June 25, 1946

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

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

I do not know that I am the minister to deal with the inquiry-it may be the Minister of National Revenue. If the hon. gentleman will send me any information which he has-it would need to be fuller than that which he has given to the house to-day-I shall see if it can be checked.

Topic:   MOTOR VEHICLES
Subtopic:   IMPORTATION OF JEEPS FROM THE UNITED STATES
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PC

Norman James Macdonald Lockhart

Progressive Conservative

Mr. LOCKHART:

I shall be glad to do that.

Right Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of supply.

Motion agreed to and the house went into committee of supply, Mr. Golding in the chair.

Topic:   MOTOR VEHICLES
Subtopic:   IMPORTATION OF JEEPS FROM THE UNITED STATES
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INTERIM SUPPLY BILL

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY moved:

Resolved, that a sum not exceeding $136,598,972.86, being one-twelfth of the amount of each of the several items to be voted, as set forth in the estimates for the fiscal year ending 31st March, 1947, laid before the House of Commons at the present session of parliament, be granted to His Majesty on account for the fiscal year ending 31st March, 1947.

Topic:   INTERIM SUPPLY BILL
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LIB

Robert Wellington Mayhew (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. R. W. MAYHEW (Parliamentary Assistant to the Minister of Finance):

I should like to inform the committee that I have made arrangements with the leader of the opposition and the leaders of the other parties to allow interim supply to go through at this time. In doing so I wish to say that the passage of this interim supply will not prejudice in any way the rights and privileges of the members of the house to criticize and oppose any item in the estimates, and I have pleasure in giving the usual assurance in that regard on behalf of the Minister of Finance.

Resolution reported.

Mr. JEAN-FRANCOIS POULIOT (Temis-couata): Before the resolution is concurred in, Mr. Speaker, I have just a few observations to make about some answers which have been placed on Hansard. On May 12, 1943, I gave a warning that millions of dollars had not been accounted for in 1943, and I asked why it was impossible to render an account for $17 million for the year 1942 and $41 million for the fiscal year 1942-43. The Minister of Finance submitted that the observation was out of order, and the chairman ruled me out of order.

To know what Canada has spent during the war we must consider first the revenue from taxation, and second the increase of the dominion debt during the war through victory loans, et cetera. In Hansard of May 27, 1946, at page 1881, the answers were given as follows:

Total revenue of the dominion from September 1, 1939, to February 28. 1946, was $12,681,719,279.

The net debt up to March 31, 1945 was $15,712,181,527.

Topic:   INTERIM SUPPLY BILL
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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Order. I am sorry to interrupt the hon. gentleman, but if he will look at standing order 38, debatable motions, he will see that the second reading of this resolution is not debatable.

Topic:   INTERIM SUPPLY BILL
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IND
LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

I asked the hon. gentleman to refer to standing order 38, debatable motions. If he does that he will see that as we are on second reading of a resolution, thi motion is not debatable.

Resolution read the second time and con curred in.

Ways and Means-Interim Supply

Topic:   INTERIM SUPPLY BILL
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WAYS AND MEANS

INTERIM SUPPLY


Right Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of ways and means. Motion agreed to and the house went into committee, Mr. Golding in the chair. amounted to $17,366 million, making a total of $22,068 million. If we recapitulate these figures we get the following result: million Total revenue from September 1, 1939 to February 28, 1946, and war debt to March 31, 1945 24,626 Non-war expenditure and war expenditure from September 1, 1939", to February 28, 1946 22,068 Mr. ILS'LEY moved: Resolved, that towards making good the supply granted to His Majesty on account of certain expenses of the public service for the fiscal year ending March 31, 1947, the sum of $136,598,972.86, being one-twelfth of the main estimates, be granted out of the consolidated revenue fund of Canada.


IND

Jean-François Pouliot

Independent Liberal

Mr. POULIOT:

In my humble view the revenue and the increase of the debt during war time, the increase of the debt through borrowing on the one hand, and on the other hand the non-war and war expenditures during that period, should balance. As a foreword may I say that the country spends the revenue which comes from taxes, and when there is not enough revenue to meet the expenditures, then there is some borrowing. During the war the borrowing was done through victory loans. The money which has been received from taxation and from victory loans should balance with the non-war and the war expenditures of the same period. This statement seems clear, and everyone may agree with it in principle.

According to the figures given by the Department of Finance on May 27, 1946, at page 1881 of Hansard, the total revenue from September 1, 1930, to February 28, 1946, was $12,681 million. The debt at March 31, 1945, which is the latest figure I have, was $15,712 million. If I subtract from that the debt when the country went to war on September 1, 1939, which was $3,767 million, the balance of the war debt proper up to March 31, 1945, was $11,945 million. If I add the total amount of revenue from September 1, 1939, to February 28, 1946, to the increase in the debt up to March 31, 1945, I get a total war expenditure of $24,626 million. No information was given for the fiscal year ended March 31, 1946. The figure for the total debt at April 30, 1946, was "not yet available" on May 27 of this year.

The official figures given for non-war expenditure and war expenditure from September 1, 1939, to February 28, 1946, do not balance with the total increase in the debt during the above mentioned period, and the total amount of revenue. From September 1, 1939, to February 28, 1946, our non-war expenditure

totalled $4,702 million. War expenditures

Not accounted for

The $2,500 million not accounted for was not a surplus. I quote from Hansard of June 12, 1946, at page 2419:

War Expenditures and Revenue

Mr. Pouliot: Referring to the statement of

the parliamentary assistant to the Minister of Finance at page 1881 of Hansard, May 27, 1946, was the difference of $2,557,559,903 between the war debt until March 31, 1945, and the total war revenue until February 28, 1946, on one hand, and the non-war expenditures and war appropriation from September 1, 1939, to February 28, 1946, on the other, a surplus?

The answer by the parliamentary assistant to the Minister of Finance was:

Mr. Mayhew: No, a surplus is an excess of

revenues over expenditures. In the period September 1, 1939, to February 28, 1946. total expenditures of the government were $22,069,226,313, and total revenues were $12,681,719,279, resulting in a deficit of $9,387,507,034.

I have a note here that this item does not balance with the increase in the war debt, according to the figures given on May 27. Then the hon. gentleman continued:

The figure of $2,557,559,903, which is the difference between the increase in total debt from September 1, 1939, to March 31, 1945, together with revenues in the period September 1, 1939 to February 28, 1946, on the one hand, and total expenditures in the period September 1, 1939, to February 28, 1946, on the other, represents an excess of receipts (including borrowings) over expenditures. This excess would be reflected in the books of the government by increases under various accounts classified as active assets (cash, loans, investments, etc.)

This leaves $7,500 million unaccounted for. The figure of $24,626 million for war expenditure was incomplete, because victory loans and extra-parliamentary expenditure during the fiscal year ending March 31, 1946, were an additional part of the debt and should have been added to this figure. That amount would be approximately $5,000 million. Therefore the total war expenditure, including war revenue up to February 28, 1946, and war debt up to March 31, 1946, should amount to about $29,626 million. A recapitulation of the above figures would give this result:

million

Total revenue from September 1, 1939, to February 28, 1946, and war debt to

March 31, 1946

War expenditure

Not accounted for

Topic:   WAYS AND MEANS
Subtopic:   INTERIM SUPPLY
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Ways and Means-Interim Supply This amount of $7,558 million which has not been accounted for represents $2,000 million more than all the deposits in the ten Canadian chartered banks. It is one-fourth the total expenditure of $30,000 million during the war. It is a very serious matter. I was the only member to complain against the Bank of Canada when it was established. Now the books of the Bank of Canada apparently balance, but there is a secret; there is a mystery behind the doors of the Bank of Canada, and it is impossible to get any information about that. When the banking committee studied the Bank of Canada Act a couple of years ago the attention of hon. members was ably directed elsewhere by a discussion of the supposed hidden reserves of the banks. Much noise was made about it, but no member of parliament took advantage of that unique opportunity to get information about the Bank of Canada itself. I warned some members that a trick was being played; I warned the house and country that it was dangerous to have amounts unaccounted for when we debated the gift made in 1943. But that was a trivial matter; it was a casual matter of no importance! Now there is an amount of $7,500 million which apparently is unaccounted for. In May I asked for information about the amount of the debt to the end of the fiscal year ended March 31, 1946. The only information I got was to the end of the fiscal year preceding. Every business man has accounts showing the operation of his business each morning when he comes to his office. He finds that information on his desk each day. I wonder if the Minister of Finance is not informed day after day as to the amounts of the debt of Canada. If we are to be the bankers of the world, then business should be done otherwise, because that figure of $7,500 million represents the amounts collected in several of the victory loan campaigns. I do not cast any doubt upon the honesty and integrity of the Minister of Finance or his parliamentary assistant. I do not cast any aspersions of dishonesty on anyone in the Bank of Canada. But the day of mystery should be ended. The time has come when the House of Commons should scrutinize the business of the Bank of Canada; and the Minister of Finance should be responsible to the people, just as in the days of Fielding, White and Jim Robb. Parliament is in the impossible position of being unable to get information about the business of the country. Money is spread everywhere, but when we ask for an accounting it is hard to get. Probably it will be made later. I wonder if that is the reason 63260-177J the budget has been delayed so long. Perhaps it may be made. As this document states: This excess would be reflected in the books of the government by increases under various accounts classified as active assets (cash, loans, investments, etc.) When Mr. Dunning was Minister of Finance I asked him for information about the personnel of the Bank of Canada. But his reply was, "No, that is a secret". When Mr. Bennett, upon my advice to one of his secretaries, left for the Antipodes, he took with him a doorman from the Bank of Canada named Brooks. Upon his return I asked the government of that day if Brooks' salary had been paid by Mr. Bennett or by the Bank of Canada while he was travelling with Mr. Bennett. The answers by the Prime Minister and by Mr. Bennett were that I had been very bold in asking such a question, and that no member of parliament should inquire about the Bank of Canada. They said' it was very bad manners to ask if Brooks had been paid by the Bank of Canada or by R. B. Bennett. We are responsible to the people of Canada for the money that is spent outside and inside the country. We must be in a position to inform our constituents when they ask us for information in these matters. It is our duty; are we neglectful of it? We live in strange times. On one occasion I complained about a man who, it was supposed, had sold the same coal three times; but no one was scandalized. Everyone considered him smart. These are the signs of the times. We are neglectful; we are careless; we pay no attention to these matters. Then, afterwards, some people will complain about taxation. They are ready to throw away their money outside, anywhere. We help the world, but we cannot look after our own business. Sir, you will remember how many times I have insisted that the Minister of Finance bring in some reform in the matter of public accounts. The help I got was from two hon. members opposite, the hon. member for Broadview, and the hon. member for Davenport, who is now in his seat. Now when members of parliament complain about high taxation, they will remember that they made no move to reform public accounts. They voted for the loans which we had not the means to make. Having done that, they cannot complain about high taxation; it would seem that they want it. They are responsible before the people of Canada for that high taxation. I wonder if they will not realize the time has come to make a check



Ways and Means-Interim Supply on public business, to scrutinize the operations of the Bank of Canada and to make the Minister of Finance responsible again to the House of Commons in conformity with the old principle of ministerial responsibility. I have asked information about government agencies, the chief of which is the Bank of Canada, including its subsidiaries, such as the foreign exchange control board. That board, it will be recalled, is operated by a man trained by Montagu Norman, and another man, who were doing so much at the Bank of International Settlements in Switzerland, and who during the war were shaking hands with Germans under the table. Those people are here. They are supposed to be internationally minded; I am not. I am nationally minded, although I am not a nationalist. I consider that the Canadians who are here should be considered first, and before any other peoples in the world. It is in their defence I speak to-day. As usual, perhaps I shall have the support of one member-or two. If there are two, there will be a crowd in support of my contentions. I wonder what the people of Canada think about it. These figures are available; they can be collected by the Bank of Canada. It is very easy; anyone could do it. It is only a matter of bringing together the various increases under different accounts classified as active assets, cash loans and investments. Let it be done; let us place responsibility where it should be. Let us say that it has gone somewhere-to the Atlantic, the Pacific, the north pole, or the south pole; we do not know where. But the money has gone. Let us suppose that one has an estate of 1100,000, and that it is to be administered by someone who, while honest, may be incompetent. When the time comes for the rendition of accounts, they are rendered for only $75,000. Where has the other quarter gone? Where is the $25,000? No one knows. It is unaccounted for. That is the situation here. I have simply given in miniature the true picture, which I believe to be my duty. I have informed the house. I wonder if the budget debate will simply be a matter of patting on the back, saying that everyone has done wonderful work, and that we must not disturb those gentlemen in the Bank of Canada who are so very competent and who are under such heavy strain because they work so hard! One time I asked Mr. Dunning how much Graham Towers received. When I asked if it was $35,000 the minister was indignant, and replied, "Not at all; it is only $30,000." In spite of all this incompetence, which has scandalized me, I see a further notice in the papers that these fellows in the Department of Finance are to have a boost in salary because. they have done so magnificently. Yet they cannot render accounts for $7,500 million out of expenditures of $30,000 million.


PC

John Ritchie MacNicol

Progressive Conservative

Mr. MacNICOL:

A salary of $30,000 is a more pittance.

Topic:   WAYS AND MEANS
Subtopic:   INTERIM SUPPLY
Sub-subtopic:   $29,626 22,068 $7,558
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IND

Jean-François Pouliot

Independent Liberal

Mr. POULIOT:

It is a small thing. I

hope I have awakened the. house to its responsibilities, and I hope that every hon. member, no matter to what party he belongs, realizes that he has a responsibility to protect the Canadian people against the incompetency of men who perhaps wdth the best motives in the world have ruled rich concerns in the state.

Then a word about university degrees. Oh, that is a bad thing. I remember that one of these men came to Mr. Bennett and said, "Mr. Bennett, you are not acknowledged as you should be on the North American continent. You should be made a doctor of laws in all the universities of this country." Mr. Bennett said, "Well, you are fair to me; you are a decent chap, and I appreciate what you say." Then Mr. Bennett was made doctor of laws in universities where he had never placed his foot. This is just a form of flattery. These people wear their mortarboards and they begin to think that they are held in higher esteem by the Canadian people. It is still done, and perhaps it is something that should be done more generously.

Members of parliament show a lack of courage and are unfaithful to their duty when they do not denounce those who consider themselves to be high above us and who really govern this country. If I had the proper words at my command I would tell the Minister of Finance and his assistant that I am sorry that they have not the nerve to follow what was done for this country by the pioneers and builders of the past, by men like Fielding, White and Robb. Those men were ready to defend the rights of the people within the precincts of parliament, and that is where it should be done.

At first the Bank of Canada was a private concern with individuals subscribing to some of the capital stock. Then it was taken over by the government and became a public institution. I do not know why the Bank of Canada is not abolished. I do not know why the foreign exchange control board is not abolished. I do not know why ministerial responsibility is not exercised again by the Minister of Finance, why there is not responsibility to the members of parliament who in turn are responsible to the people of Canada.

Ways and Means-Interim Supply

I have said this many times and I am repeating it to-day. It is pretty hard to follow figures when they are being read, but hon. members can read them to-morrow in Hansard. They will then see that there is something behind them. When I am not satisfied with an answer that is given to me I check the figures, and I felt that the discrepancy in the figures that have been given to me was so great that the matter should be brought to the notice of my colleagues in the house, which I have done.

Topic:   WAYS AND MEANS
Subtopic:   INTERIM SUPPLY
Sub-subtopic:   $29,626 22,068 $7,558
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PC

John George Diefenbaker

Progressive Conservative

Mr. DIEFENBAKER:

Mr. Chairman, we in the opposition agree with the hon. member for Temiscouata when he says that parliament should have the fullest information and be able to make the strictest examination of the country's accounts. May I add that we are happy to know that the hon. member has disavowed his vow of silence and is once more giving us the benefit of his wisdom.

There is a matter I should like to bring up which has to do with the wartime prices and trade board. For some time the press has reported various small rackets in coupon distribution in different parts of the *. ountry. Ouly to-day La Banque Provinciate du Canada were notified by the wartime prices and trade board that, after July 31 next they will not be permitted to participate in the arrangement for ration coupon banking. The announcement was in the form of a release made outside of parliament while parliament is sitting. The officials of the board explain that this bank has been warned of its method of handling coupon accounts. They say that safeguards recommended by the board to protect the public have not been lived up to by this bank; therefore in the public interest, the board has no alternative but to terminate the arrangements with them. This is the first opportunity we have had in the house to ask what irregularities have been ascertained-because they must have been widespread-how long they have been going oh, and what safeguards recommended by the board were not lived up to. Recently the press reported the investigation had indicated that about a million fake or false butter coupons had found their way into the chartered banks. Apparently the bank in question was warned that its activities were illegal. What measures are being taken to ensure that in common with ordinary wrongdoers they will be prosecuted according to law? I am sure the government would wish to acquaint, the country at the earliest possible opportunity with all the circumstances of this investigation and to indicate what action the government intends to take in order to prevent a repetition of any such practice. If the situation was sufficiently serious to warrant cancellation of the- right of a bank to operate ration coupon banking for the wartime prices and trade board, why is the right not cancelled immediately instead of being continued for over a month?

Topic:   WAYS AND MEANS
Subtopic:   INTERIM SUPPLY
Sub-subtopic:   $29,626 22,068 $7,558
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PC

Thomas Langton Church

Progressive Conservative

Mr. CHURCH:

Mr. Chairman, this is a resolution to vote interim supply of one-twelfth, amounting to 8136,000,000. Fifty years ago last Sunday, on June 23, 1896, the Liberal administration of Sir Wilfrid Laurier came into power pledged to retrenchment. The whole year's budget of the first year they were in power amounted to $36,000,000, which is S102.000,000 less than the one-twelfth that is being asked for now. We are spending billions to-day compared with millions then. There are many good business men in this house, but certainly this house does not conduct its business in a businesslike way. We are now being asked to vote one-twelfth of the whole year's supply from March 31, 1946, when hardly any estimates have been passed at all. In a few weeks another one-twelfth will be asked for, and on the 12th of July, no doubt, another one-twelfth. What we are really doing is making post mortem examinations of expenditures. We might just as well go home. John Hampden stood for an important principle wThen he refused ship money to the king. The hon. member for Temiscouata made a good stand last session and the session before; he was contending for a principle, and that is what we should do in this house. We should see that there is a proper examination of the estimates before they are voted.

The House of Commons has gone down in public estimation. The press came into being because of a lack of real parliamentary representation, and the press to-day represents public opinion more than do the members of the House of Commons, because our rights and privileges are continually being taken away from us, with the result that we have this way of doing business. I contend it is all wrong. The principle is entirely wrong. This is the sixty-seventh day of the session, and the budget has not yet been brought down. We shall be considering it in July and the session will go on until August, and probably September before we get through. That will mean that for six months of the year the money will have been spent, voted one-twelfth at a time, but, with very few estimates having been passed, and some of the departments have not yet been called in supply. There was some reason for proceeding in this

2S04

Ways and Means-Interim Supply

way during the war, but the war has been over for a year, and no budget has been brought down yet.

They do things differently at Washington. There they have applied the axe to expenditures. We are a country of only eleven millions of people, with nine provincial governments and all the municipal governments. Over-government and over-taxation is the curse of this country. Expenditures are being made without public control. We used to have an auditor general. He used to have certain powers, but they have been taken away. He is picking up quite a bit after the criticism of his reports and is doing a bit of checking, but it does not amount to anything because there is an official over him called the comptroller of the treasury. You have a war appropriation bill, A, B, C, D, E, and once the accounts go through within the terms of the appropriation bill, the account is stamped and paid over the head of parliament without any control at all. The country will face bankruptcy if we continue to conduct business in that way. A number of small business men have already been driven out of business by the controllers that have been appointed. Only the other day the owner of a house in Toronto was evicted from his own home and taken to Pape Avenue police station in my constituency. Under an absurd housing regulation issued by the housing controller this man could not get into his own home. I have examined these various controllers and boards and it is time they were all wound up.

Take an institution like the Canadian Broadcasting Corporation. It collects a licence fee of $2.50 and spends public money on capital accounts and yet it is contended that it is a private corporation, not a public corporation. Is it any wonder that the tax rate is as high as it is, and that people cannot pay their income tax? Is it any wonder that the small business man cannot continue in business? There has to be a change for the benefit of the people. Under the comptroller of the treasury we mostly have no control at all of expenditures and no control of the chiselers. There were some real Liberals in 1896. Alexander Mackenzie, it used to be said, slept on the strong-box. He has no counterpart in liberalism to-day. They have even moved his monument into the back yard. Every Tom, Dick and Harry who wants to come to Ottawa and raid the treasury finds no one guarding the nation's strong-box. The people are looking to parliament to do something, and we are doing nothing. If the municipal governments conducted their business the way we conduct ours in this House of Commons, they would be prosecuted under the Municipal

Act for not having done their duty and would be dismissed at the next municipal election. We have no check on our business or on our expenditure. I do not suppose there is much use in protesting, but this is the place where the protests should be made. We cannot go on indefinitely in this way under this new 1946 type of liberalism, where we are spending money like water over the head of parliament, over the heads of the responsible ministers and without any public check at all. If this is the way we are going to conduct our business it is no wonder that parliamentary institutions are going down and down and down in public estimation.

Topic:   WAYS AND MEANS
Subtopic:   INTERIM SUPPLY
Sub-subtopic:   $29,626 22,068 $7,558
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LIB

Robert Wellington Mayhew (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. MAYHEW:

The hon. member for Temiscouata evidently believes that it is better to give than to receive, because he left the chamber after making his remarks. The only criticism I have to make is of his statement that the information was hard to obtain. He was hasty in making that statement. I do not think he had any right to make it. When he asked for information from the department it was immediately supplied to him, and the suggestion was made that if he could not then reconcile the figures given to him, we would have someone from the department visit him and try to show him exactly what was meant by the statement. As to the rest of his statement, it will be brought to the attention of the minister and of the governor of the bank.

As to the statement made by the hon. member for Lake Centre, I am not familiar with the- matter, but it will also be given attention, and as soon as the information can be obtained it will be brought down. I exipeet that in a very short time there will he an opportunity to discuss this if it is necessary. The estimates for the mounted police will come on just as soon as the estimates for health and welfare have been dealt with, and any information we have can be given at that time. I hope that will meet the hon. member's request.

Topic:   WAYS AND MEANS
Subtopic:   INTERIM SUPPLY
Sub-subtopic:   $29,626 22,068 $7,558
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PC

John George Diefenbaker

Progressive Conservative

Mr. DIEFENBAKER:

I would not wish to put the parliamentary secretary in an embarrassing position. But there was a press release on this matter to-day, and I cannot see why parliament should have to wait three or four or five weeks for the estimates of the wartime prices and trade board in order to get the information. I ask the parliamentary assistant to have the information furnished to-day. Parliament is entitled to any information given in press releases and more. I do not want to be unfair to the parliamentary assistant, but I do insist on the information being given now, to-day, before this resolution is passed; otherwise it is just one more instance of parliament

Ways and Means-Interim Supply

being ignored. The hon. member indicated that if it was necessary to give any information, possibly it could be given later. I am sure what he meant was that after the matter had been checked with the wartime prices and trade board the information would be forthcoming. I ask for it to-day.

Topic:   WAYS AND MEANS
Subtopic:   INTERIM SUPPLY
Sub-subtopic:   $29,626 22,068 $7,558
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June 25, 1946