Mr. SPEAKER:

I am sorry to have to

interrupt the hon. member, but after all there is a rule which must apply to every hon. member, and if I permit the hon. member to discuss the Japanese question I must give every other member the same permission.

Mr. Speaker, may I with great respect say that I cannot accept the ruling that you made or I think were about to make. It seems to me that the principle of this resolution is trading with the enemy, and if the operations of the custodian deal with the Japanese as an enemy, I submit that the question is wide open. I think it is a matter for the judgment of the individual member who has the floor. I think your advice is good, Mr. Speaker, but I think your ruling would be wrong.

Trading with the Enemy

Mr. SPEAKER:

I must say to the house

that I did not give any ruling. I just suggested to the hon. member what I thought would be in the interests of every member of the house. If it is the wish of hon. members to go into details, the house of course is master of its proceedings. I felt it my duty, however, to suggest to the hon. member that he should not go into details until the house is in committee of the whole, but if hon. members believe that the Japanese question is related to the resolution I will listen to the hon. member.

Mr. FLEMING:

I do not wish to prolong this discussion, Mr. Speaker. In deference to your views and apart altogether from whether you gave a ruling or not, I shall be content to follow this matter up in committee when there may be an opportunity to question the Secretary of State regarding it.

I point out to the minister that his statement has been brief. There are numerous questions inherent in the resolution and in the bill which will follow. Most of them arise out of the fact that secrecy has surrounded all these operations. In the seven and a half years that these regulations have been in effect the house has not been given information. Before we proceed very far with this measure I think the house wdl rightly demand and insist that the fullest kind of report concerning operations under these sweeping regulations be given to hon. members and to the people.

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

I should like to support what the hon. member for Eglinton (Mr. Fleming) has said with regard to reports. This particular resolution foreshadows the introduction of a bill, but before we discuss the bill we should have the kind of report which the hon. member for Eglinton has suggested. Many of us have been disturbed by the operations of the custodian of enemy property. We should like to know just what property has been dealt with, and in what manner. Properties have been taken away from organizations and from individuals and have been sold. We should like to know something about the operation. Certain patents have been in the hands of companies which have been associated with nazi organizations such as I.G. Farbenindustrie, and I should like to know for example what has become of the royalties due to Farbenindustrie from the Bayer Company, which makes aspirin in Canada, and after the outbreak of the war what was our position with regard to the Bren gun royalties, and a few other matters of the kind, information as to all of which would be interesting to the house and to the country.

Therefore, Mr. Speaker, I wish to support the request of the hon. member for Eglinton that before we consider this bill we have in our hands a complete report of the operations of the custodian of enemy property, particularly on such matters as I have indicated.

Mr. T. L. CHURCH (Broadview):

I do not wish to debate this resolution but I wish to object to its text and to the way in which the government is approaching this problem. We made the same mistake after the first great war. When we go into committee we shall be bound by the text of this resolution and by the regulations affecting trading with the enemy.

During the war we found that there were no regulations made by one dominion; they were made by the allies, as I understand it, and they expired in 1945. What happened after that? Provision is now being made for the continuance of certain regulations respecting trading with the enemy and the disposition of enemy property or compensation respecting property in enemy territory. The whole policy is all wrong. We have already seen the result of this policy in the peace treaties after the first war. We are now going to carry on with regard to the disposition of enemy property. Canada got very little enemy property-and the same can be said of the other dominions after the first great war. We are going to make the same mistake this time because we are signing a separate treaty. We signed the halibut treaty separately from the other dominions. If we had hung together as dominions with the mother country, what would have happened? We would have got from this war a far larger share of the enemy property, of the property of Japan, Germany, Italy and all the rest of them. We shall get very little after the four big powers are through. By the treaty of Versailles we got very little out of Germany and Greece. Greece owes us a large sum today, and we are going to make the same fatal mistake today. If the dominions would hang together we would have something to say about the peace terms and about this enemy property, because we have either to hang together with the mother country or hang separately. There will be very little enemy property left after the four big powers take their shares. If we continue to sign treaties separately we shall have nothing whatever to say about the peace terms, and I doubt whether we shall get very much out of enemy property. We owe that to the policy of signing treaties separately instead of hanging together in peace us we hung together in

Trading with the Enemy

war. None of the dominions is strong enough to go it alone. If we continue to make treaties with every country on earth we shall get the worst of it all along the line. I doubt whether there will be anything left after the four senior powers have had their shares. We deserve the treatment we got because of our separatist action in taking the stand we did. In the twenties many of us on this side of the house opposed the dividing of Britain's representation in the halibut treaty. I am glad that I opposed it because we found out afterwards that we had very little to say by ourselves and got little. We also want to run this thing ourselves and decide ourselves as if we were a large power. We have seen the result of it all in the turmoil of the united nations organization.

Mr. GORDON GRAYDON (Peel):

What I have to say will be largely confirmation and emphasis of the point which has been made by the hon. member for Eglinton (Mr. Fleming) and the hon. member for Rosetown-Biggar (Mr. Coldwell) in regard to the custodian of enemy property. I hope that the government has not come to the position where it still thinks that this country is at war.

Under the stress and strain of war there may have been reasons why certain information possessed by the custodian of enemy property should be withheld from the public. I do not admit that, but it is a possibility. But it does seem to me that we have gone a long way in pulling down the blinds, putting up the shutters and locking the door so far as the custodian of enemy property is concerned; particularly is this true when one realizes that in the great country to the south a report is published by the custodian of enemy property. We find that when we want such a report we cannot get it; it is not available to hon. members; it is not available to the public.

I hold in my hand the annual report of the office of alien property custodian of the United States of America for the fiscal year ended June, 1944. If there is an argument in favour of withholding from the public of Canada the various items relating to the custodian of enemy property here, then surely the same argument would hold good in the United States, where perhaps an even greater extension of the work of the custodian is carried on.

In this booklet which I hold in my bandit consists of about 256 pages-there is a full description of the work of the office of the alien property custodian for the year 1944.

Mr. GIBSON (Hamilton West):

Does that booklet refer to alien property or alien and

enemy property? Does it deal only with the United States aliens resident in that country?

Mr. GRAYDON:

It deals with the alien property custodian's office. I shall now detail for the minister's consumption just what it contains. It covers the policies and techniques which are used in connection with the running of the office; a general description of the controlled property, which includes foreign property in the United States; total property controlled by the custodian; vested property; supervised property and assets remaining from world war No. 1; business enterprises; vested enterprises. In addition to that patents, copyrights, trade marks, real and personal property and property under judicial or administrative supervision ; claims and suits, and the finances which are an important matter with respect to the custodian's office. I point this out to the minister only for the purpose of corroborating what has already been said by the two hon. members who have spoken on this subject.

I feel, and I think the house feels strongly that we should not be taking too many leaps in the dark now that we are at peace. There may have been times during the war when we had to rest on blind faith, but that is no longer true even as regards the custodian of enemy property. I suggest to the minister that before he brings down the bill for second reading he give the house a full report of the operations of the custodian of enemy property.

This is not simply a matter of information for nineteen or twenty members of the government, nor is it a private concern. This is a public enterprise. It belongs to the people of Canada, who are entitled to the information, since we are spending public money in the administration of matters of this kind. I urge upon the minister with every bit of emphasis I can command that before the bill comes in for second reading he let us have a report with regard to the office of the custodian of enemy property.

Mr. E. G. HANSELL (Macleod):

I must confess that sometimes I am amazed at the rapidity with which the house passes resolutions that precede important bills. It appears to me that the opposition groups are pretty well at one in their desire to have the fullest information possible before this resolution carries.

I do not know that I personally have any particular objection to going into committee, but I certainly object to going out of committee until we have all the information we need. This legislation takes in quite a bit of territory, though not necessarily geographically. It is wide in its scope. For instance, the

Trading with the Enemy

last part of the resolution is for the implementing of provisions in any treaty which may be executed on behalf of Canada and ratified by parliament with respect to the disposition of enemy property or compensation respecting property in enemy territory. That may involve a great deal that we as members of parliament know very little about.

Mr. GIBSON (Hamilton West):

The treaty has to come before the house for approval.

Mr. HANSELL:

I was going to make a few remarks on that point. I do not like that either, because I believe that more often than not we put the cart before the horse and instead of having an effective democracy in Canada we render it less efficient by doing things in that way. I know that this has been done in this manner before; it has been done this way for years. Governments in power meet with legations at international conferences and sign documents andi treaties, and as far as I am concerned the thing is then practically sewn up. The government come back to parliament a few months later or whenever the house is sitting and they lay the thing at our doorstep and say, "There you are, boys; what are you going to do about it?" And what can we do about it? It may be said that we can reject it if we so desire. Theoretically we can, but that never happens. That is a general objection I wish to register.

We do know that often when governments of several countries get together at a conference some of them reserve their signature and their decisions until they take back a report to their respective parliaments and thus get the views of the people concerned. I do not see why that cannot be done in respect of negotiations carried on on behalf of Canada. I feel greatly concerned about that, because I believe there is an important principle involved, the principle whether the government or parliament is supreme; and in order to have a really effective and democratic parliament, parliament must be supreme and the government must be the servant of the people.

Motion agreed to and the house went into committee, Mr. Macdonald (Brantford City) in the chair.

Mr. FLEMING:

Will the minister indicate the general tenor of the regulations which it is proposed should be continued by the bill? There must be some line of distinction which the government, in drafting the bill, has drawn between the regulations it thinks ought to be continued and those which can now be discarded. Can the minister enlighten the committee in that regard?

Mr. GIBSON (Hamilton West):

It is difficult to give a general resume of the method that was adopted. The regulations were gone through individually and those which it was felt we could dispense with, those which under peace-time conditions were not essential, have been wiped out. In the bill as presented there has been no renumbering, so they contain just the original number marked with the section quoted, and anyone dealing with a regulation will be able to refer to a section by the same number as that by which it had previously been recognized.

Speaking of the custodian's office, I agree with a great deal of what has been said. There is certainly not the same need for secrecy that there was during the war. At that time it was of course essential that enemy countries should not know what assets remained in Canada belonging to nationals of a foreign country, or what assets of enemy countries were owned by Canadian citizens and held in this country. The same situation does not prevail today, but we do need these regulations in order to control enemy property that is in Canada and also to enable us to continue investigations which have been going on ever since the war ended to locate enemy property which may have been skilfully hidden or which wras under the control of the enemy or their agents in Canada.

When the allied forces got into Germany and had access to records there, information was secured which enabled us to locate in Canada and in other countries property which had an enemy interest. Consequently the custodian is interested in and requires authority to continue to handle the property that is already in his hands or to make investigations to follow up any leads that were secured in Germany. It might be of interest to the house to have something of the historical background of the custodian's office. I may say that I have not today any complete financial record of the custodian's office to present to the house. I do not know how far that should be given, for various reasons, and I shall look into that before making any final or definite statement on it. I do know that where there is foreign property in Canada and it is in the control of the custodian, if lists or figures are given with respect to that property it may be extremely embarrassing to the owner of it if he comes from one of the countries of Europe and possibly had assets in Canada which he had not declared in his own country.

Is that an enemy

country?

Mr. GIBSON (Hamilton West):

No, in friendly countries such as France, Belgium

Trading with the Enemy

or Holland, for example, which might have been overrun by the enemy. Those assets, of course, came under the control of the custodian during the war.

The office of the custodian was first set up in April, 1920, following the first great war. At that time the Secretary of State was appointed custodian to take over from the minister of finance and the receiver general who had acted as custodian during the period of the first great war. The administration of the assets taken over in the first great war had not been completed when -the second war broke out in 1939. At the outbreak of the second world war an order in council was passed under the provisions of the War Measures Act known as "Regulations respecting trading with the enemy, 1939". That order was later revised or amended by "Revised regulations respecting trading with the enemy, 1943". In addition to setting forth the regulations it also vested in the custodian all property rights and interests in Canada belonging to enemies, whether or not they had been disclosed to the custodian. That was a further step forward from the custodian's powers in the previous war, as it automatically vested all enemy property in the custodian, whether that property was disclosed at that time to the custodian or not. The purpose of that order was to prevent the flow of financial resources to. the enemy, to obtain complete control over enemy-owned property in Canada, and to provide for the best possible use of such property with a view to furthering Canada's war effort.

Besides making provision for carrying out these objectives, the order provided for control of -the property of aliens who were detained or interned in Canada. It provided for the control of the financial resources in Canada of every person, regardless of nationality, who resided in enemy territory or in territory under enemy control, and it provided for the recording of Canadian claims against the enemy or claims of persons who happened to be residing in Canada for any property lost -through enemy action. The amount of enemy property in Canada at the beginning of the second world war was not as great as when the first world war broke out. Between 1920 and 1939 enemy countries were not in a very good position to export substantial amounts of capital abroad; also they had rigid controls, which tended -to keep their capital at home.

I may say that under the order which vested all enemy property in the custodian it required an immense amount of work and investigation to uncover enemy assets in this

country which had not been disclosed and which had been very methodically and carefully camouflaged. But under the regulations the custodian secured wide powers to appoint inspectors with the right to go into and investigate companies and personal affairs, in order to ascertain whether or not there was any enemy interest or whether such companies had been guilty of trading with the enemy.

I said that the total assets which came under the control of the custodian were not as great as in the last war, but the total amount which has come under the control of the custodian since September 2, 1939, has reached a figure of well over a billion dollars. But by gradual release of state funds and gold that belonged to former proscribed countries-that is, to allied countries or other countries which had been overrun by the enemy-as well as the release of property to persons who were able to establish that they could no longer be considered as enemies under the regulations, the total assets now under the control of the custodian amounts, at present valuations, to approximately $350 million. All that money is, of course, not in the hands of the custodian. When I say "under his control", I mean that some of it may be actually being handled by trust companies, by banks and by other institutions, but the accounts cannot be disposed of or dealt with without the consent or the approval of the custodian.

Negotiations respecting the release of property belonging to residents of various liberated European countries are now under way with the various governments concerned. Those negotiations, of course, are carried out by the Department of External Affairs. The peace treaties with Italy, Roumania, Hungary and Finland, which will be presented to the house for ratification, provide that each of the allied and associated powers shall have the right to retain all property within their territory belonging to the nationals of those respective countries, and also give to the allied powers the right to deal with it as they see fit. At the same time under these treaties provision is made that the enemy owner of any assets in Canada which have been confiscated in this country may apply to his own government for compensation. Under the original order provision was also made that the custodian could record any claims that came in covering loss or damage to property situated in enemy territory and any loss or damage incurred through enemy action. I may say that while the custodian has not yet advertised for any claims, the value of the

Trading with the Enemy

claims already received by the custodian considerably exceeds the value of the enemy assets at the present time under his control.

I should like to say something about the administration of the custodian's office, because with such diversified lines of assets as came into his hands I feel that he has been not only doing business in the nature of that of a trust company but has also had to handle assets which no trust company would expect to find in its hands. For example, one asset which had to be taken over was a circus down in the maritimes. The owner of the circus was interned, and the custodian found himself with the circus on his hands. I may say that he operated the circus during the summer at a profit, and then disposed of the animals when winter came along and he could no longer retain them.

Mr. GRAYDON:

Are the government

operating it?

Mr. GIBSON (Hamilton West):

Well, the custodian operated it. Then as a sample of the type of difficulty we ran into, the custodian one day received a telegram from one of our inspectors stating that on one of the properties he had taken over was a cow, and asking what he would do with it. They wired him to hand the cow over to the nearest farmer. The reply was that the cow was on an island, and the only means of communication with the mainland was a rowboat. So the custodian of property was dealing with all sorts of properties ranging from enormous sums, involving large bank accounts and big business, down to small individual details in connection with the taking over of properties of enemies who had been interned.

In spite of the innumerable claims and the tremendous volume of business which came through our hands, there have been remarkably few complaints as to the work done by the custodian's office. Since the inception of the custodian's office in 1920 it has been selfsustaining. No money is drawn from public funds; all salaries and other expenses are paid out of earnings, or out of fees the custodian is entitled to collect from funds going through his hands.

As I' said earlier, with the cessation of hostilities many of the regulations required during the war were no longer necessary. The result was that on January 14 a.n order in council was passed under the National Emergency Transitional Powers Act, 1945. amending the existing regulations and removing those provisions which were no longer required. The present measure makes provision for regulations which will be necessary until such time

as the peace treaties have been signed and enemy assets in the hands of the custodian finally disposed) of.

I believe that covers the historical background of the work of the custodian's office. Then, I feel the committee is entitled to information as to what has gone on from the standpoint of financing. I shall have to look into that matter and ascertain if there is any reason why some of the individual accounts, or the names of individual enemy owners of accounts, should not be disclosed. At least I think the totals might very well be given to hon. members so that they might know the extent of the work carried on in this branch of the office.

The accounts of the custodian's office have been audited every year by Price, Waterhouse and Company of Montreal. Since assuming my present portfolio I have arranged that the accounts shall be audited by the auditor general.

Mr. BRACKEN; The resolution states-

That it is expedient to introduce a measure to provide for the continuance of certain of the regulations respecting trading with the enemy.

Early in the war the properties of certain so-called illegal organizations were taken over by the government from those organizations. It is my understanding that much of it, indeed if not all of it, was sold, and sometimes at very low figures. Later, during the course of the war, those organizations were repaid, sometimes in amounts several times as large as those for which their properties were sold. Do the regulations the minister is now asking to be incorporated in the form of a statute cover the office of the organization which had to do with that property?

I have in mind specifically an organization which was known as the Ukrainian Labour Farmer Temple Association. In any event it was considered to be related to the communist party. The properties in question were community halls, and that sort of thing. It was represented that the owning organizations were communistically inclined, or that they were in fact communist in their views. I know of certain properties which were taken and which were sold at low figures. Then, some time later-I do not know how many years- these organizations were repaid. Sometimes they were given back their buildings, and sometimes I am told they were given sums of money much greater than the amounts for which their properties had been sold.

Does this legislation cover the regulations of the office which had to do with those properties?

Trading with the Enemy

Mr. GIBSON (Hamilton West):

The custodian had under his control the properties which were taken over from the Ukrainian Labour Farmer Temple Association. That happened during the war. The properties were disposed of, and when these organizations were no longer considered illegal, claims were made for refunds up to the value of the property taken over. Each oase was reviewed separately. I 'believe a commission was appointed to consider each claim and to make recommendation as to any fair adjustment that could be made. Those adjustments were made by the custodian's office.

Mr. BRACKEN:

What report, if any, has this house had as to the operations of that office with respect to these particular matters?