Hon. R. B. HANSON (Leader of the Opposition):

Mr. Speaker, may I at this

moment ask the Prime Minister if he will tell the house definitely what new legislation is proposed at this session. On the order paper there is a bill standing in t'he name of the Minister of Agriculture (Mr. Gardiner) and a government notice of motion in the name of the Minister of Justice (Mr. Lapointe). Somewhere in Votes and Proceedings I think I saw notice of two bills of the Minister of Labour (Mr. McLarty). That makes four bills. Are there to be any more?

Right Hon. W. L. MACKENZIE KING (Prime Minister):

I think my hon. friend has mentioned all the bills that are intended to be brought down this session. May I say to him that I should be very much surprised if any of them proves the least contentious. They are quite short, and to meet situations that have developed.

Mr. HANSON (York-Sunbury):

If they

are not contentious we shall be glad to advance them.

Mr. MACKENZIE KING:

I think my hon. friend will find that they are not. There may be one or two supplementary estimates, but they also will be small.

1. Since the repeal of chapter 70 of the revised statutes of Canada, 1927, by chapter 35 of 1934, are there any more securities upon the pledge of which dominion notes are issued?

2. Are the dominion notes issued by the Bank of Canada?

3. Did the Minister of Finance transfer the securities which are the pledge of dominion notes?

4. If so, did he transfer them to the Bank of Canada, for what reason, when and by what authority ?

5. Were they again transferred by the Bank of Canada to the foreign exchange control board?

6. If so, why, when and by what authority?

7. Who holds these securities now and what are they?

8. Was there any issue of dominion notes by the "Bank of Canada since the securities above referred to -were transferred to the foreign exchange control board? If so, how many and for what total amount?

Questions

1. No.

2. No.

3 and 4. As at the close of business on March 10, 1935, dominion notes were outstanding in the amount of $220,295,439.44, issued under the following authorities- Dominion Notes Act. .$159,455,439 44

Finance Act 34,840,000 00

Chapter 4 of the statutes of 1915 26,000,000 00

The Dominion Notes Act as amended by chapter 34 of the statutes of 1934 required that the Minister of Finance hold a reserve in gold of 25 per cent against the first $120,000,000 of dominion notes issued and a reserve in gold of 100 per cent against dominion notes issued in excess of $120,000,000. Chapter 34 of the statutes of 1934 also provided that as additional security for the redemption of dominion notes "the minister may hold silver to an amount to be purchased from time to time under the provisions of the International Agreement dated at London the twenty-second day of July, 1933 ..."

The Finance Act authorized the Minister of Finance to advance to any chartered bank or to any bank incorporated under the Quebec Savings Banks Act, dominion notes to any amount on the pledge of approved securities deposited with the Minister of Finance subject to regulations made by the treasury board. These advances bore interest and no gold was required to be held as security against dominion notes so advanced.

Chapter 4 of the statutes of 1915 ratified certain orders-in-council under which there had been issued dominion notes to the amount of $26,000,000, unsecured by gold but partly secured by the deposit of $16,000,000 of railway securities guaranteed by the government of Canada.

As at March 11, 1935, the date on which the Bank of Canada commenced operations, the advances obtained under the Finance Act by the chartered banks and the banks incorporated under the Quebec Savings Banks Act were repaid by these banks by the handing over of dominion notes to the Minister of Finance, and at the same time the securities pledged with the Minister of Finance by these banks as collateral for the advances were returned to them. With the repayment in this way of $34,840,000 in dominion notes, the amount of such notes outstanding was reduced to $185,455,439.44. Under the Bank of Canada Act, the Bank of Canada assumed responsibility for this amount of dominion notes outstanding. As consideration for the

assumption of this liability, the dominion transferred to the Bank of Canada, under the authority of section 25(3) of the Bank of Canada Act, gold in the amount of $69,455,439.44, silver bullion in the amount of $986,363.18, and Dominion of Canada 3 per cent bonds due March 1, 1940, in the amount of $115,013,636.82. These assets turned over to the Bank of Canada were not required to be specifically held against the liability for Bank of Canada notes issued. Section 26 of the Bank of Canada Act sets out the reserve required to be held by the Bank of Canada as security against its outstanding notes and deposit liabilities and section 41 provides that in the event of winding up, the notes of the bank shall be the first charge upon all the assets of the bank.

The railway securities held by the dominion as security for dominion notes issued under chapter 4 of the statutes of 1915 are still held by the Minister of Finance.

5 and 6. Under the authority of order in council P.C. 1735, dated April 30, 1940 (the foreign exchange acquisition order, 1940-9, resident holders of foreign exchange, including the Bank of Canada, were required to sell their holdings of foreign exchange to the foreign exchange control board. Under the authority of order in council P.C. 1734, dated April 30, 1940 (the exchange fund order, 1940), the foreign exchange control board purchased from the Bank of Canada all gold held in unrestricted ownership by the Bank of Canada at the current market price. In accordance with the terms of these two orders, the Bank of Canada sold to the foreign exchange control board on May 1, 1940, foreign exchange to the Canadian dollar value of $27,734,444 and 5,888,565 fine ounces of gold, the current market value of which in Canadian funds was $225,772,887. To enable the foreign exchange control board to purchase the gold and foreign exchange from the Bank of Canada and the foreign exchange from other Canadian residents, the exchange fund set up by the Exchange Fund Act, chapter 60 of the statutes of 1935 was increased in the amount of approximately $325,000,000 by the sale to the Bank of Canada of $250,000,000 principal amount of one-year 1 per cent notes and of $75,000,000 principal amount of treasury bills, the proceeds of which were credited to the exchange fund. The exchange fund order 1940 furthermore provided that the bank's gold and foreign exchange reserve against outstanding notes and liabilities should be discontinued. The effect of these two orders in council is that in place of gold the Bank of Canada holds dominion securities, and the total gold reserves of the. country are centralized in the foreign exchange control board, which under

Questions as Orders for Returns,

war-time conditions is responsible for transactions arising out of the balance of payments between Canada and other countries.

7. In the answer to questions 3 and 4 it was pointed out that securities pledged by banks under the Finance Act had been returned to the banks in question, and that securities pledged under the orders in council ratified by chapter 4 of the statutes of 1915 are still held by the Minister of Finance. In the answer to questions 5 and 6 it was pointed out that no securities are specifically held by the Bank of Canada against notes outstanding but that such notes are a first charge on all the assets of the bank. It is also noted in the answer to questions 5 and 6 that the Bank of Canada has transferred all its former holdings of gold to the foreign exchange control board and holds in exchange therefor dominion government securities. Weekly and monthly statements of the Bank of Canada published in the Canada Gazette show as of the date of the statements the amount of the assets and liabilities of the bank under various classifications. In regard to the gold so transferred by the Bank of Canada to the foreign exchange control board, it is pointed out that the operations of the exchange fund are, in accordance with the provisions of the exchange fund, not made public but are subject to audit by the auditor general.

8. No, but the Bank of Canada from time to time issues notes under the authority of the Bank of Canada Act. The weekly and monthly statements of assets and liabilities of the Bank of Canada, published in the Canada Gazette, show the amount of Bank of Canada notes outstanding as of the date of the statements.

Mr. CHURCH:

Has the attention of the government been called to an address delivered at Montreal in March, 1941, by the consul-general of the French government, on Tunisia, and containing comments reflecting on the United Kingdom and her allies, and the conduct of the war?

Mr. MACKENZIE KING:

This question was answered on Monday last.

1. From what person or persons did the government purchase property near Sydney, Nova Scotia, to be used for the purpose of a rifle range?

2. What was the acreage purchased from eaeh person?

3. What was the total purchase price paid to each such person?

4. Was any agent employed in connection with such purchase, and, if so, what was his name?

5. What commission, fee or other remuneration, if any, was paid to him?

Mr. RALSTON:

1, 2 and 3. Total

Area in amount

From whom purchased acres paidCounty of Cape Breton 0-8 $ 6.00A. C. J. Drysdale 2-5 18.75M. Jane Shiers 0-9 7.50J. E. Gaudet 0-2 5.00Amidee Gaudet 0-3 5.00Annie Gaudet 0-04 1.00G. G. Cossitt, i interest in 64-1 and right of way 131.00Dominion Steel & Coal Corporation, \ interest in 65-0 243.75Henry Duffel! 16-1 128.80Note.-The total acreage to be acquiredis 450 acres. The above shows the areas towhich title has been obtained to date.4. Mr. Colin Mackenzie, K.C., Sydney, N.S.,

agent of the Department of Justice.

5. None to date. The remuneration will be fixed by the Department of Justice.