Diefenbaker: That is perfectly
true: there would be a deduction of the stocks on hand. The general impression among those who are in a position to know is that this plant did not operate efficiently and was permitted to continue so to operate for a ' long period of time after it must have been realized by the government or the controller that such was the situation.
I realize that the government made no capital advances to this company, but it did provide assistance for machinery, jigs and tools, and the like. What was the value thereof? What control did the government have over the supplies that it gave this plant? Has the amount of the indebtedness of this plant been finally determined yet? Furthermore, even after the taking over of the plant, has there been a continuing small production or the assembling of the bombers that are to be produced there? What is the situation?
We were given to understand, if the press reports were correct, that a Lancaster bomber was expected to be produced in the month of April. The date is now, I believe, a good deal later than that, certainly not during the present month. All these things point to laxity or delay which requires reorganization if Canada is to contribute her share in the aircraft division of the minister's department.
Is there any reason Why there should not be set up to-day an advisory committee of industrialists trained in aircraft production, or in other production, to assist the present controller? For the record during the past two years, during the period of the control of Mr. R. B. Bell has been such that in my

opinion any fair-minded man must agree that some change, some addition, some counsel must be given him.
I pass on to the matter of the de Havilland plant. All we know about that is that recently a controller was placed in charge of this plant. He has wide authority and is assisted by an advisory board. What are the facts in this connection? Why were changes made? What has been the record of the de Havilland corporation in the production of aeroplanes? These are matters that cannot be helpful to the enemy. The information I ask for is given daily in the United States of America. Production is stated month by month.


Clarence Decatur Howe: For each plant?


John George Diefenbaker: The total production is stated. We visited recently two plants in Buffalo producing types of fighter planes and there was no attempt at concealment of production.


Some hon. MEMBERS:: Oh, yes.


Mr. TRIPP:: Did you get that information in Buffalo?


John George Diefenbaker: Yes. I was present with five others at the time the statement was made.


Clarence Decatur Howe: Tell us what it is.


John George Diefenbaker: I am not going
to be brought into that. I will tell the minister.


An hon. MEMBER:: It is an approximation.


John George Diefenbaker: I can tell the minister.


Clarence Decatur Howe: I can tell the hon. member
what it is, but I get it in the strictest confidence myself. It is a secret list. It is carefully guarded in every country.


John George Diefenbaker: As an hon. member says, it is approximate.


Jesse Pickard Tripp: Some of the rest of us
could not get it.


Gordon Graydon: Do not blame him for
that.


John George Diefenbaker: I should like information with regard to production since 1942. Is this house and is the country not entitled to information as to production of these planes? According to the press the minister from Canada to Australia gave production figures. Why should we not have information in this house?


Clarence Decatur Howe: He is a good man to give it because he does not know what it is. He cannot violate secrecy there.

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John George Diefenbaker: If the minister of Canada to Australia did not know what he was talking about, that is a tribute coming from the Minister of Munitions and Supply to the appointment of the representative of this government in our sister dominion. In any^ event, let us have the record prior to September, 1942, in this plant. How many man-hours were taken in the production of planes in this plant? I know the minister has devoted himself to his duties. No one will pay a higher tribute to him for devotion to his job, and in what I am saying I am interested in the improvement of the situation. Many of the criticisms from this side of the house have been so accepted by the government in the past. The only way in which this situation with regard to aircraft will be improved is by adopting the attitude taken by this apposition, asking for information and demanding improvement. In Britain it was Beaverbrook; it was members on the government side of the house, who in May, June and July, 1940, in season and out of season, put before the government the necessity of expanding the war programme. They were told by members of the government that all was well, but they knew differently. It is in that spirit of service that I bring the situation to the attention of this committee.
If these factories are not producing what they should, we should know the reason why. The management in the Malton plant were not removed just for the amusement of the department. The-change in the de Havilland plant and the substitution of Mr. Glassco as controller was not made unless there was a reason. Changes were justified, and in the set-up within the Department of Munitions and Supply there should be an aircraft advisory committee similar to those which have done such magnificent work in certain other fields of production. I am not going to say more at this time, except to point out that the appointment of Mr. Glassco as controller indicates that inefficiency did characterize the operation of this plant.
Unless these matters are brought before parliament, as members of the opposition have the right and responsibility to bring them before parliament, how are we to know that the same conditions will not prevail and continue next year? I am asking the minister, within the confines of public security, to give these figures: how many man-hours were required for the production of each type of plane manufactured by these two companies during the past year? If he cannot give us the record as to the number of planes, and apparently he has taken the stand that
he will not do so, in spite of the fact that he stated that this plant is expected to produce five Mosquito bombers very shortly-


Clarence Decatur Howe: I will give the hon. member quite a lot of information.


John George Diefenbaker: Then we have been arguing at cross-purposes.


Clarence Decatur Howe: I have not been arguing. I have been saying that the situation in the United States was not just as easy as the hon. member was suggesting.


John George Diefenbaker: The minister indicated that this information might not be given.


Clarence Decatur Howe: I did not say so.


John George Diefenbaker: Then we can get the information. When we read between the lines of the order in council appointing Mr. Glassco, as I say it must be obvious that this plant failed to do its duty; and the circumstances in connection with the taking over of the National Steel Car plant are equally indicative of the same condition. The order in council appointing Mr. Glassco under date of June 7, gives him exclusive power, in conjunction with certain assistants, to operate this plant. In that work he will be a servant of the Department of Munitions and Supply and be under the control of Mr. Bell. Parliament has a right to full information in this regard.
As I remember the minister's statement the other day, it was that there had been a continuing increase in the production of aircraft in Canada since the beginning of the war. I pointed out that a year ago we had the same nine types of' planes we are producing to-day; yet now we are producing approximately eighty planes less per month than we were producing at that time. The reply was that in point of tonnage there would be an increase. If that is so, let us have the record for 1941 as to the tonnage of planes produced in Canada and the record for 1942 in that connection. I do say that since other of the organizations and agencies under the Department of Munitions and Supply have arrived at the point of full production, having regard to the need for aircraft both now and in the period after the war, attention should be concentrated now to the end that the conditions which have been prevalent in this country in connection wth aircraft production shall no longer continue to exist.


Clarence Decatur Howe: I have been waiting for some time for an opportunity to answer some of the questions that have been asked. There

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seemed to be two inquiries, one as to the National Steel Car plant, which is now called Victory Aircraft, and the other in regard to the de Havilland plant. First let me mention the controller of aircraft. As the hon. gentleman has said, we have fifteen controllers, but Mr. Bell acts in a dual capacity. As controller of aircraft his duties are very light; he simply has the power to determine what the facilities of the aircraft industry will be used for. It is as director-general of aircraft production that he directs the production of aeroplanes. While he has no committee as controller, he has a committee as director-general.


John George Diefenbaker: Who are on his committee as director-general?


Clarence Decatur Howe: It is a committee representing all the aircraft branches; I could not tell the names.


John George Diefenbaker: Could we get that list?


Clarence Decatur Howe: Yes, I shall be glad to get it, and we have the production committee under the Department of Munitions and Supply, of which Mr. Bell is a member, under the chairmanship of Mr. Carmichael, and. that committee also gives a good deal of attention to the aircraft situation, I do not think the hon. member intentionally lech the committee astray when he said that a year ago I mentioned that we were down to nine types of planes. We announced a programme for the future, of nine types of planes.


John George Diefenbaker: No.


Clarence Decatur Howe: Read your Hansard. At that time we had many more than nine types of planes.


John George Diefenbaker: On a point of order, on May 14, 1942, at page 2435 of Hansard the minister said:	*
We have now reduced our production to nine types of planes, and the plants are cleaning up old orders and concentrating on one type of production for each plant with accordingly improved results.
Those are the minister's words.


Clarence Decatur Howe: That is what I say. We were cleaning up old orders, for other than the nine types of planes; we were making a number of planes of which we have gone out of production in the last two or three months. In other words, we have cleaned up the programme. Our objective has been to get down to a production of nine types of planes. Unfortunately, two or three of these planes are not in production yet. From the time you get

the blueprints of a plane and undertake its manufacture, a certain period must elapse which, for some reason or another, which I cannot explain, is fifteen months. We can set our objective at eleven months, twelve months, or anything else, but from the time we undertake the production of a new plane until that plane is rolling out at maximum volume, the elapsed time is about fifteen months. That interval seems to be inevitable.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


Clarence Decatur Howe: Before recess I was discussing the time taken to bring new planes into production.


Richard Burpee Hanson: The gestation period.


Clarence Decatur Howe: Yes, although I see no reference to that in Hansard. As a matter of fact, the new programme is not fully in production as yet. We are producing the new trainer planes included in the programme to full capacity, except in respect of the Anson. I refer to a new type of Anson, and it is not up to full capacity, owing to drastic changes in the type of fuselage. It is now being made of plastics instead of metal, and the plastics plant is not operating to full capacity. However, the trainer programme is well under way, and it is just a matter of weeks until that programme is running at full capacity.
In respect of combat planes I would say the PBY Catalina flying boat programme is progressing favourably. It is not fully up to capacity, but the fact remains that we have turned out a large number of Catalinas. We are not particularly worried about that programme.
The Mosquito programme has been sticky. I think we underestimated the time necessary to get into full production on that item. The hon. member for Lake Centre (Mr. Diefen-baker) asked how many Mosquitoes we had turned out. At the end of last week twenty-one had been accepted. The production is not stepping up as rapidly as we had hoped; but the components plants are now operating well up to capacity, and I think it is only a matter of weeks until we shall have production approaching the objective.
In respect of the Lancaster bomber we are getting very close to production. In about

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two or three weeks the first completed Lancaster bomber will be test-flown, and it will be only a matter of hours until the second plane will come off the end of the assembly line.
The navy dive bomber is not in production as yet. There have been many changes in design, and I would hesitate to say just when the navy bomber programme will be well under way-. Two plants are engaged in this programme.


Agar Rodney Adamson: Is that a plane of United States design?


Clarence Decatur Howe: Yes, it is designed by the Curtiss company.	_	_
I now direct my attention to the transaction which resulted in the government acquiring the plant -of the National Steel Car company. The aeroplane plant of National Steel Cat was a privately built and privately owned plant. It had had a rather unsatisfactory career, so far as management was concerned. There had been a number of changes in management. Finally the department took a hand in the situation and persuaded another firm to give up a very experienced manager. National Steel Car undertook to place this manager in control of the plant, under certain terms agreed upon between themselves and the Department of Munitions and Supply.
The crisis occurred when, without warning to the Department of Munitions and Supply, this new general manager was dismissed by the directors. I might point out that in the meantime Mr. Magor, chairman of the board of the company had died. The fact that arrangements covering the new management were made directly with Mr. Magor, and involved his personal attention had, I think, some bearing on the situation which developed. I think if Mr. Magor had been in charge the situation would not have arisen. However, it did arise, and1 the board of directors dismissed the manager, and made no suggestion as to any replacement.


Gordon Graydon: How long had the
manager been there before he was dismissed?


Clarence Decatur Howe: I cannot say, but I would estimate that it would be perhaps ten or eleven months. We received petitions from the men in the plant demanding that the manager be retained, and saying that a general strike would occur if he were not retained. We received a letter signed by a great number of the office workers asking that the general manager be retained. After some discussion with the directors the government decided to expropriate the plant. As a result the plant was expropriated, and a
crown company was formed, with Mr. Bickell as president, and with the general manager who had been dismissed as general manager.
I believe I can report to the committee that subsequent events have justified the action taken by the government. Many people well-qualified to judge have visited the plant recently, and have told me that the organization is shaping up splendidly, and that it will be able to produce in volume when the flow of planes begins. I am told that to-day it is a first-class plant.
On the financial side I might explain that we took over the property as a going concern. We went back to the building of the plant, and used the actual building costs. We subtracted from the building costs the depreciation that had been paid to the owners by way of accelerated depreciation. We took account of the profits-possibly I should not say we took account of the profits; we simply took the revenues and expenditures, and we treated the profits as a separate item, and fixed our own margin of profit for the full period that the plant had been operated. We took the stocks in hand and checked them against the books. We took over the assets and liabilities of the company, as a going concern, at an agreed upon price, the details of which are covered fully in the order in council which has been tabled in the house.


John George Diefenbaker: What was the rate of profit?


Clarence Decatur Howe: I have not the order in council before me. Has my hon. friend a copy of it?


John George Diefenbaker: I have not it here.


Clarence Decatur Howe: It is two or three hundred thousand dollars.


John George Diefenbaker: What was the rate?


Clarence Decatur Howe: There was no rate. We simply assessed the work that had been done, and placed on it a profit we considered reasonable. Probably I shall be in a position to give more exact information later on.


Richard Burpee Hanson: The company had never been in actual production?


Clarence Decatur Howe: Yes, it had produced.


Richard Burpee Hanson: I am glad to be corrected on that.


Clarence Decatur Howe: Yes; it is difficult to represent production as a definite number of planes. A certain number of planes were built. They built Lysanders. An order of Lysanders, for both Canadian and- British governments, was built at the plant. It -was also engaged on the Anson production. Then, it was engaged
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on Hampden and Hurricane wings. As my hon. friend knows-perhaps I should tell him -this plant was in a group of six plants which produced the Hampden bomber. Its part of the Hampden work was completed, as well as the order for Lysanders, and some 200 Anson planes. They were actually built and turned out at the plant. In addition, the plant did a large volume of work on spare parts for Canadian and British orders, and also assembly and overhaul work on Canadian planes.


Richard Burpee Hanson: What was the specific charge against the previous management? I do not think that was ever made clear.


Clarence Decatur Howe: There was no charge against the previous management, but a board of directors cannot operate a plant efficiently except through a general manager. The board of directors dismissed the general manager whom we had gone to great effort to provide for them and who haid an excellent record in Canada as a producer of aeroplanes. They had no replacement in hand, and they had no suggestion of replacement.


John George Diefenbaker: What was the explanation for the dismissal?


Clarence Decatur Howe: That he would not carry out the orders of the board of directors. I believe it was an internal quarrel.


John George Diefenbaker: To keep production up to a certain point?


Clarence Decatur Howe: No; it had nothing whatever to do with production.


Richard Burpee Hanson: What was the charge against the previous general manager who did not satisfy the government?


Clarence Decatur Howe: He was not dismissed by the government; he was dismissed by the board of directors.
_ Mr. HANSON (York-Sunbury): Then you intervened. He was let out because you were not satisfied.


Clarence Decatur Howe: Oh, no. Does my hon. friend mean the last general manager?


Richard Burpee Hanson: I mean the man previous to the man you brought in.


Clarence Decatur Howe: They were without a general manager when we took David Boyd from Canadian Car and Foundry and made an arrangement with Mr. Magor that he would be general manager of the plant. To-day the plant is an efficiently operated unit. The

first Lancaster bomber will come off the assembly line within a matter of two or three weeks. The plant is completely jigged up and there will be substantial production.


Richard Burpee Hanson: The minister has said that the expropriated price was an agreed price. How did that affect the shareholders? Did they suffer a capital loss, or were they protected?


Clarence Decatur Howe: They got their money back.


Richard Burpee Hanson: And a
profit?


Clarence Decatur Howe: And a profit.


Richard Burpee Hanson: They were well looked after.


An hon. MEMBER:: They always are.


Clarence Decatur Howe: They got their money back by way of accelerated depreciation paid while they owned the plant, plus the balance which was paid when the plant was taken over.


Richard Burpee Hanson: They lost nothing.


Clarence Decatur Howe: So much for Victory Aircraft. The de Havilland plant is a subsidiary of the de Havilland Company of the United Kingdom. This plant had an excellent record. It was perhaps the largest of the pre-war aircraft plants. It was building the Moth plane before the war and it was first in the production of the Moth trainer, of which a great number were needed by the air force. Both the Moth and the Fleet were manufactured before the war and therefore the primary trainer was never a problem as far as supply was concerned. The de Havilland Company undertook a large share of the Anson programme and that was carried out in first-class style. Perhaps the performance of de Havilland on the Anson contract was the best of any of the several plants that were building that plane.
The plant then undertook to organize a very large operation in the building of the Mosquito bomber. This involved subcontracting on a large scale and the organizing of the de Havilland plant for final assembly. Certain objectives were set, but those objectives were not attained. The department put pressure upon the directors and the management of the plant to put their house in order and to obtain production. Differences arose between the management of the plant and the Canadian members of the board of directors-the board was made up of seven members, of whom three were British and four were Canadian, very responsible business men-and these differences reached the point

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where the four Canadian directors sent in their resignations. AVe attempted to get the British company to intervene and straighten out the situation, but no action was taken, and finally the Canadian government stepped in and appointed a controller for the plant, with the Canadian directors a committee to act as advisers to the controller.
The controller believes that with the authority of his position he can straighten out the management troubles. There now has been some change in management and we believe that the controllership will be helpful. As soon as we are satisfied that the management has been properly reorganized, the intention is that the controllership will be lifted. After it has been reorganized, the board of directors of de Havilland will be in charge of the plant.


Agar Rodney Adamson: Has a new general
manager been appointed, or has the old one been removed?


Clarence Decatur Howe: I am not in full possession of the facts of the situation since the controller was appointed.


Agar Rodney Adamson: The de Havilland is to be operated as a private company?


Clarence Decatur Howe: It is a private company being operated under a controller appointed by the government. My hon. friend asked for the number of man-hours and the number of planes, his idea being that we, could divide the dollars put into the plant by the number of planes produced and know exactly the cost of a plane. Unfortunately it is not that simple. On its Mosquito work I do not suppose the de Havilland plant produces more than twenty-five per cent of the total value of the plane. For example the complete fuselage for the Mosquito is being produced in the plant of General Motors at Oshawa, and the wings are being produced in one of the plants of Massey-Harris. Various other parts of the Mosquito are being produced in other shops in Canada. If we took the number of dollars that have been paid to de Havilland for the work carried on in this plant and divided them by the number of planes produced, we would get a very ,low-cost plane. No study is possible as yet of the man-hours used in producing the Mosquito, because to date the work has largely been the production of components. A man-hour study is possible only when the assembly line is rolling at somewhere near capacity.


John George Diefenbaker: What will be the capacity of the assembly line?


Clarence Decatur Howe: We hope to get a production of five planes a day or 150 planes a month. My hon. friend will see that it will take some
speeding up to reach that figure, but that is the capacity for which we have organized, not only at de Havilland but at the component shops. As to the cost of planes produced in Canada, we have taken contracts from the United States for planes which are common types, such as the Harvard which is used by our air training plan as well as 'by the air training plan in the United States. We took the Harvard contract at the standard United States price and have had no difficulty in producing at that price. We took a Catalina flying boat contract at a competitive price and we are manufacturing for the Canadian as well as for the United States government. We are building the Anson plane in Canada. It is of Canadian design and is being bought by the United: States government. Evidently they believe that our production price is reasonable for that plane; at least we had no difficulty in signing a contract with the United States government at our production prices. As for the efficiency of our plants, where they are operating at anything like capacity, they compare favourably with anything built on this continent.


Gordon Knapman Fraser: Do the plans contemplate the building of any
helicopters?


Clarence Decatur Howe: No.


Gordon Knapman Fraser: You are just going to buy them from the United States?


Clarence Decatur Howe: The helicopter is a machine of the future. No helicopter has been built that is in actual combat service.


Gordon Knapman Fraser: The British are using them for convoy work.


Clarence Decatur Howe: They are using them or talking of using them? So far as I know, no helicopter has been used in combat service, but there are one or two under test.


Thomas Reid: A statement was made public in Vancouver at the time there was trouble at the Boeing aircraft plant on Sea island, and according to a newspaper circulated in the district of Richmond certain charges were made by Elgin Ruddell, shop steward of Aeronautical Lodge No. 756 in the presence, it is stated, of an estimated 20,000 people. The statement alleged to have been made is this:	.
Production of P.B.Y. bombers at Boeing Aircraft of Canada Ltd. is ten months behind schedule, and the 54 bombers already built have been rejected.
I know that after that statement was made, some of the test pilots who test the planes when they are ready for acceptance by the
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government contradicted that statement of the shop steward, but I want to tell the minister and the committee that a statement of that kind had an extremely damaging effect, and I think the minister should now make a public statement to the committee so that the matter can be put straight on the record. Following this charge, I made an investigation and I was given to understand by the management of the plant that the charge made was entirely untrue. After all, however, facts are facts, and I wonder whether the minister would be good enough to make a statement in the house regarding the charge that production of PBY. bombers at that plant was ten months behind schedule and that fifty-four bombers already built have been rejected.


Clarence Decatur Howe: The charge was absolutely unfounded. The Gatalinas go into active service as soon as they are accepted at the plant. When the statement was made the management naturally were disturbed. Affidavits were obtained from the test pilots who had tested the planes and also from the Royal Canadian Air Force inspectors who are responsible for checking the planes out of die plant into service. The affidavits were ,o the effect that there was not a word of wuth in the statement. There could not be. We would know about it, if there were any truth in the charge.


John George Diefenbaker: The minister has stated that Canada is able to compete with prices in the United States in the production of aircraft. Am I correct in that?


Clarence Decatur Howe: We are not only able to do it; we are doing it.


John George Diefenbaker: Why, then, should Canada not now expand her aircraft production far and beyond what it is to-day? I pointed out this afternoon the fact that in the United States of America one-quarter of the production expenditure this year on the whole United States war programme is for the production of aeroplanes. In other words, this year, according to the estimates given, 100,000 aeroplanes are to be produced in the United States, many of which will be cargocarrying planes. Canada as yet has not gone in for cargo-carrying planes, nor has it made any preparations for the after-the-war period when cargo-carrying planes must necessarily be produced on a very largely extended basis. We are just entering the era when Canada to all intents and purposes is becoming the geopolitical centre of the world in air transport. To date our production of aircraft has been small, relatively speaking to production 
in other phases of our war effort. Only the other day I was reading the figures connected with cargo-carrying planes in Canada, which indicated how important this traffic was before the war and how very much more important it will be after the war. These figures show that in 1920 the total amount of freight, et cetera, that was carried in Canadian aircraft was a matter of only 6,740 pounds. That figure rose until in 1936, 22,947,000 pounds of freight and cargo were carried. Even in 1941, with the tremendous reduction in cargocarrying into the north country compared with what we had in peace times, over 16,545,000 pounds of freight was carried. This is a matter that is receiving the attention of all the united nations but as yet there has been no declaration on the part of Canada. The United States is producing almost exclusively all the cargo-^carrying planes produced in North America. I would ask the minister to explain why it is that Canada is concentrating on the production of bombers of the types he named and why no part of our production programme includes cargo-carrying planes. Are arrangements now being made by the joint production board of the United States and Canada whereby, when hostilities are over and the prospect of post-war trade arises, Canada will have her share of the aircraft necessary for her participation in the tremendous expansion that will take place after the war?
I should like also to have an explanation from the minister in regard to the question which I raised the other day, and) which I repeat. If we have arrived at a position in Canada where we can compete with production in the United States of America, why should we not now launch out into the production of aeroplane engines? Australia has done so. I know that her position is different from ours but she has done so. Why has Canada up to the present time not done so? I know what the answer was a year ago or a year and a half ago. It was that it would1 take two years to build up and expand such an industry. But I remember that in 1940, over three years ago, the minister informed the members of this house that it was the intention of the government to canvass the situation with respect to the production of aeroplane engines in Canada, and he indicated at the same time that he expected that the production of aeroplane engines would be proceeded with in this country. I appreciate the explanation which the minister has given, but it is only in this way, by the asking of questions and by frank statements from the minister, that many things

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which appear incomprehensible without explanation are explained1 to the satisfaction not only of the members of the house but of the country.
One thing more. When I mentioned the other day that there was a reduction of Canadian production within a year of from about 400 planes a month to 320 a month at the present time, and that the same nine models are still being produced that were being produced then, the minister made a statement as to which I should like a further explanation. He said, as reported in Hansard, at page 3606:
May I say to my hon. friend that there would be forty times the number of man-hours in the production of a Lancaster bomber than there would be in the production of a Fleet trainer. That is the reason for the smaller number of planes. But the tonnage of planes goes steadily higher.
If we take that statement at its face value, it means this, that Canada's production in tonnage increases year by year. Would the minister furnish the committee with information showing the tonnage of planes produced in 1941, 1942, and 1943 to date?
If I may be allowed, I will look over some of the questions I asked the other day to ascertain whether or not-


Clarence Decatur Howe: Well, Mr. Chairman, I have a short memory. Why not let me take these in small batches?


John George Diefenbaker: Very well.


Clarence Decatur Howe: My hon. friend asks why we do not increase the production of aeroplanes. I was trying to explain that we are increasing the production, and working very hard at it. We shall still have to find quite a few thousand men for our aeroplane plants to bring ourselves up to our present objective.


John George Diefenbaker: Are you short of men at the present time?


Clarence Decatur Howe: Certainly we are short of men.


John George Diefenbaker: To what extent?


Clarence Decatur Howe: Well, we are adding men to our aeroplane plants. As my hon. friend knows, we are trying to cut down less essential parts of the programme and divert men to aeroplane plants. I cannot say how many we are short, but I can say that any man who has any skill at all that is useful in an aeroplane plant will be hired if he goes to the gates.


John George Diefenbaker: Are the Department of Labour still calling men out of aeroplane plants?


Clarence Decatur Howe: For the armed services?


John George Diefenbaker: For service.


Clarence Decatur Howe: For service overseas?


John George Diefenbaker: No; for the armed services in Canada.


Clarence Decatur Howe: Certainly they are.


Richard Burpee Hanson: For the draft?


Clarence Decatur Howe: Certainly they are. I said a while ago that the time had come in our programme when the Department of Munitions and Supply were going to ask for no exemptions from the armed services and that is the situation except in respect of men with very unusual skills. When we had to have men; when we were building up from very small beginnings, there were men whom we regarded as essential. To-day the industry is large enough that we do not regard any individual as essential unless he has a very special technical skill.
My hon. friend points out that the programme of aeroplanes in the United States is twenty-five per cent of the total programme, and he asks why ours is not twenty-five per cent.


John George Diefenbaker: No; I asked why is it not increased.


Clarence Decatur Howe: Well, it is about twenty-five per cent. Does my hon. friend realize that we have a billion dollars of orders on our books for aeroplanes which we are called upon to deliver about July or August next year?


John George Diefenbaker: Yes; but it is not a quarter of this year's expenditures.


Clarence Decatur Howe: One billion dollars.


John George Diefenbaker: It is for the two years.


Clarence Decatur Howe: No, no. We have to-day standing on our books unfilled orders to the extent of a billion dollars, and our programme calls for these orders to be filled within twelve months from now-which is a full quarter of our expected expenditure for the current fiscal year.


John George Diefenbaker: But how much was
the expenditure last year?


Clarence Decatur Howe: Well, there is the tooling-up expenditure. We will throw that in, if you like. I do not know how much it was, but we will throw it in, and call it $50,000,000 spent and $950,000,000 to go, anything my hon. friend likes. I am pointing out that the proportion of expenditure on aeroplanes to
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the total expenditure is, roughly, twenty-five per cent in this country, just as it is in the United States.


John George Diefenbaker: Well, I hope all the reckoning is not as loose as that, that I can take off fifty million dollars.


Clarence Decatur Howe: I can take another fifty million dollars off and it will still be twenty-five per cent. The total expenditure for the current fiscal year is, roughly, three and a half billion dollars, and I am saying- that aeroplanes delivered on that programme will represent about twenty-five per cent of that value. It may be twenty per cent and it may be thirty per cent, but it is roughly twenty-five per cent.


Richard Burpee Hanson: The minister means that that is the objective, anyway.


Clarence Decatur Howe: Yes. In other words, our programme is about the same proportionately as the programme of the United States, in so far as the current fiscal year calls for provision of aeroplanes.


John George Diefenbaker: But what was the proportion last year?


Clarence Decatur Howe: I cannot say that. Let us answer one question at a time. We have still several hours to go. Do not shoot questions so fast. The hon. member has four in now. Let him sit down and allow me to answer these four, and then he can ask some more.


John George Diefenbaker: I am rising-


Clarence Decatur Howe: I have the floor.


John George Diefenbaker: Mr. Chairman, I
am rising to a point of order, even if the minister has the floor, and my point of order is this. I am asking the minister a very courteous question: what is the expenditure-


Clarence Decatur Howe: That is not a point of order.


John George Diefenbaker: What was the expenditure last year?


Joseph-Arthur Bradette: On the point of order, the hon. member for Lake Centre must realize that he has asked many, many questions. It is absolutely impossible for the minister, with the assistance that he has, to answer them all in rotation unless he is allowed the time to do so, without interference. On this point of order I call attention to standing order 41, citation 312 Beauchesne, at page 103:
Whilst a member is addressing the house, no one has a right to interrupt him by putting a question to him, or by making or demanding an. explanation. A member will at times allow such interruptions through a sense of courtesy to another, but it is entirely at the option of the member in possession of the floor to give -way or not to an immediate explanation.


Richard Burpee Hanson: I suggest
that that does not apply when the house is in committee. If the Chairman will read the rules he will know that that refers to when Mr. Speaker is in the Chair.


Some hon. MEMBERS:: Order.


Joseph-Arthur Bradette: With due respect to
the hon. member for York-Sunbury, I have read the rules, and I have given my ruling.


Lionel Chevrier: The hon. member has no right to cast any reflection on the Chair.


Richard Burpee Hanson: What
county is heard from? If the hon. member wants to say anything, let him rise in his place.


Clarence Decatur Howe: There can be only one member on his feet at a time. If we can preserve that rule I shall be very glad to carry on.
With regard to the hon. member's question, my officers have made a rough calculation and say that for the last two years the production has amounted, roughly, to twenty-five per cent of the total expenditure. What is the next question? I wish I could answer these one at a time.


Richard Burpee Hanson: As to
cargo planes and engines.


Clarence Decatur Howe: As a matter of fact Canada
has not overlooked the building of cargo planes. We have been building the Norseman for the last year. They are coming off the line as fast as we can turn them out, and they are being eagerly taken up not only by this country but by the United States. We expect to be in production of another cargo plane. I do not like to say anything about it; as a matter of fact I have not said anything about it. It is a transoceanic plane which is built wholly for cargo purposes. We have started also the design of a plane which we believe will be the ideal plane for Canada for transport work.


Richard Burpee Hanson: Would
that be something like the Commando or the Curtiss-Wright ?


Clarence Decatur Howe: The Commando is a twin-engined plane and I believe this is a four-engined plane. But it will be a wholly modern transport plane. I ask hon. members to keep in mind that at the present moment this is in the design stage. It must go from the design stage to the complete design stage and then it must go through the production stage. That means that it is two or three years away. Nevertheless we are designing a plane of allCanadian design which we think will be the

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plane of the future. It is the first time that Canada has ever undertaken that type of designing job.


Gordon Graydon: Would the minister object to telling the committee where that cargo plane of the type he has just spoken of will be built? If he has any objection to answering I would not want to press it.


Clarence Decatur Howe: Well, I would rather not, if
my hon. friend does not mind. There are reasons why I prefer not to give information about that plane at the moment.
. Mr. HANSON (York-Sunbury): It has not reached the stage where you have designed, anyway.


Clarence Decatur Howe: The hon. member was speaking of the plant that I was discussing before?


Gordon Graydon: The Norseman.


Clarence Decatur Howe: That is in the Noorduyn plant in Montreal. There is another plane being turned out in another plant which we hope to have coming off the assembly line in September or October of this year. It will be the north Atlantic type of plane. We are starting the design of a plane which will be wholly Canadian, designed and Canadian built. It is well on in the design stage at the moment.
The question was asked why we did not start now with the building of engines. I told the house, perhaps two years ago, that I had obtained an appropriation from the government to undertake the building of aeroplane engines in this country and was investigating the situation. As a matter of fact, I once upon a time obtained an appropriation of $40,000,000 to build a plant for aeroplane engines in Canada. Exhaustive studies were made and we decided on a type of engine that we would build here. The construction of the plant, the training of operatives and the installation of machinery were to cost $40,000,000. We got to the point where it was a question of buying machinery. Machine tools at that time were in very great demand. The United States was not in the war at the time, but the munitions business there was stepping up to that point where they were reluctant to allow any unnecessary drain of machine tool capacity from outside. The Canadian industry was expanding rapidly. There was a tremendous demand for machine tools here. I went to the United States with a request that we be authorized to buy machine tools to the value of $15,000,000-critical tools which were in great demand in that country. I was courteously received, but I was told that it was impossible for the United States to authorize
that expenditure on tools. I pointed out our position at that time. Our source of engines was England and that had been cut off. It was just after Dunkirk and we could not obtain engines from the other side. I said that I must have engines. I was told that we could get our requirements. A few days' production from their assembly lines would meet our needs, and they said they would undertake to give us engines. Canada has never had an areoplane waiting for an engine since that day. The promise has been kept and kept well. Had we built those engines we would have used a great deal of manpower, and. manpower of a skilled type was exceedingly scarce at that time. Indeed, it as no more plentiful to-day than it was then.
The building of engines is an exceedingly intricate job that calls for great care. We could have built engines in Canada, but we would have been building one type of engines whereas we have planes using perhaps fifteen types of^engines. We have changed engines in our planes from time to time. For instance, the Anson plane has been re-engined twice, and *we are now bringing out still a third type of plane which has a third type of engine, each type being of a somewhat higher horse-power. By having a sure supply of engines, we were [DOT] able to choose a particular type of engine that would give the best performance in the planes we built.
We obtain other items from the United States. We obtain the larger type of diesel engine used in their tanks. We could build diesel engines here, but we are satisfied to buy diesel engines from the large output in the United States. If we had undertaken a policy in this war of building every part of every munition we have turned out, we would have built far fewer munitions than we have under the present arrangement. I can also say that we build certain parts of munitions in Canada for which we are sole suppliers to the United States. Even the United States have not thought it necessary to be wholly self-contained in its munitions programme. They are quite willing to depend on Canada for certain components for munitions that are built in the United States.
As regards our future in aviation, the government is not in any way handicapped by the fact that we do not build engines in this country. We have a certain source of supply, and we can go on with confidence and build frames with the knowledge that our engine requirements will be met when the time comes. That is the story of engines.
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Mr. ROSS (Souris):: The day before yesterday I raised two or three questions. The minister has perhaps not yet had time to answer them. Does he care to answer now?


Clarence Decatur Howe: Steel for agricultural implements?


James Arthur Ross: That was the first question.


Clarence Decatur Howe: We have followed fairly well the policy of the United States in meeting the requirements of the agricultural industry, and necessarily so, because we are a deficit country in steel, and a considerable part of our requirements comes from the United States. In 1942 we followed the policy of the United States in supplying twenty-five per cent of the steel for agriculture which was supplied to that industry in 1940. In this year we have also followed the United States in providing eighty-five per cent of the steel for agriculture that was supplied to agriculture in 1940. In other words, in the current year we have increased the steel allocations to agriculture by about 120 per cent.


James Arthur Ross: Would the minister say something about the service stations staying open on Saturday nights?


Clarence Decatur Howe: The present regulations provide that they may stay open until 9 o'clock on Saturday evenings.


James Arthur Ross: That has been passed for this year?


Clarence Decatur Howe: It carries on from last year. The difficulty is that the operators are having a hard time in manning the stations, but the stations that stayed open in the evening last year have the continuing right to stay open this year. The privilege has never been cancelled. and the same stations can do so. There has been no great demand for an extension of the time to 10 p.m. I have discussed the matter with the oil controller, and he says that if there were a large demand for an extension of an hour he would not have any great objection, but he himself had never received that request.


James Arthur Ross: There was a third question about the reclamation of used lubricating oil.


Clarence Decatur Howe: That does not come within my province. The Department of Munitions and Supply supplies the requirements of the armed services. We supply whatever the armed services requisition, but salvage is a matter for the armed services. Waste lubricants belong to the army, the navy or the air force, as the case may be, and they are

entitled to make their own arrangements for salvage. I understand that the army have reclaiming plants.


Ernest Edward Perley: I have tried all day to get the eye of the chairman and I have only now succeeded. May I say, first of all, that there seems to have been a misunderstanding as to how this discussion should be carried on. We agreed after the Minister of Finance had made his statement and presented his budget to take up the different services. The ministers of the different departments, we understood, would come on and we would have a general discussion; then we would go into each particular item, and the discussion would then be confined to that item. I thought that was still the understanding when we began this discussion after the minister made his statement last Friday, but we seem to have been jumping all over the map. I can only hope that this will facilitate getting through these items as we come to deal with them, which I expect will be within a few minutes after this first item is passed.
When the house adjourned late yesterday afternoon we had spent practically the whole sitting on the question of rubber, and I thought almost everything had been said that could or should be said. But when we started in again this afternoon the question of rubber came up again, and except for the times when the minister was endeavouring to answer some of the questions asked by the hon. member for Lake Centre we devoted most of the afternoon to the same subject. The only additional contributions that we got this afternoon, as compared with what was brought up yesterday, was the statement that the minister is going to see that investigations are continued into the production of synthetic rubber from alcohol produced from wheat. I think he also agreed that if in their experiments they find a greater possibility than is apparent now that rubber may be produced in this way, then the suggestion of the hon. member for Rosetown-Biggar, which I think I mentioned myself yesterday as well, will be accepted and the industry will be commenced in western Canada where the raw products are produced. I think those were the only two matters of any consequence that came up this afternoon in addition to what was said yesterday.
On Friday last the minister reviewed the work of his department for the past three years, then dealt with the present, and in these estimates is providing for the future. He dealt with the matter from those three aspects. I find that during his statement he mentioned in detail some twenty articles or commodities

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produced under the supervision of his departs raent. During the discussion yesterday and to-day, I think we have touched upon half of those commodities; so that, as I said before,
I hope that when we come to deal with the specific items the discussion we have had already will facilitate their adoption. The one point which I believe should be' kept in mind is the fact that we started practically from, scratch in 1939; that was the thought expressed yesterday by the hon. member for Yale. Having that in mind, and looking at the information we have been given as to what has been done since then, I think to be fair we must say that a great deal has been accomplished.; I was going to say that the department had done wonders. Of course we must consider also the cost of all this, including the assistance given to industry. I believe the minister was quite frank in that regard and in answering the questions which we asked along that line.
Following the statement made yesterday by the hon. member for Yale, I was impressed also by the statement given by the minister's assistant, the hon. member for Stormont. I think a precedent was established, on that occasion. The hon. gentleman outlined to this committee how the whole organization has been set up; how it carries on; how it controls the cost and the price of various commodities, and so on. I believe the minister made the statement that by means of this organization, imperfect though it may have been, a saving of $155,000,000 has been made, and I have no doubt that is correct. I think the minister is entitled to a great deal of credit in that respect. Then the hon. member for Stormont went on to deal with the question of control, and in dealing with the question of auditors said that they had men in the various branches who were capable of properly appraising the value of the component parts going into any article produced. If that policy is continued they cannot but do good work.
Then the hon. member dealt rwith the question of contracts, how they are let and how they are controlled'. I think he divided them into two classes. The first class to which he referred he called contractors who are costconscious, which I would interpret to mean in plain English contractors who are honest.


Clarence Decatur Howe: No, Mr. Chairman, that is not fair. By "cost-conscious" we mean contractors who are always looking for a chance to reduce the cost, who keep an open mind and try to improve the methods used.


Richard Burpee Hanson: That is honesty, is it not?


Clarence Decatur Howe: But a contractor who takes a job and does it as the manual calls for it to be done is also honest. Perhaps he has not as much inventive genius.


Ernest Edward Perley: Perhaps the minister and I are saying the same thing in different ways, but I say that a contractor who appreciates that it is his responsibility and duty to endeavour to produce the article at the lowest cost possible is making a contribution to our war effort. In that connection I believe the hon. member for Kootenay West made a splendid statement this afternoon in which he did credit to himself and to Consolidated Smelters plant at Trail, when he dealt with the cost of the commodity being produced there.
Then the hon. member for Stormont referred to the other class of contractor and went on at some length to discuss the difficulties that have been experienced at times with respect to some of these contractors, showing how they are controlled and so on. In my opinion the hon. member gave a splendid outline of those items which enter into the question of cost and those other items which, practically speaking, do not. I think the precedent established was good, and I believe that if the other departments had followed the same practice, hon. members would have obtained a great deal of information which would have obviated much of the discussion that took place in connection with the three departments with which we have dealt. Then I believe the leader of the opposition made a valuable contribution the other evening when he made a plea for consideration for labour and the little man, as he termed him. If labour and agriculture get the proper consideration in connection with this industrial programme, I think it will go a long way to preserve our democracy, and I hope the minister will take that into consideration. I do not believe any group of people should have the control that we are led to believe some of them have.
Hon. members who have spoken already have reviewed the minister's statement in some detail and in turn have asked for information to which the committee was entitled and which I think the minister gave as fully as possible. Some hon. members have made constructive suggestions, and it is only right that they should do so. On two or three occasions the hon. member for Lake Centre has made a worth-while contribution to the debate when he has asked for certain information. Some of that information he has received and some of the replies may not

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have satisfied him. The fact remains, however, that we now have information we did not have before.
The hon. member for Lake Centre dealt with assistance which had been given to industry, the establishing of industry, and conditions in the post-war period. He concluded his speech of a few days ago by offering four constructive suggestions, and hon. members will find them at page 3605 of Hansard.. It will be found that he referred to a plan for the demobilization of industries, and outlined what might be done with some industries in the' post-war period.
His first suggestion was that there should be a determination of the basis upon which sale or disposition should be made. That recommendation has been covered to a certain extent by the minister, and we hope it may be enlarged upon still farther. He recommended, in the second place, that there be a government plan now for the conversion of war-time industries to peace-time economy and production. His third recommendation was that there should be a determination now as to which plants will be continued after the war for stand-by purposes. His last recommendation was that there be a plan of assistance to small industries after the war by way of loans, to stimulate the change from the war-time to peace-time economy, coupled with technical advice as to the most appropriate use of their facilities in peace-time production.
I believe, if the last recommendation in particular, is considered, some of these industries would be placed in western Canada. One might refer particularly to the implement industry. Surely implements should be produced in western Canada, where they would be needed, and facilities could be set up for refitting or repairing many of the implements which to-day are standing idle. Possibly some of those implements are idle on account of a lack of man-power, but the fact remains that they are not being used owing to the circumstances under which farmers are being forced to farm.
The hon. member for Rosetown-Biggar made a commendable contribution to the debate when he dealt with the aluminum company, and the power development at Shipshaw. I shall not discuss that matter in detail, because when we are considering the item we shall no doubt hear more from the hon. members concerned and the minister.
Listening to the hon. member for Rosetown-Biggar and some other hon. members, I have been disturbed when I have thought of the stranglehold that some of these large industries have upon Canada's resources, and the

control they exercise in respect of the development of those resources. This should be dealt with, and in such a way that we shall not lose control.
The hon. member for Davenport has spoken several times about the production of oil from tar sands. I think however, that on the last occasion he spoke he made an exceptionally clear presentation of the subject so much so, in fact, that I believe he impressed the minister. I should hope that the minister might consider carefully the facts presented by the hon. member for Davenport, and that as a result we might see a development in the -processing of these sands. The minister pointed out last night that certain ingredients might be removed from the crude oil, but that the quantity of gasoline produced would not be lessened. It would seem, therefore, that careful consideration should be given to the development of these tar sands. One might visualize a great development in this respect in the reconstruction period. I need only add that I am sure agriculturists will do their part and make a worth-while contribution when called upon to do so.
I should like to refer for a few moments to a matter I brought to the attention of the house last Monday, namely, the invention of a new carburettor by Melford J. Ball of Wey-burn, Saskatchewan. I refer to the matter now because I do not think I was given the opportunity I should have had on Monday to bring the matter to the attention of the minister. I believe that in speaking when the orders of the day were called I was in order. However, as I was then ruled out of order, I shall place the facts before the minister this evening.
This young man from Weyburn has invented a carburettor. The invention has been tried out on standard models of cars, and has had the result of increasing their gasoline mileage by over fifty per cent. Associated with Mr. Ball is a young man named Lewis Jacques of Edinburgh. Mr. Jacques is a master mechanic attached to the Royal Air Force stationed at Weyburn. This young man says that Ball has something definitely worth while, and something which should be investigated by the government. Mr. Ball only asks that he be given an opportunity of proving that he has a satisfactory invention. He is prepared to give it over to the government, or to any branch of the service, if it will be used to reduce the gasoline consumption not only of the general public but of the different services, in their buses, trucks and other vehicles.

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If this man has a worth-while invention, then certainly it should be investigated at once. If it is a good carburettor, the government should have a man try it out. I should not like this invention to suffer the same fate as was suffered by the Pogue carburettor. I happen to know quite a bit about that carburettor, because a close friend of mine had something to do with financing Pogue when he was working on his invention. I know what happened to that carburettor, and I think the minister probably knows, too. I am not going to put that on record, but I know we do not hear much about Pogue to-day. The big interests have obtained control of that carburettor; we know that. I learned that from a man who is so close to me that I can have no question about it. I refer to the man who helped to finance Pogue. He knows what happened to it. I trust the minister will give this matter some consideration and have someone make an investigation. If it is worth while, then let us use it and save millions of dollars we would otherwise spend on gasoline.
I trust that we may make more progress in the next day than we have made in the last two. I have not taken much time of the committee; in fact, I have taken only about ten minutes.


Clarence Gillis: I would ask a question in
respect of item 1 which deals with additions and extensions to plants. A large sum of money is involved. Would the minister give a break-down? How much has gone into the extension of government-operated plants as against privately owned plants? I would presume that when funds are provided for the extension of plants, it would be intended that they should be operated as soon as they are ready for operation. I believe funds were provided last year by the government to extend the blast furnace facilities at the Sydney steel plant. I have received a telegram from the steel workers' union in Sydney stating that this new unit has not been put into operation, necessitating a greater use of scrap by the open-hearth furnaces, thus decreasing production, wages and so on. I understood that when funds were made available for the erection of this blast furnace it was the intention that it would be put into operation when completed, but there seems to be some holdup. The steel is needed, and I was wondering if the minister could explain why this new unit is not in operation.


Clarence Decatur Howe: The hon. member asked for a break-down of the item. This will be found at pages 3698 and 3699 of Hansard, where this is given in some detail. A loan of $3,507,024.50
was made by the government to the Sydney-steel plant for a blast furnace and other things. I cannot understand why the furnace is not in operation, and I feel quite sure that there is some part or some auxiliary equipment which has not been finished. It is badly needed because we want to put the plate mill on a three-shift basis. I had thought the furnace was in operation and I am interested in hearing that it is not. I shall make inquiry to see what is the present position.


Mr. GREEN:: Will the minister explain the present fuel-wood policy of the government? He did not go into that in any detail when he made his statement on June 11. The1 minister is reported at page 3552 of Hansard as saying:
Following the announcement in March that the government would pay fuel-wood dealers a subsidy of $1 per cord, some increase in production has been noted. The situation is still serious, however, and many communities may be in short supply next winter unless immediate, local action is taken.
I judged from that statement that the minister was leaving the burden of this problem with the local authorities. If that is the government policy I fear that many communities will be short of fuel wood in the coming winter. I notice in the new volume of orders in council which we received to-day, No. 10, dated June 14, 1943, there is P.C.4669 which authorizes the wood fuel controller- this control has been set up since the debate on fuel which occurred in this house on March 16-to divert equipment for the production of wood and to make persons who are in a position to do so, produce wood. It also gives him power to purchase and to transport and dispose of wood fuel. It sets out that $1,000,000 has been provided for these purposes. Apparently there has been a change in policy; it would look as though the government is going into the business of producing wood. On May 17 the Minister of Labour stated in the house that he hoped Italian prisoners would be available for the production of wood fuel. There has been mentioned in the press that conscientious objectors are to be used for this purpose; and an order in council has been tabled which gives power to the government to use Japanese in British Columbia for the production of wood fuel. Could the minister give us the exact position at the present time? It will be important to many communities in Canada to know just what help they are going to get from the government in meeting this problem.


Clarence Decatur Howe: The situation is unchanged. My first statement covers the situation to date. The production of wood fuel is a local
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problem. In my first statement I offered an active working partnership between the federal government and local communities to assist in meeting fuel requirements. Those local communities that take their obligations seriously and make every effort to solve their own wood fuel problem will have the best time next winter.


Howard Charles Green: It is easier for some communities to do that than others.


Clarence Decatur Howe: That is true. The dominion government is arranging for certain wood fuel operations, and we hope to build up a considerable stock of fuel which may be moved into distress areas next year. This will be simply a safety valve. It will be impossible to promise or even to suggest that any community that does not take an active interest in solving this problem will get wood fuel shipped to it by the dominion government. We are arranging for the cutting of as much wood fuel as we can, and this will be stored where it can be shipped into distress areas.


Howard Charles Green: Is it the intention to use Japanese for that purpose?


Clarence Decatur Howe: We are using anyone we can get. We are using Japanese in British Columbia, but I do not know with what success. We have planned operations for them in the areas where they are at the present time. We have even brought pressure to bear upon ' certain pulp companies to have them start wood fuel operations before they start their winter cutting. We are doing all we can to get supplies of wood fuel. We must always remember that we are not at all sure that we shall have sufficient coal next winter. In fact, I doubt very much if we shall. Therefore, we are attempting to cut wood fuel with the thought in mind that it will help to take up any shortage there may be in coal.


Howard Charles Green: Will the government move this wood to the different centres, or will the consumers have to pay for the cost of moving it?	[DOT]


Clarence Decatur Howe: We will use it to relieve distress if there is distress. We will move the wood.


Howard Charles Green: To the different centres?


Clarence Decatur Howe: Yes; to the dealers.


Howard Charles Green: Could it not be arranged to have the municipal authorities supervise the distribution of the wood in the various centres?


Clarence Decatur Howe: I should not like my hon. friend to suggest that any municipality will

be discharging its obligations if it considers that all it has to do is to supervise the distribution of wood sent in by the federal government. Every municipality must organize efforts to supply wood to the utmost of its ability.


Howard Charles Green: I think the municipalities are doing so.


Clarence Decatur Howe: I think they are. We are helping them with equipment and1 anything else we can. As I say, we are attempting to accumulate considerable stocks of fuel wood at different points in Canada. We are doing this as a protection against the serious situation which we believe is arising. If we cannot get sufficient coal, we will move wood into areas where the situation is serious. But this is simply a reserve that is being built up, and no community should make its plans in the sure belief that wood will be shipped into it next winter.


Howard Charles Green: Is the government still paying the subsidy of $1 a cord?


Clarence Decatur Howe: Yes. I hope to make a statement about the bonus to-morrow. I announced before that the time would be extended, but I have not given the new time limit. I shall try to do that to-morrow.


Mr. MacINNIS:: Is it the intention to build up reserves of fuel wood at certain places and then, if circumstances become sufficiently serious in certain municipalities, those reserves of fuel wood will be shipped in to where there is a shortage?


Clarence Decatur Howe: That is it, yes.


Mr. FULFORD:: It was my privilege to accompany a delegation of members who recently visited Buffalo and inspected the plants of the Curtiss-Wright corporation. Anyone who was on that trip would agree that it was an inspiration to see the aeroplanes on the assembly line in process of construction. One of the most outstanding features one noticed was how much of the modern aeroplane consists of aluminum. As one stood at the end of the assembly line and looked hundreds of yards down the line where the aeroplanes are first assembled, the general thought was, I believe: If only Hitler could see this! One of our members expressed it as well, I think, as it could be expressed when he said: Thank God, these people are our allies!
During the course of our visit I asked one of the executives of the company of any of the aluminum which was going into the manufacture of these planes came from Canada, and his reply was, "I do not know what we

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should do without the aluminum which comes from Arvida and the aluminum castings which come from Kingston." Even if there are certain people in this country who do not appreciate what the Aluminum Company of Canada has done, certainly no one who has gone through these plants and has seen what our United States allies are doing in the production of aeroplanes, can fail to realize just how much the Aluminum company has done not only for our own country but for the united nations as well. In reply to the clamour and consternation that falls on the Cooperative Commonwealth Federation camp whenever private enterprise makes a great contribution not only to Canada's war effort but to that of all our allies, I can only repeat what has already been said in this house, that we are not fighting monopolies; we are fighting a war. I have no more tolerance for monopolies than have my friends of the Cooperative Commonwealth Federation, but I believe that this is no time to investigate and interfere with the turning out of a product as cheaply and in such large quantities as Aluminum Company of Canada is turning out this vital product.
I do resent one thing, which I think has not been brought out in this debate, but which I believe should have been brought out, namely, the insinuations that have been made against Canada's minister to Washington, the Hon. Leighton McCarthy. It is my privilege to have known the Hon. Leighton McCarthy for a great many years. I have known him as one of Canada's most successful lawyers and as a great business executive. I have known him as a great philanthropist, and now I can appreciate him as a great diplomat. I think it ill behooves anyone at a time like this deliberately to make insinuations against a man of his ca'ibre occupying the high position he does. I know of no surer way to drive men of his type, the very highest type, out of public and diplomatic life in this country. It is my opinion, and the opinion of a great many others, that what the Aluminum company has done so far in this war will rank as one of the great production achievements in this struggle.


Lionel Chevrier: The other evening the hon. member for Yale asked some questions in connection with construction contracts generally, and I should like to make an answer to him at this time. If the hon. member will look at what was said the day before yesterday on the subject of contracts, he will see that the statement was made that contracts generally may be divided under two heads, fixed price contracts and contracts of a cost-plus nature, and that four-sevenths, in point of number, of the contracts let were, 72537-238
generally speaking, let on a fixed .price basis, and that applies to construction contracts as well. They are let on a competitive basis by tender, and I think it is safe to say that from seventy-five to eighty per cent of those contracts have been let by tender. Exceptional circumstances, however, sometimes make it impossible to let contracts on that basis, and then the contract is let on a cost plus a fixed fee basis.
With reference to the specific case in which the hon. member was concerned, the military camp at Vernon, the contract was let on a cost plus a fixed fee basis.


Mr. MacNICOL:: Are you getting away from cost-plus contracts?


Lionel Chevrier: Yes, definitely. The
number of cost-plus contracts is continually being reduced.


John Ritchie MacNicol: They should be wiped out entirely.


Lionel Chevrier: It is hoped that they will be wiped out entirely in favour of the fixed price contract, but in this case there was a reason for the exceptional basis. This is the reason.
In 1942 there was an unprecedented request for different defence projects on the west coast, and this coupled with the activities of the United - States government on the Alaska military highway and the facilities required in connection with it, made it impossible for the Department of Munitions and Supply or anybody else to obtain competitive tenders.
The contractors were unable to maintain their men on account of the high rates paid on the Alaska military highway. The supplies of material became restricted. Priorities on materials required from the United States became difficult to obtain, and lastly,, transportation facilities, particularly to outlying points, were at such a premium that the contractors refused under the combination of circumstances to submit firm price tenders.
It therefore became necessary, in order to meet the demands of the armed services for defence projects, that the work required be placed under way as early as possible and in such a manner as would assure its completion at as early a date as possible.
The director of construction in this case examined the capabilities of the different contractors in the district with regard to their being immediately available, also as to their supply of plant and equipment, the type of their organization, their location and the materials at their command, and selected

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Messrs. Bennett and White of Calgary as the most suitable and arrangements were made with them to undertake the work.
The hon. member also asked who was included in the fixed fee; what profit there was. I am informed that the fixed fee covers the following items: (a) the services of the partners of the firm or directors of the company, ail of which are available at no charge to the contract; Ob) all head office expenses; (c) all costs of financing; (d) all other expenses other than those which are directly incurred on the site of the work; (e) the services of all employees at head office for the use of purchasing, expediting, engineering or the giving of any service ordinarily handled in head office; (f) as the fee is ordinarily set at $25,000 for a million dollars worth of work and all the above services have to be provided out of this fee, it is clearly evident that the amount of .profit is unduly small. As a matter of fact, the contractors in this case have complained that by reason of slowness of payment their financing charges have absorbed practically the whole of the fee. The profit is therefore very small.


Mr. SHAW:: There is one item I should
like to bring to the minister's attention. It may be that we have to leave these matters until a later hour because we are located so far from the Chair.
I do not know to what degree the minister is responsible for the disposition of the various types of commodities for the production of which he is responsible. The matter I wish to bring to his attention is in connection with gasoline, namely, the fact that it appears from correspondence which I have received that there is a great deal of dissatisfaction with respect to the uses made of army vehicles for civilian purposes-if I may put it in that way -or for private purposes.


Clarence Decatur Howe: We have nothing to do with
that. The army file requests with us and we fill those requests in full. The distribution of gasoline or the use to which it is put is wholly a matter for the army.


Frederick Davis Shaw: Just one point, then. May
I indicate to the minister that he might have less difficulty in providing the gasoline requirements for the army and for civilian purposes if he would bring to the attention of the Minister of National Defence that there is, according to a number of documents which I have, colossal waste, as they state, in the use of gasoline, by virtue of the fact that it is evident to anyone who is in centres where military camps are located that these army vehicles are being used for other than

army purposes. I will not elaborate on that now, since the minister has already indicated that it is not his responsibility, but I could produce some interesting evidence in that direction which has come to me. I would ask him to bring this matter to the attention of the Minister of National Defence.


The ACTING CHAIRMAN (Mrs. Cassel-man):: I wonder if we could direct attention
particularly to item 1. A very wide discussion has been allowed up to the present, and I have noted that rubber has bounced back more than once-which is of course the usual thing with rubber-but I wonder if we could come to item 1 and get it carried.


Gordon Knapman Fraser: The
agenda which has been given to us does not cover many of these items we have been discussing. There was no particular place to discuss synthetic rubber unless it be in these items. I should like to know under what item I could ask a question about gasoline and the oil controller's department?


Clarence Decatur Howe: Departmental administration.


Gordon Knapman Fraser: I
wish to put to the minister one question which has been asked of me by two manufacturers. Has he any idea how many civilians in munitions plants it takes to sustain one man in the armed forces? These manufacturers asked that because they are trying to keep up the morale of the men in their plants.


Clarence Decatur Howe: I cannot say. We have at
the present time well over seven hundred thousand men in the services. We have close to a million men and women in war production. I assume we have more than two millions in agriculture and civilian industries. That would represent about four to one, would it not? I never saw a figure on that, and I doubt whether any arbitrary figure can be given.


Gordon Knapman Fraser: The
minister has not the figure?


Clarence Decatur Howe: No; I have no figure about
that. I gave the population distribution as well as I could. I do not think there is any known ratio. It depends upon a good many factors. It would be pretty difficult, I think, to work that out.


Gordon Knapman Fraser: The
reason why these men wanted to know is that when they are talking to the men in the plants, telling them that they want to get this production, they wish to be able to say that "it takes ten, or forty, or a hundred of you men and women to keep one man in the

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armed forces, and if one of you lays off on a Saturday or a Sunday or a Monday, it means that a man in the armed forces is handicapped that much."


Clarence Decatur Howe: I should like to be able to give my hon. friend a figure, but I do not know that any study has been made. Perhaps I could have one made and give him the result in two or three weeks.


Gordon Knapman Fraser: I
believe it would help the manufacturers in that it would stimulate the munitions workers.


Agar Rodney Adamson: One'word on this item concerning Victory Aircraft. As one of those who have been critical constantly, and I think from what the minister said to-night, with great justification, of the set-up at Malton, I had an opportunity this week of visiting the plant, and in my opinion the management there now is endeavouring to do and, I believe, will succeed in doing a thoroughly capable job of producing Lancaster bombers. Probably they have a little overestimated their capacity. But I am glad to see that the present manager has been maintained by the department. I think he deserves every support because he certainly has had a great deal to try him. For years this plant has gone through frightful vicissitudes and difficulties. I was glad to hear the minister's statement to that effect.
One thing more. I have heard it stated that if the minister will use his great efforts and forceful drive to see that the Weston cut-off is paved for the two or three miles from No. 10 highway into Weston, it will be equivalent in the saving of wear and tear on cars to two Lancaster bombers from now to the end of the year.


Howard Charles Green: Will the minister explain to the committee the assistance which has been given in the Steep Rock iron development in lake Superior district? Apparently the government has given assistance of one kind and another to that development, and it would be interesting to know the nature and extent, and also when it is expected that the mine will be in production, whether the iron ore which is produced is to be all smelted and used in Canada, or whether there is any provision that a certain proportion of it must be smelted and used in Canada.


Clarence Decatur Howe: The government cooperated with the Canadian National Railways in setting rates for transportation which would be competitive with rates from the Mesaba area. The management reached an impasse with the
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railway in arriving at that rate. There is a certain rate from Mesaba range to lake Superior covering transportation from the mine and loading on to vessels. The mileage from Steep Rock area is longer and the volume of traffic less intensive, with the result that the railway thought it could not justify itself in quoting a competitive rate. The difference was twenty cents a ton for the ore transported. The government arranged to support the transportation by a bonus of twenty cents a ton payable to the railway on the first five million tons moved from the mine to the lakehead. The railway undertook to build the necessary ore dock to tranship the ore from rail to boat, and the government undertook to lend the money to the railway for that purpose, the loan to be recoverable by an amortization charge sufficient to pay interest on amortization of the amount.


Howard Charles Green: How much does that involve altogether?


Clarence Decatur Howe: The subsidy is $1,000,000-twenty cents a ton on five million tons. The cost of the trackage at both ends, and the ore dock, will be around $2,500,000.


Howard Charles Green: What about the other questions? When will the mine be in production?


Clarence Decatur Howe: I do not know when the mine will be in production. We have nothing to do with anything except transportation from the mine. The only place in which the government has intervened is in the. matter of transportation, which we undertook to make competitive with the Mesaba ore. The building of the development is a wholly private enterprise in which the government is not interested in any way.


Howard Charles Green: Apparently that was a new venture in government policy. A press release from the minister's department, dated September 30 of last year, after an announcement about the facilities to be built, contains these words:
Mr. Howe announced that the policy of assistance was decided upon as a result of a decision of the war committee of the cabinet that the development of Steep Rock iron ore deposits should be proceeded with as a means of protecting Canada against a possible shortage of iron ore to meet wTar requirements.
If that is correct, it clearly shows that this was government policy and that the government is very much interested in the development. I believe that this spring there were press reports to the effect that production was expected in about a year and a half. Can the minister say whether or not those statements were correct?
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Clarence Decatur Howe: I cannot say. I do not think any member of the government could say. Transportation comes after the development is completed. If the development is successful, we are obligated to furnish certain transportation, which we will do; but in the meantime we expect the mine management to advise us when the property will be ready for transportation facilities. They have not done so as yet, and I really do not know how they are getting along. As I understand the problem, in the first place the power plant must be moved and the Seine river diverted, then the Steep Rock lake pumped out, and after that they are in a positon to undertake mining development. I may be very willing to give forecasts, but I am not willing to state the time that will elapse in an operation of that kind over which I have no control.


Howard Charles Green: But this is war policy, according to the minister's own department. Obviously, assistance is being given to help Canada's war production.


Clarence Decatur Howe: Its possible war needs.


Howard Charles Green: Does the minister mean that no steps were taken to find out the approximate time it would take for this mine to come into production? I did not ask for the exact time.


Clarence Decatur Howe: We have the engineers' report. They were estimating that two years would be taken. That may or may not be optimistic, but I have no control over the operation and I do not see why I should be asked to give an estimate. I have given the engineers' estimate and that is the best I can do.


Howard Charles Green: If the minister had given that before, it would have saved a lot of time. Two years from last fall?


Clarence Decatur Howe: Yes.


Howard Charles Green: I asked the minister whether or not there was any obligation on the company to have this iron ore smelted in Canada or to have it used in Canada. They are getting 83,500,000 assistance from the Canadian government. Is there any understanding with regard to where that iron ore is to be smelted and used?


Clarence Decatur Howe: I am told that the Canadian mills will have first call on the output. The underwriting agreement provides for that.


Howard Charles Green: Is that in the shape of an agreement with the government?


Clarence Decatur Howe: No; the agreement with the underwriters.


Howard Charles Green: The government has no agreement in writing with the company?


Clarence Decatur Howe: No.


Agar Rodney Adamson: The underwriters were a firm, Otis and Company, in Cleveland, and the United States government. The Reconstruction Finance Corporation put up $5,000,000, and Cyrus Eaton and his associates in Cleveland put up the rest of the money to finance it immediately.


Clarence Decatur Howe: This government did not interest itself in the financing of the project.


Agar Rodney Adamson: That is the point I am trying to get at. The dominion government took no part in financing Steep Rock?


Clarence Decatur Howe: No.


Agar Rodney Adamson: The only thing it did was to provide subventions to the Canadian National Railways and build the ore dock.


Clarence Decatur Howe: Well, the ore dock is an obligation of the railway as part of the transportation.


Agar Rodney Adamson: And that is included-


Clarence Decatur Howe: The only assistance given by the Canadian government was assistance to the Canadian National Railways, to put the Canadian National Railways in a position to give a competitive transportation rate to Steep Rock Iron Mines Limited. Our only agreement is with Canadian National Railways.


Agar Rodney Adamson: I have been rather critical of the deal by reason of the fact that we allowed the development to be financed outside Canada.


Joseph William Noseworthy: Has the minister's department interested itself at all in the stock manipulations that have taken place in connection with that property-


Clarence Decatur Howe: Not at all.


Joseph William Noseworthy: -on the strength of the help the government has given?


Clarence Decatur Howe: No.


Joseph William Noseworthy: That is being used for stock manipulations.


Clarence Decatur Howe: The government has given absolutely no help to Steep Rock mines. The only agreement the government has is with Canadian National Railways. Canadian National Railways have quoted a certain rate to Steep Rock mines to transport ore from the mine and put it on board the boat at the lakehead. That is the only agreement there is between any government agency and Steep Rock mine. How the capital was raised,

War Appropriation-Supplies
I have no knowledge and the government has no knowledge, and I wish to make it clear that if there was manipulation, based on the government's interest in the actual construction, we have none. Our only obligation comes after construction has been completed and the mine is in production. If ore comes out, it is our obligation to transport it from the mine to lakehead and put it on the boat at a certain over-all rate.


Joseph William Noseworthy: What was the
arrangement for the building of the dock?


Clarence Decatur Howe: The dock will be built and owned by the Canadian National Railways, to whom the government will loan the money required for that purpose. The Canadian National Railways will pay the government six cents on every ton of ore passing over that dock for interest and amortization, until the government loan is fully amortized.


John George Diefenbaker: I should like to ask a question in regard to the Cherrier plant in Quebec which is operated on a management fee basis by Canada Car and Munitions Limited. I wish to know whether or not the magazine entitled "Employees' Cherrier House Organ" is paid for by the government, directly or indirectly. A recent issue of this magazine, which is put out by that plant, contains a most disruptive statement, which I need not place before the committee. I should like to know whether the government makes payment in any degree for that magazine, and I suggest to the government that there be an investigation into some of the statements made therein, to the end that these statements be excluded from further issues.


Clarence Decatur Howe: I have never seen the publication in question, but my financial adviser tells me that expenditures of that kind are not permitted as an element of cost, so that I presume it does not enter into the cost. However, I shall be glad to make inquiries about the publication about which, as a matter of fact, I have never heard.


Mr. KNOWLES:: Despite the fact that the subject of aluminum has been introduced once or twice to-day, I do not intend to continue that discussion to-night. I should like to direct one question to the minister, or perhaps to his assistant. The hon. member for Stormont speaking on Tuesday last, as reported at page 3648 of Hansard, said:
Under existing tax laws no corporation can earn, after tax, a greater amount than seventy per cent of its pre-war standard profit.
As the minister knows, and as is borne out on page 10 of the prospectus of the Aluminum Company of Canada and on pages 11 and 14 of the report of Aluminium Limited, these
interests in 1942 were making profits greater than in previous years; in fact, as far as Aluminium Limited is concerned they were the greatest in its history. I wonder if either the minister or bis assistant would reconcile these facts with the statement to which I have referred.


Clarence Decatur Howe: Did I understand the hon. member to say that the earnings of the Aluminum Company of Canada this year had been the greatest in its history?


Stanley Howard Knowles: I said that the earnings of both the Aluminum Company of Canada and Aluminium Limited were larger in 1942 than in the pre-war years, and in the case of Aluminium Limited the largest in its history. There was one year, 1939, when the Aluminum Company of Canada made, perhaps 8100,000 more than in 1942, but if you take the average of the pre-war years it is considerably lower than the profit in 1942.


Clarence Decatur Howe: Yes; but the volume and the facilities had t>een multiplied several times by then.


Stanley Howard Knowles: But I am comparing this situation with the statement by the assistant to the minister, which was to the effect that no corporation can earn, after tax, a greater amount than 70 per cent of its pre-war standard profit.


Lionel Chevrier: The statement to which the hon. gentleman refers was made by me on June 15. At the time I was going on to refer to the checks and controls that we exercised in the Department of Munitions and Supply over contracts of a cost-plus nature. I went on to explain that over and above that there were under the jurisdiction of the Department of Finance the corporation tax and the excess profits tax, and the figures I mentioned on that occasion were the figures given by the Minister of Finance in his 1942 budget. I made a further statement saying that no change had been made this year. Now the hon. gentleman asks a question in connection with these aluminum companies and wants an explanation. I have not seen the figures to which he refers and, of course, I cannot explain them, other than the statement I now make.
Mr. NOSEtyORTHY: Is it not a fact that the basis is not the total amount of the profits but the percentage of the turnover?


Lionel Chevrier: That is a matter for the Department of Finance, not for Munitions and Supply.


[Stage Direction]
Item agreed to.
War Appropriation-Supplies
[Stage Direction]
2. Cargo vessels-Operated by Park Steamship Limited, $45,000,000
Thomas Reid: Would the minister be good enough to give the committee some information with regard to the companies which have chartered vessels from the Park Steamship Company? As reported at page 3550 of Hansard I note that the minister said:
Up to the present time twelve vessels of 10,000 tons deadweight; five vessels of 4,700 tons deadweight, and one tanker have been delivered to the company.
It is important, I believe, that the committee be informed as to what steamship companies have chartered these cargo vessels, and I should like to know how many are operating on the Atlantic and how many on the Pacific.


Clarence Decatur Howe: I am sorry to say I have not that list at hand, though I will have it at three o'clock to-morrow. It changes from trip to trip. The boats are allocated to various trades by the Canada shipping board, and a ship is chartered to a particular company operating in the trade to which the boat has been allocated. For instance, if the boat has been allocated to the United Kingdom trade, it would be chartered to Cunard, White Star, the Donaldson line, or the Canadian Pacific. If it were operating to Australia, it would be chartered to the Canadian-Australasian line or some other line that in the past has operated to Australia.


Thomas Reid: Do the steamship companies which charter these vessels pay a set fee based on the cost of the vessel, or how is the charter fee arrived at?


Clarence Decatur Howe: The ship is operated for the account of Park Steamship company, and the full returns are made to that company less the amount of the fee retained by the operating company, which is at the rate of $3,500 per annum plus two and a half per cent of the value of the cargo.


Thomas Reid: Is the same arrangement entered into with regard to financial payments?


Clarence Decatur Howe: No; we charter ships to the British ministry of war transport for a dollar a year. What arrangements the British ministry of war transport make for their own account, I cannot say.


Angus MacInnis: How many of the ships turned over to the Park Steamship company are of Canadian register, or are they all of Canadian register?


Clarence Decatur Howe: They are all of Canadian register.


Angus MacInnis: I should like to say a few words in connection with wage rates on those boats. The minister may have forgotten, but I wrote him in August, 1942, on this point. There is considerable complaint respecting the wage scales for both officers and men. I understand the scale in effect on Canadian ships is the British scale of wages.


Clarence Decatur Howe: For officers.


Angus MacInnis: For officers and men.


Clarence Decatur Howe: No; it is higher for men.


Angus MacInnis: I have the minister's letter of September 17, 1942, and I find this sentence in it:
The wage scale in effect on these vessels corresponds to that on vessels operated on the Atlantic coast under the supervision of the Park Steamship Company, and is in exact conformity with the wage rates of the British national maritime board.
Then the minister goes on to say :
I quite concur in the company's opinion that it would be unwise to operate vessels out of Pacific ports with a wage rate at variance with that of vessels operated by the same company out of Atlantic ports.
It is a matter of fact that wage rates on the Pacific coast have always been higher than those on the Atlantic coast and, generally speaking wage rates on Canadian boats, and more particularly on United States boats, are much higher than wage rates on British boats. I have had considerable correspondence on this matter with the Canadian seamen's union, British Columbia section, and the Canadian merchant service guild, officers' organization. They have been good enough to forward me copies of all the correspondence which passed between themselves and the manager for the Park Steamship company, whom I believe to be Mr. R. B. Teakle. I find there is considerable dissatisfaction with the rates of pay.
In a letter dated September 14, 1942, replying to a letter from Mr. Teakle the officers of the Canadian merchant guild write as follows:
This guild is very disappointed with the attitude taken by your company on the above question. First, our information is, and we believe it to be authentic, that more than the two vessels you mentioned will be for Canadian register.
Mr. Teakle, in his letter to the guild, said there would be only two of these vessels under Canadian register. The letter continues:
Secondly, in regard to these ships being fully manned we believe this is correct, due in some

War Appropriation-Supplies
measure, in so far as masters and deck officers are concerned to this organization's attitude, as in nearly every instance we were consulted by the officers who were offered the positions for advice on the advisability of signing on, when we advised these officers that it was not in the policy of this guild to interfere in the manning of these ships, regardless of the scales of pay or other conditions, as we consider this service part of our war effort, and we had, on September 7, 1939, written the then Minister of National Defence, the Hon. Ian Mackenzie, that this guild was prepared to cooperate in any manner which would further our war effort. Our members now feel however that this declared policy is being taken advantage of.
Then, the next paragraph reads:
In regard to the comparison made by you to ships operated by the Minister of War Transport for Great Britain, this is, so far as we are aware, the first instance of such vesels being compared to Canadian ships in regard to scales of paj- or conditions, as it is well known that in the past British ships have been looked on as being, if not the poorest, at least one of the poorest paid services on the seven seas.
In the wage scale the guild proposed to the Park Steamship company, they pointed out that it was in conformity with the wage scale then in effect on the Pacific coast on vessels which were much smaller. As a matter of fact, it applied to vessels of less than 4,000 tons, and the scale was considerably less than that on United States ships.
In regard to crews, the rates of pay are very much below those on similar ships operating on the Pacific coast. I have before me a list of the rates, as given to me by the officers of the seamen's union, and I shall place them on record for purposes of comparison. In both cases bonuses are not included, but in any event bonuses on the Pacific coast would make the total wage still higher.
The following is a comparison of rates paid on the Pacific coast and those paid by the Park Steamship company:
	Pacific	Park
	coast	Steamship
Boatswain	$110 00	$64 50Able-bodied seaman. .	90 00	56 00Ordinary seaman. .. .	70 00	41 70Fireman	85 00	58 50Donkevman	95 00	62 90Oiler	85 00	60 65Trimmer	75 00	56 20That is bad enough,	but I hold	in my hand
the June issue of the Searchlight, official organ of the Canadian seamen's union, printed in Montreal. This paper draws attention to the fact that the rates paid by the Park Steamship company on ships at sea is less than those paid in the manning pool, while sailors
are waiting to be taken on vessels. In order to show a comparison, I shall place the following table on record:
	Manning	Park
	pool	company
	rate	rate
2nd cook	. $57 59	$49 50A.B. seaman	. 62 02	56 20Donkeyman	. 69 00	62 00Carpenter	. 80 85	70 10Boatswain	. 70 88	64 50Fireman	. 64 23	58 50Assistant steward...	. 57 59	49 50
When the government is attempting to build up a Canadian merchant marine which will operate not only during the war but after the war, we should surely try to make working conditions for the men who will operate these boats have some relation to conditions on privately-operated ships both in this country and in the United States. I should like to know why the government has adopted the British rate rather than the United States rate.


Mr. MICHAUD:: Since merchant seamen come under the jurisdiction of the Department of Transport I shall try to give the hon. member some explanation. It is well known that the basic rate for seamen on foreign going ships has never been uniform. I am informed that the United States rate has always been higher than the British rate. When the seamen were hired to man Canadian ships a Canadian basic rate was tentatively established with the idea of conforming as much as possible to the British rate. The United Kingdom basic rate for able seamen is $62.02, with a war risk bonus of $44.50, making a total of $106.52. The basic rate paid by the' Park Steamship company for 10,000-ton ships is $56.20, to which is added a war risk bonus of $44.50, a cost-of-living bonus of $18.42, making a total rate of $119.12, as compared with the British rate of $106.52.


Howard Charles Green: What is the United States rate?


Joseph Enoil Michaud: So far as we have been able to understand, there is really no basic rate.


Angus MacInnis: Does the minister know what the Pacific coast rate is?


Joseph Enoil Michaud: It varies according to the vessel and the trade and the route and the company. Of course there are union rates on the Pacific coast, and they bear more relation to the United States rates than do the basic rates established for British seamen and the tentative Canadian rates. The Canadian rate has never been definitely established. The
War Appropriation-Supplies

matter has been referred to the war labour board for adjustment and ruling, and that is where the matter stands at the present time.
Mr. MadNNIS: When was the matter referred to the war labour board?


Joseph Enoil Michaud: I have not the exact date of the reference, but I know the matter has been under consideration. There has been a lot of correspondence and negotiation, and that is the action that has been decided upon.


Howard Charles Green: Why was it necessary to keep the Canadian rate down to the British rate? In making his statement the other day, the Minister of Munitions and Supply said in effect that Canada could have as many ships in her merchant navy as she could man, that the bottleneck was getting crews. It may be that this is one reason why you cannot get crews. The wages on this continent are higher than those in Great Britain; the wages paid in the United States merchant navy are higher than those paid in the British merchant navy. Why should Canada be restricted to the rates paid in the British merchant navy?


Clarence Decatur Howe: I wish my hon. friend would quote me. I said the difficulty was in obtaining qualified officers.


Howard Charles Green: The minister is reported at page 3550 of Hansard as follows:
The United Kingdom is able to furnish crews for these boats whereas Canada cannot do so at this time.
Every effort is being made to obtain the maximum number of crews for the purpose of operating as many ships as possible by Park Steamship Company, and in that connection the company works closely with the director of merchant seamen, Department of Transport, During the war period the size of the Park Steamship Company fleet will be limited only by the number of Canadian crews that can be obtained.
There is the story.


Clarence Decatur Howe: I am quite sure that I explained on another occasion that it was possible to train seamen, but it was impossible to train captains and chief engineers in a short period. As my hon. friend knows, in order to qualify as a captain or a chief engineer a man must have at least four or five years service on a ship. Certain other officers also require a considerable period of service on a ship. Even an ordinary seaman must have four months on a ship to qualify. He signs on as a boy and comes back from his first voyage an able seaman. We can make seamen and we can make officers to the extent of the time at our disposal. We have officers' training schools, but our difficulty is in producing certificated captains, certificated first officers,

certificated chief engineers and perhaps certificated firemen. These we are borrowing in part from the British mercantile marine, and the British mercantile marine are willing to lend them to us, provided that our scale of wages for officers is identical with theirs.


Howard Charles Green: For officers?


Clarence Decatur Howe: For officers.


Howard Charles Green: What about the men?


Clarence Decatur Howe: The scale for the men is higher on Canadian ships than it is on British ships.


Howard Charles Green: Not very much.


Clarence Decatur Howe: It is higher.


Joseph Enoil Michaud: 
Howard Charles Green: How far is it intended to carry this policy of tying the rates paid to Canadian seamen to the rates paid to British seamen? We have been told in this house in the last few weeks that Canada is going to build up a merchant navy. Do the present rates mean that after the war the Canadian rate is to be tied to the lower British rate? If that is to be done, we may have a whole lot of trouble in building up a merchant navy.


Clarence Decatur Howe: We shall have four times the trouble if my hon. friend keeps agitating against the present policy.


Howard Charles Green: The minister need not fly off the handle and start calling people agitators and everything else. Apparently there is only one person in this house and that is the minister himself. He might give somebody else credit for having a few good motives.


Joseph Enoil Michaud: The hon. member for Vancouver South realizes that we are just pioneering in building up crews for our merchant ships. We have not been able to secure officers in Canada and we get them from the British merchant service. Fortunately we are building up our own engineers and mechanics. We have two schools

War Appropriation-Supplies
in Canada, but we have not yet reached the stage where we can give instructions in the higher class of engineering and consequently we get these engineers from the British service. We have been successful so far through an understanding with the British government. We are happy to be in that position. But we hope to develop our training facilities to the point where we shall be able to give the initial training in Canada and enable our boys to graduate and eventually reach the stage where they will be capable of taking full charge of our merchant ships. I do not want the hon. member to misunderstand me. There is no move to tie up the rate of pay for Canadian seamen to the rate of pay in the British merchant navy. There is already quite a difference. A second officer in the British merchant navy gets $148.60 a month and in the Canadian merchant navy $192.90 a month. There is a differentiation so far between the United States rate of pay and the British rate of pay. The whole matter is in the process of pioneering. We are doing the best we can to get the crews and pay them a rate that wall satisfy them and at the same time meet the shipping conditions that have so far prevailed in Canada.


Angus MacInnis: The Minister of Transport has said that we are pioneering in this field and trying to attract men who would serve as officers and crews on our boats. If we want to attract men to serve as officers and crews on these boats, I think the best way to do so would be to .pay reasonable wages, wages that would have some relation to the wages which are being paid for similar work on this continent. The minister will not attract Canadians to this work unless he pays Canadian wages. If he is going to keep the wage rates at the British standard he will have to depend for all time on British sources for his officers and crews. He will not get Canadians under those circumstances if they can find work anywhere else. When I hear the Minister of Transport speak in regard to this matter and take into consideration what the Minister of Munitions and Supply said the other day in regard to the Aluminum company, I am forced to the conclusion that the Canadian merchant seamen's guild and the seamen's union are not in a position to demand what the Aluminum company was in a position to demand. The company had the bulge on the minister and on the people of Canada and they used it. But the seamen were patriotic enough not to press for all that they could demand because their country was at war. Consequently they feel that
advantage has been taken of their willingness to serve. What is the rate of pay for deck officers on the Pacific coast?


Joseph Enoil Michaud: I am sorry I have not that information before me. This matter has come up unexpectedly, but I shall have the information when my war estimates are before the house.


Howard Charles Green: This item for cargo vessels is of the utmost importance to those Canadians who live on the Pacific slope, and in fact it has become of the utmost importance to the whole of Canada. The Minister of Munitions and Supply very properly said the other day when he was making his statement that the development in our cargo shipbuilding represents the achievement of building up what is virtually a new major industry for Canada. He went on to point out that there are now 43,000 men and women in this country engaged in building merchant ships. Of that number I believe that over half are working on the Pacific coast, where we are making the majority of these cargo vessels. We have also been told within the last two or three weeks that Canada is going to build up a merchant navy and a substantial naval fleet which will include not only escort vessels but such capital ships as cruisers and possibly submarines. We have also been told something of the ship repairs that are being made in Canada in our various shipyards, and of course there will be more and more of this. In addition to the plants engaged in shipbuilding itself, there are many plants making components for the ships; that is the position on the Pacific coast.
But there, and I am sure all members from British Columbia will agree with me in this, we are greatly concerned as to the permanency of this large industry. In the last-war we saw a shipbuilding industry built up there, and then after the war it died right away until there was practically nothing left. We are afraid that something of the same sort will happen after this war unless steps are taken by the government to prevent it. Most of the shipbuilding plants and the industries manufacturing components for ships are dependent largely on steel, and at the present time we are in an unnatural position, in that our steel has to be hauled from eastern Canada or the Eastern United States, and our scrap iron cannot be used on the coast, but is being sent back east under a freight rate which amounts, I believe, to $13 a ton. Therefore, as I say, the situation is unnatural, and unless something is done to change it,

War Appropriation-Supplies

the whole shipbuilding industry may collapse; in fact, it may not be able to carry on at its present capacity during the war itself.
We believe that there should be established on the Pacific an iron and steel industry. We believe that it is a natural industry for that coast, and we would ask the help of the ministry, and hon. members from other parts of Canada in seeing that such an industry is established there eventually. We have the iron and the coal from which to make the coke, and we have the limestone. The provincial government of British Columbia has been greatly concerned over this question for some years, and particularly during the last session. For many years there has been an act on the provincial statute books which provides subsidies to anyone who will establish a steel industry. I believe two million dollars is available for the purpose now. Last year our government had a report made by engineers from the United States, named Arthur G. McKee and Company, on the question of whether we had the iron ore and also the coal and limestone with which to establish the industry. I find in the report of this firm, at page 23, the following:
The principal raw material requirements for the 75,000-ton plant would be iron ore, coking coal and limestone. These are available in ample amounts and suitable quality on Vancouver island and in the interior of the province. Vancouver island is recommended as a preferable location for the plant because of its more central location with respect to the principal consumers and its facilities for transportation by water.
In addition to this iron ore at the coast, there are several million tons of iron concentrates which have been stored by the Consolidated Mining and Smelting company, to which the hon. member for Kootenay West made reference this afternoon, at their Sullivan mine, located at Kimberley in east Kootenay. From that wonderful mine they get three products: lead, zinc and iron. They are using the lead and the zinc and storing the iron concentrates right there on the spot. That is only a few miles away from splendid coking coal in the Crowsnest pass, which is also in the east Kootenay district.
So that, I repeat, we believe that the iron and steel industry is a natural industry for British Columbia; that it can be made permanent if the government gives help; and we would like to know what the government is prepared to do, whether or not it will give any help. For example, will it consider a subvention to assist in the establishment of a steel and iron industry? We feel that eastern interests are against the project. The hon. member for New Westminster mentioned that
the other day, and the opinion expressed by him is held, I believe, by the other members from British Columbia. Therefore we ask assistance from the dominion government. The Minister of Munitions and Supply has already broken ground in establishing a policy of this type, by what was done with regard to Steep Rock. Earlier this evening I read to the committee from a press release made by the Department of Munitions and Supply on September 20, 1942, which stated:
Mr. Howe announced that the policy of assistance rvas decided upon as a result of a decision of the war committee of the cabinet that the development of the Steep Rock iron ore deposits should be proceeded with as a means of protecting Canada against a possible shortage of iron ore to meet war requirements.
I have no objection to that help being given. I think it is a wonderful thing to assist the development of iron mines anywhere in Canada, for I suggest that there are some very weak pillars in the edifice which we Canadians are building. One was mentioned this evening; it is that we do not manufacture aeroplane engines. I believe every hon. member will agree that that is a tragedy. It may not be practical to do so; the fact nevertheless remains that it is a tragedy. Another weakness is that we are short of coal; we do not produce enough to keep ourselves warm in the winter. We have had a very sharp taste of what that means during the past winter, and it, too, is a weakness in our Canadian economy. Another is that we produce very little iron. Let there be no mistake about it; that is one of the weaknesses of our Canadian economy. These deficiencies have become clearly visible during the war, and we should exert every effort to make them good. So I urge upon the government that it adopt the definite policy of offering inducements which will help in the establishment of an iron and steel industry on the Pacific coast. It is a matter on which there is no division of opinion; all the people of our province, whether Liberals, Conservative, C.C.F. or Social Creditors, are keen that something should be done along this line. I am afraid that the industry cannot be started without help from Ottawa. I ask the minister to give us some idea of the views of the government on this question.


Clarence Decatur Howe: I was approached early in the war regarding a steel industry for British Columbia. I then stated that the first essential of starting a steel project was to get expert management, and that without expert management nothing could be done. I said that the second problem was to get capital interested. I promised that if the expert management was

War Appropriation-Supplies
obtained and certain local capital was provided, the government would be prepared to examine the situation very carefully with a view toward participation. That offer has never been withdrawn. It was repeated recently.


Howard Charles Green: That is, for a rolling mill or a regular steel industry?


Clarence Decatur Howe: Either one.


Howard Charles Green: That would apply also to a proper steel industry?


Clarence Decatur Howe: Quite. That has been an open offer. I would point out to my hon. friend that Steep Rock was not organized by the government. It was organized by private interests, who spent a great deal of work and money in preliminary examination. They went out and got their management and their finance, and came to the government and said, "We cannot compete for this reason," and the government met the lack in that regard, which was lack of transportation.


Howard Charles Green: It is a little easier for them to do that in the east than it is on the coast.


Clarence Decatur Howe: I cannot say about that, but I know that every steel industry in eastern Canada was started, not by government capital, but by private capital and private initiative.


Howard Charles Green: Well, but they are more firmly established in eastern Canada.


Mr. BLACKMORE:: Could the minister say how much capital would be required to establish a workable project?


Clarence Decatur Howe: You have a splendid industry established in your great province, a steel rolling mill of the type discussed for Vancouver. I suppose the capital invested in that is about a million dollars. If we are talking about steel, from the ore to the finished product, at least $40,000,000 would be required initially and probably considerably more before it was through. The report was made on it and the suggestion was that $36,000,000 would be the minimum.


Howard Charles Green: The McKee report sets out between $16,000,000 and $17,000,000.


Clarence Decatur Howe: That is for a small beginning, a blast furnace.


Ernest George Hansell: Are cargo vessels built in Canada burning coal, or have you any burning oil?


Clarence Decatur Howe: The North Sands type are coal burning and the Victory type oil burning, and plans are now being made for the production of a modified North Sands type which will have provision for burning either coal or oil.
72537-239J


John Horne Blackmore: The government has contributed a great deal of capital to the establishment of certain industries connected with the war. I have the impression that it has put a great deal of money into various private industries.


Clarence Decatur Howe: No. The government has not put money into private industry, but has built government facilities to be operated by private industry. It has not financed private industry. It is unfortunate that the words "capital assistance" have been used to describe expenditures of this kind. Expenditures for increased industrial expansion are, in ninety-nine cases out of 100, built for the account of the government and are retained in the ownership of the government.


John Horne Blackmore: What seems difficult for us in the west to understand is why the government does not contribute capital to the establishment of a steel industry in British Columbia. 1 sympathize strongly with the people from British Columbia. I do not believe that industiy is being conducted for the good of the country. In Ontario and Quebec, where industry is being centralized, the people will ultimately be among the greatest sufferers. Every effort should be made to decentralize industry, and for that reason I do think the government should do more than make an offer. They should actually make an endeavour to establish a steel industry in British Columbia.


Howard Charles Green: Has the government considered providing for a subvention on iron ore produced in the west? It might help in the opening up of iron mines. The provincial government have some provision for assistance, and it might be a great help if the dominion would do something similar.


Clarence Decatur Howe: The dominion government have never subsidized iron ore. They are not subsidizing iron ore anywhere at the moment.


Howard Charles Green: It is a fact, is it not, that Canada is very short of iron ore and will be in the future?


Clarence Decatur Howe: No one at the moment is short of anything. British Columbia is not short of steel and Canada is not short of iron ore. We are doing all right.


Howard Charles Green: We are using United States iron ore at the moment.


Clarence Decatur Howe: Yes.


Ernest George Hansell: I do not quite understand the minister when he speaks about the unfortunate term "capital assistance". In Votes
War Appropriation-Supplies

and Proceedings of Friday, March 26, we have a list of companies that have been assisted- page after page of them. There must be hundreds of them. Surely all these companies mentioned do not belong to the government.


Clarence Decatur Howe: Yes, they do. The companies do not, huit the assets created by the money shown opposite the companies belong to the government, whether it be machinery or buildings or land.


Ernest George Hansell: And do I understand that none of this represents expansion of the firms themselves?


Clarence Decatur Howe: The firms are using it, either machine tools or the building created at the government's expense, but it belongs to the government and it will be reclaimed by the government after the war.


Ernest George Hansell: But it does result in expansion of the company for the present.


Clarence Decatur Howe: Yes.


Clarence Gillis: I am interested in the question of Canadian seamen. The Minister of Transport is in his place, and there are a few questions I wish to ask him. The Minister of Munitions and Supply stated that the problem now is not getting ships but getting men to man the ships. I discussed this matter recently with a member of the Canadian seamen's union and he pointed out that Canada had lost 3,000 seamen to United States ships on account of the differential that exists between the wage rates, and more and more Canadian seamen are going in that direction. We can understand why. There is a lot of confusion in regard to wage rates as applied to the Canadian merchant navy. For example, the war risk bonus is a matter of agreement between the shipping companies and the seamen. If they are organized, there is some uniformity in the rates; if they happen to be on ships that are not unionized, then the bonus is mot paid in the same way. I do not believe the government has anything to do with the war risk bonus. It is considered a matter of agreement between the seamen and the shipping companies. Second, there is a lot of confusion with regard to the cost-of-living bonus. A certain class of seamen receive it and others do not, and that is something which has not been settled so far as the Department of Labour, and the seamen generally, are concerned. I wish the minister would make some comment on that to show where the matter stands. I had a specific complaint only yesterday in a telegram from the Canadian seamen's union in Halifax, to the effect that a ship engaged in salvage work was

about to start on a four months' trip going into waters which they considered entitled them to the war risk bonus. The bonus does not apply to salvage work within a certain area. This was a four months' trip.


Joseph Enoil Michaud: Is that a governmentowned and operated ship, or is it private?


Clarence Gillis: Private. No bonus applies,
but the men are going into waters where the bonus should apply. The company does not pay. It stipulates that if the job is successful, when the men return, half of the risk bonus that applies to other ships in that area will be paid. That is a specific complaint and it may tie up that ship. I tried to get information to-day and succeeded in getting what they had, that as far as the government is concerned there is no authority in the matter. I think it is something that the government will have to interest themselves in. If you allow 3,000 seamen to go into other ships by reason of a difference in wage rates, that is a factor which will have to be taken into account, because there is no use in building ships to carry war materials if the ships cannot be manned. The country is full of war materials, but there is a lack of men to get the material moving. The matter should be clarified. There should be some uniformity on the part of the government.


Joseph Enoil Michaud: The hon. member has in mind conditions on privately-owned ships. The figures I gave a few moments ago with regard to basic rates were figures pertaining to government-owned ships, our steamships or those of other branches of government or in the Canadian government merchant navy. I agree that no jurisdiction over the seamen on privately-owned ships is now exercised or attempted to be exercised; that is a matter with which we have not dealt as yet.


Clarence Gillis: That is exactly the point I am making. I do not think there is anything privately owned to-day in Canada, or in any country that wants to prosecute this war successfully. I think any agency that has a definite influence on the progress of the war and is not performing maximum service should be brought under government regulation. In connection with the question of seamen, when the shipment of war materials is definitely retarded by the wage factor I believe the time has arrived when definite regulations should be laid down by the government.


Humphrey Mitchell: I was late in getting into this argument, but I think my hon. friend knows as well as I do that the matter of seamen's wages comes before the national war labour board. If my memory serves me cor-

War Appropriation-Supplies
rectly, at this moment there are cases of this kind before that board. I think he will agree that this chamber is not the place to adjudicate on wage structures.


Clarence Gillis: I did not make any such suggestion. I was endeavouring to get from the Minister of Transport a clarification of the regulations in regard to the war risk bonus and the cost-of-living bonus, because these are matters which are not understood.


Humphrey Mitchell: If my hon. friend works in between sessions, even he has a right to go before the national war labour board, as an individual, in regard to wages. When I was chairman of the national war labour board we adjudicated on war risk bonuses and we also did the same with regard to the cost-of-living bonus. I am pointing out what I think the hon. member will admit, from his own experience, that this chamber is not the place to negotiate working conditions when there is an agency that has been set up for that very purpose.
Mr. MaeINNIS: I should like to know what the Minister of Labour thinks this chamber is for if members are not entitled to raise the grievances of their constituents here. At one time I thought the minister was a radical; as a matter of fact I helped to elect him on that basis when he first came into this house.


Humphrey Mitchell: And my hon. friend almost succeeded in losing that election.
Mr. MaeINNIS: I believe I made a mistake, though I do not make mistakes very often. Now he comes along and says this is not the place to raise questions of wages because, he says, those questions will come before another body.


Humphrey Mitchell: I did not say that.
Mr. MaeINNIS: The minister said this was not the place to adjudicate upon them. We are not trying to adjudicate upon questions of wages; we are trying to bring grievances to the attention of the ministers, to show them the conditions prevailing in this country. The minister says that anyone can bring a matter to the attention of the national war labour board.


Humphrey Mitchell: Or the regional board.
Mr. MaeINNIS: That is quite true; but the minister knows as well as I do that before a person can appear and make proper representations before one of these boards, he must have some experience in negotiation, and the ordinary seaman has no such experience. They have to be organized, and even then they can
get their experience only by putting such cases before the boards or by dealing with negotiating committees.


Humphrey Mitchell: They are fairly well represented; I know their officers fairly well.
Mr. MaeINNIS: I know them too. Those who are organized are represented, and, they have quite capable representatives, but they are not all organized. What has been done here in almost every action by the government has proved conclusively to the workers that they will not get any justice or any considL eration unless they are sufficiently organized to demand it. Then you wonder at strikes. Many of our labour difficulties could be met. before they developed if employers and the government would agree to meet the representatives of the workers and give proper consideration to their requests. It is a strange and dangerous doctrine to put forward in this house that we are not to raise matters affecting the workers here.


Humphrey Mitchell: It just so happens that my hon. friend is sitting there and we are sitting here. I often wonder how he would run a socialist state on the basis he has been mentioning. My hon. friend was business agent for the street railway union in the city of Vancouver, and he understands as well as I do that negotiations are always the result of a difference of opinion. If you did not have a difference of opinion you would not have two or three or four political parties; if there was not a difference of opinion there would be no need for trades unions. The hon. member gets my point, and if he were sitting here probably he would have to do as we have done; he would set up these agencies like the national war labour board and the regional boards to adjudicate on these things. I wish to say to my hon. friend that I think these boards have done a remarkable job in a big way. They are, however, human institutions; probably they have made mistakes, just as my hon. friend sometimes makes mistakes. I have no doubt he thinks he made a mistake when he came to speak for me in Hamilton; and let me say that we thought we would lose the election after he had been there. But while it is quite logical to bring a grievance before this House of Commons, I do not think this is the place to negotiate trades union agreements.
Mr. MaeINNIS: We are not trying to negotiate trades union agreements here.


Clarence Decatur Howe: I think this discussion is rather outside the item, Mr. Chairman. This item is to provide for the construction of boats, not for their operation. If there is any
International Relief

question in regard to the wages involved in the construction of the boats, that would be quite in order, but I do not think it is in order to raise the question of wages in connection with operating the boats.


Angus MacInnis: The whole matter of the operation of these boats should come up here, because the minister referred to the matter of operation during his statement, and I think we have a perfect right to raise the point on this item.


Mr. POULIOT:: I wish to ask just one question of the hon. member for Vancouver East, who has just spoken, and the Minister of Labour. Who is true to the old principles of the Cooperative Commonwealth Federation group; is it the Minister of Labour or the Cooperative Commonwealth Federation group?


Major James William Coldwell: Actions speak louder
than words.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Friday, June 18, 1943