Mr. T. M. CAYLEY (South Oxford):

Mr. Speaker, before the orders of the day are called I desire to rise to a question of privilege. The Woodstock Sentinel Review of Monday, May 4, contains the following item:

Oxford members at Ottawa voted opposite ways on the Armistice day holiday bill. Presumably the south riding will refuse to take the day off.

Every hon. member knows that this bill passed the house unanimously; there was no opposition. There was a division on the motion of the hon. member for Parry Sound (Mr. Arthurs) to adjourn the debate on the second reading, which I opposed, but the bill itself was passed unanimously as will be shown at page 133 of Votes and Proceedings of April 28.

The south riding of Oxford will consider it a solemn duty and honour to keep this Remembrance day in honour of those splendid men who died during the great war.

Right Hon. R. B. BENNETT (Prime Minister) :

Mr. Speaker, I promised the house yesterday that I would make a general statement with respect to the proposed conversion loan. During the years of the war the Canadian people loaned the government of Canada 853,000.000, payable in October, 1931, with interest at 5 per cent per annum; 873,000,000, payable November 1, 1932, with interest at per cent per annum; 8446,000,000, payable on November 1, 1933, with interest at 5^ per cent per annum, and 8511,000,000, payable on November 1, 1934, with interest at 5^ per cent per annum. The total amount of these four loans is $1,083,000,000, and it will be ob-

served that nearly one billion dollars of this amount falls due in November, 1933, and November, 1934. These loans will either have to be paid or renewed and it is obviously impossible that they can be paid except by the flotation of new securities, the proceeds to be used to liquidate the old loans.

At the moment this large obligation is a serious menace to our financial operations because it is felt that as long as these liabilities have to be met in successive years there will be increasing difficulties in connection with the handling of such transactions. The government, with the best advice available, has concluded that it is desirable to anticipate the maturity of these obligations and has created what will be known as the Dominion of Canada conversion loan, 1931. No new money will be sought but the old securities will be exchanged for new bonds bearing a rate of interest of 4} per cent per annum. All interest provided by the former securities and any benefits and privileges created thereby will remain intact until maturity.

On Monday next every newspaper in Canada will contain a full statement on the proposed conversion loan and I do not think it is necessary to do more at the moment than to merely indicate the general reasons which have actuated the government in taking this action.

Before taking any final steps in this matter, the government was fortunate in being able to set up with the aid of the banks and bond houses of Canada a central committee, the chairman of which is Sir Charles Gordon, president of the Bank of Montreal and the vicechairman, Mr. Victor Drury of Montreal. The 'Canadian Bank of Commerce is represented by Mr. S. H. Logan, its general manager; the Bank of Nova Scotia by Mr. J. A. McLeod, its general manager; the Banque Camadienne Nationale by Mr. Beaudry Leman, its general manager and the Royal Bank of Canada by Mr. M. W. Wilson, its general manager. The bond houses in Toronto are represented by Mr. Arthur F. White, of the Dominion Securities Corporation, Mr. H. R. Tudhope of A. E. Ames & Company, and Mr. J. H. Gundy, of Wood Gundy & Company. The bond houses in Montreal are represented by Mr. Drury and Mr. E. G. Hanson of Hanson Brothers. In addition to that, Mr. G. W. Spinney, one of the executive officers of the Bank of Montreal, has given unremitting toil to this transaction and, while not a member of the committee, has undertaken large responsibilities in connection therewith.

The plan involves the participation by and cooperation of 4,500 agencies throughout Canada, including the branches of all the char-

Conversion Loan-Mr. Bennett

tered banks of Canada and of the recognized bond dealers and brokers. I need hardly say that in a country as large as Canada it is important that the same opportunity be afforded on the same day to every person interested and it therefore becomes necessary to prepare very large quantities of material to be made available on Monday next in every part of Canada. It will perhaps sup-prise the house to know that during the iast seven days orders for over 8,000,000 forms have been placed with the, Printing Bureau and that the major portion of this large order has been delivered to the Department of Finance. Prior to noon to-day, actually

4,850,000 forms had been shipped by the Department of Finance to various depositories established throughout Canada. Five hundred thousand interim certificates in various denominations from 8100 to $100,000 are being printed and distributed to the offices of the receiver general throughout Canada. We expect that on Monday next the interim certificates for those who wish to exchange the old bonds for the new, will be available for the full amount of the loan, and therefore the conversion may be made promptly.

The Post Office Department has done a great deal of work in expediting the transmission of mail, because in large cities like Montreal and Toronto, this has imposed upon that department a great additional effort. The campaign is for the moment limited to the conversion of $250,000,000 of the old securities. The books will open on Monday next and it is proposed that the, Minister of Finance shall have a discretion as to the closing of them, otherwise they will close on the 23rd of May. Whatever additional information any hon. member may desire to receive will, of course, be available on Monday morning through the press, but I do not think any useful purpose will be served by stating more than I have indicated as to the purpose and intention of the government in making this conversion at this time.

It is the belief of the government and those best qualified to speak with authority in Canada, that a conversion or exchange of this kind at this time will be of a two-fold advantage to this country. In the first place it will do something to remove from the horizon a dark cloud of impending borrowing that every Minister of Finance must face as long as there is $1,000,000,000 to be liquidated in some way between now and 1934. In the second place, inasmuch as the securities are largely held by Canadians, it is believed that by accepting, after the date of maturity of the present obligations, a rate of interest one per cent less than that which they have been receiving, they will indicate a faith and belief

in the future of their country that will be a striking testimony to the value of its assets and its credit amongst the peoples of the world. I do not think it is necessary to take up further time than to indicate in this general way what the purpose of the government has been in this regard.

Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):

I should like

to ask the Prime Minister a question in reference to one feature that has been referred to in the press, namely, a possibility of the exemption from taxation of any of the new bonds. Would my right hon. friend indicate whether anything of the kind is contemplated?

Mr. BENNETT:

I am very glad the right hon, gentleman mentioned that because really I did not suppose it was necessary in this day and generation to say that the bonds and the interest therefrom are all taxable. The nontaxable feature which is, of course, a part of the contract of the old bonds, cannot be abrogated, but none of the new bonds is free from taxation as to principal or interest. They are all taxable.

Mr. EULER:

What is the length of term

of the new securities?

Mr. BENNETT:

The reason I did not go into the details of that was that some of them are somewhat complicated, and it would be better just to make the general statement: twenty-five years from the date of the maturity of the present obligations, callable at the end of fifteen years. That is, during the last ten years of the life of the new bonds the government has the opportunity of calling them in.

Mr. EULER:

That is a long period.

Mr. BENNETT:

Yes, but it is desirable in an operation of this kind that we should have that right. The bonds are for fifteen years certain. Do I make myself clear?

Mr. STEWART (Edmonton):

Is there a time limit on the applications?