1904-08-04

Mr. E. D. SMITH asked :: 1.	What were the orders issued or instructions given by the Militia Department, or By the G. O. C-, to Colonel W. D. Otter for services during the Fenian Raid of 1870 ?
2.	On what dates was he on active service 1
3.	Where did he serve ?
4.	What extra pay did he receive ?
5.	What troops served under him ?
6.	Were there any clasps or medals issued, or are there any records of services rendered in the Militia List, the application for which was not the same as Militia Form A17 ?


Hon. Sir FREDERICK BORDEN (Minister of Militia and Defence) :: 1.	No record at headquarters.
2.	October, 1869, to May, 1870.
3.	At Toronto.
4.	No record at headquarters.
5.	No record at headquarters.
6.	None, so far as Fenian Raid or Red River are concerned.


STR. ' ALERT '-ST. LAWRENCE CANAL.
Mr.  J. D.@: 
Hon. RAYMOND PREFONTAINE (Mill ister of Marine and Fisheries) :: 1.	Five men.
2.	$270 per month.
3.	For the month of July the cost was $351.
4.	$60. It was purchased by Superintendent Stewart without special authority.
, 5. Four persons outside of the crew. The trip was made in the ordinary course of official duties. No special authority was necessary, as the Murray canal is under the charge of Superintendent Stewart.


TRURO ARMOURY.
Mr. GOURLEY asked :: 1.	Does the government intend to build an armoury at Truro this year or in the near future ?
[DOT]2. What is the policy of the government with reference to building armouries in Nova Scotia?


Hon.  W. S.@: The matter is under consideration. There is a large lump sum in the estimates for the construction of *armouries, out of which armouries may be built at many points.


Mr. GOURLEY.: I would point out to the hon. minister that we have a very fine rifle club in Truro, that our militia are active and are entitled to some recognition.



CUSTOMS ACT AMENDMENT.

Hon.   WM@: 

SATURDAY SESSION.

Rt.   H@: That when this House adjourns on Friday next, it stand adjourned to the following day, Saturday, at 11 a.m.; and that the order of proceedings will be the same as the order for Friday.


[Stage Direction]
Motion agreed to.

Hon. OH  AS@: FITZPATRICK (Minister of Justice) moved third reading of Bill (No. 148) to amend the Dominion Elections Act.


Mr. GEO  O.@: AfLCORN. I beg to present the motion I made in committee the other day with regard to section 3 of this Bill, which affects section 29 of the Elections Act. Hon. gentlemen are (probably fami-i liar with the matter at issue. Under the Elections Act, as it now stands, the Governor General fixes the days of nomination and election, and names them in the writs, except as regards certain constituencies, two in Quebec and, under the amendment, made by this Bill, three in British Columbia. As regards the excepted constituencies, the returning officer fixes both the day of nomination and the day of election, the alleged reason for this being that in those constituencies, owing' to their large area and sparse population, it is impossible for the returning officer to do the work assigned to him preparatory to the polling within the delay prescribed in the other constituencies. That work consists mainly of posting his proclamation, which is begun as soon as possible after the receipt of the writs, and the posting notices of the holding of the poll after nomination. It is said that the time allowed under the ordinary rule in other constituencies would not be sufficient in these excepted constituencies. As regards the other duties of the returning officer. I am

satisfied there would be no difficulty whatever in his performing the whole of them within the time fixed by the Bill as it now stands. It is also said that the distribution of the ballot boxes would occupy a little more time than the ordinary rule allows. I understand that the rule ordinarily followed by successive governments is to allow a period of about thirty days between the issue of the writs of election and the polling day. But for the purpose of avoiding any difficulty which the returning officer might experience with respect to the work he has to do in the excepted ridings, I propose that that period of thirty days be divided into two equal periods and to allow fourteen days before and fourteen days after nomination day. In the excepted ridings, instead of postponing the holding of the poll to a date subsequent to that on which the poll is held in other constituencies, 1 would advance the date of nomination by a week, and allow fourteen days after the issue of the writ for nomination in the excepted constituencies and fourteen days between nomination day and polling day.
I think it is perfectly obvious that this amendment will overcome any difficulty' which can reasonably be alleged to exist in the way of the returning officer performing the several duties assigned to him with regard to the posting of the proclamation and notices and the distribution of the ballot boxes. The difficulty assigned as the reason for postponing the elections in Chicoutimi and Saguenay and other districts is that there is not sufficient time to do this work. At confederation, that difficulty might possibly have furnished reasonable grounds for postporiing the election, but it has long since disappeared. Allowing fourteen days between nomination and polling is certainly all that is necessary to enable us to have all the elections on one day. Successive governments have left this provision in the election law because it was supposed that advantage might be derived through holding what were in effect a number of by-elections after the general election. I think it is time that that should be swept away and that all the elections be held at the same time.


Hon. CHARLES FITZPATRICK (Minister of Justice).: I fear that, if we are to accept as accurate the statements made with respect to the local conditions in these constituencies by those who are familiar with them, and which conditions seemed to justify the laws which we have had on the statute-book for many years past, this amendment will not help us to a sufficient extent. I cannot see any good reason why we should depart from the law which we have had so long and which, I think, is still necessary under the circumstances of these excepted constituencies.


Mr. R. L. BORDEN.: I have not heard any argument that would convince me that [DOT] Mr. ALCORN.
there should be any exception with regard to the two constituencies in British Columbia which I have named, and especially with regard to one of them as to which I have had statements from independent men who are worthy of belief. These men assure me that there is no reason why the election should not be held in the new riding of Kootenay on the same day as the other elections in Canada. While disposed to admit that the Minister of Justice (Mr. Fitzpatrick) is desirous of doing what is right, I believe he is being misled by his political friends in British Columbia and that this election is to be postponed simply for considerations of party expediency and not from any necessity arising out of the circumstances.
Amendment (Mr. Alcorn) negatived on division.


Robert Laird Borden: Before the motion for the third reading of the Bill is put, I desire again to mention the two Bills introduced by my hon. friend from Montmorency (Mr. Casgrain) of which I spoke on a previous occasion.


Charles Fitzpatrick: I have a memorandum with regard to these Bills. But, unfortunately, it has been left at my dffice. If my hon. friend (Mr. R. L. Borden) will agree, we can read this Bill a third time now, and, at three o'clock, I will be prepared to make a statement with regard to the Bills to which he refers.


[Stage Direction]
Motion agreed to, and Bill read the third time and passed.

[Stage Direction]
House went into committee to consider the following proposed resolutions :
That it is expedient to amend Chapter 6S of the Statutes of 1903, respecting bounties on certain articles manufactured from steel, and to provide as. follows :-
1. That section 1 of the said Act be amended by adding the words ' or used,' after the word ' use ' in subsection (a), and after the word ' sold ' in subsections ' (b) ' and * (c) '.
3. That the foregoing provisions shall be held to have come into force on the 24th of October, 1903.-Sir Richard Cartwright.
Rt.   H@: The object of this resolution is simply to enable parties who not only manufacture wire, but use it in processes of further manufacture in their own factories to enjoy the bounty. That was, I think, tin. clear intention of the Act, but the question was raised In the Auditor General's office as to whether it could be so interpreted. If parties used wire produced by others, there was no question as to their right to the bounty, but if they produced it in their own factories and used it, objection was taken.
<4393

Resolutions read the second time and agreed to.
Sir RICHARD CARTWRIGHT (Minister of Trade and Commerce) moved for leave to introduce Bill (No. 105) to amend chapter 68 of the statutes of 1903 respecting the bounties on steel and iron.


[Stage Direction]
Motion agreed to, Bill read the first and second time, and House in committee thereon.
Mr. WILSON.: I would like the right lion, gentleman to explain what this means, because I do not feel well disposed towards the bounties.


Sir RICHARD CARTWRIGHT.: This legislation is introduced to meet an objection taken by the Auditor General. Although there is no question whatever that parties making this steel and selling it to others should receive the bounty, there is a question whether, if they manufacture the iron into wire in their own factories, they are entitled to get the bounty. I think the section is clearly in their favour, but it is to remove any doubt that these words are inserted.
Bill reported, read the third time and passed.	'



THE TOBACCO INDUSTRY.

Hon.  L. P.@: BRODEUR (Minister of Inland Revenue) moved that the House go into committee to consider the following' proposed resolution :
Resolved, that it is expedient to amend the Inland Revenue Act, in providing that :
(2.) Any license authorized by this Act may be cancelled in any ease where a person who, being a manufacturer of any class of goods subject to a duty of excise, either directly or indirectly-
(a.) makes a sale of any such goods to a person who sells or intends to sell goods of that class in connection with his own business, subject to the condition that the purchaser shall not sell or deal in goods of a like kind produced by or obtained or to be obtained, from any other manufacturer or dealer ; or
(b.) makes such sale upon terms that would in their application deprive the purchaser of any profit upon the sale of such goods, if he should sell or deal in goods of a like kind, produced by, or obtained, or to be obtained, from any other manufacturer or dealer ; or
(c.) consigns any such goods to another person for sale upon commission, upon such terms that the consignee can profit by such sale only if he does not sell or deal in goods of a like kind manufactured by or obtained or to he obtained from any other manufacturer or dealer.
He said : This legislation has been asked for by almost all the tobacco growers of this country. We have received petitions from tobacco growers in the west as well as from those in the east, asking for legislation of this kind, and from almost all the independent Canadian tobacco* manufacturers. This
Bill is the outcome of the report of the investigation made by Judge MacTavish in 1902 and 1903, which report has been laid before the House. Complaints have been made to the government that the Empire Tobacco Company and the American Tobacco Company were making exclusive contracts which tended to create a monopoly in this country, and which tended also to a certain extent to destroy all independent manufacturers. The government thought it their duty to investigate the matter, to find out whether these allegations were true, and whether it would be advisable to introduce legislation. That report is well known to members of this House, it was laid on the table last year and again this year. I see, Mr. Speaker, that during the last few days the Empire Tobacco Company and the American Tobacco Company have favoured the members of this House with a memo, upon the resolutions which I have the honour to introduce now ; in which they complain of this legislation as being arbitrary and absolutely opposed to the principle of fair competition. Now, Sir, on account of the memo, having been sent to the members of this House, I propose to give in a few words the history of this American Tobacco Company and this Empire Tobacco Company, and to show what are their aims and objects in opposing this legislation. The American Tobacco Company is not an unknown company in the United States. We find that in 1890 that company was incorporated under the laws of New Jersey as an amalgamation of several tobacco companies, especially of cigarette companies, and a trust with a capital of $25,000,000 was then formed. Since 1890 this little trust of $25,000,000 has increased its capital, according to a report which I hold in my hand, till it has now a capital of $301,570,000 ; so that this company which started with $25,000,000 in 1900 now has a capital, increased by water and otherwise, of over $300,000,000.


Robert Laird Borden: [DOT] As the hon. gentleman refers to water, I should say he ought to use the word diluted.


Mr. BRODEUR.: The right hon. gentleman is right. Almost immediately after the formation of this cigarette trust in the United States, they invaded this country and bought up two or three manufactories of cigarettes. In 1895, the same year in which they bought these independent concerns, they got letters patent from the government, and I find by those letters patent that amongst the persons who asked for them were J. B. Duke, George Arents and Wm. Henry Butler, of New York. Almost at the same time the American Tobacco Company of the United States asked to be listed on the New York Stock Exchange, and there we see, amongst the names of the directors of that American trust, the names of Mr. James B. Duke, George Arents and Wm. Henry Butler ; that is to say, we find the
8395 .

same men who got letters patent in Canada were directors and -proprietors to a certain extent, of the American trust. We find also, by the report of the secretary and treasurer of the company made in 1895, that the American Company were not able in that year to declare a dividend, on account of the increased volume of business and the acquisition during the year of new plant, the company required more working capital than before. So, they did not declare a dividend in 1S95 in order that they might buy some new plant. We find in an interview which was published in the New York ' Tribune ' in December, 1895, the following statement made by the secretary of the company :
The company last summer paid $1,000,000 for the cigarette business in Canada.
So I say that this American Trust which has been incorporated here under the name of the American Tobacco Company, is controlling the cigarette business of this country and we have evidence that 84 per cent of the cigarette business of Canada is now under the control of the American Trust. They have almost succeeded in killing the cigarette business of independent manufacturers and they have substituted for the former conditions their own modes of doing business. We see also in the report of Judge MacTavish, that in 1898, the United States plug tobacco business was amalgamated and placed under the control of the American Trust. We see also that after having obtained incorporation in the United States, they came to this country, bought out the Empire Tobacco Company and some other companies which are now under their control. Judge McTavish says that the Empire Tobacco Company are now virtually controlled by the same management as that which control the American Tobacco Company. In addition to that last year, or the year before, the American Tobacco Company virtually amalgamated most of the cigar factories in the United States. We must not forget that they are now controlling the United States cigarette business, and that immediately after consummating that arrangement, in 1895 or a little before 1895, they came up to this country and secured control of the cigarette business of Canada. We must also remember that seme time after they succeeded in amalgamating the plug tobacco busiuess of the United States, they came up to this country and did the same thing. They had last year or the year before amalgamated tne cigar business and we must expect-in fact, 1 do not know whether it is not now going on in this country-that before many months have passed, they will try to take control of the market of the cigar manufacturers of Canada. Therefore, all the tobacco raised or produced in this country will be entirely under the control of the American Trust.'


Louis-Philippe Brodeur: Now, what are their methods of doing business ? Their methods of doing business In this country are the same as those which exist in the United States. I may perhaps remark here en passant some of the features of those famous contracts of the American Tobacco Company. I commend these contracts to the business men of this House, because I think they will find that under such a contract there is no chance for any other concern to live. Take the contract made in 1895 by the American Tobacco Company and which is still in force ; the selling price is fixed by the company. The purchasers are designated by the company, the freight from the factory to the stores is Paid by the company, the property in the goods remains also in the company, but if it happens that the store of the wholesale trader in which these goods have been stored is destroyed by fire tile loss has to be sustained by the merchant. Bad debts which the merchant incurs are to be made good by him and the cost of storing and selling the goods is also to be borne by the consignee. Here are several important conditions of this contract, and if the merchant fulfils all these seven conditions, he gets the large profit of two per cent for the sale of these goods. But. there is another clause in this contract which provides that if the merchant will deal exclusively in the products of the American Tobacco Company, he will receive six per cent. But, that is not all. In spite of all these stringent conditions of the contract it is provided also that the company shall be the sole judge whether the merchant shall he entitled to such a percentage or not; that is to say that they impose upon the wholesale traders the most stringent conditions and they say further that they will pay him only if they want to pay him. But, there is more than that. We find in the exclusive contract of the American Tobacco Company that the merchant will be entitled to this percentage on one condition, and this condition is that he shall not deal in any other Canadian tobacco. They do not care about foreign tobacco. They permit the wholesale traders to sell foreign tobacco, but they prohibit them from selling any other Canadian tobacco in competition with their own. They discriminate against our product and permit the wholesale trader to deal in foreign products ?


Robert Laird Borden: Has the hon. gentleman the exact language of that clause ?


Louis-Philippe Brodeur: Yes, the exact language is this :
4th. If you handle no manufactured tobacco made from Canadian leaf or made from a combination of Canadian and foreign leaf except in the brands made by us, and, if you, in all respects, fully comply with the terms and conditions of this agreement, we will pay you a rebate of five cents per pound.
They prohibit the wholesale traders front selling any other Canadian tobacco except

their own, but they do not prevent them from selling any tobacco made from foreign leaf. They discriminate against the Canadian tobacco in this way because they permit the wholesale traders to sell foreign leaf tobacco while they do not .permit them to sell any other Canadian leaf except their own. So, I think this makes it very plain .that they are discriminating against our own product. Now, I say that this method of doing business in Canada is the same as that which has been adopted by tlie American Trust in the United States, and we want to know whether an American Trust from the United States can have the privilege of coming Into this country and destroying our own industries by such business methods.


Robert Laird Borden: Is not this the same combination or trust which went to Great Britain and undertook to control the whole tobacco trade ?


Louis-Philippe Brodeur: Yes.


Robert Laird Borden: And was there not a trust formed in Great Britain for the purpose of fighting it ?


Louis-Philippe Brodeur: Yes.


Robert Laird Borden: Can the hon. gentleman tell me whether that is still existing, or whether the two have combined, and what the conditions are under which the business is carried on in the mother country, because that would be a great assistance to us in determining what restrictions should be employed in this country ?


Louis-Philippe Brodeur: I have no special information as to the result of that fight in Great Britain between the independent men and the American trust, but my impression is that they have come to some agreement, I am not very positive as to that. I am under the impression, as the leader of the [DOT]opposition is, that the American trust bought an interest in the British firms and tried to form a combine, but I do uot know whether they have succeeded or not.


Robert Laird Borden: They did go over there and there was a battle royal between the two trusts. The tobacco manufacturers -of Great Britain formed a combine with fifteen million pounds, or twenty-five million pounds sterling and a great deal of money was expended in the contest. I understand that finally the arrangement was made by which the British trust would handle in Great Britain the tobacco of the American trust, and the American trust would handle on this side of the Atlantic-not only in the United States, but in Canada-the tobacco manufactured by the British combine. For example, if you take Wills' tobacco which formerly came to us direct from England, it is now sent into Canada through the American trust. What I want to know particularly is, whether or not in the mother country, there is any coercion-if you may use that word-practised by the British trust which was formerly for the purpose of fighting the American trust.


Mr. MONK.: The result of the conflict in Great Britain was that they combined. The British manufacturers kept the British territory and the American territory was left to the American trust, and some arrangement was made as regards the colony.


Louis-Philippe Brodeur: I have no special information as to the result of the efforts of the American trust to control the British market, but I have no doubt that my bon. friendi (Mr. R. L. Borden) is correct. My hon. friend the Minister of Justice has now handed me a book which tells of the result of the tobacco in England. I quote the following :


Mr.   T@: Ryan who conducted the negotiations for this large consolidation in England announced at this time that the Consolidated Tobacco Company (The American Trust) will now pursue its business in the American field including not only the United States but Cuba, Port Rico, the Hawaiian Islands, and the Philippines. The Imperial Company (that was the firm in England) will carry on the business in the United Kingdom of Great Britain and Ireland including Scotland and Wales. In the new British American Tobacco Company, limited, the Imperial Company has one third of its stock, and the Consolidated Tobacco Company two thirds. The British American Tobacco Company (that is the new combine on the other side, I think) will carry on the entire business in all foreign countries including India, Canada and Australia.'	[DOT]
I am sorry to say that this official of the company had declared that Canada is a foreign country.


Seymour Eugene Gourley: That is got up by a Yankee.


Robert Laird Borden: These are the words of an American writer.


Charles Fitzpatrick: And tlie words of a Canadian statute ; the Patent Act.


Louis-Philippe Brodeur: It was alleged some time ago by a member of the delegation; wiblcb came before the government to sup-, port those exclusive contracts, that those contracts have been forced upon the trust by the wholesale grocers of the province of Ontario. I mus't say that those contracts have not been imposed by the grocers upon the American trust as has been alleged. When the delegate, Mr. Bristol, made that assertion I asked him the date of these com tracts, but be could not give me the information. He informed me, however, by telegram the day before yesterday that these contracts were made for the first time at the request of the grocers in the month of August, 1898. Mr. Bristol was misinformed as to that, because I see in HallS, on trusts,

page 25, a reference to the origin of the combines in the United. States, which says:
In some cases finally the coercion is upheld by a system of premiums. The one party pledges itself to buy only from the other or to sell exclusively to it ; in compensation it receives special rebates. The American Tobacco Company has for a long while granted such rebates to the cigarette dealers.
Mr. Bristol was therefore misinformed, because these contracts were in existence long before 1898. This hook was written in 1895, and we find that the American To-baco Company were then using these exclusive tobacco contracts. I may say 'also that in Moody, he speaks of this agreement as being an agreement which has been in existence for yetjrs in the dealings of the American Tobacco Company, under the name of 'secret factory agreement.' We have therefore the American Tobacco Trust firmly established in Canada. They have imported into this country their exclusive contract system, and their business methods which they have practised for years in the United States. They propose in two ways to destroy our national industries. In the first place, they 'buy out a number of existing manufactories. They have bought five such ir. the province of Quebec : One in Granby, one in Montreal, two in Quebec city and one in Joliette, and of these five factories, three are now closed and only two are in operation. After having purchased and closed those factories they are trying to kill the other manufacturers and having these exclusive contracts, they are using them for that purpose. The trust began this process by advertising very largely their brands of cigars and cigarettes. They are spending large sums in advertising and as I have shown, they have $300,000,000 at their disposal so that they can afford to spend large sums of money. The leader of the opposition will find from the book in his hands, that 'in England, in order to kill the English tobacco manufacturers they went so far as to make a contract with the retail dealers by which they offered them $1,000,000, that is to say, all their profits during four years if they handled that tobacco exclusively. That is the way they have been doing in England and that is the way they are doing in this country. These are some of the reasons for the legislation which I am now introducing. I say first that no restraint of trade should be allowed in this country. Let us have a free countryAn all respects, let us be free of any foreign corporation. and let us act as we should act. as Canadians, and purely as Canadians, for the Canadian interest. I say further that no monopolies should exist in this country. Here is a monopoly which is controlling the market in the United States ; we should no* permit that monopoly to exist in this country. I say that no American trust should control our manufactory, and in say-Mr. BRODEUR.
ing that I believe I voice the utterances of every man of this House. We want independence in this respect, and no American trust should be allowed to control our manufactures.


Robert Laird Borden: I desire to understand the hon. minister's position. Would he regard this as just as great an evil to the people of the country if the capital were all subscribed in Canada and the same methods pursued ? Would it not still be an evil ? I admit the danger from the United States because they have larger amounts of capital, but if the same methods were pursued and all the capital were' Canadian it would be an evil all the same.


Louis-Philippe Brodeur: We would be in the face of a similar danger, but here we have industries now existing, manufactures that have been established for some years in this country. The trust are destroying those manufactures, and the question facing us is whether we should allow their destruction or come to their rescue. I say that these contracts, should not be allowed because they discriminate against our own products as I have shown a minute ago. I may be asked:	Why not introduce a
general law or amend the Criminal Code ? That brings me to the discussion of the effect of the anti-trust legislation introduced into the United States. That began in 1887 by the Interstate Commerce Law. Later in 1890 they introduced the Sherman AntiTrust law, and the government established the Department of Labour and Commerce. In many of the states of the American Union legislation has been introduced for the purpose of preventing the establishment of these trusts but in all cases they have simply declared that the trusts were illegal and should not be allowed and then they provided for a penalty. What is the result ? Numberless Bills were filed with the different state legislatures during the next few years. They aimed at forbidding combines for the purpose of raising the prices, &c. They provided for fines of $5,000 to $10,000 and imprisonment for from five to ten years for breaches of the law. Despite of all these rigid provisions of the law, the trusts are just as powerful as they ever were in the United States, and if we simply take the power here to deal with the American trust which is existing in this country by making them liable to a fine of $500 or $1,000, will result in their fighting the matter before the courts for three or four years and in the meantime the national industries will be destroyed. I say that this is not the most effective remedy and after studying the question carefully I have come to the conclusion that the only way of dealing with this American tobacco trust is in the way I am now suggesting. Mr. Speaker you will see by the report of Judge MacTavish that they have in the state of Massachusetts a * law of this kind. Judge MacTavish de-1

dared in lais report that this law would not he sufficient and would not meet the case. Then I am asked : what should we do ? X claim that the only way of dealing with these people is to deal with them as they are trying to deal with others, to give them the same remedy as they are giving to [DOT] others. That is the reason why I think that the best way would be to provide for the *cancellation of their licenses provided they do not cancel those exclusive contracts which they have in existence to-day. We are not going to kill them, I am sitnply asking this parliament to declare that these people will have to cancel these exclusive contracts, will have to open the channels of trade which they have closed now, and will give the trade the opportunity of dealing with the wholesale traders as the trust now does. It has been alleged that the trade was siding with the American Tobacco Company. I say now, the trade is not siding with the American tobacco trust, the trade is opposed to the trust and the ti'ade is willing that these exclusive contracts should be cancelled as soon as possible. I have in my hands a resolution passed at a special meeting of the Wholesale Grocers' Association of Montreal, and I am led to believe that all the members of that association have signed these exclusive contracts. In this resolution which was passed on July 19, just a few days ago, they said :
Resolved, that no one be authorized to go to Ottawa on behalf of the Montreal Wholesale Grocers' Association to support the case of the American Tobacco Company.
Here are men who have signed the contracts because otherwise they could not do any business in tobacco, and in spite of that they say. We are not going to support the demand made by the American trust. It might be alleged, it has been alleged in the document which has been distributed amongst the members of this House that the power which we are asking is an arbitrary power. I say no, I say that this, power is much less arbitrary than that given in the statute which has existed in this province for years. In 1893 under the regime of the Conservative party a law was introduced in amendment to the Inland. Revenue Act declaring that :
The Minister of Inland Revenue may, where for any reason he deems it in the public interest to do so, refuse to issue any license authorized by this Act.
That is to say that for any reason that the minister deems it expedient he may refuse any license. Is this not a more arbitrary power than the one I am asking ? What I am asking is simply this, that when a license has been granted, either the Minister of Inland Revenue or the Governor in Council, as the House may determine, may cancel the license if such and such a thing exists. In the law passed by hon. gentlemen opposite it is declared that the Minist-

er of Inland Revenue had the right to refuse any license for any reason. I am not asking as much as that but am simply asking that I should be empowered to cancel the license when such and such a contract exists. The minister has almost the same powers to cancel a license when the licensee is unable to render an account or does not pay his dues or penalties. These are very extraordinary powers, but I am not aware of any one instance in which they have been exercised to the detriment of trade.


Mr. SPROULE.: Does the hon. gentleman consider that this trust is in restraint of trade ?


Louis-Philippe Brodeur: It must be, and Judge MacTavish in his report says that though the contract Is legal, It is certainly in restraint of trade.


Thomas Simpson Sproule: Should they not be prosecuted for a penalty under the Criminal Code ?


Louis-Philippe Brodeur: I am afraid the result would be that they would drag the case through three or four courts and it would take two or three years before any result could be had. I think the remedy I propose is much more effective. We are face to face with a very serious situation.


Thomas Simpson Sproule: I do not wish to be understood as not being in favour of this. I am not opposing it but simply wish to ascertain what is the best remedy.


Louis-Philippe Brodeur: We are face to face with a very serious danger. These people are taking control of the cigarette business. They have formed a trust for the plug tobacco business. And last year or the year before they formed a trust for the cigar business. And before two or three years our 204 cigar factories, which gre giving employment to many people, may be destroyed by this American trust. Is it not our duty to do something to relieve that industry and prevent it from falling into the. hands of a foreign corporation. What in such eases will be the result ? There will then be only one buyer, the American trust, and that will pay the farmers whatever price it likes. What will be the result to the merchants ? Take a merchant who today is doing a profitable business, when the trust will be absolute master of the situation, it will come to those wholesale dealers and dictate terms to them. The wholesale men will be at their mercy. It has been alleged that we are interfering to a certain extent with private contracts. Well, if you take the anti-combine clause of 1897 in the Customs Act, is that not an interference with private contracts ? Take the anti-dumping clause now before parliament, is that not an interference with private contracts ? This legislation is asked for the purpose of destroying a private contract made between the exporters and importers

i.
and parliament would be remiss in its duty if they would not pass the legislation I am now introducing. It is perhaps not perfect, it might be better or stronger, but I think it will meet the evil and hope it will receive the support of this House.


Robert Laird Borden: The question with which the hon. gentleman proposes to deal is one that is very much larger than appears on the surface of these resolutions. It concerns the effect of enormous aggregations of capital which may be used for the purpose of crushing out persons carrying on smaller enterprises with moderate capital. I do not see that the evil would be very different whether the capital employed be Canadian or American, except in one respect. The profits on capital belonging to the United States will go over to that country, but if the capital be raised in Canada, they will be distributed in this country. So far, however, as the individual dealer is concerned, who is crushed out of existence it makes not the slightest difference to him whether the capital employed to crush him comes from the United States or this country. Let me point out in that connection some of the clauses to which the hon. gentleman has referred in these resolutions. For example, in a memorandum, he was good enough to send over to me, there is a clause of this kind :-
7.	If you do not discriminate against our cigarettes in favour of those of other manufacture, and if you do not sell, or dispose of, any of our cigarettes at less than the list price, and if, in all respects, you comply with the terms of this agreement; we will pay you a commission of two per cent (2 per cent) on the amount realized by you from the sale of the cigarettes which we may consign to you.
8.	If, however, you handle cigarettes of our manufacture, exclusively, and do not sell or distribute, or in any way aid in the sale or disposition of, cigarettes of other manufacture, and if you, in all respects, fully comply with the terms and conditions of this agreement, we will pay you an additional commission of six per cent (6 per cent) on the amount realized hy you from the sale of cigarettes which we may consign to you.
Another one of considerable importance is this. In another circular sent out by another branch of this company there is this clause :
4. If you handle no manufactured tobacco made from Canadian leaf, or made from1 a combination of Canadian and foreign leaf, excepting the brands made by us, and, if you, in all respects, fully comply with the terms and conditions of this agreement, we will pay you a rebate of five cents per pound.
All those clauses would be equally serviceable to a great trust formed in this country and composed exclusively of Canadian capital, and in that case the small dealer and tobacco grower would be crushed by a great corporation just as much as he is at pre-Mr. BRODEUR. .
sent. Therefore it is not solely a question of keeping out the American trust and of dealing with that trust. But we must all recognize that inasmuch as there are these enormous aggregations of capital chiefly in the United States, we are confronted with the danger that small branches are likely to be formed from time to time, and therefore the danger which confronts us is one which, in the first instance, will come very largely from the United States. But there is a big question behind it all, and that is the control of these trusts generally. It has been said that the trusts are due to the protective system, hut I have taken occasion to observe more tlmn once that these trusts find ample scope in the mother, country' where almost perfect free trade conditions prevail. And in 1 Truth about the Trusts,' by Mr. John Moody, of New York, I read in pages 89 to 90. This- will show what lias been done in Great Britain. The Ogden Company was one branch of the American Company formed for the purpose of obtaining the control of the tobacco trade in Great Britain .-
The Ogden Company telegraphed 7,000 retailers that it would give its entire profit of $1,000,000 a year in cash for the next four years to its customers if they would purchase its goods.
That was the American Company ; why was the offer made ? The book goes on to explain :
This offer was made to counteract an offer of the Imperial Company,

That was the British Company.
-sent out a few days before wherein the latter agreed to give large bonuses to those custom-jvs who would undertake not to sell American goods for a term of years. A large London retail house at this time issued a notice stating that inasmuch as the Imperial Tobacco Company was .now really competing with the retailers, it would not sell the Imperial Company's goods in the future.
However, we are not so much concerned with that, as we have not-at least I have not at present-any information as to the methods which this British trust is employing.


Mr. FIELDING.: Is it not the fact that the trusts alluded to are uncommon in Great Britain and very common in the United States ?


Robert Laird Borden: I would not be inclined to go so far as that. I do not think the situation can be fairly described in that way, and, even so, we must recollect that modern methods in the employment of large aggregations of capital, have been largely developed by the enterprise of the people of the United States. We know that they have a higher appreciation than most nations of business conditions and of the way to render available for their exclusive use and benefit these conditions. And, even

if it tv ere true, as my hon. friend (Mr. Fielding) suggests, that these trusts are more common in the United States-and X believe they are more common there-still that might not be absolutely ascribed to the fact that protection prevails in the United States and free trade prevails in Great Britain. Now, these trusts have been known in the United States for a very considerable time, and the United States has legislated against them ; but, barring two or three somewhat barren victories, I do not think that the legislation of the United States, up to the present time, has been very effective. I think we will probably all agree to that. There is the beef trust in the United 'States, which, as I understand it, has wiped out of existence hundreds of retail dealers. There is the Standard Oil Company of the United States, which has crushed out hundreds of small companies and hundreds of individual dealers. And of one of these great trusts in the United States it was said that, not only was it able to crush out all those who were opposed to it but, as part of its business enterprise it undertook to control legislatures where it found that control necessary, and, at one time, the legislatures of no less than four great states of the union were under the control of this trust,-that is, these legislatures represented not the will of the people but the will of this great monopoly, and were subservient to its interests with regard to any legislation affecting the monopoly's interests. This is, therefore, a very great subject and one, as I have said before, that we will have to deal with comprehensively some day. We will have to deal with the whole subject of trusts, for I believe-if I may credit what has been told me-that it is not alone the American Tobacco Trust whose influence has been felt in this country but other trusts, especially United States trusts, have niade their influence felt in this Dominion. The Dominion Iron and 'Steel Trust, as I pointel out, I believe, at the commencement of the session, dictated to persons in Canada using steel for the manufacture of nails where they should buy their material, and threatened them that, if they continued to buy their material in Germany, as they had been doing, the trust would come into Canada, establish manufactories and crush them out. This trust even saw fit to render Bills to these Canadian manufacturers charging them, if I remember well, $2 per ton for all material they had purchased in Germany during the previous year. So, it is not the influence of this tobacco trust alone that is felt in Canada, but the influence of other great aggregations of capital in the United States as well. These aggregations of capital are created simply for the reason that capitalists in the United States have seen the advantage which result from combination and from crushing out small rivals.


Louis-Philippe Brodeur: Do I understand the hon. gentleman (Mr. R. L. Borden) to say that the American Steel Trust is established somewhere in Canada ?


Robert Laird Borden: it at a very late day of the session. This 4s a very large subject and one that had better have been brought before the House when there was a fair opportunity for discussing it. It seems to me a rather dangerous undertaking to bring down a motion of this kind when we cannot really expect that it will receive the attention and discussion which a question of such great moment should receive. If these resolutions had been introduced earlier in the session, it seems to me, possibly some comprehensive scheme of legislation might have been worked out and we might have placed on the statute book a law which would deal not only with the conditions which arise through the operations of this company, but with the conditions which arise through the operations of other trusts which have their home in the United States of America. I feel that this legislation is too much of a piecemeal character and that more comprehensive legislation might have been passed had the subject been brought forward earlier in the session.
While I say this, I want my hon. friend who has introduced the measure, in a very careful, a very moderate and well-reasoned speech, to understand that I am in sympathy with the project of curbing these trusts generally, but I do not know that I would fully sympathize with the project of dealing with them by the exact method which he has provided in this case. What is the method ? The method is that the government of Canada are to exercise their power of licensing for the purpose of preventing these undesirable trade restrictions from being carried out. That is, as I understand the scope of the measure. With regard to that I have to say, in the first place, that it does not touch any company at all, or any large aggregation of capital which does not require to take out a license. It leaves them absolutely free, as it leaves the American Steel Company, to threaten and coerce Canadian manufacturers, and other trusts are at liberty to carry on their operations in this country as fully and as freely as they do in the Dili ted States. I think it desirable that we should have legislation of a somewhat more com-[DOT] prehensive character. Then if you are to deal with the matter of refusing a license or of cancelling a license, is this not rather a dangerous power to put into the hands of the government, and is there any need of doing it in that way ?


Louis-Philippe Brodeur: That power already exists in the law, so far as granting the license is concerned.


Robert Laird Borden: Well, it exists in the law at the present time, but it is nojt in the law for the purpose of dealing with a great question of this kind. The Governor in Council has absolute power to declare that some corporation has violated this provision. The company has an appeal.


Robert Laird Borden: These companies, let it be remembered, possess great aggregations of capital, and is it desirable to put the government in that relation to a company which may have a capital of three or four hundred million dollars ? Now, I am making no personal allusion to the present administration, or to any member of the present administration. My language is just as applicable to an administration formed from this side* of the House, it is absolutely impersonal. But when a question as to withdrawing or cancelling a license of that kind to a corporation possessing three or four hundred millions of capital, comes up perhaps on the eve of a general election, is that a desirable state of affairs to establish in this country ? I think there might be some food for reflection in that view of the matter. Why can you not provide in these resolutions that any license granted to a company of that kind shall become ipso facto void if that company carries on business in that way ? Can you not empower the Attorney General of Canada to go to court, if necessary, when there is an appeal from that court, so that there may be no undue delay, and have it declared that the company has violated the provisions of this section, and that its license has become void, and that it shall never again be renewed ? Would not that be a better form of legislation than that which the hon. gentleman proposes ? I admit I In re not given this question the consideration that it deserves, but it would strike me, in the first place, that what I have suggested is well worthy of consideration by the g ivern-ment. I do not know that I need detain the House any further at this stage : we will have ample opportunity to consider the matter in committee ; but I thought it desirable now to place my views befo:e the House in this way.


Frederick Debartzch Monk: I quite agree with the leader of the opposition (Mr. R. D. Borden) that it is very regrettable that we should at this late stage of the session be confronted with a question of this magnitude, which is agitating at the present moment the minds, I might almost say, of every legislator throughout the world, the question of the control of trusts. I do not think the government is entirely to blame for that, I am willing to assume a part of the blame myself ; because it was only after I had informed the Prime Minister and the Minister of Inland Revenue that I intended to bring up this question that the next day my hon. friend the Minister of Inland Revenue very innocently hut with; great celerity, gave notice of this resolution.


Mr. TAYLOR.: He stole your thunder.


Frederick Debartzch Monk: 

than those controlled by the trust. Then they have invaded the field of American leaf. They purchased a factory in Montreal, they purchased a factory at Joliette, they closed up the factory in Montreal, they closed up the factory at Joliette, and they acquired an important factory in Quebec. They have now a factory at Granby, and in these factories they manufacture Canadian and combination tobacco. I have already explained to the House that combination tobacco is tobacco made from a mixture of American and foreign leaf. They have not yet invaded the field of foreign leaf, but, as the hon. Minister of Inland Revenue stated, that is in their programme. It is coming, and before long they will invade and get possession of the only field that' is left open to-day.
As I understand it, the passing of this law and putting it into execution would involve the cancelling of five licenses in the province of Quebec-a license for the manufacture of cigarettes from foreign leaf in Montreal, two licenses for the manufacture of combination and cut tobacco at Granby, and two licenses for the manufacture of combination and Canadian tobacco at Quebec. All the smaller factories are gradually falling out of existence. They have not been purchased, and the trade is made so difficult for them that it is impossible to carry on the trade as they did before. These gentlemen are urging that they are in the field of competition simply, and that the smaller dealers can carry on their trade. It has been estab lished before the commission that this is impossible. It cannot toe done without loss. These are the facts that surround us. It has been said on behalf of these people that they have only made an exclusive contract with about 500 dealers, a'nd that there are throughout the Dominion probably 25,000 dealers ; but anybody acquainted with the conditions will tell us that these 500 dealers, the large jobbers, control the whole trade, and that in order to be able to do business with the 24,500 others, they make this arrangement with the jobbers. Those knowing the condition of affairs know' that while this exclusive contract.is made with only a few of these dealers, it is made with the principal dealers. It has been said that this lhw confers upon the minister very arbitrary and very drastic powers. That, I think, is true. I think it is regrettable since the government has been in possession of all the facts connected with this case for two years, that it has not endeavoured by one law to deal with the problem as it presents itself throughout the country, and with all trusts at the same time. Last year my hon. friend the Minister of Justice (Mr. Fitzpatrick) introduced a general amendment to the Criminal Code, which, I think, we should have tried. In some way or other that law was dropped, although I urged the government to give it a trial. I thihk a general law would have been far more advisable, but at the present moment we have to deal Mr. MONK.
with one of these trusts, and there is nothing truer than what has been said, that almost every description of law has been tried ineffectually. I think the hon. Minister of Inland Revenue mentioned forty-five law's that have been tried in the United States. There is no doubt that, if not all, most of these law's have proved practically ineffectual against the destructive inroads of the trust. I am not prepared to say that the method proposed of dealing with this particular trust is not the most effectual. At any rate, wye should give it a trial. We will have a chance, if it should prove defective, to amend it before six months have elapsed. Why should we not give it a trial and check at once the most disastrous effects of the operation of this trust upon this most important industry ? I think it is a pity that the exercise of this power has not by my hon. friend been conferred upon a judge. My hon. friend states that already the Inland Revenue Act gives him power to refuse a license. This is a greater power, because it interferes with vested rights, and it is going to be exercised, as my hon. friend the leader of the opposition has said, against a very powerful corporation.


Louis-Philippe Brodeur: Is not the renewal of the license an interference with vested rights also ?


Frederick Debartzch Monk: I do not see how it is. Perhaps my hon. friend will point out how it is.


Louis-Philippe Brodeur: Suppose a factory has been established for several years under license, would it not be an interference with its rights if a license was refused this year?


Frederick Debartzch Monk: Yes ; but the hon. gentleman knows perfectly well that as a matter of practice the license is renewed as a matter of course, unless there is some very strong reason against it.


Thomas Simpson Sproule: You could say the same as to liquor licenses.


Frederick Debartzch Monk: 
Seymour Eugene Gourley: Both remedies are open 1 to us now.


Frederick Debartzch Monk: I think so. In the province of Quebec under the law of last year every contract made by the tobacco trust would be ipso facto illegal, as being in violation of the criminal law and immoral.


Louis-Philippe Brodeur: If the provincial legislature passed an Act that such contracts should be valid, and at the same time the parliament of Canada should by criminal legislation declare they were illegal, which of the two would prevail ? I think the local legislatures have absolutely the same power as we have in that respect.


Frederick Debartzch Monk: I am not prepared to speak on that question off-hand, but I think the sense of the decision of the Privy Council is that if by a criminal enactment we bring any matter which is under the control of the provincial legislature, within the purview of this legislature, then we have supreme control.


Louis-Philippe Brodeur: In what case is that decided ?


Frederick Debartzch Monk: I cannot state from memory, but will get the authority.


Seymour Eugene Gourley: In the Lord's Day Act, they practically held that.


Frederick Debartzch Monk: Long ago they laid down that doctrine. We are empowered to legislate in all criminal matters and also for the peace, order and good government of Canada. Although a matter prima facie might
[DOT]	267
appear* to be under the control of the provincial legislature by section 93 of the British North America Act, yet our action in bringing it into the dotnain of the criminal law gives us exclusive jurisdiction. My reason for giving cordial adhesion to this attempt of the Minister of Inland Revenue to suppress this great evil is, that the moment this Act is passed, the government may take steps to suppress it. The onus for the next six months will be on the government to do what it has promised to do for several years past. When innumerable deputations of those aggrieved claimed redress from the government, they were told to prove their statements and a remedy would be supplied. A commission was instituted, and that commission amply justified the statement of facts made by the complainants, and if we were to prorogue without taking some steps to suppress this evil I believe the blame will be upon us. This is a laudable attempt in the right direction, it places the responsibility upon the government, and, after nil, within six months parliament will resume again and we will be in a position to go more fully into this question. In the meantime there is not a moment to be lost and I think some step ought to be taken to prevent the destruction of this most important industry.
At one o'clock, House took recess.
House resumed at three o'clock.


George Taylor: Mr. Speaker, the Minister of Inland Revenue, who introduced this resolution, made a lengthy statement, in which he dealt altogether with the question of tobacco. When we come to look at the resolution, we find that it goes much beyond the manufacture of tobacco. It says :
Any license authorized by this Act may be cancelled in any case where a person who, being a manufacturer of any class of goods subject to a duty of excise, either directly or indirectly

Now, what classes of goods are manufactured in this country subject to excise ? It is not tobacco only, although manufacturers of tobacco have to take out licenses, but every manufacturer of beer, lager, whisky, vinegar and other articles that come under the excise law. Any practical business man knows that nine-tenths of the business of this country is done just on the line laid down by this resolution, and if the resolution went far enough it would apply to every manufacturer in the country, my hqn. friend who sits beside me (Mr. Rosamond) for instance, or the Massey-Harris Company, or the Frost & Wood Company. How do they sell their goods ? They simply appoint an agent in every town or locality and sell to him exclusively, provided he does not handle any one else's goods. It is the same way with the brewers and [DOT] liquor manufacturers of this country. I



know that liquor manufacturers come to our town and say :	You handle my gbods exclusively and I will sell to no other dealer in town. That arrangement is made and the percentage of profit is arranged according to the amount of goods sold. My non. friend (Mr. Brodeur) referred to profits of 2 per cent and 6 per cent. That is a small margin, it is no inducement to merchants to do business on a 6 per cent basis. Nine-tenths of the business of the manufacturers is done in this way. It is the sams way with the merchants. There is hardly a wholesale merchant in the country who will sell to two retail merchants in a town ; they will sell to one provided he handles their goods only and his account is an exclusive account. This is putting power in the hands of the minister to go to every brewer and say :	I have information that
you are selling exclusively to one man, and unless you put up your license es cancelled.
I bring this matter to the attention of the minister and I am sure that once it is brought tp his attention he will either amend or withdraw the resolution. If it is intended to refer to tobacco only why not word it: *
Any person paying excise on tobacco, cigars, cigarettes, &c.
Why should it apply to manufacturers of everything that pays excise ? That is the power the minister takes. I understood that a large deputation of retail merchants the other day waited on the minister and the report got out that these gentlemen were paid their expenses by the Tobacco Company. I have received this telegram :
Geo. Taylor, M.P., Ottawa.
I wish to state most emphatically that the American Tobacco Company did not pay my expenses to Ottawa last week.
(Sgd.) MICHAEL, McFARLANE.
Mr. McFarlane is one of the largest retail men in my town. He is no political friend of mine and I did not know what they were for until I received this telegram, but I understand he is one of the retail merchants who were_ here in opposition to this Bill. I am satisfied from the numbers of retail men here that the Bill does not meet with favour in the trade. I know as a business man that the greater portion of the goods manufactured in this country are sold exclusively through agents and to only one agent in a locality and that contracts similar to the one my hon. friend read are made by nearly every manufacturer. I presume my hon. friend here who manufactures clothes will sell to a wholesale man and sell exclusively ; I do not think he thrusts his goods on the market and sells to every one. If this resolution is meant to hit tobacco, it should hit tobacco alone, and not apply to every article that pays excise duties.


Thomas Simpson Sproule: The subject which we are called on to consider to-day is one of Mr. TAYLOR.	.
very great importance. The minister has outlined its importance by telling us the result of the operations of this company. Why ? Because of certain things that followed as a result of their operations. What are they ? First, they are a close corporation. They do not let the general public into their secrets ; they do not let them know what they are doing in their conclaves among themselves. Second, because they are bound by a solemn agreement and because they restrict trade and force it all through one channel. Third, because they pay exorbitant dividends. Fourth, because they are sometimes called a trust. Fifth, because their object is to kill out all opposition. What is the remedy suggested ? _ No renewal of their license. Let us consider some of the questions involved in this. In the first place, as an individual member of this House, for several years I made efforts to attack one of the combines or trusts, the leather trust, but quite ineffectively, because! I neither had the co-operation nor the moral support of the government. Is the memory of the hon. minister so short that he forgets that only a few years ago he himself stood up in defence of one of these combines, a combine which may not reach as many people but it is just as injurious in its effects. I refer to the Standard Oil combine.


Louis-Philippe Brodeur: I never took up the defence of the Standard Oil Company. Quite the reverse.


Thomas Simpson Sproule: The hon. minister defended it by giving in conjunction with his colleagues, concessions which enabled that company to plant itself down in Canada, get control of the market, circumscribe the1 market, and drive others out of it just the same as this tobacco trust, is doing.


William Stevens Fielding: You are mistaken.


Thomas Simpson Sproule: He says that this tobacco trust buy up the manufacturers. Well, what do the Standard Oil Company ? They buy up the manufacturers of petroleum, they have control of the industry in Sarnia, and they circumscribe the market. The hon. minister says let us be free from monopoly. Was he freeing us from monopoly then ? On the contrary he was fastening on us one of the greatest monopolies in the country.


William Stevens Fielding: What concessions did we give the Standard Oil Company ?


Thomas Simpson Sproule: The hon. gentleman took off the duty upon the raw material and enabled that company to bring It in free, and as they have the United States under their control, they extended their operations to Canada. They got hold of the oil refineries in Canada and restricted the market. Many years ago we drew attention to the fact that when the present government reduced the duty on oil imported, that operated in favour

of the Standard Oil Company who were then making the strongest efforts to get possession of the Canadian market. We drew attention to the fact, when the next concession was given, that of bringing over oil in tanks, that the Standard Oil Company were going to kill out the Canadian manufacturers and we endeavoured to get the government to refuse this concession, but in vain. Finally they gave them this other concession when they allowed crude old to come in at greatly reduced rate of duty, and what has been the result ? The result has been just what the Minister of Inland Revenue says will follow if this tobacco trust be allowed to carry on their operations. They bought up the manufactures and there is only one buyer from! oil men to-day in Canada.


Louis-Philippe Brodeur: The hon. gentleman is mistaken. He must admit that some years ago when there was a combine made between the railway companies and the Standard Oil Company, resulting in discrimination in favour of the Standard Oil Company, the government interfered and broke that contract.


Thomas Simpson Sproule: They made a kind of an attempt, but I always understood that the attempt was not successful and that these companies have gone on carrying on .their operations all the same ; and whereas the Canadian oil producers were formerly able to sell to the railway companies and oil refineries and manufacturers, they are now only able to sell to the Standard Oil Company and must take what prices that company choose to give. Then I ask the hon. minister to be consistent. If the government are not going to restrict the Standard Oil Company, how can they consistently restrict the tobacco trust ? We want competition for the products of our labour. If we have competition, we will have a larger market, but if you give the control of the market to one firm, that firm will inevitably fix the price.
We are told that this trust is controlled because they pay large dividends. What was the dividend paid by the Standard Oil Company last year ? They paid 44 per cent besides setting apart a very large amount to the rest account. In 1893 they paid 12 per cent dividend, and the dividend has been kept running up all the time, especially from 1896 when the company paid 31 per cent for the first time. When the government allowed the Americans to bring in oil in tanks, the Standard Oil Company paid 17 per cent. The year following they paid 31 per cent, the next year 32 per cent, and then 33, 48, 45 and 46 per cent. The hon. minister says that he attacked those combines because they pay large dividends. Why then did he not attack this Standard Oil combine ? We did our best on this side to get the government to attack it but did not 267i
succeed and the result is that company have been paying large dividends ever since and we have been making no effort to control them.


Mr. HEYD.: How can you control them ?


Thomas Simpson Sproule: The hon. gentleman always breaks in with irrelevant questions, not for the purpose of eliciting information, but merely to interrupt. We think that they could have been controlled. There is no doubt in the world that trusts and close corporations and monopolies are very bad. If it is the duty of parliament to attack monopolies, I do not see how this government can hope to escape.


William Stevens Fielding: We have monopoly over here.


Thomas Simpson Sproule: Yes, these hon. gentlemen are bound together, and not bound by an agreement but by an oath. Surely that is a close corporation. And who will pretend that they do not restrict trade ? They keep everybody else out of the market. And who will say that they do not favour their own patrons ? Why, the patronage of the whole country is handed over to their own friends. And they are paying big dividends. I can point to some members of the government of whom it is said, although I do not say that the rumour is correct, that they have paid larger dividends during the time they have been there than the Standard Oil Company or the great tobacco trust. But I do not know why they should be called a trust. No one can trust them, for, as has often been shown they have broken every promise they ever made to the country. It would be fair to call them a combine, for they are a political combine, and a combine in restraint of trade for they seek to keep everything in their own hands. Every contract they gave out was given out for the purpose of aggrandizing their own power. The Minister of Inland Revenue has suggested a remedy for the combine he attacks-do not renew their license. That is exactly what we suggest to the people with regard to this great political combine. And I think that the people will take our advice. When these gentlemen reach the great court of the people, they will not have the Minister of Inland Revenue to deal with -it will not be a matter of gaining the right on one more judgment, but of listening to the edict of the people. A strong attack will be made upon this political combine and I hope it will be more successful than the government are likely to be in this attack upon the tobacco trust.
Now, a few years ago I endeavoured to attack the leather combine and asked the help of the government in the work I was doing. There is more than one way of making that attack. One is to throw off the duty on any line of goods which has been made the subject of monopoly prices.

That is an American proposition. This combine entered into an agreement with dealers giving special terms for the purchase of Spanish sole leather and oak tanned leather, and those who would not sign that agreement they would not deal with at all. In this way they sought to destroy the small tanneries throughout the country. Year after year we did our best to induce the government to come to our aid. But they failed to do so. We had an anti-combine law. We tried to get them to invoke that law against the combine but they would not prosecute. We offered to prove that there was this combine with a view to having the duties thrown off. But they turned a deaf ear to our appeal and allowed the combine to go on. That combine was as injurious as the one that is now attacked, except that it did not reach so many people and was not so large. An hon. member suggests that it did not reach the farmers. It did reach them indirectly, but not directly. The government are now coming to the aid of the people in this one case, on the ground that this is a corporation whose object is to restrict trade. But the leather combine restricted trade because dealers, when they agreed not to handle the products of any other manufacturer, were assured five or six per cent discount on their purchase than they would make if they remained outside. The combine not only restricted trade but it paid exorbitant dividends. As to this Bill, I stand by the minister, but I say that a general law would be very much more valuable. We have been eight years trying to convince the government of the importance of this question. In the meantime these combines have secured a foothold in our country and are extending their operation in every direction. The result is that vested rights are established arid great interests involved, and these combines are bringing under their control large masses of people. For these reasons, it has become more difficult to dislodge them than it would have been in their early history. At last the government are making an effort to dislodge one of these combines. But we have many of them. There is the sugar trust, the iron trust, the salt trust, and many others, a'list of which I have here, carrying on their operations in Canada. The government attack the tobacco trust while the oil trust, sugar trust, the leather trust and others are left free. If I were permitted to give a piece of advice to>
the government it would be to make a general law and attack these trusts all along the line. However, I do not regard the failure of the government to attack all these trusts as a reason why I should not support them in the measure now before the House. The government are entitled to credit for what they have done, but had they done their duty they would have begun their attack upon these trusts at an earlier day. This Bill is objectionable because it does not go far Mr. SPROULE.
enough. It deals with a trust in only one line. This is a step in the right direction, and I support it. But the fact that the government do not go further is a proof that they are not sincere in their declaration against the trust, otherwise they would attack all the trusts which are equally injurious, though, perhaps, not so widespread in their operations or possessed of so much capital as the trust that they are now attacking.


Seymour Eugene Gourley: I have listened to the hon. member for East Grey (Mr. Sproule) with great pleasure. But, notwithstanding any criticism that may be levelled against this measure I feel strongly that we should all support it.


Thomas Simpson Sproule: I am supporting it.


Seymour Eugene Gourley: Quite so. No doubt there are other trusts in Canada that ought to be struck at, but we must approach this matter as best we may ; and as the Minister of Inland Revenue (Mr. Brodeur) has thought fit to mature a measure of this kind attacking one of these evils, I cannot withhold my support from him, because he has not widened the measure, so as to attack them all. In fact, I think it might be better to attack one of these combines first, and make it quite clear to this combine and all others, that, no matter how they may be able to evade the miserable courts of the United States, and the miserable system of laws there, they cannot evade the laws of a British country. I happened to accompany a delegation of men interested in the tobacco industries of Canada who were heard by the Prime Minister of this country and the Minister of Finance and some others two or three years ago. At that time I heard a number of retail dealers discuss this question from end to end. I gave the matter some attention, and afterwards pursued the subject, as far as I could, with the help of our library. I then became convinced that the tobacco industries of Canada were being attacked, covertly and insidiously attacked, by the American Tobacco Company, with the object of exterminating those industries, and installing in their place the American Tobacco Trust. From that moment, I became a convert to any system, or policy, that would nullify that attack by the American Tobacco Company, upon the tobacco industries of Canada. I congratulate the Minister of Inland Revenue (Mr. Brodeur) upon combatting this insidious attack, so far as this measure will combat it. I have not bad the opportunity of perusing the measure carefully, and do not pretend to know exactly what its effect will be. But, let us attack this company as best we can. And if this measure is not enough, I believe that there are brains enough in this House, to make a measure that will be sufficient to accomplish the result desired. I do not suppose that any minister or anybody else

is competent to foresee all the devilish ingenuity that will be employed by this company to get around this law. But what I hope for is that if they display their ingenuity in evading the law, we will have ingenuity enough to put up further defences and ultimately to crush these corporations. Xqw, how did they treat them in England V We heard this morning that the American trust invaded England ; how did they meet it there? Why, they met it as only men who are not aided by parliament could meet it. The whole tobacco trade of England had to form a contra combine in order to preserve their own interests.


Charles Bernhard Heyd: And then combine together.


Seymour Eugene Gourley: Of course. When the English tobacco interests found themselves invaded they were compelled to combine to fight this American trust ; and what was the result ? After combining and fighting between themselves for a while, they agreed to divide up the world. They divided up the world, and they said :	Y'ou shall have
that sheep to shear, and we will have this sheep to shear. Now, what was the proper course to have taken? If the English parliament had been open to reason they would have dealt with this matter, and spared themselves and spared the world from being made victims of these two companies. But we know that in England public opinion is so profoundly Conservative that if the tobacco interests had appealed to the House of Commons they would have had to appeal twenty-five years before they could have got redress. The result would have been that the tobacco interests in England would have failed before relief came. Therefore the tobacco interests had to combine, and the result of it is that we have two combines now dividing the world so far as tobacco interests are concerned.
Now, we propose a much more intelligent way. We propose that the tobacco interests in Canada, not being able to fight the American combines, shall be permitted to resort to this parliament, and I am glad to see that they have not found public opinion here so Conservative, they have found that this House of Commons is able and willing to deal with this monopoly, and not stand by and see the tobacco interests of Canada compelled to fight this combine in their own defence. We will come forth and exercise the strong resources of a government to protect our own people, and they shall not be compelled in self-defence to form another combine, which is simply adding to the great evils of the world. Therefore, I think in Canada we have pursued a much better course than they have pursued in England or in the United States.
Now, some reference has been made to the arbitrary power that we place in the hands of the minister. You must always place extraordinary powers in the hands
of any minister when you seek to strike down an extraordinary power that is arrayed against the people of Canada. What more arbitrary power is sought to be exercised than is exercised by the American tobacco trust ? These tyrants who are organized to rob the whole world, are they the men who come to this parliament and say : Oh, you are putting in the hands of a minister in Canada arbitrary powers; That is just the thing we want to do. We want to meet the remorseless tyrants that are invading the world to rob it ; therefore we will place in the hands of a responsiole minister in Canada all the powers necessary, legislative or otherwise, to meet the awful combination of capital that is arrayed against us. It does not lie in the mouth of these hideous tyrants of the United States Tobacco Trust to utter one word against any power, no matter how arbitrary, we place in the hands of some responsible man in Canada to defend the people of this country from their extortion. Therefore, I dismiss that objection. I want to place the most ample power necessary in the hands of the minister to curb these people and to protect the interests of Canadians.
,Now, I read a couple of years ago the history of the Standard Oil Company. I think it was shortly after my attention was called to the tobacco trust; and if ever there has been a remorseless creation it is that Standard Oil Company. They started as a little corporation in the United States, and gradually gathered capital, and then they proceeded to strike down every similar industry in the United States, no matter how big or how little. They have formed themselves into a hostile army entrenched in their own country for the purpose of destroying every similar industry in the United States. They proceeded most intelligently and most ably; first to buy up, if they could, every similar industry ; if they could not buy it up, then they proceeded to destroy it ; they proceeded remorselessly to destroy every man that had any connection with a similar industry and who would not sell out. There are instances detailed in that book of the scientific and cruel methods they took in order to destroy entirely all rival corporations, and ultimately to drive them into bankruptcy or force them to sell out.


Mr. WM. ROSS (Victoria).: They extended their influence to Germany also.


Seymour Eugene Gourley: They proceeded all over the United States until they practically controlled every oil industry in that country. Then they said : Having captured the United States, let us conquer the world. They went to Russia, they went to China, they went over the whole earth, and brought under their control and aegis every oil industry in the world. To-day they are one of the most hostile forces that exist

against the civilization in the world. Parliaments and legislative authorities in all nations must wake up to the fact that you cannot allow counter organizations and counter combines to be formed to fight evils of this kind, but parliaments must themselves come to the rescue. The hon. member for East Grey (Mr. Sproule) has said that he has been labouring with this government to induce them to act. I have no doubt he will have to labour with this government a long time before he can get them to undertake this difficult task. But if the Finance Minister and the Prime Minister have not given as much attention to these matters as they ought, I am glad to see that the Minister of Inland Revenue has undertaken so far as he can, to look after the special interests with which he is charged. Therefore, he ought to have that much credit. Now there are numbers of trusts all over. Canada that could be dealt with, and what I want is to show these people that we can deal with them, and if we can deal with the tobacco trust successfully, we will have no trouble with these other people. When they know that there is a parliament in this country that cannot be controlled, that cannot be influenced, and that will ruthlessly deal with their business when they attack the public interest of Canada, we shall not have much trouble with them. I want it to go abroad that although the trusts can control the Congress of the United States, they cannot control the parliament of Canada, that this parliament will exercise all the powers necessary in order to control these corporations, just as soon as they attack the commercial interests of our people. When the trusts know that, we will be free from many of the enormous crimes they have committed against the people of the United States and other countries.
Now with regard to Great Britain* the Minister' of Finance said : Oht you have trusts formed there. They have, but they were always formed in answer to the trusts formed in the United States. Trusts were formed in the United States and invaded England, and there was only one defence left for the people of England, and that was to create counter trusts, because, as I have shown, the English parliament is so Conservative that they could never have been brought to the point of providing protective legislation. Now, I want this experiment to be tried in our country to see if we cannot, in one instance, attack the tobacco trusts and control them successfully. If we can deal with these people, then we shall have established a precedent that we can deal with other industries, that we can attack the oil trust, and any other enormous incubus from which our people are sufferers.
My horn friend from Jacques Cartier feared the evasion of this law. I have no doubt they will try to evade it as they try to evade every law on earth, but I hope Mr. GOURLEY.
these people will not be able to override parliament and the courts of Canada. I think that we will be able to hold these people down and control them, no matter how successful they may have been in the past in evading the law. In regard to vested rights I may say that I am in favour of vested rights. Any honest man is in favour of vested rights because vested rights is nothing more or less than standing by property properly acquired by individuals. I would be in favour of vested rights but I want to warn these trust people that as they have never regarded vested rights as sacred, that as they have ruthlessly stricken down all competitors they must not come to this parliament as men with clean hands and claim that they ought to be protected, that the doctrine of vested rights ought to save them. I want to tell this trust here and now that after destroying the property of every man who offered competition to them they are not in a position to plead vested rights. While I am in favour of vested rights I will look very narrowly into their claim for protection on the plea of vested rights. I want to congratulate, not the ministry, but the hon. Minister of Inland Revenue (Mr. Brodeur). I think the criticism of my hon. friend from East Grey (Mr. Sproule) is justified that the ministry as a whole ought not to be congratulated upon having grappled with trusts, but as the hon. Minister of Inland Revenue has broken free from the bad example of his colleagues it shows that the Bible sometimes, under our narrow construction, must be misleading when it says that evil communications corrupt good manners, because in this instance it does seem that the hon. Minister of Inland Revenue notwithstanding his evil associations has attempted to give us a remedy for this evil while his colleagues perhaps have only been giving us the gloved hand.


Mr.  W. S. MACUAREN@: Mr. Speaker, it will be within the recollection of this House that at an early stage of this session I introduced a Bill to do away with the manufacture, importation and sale of cigarettes. .
Some hon MEMBERS. Hear, hear.


Mr. W. S. MACLAREN.: I was pleased with the support that was given to this Bill. Sometimes I thought I hardly got fair-play as the Bill went on. I do not know about the straining of the rules of the House but I thought that some hon. gentlemen used them up to their full extent. I am not one of those who complain when he gets cold justice. Some Bills introduced by lion, members during this session got their first and second reading and were considered in committee at the same sitting, but the Bill which I had the honour of introducing in this House was only allowed to pass barely one stage at a time. Notwithstanding-I was going to say the opposition but I will not use such a strong word as that-* the want of sympathy for my Bill which

came from high places both on the government side as well as on the opposition side I was able to get it through the committee stage, but yesterday, or the day before, I noticed that it was slaughtered along with other unfortunates. It is not my intention to speak upon the merits of this resolution which has been introduced by my bon. friend the Minister of Inland Revenue (Mr. Brodeur) although I am in entire sympathy with it, but in looking up this matter I find that there is one thing in connection with cigarettes which I wish to place on record in the House. I have a statement here showing the growth which has taken place in the manufacture of cigarettes in Canada for the last fifteen years and which is as follows :
Number of
Year.	cigarettes
manufactured.
1890		'	 34,206,940
1891		 41,531,360
1892		 40,201,700
1893		 47,749,800
1894		 70,437,680
Then in 1895 the American Tobacco Company, at which this legislation is especially aimed, came upon the scene, started the tobacco manufacture industry in Canada and absorbed two companies and we see the result in the following statements of the number of cigarettes manufactured and
the number manufactured by the American Tobacco Company : No. manufactured		
Year.	Number manufactured.	by American Tobacco Co.1895 .. ..	.. .. 83,854,440	82,000,0001896 .. ..	.. .. 86,000,000	57,000,0001897 .. ..	.. .. 106,500,000	86,000,0001898 .. ..	.. .. 88,000,000	71,500,0001899 .. ..	.. .. 105,500,000	96,376,5001900 .. ..	.. .. 123,200,000	102,234,0001901 .. ..	.. .. 125,000,000	108,000,0001902 .. ..	.. .. 138,000,000	109,000,0001903 .. ..	.. .. 179,000,000	149,000,0001904 .. ..	.. .. 216,000,000	' 191.000,000
What does this mean ? It means that the manufacture of cigarettes in Canada during the past fifteen years has increased sixfold. That is out of all proportion to the increase in population. It is out of all proportion to the increase of tobacco in other forms. That simply means that there must have been a great market created for the consumption of these cigarettes. A good deal has been said about the hardship of taking away the dear cigarette from the grown up man. I do not object to seeing a man with a pipe or cigar in his mouth but I think it looks very boyish to see a grown up man with a little cigarette in his mouth.


An hon. MEMBER.: Or a clay pipe.


William Scott Maclaren: Well, a clay pipe, or anything but a cigarette. I think that it means that there has been created in this country, a largely increased demand of cigarettes. These cigarettes are certainly
being used by the boys of this country. I do not think that any person sitting down and calmly thinking over the matter will be prepared to say that this increase of sixfold in the manufacture of cigarettes in fifteen years represents the use of tobacqo by grown up people, but I am cpnvinced, on the contrary, that he will be prepared to admit that it represents simply the increased consumption of_cigarettes by boys. The use of tobacco in this form is increasing much more rapidly than that of tobacco in any other form. You cannot go through the streets of Ottawa or of the cities and towns in other parts of the Dominion unless you see bright pictures and electric light signs advertising Sweet Oaporal cigarettes and things of that kind. But, you do not see any such advertisements of black plug tobacco. Not at all. These bright advertisements are for the boy because he is imaginative and their object is to induce him to purchase cigarettes and if that is not sufficient they give presents, coupons and resort to all those little tricks of the trade in order to induce the boys to buy. I am heartily in favour of the resolution introduced by my hon. friend the Minister of Inland Revenue, and I thought I would take this opportunity as I could not get at it in any other' way, of bringing the question of cigarettes before the House and of pointing out these facts. The strictures which have been pronounced in regard to the resolution by the hon. member for East Grey (Mr. Sproule) may in a sense be right. The growth of tobacco is quite an industry in many parts of this country. I repeat that I am heartily in favour of the resolution and if the government seek to go beyond the question of tobacco and to legislate in regard to trusts in connection with the other things mentioned by the hon. member for East Grey I would be heartily with them in that as well as in this.


Mr. W. A. GALLIHER.: I endorse the resolution now before the House. I believe it to be a much needed piece of legislation. I do not rise to discuss the subject matter of the resolution now, but to bring to the attention of the Minister of Inland Revenue, as I brought to the attention of his predecessor, and to the attention of parliament last session, a matter in which the tobacco-growers of the Kelowna district in my constituency are deeply concerned. In 1901 an Order in Council was passed by which importers of foreign leaf tobacco were allowed a rebate to the extent of the duty on the cuttings if they exported the cuttings out of the country. This results in a serious harship to the tobacco-growers of the Kelowna valley, and I presume to the tobacco-growers of other parts of Canada. Probably eight-tenths of our cigar-making establishments import foreign leaf for the purposes of manufacture. The consequence of their being allowed a * rebate on the cuttings is, that we are unable

to sell Canadian tobacco leaf to these factories, because the department believes that they could not separate the domestic qut-tjings from the foreign leaf cuttings, and so if they use our tobacco the rebate Is not granted. I do not see any reason why there could -not be a departmental regulation made by which the cuttings from the domestic leaf and the cuttings from the foreign leaf could be kept separate, and the rebate aliowed only on the foreign cuttings when they are exported. I have here a letter from one of the largest tobacco growers in the Kelowna district. He is a gentleman with whom I am personally acquainted, and a gentleman in whom I have every faith and confidence. He says :
Samples of the tobacco I now have in stock have been shown to all the largest manufacturers in Montreal, London, Toronto, &c., and declared by them to he equal to anything grown In the United States.
Tne tobacco growers of the Kelowna valley have gone to a great deal of expense in experimenting on tobacco culture, and by their perseverance, enterprise and energy they have produced a quality of tobacco which the most expert handlers of tobacco in the chief cities of Canada declare to be equal to anything grown in the United States.
But in face of this Order in Council I am unable to sell any to any foreign leaf factory.
And, as I have said, the foreign leaf factories in Canada are at least seventy-five per cent of the total number.
To one firm, an actual sale of 6,000 pounds at excellent prices was made, provided it could be taken into the factory free of duty. They ascertained that this could be done, but if they took it in, the rebate on their cuttings would be lost. As their annual rebate amounted to more than the value of the tobacco, the deal of course fell through. I have tried factory after factory with the same result.
I would impress upon the Minister of Inland Revenue that this is a matter which should receive the serious and immediate attention of his department with the view of finding some means by which the use of the home grown tobacco leaf in these cigar factories would not be practically prohibited.


Mr. R. HOLMES.: I heartily endorse the remarks made by my hon. friend from Huntingdon (Mr. Maclaren) I endorse the proposition now before the House, but I must express my regret that it was found necessary to slaughter the cigarette Bill this session. I am a believer and I am glad to be able to affirm my belief, in the absolute prohibition of the manufacture and importation of cigarettes. The figures quoted by the hon. member for Huntingdon ought in themselves be sufficient to convince this parliament of the * urgent necessity at as early a date as possible, of passing legisla-Mr. GALLIHER.
tion which would be effective in preventing the cigarette evil in Canada. The enormous increase in the sale of cigarettes, which is very largely to the youth of the land, should convince this parliament that no legislation would meet with more general favour-by moralists at any rate, and also by other classes in the community-than the prohibition of dealing in cigarettes. I am as anxious as any one else to get away from here, and I shall therefore conclude by strongly endorsing the remarks of my hon. friend (Mr. Maclaren). I trust that no matter what government may be in power in the future, steps will be taken to overcome the cigarette evil which is so far-reaching and disastrous in its consequences.


[Stage Direction]
Motion agreed to, and House went into committee on the resolution.
George Taylor: I would now like an answer from the minister to the questions I asked as to why this should be made to apply to persons manufacturing the goods that pay excise, whether whisky, beer, vinegar or anything else, if you mean it to apply to the tobacco men alone.


Louis-Philippe Brodeur: Simply to meet the objection that has been made that the Bill should not be too restrictive and that it would be well to apply it to all goods subject to excise. I think the law should be as general as possible. I appreciate the strength of the argument of the leader of the opposition this morning that we should have a general law applying to all trusts, but if you decide to deal with this question only so far as goods subject to excise are concerned, I think you snould not take simply tobacco, but should make a general law referring to all licenses. That is the reason I have proposed that the law should apply to all goods subject to excise.


Robert Laird Borden: The minister will observe that he is not doing either one thing or the other ; he is neither making a general law nor confining the operation of the proposed Act to the cases in which the evil is said to exist. It seems to me he should either do one thing or the other, either make a general law or deal only with the case where the grievance ex-i ists.


Louis-Philippe Brodeur: We make it general as far as goods subject to excise are concerned. There would be serious objection to it if we dealt solely with tobacco ; the objection might be raised that we did not apply it to all goods subject to excise. We take this stand, that persons who have licenses from the government, who are only able to carry on their business on terms stated by the government should be subject to this law.


Robert Laird Borden: Of course we adopted the principle of the Bill on the

second reading and X shall not repeat anything I said then. I am assuming that the principle has been adopted by the House, and is a good principle on which to act. That being so I think we should either deal with the case where the evil exists or make a general law. You could make a law general in this way, that you could prevent any business from being carried on without a license. It seems to me that that would be the logical outcome of the present law. You are here dealing with the tobacco trust, with an evil which exists in the business of manufacturing tobacco, which cannot be carried on except under a license from the .government. You are not restricting your resolution to the manufacture of tobacco in reference to which that evil exists. You are embracing by the terms of your enactment other classes of business in which no evil, so far as I am aware, is said to exist. If you go that far, ought you not to go further ? That is the point. In this connection I would like to ask about the proposed amendment to the Criminal Code which was discussed last year. To what extent does this system adopted by the American Tobacco Company exist in respect of other manufactures in Canada. I mean the system of selling or consigning goods upon a stipulation that the persons to whom the goods are sold or consigned, shall not handle the goods of any other manufacturer of a similar class of goods. It was alleged last year-I do not know with what truth-that this is a system of very general application. Of course I understand that it is a system which may be innocent, may be productive; of no harmful results at all, so long as you have ten, fifteen or twenty manufacturers engaged in the same business. I realize that the operation of a system of that kind might only become injurious when you have one corporation engaged in the enterprise, controlling perhaps 90 or 95 per cent of the whole business. I appreciate all that, but at the same time I think it would be useful for us to know as this measure is going through the committee, to what extent that system so made harmful by what is practically a monopoly, if we are to accept the statement made by the hon. Minister of Inland Revenue, applies generally in carrying on business in this country.


Louis-Philippe Brodeur: I have no special information as to that. The tobacco question was investigated by Judge MacTavish and during that investigation there was some suggestion that combinations of a similar character to this existed in other trades, but the judge did not find it expedient to investigate that question because it was hot within the scope of the inquiry.


Robert Laird Borden: Was any complaint made with regard to it, in respect to any other industry ?


Louis-Philippe Brodeur: Not that I am aware of. Some mention of it was made during the tobacco investigation but there was no actual investigation of other trades. The reason given by Judge MacTavish was this : He said in his report that he was called upon to investigate the tobacco question, that the opposing parties appeared before him whereas as far as other trusts are concerned, nobody appeared before him and it looked to him as being unjust and inexpedient to make any investigation as to these trades. We are simply dealing with the facts that have been brought to our attention.


Mr. PARMELEE.: Will the Bill to be founded on this resolution make any provision for reasonable notice ? These arrangements have been made and I fear that if you take the right or exercise the right to cancel these licenses out of hand it would throw the trade into a great state of confusion and cause great injury and harm not only to the manufacturers but to the wholesalers and to the people who handle this tobacco all over the country.


Louis-Philippe Brodeur: I suppose that before we put the law into effect it wodld be only fair to draw the attention of the interested parties, that is to say the Empire Tobacco Company and the American Tobacco Company to the fact that a law has been passed providing that their licenses would be cancelled if they continue to use exclusive contracts, and I would be very glad to give them an opportunity of cancelling these exclusive contracts.


George Taylor: I think the resolution ought to be changed to read as follows;-
Any licenses authorized by this Act for the manufacture of tobacco or cigars or cigarettes shall be cancelled.


Louis-Philippe Brodeur: I do not think it would be fair to make that restriction. My hon. friend, the leader of the opposition, expressed very strongly his conviction this morning that legislation of this nature should be as general as possible. Under the circumstances we cannot go so far as to make a general law applicable to all trades, but I think the law should be as general as possible so far as the licensees are concerned. The information I have is that there is no other combine amongst the licensees but if it should be found that other licensees were doing the same thing, we should have power to deal with them.


George Taylor: It will be time enough to deal with them when they arrive. What other goods which are manufactured have to take licenses from the department ?


Louis-Philippe Brodeur: The most important are spirits, vinegar, tobacco, cigars, malt, brewer's acetic acid.

'Mr. MONK. Is it the intention of the minister, as soon as this Bill becomes law, to enforce it ?


Louis-Philippe Brodeur: Certainly.


Frederick Debartzch Monk: Is there going to be any further inquiry ? At the time the grievance was exposed to the government the answer of the government to the deputation was that they would ascertain the facts by means of a commission of inquiry and then would act. That was two years ago. If this becomes law, will the minister act at once, or will there be a further inquiry ? Is there any special procedure contemplated by the minister, or will he act iproprio motu.


Louis-Philippe Brodeur: I shall have to find out whether those exclusive contracts are still in existence. The investigation took place a year ago and these contracts were then existent. I am convinced they are existing still, and if so I shall be called on to cancel them.


Frederick Debartzch Monk: It would not take the minister more than a week at the outside to find out in an official and exhaustive manner that these contracts still continue. I suppose we can then expect the action of the government within a month at least, giving it the utmost extension possible.


Louis-Philippe Brodeur: -I shall give this matter my immediate consideration. I will do my utmost to carry out the wishes of parliament.	[DOT]


Mr. J. E. E. LEONARD.: (Translation.) Mr. Chairman, before this resolution is reported, I would like to offer a few remarks. It seems to me that the hon. Minister of Inland Revenue must know by this time wluit is the position of the American Tobacco Company trust. Judging from all the reticencies used by the hon. minister for not saying in what delay he is going to apply that law, I understand his only aim is to win the elections two months hence.
Together with the hon. member for Jac-ques-Cartier, and as representing a country which is deeply interested in tobacco growing, I would like the minister to state positively that this law shall come into force as soon as passed by this parliament, and I hope the hon. minister will have no objection to tell us that he is determined to put it into force immediately, especially as against the American Tobacco Company.


Louis-Philippe Brodeur: (Translation.) My hon. friend knows perfectly well that we cannot proceed immediately with the cancelling of the licenses without having positive evidence of their being extant. If he has taken the trouble of reading the law-and I suppose he has-he will notice that the minister has the right to cancel the licenses when such and such things shall exist; but we must first be satisfied that the state Mr. BRODEUR.
of things complained of is actually existent.
My hon. friend from Jaeques-Cartier says : 'We have Judge MaeTavish's report.' Tnat is true, but the judge made his investigation two years ago. Suppose the contracts he denounced did not exist to-day, we would be in a very bad position indeed if we undertook to cancel the licenses without first making ourselves sure that they are still in force, and the government might be called to pay heavy damages. Therefore, the most rudimental prudence makes it a duty to inquire if those contracts are still in existence. My conviction is that they are, but I must have the reports from my officials, and if they are, I shall take immediate action. My hon. friend may rest assured that the desire of parliament will be complied with, and that it will not take the minister a long time to apply the law.


Frederick Debartzch Monk: (Translation.) The effect of this equivocal statement, by the hon. minister is to put me in the greatest anxiety. At the end of this session, when the Prime Minister stated that all the legislation the government were to introduce this year was before the House, I called the attention of the hon. Minister of Inland Revenue to the fact that the tobacco question had been forgotten, and that I was going to submit it myself to the House. The following day my hon. friend gave notice of his resolution. We rely upon him. Hon. members on this side of the House have given their adhesion to my hon. friend's Bill. We give him full discretion as regards its execution. We had the right of asking parliament to decide that point, and not leave it with Lie executive to suppress that monopoly ; but under the circumstances, we accept the Bill submitted to our consideration. I think it ouly fair that the government should state under what delay they are going to apply that law, because such means of information are absolute and most effective. They could know within a couple of days as to whether the state of things pointed out by Judge MacTavish is still existing or not. It is our right to have a clear statement from the government on that point.
If my hon. friend knows, as we all know, and as we are all persuaded in mind, that nothing has been changed in the state of things stated by Judge MacTavish, why should the hon. minister hesitate in telling us that within thirty days after the passing of that law the remedy involved in it shall be .applied ? That would be twenty-five days more than is necessary for gathering sure evidence as to the existence of the abuse in question. Under these circurii-stanctes, it seems to me that since we confide in the government, they should tell us when they are going to take action.
My hon. friend has not been absolutely candid in this matter, and that is why I

am a little like St. Thomas and I have some misgivings. It is not that I wish to have any proof of the evil, for it is well known to me, but what I want is to have something tangible as regards the remedy the hon. minister intends to apply to that evil. Now', it seems to me that this desire is quite reasonable.
When we on this side of the House have raised that question, we have been accused of varying on the question of protection. That question is not involved in this matter. The question involved is that of abolishing the monopoly ; the question at stake is that of finding new markets for our Canadian tobacco. These two questions are the most important of all. Should you even raise the duty two hundred per cent, we would not be any better as long as we have that monopoly, which is proved to have existed for more than two years past. Therefore, I think the hon. minister should let us know when he intends to use that law.


Charles Fitzpatrick: (Translation.) I would ask my hon. friend (Mr. Monk) to observe that the proof of the fact that the government realize all the importance of this question is that they had it immediately submitted to the House, although the end of the session is drawing near. So fully did they realize the importance of the matter that they made an exception in introducing this law7, when they had stated their intention of introducing no other new legislation at this session, as reminded by the hon. gentleman. Since the government have given such evidence of their good faith, my hon. friend and the House may be sure that this law w7ill be used in order to protect that industry and the tobacco growers against the effects of that monopoly. Therefore, there can be no doubt as to whether the government will execute this law intended to put an end to the monopoly now existing.


Mr.   MONIC@: (Translation.) I take note of this explicit statement made by my hon. friend the Minister of Justice. At the same time I would ask the hon. Minister of Inland Revenue (Mr. Brodeur), who will be charged to execute this law, to tell us within what delay he intends to use it ?


Louis-Philippe Brodeur: (Translation.) My hon. friend must bear in mind that if there is any evidence as regards the existence of that monopoly it is in the hands of parties opposed to this government, or at least to the law now under discussion. It must not be believed that the proof of those contracts being existent will be furnished to us by the American Tobacco Company. We shall have to get it otherwise. I may say to the hon. gentleman that immediately after the session, that is after this law is sanctioned, my officers will be instructed to make the necessary investigations, in order
to gather evidence as to the existence of those contracts, and as soon as that evidence is handed to me, the cancelling of the licenses will be immediately ordered. That evidence might perhaps be gathered within fifteen days ; it may be also that three weeks or one month are required ; but in addition to this, we must be given sufficient time to take an intelligent decision. My hon. friend may rest assured that the government will make all possible haste, in order to have this law executed, and will take action with all expedition.


Frederick Debartzch Monk: (Translation.) This statement made by my hon. friend is more satisfactory than the one he made a moment ago. I presume he understands, as we all do, that the government are not going to leave this law unexecuted until some third party comes iu, but that his own department will take action without the interference of third parties.


Louis-Philippe Brodeur: (Translation.) Certainly, the department will take immediate action.


George Taylor: That the resolution be amended by striking out the word ' may ' and inserting * for the manufacture of tobacco, cigars and cigarettes shall.'


Thomas Simpson Sproule: If the rest is left out and ' shall ' inserted instead of ' may,' I shall be satisfied.
Amendment negatived on division.
Resolution reported and read the first time
Mr. BRODEUR moved that the resolution be read the second time and concurred in.


George Taylor: If there is any objection, Mr. Speaker, this stage cannot be taken at this sitting.


Louis-Philippe Brodeur: But I suppose my hon. friend (Mr. Taylor) will not make any objection. We are nojv at the end of the session


George Taylor: That is a very good reason why this Bill should have been brought in earlier and parties interested given an opportunity to be heard.


Louis-Philippe Brodeur: I thought the hon. gentleman was in favour of it.


George Taylor: If the hon. gentleman (Mr. Brodeur) will amend it to suit me I am, but I do not want it to apply to everybody.


Mr. SPEAKER.: Second reading at the next sitting of the House.



CONTAGIOUS DISEASES-ANIMALS.

[Stage Direction]
House went into committee to consider the following proposed resolution :
That it is expedient to provide that the Animal Contagious Diseases Act of 1903 be amended as follows -	.
[Stage Direction]
That paragraph (e) of section 2 of the Animal Contagious Diseases Act of 1903, chapter 11 of the statutes of 1903, be amended by adding after the word ' farcy ' in the third line of the said paragraph the words ' maladie du coit.'
That subsections 2 and 3 of section 12 be stricken out, and the following substituted therefor :-
' The compensation, if any, shall be two-thirds of the value of the slaughtered animal before the same became affected with infectious or contagious disease, 'or came in contact with, or in dangerous proximity to animals so affected ; provided that when it is clearly shown that an animal has been slaughtered on insufficient grounds, and that the slaughter was not in accordance with, or justifiable under this Act, the owner shall be entitled to compensation at the full value of the animal so slaughtered.'
That subsection 4 of the said section 12 be amended by adding at the end thereof the loiaowinngi :-[DOT]
' But shall not exceed, in the case of grade animals, $150 for each horse ; $60 for each head of cattle ; or $15 for each pig or sheep ; and in the case of pure bred animals, $300 for each horse ; $150 for each head of cattle ; or $50 for each pig or sheep,'-Mr. Fisher.
Mr. CLANCY.: It seems quite evident that in this resolution the hon. minister is discriminating in favour of the pure bred and graded stock. As I understand the law at present, all animals coming in contact and having contracted disease


Mr. FISHER.: If the hon. gentleman (Mr. Clancy) will permit me, I will give an explanation of changes proposed.


James Clancy: I think I understand the changes, hut I would like to get the hon. gentleman's (Mr. Fisher's) reasons .for them. Under the present law, for an animal that has contracted a contagious disease and is slaughtered by order of the government the owner now receives one-third the value For those that have come in contact and have not contracted the disease, he receives three-quarters. The hon. gentleman proposes now to place them both on the same ground of two-thirds. Under the present law the limit for a pure 'bred animal is $60. and for grade $20. Under the proposed resolution, for grades it is raised to $60 for each head of cattle and $150 for each horse- it is probably right to make a distinction between the amount for each horse and for each head of cattle. In the case of thoroughbreds, under the resolution the limit is $150 for each head of cattle and $300 for each horse. These are very large sums. There Is danger of the country being put to great expense here, because the animals under these circumstances are apt to be valued very high. There is often a fictitious price

Mr. FISHER, If the hon. gentleman (Mr. Clancy) will allow me, I think he has not quite seized the details of the resolution. Under the resolution, three changes are Mr. SPEAKER.
I
proposed. The first is to add a certain disease to the list of contagious diseases. That is very simple. The disease is one that has been known in this country only for the last two years, but it has been found to be quite general in certain sections of the Northwest, and it is very desirable, in the interest of the herds there, that it should be stamped out. This is the maladie du coit. The . second change is as to the compensation to be paid when animals are slaughtered. In the old Act, the figures which the hon. gentleman wjll read in subsections 2 and 3 of section 12 are not the limit of the valuation, but the limit of the compensation. In the present measure I am putting in the limit of the valuation. To find the limit of the valuation under the existing law, you must multiply the figures by three, as the compensation is limited to one-third of the value. In the old Act:
When the animal slaughtered is affected with infectious or contagious disease, the compensation, if any, shall be one-third of the value of the animal before it became so affected, but shall not exceed, in the case of grade animals, twenty dollars,

That means that the value of the animal shall not be more than $60.
-and in the case of pure bred animals, sixty dollars.
We must multiply that amount by three, which makes it $180. Now I want to explain that in these figures, in the old Act, horses were not considered at all. The figures were for the valuation of cattle, and for sheep and pigs, there was no difference in the possible valuation of any animal, whatever animal it might be ; the result was that, whether it was a horse valued, we may say, in the ease_of a grade animal, at about $150, or whether it was a pig, valued at $10 or $15, the limit of the compensation was the same. In my proposed amendments I give a limit of valuation for the horses, a limit of valuation for the cattle, and a limit of valuation for pigs and swine. In the old Act there was no difference in the valuation of any of the domestic animals. But it is not a fair comparison in regard to valuation to take the figures in the old Act and compare them, without this explanation, with the figures in the new Act.


James Clancy: Will the hon. gentleman say how you are to make the computation under section 3 of the old Act.


Sydney Arthur Fisher: Under that section the compensation was three-fourths of the valuation of the animal ; and the limit of compensation was, in the case of grade animals, $50. The value of the animal in that case would be about $67. One-third of $50 is about $17 ; and if you take $50 as three-fourths of the value of the animal, that would mean that the value of the animal might go up as high as $67, with a fraction.

Then three-quarters of that valuation might be paid, which would be about $50. Now in the case of cattle, my proposal is that, In the case of grade animals, it shall be $60 per head. In the old Act it might have been $67. In the new Act it cannot be more than $60 for a grade cow or steer. That valuation is not fixed by the Act, it is only the limit of valuation, which is not a fixed valuation. I am giving the maximum possible valuation, and in this particular instance it is slightly lower than under the old Act, and that is more or less modified by the fact that I provide that the compensation instead of being one-third in the case of actual disease and three-quarters in case of contact, it shall be a flat rate of two-thirds in every case.


James Clancy: I would like to ask the hon. gentleman here-he has had a good deal of experience in his department-in case of slaughtered animals, those coming in contact and becoming diseased, and those coming in contact without being diseased, what has been the proportion up to this time ?


Sydney Arthur Fisher: The proportion until this last year or so has been, roughly speaking, about one-third of them in contact, and two-thirds of them diseased-I am speaking of swine, which are much the largest number of slaughtered animals. I adopted the practice lately of requiring a post mortem examination in the case of every animal slaughtered, and the result has been to decrease the number of those in contact, because, by the post mortem examination, we have found that there was disease which, in a good many animals, did not appear on the surface, and the result is lately a smaller proportion of what we call contact animals have been paid for than of diseased animals, and that, roughly speaking, the proportion is, instead of being as one-third is to two-thirds, it is about as one-fifth is to four-fifths, during the last year. But I want to point out to my hon. friend that this nroceeding has occasioned a great deal of difficulty and friction. People whose animals are slaughtered are of course eager to get as much as they can, and if a veterinary makes a post mortem examination and finds a very slight indication of disease he declares the animal is diseased, although there is no outward clinical symptom, and the farmer is dissatisfied. he is aggrieved, and feels in many eases that the animal, especially if a pig, might have been sold or slaughtered by himself. The consequence has been a great deal of friction, difficulty and dissatisfaction, and that is the chief reason why I propose in this law to make a change, and make a flat rate for all slaughtered animals, whether in contact or diseased. I think that a slight increase of payment will be required ; but I trust that a good deal of dissatisfaction will be removed, and a greater willingness
will be found on the part of farmers to. call in the veterinary and to declare that they have disease in their flocks. That is really the object of the changes. We have been struggling to stamp out hog cholera in this country. We have got it pretty well circumscribed. There are sporadic cases occurring in a considerable area of country, but of late, with the exception of one particular district, the cases have been only sporadic. I hope that by this change we will be able to stamp it out there as we have been able to stamp it out in some other places. That is my reason for suggesting this change, in addition to the reason that if we are going to deal with this mala-die du coit, which is a disease of horses, we will be obliged to make the valuation of horses for compensation higher than the old Act allowed, it being a valuation determined on the idea of cattle slaughtered and not of horses.


Mr. STEPHENS.: I am much pleased that the Minister of Agriculture has introduced these amendments to the old Act. I have taken a considerable interest in diseased cattle of all sorts in the county of Kent, and I have been complaining for some years back that the compensation paid to farmers owning animals that the government have slaughtered, has not been sufficient to induce the farmers in many cases to call in the government veterinary when their animals became diseased. They found in some cases that it would be better to slaughter the animals that had disease, and keep the well ones to be shipped out of the country. This was done in many cases. I have compared the old Act with some of the Acts of several states of the United States, and I find that nearly all those states have been paying more compensation than we have been paying in Canada. I find also that in England the government pay for animals attacked by pleuro-pneumonia three-fourths of the value, and the full value for all other animals that are slaughtered to prevent the spread of the disease. In cases of cattle plague half value is paid for diseased animals and whole value for all others ; foot and mouth disease, full value before the animal becomes affected ; sheep-pox, half value for diseased animals and full value for all other animals ; swine fever, half value for diseased animals and full value for all other animals slaughtered in all cases up to a certain amount. The question was asked how this legislation would affect the payments to farmers. For the last year ending June 30, 1904, there was paid on account of hog cholera for diseased animals, one-third value, $18,099.32 and for contact animals, three-quarter value, $4,022.03, making a total of $22,101.35. If compensation had been paid on the basis of two-thirds value .for all hogs slaughtered the figures would have been :

Diseased, two-thirds value	$36,198 64
Contact, two-thirds value		3,557 36
Increase	$18,099 32
Decrease	 444 67
Or making a net increase in the amount of compensation of $17,654.65. I am sure that when the farmers help to pay the bounties on lead, silver, iron, steel, petroleum and some other things, they are entitled to this increased compensation. X have had. letters from farmers in Ontario and in the North west Territories asking that more compensation be paid them, as they have felt the loss was too great for them to .bear. When you consider that the export trade in animals and their products amounts to from $60,000,000 to $70,000,000 a year, you will at once see that this is a very important industry, and that it should be well looked after, so as to enable us to stamp out disease as Quickly as possible. The compensation which has been paid in the past has not been effective to stamp out disease in my county, for the reason that the farmer does not in all cases at once notify the veterinary and have the animals destroyed. I would also suggest to the government that when disease, particularly hog cholera, breaks out in a county the Act, as the hon. minister has now brought it into the House, should be published in the weekly newspapers to enable the farmers to know what the law is. In a great many cases they do not obey the law for the reason that they do not understand what it is. I would also suggest that in cases where the government have a veterinary surgeon employed by the year, as there is a considerable time during which he is not engaged in the inspection and slaughtering of animals, he should employ himself holding meetings amongst farmers and endeavouring to show them the best way to keep their animals in order to prevent disease breaking out amongst their herds and flocks, and also the best methods of preventing the disease from spreading. I do not think there is a member of this House who will not be willing to vote for the extra expenditure that will be incurred under this Bill.


Thomas Simpson Sproule: Will the examination under this Bill be made by veterinaries in the employ of the Department of Agricul ture or by veterinaries just as they are picked up all over the country in the districts in which the slaughtering will take place ?


Sydney Arthur Fisher: By regularly appointed officers of the department.


Mr. DANIEL.: What disease is meant by this one which is mentioned in the resolution-maladie du coit ?


Sydney Arthur Fisher: The disease is equine syphilis.
Resolution reported, read tHe second time and agreed to.


George Stephens: Mr. FISHER moved for leave to introduce Bill (No. 166) respecting the Animals Contagious Act, 1903.


[Stage Direction]
Motion agreed to, and Bill read the first time.
On the question : When shall the Bill be read a second time ?
Mr. HENDERSON.: Mr. Speaker, I do not rise to offer any opposition to the Bill. It may be a very good Bill, it may be entirely in the interests of those whom it is intended to assist and whose benefit the hon. minister has in view, but I rise to protest against this absurd system of bringing up matters of this kind at the end of the session, when there is no opportunity whatever of giving consideration to them. The hon. minister has been absent more or less for a very considerable part of the session, more especially recently. He lias been having his pleasure here and there, without paying any attention to the business of the House, and I must insist that action of this kind and the railroading of a measure of this kind through the House without hon. members having an opportunity of considering it, is not what the members of this House have a right to expect at the hands of the hon. minister. I think that if he had any consideration for the members of this House, lie would treat them with more courtesy than he has in the past, and that he would bring down measures of this kind a reasonable time before he asks the House to consider them, and give ample opportunity, after the measures have been introduced, for members to consider them. I say this is a mere farce ; it is simply getting snap legislation. This House knows nothing of the merits of this Bill, and I question if the hon. minister knows very much about it. It has not received that serious consideration which it ought to have received. What is it? An amendment of a Bill passed last year, not twelve months ago, not probably nine months ago ; yet the minister comes down in the dying hours of the session and asks the members of this House to amend a Bill which he, in his judgment, thought was perfection only nine months ago. I think it is time hon. ministers came to the conclusion that the members of this House ar;e entitled to some little consideration and some little courtesy at their hands. This is getting to be a practice too often repeated. What have we had in this House in the last three or four months during the present session ? Time after time we have been called upon to amend Bills passed during the present session. If these Bills had received proper consideration in the departments before they came before the House there would have been no reason for them to have been amended during the session in which they were enacted, and at the same time there is no reason in the world why a Bill passed in 1903 should be amended in 1904. If it were right in 1903, surely it could re-

main on the statute-book for one year at least. The minister has explained that one of these diseases has only been recently discovered, but if it has been known for two years even, the officers of his department should have drawn his attention to it and have had it included in last year's Bill. I am not opposing this Bill ; it may be a good Bill or it may not; but it is not a proper way to do business. I would ask the Minister of Agriculture to give a little more attention to the affairs of parliament and of his department, and to treat the members of this House with more courtesy if he wants io get such legislation through.


Sydney Arthur Fisher: This Bill has been in a different form on the order paper for a month and as to the disease it has only been reported to parliament since the legislation of last session.
Motion agreed to and House went into committee on the Bill.
On section 3,


Mr. FOWLER.: It says the compensation shall not exceed $150 for each grade! horse. Some grade horses may be worth $1,000.


Sydney Arthur Fisher: Sometimes, but not very often. We have to take an average of the value ; we do not give compensation at fancy prices.


George William Fowler: A valuable trotting horse might not be pure bred or thoroughbred and still you only allow $150. As a matter of fact a grade horse in the roadster class, if you get a superior animal, might be much more valuable than a pure bred horse.
Bill reported.
On the motion for the third reading of the Bill.


David Henderson: I suppose we might as well complete the farce and allow the Bill to go through.
Bill read the third time and passed.



BOUNTY ON CRUDE PETROLEUM.

[Stage Direction]
House went into committee to consider the following proposed resolutions :
1.	Resolved, that it is expedient to provide that there shall be paid out of the Consolidated Revenue Fund a bounty of one and one-half cents per gallon on all crude petroleum produced from wells in Canada on and after the 8th day of June, 1904, and on crude petroleum produced from wells in Canada and held in storage tanks or other storage receptacles on that date.
2.	Resolved, that the Minister of Trade and Commerce may, subject to the approval of the Governor in Council, make such regulations as he deems necessary respecting the payment of the said bounties.
William Stevens Fielding: This matter was fully >
discussed by me in the budget speech, and I
do not deem it necessary to add any further explanation at present.


James Clancy: I had hoped the Minister of Finance would have profited by the expert lence which he must have obtained since he introduced this measure on the (ith of June last. Without meaning to be offensive to the hon. gentleman (Mr. Fielding), I must say that the conclusion has been forced upon me, as well as upon others, that the hon. gentleman did not know what he was doing when he dealt with this measure in quite as summary a manner as he now proposes. The Finance Minister and his political friends have for many years endeavoured to exercise a sort of destroying influence on the oil industry. It has been a constant subject of attack by them. For years the principal part of the Liberal campaign literature has been devoted to an attack on the coal oil industry. Now, the time has come when the Minister of Finance feels himself, not so much in the interest of the country as for other reasons, to yield to the pressure brought upon him from, I believe, not very reliable sources. There is no doubt that the coal oil industry is important, and there is no doubt that its conditions have changed of recent years. I am convinced that there should be a readjustment of the duties on the oil industry, but I am not convinced that the measure now proposed by the government remedies the difficulty. If we wish to deal with the oil industry in the same way, and give it the same protection as we give to other industries, it is common business sense that we should in the first place encourage production of crude oil in Canada. We should also protect and encourage the refining interests of this country, so that the people of Canada would be enabled to use oil refined in Canada, and the manufacture of which had given work to Canadians. I hope that we all assent to that doctrine. There is another phase of the question which the Minister of Finance seems to have lost sight of, and that is, that we should fairly safeguard the revenue. Another consideration, which I admit is a very important one, is, that the consumers should have refined oil at a fair price considering ail the circumstances.
I do not know what information the hon. gentleman had with regard to the first proposition, but it is known by the whole country that the crude interest is a very important one, in fact of greater importance than the refining interests are in this country. The number of men and the capital employed in the producing interest is very large in comparison with the refining interest. We have two refineries in Canada-one at Petrolia, a very good refinery, and another at Sarnia *which is a very large and important industry. I would give my most cordial support to any fair measure-and I wish the words ' fair measure ' to be marked,-that would

This shows a net loss to the revenue

not considering the by-products, upon which tne hon. gentleman has made a reduction of the tariff-of $858,628. In other words if the contention of hon. gentlemen opposite be the correct one, namely that the measure of protection enhances the cost to the extent of the protection, then we will have a cost to the country for protection and bounty combined of $830,165 and we will have a loss on the other hand of $858,682 in revenue alone.
Let us take the proposal of the imperial people and see what it will cost this country. Mind you, Sir, I do not assent to the proposition that the protection you give an

industry enhances the cost of the products to that extent, but that is the contention of the Minister of Trade and Commerce and the Minister of Finance.
I have stated that the cost of protection and the cost of the bounty amount altogether to about 8830,000. Putting it on the same basis, let us turn to the proposal the Imperial or Standard made to the minister. On refined oil, a duty of five cents a gallon, taking the same number of gallons, the cost of protection upon that to the people would be 8430,794. That they would pay, according to these hon. gentlemen, extra by reason of having the protection of five cents per gallon. That is what they would pay on the oil refined from Canadian crude oil. Then take the American oil. Last year we imported American refined oil to the extent of 14,479,170 gallons. Upon that the people paid $<23,945, every dollar of which went into the treasury according to the hon. gentleman's contention, because that was not refined in Canada. But if the proposition of the head of' the Standard Company had been followed, what would have been the result ? It would have been that that industry would at once have been transferred to Canada. This 14,000,000 gallons of refined oil would have been refined in Sarnia and no refined oil would be imported into Canada. I do not believe there will be one gallon of refined oil imported into Canada in the future, because, with the equipment of tank vessels and cars and outfit which the Standard Company can control, they will refine every gallon of that oil in Canada. What would follow ? We would require to import crude oil for the purpose of refining to the extent of 28,958,352 gallons. We import some crude oil for gas and fuel and other purposes amounting to 2,143,888 gallons. The whole amount of crude oil required to be imported into Canada next year, in order that all the oil may be refined in Canada for Canadians, would amount to 31,102,240 gallons, which at 2 cents a gallon would yield a revenue of $622,044. Deducting this from the $723,945, we have a balance of $101,901, diminishing our revenue to that extent. Here is the statement tabulated :



COST TO COUNTRY.

[Stage Direction]
Oil refined from Canadian crude, 8,615,892 gallons-5 cents per gallon.. .$430,794 Oil refined from American crude,
14,479,176 gallons-5 cents....$723,945
Less duty paid' on American crude-
Gallons.
For refining purposes.. ..28,958,352 For gas, fuel and other purposes	 2,143,888
31,102,240-2 cents.

[Stage Direction]
President of the Producers' Association.
William Stevens Fielding: Has the hon. gentleman any telegram addressed to the member for West Lamb ton ?


Mr. ARMSTRONG.: I would suppose that would naturally affect the member for West Lambton. He certainly showed himself in a very strange position when the producers of crude oil were begging of him to go before the Finance Minister with a deputation asking for an increase in the bounties on crude oil.


William Stevens Fielding: They chose a very strange way of inviting him. '


Mr. T. G. JOHNSTON.: I was never asked by anybody except by the hon. gentleman himself as a result of that telegram.


Joseph Elijah Armstrong: The hon. Minister of Finance has spoken of the hon. member for West Lambton as being satisfied with the present state of affairs. He has three townships in his riding in which the farmers are distinctly interested in this question and are anxious that the bounty should be raised, and I would say that if the hon. member for West Lambton would go into those three townships he would realize that the people are far from being satisfied with the present state of affairs. The statement has been made not only today, but on previous occasions that the election in East Lambton was run with reference to the oil question. I merely want to say, without boasting, that I have only one township in my constituency that has any producing oil wells in it. I might also state that I had a majority in every township in the riding, that I had a majority in every municipality in the riding but one, in which we broke even, and that I had a majority in every polling division but sixteen out of sixty-five, so that I think it is unfair for the hon. Minister of Finance to state that it was the oil question that gave me the honour of representing that riding.
I had the privilege some weeks ago of laying before the House a number of figures in reference to the oil question. These figures have not been refuted and I might quote them again to-night and defy any refutation of them. I tried to show the position that the producers were in at that date and the remarks which I made at that time in reference to the producers, consumers and refiners of this country have practically come true within the last few weeks. On the 6th of June we were receiving for crude oil in Canada $2.09 per barrel and on the same date Ohio crude was being sold for SI.08 a barrel. Add to that $1.08 a barrel 23 cents, the cost of


Joseph Elijah Armstrong: bringing the oil to Sarnia, 13 cents duty and add to that 52 cents bounty and it makes $1.83. Take $1.83 from $2.09 and it leaves 26 cents in favour of the Ohio crude delivered at Samia for a better class of crude oil worth more to the refinery. Now, that is 26 cents of a difference. Then you must take into consideration the fact that the oil has to be gathered in the Petrolia district and delivered in Sarnia. Before you can purchase a receipt for crude oil at Petrolia you have to pay 3 cents a barrel for it. The oil, after it has been gathered, has to be sent seventeen miles through a pipe line at a cost of 10 cents per barrel. Then, you must remember that the extra value of Ohio crude oil is 35 cents per barrel. Thirty-five plus ten makes 45 cents and the extra value of Ohio crude brings the difference up to 80 cents per barrel in favour of Ohio crude as against our own Canadian crude. I would like to present a still further argument in order to demonstrate to the House why it is that the Canadian refiner prefers Ohio oil, and to show why the independent refiners have ceased to purchase Canadian crude oil. I have not gathered these figures entirely from them, but this is an estimate that is made up as a result of the practical operation of the industry. First we wilTtake the example of 100 gallons of Canadian 31 gravity crude oil at ,$lj.57 a barrel on July 18, 1904, and the result is as follows :



CANADIAN OIL.

[Stage Direction]
100 gallons 31 gravity oil, crude, $1.51, July ,	18th, 19h4.
Naphtha, 4 gallons, price in bulk, 101 cents
per gallon	 $0	45
Refined oil, 45 gallons, average price, 83
cents per gallon	3	94
Gas and fuel oil, 25 gallons, price 4 cents
per gallon	1	00
Lubricating oil, 12 gallons, price 10 cents
per gallon	1	20
Paraffin wax, 2 per cent or 16 pounds,
price 41 cents per pound	
0	72Coke, 5 per cent per ton	0	14
Loss, 7 per cent.
100	$7	45
The price of crude is $1.51, for collecting, 3 cents, making $1.54 per barrel, $1.54 per barrel is 4 4-10 cents per gallon, 100 gallons at 4 4-10 cents per gallon amounts to $4.40. The cost of running the oil through the stills is 75 cents per barrel, or 2 15-100 cents per gallon, or $2.15 per 100 gallons. The difference between $6.55 and $7.45 leaves 99 cents per 100 gallons for all expense in maintaining a refinery with all appliances. For instance, the life of a st'ill is 34 runs, piping, &c. It is estimated that wear and tear, interest and cost of management, &c., represents 75 cents per 100 gallons, which leaves a net profit to the refiner of 15 cents per 100 gallons when using Canadian oil.

Now take American Ohio crude oil on the same basis, 100 gallons 38 gravity, and it works out in this way :
Naphtha, 12 gallons, price in bulk, 10|
cents	per	gallon	SI	Si
Hefined oil, 50 gallons, price in hulk, 81
cents	per	gallon	4	38
Gas and fuel oil, 161 gallons, price in
hulk, 4 cents per gallon	0 65
Lubricating oil, 12 gallons, price in bulk,
10 cents per gallon	1 20
Paraffin wax, 11 per cent, or 14 pounds at
at 4J cents per pound	0 63
Coke, 3	per	cent	0	08Loss, 5	per	cent.
100 $8 20
The price of Ohio crude is $1 per barrel. This oil can be delivered in Petrolia for 40 cents per barrel. That equals $1.40 or 4 cents per gallon, which in turn means $1- per 100 gallons.
The cost of running the oil through the stills is 80 cents per barrel, which equals 2 20-100 cents per gallon, or $2.29 per 100 gallons, which makes the cost to the refiner $6.29 per 100 gallons, leaving a difference between the cost of $6.29, and the price received for same $8.20, when sold of $1.91.
Take away the 75 cents cost of management and wear and tear and it leaves $1.16 clear profit on 100 gallons, or $1.01 more profit to the local independent refinery in refining 100 gallons of American crude than in refining 100 gallons of Canadian crude, which only gives 15 cents profit on 100 gallons.
Can you not readily see that the refiner is more anxious to use American crude and can you not realize why the independent refiner situated in Petrolia has ceased to purchase Canadian crude and is making arrangements to bring in American crude whereby he can make more money, thus placing our oil at a disadvantage.
I am justified in urging upon the Finance Minister that he should grant to the producers of crude oil in Canada a greater bounty than he proposes. The people of Essex, Kent, Lambton, and Elgin counties are deeply interested in this matter ; every city, town, village and hamlet has its interests bound up in the production of .crude oil ; every farmer throughout these counties is anxious to have his farm tested and the district throughout which crude oil is being found is enlarging from year to year in these counties. I am voicing the sentiments of tile producers when I say that they believe they will be placed in an unfair position unless this bounty is increased. Surely something can be done for them. I cannot believe that the government will leave the producers of Canadian crude oil in the hands of this corporation, and remove them from the position which they have heretofore occupied in which the government of Canada to a certain extent was able
to regulate the price of oil. Over $700,000 has been spent in the development of the oil industry throughout that western peninsula, and when you realize this you will see the importance of the industry. Let me call the attention of the Finance Minister to the fact that when he was taking into consideration the distances over which oil is carried from Lima, Ohio, to Sarnia refinery, the estimate of 54 cents per barrel was altogether too high. According to the Unitfed States table of distances, the distance from Lima, Ohio to Toledo is seventy-one miles, from Toledo to Port Huron 122 miles, or in all 193 miles. The distance from Lima, Ohio, to Cleveland, and thence on to Sarnia is 379 miles, and the extra distance over which they were carrying the oil for 54 cents is 186 miles. You can therefore readily see why the Standard refinery is stating that it will cost 54 cents instead of the 23 cents which I am informed on reliable authority it can be delivered for. We must also consider the o'utput of the Texas field. Within this last six months they have shipped over 10,000,000 barrels of oil from the Texas field and this is bound to have an effect on the market. The Port Huron ' Times ' says :
Port Huron men, who are interested in oil business in Ohio, are considerably worried. They have a number of .wells which are being pumped, but the price ot oil has dropped from $1.31 to 95 cents a barrel. This price takes all the profit out of the business.
A correspondent in Bakersfield, Cal., writes us that things are exceedingly dull there, owing to the fact that the Standard Oil Company has the producers under its thumb. He says they are kept guessing all the time, and as the price is about 15 cents per barrel, the game must be to squeeze them all out and buy up the field cheap. He thinks Canadians should fight the Standard so long as they have an ounce of strength in their bodies.
There is no doubt that crude oil has been reduced in price. The Standard refinery was formerly obliged to pay $1.65 per barrel and on the 18th of this month they were only paying $1.51, and if they are to carry it along with the Ohio crude oil we may expect a further drop of 5 cents. I beg to present to the Finance Minister an estimate of the duty paid by oil producers and refiners of this country per annum. For pump tubing, pipe line tubing, gas and lead pipe, they pay a duty of $25,000 *a year ; for all kinds of coal used in developing, producing and refining, they pay a duty of $10,000 a year, and for steel, iron, wire rope, lathes, tools, shafting, and oil well supplies they pay a duty of $5,000 or in all $40,000 a year. I wish to call the attention of the government to some of the profits the gas companies and manufacturers are receiving throughout the country. It has been ably alluded to by the hon. member for Bothwell (Mr. Clancy) but he omitted to mention that last year the Consumers Gas Company of
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Toronto was paying $2.13 a barrel for their oil, while this year they are purchasing the same oil for $1.40 a barrel. In view of the fact that they hav>e made a contract for 55,000 barrels of oil this year, you can readily see that the Consumers Gas Company has put into their pockets $40,000 on this account alone. And does the government suppose that the Consumers Gas Company of Toronto give the citizens cheaper gas ? Not at all. That money is taken out of the pockets of the producers of crude oil and put into the pockets of the gas company. It is the same with manufacturers and railroad companies throughout the country. I trust that the government will not treat this industry as they have treated the woollen industry, which on account of the low rate of duty established by the preference has been practically wiped out of existence. If outsiders once get control of the Canadian oil market it will be a very difficult thing to get it back into the hands of Canadians again. I am firmly convinced that the producers should receive more bounty from the government. The Minister of Finance stated that his present policy would result in a saving to the country of $390,000 a year. If you give to the producers even half a cent a gallon more bounty it will mean $85,000 which will benefit them to a very great extent, and I sincerely hope that the Minister of Finance will see his way clear to do that. I realize that the House is anxious to finish the business of the session, and I shall conclude these hasty remarks with an appeal to the government to do justice to the crude oil producers of Canada. The Minister of Finance would be doing no injustice to the people of Canada, and he would be doing a great act of justice to the oil producers if he increased this bounty.
Mr. JABEL ROBINSON.: Within the last few years considerable money has been spent in boring for crude oil in the county I represent. A certain measure of success has been achieved, but nevertheless it costs a great deal of money to carry on these operations. The point I wish to make is that whilst the other industries are protected to a large extent, and some of them to a very large extent, the farmers who have oil lands have just as much right to be protected as the people engaged in any other industry. I am satisfied that unless some assistance is given to the oil men such as you give to other industries the oil industry will be very much injured and we do not wish to injure any industry in Canada. The farmers, of course, are the great consumers of coal oil. We know that in towns and cities electric light and gas is the principal light, except sunlight, but the farmers must use coal oil all the time and it is a bill of expense to him. so that he is anxious to get his coal oil as cheaply as he possibly can. If we encourage the production of coal oil Mr. ARMSTRONG.
in our own country we will be able to get it cheaper than if we import it. and we want to refine that oil in our own country. Consequently I think the coal oil industry should receive the same assistance as all the other industries.


William Stevens Fielding: I listened with interest to the somewhat protracted speech of my hon. friend from Bothwell (Mr. Clancy) and I confess I had some difficulty in understanding what he was driving at. The nearest approach I could make to it is this, that my hon. friend was very anxious to have a grievance in Bothwell or in West Lamb-ton on the oil question and he finds himself deprived of his grievance. He finds that be position of the oil question in that part of the country is eminently satisfactory, that he has* nothing to grumble at, and so he takes refuge in grumbling at the government. There are many things in connection with this business that he cannot understand. He cannot for the life of him understand why the government did not allow this oil question to be fixed just in the way the representatives of the Standard Oil Company asked to have it fixed. I can say to my hon. friend that, whatever may have been the practice in former days, it is not the practice of this government to allow the representative of any great industry to come here and determine just what shall be the policy of the government. After the occasional observations of hon. gentlemen on that side, after the observation made even to-day by one hon. member on that side, that this oil business has been regulated at the will of the Standard Oil Company, it is a strange proceeding for my hon. friend from Bothwell (Mr. Clancy) to get up and complain that we refused to follow the dictation of the representative of the Standard Oil Company. The Standard Oil man knew all about it while the Minister of Finance did not know much about it, and why did the Minister of Finance not do just what the Standard Oil representative wished ? I will again tell my hon. friend that that is not the policy of this government. Much as we may respect all representatives of great industries, we cannot go so far as to say that we are prepared to allow any of them to come here and dictate the policy of the government. Then my hon. friend said : Why did we not adopt the policy advocated by this, that or the other section of the people connected with the oil industry ? There were the citizens of Sarnia, a beautiful city and excellent citizens it is true. Why not take their view ? Then there was the Board of Trade of Sarnia and the oil producers of Petrolia who had sent in another petition. It is true they did not all say the same thing, but we should have been governed by what they said and not by what anybody else said. There was one curious fact that the hon. gentleman did not refer to, and I believe he cannot

quite understand that, namely that the town of Sarnia and the great county of Lambton, East and West, with all its large industries, important as they are, after all do not comprise the whole Dominion. There are probably five millions of people in Canada, or that proportion of the five millions who have come to the years of maturity, who have opinions on the oil question, and the opinions of these people, finding expression through bon. gentlemen on this side and hon. gentlemen opposite ought to be considered by this government as well as the opinions of the Standard Oil Company or others particularly interested. My hon. friend seems unable to understand that. He is anxious to know in whose interest this policy was adopted. It was not adopted in the interest of the Standard Oil Company. We refused to do what Mr. Chamberlain asked. It was not adopted at the request of the Sarnia Board of Trade. It was not adopted at the request of the producers at Petrolia. It does not seem to have occurred to the hon. gentleman that perhaps it was adopted in the interests of the consumers of oil in the Dominion of Canada. When my hon. friend finds it impossible to understand that I am afraid his case in hopeless. Then he said it was a. dreadful thing that nobody knew that this was going to be done. He looks across the House, (points his finger at the hon. member for West Lambton and says : ' Sir, did you know that that was going to be done 1 If I do not get an answer in the affirmative, I will assume that you were ignored by this government.' That is the method of argument he pursues. I am here to confess that the hon. member for West Lambton (Mr. .Johnston) did not know that this was going to be done. I am here to confess that no member of this House, outside of the government, knew that this thing was going to be done. 1 am here to tell my hon. friend that in the preparation of tariff changes, no man outside of the government knows what change is to be undertaken, and therefore, when my hon. friend challenges the lion.' member for West Lambton (Mr. Johnston) to tell him whether he knew that this change was contemplated he is only paying a Compliment to this government, which but does its duty when it keeps its secrets with respect to the tariff changes until the moment comes for announcing them in the Budget speech. Thus I think that on these several points my hon. friend has no cause of complaint. He says we are destroying the industry, that it has been the policy of hon. gentlemen here to destroy the industry. The oil question has been a much discussed one for many years on both sides of the House. My hon. friend will do no injustice to the Liberals if he says that as a rule they have complained about the oil duty and desired that there should be a reduction; but if he wishes to be a faithful historian he will say that from that side
of the House year after year there came propositions to abolish or reduce the duty on oil. An hon. member from the Eastern Townships came here year after year and proposed a resolution in favour of free coal oil. The late member for West Assiniboia took a similar course and I think on one occasion he divided the committee on a motion in favour of free coal oil. My hon. friend (Mr. Clancy) if he wishes to be. a faithful historian must tell all the truth and state that from the ranks of the Conservative party, as well as from this side of the House, have come attacks upon the coal oil duties and he must not for a moment assume that there is any foundation for the statement he makes, that this government have been destroying or attempting to destroy the coal oil industry. Sir, we desired a reduction of the duty on coal oil. We gave a reduction in IS97 and we were waiting for a favourable moment to grant a further reduction in the interests of the people. I think these are the only points in the hon. gentleman's speech that call for notice.
As to the general statement that we are destroying the industry, a line in which the hon. member (Mr. Clancy) was followed up by the hon. member for East Lambton (Mr. Armstrong) in his briefer speech, I wanted to give a few figures furnished to me in all good faith. If they are not right I will be glad to be corrected. It is not necessary to complicate the question, as both hon. gentlemen have done, by confusing statements about the cost of transportation, pipe lines, storage, &c. All of these things simply confuse the question. Let me put it in what I think is a very simple form.
On June 7, crude oil was quoted at Petrolia at $2.06 per barrel.
On the same day crude oil at North Lima, Ohio, was quoted at $1.11.
The North Lima oil affords a standard of comparison as it compares generally with our Canadian oil. Thus we see that at that time, under the former condition of affairs, before our tariff change took effect, Petrolia oil was worth 95 cents per barrel above the standard price of North Lima oil.
That was the condition when the Budget speech was delivered. Now, I find from the very latest information-and my figures are confirmed by the hon. member for East Lambton (Mr. Armstrong)-that Petrolia oil is selling at $1.51 per barrel and adding the bounty of 521 cents, that makes the value of Petrolia oil to-day $2,034 per barrel. On the other hand the value of North Lima oil- *because there has been a general falling off in the market since-to-day is $1 per barrel. Deduct that from $2,034, and we find that whereas before the Budget speech was delivered Petrolia oil was worth 95 cents per barrel more than the Lima standard, Petrolia is bringing to-day $1,031 per barrel more than the standard price of oil

at Lima. There is no use introducing conflicting and confusing statements about the cost of transportation. I take the price which the producer receives at Petrolia to-day and the price he received before. If there is a difference we have to look into the cause. It might be that to-day he is receiving a higher price because of the fluctuations of the market, and there have been some fluctuations. But what do we tind ? We find that the Lima oil has fallen to a lower figure comparatively than the I'etrolia. Instead of injuring the producing interests of Petrolia, the men who are producing in Petrolia to-day are receiving relatively a higher price per barrel than they did before the change. In the face of these figures how absurd it is for hon. gentlemen to talk about our destroying the oil industry. The government have shown a desire to deal fairly with this industry as with all others. We have looked about for a way to do it. We wanted to give that great body of the people, whose interests the hon. member for Bothwell (Mr. Clancy) seemed utterly unable to understand-we wanted to give the consumers cheap oil, and we have done that by reducing the duty on the refined article. We wanted to give the oil industry a fair chance to succeed, and we have endeavoured to make good any loss they would suffer by a bounty. And we believe the net result is to leave that industry comparatively in the same position as before. If there is a difference at all, it Is in a better position than before the change. Our policy in the' matter of oil has two points. With one we are dealing now, namely the bounty. If that is not a good policy, my hon. friends have 6imply to record their votes against it. They will not do that. They will say they think the bounty ought to be more. Well, I would not expect these gentlemen coming from the oil regions to say they would not be glad to have another half cent. I think they would be glad to have another cent. Eacn of us representing a constituency in which there is a large interest would like to do the best we can for it. We all are a little biassed in such cases. What the government has to do is to hold the scales evenly and do what is best, not only to the particular constituency, but the public at large. That is what we have attempted to do.
There is another side to the question with which we are not dealing at this moment, but with which the hon. member for Bothwell has dealt at great length, and that is the duty on refined oil. He attacks us for having reduced the duty even th'ough we give a bounty on the crude. He wants the duty on refined oil kept up to its former point.
I do the hon. gentleman no injustice when I say that that was the sum tottil of his argument. Well, I invite my hon. friend at the first right moment-and that moment will come later-to put himself and his Mr. FIELDING.
friends on record on that point. I noticed that when he advocated that policy and when he condemned us for having reduced the duty on refined oil, there was a good deal of applause from his friends. But mere ' hears, hears ' and vain words will not do. If the policy of reducing the duty on the common coal oil of the people is a bad policy, I want to warn my hon. friend that if he expects to make a record he must put a motion before the House at the proper moment and find out whether these hon. gentlemen who received his sentiments with applause are prepared to go on record and vote against the policy this government have adopted, a policy which does justice to the refiners and the producers and at the same time to the great masses of the consuming public.


James Clancy: Just one or two minutes. If I do not attempt to answer all that the hon. gentleman has said, he will understand that it is not by reason of any discourtesy to himself. He says I am unable to understand why the government have taken the position they have. I confess that I am stil! in the dark after the hon. gentleman has made his speech.


Sir WILFRID LAURIER.: Hear, hear.


James Clancy: I hear the approval of the First Minister, and I assume it is in endor-sation of my statement that the Finance Minister rose and made a speech and then sat down and left the country in the dark.


Wilfrid Laurier: My hon. friend, not the country.


James Clancy: He says that the government did not obey the behests of the Standard Oil Company, Does he mean to say that the hon. gentleman for West Lambton (Mr. T. G. Johnston) was the mere mouthpiece of the Oil Company ?


William Stevens Fielding: I did not say that.


James Clancy: That is what it meant.


William Stevens Fielding: The hon. gentleman quoted the name of the representative of tlie Standard Oil Company and asked why we did not adopt the policy which Mr. Chamberlain put before us.


James Clancy: I repeat that, and I add just what I said a moment ago. Mr. Chamberlain saw fit to come to Canada in the Standard Oil interests and that he had a perfect right to do.


William Stevens Fielding: Surely.


James Clancy: He is not obliged to consider the interests of the people of Canada. His business is solely to consider the interests of the company with which he is associated and of which he is so able a manager. He came to the people of Sarnia and he said to them : if you will succeed in getting the government to reduce the duty, the duty from 5 to 2 cents on crude oil-and the

duty Is prohibitive now, because there is not one gallon brought into Canada for refining purposes-just so soon as you succeed, we will run up a splendid refinery in yotfr town and give employment to 400 or 500 men. He came as a business man to the town of Sarnia. A public meeting was called and that view was put before the people. The hon. member for West Lambton was present and a resolution was passed adopting the views of Mr. Chamberlain. Why, because the people were glad to have a great industry established there. They were wise in their day and generation. Mr. Chamberlain's motive was to improve the condition of the Standard Oil Company. The object of the people of Sarnia was to improve their condition and they endorsed Mr. Chamberlain's proposal by a resolution, followed up by a petition from the Board of Trade. Those requests were put in the hands of my hon, friend from West Lambton to present to the government. He quite understood, as Mr. Chamberlain did, that that interest would be brought to Canada and the hon. minister has done scant justice to the hon. member for West Lambton. I am sorry it has fallen to my lot to have to defend the hon. member as against the hon. minister.


William Stevens Fielding: It is unfortunate for him.


James Clancy: Let this country understand what the hon gentleman said, that the hon. member for West Lambton knew nothing about what the government were going to do.


William Stevens Fielding: That is it.


James Clancy: The papers supporting that hon. gentleman might well say it was a surprise. Nobody looked for anything of that kind. The hon. gentleman, in spite of his efforts, though he was going to show a reduction in favour of the consumer, sat down without showing what that reduction was. Giving him every credit for it-for the sake of argument, though as I have said it never could be realized in practice-the saving would amount to the mere fraction of 8219,000, and he proposes to go about and collect bounties from the people of 8250,000 to keep the producers of crude oil alive. But the hon. gentleman was discreet enough to not touch the question of revenue. His attention was called to the fact that there was a greater loss of revenue through this single change of duty than was caused by his general revision of the tariff in 1897. Was it not a most extraordinary thing for the Finance Minister who had carefully calculated the reduction through various changes made in 1897 to completely ignore the reduction caused by this change though the loss of revenue on this one item was greater than on the changes made in 1897 ? Now, with regard to what the hon. gentleman said as to attacks on the coal oil interest by hon. gentlemen on this side. The cases cited by him are true. But how did they arise Was it an expression of the doctrines of the Conservative party ? No ; it was because hon. gentlemen opposite had raised the cry in the west and in the east against this coal oil interest, and so had educated the people in false opinions with regard to this great industry, and even hon. gentlemen on this side were led away by their false doctrine. To say that hon. gentlemen on this side led in this agitation in the coal oil industry is merely the accusation that the wolf made against the lamb. Though the lamb drank near the outlet of the stream when the wolf was higher up towards its source the wolf accused the lamb of fouling the course of the stream. But the source of the stream was poisoned by hon. gentlemen opposite.


William Stevens Fielding: The hon. gentleman's (Mr. Clancy's) friends seem to have had more confidence in us than they had in him.


James Clancy: And this is not by any means the only case of that kind. One thing more I desire to call the hon. gentleman's attention to-a matter concerning which I spoke before but on which he did not think it well to attempt a reply. I pointed out that this industry had not been a burden upon the people. I showed that two other industries the protection to which had not been taken away, cost the people far more, according to the hon. gentleman's own method of calculation, than this coal oil industry. I showed that while the coal oil industry cost only 21 cents per head of the population, the coal industry of the hon. gentleman's own province cost 86 cents per head, while the sugar industry cost 87 cents per head. I did not ask the hon. gentleman to reduce the protection of these industries, but I asked him to explain why he singled out this coal oil industry for destruction. Why should he seek in this way to make a cheap fuel for the gas-makers and manufacturers of this country ? Both these industries have a right to live and to be reasonably protected, but they have no right to demand the destruction of another industry. The hon. gentleman sat down without explaining why this coal oil industry was singled out to be sacrificed. I am willing that the people should be left to judge between the hon. gentle-'man's position and mine. The hon. gentleman lias played a false part; he has ignored the advice of those who knew best. If any man understood his business, it was Mr. Chamberlain. He proposed to come to this country and establish a great industry-and it is a great industry and a great benefit to the town of Sarnia


William Stevens Fielding: Is it not running to-1 day ?


James Clancy: 
Hon.  W. S.@: FIELDING (Minister of Finance) moved for leave to introduce Bill (No. 167) to provide for the payment of a bounty on crude petroleum of Canadian wells, founded on the resolution.


[Stage Direction]
Motion agreed to, and Bill read the first and second time, considered in committee, *reported, read the third time and passed.

Rt.   H@: I would ask the House at this stage of business to interrupt the regular course of proceedings in order to perform a duty which will be at once, I am sure, the expression of a regret and a pleasure. The House will be reminded with sincere regret that the term of His Excellency Lord Minto as Governor General of Canada is about to be concluded. His Excellency will prorogue this House in a few days, and when parliament again meets in a few months hence, the term of His Excellency will have (expired, and he will be no longer among us. At the same time I am sure it will be a pleasure for the House to join with another branch of parliament in a farewell address to His Excellency, in which we will Mr. CLANCY.
endeavour to convey to him the appreciation, not only of parliament, but of the whole people of 'Canada, of the manner in which he has discharged the duties with which he was entrusted by Her Majesty Queen Victoria. Canada has been really very fortunate in all those who have, since confederation, exercised the functions which pertain to royalty in this the first colony of the empire. The Earl of Minto will take fitting place as the last, so far, in the line of illustrious statesmen who from time to time have exercised these duties. His name will come fittingly after the names of Dufferin, Lome, Lansdowne, Stanley and Aberdeen. It has been my privilege especially to come in close contact with His Excellency, it has been my privilege as first servant of the Crown in this country, and I bear this testimony most cheerfully, that above all things he is a man most unflinching in the performance of his duty. Nothing can move him from what he conceives to be right. In all things he has been a model of a constitutional governor, maintaining at all times the dignity of the Crown, and never forgetting the rights of the people. He was not satisfied only to perform his duties in a merely perfunctory manner, but he took the Double to go out and to come in close con tact with the people. He visited different sections of the country, he was appreciated by all classes ; and I am not speaking too strongly when I say that, if it was possible to do so, he lias drawn the Crown even nearer to the hearts of the people than it was before.
Neither should we upon such an occasion as this forget Her Excellency the Countess of . Minto. The Countess of Minto has brought to Government House all the virtues which adorned the court of the late Queen Victoria, and which are now maintained so worthily by Her Majesty Queen Alexandra. It is true that all these virtues have ever been conspicuous at Government House, but it is only true to say also that in the Countess of Minto, in the present incumbent of that position, those virtues shine with a special grace and charm. Her Excellency did not confine herself to fulfilling the duties of the social side of her high station, but she went amongst the people and endeavoured to alleviate suffering and to bring the comforts of life and home to those who were homeless and comfortless. The fact that she has established the institution of cottage hospitals, which have been scattered all over the country, is in itself enough to endear her memory forever to the Canadian people. I beg therefore to move, Mr. Speaker, seconded by the leader of the opposition, the following address :
To His Excellency the Rt. Hon. Sir Gilbert John Elliot, Earl of Minto and Viscount Melgund, of Melgund, county of Forfar, in the Peerage of the United Kingdom, Baron Minto of Minto, county of Roxburgh, in the Peerage of Great Britain, one of His Majesty's Most Honourable Privy Council,

Baronet of Nova Scotia, Knight Grand Cross of the Most Distinguished Order of St. Michael and St. George, &e., &c., Governor General of Canada.
May it please Your Excellency :
We, His Majesty's dutiful and loyal subjects, the Commons of Canada in parliament assembled, desire to express our sincere regret at the approaching termination of your official connection with this1 country.
Your Excellency will bear from our shores our high respect and esteem.
It must be a gratification to your Excellency to reflect that the period of your administration of the affairs of the Dominion has been one of marked prosperity on every hand, during which the development of Canada has increased at a rate unexampled in its previous history.
We are sensible of the fact that your Excellency has watched our progress with sympathetic interest, and has omitted no opportunity of familiarizing yourself with the people and resources of the Dominion. While we cannot expect to enjoy in the same exclusive degree as in the past, the advantage of your Excellency's personal interest in our affairs, we venture to hope that we may continue to possess in the Earl of Minto a friend and advocate in the imperial parliament and in the councils of the Crown.
We beg that when you deliver up to the King the charge committed to your hands by our late revered Sovereign Lady Queen Victoria, you will not fail to assure His Majesty of the unalterable loyalty 'and devotion of the people of Canada to the throne, and their abiding affection for the motherland.
We feel that any expression of regret at your Excellency's departure would be imperfect that failed to include the gracious lady who for the past six years has so acceptably fulfilled the duties devolving upon the wife of the Governor General of Canada, and whose kindly interest in every movement having for its object the alleviation of suffering and the brightening of the lives of the poor, has endeared her Excellency to all classes of the community.
In bidding farewell to your Excellency and the Countess of Minto, we desire tb assure you that you take with you our warmest wishes for your future welfare and happiness.


Robert Laird Borden: The very eloquent words of the Prime Minister in moving this address which is to be presented to His Excellency, and the very appropriate words of the address itself, leave little for me to add in seconding it. However, I may say that I have very great pleasure in expressing my hearty concurrence in all that the Prime Minister has said, and, on behalf of those who sit to the left of the Speaker, in expressing our esteem and respect for His Excellency, as well as for the Countess of Minto. Lord Minto has discharged his duties with great ability and with great tact. Although the Governor General of Canada always acts upon the advice of his responsible ministers, nevertheless there are undoubtedly occasions from time to time when it is necessary that judgment and tact should be exercised. More than this, I think we may say that Lord Minto has been 269
one of ourselves during the whole time in which he has filled the post of Governor General.	.
He has entered into the aspirations of the Canadian people, he has appreciated our country as we appreciate it ourselves, he. has learned to understand it, he has learned to know what its possibilities are in the future, and he has not been slow to express that appreciation of this country, of its people and of its resources which we are glad to observe in those who come among us to occupy high positions. Not only has he done this but he has entered into our national life by taking an interest in charitable work of various kinds. I refer more particularly at the moment to his very great earnestness in connection with the work of endeavouring to stamp out that dread disease of consumption, as it is commonly called, which has wrought so much evil in this country. Lord Minto has, more than that, been a thorough sportsman in every sense of the term. He has entered into our national games and sports. He has taken an interest in the people of this country and in all that interests them and in that way he has very much endeared himself to them. I remember very well hearing him speak, I think in the month of January last, at a banquet of the Canadian Club in this city and I was very much struck with one observation that he made, and that was that if he were a Canadian living in this country he would he shouting for Canada as loudly as any one of us. That shows the spirit in which he regarded this country and its people. But, I recollect some very eloquent words which he used then and which it is fitting that I should quote on this occasion :	'
But we Canadians, or Scotchmen, or from whatever nationality we spring, let us never forget that we are members of one clan- England, Scotland, Ireland, Canada, Australia, New Zealand, South Africa, the Indian empire and all the dependencies-owing a clan fealty to one chief-our King-working out together the greatest history the world has ever known-the history of the British empire.
I also concur in every way in the very fitting words that the right lion. Prime Minister has used in regard to the Countess of Minto. She has presided at Government House, with wonderful charm and tact. Not only has she done so but as her husband has also, she has been one of the people interesting herself in the every day life of Canadians and taking a very prominent part in charitable work which has endeared her very much to the people of this country. Let me merely say in conclusion that His Excellency the Governor General and the Countess of Minto will leave this country with every good wish from all Canadians and they will bear with them, I am sure, not only the respect and esteem but the affection of the people of this country.


Mr. DEPUTY SPEAKER.: It would be fitting that the House should carry this motion by a standing vote.


[Stage Direction]
Motion agreed to, all members present rising to their feet.
Right hon. Sir WILFRID LAURIER (Prime Minister) moved, seconded by Mr. R. L. Borden :
That a message be sent to the Senate informing their honours that this House has passed an address to. His Excellency the Governor General on the occasion of the approaching termination of His Excellency's official connection with this country and request that their honours unite with this House in said address.	S	**
Motion agreed to.

['I have not seen the minister for some time and cannot answer as to the authority be had.']
Hon.  W. S.@: FIELDING (Minister of Finance) moved that the House go into Committee of Supply.


Mr. E. F. CLARKE (West Toronto).: Mr. Speaker, before you leave the chair, I would like to renew a question that I asked yesterday in the absence of the hon. Minister of Militia and Defence (Sir Frederick Borden) and which the right hon. Prime Minister (Sir Wilfrid Laurier) suggested I should ask to-day, as to why the newly established cavalry regiments in the service consist of five squadrons, while the old cavalry organizations consist of only four squadrons ; and if it is the intention of the department to increase the number of squadrons in the old established cavalry regiments ?


Hon.  W. S.@: My hon. friend (Mr. Clarke) told me a day or two ago that he would ask this question and I made some inquiry in the department in order that I might be able to give him some information. The information I have received is that there is no regulation governing the number of squadrons that compose a regiment of cavalry, that the usual number in the past has been four, but that the late General Officer Commanding organized most of five, taking that to be the best number. As to what may be done in future I prefer not to take any immediate action, but I would say that as soon as the new council is organized some definite conclusion will be reached and some regulation passed which will bring about uniformity. Whether it will be by way of increase or not, I cannot say, But I think it is quite probable that it will be.


[Stage Direction]
Motion agreed to, and House went into Committee of Supply.
Cornwall canal, $9,700.
['My hon. friend (Mr. Clarke) told me a day or two ago that he would ask this question and I made some inquiry in the department in order that I might be able to give him some information. The information I have received is that there is no regulation governing the number of squadrons that compose a regiment of cavalry, that the usual number in the past has been four, but that the late General Officer Commanding organized most of five, taking that to be the best number. As to what may be done in future I prefer not to take any immediate action, but I would say that as soon as the new council is organized some definite conclusion will be reached and some regulation passed which will bring about uniformity. Whether it will be by way of increase or not, I cannot say, But I think it is quite probable that it will be.']
Mr. LENNOX.: It has been said recently that it is well for Canadians to keep both hands upon the Union Jack ; but in this Mr. R. L. BORDEN.
House at the present time fhe order is to keep both eyes upon the clock and to curtail our remarks as much as we possibly can, having regard to the public interest. I realize that all things come to him who waits, and I have certainly waited long and anxiously for an opportunity to present to the House, and to the country, a short statement of the facts, as I understand them in connection with the contract made by this government in 1900 with Mr. M. P. Davis for electric light and power for the Cornwall canal. As early as the month of April last I called attention to this matter. Again early in May I invited the Prime Minister to name a committee, which, while it would not right the wrong in connection with this contract, might prevent the recurrence of the evil. The right hon. gentleman declined. Some few weeks ago we invited the Minister of Railways to enlighten us as to the position of this matter from the standpoint of the government, but the Minister of Railways also declined. I understand now that in discussing this matter we are to be confronted by the distinguished ability of the Minister of Justice. I have nothing to complain of in that respect ; I merely mention it as an unfortunately frequent occurrence, and as leading us to the thought as to what on earth this government would do if they had not the Minister of Justice to rely upon when they got into difficulty. From first to last throughout this session the only fighting man to come to their rescue in peril, was the Minister of Justice, and I do him the credit of saying that he has sustained the role with distinction and ability. In dealing with this matter I shall for con-' venienee divide it into four distinct periods. We have first the contract entered into in 1896 by the then Conservative government, and executed by the Hon. John Haggart. It is well that we should give close attention to the dates, because, through an inadvertent statement of the Auditor General, it has gone to the country as though that contract might possibly have some connection with the general elections of 1896. Now this matter was first initiated on the 4th of February, 1894, more than two years before the elections of 1896. Mr. Davis then made an application to the government for substantially the same lease as was afterwards granted. To show that the matter was bona fide and was practically consummated in 1895, I call attention to the General Terms and Conditions annexed the lease executed in June, 1896, and taking effect on the 1st of July, 1896. That lease was completed and ready for execution prior to the 1st of July, 1895, and in article 20 we have this language :
The 1st day of July, 1895, and the 1st day of July of each twenty-first year thereafter following shall he the date to which respectively the terms of the leasing of water-power shall he computed.

Again, in dealing with the extreme term of the lease it says :
It shall exist for eighty-four /ears from the said first day of July, 1895.
We have thus intrinsic evidence from the official documents that not only was it contemplated as early as 1894 that this lease should be executed, but practically on the 1st day of July, 1895, the whole terms had been agreed upon. Why was it not then carried out ? That is explained by a letter of November 13, 1895, from Mr. Bergin forwarding an amended plan. It had then been found that there had been a mistake in the plan and it was necessary to amend the description of the ground. That was forwarded on December 24, by the deputy minister to the secretary. On February 8, 1896, we have a memo, from the minister for an Order in Council. On February 18 we have the Order in Council for the execution of the lease. On May 22, there is a memo, from the minister for an Order in Council amending the description, and on June 12 we have an Order in Council authorizing the amendment. Afterwards the elections took place and in carrying out and making good the contract which had been virtually made in 1894, the contract was formally signed on 25th June, 1896. Now we have that state of things continuing until the execution of the new lease. The lease which was made in 1896 provided that there should be no rent payable for two years. In 1897 it appears that no work had been done under the contract and that the lessee, Mr. Davis, was not desirous of proceeding with the work at that time. On November 30, 1897, Mr. Davis wrote the following letter :


Hon.  A. G.@: Blair,
Minister of Railways and Canals,
Ottawa.
Dear Sir,-As lessee I request that no rent shall be charged under my lease Dor should the performance of the lessee's covenants mentioned in the said lease be required for two years from July 1st, 1898, and that an Order in Council to that effect should be passed, the lease in all other respects to remain valid and binding for the following reasons :
I need not deal with the reasons at this point, but I point out that Mr. Davis asks for an extension of time in 1897 and that that extension if granted would extend until July, 1900, or practically until the time the new contract was entered into. As a matter of fact whether an Order in Council was passed I am not in a position to say, but I assume not because there is no such document in the papers returned to us. Nothing was done and so we come down to the second period in the history of this transaction, October 19, 1900, when a new lease was executed. What do we find was the condition of things at that time ? We find that there was a lease then reserving $1,000 of rent but that no rent 269*
'had been paid, that there was a collateral executory contract under which nothing had been done, that the parties were in their original position in regard to each other and the whole matter was in fact, if I may so phrase it, an ' inutle pactum.' It was a dead letter and the parties were in a position to abandon the whole matter, if they thought fit, without injury to either of them. This was the condition of the matter in 1900 when this government did in fact enter into a new transaction with Mr. Davis.
I want to make it clear that there had been no outlay by Davis, there was a clear slate so far as both parties were concerned, and no premium had been earned. In other words, under the terms of the lease made by the then Minister of Railways and Canals, the government could take over the work, terminate the lease, put an end to the contemplated condition, returning both parties to their original position without the expenditure of one dollar. This govern ment had in the meantime of course dealt with it in the way I have mentioned and in other ways which I have not found it necessary to mention. Bet it not be forgotten though that from 1896 the day they came into power this government had power to deal with this matter and were responsible for anything that supervened from 1896 to 1900. Now, although we had the parties in unchanged positions and either party could recede from the bargain and not have to sacrifice a single dollar, without a grievance on either side, although that was a fact we were not in the same position as in 1896 in every regard. In other words -and this is an important matter-new conditions had arisen, very significantly new conditions had arisen, more power and more light were wanted. Instead of wanting 50 horse-power the government wanted 400 horse-power. Fifty horse-power will be found to be about the limit by comparing the figures which I shall refer to presently and also according to the statement of the hon. member for South Lanark. That is what he contemplated that the government, would take from Davis, about 50 horsepower and for a specific purpose. It was not the purpose to which this government afterwards applied that power and light. No suggestion can' be gathered from the contract that general illumination all along the line, winter and summer, at the same expense in winter as in summer, was contemplated in 1896. In fact I think I am quite right in saying, and I am bound to say this from a perusal of this matter, that an entirely new policy was inaugurated by the government in the year 1900 when this new contract was entered into. Let me read, so as to be perfectly fair, what the lease of 1896 provided :
That the lessee shall supply electric power to the satisfaction of the chief engineer of Railways and Canals for the working of all the

locks on the Cornwall canal at $63 per horse power per annum.
Mark that the language is-
For the working of all the locks on the Cornwall canal.
When we come to scrutinize the new contract we will find a very marvellous enlargement of the scope of the contract and in that regard we will find an equally remarkable enlargement as the matter still further advances. I need not speak as regards the light at this time more than to say that the light was to be at such points, in such numbers and at such times as should by the engineer from time to time be deemed necessary. Now there was more than an enlargement of the policy, there was more than a new scheme. There were new outside conditions. The government were free agents to do or not to do as they thought tit, to enter or not enter into this new contract. There were outside conditions brought about by the rapid and unprecedented development of a new industry. There was the march of progress from 1894 to 1900, which induced a new condition of things and placed electrical energy and electric light in a new attitude before the people, and put contracts which were made six years before in a position requiring revision. I am not going to make any statements which I cannot support by the admitted records of the (Public department. And in support of this to some extent, aside from the general knowledge of hon. members of the House, let me read what Mr. M. P. Davis says in a letter I have quoted of the 30th of November, 1897. He said, in giving his reasons for wanting an extension of time :
The government have not advised me when they would require me to furnish electricity for power or light aa called for in the said lease, and for the further reason that there are now under construction several large electrical plants as at Niagara, Lachine and Chambly, and on account of the great improvements being made in electrical appliances and machines, I thought it desirable to await the results accruing from the above before going into the large expenditure necessary to properly devolop the said power at Sheik's island.
Pretty conclusive that at that day Mr. Davis realized there was a rapidly changing condition of things, and that it was important for seller and buyer alike, to adjust themselves to the new conditions, and not enter into any arrangement which would not carry them over all contingencies. It was incumbent, on the government particularly, in a contract for electric light and power, to have provided there should be adjustments from time to time and at reasonably short periods, or to have insisted on a price low enough to meet any probable reduction during any of these periods. There is some-


Haughton Lennox: thing else to be gleaned from that letter, and that is that whatever view was taken by Mr. Davis and the government at a later stage, Mr. Davis presented his case then upon the basis that the government were not bound to take any horse-power or light until whatever time they saw fit. That is the first portion of the reason he puts forward. We find then that at the beginning of this second period, when the government entered into this contract, there was a falling market and that by reason of the rapid development in electric light and energy, there was no telling what might be the condition of things or what vast improvements might be accomplished within the range of a very few years.
It is the boast of the government that they have the same old contract. We have heard that time and again. Their press reports it-the same old contract. And that was the argument of the Minister of Justice the other night. I do not know that the government can gain much consolation from that view. What was the duty of the government in 1900 ? We had then a system of electric light and power, which was almost unknown in 1894, we had had rapid development in the meantime, and we had immeasurable possibilities opened up in 1900, so that, with Mr. Davis in default, and with rapidly changing conditions, it was the duty of the government to hesitate. They should either have refused to enter into a contract or made a new contract at lower prices and in terms consistent with the changed state of things. The prices should have been lower because of the changed conditions and because * of the larger quantities that they were taking both of power and light.
The Minister of Justice the other night, on the 13th of July, when we were discussing this matter, emphasized the fact that there is no change. Well, Sir, I emphasize the fact that they were bound to change, and, I emphasize the fact that they did change, but the change they made was to tighten the chains about the people. Let me be perfectly definite. I speak by the book. What was the old contract ? The old contract was for power for the working of the locks, and the working of locks alone, to the satisfaction of the engineer. What is the meaning of this ? It means sufficient power for working the locks ; it means necessary power and no more. It means the actual requirements of the government for the working of the locks. When it says : * to the satisfaction of the engineer,' it means too that the engineer has power to vary the quantity from time to time as he may find it necessary. I do not mean in an unreasonable way. I do not mean that he should change from day to day. but I mean that under the old contract the engineer could say : 'We want so much power, about fifty or sixty horse-power, and the

next year he could come and say we need more horse-power and Mr. Davis must supply it. Under the old contract, the chief engineer had the right to say : we need only 40 horse-power; and if you supply any more, we will not pay for it. That is the meaning of power for the working of the locks to the satisfaction of the engineer. What have we ? We have an absolute contract for 400 horse-power, amounting to 825,200 per year as a fixed charge on the people of this country. Yet, even with that condition of things we have not one man dispensed with in the working of the canal. We have a contract taking effect six months before we could possibly need the power and twenty months before we actually needed it. And even when these twenty months had elapsed, as I shall show by the record, only a fraction of the power was required. Let me quote the contract of 1900 as to delivery of power six months before it could possibly be required :
by adding valves, bridges, &c. Now, we have the Order in Council, and that goes a little further. In the memorandum we have no suggestion of such a thing as 400 horse-power and I am endeavouring to show that new conditions kept creeping in, and there is no way of tracing from whence they came. In this, we have this expression :
For a minimum of 400 horse-power

Where that came from, I do not know. But we have these facts : First that in the memorandum of the minister we have an enlargement of the scheme contemplated in 1896 ; then, a few days afterwards when the Order in Council was made, we have a further enlargement by providing that there shall be a minimum of 400 horsepower as governing the contract; and now when we look at the contract itself we find a significant enlargement there :
The said Michael P. Davis shall under said indenture furnish and supply to Her Majesty electrical current not less than 400 electrical horse power and shall also furnish and supply direct current arc light not less than 250 lights, nor, without the consent of the lessor, more than 270 lights ; and that the said Michael P. Davis shall supply such lights from first day of May, 1901, and the current for power from 1st October, 1901.
I suppose we ought to presume that this contract was entered into in the interest of the people, but it will require some explanation from the government to show how it happened that they contracted to accept delivery of the power from Mr. Davis, not in the spring, at the opening of navigation, but from 1st October, at the close of navigation. Speaking of change, we have not only change but we have a most marvelous development from date to date. I have referred to the contract which was entered into in 1896 providing for the power for operating the locks. I refer now to what is provided by the memorandum of the minister on which the Order in Council in 1900 was based :
The undersigned recommends that, in pursuance of the last provision, he be authorized to enter into a contract with M. P. Davis for the lighting of the Cornwall canal, the number of lights to he not less than 250 arc lights of 2,000 candle power each, nor more than 270, at the discretion of the department, to be paid for at 30 cents per lamp for each night during which the light is1 required to be supplied.
Then comes the part to which I would ask particular attention :
Further, that the supply of electrical power for the operation of lock gates and valves and of bridges throughout the said canal, &c.
So, in the Order in Council we find that there is a change in the quantity of power supplied, as compared with the old contract,
-no less in any one year, then 400 electrical horse-power, and also to supply and work direct current arc lights, such lights to be not less at one time than 250 lights, nor, without the consent of the lessor, more than 270 lights, but leaving out the important qualifying words contained in the Order in Council : ' for each night during which light is required and supplied.'
But that is not enough. We have the deputy minister coming to the rescue and, by the construction he places upon this, vastly enlarging the scope of the system adopted by the government in 1900. It may or may not be that the construction of the deputy minister is the correct one. But there is the fact that, if the construction of the deputy minister is the correct one) they were not contented by enlarging the old contract by the memorandum of the minister, enlarging it again by the Order in Council, and enlarging it still further by the contract made in alleged pursuance of the Order in Council, but the minister enlarges the scope of it still further. Writing to the secretary of the department on 25th August, 1902, the deputy minister says :
On the above basis the following would be the apportionment of power :


Mr.   T@: New canal, lock and guard gates..26x4	104
Old canal, lock gates	20x4	80
New canal, sluice gates or valves..26x1	26
Old canal, sluice gates or valves..20x1	20
6 weirs (66 openings)	66xJ	33Bridges	1x3-1x2	5
New canal, winches to help vessels
through locks	6x6	36
Old canal, winches to help vessels
through lock	5x6	30
Workshops, serving both Cornwall and Williamsburg canals	 60
Making 220 horse-power, more than is covered by etlen the most generous construction of the enlarged contract into

which the government entered in 1900. I think I am right in saying therefore that there has been a gradual expansion and enlargement of this scheme to meet the varying circumstances and wants of the government, or of the contractor, or of both. Now the deputy minister sums that up and says this makes a total of 417 horse-power. The hon. gentleman either means that to be a fair presentation of the case, or he is in great difficulty to bolster up a bad case. What does it mean ? Will the Minister of Justice contend that it is a rational thing to say that all these gates, and sluices, and weirs, and winches, and workshops are to be operated at the same time ? Yet the minister, in endeavouring to meet the argument of the Auditor General, in saying that the Auditor General is wrong, and in supporting the contractor, brings forward this argument in order to support his case that the government were justified in 1900 in entering into a contract for 400 horsepower. Well, suppose I go down into the city, and call at an undertaker's shop and say : You do a pretty large business ?-Yes, I have a patronage of probably


Mr. EMMERSON.: We will require several undertakers if you talk much longer.


Haughton Lennox: The hon. gentleman begins to weaken, then. Well, what I propose to do is to confine myself to the important facts of this discussion. There are 132 pages of matter given us to deal with, selected from a vast body of material, and I have gone to the trouble of noting carefully the matters I wish to speak upon, in order that I may not wander from the issue. But I see the' Minister of Agriculture here, and I think I will amend my illustration. A high functionary of the government, I will not give the name, who was at one time interested in the census of this country, and who, finding it was not working very well, went into the city to investigate for himself. He called on an undertaker and said : What is the extent of your business ? The undertaker said : A sixth of the city trade, say, 10,000 persons. Do you mean to tell me, sir, said the functionary, that you have coffins in stock for 10,000 people ? No, said the undertaker, but I don't expect they will all die the same day. My hon. friend, whoever he may be, who had charge of the census, goes on and he calls into a thrifty and tidy little house of one of our French Canadian citizens, and sees there one of those splendid evidence of the building up of a nation-family of eight or ten children-and he says : My good woman, do these children all belong to you ? She says, Yes.-My good woman, I am not going to be humbugged : Is that the cradle ?
__Yes-Have you any more than one ?-
One more. Oh, says the functionary, you can't fool me, two cradles and ten or ele-Mr. LENNOX.
ven children.	But you know, said the
mother, we did not expect they were all going to be born on the same day. Then the hon. gentleman, who carries a sword in one hand and a sickle in the other, goes to a farmer and he says to him, We have electric lights' to dispose of. You want to run a threshing machine, you want to run a cutting box, and crusher and pulper and fanning mill ; and to all these various things the man says, Yes. Then the hon. gentleman says, to run all these things will require 35 horsepower, and that is what I want to sell you. The man says, I am not altogether an idiot,
I am not going to carry on all the operations at the same time. And so it is. I see hon. gentlemen who to-day have spoken in the French language and in the English language; but they do not need two tongues because they don't speak them both at the same time. In other words, when the Deputy Minister comes to us and tries to show that the government was justified in taking this large quantity of power because all the gates and all the appliances on the Cornwall canal together represented about 400 horse-power, he asks us to believe something that is ridiculous on the face ot it. Now the same enlargement of the scope of the contract was made in reference to the lighting. I won't take the trouble to read it, because it is familiar to the House. Under the old contract, as I said, so far as the lighting was concerned, there was an absolutely unlimited range. We could take much or little, as we thought fit. We could take none at all, according to the construction put upon it by Mr. Davis in a letter which I have read. Under the new contract we have the range of exactly 20 lights. We must take 250 lights and we cannot demand more than 270 so that the utmost discretion that is left to the government is a range of 20 lights. Now, to further show that this contract has been changed, and that previously we had an unlimited ranges as to what we should take, I do not need to go outside of the gov-vernment themselves for confirmation. We have from Mr. Newcombe, the Deputy Minister of Justice, the most emphatic statement not only in vindication of the attitude taken by the Auditor General but of the significant departure made by the government from the condition of things existing in 1896 and showing the contention of the government when the trouble arose between the Auditor General and the department. Mr. Newcombe writes on the 13th November, 1902, the same day upon which the Treasury Board overruled the Auditor General. The question is asked him :
Can the chief engineer direct Mr. Davis during any day, or week, or other period named by him to shut off the current from, all the lamps on the canal ?

He says:
I am of opinion that ha can so direct. Under
the lease to Mr. Davis of 25th June, 1896, he undoubtedly could do so.
It is to be noted that be refers to the lease of 1896, and distinguishes it from the contract which was made in 1900. Skipping some things, he goes on to say :
Under the lease itself no minimum or maximum was fixed, but the lessee was bound to provide any number of lights which the chief engineer deemed necessary. The chief engineer might require any number, great or small, or he might require none. I am of opinion that under the lease as varied by the agreement, it is still competent for the engineer to dispense altogether with lights for the period named by him.
A contention which is in strange contrast with that of the government at a later day, but which is in striking conformity with the attitude of the government up to that date.
Mr. Newcombe proceeds :
I may point out that if the proper construction is what Mr. Davis contends for, it is clear that the Minister of Railways in entering into the contract of the 19th October, exceeded the authority under which he was, and expressed himself to be, acting, for the Order in Council of 19th October, 1900, plainly intended that the lights should be paid for only for each night during which light is required and supplied.
iMr. Newcombe puts in quotation marks * for each night during which light is required and supplied,' and adds :
-and the contract upon proper proceedings being taken, would in my opinion be reformed by the court accordingly.


Charles Fitzpatrick: Would the hon. gentleman tell me what he is reading from now ?
Mr. iLEiNNOX. I am reading from the opinion of the Deputy Minister of Justice It is marked G-10. This throws a very significant light upon the position of the matter, but not nearly so significant as some other matters to which I shall have occasion to refer. While I have it in my hand, I might as well read one further extract showing a number of changes. I am pointing out that most significant changes were made. The Deputy Minister of Justice is pointing out that the Minister of Railways, in executing the contract, exceeded the Order in Council ; that he acted ultra vires; that, therefore, there was a most significant change in the wording and effect, and that until modification was brought about by an action in court, a most important departure from the contract of 1896 would exist, a departure that involves, as I shall show, thousands and thousands of dollars to the people of this country during every year, and in the end of the period for which it would have to run more than half a million dollars. Mr. Newcombe is asked :
Can the chief engineer direct Mr. Davis to operate during similar periods more than one lamp, but less than two hundred and fifty lamps.
And the answer he gives is this :
I think he can so direct, but that if fewer than 250 lights are required the minimum number of 250 must nevertheless be paid for, unless, as has been the case heretofore the lessee is not in a position to furnish that number. '
A most significant change is here pointed out by the Deputy Minister of Justice as between the lease of 1896 and the contract of 1900, because before the contract of 1900 was made all we had to pay for was what we actually received, and we had the actual power in the first contract to say, not only once for all, but from time to time the number of lights we required. I do not mean that we had the right to take an arbitrary or unreasonable attitude, or to say that we will change at short periods, or from year to year, but on occasions at reasonably distant periods as the necessity of the public service might require. Now, I have indicated the changes that have been made, which, upon an analysis of the matter later, will be shown to involve vast sums of money to this country ; in fact, a matter of a difference, according to the new contract of upwards of $22,000 a year, and an actual matter of difference, when a proper adjustment of the contract is made, of about $26,000 a year, or more than one-half of the total amount claimed by Mr. Davis under the contract of 1900.
I submit also that there was an important change made in the period during which we were obligating ourselves to take electric power-and light, when it was extended from an utmost period of 21 years to a period of 84 years. I have too much respect for the able argument advanced by my leader on this point, to enter elaborately into that matter now, and I only refer to it, in order that in dealing with this matter I should have covered the whole of the grounds on which I attack the government for the contract of 1900. I think, however, it could very well be argued that the document of 1896 was a lease and an option ; that the government having at that time the waterpower granted the lease to Mr. Davis at a reasonable rental, in view of the fact that he would develop an industry along the canal, and the government reserved to themselves the option to take power and light if they should think fit. That the government never aid or never proposed then to bind itself to take one unit of power unless they themselves wished. That was the construction placed upon it by the government and by Mr. Davis himself from 1896 to 1900. That is borne out by the fact that throughout the lease there is no provision for the regulation of details in reference to supplying electric power, and light while there are most ample provisions as to the minor question of a lease at $1,000 a year. How-

ever, we are not compelled to resort to that argument. Within the four corners of this document which was executed in 1896 we have two distinct contracts, one the contract of lease, and the other contract for the supply of power, which, if incorporated in a separate document as it well might have been would have no different effect from that which it has been incorporated in the lease. My hon. and learned friend the Minister of Justice, with what I regard as very great adroitness and cleverness, made a very presentable argument the other night on this point, but after all it only showed what could be done in argument and it failed to carry conviction to the mind. The Order in Council is the first thing we have to deal with. The Order in Council is dated the 9th of October, and is based on a memo, of the minister dated the 26th of September. It is made after Mr. Davis had applied for the privilege, or, as the Minister of Justice and the Prime Minister have already explained, at the instance of Mr. Davis. This Order in Council provides :
The said contract to be in force for a term of 21 years.
This shows that Mr. Davis and the government regarded it as a matter which was not defined by the old contract beyond 21 years, because this is said to be in pursuance of lease, and the leasing provision of the contract of 1896, and the memo, of the 26th of September had to be satisfactory to Mr. Davis or else there was no use in presenting it. On the 9th of October the matter came before Council for final consideration, and it was then regarded that the true construction of the document was 21 years so far as the lighting and the power were concerned. But that is not all. Mr. Davis became dissatisfied, and as this is a period of expansion all the way through, within a week or two, Mr. Davis became anxious to have something more. I am not blaming Mr. Davis if he could get it out of this pliant government. Then we have the Order in Council of the 16th of October, 1900, based on a memo, dated the 15th of October, 1900, from the Minister of Railways and Canals, recommending that the Order in Council of October 9, authorizing the entry into the contract with Mr. M. P. Davis be amended to such effect that the term of 21 years therein mentioned, may be extended by successive renewals to July 1, 1979, in conformity with the lease of waterpower granted to Mr. Davis mentioned in said order. If it were already in conformity with the lease which was undoubtedly renewable in periods of 21 years ; if it were already renewable under the old contract as the lease was renewable, if it did not stand out distinctly and separately from the lease; then that document was absolutely useless, so, the government and* Mr. Davis have here for the third time set their seal to the acknowledgment, that under the original Mr. LENNOX
contract a term of only 21 years was entered into between the government and Mr. Davis, with regard to the lighting and power. But the lease goes on to say :
Nothing herein shall be taken to vary, other than as above specified or provided, any of the provisions of the said indenture.
What I have read is relied upon by the Minister of Justice. Then follows this, which I do not think hon. gentlemen have yet tried to explain and I will be glad if the hon. gentleman will try to explain it:
This agreement shall extend for twenty-one years from the date of the said indenture No. 12,336

That is the original lease.
-and shall thereafter be further extended by successive renewals to the first day of July, 1979, thus making the term of this contract co-existent with the leasing portion of the said indenture, and shall be binding on Her Majesty, her successors and assigns, and upon the said Michael P. Davis, his executors, administrators and assigns.
No language could be more definite and positive than this. It is now open to the Minister of Justice to explain this away. I do not ask him to explain any matters which depend upon a strained construction, but as to clauses which have received a construction by his department at a time when there was no controversy in reference to them, and which it is now important for the department to have appear in another light. The contract of 1896 entailed no expenditure on this country between that year and 1900. Under the contract of 1900 this country was spending at the rate of over $52,000 a year, until the Auditor General came to the rescue and battled, as one man has never fought before in this country, against the united strength of the department and of every official in the department until he drove them from their positions and compelled them to make a more reasonable contract. There was a great change from the conditions under the contract of 1896 under which not one dollar was spent to the conditions with this new contract of 1900 with an expenditure of $52,000, which was confirmed by an Order of the Treasury Board until the government for reasons to which I will revert to later, rescinded that order. Not only have we strange changes, but we have a strange contract. By this contract we agreed to begin the payments for power at the season of the year at which we did not want it, so that we paid for practically six months before we needed the power, which would involve at least $12,000. We were to commence to use and 'to pay for the light on May 1, 1901, instead 'of October 1, 1901, as was the case in the 'matter of the power, and so we might say that the government is all right on the question of light, but they did not stay right on that question. They receded from that cor-

irect position and I will ask the Minister of (Justice to explain, because I think it requires explanation, why it was that when we had a contract with Mr. Davis by which we were to take light from the 1st May, that without asking for any concession from Davis, by two successive Orders in Council and by two successive memorandums endorsed by the Minister of Railways we did away with the one reasonable provision of the contract fixing the 1st of May for the commencement of the light supply. We have here a memorandum by which it is provided.
The undersigned minister, acting on behalf of His Majesty the King by virtue of an Order in Council dated June 29, A.D. 1901, has agreed with Michael P. Davis, within described, that the time from which the said Michael P. Davis shall supply the electric arc lights within mentioned shall be the first day of October, 1901, instead of the first day of August, 1901, as hereinbefore provided.
That must have been a second arrangement because originally it was provided for May 1, thus it is provided that not only are we to pay for power but for light, to commence to take light at a time when we do not need to light the canals. Both now commence on October 1. We take the light all winter, so as to have it for six months in advance and have it ready for the opening of navigation in 1902. That Is not all. I would not have referred to this only that it is significant in this way. It is said that the power and the light were ready to be turned on and the light wTas actually turned on on the 24th of October. I venture to say that that is not true, and I shall read this note for the purpose of proving my statement. This is dated the 26th of October, 1901, two days after the time when the power is said to have been available and the electric lights turned on :
The undersigned minister, acting on behalf of His Majesty the King by virtue of an Order in Council dated the third day of October, one thousand nine hundred and one, has agreed with Michael p. Davis, within described, that the time from which the said Michael P. Davis shall supply the electric arc lights within mentioned shall be the fifteenth day of November, 1901, instead of the first day of October, 1901.
So that we have her,e two days after the lights are said to have been turned on, an agreement under the seal of the Minister of Railways and Canals, signed by Mr. Jones, Secretary, and by Mr. Davis, and subscribed by two witnesses, to extend the time to the 15th of November. So that by the record, the light could not possibly have been turned on the 24th of October. We have therefore the fact that the government, in utter neglect of its duty, extended this contract, which was bad at first, and altered it until there is not a leg for any one to stand on who wishes to defend it, unless he advocates the interests of corporation and contractors against the interests of the people. The Auditor General con-) demned this matter and for condemning it he was condemned. For repudiating it he was repudiated, but by the logic of events he has been amply vindicated before the people and the country. Permit me t6 say that the construction and the attitude of the government were all right until the Auditor General intervened. We find this state of things that so long as the Auditor General did not appear on the scene, the gentlemen were pretty rational. They had at all events lucid intervals. But as soon as the Auditor General appeared, they one and all combined to crush him and stand by Mr. Davis on this contract which, upon their own admission, gave Mr. Davis $22,000 a yetir more than he was entitled to. There is not only evidence of gross carelessness in the wording of the contract, of gross indifference to the interests of the people in the original framing of this contract, but there is also evidence of great neglect throughout the progress of the matter. Take this as a sample. On the 25th of April, 1902, Mr. W. A. Stewart, superintendent of operation, writes:
I did not keep track of such deficiencies in the number of lights- each night.
In fact, it was only for my own satisfaction that I took any notice of the electric light line, as I had been informed that it was not yet accepted by the government, and until it was I had nothing to do with it.
On the 25th of February, 1902, this same Mr. Stewart writes 'to Mr. Collingwood Schreiber regarding the number of lights required upon the canal for operation during the winter months, and I read this document for the purpose of showing that at that time the construction placed upon the contract was the same as afterwards placed upon it byxMr. Newcombe, namely, that notwithstanding the contract entered into in 1900 the government had control of the number of lights. And it also shows what were the actual requirements of the canal during the winter months. Mr. Stewart says :
Sir,-In reply to your request of 22nd instant, I would suggest placing lights as here given, during the winter season on the Cornwall canal.
Then he specifies every place a light should be, and sums it all up as not 250 lights but 30 actually required for the use of the canal. He says :
The number of lights here given will allow of a good light at every point where we have work to do, during the- winter season.
Let us see what action the department took. Mr. Davis was notified of that matter. He adopted the same construction of the matter at that time. On the 21st of February, 1902, he writes :


Mr. L. K.: Jones.
Secretary of Railways and Canals Dept.
Sir,-I am In receipt of your letter of February 19th re lighting Cornwall canal. Will you please let me know what lamps you desire should not be lighted.
So that at that time, before the Auditor General came upon the scene, the department considered that they had control over the number of lights and Mr. Davis concurred in that view, and wanted to know how many lights they wanted him to dispense with and how many to retain. That is further shown by the letter of the 1st of March, 1902, from Mr. Jones to Mr. Davis. This letter states :
I have to acknowledge the receipt of your communication .of the 21st instant, relative to your contract, dated the 19th October, 1900, in respect of the supply of 400 horse-power of electric current and 250 electric lights for working and lighting the Cornwall canal, by which you ask for information in that connection.
In reply, I am, by direction, to say that during the period when the, said canal is closed to navigation, only the thirty lights enumerated in the list I inclose herewith are required to be furnished under the contract in question.
So that we have this state of things, that before this difficulty with the Auditor General arose, the government and Mr. Davis were in harmony as regards the number of lights he was expected to supply, and that number was to be such as the public service actually required from time to time.
Now, I think there is another document I might read. We have file 634 Department of Railway and Canals. This is evidently a memorandum of what took place in the department at the time :
Law clerk, 8th February, 1902.
Memo, herewith, 13th February, 1902.
Give notice that no occasion to light the canal during the close of navigation.
19th February, 1902, M. P. Davis.
What does that mean ? It means that the department did not think it necessary to light the canal during the season when navigation was closed. Now, one further quotation of a memorandum marked ' Re file 634, 186, 144.' This is said to be re lighting Cornwall canal. I do not know by wihom the memorandum is made but it is made by some one in the department. After referring to the agreement with Mr. Davis it goes on :
This agreement does not mention the fact that the lights are to be only turned on when so required by the chief engineer, but this is provided for by a clause in the agreement which states that ' nothing herein shall be taken to vary, other than as above specified or provided, any of the provisions of the said Indenture ' (of lease). Taking the lease and agreement together, the agreement being, as it really is, part and parcel of the lease, Mr. Davis has no


Haughton Lennox: legal claim for, and is not entitled to, any payment for lighting unless such lighting is first ordered by the chief engineer.
Mr. Davis might therefore be notified of the report of the superintendent of operation and might simply be asked why he is lighting the canal.
13th February, 1902.
So, we bave it abundantly clear that, not only did they change the contract of 1896 in the most significant, and I may say the most unfair way, by the agreement of 1900, but they have been changing position from time to time as the necessity of the case or the circumstances seem to demand and for reasons which, as yet, have not been explained. At this point I desire to read two letters of the Auditor General, one of them very brief, which throws a good deal of light on this matter in many ways. The first shows a position of things I have already referred to in this House that, notwithstanding the attitude of the department was always in conflict with that of the Auditor General and although he was given the least possible information throughout the whole matter yet in every letter he evidences the most persistent desire to come into harmony with the department and to adjust himself to the conditions if he can possibly do so. In other words as long as he does not sacrifice his conscience or the rights of the people he was ready to go any length :
Audit Office, Ottawa, October 6, 1902.
Sir,-It may be well to draw the attention of the Treasury Board to page 7 of the lease to M. P. Davis of June 25, 1896, where the circumstances, under which the lease may be cancelled, are described, It seems plain that Mr. Davis would have no right to object under this agreement. Then the government might feel that the cancelling of the lease would be an easy method of getting rid of two serious difficulties besides the lease itself- The two difficulties are, of course, the paying for lights, some of which are not used, and the paying for electric energy, none of which is used.
I am, Sir, your obedient servant,



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Auditor General.
The Secretary, Treasury Board.
That was 6th October, 1902, and the claim of Mr. Davis was from 24th October, 1901. Here is a letter of later date :
Audit Office, Ottawa, October .11, 1902.
Sir,-'Since writing you last on the Cornwall electric light and energy question, it has occurred to me that although I have diligently endeavoured to find it, without any success, there must be some fact or explanation to diminish the unpleasantness of the conclusions which I have drawn.
May I suggest that you send my other letters as well as this to the Department of Railways, with the hope that before the question is disposed of by the board, to be subsequently made public, the possible elucidation may be obtained officially. I cannot speak except to criticise, but it is disheartening that, after twenty-four years of service, such criticisms as I have made

have had no better results than to permit the most inexplicable transaction, considering both its magnitude and character, of any of the transactions which have come before me.
Should the reply from the Railway Department show that I have been mistaken to the injury of the department, please let me see it, so that I may withdraw the unfavourable strictures.
Consider the condition, before 'he second contract was entered into in T900, of the services which are the subject of the two contracts :- 1st. Electric light.-A 

ate per light per night of thirty cents was agreed upon. Only the lights used and when in use were to count for payment. , Under such an agreement, while the canal is closed, for nearly half the year, only one-fifth or one-sixth of the number
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Actually less than one-eight.
-those in use to light the bridges-would count.
If for any reason others were not required, while the canal is open, they would not count.
2nd. With reference to electric energy.-Under the first agreement payment was to be made for the quantity used, and exact provision was to be made for determining the quantity used.
Under the second agreement, that of 1900-
(1.) Under the contention of the Department of Railways, lighting is to be paid for on the basis of all the lights available and for every night in the year.
(2.) So far as the energy is concerned, by the contention of the Department of Railways, we are now to pay for 400 horse-power from October 24, within a few days of a year, and there is no electrical attachment to permit the use of a single horse-power.
That is enough to show the position the two parties occupied and the evident desire of the Auditor General to bring about a working arrangement. He says further :
With remarkable composure an application is made for the payment of electrical energy at the rate of $25,B00 per annum, to run from October 24, 1901, while instead of making provision to enable the government to use the energy from the time when they were to pay for it, by having the work for the connection with the lock gates begin in the early part of the summer of 1901, the contract for this purpose was dated only on May 20, 1902, the work to be completed on August 15, 1902.
Showing that no provision was made by the government for making this power available.
Is Mr. Schreiber the person to have been found in such an unprepared state and one which might so easily have been prevented ? There is no one in the public service to whom I am under greater obligations for pleasant relations than to Mr. Schreiber, and it pains me to make these remarks.
I am, sir, your obedient servant,

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Now, what was the claim of the Auditor General, and in the history of the Davis contract, what was the claim made by Mr. Davis ? The claim was .from the 24th of October, for both light and power. I will
refer presently to a statement which shows that for twenty months after the time when the complaint was made there was probably no energy of more than 20 horse-powei available for use. The claim made by Mr. Davis was for electric lights at the rate of $27,375 per year, and for 400 horse-power at the rate of $63 a year, making $25,200, or a total of $52,575. He shows that the government had not made any appropriation to make power available to them, and that they had so extended the contract as to make it certain that even if they wanted every light and every unit of power provided for in the contract, they most flagrantly disregarded the rights of the public by allowing the contractor to complete the work in the fall, at the close of navigation, instead of at the opening, this being done in a most peculiar way as regards power in the first instance, and by the extension of time as regards light later on.
Now, I hope I am not taking up time unduly in this matter ; but I have given a good deal of time to its investigation, and I would like to bring forward the material facts from our standpoint. I am somewhat particular because the leader of the opposition has been compelled to leave this evening, and a greater burden falls therefore upon me in going over the whole ground I have explained that the Auditor General was not only justified in the position he took, he was not only sustained by the result of the investigation, but he was absolutely correct in his view of the matter, if Mr. Newcombe is right, as a matter or law. X know that other legal opinions of great weight can be cited not entiiely in harmony with this, but I prefer, not because it favours my argument, but because it commends itself to my judgment, to believe that Mr. Newcombe is right rather than a hasty opinion expressed by another eminent lawyer whom the lion, gentleman consulted. I need not real again the opinion of Mr. Newcombe. But let me say here why I think it is a sound opinion. The Minister of Railways and Canals, when he signed this contract, had no power to go beyond the Order in Council,^ but he did, as a matter of fact, when he-' signed the contract, go beyond the Order in Council by omitting the specific provisions that were contained in that Order in Council, and which would have controlled the rights of Mr. Davis, and would have safeguarded the rights of the country in the way that we contend for, and in the way Mr.Mc-Dougall contended for, and in the way that Mr. Newcombe says would have been determined by the courts if the matter had been submitted to them.
Now, the government have changed then position about the time that the Auditor General appeared in the discussion, about April, 1002. The government appear to have then taken a new position in the matter, and unfortunately a hostile position, and instead of contending that the contract was to the
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effect that I have indicated, they take the position that they are absolutely bound to pay Mr. Davis the full amount of his claim of some $52,000, that they must pay him for the full number of lights for every day in the year, if they are actually available, and for the full 400 horse-power if it is available. Now, what brought about the change ? The change is brought about through the instrumentality of the Auditor General, because these gentlemen not only contended through thick and thin that their position was right, but they actually made an Order in Council overruling the Auditor General. At that time they may or may not have had in their hands the* letter of opinion of the Deputy Minister of Justice to which I have referred. Whether they had or not, they are equally to be condemned for their attitude. Let me refer to the Order in Council, because it is important just here for it affords complete evidence that the final change was effected through the instrumentality of the distinguished servant of this parliament (through the vigilance of the faithful servant of this parliament, through the activity, the earnestness and anxiety of a man who stands high in the esteem of hon. members on both sides of this House, and we find that this change was brought about which change saves $22,000 a year, a sav-mg in the whole of nearly three-quarters of a million dollars, significant and important in itself, but vastly more significant having regard to the important principles that are involved, the safety of the people's money This I say has been effected through the instrumentality of a gentleman who was appointed a quarter of a century ago for the express purpose of standing between the administration and these contiactors and seeing that the people's money shall not be paid out unless it is fairly earned. What does the board say ? They say in the ordinary language that they have fully considered the papers and correspondence and that they consider that the Auditor General is wrong and should be over-ruled. That is substantially what is said. There are no reasons given. There ought to be reasons given but they are not given. Looking back some years ago when a better state of things prevailed-my hon. friend from South Lanark (Mr. Haggart) knows the period to which X refer- X find that very frequently in overrulings by the Treasury Board reasons were given but they are not given now. Sometimes they say that a judgment may be good, but that the reasons may be bad and therefore it is not well to give reasons, but in this case both the reasons and the judgment are bad. But after giving their formal judgment they say :
The board observe that the Auditor General has raised questions as to the economy of the arrangement made between the government and Mr. Davis. These questions should Mr. LENNOX.
be the subject of inquiry as to the future, but they in no way affect the obligation of the government to make payment for services rendered under the existing contracts.
They should be the subject of inquiry for the future but they in no way affect the obligation of the government to pay for what has gone by. They had the letter of the Deputy Minister of Justice in their hands then. They had applied for it. They were bound to have it before they decided, they had it in their hands, they did know that it was absolutely untrue In fact and in law. They knew that they had the power to right this wrong. They knew they had the power to apply to the court, they knew that the court would remedy the mistake and they knew more, or they were not fit to occupy the positions that they did occupy-they knew that if an Order in Council is exceeded the paper which purports to go beyond the Order In Council is of no more use than this piece of blank paper which I hold in my hand And yet what are the facts ? In the main the Auditor General is vindicated because within a few months, when the account came in, a reduction was made upon the basis of the Auditor General's contention. At that time Mr. Courtney, the Deputy Minister of X1 inance, wrote to Mr. Schreiber to warn him and to apprise him of the blunder into which he had fallen. Mr. Courtney says :
Nevertheless, the board are of opinion that the questions so raised by the Auditor General should be fully investigated ; and for this purpose the assistance of independent electrical experts should be obtained, with the view to ascertaining whether any arrangement more advantageous to the interests of the Dominion could be effected for the supply of light and power for the canal.
I notice that the hon. Minister of Justice said the other night that these experts were appointed at the request of the Auditor General. I need hardly state that I know the hon. minister must have considered that he was amply sustained in so stating, but I think it is my duty to the Auditor General to say that this is not his recollection of the matter and that he states distinctly that he was not a party to the appointment of these gentlemen though he was, of course, most anxious that by any means that contract should be so modifieii as that the people's interest should be conserved to a greater extent than It was under the contract of 1900. In other words the Auditor General said that he was willing to join hands with these gentlemen at any time to effect anything for the benefit of the people and any one who will peruse the letters subsequently written will see that the Auditor General, nowithstanding the way he is treated, is still patient and amongst things suggests splitting or dividing the accounts in order that he
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shall be able to pay Mr. Davis what he is entitled to, retaining only the amount in dispute pending the investigation of the matter. Let me say here that not - only was the Auditor General vindicated by the letters I have referred to, but whilst his calculation in regard to the Soulanges canal was repudiated and langhed at not only in this House, but out of the House, yet when we come to place that calculation beside the actual figures in accordance with the compromise agreement, we have figures substantially identical and we have the Auditor General, the watchdog of the treasury, if I may use that language without being offensive, and I might use almost any language in describing him after the language that has been used in this House, the guardian of the treasury vindicated in this matter as well. The Auditor General did not succeed in getting all that he was entitled to nor did he succeed in getting all we were entitled to. For instance, there was a change made in the contract by which instead of paying for 250 lights the year round, we have only to pay for 100 lights during four months of the close season, making eight months of navigation. Yet, in the same transaction the same construction ought to have obtained and we find that in this lease, the same old lease which was the foundation and germ of this same oid contract, it is absolutely laid down as the governing term that there is to be seven months of navigation and five months of close season, and I think it would have been fair in making this new contract to have adopted the same principle.
But many things have been adjusted not in the best interests of the people, and this is one of them. We are paying for 100 lights in winter and according to the report of the operating engineer, and according to every authority on record, we require at most thirty lights. Is there any justification for that ? There again we have not got justice. I do not want anything else from Mr. Davis but justice ; I don't want to grind him down, but I don't want him to make an unreasonable profit out of this transaction at the expense of the people. We were to pay $63 a horse-power in 1896, when electric science was comparatively unknown and when the contemplation was to take only fifty horse-power, but now we are taking 400 horse-power and we are paying $63 still. If $63 was a fair price in 1896, surely $63 is not a fair price to-day under the changed conditions.
'Mr. WM. ROSS (Victoria). I am going out; I cannot stand any more of this nonsense.
Haughton Lennox: Is there anything the matter with the hon. gentleman (Mr. Ross). The hon. gentleman must know that I have the same rights in this House as he has, and
that I am protecting the \Auditor General who stands as high in the estimation of the people of Canada as any man in this House. I crave no indulgence and I ask no quarter from anyone. I will fight this thing all summer if necessary, and I will have the people know exactly where they stand. I will hew to the line let the chips fall where they may. It has been said that it was the action of the former government that brought about this result. That I do not believe, but whether or not it is unfair to this country and it is our duty to set it right as far as we can. By the reduction of 100 lights for four months, $9,075 became $3,630 a difference in that one item alone of $5,445, and by the change'as regards the power, what was to have cost us $25,200 became $7,875, a difference of $17,325, or putting these two sums together an annual saving of $22,770, leaving as a result of the whole transaction, that $52,775 becomes $29,805 under the present condition of things. Let us take the accounts for the month of March alone. In the account furnished by Mr. Stewart we have a statement of what purports to be the actual item, but notwithstanding that there are certificates in great numbers showing that these lights burned continuously from the 24th of October, at the time the contract was extended, to the 15th of November ; on investigation under extreme pressure from the Auditor General, we have the fact that in March 1902, thirty lights were burning for 31 nights, which should cost $279, but under Mr. Davis' claim and under what would have been paid according to the overruling of the treasury board, it would amount to $2,018.10 so that there is a saving of $1,739.10 in that one month alone.
We have that reduced rate for four months instead of five, as we should have according to the proper construction of the contract. In that change we effect a very important saving for the people. Putting it upon the very highest ground that it can be put on behalf of Mr. Davis I submit that without regard for the moment to the question of different prices which should prevail under the new condition of things there should be a reduction of more than 4,000 in addition to what the Auditor General was able to obtain, and I think I will be in the judgment of the committee when r give the reasons- upon which I found that opinion I say that instead of having to pay for 250 lights for eight months we should only have had to pay for seven months, or 214 instead of 244 days. That at 30 cents a night would $16,050. Thirty lights instead Ol SO tor the other 151 nights at 30 cents a light per night cost $1,359: 125 horse-power at $63 per annum comes to $7,875 making a total which we pay of $25,284 without reference as I say to any question of reduction of price. On the most favourable construction, I submit that this is the'uttermost farthing we should pay. It has been said

by bon. gentlemen in this House for whom I entertain a high respect that Mr. Davis is making very little ; that this plant is hardly paying even now. Perhaps not, hut although X am not an advocate, of government ownership in all cases, X am a straight advocate of government ownership in a matter of this kind, rather than that any one should suffer unduly at tlie hands of the government. I think there should he a reduction of at least $26,991 instead of the $22,000 that the Auditor General was able to obtain. I am sorry at this late period of the session to have taken up so much time, but I have endeavoured to adhere to a certain line and to restrict my remarks as much as possible. I have been endeavouring for more than three months to get the matter before the House and the public, and I hope if an apology is necessary the House will accept this as a sufficient apology.


Charles Fitzpatrick: If I venture to trespass on the attention of the Hoyse at this late hour, it is only because a matte [DOT] of the greatest possible urgency requires that I should leave town to-night and be absent possibly for the remaining days of the session. I want to follow the example of my friend who has just spoken and deal with this matter as briefly as I can. At the same time I would like at the very outset to declare that I have no intention to attempt to apportion responsibility as between the two political parties for this contract because it is my intention to justify and to explain everything that has been done from the beginning. My bon. friend thought it proper at different intervals during the course of his address to the committee to justify the Auditor General, and to speak of him as a man who had been very much maligned and who was deserving of great credit in the opinion of the people o' Canada. I have no quarrel with the Auditor General, X have had occasion to say that before. It takes a rather rash man to quarrel with the Auditor General so far as public opinion in this country is concerned, but I do not intend, because a statement happens to be made by the Auditor General to accept it if it is not founded on fact. One may speak respectfully of a man and at the same tima differ. I do not intend to discuss this as if the Auditor General was concerned in it at all. I do not know that he occupies any, but a very secondary role in connection with the matter, and as I go through the papers, if I find that at times he has made a mistake, I intend to say so respectfully but notwithstanding he is the Auditor General, I mean to contradict him if I can justify my contradiction. My friend thought it necessary also, notwithstanding his previous admiration for the Auditor General, to show that with respect to his statement as to this contract having been entered into originally on the eve of the elections of 1896, the Auditor General was mistaken. I Mr. LENNOX.
am glad my hon. friend took the trouble to set the Auditor General right on that point, and I am quite sure that he would have been able to set him right on many other points as he went along, if it had suited political exigencies for him to do so. My hon. friend did not, of course, overlook what the Auditor General said himself, in the letter he writes communicating these documents to the House. He says :
Excuse may be made for some of my remarks in connection with this correspondence. They should have been different it written in cooler blood.
I think in these words we find an explanation of everything the Auditor General has said.


Thomas Simpson Sproule: No wonder.


Charles Fitzpatrick: My hon. friend says ' no wonder.' He feels exasperated. Some of us feel exasperated for very small things. This contract was entered into .Tune 25, 1896, in pursuance of an agreement settled many months previous to that time. What is the character of that contract ? The government leased to Mr. Davis a certain parcel of land designated in the agreement, and pursuant to the lease and subject to certain restrictions and reservations they also gave him a lease for manufacturing and mechanical purposes :
So much of the surplus water, if any, on lock No. 30 level, Cornwall canal, as the lessor may deem advisable.
But here is the reservation. He gets the surplus water :
After navigation and existing mills and mill sites hereinafter to he leased are supplied.
He does not get all the surplus water of the canal, only such portion of it as remains after leases have been provided for, and in addition there is a stipulation that the government reserve to itself tLe right to take of that surplus water such quantity as may he necessary to provide any mill sites they may thereafter lease to any one. We see in these words exactly the character of the lease given to Mr. Davis. He, on the other hand, covenants to do certain things for the government. Among other things he covenants to pay $1,000 a year and also to supply electric power to the satisfaction of the chief engineer of Railways and Canals for the working of all locks on the Cornwall canal at $63 per horse-power per annum. And in addition - to that he covenants to supply and work electric direct current arc lights of not less than 2,000 candle power, in perfect working order, at such points and in such number as from time to time shall be deemed necessary by the chief engineer For those lights he is to be paid 30 cents per light per night.
There is a provision in the lease that these privileges, rights and easements are given

Mr. Davis for the term of twenty-one years from and after the 1st of July, 1896, to be ended on the 1st of July, 1917, and thereafter for a term or period of twenty-one years, renewable as is provided and "mentioned in the annexed general terms and conditions.
And there is a provision for four successive renewals in the annexed general terms and conditions of the lease.
,The first question to be considered is whether or not the rates are reasonable, but I now wish to draw the attention of the House incidentally to another matter. Not only did the government give Mr. Davis a lease of the surplus water, but also the right, for the purpose of creating this power, of erecting a dam across a place called Iloople's Creek, and gave him the right to benefit by any increased flow of water that might result from the erection of that dam.


Mr. HAGGART.: Not a dam, a ditch.


Charles Fitzpatrick: The words are :
The lessee shall have the privilege of using at a weir hereinafter to be constructed by him, on or adjacent to the land hereby demised and as shown on the plan hereunto annexed, for the purpose of power, the amount of water flowing and to flow into the said canal from Hoople's creek.


John Graham Haggart: It is not a dam.


Charles Fitzpatrick: This contract was entered into in 1896 and has to be judged by the conditions then existing. In dealing with the question of price, we have to consider whether or not the price which the government contracted to pay for the horsepower and the lights was a reasonable price at the time the contract was made. I shall not ask hon. gentlemen to speculate on that point, but will refer them to the opinion of three expert engineers who were appointed, notwithstanding the statement of my hon. friend from South Simeoe (Mr. Lennox), and had conferences with the Auditor General. So true is that, that not content with obtaining their opinion, he quite recently consulted one of them again with respect to this very contract. He has made them his experts.


James Clancy: The Auditor General denies that.


Charles Fitzpatrick: He does not deny the statement I make, because there is a dispute as to who shall pay for the services rendered the Auditor General. There cannot be any denial of that. What did these experts report with respect to the prices in the original contract ? In the opinion given by them, which is to be found on page 45, of the Auditor General's Report, they say :
We are of the opinion that for the time (1896) and the service to be rendered, namely, to supply power for twenty-four hours per day in small units, and to furnish lamps and light them, the whole scattered over a course covering many miles-the prices to be paid were reasonable.	*
That is the opinion of the experts. In addition, this contract contains the provision that at any time the government I has the right to expropriate the works which may be erected by Mr. Davis and take over this contract, paying him his actual expenditure plus five per cent. So that what the present government has done is merely to give effect to that contract, and the chief engineer of the Department of Railways and Canals

the gentleman mentioned in the original agreement of 1896-has been asked to declare what is the amount of power required for the purposes of the canal and the number of lights requisite to light it. That is to say that the gentleman chosen by the two parties to the agreement in 1896 to determine the quantity of power and fix the number of lights, has been asked to do that which both parties agreed he should do at a subsequent period. He has done what] it was agreed he should do. Here I may observe that my hon. friend said that under the original contract it was provided that the contractor who was to light the canal and supply the power was at the mercy of the chief engineer to this extent, that the chief engineer could say at any time how many horsepower should be required for the operation, of the canal, and how many arc lights, and it was free to him to change the number of lights at his sweet will. The position we take is this. That that is an impossible construction to put upon the original agreement. What was in contemplation then was that when the government would require this power and these lights, they would notify Mr. Davis, so that he would be in a position to install the necessary plant and machinery to create the power and supply the lights. Is it conceivable that any man would enter into an agreement to supply 16 horse-power to-day, 40 to-morrow and 400 the day after ?


James Clancy: The cuitractor contemplated furnishing power elsewhere for other purposes.


Charles Fitzpatrick: I am dealing with the contract and not with an imaginary supply of power elsewhere. That may or may not be done, but it is not done at present. At any rate we are dealing with the agreement, and I think it is better to stick to the documents and papers and rely on the contracts. Would it be reasonable to suppose that Mr. Davis would erect expensive plant which, as events have proven, cost about $300,000 without knowing in advance what were the requirements of the government ? Is it reasonable to suppose that he would make such an expenditure without knowing what the government expected him to do ? He might erect a plant of 100, or 200 or 400 horse-power, and then the government would say to him : It is our intention to install machinery upon this canal to operate the weirs, locks, bridges and winches and for

that machinery we will require so much horse-power. But according to the argument of my hon. friend, they would have the right to say, you will provide us with so much horse-power but at any time we can call on you to increase or lessen it without limit. No business man would enter into an agreement of that description.
Mr. BARKER, Is it the hon. minister's construction that if the engineer once ordered say 100 horse-power he could never order any more or less ?


Charles Fitzpatrick: That is the construction put upon it by my hon. friends opposite but it is not mine. To light this canal it is necessary to erect poles, and the chief engineer should fix the places for these poles to be put up. Mr. Davis' obligation is to erect the poles and supply the current. After these poles are installed and the wire is put up, is it reasonable that the chief engineer should say under the agreement, to-night I will want 10 lights and tomorrow I shall want 100 and the day after 200 ? Surely no man would enter into such a contract, he being obliged to supply electric machinery and to provide a current, put down the posts, &c., and supply also the means necessary to look after the machinery. He would have his plant installed and then be at the mercy of the engineers or the Auditor General.
Is that a business proposition ? When we come to deal with the power, the facts are even worse. So far as the power is concerned, the government put their machinery upon the canal and then say to those gentlemen, we want the power to operate this machinery. He provides the means necessary to supply the power required. But after the .machinery is installed and he has provided his power-house we find ourselves in this position : Any day, the engineer may go to him and say, we have installed the machinery and you have provided the plant to operate it, yet we will decide that from to-morrow we will take only a forty horse-power, though to-day we require 400 horse-power. Is that a business proposition ? Is it conceivable that any man would enter upon an agreement drawn on such lines ? When the original contract was entered into, the canal was in course of construction. And when the canal was completed the government called on Mr. Davis to do that which he had covenanted to do under his original agreement-to supply light for the canal and power to operate it. Very properly Mr. Davis said: Under the original agreement the government engineer is to determine the number of lights I am to supply and the power that will be necessary fot the purposes of the canal.


James Clancy: From time to time.


Charles Fitzpatrick: From day to day;- from hour to hour;-from moment to mo-Mr. FITZPATRICK.
ment. If that is my hon. friend's (Mr. Clancy's) construction, I am willing that he should have it. The government estimates that there are so many gates, so many weirs, so many bridges, so many winches, and that to operate all these, it will require a total of 410 horse-power.


Thomas Simpson Sproule: Does the hon. minister expect that all these gates, wires, bridges and winches are to be in operation at the same time ?


Charles Fitzpatrick: 

We said, we are not legally liable, but in view of the fact that we are going to be called upon to pay for something we are not getting, while we are prepared to stand by our legal obligations and pay our money, we will see to it that this sort of thing shall not go on; we will take advantage of the provision in the original agreement for expropriation. Then, the whole question being opened for readjustment, Mr. Davis waived his claim for the past and a new contract was entered into which provided for 400 horse-power to be supplied the same as the original agreement did. The new contract contains this provision, the same 400 horse-power will be supplied as in the original agreement, but the government will pay for it as it is supplied from time to time when the machinery is installed.
Naturally lion, gentlemen will ask, why did not the government have this machinery installed and be prepared to carry out their part of the agreement with Mr. Davis. The answer to that is that this machinery was of a kind that required to be experimented with. As a matter of fact some of the machinery, for instance, the winches at the present moment are just being completed. It was necessary, practically, to invent a new device for the purpose of operating the locks on the canal, and especially for the purpose of enabling the boats that use the canals to be moved through them by the aid of these winches. This is entirely a new departure, there is no other canal in Canada or the United States equipped with electrical appliances of this sort, and it was necessary, practically, to invent new machinery for the purpose of utilizing this electrical energy. Gentlemen connected with the canal say that they did not realize, when the contract was first entered into, the difficul

ties they would be called upon to encounter with respect to the installation of this machinery. The machinery is not yet completely installed, and will not be for some time to come, because of the difficulties X have pointed out.
Now let us come down to the real issue, the only issue in this case. It is this, as to whether or not the contract of 1900 was a provident contract in this respect, that it imposed upon the government an obligation to pay at a fixed date, when they were not prepared to accept the electric energy they were obliged to pay for. That is the whole issue. Now it is to be borue in mind that the government have not paid a dollar on that contract, it is to be borne in mind that taking advantage of the wise provision contained in the original agreement, which agreement, as I say, has been carried out in so far as it could be, we were in a position to say to Mr. Davis, we are 'in law obliged to pay you for the power, but we are in a position" to protect ourselves under the expropriation clause. Incidentally, here I may remark that my hon. friend from Simcoe Mr. FITZPATRICK.
(Mr. Lennox) said he was not always in favour of government ownership, but this was a case in which government ownership might be very usefully applied, that it would be proper for the government to take over this plant and machinery and operate it. Let us see what that 'would mean. I ask the attention of the House for a moment to the fact that the government have made an experiment of the Soulanges canal in the way of lighting and supplying power, and we have the experience of the government in doing the same sort of work that Mr. Davis is doing now. What is the result of that experience ? We have installed a plant that cost us, not a sum mentioned by the Auditor General, $100,000, but that cost us $218,632.03. Now in order that there may be no doubt about the facts-because I want to follow the good example set by the hon. gentleman who preceded me and speak from the records

I will give these details from1 the Auditor General's own reports :


SOULANGES CANAL.
[Stage Direction]
Cost of Electrical Equipment.
Sundry expenditure on power bouse
(page R-171-
Cooper, Jas	$ 148.78
Cox & Amos	 150.00
Dion, A. A., C.E	 5.00
Doucet, Louis	 5.66
Ion, Thos	  137.30
Legros, Hon	 3.85
Pay-lists, Oct.. Jan, 9-Feb. 4.	196.00
Pay-lists	 234.13
Stily^ll-Bieree & Smith-Vaile
-Co	 3,425.00
Stilwell-Bieree & Smitb-Vaile
Co	 4,715.00
[Stage Direction]
(Page W-17) details W-122-
C. H.	Raynor	 43,916.74
Bills outside of progress estimates (page W-18)-
Cox &	Amos	$	300.00
Mitchell, Robt., Co	 173.00
Royal Electric Co	 2,427.50
Stillwell-Bierce & Smith-Vaile
Co	 262.00
[Stage Direction]
	3,162.50
1900-01.
(Page W-16) details W-128-
Canadian General Electric	Co..	..	108,976.02
1902-03.
(Page W-14) details on W-117-
Canadian General Electric Co., electric equipment for locks and
bridges	 35,347.75
Bills outside of progress estimates (Page W-14)-
Canadian General Electric Co.. ..	345.93
Transformers, &c. (Page W-15)-
Ahearn & Soper	 587.59
[Stage Direction]
.Payments in 1903-04 not In Auditor's Report-
Canadian General Electric Co.. .. 15,832.55
5217,189.80
Accounts unpaid	 1,442.23

[Stage Direction]
For accountant.
July 21, 1904.
This statement is signed by the Deputy Minister of Railways and Canals and by the accountant of the department.
Mr* INGRAM. At what page of the Auditor General's Report does that appear ?
Charles Fitzpatrick: This is for 1903-4. It is not in the Auditor General's Report, Canadian General Electric Company, $15,832.05. This claim is certified to by the Chief Engineer of the Department of Railways and Canals and by the accountant.


Thomas Simpson Sproule: Is that for installing the plant ?


Charles Fitzpatrick: This is for installing the plant. If you take that amount and add 3 per cent interest, that will give you $0,000. Then if you allow 7 per cent for depreciation, you will add $14,000 ;	$14,000 plus
$0,000 makes $20,000. If you will .then take what is actually paid for maintenance, for operating expenses, wages of electricians and motormen, amounting to $11,131, and add'that, you will find that the government are paying $31,131 for the 120 horse-power required to operate the gates, 213 arc lights and 310 incandescent lights. Those who are curious enough to pursue these details further will find that it has cosjt the government about $70 per horse-power. That is the result of government ownership as far as the Soulanges canal is concerned. The hon. gentleman expressed some amusement at the fact that I had attempted once or twice, when this matter was up for consideration, to explain the contract rather than allow my hon. friend the Minister of Railways and Canals (Mr. Emmerson) to do it. The reason for that seems to me to be obvious. When the contract of 1902 was entered into I happened to be Minister of Justice. I was not the Minister of Justice when the original contract was made. I was, therefore, responsible for everything that was done in connection with the contract of 1902. The Minister of Railways and Canals, who was my client at that time, was not here to explain what had occurred, and the present Minister of Railways and Canals knew absolutely nothing about the facts. As the legal adviser of the minister at the time, it became my duty to make myself familiar with all the facts of this case, and it was only because I had made myself familiar with the details of this contract that I interfered in this discussion. My hon. friend the Minister o?
270}
Railways and Canals would have been in a position to have explained the whole transaction very much more satisfactorily than I could have done had he been connected with it from its inception as I was. I do not know that there is anything more for me to add about this contract, but I presume that other hon. gentlemen will be called upon to discuss this question, and if, in connection with the discussion, any new fact is brought out that requires explanation, I shall be glad to give such information as I possess in explanation of any point that may be raised. I want to make it clear that the government has not paid a dollar in connection with this contract except for power actually supplied and lights actually furnished. I might say, in addition, that in so far as the lights are concerned, when the hon. gentleman says that 30 lights would be sufficient to light this canal in winter time, he does not realize what this means. To supply 30 lights on a circuit of 22 miles, the 30 lights being distributed at different points on the circuit, is as expensive to the man who supplies them as if he supplies 250 lights.


Thomas Simpson Sproule: I thought the canal was only 11 miles long.


Charles Fitzpatrick: It is 11 miles long and it is lighted on both sides. To supply 30 lights on a circuit of that description requires the same power-house, the same expenditure on machinery to create the power, the same capital account and entails the same interest charges and charges for repairs and ail that sort of thing, as it does to supply 250 lights. The only difference as between the cost to the contractor, when he supplies 250 or 30 lights on a circuit of this sort, is the expense of carbons and lamps, which are matters of a few cents. All the other expenditures remain the same. His trimmer has to go around the circuit every day. He has to be kept on just the same for 30 lights as if there were 250 lights. The only difference is in respect to carbons and lamps, so that when my hon. friend says that 30 lights are all that are required that is absolutely unreasonable. Even the Auditor General saw it was unreasonable, and he agreed, under the compromise, that 100 lights should be supplied. Then my hon. friend says that Mr. Davis was glad to accept this modification. Of course, he was glad to accept it. He had spent $300,000 upon the installation of his machinery and plant, and he was glad to get that rather than nothing at all. He had been waiting for about two years without receiving any payment on account of the contract. I think that these are all the facts that I want to bring to the attention of the committee.at this late hour.


John Graham Haggart: In the speech of the hon. gentleman (Mr. Lennox), who introduced this subject, and in that of the hon. Minister of Justice (Mr. Fitzpatrick), who replied to him,

there is nothing at all that involves a charge against the management of the Department of Railways and Canals when I was at the head of it, but I see in the newspapers-perhaps I ought not to pay any attention to it-that the charge is made, especially against my leader in the House here, that he dare not take part in the debate, because a leading supporter of his was a party to what is alleged to be this corrupt bargain with Mr. Davis. The Auditor General, in his report, insinuates that this contract was made at the time of a general election. What does he mean by that ? Does he mean that it was done for some corrupt purpose at the time of the election ? If there ever was a transaction with which I was connected that would bear the light of day it is this one. I was most particular in all the arrangements in reference to this matter. An application was made to me in 1893, perhaps before that, by the member representing the Cornwall district for the power which he'saw was to be developed by the construction of the Sheik's Island dam, or by the sluice-way which was intended to be constructed for the purpose of drying up the canal between the guard-lock and Sheik's Island so as to permit of repairs being made upon the canal. He wanted the lease given to his brother, John Bergin, of Cornwall. He was at me for several months in reference to the matter. Finally he associated himself with Mr. Davis. I remember very well when they came to me to get a lease of the water-power He stated they were going to establish an electric car service, I think in Cornwall, and he wanted to utilize the power. Before they made application on both occasions they consulted me and had my opinion as to what I would recommend. I told them that I could not give them the lease unless I reserved the first power for the government for the purpose of erecting works for lighting and operating the canal. They did make application in that direction which was finally withdrawn after consultation with me. Then the proposition was made w-hich is embodied in the Order in Council and the lease of 1896. This was in 1895, and I remember perfectly well making the agreement as to the lease. I instructed my deputy to make the closest inquiries as to the cost of electric light and power elser where in Canada. I think I have his report in my private papers which I took away from the department, and in it he stated that on inquiry with Mr. Davis, and after going over the subject in nine or ten different towns in Canada, the lowest price paid for lighting was 30 cents per lamp per night. Then the horse-power had to be considered and. strange to say, although it is only a few years ago, there was one horse-power for such purpose generated by electricity in .the whole Dominion at that time. I got a (report as to the cost of generating horsepower from the officers of the department, Mr. HAGGART.
and it stated that it was worth $65 per horse-power to be utilized in that way. Now it is not $65 per annum that we are paying or that we agreed to pay under the lease. You must remember that it. is a .twenty-four hour service, and if we utilized it the whole year, instead of paying $63 per annum we are only paying $31.50 per horsepower per year. Then we only pay for the time we use it, viz., seven months out of the twelve months. If you w'ant a couple .hundred horse-power it is almost as cheap to furnish it for the whole year as for seven months, because you require to have your .power house, dynamos, and everything else there except the men who run the machinery. As a matter of fact, if you only utilize it for seven months in the year and pay for it in proportion, we are only paying at the utmost $25 or $26 per horse-power per annum. In my innocence then I thought I was making a first-class bargain for the .country. I thought it was impossible to get the lighting or the power at any cheaper .rate. In order to guard myself further, I .made it a condition-of the contract that we .could expropriate at any time by paying the .value of the investment plus five per cent. *That isthe position of the matter. I thought I had the option to use the power or not, just as I pleased. But I think there is a good deal in the argument of the Minister of Justice, that when one party undertakes .to furnish certain material or do certain work, there is mutuality in the contract. I did not know that at the time, but it did pot make the slightest difference anyway, because at the end of twenty-one years you could make any conditions you liked.


Charles Fitzpatrick: And that continues.


John Graham Haggart: Yes, I see the Minister of Justice has retained that in the new lease, and he has the power of expropriating at the cost, plus five per cent at any time. I repeat that the .application for this lease was made a year and a half before the contract was filed. The Order in Council was passed in February, 1896. and the lease was signed in June, 1896, a few days after we were defeated. It was then signed for the simple reason that all unfinished business in any of the departments was to be [DOT]completed before we went out of office. ' I believe that contract was a perfectly proper one, and I do not see anything to be ashamed of in it. It never entered into my head that .1 was doing anything but making a good bargain for the country, and I think so to [DOT]the present day. I cannot understand the allusion of the Auditor General ; and I cannot understand the charges in newspapers that I was party to a corrupt bargain in making this contract with Mr. Davis in 1896. There is nothing in the contract which any one need be ashamed of. The lease is in ordinary terms, and is the same as all other leases from the Welland canal down to the Lachine canal, and Mr. Davis pays the same

price under the same conditions and specifications as are attached to other water leases that were executed by the government when I was a minister. There is *nothing in the arrangement which bears the stigma put upon it by the Auditor General that it was corrupt. The bargain was one that 1 could justify at any time and which at the time it was made in the best interests of the country.


Thomas Simpson Sproule: The calculation of the Minister of Justice was, that all the gates and all the locks, and all the other works in the canal would require power at the *same time, which would be a practical impossibility. The full amount of power under any ordinary circumstances would not be required at one and the same time on the canal.


Charles Fitzpatrick: I think I omitted something. If all the operations were going on at the same time it would take 596 horse-power.


Thomas Simpson Sproule: You are paying for nearly 700 horse-power.


Charles Fitzpatrick: The 596 is simply for the operation ; for the light it would take more.


Thomas Simpson Sproule: Four hundred for the operation and the rest for the lights. This contract seems to have been let without any tenders. The Act provides by chapter 27 that such a contract as this should be let after public tender. It cannot be contended that this is a work of urgency. Then it was not done by the servants of the department, and at the same time it is a violation of the law which is intended to get the best results for the people of the country. The minister proceeded to show that there was no change in the contract. I do not know how he reaches that conclusion. I have gone over the contract time after time and I cannot reach any such conclusion for it seems to me that the contract is changed and changed for the worse, very materially. The first contract is for 21 years.


Charles Fitzpatrick: No. no. read paragraph No. 7 of the contract, beginning ' To have and to hold.' It is renewable.


Thomas Simpson Sproule: There is a rumour afloat to-day that a company is being incorporated to take that over, and that cannot be done without the consent of the government.


Charles Fitzpatrick: That is right.


Thomas Simpson Sproule: In view of what has come to light, is that not going to put us In the hands of the company whereby vested rights will become such that parliament cannot take the plant over ?


Charles Fitzpatrick: Of course any company taking it takes it subject to the terms of that lease.
Mr. SPROU'LE. If a company takes it it will be on the basis of 84 not of 21 years. When any company put their money into it would this government or any government take over the contract at the expiration of 21 years ? They are not likely to do it. The minister has made a calculation with reference to this to the eifect that for the lighting of the Soulanges canal it would cost a great deal more. The information the Auditor General has given us is entirely different; the interest upon the money invested for the plant and the cost of operating would come to about $9,800 a year. I have not gone into the calculation because I always find that the Auditor General is pretty correct and I have taken his figures. The Soulanges canal is longer than the Cornwall, the Soulanges being fourteen miles and the Cornwall eleven miles long, the only difference being that there are lights on botli sides of the Cornwall and only on one side of the Soulanges. If the one can be lit for less than 810,000, why is it that we pay $51,000 for the other ? That seems to me to be a mystery. The power costs $03 per horse-power, and while the ex-MiniSter of Railways and Canals used an expression which seems to reduce that cost very much, that the days are counted as twenty-four 'hours, still this seems a large amount 'when we consider the fact of which I am 'informed that at Hull, in the cement works, they get their power for $15 per horsepower, with a 24-hour day. And that is a contract for ten years, whereas this contract is made for four terms of 21 years each, or 84 years. The existence of the contract being longer, you ought to get the power and lights at a smaller price. We are dealing witli the public money, and I find that a private company, dealing with their own money, are getting for $15 what we are paying $63 for. Surely that dres not look like an economical or prudent contract, especially in these days of invention and change when there are continual improvements being made in electricity. In two or three years the whole business of providing electric power may be transformed, but in this contract it is not the company. but a contractor who will reap the benefit from any advances in electrical science. If the calculation of the Auditor General is correct witli regard to the Soulanges canal, that is lighted for $10,000 a year, whereas this costs $51,000. True, we cet 81.000 a year for the wrater-power, but just look fit the situation. We rent waterpower to Mr. Davis at the rate of $1.62 per horse-power and buy it back from him at 863 per horse-power. And his lease does not even cost him that, because he has a great deal of surplus power to sell to the public.


Sir WILLIAM MULOCK.: Does lie not spend money to get that $63 ?


Thomas Simpson Sproule: Yes, but taking into account all the expenditure, that is a capital expenditure for once only, apart from the keeping in repair, and certainly therfe seems to be a wonderful profit in the transaction. The essence of the whole thing is waterpower. You go through the country and rent water-power at a high figure. The power rented on the Cornwall canal, if put up to public tender, would have brought many times $1,000 a year. There is one small stream in my part of the country, supposed to be strong enough to generate 400 to 500 horse-power, and they are capitalizing it to-day for $500,000, and it is believed to be good value for the money. We sell all the power for $1,000 a year which is applied by the Cornwall canal. I do not think that is a good bargain. The ex-Minister of Railways has pleaded that at the time this first contract was entered into, there was but little knowledge with regard to electrical power and no one knew what it was worth. That, no doubt, is a substantial excuse. All that could be done was to depend on the judgment and intelligence of the engineer and when acting on the advice of the engineers the department could scarcely be blamed.
What did the whole bargain mean to Canada V It means for 84 years, over and above what we get for the power we rent, we pay $4,000,000, whereas tne same work is being done on the Soulanges canal for a little less than $1,000,000, some $800,000. With regard to your 2,000 candle-power lights, it is said that they are very cheap at 30 cents a light per night. How much does that come to in a year? It comes to $108. These lights do not require to run 24 hours in the day because half the time is daylight. What does an ordinary light cost the various towns in the country ? I went into that a few years ago, and I found that $73 a light is the highest I can find for 2,000 candle power every year. True, these were to run all night, but on full moon nights they would not be required. With reference to the canal, it is not used the whole year round, but only during seven months. Here is the country paying $108 a light when private corporations and towns and villages are not paying at the outside more than $73. I want to say a word with regard to the troubles of the Auditor General. That officer made every effort to do his duty, but when he appealed to the government, the government and its employees thought proper to throw every obstacle in his way. He did not get that encouragement to which he is entitled. No one can read the correspondence and come to any other conclusion than that there was no effort made to help him to do what he believed to be his duty, and I am not surprised that he should have felt discouraged and said if you will not give me the authority I should have, I will resign. It is certainly a very heavy loss to the country which this contract imposes on us. Is it Mr. SPROULE.
going to be continued V Is it going to be a capitalized concern to-day which will continue and compel us to pay $4,000,000 a year during the term of the contract when the work could be done for less than $1,000,000 ? The people will not regard that as a provident bargain. If the government allow a corporation to take over that contract on a basis of 84 years, what will the country think of it, or say about it.
Then we have $25,200 paid and not one penny of it returned to the country. The explanation of the Minister df Justice did seem to have some weight. If Mr. Davis did his part and the government failed to do theirs, and the contract provides that as soon as Mr. Davis is prepared to supply the power, the government would be compelled to pay, it looks as if he were entitled to some consideration. But I do not see anything in the contract that obliges the government to pay before they begin using the power, and I would be glad if the Minister of Justice would tell me where that is to be found. With regard to the cancelling of the contract, the Minister of Justice says the government have that power. I assume they are not likely to exercise it. We have the Auditor General's statement for that. And we have the statement made some nights ago by the Minister of Justice that not a dollar of this money had beSn paid out. I asked him then and I ask him now,, why ? The department signed the certificate for the money, and but for the action of the Auditor General it would have been paid. If that money has been saved for the country, who ought to get the credit for it ? The Auditor General, and not the Minister of Justice. Every official of the government sided with Mr. Davis, and the Auditor General had to fight the whole lot. If he succeeded in keeping the money in the treasury, so much the more credit fo him and so much the less to'the government and their employees.


George William Fowler: As there seems to be some difference of opinion between the Minister of Justice (Mr. Fitzpatrick) and Mr. Ayles-worth as to what was required under the first contract, I would like to ask the Minister of Justice on what he bases his opinion. On page 39 of the Auditor General's Report appears the letter of Mr. Aylesworth, dated 21st March, 1903. and addressed to the Auditor General. He says :
Referring to your favours of 16th and 18tb instant. I have now examined the lease of June 25, 1896

 .
This was the original lease on which the whole contract was based.
-the Order in Council of October 9th, 1900, and the agreement of October 19th, 1900, thereupon entered into.
This. I understand was the new contract made by this government with Mr. Davis.

I understand you wish my view on the question whether the government can, under these contracts, fix the number of lights to be used on any one night, paying only for the number of lights so used at the rate of thirty cents per night.
I think that was the position of matters and the right of the government in the premises prior to the agreement of October 19, 1900, but by the document of the last mentioned date the number of such lights has been, I think, fixed by the agreement of the parties at not less than 250, and I think, therefore, that if on any night any lights at all are required Mr. Davis has the right, if he wishes, to insist that not less than 250 shall be paid for.
That was the result of this government meddling with the contract.
So long as the lease of June 25, 1896, was the only document evidencing the agreement between the parties, the situation was that Mr. Davis had the right to supply at the prices named in the lease, whatever electric power was required for the working of the locks on the canal, and electric lights along the canal at such points and number as should from time to time be deemed necessary by the chief engineer.
That is, that the chief engineer should have the power to do just what the Minister of Justice said he should not have the power to do. It means, if it means anything, that he was to have.the power to vary the number of lights and the amount of power to he used, He could demand,, as the hon. member for South Simeoe (Mr. Lennox) said, that there should be 50 lights at one time and 40 at another.


Charles Fitzpatrick: Would the hon. gentleman (Mr. Fowler) make such a contract ?	.


George William Fowler: That is not the question. But here is a contract that was made. Does the Minister of Justice mean to tell this committee that this new contract was made to let Mr. Davis out of a hole that he had gone into ?


Charles Fitzpatrick: No, it "Was to give a common-sense effect to the original contract.


George William Fowler: This, according to the opinion of Mr. Aylesworth was the legal interpretation of the contract. This was the position that Mr. Davis placed himself in, according to the opinion of Mr. Aylesworth and the opinion of Mr. Newcombe, two very eminent counsel. I will read the letter of Mr. Newcombe which comedies with that of Mr. Aylesworth. So, if Mr. Davis had made an imprudent contract, then, this government made this contract of 1900 for the purpose of letting Mr. Davis out of a hole:
As matters stood, so long as this lease was the only contract-
As it was until this agreement of October 19, 1900.
-it rested with the chief engineer to define the points along the canal at which lights were required, and from time to time to determine the number of lights.
If that means anything, it means that the chief engineer would have the right to say how many lights were required-say 100 for this year, and 60 or any other number next year.
The prices and various particulars in regard to the lights are specified by the lease.
The Order in Council of October 9, 1900, and the agreement of October 19? 1900, specify in distinct language the number of lights to be furnished. They are to be, in number, not less than 250 nor more than 270, at the discretion of the department, and the government having by this Order in Council and subsequent agreement exercised the right reserved to it under the lease of determining the number of such lights which Mr. Davis should supply, he is, I think, entitled to rely upon such Order in Council and subsequent agreement, and to say that if any lights at all are required from him on any particular night, the number of them shall be not less than 250.
So, we have the fact that the previous government entered into an agreement and lease with Mr. Davis to supply what lights were required and the power required for the works of the Cornwall canal at a specified sum per light and per horse-power. Under that same lease, it was to be left to the chief engineer of the department to determine from time to time what amount of lighting of the power was to be required. Then, the only question that could possibly arise with respect to the original contract was and is, was the price per light and per horse-power reasonable price ? If it is left to the engineer of the government to say how much shall be required, then, the matter of quantity cannot be considered, because only such quantity would be taken as the interests of the canal required. The question is simply one of price. In 1896, as has already been pointed out, the supplying of electric energy was almost in its infancy in this country. I think the former Minister of Railways and Canals (Mr. Hag-gart) has told us that electric energy was not then supplied at so much per horsepower. Therefore, it was difficult to ascertain what would be a proper charge for such service. With the best information he could obtain, the price was fixed at $63 per horse-power. That may have been a fair price in 1896 ; I am not sufficiently familiar with the circumstances to say whether it was or not. It is certainly not a reasonable price per horse-power for electrical energy at this time. On the Welland canal, I understand, electric energy is supplied to the government at $14 per horse-power.


Mr. INGRAM.: And with a ten years' contract at that.


George William Fowler: And here we are paying Mr. Davis on the Cornwall canal just four and a half times that amount, and paying

for power in excess of what the service of the canal requires. The conditions may not be the same on the Welland canal as on the Cornwall canal, but certainly they are not sufficiently more onerous on the Cornwall canal as to make this difference of four and a half times. There is no part of eastern Canada where you cannot supply electrical energy by steam-power cheaper than $63 per horse-power.


John Graham Haggart: It will cost that here.


George William Fowler: I doubt that, although coal is much higher than it is in New Brunswick, it will not cost $63 per horse-power or anywhere hear that amount. It has been pointed out that a contract has been entered into with the cement works at Hull to supply electrical energy at $15 per horse-power, 24 hours in a day and seven days in a week. That is a matter of fact which I have learned from the parties to the contract themselves. I say this Davis contract is an improvident contract as to the price at the present time, that it was an unnecessary contract for the government to make. There has been no necessity shown for the government to enter into the second contract at all. It has been pointed out by my hon. friend from East Grey (Mr. Sproule) that Mr. Davis got the use of this canal at a very low rate indeed, and I think that the ex-Minister of Railways was culpable in that he did not see this matter put up for public tender. All these public services should be put up to public tender where every one may have an equal right to tender. Now, I want to read briefly from the opinion of Mr. Newcombe :
(a.) Can the chief engineer direct Mr. Davis during any day or week or other period named by him to shut off the current from all the lamps on the canal ?
I am of opinion that he can under the lease to Mr. Davis of the 25th June, 1896, he undoubtedly could do so.
Absolute control is in the hands of the chief engineer, the government could take it out of the hands of Mr. Davis.
The contract of 19th October, 1900, varied the provisions of the lease only as is specified or provided thereby, and so far as this point is concerned all that that agreement specifies or provides is that it is agreed between the Crown, represented by the minister, and Mr. Davis, that the latter should under the lease supply and work electric direct current arc lights not less at any one time than 250. lights.
Now, I say that before this agreement or second contract of 1900 was entered into, the matter was entirely under the control of the government themselves as represented by the chief engineer.
Liuder the lease itself no minimum or maximum was fixed, but the lease was bound to provide any number of lights which the chief engineer deemed necessary. The chief engineer might require any number, great or small, cr he might require none.


M&quot;. FOWLER.
[Stage Direction]
Now, that opinion exactly coincides with the opinion of Mr. Aylesworth in the Auditor General's Report, page 39. It seems to me there is some reason for the outcry that has been raised with respect to this contract, nor do I think the government have served the best interests of the public by making the second contract. Of course, after having fought a round or two with the Auditor General and having become frightened, they then changed the contract so as to reduce the expense by some $22,000. It is surely an excellent reason why that gentleman should be continued in the position he occupies; I trust he will withdraw that application for superannuation and will still continue to be the watch-dog of the treasury.
Now, this gentleman, Mr. Davis, figured last year in a matter that came before this House. He seems to be a favourite with this government as, I believe, he was years ago with the government that preceded the [DOT]present one. He seems to be a sort of general government favourite. This gentleman figured with respect to the Quebec bridge, and it is a remarkable coincidence that Mr. Davis's connection with that bridge was defended at the time by the Minister of Justice, who is his chief defender tonight. Under the arrangement with the Quebec Bridge Company Mr. Davis benefited by the new order of things to the extent of $140,000 or $160,000, a nice little sum for a man to make. Mr. Davis took bonds of the Quebec bridge at some 60 cents on the dollar, bonds amounting to $400,000, for whieh he gave credit for $240,000. These bonds standing for cash by the new deal that was made in connection -with the Quebec bridge and the Grand Trunk Pacific, they were worth par, which would give him the nice little sum of $160,000. Now, in this contract he has benefited to the extent of some $50,000, and, as reduced by the Auditor General, he will get $30,000. So, I think Mr. pavis altogether is doing very well out of his connection with this government. I think the best thing to be done by the government is to go back to the original contract of 1896 and pay for only such lights as are required. To say that when we require thirty lights in the winter time, and that this canal shall be kept blazing with lights when it is all frozen up, seems to me to be absurd.
Haughton Lennox: I want to make one or two observations in answer to the Minister of Justice. I do not complain of the fact that the Minister of Justice has defended this contract. I feel it to be a compliment to be opposed by the Minister of Justice in this matter. I think the government realized that it was a grave matter, because they have chosen their most distinguished member in respect of legal ability to plead their case. In reference to the member for

South Lanark (Mr. Haggart) I don't want to say much, I do not think it is necessary to say much. He naturally defends the contract he made. As for the government, they necessarily have to treat it as a good contract because they make it the basis of their present contract. I am afraid that my hon. friend from South Lanark is in the condition that I notice many hon. gentlemen opposite are in at times, when they seem to live in the past, they' do not take account of changing conditions. In other words, the contract of 1896 may have been a very proper contract at the time, but it is absolutely improper for the government to renew it, or to make it the basis of another in 1900, when Mr. Davis was in default, and the government was absolutely free to renew it or not as they thought fit.
From what occurred on the 13th last month w-hen a gentleman infinitely more qualified to present this matter than I am, presented it from our side of the House I thought that it would be allowed to rest there ; in other words, that the government had so far set their construction upon the question of whether or not the lease of power and lights was renewable that it had been practically eliminated from the controversy. But, it does not seem so to-night because the hon. Minister of Justice seems to have got fresh energy in the matter and lie to some extent intimates that he is still of the opinion that the 84 year term applied under the old lease to the power, and light as weil as to the lease. He founded that upon this clause of the lease :
To have and to hold the said lot of land and the said surplus water and such Increased flow of water into the said canal from the said creek through any works of thg lessee, as appurtenant to the said lot of land for the erection of an electric plant andr the operation of the machinery therein, and the privileges, rights and easements thereof for the term of twenty-one years from and after the first day of July, A.D. 1896, and ended on the first day of July, A.D. 1917, and thereafter for a term or period of 21 years renewable as Is provided and mentioned in the annexed general terms and conditions.
What are the general terms and conditions ? I shall read the heading :
GENERAL TERMS AND CONDITIONS for the


LEASING OF WATER POWERS,
[Stage Direction]
With or without Mill Sites, upon or in connection with the Canals of the Dominion of Canada.
Not one word of application to a case such as we are arguing now. This was intended to cover the rights of a lessee of a water privilege or a mill site under the government and it was never intended to cover any such case as we are here dealing with, namely, the question of the government entering into an arrangement with Mr. Davis to take power and lights. Not
only was it not intended but throughout it is not adapted and of the twenty-four different articles and provisions that are contained in these general terms and conditions could it by any construction be made to apply to a case such as we are dealing with. Let me refer to one article that was,remarked upon in this connection on the 13th last month.
Article 20. The first day of July, A.D. 1895, and the first day of July of each twenty-first year thereafter following shall he dates from or up to which respectively the term of this lease of water-power shall be computed. The lessor covenants and agrees that if during the term of his lease the lessee do well and truly keep and perform all and singular the covenants, agreements and undertakings on the part of the lessee to be kept and performed as herein and in his particular lease contained, then the said lessor shall or will, at the expiration of the term of the lease, on the written request of the lessee, made at least three months before such expiration, execute and deliver to the lessee, or to his legal representatives and recognized assigns, a renewal of the said lease for a second term, which shall then be twenty-one years, and also at the expiration of the aforesaid and of every subsequent period of twenty-one years for eighty-four years from the said first day of July, A.D. 1895, and then to be completed and ended.
Not one word of that provision can by the most forced construction be made to apply to a case such as we are here dealing with. The Order in Council expressly provides that this is to be for twenty-one years :
The said contract to be enforced for a term of twenty-one years.
That is the Order in Council of the 9th October. The Order in Council of the 16th October is that the time shall be extended so as to correspond and be brought into conformity with the lease of the water-power. It shall be extended for the additional period of the lease. When the lease is drawn up after due consideration and carefully drawn up and it provides that it shall be extended for eighty-four years in compliance with the amended Order in Council, so as to make the term of this contract as to power and light, ' coexistent with the leasing portion of the said indenture.' Not only have we that construction definitely placed upon the contract by Mr. Davis and reiterated by the government on four different occasions but we have that construction placed upon it by the experts who were appointed by the government because they point out the necessity of the conditions being frequently readjusted. If the contract was renewable in the way suggested that would not be the case.
Charles Fitzpatrick: If at the expiration of twenty-one years the contractor refused to supply lights would that be a covenant enforceable against him?


Haughton Lennox: The difficulty might have arisen if it had not been that the former government put into the contract the power to determine the lease at any time and take the works over. That emphasizes rather than militates against the prudence of my hon. friend the member for South Lanark in entering into an agreement reserving to the government the right to open further negotiations, holding in one hand the power to determinate the lease and in the other the power to sign the -contract with the lessee if he would give, but only if he would give, reasonable terms having regard to the new conditions which would necessarily arise after the lapse of twenty-one years.


Charles Fitzpatrick: That is another question about which there is no dispute. I am at one with my hon. friend as to that, but I put my hon. friend as a matter of law the question : Is the covenant to supply power an enforceable covenant against the lessee At the expiration of twenty-one years ?


Haughton Lennox: If we were both unprejudiced I would attach more importance to the opinion of my hon. friend than I would to my own opinion.


Charles Fitzpatrick: I want your opinion.


Haughton Lennox: As far as I know and as far as I construe the agreement it was an absolute impossibility for us to hold Mr. Davis to the contract to supply light antd power beyond twenty-one years. And I go further ; I doubt very much indeed if we could have held him to the contract to supply light and power at all in a sense because there is nothing definite at all in the agreement. It was only an option reserving for the government a part of that which they already had. I reaffirm the statement that in 1900 the government had power to control the quantity of light, and that by the Ordler in Council they reserved that right, and that by the improper departure of the minister from the terms of the Order in Council we lost that right. Mr. Aylesworth draws attention to the fact that the matter had been complicated by the lease not conforming to the previous Order in Council, and it is to that Mr. Neweombe refers as showing that the government had the power ipso facto, as well as by applying to the courts to remedy the mistake and have the original term of the first contract carried out. At the close of the correspondence between the Auditor General and the government, Mr. Stewart calls attention to the fact that he remains in great doubt as to whether there is sufficient power for both the government and the other lessees of power from Mr. Davis, and when the Minister of Justice takes into consideration the total cost of the work his argument is practically futile. The minister told us that not a dollar had been paid beyond what was supplied according Mr. FITZPATRICK.
to the contract. But for six months in the first instance we were paying for light which we did not need. Upon the facts admitted by the government we were paying for 250 lights when'as a matter of fact we only needed thirty. We were paying for the power from the 24th of October, 1901, to the 11th of October, 1902, when the Auditor General wrote his letter, when not one unit of power, had been used or could be used and when subsequently after the agreement of 1903, we were then according to the official record, only in a position to use twenty horse-power out of the total amount for which we were paying. When we come to t)ie circumstance that we have only had to Day for a reduced number of lights and for a reduced quantity of power, we have that by reason of what the Auditor General lias brought about, and in direct opposition to what the Treasury Board decided was the correct course and our legal obligation on the 13th of November, 1902. Although it was true in one sense that we have not paid any more than what Mr. Davis has put himself in a position to demand, yet we have paid for a vast quantity of power that we have not been able to avail ourselves of. We have paid for a vast quantity of power that we have not been able to avail ourselves of and the statement furnished on the 14th of August, 1903, a very recent date, shows that we have been paying for 100 lights during a period of twenty months and for 125 horsepower at $63 per horse-power, and it was only about the end of that period that we were able to make connection with the gates at all. We were paying for the light las a rule with the exception of one month not less at any time than 217 lights, and up to 249 lights on other occasions, and yet it was declared that during a great portion of that period it was determined by the depart-|ment that only thirty should be actually used.


John Waterhouse Daniel: On July 28th, the following questions were put and answered :


Mr. FOWLER asked :: 1. How many tons of grain and grain products were carried by the Intercolonial Railway from southwest of Montreal to St. John, for other Bay of Fundy ports during each month commencing September 1, 1903, to June 30, loot, f.nd how many tons of the same articles from points west of Montreal were carried during the same time to the same port for local delivery ? *******
3.	Is the Department of Railways and Canals aware that grain and - grain products from points west of Montreal have been delivered in St. John for local delivery after having paid the export rate of freight only ? If so, to whom have these products been delivered, in what amount, and what is the reason for the discrimination ?
4.	What means are taken by the department to make sure that freight delivered at St. John by the Intercolonial Railway at a special rate

for export is really exported and not detained tor local delivery ?
The minister's answer to the last two questions was :


Hon. H. R. EMMERSON (Minister of Railways and Canals) :: 3.	The Department of Railways and Canals is not aware that grain and grain products from points west of Montreal have been delivered in St. John for local delivery after having paid the export rate of freight only.
4.	The usual means adopted by all railways, viz.: the delivery of the freight to the steamship line upon which the through bill of lading is drawn.
X * understood that Mr. Tiffin had been making some inquiries with regard to this and had made a report to the department to the effect that there had been some irregularities of that kind carried on at St. John. Is that correct ?


Henry Robert Emmerson: No, that is not correct. There have been no irregularities with respect to the export traffic. I remember the question. I looked into it very thoroughly, and made the answer in accordance with the actual facts.


John Waterhouse Daniel: Are not other means employed for tracing such matters than what the minister states here, simply the delivery of the freight to the steamship lines ? Is there no one to see that such freight is properly delivered ?


Henry Robert Emmerson: The officers, of course, follow the bill of lading. These bills for export traffic come to the department, and they are followed by the officers of the department to the different steamships and the points to which they are consigned.


John Waterhouse Daniel: Is it not required that there should be a duplicate of the bill of lading, for such cases as I referred to, sent to some individual who acts especially for that purpose, which is not required with regard to other freight that is carried ?


Henry Robert Emmerson: Usually the bill of
lading goes to the consignee for export, and of course a copy of that comes to the railway. Of course, one goes to the consignee. The railway follows the way-bill, which goes into their hands, and the officers of the department follow that and see that that export is made.


John Waterhouse Daniel: What duties does Mr. Seeley perform ?


Henry Robert Emmerson: He is one of the officials at St. John.


John Waterhouse Daniel: It is necessary that shippers should send to Mr. Seeley the bills of lading of all these goods that are sent over for export, and the answer I take it was not very full as given by the department, because it simply says that the goods are sent to the steamship the same as any other railway.


Henry Robert Emmerson: The officials follow the consignment to the point of shipment.


John Waterhouse Daniel: As a matter of fact there is a special officer to look after that business ?


Henry Robert Emmerson: Yes.
Progress reported.


MUTUAL RESERVE LIFE ASSURANCE CAMPANY.
William Stevens Fielding: We have been urged very strongly to permit an opportunity to be had to move the reading of a Bill on the Public Orders and if there be no objection, I will move that it be called. It is a Bill respecting the Canadian Assessment Policyholders in the Mutual Reserve Fund Insurance Company. It has been sent down by the Senate, and if there be no objection. I would move that it be called now and allow the hon. member for Brantford (Mr. Heyd) to deal with it.


Andrew B. Ingram: I do uot rise for the purpose of objecting, but I would like to give one hour of my time to expressing my opinion of that insurance company. If lion, members can imagine what I could say in that time, I shall leave it to their imagination, but they would find it difficult to exaggerate the opinion I have of its conduct-


ADJOURNMENT-GENERAL ELECTIONS.
Hon.  W. S.@: FIELDING (Minister of Finance) moved the adjournment of the House.


Thomas Simpson Sproule: Any information which ministers have to convey to the country, it is the usual practice for them to convey through the House when parliament is sitting, but I find in this evening's 'Journal' the following special from Brandon :
Brandon, Aug. 4.-Hon. Clifford Sifton's visit yesterday had an important significance to the Liberal workers here. They were assured that no election will take place this year, nor Is it likely till after another session of parliament.
They had so neglected their opportunity when the provincial lists were being prepared that to go to the people under present conditions would mean defeat. Mr. Sifton has assured Brandon workers that he has power enough at Ottawa to delay the general election for several months.
Would the hon. gentleman who is leading the House inform us whether that report is correct or not ?


William Stevens Fielding: I have not any information on the point myself and I learn of that announcement with great Interest, as I am very anxious to know when the elections will be held


Andrew B. Ingram: I do not think a report of that kind should be so flippantly replied to.
committee to allow the til to-morrow.
motion to stand un-


William Stevens Fielding: I did not intend to be Motion allowed to stand, flippant but very grave.	BOUNTIES ON LEAjD.


Andrew B. Ingram: We have been trying the last two or three years to find whether there cannot be some settled policy on the question of an appeal to the country. Hon. gentlemen on both sides have been anxious to know when that appeal would be made and business has been unsettled pending a decision on that point by the government. Here * we have a Minister of the Crown making a declaration off his own bat. Surely the government ought to be able to make up their minds as to when they will hold an election, and the Prime Minister should give the assurance to the people either that the election will not or will take place before we next meet. And I for one protest against this kind of thing. It is about time we should have a date fixed for our election, something like the United States. I suppose our constitution would not allow that. but, at the same time, there is a strong feeling in this country against the way the reports of a general election are bandied about.
Rt. Hon. Sir RICHARD CARTWRIGHT (Minister of Trade and Commerce) moved that to-morrow the House do go into committee to consider the following proposed resolution :
That it is expedient to amend section 2 of Chapter 31 of the Statutes of 1903, intituled : ' An Act to provide for the payment of Bounties on Lead contained in Lead-bearing Ores Mined in Canada,' by .adding after the word ' Canada ' the words ' and any balance of the sum. of five hundred thousand dollars unexpended at the close of any fiscal year may be carried forward to the next succeeding year, and payments may be made therefrom in such succeeding year of any portion of the forty per cent hereinbefore provided for on such ores, and such only as had been delivered for smelting in Canada, but which had not been actually smelted until after the close of the year within which delivered.'	.


[Stage Direction]
Motion agreed to.

William Stevens Fielding: I am sorry to hear my hon. friend (Mr. Ingram) advocating the adopting of American institutions. But hon. gentlemen opposite will do it.


David Henderson: ' I do not think the hon. gentleman (Mr. Ingram) was advocating American institutions. He expressed no such idea. But the question, I think was a fair one-is the report true or untrue ? Is the minister who is now in the west authorized to speak for the government in making the declaration he has made ? Are we to believe it or not ? I think that is a fair question and we should have an answer.


William Stevens Fielding: I have not seen the minister for some time and cannot answer as to the authority be had.


[Stage Direction]
Motion agreed to, and House adjourned at 2.35 a.m. Friday.
[Stage Direction]
Friday,' August 5, 1904.