Proceedings of the House of Assembly During the Second Session of the Thirtieth General Assembly of Newfoundland PRINTED IN CANADA BV GUARDIAN LIMITED, ST, JOHN'S, NFLD ,

PROCEEDINGS of the SECOND SESSION of the THIRTIETH GENERAL ASSEMBLY OF NEWFOUNDLAND MONDAY, June 30, 1952. The House met at 3:00 of the clock in the afternoon, pursuant to ad­ journment. MR. SPEAKER : The Honourable 1he Administrator has anh•ed to open rhe second session of the thirtieth General Assembly of Newfoundland. His Honour the Administrator reads the Speech from the Throne: MR. SPEAKER AND MEMBERS OF THE HONOURABLE HOUSE OF ASSEMBLY: No one thought, when your Hon­ ourable House was prorogued a few weeks ago, that need would so soon arise to call it together again.

In the course of the recent Session legisla­ tion was enacted authorizing my Gov­ ernment to guarantee principal and interest of a bond issue of Ten Mil­ lion Dollars proposed to be sold by Newfoundland and Labrador Cor­ poration Limited. Negotiations had been conducted for the sale of these bonds in the United States of Amer­ ica, and the language of the Act in question was based upon that fact.

My Ministers, and the Corporation, subsequently became convinced of the financial unsoundness of selling the bonds in the United States; and the Corporation consequently decided to make an effort to sell its bonds in Canada. Negotiations were entered into between the Corporation and cer­ tain leading bond houses in Canada, but it became apparent recently that the Corporation would be unable to dispose of the proposed bonds at this time. The reasons for this inabilitv will be explained by my Government.

You will be asked to enact legisla­ tion authorizing my Government ro sell bonds of the Province to the value of Ten Million Dollars, and to repeal the Act authorizing the guaran ­ tee of the Corporation's bonds. r trust that you will not need to g-ive too much of your time to your work as legislators at this pleasant season of the year, and I pray that Providence will guide you in your de libera lions. Presenting Petitions Non e. Presenting Reports of Standing and Select Committees None . Giving Notice of Motion and Questions None . Orders of the Day HON. P. ]. LEWIS (Minister with• out Portfolio): Mr.

Speaker, I beg

4 HOUSE OF ASSEMBLY PROCEEDINGS leave to move first reading now of a Bill, "An Act to Amend the Revenue and Audit Act, 1951." Bill read a first time . Ordered read a second time on tomorrow. MR. SPEAKER: I have to inform the Honourable House that at 3:00 o'clock this afternoon His Honour, the Administrator opened this second session of the thirtieth General Assem­ bly of the Province of Newfoundland. His Honour delivered a most gracious Speech from the Throne which for the purpose of accuracy I have ob­ tained a copy in writing which Mr. Clerk will now read to the House. Speech from the Throne read by Clerk. ,WR.

MORGAN: Mr. Speaker, I move a committee be appointed to draft an address in reply to the Speech from the Throne with which His Honour graciously opened this session. MR. JANES: i\Jr. Speaker, I second that motion. MR. P. J. CASHIN (Leader of the Opposition) : Mr. Speaker, most people thought when this Legislature prorogued roughly a month ago that it had prorogued for al least seven or eight months but some of us had a different opinion.

The Speech from the Throne read this afternoon by His Honour the Administrator indi­ cates that a matter of urgency and national importance is to be discussed in this House. ,,ve on this side of the House, representing Her Majesty's Loyal Opposition, want to point out that all particulars in connection with this transaction will be necessa, y during the course of the debate. It is our purpose to table certain ques­ tions this afternoon , at the proper time, asking that ce1·tain inf01·mation he tabled.

It would appear that t,his loan which was guaranteed for the New­ foundland and Labrador Corporation of approximately ten millions of dol­ lars was about to be floated in the United States, as a matter of fact we were told in the House on the intro­ duction of the Bill that the money was already available, everything had been arranged and all we had to do (that was roughly May 6) all we had lo do was to pass the legislation and the necessary money would be trans­ ferred or handed over lo the Govern­ ment on May 15.

This House did not close until shortly after May 15th but the money has not been handed over yet which is something apart from the fact thal Lhe Government later thought it would be wiser to have the Bill changed so that some­ thing must have taken place and these particulars will have to be told to this House, and we, as represent­ atives not only of the constituents whom we represent in the Legislature but of the people of Newfoundland as a whole, must insist that all particu­ lars relative to this very important matter will hav e to be forthcoming during the course of the debate which will take place not alone on the Speech from the Throne but also when the Bill for repealing the guar­ antee Act comes forward and further when the loan Bill for the raising of ten million dollars on the credit of the Province comes forward for dis­ cussion.

These are matters most u1-­ gent, most important for the people to know. It is no use for any mem­ bers of the Government to come in here and make any effort to hide any­ thing and use the expression we have so frequently heard in the past, that it would not be in the public interest -all these t-hings are in the public interest, these things affect the fin-

HOUSE OF ASSEMBLY PROCEEDINGS 5 ancial standing of the Province of Newfoundland, and true details will have to be told because, Mr. Speaker, if I might revert to four or five weeks ago when we were informed through the delivery of the Budget Speech; to borrow on the credit of the Province was unthinkable. However, this afternoon it is not my intention to speak at any length. I presume the Honourable the Pre­ mier will make a statement here this afternoon and the House will prob­ ably be adjourned until a later date .

There are certain questions we will table this afternoon and we hope they will receive the cons id era tion they de­ serve. HON. J. R. SMALLWOOD (Prime Minister) : Mr. Speaker, before say­ ing a word in reply to my honour­ able friend, I think, I would be voicing the sentiment of the House and indeed of the people of New­ foundland if I were to say how proud we are that a native born Newfound­ lander left our shores today on his way to the Olympic Games to take part as one of the small group of representatives from Canada in com­ petition with the greatest athletes of the world.

Ferd Hayward is a great son of Newfoundland, a great athlete, and we a1·e all intensely proud that he has been chosen as one of the Canadian team, the only one at present from this Province to take

part in that famed athletic event. The hearts of all Newfoundlanders go with him, and whatever happens we know that he will uphold the tradi­ tions of Newfoundland in the great athletic world with high honour and credit to all of us. I should like also to invite the attention of the House to an addition made in the artistic design of the Chamber in the portraits which have been added since our last session. For several seasons past we have had with­ in the Chamber itself, inside the bar, portraits of former speakers, all of them from the beginning in 1832 down to but not including Your Hon­ our.

Since t-hen we have added por­ traits of all the Premiers of New­ foundland beginning with William Francis Little, whose son I may say is living today as a member of the Irish Free State, and ending with the late Mr. Alderdice and including all premiers of Newfoundland . I am very happy to see one ex-premier has today honoured us by his presence. Now, Mr. Speaker, as the Speech from the Throne says, it was some­ thing of a surprise lo all of us that it should become necessaq• to call the House together so soon after prorog­ ation of the last session.

As my hon­ ourable friend, the Leader of the Op­ position, said, when we left here a few weeks ago it was in the belief thal the corporation would indeed float its ten million bond issue in the United States. It was not actually floated. MR. CASHIN : We were told here arrangements were made to under­ write the loan in the United States. MR.

SMALLWOOD: As the Speech from the Throne says, the Govern­ ment became convinced as did also the directors of the Newfoundland and Labrador Corporation that it wou Id be financially_ unsound to take advantage of the Act as passed and to float a bond issue · in the United St.ates at this time. The reason is fairly easy to see, quite simple . Years ago when Newfoundland borrowed money the interest was payable as a rule in Canadian, American or British funds, as the principa I was so repay-

6 HOUSE OF ASSEMBLY PROCEEDINGS able also. But that method of bond issues died away and until but a few months agu was not carried out. \,Vhen Canadian Bonds of the Cana­ dian Provinces or of the Canadian Government were sold in the United States, but a .few months ago, the practice was revived.

That happened, Sir, when the Canadian dollar went above the American dollar, when it took more than one hundred Ameri­ can cents to buy a Canadian dollar. \Vhen that happened bond houses in the United States revived an old practice, namely, of demanding pay­ ment of interest on bonds and repay­ ment of principal of bonds in either Canadian or American funds which­ ever might be the higher from time to time, the option resting entirely with the bond owners.

Now, Sir, be­ fore that practice was revived, quite recently, when Canadian Bonds were floated in the United States the bor­ rower took some risk, ran something of a gamble.

So long as the American dollar was higher than the Canadian we had to pay a premium on it, when we repaid the bond or when interest was paid on it, but as against this there was the fact that if he borrowed a million dollars in U.S. funds and converted it to Canadian funds the actual amount would be something over a million dollars, and the bor­ rower's expenses when he borrowed in the United States would be counter­ balanced and perhaps more than counterbalanced by the premium he had to pay when he bought American dollars within Canada. It was a gamble, a risk the borrower took, knowing he was taking it.

But Sir, when this old technique was restored it took the gamble out completely, there was no gamble, you knew that the cards were stacked against you, knew that you had to pay a premium coming and going. In the first place when you sold a million dollar bond issue in the United States you got back less than a million dollars Canadian. MR. HOLLETT: You knew that already. MR. SMALLWOOD: And when you went to pay interest semi-annually lhe bond holder could demand it in Canadian funds.

You were therefore obliged to pay a premium on the prindpal sum which you had floated, when finally the issue matured you were obliged to pay back more than you had gotten in the first place, and in the meanwhile pay a premium 011 the interest, the cards were completely stacked against you with the result that

whereas mosr of the Provinces of Canada up to a few months ago were floating their bonds in the United States they have now discontinued doing so and are floating them with Canada ilself .

The last case, I be­ lieve, of a Province of Canada float­ ing a bond issue in the United States was that of New Brunswick, and in thal case New Brunswick used the new arrangement, namely; the interest is payable to the bond holder in either Canadian or United States funds at the option of the bond holder and the principal is repaid in the same way whichever is higher at the time of redemption. l believe New Brunswick is the only Province of Canada which has floated a bond issue in the United States since this old arrangement has been recently restored.

It was for that reason, and that rea­ son alone, that we decided not Lo go ahead with the floating of the bond issue in the United Sates of America. There was no difficulty in floating the bond, arrangements had indeed been made to float it but not signed,

HOUSE OF ASSEMBLY PROCEEDINGS 7 the bond had not in fact been issued but the arrangements were completed, there was no difficulty about floating the loan in the United States. It was a unilateral decision on the part of the Government not to proceed with the floating of the issue in the United States.

I say thal in answer to any rumour that has circulated within Newfoundland within recent days, rumours to the effect that we have not found it possible to float the bond issue in the United States. ,ve turned therefore Lo the Can­ adian financial markets, to a syndicate headed by two financial houses, two groups, one headed by the firm of Nesbitt and Thompson and the other headed by the firm of Dominion Securities Limited.

In the Nesbitt, Thompson concern they have five or six other bond houses together with the Bank of Nova Scotia and in the Dominion Securities they have four or five bond houses together with the Bank of Montreal making in all thir­ teen bond houses and two banks and the whole syndkate headed by the firm of Nesbitt and Thompson.

They said at once, in principle, that they would underwrite the bond issue or at least underwrite part and option the remainder of it and having agreed in principle they set their statisticians, accountants and ecomonists at work to investigate the affairs of the corpor­ ation for which it was proposing to · float the bond issue, and the affairs of Newfoundland which proposed to guarantee the issue of the corporation in Montreal by representatives of the group who visited our Finance De­ partment and our Auditor General to confirm the statements made by the Government an(i to examine the ac­ counts of the corporation.

At the same time the group put its own legal counsel .at work to study Lhe Act of the Legislature of New­ foundland authorizing the Govern­ ment to guarantee the bond and the Act of the Legislature creating the corporation. The fii-st thing the legal counsel for the syndicate reported was the fact that the Act passed here in the last session authorizing the Gov­ ernment to guarantee the bonds of the corporation was inapplicable to a loan to be raised in Canada.

That is to say; that Act passed in the last session has, as the Speech from the Throne says today, authorized the placing of a bond issue in the United States in American funds under cer­ tain conditions, the chief of which was, of course, the fact that the inter­ est was payable in United States or Canadian Dollars at the option of the bond holders and the principal re­ payable in either funds at the option of the bond holders-they found that Act would not permit the floating of a ,bond issue in Canada, indeed would not permit the floating of any bond issue anywhere under those conditions except in the United States.

So that for the issue of such bonds in Can­ ada there was no legislation. Even were the corporation to propose to float a bond issue in Canada guaranteed by Lhe Government, no such legislation existed. The Legislature , had not passed

an Act authorizing the Govern­ ment to guarantee the bond issue of the corporation floated in Canada, but it was one to be floated in the United States, in U.S. funds. That is the first point. It required, therefore, at the very least new legislation if there were still to be a corporation bond issue, new legislation authoriz­ ing the Government to guarantee the corporations bond issue floated in Canada, in Canadian funds, and un­ der certain conditions laid down in black and white.

8 HOUSE OF ASSEMBLY PROCEEDINGS But Sir, when the legal counsel for the syndicate and the banks came to examine the accounts of the Corpor­ ation and the legislation creating the Corporation, that is to say the New­ foundland and Labrador Corporation Act, they found several things which to them at least, and I fear to us, were rather disconcerting. In the first place, Sir, they found that the Newfoundland and Labrador Corpor­ ation had virtually no assets, virtually no assets.

The Corporation is quite new, it held its first meeting in December last, since when it has held only one other meeting, the Corpor­ ation is entirely new, has no record whatsoever of earnings, it has never earned anything to rP-rord, a brand new business organization without any record of earnings.

In the second place it was seen that the Corporation had as assets only a paid up capital of one million dollars, of which, as the House is aware, of which nine hundred thousand dollars was sub­ scribed and put into the Corporation by the Government, and one hundred thousand by a group of private firms, and this notwithstanding the fact that the authorized capital of the Corpor­ ation is three million dollars of which only one million has been sold.

There arose therefore a natural question, it was a rather significant fact in the eyes of the financial underwriters that only a portion of its authorized shares or capital of three million dollars had in fact been sold, paid for and entered into the Treasury of the Corporation. The first question they asked was; why does the Corporation not sell the remainder ·of its authorized shares of two million dollars? Why have 1hey sold only one million dollars of shares? Su lhal what appeared at first sight to be an asset of the Cor­ poration turned out on second sight to be something rather less than an asset.

Then they turned again to the wording of the legislation-the House will remember that when I brought in the Act we were most careful not to give to the Corporation title to anything fee simple or unencumbered clear title to anything. We did give them rights to twenty-one thousand nine hundred square miles of area of Newfoundland and Labrador, areas which we believe lo contain minerals, water-power and timber. But what did we give the Corporation in that twenty-two thousand square miles?

We gave them no title, we did not give them the ownership of that area, but we gave them merely the sole right to prospect and that only for ten years, and we were very careful here in our debate in the House when Lhal legislation was before us, very careful, in view of the fact that the Corporation was not wholly public but only as to ninety per cent and ten per cent private, we were very careful not to give to the Corporation abso­ lute title lo the twenty-two thousand square miles oE our public domain, and so were careful to give them only prospecting rights for ten years and then as and when any particular part of the twenty-two thousand square miles became ready for actual devel­ opment the Corporation was to re­ ceive from ·the Government a long lease over the area in question, and as each part of the area became ready for development, for a period of forty or ninety-nine years depending on the nature whether timber of minerals, whether in Labrador on the one hand or in Newfoundland on the other.

But the terms and conditions of such leases whether they were for forty or ninety-nine years were not stated in the Act, the Legislature reserved to the Government the right to negoti-

HOUSE OF ASSEMBLY PROCEEDINGS 9 ate the terms with the Corporation from time to time. So the legal counsel of the bond holders, the bond underwriters, financial houses was bound to report that what appeared to be a spectacular asset of the Cor­ poration was in fact not an asset at all because it consisted only of the sole right to prospect for ten years on twenty-two thousand square miles of public domain and with the right of development not even stated in that Act but left to be determined by the Government from time to Lime in negotiation with the Corporation.

So they had to report to the under­ writers that the Corporation had no assets, and it boiled down finally to the fact that the only security the Corporation had -that they could offer was the Government guarantee of the bond issue.

It was the opinion of the financiers, and I sat in with them at Montreal, they came from Winnipeg, Halifax, Montreal and sat at the con­ ference table in Montreal, and they were quite affable, in fact they said; don't you think you are going too far with your aversion to public borrow­ ing, don't you think frankly this is a case where the Province itself should take the bull by the horns and just borrow the ten million dollars.

I argued against it, but frankly I found myself, and the Government found it­ self confronted by the fact the Cor­ poration could not borrow ten million dollars because they have no assets. The time may come when they have assets, in which case they may be able to borrow, but presently they are not but the Government can. The Gov­ ernment's credit is good, the Govern­ ment's guarantee is good.

IE the Gov- ernment went to the financial houses for a Provincial Government bond issue, l venture to say here and now in my belief, a belief based on in- formation, the bond issue would be oversubscribed next week and that within a few days after sale will be quoted above par. Sir, this is the month of July. Not Lhe best month of the year for the Legislature to meet; members, I feel quite sure would prefer infinitely not to open this time of the year. Never­ theless we have our duty to do, time does press, tomorrow we will not meet, we will reassemble on '~'ednesday.

The issue I am informed will be ready next week if we can enact the necessary legislation this week. So that I am going to ask the indulgence of the House, on both sides for a proposal that, we have only two pieces of business to do, (1) the pass­ ing of this Act of which notice will be given today and (2) the passing of the Act to which we have given first reading in an amendment to the Audit Act. The House should con­ centrate its attention on it as the Speech from the Throne only men­ tions one matter and that is the matter that is dealt with also in the legislation.

The House may feel it may want to debate the matter twice, in the debate on the address in reply and again on second reading and in the committee stage of the Bill. MR. CASHIN : And on the repeal of the other one. MR. SMALLWOOD: And perhaps 011 repeal of the piece of legislation we passed last session, the House mav decide and we may be able to accom·­ plish it and meet morning, night and evening and accomplish in one week what would normally take three weeks to accomplish.

Lest anyone should think the session is called unneces­ sarily and only that members may get additional sessional pay, may I say to disabuse any such idea that I think

10 HOUSE OF ASSEMBLY PROCEEDINGS that most of Newfoundland would agree that if we paid members of the House a hundred dollars sessional pay for this short session it won't break Newfoundland and if we pay those members of the House who do not live in St. John's but live in the out­ ports an extra fifty dollars, one hun­ dred and fifty for those outside St. John's and one hundred dollars for those who live in St. John' s, then any member who cares to, including my honourable friend the Leader of the Opposition, would join with me we could turn this extra pay of two hun­ dred dollars as a gift to the TB fund.

We would be very happy to do it, and anybody who like my honourable friend and myself who would care to contribute to the TB fund I think there would be no law to prevent their so doing. MR. CASHIN: It is not our fault we are here at all.-It is the Govern ­ ment's fault. MR.

SMALLWOOD: I£ it is th e Government's, we are prepared to ac­ cept it. ,ve are preparerl to accept the blame for anything the honour­ able gentleman likes to mention, any­ tl1ing at all, the gentlemen opposite can hammer us, attack us, attack the Newfoundland and Labrador Corpora­ tion, they can attack the directors and tl1e Chairman of it and they are wel­ come to do so and it will do no one any harm by doing so.

There is only one way they can harm, and that I know as patriotic Newfoundlander s they will not do, they will not attack Newfoundland and her standing and credit which today is as good as that of any Province in Canada with eleven million dollars cash in the bank ready for a rainy day if it should come. ,ve will not touch that eleven millions, and so far as the surplus on current account in the current year is con- cerned we will use it for improvement on roads, schools and hospitals but so far as economic development is con­ cerned we will borrow for that pur­ pose. MR.

HOLLETT: You said a month ago you would not. MR. SMALLWOOD: The honour­ able gentleman, I fear, has a shorl memory . I will refresh it as to what l said a month ago. I have it in book form h ere. Page 22. l\IR . HOLLETT : Page 23. MR. SMALLWOOD : "Before l pass [rom this subject I say for th e benefit of the House that this Gov ernment, and 1 personally, take a most un -­ friendly view of the idea of Newfound­ land borrowing to finance public serv­ ice extensions and improvements." I repeal that now, we don't propose to borrow Lo finance public servies ex­ tension or improvement.

Then if you lllrn to page 28 : "lt is a paradox indeed that we should have money that we do no1 need, and not have money that we do need. Our need is for money to fin­ ance capital account expenditures, es­ pecially and indeed above all on econ­ omic development. Our need is not at all for money to finance deficits, for instead of deficits we have sm­ plusses and shall have larger surplusses.

The solution appears to be this: that we should finance capital account expenditures on public servic es out of current account surplusses which we earn from year to year and finance economic developm e nt by the sale of our bonds, or by the sale of company bonds guaranteed by us. It is not a final and ultimate solution, but is the only immediate one I can see. We shall perhaps have to make it do as a

HOUSE OF ASSEMBLY PROCEEDINGS 11 short-term policy.

One thing above all is clear: we have the most pow­ erful aversion in Newfoundland to borrowing for public services, even on capital a<:count public services." And again on page 31 : "Let us however, notwithstanding these vastly improved conditions, re­ solve as one man to avoid to the last possible hour all public borrowing for anything in Newfoundland apart from sound Economic DevelopmenL That way lies wisdom for all of us." Then if my honourable friend will turn to the same page: "By way of brief summarization let me state the policy and intention of the Government : I.

We shall continue our policy of surplus budgeting on current account. 2. \,Ve shall continue to make ex­ penditures on capital account, to im­ prove on public services, but shall not borrow to do so. 3. l\'c shall continue our policy of economic development, but turn in­ creasingly to the Newfoundland and Labrador Corporation as the means of accomplishing that development. 4. We have completed our pro­ gramme of building industrial plants out of public funds. No more such plants will be built. :,.

Upon the completion of the Euro­ pean branch factories, whose establish­ ment has been under negotiations, we shall assist in the financing of no more rnch plants, but will channel all such projects through the Newfoundland and Labrndor Corporation. 6. In order to secure the business­ like management of the investments and assets of the Government in this Economic Development programme we intend to vest their control in the Newfoundland and Labrador Corpora­ tion. i. Our financing of capital account public services, and economic develop­ ment, will in future be made out of: a. Surplusses on current account; b.

Revenue received from invest­ ments made in our economic de­ velopment programme; c. Borrowings (but only for economic development) based upon conser­ vative practice. 8.

We consider that we have given a powerful impetus to the industrial­ ization of the Province, and are of the opinion that we should now progres­ sively withdraw from active partner­ ship in that drive except, in the main. through the Newfoundland and Lab­ rador Corporation under the valued leadership of Sir William Stephenson." So that all through , the policy o[ this speech in the last session the note runs-no borrowing fur the purpose of the public sen·ices, roads , bridges, hospit als, schools and the like, but borrowing, if at all for economic de­ velopment.

That is the theme, the policy of the speech, eve1·y word of which was carefully chosen, and as the House will remember written by me and read oout so that the whole represented the considered policy of the Government of Newfoundland made in the House by the Leader of the Government, and that is the pol­ icy we propose to continue and to carry out. The purpose of Lhe session now is to pass legislation enabling the Government to borrow ten million dollars on the credit of this Province, good credit of this Province for the purpose of continuing to carry out that programme of Economic Devel­ opment.

12 HOUSE OF ASSEMBLY PROCEEDINGS Moved and seconded a committee be appointed to draft a reply to the Speech from the Throne. Carried. MR . SPEAKER: I name the fol­ lowing honourable gentlemen to be members of the committee : The Mover and Seconder of the motion, honoura:ble member for S't. John's West. Notice of Motion MR. SMALLWOOD: Mr. Speaker, give notice I will on tomorrow ask leave to introduce a Bill, "An Act to Authorize the Raising of a Sum of Money by the Way of a Loan on the Credit of the Province." A Bill. "An Act to Repeal the New­ foundland and Labrador Limited Guarantee Act, 1952." Notice of Questions MR. CASHIN : I give notice ol ihe following questions on tomorrow:

(1) Tu ask the Honourable the Minister of Education to inform the House what arrangements have been made by the Government with Dr. Raymond W. Miller regarding the establishment of the Newfoundland University. ,vhat fees, retainer or salary is Dr. Miller to receive for his services?

(2) To ask the Honourable the Minister of Fisheries and Co-oper­ atives to table the following inform­ ation:

(1) The total amount of loans made by the various Loan Boards of which Mr. James Baxter is Chairman-to what persons or com­ panies were the loans made and the amount of each loan. This inform­ ation to include all loans made by these boards since their inception.

(2) What has been the total cost of the administration of these three loan boards since their inception in the way of salaries, etc., giving details of such salaries, tra veiling expens es, etc,

(3) Give a statement of the total amount of loans made by the present Government for fishery purposes and expansion since it assumed office on April 1st, 1949-to what individuals or Corporations such loans were made. Also give a statement showing the total amuuul uf guarantees given by the Government for fishe1·y develop­ ment purposes since it assumecl office togeth er with the amount of each guarantee .

(3) To ask the Honourable the Minister of Justice to inform the House whether or not any steps have been taken to carry out the provision of the "Freight Claims An" pa .s.sed in the Legislature at its last session. If such steps as outlined in the Bill have been taken, what firm of lawyers have been retained by the Provincial Gov­ ernment to act on our behalf and have any exp enses in t.hP way of re­ taining fees, etc., been disbursed on this accou 11 t.

(4) To ask -the Honourable the Minister of Finance to table the fol­ lowing information :

(1) The total amount of money on deposit with the Federal Government at Ottawa at ·the present time .

(2) The total amount of money to the Credit of the Treasury in the Bank of Montreal as at June 30th , 1952.

(3) The total amount of money to the credit of the Board of Liquor Control in the Bank as at June 30th, 1952.

(4) Have the Government arranged a Temporary Loan from the Bank of

HOUSE OF ASSEMBLY PROCEEDINGS 13 )fontreal since April 1st, 1952? If so, what is the amount of such Tempor­ ary Loan and what is the Government indebtedness to the Bank at the pres­ ent tim e. Give full particulars in connection with such Temporary Loan if any .

(5) What amount of money has been collected since April 1st, 1952 on account of pre-union surplus? What is the amount to the credit of this account at the present time, ex­ clusive of the amount to the credit of the Treasury and on deposit with the Federal Government at Ottawa. vVhat obligations have been incurred against this account since April 1st, 1952? 5. To ask the Honourable the Minister of Finance to table the fol­ lowing information:

(1) The total Ordinary Revenue collected hy the Province from April l st, 1952 to June 30th, I 952. This in­ formation to be given under the vari­ ous departmental headings.

(2) The total Ordinary Expendi­ ture from April 1st, 1952 to June 30th, 1952. This information to be given under Lhe various headings.

(3) The total Expenditure incurred by Capital Account from April 1st, 1952 to June 30th, 1952. This infor­ mation to be given under the various depa1·tmental headings.

(4) The total amount of subsidies or other revenues due the Province by the Federal Government at the pres­ ent. Also a statement showing what amount of subsidies or other revenues have been collected from the Federal Government for the period April 1st, 1952 to June 30th, 1952.

(5) What amount of Surplus is presently remaining to the credit of the Province of Newfoundland with the Federal Government.

(6) Table a statement showing what amounts of money have been advanced by the Newfoundland Trea­ sury since April 1st, 1952 to date to the following industrial development projects : The Cement Plant-The Gypsum Plant-The Birch Plant-Fur Plant-Tannery- The Machinery Plant - The Textile Plant-The Pressboard Plant-The Optical Plant and the Newfoundland Asbestos Ltd. This in­ formation to show the amount ad­ vanced to each of the above men­ tioned plants.

(7) Have any Bank Guarantees been given by the Provincial Government to any Industrial Companies now in operation or coming into operation since April l st, 1952? 1f so, state the amount of such guarantees as weJI as the terms of payment.

(8) Did the Newfoundland Asbes­ tos Ltd . make an effort to raise the sum of $250,000 .00 under its 1951 agreement with the Government in New York or elsewhere and what was the result of such effort if any? When did this Company make such an ef­ fort to raise such an amount?

(6) To ask the Honourable the Premier to table all correspondence 01· telegrams between him and Sir William Stephenson during the past three months relating to the raising of the sum of ten million dollars by the Newfoundland and Labrador Cor­ poration Ltd., as guaranteed by this Legislature during its last session .

(2) Copies of all correspondence between the Premier and any invest­ ment houses in Canada relative to the raising of ten million dollars on the credit of the Province.

14 HOUSE OF ASSEMBLY PROCEEDINGS

(3) A statement showing the actual cost to the Newfoundland Treasury of each of the industrial development projects since their inception to date. Also a statement showing what amounts have been advanced to any of these projects for working capital and the dates of such advances.

(4) Table a copy of the amended Bill "An Act to Provide for the Guarantee by the Government of Newfoundland of a Loan to be raised by the Newfoundland and Labrador Corporation Limited."

(5) Give a statement in full show­ ing the names of the various Indust­ rial Projects now being· undertaken by various Companies which are being financed by the Government and the amount which each Company is re­ ceiving in lhe way of guarantee or advance in cash. In other words give a statement showing the Contingent Liabilities of the Province of New­ foundland, which liabilities are not to include Fishery advances or Guaran­ tees or the Bowaters Guarantee, but Contingent Liabilities incurred by the present Government since it assumed office on April 1st, I 949.

(7) To ask the Honourable the Minister of Economic Development to lay on the Table of the House the following information: (

I) Give the name of the Govern­ ment Official who approved items of expenditure exceeding $1000.00 in connection with the building of the Birch Plant.

(2) Give the name of Clerk or Clerks appointed and paid by the Government to certify the delivery of all materials ordered for the Birch Plant, and -the name of the official or clerk appointed to check payrolls. Give salaries of such clerks or officials.

(3) Give an itemized list of all materials used in the building of the Birch Plant, together with costs, and of all machinery installed, with cost of each machine . Give names of all persons or companies supplying mater­ ials and machinery.

(4) How much insurance has Mr. Chester Dawe taken out on the Plant, and who pays such insmance?

(5) Has the Operator, Chester Dawe assigned his benefits and burden under the Agreement re Birch Plant to any Joint Stock Company, and has Chester Dawe subscribed and paid for shares in said Company, and if so l:O what amount? (fi) What amo11nts if any have been advanced to the Operator as working Capital under the following heads and give dates of such advances : (

a) For purchase of stocks of Hardwoods. (

b) To of raw products. finance materials the into manufacture markerable (

c) To finance payment of wages and overhead. (

d) To finance shipment of finished products.

(7) How much money has been ad­ vanced by the Government to supply mill owners with equipment? How many saw mills and small factories have ·been thus established? Give names of operators, location of mill or factory, and amounts advanced in each case, under terms of agreement re Birch Plant..

(8) What quantities or raw materi ­ als are now on hand and give costs of same? What is the approximate value of manufactured goods on hand, and

HOUSE OF ASSEMBLY PROCEEDINGS 15 how many men are presently em­ ployed? MR. HOLLETT: Mr. Speaker, I would like to table a copy of ques- 1ions asked by me back in March 31, ii is now June 30, and I will tomor­ rnw ask leave to ask the Minister to lay on the table the following. J\'1R. SPEAKER: Members are not entitled to make a statement when giving notice ol' questions. MR.

SMALLWOOD: As Lhe hon­ ourable gentleman has in fact made a comment, the reason was that the firm of Peat, Marwick and Mitchell were auditing and still are auditing the accounts I believe of the New­ foundland Hardwoods and I will give Lhe answer only if the auditors give iL to me and if they can't the honour­ able gentleman won'L even get it this session. I don't carry the information in my head and if the audit is not ready iL will not be tabled. MR. HOLLETT: May I poinL 0111 1hat explanation was not given 10 me at Lhe last session of the House. J\fR.

SMALLWOOD: That was given-again the honourable gentle­ man's memory is poor. MR. SPEAKER: Encl of the busi­ ness of the day. MR. SMALLWOOD: I move the House at its rising do adjourn until tomorrow Wednesday at ll:00 a.m. House adjourned until tomorro,_. Wednesday at 11:00 a.m. WEDNESDAY, July 2. 1952 (Morning Session) The House met at 10.00 of the clock in the morning. pursuant to adjourn­ ment. Presenting Petitions None. MR. P. J. CASHIN (Leader of the Opposition): Mr. Speaker, there is no Order Paper being distributed this morning.

It is customary that an Or­ der Paper be distributed hut we have nol an Order Paper here . HON. J. R. SMALLWOOD (Prime Minister): Mr. Speaker, the Order Paper is in the hands of the printer, al the moment on the press being · printed and the van is standing by to have it delive1·ed here the momenL it is off the press. That was ten or fifteen mimlles ag·o so that the printed copies oug·ht to be here within a mat­ rer of minules, and I think perhaps we could proceed in its absence.

The n1ain portion of Lhe Order Paper would be the questions of which notice was given last sitting·, but certainly in Lhe meantime I think we could con­ Li nue without the Order Paper. MR. SPEAKER: The Order Paper has nothing to do with the transaction of routine business. lVe have not yeL reached that stage and can decide thar point when we come to it. MR. CASHIN : There are several questions on the Order Paper, Mr. Speaker. MR. SPEAKER : The Order Paper has nothing to do with the transaction of ordinary routine business. lVe have not yet 1·eached it and will discuss that point when we come to it.

We have not reached the Order Paper stage yet. If the honourable members would refer to Standing Orders thev would see there is so much routine business, such as petitions and notice of motions which cannot appear on the Order Paper. Notice of Questions.-! have not called for Answers to Questions yet.

16 HOUSE OF ASSEMBLY PROCEEDINGS Presenting Rep01·ts of Standing and Select Committees MR. MORGAN : The Select Com­ miLtee, Mr. Speaker, to draft an Ad­ dress in Reply to His Honour the Ad­ ministrator. To His Honour the A<lministrato, ·, Sir Albert Joseph Walsh, Knight Bachelor, LLD . May it please Your Honour: ,,ve, the Commons of Newfoundland, in Legislative Session assembled, beg 10 thank Your Honour for the Gracious Speech which Your Honour has ad­ dressed to this House. (Sgd.) A. B. MORGAN, C. W. Janes, M. M. Hollett. .-\ssembly Room, July 2nd, A.U., 195,!. Motion is this repon be adopted. MR. CASHIN : Mr.

Speaker, iL 1s evident you want to go on with the debate. MR. SPEAKER: That is entirely np to the House. MR. CASHIN : I would like Lo point out, particularly in view of Lhe [act that there is no Order Paper, the standing orders sav the time for the meeting of the House is three of the clock in the afternoon each sitting day. I just want to point out we are violat­ ing a rule of the House by being here, particularly as there is no Order Paper. MR. SPEAKER: The attitude ol' the Chair on that is that there must be some normal time set for sitting of the House.

That is pretty general all over the British Commonwealth at 3:00 of the clock in the afternoon, and the House does not sit on Saturday or Sunday . However there is nothing there Lo prevent the House sitting Sat­ urday nor Sunday in case of emer­ gency nor al any hour in the twenty­ four. Tbat is usually done on notice of motion to that effect but Monday was our first sitting clay and the mo­ I ion was offered that the House at its 1 ising adjourn until 11:00 a.m. of the following sitting which is today.

Since there was no opportunity Lo give notice of motion to that effect and since it was then entirely up to the House to decide whether or not it would sit al 11 :00 a.m. or not. I put the motion and presumed it was the opinion of I he Home we might very well sit this morning·. That is the position of the Chair. It is not illegal if the House so made it. MR. CASHIN : l am not saying it i~ illegal but no t 1 ules of the House . rules reads : according to the

Section 7 of the If al the hour of 6 o'clock 011 Wednesday the business of the House is not concluded, Mr. Speaker shall leave the Chair until 8 o'clock p.m. .-\L the hour of 6 o'clock p.m. on Wednesday Mr. Speaker adjourns the House without questions put. The House then stands adjourned until Thursday . If at the hour of G o'clock the business of a Commit­ tee of the Whole House be not con­ cluded the Chairman is directed to report progress and ask leave to sit ag·ain. What would happen this evening, under these rules, if we wanted to sit? MR. SPEAKER: If the House wanted to sit after six o'clock it would have to suspend that rule. MR. CASHIN : And would have to give notice of the motion.

HOUSE OF ASSEMBLY PROCEEDINGS 17 MR. SPEAKER: Not necessarily. MR. CASHIN : It would have to be unanimous. MR. SPEAKER : Two-thirds major­ ity can suspend the rules. As a case in point of that: towards the end of any session it is customary for the Leader of the House to move that the rules for the remainder of the session be suspended, and that is usually done without any dissenting voice because the Chair in such proce­ dure has the deciding voice.

Motion is put to the House and carried by a majority, but to change the rules per­ manently requires a two-thirds major­ ity, that is to change the rules, not to suspend them. MR. FOGWILL : To suspend the rules for the remainder of the session you have to give notice of motion, is that correct? MR. SPEAKER : It is the custom. I think the Premier gave notice on Monday to suspend the rules. MR. FOGWILL : Carried by a majority or would it have to be unani­ mous. MR. SPEAKER : Since the Orde1· Paper is now here the members have the questions before them now. Address in Reply: MR. FOGWILL : Mr.

Speaker, it is not very long ago since we left this Chamber and went about our ordin­ ary business and our several vocations. When we left this House in May it did not appear at that time that we would be back again so soon, although, Sir, we on the Opposition were not entirely surprised when we found that we were again to come to this House at ,this time. The whole business of this House, I believe, Mr. Speaker, is just pertaining to one item; that is the borrowing of the amount of ten million dollars on the credit of the Province.

It appears, in my opinion at least, and I think in the opinion of several gentlemen on this side, that the Newfoundland and Labrador Corporation was unable to raise the loan even with the Gov­ ernment's guarantee as to interest and principal. The Speech from the Throne set out that negotiations for the sale of the bonds had been con­ ducted in the United States, and points out that the language of the Act was based on that fact.

The ex­ planation was given, I believe, that due to certain language in the Act whereby the principal and interest were payable in Canadian or Ameri­ can funds the Government decided in the best interest of the Province to try and raise the loan in Canada. Negotiations then were conducted in Canada with certain bonding houses and it was found again that the cor­ poration was unable to raise a loan even with the guarantee of the Pro­ vincial Government. Well, Mr.

Speak­ er, the same thing should apply in the negotiations and efforts which were made to raise the loan in the United States, that the Corporation were un­ able to raise a loan on the guarantee of this Province. Now, Mr. Speaker, we are faced with the fact that we will attempt to raise a loan as a direct loan on the Province of Newfoundland. I don't want to make any reference, Mr.

Speaker, to what was said in the debate in connection with this legisla­ tion which was passed at the last ses­ sion, but I do know that when it was intimated by members on this side that the loan, the proposed loan to the Crown Corporation would be a direct debt on the Province of New-

18 HOUSE OF ASSEMBLY PROCEEDINGS foundland we were jeered at and in fact, Mr. Speaker, sneered at for even suggesting such a thing in this House. It is very poor tactics, it ,seems to me, to tell people, I told you so, but the fact remains now that is the answer.

The Government's creature, the Crown Corporation, was unable to raise a loan on whatever assets they had, which were nil, and even with the Government's guarantee and the magic name of Sir William Stephen­ son which was supposed to unlock the money bags of Canada and the United States and we in Newfoundland would be able to have the use of some of the large amounts of money which seemed Lo be floating around in both these l wo countries in the way of capital in\'estment in various projects which are now g·oing ahead. But the end l'esult, Mr.

Speaker, is that the Gov­ ernment could not get the money and now we are here and we are faced with legislation by which an attempt is to be made by the Province to raise ten million dollars on the credit of the Province. Now that is surprising in itself, Mr. Speaker, because in the Budg·et Speech it was stated emphatic­ ally that it was unthinkable that this Government would borrow, utterly un­ Lhink~ble that this Government would borrow.

In fact it stated that it was the policy and intention of the pres­ ent Government in proceeding with their economic development and tlw extension of public services that il was going to be done by raising the necessary funds to pay for these thing·s out of surplus revenue on current ac­ count. It was unthinkable that the Government would borrow for the purpose of economic <levelopment or the extension of the public sei-vices. That is the policy which the Govern­ ment a<lopted, the policy which formed the key note of the budget speech ot the 30th of April. ;\/ow, Mr.

Speaker, I am not going Lo g·o back over old sorrows or things Lhat were said long ago but the fact remains that now the Province of New­ foundland is faced with the necessity of raising money on the credit of the Province. The people of this coun­ try were told so often and so emphat­ ically over the air waves and from the platform that the golden age had ar­ rived, there would never be need for any necessity for this Province to bor­ row, it would never be necessary.

We were Lold that the capitalists and mou eyed people of Can ada were only too 1·eady and willing, in fact they were practically drooling from the mouth for Lhe opportunity to pour millions of cloll~rs into Newfoundland to de­ velop this Province, and fro1u Canalld, Mr.

Speaker , we have not yet received a cent to aid us in developing our natural resources. \Ve were told that our great wealth and natural resources had become so well known that it should not be necessary for the Gov­ ernment to raise money; we were told I hat we are Canadians now, that Can­ adian money would be put in here and that no difficulty would be had in our current and future development. But the record, Mr. Speaker, is en­ tirely diff erent. Outside people l1ave not seen fit to place much confidence in the utterance of the present Admin­ istration.

The borrowing of money on the credit of the Province, we were told, Mr. Speaker, was going to be used as a last resort, there were other means at the disposal of the Govern­ ment, even to the extent of imposing a three per cent sales tax on food which this year it w~s estimated would bring in to the Treasury two million dollars, two million dollars which the people would pay on foodstuffs, giv-

HOUSE OF ASSEMBLY PROCEEDINGS 19 ing the Province this money by bring­ ing about this rather hard measure of imposing this three per cent sales tax on foodstuffs, the very fundamentals of existence of the small wage earn­ ers. I think, Mr. Speaker, that is a rather dreadful step for a Government to have to take, to impose taxation on food in order that they may assist in­ dustries of a doubtful nature particul­ arly industries which are fostered and brought into this Province by people in Europe whom a great number of the Newfoundland citizens have little faith in. Now, Mr.

Speaker, it is too bad that we have to come here again, particul­ arly in the middle of the summer for the purpose of raising ten million dol­ lars on the credit of the Province, a rather desperate measure. I wonder why so much difficulty was had by the Corporation with the Government guarantee in attempting to raise a loan for the Corporation. Is it because the people who may be interested in lending the Corporation money under the Government guarantee, is it ,because they have not too much faith in the present Administration?

I don't doubt that the credit of this Province is good, we never welshed on our national debt although since 1946, Mr. Speaker, much has been said to ruin the credit of this new Province in a national convention of which there were several members who are new members of this House. Much was said in the National Convention, Mr. Speaker, which did not do the credit of this Province any service. Put it another way: those responsible for helping to ruin the credit of this new Province would be responsible now for any difficulty in raising a loan on the credit of the Province.

The same thing happened in the two referen­ dums as in the National Convention, special papers were issued, one paper called the "Independent" and another called the "Confederate" with wide dif­ ferences of opinion expressed in both those papers which gave many people cause to wonder which was right. The independent paper did profess faith in Newfoundland as a Dominion of the Commonwealth, and the people behind it writing in that paper had faith in what was said and believed it.

On the other hand in the Confed­ erate paper much was said to per­ suade people that the golden age was approaching and much was said in respect to the credit of Newfoundland. That paper helped to ruin the credit of Newfoundland at that time, and to ruin the faith of many thousands of people in their country, and now Mr. Speaker, after only three years of being a Province we find ourselves in the position where we have to go out into the money markets and bor­ row-It is not nice. The very fact that we are faced with this borrowing knocks the estimates for this year all out of kilter.

The estimates for this year show a surplus on current ac­ count, a surplus even on current ac­ count of over six million dollars. I[ Newfoundland is in such a position as to show a surplus of six million dollars on current account then why have we got to go out and borrow? The Government are in financial dif­ ficulties now and they are asking this House to pass legislation to· get them out of it. They must have foreseen this in May. But it has been the re­ cord of the Government, Mr. Speaker, all through its past three years they have just used a number of expedient answers.

In the first year, I remem­ ber a time when a public statement was made by the Government that they were not going to have any more relief even if it had to build a road

20 HOUSE OF ASSEMBLY PROCEEDINGS with picks and shovels. Just a mat­ ter of expediency, keep the public hoping better times are around th e corner. As we went on, Mr.

Speaker, the Government outlined several other projects to open up the country [or development, they were going to be the means of interesting outside capital in coming in here-The Rockerfeller survey was one such which was to bring this Province much money, but rhe r.esult of the survey nobody knows . this survey which was to be the means of bringing untold millions of dollars into the Province did not bring in a cent , the tourist survey the sam e thing but cost a smaller amount of money. But here we are, Mr.

Speaker, three years as a Province of Canada and we have only uow reached the point where a tourist director has been appointed and what can he do with it to entice people to come in her e and spend their holidays? Three years and tourism was one of the heaviest items in the Liberal platform and they have only now gotten around to th e fact that they have appointed -a direc­ tor of tourism. ,-vh at can he do about it? Nothing. There is no place to put a visitor coming here, only one hotel in St. John's and a couple of lesser ones on the ,vest . Coast and no mads. Now, Mr.

S'pcakcr , I am not going to say much mor e e xcept to repeat what T said in the beginning that it was the keynote of this Govei-nment' s policy, the keynote, Mr. Speaker-they said it was unthinkable that this Gov­ ernment should borrow, and now we are here just a few weeks after the House closed seeking legislation so that we can borrow ten million dol ­ lars . It is an olrl story and if the loan does go over-a prediction was made and one opinion expressed that the loan would be sold at par-I don't think so particularly when so · much effort was made to ruin the credit of Newfoundland .

I do not see how a ten million dollar loan will sell at par, neither can I see ... MR. S.MALLWOOD: Mr. Speaker, to a point of order. Now , if the hon­ ourable gentleman wants to try and ruin Newfoundland's credit he is wel­ come and will take the medicine he rieserves. T he point nf order is: As the gentleman knows, the only speech­ es made in this session were made by the Honourable Leader of the Opposi ­ tion and I. No one said, I did not say I am sure, the Leader of the Op­ position did not: say, the loan would be sold at par. I said it would be quoted above par within a week.

That is what I said, sold above par within a v.reek at pren1iu1n. MR. CASHIN : It was said above par within a week-then was not that tantamount to par-we know it is not going to. The Honourable Premier said we, or Lhe honourable member, are trying to ruin the credit of the Prnvince and can take the responsibil­ ity. We are not prepared to take any responsibility with regard to the credit of this country, let us place that re­ sponsibility where it belongs. MR. FOGWILL : Mr.

Speaker, I have just about concluded the few remarks I have intended to make and any member in this House who makes such a silly remark that anyone over here, five members in the Opposi­ tion, are going to ruin the credit of this Province, it is utter nonsense, ridiculous . I have faith in this Is­ land just as well as any other member here but I have none in the present administration, and the record of the past three years has proven it to me with their extravagance jumping into this project and that project and

r-lOUSE OF ASSEMBLY PROCEEDINGS 21 jumping all around the place spend­ ing money without looking to whether it is going to be spent and whether the result is to be good or bad, spend­ ing money on ideas. Any responsi­ bility for injuring the credit of this Province will 0 be upon those people and not on the people on this side of the House. Do you think I am going to 'ruin my own home? Do you think I am going to ruin my family, to ruin my neighbour or any of the people who live in this Island?

When anybody says such a thing particularly a high official of the Government, what nonsense-I quote the budget speech again, Mr. Speaker-"it is un­ thinkable that we will borrow." So it is stated in the budget speech and I repeat, "It is unthinkable that this Government should borrow." The paragraph does contain that it is un­ thinkable that they should borrow for the extension of public services and economic development. That is the policy of the present administration. Now, if there is any ruining to be done, Mr. Speaker, it will be done by the present Government and not by the Opposition.

I have no faith in the present Government and many other people have no faith in the present administration and as we go along you will find faith in the pres­ en-i" administration lessen each week and each day. Thank you, Sir. . MR.' CASHIN : Mr. Speaker, we have the Order Paper here now, I wonder if it would be in order to go 'back for a nioment to notice of ques­ 'tions? · MR. SMALL WOOD : - I would be agreeable, Mr. Speaker, to interrupt temporarily the debate so that we might revert to the Orders of the Day. MR: SPEAKER: · Question No. 1 addressed to the Honourable Minister of Education : HON. S. J.

HEFFERTON (Minis­ ter of Education): Mr. Speaker, I will have the answer tomorrow. MR. SPEAKER : Question No. 2 : Addressed to the Honourable Minister of Fisheries and Co-operatives. HON. W. J. KEOUGH (Minister of Fisheries and Co-operatives) : Mr. Speaker, I just see the question now in written form. It will be trans­ ferred to the proper officials of the Department and I will get the answer as soon as possible. MR. SPEAKER : Addressed to the Attorney General. Question No. 3: Honourable the HON. L. R. CURTIS (Attorney General) : Mr.

Speaker, I see this question now for the first time, but I can say that as yet no firm of lawyers has been retained, no expenses have been incurred. I might just -say that on a recent visit to Ottawa I did_ dis­ cuss our proposed Act with some Cabinet Ministers of the Federal Government. MR. SPEAKER : Question No. 4: Addressed to the Honourable the Minister of Finance : HON. G. J. POWER (Minister ~f Finarice) : The information requested in Questions Nos. 4 and 6 is being prepared by the Department of Fin­ ance. MR. CASHIN : May I ask jf it will be available today or by the time the House adjourns. MR.

POWER : It should be by to­ night. MR. SPEAKER : Question No. 5 : Addressed to the Honourable the Premier.

22 HOUSE OF ASSEMBLY PROCEEDINGS MR. SMALLWOOD: I decline to table any correspondence between the Newfoundland and Labrador Corpor­ ation and anyone, for obvious reasons. 5

(2) That I will table, it is being typed at the moment, in fact it is probably typed and as soon as it arrives here I will certainly table it. 5

(3) That is being prepared and should be here today or tomorrow. That is the Bill passed in the last session-I take it the Clerk will have a copy of that, I certainly have not. I think the Clerk of the House could take note of that question and see that the copy of the Bill is tabled. That last item is being prepared. MR. SPEAKER: Question No. 7. MR. SMALLWOOD:

(1) I did so. J. R. Small,wood;

(2) The name is Mr. Harold Mad­ dock, the salary I don't recall but I can certainly get that.

(3) I will gladly table that as soon as I get it. The whole matter is be­ ing audited by the firm of Peat, Mar­ wick and Mitchell. As soon as we receive it I will gladly table it, wheth­ er in this session or not I frankly don't know. They have been con­ ducting the audit for some weeks and how long it takes to do an audit I am frankly unaware.

(4) I will table that information. I can say Mr. Dawe took it out and the Newfoundland Hardwood Limited pays it.

(5) The answer is yes, and the company is the Newfoundland Hard­ woods Limited. Has he paid for his share in the said company? The an­ swer is yes, and $25,000. As the ,Government lent Mr. Dawe the sum of four hundred thousand dollars at interest, it is all set forth in the agreement. It is all set forth in the Bill, in the agreement, incorpor­ ated in the Act passed here a couple of sessions ago. The agreement was tabled here in the House. MR. CASHIIN : Yes, tabled but never legislated for. MR.

SMALLWOOD: So that in­ formation requested is already avail ­ able to the House, and was tabled in answer to a question last year. MR. HOLLETT : It only gave authority or agreed to give four hun­ dred thousand dollars, the question is how much has been advanced? MR. SMALLWOOD: Four hun­ dred thousand dollars agreed and I hat was in fact advanced. MR. CASHIN : Capital account? MR. SMALLWOOD: A loan out of our capital acmunt and it became for him his operating account. How much money has been ad­ vanced by the Government to mill owners with equipment .... ?

The amount is included in the one mil­ lion six hundred thousand of the actual capital investment of the Birch Plant and forms part of that 1.6 mil­ lion dollars we spent, but it is on our behalf, we own them, the Government owns them but the Government did not want to be dealing with thirty or forty mill operators scattered around the Island, they had no experience and no desire to do it. Mr. Dawe on the other hand has a great deal of experience in dealing with mill oper­ ators around the Island and it was he who advanced the orders to the people concerned on terms and con­ ditions laid down.

Now, I can get the list of owners and the locations

HOUSE OF ASSEMBLY PROCEEDINGS 23 and will gladly table it. Finally what quantity is now on hand, and the cost of same? All that will come in the audit, frankly I don't know when. MR. HOLLETT : Mr. Speaker, may I ask if the Honourable the Pre­ mier, will repeat the answer to sub-section (1) of No. 7. MR. SMALLWOOD: I said that I had done so, since Mr. Russell re­ signed as Minister of Natural Re­ sources. Up to then he was the official concerned, then I was the official concerned as Acting Minister and as Minister. Adjourned debate on the Speech from the Throne : MR. HIGGINS : Mr.

Speaker, the Speech from the Throne delivered by His Honour the Administrator on Monday was I think, from what in­ formation I have been able to get, the shortest Speech from the Throne ever delivered to this Honse, and it was short because of necessity very little had to be said. 'We know now that something that had been pre­ dicted in this House less than two months ago has finally come to pass. Your Honour will remember that when the debate on the Newfound­ land and Labrador Loan Bill was in progress it was said that the Govern­ ment was only blindfolding the devil in the dark.

In effect that proposed Bill would only have meant that the Government in the final analysis would be called upon to pay. The general terms of the Opposition's criticism was that the Government should come out and face the fact that it had to borrow money. That statement was indignantly refuted; it was not the policy of the present Gov­ ernment to borrow, that fact was an- nounced time and time again by all the responsible Government spokes­ men.

Your Honour will remember the budget speech which was deliver­ ed in this Honse on the 30th day of April by the Minister of Finance, and I would refer the House to the state­ ment made at that time. This is a copy, Your Honour, which was fur­ nished to each member of this House, and I presume I may read from that copy.

At page 23 of the budget speech, the last paragraph of that page, the Minister of Finance an­ nouncing the Government's financial policy said : "As we of the Government consid­ ered the future, as we faced ·this pres­ ent year in particular, we were faced by the same two courses of action : to abandon all further improvement of the public services, and to abandon all further economic development, on Lhe one hand; or, on the other hand, to borrow the funds for such pur­ poses.

We decided as a Government that is was unthinkable that we should abandon public services and economic development and we decided that it was equally unthinkable that we should borrow. There was a third course open to us, and that was to earn our own cash surplus, year by year on current ac­ count. That is to say, we could adopt the policy of collecting from the people each year, in current account revenue, more than was actually needed for current account expendi­ ture. We could employ the resulting current account surplus each year to finance capital account development.

That is the policy we adopted, and that is the policy which forms the keynote of this budget speech." Now, Mr. Speaker, that was the considered statement of the Minister

24 HOUSE OF ASSEMBLY PROCEEDINGS of Finance who spoke as the repre­ sentative of the Government on the 30th of April, it was unthinkable that this Government should consider bor­ rowing. And at the risk of reiteration I would recall that when I said Government guarantee of the Gov­ ernment Corporation was in effect the same thing it was treated with derision. But that is the fact, Mr.

Speaker, and that is the reason that today or on Monday when we heard the words of the Speech from the Throne, that no one thought when the House was prorogued a few weeks ago that the need would so soon arise to call it together again, that we on this side of the House are in the posi­ t.ion that, as my colleague from St. John's East said, it is almost impos­ sible to resist the temptation to say, we told you so. Now, to continue with the Speech from the Throne.

We were told that negotiations had been conducted for the sale of these bonds, that is the bonds of the Newfoundland and Lab­ rador Corporation, Limited, in the United States of America, and the language of the Act in question was based upon that fact, I would refer you again, Mr .

Speaker, to the budget speech, page 21, where the Minster says; "Nothing was ever more war­ ranted than the Government's de­ c/sion to build the Cement Mill, the Gypsum Plasterboard Mill and the Birch Veneer Plywood and Flooring Mill; but it is an unfortunate fact that from the moment the decision to build was announced it was twisted and distorted by political opposition and partisan criticism. Any ordinary mechanical or operational mischance in one of these three mills was ad­ vertised widely by political opponents of th~ Government that built them, and .exaggerated beyond all semblance to reality.

One could almost believe that a complete failure of these enter­ prises would be welcomed in certain quarters. So it would be in any en­ terprises started by the Government, and it was partly for this reason that the decision was taken to set up the Newfoundland and Labrador Corpor­ ation, so that economic development might be removed from the realm of politics.

At their last meeting the directors of the Corporation decided to pur­ chase these three mills from the Gov­ ernment at cost, and to request the Government to guarantee a bond issue of ten million dollars that the Cor­ poration would sell for the purpose of acquiring the .funds with which to buy the plants. The Government have agreed to give the guarantee, and the House win shortly be asked to authorize the agreement." This is a particular sentence, Mr.

Speaker, "The Corporation have made the necessary arrangements with bond underwriters for the sale of its bonds and the sale of the three plants by the Government should take place in the immediate future." That was on the 30th of April. The legislation re­ ferred to in the budget was sub­ sequently introduced and it is un­ necessary, Mr. Speaker, to remind hon­ ourable members that during the de­ bate on that Bill it was pointed out that it was necessary that the Bill should be passed so that the deben­ tures to be signed could be dated as of May 15, 1952.

The impression was created by the phraseology that it was only necessary for this House to pass that legislation and then Sir William Stephenson would trot off to New York and see this bond firm, this second largest bond firm in the United States, sign the necessary documents,

HOUSE OF ASSEMBLY PROCEEDINGS 25 put the money in his valise and come home. That, in effect, I say, Mr. Speaker, was the impression created on any ordinary member of this House.

Looking at the record we find that the Bill was passed, we find that Sir William Stephenson did depart, the 15th of May came and passed, the 15th of June came and passed, and no word of Sir William Stephenson has been he~rd, and quite suddenly this House is called together and we are told that, in the words of the Speech from the Throne, "My Ministers and the Corporation subsequently became con­ vinced of the financial unsoundness of selling the bonds in the United States." Mr. Speaker, it is the first time I knew that unsoundness was a synonym for impossible.

But that in cold hard facts is the position : Sir Wililam Stephenson, a gentleman whose reputation has never been questioned, who deservedly was lauded to the skies as being a man of tre­ mendous financial contacts, a man who could rightly control millions, this Sir William Stephenson on the first time he was given the ball and asked to run with it, drops it. That may not be financial lingo, Mr. Speaker, but it is the bold, blunt way of putting it. MR. SMALLWOOD: Also lively imagination on the honourable gen­ tleman's part. MR. HIGGINS : The fact remains to be seen, Mr.

Speaker, I do say this : Sir William's own pe1,fonnance today has not lived up to advanced . belief. Now we find ourselves back in the position that negotiations· had to be entered into for reasons, some of which have been given and given at some length by the Honourable the Premier in his speech off opening day; justifying the position that · necessitates an approach to Canadian financiers. Now, Sir, certain questions have been asked here on opening day. The answers are not as yet read_y but they will be given. Until, Mr.

Speaker, that information is forthcoming it is impossible to adequately discuss the business which is to come before the House. We have the situation today where the Government finds itself in the position where it is asking this House to give its approval to the raising of ten · million dollars. It may be that the Government needs that ten million dollars despite the protestations to the contrary which we heard in the last session of this House. But, Mr.

Speaker, before any member of this House irrespective of which side of the House he may be sitting, before any member can vote with a clear mind and easy conscience on the issue here, I submit, we want to have a clear and detailed account of just what are our foreign commitments.

Is it to be the intention that if this loan is raised, wherever it is raised, that this money is to be passed over to the Newfoundland and Labrador Corporation to acquire these various plants or is some of the money to be paid to these various industries who build plants and when completed and paid for the plant~ to be turned over to the Newfoundland and . Labrador Corporation? Because, Mr. Speaker, when the Newfoundland and Labrador Corporation Bill came up one of the biggest items that they· were going to take over was; as the Minister of Fin­ a~ce poi_nted out, the cement m!ll.

Most members of this House wil_l r_r;­ member seeing in a colu_mn written in the "Evening Telegram" on the 2nd of June an item referring to the .tentative approaches made by the firm of Miag with reference to acquiring the cement mill'. The information or

26 HOUSE OF ASSEMBLY PROCEEDINGS rumour, call it what you will was broadcast and that same night- MR. SMALLWOOD: If the hon­ ourable gentleman would like I would be glad to give him information to assist him in his argument. The Government agreed to sell the plant, the cement mill, to the Corporation and the Corporation in turn agreed to sell it, not to Miag , but the Can­ adian Machinery and Indu stri es Com ­ pany Limited. MR . CASHIN : Who are they? MR. SMALL WOOD : They are the owners of the machinery, Mr. Roethe is the president of the com­ pany with offices in the City of Mon­ treal.

The Corporation has g·iveu the option for the sale of that company of the plant and the Government has agreed with the Corporation to sell the plant to the Corporation. The option by the Corporation to this company to sell the plant is of course conditional upon the Corporation ob­ taining it. Now, the Government have agreed to sell it to the Corporation uul <li<l so at the Lime when it thought the Corporation would through the sale of its bonds acquire the funds with which to pay the Gov­ ernment for the plant.

So that the agreement to sell the plant to the Corporation was conditional upon the Corporation's being able to buy it, and on the other hand the Corpora­ tion agreed to sell the plant to Can­ adian Machinery and Industries Com­ pany. The bonds have not been sold and that is how it stands at this moment. MR. CASHIN : Have they got the money? MR. SMALLWOOD: That is a matter between the Corporation and them . If the Corporation does not buy the plant it cannot sell it. MR. HIGGINS : Can you tell me if there is any connection between the Canadian Machinery and Industries and the people who built the cement plant?

MR. SMALLWOOD: The people who built the cement plant under contract with the Government are MIAG. That same company are closely associated, very closely associ­ nted with the Canadian Machinery and Industry. MIAG's contractors are building the plant at the Octagon, they are providing the technicians and the managem ent for this company at the Octagon, and it is this company that has the option from the Cor­ poration to buy the cement mill with a view to operating it. MR . HIGGINS : Well, Mr.

Speaker, that is most intere sting and opens an entirely new field of speculation be­ cause the explanation given by the Premier, which has been most help­ ful, does now then raise the question of just how close is the connection between the Canadian Machinery a;;_d Industries Company, Limited, and MIAG, I don't know if it is possible or will be possible to find out whether these people control all these organiz­ ations.

It would be most interesting i£ that were so because , we would find, as I -5ee it Sir, that the position conceivably arises that of this ten million dollars loan which the Gov­ ernment seeks to raise, and which, whatever niay be said, will be raised, of this ten million dollars a sizable portion, something in the order of five million, I am speaking subject to cor­ rection, is on a·ccount of lhe cement mill. If that be so, Sir, -and if MIAG is interlocked closely with the people who hold the option, would it not be much simpler simply to say we will sell you back the mill and cancel our

HOUSE OF ASSEMBLY PROCEEDINGS 27 bill or are we going to find we are raising a ten million dollars loan of which five million dollars goes to finance the builders of this plant who are subsequently to operate it? Why not take back the job at cost and pay something for goodwill built up for them? MR. SMALLWOOD : Will you allow me?

MIAG as the honourable gentleman appreciates are a German Company existing in Germany and as such are under German Law and be­ ing under German Law may not with­ out very special permission from the Government of Germany, I speak of Western Germany, accept, except in United States dollars, not in Canadian dollars which are not acceptable but only in United States dollars, pay­ ment for goods shipped from Ger­ many to this side of the Atlantic Ocean.

MIAG therefore without very special permission from the Govern­ ment of Germany cannot export capi­ tal nor capital goods except for pay­ ment in United States dollars, which payment is at once sequestered by the Government of Germany which se­ questers all money flowing into Ger­ many from whatever source or by whatever means. The fact that MIAG are paid by the Newfoundland Gov­ ernment in U. S. dollars for the machinery they supplied for this cement mill is not by any means to be taken as meaning they now have or at any time had the U.S. dollars paid them.

They were given pay ­ ment in their own currency in ex­ change for U.S. dollars which dollars were taken by the German Govern ­ ment. That is the case all over the continent of Europe except in Switzer­ land and Liechtenstein.

Therefore in view of the high improbability of the German Government giving permis­ sion for the removal of German In- dustries from Germany by the export of capital goods except for sale in U.S. dollars, it is highly unlikely to say the least, if not utterly impossible for MIAG to ship any machin ery, and have not in fact done so, but the compan y here, the own ers of Canadian Machin ery and Indu stries Company Limited at the Octagon , the owners of that company namely Machinery and Trust Company Limited, living in a country with a free and convertibl e currency are in a position to buy the cement mill.

If my honourable friend does not follow that closely I would be glad to illustrate . They have the legal authority to do what they like, and the ability to do it. I was not discussing only their legal authority as they have a company existing in Switzerland with free currency and convertible, therefore have the auth ­ ority under existing law to do almost what they like. I was not discussing the dollars . MR. CASHIN : That is the main thing . MR. HIGGINS: We are making progress, Mr. Speaker, in any event slowly and I am afraid tortuously .

As far as the Premier is concerned he knows this stuff, has been living with it a <:ouple of years and must bear with those of us trying to pii;k up facts as we go along. We ·have the position, Sir, at the moment, whilst the Government has set its sights on ten million dollars, I at least, I have no authority to ~peak for anyone else, I am not able to say at the moment just how much of this ten million dollars is actually required for the payment of these commitments for industrial development . It may be that the Government only needs say, six millions or may be seven millions.

The point I am trying to make, Sir,

28 HOUSE OF ASSEMBLY PROCEEDINGS is this, that whatever amount is the minimum needed for the Government to honour its commitments and to keep the good name of this Province as far as meeting its obligations is concerned unsullied, that should be the full amount voted by the House , and no more. I am saying that sim­ ply as one who has no knowledge, a fact already apparent, of finances.

I can say this as an ordinary citizen, that any Government which in the space of three years starting off with a jackpot of forty million dollars ac­ cumulated by other people, with a revenue which I think, in the words of the Minister of Finance in his bud ­ get speech, has been continually in­ creasing, and as a Government which has expended all that money in three years is not, I submit, Sir, financially responsible an<l should not be given any more money than the bare mini­ mum requirement.

In other words we have been living in a dream world for a few years-we are a comparative­ ly poor country despite a lot of the prophecies made, and made probably quite honestly. All that we were told about the influx of capital and in­ dustry on this side of the water, when we got down to brass tacks we found it necessary or the Government found it necessary to go across the · water and get' people who had the scientific technique and know-how, and a ·huge amount of money, huge for a country such as ours, has beeri dissipated and _we. have no solid things to go by.

It .is tru.e we have these various indus ­ tries, -we -have the cement mill, the gypsum plant, we have the birch plant, but Sir, just how far has any ­ one df these been proven t~ be a sound and profitable proposition. It is true that we hea~. and see occasion­ ally in the paper , reports that prnduc- tion of the cement mill can stand up to any Mainland competition. MR . SMALLWOOD: Fifteen per cent higher. MR.

HIGGINS: ·It is true · we hear the gypsum plant is also guaranteed of success by reason of the location of its source of supply and various other factors, it is true that we hear reports of the birch mill , but it is also sadly true that we hear reports of the birch mill which are not so enthusiastic. That is something which I take it this House will get more information on as we go along.

If these reports and these rumours are only malignant, spiteful reports they should be spiked am.I <lorn~ so by the people in the best position to do so, men associated with those industries who are or should be in full possession of the facts. Now, as I say, I do feel that this Bill, this Loan Bill will go through. At the moment on the information that we have at hand I do say that the Government might be well ad­ vised to <:Orne into this House and put the members in possession of the facts, and the facts showing what are their bare m1mmum requirements.

On their record as financial operators in the past three years, I say, Sir, there is no justification in asking for any more money than they ·must absolute­ ly obtain to preserve the credit of this Province, and I don't think any­ one could regard that as an attack upon the integrity of Newfoundland nor the integrity of the members of this Government, they are just as honest as you would meet anywhere, but I woul<l say they are not big enough to handle the amount of money dished around with s11ch pro­ digality in the past few years. If we go on with this idea of economic de­ velopment, take one or two of these

HOUSE OF ASSEMBLY PROCEEDINGS 29 rdeas, may be they are all good, but what I do say, Sir, is this reckless plunging into ten or a dozen at one time, take one or two, prove them and you got something you can sell. At the moment we have the Newfound­ land and Labrador Corporation, but have we any assurance they have agreed to buy and if so has any price been set?

We are talking, Sir, largely in the dark, we are in effect .being asked to buy a prospectus because we all know and have been told time and again of the resources of this country which are now being harnessed, but the point is, we have not yet had a coldly impartial analysis of the earn­ ing capacity of any of these indus­ tries. 'It is true we do have, I believe when this House met in March we had a survey which was made by an eminent firm, Coverdale and Coll­ pitts, but that report itself said that it was made from three to six months too soon, so that we have not today, Sir, got that information about our whole financial picture that we re­ quire when we vote on issues as serious as this.

I know, Sir, we are going to have the opportunity to go into this matter more fully when the actual Loan Bill itself comes up, but l do hope, Sir, and I know that the Government will not take this in any unkind spirit, I do hope when this Bill is coming up for discussion we will be put in possession of all the information, because if the situation is bad it is better to know it, not go in · a fool's paradise thinking we have lots of money, millions of dollars, never have to borrow, and then wake up six months hence or next year and find something worse, however good or · bad the picture let us have it honestly and the House as in­ dividuals. and Newfoundlanders can face up to it.

MR. HOLLETT : I believe the address, Mr. Speaker, read by His Honour the Administrator a few days ago did express surprise evidenced by the Government of the fact that we are being asked to meet again now. I now would like to express the shame and surprise which would overwhelm me if I were a member of the Govern­ ment which includes one Minister, Sir, who a month ago decided and asserted in this House that their spokesman in the United States, Sir William Stephenson had arranged a loan of ten million dollars and all it needed was this House should pass the Bill and the money would be forthcoming.

Now, Sir, they have to come here and hold their heads in shame, as I see them on the other side of the House now and admit that this Sir William Stephenson, this man who was raked up by Dr. Valdmanis out of the mass of financiers of Europe and the United States of America and brought here by this Dr. Vald­ manis and recommended to the Gov­ ernment as a man who could do all things, a superman financially, he had the money in the United States of America and it would pour down if the House would just pass the Bill.

However of the ten million dollars five points two millions were to pay for the German industries and the rest to build hospitals, schools, etc. Mr. Speaker, I put it to you, Sir, any Gov­ ernment which has had in such a short time to make such a confession of inaptitude and inability to run the Government of this Province should hold their heads down in shame and immediately tender their resignation to His Honour the Administrator. But they don't do that, Sir, this Gov- ernment has not the decency to do that, but come in ·here and tell us they have suddenly decided at the

30 HOUSE OF ASSEMBLY PROCEEDINGS moment it is not the thing to do to borrow money in the United States of America, I put it to you, Mr. Speaker, that the Government of this little Province of ours would borrow money anywhere, get it wherever they could get it-not borrow in the United States-the whole world knows, Sir, why they did not get the money in the United States of America, the whole world knows this Government is au iuapl uowd, people who do not understand any more about finance than I do, and I admit I know very little about finance, particularly high finance.

I put it to you, Sir, in­ dividuals on the other side of the House know less than I do. I would have no excuse for myself if I sat on the other side of the House in having to come and admit the shame and humility just one month after passing this Act, Sir, they have to come and say, now we decided we would not have this money in United States, we will wipe that out and pass new legis­ lation and we are going to Canada to grovel, grovel, Sir, at the feet of the Banks of Montreal and Nova Scotia and a few bonding houses and beg them for ten million dollars.

We in this Province who three years ago, Sir, were a wealthy Province with practically fifty millions of dry cash in the Treasury and a good revenue coming in, the height of prosperity all over the world, and now, Sir, this Government is broke, I say, and sadly broke, and their credit has been dis­ credited by the very Government members we see on the opposite side of the House. To me, Sir, that is the direst admission of inability that any Government in the British Common­ wealth of Nations has ever had to make or admit.

Yet, Sir, they sit there and they have not the decency to resign the Government and allow gomebody else to take over. MR. SMALLWOOD: A foul and filthy thing you just said, suits you perfectly. MR. SPEAKER : Order. MR. HOLLETT: Who has the floor, Mr. Speaker, who has the floor? I have said no foul and filthy thing, J\fr . Speaker, all foul and filthy things come from the other side and from the mouth of the man who has just spoken, and I will not allow myself to be interrupted by such interjections without throwing them, back in his face. MR. SPEAKER: Order . MR.

HOLLETT: "Newfoundland is on the March ." On the march where? Where, I say? Mr. Russell told us that a year and a half ago, we are on the march to ruin and de­ gradation at the hands of a few people who don't know anything more about finance. MR. SMALLWOOD: You rotten traitor. MR. HOLLETT : I am a rotten traitor? I am a rotten traitor? MR. SMALLWOOD: To New­ foundland. MR. HOLLETT: From anyone on the opposite side I will not take that, and will throw it back in his face­ unless he is put in his place. I de­ mand that statement be taken back, Sir, "I am a rotten traitor." MR. SPEAKER : Order.

Honour­ able members will bow to the rules of the House. No honourable member hurls that accusation against any other honourable member.

HOUSE OF ASSEMBLY PROCEEDINGS 31 MR. HOLLETT : I demand that it be taken back. MR. SMALLWOOD: If the hon­ ourable gentleman- MR. HOLLETT: No if about it, unconditional. MR. SPEAKER : The honourable member who is in the act of making a speech has the right to be heard as has every honourable member, it does not matter if his words have interpre­ tations unwelcome to the other mem­ ber so long as it is not unparliamen­ tray. The honourable member has no right to call another a "rotten traitor" or words to that effect, it is unparlia­ mentary and the Honourable the Premier will retract the statement. MR.

SMALLWOOD: Mr. Speaker, I do retract, and say only this, when any honourable member in this House says that Newfoundland- MR. HOLLETT : Does he retract or not? MR. SPEAKER : Order. If the hon­ ourable member will insist on refus­ ing to regard any authority from the Chair, there is nothing left for the Chair but to resign, will the honour­ able member be seated? The Premier has a right to speak. MR. SMALLWOOD: And I say only this, Mr. Speaker, when any hon­ ourable member of this House at this time declares Newfoundland is head­ ed for bankruptcy and degradation it merits some strong- MR.

SPEAKER : The honourable member will have opportunity to re­ peat that in his own speech, there are allegations which may or may not be true. MR. SMALLWOOD: It is a nice thing to be published across Canada. MR. HOLLETT : If the honour­ able member got me correctly-I un­ derstand we are heading, 'on the march', I said; we are on the march for degradation and ruin at the hands of a few people inapt and inefficient, that is what I said and will repeat and I have figures before the hour and a half a1·e up to show we are on the march.

"Was Newfoundland to go ahead or behind" (I am just looking at this book which I shall table) "New­ foundland is on the March" signed by J. R. Smallwood-"Our people as a result of Confederation embarked upon a new course". Then "My col­ leagues in the Government shared my faith" so it goes on, and refers to the building of the industries.-There is something there about fishing in troubled waters.-May I point out, Sir, there is no further need to ask ques­ tions as to what to do with our sur­ plus-"We dislike borrowing." May I quote from the Premier's words a month or so ago?

"The people of the nearby Maritime Provinces do not turn a hair when their Government borrows money to finance capital im­ provement. They know that is the perfectly conventional way to finance new roads, hospitals, schools and all the rest. The people of Newfound­ land, however, view the matter alto­ gether differently, their experience with borrowing was a sad one espe­ cially in the last ten years or so dur­ ing which we did it. To them borrow­ ing spells bankruptcy." To me, Sir, now, borrowing by this Government spells bankruptcy.

"Indeed," the Premier goes on, "I hardly suppose there is a member of this House who does not wince" (wince mind you) "at the thought of Newfoundland borrow­ ing." "My purpose today is not at all to suggest we ought to borrow ·but rather to point out there are only two

32 HOUSE OF ASSEMBLY PROCEEDINGS ways to finance Government expenses" And he goes on to say: "Let us create a goose to lay a golden egg." A very interesting document. I would point out to all members par­ ticularly the back benchers of the Gov­ ernment. On page 28 of this "New­ foundland is on the March": "One thing above all is clear." Clear to whom? One thing above all is clear, a month ago or a little more we had the most powerful aversion in New• foundland to borrowing for the pub­ lic services even on capital account, public services. "I doubt whether the people of Newfoundland"-("My pub­ lic", you know).

"Whether the peo­ ple of Newfoundland yet have the kind of faith in Newfoundland that would enable them to take such bor­ rowing in their stride as do the people of the other Provinces of Canada ." S'o we go on to other ridiculous state­ ments and on page 23 we find: "We shall continue to make expenditures on capital account to improve our public services but shall not borrow to do so." T r.onld go on-that is a little over a month ago.-"We shall not borrow." When we pointed out, Mr.

Speaker, that a guarantee of a loan of ten mil­ lion . dollars to the Newfoundland and Labrador Corporation was in effect Government borrowing we were jeered at, it was ridiculous. Well, the Act is passed and the birds now have it. But Sir William Stephenson and Vald­ manis and the Honourable the Prem­ ier and the Attorney General flew, they could not go quickly enough by train, but they flew to the Mainland to get this ten million dollars. I sup­ pose they even intended to bring it back in a suitcase, as honourable mem­ bers of the other side brought back some money during Confederations days in a suitcase.

Perhaps they meant to bring it back t-hat way, but unfor­ tunately, Sir, for Newfoundland, I say, they did not get it and we are told now, Sfr, in this House that we must be careful what we say, at least that is the insinuation made to my honour­ able friend for St. John's East a few moments ago, must be careful not to injure the credit of Newfoundland. I say, Sir, it has been torn to ribbons by the Government, by the front benches on the other side of the House.

American financiers only have to look at the records, Sir, of this Gov­ ernment, they only have to go back to 1949, and look at our position then with forty-six million dollars, practic­ ally fifty millions and twenty millions a year coming in from Ottawa and a very nice revenue being collected. They only have to look at that pic­ ture three years ago and then have to glance at that month 's budget or of two months ago and they will see that this Government have two-thirds of the surplus gone and they will see that the Government has to bring in a Bill where they have taxed food three per cent.

They must ask themselves, Sir, we had better look and see before we lend money to this Government. They spent all that money and what have they got for it? What have they got for it? I be­ lieve there are three boats still down there by Job's, the Icelandic boats, money spent through the Honourable the Premier and another honourable gentleman on the other side of the House who arranged the meeting with the men.-Five hundred thousand dol­ lars, approximately for three or four Icelandic boats still down there. What have we got? A cement mill in Cor­ ner Brook, we don't know how much revenue it earned yet.

We have the gypsum mill, probably one of the

HOUSE OF ASSEMBLY PROCEEDINGS 33 best prospects we have . We have the cement mill but certainly don't see any earnings from there, that cement mill which was to cost three million dollars and I am informed now it is over five million dollars. MR. SMALLWOOD: You are wrong­ ! y informed. MR. HOLLETT: But wrongly in­ formed by the other side of the House. The hardwood plant. That, too, I believe cost considerably more money than it was supposed. MR. SMALLWOOD : Not one dol­ lar. Not one dollar more. MR. HOLLETT: Not one dollar tUore?

The hardwood plant, four hundred thousand dollars, according 10 the agreement given them for oper­ a ting expenses, I wonder if they want some more now? I wonder did it not cost more than one million six hun­ dred thousand dollars you said it was. Why are not the questions I asked re­ lative to that plant answered? Sir, I submit the reason, and the only reason why these questions have not been answered is the fact that the cost is very, very, much higher than was at first anticipated. MR. SMALLWOOD: Not a dollar higher. MR. HOLLETT : That has no ef­ fect on me, Sir, such interjections as that.

Well, we got Icelandic boats, gypsum plants, cement plants, and in­ cidentally, the cement plant was that built by Mr. Lundrigan, I believe he is an engineer or something. He had something to do with that plant, I wonder if the Attorney General's solic­ itors informed the new company which was registered on the 21st day of June this year, if he could tell us something. Mr. Curtis and Dawe, Mr. Speaker, were the solicitors to form this new firm, The Canadian Promot­ ing and Trading Limited. MR. CURTIS: I don't know of any such company, my firm does, I don't. MR.

HOLLETT : I have no doubt the honourable gentleman is stating what is correct, but as a fact you, Sir and your partner are the solicitors, Curtis and Dawe at any rate, for the Canadian Promoting and Trading Limited which was incorporated on the 21st day of June. And who do you suppose are the three promoters, Ernest J. Leja, Max J. Braun Wogan, you have heard that name, Mr. Speaker, he was sent up to intercept Dr.

Sennewald in an airplane, and put the gun to his head and said, "Look you say this or that, or you won't get that guarantee of one hun­ dred and fifty thousand dollars." That is the company incorporated on June 21-but what for?-to procure and lease and operate mills and manufacture establishments. I won­ der what mills and establishments are they to procure and to operate, this Mr. Leja, and Mr. Braun Wogan, friends of the Honourable Premier who dispatched him to Gander in that famous case? I wonder what mill they are to take over?

I would like to have some particulars on that be­ fore we agree to certain things which we will be asked to agree to. Yes we have the cement plant and the gyp­ sum plant and the hardwood plant, and these financiers in the United States, Sir, must have looked up the records and found out the machinery plant and textile plant and fur dying plant, if they looked up the records they will say, this Government of Newfoundland they owe them about five point six according to agree-

34 HOUSE OF ASSEMBLY PROCEEDINGS ments, the surplus is gone and they probably took a look at the Bank of Montreal and wondered just how our Treasury Department-what their re­ lations were between them and the Bank of Montreal. Mr. Speaker, I could have given you some idea of the facts at the moment but I hesitate to do so.

So, Sir, these financiers in the United States of America did not subscribe to this loan, they did not subscribe-no­ body can gainsay that, ten million dollars g·ood Government bonds de­ bentures of the Province of New­ foundland, the Government of New­ foundland offering them for sale in the United States. MR . SMALLWOOD : There were no such bonds. A point of order. The honourable gentleman is, I will not say falsifying, he is now saying the Government of Newfoundland was offering bonds in the United States. He knows that was not so no New­ foundland Government bonds have yet been offered for sale. MR .

HOLLETT : Well, Mr. Speak­ er, they owned them nine-tenths, the Government owns nine-tenths of the Corporation and they offered their bonds for sale and they were not ac­ cepted, and the Government on the other side of which the Honourable the Premier is the Director, they offered them for sale in the United States of America and they were turned down. MR. SMALLWOOD: Mr. Speaker, to a point of order-I have jmt said in this House in my official capacity that the Government and the Cor­ poration decided unilaterally not to float the bonds for reasons which I gave.

Now, the honourable gentle­ man says they were turned down and calls me a liar, the Premier a liar. Is it in order to call the l'remier of Newfoundland in effect a liar. We know he is only a cur-I take that back, I retract that, I retract that. MR. HOLLETT : Mr. Speaker, God forbid I should lose my temper with this Premier of Newfoundland, this Premier of Newfoundland who gets up in his seat and calls another honourable gentleman a contemptible cur, a traitor to my country. Am I supposed to stand here and take that and not lose my temper.

I shall do it, Sir, whether I am suppos ed to or not and any man on the oth er side ot the House who dares say that to me outside the door of this House will get his just desserts which I myself will hand out to him. And I issue that now, Sir, as a threat to anybody who likes to take it up, calling me, Sir, wh~t they have been calling me on the other side, outside this bar and I shall deal with it myself- "a contemptible cur. " MR. SPEAKER : The honourable gentleman is not supposed to stand and take that-he is ,not supposed to stand at all.

A point of order has been made and I have not had the slight est chance nor opportunity even to think of the point of order, the honourable member is on his feet making the decision for himself. In that case what does he expect the Chair to do. I would advise, how­ ever to stop indulg·ing in personal re­ criminations which have no real bear­ ing on the subject and only riles the tempers and does nothing to redound to the credit of this ancient House. MR. HOLLETT: Mr. Speaker, if it is in order, I would like to adjourn the debate until this afternoon. MR.

SPEAKER : It is now one o'clock and I move the adjournment of the debate until 3:00 of the clock.

HOUSE OF ASSEMBLY PROCEEDINGS 35 AFTERNOON SESSION The House resumed at 3:00 of the clock in the afternoon. MR. SMALLWOOD: Mr. Speaker, before we resume I have a reply to a question I was not able to answer fully this morning. First of all the correspondence requested by the Hon­ ourable the Leader of the Opposition between the bond underwriters and the Government with regard to the floating of a Government issue. I may add to that for the honourable gentle­ man's information, I have only the one copy and if he would like to jot it down I will read it slowly as I don't want to table it : Nesbitt, Thompson and Co.

Ltd.; W. C. Farris & Co. Inc.; James Rich­ ardson & Sons; Burns Bros. & Denton Limited; Gardner & Co. Ltd .; Cornell, MacGillivray, Ltd.; B. D. Parsons & Co. Ltd .; Dominion Securities Corp. Ltd .; A. E. Ames & Co. Ltd .; Midland Securities Corp. Ltd.; Cochrane, Mur­ ray & Co. Ltd.; Royal Securities Corp. Ltd.; W. C. Pitfield & Co. Ltd .; L. G. Beaubien & Co. Ltd.; Collier, Norris & Quinland, Ltd.; Eastern Securities Co. Ltd .; Dawson, Hannaford, Ltd .; Renet LeClerc Incorp.; Mills, Spence & Co. Ltd.; McLeod, Young, Weir & Co. Ltd .; Bell Gouinlock & Co. Ltd.

That makes a total of twenty-three, four banks and nineteen bonding houses. That is the answer to the honourable gentleman's question . Now, with regard to -the question of the honourable the junior member for St. John's West. 7.

(2) The salary is $3,000. With regard to insurance taken out by Mr. Dawe on the birch plant, I just telephoned the Auditor General a few minutes ago and his impression was that it was covered in an amount of two million dollars. His impression however was to be con- firmed and he would call me back and I have arranged to have the in­ formation telephoned here to the clerk and I will gladly table it. MR. SPEAKER : When the House rose at I :00 o'clock the House had been presented with something in the semblance of a point of order.

I want to say before the debate is resumed, and ask honourable members to try and conduct this debate with some semblance of order and parliamentary decorum. These rule s are very simple and very ancient and their age is proof of the great need that exists for such rules. The simplest one of all is that a member may criticize -the Government, its acts, whether acts of omission or commission, good or ill depending on the opinion of the member speaking. But no member may impute false motives nor speak disparagingly of other members on either side of the House.

Members will sometimes make a mistake or mis­ statement of facts, whether such mis­ take be deliberate or unintentional no man can tell. It is impossible to rule on it. All that can be done is that the member may object and say it is a mis-statement of facts. That, how­ ever, is not the same as denying the truth of a ministerial statement. These are very simple rules surely within the grasp of any member of the House or of any House. If they are adhered to a debate can go along smoothly, be it as hot as it will.

Further I will say that when a mem­ ber rises to a point of order the speak­ ing member should resume his seat. If he wishes to speak to the point of order let him do so by addressing himself to Mr. Speaker, and finally do allow Mr. Speaker the opportunity to decide if there is a point of order. Otherwise he just has a hot conver­ sation and every member has a right

36 HOUSE OF ASSEMBLY PROCEEDINGS to jump in if the other has . So I will ask the honourable member now to resume his speech and let us have no reference to the passage taking place this morning. Honourable member for St. .John's \Vest: MR. HOLLETT : Mr. Speaker, I am quite sure the words you have spoken have been taken to heart by members on this side of the House and I hope they will sink in deeply into the minds of certain members on the opposite side. MR. SPEAKER : It applies to all members. MR. HOLLETT : Thank you, Mr. Speaker. When ,1 left off at one o'clock, Mr.

Speaker, I was refnring to a picture as it must have presented itself to the financiers, these great financiers we heard so much about, the Rockefeller, Harriman-Ripley and others, as they were approached in all probability hy this gre~t man who has been brought before us by Dr. Vald­ manis with a view to their subscrib­ ing to a loan for the Newfoundland and Labrador Corporation who had a Government guarantee as to principal and interest and unconditionally. There it was on the blotter, Mr.

Speaker, we are offering, says the Newfoundland and Labrador Corpor­ ation, ten million dollars in bonds, debentures, securities guaranteed by no less a Government than the Pro­ vince of Newfoundland who owe practically nothing.

We will pay you your four and three-quarter per cent, guarantee the principal, pledge our rights to twenty-two thousand square miles in the Province of Newfound­ land and we believe we will be able to pledge the great new cement plant and a hardwood plant, at any rate we are able to offer you all that as security and on top of that we offer you the guarantee of the Newfound­ land Government. Now, Mr. Speaker, that must have looked a very, very attractive picture to these great financiers, these men who control the millions.

It must have looked very attractive as a bait to Sir William Stephenson, who has been held up to us as a man who could move mountains, could do al­ most anything, was ,brought here at the instigation of this man, Dr. Vald­ manis . By the way, where is Dr. Valdmanis, I have not seen him for quite a while, I have not seen him for ages. But I do remember this about Dr. Valdmanis, just prior to the last session of the House I was called from 1ny work cne day by telephone and on [he other end was a sick man who said his name was Dr. Valc\manis. I enquired as to what he wanted me about .

There was no privacy about the conversation because at my office there were others and he spoke so loudly anyone within twenty feet would have heard what he said. But he implored me, Mr. Speaker, to say nothing which would offend this great Sir William Stephenson for fear he would not accept the presidency or chairmanship of the Newfoundland and Labrador Corporation. I assured Dr. Valdmanis I would do no such thing. He said, if you do, he said, I will resign, I will leave your country. \Vell now, Mr. Speaker, he must have left the country as I have not seen him for some time.

At any rate the man who produced Sir William Stephenson to the Government and when ,r say the Government I refer to the men in the front benches, Mr. Speaker, who are holding their heads down today in shame that they have to call this House together at this

HOUSE OF ASSEMBLY PROCEEDINGS 37 moment to repeal one Act and bring in another. I don't blame them for holding their heads down, but only blame them for not handing in their resignation and allowing someone else on that side to form a ministry, In my opinion, Sir, the biggest let• down any Government could have had in this part of the Common• wealth of Nations under the British Flag-back in the old days of Respon• sible Government in Newfoundland we never had such a let-down and I re• peat it. Here we are, as I pointe<l out this morning, Mr.

Speaker, when in 1949 we had practically fifty mil• lion dollars dry money, did not owe any money scarcely and had forty-six millions dry cash, and we had a revenue which was $Oaring but today _we have not five cents to carry on our own works, to build our hospitals or to build the Memorial University, it is all gone. Is it any wonder why the financiers of the United States and Canada look ed askance at this Provincial Government when they im· plored them to buy our bonds.

I say here and now that in my opinion which I give, it would be to the credit of this country if we did not or rnuld not raise a loan at this time.

Because, Sir, I point out to you the first cheque to · be paid out of that ten million dollars after the commis• sion has been paid which is about nine million two hundred thousand or some.thing like that, the first cheque to be paid or advan~es to be made are five million two hundred thou• sand dollars to some German indus• tries, and nothing has ever been pres· ented to this House to prove to us that there is any soundness whatso· ever in these any more than anyibody offered to prove to us there is sound· ness in this cement or hardwoods are having difficulty to carry on. I may be wrong. But on the words of Mr.

Dawe, did I hear him saying he had a million dollars worth of birch lying in Lhe woods of this Province? Nbw, Mr. Speaker, anybody who knows anything about wood, particularly birch, will know what effect one sum• mer even will have on birch lying cut dowr:i in our woods, it will be practi· cally valueless. I have not any doubt, Sir, but some of these German in­ dustries particularly will have the first cheque to be paid, five million two hundred thousand out of that loan of less than ten million dollars. Another one, this one a little one, will have to be paid out to Dr.

Senne• wald, and that was the man who was ordered to stand up and deliver by Braun Wogan. And do you remem• ber, he is the German, who, as I said this morning, went out to Gander to lay down the law to that Dr. Senne· wald and said to him, you must not say this and say Lhe other thing. And I pointed out also this morning and rep eat because it is important, and it is important because I make this state• ment now, we are getting tangled up with a crowd of Germans in whom I have no faith whatsoever, never had any .

This Braun ,vogan is the prin· cipal now, Sir, in a new company which is being formed ·, with the man who built the cement plant, and there is some question as to whether . he is not one of the directors of New Technique. Who are New Technique, Sir? It is, Mr. Speaker, the company which is doing its best to smuggle certain materials . out of Eur.opean Countries . I put it to you, Mr. Speaker, are we not acting most ,hamefully iE we are stooping to collaborate with people who would defeat the interests of their own pl;mt which I understand. even !].OW countries' welfare. That is being

38 HOUSE OF ASSEMBLY PROCEEDINGS done by some of these men . I know it and I say our Government, some of these men on the opposite side of this House are in collaboration with some of these Germans, and this man whom we all know put Dr. Senne­ wald in his place- MR. SPEAKER: I want to inter­ rupt the honourable gentleman. Is he going to continue his speech or con­ tinue whh repeating the first half hour as he has done so far. This morning he made an insinuation against the Attorney General. He should drop the subject or be very specific and make the charge or give notice of motion. MR.

HOLLETT : Tu whaL state­ ment do you refer, Sir? MR. SPEAKER: The honourable member, is merely repeating his morn­ ing's speech and I say the statement made this morning linking the name of others and Mr. Dawe contained, in the opinion of the Chair, insinuations. I have already said the honourable member will have to drop the subject or be specific and give notice at some other time and make the charge against the Attorney General. MR. HOLLETT : I don't wish to make any charges . MR. SPEAKER : Then the hon ­ ourable member will leave that sub­ ject which was already covered very thoroughly this morning. MR.

HOLLETT : I believe surely I can repeat something I have already said? MR. SPEAKER: Is the honour­ <1ble member going to question the decision of the Chair? I remind him there is such a thing as tedious repeti­ tion, and I give the honourable mem- her warning I am not going to put up with any further breaches of the rules of debate. MR. HOLLETT : I said before I am quite sure the Honourable Speaker will apply that rule to other members. MR. SPEAKER : That is just what I object to, such insinuations which arc unworthy of the honourable mem­ ber himself . MR. HOLLETT : I thank Your Honour for the insinuation. MR.

SPEAKER : Now the honour­ able member knows what an insinu­ ation is. MR. HOLLETT : I did not expect them from the Chair, Mr. Speaker. I point out now that Mr. Donald Dawe, Braun Wogan and Leja are the heads of this company as directors and he is the solicitor of the firm of Curtis and Dawe. The interruption rather put me off my main thought, Mr. Speaker, and I shall try to pick up some place. We have had tabled this afternoon some correspondence with reference to this proposed loan , and I note in that, if I am allowed to refer to this or read it, Mr. Speaker, the answer to a question just given. MR.

S·PEAKER : I can see no rea­ son why not. MR. HOLLETT : One of the an­ swers to a question asked by the Hon­ ourable Leader of the Opposition is a letter written to Dr. 'Va:ldmanis, President of the Newfoundland and Labrador Corporation, Limited, Dear Dr. Valdmanis, As the result of re.ce.nt cliscussions and negotiations between us, relative to the marketing of Sl0,000,000.00 Newfoundland and La,brador Corpilr-

HOUSE OF ASSEMBLY PROCEEDINGS 39 ation Limited Debentures, we wish to let you know that we have just been advised by Counsel for the Corpor­ ation, that legislation passed by the Government of Newfoundland, cover­ ing the guarantee of Principal and Interest of the proposed debenture issue, which it was anticipated would be sold in the United States, would not meet the requirements of a Can­ adian issue, to which consideration has recently been given.

Further, after carefully checking the Canadian market, we are satisfied that it would be very difficult to mar­ ket a S.I0,000,000.00 issue of the Cor­ poration, guaranteed by the Province. You are familiar with the difficulties which have forced us to this conclu­ sion.

In view of the foregoing, we recom­ mend that legislation recently passed, guaranteeing Principal, Interest and Sinking Fund on the proposed U.S. issue of Debentures of the Corpor­ ation, be replaced by legislation auth­ orizing the Province to issue, as a direct obligation- SI0,000,000.00 Province of Newfoundland 43/.i % 12 year Debentures, payable as to Prin­ cipal and Interest in Canadian funds only.

The Underwriting Group, compris­ ing one Chartered Bank and seven dealer firms, of which we are Man­ agers, would certainly be inte1·ested in this proposed new financing, and we have received in writing, from the Managers of a second underwriting group, comprising a Chartered Bank and four dealer firms, assurance that their group, including all its Mem­ bers, would be willing to join our group in this financing, on terms and conditions equally as favourable to the borrower as those we have dis­ cussed and providing marketing con­ ditions were not less favourable than those at present.

It is the view of the Managers of the two groups mentioned that this public financing could be undertaken within one month of the date of pas­ sage of enabling legislation, providing such legislation can be enacted by the end of June. May we assure you that we wish to be of all possible assistance to the Province. Very truly yours, :'llesbitt, Thompson and Company, Limited. R. H . DEAN, Vice-President and General Manager. I read that, Sir, to draw attention to the state of which the Province has been brought by inapt and inefficient Government on the other side.

We have that letter written by the firm of Nesbitt, Thompson and Co., to one Alfred Valdmanis, a Latvian, not even a Canadian citizen, recommending tha·t the Government which he repre­ sents, Valdmanis, repeal certain legis­ lation which has just been passed and pass other legislation. What in the name of Heaven, Mr. Speaker, are we come to when a financial firm in Canada, thank God they are in Can­ ada at any rate, have to write to D1·.

Valdmanis to tell him to advise the Government to repeal legislation passed, and then they will consider whether cir not they will have some­ thing to do with this ten million dol­ lar loan. That, Sir, is enough to make any Government hold its head down in shame and enough to make anybody in charge of such a Govern­ ment hand in his resignation ai1d al-

40 HOUSE OF ASSEMBLY PROCEEDINGS low some other cabinet minister to take control. I say that with no dis­ paragement to the Honourable the Premier personally but with relation­ ship to the premiership of this coun­ try. I was called many things this morning, Mr. Speaker, I am not go­ ing to repeat them, I am going to say something else now which will prob­ ably excite people to say or suggest certain other charges against me. You will remember, Mr. Speaker, LhaL all down through the years money was not so plentiful in these days and Newfoundland had to go to the bank continuously to raise loans, raise money.

Why did the banks loan the money to help out previous Govern­ ments? Because we were under the sheltering wing of the Great British Empire, and the banks did not worry, the Bank of Montreal nor any other banking house in Canada nor in the United States did not worry. Why? Because they had the guarantee of the Great British Government in ad­ dition to our own Government's guar­ antee. Now, Sir, we are again starting on a process of bo