Mr. ILSLEY:

No; I did not take it that

way at all. As a matter of fact, while my views and those of the government on matters of finance are very different from those of the hon. member for Vancouver-Burrard, I have appreciated his attitude during the war. With his considerable ability as a parliamentary speaker, if he were to attack and had continued vigorously to attack the policy of the government, it would have been embarrassing and prejudicial in the conduct of our loan campaigns, and the carrying out of our policies of taxation. While he has these views he has shown a great measure of restraint in the tone of his address to-day. It was simply the tone which one would use with a view to keeping one's position on record, in the hope that at the proper time it might be favourably considered.

As I have said, I differ from him. I do not think the printing of money is the proper way in which to finance a war. To-day the hon. member advocated that the mint should be turned to that purpose. If we wish to print money we have another mint in which we could do it, namely, the Bank of Canada. The borrowing of money from the Bank of Canada has exactly the same effect as the printing of it at the Royal Canadian Mint. The mint does not print money; it makes coins.

Mr. McGEER:

I was talking about the physical part of it. The bank note company is the private corporation making notes.

Mr. ILSLEY:

There is nothing new either in the hon. member's position or in mine, and I do not desire to revive old controversies, or to enter into old discussions. For the purposes of the record perhaps I should reiterate my position, that I think it is highly undesirable

to finance a war, or indeed anything else, by the heavy printing of government money, either by borrowing from the Bank of Canada or by direct printing operations. And while the drawback of the system we follow is that it results in the creation of a heavy internal debt, it is my belief that that is by far the lesser of the two evils.

I do not like of course to see the debt of this country piling up. But I do feel it can go a great deal further without seriously interfering with our ability to service it. I say that because the interest rate is coming down steadily. It is now about 2-6 per cent, or around 2J per cent; and the addition of very considerable sums to our debt do not increase1 interest charges very much. When one compares the interest charges with the total amount we have to raise, although we could not say they are a drop in the bucket, yet we can say they are very, very small indeed. It i my belief that the system we are following is considerably the better of the two. If we were to follow the other system I do not know how we could prevent the tremendous volume of money which would be in existence in the country from creating an uncontrollable price rise, a runaway inflation.

The hon. member was good enough to say that we had proved that we could control inflation. I wish I was just as sure as he is that we can, over a long period of time. We-have a bitter fight every day in our efforts-to do so. And we could not, if we did not tax. as severely as we do, and go to such tremen- ' dous lengths to siphon back the purchasing power of the people by borrowing from them.

If we did not do that we could not begin to make our price ceiling stick at all.

In other words, we have to borrow large sums from the people, and we must pay them interest in order to induce them to save. That is why we have to pile up interest charges. We are not doing it for fun. We are not doing it because we like doing it, but because we are engaged in a terrible war. Some of the things we have to do would not be done in s perfectly planned utopia, under ideal conditions. I do not wish to enter into the discussion at greater length. The hon. member for Vancouver-Burrard has been considerate1 and moderate in what he has said this afternoon, and I am trying to be the same.

In our fourth victory loan we are going to ask the people of Canada for a very large sum of money. I do not want them to think that we do not know what we are doing, or that we are off on the wrong foot, and that the whole thing is needless or unnecessary. The method we are following is the one followed in Great Britain, in the United States, and in other

Supply-Finance

British dominions and, in my view, it is the better one. That is all I can say on the point.

Mr. MacINNIS:

Do all civil servants or all government employees under a certain salary range receive the cost-of-living bonus?

Mr. ILSLEY:

All public servants-what we call civil servants-receive the cost-of-living bonus if they are in receipt of less than $2,100 a year, or $175 a month. I cannot think of any exceptions.

(Mr. MacINNIS: An exception was brought ;to my attention, in connection with the employees in the office of the custodian of enemy property in Vancouver. It was pointed out to me that they are not receiving the cost-of-living bonus. While I have not had an opportunity of verifying my information, I should like the minister to look into it. I see no reason why these government employees should not be placed on the same basis as others.

Mr. HANSON (York-Sunbury):

I should

like to give the details of the case of a wife of a civil servant who in order to help out in the effort went into the service. She gets only $50 a month as a grade one civil servant. I have given the details of this case to the chairman of the civil service commission. She went in as a grade one stenographer and .has lately been transferred to a branch in matronal defence where she is in charge of six operators of machines. She is quite .capable and was to get an increase in her grade, but she was told that she would have to wait until after six months. That time has expired and she has not received her increase, the theory being that there is a new ruling, either already in effect or to be put into effect, that no increases can be granted until she has been there a year. I believe there are cases where the cost of living bonus has not been paid. The whole thing is in the hands of the treasury board and I shall not pursue it any further.

Another matter was brought to my attention recently which will come up under item 1$'2, "Annuities Act-further amount required, $3,500." I will put the facts of this matter on the record so that the minister and the Minister of Labour may be able to answer to-morrow. I do not expect an answer today. It has been reported that the annuities branch is to be taken from the Department of Labour, which has handled it for over twenty years, and passed over to the Department of Finance. My recollection is that the annuities branch was formerly under the Post Office Department, but was passed over to . the Department of Labour about twenty years ; {Mr. Ilsley.]

ago because it was considered that the latter department was more interested in the social security programme than was the Post Office Department:

Since 1908, when the annuities system was first established and put into operation, fathered I believe by Sir Richard Cartwright, approximately $200,000,000 have been raised at a cost of one and a fraction per cent, apart from interest on the funds. Last year the annuities branch did $20,000,000 worth of business. With due respect to the hon. member for Vancouver-Burrard (Mr. McGreer), these annuities have been looked upon as the small people's savings bank. If sufficient support is continued to be given by the government, it is estimated that the annual income might be raised to $100,000,000. We are talking about social security, but if this branch is to be scrapped as has been suggested-

Mr. ILSLEY:

Who suggested it?

Mr. HANSON (York-Sunbury):

Before I am through I intend to ask the minister if it is to be scrapped.

Mr. ILSLEY:

Has anyone suggested that it was to be scrapped?

Mr. HANSON (York-Sunbury):

That is the report, that it is being transferred to the Department of Finance.

Mr. ILSLEY:

To be scrapped?

Mr. HANSON (York-Sunbury):

And at a later stage, may be scrapped. I suggest to the minister that there should be some undertaking given, not only that the branch will be carried on but that it will be extended. This constitutes a fine economy in the lives of many people; it represents a great saving and it ought to be protected. There may be good reasons why the branch should be transferred to the Department of Finance, but as yet I am not aware of them. It has been suggested to me further that there is in contemplation a reduction of the four per cent interest on annuities to three per cent, which will make it practically impossible for annuities to be sold to the people of Canada who have available to them war savings certificates and bonds which may be cashed at will. I wonder if the insurance companies have made any representations to the minister and the department.

Mr. ILSLEY:

Apparently somebody has given the hon. gentleman some material from which he is reading-

Mr. HANSON (York-Sunbury):

I have a memorandum.

Mr. ILSLEY:

-in order to stop something they fear. Why does the hon. gentleman say

Right Hon. Anthony Eden

that it will be impossible to sell annuities to the people of Canada if the rate is three per cent? I do not know of any plan to reduce the rate to three per cent, but I should like to know why the hon. gentleman is interjecting a highly tendentious statement into his memorandum, or perhaps somebody has done it for him.

Mr. HANSON (York-Sunbury):

If the rate is reduced from four to three per cent you will not sell any annuities because the people can put their money into war bonds which will be more readily available for resale. That is the theory I have in mind. Then there is no tax on war certificates. I should like to have an undertaking from the minister, first, that there is no contemplated transfer of this branch to the Department of Finance, or, if so, that he give us the reason why it is being done; second, that there is no intention on the part of the government to scrap this system of savings-one of my regrets is that I did not avail myself of it years ago-third, that there will be no tinkering with this matter in the interests of the insurance companies, because we all know that the insurance companies cannot handle these annuities as cheaply as can the government. That is what I say, and perhaps the minister will give some attention to it.

Mr. ILSLEY:

The hon. gentleman has said quite a lot; he has been making statements in the form of questions.

Mr. HANSON (York-Sunbury):

Interrogatories.

Mr. ILSLEY:

I am not in position to make any statement on that. I am under the impression that some consideration has been given to the terms of annuity contracts and the department by which they should be administered. When the decision is arrived at, it will be announced. Before that is done, I cannot make any statement about it.

Mr. HANSON (York-Sunbury):

Can the minister say that the system of government annuities is to be maintained? Such a statement will be reassuring to many people.