Mr. ROBB:

You must allow them something for administering the affairs of the country; you must remember that the banks pay all these interest coupons and cheques all over the country for the government at par.

Sir HENRY" DRAYTON: My hon. friend is right, and yet perhaps he is wrong. It is not quite fair to say that the government borrow7 on the same security used by the banks; they do not. As a rule the government gives its obligation with no further security, and that is first rate security. When the banks come to the Department of Finance for a loan, they do not give their obligations or anything like that; they give securities in other forms. For instance, when we had the stress on the currency at the time we first stopped the operations of the wheat

[Mr. Bnbb.l

pool, we introduced what are known as prime bills. I thought they made a first rate basis for the emission of currency, and events proved that I was correct. The banks either use those bills or they leave with the government its ow7n securities, such as victory bonds and so on, which are held by the banks. So the situation is not exactly the came. My hon. friend from Battle River (Mr. Spencer) has followed this question very carefully, and he will recall the evidence given before the committee on banking and commerce the other day by Mr. Harding, who pointed out that all these emissions of currency, or emissions of credit one way or the other, have to be controlled by something which would make for an immediate and proper return at the right time, in order to do away with any danger of inflation. All these bank transactions are protected and fortified in that way. For example, when we looked after the financing of the wheat crop, all the emissions at that time which were on a 5 per cent basis, all the extra currency, all the issues had to be retired, because it was manifestly in the interests of the banks to retire them as soon as possible.

Now just one other point in connection *with these loans. The treasury report fixes the rate of interest, at least it ought to fix its rate of interest having regard to the then value of money and the then needs of Canadian commerce. My own view is that the latter consideration is greater than the first, but those are the two great considerations one must always have in mind. The rate of interest was then high and I used to be able to get 5 per cent without any trouble. To-day my hon friend was pointing out that at one time there was a very low rate, only 3J per cent. The reason of that woVild appear to be that at that time the banks could borrow at that rate and even less in New York; and it is just as well for us to keep our banks borrowing money here on perfectly good security, prime bills and the like, against which we issue currency, costing us nothing, and under such terms that the currency must in the very near future be redeemed. It is a question of fighting for the business, and that was the situation, I would imagine, at the time that low rate was got. That would have nothing whatever to do with the rate the government was paid because the times or conditions might not have been at all similar. I apprehend that if at that time the government also had been in the market for money it would have got a lower rate. The fact may be that the rate was higher at that particular juncture.

Pensions and National Health

Mr. SPENCER:

I would like to remind the minister, Mr. Chairman, that if he is anxious to get money at a cheap rate, he would get very large amounts if he would simply increase the rate on post office savings to 3J to 3i per cent. The accounts having a government guarantee behind them, I have not the slightest doubt that a very large amount of money would be put in the savings banks ana the government could make use of these deposits. This seems to have been simply ignored by those in charge up to the present time. Why the rate is kept down to 3 per cent, when the government is paying anywhere from 4 to 51 per cent, I cannot understand. .

Mr. ROBB:

I am ready to listen to my friend's argument, but the government is not paying anything like 5 or Si per cent. We have paid that in the past but are not now.

Mr. SPENCER:

I mean in the past. There are some bonds outstanding, I take for granted, that are carrying 5J per cent.

Mr. ROBB:

Yes.

Mr. SPENCER:

If the government expects to borrow at 4 per cent, why not give the rank and file who have some savings or want to make savings, the guarantee of the extra one per cent? Why not!

The CHAIRMAN:

The minister moves to strike out the words in the second and third lines:

to be called the Department of National Health and Veterans' Welfare.

Mr. LADNER:

Just what is the change

which the minister has made in that matter?

Hon. J. H. KING (Kootenay, Minister of Health):

I have not changed the name but I propose to strike it out. I suggested the other night in committee that we strike out the 58103-128

name, and then on the second reading of the bill we would be ready for suggestions for the name, and then the name would be inserted. Leave it in blank for the present.

Mr. McGIBBON:

May I ask the minister if it is intended to appoint a separate deputy minister?

Mr. KING (Kootenay):

No.

Mr. McGIBBON:

You are going to amalgamate it under the same deputy ministers?

Mr. KING (Kootenay):

Yes.

Mr. McGIBBON:

Will the minister tell us just what will be the advantage on the whole?

Mr. KING (Kootenay):

I think the whole amalgamation will be advantageous. I stated the other night that the work of re-establishment, for which the department was primarily organized, was largely past; and to-day the work is -confined pretty much to the administration under the Pension Act and to the treatment in our hospitals, and the care of certain unemployable people in our vetcraft shops, and measures of that character.

I have here some statistics, prepared by the department officials, which will bear out my statement. The total expenditure under the department for the year 1926-27-the figures for the past year, 1927-28, are not quite up to date-is shown as $47,774,371.92.

Administration costs $ 1,447,127 39

or 3.03 %

Pensions

37,674,163 50Returned soldiers insurance.. . 778,413 07War service gratuities.... 22,968 72Pensions, administration fund.. 319.836 53Interest on funds

24,804 80

The balance of $7,507,000 would be applicable to medical care and re-establishment. As regards treatment the expenditures are as

follows:

Hospital treatment $3,314,269 62Limb factory operation

211,647 40Capital expenditure

6,412 30Transportation

130,035 25Funeral expenses

25,549 99Shelter employment

358,517 52Employers' liability compensation. 65,174 80Treatment, stores purchased.. .. 271,334 09Accounts receivable

175.458 78Pay and allowances

2,008.844 80Burial of destitute

10,000 00Total $6,577,244 55

Under re-establishment the expenditures are as follows:

Unemployment relief $376,055 35Transportation of blind

4.950 87Vocational training

1,353 55Vocational loans

1,250 14Federal appeal board

163,416 01Total $567,025 92

Pensions and National Health

Or 7.29 per cent of the total. I think that covers the information sought the other night and bears out the statement I made that more than ninety per cent of the work of the department to-day is in the nature of treatment or care of the veterans rather than re-e tablishment. This amalgamation was not gone into hurriedly. It was only in May last that, after some months of observation in the department, I suggested to the government that there should be a reorganization or an amalgamation of the department possibly with the Health department. In making that recommendation to the government, in order that we might have confirmation of my opinion, because one who undertakes to reorganize a department of government or to amalgamate one department with another, undertakes a very responsible and rather difficult task. I suggested to the government that an outside authority should be asked to come into the department and make a survey. Mr. Gordon W. Scott, of the firm of P. S. Ross and Sons of Montreal, was asked to make this survey and he spent some two or three months investigating the work of the department. His report has been tabled and it is now in the hands of the members. He confirms my opinion that an amalgamation could be properly made; that economies could be had, and that the administration would thereby be improved. That is why we are bringing down legislation and asking that it be accepted by the house.

Mr. GEARY:

This is a matter in which

some of us are interested and I hope we may be allowed to listen to the discussion.

The CHAIRMAN:

I hope we shall have

better order.