Mr. W. H. GOLDING (Huron Perth) moved:

That the first and second reports of standing committee on standing orders, presented on May 14, be now concurred in.

Hon. R. B. HANSON (York-Sunbury):

I object to this motion. I think the members of the House of Commons ought to understand its import before it is passed. By a

Standing Orders

recent order of the house the committee was instructed to study the request of a certain insurance company which desired to have a refund made to it of some S700, and the committee, on that reference, brought in this report. The committee has not given the house adequate reasons why these funds, which are paid legally under the rules of the house, should be refunded to the company. The rules provide that certain payments shall be made on the incorporation of a company

so many hundred dollars on account of the capitalization-and* if the petition is late in being introduced to parliament a penalty is imposed. The payment was made last year. The company was not before parliament in time. For some reason or other which is not apparent, the bill did not pass the House of Commons. It has been reintroduced, and they suggest now that the whole fee paid last year, legally and in accordance with the rules of the house, be refunded to them. The strange part of it is they suggest in this report that the penalty of $300 should be repaid not to the company but to a private individual.

I suggest to the Minister of Finance that he had better look into the matter. What are the rules there for, and why should moneys be refunded without adequate reason? Four hundred dollars was paid and the penalty was paid under the rules of the house for failure to be on time. They ask that the whole thing be refunded and that $300 be given to a private individual, which in principle is wrong.

I see no reason why there should be a refund of any portion of this money. If the company was late in getting into parliament last year and now seeks to carry the bill through, it should do so without the public revenues suffering. We are getting pretty free with remissions in this house and I think the whole position should be reviewed. I would ask the Minister of Finance to review the whole matter. The company is the Alliance Insurance company. I do not know anything about the company, but the strange part of the whole request and recommendation is that the $300 paid as a penalty shall be refunded to a private individual, the solicitor in charge of the bill.

Mr. GOLDING:

I am satisfied to let the matter stand.

Mr. SPEAKER:

I would point out that the motion is that the first and second reports of the committee be now concurred in. There are two reports, each dealing with a separate subject, and each of them must have a separate motion.

Motion stands.

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

I should like to take the earliest opportunity to place on record the government's appreciation of the splendid response of the Canadian people to the appeal for the fourth victory loan. When, on the 15th of this month, the period fixed for the campaign had terminated the objective of $1,100 million had been exceeded by over $100 million. As soon as the official returns of the campaign are available the Minister of Finance will of course indicate them to the house.

What is even more significant than the fact that the total objective was oversubscribed is that reports indicate that the objective of $500,000,000 for the general canvass and payroll subscriptions will also be exceeded. That fact in itself is a magnificent demonstration of the patriotism of the men and women of Canada, and an equally emphatic evidence of national unity of purpose in firm support of Canada's fighting men in the campaigns which must be undertaken before victory can be achieved.

I should like to express the government's thanks to the chairman of the national war finance committee, Mr. G. W. Spinney, and to the thousands of devoted Canadians _ in national, provincial and local organizations without whose untiring efforts the loan could not have succeeded. I am sure all hon. memr-bers would wish to share in this expression of appreciation of the services of the men and women of our country and of those from other lands who have given of their talents, time and energies to this phase of Canada's war effort. Speaking for the government, may I also express appreciation of the -contribution to the success of the campaign made by hon. members of all parties in their own constituencies and elsewhere.

Hon. members, I am sure, will feel that I am justified in extending warm congratulations to the Minister of Finance, whose efforts on behalf of the loan have been indefatigable. He is entitled to the sense of deep satisfaction which he must be experiencing to-day. The confidence he expressed in the Canadian people in setting the high objective of the Fourth victory loan has been more than fulfilled.

In expressing appreciation of the support and determination of the people of Canada, there is one word I should like to add. The completeness of the victory in North Africa is causing some persons who ought to know better, to say that the major issue in the

Fourth Victory Loan

war in Europe has been decided, and that we may look for the end of the war this year. Significant as is the North African victory, I am sure that in Europe the heaviest fighting still lies ahead. Further decisive battles have still to be fought and won. We have not yet reached the moment of supreme ordeal. The *vay in which the Canadian people have responded to the victory Joan shows that they have not allowed any false optimism concerning an early victory to weaken their' will. We know it would be fatal to let one victory destroy our sense of proportion. The victory in Africa has only touched the fringes of axis power; the assault on Europe has not yet begun. There remains as well the task of defeating Japan. This, clearly, is not a time for relaxing, but a time for redoubling our efforts. It is a time for strengthening our hearts and minds for the tremendous exertions which will still be required to bring the cause of freedom to the hour of victory.

Mr. GORDON GRAYDON (Leader of the Opposition):

I should like to add my words to the congratulatory terms in which the Prime Minister (Mr. Mackenzie King) described the response of the Canadian people to the fourth victory loan. I should like also to support the warning the right hon. gentleman gave with respect to our position having regard to the entire theatre of the war, and to caution the people, as he has done, against any over-optimistic trend at this time. I should like as well to say to the government that in this fourth victory loan the people have done their part. The responsibility now rests with the administration to see that the money thus subscribed is expended with the least waste and the least inefficiency that government operation can possibly achieve.

Mr. M. J. COLDWELL (Rosetown-Biggar):

We should like to join in congratulating the Minister of Finance and the country generally on the satisfactory outcome of the loan.

I am sure we are all gratified at the result.

Mr. J. H. BLACKMORE (Lethbridge):

I feel, too, Mr. Speaker, that there is cause for deep satisfaction throughout the country, and particularly in the heart of the Minister of Finance, because of the success of the fourth victory loan. It was a great effort, and it has been crowned with great success.

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

I should like to refer to

a statement made by the hon. leader of the Cooperative Commonwealth Federation group (Mr. Coldwell) on Friday last. I regret that I was unavoidably engaged elsewhere at the time and so did not hear the statement when it was made. The remarks to which I wrish to draw particular attention will be found at page 2680 of Hansard for May 14, 1943.

The Prime Minister has announced that he is going to Washington. I think it would be well for him while there to inquire into all the matters concerning the signing of Canada's agreement; for I want to ask him what part in this agreement and in the general agreement we are discussing under this bill the Department of External Affairs played. What part did it play in relation to this country?

The matter to which my hon,. friend was referring was the Shipshaw development. So far as the Department of External Affairs is concerned, it had nothing whatever to do with any of the arrangements with respect to the Shipshaw power development. In reply to a request from the United States government, formal assurance was given by the government of Canada, through the Department of External Affairs, to the United States government that there would be no restriction of any kind on the export from Canada to the United States of "all Canadian aluminum purchased by the Metals Reserve Company under contracts entered into prior to the termination of the present war." This, so far as the Department of External Affairs was concerned, was wholly a matter of formal procedure.

When I read the statement of my hon. friend and saw that it contained numerous reflections upon the Canadian minister to Washington, the Honourable Leighton McCarthy, I directed the Under-Secretary of State for External Affairs to have a copy of the statement made by the leader of the Cooperative Commonwealth Federation party sent immediately to Mr. McCarthy in order that he might have these representations before him. That was done on Saturday, and yesterday the under-secretary received from Mr. McCarthy a statement which I think answers all the points' raised1 by the hon. member for Rosetown-Biggar, which statement I wish to read to the house:

Questions asked by Mr. Coldwell may be summarized as follows:

(I) "I want to ask him what part in this agreement and in the general agreement we are discussing under this bill the Department of External Affairs played. What part did it play in relation to this country?"

Answer: So far as the minister in charge

of this legation is concerned, the answer to this question is that he played no part whatever, and he goes further and says that he has

Washington Legation

never discussed with any member of the United States administration or officer thereof, the question of supply of aluminum or the subject matter of the agreements referred to.

Nor has he discussed any questions of taxation with any member of the United States or Canadian administrations or officials thereof.

(2) Mr. Coldwell says: "I find it very difficult to believe that the minister at Washington had nothing to do with negotiations in regard to these matters involving Canada and the United States."

Answer: No matter how difficult Mr. Coldwell finds it to believe, the fact is that the minister had nothing whatever to do with these negotiations, and played no part in them.

(3) Mr. Coldwell says: "He (Mr. McCarthy) is still a director and vice-president of the parent company, the Aluminum Company of the United States."

Answer: Mr. McCarthy is not now nor has he ever been a director or vice-president or officer of the Aluminum Company of America.

(4) Mr. Coldwell: "As a matter of fact Mr. McCarthy has been for thirty years legal consultant to the Aluminum Company of Canada."

Answer: That would be a correct statement beginning with the year 1907, but incorrect as to the last probably 8 or 10 years, when he was superseded by Mr. Aime Geoffrion, K.C., of Montreal, who has been elected a director of Aluminum Company of Canada in Mr. McCarthy's place.

Mr. J. P. Van-Lane referred to by Mr. Coldwell has been a director of the Aluminum Company of Canada for a great many years.

(5) Mr. Coldwell: "Mr. McCarthy is a director of a number of power companies, which, like the Aluminum Company group, have used every means possible to prevent the development of public power in this country, particularly St. Lawrence power."

Answer: Mr. McCarthy is a director of only one power company, namely, the Saguenay Power Company. It is absolutely untrue to say that he has used any means to prevent the development of public power in Canada, particularly St. Lawrence power.

(6) Mr. Coldwell: "Personally I think Mr. McCarthy should be asked to come back to Canada and explain to the government why it is that he has retained these directorates in spite of custom."

Answer: There is no necessity for Mr. McCarthy to go back to Canada to explain this. The Prime Minister was told by Mr. McCarthy before he accepted the Washington position that he would not dissociate himself from his business connections, and that if it were necessary for him to do so he would have to decline to take the Washington post.

It might be pointed out here that the acceptance by Mr. McCarthy of the Washington post was of a temporary character, pending the convalescence of Mr. Loring Christie, who remained minister, and Mr. McCarthy declined even to say that he would remain for the duration of the war.

Mr. King in making the announcement stated as follows:

"He has agreed to accept the position for such time as he is able to give his services at Washington."

Newspapers at the time this announcement was made all fully reported Mr. McCarthy's various directorates, and the public were fully aware of his business associations.

Mr. Coldwell, apparently, from Hansard, was in the house at the time Mr. King made his announcement of Mr. McCarthy's acceptance of this post, and could hardly have been unaware of what the newspapers were carrying in regard to Mr. McCarthy and his business associations.

(7) Mr. Coldwell states: "This house should know that the New York State power authorities in its annual report for 1937 named Mr. McCarthy as one of the men blocking the development of the St. Lawrence waterways as a public enterprise."

Answer: Mr. McCarthy never heard of this alleged report until a few weeks ago when referred to by Mr. Stone, correspondent for the New York newspaper P.M., from whom Mr. Coldwell evidently got this quotation. Mr. McCarthy told Mr. Stone that it was absolutely incorrect. However, he passed it on to Mr. Coldwell, and Mr. Coldwell has seen fit to use it.

Mr. McCarthy specifically states that he is not one of those *who opposes the development of the water power resources in the St. Lawrence and Niagara rivers, but on the contrary was one of' those who supported it, and is prepared to support it either by public enterprise or private enterprise. He denies explicitly that he ever played any part in obstructing development of these waterways by either public or private enterprise.

I have only to add that I am prepared to support all the representations made by Mr. McCarthy in the statement he has presented here. What is disclosed with respect to his relationships with the government, and his position at Washington, are entirely in accord with my knowledge of the situation.

As Mr. McCarthy says, at the time he took the position in Washington it was only as a result of very strong persuasion, both on my part and on the part of some of my colleagues, that he, as a patriotic duty, undertook for the time being to give up the active associations he had with different businesses in Canada, and to give his entire time at Washington to the service of our country, while serving there in the position of minister. It has been with real difficulty that it has been possible to persuade Mr. McCarthy to continue in that position. In 1941 he asked me if, in the light of conditions then existing, he might not be relieved of the post, and someone else be appointed in his place. In 1942 he went so far as to tender his resignation, but I persuaded him to remain, having knowledge of the exceptional services he was rendering not only to Canada but as well to other parts of the British empire, through his post at Washington as Canadian minister. It would have been deplorable had he not seen his way clear to continue in that position.

Washington Legation

In February of this year Mr. McCarthy delivered an address, before the Canadian Club at Toronto, I believe it was. In that address, which was broadcast, he made it perfectly clear that he was not clinging to the job he now holds, but that the job was clinging to him; and that he wished it to be known that his continuation in the position he held at Washington was due entirely to his sense of public duty, and as a result of the request the government had made that he continue in that position.

I wish it were possible for me to give to the house some of the communications which have passed between Mr. McCarthy and myself in regard to what he has achieved in his work at Washington. Unfortunately time and other circumstances do not permit my doing so. But I do say to the house I have the best of reasons for knowing that Mr. McCarthy is performing a duty as minister for Canada at Washington which, I believe, under existing circumstances, and under conditions of war, could not be as well performed by any other person who could have been selected.

May I say a word with respect to resignations from directorates, and the like, by one who does not seek to make the diplomatic service a career. Mr. McCarthy has never sought to be a diplomat. He has had an exceptionally wide business experience, and has an exceptional acquaintance with men in all parts of this continent; and those same exceptional relationships are of service to the country in the position he now holds. But it would not be possible to secure for diplomatic posts for the period of the war men of Mr. McCarthy's attainments in business and in professional life if appointees were obliged1 to sever completely all their business associations and connections. I do not believe hon. members think that any gentleman who has honourable obligations, when he is holding the high position of minister in another country, is likely to descend to any act which would be open to criticism, or one which would not be expected from a person holding that position.

I knew Mr. McCarthy in the days when he was a member of the house-a good many years ago-as at least some other hon. members who are here now also knew him. I am quite sure that they will agree with all his friends that a man of higher integrity, a man who would be more scrupulous in the observance of all that is essential in public relations, could not be found anywhere. I expect to see Mr. McCarthy to-morrow, and I have no doubt that as a result of what has been said by the leader of -the Cooperative Commonwealth Federation I shall again have to

use what persuasive powers I have to cause him to continue to carry on in the position which he has filled so admirably. However, I believe he will be the first to appreciate that, in the light of -the statement which he himself has made, innuendoes of the character made by the hon. member are really unworthy of him. Knowing the appreciation my hon. friend has of what is involved in these diplomatic relations, I cannot understand why he did not do what Mr. Stone did- in relation to Mr. McCarthy, and go direct to Mr. McCarthy to see if he would be justified in making these representations in public. My hon. friend could have come to me and asked if these things were true, and I would have told him. If men who assume high responsibilities of -this character are to be subjected to all kinds of irresponsible representations it will not be possible for the government to keep in the public service the men who are so greatly needed in this time of war.

Mr. M. J. COLD WELL (Rosetown-Biggar):

Mr. Speaker, I do not know under what order of business this is being done, but since the statement I made on Friday has been criticized and attacked by the Prime Minister I presume I have a right as a matter of privilege to say something in relation to it.

I am glad -to have any correction of any misstatement that I may have made, but what I said was said in perfectly good faith and was based on information which I believed to be correct. The Prime Minister has not dealt with the very important statement which I made in connection with Mr. McCarthy, that is, that right up to January of this year he was a director of the Aluminum Company of Canada. If I were in error in speaking of his association with the Aluminum Company of the United States, I was not in error with regard to the Aluminum Company of Canada. I made this statement because I believed, as I have always believed, that Canada should be represented, abroad by gentlemen who have no association with companies or corporations which may be involved in negotiations between our country and the ones to which -they represent us. I understand that it is obligatory upon cabinet ministers to resign directorships. I understand that when Mr. Burchell was appointed high commissioner -to Australia a few years ago special permission was given to him to retain a directorship when he was acting in that capacity. I bring this to the attention of the house because I believe, in spite of what the Prime Minister has said, as I stated in my remarks on Friday, that while Mr. McCarthy may have been guilty of nothing improper, this is an unhealthy situa-

Coal Emergency

tion and I think it is a matter which the government should take into consideration. They should see to it that when we are negotiating deals of this description with other countries which may involve great corporations our ministers are free from any association which may lead to the kind of suspicion which was in my mind and in the minds of a good many other people.

Mr. MACKENZIE KING:

In reference to the statement my hon. friend has made, this is the answer which Mr. McCarthy himself has made to the hon. member:

Mr. Coldwell: "As a matter of fact Mr. McCarthy has been for thirty years legal consultant to the Aluminum Company of Canada."

Answer: That would be a correct statement beginning with the year 1907, but incorrect as to the last probably eight or ten years, when he was superseded by Mr. Aime Geoffrion, K.C., of Montreal, who has been elected a director of Aluminum Company of Canada in Mr. McCarthy's place.

Mr. COLDWELL:

Since when?

Mr. MACKENZIE KING:

Eight or ten years. He has been legal consultant for eight or ten years and was chosen a director later. May I say a word in reference to my hon. friend's further remarks about gentlemen who happen to be directors. Are we to assume in this parliament that when a gentleman takes on a public position as a war duty he is to be subjected to criticism as one who will be performing unworthy acts simply because he happens to have a business connection with some large concern? I do not think it is fair to human nature to assume anything of that kind. I believe that most men have a strong sense of public duty. If a man were entering a diplomatic career in which he expected to remain for the rest of his life, I agree that he should there and then have to choose between directorships and the like-

Mr. HANSON (York-Sunbury):

What about cabinet ministers?