Hon. J. L. ILSLEY (Minister of Finance):

Mr. Speaker, some members of the house are intensely interested in government finance, some only mildly so, and some, I fear, not very much at all. But all are entitled to a clear presentation of whatever the government may wish to say on the subject and I have therefore given some thought to the arrangement of my remarks.

These will fall naturally under four heads- principles, developments, criticisms and prospects. And it will be my object to present under these heads, and with all possible brevity, the facts and observations relating to government finance which I believe deserve the attention of this house.

The Address-Mr. Ilsley

The principles of our war finance policy have been stated before but will bear repetition. Briefly summarized these principles are:

1. That in real terms, that is to say in terms of the loss to the nation of the production required for war purposes, the war is paid for substantially while it is in progress.

2. That the limits of what we can devote to war purposes are not financial but, as previously stated in this house, are physical, mental and moral, that is to say, the physical limits of our resources and the mental and moral capacity of Canadians to bear burdens and make sacrifices.

3. That the task of finance is not only to provide the funds which are used to pay for the war services but more fundamentally is, by taxing and borrowing, to restrict the civilian demand for economic resources in order that they will be available to the defence or supply departments when required.

4. That in discharging this function, finance must keep in step with the defence and supply programme.

5. That for this purpose, taxation, as far as practicable, is a better method than borrowing because it is fairer and final.

6. That taxation should be imposed upon a basis of equality of sacrifice, having regard to ability to pay.

7. That there are practical limits beyond which taxation cannot be carried, so that the government must also do some borrowing, which should be as far as possible out of voluntary public savings.

8. That the third method of war finance, namely, inflation, is the most unfair, the most uneconomical and the most dangerous of all methods of financing a war.

9. That in the early stages of a war, some expansion of credit is often possible without inflation.

10. That later, as the resources of the country become fully employed, monetary or credit expansion necessarily brings about inflation unless offset by strict counter-measures, such as severe taxation.

These principles have been laid down repeatedly in this house by spokesmen for the government, particularly in the budget speeches of September, 1939, and June, 1940. Every step of a financial character which the government has taken has been based upon these principles and it is the policy of the government to continue to follow them.

I may add that as far as I can judge or ascertain, these principles have met with widespread approval in the country. In so far as there can be said to be a public opinion on principles of war finance, the principles I

have outlined are in accord with the overwhelming preponderance of Canadian public opinion.

May I now review the main events or developments relating to government finance -which have taken place since the end of July, when I last spoke on this subject in the house.

First, I should mention the very rapid acceleration in war expenditures w'hich has taken place during the last few months. War expenditures in June and July had been in the neighbourhood of 840,000,000. For August they amounted to 859,000,000; for September to $67,000,000, and for October to about $S2,000,000, which is at a rate of very nearly one billion dollars a year.

Mr. HANSON (York-Sunbury):

I do not wish to interrupt the minister, but would he be good enough to say whether these expenditures were actual payments, or commitments?

Mr. ILSLEY:

Payments.

Mr. HANSON (York-Sunbury):

Thank you.

Mr. ILSLEY:

So far as I have been able to ascertain, war expenditures will continue to rise as our military, naval and air programmes develop. I do not know whether hon. members fully realize what it means for this country to be spending at the rate of one billion dollars a year on war purposes, the rate which we have already reached. That is nearly twice our normal peace-time rate of expenditure of all kinds. It is about one-fifth, probably more than one-fifth, of our national income.

Non-war expenditures during the first six months of this fiscal year have been about $29,000,000 less than in the similar period last year. The reductions to be achieved in the second half year will be larger in the case of most items than those in the first, particularly in the major items of public works and relief: in the first because the fiscal year had already begun before the new policy was fully operative, and in the second because the winter relief load is larger than the summer and there is more room for saving.

On the side of revenue, receipts during the fiscal year up to yesterday were about $145000,000 more than at the same date last year and have been well in line with the budget forecasts, bearing in mind the normal and anticipated variations through the year. If anything, the budget estimates are apt to prove slightly conservative as regards revenue. The first returns from the national defence tax are proving to be somewhat better than the necessarily approximate estimates that were made without previous experience of this kind of tax. It is worth noting, moreover, that the increases in taxes made in the June budget

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accumulating on a compound interest basis until maturity. While the special advantages of this type of security for the small investor will be readily apparent, it does seem to me that in future war loan issues we should again issue the fifty-dollar denomination in order to allow ever}'' investor, small and large, to participate in the tremendous patriotic effort of our war loan campaigns.

Someone has suggested that because it took two weeks to sell the second war loan it was not a success. That view implies a complete misunderstanding of the desiderata involved in the sound distribution of securities. If we wish to depend on large corporations and large financial institutions to buy our bonds, perhaps a campaign of two or three days would be all that would be necessary, but no one with experience in the security business would regard this as sound or satisfactory distribution. We believe that in the interests of the public as well as of the treasury, dominion securities should be as widely distributed as possible among individual investors who intend to hold their bonds as a permanent investment. It is ridiculous to believe that this distribution can be obtained in a few days in a country like Canada where the population is scattered over so large an area. The victory loan campaigns of the last war lasted for at least two weeks, and personally I shall endeavour to see that in our future loan campaigns the books of the loan are kept open for at least this long a period in order to give an opportunity for everyone to subscribe.

There is one further point I should like to mention. In thinking of our September loan it is necessary to remember that it was the second of two public loans issued during 1940. or rather during the first nine months of 1940. From these two loans and from the sale of war savings certificates, war savings stamps and non-interest-bearing certificates we have raised during the calendar year to date a total of approximately S524.000.000 in cash from private: and institutional investors other than banks. That is a record of which Canada has every reason to be proud, particularly when we remember the interest rates at which the funds have been raised and the extent to which taxes have been increased to pay for this war. To my mind there is no comparison between this record and the record of financing during the last war when 5 per cent or 5-J per cent bonds on a tax-free basis were sold, sometimes at a discount, in an era of inflationary expansion of incomes.

I come now to some of the criticisms which have been made of our financial policies and administration.

These have been of two types: criticism of details and criticism of principle. To the first type belong the observations of the leader of the opposition, who took no exception to our policies on grounds of principle, if I understood him correctly, but took exception to their application in certain respects.

I have already replied. I think, to his criticism of the second war loan.

His next point was a more serious one. He said:

I lay at the feet of the administration the charge of having imposed tremendously heavy and oppressive taxation by the 1940 budget.

And later:

We are taxing the well-disposed to the limit. There is no equality of sacrifice in the 1940 budget. I place the responsibility for this squarely upon the administration.

As the additional taxes imposed by the last budget were steeply graduated and as the taxes imposed under the Excess Profits Tax Act are generally, I think universally, regarded as severe, it would almost appear that the leader of the opposition, in speaking about the "well-disposed" means the well-to-do, and that when he says there is "no equality of sacrifice," he means that the rich are called upon to sacrifice more on a percentage basis than the poor.

These charges are well founded. The well-to-do are being taxed very heavily and at higher percentage rates than those in the lower income brackets. But when we announced the principle of equality of sacrifice we made it clear that it was equality of sacrifice having regard to ability to pay.

It is interesting to find the leader of the Conservative part}', which has been demanding a greater and ever greater war effort, already complaining about the tax burden which that effort involves. Make no mistake about this. If we are really honest in demanding a war effort to the utmost we all must expect to be taxed until it hurts. Taxes that can comfortably be paid are not enough.

Next, the leader of the opposition says that there has been great extravagance in government expenditures and that the treasury must step in and put a brake on foolish and extravagant expenditure. The hon. gentleman would hardly contend that he proved his case by the examples cited. However, I have no doubt that in the extensive and complicated organization that has been set up for the prosecution of our war effort all over this dominion there will be some instances where full value is not obtained for the money expended. All I can say is that my colleagues and I realize our responsibility in that regard. I agree with the opposition that nothing could

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be more unfortunate than to have the impression go out among the people that the money they place in our hands, in trust, for a high cause, is not being prudently, carefully and responsibly expended. But, Mr. Speaker, as far as the Department of Finance is concerned we are eternally vigilant in that regard; and I feel sure that the same observation applies to my colleagues and to their responsible officials.

I would say to the leader of the opposition, and to every other hon. member of this house, that if he knows of any instance of misuse or overexpenditure or extravagant expenditure of public money I should be glad if he would bring it to my attention or to the attention of the head of the department concerned, because we do not intend to permit that to take place. If there have been incidents- and the ones cited by my hon. friend were of a very minor character-I think they could properly be regarded as isolated instances which must be taken as accidents, incidental to a huge undertaking carried on at the speed necessary in war time.

The leader of the opposition also suggested that in every field of war endeavour this country is far behind our sister dominion, Australia; and he asked for a comparison of our war effort with theirs. I need hardly say' that I do not wish to make any invidious comparisons, particularly in view of all the different circumstances; but I might tell the hon. member that the latest information I have been able to obtain shows that Australian war expenditures for their current fiscal year, which ends June 30 next, are estimated at 177 million Australian pounds, or at current exchange rates, about $630,000,000. This is almost exactly two-thirds of the estimate I gave the house in August for our own war expenditure for the year ending March 31 next; and as the hon. gentleman himself pointed out, this is about the ratio of the population of the two countries. On this basis it would appear that the efforts of the two countries are of the same general order of magnitude. But the leader of the opposition has overlooked the very substantial assistance which Canada's greater wealth enables her to render to the United Kingdom by means of our repatriation programme, which has no counterpart in the case of Australia.

These, I think, were the main criticisms offered by the leader of the opposition. He did me the honour of addressing me rather directly in the debate and therefore I have answered him with some care, though it was not my intention to make what in any sense could be regarded as a debating speech. It is significant, I think, that the principles of

our war finance policy have not been challenged by the official opposition but that criticism has been confined to detail.

With regard to the opposition led in the house by the hon. member for Rosetown-Biggar (Mr. Coldwell), it has not been possible for me to be in the house throughout the entire debate; but, so far as I know, no member of the Cooperative Commonwealth Federation has attacked our financial policy in principle. Of course the general position of that party is that the whole organization of industry in Canada is wrongly conceived and that war production should be on a socialistic basis. Probably this is not the time to debate this question. I think it is obvious, however, that a rapid increase in production and the utmost efficiency of production are necessary in time of war; and apart from all other and far more important considerations, to attempt to reorganize our commercial, industrial and financial institutions upon a principle thoroughly disliked and disapproved of by the overwhelming majority of the Canadian public would of itself have been most prejudicial to production. The dislocation of industry which would be involved in the adoption of the proposals of the Cooperative Commonwealth Federation; the dissolution of the structure of industry which is implicit in the position of the Cooperative Commonwealth Federation, certainly should be avoided at a time when we are seeking and must seek the cooperation of all Canadians in our war effort. I need hardly add that should this cooperation not be forthcoming from those in control of any plant or industry, the government has ample power to take appropriate action and will not hesitate to use it.

I now come to the criticism offered by the leader of the Social Credit group, the hon. member for Lethbridge (Mr. Blackmore). Here our principles are challenged, and I think it may be necessary for me to say something about the challenge and the arguments advanced in support of it.

The leader of the Social Credit group, after moving a subamendment reflecting on the monetary policy of the government, proceeded to say:

Social credit proposes to use the national credit to provide money without additional debt, without additional taxation.

By the providing of money I assume he means the creation of money. Indeed, later in his speech he says:

Let us consider the matter of created money. What an all-wise attitude was taken by some people when reference was made to the creation of money!

2S6

The Address-Mr. Ilsley

Thus he made it clear that for the raising of money by taxing and borrowing he would substitute the provision or creation of money by the government. I have stated already that our war expenditures are now running at the rate of almost a billion dollars a year. I ask members of the house, any hon. member, this question: Does anyone think that the

creation of something like a billion dollars a year in money by the government for war purposes would not result in wild inflation? There can be only one answer to that question, unless indeed some extremely severe and comprehensive counteracting measures were taken at the same time. In his speech the hon. gentleman seemed to recognize this, because he goes into the question of countermeasures.

In his speeches in this house, of which I have listened to a good many, I think the hon. gentleman has consistently admitted the evils of inflation. There is no doubt that Canadians could be made to curtail their civilian demands and free economic resources for war demands by inflation. If prices were to be doubled to-morrow there would be no doubt about the curtailment of civilian demand that would ensue. But, as I stated in the beginning of my remarks, this would be the most unfair, the most uneconomical and the most dangerous method of war financing that could possibly be adopted. In countries where there has been a period of serious inflation the people look upon inflation as a national calamity. Fortunately we in this country have not passed through such a period and our people are in no position from experience to form an opinion of the evils of inflation. If they had suffered those evils they would dread them as they would a great plague.

The leader of the Social Credit group apparently realizes those evils and therefore enumerates counter-measures. What are they? First, he says inflation can be controlled by employing credit restriction. Needless to say he does not mention this method with approval; as a matter of fact that is what he criticizes. Next, he says another way is by taxing the people until they have no money to spend. He makes it clear that he is not in favour of taxation as a method of combating inflation. Next, he seems to advocate a sort of universal bonus to consumers, and, later in his speech, he advocates that bonuses be also paid to many, if not all, classes of producers.

Now, with respect to this matter of universal bonusing: If the government, for the purpose of keeping prices down to consumers, pays them bonuses, or, in other words, assumes and pays part of the prices they are

paying for the goods they buy, this will require large expenditures on the part of the government out of the newly-created money and will increase the evil w'hich it is designed to abate.

The more these prices rise, due to the issue of these large sums of money, the larger will be the proportion of these prices the government will have to pay, and the greater will be the amount of newly-created money the government will have to issue. The more they issue, the more prices will rise, and so on.

Mr. BLACKMORE:

I wonder if the minister is making allowance for the fact I emphasized particularly, that there would be no rise in prices, provided production was adequate.

Mr. ILSLEY:

I shall come to the matter of production, and our capacity to produce.

Then, the hon. gentleman mentions the method of counteracting inflation which is, in my opinion, the only alternative .to taxation or borrowing out of savings which is really worthy of consideration. This is price fixing on a universal scale, which, of course, would have to be accompanied by rationing and regimentation, also on a universal scale; because it is obvious that to fix prices without limiting the amount any one person can buy will mean that only the first comers will be served. So that there would have to be rationing, along with price fixing.

Price fixing of a few commodities, indeed rationing of a few commodities, is possible and need not have a very serious effect, but price fixing and rationing on a general scale have at least two disadvantages.

In the first place, this would call for bureaucratic interference in the private affairs of all Canadian citizens. Perhaps I am speaking a little bit figuratively here, but generally speaking there would have to be a government spy in every grocery store. The Germans did this with some success, but the Germans are experts as spies.

Mr. BLACKMORE:

Will my hon. friend permit a question?

Mr. ILSLEY:

Let me proceed, please.

The second objection is that to issue quantities of money and then sterilize a large part of it by rendering it useless for buying purposes so that it will not come into competition with the money used by the government in its buying and thereby cause prices to rise, leaves the holder of the money no better off than if he did not have it. This is equivalent to taxation or a forced loan.

The whole habit of thought of the Canadian people, the dislike of intensive and

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general government intervention in their personal transactions and private affairs, would make a universal system of price fixing and rationing, even if it were practicable in Canada, far more odious, I am satisfied, than a system of taxation and borrowing out of savings, which is the policy of this government.

Every detail of our economic life would have to be controlled by someone sitting here in Ottawa.

It is true that the nazis in Germany have gone nearly as far as this with their price fixing and rationing. But even they, with a dictatorship and with years of experience before the war, have had to combine this price fixing with very heavy war taxation and with borrowing enormous sums at interest rates higher than we pay in Canada.

Mr. BLACKMORE:

But we are fixing the price of milk.

Mr. ILSLEY:

I said that to a limited extent it was possible, but certainly not to the extent which would be necessary if we created money from year to year with which to cany on the war.

Furthermore, if we did succeed, by price fixing, in preventing inflation resulting from the financing of the war by creating new money, we would in the end only reach the same result that we shall reach by sounder methods; for if war production is to be the same in each ease there will only be the same remainder of resources left over for civilian purposes. The new money dammed up in the public's pockets would be useless to it during the war, and after the war it would come bursting forth in a flood that would create inflation as soon as the rigid war-time price controls were once relaxed.

There is another, and, from a war point of view, more fundamental point. It is suggested that we should finance by issuing new money so that we can bring all useful resources into production and avoid curtailing civilian demand. But if we are really to put forth a maximum effort in the war we must not only bring all our resources into use but, in addition, restrict as far as possible civilian use of all those resources which can be used for war. As I emphasized in the budget speech in the first week of war, it is necessary to inSrease employment and production to the maximum; but that is only part of our task; we must also divert all we can from civilian to war use. We should certainly not be doing that if we refrained from borrowing and taxing.

In fact very great increases in employment and production have been achieved since the war began. The index of industrial production in September was at 167 compared with 127 immediately before the outbreak of war. The index of employment at the beginning of October was at a new record-136-2. It indicated a total increase of wage earners in employment, as compared with the month preceding the outbreak of war, of about

350.000 persons. This does not include about

200.000 men added to our armed forces since war began.

Consequently, the total number of persons in employment and in the services has increased by something like 550,000 since the outbreak of war. In very few industries has there been any decrease of employment; highway construction is the only significant item to show a decrease and that is due mainly to the disappearance of what was really a relief work.

From an examination of these and other figures it seems clear that so far our war activities, both in the services and in production, have not required any significant reduction of civilian activity or expenditure, though, of course, many individuals have had to restrict their consumption. In fact the figures for retail sales, and production and imports of consumers' goods, indicate that total civilian consumption, particularly of luxury goods, has increased significantly during the war, even when allowance is made for somewhat higher prices. This remarkable economic expansion which we have had in the last fifteen months has not been accompanied by any significant general increase in prices, except the increase which occurred in the early weeks of the war consequent upon the changes in exchange rates and ocean freights and insurance.

This brings me to a consideration of the prospects which we now face in the financial and economic sphere. As the military and supply programmes develop they will require an increasing number of men and amount of materials. Analyses are at present being made of the various elements in these programmes in order to see just what they do require in terms of labour and materials; for those, and not money, are the limiting factors. In fact, one of the principal reasons for setting up the war-time requirements board, which the Minister of Munitions and Supply (Mr. Howe) described to you yesterday, was to assist in the analysis of these physical requirements and the implications which they involve for civilian consumption. It is on the basis of such information that we must decide what we can accomplish.

It is certain, however, that the programmes upon which we have already embarked will create many scarcities and, before many months have passed, carry us to the stage

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of full employment of our labour power and full utilization of most of our economic resources.

We still have some unemployed labour despite the great increase in employment which I have just mentioned. We still have some excess capacity in a number of our industries. Furthermore, we have many people employed in industries not essential to the war programme and we can, if necessary, shift many tens of thousands of people from agriculture and trade into war industries, or into other industries to replace people needed in war industries. In other words, we are now at a stage where we can still expand total production by a careful use of those resources which are unemployed or poorly employed. War production can and will be expanded even more than this by transferring resources from civilian purposes to war use. But all this expansion and transfer requires careful management and takes time. In particular, it requires the training of labour to fit it for new tasks, and the most efficient use of skilled labour. Measures have been and are being taken to ensure that this necessary training and efficient use of labour are carried out.

Facing the prospect of substantially increased requirements for war production under these conditions, I think it is higly essential that all of us should economize all we can and not spend our incomes on things which compete for labour and materials with war production. We must save and invest our savings either immediately in war savings certificates or later in next year's war loan.

I quite realize that the view is held that it is not wise to ask people to reduce their expenditures while there is still any unemployment or any room for expansion of production. But, as I have already stated, we are now running into shortages more and more frequently. The expanding war demand will continue to absorb the existing unemployed. The civilian demand will also be growing because of increased employment and earnings in war industries. Therefore, even if we do increase our savings, employment and production will continue to increase rapidly.

We have recently 'been giving consideration to our programme of financing for the next twelve months. Two decisions have had to be reached. The first relates to the character of the organization which should be set up on the next occasion when a large war loan is being sold to the public. The second decision relates to the time of issue of such a loan. It is our belief that the time has now arrived when we must resort to the cooperative type of organization to which I have already referred. The amount which we will need to raise will require the creation of a broad

national organization to ensure that all persons who are financially able to subscribe for war bonds shall be directly approached. As a people, we must develop a full understanding of our joint responsibility for the results we wish to obtain. I can say that the government will do its utmost to ensure that the organization built up will be equal to its task. I am certain that we shall receive from all quarters the cooperation and generous assistance without which success cannot be obtained.

Turning now to the question of the timing of the next loan, I believe that there is a great deal to 'be said for not undertaking a public appeal until the summer of 1941. By that time the budget will have been brought down, the great bulk of 1940 income tax payments will have been made, and individuals as well as institutions will be in a good position to know how 1941 will turn out for them from a financial point of view. If we were to come to the public with a loan in the early part of 1941, potential investors would still be faced with a number of difficulties and uncertainties. Furthermore, the type of comprehensive community organization which it is proposed to use is of such a character as to make it undesirable and indeed practically impossible to have two such campaigns following closely upon each other. This type of organization is cumbersome and requires a great deal of preliminary preparation and planning, and from the point of view of cost it is more easy to justify if the size of the loan is substantial.

Our decision not to issue the third war loan until next summer will make it necessary to undertake some short-term financing shortly after the beginning of the new year. It will be recalled that in the budget speech delivered on September 12, 1939, I said that our first borrowing operation would be of a short-term character and would be accompanied by a small and carefully regulated amount of credit expansion. I stated that expansion of credit, while appropriate during the early stages of war, should not be continued when employment and production were approaching their limits. I have not had occasion to change my basic views on this subject, but I believe that the tax programme of the government has been and will continue to be such that some additional financing of a short-term character, accompanied by some increase in total bank deposits, will not under the circumstances have inflationary results, and will, I believe, avoid undue stringency in the monetary field at a time when the working capital requirements of industry are increasing because of expanding business activity due to war orders. In forming these views, I have given some

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weight to the fact that uncertainties bred of war and the necessity of building up substantial balances in anticipation of tax payments have made many people somewhat reluctant to deplete their bank balances, and anxious to keep in a good liquid position.

In deciding to undertake some additional short-term financing, the government also had in mind the fact that the major portion of the new money which will have to be borrowed prior to next summer will be required for the activities of the foreign exchange control board. It has been decided that the board will finance the repatriation programme to a greater extent than it has in the past, and additional funds will be necessary for this purpose. You will recall that the process of repatriation involves the temporary accumulation of sterling balances by the foreign exchange control board, and these balances are later used to acquire Canadian securities held in the United Kingdom.

I believe that these decisions in regard to our financing programme will commend themselves to the financial public as well as the general public, and will enable the government and our people to make adequate preparations for assuring that the third war loan will be a resounding success. It has been stated by several ministers in this house in recent months that, in the words of the Prime Minister:

The only limits the government is prepared to place upon Canada's war effort are those imposed by the extent of our resources both human and material and by our capacity for sacrifice.

And that:

We will make financially possible the utmost effort the people of Canada are physically and morally capable of making.

This does not mean, however, that we shall have no financial problems to face. In fact it means quite the reverse-that we are going ahead no matter what financial problems may be created by the need to finance the enormous military and supply expenditures. It is going to require the most careful attention to both the physical and the financial aspects of the programme. On the one hand we must determine what is physically possible and we must make sure that all our physical resources, our man-power, capital facilities and materials, are used to the fullest extent possible and as quickly as possible. On the other hand, it requires the most skilful and thorough financial management in order to assure that these physical resources are made available for carrying out the war programme quickly and efficiently.

This policy implies that our financial problem will be one of tremendous magnitude- that we must be prepared to raise very large sums of money in one way or another and divert ever-increasing amounts of our national income into the treasury. It will be no easy task. It will require the utmost skill, the most energetic direction and hard, unremitting work on the part of the government and people alike, but I believe that we can do by voluntary action as much as the enemy is doing by the most rigid compulsion. I have faith in our ability to match and surpass their effort once our people are aroused.

When we came together here in May last, Great Britain was meeting with reverses in Norway, the low countries were being overrun by the enemy, and our ally France was on the brink of the disaster which overtook her shortly afterwards. The Canadian people were willing to go to any length to aid Britain. Their private interests had second place. They were ready for any sacrifice. An invasion of England was believed to be imminent. The existence of the empire was in peril. Sectionalism and selfishness, the bane of democracy, perhaps of every form of government, were subordinated to patriotism. Burdens, whether tax burdens or others, were accepted with little complaint. Our main, if not our sole desire, was to help to win the war.

To-day, only a few months later, we are reassured, too much so. We feel, vaguely, that the important things in our lives are at stake, but we are not so sure that they are in jeopardy. Instead of a consciousness every waking moment of the deadly peril of a powerful enemy, many of us have a feeling that the battle of Britain is won, and that all is well. This optimism is excessive and dangerous. The war is not won. A far closer engagement with the enemy will be necessary long before we achieve victory. Not only must our fighting forces engage his, we must engage him in our civilian activities-by the making of sacrifices, the forgoing of pleasures, the devotion of our substance to the common cause-in these ways must all of us engage the enemy.

To-day there is heroism in the air, on the sea, in the deserts of Africa-and there is heroism among the common people of the motherland. Let their example be our inspiration. Civilian Canada has its responsibilities, easier to assume but no less important than those of civilian Britain. Let us assume those responsibilities with the same unselfishness and courage and determination.

Mr. H. C. GREEN (Vancouver South):

Mr. Speaker, at the outset may I offer a word

The Address-Mr. Green

of encouragement to the Minister of Finance (Mr. Ilsley) who has just taken his seat. Although he is one of the youngest members of the ministry, perhaps no member of the cabinet except the Prime Minister (Mr. Mackenzie King) is bearing a heavier burden at this time, and I think I may speak with the endorsation of the whole house when I say to him that he has our admiration, our respect and our best wishes in carrying on his very arduous work.

When we private members left Ottawa early in August, the battle of France had been lost and the battle of Britain had not yet begun. Every member felt grave concern. I think that the war has greatly reduced partisanship in this house; it has made each one of us a greater patriot. We all felt grave concern at that time about the outcome of the battle of Britain. We felt that the survival of Canada as a nation, in fact the survival of our Christian civilization, depended on that battle. To-day, only three and a half months later, there is a different feeling in the corridors of this house and across the country, because, while the battle of Britain may not have been won, the first stages of that battle have been won, and won by a few thousand young empire knights of the air, by the sturdiness of our empire sailors, and above all, won by the courage and the determination and-to sum it up-by the character of the ordinary men, women and children of Great Britain.

What an inspiration that is to us! What pride we feel at being their fellow-citizens of the British commonwealth! And yet, what a challenge to Canadians to throw our all into this struggle! I believe that the Canadian people are not only willing but are eager to do just that. But they look to the Canadian government for leadership, and they look to parliament, to the private members of this house, to make dead sure that the government carries out the promise contained in the speech from the throne, that this war will be prosecuted to the utmost of Canada's strength. The private member can do his part only by making suggestions and by pointing out errors. That is what I propose to do to-day, to the end that our war effort may be improved.

First of all may I suggest that the ministry adopt the attitude of welcoming criticisms and suggestions. The Prime Minister did that a year ago at the war session: he said, "I ask you all to give us suggestions and constructive criticism." But my impression of this session is that the ministry are now inclined to be resentful of suggestions. Perhaps that is also their attitude towards their own supporters. Perhaps there is reason for

it in the fact that they are under terrific pressure, working long hours. They are tired out; I do not blame them for being a little quick on the trigger. But I urge them to remember that they as the leaders of Canada must never be satisfied that all is being done which can be done, that they must always try to do more. As the hon. member for Provencher (Mr. Jutras) said so fitly some days ago, they must attempt the impossible; because in this crisis everything we hold dear is at stake,

our freedom, our religion, the future of our children, and our very lives. How I wish that every German bomb which falls on Great Britain could din into our ears and imprint on our minds the words, "Hurry, Canada, hurry!"

Secondly, I suggest that the ministry emphasize to the Canadian people the difficulties and the dangers of the situation rather than the accomplishments of the government. Ask for help from our people. If you ask for that help you will get it. But it seems to me, although I may be influenced by the bias from which few of us can escape, that the ministry have been at great pains throughout this war period to justify their every move and to justify their every failure to move. They have continually talked about our war effort being "ahead of schedule," when the whole country knows that the schedule was totally inadequate. Government information bureaux have poured out printed matter to the same effect, and even in the interesting essays which have been read by ministers at the present session that note has been uppermost. The result has been, and I say this from many observations in western Canada, that the people are adopting the attitude: "Oh well, everything is being done that can be done; why should we worry?"

Our chief of staff said recently in an address that the thirty-day training plan had been a great help in arousing young Canadians to a sense of national obligation. Such would not have been necessary if the ministry had adopted another attitude. Their attitude constitutes a grave menace to Canada, because our people do not realize the dangers of the situation. For that reason I would ask ministers to think very deeply over the proposed amendment to the address in reply to the speech from the throne, and particularly the first paragraph, which says:

. . . this house regrets that the government

has continued to soothe the Canadian people

I emphasize that word, "soothe."

-regarding the war effort of the nation, thereby creating a false sense of security when a clear-cut call to action is desperately needed.

The Address-Mr. Green

The Right Hon. Winston Churchill has followed the opposite course. He said, among other things, in his first speech as Prime Minister to the British House of Commons, on May 13 of this year:

I have nothing to offer but blood, toil, tears and sweat. We have before us an ordeal of the most grievous kind. We have before us many, many months of struggle and suffering. You ask, what is our aim? I can answer in one word: It is victory. Victory at all costs, victory in spite of all terrors, victory, however long and hard the road may be, for without victory there is no survival! Let that be realized-no survival for the British empire, no survival for all that the British empire has stood for, no survival for the urge, the impulse of the ages, that mankind shall move forward towards his goal.

He knows his people. He knows that they can "take" bad news, that they will rise to the challenge of the difficult and seemingly impossible task. The Canadian people, Mr. Speaker, will do the same. But so far this government has given them little chance to do so.

The Minister of Finance has just explained clearly the necessity for the government to do certain things in which it will obviously require great help from the Canadian people. For example, our people are being asked not to purchase so many luxuries. There will probably be restrictions, perhaps on gasoline or some other such commodity, perhaps on liquor-and, incidentally, I do not think the Canadian people can drink their way to victory in this war; I believe a great deal of money could be saved and a great deal of human energy conserved if restrictions were placed on liquor. The government is also faced with the raising of war loans, selling war savings certificates, recruiting defence forces, finding men and women for industry, and organizing air raid precautions. These are some of the problems facing the ministry. Let them appreciate the fact that Canada is really organized on a community basis, divided into municipal or metropolitan areas in which there are highly organized and highly efficient municipal governments, service clubs, lodges, unions, religious associations, cooperatives, professional and business associations, sports clubs and many others made up of the leaders in the everyday life of our people. Incidentally may I here contrast the strength of this type of organization with which we are blest in Canada with the nazi party in Germany or the fascist party in Italy, the only organizations allowed in their respective countries. There is no comparison; and in that difference there lies one very good reason why the democracies are going to win this war.

I suggest to the ministry that they go to these organizations direct. Tell them what

14873-19J

is wanted and ask them to help, and the organizations will respond. They will prevent hysteria and will get action. But what is the situation now? They are spectators against their wish. Many of them have made offers of help. Those offers are on file in Ottawa but nothing has been done about them. These people are waiting for directions from the government, and surely it is the duty of the Department of National War Services to see that organizations of this type are used.

May I quote from the order in council setting up the divisions of that new department. Paragraph (c) provides for a division to be known as:

. . . the division of voluntary services to

administer the War Charities Act, to coordinate, organize and utilize the voluntary effort of the Canadian people, to organize and assist organizations engaged in supporting the war effort of the nation.

These are the powers that are given. This was printed on September 18, but, so far as I know, nothing further has been done. I hear an hon. member mentioning that I left out the women's associations. They are very important and I hasten to add them to the list.

Further, the government should decide upon and announce some definite policy on recruiting. They have never done so. Recruiting has been by fits and starts from the outset. Last fall on the outbreak of war the plan was to recruit for home service only, but this was afterwards changed and there was recruiting for overseas. A certain number of men were taken on the strength, and then recruiting was shut down. This spring came the crisis, the fall of France, and again recruiting was thrown open, but on August 15 of this year again it was stopped. In the meanwhile the National Resources Mobilization Act had been passed and we were told that thousands of young men, trainees, were to be given training. We understood that these young men would be encouraged to volunteer for the Canadian active service force at the completion of their training. In other words, here would be the means whereby Canada would build up a full-time fighting force. Mind you, these young men are the very men whom this government deemed to be best able to serve the country, men of the ages called up at this time; yet that plan was not carried out. Recruiting is still closed. The first group of trainees finished their course and instead of being given a chance to go into the forces, which they were only too anxious to do, they were sent back home to civilian life.

This uncertainty, this indecision, this failure to recruit cannot be because no more men

The Address-Mr. Green

will be required. I have only to quote again from a statement of the chief of staff, Major-General Crerar. He is reported in a press dispatch from Ottawa on October 23 as having said, in effect:

Canada will be sending more army divisions overseas next year when Great Britain takes the offensive against German land forces in continental Europe. This is the implication of the speech here this afternoon by Major-General Crerar, chief of the general staff. General Crerar is both in a position to know and also to speak with a note of exceptional authority.

This was confirmed by the Minister of National Defence (Mr. Ralston), who, speaking in the house last Friday, said:

During this phase-

That is, during the year 1941.

-we must continue to build up our strength against the day when we shall take the offensive with all arms and services.

And the Minister of National War Services '(Mr. Gardiner) made this statement on 'Thursday last:

We must have the necessary trained manpower to handle all the instruments of war and put them into operation against Hitler on the continent.

According to press reports, on November 18 he said in a broadcast:

Remember that in one year from now a man will be needed to use every gun, operate every plane and drive every truck made, and in the front line of battle. There is no reason for making these machines unless we provide for their being operated.

This failure to recruit cannot be because we already have adequate troops to defend Canada; we have not. We have one division on the Atlantic coast and it is hoped that there will be one division on the Pacific, but the latter division, according to the Minister of National Defence, is only now in the process of organization.

Certainly young Canadians who are to be called on to go overseas or to serve in Canada should be taken in quickly. The time for training is none too long if this great offensive is to come, as we have been warned, and adequate time for training means better soldiers, which means that the soldiers wifi have a better chance for their lives.

The ministry should remember that unlike Britain they are relying upon volunteers to build our full-time fighting forces. Before the average man will volunteer he must see the need. And he must have a certain amount of enthusiasm. He must have time to arrange his affairs and time to arrange for the persons who are dependent on him. In their recruiting plans it seems to me the ministry do not consider the human element

(Mr. Green.]

at all. I suggest that they announce the approximate number of troops that are to be raised say within the next year. Australia and New Zealand do that; Great Britain lets her people know the number of men that are to be taken on, why cannot Canada do the same? Then let us take on a certain number of recruits, say weekly, and certainly let us give every trainee a chance to enlist on the completion of his training.

There are now women's corps established in several centres in Canada. We have two in Vancouver, training for many months, and most efficient. AVhy can they not be recognized and made part of the forces? I cannot praise too highly their initiative and spirit, their determination and their efficiency. They are training to take on clerical work, the driving of ambulances and motor vehicles of various kinds; for first aid, air raid protection, nursing and dietetic work. Why can they not be used in the forces of Canada? It seems to me there must be antiques or old fogies in our defence headquarters even yet, or there may even be some in the cabinet, when consistently these women are refused recognition.

May I further ask the government to decide upon and announce a policy on the use of man-power? To-day there seems to be a tug of war between the fighting forces on the one side and industry on the other. And that tug of war seems also to be in the cabinet. I may be wrong, but I have visions of the Minister of National War Services (Mr. Gardiner) as the anchor man on the side of the fighting forces, and the Minister of Munitions and Supply (Mr. Howe) or the Minister of Labour (Mr. McLarty) as the anchor man on the side of industry. While the Minister of National War Services may not be very bulky I think the majority of members would put their money on him in this tug of war. From the national registration the ministry have a survey of the manpower and woman-power of Canada. What does it show? Why can they not tell the house what it shows? Why do they not use that survey? Why have they no plans for using . the man-power and woman-power of Canada?

Steps should be taken to recondition and use the older men, men who were laid off during the depression. I have here a letter from an ex-railway mechanic in Vancouver, in which he says that in that city alone there are many men who have served as machinists on one or other of the two railways; when the depression came they were let out, and since then they have been on part time only. Why cannot men of this type be put back to work to release some of the

The Address-Mr. Green

younger men for war service? There is a great field among the middle-aged people in Canada. Then there is a great field among the unemployed. The Minister of Labour himself was quoted on October 30 as using these words:

Every unemployed man in Canada must be trained to take a place in industry. . . . There are 26,000 a year now being trained. We can increase that figure and we will.

Those are fine sentiments; that is a splendid plan. But what are the facts? Just a week ago in Vancouver we had newspaper reports to the effect that there are 500 single unemployed back in that city for the winter. Many of these men have appeared in the police court charged with vagrancy, and numbers of them have been sent to gaol because they have no means of support. Here is the impression of the young newspaper reporter sitting in at those trials:

There were all sorts and conditions of men in those two lines and all they owned were the clothes they stood up in. One who said he had a job to go to and four who said they could look after themselves for another night were allowed to go. The rest were herded back to the cells.

That kind of thing is inexcusable in Canada under present conditions. Men of that type should be given a chance to be reconditioned and placed in a job. That should be done by the Department of Labour here at Ottawa.

Then there are the ex-soldiers discharged from the present Canadian army. I was surprised to learn the other day that over 15,000 men had been discharged from the Canadian forces. Surely those men could be reconditioned and placed at work. It seems to me that one of the most important statements that should be placed before the house at this time is a statement by the Minister of Labour as to what he proposes to do about using the man-power of this country.

I have a suggestion also for the Minister of Munitions and Supply. He told this house yesterday that hundreds of millions of dollars were being invested in new plants and plant extensions. He was allowed to place certain figures on Hansard, which I thought were going to show in which provinces those plants were situated; however the figures turned out to be something else. But there can be no dispute that practically all those plants and plant extensions are in Ontario and Quebec, the reason given being that there is hydro-electric power available in those provinces. This means an unfair and unhealthy concentration of wealth in the central provinces of Canada. It means a great increase in employment in these provinces; it means that the young men

and young women of the other provinces will in many instances have to migrate to central Canada to get jobs. That is already happening. It means that families will be broken up, and it means lopsided development of industry. Many of these plants will continue in operation after the war, so that that process will carry on. I plead with the government to change that policy at once, to scatter these plants across Canada. There may not be much trouble now while the war is on; it may be overshadowed by more important issues, but hon. members from the other seven provinces know that if this thing goes on it will mean grave trouble in Canada for the next fifty or a hundred years.

Then as to the treatment of the fighting forces: I said a few moments ago that 15,000 men have been discharged. I believe they are discharged without any gratuity; in some cases they are given a small clothing allowance. A very few will get pensions. They are struck off the strength just as quickly as possible. Some of these men are on relief today. No rehabilitation plan has been put into effect by this government. The Prime Minister was quoted in the press two days ago as saying:

Plans for the "adequate" rehabilitation of soldiers, sailors and airmen discharged from overseas service are being formulated by the dominion government.

Apparently nothing is ready yet. Rehabilitation plans should be in effect now. We could be experimenting, we could be improving, building up efficient schemes for getting these men back on their feet. It must not be delayed until after the war. Here we have almost the equivalent of an army division discharged from the Canadian active service force already. These men should be looked after without further delay. If they cannot be absorbed in industry, why cannot the government go ahead with the trans-Canada highway and other projects of that type, in which many of them could find employment?

Also I think the time has come, Mr. Speaker, when a man enlisting in the forces should receive an allowance for each child. At the present time, as I understand it, a man with more than two children receives no allowance for any beyond that number. The government is quite willing that these men should enlist; therefore it should see that they receive an allowance for each of their children.

The question of transportation on leave has been dealt with by many hon. members, and I would urge upon the government that some action be taken to meet this situation. Public opinion in Canada is in favour of giving these men some form of free transportation.

The Address-Mr. Green

of making it possible for them to get home for their leaves, certainly their embarkation leave and I think, also, for their six months' leave. Why, we had units sent down to Nova Scotia from the Pacific coast. Some of the men in those units had not had embarkation leave, and they were moved out of our province on twenty-four hours' notice. Others are now entitled to their six months' leave, but it will be absolutely impossible for them to get back home if they have to pay even single fare. The same condition applies to the men in Newfoundland. Some of them now have the promise of leave in order to come back to central Canada, but that costs a great deal of money. These men will have to stay in Newfoundland unless some provision is made for them. I should like to quote briefly from a letter received from half a dozen of these men now in Newfoundland:

This furlough is particularly important to us as we are not entitled to another one until December 1941 and just where we shall be tfien no one knows.

The Minister of Finance might very well soften his heart and agree to some provision being made to pay the transportation costs of these men.

Further I should like to say a word about winter accommodation. The other day the Minister of National Defence (Mr. Ralston) said that Canada had winter accommodation for 150,000 men. Yet in the public press, in newspapers supporting this government, such as the Vancouver Sun, we see reports denouncing conditions in the camp at Nanaimo. I quote the headlines only:

Needless Suffering at Nanaimo Camp.

Construction of Huts Delayed While Men Exist in Damp and Soggy Bell Tents-Excellent Site but Rains Create Misery.

That is from the Vancouver Sun of November 14, 1940. This condition was drawn to the attention of the Minister of National Defence, who, to his credit, took immediate steps to have it rectified. But it shows that somewhere on the staff there is a lack of interest in the welfare of these men, and because of that lack of interest men become sick, they are not fit and do not make as efficient soldiers as otherwise they would be. There is no excuse for putting hundreds of men into tents at this time of year, as was done at Nanaimo.

I might draw to the attention of the government many other things in connection with the army, but I hesitate to bring up a great many small matters. However, I should like to mention the plight of the Canadian people who are living on the ragged edge, such as the old age pensioners and the recipients of the war veterans' allowance. The cost

of living is rising; according to the latest figures it is going up steadily. In September of last year, under the new index, it - stood at 100.8. As of October 1, 1940 it stood at 107, and I believe it has been rising steadily since then. Relief allowances are being increased in some of our cities, but the people who are on very small fixed incomes are caught in a trap, and some provision must be made for them. The situation is very well set out in a letter I received this week from a recipient of the war veterans' allowance in Vancouver. He says:

-there are hardly any of the necessities that have not been hopped up 15 to 20 per cent in the past two months.

Then he goes on:

This is a poor time for anyone to ask for an addition to the strain that the country is undergoing but it is necessary that we ask . . . sufficient for a bare existence. The suggestion is that the government without amending any existing laws grant us a field allowance of 10 cents per day to be discontinued when conditions warrant . . . and we regret very much the necessity of asking for it.

That is a reasonable plea, and I submit to the Prime Minister that something must be done to meet this condition.

The Canadian people are looking to the ministry and to parliament for leadership in improving conditions here at home. They want the methods of carrying on the life of Canada changed to such an extent that far more value will be placed on people; that there will be a chance for everyone to work who is willing to work, and that there will be reasonable security for our people. Whenever I expressed those sentiments in Vancouver during the recess they were most heartily approved, no matter what the type of audience, and I believe that is the will of the Canadian people at this time. We find the same thoughts expressed in Great Britain. Yesterday Mr. Bevin, who has given such wonderful leadership there, was quoted in the press as having said that his aim is social security, and that something should be done about it even during the war. The report continues:

" Begin now," he urged. " That doesn't mean that all profit and surpluses must be wiped out. but it means that the whole economic life shall be devoted to give security, not to a small middle class but to the comunity as a whole."

I quote also from an editorial appearing in the Illustrated London News of September 7, 1940. These people are being bombed night and day, yet they are trying to figure out ways to improve the general conditions of life in their country. This editorial states:

. . . the ordinary Englishman (of all classes) wants a home which he can call his own and

The Address-Mr. Picard

which no other man or men can take from him, security in his employment, pride in his work, a decent chance for his children to do better than himself, and, in at any rate a very large number of eases, a bit of land to sweat and ruminate over and in which to grow flowers and vegetables. He also wants the right, again within reason, to criticize his employers and his rulers and to change his job and his political allegiance as he thinks fit.

I think the average Canadian wants the same thing; in fact I hope many Canadians wish to change their political allegiance. But this new world, which many seem to think will begin after the war, really began in September of last year. The ministry should arrange that the house give consideration to just what is to be done about it, when we meet after the new year.

In conclusion, Mr. Speaker, may I say that we in this nineteenth parliament are privileged to lead a young nation, strong and brave; standing firmly in a just cause; a young nation blessed with the best friends any nation could have, her sister nations of the British commonwealth and our great and friendly neighbour the United States; a young nation that is steadily growing in importance in world affairs and steadily assuming more and more responsibility. It is true that never before have the Canadian people had to face such challenging problems, but it is also true that never before have they had such an opportunity to revise their national plans, to remedy defects and to adopt far-reaching policies. In this nineteenth parliament we have an opportunity to mould a nation-our own nation, Canada. I believe if the ministry will only put this parliament to work, the spirit of hon. members is such that we can leave a record of service which will prove to have been unequalled in the history of Canada.

Mr. L. PHILIPPE PICARD (Bellechasse):

Mr. Speaker, I had not intended to take part in this debate. But some of my friends, and particularly my English-speaking friends, have asked me why more members from the province of Quebec have not expressed their views respecting the problems of the day. In fact I believe the hon. member for Lethbridge (Mr. Blackmore) said that somebody should speak on behalf of the eastern farmers. I admit I am not yet qualified to speak for farmers. I will tell my hon. friend, however, that before this parliament has run its course I shall have done my very best to learn the eastern farmers' problems, and I hope by that time to be able to express the views held by farmers, particularly in the light of the fact that I represent an entirely rural constituency adjoining the city of Quebec.

I suppose my first and most important duty would be to congratulate those to whom

I believe congratulations should go. May I begin by extending my congratulations to the mover (Mr. Claxton) and the seconder (Mr. Jutras) of the address in reply, each of whom performed his task perfectly. Both have shown, by their understanding of national problems, that Canada can be made into a great country, a country where both the east and the west, the people of both French and English descent, may meet on common ground to work for the greatness and unity of Canada.

As a French-speaking member I believe my congratulations should go, next, to the hon. member for Selkirk (Mr. Thorson), the hon. member for St. Lawrence-St. George (Mr. Claxton) and the hon. member for Nanaimo (Mr. Chambers), who, in the course of their speeches, showed they understood the views of the French-speaking people. They demonstrated that they understand our mentality, and were good enough to place their views before the house.

Above all, however, I believe our congratulations should go to the Prime Minister (Mr. Mackenzie King). First I would congratulate him upon the forceful manner in which h

In this connection I would like to echo the words of the hon. member for Selkirk who spoke to the house a few days ago. On that occasion he said:

. . . but no one will deny him his fair measure of praise for the splendid part that he has played in promoting friendly relations between Canada and our great neighbour. We are deeply grateful to the United States for the assistance that it has given and for the assistance that it is still to give, and we are thankful-

I repeat the words of the hon. member for Selkirk, and make them my own.

-I think I can say this in the name of the whole Canadian people-that we have in the present Prime Minister a leader who can be relied upon to preserve and promote the strong and growing feeling of friendliness and common purpose which exists between our country and our great neighbour.

I believe, too, that the Prime Minister might well be congratulated upon the speech from the throne, which is in effect his responsibility. He is to be commended because of its conciseness, and yet by the way in which it has implied all that would be done by the country, under the guidance of the government, in the pursuit of the war.

The Address-Mr. Picard

He is to be congratulated, too, upon his action in connection with the report of the commission on dominion-provincial relations, commonly known as the Sirois report. I believe his promptness in announcing to the house the summoning of a provincial conference will please the whole country, and is evidence of the fact that when he decided upon the formation of the commission he had it in mind to take action on their findings and to study carefully any suggestions which might come from it and which would improve the administration of the country's affairs. I believe congratulations might be extended to the Minister of National War Services (Mr. Gardiner) upon his report respecting his mission to England, the description of his trip in general and his report as to conditions in the old country.

We might make special note, too, of the speeches delivered by the ministers who have taken part in the debate.. I refer to the Minister of National Defence (Mr. Ralston), the Minister of National Defence for Air (Mr. Power), the Minister of National Defence for Naval Affairs (Mr. Macdonald), the Minister of Munitions and Supply (Mr. Howe) and the Minister of Finance (Mr. Usley). They are to be complimented upon the splendid expose they have given of Canada's war effort, and the way in which they have dispelled any doubt which might have existed in the minds of some people-doubts which have developed through false and alarming pronouncements of the leader of the opposition (Mr. Hanson) and his own Tory press.

During the last week-end, Mr. Speaker, I visited my constituency. While there I met an old farmer friend, one who has always been a friend of the party, but whose acquaintance I have enjoyed for only a little more than a year. He is a witty old man, and has always kept himself well informed on public matters. He has reared many children, who work on his farm, and he now lives more or less retired. In a way which I thought was clever he expressed to me his wonder, and that of his friends, as to why the leader of the opposition had wanted a session at this time-a time when everything seemed to be going well concerning our war effort. As he expressed it to me, everybody seemed to be satisfied with the possible exception of the Montreal Gazette and the leader of the opposition. At first," he said, "we wondered why he wanted a session of parliament, but, now that he has spoken, we believe we understand why. The hon. gentleman wanted to show himself a true patriot; apparently he wanted to cooperate with the government, and indeed he has done so quite hand-

somely. He showed by his speech that he had very little to say, and very little constructive criticism to offer. He has helped to prove that the people of this country had placed their confidence in the right place when they elected the present Prime Minister and sent a Liberal government to Ottawa, rather than one formed by the opposition party; indeed, that they had made a proper choice."

Mr. GRAYDON:

The hon. member has

based, his argument on the wrong premises.

Mr. PICARD:

No; I believe the old man was wise in his comment that the absence of constructive criticism in the speech of the leader of the opposition indicates that the country has not made a mistake in electing the present Prime Minister.

Some few days ago the hon. member for Souris (Mr. Ross) said that the war was being waged as a Liberal war, and that patronage was rampant, I am convinced that the war is not a Liberal war. Rather it is a Canadian war, and the people of Canada have so decided. They made their decision at an election which took place after, not before, the war began. Had the election been held before the war, and had the government appealed to the people on something other than the war issue, the allegation of the hon. member for Souris might have had some weight. The truth is, however, that when the government went to the country the war had been in progress for six months, and the people of Canada were given the opportunity to choose between the Liberal party and the best brains Mr. Manion could offer. They have chosen the best brains-but not those of Mr. Manion. They have chosen a Liberal government, a government which is showing now that it has the best brains available to carry on a war and at the same time to maintain unity within the country. The only ones who seem to object are those who make up that remnant of the Conservative party in this house, members who are all dignified and most charming to meet. There are also some members of the ultra-imperialistic press, like the Montreal Gazette, and a few others.

Mr. GRAYDON:

Is the hon. member

opposed to imperialism?

Mr. PICARD:

I am opposed to that

imperialism which places the empire above Canada. I am for Canada first; I place Canada above all. Canada should play her part in the empire, but we should not lose sight of the interests of Canada.

The Address-Mr. Picard

The hon. member for Souris referred to patronage. I think patronage can be judged by the way the public contracts are awarded and by the way in which employment is given in connection with government contracts and government enterprises. Speaking of that part of the country that I know best, Quebec, I must state that my hon. friend seems to know very little of what has happened there. As a Liberal member of parliament I am rather ashamed, but I must admit that half, if not more government contracts have gone to Conservative firms. This is due to the fact that the government follows a policy of granting contracts to the lowest bidders. I know that some of my friends are far from satisfied with this state of affairs, but I think it answers the objections of the hon. member. If he could be present in the office of a Liberal member in the city of Quebec on Saturday morning he would hear quite a different story. He would hear Liberal supporters complaining that they cannot get work in the arsenal at Quebec or elsewhere. It is easy to make complaints, but I think if we examine closely the way in which these contracts have been dealt with we will find that it is quite different from what the hon. member stated.

Some hon. members have referred to the scarcity of trained men and women for munitions work. I do not want to deal with the matter at any length, but I contend that the blame for this condition might be laid at the door of Canadian industry. They have never bothered to form technicians and never properly planned their work in order to avoid periods of slackness and periods of overtime work in order to make available a continuous supply of skilled and trained people. They have never followed the practice adopted by many large United States corporations to have schools to prepare skilled labourers. We are suffering now from the lack of prevision of the captains of industry. In 1929 we were shown the imprevision of the financiers, but throughout crisis has continued the imprevision of great industrialists. Those who sometimes object to the control which the government is taking over industry would not have rendered it necessary had they seen fit to act differently in the past.

This matter of trained men brings up a point of concern to my own district. The rural electors in the districts around Quebec have been left out when employment has been given at Valeartier and the Quebec arsenal. Many of the rural people have worked in factories and quite often they are more skilled than the unemployed of the cities who have been given work. This may be a good policy in order to deal with unemployment,

but I contend that those who bear an equal burden of the taxation should be given a chance to work. I submit this to the ministers at large of the Department of National Defence and ask them to look into the matter and reconsider their first decision.

Some members have referred to the necessity for economy in the ordinary expenditures of the government. I agree that this should be done, but on the other hand there is a point below which we should not go. For some time I was connected with one of the departments of the government and I can remember how the heads of the different branches used to prepare their estimates. Those estimates were generally cut by ten to fifteen per cent by the treasury board, and yet the original amounts were considered as being necessary to carry on the administration of the department. It is easy to understand that the Department of Justice and the Royal Canadian Mounted Police should have their estimates increased rather than lowered due to the special work that is being carried on. The same thing applies to the Department of Agriculture. I have received many letters from my constituents complaining that demonstration farms have been closed. This has been done because of the policy of retrenchment and economy. I wonder if we are serving the country as it should be served when we do not give our farmers the help they used to get, the help they are entitled to get in bettering their production and their efforts in agriculture. I do not think that the estimates of this department should be lowered.

The same thing applies to the Department of Trade and Commerce. Not all our factories are turning out war supplies. Many of our foreign markets are closed, and they certainly are becoming fewer. Through its intelligence service this department can do much to help us find new markets. I think the estimates should be kept where they are because it is to the advantage of the country to carry on. We should not ruin our national economy by lowering expenditures to a point where it becomes dangerous. This war can be waged successfully if things go well in Canada, if everything is administered to the satisfaction of the majority and in an efficient manner to continue the national well-being.

The hon. member for Peel (Mr. Graydon) made one suggestion with which I agree absolutely. It was that letters to members of the Canadian army should be sent free of charge. I do not know whether the Postmaster-General (Mr. Mulock) will agree that letters from a man's parents and friends and so on should be sent free of charge,

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but I think parcels which bring cheer to a man should be sent without costs to the sender. There are many enlisted men whose families have very little personal means. While it may be fairly easy for them to send a piece of cake or some other small gift, when it comes to paying forty or fifty cents postage on a parcel it cuts into their budget quite deeply and they hesitate to send it. The man overseas wonders if his friends have forgotten him. Perhaps it could be arranged to have parcels of a certain size sent free of charge, either through the different units of the army or otherwise. If the government wants to include letters in this scheme, I am all for it. Many of these men have been away from home a long time and they deserve every encouragement they can get from those of us who are in comparative safety in this land across the sea.

Perhaps I may be permitted to take up a few matters which are of interest to my own constituency. I notice many hon. members have done this. I should like to refer first to the taxation imposed last year which was of particular interest to my people. Although taxes in general were increased, they were accepted with true patriotism by everybody throughout the country. However, I must mention three of them which did not seem to please everybody. The first one, and in this respect I think even my western friends will agree with me, is the tax on flour. In eastern Canada, including my own constituency, many complaints have been received about this tax, which is on a necessity. Against taxes on a great many luxuries we could not have a good argument, but everybody needs flour. Western farmers want to sell their wheat, and we in the east want to eat bread. The minister might consider whether something cannot be done about that.

Another point I should like to bring out in connection with taxation concerns the way in which the tax on electricity is collected. At present it is collected on the cost of the electricity, which is far from being a fair system of collection. I understand that national taxation has as its basis the greatest possible degree of equality and justice. Well, if this tax is to be judged upon that principle we are far from acting with justice, because some provinces, amongst them my own, pay more for electricity than others do. The basis of taxation might be on consumption, on the kilowatt hour, as was mentioned, I think, last year by the hon. member for Champlain (Mr. Brunelle), who did not quite agree with the remark of the then Minister of Finance (Mr. Ralston) that if such a change were made, those who pay less, because the price of electricity was lower

IMr. Picard.]

in their provinces, might object. That is an argument, but it is not an argument of justice, because consumption is the basis upon which a tax should be collected.

Another tax which may not be so strongly objected to by others as it is among my people, is that on raw leaf tobacco. Raw leaf is smoked mostly in the province of Quebec, and before the imposition of the tax that tobacco was sold at about fifteen cents a pound. The tax of ten cents a pound which was imposed on it nearly doubled the price. I do not suppose I shall get so much sympathy from hon. members from other provinces, because they are not interested in the matter, but so far as we are concerned that tax has been quite a burden on the farmer who uses only raw leaf tobacco. When he heard that this tax was being imposed he provided himself with a few months' supply, but that supply is getting lower and lower, and he will soon be coming to us with complaints about the levying of this tax. If we base taxation on broad national lines, this tax on raw tobacco does not quite comply with that principle of taxation, because I am told by statisticians that the greater part of this tobacco is consumed in the province of Quebec.

Another point with which I want to deal briefly at the moment is that of the period of training under the mobilization scheme. Complaints have been voiced that one month is not enough. However, I have met many officers who were more than satisfied with the progress made. Some of my constituents have been called; they have answered willingly, and I am proud to say here that in my own constituency not one man has come to me to ask for any sort of exemption. All of them went Cheerfully, because they knew they were going for Canada and they knew they were going to train for the defence of their country. But the talk has been that one month is not enough. It may be so. I would only suggest, Mr. Speaker, that the scheme should be carried on for a year until the men who are liable to this service-I believe, from twenty-one to thirty-five years-have each undergone one month of training. That would carry the scheme along until, probably, September of 1941. If it should appear to be inadequate, those who were called up first could be recalled for a second period of either two or three months, if necessary; but I share the view of one hon. member who was in the Canadian active service force, the hon. member for Nanaimo (Mr. Chambers), that one and a half months would be sufficient. However, I am not a judge of such matters. But I think the scheme should be carried on as it is until the unmarried man reaches the

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age of thirty-five years. If we rely upon what has been stated by the Prime Minister of Great Britain, 1942-43 is the year when we shall need men for the battle. Our men might have time to be trained by then, and if they are now trained for one month and given a taste for the army, more might enlist than if they were kept there for four months and become tired and fed up with it.

Before I turn to other matters, may I mention something which was said here the other night, which did not quite please me. It was stated by one of my own friends, the hon. member for Rimouski (Mr. d'Anjou). He said:

I listened the other night to the excellent speech given in French by the hon. member for Nanaimo (Mr. Chambers). In my opinion, the hon. member thereby gave a lesson to a great many members from the province of Quebec who, either through snobbery or for other reasons unknown to me, rarely speak French in this house. When one wishes to preserve a right, it has always been my belief that he must exercise it.

I do not think I am much of a snob, and I do not believe that speaking either English or French is any kind of snobbery one way or the other. It is just a way of expressing one's thoughts, and when we feel that to speak in one particular language would enable us to reach more persons, it is logical to use it when we are able to do so. If it were a question of right. I would be the first one to fight to the limit to have that right respected and granted to me. But once I have the right, must I use it all the time; may I not use my right to speak in another language? I do not believe that the hon. member for Rimouski understood the lesson to be drawn from the speech of the hon. member for Nanaimo. He should realize that if an English-speaking member makes an effort to speak in this house in French, it indicates that he wants to show his good-will. One peculiar characteristic of English-speaking people is that usually they do not care to show that they are not perfect in anything. I know quite a number of people, friends of mine, who can carry on quite competently in French, but because they cannot speak perfectly in that language they do not care to speak it in public at all. So it seems to me that the hon. member for Nanaimo was quite brave when he went ahead and spoke in French; and rather than blame French-speaking members for speaking in English, my hon. friend from Rimouski should draw a totally different lesson from the excellent speech of my deskmate.

Since my arrival in Ottawa for the present session I have been asked by many people what were the reactions in French Canada

concerning the collapse of France and the incident of Oran. In dealing briefly with this question I shall bear in mind what the. Prime Minister said in his speech on the address:

I do not think we can be too careful in this House of Commons about what any of us say with regard to other countries and their position at this time in the matter of war.

Later in his speech he stated:

I appeal to hon. members in the house and I appeal to my fellow-countrymen in all parts of the dominion to bear always in mind the task which Canada alone can perform in keeping hope alive in the hearts of the grief-stricken people of France. Let no word from Canadian lips add to the agony of her open wounds. Let us inflict no new pain, and let us be ever watchful to exercise the healer's art.

I will do my best, in the few minutes I want to speak on this question, not to forget the advice of the Prime Minister.

The people of Quebec remember with joy the appeal which was made to them a few days after the collapse of France by the Prime Minister, when he asked them to keep alive French love for liberty and for freedom and French culture, and to help prevent the widening of the gap between France and Britain. The way the Prime Minister treated this question in his speech on the address has won for him further admiration in Quebec.

The tragedy of F'rance, as it has been called, can be studied from many angles. But from whatever angle we look at it, it is advisable to avoid extremes. Trying to pin the responsibilities on one political group or another is a silly game that can lead only to bitterness, and I can hardly hide my contempt for those French writers of the right who try to convince us that the leftists led the country to its downfall, and my contempt for the French writers of the left, who explain to us the negotiations of the rightists with the enemies of the state. Many of these writers might be more persuasive if they were less abusive.

It is childish to talk of the unworthiness of French statesmen. Anybody who has been in touch with European politics will vouch for the fact that they were as good, often better, and never any worse than those of other continental countries.

It is naive to talk of deserved punishment for the sins of France. France has always been the land of true proportions and of moderation: "le pays de la mesure," as we say in French. It was the home of highly developed individualism, which was the product of a vast general culture in all fields of intellectual endeavour. An analysis of the French collapse is too complicated a matter

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to be made curtly and sharply as it is by some ill-informed people, and moreover it cannot be done within the scope of my remarks.

For us, June 16 was a sad day, when France failed in her word to Britain. We felt badly about it and felt it was a mistake on the part of those who influenced the decisions of Bordeaux. I was of opinion that M. Reynaud, M. Herriot, President Lebrun and all those who shared their views were in the right in -wishing to continue the fight from Africa. Personally I think that those who influenced the decision to abandon the British alliance will have an extremely heavy responsibility thrown upon them when history is written. We must remember, however, that it is difficult to judge of the situation from the comparative safety of our shores. We must remember that on June 16 France was alone in the defence of her soil, and also that she *did not have the English channel between herself and the motorized war machine of Hitler. No matter how severely we may judge that man Laval, we must believe that France's great hero who is now her leader acted with sincerity. He is now a prisoner of his first mistakes, but his patriotism is a guarantee that he cannot be blinded to the true interests of France. We should therefore reserve our judgment on any moves of Vichy as reported in the press until they are confirmed by positive facts and we can know their full meaning. We must rely, sir, on the fact that the sentiment of the majority of France will prevail in the mind of its leader and that ways will be found to prevent a clash with Britain. But even should matters come to the worst, no one need fear anything about the sentiments of French-Canadians. They will be more than ever on the side of democracy and its valiant defender, Britain.

I was told a few days ago that there was in Montreal a self-styled "man of good-will" going round interviewing people with regard to the incident of Oran, and I understand that he expressed the view that French-Canadians had been terribly offended by that incident. I suggest that he did not meet the proper people, because, no matter how much we may dislike the publicity given to this matter, we admit the necessity for it and we would still say, "Go ahead and do it again," if it had to be done again. We consider that it was in the interest of Canada because it was in the interest of Britain. French-Canadian loyalty has been tested many times in the past. If I remember rightly, it was in 1776 when the American revolution was in progress that Lafayette and d'Estaing came over to America and sent emissaries to the French-Canadians with an appeal for help to the colonists in

revolt. It was only seventeen years after the fall of Quebec, and yet French-Canadians turned a deaf ear to that appeal and stood by Britain. They did not participate in the struggle against the crown at that time. In 1812, French-Canadians again proved their loyalty to the crown, and at Chateauguay, there was a battalion of Voltigeurs led by de Salaberry on the side of the English.

Many ill-informed references have been made to the incidents of 1837. That was not a revolt against the crown; it was not a movement in favour of the enemy; it was merely a fight for the recognition of constitutional principles in Canada, in which Upper and Lower Canada participated.

Even in our day, Mr. Speaker, there have been stronger provocations than the necessary incident of Oran which have tested the patience of French-Canadians. They do not have to moan about that African incident when in their own land, in their own province, my compatriots have been hurt. A long and sad story could be written of the lack of fair play shown by certain elements of the majority. Mind you, sir, I am not referring to this house, where the most satisfactory atmosphere exists. I am not referring to the government, who have shown more understanding and good-will than any administration that has preceded them. I am referring to the civil service of Canada, here in Ottawa, and more so in the federal service in the province of Quebec. I am pointing to the great public service companies like the Bell Telephone company, the Canadian National Railways and the Canadian Pacific Railway in relation to their services and their employees in that province. I am pointing to all other agencies or companies of a public nature who derive their revenues from services to the French-speaking population and fail to recognize that population in the allotment of their favours and in the performance of certain of their services. Take the war effort of the country. We call for equality of sacrifice. Do we have equality in the benefits that accrue from war contracts and the direction of the industrial effort of the nation? Some of these daily occurrences are meat for the extremists and a few agitators and are more important than the incident of Oran.

We have a long way to go and there is much to be done to bring about a satisfactory situation. But, Mr. Speaker, never have these just grievances affected French-Canadian loyalty in the past, and happily it is still time to bring about remedies. We are sure that in the end everyone will realize that our country can be made great only by the

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unity of its component races, and that unity is never reached by one-sided advantages. Unity can be reached, not by coercion but by good-will and understanding, and I have been preaching the necessity for cooperation whenever I have had occasion, in my short public life, to address the people whom I represent. I say to you to-day, sir, let us all work to this end.

It has been a consolation to us, throughout

our history, to have, in the other race which constitutes the majority, friends who understood us and shared in some of our views. It has been a pleasure to see the gradual growth of conciliatory sentiment in the political life of the country and in our universities. There is no more reason for Canadians of pure French descent to have what we call love in the true sense of the word for England than there is for English-speaking Canadians to have a love for France; but there is a common ground on which we can meet, it is our love for Canada our country which our forefathers have built, for which they fought in the past, for which we are ready to fight now. This is the common ground on which we all should meet.

French-Canadians have always respected Britain, and they have been grateful for the political institutions that have been bestowed upon them by Britain, based on freedom, selfgovernment and justice.

In conclusion I wish to state that since the battle of Britain started, the splendid behaviour, the determined and stubborn courage, the heroism of the civilian population of Britain, the magnificent performance of the Royal Air Force and the Royal Navy, have provoked throughout the province of Quebec the deepest and most profound admiration for Britain and the most sincere affection for our sovereigns.