June 13, 1941


On the orders of the day: Mr. JEAN-FRANQOIS POULIOT (Temis-couata): I hold in my hand a bottle which bears a certain label and I should like to ask for some information from the Minister of Pensions and National Health. On this label appears the word "genuine" when it is not genuine; it bears the word "Hollands" when it is not Hollands; it bears the word "Geneva" when it is not gin; it bears the word "Rotterdam" when it is not Rotterdam; it also bears the words "John de Kuyper." Will the minister see to it that these labels are changed immediately, and any stocks of this product that may be in the stores seized at once? Hon. IAN A. MACKENZIE (Minister of Pensions and National Health): Replying as an amateur to a question asked by an expert, I may inform the hon. member for Temis-couata (Mr. Pouliot), with his inquiring mind, that all the regulations under the Food and Drugs Act with reference to the contentious question of gin have been complied with as the result of instructions issued on April 24 last.


BANKING AND COMMERCE

STATEMENT AS TO RELATIONSHIP BETWEEN THE GOVERNMENT AND THE BANK OF CANADA


On the orders of the day: Mr. DOUGLAS G. ROSS (St. Paul's): I should like to ask the Minister of Finance if he will consider having the banking and commerce committee meet in the fall when we come together again, for the purpose of continuing our discussions on monetary matters and going into the principles of taxation? 3936 COMMONS Government and Bank of Canada


LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

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

-The hon. gentleman asked a similar question when my estimates were before the committee, or at some previous stage. I shall be glad to see that the government gives consideration to the desirability of the banking and commerce committee being called for this purpose. I should like to say a word about the banking and commerce committee and about the submission of monetary policies to that committee. I do this because the Premier of Alberta has issued a statement which perhaps makes it desirable for me to say something about the relationship between the government and the Bank of Canada.

As hon. members know, the report of the governor of the Bank of Canada was considered by the banking and commerce committee in the spring of 1939, with I think most beneficial results. On June 2 this year,

I made certain statements in this house with respect to the relationship between the government and the Bank of Canada, statements which were referred to by an hon. member on June 5. Whereupon I made certain other statements in relation to that matter. I note that the premier of Alberta has issued a statement which probably will be widely used to show that the government has no control over monetary policy. Therefore, I should like to make the matter clear before the house adjourns.

When I made my statement on June 2 we were discussing whether the internal administration or operations of the Bank of Canada should be subject to discussion in this house. At least that is what I had in mind, and I think a careful reading of what I said on that occasion will bear me out, although I will admit that it is open to another construction. I tried to make it clear that that is what I had in mind when I spoke on June 5.

As the committee knows, the Bank of Canada was created by parliament as an autonomous corporation with its stock owned wholly by the government, but with its own management and board of directors appointed by the government. It is an arm of the government, but not a department of government. The character of the act is such that responsibility for its operations is placed squarely on the shoulders of the governor and the board of directors. In this connection I wish to quote from Hansard of June 20, 1938, a statement made by the then minister of finance when proposing certain amendments to the Bank of Canada Act:

There is, of course, no intention nor any hope that it-

Meaning the change in the constitution of the bank.

[DOT]-will dispose of political discussion regarding the use which shall be made from time to time of this instrument of national control of monetary policy. I should say in this regard, however, that it is not the intention of the government by the introduction of this measure to make the Bank of Canada merely a department of government. If the central bank of a country is to serve the high purpose for which it is created, it must be manned by men who not only are expert in monetary policy, economic and financial matters, but also have a sufficient independence of judgment to be able at all times to talk on equal terms to the government of the day with respect to the matters which come under the jurisdiction of the bank in the ordinary course of business. It is not the intention that by this resolution the Bank of Canada should become in any way a political arm of government. That, indeed, would be fatal to the successful operation of the control of monetary policy and credit in this country.

The point which I would like to emphasize is that the responsibility with which the governor and board have been charged by parliament does not in any way relieve the government of responsibility for the monetary policy being pursued by the bank, nor in any way militate against public control of monetary policy. The monetary policy which the bank carries out from time to time must be the government's monetary policy, but the government must leave the carrying out of that policy, the choice of ways and means of executing it, to the management of the bank in whose judgment it has confidence.

If the government is satisfied with the policy which is being pursued, there is obviously no quarrel between it and the bank. Let us suppose, however, that the management of the bank and the government do not see eye to eye in the matter of monetary policy. Let us assume that after the usual careful consideration of the pros and cons, a serious difference of opinion remains. In such a case there can be no question whatever as to the outcome of the dispute. The government's views will prevail.

In view of the statutory responsibility placed on the governor and the board of directors, I do not believe that those of them who disagreed with the government on a fundamental issue could conscientiously carry out the government's policy. It would therefore be necessary for them to resign, and they would be replaced by others who were willing to accept responsibility for the type of policy which the government believed to be appropriate. It follow's that if a serious dispute ever occurs, it will be brought to the attention of the house and of the countiy.

The type of organization which parliament has created combines the essential factor of public control with the extremely desirable factor of managerial responsibility. I know

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of no better way of safeguarding the public interest. It is, of course, always open to parliament to question and reject any policy, including monetary policy, which is being followed by the government of the day.

I think it is desirable to have this on record. I regret that the matter should have been dealt with-I am speaking now for myself- by question and answer on another matter, as it was, and I think it was due to that that some misunderstanding arose on the part of certain hon. members of the house and apparently some outside the house.

Topic:   BANKING AND COMMERCE
Subtopic:   STATEMENT AS TO RELATIONSHIP BETWEEN THE GOVERNMENT AND THE BANK OF CANADA
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PROPOSED COMMITTEE TO EXAMINE REPORT OF BANK OF CANADA


On the orders of the day:


SC

Ernest George Hansell

Social Credit

Mr. E. G. HANSELL (Macleod):

I should have liked to place this question on the order paper, but it is too late now to do so. I would ask the Minister of Finance if before the next session of parliament the government will give consideration to the setting up of a standing committee to examine the report of the Bank of Canada, similar to the existing committee on railways which examines the reports of the Canadian National Railways.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

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

Well, Mr. Speaker, there would be no objection to giving consideration to this request, but I should say that duty could be acceptably discharged by the banking and commerce committee.

Topic:   PROPOSED COMMITTEE TO EXAMINE REPORT OF BANK OF CANADA
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WHEAT ACREAGE

ASSISTANCE TO FARMERS TO MEET COST OF SUMMER-FALLOWING


On the orders of the day:


CON

John George Diefenbaker

Conservative (1867-1942)

Mr. J. G. DIEFENBAKER (Lake Centre):

I should like to ask a question of the Minister of Agriculture (Mr. Gardiner). I have a volume of correspondence which I have received in the last few days in reference to the question of summer-fallowing and the inability of farmers generally in western Canada to finance their summer-fallowing operations by reason of the fact that the oil companies are refusing to advance them credit. Would the minister advise whether the government is prepared to advance say 50 per cent of the cost of summer-fallowing to farmers in order to enable them to get the work done? Or as an alternative, will the government devise a scheme whereby the municipalities could guarantee a percentage of the cost of summer-fallowing and the government pay direct to the municipalities the amount guaranteed?

Topic:   WHEAT ACREAGE
Subtopic:   ASSISTANCE TO FARMERS TO MEET COST OF SUMMER-FALLOWING
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LIB

James Garfield Gardiner (Minister of Agriculture)

Liberal

Hon. J. G. GARDINER (Minister of Agriculture) :

I do not think the federal government has at any time taken part in the promotion of summer-fallowing activities in the western provinces. That has always been looked upon as a responsibility of the provincial governments in so far as it has been taken care of by governments. I do not think the provinces will expect the federal government to take on a load at the present time which has not been carried even in peace time.

The house in committee of supply, Mr. Vien in the chair.

Topic:   WHEAT ACREAGE
Subtopic:   ASSISTANCE TO FARMERS TO MEET COST OF SUMMER-FALLOWING
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DEPARTMENT OF NATIONAL DEFENCE


182. Normal services. Cadet services, $171,500.


LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

Before this item is voted I should like to place on record copies of two letters I have sent to the Minister of National Defence, under date of May 15, 1941, and May 16, 1941. The second letter reads:

Ottawa, May 16, 1941

The Honourable J. L. Ralston, K.C.,

Minister of National Defence,

Ottawa.

My dear Minister,

Referring to your letter of May 11, there is something that I do not understand.

Eleven months ago, the Prime Minister pointed out to me that in doing voluntary recruiting for the defence of Canada, I might be making the greatest mistake possible with respect to the national interest.

Would there be no mistake possible with respect to the national interest in doing it for overseas service? In other words, how can I do, at your request and for another country, what I had been precluded to do by the Prime Minister for our native country?

Please find herewith attached supplementary memorandum in the form of a letter which completes this one. .

Yours truly,

Jean-Fransois Pouliot.

The first letter reads:

Ottawa, May 15, 1941 Colonel the Honourable J. L. Ralston, K.C., Minister of National Defence,

Ottawa.

My dear Minister,

I have received your letter of May 11 and copy of a broadcast of your colleague, the Honourable C. G. Power, with regard to voluntary enlistment.

I take the liberty to refer you to a most important statement made in the house by the right honourable the Prime Minister, on June 19, 1940, Hansard, page 922. In the forenoon, at a general caucus of the Liberal party, I had offered to recruit in my constituency, within

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a week and for the defence of Canada, a regiment composed mostly of lumberjacks, farmhands and day labourers. I mentioned the fact that all those men would be in excellent physical condition and besides that, nearly all of them would have been familiar with the handling of a gun. I added that if every member did the same, we would have in a very short period of time an army of 245,000 fresh recruits of the best kind.

The remarks of the chief, which appear at page 922 of Hansard (last line of first column and first lines of the second one), honoured me by mentioning in the house what I had said at a caucus, but at the same time I was deeply disappointed as I happened to be the one he referred to on that occasion. Here is the text of his remarks:

"An lion, member on this side of the house made the statement publicly this morning that he felt he could go into his constituency and, by making it known to his constituents that this measure had to do with the protection of Canada and our own Canadian soil, bring forward in a very short time men from the forests, from the fields and from the factories, all prepared immediately to join the Canadian forces to resist any possible invasion, and that he would be prepared to guarantee that that could be done in constituency after constituency throughout the country, once it was understood that there was the necessity of defending our own Canadian shores. I pointed out to him that in doing that he might be making the greatest mistake possible with respect to the national interest; that, to win this war, we might wish to keep at work in the forests the men who are now working in the forests, to provide the timber which will be required for docks and wharves and required immediately; that the men who are working in the factories may be a thousand times more useful to the government of this country in giving their skilled labour to the manufacture of aircraft, munitions, or other weapons of war than they could possibly be in lining up and presenting themselves for military service; equally that on the farms, if we are to perform what will be expected of us, we shall need all the production that can be effectively and rapidly carried out on the farms of our country."

It was undoubtedly because my offer was turned down by the Prime Minister eleven months ago that no other member made a similar one until you did it yourself a few days ago.

After the chief had told me in very definite terms that "I might be making the greatest mistake^ possible with respect to the national interest" if I did some recruiting in my constituency, that very statement and the wide publicity given to it made it impossible for me as well as for any other member of parliament to do any recruiting in his constituency.

At that time the government had already announced their policy about conscription. In fact it was the day before that the Prime Minister had presented a resolution for mobilization of human and material resources in the present war. I wonder if it was precisely because of that new policy of conscription that members of^ parliament were prevented from doing recruiting on a voluntary basis, which would have shown that conscription was unnecessary to recruit as large an army as could be equipped and maintained for the defence of this country but, in spite of the rebuke that I received and which was evidently

fMr. Pouliot.l

inspired by the brass hats of the war departments because it was much stronger in the afternoon than in the morning, I did not remain inactive and I did my best to assist all those who expressed to me by writing or verbally their desire to enlist into the militia, the navy or the air force.

The policy of the war departments as put into effect by those who were in contact with the people was to give the least possible chance to those who were willing to enlist.

I cannot mention all eases, but I sent you copy of a correspondence of Antoine Lagace, of Riviere-du-Loup, who has done some military service and who has written to three commanders for enlisting into the home guard: he was turned down because he was not a veteran of the first great war.

Another man, in a similar case, could enlist only because his brother-in-law was a sergeant, and it was considered something like a government favour to be accepted in the army.

I insist on that; it was considered a government favour to be accepted in the army.

How many men wanted to enlist as truck drivers, and how many were accepted?

I have mentioned in the house the difficulties that our boys had with regard to medical examination. Many difficulties have arisen from the fact that those who were unfit were accepted and those who were really fit were declared unfit. Finally, since the establishment of conscription, some who desired to enlist had to travel at their own expenses from Riviere-du-Loup to Quebec city and if they were declared unfit by your medical staff, they had to pay their travelling expenses from their own pockets.

Whatever could have been the intention of the government in the application of the mobilization act, in my constituency, I had the impression that everything was done not to recruit the best army, but to justify the uncalled for policy of conscription.

Please find herewith enclosed copy of letter which I am sending to-day to your colleague, the Hon. Minister of National Defence for Air. It is from Jean-Joseph Lajoie, who has a brother in the air force and another one in the navy. He says that he is so anxious to enlist in the Royal Canadian Air Force that, although he knows English very little, he is ready to spend the money that he has to learn it. I presume that he will have no opportunity to get there, although I am sure that he would do very well because that career appeals to him. I also enclose another letter to the same effect which I received to-day from L. Paul Ouellet, of Riviere-du-Loup station. It speaks by itself.

That man has been taken in.

My first cousin, Yves Bertrand, had won medals as an athlete and a marksman. Squadron-leader Stewart could tell you the trouble I had to have him enlisted as a gunner and it is only thanks to Mr. Stewart's intervention that he could get in.

Now-, regarding the manufactures of munitions, you could be astounded in reading the letter from Donat Champagne, a settler of St. Elzear, in the back country of my constituency. I wonder if it would not be possible to secure work for .him although he is a mechanic of great experience.

By the way, three people in the employment office in Quebec have been arrested because

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they were selling jobs, and no one could get in unless he paid something to the people higher up. This explains why we have trouble. I mentioned the matter a long time ago to some people, but I never succeeded in getting anywhere until those people were arrested. I continue with the letter:

Sometimes, you may find that I am grouchy and of unpleasant disposition: there is always a reason for it and I will give some of them.

Before the war, I recommended more boys for the air services than any other member ever did. General Lafleehe could tell you about it, and he was satisfied with those boys amongst whom was a nephew of your colleague, Right Honourable Mr. Lapointe. But now, since the war started, it seems as if French-Canadians were unwelcome in the army, in the navy and in the air force, and the first thing to do would be to remove all barriers seen or unseen, and, in the latter ease, badly felt, which prevent French-speaking Canadians from enlisting when they are perfectly willing to do so.

In the first place, the medical examiners shall be competent and unbiased; they shall be thoroughly familiar with French language and easily accessible, which means that no one would have to pay travelling expenses to undergo medical examination which will establish definitely and to the satisfaction of the recruit whether he is fit or not.

In the second place, the French-speaking Canadians shall be under French-speaking officers and the men shall be in a position to expect and to receive legitimate promotions in due course. On this point, I will quote the case of Sergeant Major Leo Pinel who has been in the army for several years, had won all the cups and trophies of his regiment, and has been on guard at Buckingham Palace. Colonel DesRosiers could tell you about it, as I took up this case unsuccessfully with him.

I do not blame Colonel DesRosiers; he just placed my letter before general headquarters overseas. It continues:

That fellow is very popular in a certain part of my constituency. In fact, on the occasion of the opening of a new post office at Cabano, where his family lives, I paid a tribute to him as a sportsman and a soldier, adding that on account of his services it was expected that he would soon get the promotion he was entitled to in the army. At that point, there were prolonged cheers from the whole crowd. You will understand that if Pinel gets a well-deserved promotion it will have a very good effect for increasing voluntary enlistment where he is so favourably known.

What astonishes me is the considerable number of French-Canadians who have already enlisted in spite of so many obstacles to overcome.

It is bad for a man who is ready to enlist to have a door slammed in his face. He is not anxious to go back. The letter continues:

It is true that the members of parliament are more familiar with the feelings of the people because they are in daily contact with them, but if they convey to you suggestions that really originated from the people, what-14873-249*

ever it is, you pay no attention to it and you seem to prefer to listen to the so-called military experts that Hore-Belisha has expelled from the war office.

I wonder if you ever realized that the success of voluntary enlistment in this war is largely due not to any public speeches, but to the painstaking efforts of the members of parliament who are spending lots of time with their people trying to explain and make as acceptable as possible policies for which they have never been consulted.

Topic:   DEPARTMENT OF NATIONAL DEFENCE
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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Hon. J. L. RALSTON (Minister of National Defence):

Mr. Chairman, my hon. friend

sent me the letter to which he has referred, enclosing the memorandum-or a previous letter, I have forgotten which it was. As he understands, I could not go into a long and detailed correspondence in connection with the various matters indicated in the letter. But I did, as a matter of fact, make inquiries about.it.

His first letter has to do with a statement made by the Prime Minister in the House of Commons with regard to the relative benefits of recruiting, and of the calling up of men under the National Resources Mobilization Act. If hon. members will refer to the passage in question I am sure they will realize at once that the Prime Minister was endeavouring to indicate that under the National Resources Mobilization Act provision was made for the postponement of those in essential industries. That, I believe, was what was meant by the Prime Minister's statement, and I do not feel that it would be a justification for my hon. friend's feeling that he could not take part in a recruiting campaign and in asking men to enlist.

The other part is more important, so far as I am concerned. It has to do with the welcoming of French-Canadians to the Canadian Army. May I say to the hon. member for Temiscouata-and this is no idle statement, no platitude-that I do not think any matter of policy has received more intensive attention from me than has that same matter. And I can say to my hon. friend that I have tried day in and day out, avowedly

I have made no secret of it-to see to it that just as far as possible our friends in French Canada are represented in the army, and are represented in as high places as they could possibly fill.

As a matter of fact Brigadier Archambault was recommened for a brigade in the third division, since I have been Minister of National Defence. Brigadier Reynaud has been made deputy quartermaster general. Brigadier Leclere was given a brigade overseas. He has just been returned as being medically unfit. I may point out further that a number of staff appointments have been made.

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I must say to my hon. friend and to the house and country generally that instructions at National Defence headquarters are that every effort should be made to see that French-Canadians have fair representation in appointments. There is no reason for not doing so; that is part of the national effort. It is part of the effort for the unity of Canada. I make no apology for taking that stand, and I believe hon. members of the committee will concur with me in the stand I have taken.

There are difficulties of course, and my hon. friend has pointed them out. One difficulty is connected with the question of language. I take the position that there are two official languages in this country, and that a man is entitled to speak French and to say, "That is all I can speak," just as a man is entitled to speak English, and to say, "That is all I can speak." May I pay this tribute, to the French-Canadians, that there are far more French-Canadians than there are English who are bilingual-yes, far more.

The situation with regard to enlistments and appointments is this, that in connection with units other than infantry units a man who does not speak English finds difficulty. It is difficult for a man to hold a position of command or responsibility in those other units. In fact, it is difficult for a man in those units to carry on, unless he does understand English. The technical terms in connection with the artillery, signals, ordnance and army service corps is in English. It is therefore difficult to have all French-Canadian units in those particular services. But we are trying to meet the situation in two ways. We are having French-Canadian units as far as we can, and I want to pay my tribute to those units which I saw overseas representing the province of Quebec. They were fine units, wholly French-Canadian, and officered by French-Canadians. They have done a fine job, not only in the field, but through their second battalions, in recruiting reinforcements. Those as mostly infantry units.

We are also endeavouring to recruit French-Canadian artillery and other technical units. In that connection, in order that there may be coordination, because artillery units cannot be used alone but in conjunction with divisional formations, we have sought to have a sufficient number in the artillery units who are bilingual, so that they can understand the directions which are given. And we have a school now which is opening up to give special instruction. I think it is in the interest of the country that we should do this for the French-Canadian boys who do not understand English, particularly those in the technical units, so that they will understand

the phrases and commands which are used, the articles which are referred to, and the orders which have to be communicated between their own and English units. We are doing that. We are endeavouring to form French-Canadian units and we are watching to see that our French-Canadians get fair representation, just so far as their qualifications permit.

I am sure that my hon. friend would not suggest on behalf of French-Canadians or anybody else in this country, at this time, when we need men who are equipped and trained and efficient that we should take men simply because of language or race unless they are efficient and have the necessary training. We are endeavouring to provide that training. My hon. friend will find that the French-Canadians stand up well in the officers' schools to which they go.

I do not think I can say any more, except to assure my friend that this subject is very much in my heart and in the hearts of the officers at headquarters. I know that he has not the same confidence in or the same warm feelings towards some of the officers at headquarters that I have, but I assure him, nevertheless, that the matter he speaks of is not being lost sight of either here or overseas, as he would know if he could see the exchange of cables which has taken place with regard to various French-Canadian appointments.

Topic:   DEPARTMENT OF NATIONAL DEFENCE
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LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

If I may ask one more

question, will it be possible for charitable organizations to get for the people in need in the poorer districts some of the used clothing from the Department of National Defence as was done before?

Topic:   DEPARTMENT OF NATIONAL DEFENCE
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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Mr. RALSTON:

I cannot make any general statement on that. I received a very special application last night, an application on behalf of sufferers in the recent forest fires in Quebec province, and I did authorize the use of some unused and some discarded clothing for that purpose, to the extent of helping something like six hundred persons. But answering my hon. friend's question, each case will have to depend on its own merits.

Topic:   DEPARTMENT OF NATIONAL DEFENCE
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June 13, 1941