Mr. ABBOTT:

And not paid out in dividends or interest otherwise.

Mr. BRACKEN:

Whether they are paid out or not, you are going to tax them to that extent.

Mr. ABBOTT:

No, not if they are paid out in interest.

Mr. BRACKEN:

If the concern makes up to three per cent you are going to tax them on the basis of that three per cent earned. That is in resolution 12, no matter what else there is in it. This afternoon when the acting minister came in he suggested that he was going to make some changes, and certain of those changes were incorporated in an amendment which has been suggested but which, I gather, has not been moved.

Mr. ABBOTT:

It has been moved but not yet put.

Mr. BRACKEN:

That is not a matter of importance.

Mr. ABBOTT:

The record will show that one of my colleagues moved it.

Mr. BRACKEN:

That does not matter. I did not hear it moved.

The ACTING CHAIRMAN (Mr. Golding) :

The amendment was moved and I read the amendment to the committee.

Mr. BRACKEN:

It is not worth while wasting time on, but who moved it?

Mr. ABBOTT:

The Minister of Veterans Affairs.

Mr. BRACKEN:

Sometimes things appear on the record which have not happened, but that does not matter. If it was not moved, it can be; the minister tells us that it is going to be, so that there is no question about it. What was in his amendment? There were two things in it. First, he moved that the word "six" appearing in paragraph

(a) of resolution 12 be replaced by the word "twelve". Everybody in the house accepts that as far as it goes, but it changes no principle. To the extent that it does change, it is more acceptable to this side of the house and, I think, to all parties on this side. The second part of the amendment was that the words "after the 1941 taxation year" appearing in paragraph (b) be deleted. That covers one of the objections which members on this side of the house and I myself raised the other day. As a matter of fact, the words in that part of the amendment are almost

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identical with the words in an amendment which I would have proposed myself. The words in my amendment were:

That the resolution be amended by deleting from sub-paragraph (b) the words "after the 1941 taxation year."

In that one respect one of the features of the amendment which I would have moved has been completely covered.

The question was raised a little while ago as to what power a private member would have, either at this or at a later stage, to deal with major aspects of this question. I think I am right in saying that a private member of the house cannot move an amendment, either now or later, which would impair the revenues that the government had decided it wants to get. Therefore we are precluded from moving that the taxation on this three per cpnt be cut out, and we are precluded from moving that the taxation on the earnings or profits or savings of a cooperative during the last two years be cut out.

For the information of the acting minister when he is drafting his bill, I should like to read the other amendments I would have proposed. The minister has to some degree agreed to put these into effect, although perhaps in one instance not completely. The first clause of the amendment that I would have moved and had planned to move until the acting minister proposed to make certain changes was:

That the said resolution be amended as follows:

(a) by adding after the word "made" in the seventh line thereof the words "in cash or its equivalent of any kind."

That was intended to not limit the exemption on patronage dividends to dividends paid in cash only; it was intended to apply the exemption to dividends paid in cash or some equivalent. The minister has said that he is going part of the way to meet that, and we shall have to wait until we see the bill to know how far he is going. Perhaps that may be too wide; perhaps the minister's plan may be too narrow, but when the bill is brought down the house can deal with it. The other clause of my amendment was:

That the said resolution be amended as follows:

(b) By deleting from the second line of subparagraph (a), and from the first line of subparagraph (b), the words "his customers," and substituting instead thereof "its members," and from sub-paragraph (c) the words "his contracts with his customers" and substituting instead thereof "its contracts with its members."

The point of that amendment was to see that cooperative organizations shall not be required to pay partonage dividends to nonmembers. The minister has given some indication that he will accept that, as I interpret his remarks. I think that is one thing that all members on this side want done, and to the extent the acting minister does it he will be meeting the wishes of hon. members.

I should like to ask also that the minister clarify as simply as possible just how he intends to apply the taxation to these three types of cooperative organizations for the last two years. I know he dealt with it this afternoon, but that was in the form of a prepared statement which I have not as yet seen.

Mr. ABBOTT:

That was not a prepared statement; that was extemporaneous.

Mr. BRACKEN:

Then the minister can do it extemporaneously again, and perhaps in a shorter time.

I rather hesitate to refer to a matter which was raised by one of the speakers this afternoon. Ordinarily, when a private member asks a question and requests an answer of me I do not feel compelled to give it. This afternoon the hon. member for Dauphin raised a question as to my authority to speak for this party, and he referred to someone in Winnipeg who speaks either for himself or for an organization known as the income tax payers' association.

I think every one admits that we are still living in a country where there is free speech. Mr. Thorvaldson is entitled to speak for himself or for the organization he represents. Whatever may be the merits or demerits of his attitude toward this matter, he does not speak for this party. If there is any question about that, let this one simple statement answer it. The question was raised as to the sincerity of myself or of this party with respect to this matter by the hon. member for Dauphin.

Mr. ZAPLITNY:

I am sorry to have to

interrupt the hon. member, but that is not a correct interpretation of what I said. There was no question raised as to the sincerity of the leader of the opposition-

Mr. ROSS (Souris):

There was of this

group.

Mr. ZAPLITNY:

I do not think there was even that. All I wanted to know was whether he or Mr. Thorvaldson spoke for the party.

Mr. BRACKEN:

If the hon. member had to wait to be told that, he is not half as intelligent as he appears.

With respect to my attitude on this matter, no member who is familiar with the history of the cooperatives in western Canada can have any doubt about it. Let me say briefly that if it had not been for the stand taken by myself and two other men-I happened to be

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premier of Manitoba at the time; another was the premier of Saskatchewan and the other was the premier of Alberta-if it had not been for our attitude with respect to saving the cooperatives from destruction in the year 1930 there would not be any western wheat pools to-day. At that time these well-intentioned organizations, trying to serve their farmer members who formed the organizations, had advanced initial payments on hundreds of thousands of bushels of wheat at a time when the price of wheat was rising. If I remember correctly the payments advanced were 60, 70, 80 and eventually 90 cents a bushel. I am just calling on my memory because this was in 1930.

Mr. WEIR:

One dollar a bushel.

Mr. BRACKEN:

The hon. member for

Macdonald says, "one dollar a bushel." The pools advanced that money to the farmers because the price of wheat was considerably higher, but before the crop was sold the price of wheat went down below the amount that had been advanced. These organizations, in order to finance, had borrowed from the banks, which was a legitimate business transaction, the way they were carrying on their business and had given the banks security on their organization for the repayment of the money. The banks saw the danger that was coming and they were taking the position that the grain should be sold before heavier losses were sustained. The three western premiers, feeling that, if a huge crop were dumped on the market, the price of wheat might be driven down to 30, 40 or SO cents a bushel, went to the banks and said: "Even though you have the power, do not do this. Do not do anything that will cause the market to crash. If now you want to protect yourself and you are afraid, we will guarantee that you will get back the money you lent to these organizations on condition that you undertake not to have this crop thrown on the market."

So the crop was not thrown on the market. The three western governments guaranteed the banks against loss of the money they had advanced to these cooperative organizations. But when the accounting came, the pools got less money for the crop than they had advanced. There were other steps taken, which I need not go into now, and eventually the dominion government was brought into the matter in later years. As I said, the pools had paid the farmers more money than they got for the crop, because in the meantime the price has gone down.

What was the result? I will deal with only one province. The Manitoba pools came into the possession of the Manitoba government

because of the guarantee it gave.. The Manitoba government could have kept these pool elevators. It could have sold them to private concerns. It could have sold them back to the farmers themselves. What did we do? We did not keep them ourselves. We had had in that province a previous experience with government-owned elevators which was not to the credit of government ownership, although I am not blaming government ownership generally. But the results in that particular case were far from satisfactory.

WTe did not sell the elevators to private concerns. Everybody was looking to get the elevators at a low price. We sold them back to the original owners-the farmers-on time. They had no money, but we had faith in their integrity, and we sold these elevators back to the men who had1 owned them before. We sold them back to them, not at the amount we had to pay to rescue them, but at a loss of one and a quarter million, dollars, and if the farmers of Manitoba to-day have a cooperative organization know as the Pool Elevator companies, it is because of that act.

While I am telling the story, let me say that the agreement entered into by that organization, as I remember it, was this. It was to pay for the elevators so much a year over twenty years. We had even to help them with their operating expenses. They have lived up not only to the spirit but to the letter of their agreement, and they now have those elevators practically all paid for.

The cooperatives in Manitoba never asked for any favour from me or from the government I led, and we never promised them any. But they expected, and we were always willing to assure them, that they would get a square deal. And now, as the hon. member for Calgary West has said, the job in this house to-day is to find a fair system of taxation of these and other organizations, to find it without discouraging or hurting these organizations, which, as so many members have said, are a splendid acquisition to the economic life of this country. I would not have referred to this personal experience of the past if it had not been for the question raised this afternoon by the hon. member for Dauphin. I do not ask this house to give favours to the pools. I agree with .those who say that we must find a system of taxation which by itself will not drive the industry of this country from one kind of economic industry to another. At the same time we must recognize what Doctor Coady said this afternoon, that the pools are not only a great economic organization but

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a great social organization, and we in this house must not do anything to discourage their sound development.