Mr. Solon E. Low (Peace River):

When the house adjourned at eleven o'clock last night I was airing before the house a grievance arising out of the administration of the Prairie Farm Assistance Act. I had described certain lands in the Peace river country that were adversely affected by the amendment to the Prairie Farm Assistance Act which was passed in the spring session of 1950. I stated in my concluding words last night that when the minister put through the amendment last year I did not think he had in mind excluding from the act lands such as I have described to him. I said that in support of that view I would quote from the speech he made in the house on June 7, 1950. These are his words as they are reported at page 3310 of Hansard:

I want to make it perfectly plain that the bill does not deal with submarginal lands as such. It deals with lands which up to a certain date everybody considered were not good enough either to homestead or to buy. It is true that having set the date at December 31, 1940, there will be a few pieces of land in Saskatchewan particularly that were homesteaded after that date, and there will be a few parcels that were purchased after that date but they are largely in areas where the act would not apply in any case.

Those were the minister's words. I would ask hon. members to note that the minister said the amendment dealt with lands which up to 1940 were not considered by anybody good enough either to homestead or to buy. Those words would not apply, by any stretch of anybody's imagination, to lands in the Peace river country; because long before 1940 a good many applications had been received by the Alberta government for the outright purchase of or for homesteading rights on these parcels in question.

The minister knows, too, that these lands are situated in an area where, in nine years out of ten, there is ample moisture for the production of good crops. It seems to me that that is the very kind of land which the act originally was designed to protect. Even last year there was plenty of moisture; but in late July and early August two heavy hailstorms ripped through the area and riddled the splendid crops in an area fifty or sixty miles long and from one to perhaps fifteen or sixteen miles wide. Later in August, many parts of the country which had not been hit by the hail were visited by heavy frost. I believe it was on August 16, if my memory is correct, when there was

one of the earliest and most devastating frosts on record, followed by a snowstorm which flattened many of the crops to the point where they never recovered. The result was that hundreds of farms yielded below the minimum required to qualify under the Prairie Farm Assistance Act. There were many, of course, who suffered total failure.

The farmers affected are up against it in the matter of securing seed this spring, and they do not know where to turn for help. Everyone knows that the banks have tightened up on loans, which makes matters worse for these farmers. Another factor that aggravates the situation is that immediate neighbours of these lessee farmers who happened to own their own property, or to have leased the property prior to 1940, are being paid compensation for their losses which resulted from the same storms and frosts.

Again, the veteran farmers in the same block, many of whose farms border the area to which I am directing my remarks, are receiving payment for their losses, despite the fact they are leasing their lands from the Alberta government under contracts entered into since 1940. It appears therefore to those who are being denied the benefits of the Prairie Farm Assistance Act, simply because they are on ten-year lease contracts, that they are suffering discrimination; and it is difficult to convince them that they are not.

I believe they are. Every year they pay their one per cent premium when they market their grain, and I know after the tragedy of last fall many of them took some comfort in the thought that they would get enough funds for seed this spring under the provisions of the Prairie Farm Assistance Act.

I supported the minister's amendment in June, 1950, because I believed that P.F.A.A. benefits should not be paid on lands that were -not good enough to be homesteaded, or to be purchased outright, or to be called agricultural lands, and with the minister's assurance at that time that the amendment was to apply only to lands which up to 1940 were considered by everybody not to be good enough for homesteading or to be purchased for agricultural purposes. I had no misgivings about the amendment gt all. However, I now appeal to the minister to consider issuing instructions to the P.F.A.A. administration to reconsider the lands I have mentioned, and to give relief to these struggling farmers who fully expected they would be entitled to benefits under the act.

One more point before I conclude: What makes matters even worse for the farmers on the lands I have described is the fact that

their lease agreement requires them to stay on those lands and to seed them. That is a serious situation. For example, I have here one letter, out of scores I have received from the area, which I should like to quote in support of what I have said. This letter, from Deer Hill in the Peace river area, states:

I have to stay on the lease, which means that I can't go out to work. What am I to do for seed and fuel this spring? If I don't seed the place and stay on it, I lose it.

All of the work he has put on the property will have been lost. This man has been operating his lease for some years, and expects in due course to be able to pay the small cash payment and to get title to it. This he can do within the ten-year period from the time he took out the lease. If he has to leave this spring to go out to work so as to earn a grubstake, and cannot seed his place, one can readily see how serious the matter becomes. There are a good many others in the area who are similarly affected. Under the circumstances I am appealing to the minister to reconsider.

Mr. Gardiner:

May I ask a question, for purposes of information? The act provides that a man must be on the land in the fall of the year. He must be there until November 1. Then it provides that he must be back by May 1, in order to draw his pay. That permits him between November 1 and May 1 to go out and earn a grubstake. He is supposed to be back farming the land the next year in order to prove his intention of working on the land as a farmer. How is that affected in the instance to which the hon. member referred?

Mr. Low:

I am glad the minister has raised the point. I was referring to provincial lease regulations, under the Prairie Farm Assistance Act. Under those provincial regulations the man to whom I referred is required to stay on the land and to seed it each spring; otherwise he loses his lease.

Mr. Gardiner:

Under the act he is required to be on the land and to seed it each spring in order to get his pay for the year before.

Mr. Low:

Yes. There is this consideration, too: many of these people were not told finally until recently that they would not receive assistance under the act. This has made it more difficult for them. Most of them were told last fall by inspectors that their lands qualified under the act, and that therefore they could expect some assistance. They expected it, and now when spring is here they cannot get assistance and they do not know what to do about obtaining seed and fuel to be able to carry on their farming operations.

Prairie Farm Assistance Act I appeal to the minister on behalf of fully 100 or 150 persons in that area who are similarly affected. It becomes a rather serious matter, and I am sure the minister will give his sympathetic consideration to the appeal that has been made.

Mr. P. E. Wrighi (Melfort):

Mr. Speaker, I should like to say a word on this matter. Probably the largest part of the area affected in western Canada is in the territory represented by the hon. member for Peace River (Mr. Low) and myself. There was a great deal of sympathy for the minister's amendment last year. Its object was to prevent lands within the Palliser triangle especially, which during the years had come back under municipal and provincial ownership, from again being held under private ownership and becoming eligible for payments under the Prairie Farm Assistance Act. Unfortunately that is not the only land affected by the amendment. It did not affect us so much in the northeastern part of Saskatchewan, because generally speaking the men who have taken land there during the last three, four or five years have been returned men, and the amendment did not apply to them.

However, there are now many other people going on land in that area. Last year approximately 200,000 acres were allocated by the provincial government, and many of the men who went on that land were not returned men. Nevertheless they are paying and will pay their one per cent levy as long as the act remains in force, but will never be able to draw anything under the act. An injustice is being worked there, and as more land is opened up the injustice will become more apparent. I believe it is the intention of the government of Saskatchewan to try to withdraw from certain forest areas in that region approximately 200,000 acres a year for the next three or four years. Therefore on approximately a million acres of land this levy will be paid, and it is good land. It is land much the same as that referred to by the hon. member for Peace River. It is land with respect to which payments will have to be made under the Prairie Farm Assistance Act in all probability only for one year out of ten or one year out of twenty. Only when there is frost or some other extraordinary condition is this land likely to come under payment.

' It seems very unfair that the men who have settled on this land should have to pay the levy in perpetuity without ever having the opportunity of drawing any benefits under the act, while their neighbours who happen to have purchased similar land prior to 1941

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will receive benefits under the act. The minister would be well advised to introduce an amendment that would limit the provision which was placed in the act last year to the area contained within the Palliser triangle. I think it was his objective to prevent land within the Palliser triangle, where drought is recurring, from again coming under the act when it has once been withdrawn. Everybody sympathized with that objective, but it is working an injustice in other areas.

Mr. J. H. Blackmore (Lethbridge):

Mr. Speaker, I rise to voice a grievance against His Majesty's government of Canada. My grievance is that His Majesty's government of Canada has for at least nineteen years dishonoured and continues to dishonour the British North America Act, section 91, classes

14 and 15, greatly to the detriment of Canada. To help make my meaning clear may I read section 91 to the house. It is as follows:

It shall be lawful for the queen, by and with the advice and consent of the Senate and House of Commons, to make laws for the peace, order, and good government of Canada, in relation to all matters not coming within the classes of subjects by this act assigned exclusively to the legislatures of the provinces; and for greater certainty, but not so as to restrict the generality of the foregoing terms in this section, it is hereby declared that (notwithstanding anything in this act) the exclusive legislative authority of the parliament of Canada extends to all matters coming within the classes of subjects next hereinafter enumerated; that is to say . . .

I omit the first thirteen classes. Class 14 is "currency and coinage", and class 15 is "banking, incorporation of banks, and the issue of paper money".

When the United States proposed' to issue greenbacks there was some doubt as to the constitutionality, but in Canada the British North America Act left no doubt whatsoever of the clear constitutional authority of the federal treasury of Canada to issue currency as it saw fit.

In support of my position may I draw to your attention the fact that from at least as far back as 1910 up to and including 1932 the finance department of Canada occasionally employed the powers conferred upon the dominion government through classes 14 and

15 of section 91 of the British North America Act. For instance, the Finance Act of 1914 clearly indicated that the members of the Canadian parliament of those days realized, in a measure at least, the nature and value of the power to create debt-free currency conferred upon them through classes 14 and 15 of section 91. The Finance Act of 1914 also indicated that the parliament of that year

[Mr. Wright.l

appreciated in some small degree the vital potential importance to Canada of the powers inherent in classes 14 and 15 of section 91.

May I read the footnote appearing at the bottom of page 759 of the Canada Year Book for 1932, which pretty well outlines the general nature of the Finance Act of 1914. The footnote reads as follows:

The Finance Act, 1914 (5 Geo. V, c. 3), makes provision in case of war, panic, etc., for the issue of dominion notes against approved securities; this emergency arrangement was made a permanent feature by c. 48 of the statutes of 1923.

I should like to read into the record a passage from the report of the royal commission on banking and currency, published in 1933. I want to refer to paragraph 47 on page 22 to show how the Finance Act of 1914 was employed. My good Conservative friends will be deeply interested in this matter because this was all done under a good Conservative regime with one of the great statesmen of Canada, Mr. R. L. Borden, as prime minister. The paragraph reads as follows:

In the war session of August, 1914, parliament raised the partially covered issue to $50 million. Subsequently an issue of $16 million was made against a deposit of railway securities guaranteed by the dominion government, as well as an uncovered issue of $10 million for governmental purposes.

May I pause a minute or two to comment on "governmental purposes". I was talking the other day with a stalwart Liberal who maintained that the money which was issued between 1914 and 1917 never did go out into circulation, that it all remained hidden. Well, the poor man simply did not know. When he comes to read this, however, he will be able to learn something which will be of value to him. I continue with the quotation:

In 1917 an emergency issue of $50 million of dominion notes was made to finance war purchases in Canada, by the British government. The notes were secured by imperial treasury bills. In due course, this indebtedness was liquidated by payments from the British treasury and all of this issue had been redeemed by 1927.

That was ten years later.

No changes have since been made in the Dominion Notes Act except that by a statute passed on 30th March, 1933, the governor in council was empowered to suspend the redemption in gold of dominion notes, and an order in council to this effect was made on 10th April, 1933.

To Canadians in our situation I consider the incident recorded in the passage I have read into the records to have exceedingly great significance. If in 1914, with our country as immature as it was at that time, and entering into a war, the parliament of Canada thought it could issue $26 million of debt-free money and spend it into circulation, if it could issue $50 million against British treasury certificates that would not

be redeemed for at least ten years, thereby putting into circulation in all $76 million of debt-free money, I maintain that event is significant to us in this day of tremendous development in Canada, when we are at a loss to know where to find the money with which to do the things we feel we ought to do. This was done under the Finance Act of 1914.

Now I believe it would be well to read into the record three other paragraphs from this report of the royal commission on banking and currency in Canada, which was made in 1933. The first is paragraph 49:

A proclamation in pursuance of the act was issued on September 3. 1914, and thenceforth, throughout the war and the early post-war period, extensive use was made of the act.

I pause to comment on those words "extensive use was made of the act". We have no details as to how many millions of dollars of debt-free money were created and spent into circulation. We have to rely on the word "extensive" and what it probably meant in the minds of the careful men who drafted this report. Then paragraph 50:

An act passed in 1919 provided for the continuance in force of the proclamation made on September 3, 1914, "until two years after the conclusion of peace on termination of the present war." This explains the continued operation of the act until 1923.

This measure had been adopted as a war measure, but by 1919 it had' been found of sufficient value to justify the parliament of that day in continuing its operation for another two years, even in peacetime. Once more we have no account of the amount of money issued debt-free and spent into circulation in that way. Now paragraph 51:

The provision relating to a general moratorium has never been used. The powers relating to payments by the banks in their own notes, the issue of excess circulation and the suspension of the redemption in gold of dominion notes ceased to be exercised at various dates. But extensive use continued to be made of the power to issue dominion notes to the banks against approved securities with the result that it was decided in 1923 to make this part of the Finance Act mechanism a feature of the normal Canadian financial system.

I grant that those notes were issued on the securities of the banks, and consequently were lent into circulation. The question our generation has to ask and to which it must demand an answer is, was there any reason why those notes should not have been issued debt free to finance consumption, just as was done in the case of the $26 million and the $50 million backed by British treasury notes? When we get that answer I believe we shall all be much wiser and much readier to listen to those who advocate 80709-164

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the use of debt-free money under suitable circumstances. The paragraph continues:

In introducing the new legislation Mr. Fielding, the Minister of Finance, made the following brief explanation of its purpose:

"The act (Finance Act) was adopted as a war measure, and no doubt was exceedingly useful in the financial operations during the war. It may be said that the war being over we no longer have any need for the act, but experience has shown that the act is still required; indeed, I am inclined to think that something of the kind will have to become almost a permanent part of our financial system."

The Liberals should become interested here, because this is a great Liberal finance minister, Mr. Fielding, telling what he thought of the Finance Act of 1914 as he introduced the Finance Act of 1923.

Now I draw the attention of the house to a rather remarkable use made of the Finance Act in 1932 by the Right Hon. R. B. Bennett, while he was in power. This is an account that has been given me by a man who I think knew what he was talking about, because he was a member of the finance department. "In 1932 the dominion government issued $35 million worth of what they called notes. On November 1, 1932, the dominion government turned over these special notes to the chartered banks for two years. The chartered banks let the dominion government have $35 million at 4 per cent, to use as it saw fit. Then the chartered banks took the $35 million bond-like notes to the dominion finance department and pledged them for $35 million of dominion government bills, paying the dominion 3 per cent for the bills. The dominion finance department issued or printed the bills debt-free under the Finance Act of 1923. Thus the dominion government got $35 million for two years at 4 per cent, a very low interest rate for those days. Then the dominion received from the chartered banks 3 per cent on the $35 million it had created under the Finance Act and lent the banks in return for the pledge of $35 million of dominion bond-like notes. The result of the whole transaction was that the dominion obtained from the chartered banks the use of $35 million for two years at a net rate of 1 per cent."

I invite my respected Conservative friends to pay close attention to that operation under the Finance Act of 1923. If they could get $35 million at 1 per cent by that means in 1932, is there any conceivable reason why they could not have obtained $350 million just as easily if the goods and services position in Canada would have justified the issue? What a difference $350 million put into

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circulation in the right places in 1932 would have made to our country harassed by the depression!

Right at the time, Mr. Speaker, the Right Hon. R. B. Bennett was discovering this unique way in which to get money, was discovering and employing this Finance Act of 1923, the Bank of Canada came into being in 1934. Since I came into parliament I have not raised any serious question concerning this institution known as the Bank of Canada. The further I see this nation go under the Bank of Canada however, the more my mind is filled with question marks regarding the development of that institution. I have given some attention to trying to find an answer to the question how it happened the Bank of Canada was formed. Did Canadians demand that a Bank of Canada be formed? Did the Canadian parliament ask that a Bank of Canada toe formed?

I have wondered considerably about this matter ever since I saw a pamphlet which evidently was published by people with plenty of money at their disposal, and distributed generously throughout western Canada, if not all over Canada, called "A Bank of Canada; Why Not"?

I read this pamphlet with considerable interest, and I must say that the beautiful things that pamphlet would make the people who read it believe were coming as a result of the Bank of Canada have all faded away like mist on a July morning. In other words, someone who had a great interest in the formation of the institution spent a quantity of money endeavouring to popularize the institution with enough of the Canadian people so that there would not be any serious objection when the institution was set up. It is a question which I believe we would find extremely interesting, and which I am simply throwing out for the members to think about.

Was the Right Hon. R. B. Bennett in favour of the establishment of a Bank of Canada, or was this institution forced upon him against his will? I imagine hon. members would be quite interested to hear that I am told there is preserved in a safe place confidential correspondence between the Right Hon. R. B. Bennett and certain prominent Canadians, indicating quite clearly that he resisted the imposition of a Bank of Canada with every bit of energy at his disposal. All of that was behind the scenes, of course.

What is the net effect of the Bank of Canada? Hon. members will be able to see immediately that the Bank of Canada shut off from the federal treasury of Canada the

authority to issue debt-free money, because in the process of setting up the Bank of Canada the Finance Act of 1914 and the Finance Act of 1923 were repealed. When the Bank of Canada was accepted, the parliament of those days surrendered to an institution of questionable origin one of the most sacred powers conferred upon the dominion government by the British North America Act. If we now want money from the Bank of Canada, we have to borrow it. If we propose that we borrow money extensively from the Bank of Canada, we hear vague hints that we shall probably upset the stability of that bank. In fact I recall the Right Hon. Mackenzie King, while prime minister of this country, making a remark while we were discussing this sort of matter, to the effect that anyone must be completely foolish-these are not his words -to think that we could finance any proposition of the proposed nature through this little institution down on Wellington street.

Mr. Drew:

Mr. Speaker, I must confess I have been extremely interested in some of the more recent remarks of the hon. member now speaking, because I had not previously heard the suggestion that the Right Hon. R. B. Bennett, later Lord Bennett, was unduly subject to compulsion by other people in matters of that kind. I should like also to have an explanation as to what debt-free money is; that is something I do not understand.

Mr. Blackmore:

I shall be happy to explain debt-free money if the hon. member is willing to listen for a minute or two. Let us just imagine that the leader of the opposition is in the Canadian mint, and he sees a fifty-cent piece minted. Does the Canadian mint owe anybody for that fifty-cent piece? Is there any conceivable reason why the Department of Finance which minted the fifty-cent piece should not take the fifty-cent piece and spend it as part of an old age pension to relieve suffering in Canada? Is there any reason under the sun why this fifty-cent piece has to go through the banking system and become a debt before it can be used?

Mr. Drew:

If the question is really directed to me, I must confess it does seem to suggest some interesting possibilities if those who work at the mint are free to handle the coins produced in that way, just as they see fit.

Mr. Blackmore:

I am really sorry that the leader of the opposition made such a flippant remark. That is not what I said. I said the finance department that owns the mint could

do so. If the leader of the opposition cannot pay any better attention to what has been said in reply to his question than that-

Mr. Drew:

I am not going to enlarge on it. I have been able to follow to a very limited extent some of the suggestions about debt-free bonds or non-interest-bearing bonds. I must confess, however, I am wholly unable to understand debt-free money, and I should like to understand it.

Mr. Blackmore:

Suppose we have a one-dollar bill. I really believe the proper place to discuss this is in committee, and if the leader of the opposition will bring the point up when we are discussing this matter, with the consent of the chairman, I shall answer him to the fullest degree. In the meanwhile, let us suppose a one-dollar bill is printed by the Bank of Canada. That one-dollar bill could or should be able to get out into circulation in either of two ways. There is no conceivable reason why the finance department should not take the one-dollar and spend it as part of its revenue. If it did that, the bill would come out into circulation debt-free. On the other hand, if the one-dollar bill goes through the banks, as it now does, it comes out into circulation in the form of a debt. Somebody has borrowed it. Somebody has to pay interest on it, and in due time it will have to be repaid to cancel the debt which was incurred in putting it into circulation. That dollar bill thus lent into circulation would be debt money. There is certainly a distinct difference between the kind of one-dollar bill we have in circulation when it is spent, and the same dollar coming out into circulation after being lent.

Now, we shall just leave that matter until we get into committee, when I shall be able to go into as much detail as the hon. member desires. Meanwhile, I give him one little illustration. Suppose he were travelling and he discovered a gold nugget worth $10. Some men have said that gold is the only money. This ten-dollar gold nugget is money in the sense that gold is money. Is there any debt connected with it? There is not the slightest debt connected with it. It is debt-free.

Mr. Low:

If it goes through the banks, there will be.

Mr. Blackmore:

That is right. If it is lent into circulation, it is a debt, even although it is gold. It is debt money then.

Mr. Cameron:

Let the hon. member try to borrow it from the leader of the official opposition.

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Mr. Blackmore:

I believe I have given sufficient attention to the timely question asked by the leader of the opposition (Mr. Drew).