1924-06-11

OFFICIAL REPORT


[Stage Direction]
Volume Is Pages 1-1020	Volume II: Pages	1021-2012
Volume III:: Pages 2013-3040	Volume IV: Pages	3041-4035


Volume V:: Pages 4037-4877	Volume VI: Index



VOLUME CLXIII


[Stage Direction]
Jiotise of Commons lie bates
[Stage Direction]
Wednesday, June 11, 1924

Right Hon. W. L. MACKENZIE KING (Prime Minister):: I desire to lay on the
table of the House copies of correspondence between the government and the Civil Service Commission and the Board of Audit respecting the revision of salaries of postal employees. This is the correspondence which was requested yesterday by the hon. member for Charlevoix-Montmoremcy (Mr. Casgrain). What is tabled includes all the correspondence, but it does not include some of the statistical tables which accompany that correspondence. If, however, those tables are desired they can be brought down later.


Mr. MEIGHEN:: Do the copies include the correspondence with the other various bodies which were supposed to co-operate with the commission-the Audit Board and the deputy ministers?


William Lyon Mackenzie King: I think it includes all the correspondence between the government and the Civil Service Commission and the government and the Audit Board; I cannot be sure at the moment whether it includes the correspondence between the deputy ministers and the commission. I will have inquiry made and if necessary submit tomorrow such further correspondence as is not now included in what has been tabled.


Arthur Meighen: Including correspondence between the Audit Board and the commission if there is any?


William Lyon Mackenzie King: Yes.



HOME BANK INQUIRY


William Lyon Mackenzie King: I beg to lay on the Table of the House the interim report of the Royal Commission appointed to inquire into t'he Home Bank, and I move that the said report 193
be referred to the select standing committee on Banking and Commerce.


Mr. MACLEAN (York):: When will the report be printed?


William Lyon Mackenzie King: I shall make a motion in a moment respecting the printing.


Arthur Meighen: What is the idea of referring the report to the Banking and Commerce committee? It was not the Banking and Commerce committee which was appointed to consider it. Perhaps this is done in pursuance of a motion made early in the session.


William Lyon Mackenzie King: There was an order passed to refer all Home Bank matters to the Banking and Commerce committee.


[Stage Direction]
Motion agreed to.
William Lyon Mackenzie King: I move that
rule 74 be suspended and that there be printed forthwith 750 copies in English and 250 copies in French, of the interim report of the Royal Commission appointed to inquire into the Home Bank, just laid upon the Table.


[Stage Direction]
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Sir HENRY DRAYTON:: 1.	What amount has been collected under the sales tax during the fiscal year last passed in each city with a population of one hundred thousand or over?
2.	(a) What amount of sales taxes were due and unpaid on the 31st March, 1924, and (b) what is the number of taxpayers in arrears on said date in each of said cities?
3.	Have legal proceedings been taken against such taxpayers? If so, in what cities and what is the number of such proceedings in each city?


Hon. Mr. BUREAU:: 1.	Montreal	$26,278,911.39
Hamilton	 5,583,635.03
Ottawa	 1,570,821.44
Toronto	 23,701,694.45
Winnipeg	 4,987,623.56
Vancouver	 4,263,942.46

Questions

2. (a) Total arrears at all ports on March 31, 1924, were $2,329,938.56.
Total
(b)
Montreal	1,078
Hamilton	 86
Ottawa	 69
Toronto	 546
Winnipeg	 156
Vancouver	 123
3.	For period 19th May, 1920, to date.
Montreal	 97
Hamilton	 13
Ottawa		17
Toronto	 101
Vancouver	 35
Winnipeg	 25


DORCHESTER-FRENCH ACADIAN EMPLOYEES
Mr. DOUCET:: 1.	What is the name and position of each of the French Acadians holding superior positions in the Dorchester .penitentiary?
2.	What is the date of employment and salary of each, respectively?


Hon. Mr. LAPOINTE:: 1.	(a) Rev. P. P. Dufour, Roman Catholic Chaplain, (b) W. L. Allain, School Teacher and Librarian, (c) E. F. LeBlanc, Assistant Engineer, (d) A, P. Bourque, Keeper.
2.	(a) Appointed Nov. 16, 1916, Salary
$1,500. (b) Appointed Feb. 5, 1917. Salary $1,620. (c) Appointed Jan. 27, 1919. Salary $1,500.	(d) Appointed Apr. 1, 1912. Salary


$1,320. UNITED STATES TARIFF
Hon. Mr. STEVENS:: 1.	Is there a clause in the United States tariff empowering the president to increase the duty against foreign goods entering the United States, under certain conditions?
2.	If so, has the said law been invoked during the past two years, and how frequently and on what goods, and to what rate was said duty increased?


Hon. Mr. LOW:: 
DUMPING DUTY ON COKE
Mr. EVANS:: 1.	Why was $1 per ton of dumping duty levied on a car of coke imported from Detroit by W, O. Sealy of Hamilton when the price paid F.O.B. Detroit was $6.50 per ton, which was the price at which coke was sold in the ordinary course of trade in the United States?
2.	What was the name of the customs officer who made the levy?
3.	Who made the regulation that coke bought in Detroit at less than $7.50 per ton was subject to the dumping clause?
4.	How long has such regulation been in force?
5.	May goods be held to be dumped when the price paid is the ordinary charge in the country of origin?


Hon. Mr. BUREAU:: 1.	On report of investigating officer that the-selling price to purchaser in Canada was less than the fair market value when sold for home consumption in the usual and ordinary course of trade.
2.	Collector of Customs and Excise, Hamilton, Ontario.
3.	No regulation, but instruction by Appraising branch that invoice did not represent, fair market value.
4.	Answered by No. 3.
5.	No, provided price paid is not less than the fair market value of the goods when sold for home consumption in the usual and ordinary course in the country whence exported to Canada at the time of their exportation to Canada.


BEER MANUFACTURED IN MANITOBA
Mr. WARD:: 1.	What total quantity of beer was manufactured in Manitoba in each of the years 1915 to 1923, inclusive?
2.	What revenue accrued to the Dominion from the manufacture of beer in Manitoba in each of the years 1915 to 1923, inclusive?
3.	What reports of violations of provincial liquor laws by breweries in Manitoba have been made to Dominion authorities for each of the years 1915 to 1923, inclusive?
4.	What decision, if any, has been reached by the-Government as to the continuance of license to breweries, found guilty of violation of law?

Questions
5.	What total quantity of wines and spirituous liquors were (a) imported into Canada: and (b) manufactured in Canada, in each of the years 1915 to 1923, inclusive?
6.	What total quantity of beers and malt liquors were (a) imported into Canada: and (b) manufactured in Canada, in each of the years 1915 to 1923, inclusive?


Hon. Mr. BUREAU:: 1 and 2. Statement showing the quantity of malt liquor manufactured in Manitoba, and the excise duty and excise taxes accrued on same for the fiscal years ending March 31, 1916 to 1924, inclusive.
Malt Liquor Excise duties manufactured on Malt
Year	Gals.	Liquor Excise Taxes1916	
2,658,488	$ 9,347	1917	
1,666,090	4,254	..1918	
1,838,477	6,142	..1919	
1,551,185	3,681	..1920	'..	2,178,527	8,069	1921	
2,212,918	8,167	$142,0141922	
1,576,019	2,742	15,3361923	
2,377,223	9,234	130,3601924	
2,475,624	28,032	192,511
5 and 6. Spirits and malt liquor manufactured in Canada for the -fiscal years ending March 31, 1916 to 1924, inclusive.
Spirits Malt Liquor
Year	Proof Gals.	Gals.1916	
3,450,012	39,803,0801917	
6,400,119	34,949.6831918	
3,566,955	28,717,5391919	
4,187,109	26,247,5621920	
2,356,329	36,984,2781921	
4,194,691	36,194,6261922	
5,050,188	38,541,7461923	
3,828,870	36,902,0661924	
4,411,896	44,080,490
Imports of malt liquors, spirits and wines entered for consumption in Canada during the fiscal years ended March, 1916 to 1924.
Malt Liquor	Spirits	Wines'Year	Gals.	Gals.	Gals.1916	. 331,633	2,341,765	514,8601917	. 188,155	1,665,096	530,6311918	. 100,723	1,208,707	529,0171919	. 17,903	441,633	223,8651920	. 38,760	1,444,601	720,5561921	. 66,738	3,554,214	694,1491922	. 46,706	1,368,297	364,5171923	. 54,134	1,210,413	341,9831924	. 96,339	1,388,186	567,719*No records	are available in	this department covering	
Canadian manufacture of wines.
3.	Mr. J. H. MacLean, chief inspector under the Manitoba Temperance Act advised the department on the 17th of February, 1922, that fines were imposed upon the following brewers for violations of said act.
The E. L. Brewery Company, Winnipeg, Man., February 28, 1921, $200; November 14, 1921, $300; December 20, 1921, $1,000.
Frank P. Shea, Winnipeg, Man., October 20, 1921, $300.
The Home Brewery Company, Winnipeg Man., December 19, 1921, $1,000; January 16 1922, $200.
Idelweiss Brewery, Winnipeg, Man., March 21, 1921, $300; August 30, 1921, $500.
4.	The department is advised that the minister lacks authority to terminate such licenses under section (2) of chapter (19) of the statutes of 1916, unless they have been forfeited by the court, pursuant to the said section, as an additional penalty.


UNITED STATES WHEAT IN CANADIAN ELEVATORS
Mr. SPENCER:: What quantity of wheat, if any, originating in the United States was taken into public or private terminal elevators in Canada in each of the years of 1921, 1922 and 1923?


Hon. Mr. LOW:: No wheat of United States origin is handled in the public and private terminal elevators in the Western Inspection Division. A small amount of United States com sometimes is received at the head of the lakes. The public elevators in the eastern inspection division, however, regularly receive considerable quantities of United States wheat in transit. The amounts handled during the crop years ended August 31st, 1921, 22 and 23 were as follows:
Crop year ending August 31
Public elevators in the east	-Bush.	Bush.C.N.R. elev., Depot	1921	1922Harbour	
C.P.R. elev., Pt. Me-	197,873	1,636,639Nicoll 	
Aberdeen Elev., Co.,	6,917,322	9,056,995Tiffin	
Midland Elev. Co.,	742,671	538,110Midland	746,112	808,397C.N.R. elev., Tiffin. .. C.N.R. elev., Colling-	1,889,574	1,808,57253,466Goderich Elev. & Trans-	sit Co., Goderich. .. Dom. Gov. elev., Pt.	60,880	113,428Colbome	
Maple Leaf Mlg. Co.	6,599,629	9,200,3671,097,392	Harbour Commissioners elevators 1, 2 and	B., Montreal	
[DOT]Montreal Warehousing	10,938,671	25,864,944Co	
Harbour Commissioners	2,443,046	5,512,166elevator Quebec.. .. W. St. John, C.P.R.	40,011	634,709elevator	
St. John, C.N.R. Ele-	1,014,940	197,743vator	679,492	30,440
Bush.
915,012
8,171,966
353,390
477,944
3,195,260
70,645
8,865,903
1,474,267
26,261,481
3,132,678
408,894
102,994
55,107
Total	 33,367,613 55,455,976 53,485,541
*On March 2, 1923, Montreal Warehousing Company's elevator was taken over by the Montreal Harbour Commissioners as elevator "B" and wheat received is
Questions

included in the amount of the Harbour Commissioners' elevator from that date to the end of the crop year.
Note.-It must be borne in mind that a large part of this wheat is shown .twice-first as a receipt at the lake ports, then again at the elevators in Montreal, Quebec or St. John, N.B.


CANADIAN CUSTOMS OFFICER AT NEW YORK
Hon. Mr. STEVENS:: 1.	Did the government pass an order in council, providing for the establishment of a Canadian customs officer at New York to facilitate the transfer of goods originating in eastern Canada and destined to the Pacific coast port of Vancouver?
2.	If so, has such officer been appointed?
3.	If no such officer has been appointed, what is the reason?
4.	Did said order in council limit the shipment of such goods via New York to British bottoms; if so, why?
5.	Has the government received representations from Vancouver board of trade requesting the elimination of such limitation ?
6.	If so, has the government reached any decision in the matter or when can such decission be expected?


Hon. Mr. BUREAU:: 1.	The order in council provides for a Canadian customs officer being stationed at the point of transfer in the United States, and for the transfer of the Canadian goods from car to vessel and vice versa, and from vessel to vessel, to be made in the presence of the officer and to be certified by him.
2.	No Canadian customs officer has as yet been assigned to duty at any place in the United States under the provisions of this order in council. When the department has been notified that Canadian goods have arrived at a place of transfer in the United States under special customs manifest as provided in the regulations, the department will assign an officer to supervise the transfer of the goods under the provisions of the regulations.
3.	Answered by No. 2.
4.	Yes. For the purpose of confining the benefits of this trade to Canadian and British vessels.
5.	Yes.
6.	No change in the present regulations is contemplated.


MEMBERS OF PARLIAMENT-WEMBLEY EXHIBITION
Miss MACPHAIL:: 1.	How many steamship passages have been booked for England for members of parliament by or on behalf of the government in connection witn the British exhibition at Wembley?
2.	With what steamship company have the passages been booked?


Hon. Mr. ROBB:: 1.	None.
2.	Answered by No. 1.


DOMINION ELECTIONS ACT AMENDMENT
[Stage Direction]
On the Orders of the Day:
William Lyon Mackenzie King: I want to ask my right
hon. friend the leader of the opposition (Mr. Meighen) whether there would be any objection to our proceeding with the second reading of the bill regarding the transferable vote?


Arthur Meighen: Although I am in a
very conciliatory mood I cannot agree to that; it would be the last thing I would want to proceed with to-day or, indeed, any other day.


William Lyon Mackenzie King: It was understood that wre would proceed with the matter yesterday, but if my right hon. friend prefers that it should still be deferred we will take it up at the first favourable opportunity.


TRUST COMPANIES ACT, 1914, AMENDMENT
[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved that the House go into committee to consider the following proposed resolution:
Resolved, That it is expedient to amend the Trust Companies Act, 1914, and to provide,-
1.	That the Superintendent of Insurance shall annually ascertain and certify the total amount of the expenditure incurred by the Government for or in connection with the administration of the Act during the last preceding fiscal year, and the total amount of income received during the last preceding calendar year by each company, and the findings of the superintendent shall be final and conclusive.
2.	That thereupon the superintendent shall ascertain the ratio or percentage which the total expenditure so found and certified bears to the aggregate of the income aforesaid, and shall assess each of the companies an amount equivalent to that percentage of the total amount of the income received, and such assessment when certified by the superintendent shall be binding upon the said companies, and be final and conclusive.
3.	That the amount so assessed against each company shall constitute a debt payable to His Majesty, and shall be payable upon demand of the superintendent', and may be recovered as a debt in any court of competent jurisdiction.
Sir HENRY DRAYTON:: Will the minister explain the resolution?


Mr. ROBB:: The purpose of the amendment is to make some minor changes defining the classes of securities that would come under the act. The investments are also defined, with certain reference to loans to shareholders and directors and to provide for assessment for administration and inspection. As my hon. friend knows, the cost of inspection is at present entirely levied on the insurance companies and we propose under the three bills which we intend to submit to assess on the
i

Trust Companies Act
trust companies, the loan companies and the insurance companies.


Henry Lumley Drayton: My hon. friend is right. Formerly the cost of inspecting trust companies ,and, loan companies "was comparatively so trifling that no assessment was made, and there was no objection to the use of the surplus under the Insurance Act for that purpose, although strictly perhaps it ought not to have been so used. Has the cost gone up very much, and are we going to have expensive bureau work in connection with it?


James Alexander Robb: No, we do not anticipate any additional expense. We simply propose to spread the cost over the three classes of companies.


Arthur Meighen: Am I right in assuming that what the minister proposes is to take the cost of inspection during the previous year, and assess it in proportion to the income of the insurance companies?


James Alexander Robb: -and the loan companies and trust companies.


Mr MEIGHEN:: And that this power of
assessment shall be wholly in the hands of the superintendent, with no appeal from his decision?


Mr ROBB:: I am not sure about the question of appeal.


Mr MEIGHEN:: There is no appeal The
bill says that:
-such assessment shall be binding upon the said companies, and be final and conclusive.
Before I would care to assent even passively to the principle, I should like to know what the minister's view is on this whole question of inspection of companies. We have gone pretty far in connection with the inspection of banks in certain proposals put forward by the minister this session. It is said that consultation involves responsibility. Well, if it does, inspection involves responsibility many times more. I have no question mark in my mind at all as to the wisdom of government inspection so long as its efforts are directed towards reasonably safeguarding the public of Canada; but I have a great question mark in my mind as to the wisdom of government going into the field of inspection where its wards whom it is supposed to be protecting are not the public but are merely investors, debenture holders and people of that class. I hope the government is not going too far. I am not making any objection; in fact the question mark in my mind
is: Have we not gone too far already? Also, are we not pushing the powers now vested in our officials too far? Are we not delving at the roots of enterprise and all the time involving responsibility on ourselves to a great degree, not on behalf of the public of this country, but really on behalf of investors who are entirely competent to look after themselves?


James Alexander Robb: My hon. friend must bear
in mind that some of these trust companies and loan companies under their charters invite and secure deposits from the public. I think it is quite reasonable that we should have a measure of inspection of these companies as to their investments and administration.


Arthur Meighen: I am not raising the
point at all in so far as depositors are concerned. But I should like to have the minister's view as to how far we should go in seeking to protect debenture holders in this and other lands and thus incurring a degree of responsibility on behalf of people who can look after themselves a lot better than we can.


[Stage Direction]
Motion agreed to, and the House went into committee, Mr. Gordon in the chair.
On section 1:
Henry Lumley Drayton: How many men are now employed?


James Alexander Robb: There are about eight or nine men, but they are inspecting all the companies. During the past two years one man has been devoting his time largely to the inspection of trust companies and loan companies.


Mr. HANSON:: I see by the estimates
this year that in the insurance department there are thirty-two employees, and that the salaries and contingencies total $131,550. Under this and the other two resolutions on the order paper is it proposed to put all the expense of inspection on the companies? And what has been the increase in the cost of this department in the past ten years?


James Alexander Robb: The percentage of increase
has been less than the increase in the number of companies and the assets involved. The expenses which the hon. member quotes were formerly altogether charged to the insurance companies; now we propose to apportion them among the insurance companies, the loan companies and the trust companies in proportion to their business.
Trust Companies Act


Richard Burpee Hanson: Do I understand from the minister that the assessment is now and has been for some time made on the insurance companies for the cost of their inspection? And does that cost cover all the items set out under the details of Civil Government on page 103 of the estimates? In other words, is the country recouped by the insurance companies for the total cost of the department?


James Alexander Robb: Oh yes, the insurance companies pay the total- cost of the administration of the department now.


Richard Burpee Hanson: You propose to spread the cost over the three classes of companies?


James Alexander Robb: Yes.


Mr. CHURCH:: Some weeks ago I introduced a motion regarding these trust, loan and insurance companies, asking for further safeguards, inspection and audits to further protect the public and those interested in and dealing with these companies. A survey is needed and additional safeguards to protect all concerned. Are we to wait until the loan, trust and insurance companies follow the Home Bank's example? What inspections are there of these companies, and what is being done to further protect the public? What are the functions of a trust company? The act has not been consolidated and revised since 1914, and trust companies have gone far afield and beyond the functions intended by parliament, with the skilful way lawyers can draw agreements. Trust companies to-day are doing a banking, real estate and general business, and usurping powers never intended by parliament. The Home Bank inquiry shows how they go far afield, and how such a company can be the backbone of a bank, a trust, and a restraint of trade. The whole Insurance, Loan and Trust Company General Act should go to the Banking and Commerce committee, a survey should be made and the act revised and consolidated and brought up to date to protect the public before these companies follow the Home Bank way of doing things. All these acts need overhauling. Are we to wait until it is too late. These companies are -exercising powers never intended by parliament.


James Alexander Robb: We have an inspection in
that regard, and a report is published each year and may be obtained from the Superintendent of Insurance. The last one I have in my hand is dated the 31st of December, 1922, and we have a preliminary report now out for the period ending 31st December, 1923.


Arthur Meighen: The minister has had a
recess now; perhaps he will venture to give us an opinion on the question I asked about. I think it is fundamental; it is the root of the whole matter.


James Alexander Robb: That is, as to guarding investors?


Arthur Meighen: I want the minister's
opinion about the wisdom of the government of Canada making itself the guardian of debenture holders, clothing itself with powers and responsibilities to safeguard any except the public of our country. The principle was conceded long ago of guarding the public in respect to deposits made in response to an invitation extended to the people generally. But what does the minister think about our inspecting with a view to protecting debenture holders? Just to make the case specific: The minister has talked pretty strongly in the past against the drift to socialism, but if I were drifting that way this is about the last by-way 'of socialism I would want to tumble into. Why do the debenture holders need our help?


James Alexander Robb: We are not making any
change in the act in that regard. The act we are working under now was the act adopted in 1914, and my right hon. friend supported the government that introduced it.


Arthur Meighen: The -act has been
amended, and amended under this government, in this very feature. There has been continuous expansion. I am not sure I can defend all the expansions that went on even under the late government; one cannot follow every detail. But there has been a growth, and I think a dangerous growth, since. Now, what does the minister think of it? Is it right or is it wrong? If we start or if we continue in this direction-and this is going to encourage the continuance, because this gets the money to keep enlarging the staff, building up an extensive department, sending men here, there and everywhere, inspecting this company and that for fear somebody will lose some money over in Scotland-where are we going to end? Suppose after all somebody does lose something-the hon. member (Mr. Jacobs) laughs.


Mr. JACOBS:: I was laughing at the idea
of Scotland being a place where any one would lose money.


Arthur Meighen: I got the point, especially coming from the hon. member.


Mr. McMASTER:: Almost as strange as from Palestine.

Trust Companies Act


Arthur Meighen: If we keep on, notwithstanding anything we do there is sure to be trouble, and when that trouble comes are we not going to be in a position where we cannot answer the demands of the debenture holders to be recouped by the Dominion of Canada? In a word, what need we care? If there is one class of people in the world who are able to look after themselves it is the money lenders. Had we not better keep out and let them look after themselves, rather than make provision that will involve increase of staff, the final object being only to pile greater and greater burdens on our own shoulders?


James Alexander Robb: There is no intention of increasing the staff; it is just a question, as I said before, of distributing the cost. It was determined in the amended act of 1920 what were the liabilities and what should be the nature of the report submitted to the department. I find in the statement of liabilities in the schedule to the act that the very first item is marked, "Liabilities to the public; amount of debentures or debenture stock issued and outstanding." We require that, and my hon. friend will recognize that debentures are regarded as a liability to the public. We are not rescinding that; we are not changing, enlarging or reducing it.


Arthur Meighen: The minister has made no answer at all. Even if the act were passed in 1920 we still have the question before us, are we going to continue the principle there adopted? I do not admit, though, that the minister has shown that the principle was there adopted. It may be quite right that returns should be made to the government of debentures outstanding; we need to know that. But we do not need to know it for the sake cf looking after the debenture holders. The minister will not deny that his department has assumed that duty of superintending, inspecting, demanding reports and all the rest of it, with a view to seeing that the debenture holder does not lose any money. I am under the impression, and I do not care whether I am right or wrong, that the amendments made after this government came in had that object in view. But for the sake of argument, I will let the minister assume they were made before. If they were made before, does the minister not think we ought to discontinue, and the sooner the better?


James Alexander Robb: I would not admit that. It
would be admitting that my right hon. friend was wrong in 1920, and of course I would not like to do that.


Arthur Meighen: If that will help the
minister, let it go at that. But surely he will come to the point: Why should we continue if it is wrong? I think the amendments were made since, but let that go. Goodness knows it is enough for us to look after the public of Canada. The depositors are the only people we need to look after in relation to these companies; that is the way it appears to me. Once we have done that let us be done with it and let the other people look after themselves.


James Alexander Robb: Well, we advertise to the
world that we have government inspection of these companies.


Arthur Meighen: Very lately. When did
we advertise that?


James Alexander Robb: In the act of 1920.


Arthur Meighen: We are not advertising
in Scotland. Our public here know we have inspection. That is what is intended.


James Alexander Robb: Have we not some obligations
to investors in securities of this kind in Scotland as well as to our own people?


Arthur Meighen: No, I do not think so.


Thomas Langton Church: Since the passage of the
act of 1914, in which the functions of trust and loan companies were set out, owing to the way in which lawyers draw agreements trust companies to-day are doing a banking and all kinds of business, a real estate business, and so on. It was in 1913-14 that this whole act was revised by a select committee of parliament. Why should not this resolution go to the Banking and Commerce or some other committee? They had an investigation in the United States into the matter of trust companies and it was found that those companies were fulfilling functions which had never been intended by the senate or by congress. They were going into the banking business, the railway business, the real estate business, and generally entering upon activities which were not contemplated in the acts under which they operated. Are we going to wait until another disaster like the Home Bank occurs before we take action? I contend that the acts respecting trust companies, loan companies and insurance companies, should be revised to protect the public-in addition lapsed policies of insurance cited in the inspectors report are revealing a state of affairs which should not exist in Canada- these whole resolutions should be referred to the Banking and Commerce committee, together with this Trust Company resolution,
Trust Companies Act

for investigation and report, because these companies are going far beyond their functions under the general act of 1914.


Henry Lumley Drayton: I do not know that we have got very much further in understanding where this matter stands. I think my hon. friend will agree with me that there are functions in connection with inspection which are more of an inquisitorial character than judicial in their exercise, not calling for the exercise of judgment-certainly not calling for the substitution of a civil servant's judgment for the business judgment which ought to be exercised by a director. I rather apprehend that is the real point that my right hon. leader seeks to make clear. Just to illustrate, take the act of 1920. The finding of the amount of bond issues, and that sort of thing, is merely an inquisitorial function; it is merely finding out the fact, and making public an expression of the fact. That is one thing about inspection, and that is only an illustration that will apply in all the different fields.
The next thing about inspection is that there is not only an inquisitorial function, but a function that requires the exercise of a nicety of judgment; for example, the determination of the value of securities, the determination of the propriety of the policy which the company may have entered upon. Now, if we adopt-and my right hon. leader thinks we ought to adopt-the policy of looking after the more or less uninformed public which uses these companies for the purpose of deposit, it is manifest that the mere official act of ascertaining the figures and reporting the figures under their different heads cannot protect those depositors. Inspection has to be carried further. The official has to exercise judgment, and judgment of a high order. He has to determine upon securities and investments, for instance; he has to determine to some extent upon company policy. Now my right hon. leader has admitted in effect that that ought to be so, so far as these people are concerned. Who are these people? These people are the citizens, not of necessity informed at all in matters of finance, who are putting into these institutions the little savings they make from time to time. That is admitted at once to be a proper field of government operation. Now you can carry it further. You can carry your inspection, your valuation, your criticism, yes, indeed, you can carry your reversal of company policies, to the point of making sure not only that those are safe who are not in a position to ascertain for themselves the safety of their depositoiy, but to the point of looking after tMr. Church.]
the general business investor, the shrewd man of affairs and the like. That is what is done when we look after this question of debentures. My right hon. leader illustrates Scotland, and he takes Scotland because it is known very well that nearly all these moneys were raised at a low rate of interest in Scotland,-or at least this was the case before the war, and I hope soon will be again-and they are looked after there by gentlemen who are very, very efficient in looking after securities of this character.
Now, after pointing out the groundwork to my hon. friend, and if I am wrong in it I want him to correct me, I want to see what he thinks of this. In the first instance I take it that he would say, and I would agree with him in saying, that the function of the department should be carried, if necessary, to the point of reversing company policy in order to save the depositor; to the point that values may be written down, that certificates may be withheld. But will he go to the point of saying that in connection with these companies, whose obligations to a very large amount consist of these debenture moneys, the government official ought to take the place of the directorate and the management, and ought to say whether they can carry on or not, and whether or not the certificate will be withdrawn? That is the logical! result of these things. Now it is not so much a matter of law perhaps, as it is a matter of administration, and it is an exceedingly hard thing when you get to the final point as a matter of administration, as my hon. friend has found, and as I know I found it to be, to say whether the judgment of what after all is an irresponsible government official,-and I use that term "irresponsible" merely to indicate that he has no monetary interest in the company, shall be substituted for the judgment of the directors who may have their all in it.


James Alexander Robb: Suppose a case came to the attention of the government where the directors did not have anything in it?


Henry Lumley Drayton: Then their position is very much like that of the government official. But usually directors have a monetary interest in the concern, and they ought to have a monetary interest in it. Perhaps it would be well to consider making a change in the act to provide that the directors should have a substantial interest in it; that is the way of dealing with that problem. But it is a very difficult matter, I think my hon. friend- will agree, to find out, first, when absolute interference with corporate rights is justified, and secondly, what is to be regarded

Trust Companies Act
as a just cause for that interference. It is not at all difficult to imagine a situation where the company finds itself with two avenues open to it; for example, it may have made loans which everybody would regret; the values may have largely disappeared, and it becomes a question whether or not taxes and interest should be paid in order to preserve the investment. Now it well might be that one acting in the very best of faith would say: You are simply throwing good money after bad to do it. Again, it well might be that with the turn of the wheel it would have been insanity not to have put up the money. The difficulty that I see, when we get down to the point where you are going right to the very end of the company's activities, is how on the one hand to preserve anything like proper business administration by the directors, and at the same time give effect to the full provisions of the act. It can be done easily enough so far as the depositors are concerned, because as a rule the depositors' interest in these companies is relatively very small and the whole interest of the department wrould be to see that there was always left intact enough liquid assets, or assets readily convertible, to meet the claim of the depositors. A company, indeed, would have to be in a very bad position before that time came. On the other hand where you have companies with a tremendously large debenture debt-and some of our very best companies have that-if the work of the inspector is to include the whole of that, why the margin as to apparent absolute solvency may become very narrow from the standpoint of the debenture holders of the company. There we are getting on difficult ground. I really think the hon. gentleman should give us an idea of what is to be done.


William Findlay Maclean: I should like to point out that from the facts that have transpired before the Banking and Commerce committee the banks are closely allied with trust companies, and the latter ought to be inspected in the same way that the former are to be. If the proposition now before the House is in that direction I certainly would endorse it. The same remark would apply to insurance companies. In the public interest they ought to be protected by some system of inspection such as is provided for by the resolution coming up later.


Mr. HARRIS:: How far will this inspection guarantee to a greater or lesser extent protection to the institutions concerned? If the inspection carries with it no responsibility on the part of the government, and does not
increase the responsibility of the directors of the different companies, I am absolutely opposed to it.


James Alexander Robb: There is no government
guarantee. My hon. friend knows that in common law there is no recourse against the Crown; but the inspection is a protection and a safeguard to the public. Legislation providing for the inspection of loan and trust companies was first introduced in 1914; the law was amended in 1920, and additional amendments were made in 1922 to provide some further protection. My hon. friend, I imagine, argues from the point of view that the claims of the depositor have some preference. I should like to point out that the debenture holders and the depositors rank equally, therefore anything that affects the solvency of the company as a whole affects the depositors as well as the debenture holders.


Henry Lumley Drayton: Ought not that to be amended?


James Alexander Robb: No, I would not admit that.


Arthur Meighen: Suppose there are ni
depositors? Suppose they are all out of the .road, should the government keep on looking after some of them?


James Alexander Robb: We cannot legislate for every individual company. The law must be general in its nature and applicable to all companies doing business. Let me point out to my hon. friend, who has a pretty clear mind, this fact:	He brought up the question
a moment ago of looking after the Scotch debenture investor. Suppose there is a company doing business in Canada, having a Canadian charter, taking deposits from Canadians and selling debentures in Scotland or any other country at a price that will cost the company 8 per cent here while they are investing money in Canada at a net rate of 7 per cent. How long will they keep going on that line without destroying the security of their depositors? I think that will appeal to my hon. friend.


Arthur Meighen: My hon. friend does not know the Scotch or he would not expect to sell them any of these debentures.


James Alexander Robb: We must consider the effect of exchange. My hon. friend a moment ago brought up the question of directors. Suppose that in the case of some of these companies the directors have borrowed from the companies sums far in excess of the amount they had invested in the enterprise, does my hon.
Trust Companies Act

friend think it would then, be time for the
department to step in and see to it that they conformed to the loan and trust law introduced by himself?


Arthur Meighen: We must certainly see that the law is carried out, and, if the law as to the responsibility of directors is not strong enough make it stricter. But that is a very different thing from going in, after the law is carried out, and valuing real estate here, there and everywhere all over Canada, and getting into all sorts of conflicts in order to make sure, if possible, that debenture holders are not going to suffer. The debenture holders will look after themselves 'both when they are making the investment and afterwards. If the minister is right why not go into commercial companies also? They are capable of just this same kind of thing,-why not go ahead and supervise their business? I do not know where we are going to stop. It simply means that we are becoming grandmother and wet nurse for the business of the country. What we should seek to do is to look after the public of Canada, no more and no less. It is only of recent years-that is to say comparatively recent years-that we have gone so far as to make the government of Canada responsible for depositors. But if we are going to apply the same principle to loan and trust companies and watch the interests of debenture holders. here, there and everywhere I think it is a very dangerous path for the government to enter upon.


Mr. HEALY:: I am absolutely in accord
with the proposed resolution. We are about to put the chartered banks of Canada under government inspection. Now, these loan and trust companies are bidding for deposits against the chartered banks and at a higher rate of interest. Therefore there is no difference between a deposit and the debenture that is sold in Canada at the present time. The short term debentures of loan and trust companies are sold and bear interest at the rate of 4 or 4i per cent, and the company allows the money to be drawn after the lapse of six months on fifteen days' notice. It is absolutely a deposit such as the banks receive, except that it is for a longer period of time. If the chartered banks of Canada are placed under government inspection then the companies competing against them for deposits-whether it is a daily or monthly deposit, or a deposit for six months-in the form of debentures should be placed under identically the same form of inspection. The 
inspection need not go into the byways and highways of the country valuing real estate at all. That can be carried on at the head office, just as the proposed inspection is going to be carried on in the case of a bank, and the valuation of real estate can be taken from the valuation as submitted by competent valuators such as these companies have in their pay all over Canada. I think inspection is certainly necessary in the case of these institutions from the fact that they are competing daily with the chartered banks of Canada.


Henry Lumley Drayton: My hon. friend has not caught the point to which I was addressing myself. I am not objecting to this inspection; I am trying to point out some of the difficulties we have in carrying it to the length it is apparently proposed to carry it. My hon. friend has not read the act. Had he done so he would have found that we do bother about real estate. That duty is thrown upon us. *


Albert Frederick Healy: Certainly.


Henry Lumley Drayton: It is just as well to look into these things before we talk about them. In the next place I point out to the Acting Minister of Finance that it is because of the legislation of 1922 that matters have been pressed to the length that they are now being pressed. It was not done before and could not be done before. I pointed out in the first instance that in the act of 1922 provisions very much more stringent in connection with the companies are made; and we find very plain regulations, and plain distinctions as to what is proper security and what is not, which is a good thing, and was done before. We have a list showing how they can invest their money, which occupies over a page of the statute. We have another list which is set out, and then this duty is imposed on the Inspection department, under section 6:
The following sections are inserted after section 70A, inserted by section two of chapter 21 of the statutes of 1920:-
70B (1) In his annual report prepared for the minister under the provisions of section 70 of this act, the superintendent shall allow as assets only such of the investments of the several companies as are authorized by this act, or by their acts of incorporation or by the general acts applicable to such investments.
Hon members will see that so far as that is concerned, it is a mere ministerial act, pointing out what can be done .properly: That is, checking the list of investments and seeing


Trust Companies Act
whether they fall within the character allowed by this long list Then we have the provision :
(2)	In his said report the superintendent shall make all necessary corrections in the annual statements made by the companies as herein provided and shall be at liberty to increase or diminish the assets or liabilities of such companies to the true and correct amounts thereof as ascertained by him in the examination of their affairs at the head office thereof or otherwise.
That examination is carrying out the terms of the act, placing the securities in their proper columns, with proper deductions, and there is no difficulty there at all. However, the inspector is given a right to take hold of the company as such, and this is the matter we are talking about. This right was not given in 1920, but in 1922, and it reads:
(3)	The superintendent may request any company to dispose of and realize any of its investments acquired after the passing of this act and not authorized by this act.
That order might be given at any time when nothing could be got for them. Suppose the company buys some stock that never should have been bought, and there is a slump in connection with it in the market, and the directors say "Leave that alone, we know it will be all right again; we know what the assets of that company are; leave them alone;" under this act the superintendent has the right to say, "No, sell it now." Perhaps the delay of a month, and the exercise of the business judgment of the directors, might enable them to realize on the investment, but after that order it becomes a matter of law that the companies must absolutely dispose of the stock within sixty days. And if the amount realized therefrom falls below the amount paid by the company for the stock, the directors shall be jointly and severally liable for the payment to the company of the amount of the deficiency; that is the provision in this section, and it is a very wise provision, it makes the directors personally liable for an investment that should not have been made. This is very different from the provision the minister suggested, that the directors could have no personal interest in these matters. The minister's own act says that if a director makes an unauthorized investment he is personally liable for it. That is quite right. It is idle to say that the directors have no interest. Their direct interest is to save the company from all loss, because if they do not do so they themselves lose. Now, there is a right of appeal to the Exchequer court and so on. My hon. friend from North Essex (Mr. Healy) referred to the question of real estate, and to the business way of doing it. I am sorry he has left the
room. We have an express provision put in as to real estate which reads:
70C. If upon an examination of the assets of any company it appears to the superintendent, or if he has any reason to suppose, that the value placed by the company upon the real estate owned by it or any parcel thereof is too great, he may either require such company to procure an appraisement of such real estate by one or more competent valuators, or may himself procure such appraisement at the company's expense, and the appraised value, if it varies materially from the return made by the company, may be substituted in the annual report prepared for the minister by the superintendent. If, upon such examination, it appears to the superintendent, or if he has any reason to suppose that the amount 4 p.m. secured by mortgage or hypothec upon any parcel of real estate, together with the interest due and accrued thereon, is greater than the value of such parcel, or that such parcel is not sufficient security for such loan and interest, he may in like manner require the company to procure an appraisement thereof, or may himself at the company's expense procure such appraisement', and if from the appraised value it appears that such parcel of real estate is not adequate security for the loan and interest, he may write off such loan and interest a sum sufficient to reduce the same to such an amount as may fairly be realizable from such security, in no case to exceed such appraised value, and may insert such reduced amount in his said annual report.
I am pointing this out for the purpose of showing the minister that the superintendent's powers-not under the legislation of 1920, as he supposed, but under the legislation of 1922-are very great. Why, his powers of management indeed are as great as those of the management itself. If it appears to him that some of the assets are not worth as much as they ought to be then, if he wants to manage the company, he steps in, and under the act he has the right to impose his business judgment upon the company even against the judgment of the management. I simply rose to ascertain to what length the minister thinks this inspection ought to go, and whether it is to go to such a length that it of necessity substitutes the judgment of an official of the department for that of the management and directors. Now, all directors are not either imbeciles or fools. The great majority of them have done pretty well.


James Alexander Robb: Hear, hear.


Henry Lumley Drayton: And have made an excellent return for their companies.


James Alexander Robb: Hear, hear.


Henry Lumley Drayton: And they know a good deal more about any particular district in this country where they are operating than it is possible for any government official to know. And difficulties in connection with
Trust Companies Act

these companies usually occur by something going wrong in a particular district. Does the minister think that this scheme of inspection-which was supposed to be for the purpose of seeing first that law was administered and the affairs of the company carried on reasonably and properly with proper books and the like-is to be extended to such a point that the judgment of a government official may be substituted for the judgment of the management and the company immediately closed?


Samuel William Jacobs: Does the hon. member
remember a case in Winnipeg two months ago, where a life insurance company invested all its capital in a washing machine company?


Henry Lumley Drayton: Yes, that was
an awful thing to do.


Samuel William Jacobs: Do you suggest that this
new Superintendent of Insurance would prevent such an occurrence?


Henry Lumley Drayton: No, and I do
not see the bearing of the question. There is full inspection under the act, but we are talking about another matter now. There is no use starting out with a question like that, when we want to know where we are going. We want to know whether or not, in the * minister's view, this inspection, which started out on the lines I have indicated, is to be carried to such a point that power is given, perhaps without responsibility to any one, as the minister says, and without recourse even in the case of an entirely mistaken policy, to substitute the judgment of a government official for that of the management in connection with the whole of the undertaking.


James Alexander Robb: May I point out again that
the inspection clause which my hon. friend quoted was taken precisely, word for word, from the Insurance Act of 1917. As to the "will of an official of the government," let me say that the revaluation can be made only by an independent appraiser; it is not the inspector of the insurance companies who will value the properties but a recognized independent appraiser. The act has been administered fairly and well for some years, the officials being very largely the same persons who administered the law under my hon. friends.


Arthur Meighen: It is a different act.


James Alexander Robb: Let us get down to brass
tacks. Will my hon. friend tell us where, if

in any degree, the Inspector of Insurance has done anything to injure a company?


Arthur Meighen: I am not going to wash linen in this House in regard to any company, but what I am trying to argue before the minister-and I did expect he would meet my argument favourably-is the unsoundness of the principle. The hon. member for George Etienne Cartier (Mr. Jacobs) tells of cases where companies have made gross blunders. Does he realize that one of these companies was inspected?


James Alexander Robb: No.


Arthur Meighen: It was not? Why was
it not?


James Alexander Robb: It has a provincial charter.


Arthur Meighen: The provinces have got
out of this responsibility and I venture to say they are glad.


James Alexander Robb: To the detriment of the
policy holders of the company.


Arthur Meighen: Insurance companies, of
course, differ from trust and loan companies, and the policy holder does deserve a little more in the way of safeguarding at the hands of the government than do the men who loan money to trust or loan companies. But I would not go too far in assuming responsiblity in connection with insurance companies either, for I do not know where we should find ourselves. I do not doubt for a minute that there are many power companies, for instance, the directors of which have little if any financial responsibility in the way of investments. But they have entered upon a great enterprise and it is our business to see that they lay the facts before the investor. That having been done, however, are we going to inspect these companies too, because they have charters from us? They are quite capable of making mistakes. They might buy washing machines or anything else; but why should we be their guardians? Why should we sit at their desks? Should we have an official with power to value their property, revise their books, and generally to take the place of their managing director the official is of the opinion that they are not managing their business properly? Really, I cannot see the difference between these companies and the others we are discussing. Once you get beyond the sphere of guarding the immediate depositor in connection with loan companies and banks you are on dangerous ground. I object to the government going further; let the other

Loan Companies Act
people look after themslves. Why should we by this act venture to stand between investors in loan company securities and the loan company itself? We might as well intervene between the investors of any other company, such as industrial power concerns, and the company itself; I do not see a bit of difference. All these things tend to the building up of great superstructures of governmental departments and the massing of power in the hands of individuals in departments. And, oh, how they love it; they love to have a long entourage of officials at their command. But is that good public policy, and are we prepared to take the responsibility which must naturally and inevitably follow? It will not be the officials but this parliament and the government of Canada which will be held responsible. I venture to ask the minister to look again at the basic principles on which the act of 1922 rests and to see whether they do not need revision.


[Stage Direction]
Section agreed to.
On section 3.
Thomas Langton Church: Does the government intend to consolidate and revise this whole act? I do not think that there are the necessary precautions in the legislation as it stands to provide the protection which those interested are entitled to. I understand that one of these insurance companies was recently called upon to supply further security. Surely, in view of the importance of a matter of this kind, an act like this, which is some ten years old, should be revised and consolidated. The scope of the trust companies should be clearly defined; they are performing functions which I am sure it was never the intention of parliament to sanction. There is such an interlocking of trust companies and banks and loan companies, and the rates that are charged to-day are so high, that it seems to me beyond question that the whole thing should be looked into and rates regulated. I would urge the minister in the recess of parliament to prepare for a revision of these acts so that they may be brought up to date to meet the changing conditions of business and to limit the functions of trust companies also within their proper function and scope. The companies are operating to-day in a wider field than it was ever intended they should engage in. It has been shown in the United States that these companies form the backbone for the efficiency operation of trusts and combines in that great land, and the authorities there are endeavouring to revise
the American law with a view to bringing it right up to date. The minister might tell us what he intends to do in this matter. I would remind him that the inspector of insurance has recommended a survey of the whole field; and I believe it would meet with the approval of parliament if the minister would bring down next session a bill for the purpose of consolidating and revising the legislation controlling these companies.


James Alexander Robb: I will consider my hon. friend's observations. I am glad, by the way, to note that I have some support from the other side of the House.


Richard Burpee Hanson: Has the minister considered the question of placing such great power in the hands of the superintendent?


James Alexander Robb: He has no greater power
under this legislation than he at present exercises.


Richard Burpee Hanson: With respect to insurance
companies.


James Alexander Robb: No greater power.


Richard Burpee Hanson: What about the question
of appeal?


James Alexander Robb: They appeal to the Exchequer
Court.


Richard Burpee Hanson: On what ground does that appeal lie?


James Alexander Robb: If it is thought that the valuation is not fair an appeal can be made.
Resolution reported, read the second time and concurred in. Mr. Robb thereupon moved for leave to introduce Bill No. 173 to amend the Trust Companies Act, 1914.
Motion agreed to and bill read the first time.


LOAN COMPANIES ACT, 1914
[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved that the House go into committee to consider the following proposed resolutions:
Resolved, That it is expedient to amend the Loan Companies Act, 1914, and to provide,-
1.	That the Superintendent of Insurance shall annually ascertain and certify the total amount of the expenditure incurred by the government for or in connection with the administration of the act during the last preceding fiscal year, and the total amount of income received during the last preceding calendar year by each company, and the findings of the superintendent shall be final and conclusive.
2.	That thereupon the superintendent shall ascertain the ratio or percentage which the total expenditure so found and certified bears to the aggregate of the income aforesaid, and shall assess each of the com-
Loan Companies Act
[Stage Direction]
panies an amount equivalent to that percentage of the total amount of the income received, and such assessment when certified by the superintendent shall be binding upon the said companies, and be final and conclusive.
3.	That the amount so assessed against each company shall constitute a debt payable to His Majesty, and shall be payable upon demand of the superintendent, and may be recovered as a debt in any court of competent jurisdiction.
Motion agreed to and the House went into committee, Mr. Gordon in the chair.
On section 1.
James Alexander Robb: Mr. Chairman, this resolution is practically the same as the previous one.


Henry Lumley Drayton: I think a similar act was passed in 1922-the superintendent will recollect if I am right-giving powers somewhat similar to those in the trust case.


James Alexander Robb: Very similar.


Henry Lumley Drayton: That is what I thought. Was the situation exactly the same?


James Alexander Robb: Yes.


Henry Lumley Drayton: What loan
companies are we now inspecting?


James Alexander Robb: All loan companies incorporated under the federal parliament.


Henry Lumley Drayton: I could have
given my hon. friend the same information. I was wondering what loan companies we still have under our jurisdiction.


James Alexander Robb: There are fifteen companies in all.


Henry Lumley Drayton: What is the total capital of the fifteen, the securities held by them, and their assets?


James Alexander Robb: Their paid up capital stands at $24,939,522; the book value of their assets is $104,358,626; their liabilities to the public are $63,579,876.


Henry Lumley Drayton: How many men have we to-day working on this value of $103,000,000 of securities?


James Alexander Robb: My hon. friend from York-
Sunbury (Mr. Hanson) gave the number in the department a few moments ago-some thirty odd. There are eight or ten inspectors for all the companies.


Henry Lumley Drayton: We heard that in connection with the trust companies. But I want to find out how many valuators we have working specifically on loan companies.


James Alexander Robb: The department gets an
appraisal of the securities by experts. If we have any doubt about the appraisal we institute a special investigation.


Henry Lumley Drayton: Taking last
year, what was the volume of valuations made of this $103,000,000?


James Alexander Robb: A considerable portion of the
real estate has been valued, and all the bonds and debentures.


Richard Burpee Hanson: A very large portion of the assets of these loan companies is in mortgages, especially western mortgages according to the newspapers. What methods are adopted in valuing these securities?


James Alexander Robb: If it appears to the department that the securities are in bad standing, a special appraisal is made. If the interest is paid up regularly it is taken as an indication that the securities are in fair shape.


Thomas Langton Church: The minister and the
government should be interested in something more than the cost of inspection of these companies and the overhead expense. Where does the public come in? Formerly these loan companies loaned fifty per cent of the value on real estate, but to-day they loan only on an average from twenty to twenty-five per cent of the value, with the result that the building of small houses is seriously restricted and the housing situation correspondingly aggravated. As the government has no housing policy such as the government of Great Britain has, some further restrictions and control of rates should be placed on these loan companies. They have been given very wide powers by parliament, but we have no control over their rates or policies. For instance, they have one rate for the farmer and another rate for the city man. Parliament has endeavoured to do something to control the banks, why should these loan companies be left to be a law unto themselves, to charge what rates they like? I think these resolutions should go to the Banking and Commerce committee for revision. It is all very well from the standpoint of revenue to inspect these companies and to charge them with the overhead cost of inspection, but what about their functions? They claim and exercise functions which parliament never intended they should have. It is over ten years since these companies were looked into and the act revised, and it is time that a survey was made, the legislation brought up to date and consolidated, with a view to the pro-

Loan Companies Act
tection of the public. I venture to say that before many days are over there will be a rude awakening and some of these companies will go *to the wall. Are we going to wait until there is some such disaster as the collapse of the Home Bank before we take action? The minister ought to take steps to bring this act up to date; there is a demand for it all over Canada. There should be an audit of these companies; there should be control over the rate of interest charged and there should be some revision of the vast powers they have to confiscate property by foreclosure, and so on. Expensive legislation is put upon the second mortgagee under the present procedure. The law requires the first mortgagee to notify the second mortgagee in due course and give him a chance to redeem, but this is not always done. I was speaking to a parish priest yesterday in the constituency of a member of this House and he mentioned a case where a second mortgagee had not been so notified by the firsit mortgagee, with the result that the loan company foreclosed and it cost him $200 to get the thing straightened out. These companies should be put under proper control, not only as to rates, but as to many other matters.


James Alexander Robb: I will take my hon. friend's
observations into consideration. The act was revised in 1922. These companies are not earning excessive dividends; I notice that the paid up capital and reserve combined is something over $39,000,000, on which they paid $2,135,000, on the average a little under 6 per cent.


William Findlay Maclean: Do any of these companies take deposits?


James Alexander Robb: Oh, yes.


William Findlay Maclean: I want that point brought out.


[Stage Direction]
Section agreed to.
Resolution reported, read the second time and concurred in. Mr. Robb thereupon moved for leave to introduce Bill No. 174, to amend The Loan Companies Act, 1914.
Motion agreed to and bill read the first time.

[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved that the House go into committee to consider the following proposed resolution :
Resolved, That it is expedient to amend the Insurance Act, 1917, and to provide,-
1.	That there shall he a department of the government of Canada to be called the Department of Insurance over which the Minister of Finance shall preside, and the Governor in Council may appoint an officer to be called the Superintendent of Insurance who shall be the deputy head of the department and hold office during pleasure. Such officer shall be paid such salary as may be authorized by law, and perform such duties as are prescribed.
2.	That the Superintendent of Insurance shall annually ascertain and certify the total amount of the expenditure incurred by the government for or in connection with the administration of the act during the last preceding fiscal year, and the total amount of gross premiums received in Canada during the last preceding calendar year by each company licensed under the act and by each company not licensed under the act but transacting life insurance business thereunder, deducting the amount of the dividends paid or allowed by each such company to its policy holders in Canada during the said year, and the findings of the superintendent so certified shall be final and conclusive.
3.	That thereupon the superintendent shall ascertain the ratio or percentage which the total expenditure so found and certified bears to the aggregate of the net receipts, aforesaid, and shall assess each of the companies an amount equivalent to that percentage of the gross premiums received in Canada, less dividends, and such assessment when certified by the superintendent, shall be binding upon the said companies, and be final and conclusive.
4.	That the amount so assessed against each company shall constitute a debt payable to His Majesty and shall be payable upon demand of the Superintendent, and may be recovered as a debt in any court of competent jurisdiction.
Motion agreed to and the House went into committee, Mr. Gordon in the chair.
On section 1.
Henry Lumley Drayton: What is the real effect of this resolution? We now have a Superintendent of Insurance, and he is a very capable one. What is the idea of making the changes here?


James Alexander Robb: It is simply to bring the wording in conformity with that respecting other departments.


Henry Lumley Drayton: There will be no change?


James Alexander Robb: Practically the only change is that the statutory limit to the salary is struck out.


Henry Lumley Drayton: I do not see
why the Superintendent of Insurance should not have just as much right to the salary as any other deputy; he has been performing the duties of deputy for a long time. Is there any other object than to remove him from that disability, a course which I do not object?
Loan Companies Act


James Alexander Robb: None whatever.


Henry Lumley Drayton: Will there be
any more cost to the treasury?


James Alexander Robb: There is no cost to the
treasury now, and there will not be any. It is all reimbursed by the companies.


Henry Lumley Drayton: Will it work
any greater burden on the policy holders?


James Alexander Robb: I would not think so, no.


[Stage Direction]
Section agreed to.
On section 2.
Henry Lumley Drayton: There is no
change here at all?


James Alexander Robb: No.


Henry Lumley Drayton: Then why make this provision, if it is in the present law?


James Alexander Robb: We are putting into the
statute the machinery for calculating the assessment at present in use in practice.


Henry Lumley Drayton: But it is all in the present Insurance Act?


James Alexander Robb: Not the details, no.


Henry Lumley Drayton: There are other provisions besides that I would not like to see dropped.


James Alexander Robb: We are not dropping anything.


Henry Lumley Drayton: This has been
submitted to the law officers of the Crown?


James Alexander Robb: Yes, and approved.


Henry Lumley Drayton: How much is
it now costing to run the department?


James Alexander Robb: For the fiscal year 1922-23
the total cost was $107,814.43.


Henry Lumley Drayton: How much
should be taken off for the trust companies and the other companies?


James Alexander Robb: Their proportion is estimated
to be about $5,000 or $6,000.


Thomas Langton Church: 
Mr. CALDWELL:: Does this inspection and supervision extend to fraternal insurance societies?


James Alexander Robb: Since 1919 to all such as have a Dominion charter and to foreign societies.


Thomas Wakem Caldwell: Not to those having a provincial charter?


James Alexander Robb: Not to Canadian societies
having a provincial charter.


Henry Lumley Drayton: I think the
minister should make some reply to the strictures that have been passed by the superintendent, as shown in his report, and which have been read by the hon. member for North Toronto (Mr. Church). It shows an unfavourable condition. What is the trouble?


James Alexander Robb: It is probably true that there have been lapses, but as my hon. friend knows, this runs more or less in cycles. We had a somewhat similar experience in 1915. I recall that because I was then associated with a fraternal society, but they are all doing better now, and the insurance companies themselves are doing much to cure this condition by a follow-up system.


Henry Lumley Drayton: The minister
also heard the suggestion of the hon. member in connection with appointing an actuary, the need for inspection, and the like. I do know that once upon a time we had very good actuaries and a complete inspection. Have we not that now?


James Alexander Robb: Certainly. We have that
now. I was going to mention that.


[Stage Direction]
Section agreed to.
On section 3.
Henry Lumley Drayton: While the
superintendent is here, I would like to bring up one question. I have already had some communication with him about it in connection with the bill reported this year. I would like to find out what the policy of the minister is in connection with participating rates. It is about the one thing I think the superintendent cannot really control at all, and it is one matter in connection with which the returns of some companies at least are very, very disappointing. These participating rates have been merely a fraction in some cases of what the bank interest would have amounted to on the extra premium during the same period. The idea of the extra premium is to earn the profits. It has nothing at all to do with the life risk, which is covered in the straight rate. I hope the minister understands what I am drawing to his attention. There is no question here of the risk of the company, because that is covered by the basic rate. It is just a question whether these higher rates and some dividends that have been shown are at all fair to the public, and whether or not straight life business ought to be the business which the department should encourage and look after.


James Alexander Robb: Competition takes care of
this, and it was never keener than it is now between the life insurance companies. Participating rates are being greatly reduced. My hon. friend will recall that the life insurance companies suffered very heavily during the war period, and consequently their profits were reduced, and that, of course, affected the dividends to the policy holders.


Henry Lumley Drayton: The tendency
at present is to get away from these participating profits as much as possible.


James Alexander Robb: And that, consequently reduces the rates that are charged.


Henry Lumley Drayton: The two classes of insurance are entirely different. There is

Loan Companies Act

the regular insurance, and then there is a class of business as to which the company doing it say: "If you pay so much more you come in on our profits." The latter kind of insurance means that higher premiums must be paid than under the ordinary straight line rate. Of course it is true that the war had its effect, and possibly is responsible for the feature in question, but on the face of it the showing is not a happy one for the policy holders.


Thomas Wakem Caldwell: Does the Superintendent of Insurance have any control over the class of insurance which a company shall write? For instance if an insurance company is not paying dividends to those holding participating policies it might be wise to see that it shall not write too much of that kind of insurance but shall rather issue a straight insurance policy. I think it is a very important point. If the companies were allowed the right of issuing policies on the participating plan and were not paying any dividends they would certainly stand to win, and the public, probably to lose.


James Alexander Robb: We have in some rather rare
cases insisted on a company doing only a non-participating business.


Henry Lumley Drayton: That must have been in a case where there was a likelihood of a deficit. The Superintendent of Insurance does not interfere in the direct management of a company at all. The point the hon. member (Mr. Caldwell) was making was that in view of past results it is very much more to the benefit of the policy holder to take, for example, a straight twenty-year life policy than a twenty-year life policy with profits.


[Stage Direction]
Section agreed to.
Resolution reported, read the second time and concurred in. Mr. Robb thereupon moved for leave to introduce Bill No. 175, to amend the Insurance Act, 1917.
Motion agreed to and bill read the first time.

[Stage Direction]
The House again in committee on Bill No. 142, to amend the Special War Revenue Act, 1915, Mr. Gordon in the chair.
On section 1-tax on sales reduced.
Henry Lumley Drayton: When the resolution on which this bill was based was being

considered I made a statement in connection with the difficulties encountered under the act at the close of one evening's sitting, and my hon. friend was good enough to thank me for what he termed constructive criticism. He said he would look into the representations made and see what could be done in the matter. Has my hon. friend been able to iron out any of the many difficulties pointed out at that time except the one as to licenses?


James Alexander Robb: In a consultation with the
minister in charge, and the department, they expressed the belief that most of the difficulties in question have been corrected from time to time, and that the act is now meeting with a fair amount of favour from the public. I had in mind that my hon. friend would have gathered any further information he desired when the minister was passing his estimates through in committee of supply.


Henry Lumley Drayton: The Minister
of Customs was not troubled very much on estimates apparently. I think his estimates went through on record time.


Mr. KELLNER:: I should like to find out how the tax to be levied is figured out. In the case of the sale of $100 worth of goods would the department figure at 6 per cent of that amount, or how would the tax be arrived at?


James Alexander Robb: I will read the clause governing the matter:
In addition to any duty or tax that may be payable under this part, or any other statute of law, there shall be imposed, levied and collected a consumption or sales tax of six per cent-*
Which is now reduced to 5 per cent.
-on the sale price of all goods produced or manufactured in Canada, including the amount of excise duties when the goods are sold in bond, which tax shall be payable by the producer or manufacturer at the time of the sale thereof by him, and in the case of imported goods the like tax upon the duty paid value of the goods imported payable by the importerand so on.


Donald Ferdinand Kellner: I want to know whether
the department's agents collect 6 per cent, we will say of $100, or whether the percentage is less than that?


James Alexander Robb: The act provides:
For the purpose of calculating the amount of consumption or sales tax, "sale price" shall mean the price before any amount payable in respect of the consumption or sales tax is added thereto.
Is that what my hon. friend wants to get at?

Ways and Means-Sales Tax


Donald Ferdinand Kellner: Would the minister name the rate?


James Alexander Robb: It would be 5 per cent now
or, if the articles are boots and shoes or some other articles that come in under the 2i per cent clause, the latter percentage is the amount that would be levied.


Thomas Wakem Caldwell: I wish to call to the
attention of the minister-and I presume the matter has been brought to his attention on various occasions previously-an old claim pending against the government by the automobile dealers of Canada. It is not in reference to the sales tax, and I may not be in order, but I hope I will be permitted to present the case as it is a very sore point with automobile dealers all over Canada. In 1918, when the luxury tax was imposed on automobiles, jewelry and a lot of other things, it was made retroactive in the case of the dealers in automobiles. I do not know whether it was made retroactive in other cases or not but I think not. The automobile dealers had to pay the luxury tax on the cars they had on hand at that time, although these cars had been bought previously. I think in all other cases the luxury tax was paid when the merchandise was disposed of by the merchant. In the case of the automobile dealers they had to pay the tax on the oars on hand, even though they did not sell them for six months. That was a discrimination against them. That is not what they are finding most fault with however. When the luxury tax was repealed in 1920, I think it was, they expected that they would be refunded the luxury tax they had paid on the cars they had on 'hand, as the tax, when it was imposed, was made retroactive, to cover the cars they had on hand at that time. This has never been done. I believe in the case of a merchant who had stamp taxes on hand to attach to the goods that he sold, the government did grant a refund amounting to $169,426.97. There was another feature that was still worse, I think. Automobile manufacturers who were maintaining retail establishments were I believe, given a refund on all the cars they had in their retail warehouses. This refund amounted to $171,650.53, but the dealer who was not a manufacturer was not given any refund. I know of dealers in my own province who were pretty nearly ruined alt that time, because they had a large stock of automobiles on hand on which they had paid the luxury tax. They certainly felt that they had the same right to a refund of the luxury tax as the manufao-194+
turer who possibly had a retail establishment on the opposite side of the street, and was competing with them. When the luxury tax was abolished the dealer who had paid the tax and did not get a refund had to sell in competition with the retailer across the road who did get a refund, and it put the former in a very unfair position. I desire to say however that I firmly believe that the luxury tax never should have been repealed. I know it was a tax that brought the government a good deal of money, obtained it from the source from which the government should obtain it, namely the people who were able to buy high-priced articles and luxuries.


James Alexander Robb: Blue-nose potatoes are a
luxury.


Thomas Wakem Caldwell: I would hardly credit
that statement. When we have been selling our potatoes for fifty per cent of what it cost to grow them they could not be considered a luxury; but if you speak of the quality of the potatoes, they certainly are a luxury. When you speak of the price of the potatoes they could not be classed as a luxury. Has the minister considered (the representations of the automobile dealers? I will admit that it is pretty late in the day now to bring the matter up. However, I do not consider that this was a bit better than stealing the money from the dealers. When the government imposed the tax they made it retroactive, but when they abolished the tax they did not make it retroactive. I think two million dollars was the amount paid by these dealers. At the time they paid this money it was virtually promised that they would be enabled to pass it on to the people to whom they sold. They were not able to do this; they lost this money and it very nearly ruined a good number.


James Alexander Robb: If my hon. friend sat in this chair and had to defend the policy of the department, he would be against any person who comes forward looking for refunds or rebates. This question has already been considered, not by two governments but by two different ministers, and was very carefully gone into. I have looked through the files. Representations have been made that there should be a refund. I have consulted some of the officials of the department and it has been represented to us-and I think the records confirm the statement-that there was a conference between the manufacturers and the dealers; and the government of the

Ways and Means-Sales Tax
day did everything possible to see tha<t there was a fair adjustment as between the manufacturers and the dealers.


Thomas Wakem Caldwell: I do not consider the
dealer had any claim against the manufacturer. He did not pay the manufacturer the money. He paid it to the government under a public act. When the government abolished the luxury tax, if they had not re-
5 p.m. funded the money to the manufacturer who, in a great many cases had a retail establishment just alongside of the retailer, it would not have been quite so bad, I will admit, because all of them would have held up their prices and got something out of it. The fact that the manufacturer, who in many cases was carrying on a large number of retail establishments, was refunded the luxury tax on the cars he had in his warehouse, put the regular dealer who was not a manufacturer in a very awkward position indeed, and he was not able to get his money back. For the minister to say that there should be a readjustment between the manufacturer and the dealer-


James Alexander Robb: No, I say the government of
the day tried to arrange a readjustment, and it was represented to the government, I understand, that they had got together and had an understanding.


Thomas Wakem Caldwell: They may have got
together but I can assure my hon. friend that the dealer did not get any money out of it, and when a group of men are deprived of two million dollars in such a manner that they cannot get it back, they do not feel pleased about it. Does the minister think it was a fair thing at the time? I am firmly convinced that if my hon. friend had been Minister of Finance at that time this refund would have been given.
Mr. ROBB. Do not be too sure about that.


Thomas Wakem Caldwell: I will admit that while my hon. friend is not all Scotch, he has quite a Scotch disposition, and I think he would have made the refund. Practically everybody else affected by the luxury tax got the refund. I think the luxury tax never should have been abolished, and I think we should institute a luxury tax to-day. But if you are going to impose a tax and abolish it, if you make the imposition of it retroactive, you certainly should in all fairness refund the tax to the man who has the stock on hand when it is abolished.
[Mr. Kobb.I


Mr. ROSS (Kingston):: Will the minister
tell me if the retail automobile dealers had a conference with him, and if a decision was arrived at?


James Alexander Robb: What I said in reply to my hon. friend from Victoria and Carleton (Mr. Caldwell) was that it had been represented to me that the government of the day had a conference at the time with the manufacturers of automobiles and the dealers in automobiles. It was not our administration at all.


Thomas Wakem Caldwell: Could the minister tell us what decision was arrived at in the conference between the automobile dealers and the manufacturers?


Jacques Bureau: It was not the present government.


Thomas Wakem Caldwell: No, I think it was before the present government came in. If my hon. friend had been Finance Minister they would have got the rebate.


James Alexander Robb: The hon. member is wrong.


Thomas Wakem Caldwell: I think he is very much Scotch.


Jacques Bureau: Yes, all Scotch.


Thomas Wakem Caldwell: I think a Scotchman
tries to be fair. I am pretty nearly all Scotch myself and I would hate to think that anybody could tell me I would not be fair. When it comes to the question of being tight-fisted I may be all Scotch. I have always considered these automobile dealers did not get a fair deal. What was the result of that conference and what action was taken?


James Alexander Robb: I was not present at the conference but I have 'been informed by officials of the department who were present representing the government that there was an understanding that the manufacturers should deal fairly with the dealers and settle with them in the event of there being a rebate. That has been represented to me but I am not going to vouch for it because I was not present. We were in opposition at that time.


Thomas Wakem Caldwell: I cannot see the force
of the statement that the government urged the manufacturers to deal fairly with the dealers; as I have pointed out, the dealers did not pay the manufacturers the money, they paid the government.


Jacques Bureau: The manufacturers would
absorb part of the tax.

Ways and Means-Sales Tax


Thomas Wakem Caldwell: I do not think that
the manufacturers are under any obligation to reimburse the dealers. If the government had said to the manufacturers, "We will refund you half of yours and the dealer half of his," that would seem to be equitable; at all events, all should have been treated alike. 1 realize of course that it was not this government that was responsible. But I am not interested in the question as to what government it was; what I am concerned about is to see that there is fair play. In all fairness to the men who were not treated properly, I say that something should be done to put matters right; it is not too late yet to do justice in this connection. I know there is a strong feeling throughout the country not only among the dealers but on the part of the general public that this has not been a fair transaction, and the government would be well advised to reconsider what has been done. I offer it as a suggestion that possibly there might be a conference between the dealers and the manufacturers; the government could then find out what readjustment if any has taken place as between these two classes. If there has been any, I think it would be very slight, inasmuch as the manufacturers were under no obligation whatever in the matter. As things stand now, the manufacturer has the satisfaction of having had his money refunded while the dealer has not. I would very strongly urge upon the minister the desirability of taking steps to see that justice is done.


Mr. EVANS:: It would seem that there was some unfairness in connection with this tax at the time of its abolition. Many dealers had put in heavy stocks for the year's trade and the tax was suddenly taken off. I know some who were put out of business during that time. There was some arrangement I believe whereby the manufacturers were to absorb a part of the tax, but although they appeared to make some concessions they did not suffer; they simply put up the price of their cars and so covered what would otherwise have been a loss. Clearly therefore they made no sacrifice. It would seem to me that the government would only be doing the fair thing if it gave bonds for the amount and allowed those who have not been reimbursed the benefit of interest from December 1920 up to the present time.


James Alexander Robb: Where shall we get the
money?


Thomas Wakem Caldwell: You have already got
it from the dealers; you have their money.


Jacques Bureau: That is the question,
whether it is theirs or ours.


John Evans: I understood that the matter was at present before the government and that an answer might be expected some time before the close of the session.


Thomas Wakem Caldwell: My hon. friend the exMinister of Finance (Sir Henry Drayton) has just returned to the Chamber; he went out shortly after we began the discussion of this matter. Perhaps he can contribute a word or two to the debate to enlighten us. I will not say that he was the criminal, but he was Minister of Finance at that time and he would know something about the matter. He might be able to tell us what action was taken by the government as 'between the manufacturers and the dealers.


Henry Lumley Drayton: The action of
the government was not precipitate by any means; the matter was passed upon in the first instance by myself and was discussed in the second place by the Minister of Finance (Mr. Fielding). It was a contentious matter, and I may observe in passing that the reason I left the room just now was to get a copy of the record. This memorandum which I shall now read was prepared at the time, or shortly afterwards. So far as I am concerned, let me say at once that I am not going to offer any comment in regard to the question as to who got the money and who did not; my purpose is simply to show the facts as they were. The memorandum is as follows:
A large number of special taxes were suspended by order in council which came into force on the 20th of December, 1920, Having particular regard to taxes on automobiles, before action was taken cancelling them a large deputation of those interested in the industry made specific representations to the effect that in view of the then financial condition of the country and what they stated then existed,-a "buyers' strike"-it was quite impossible for automobiles to be sold. It was represented that if the tax was cancelled men would be put back in employment and conditions greatly improved. Nothing whatever was said about refunds.


Thomas Wakem Caldwell: Were the dealers represented at that conference?


Henry Lumley Drayton: Both sides were represented. The memorandum proceeds:
After the order was issued automobile dealers applied for refund of taxes paid on automobiles which were still in stock. The Retail Merchants' Association took the matter up and made very strenuous representations. No refund was granted but at the suggestion of the then Minister of Finance representatives were appointed to go into the matter directly in behalf of the automobile industry, such representation to include not only

Ways and Means-Sales Tax
the manufacturers but also the dealers. The dealers and manufacturers shortly afterwards met the minister who pointed out that the government had no funds whatever from which to make this drawback and that when changes are made in fiscal matters rebates are not given-then when customs duties are reduced on merchandise on which the merchant has paid duty, while his competitor's goods are still in transit to the country, no refund of duties on the lower or free scale is ever made, notwithstanding the resulting hardship.


Thomas Wakem Caldwell: There is this fact to
be noted, that when a duty is imposed it is not made retroactive to cover goods which the merchant had on hand four or five months previously, as in this case.


Henry Lumley Drayton: We shall come
to that. Under that legislation, the tax was payable when the sale was made.


Thomas Wakem Caldwell: Not on automobiles.


Henry Lumley Drayton: Yes. It was
payable on sale by the manufacturer; as soon as the manufacturer made a sale of a car the tax was due. That tax was collected at the source; it immediately became due as soon as the manufacturer disposed of the car. And that is where the resulting hardship came in.


Thomas Wakem Caldwell: It is a fact then that the dealers did pay a luxury tax on all cars they had on hand when the tax was imposed.


Henry Lumley Drayton: Yes.


Thomas Wakem Caldwell: Although in the case
of some cars they may have had the stock on hand four or five months previous to the imposition of the tax.


Henry Lumley Drayton: Yes.


Thomas Wakem Caldwell: Is it not a fact that
the dealers had to pay the tax on all cars they had on hand in the warehouse?


Stir HENRY DRAYTON:: My hon. friend is referring to the original tax of Sir Thomas White. I dare say he is right in that regard; I will not contradict him. But all those cars were out of the way long before this legislation was effective.


Thomas Wakem Caldwell: But in 1920 they still had this stock on hand. They paid the tax on those cars which they had not been able to dispose of.


Henry Lumley Drayton: They did have on hand cars on which they had paid the tax; there is no question about that, because the tax was payable as soon as the sale was made.
The minister also pointed out that the action taken by the government was directly for the purpose of

assisting the industry and that if the opinion of the trade was that more harm than good was done by the withdrawal of the tax, another order in council would be passed restoring the taxes and placing everybody where they were. Both dealers and manufacturers insisted that this ought not to be done.
The minister then asked that a small committee be appointed for the purpose of arriving at an adjustment, pointing out that it was in the immediate interest of the manufacturers themselves to see that distributors were not unfairly treated in a matter that was for the good of the whole trade and that they were vitally interested in seeing that existing channels of distribution were maintained.
That is, looking after their dealers.
A committee of four was nominated, two representing the manufacturers and two the dealers. The committee met and reported to the minister that no arrangement could be made and insisted on a refund of the tax. This was refused. The committee again went into deliberation and came back and reported that the claim for refund would be withdrawn provided the tax be not reimposed, and that satisfactory arrangements had been agreed to by the representatives of the dealers.
I forget the names of the gentlemen who were on that committee, but I think Mr. Fortier of Quebec and another dealer who handled Cadillac cars were the dealers' representatives.


Mr. HALBERT:: Were the dealers willing
to forego the rebate if the tax was removed?


Henry Lumley Drayton: Certainly they
were willing to do that rather than have the tax reimposed. Then they came and said that a satisfactory arrangement had been made between the manufacturers and the dealers. I was inclined to get the manufacturers to help out the dealers; that was my whole object in asking them to db this. I pointed out that it was very much in their interests to look after their distributors. The memorandum goes on:
Apparently some manufacturers have not carried out the arrangement. Bulletin No. 1792, issued by the McLaughlin Motor Car Company Limited, dated January 21, 1921, is attached hereto and speaks for itself.
The memorandum issued by the McLaughlin Company is addressed to their dealers, and is as follows:
Gentlemen:
Enclosed please find Bulletin No. 1799, in connection with a refund of part of the luxury tax paid to the government by you.
You doubtless have been advised, through the representatives of the dealers who appeared before the government at Ottawa, and through the press, that the government has decided that it will not refund any of the luxury tax paid by the dealers on cars on hand, unsold, when the tax was abolished.
When the tax was originally imposed, and later when it was increased to 15 per cent and 20 per cent,

Ways and Means-Sales Tax
it was thought that the automotive industry was being placed at a serious disadvantage, and was being subjected to a more severe rate of taxation than other industries. Representations to this effect were made to the gvernment but without avail.
Owing to the general depression this fall and winter the Automotive Association again took up the matter with the government, and made very strong representations as to the unsatisfactory conditions of the trade, attributing this condition in part to the excessive taxes imposed. The case was ably presented to the government, and after investigation of the circumstances, they abolished the luxury tax completely. We are all agreed that this was a courageous stand, and we are much pleased at the government's action.
Inasmuch as the Department of Finance had collected the tax from the dealers upon cars which they had on hand when it was originally imposed, it was naturally assumed that in doing away with the tax, the dealers would be reimbursed on a similar basis, but this was not done.
That is the point made by the hon. member for Victoria and Carleton (Mr. Caldwell). The dealers insisted that when the original tax was put on by Sir Thomas White in 1918 everything in their hands was taxed. There was a difference in the two bases of taxation.


Mr. NEILL:: Although the cars had been
sold by the manufacturer to the dealers at that time?


Henry Lumley Drayton: Yes, the difference being this:	In one instance you had
a tax at the base, the distributor; and in the other you had it at the source, the manufacturer. My proposition was to tax at the source. I am quite free to admit that I had forgotten what Sir Thomas White did a few years ago.
No doubt you are acquainted with the steps taken by the various dealer organizations throughout the Dominion, and through the Retail Merchants Association, to bring this matter clearly before the government. After the dealers' deputation left Ottawa, the government asked the dealers to appoint a smaller committee to meet with the manufacturers at Ottawa for further discussion. This meeting was held at Ottawa recently, but after presenting the case from all angles to the government, and using every available argument, the combined efforts of the dealers and manufacturers were unavailing. The department has given its decision-that taxes once collected cannot be refunded, and had declined to reimburse the dealers.
The suggestion was made that the list and wholesale prices of cars should be increased for a period of several months in order to assist the dealers to get back from the customer their investment in these taxes, but we feel that this would be equivalent to re-imiposing the luxury tax in a modified form, would present a definite sales resistance which would prevent accomplishing the desired results, and would certainly lengthen the time necessary to get back to normal conditions, and prevent the dealer from reaping the full benefit of volume business brought about by the complete elimination of the tax.
On looking at the whole matter it is well to remember, that had the government not taken the unusual and almost unprecedented stand of eliminating the entire luxury tax, by order in council on December
20th, and had they, as is usual and customary, allowed matters of taxation to stand and be dealt with in the budget speech, and had deferred any action looking to the relief of this taxation until the budget was brought before parliament in the usual way (last year this was not until May 19th) the whole trade would have been in a very serious and undesirable position. We, therefore, feel that the industry as a whole has much to be thankful for by the prompt action of the government.
Under all the circumstances, and having regard to the government's refusing to make any reimbursement of taxes collected, we propose to assist the dealers in their difficulty by absorbing (under certain conditions), without raising our price for this purpose, 50 per cent of the taxes paid on new, unused McLaughlin cars in dealers hands at the opening of business Monday morning, December 20th, 1920, thereby assisting the trade to return to normal basis with the least possible delay. We are at present absorbing two per cent sales tax and will continue to do so until further notice.
While some dealers may be inclined to regard the balance of the tax which they absorb as a loss it must not be forgotten that all merchants, manufacturers, traders, etc. have had to assume their share in the general reconstruction (and in some cases excessively heavy and severe losses), through the writing down of inventories, the fall in raw materials and commodities, and the contingent liability for goods contracted for at high prices in advance.
It was hoped that all manufacturers would adopt a uniform basis of handling this situation, but this could not be arranged.
So they sent out their bulletin. At the time I understood that it was entirely arranged between the manufacturers and the dealers, on the basis of fifty fifty, as shown by this circular.


Thomas Wakem Caldwell: Do you know how
many manufacturers adopted that attitude, and what was done?


Henry Lumley Drayton: I could not say.


Thomas Wakem Caldwell: Is it not a fact that the government did refund to those manufacturers who were conducting retail establishments the tax on the cars which they had in their retail warehouses? I know a statement was made that refunds were granted amounting to over $170,000.


Henry Lumley Drayton: I know of no
refunds at all. But, in fairness to my hon. friend, I should add that the sales tax under the law was not payable until the sale was made. Merchants had stamps on hand to be attached when sales were effected. Now, those stamps would be redeemed on presentation; but that would not be a refund, the tax never having been payable because no sales had ever been made. I do not know, I tell my hon. friend frankly, but it may be that some manufacturers had cars on the retail side of their warehouses instead of on the wholesale side, and if they had not sold

Ways and Means-Sales Tax
those cars, but had simply transferred them from one side to the other, the government could not hold the tax. It is possible that some payment has been made in connection with this; I do not know. But so far as I am aware everybody was dealt with on the same basis. Now, there are the facts. I am not objecting to any action being taken. I think what I did was right, and Mr. Fielding thought I was right. If somebody else thinks I am wrong, I am not going to be at all warm about it.


[Stage Direction]
Section agreed to.
On section 6-License to bona fide wholesaler or jobber.
Mr. WHITE:: With respect to this clause, I have had a matter brought to my attention by a firm in my city who deal in scrap materials.	It was brought before the Minister of Customs through a letter written to him on January 19, 1924, as follows:
We desire to call to your attention an unjust measure which has to do in taking out a bond in connection with sales tax.
In our business, which is the handling of scrap materials and is sold to manufacturers as raw material, there as no sales tax. We are therefore not in the position that we were last year, as we do not collect any sales tax to be turned into the department. Under the circumstances it is unreasonable for us to be put into the position of having to take out a bond, covering three months maximum business of 1923 calculated on 12 per cent, which would mean that we would have to spend about $75 for the cost of the bond each year.
You will agree that our position is not analogous with that of the manufacturer and as our business is taxed to the limit now we believe you should withdraw the ruling making it necessary for the wholesale scrap merchant furnishing this bond.
We are placing thiis matter before you for your kind indulgence and we are hopeful, that you will consider the matter carefully, and we will await your reply with interest in due course.
That is from London, Ontario. In reply to that the minister wrote to Harris & Sons as follows:
I beg to acknowledge receipt of your letter of the 19th of January with reference to the bond which 3rou are asked to furnish -in connection with the sales tax.
This is a matter of legislation and parliament alone could change it. I will submit your letter to the proper authorities and see what can be done with the object of meeting the grievance of which you complain.
On January 26th the minister again wrote as follows:
With further reference to your letter of the 19th instant and to my acknowledgement of the 22nd, I regret to say that it is not possible to meet your request that the giving of a bond be waived in view of the fact that it is a statutory provision which the 
department has no power to change or modify. Parliament alone has the power to amend or repeal such provisions.
That is signed by the Minister of Customs and Excise. On May 20th, 1924, I received a letter from Harris & Sons as follows:
Since the first of the year we have been classed as a wholesaler under the new sales tax regulations and inasmuch as everything we handle is classified as raw material for re-manufacture we do not charge sales tax of any kind when selling to manufacturers or others with a license. You will therefore understand that we do not hold any moneys to be turned in to the government, as we do not collect anything. Notwithstanding this the regulations say that we must furnish a bond from a bonding company, amounting to $7,000, which amount ds arrived at by three months of our last year's sales. Although we were able to get a bonding company to furnish the necessary bond for the first three months of this year same has been cancelled, and we are not able now to furnish this bond although we have explained the fact that we do not collect any sales tax to be turned into the government and therefore the bonding company incurred no risk.
Without this bond the government refuse to grant us a license, and under this circumstance we must pay the 5 per cent sales tax ourselves on everything that we buy and import from the United States, and we feel that under present business conditions we could not remain in business if we had to work under this tax and not obtain a license.
Our 'bankers are willing to give the government a guarantee in our behalf but they refuse to give the bonding company this guarantee and thereby have them collect their premium without earning same.
I took the matter up with the Acting Minister of Finance and was referred to the Department of Customs and Excise. I took it up with the Minister of Customs and Excise, who wrote me on the 6th of June 1924 as follows:
I duly received yours enclosing correspondence with reference to Messrs. J. Harris & Sons.
In reply I may say that the department has no authority to waive compliance with the provisions of the statute which specifically provide that before being granted a license a wholesaler shall give a bond of security by an incorporated guarantee company authorized to do business in Canada and whose bonds are acceptable to the Dominion government, or Dominion of Canada bonds.
I return the correspondence enclosed with your letter.
I am sorry that I am not in a position to meet the request' but, as you will understand, I cannot exceed the powers given by the act.
It seems to me that this is the time to make a change, if a change can be made, which will relieve this company, and other companies as well, of the hardship incurred under the provisions of the act. As they say, they are now taxed heavily enough, and the regulation referred to is one which evidently makes it even harder to carry on business. That regulation seems unnecessary, but it is evidently in conformity with the provisions of the Special War Revenue Act. I would ask the minister whether some change could not be made to afford relief in this connection. For some un-

Ways and Means-Sales Tax
known reason this firm has been unable to get the necessary bond, and in any case it would involve an expenditure on their part of $75 a year, although they pay nothing whatever to the government.


Jacques Bureau: This is a question of the
classification of this firm's activities. They are not manufacturers; they are wholesalers. The act provides that these people shall give a bond. It is the first case I have heard of where the bond company has refused to guarantee the honesty of the trader or his faithful compliance with the law. I do not see what I can do in the matter. These people buy the scrap and sell it, and when a wholesaler sells to a manufacturer he gets a refund from the department of the sales tax he has paid. When the material goes into the manufacture for consumption then the tax is collected and turned in to the department.


Henry Lumley Drayton: Why could a
small amendment not be made to provide that a bond or other security might be accepted, in the discretion of the minister? I do not believe this government is out to make business for the bond companies, but that seems to be the effect of the present provision. The guarantee of a bank is just as good as that of a bond company, and many other things could be suggested that would be just as good. Why not provide that such security may be accepted as shall meet with the satisfaction of the minister? The only real difference is that the trader has to pay $75 to get the bond from the guarantee company, whereas in the other case he has not that expense.


Jacques Bureau: There is a lot in what
my hon. friend says, but he knows by experience the difficulties in connection with taking other security. If a man wants to be his own security-


Henry Lumley Drayton: It would have
to be outside security, of course.


Jacques Bureau: There were cases as soon
as the law was amended, and when they came to the minister and he had to make a decision, he was accused of causing hardship and all sorts of things. In the case of a bond to be given when duty was not paid on liquor, we made it a guarantee bond approved by the department. I would have no objection to what has been suggested if it were not for the difficulty of administration, and the very difficult position in which the minister is very often placed. He may do some injustice in refusing to accept certain bonds, and on the other hand1 he may expose the government to loss by accepting certain
bonds. This makes it difficult. If my hon. friend wants to make it bank security, or add to the kinds of securities we must accept, all right; but I think it is unfair to leave it to the minister to judge whether or not the security should be accepted.


Henry Lumley Drayton: I do not want to add for one moment to the minister's difficulties, or to be the cause of his losing one wink of sleep. Why not say, or "bank guaranteed "?


Jacques Bureau: I would not object to
that.


Richard Smeaton White: That would cover the ground, I think.


Samuel William Jacobs: It is just a question whether the bank has the power to give guarantees to the government for its customers. Banks are created for a certain specific purpose, and I do not think it would extend to giving credit to the government for their customers. That is the function of a bonding indemnity company.


Henry Lumley Drayton: I do not think there would be much trouble about that. Every time a bank issues a letter of credit it is, in effect, doing that.


Jacques Bureau: We have never had any
difficulty in getting bonds from outside, but they want us to take their own guarantees, and that is where the trouble comes in. Better leave it as it is, and if there is any difficulty in any particular case we will see what we can do about it.


Richard Smeaton White: The minister has had a
special case placed before him, and he says he cannot alter the statute.


Samuel William Jacobs: Why cannot the man get
a bond to guarantee his dealings?


Henry Lumley Drayton: It would cost
him $75 a year. It is a very serious addition the government is making to the cost to the public.


Jacques Bureau: How are you going to
protect the government?


Henry Lumley Drayton: This is one of the troubles of this legislation. The government says: You can only do business with us if you give us a bond, and that will cost you $75 a year to get. Now, there is any amount of different ways of giving security.


James Alexander Robb: He can always get his refund.


Henry Lumley Drayton: My hon. friend knows about refunds.

Ways and Means-Sales Tax


James Alexander Robb: I know it is slow.


Henry Lumley Drayton: I venture to
say there are refunds still outstanding under the sales tax legislation of last year, any amount of them. The department does not know, nobody knows, what the position of refunds of sales tax under that legislation of last year is.


Samuel William Jacobs: You are dealing there with hundreds of millions of dollars. You cannot expect that to be rushed through in a day.


Henry Lumley Drayton: What a vivid
imagination my hon. friend has-hundreds of millions of dollars!


Samuel William Jacobs: Yes; I am talking of the
sales tax.


Henry Lumley Drayton: 
Samuel William Jacobs: There is about $30,000,000 or $40,000,000 involved in that.


Henry Lumley Drayton: It is a pretty
serious thing, and is it not a serious thing for the trader, that he should have to put this up without-


Samuel William Jacobs: Is it not more serious to make refunds without a proper checking up and auditing of the accounts, without investigation and inspection?


Henry Lumley Drayton: There is no
question about it, that the most serious thing is to create a condition that results in a mess where you do not know where you are with respect to refunds. If there is any way of getting out of any more messes with regard to refunds-


Mr. CANNON:: Were there any refunds
when my hon. friend was minister?


Henry Lumley Drayton: I do not remember any. There was no legislation passed then creating refund liabilities that I remember. My hon. friend has a keen wit

and a very good memory. Perhaps he will tell me what legislation was put through then creating refunds.


Samuel William Jacobs: We had to do it after you
left office.


Henry Lumley Drayton: My hon. friend is showing his humour again, although not his usual strict fairness. This refund business, as my hon. friend knows, is the result of the legislation of last session. It has absolutely nothing to do with a single act that we had on the statute book before. Now what is the use of getting into this silly kind of altercation here? Of course, I do not mind it a bit; if my hon. friend likes it he can go on indefinitely; I rather like it.


Jacques Bureau: I may tell my hon. friend that this system of refunds has been made easier and simpler. I have not the new regulations here, but I would like my hon. friend to see them. They are much simpler.


Thomas Wakem Caldwell: The hon. ex-Minister of Finance simplified this matter when he was in office by simply refusing to make any refunds at all. He acted on the principle, what we have we'll hold, what we have collected we'll keep, especially in the case of the automobile dealers. That was a very simple way of doing it.


Jacques Bureau: But a radical way of
making it simple.


Henry Lumley Drayton: I am still
awaiting information as to that legislation that weis passed when I was minister that created these difficulties in connection with refunds. I see my hon. friend (Mr. Cannon) is going out, without giving me the information.


Lucien Cannon: If I get any information
from my hon. friend, it will be the first time I ever did.


Henry Lumley Drayton: I am afraid I
am not going to help him out now. The hon. gentleman referred to me, and then I asked him to tell me the legislation I was responsible for that created the necessity for refunds, but I have not got the answer to that question yet. I have no doubt the hon. gentleman made a mistake. We will let it go at that. There was no such legislation, and no such situation created. I am very glad to hear the minister say that the regulations now are

Ways and Means-Sales Tax
very much simpler for dealing with this tremendous burden of refunds created by the legislation of last year.


Jacques Bureau: I do not want to take
credit to myself for that. It is the officials.


Henry Lumley Drayton: I give credit to my hon. friend if he has been able to do something in that direction, because the mess thrown on the department was something awful, and the expense put upon traders was tremendous. Inventories had to be taken all over the country, and checked, all for nothing, really all for nothing, but it all had to be done. I do not wonder that although the act was brought in last year the department has only now been able to find out some way of dealing with the situation. I am not blaming them for the delay. The legislation itself was of such a character as to invite opposition. Only last week, or quite recently, has the department been able to evolve a workable scheme. But, I repeat, the department is not to blame; the House and the government are to blame. The government are to blame for bringing down legislation they did not understand, and the House is open to censure for passing legislation which it did not understand; and we have had the sorry spectacle this year, with this act, only a year old, of ministers not being able to understand a simple regulation when it was read to them. More than that, they cannot understand how the tax act of last year is working out. Under these circumstances my hon. friend surely will not suggest that under the new act traders should be unduly handicapped. When they do not want to pay $75 for a bond, surely it would be perfectly easy to provide that it shall be a bond "or other approved security"-something like that.


Jacques Bureau: You would still put it up to the minister?


Henry Lumley Drayton: But the minister takes far more grievous burdens under this act. It really ought to be a matter of regulation. It is only by regulation that the government are going to bring light out of the darkness, or order out of the chaos, that has existed for some time past.


Jacques Bureau: As far as returns are concerned we are making the law simpler than it formerly was. My hon. friend contends that the guarantee ought to be subject to the approval of the minister. The minister says that will bring up a lot of difficulties. As I
have just mentioned most of the time people come to the department and say "We will give you a guarantee ourselves."


Henry Lumley Drayton: A guarantee by the person himself is no good.


Jacques Bureau: In the case of banks and
corporations dealing with us they want to give their own guarantee. The advantage of having a guarantee bond is that when we have a claim it is made good. In other cases it very often means a law suit. I do not want to shirk any burden. On the other hand, in the interest of the better administration of the department, I think the clause as it is now framed should be allowed to stand. In some cases it may not work out with entire satisfaction but there is no regulation or law which works in that efficient manner.


Richard Smeaton White: I can see where it might be a just provision to require a bond when a company is liable to the government for a certain amount. But if I am correctly informed in this case the company collects no sales tax, there is no money involved at all. Yet the government insists upon having a bond which costs a certain amount a year. The minister has expressed the opinion that he would accept a bank guarantee. To a certain extent that would relieve the situation but not entirely, because a certain amount of expense is incurred even in providing a bond of that character.


Jacques Bureau: It is not a question of having sales tax returns. These men are paying the sales tax. But when the wholesaler sells to the manufacturer my hon. friend opposite claims he is entitled to a refund because the consumption tax is paid when the material is put into the article manufactured and that article is ready for consumption. That is the reason why the tax is called a "consumption" tax. The bond is given in order that the books may be accurately kept and the government may be able to obtain proper returns. If proper returns are not kept and there is any delinquency or fault on the part of the man who holds the license, we go to the guarantee company to get our money.


Richard Smeaton White: Is the minister still willing to accept the guarantee of the bank?


Jacques Bureau: I do not object to a bank
guarantee. '


Henry Lumley Drayton: Why not add to the section the words "or a bank?"


Jacques Bureau: I would suggest the words "or of a chartered bank."

Ways and Means-Sales Tax


The CHAIRMAN:: The words can be added at the top of page 4 and the line will then read " bond of an incorporated guarantee company or of a chartered bank."


Mr. MARLER:: Is it the intention to generally license wholesalers or jobbers under this section?


Jacques Bureau: We have not discussed the matter yet but it looks like it.


Herbert Meredith Marler: It is a very important
question. Any wholesaler or jobber getting a license of that description need not pay the sales tax at all until the goods go into the hands of the consumer virtually.


Jacques Bureau: Why should the wholesaler have to pay the sales tax? If the manufacturer does not pay the sales tax why should the wholesaler if he is licensed have to pay that too and lose the interest on his money until the goods reach the consumer and we make a refund? I think it is only fair to the wholesaler as it stands.


Herbert Meredith Marler: In some cases my hon.
friend is perfectly correct. There are instances where the sales tax may not be paid at all. Is it ithe intention of the minister to classify these wholesalers as jobbers who may be granted licenses or is it not?


Jacques Bureau: How would it be with
the people who have not paid the tax? They would not pay the tax if they did not sell the goods.


Herbert Meredith Marler: Suppose the return is not made.


Jacques Bureau: We get a guarantee they will keep their books properly and that we will get a return.


[Stage Direction]
Section agreed to.
On section 8-Refund on goods enumerated in item 445A.
Henry Lumley Drayton: This is for the purpose of implementing the budget and is a refund to the agricultural implement firms, under item 445A. It will cost us $204,000.


James Alexander Robb: It applies to 445A. I gave
my hon. friend the figures some time ago.


Henry Lumley Drayton: I think it was $204,000.


James Alexander Robb: That would be the total
amount. This would only be a small part of it.


Henry Lumley Drayton: Where is the
balance of it put in?


James Alexander Robb: It would come under section
4.


Henry Lumley Drayton: Why is this
dealt with in this way? At the time of the budget it was pointed out by my hon. friend that refunds which were given under the sales tax act itself were quite a proper matter for action under the existing machinery of the Finance department; but when by a budget proposal a direct charge is made on any of the income of the country actually received it is misleading. It is a wrong principle to treat it as a matter of refund because it is not. It is a matter of originating expense as a result of that legislation, and at the time it was discussed my hon. friend agreed with me. What is the reason for the change?


James Alexander Robb: It would be in the same position as the automobile matter we have just been discussing.


Henry Lumley Drayton: No, not at all. There was no refund in the case of the automobiles. If there had been, that money having been actually taken into the treasury of the country under the law which put it there, which law had no refund provision in connection with it, there would be no right at all to pay it out. This is put in just where it ought not to be put in; it is made a statutory charge, when it ought to follow the general rule and be voted in the estimates. It is the only proper way of doing it.


James Alexander Robb: The purpose of section 8 is
to put Canadian material in the hands of wholesalers, jobbers or other dealers on the same footing as imported material used in the manufacture of articles covered by tariff item 445A.


Henry Lumley Drayton: The minister
has not answered my point.


Arthur Meighen: The purpose seems quite plain. It is another attempt to bury the estimates.


James Alexander Robb: No.no.


Arthur Meighen: That is what is done.
It is something that has to be voted to these companies, and it is going to be done by a statute instead of being put in the estimates and voted dollar for dollar by parliament.


James Alexander Robb: I think the hon. gentleman
is wrong.


Arthur Meighen: Tell me what it is.

Ways and Means-Sales Tax


James Alexander Robb: This is material that might be put in the hands of a retailer who had already paid the tax. Then he sells it, and it comes under this tariff item 445A, and he is entitled to a refund.


Arthur Meighen: My hon. friend from
West York (Sir Henry Drayton) has pointed out that the tax was paid under a law that made no provision for a refund; consequently the money is in consolidated revenue. Now a new law is passed and the money is required to pay that back. That money should be voted in the regular way.


James Alexander Robb: The hon. gentleman is wrong.


Arthur Meighen: Of course the thing is
as plain as can be. You might as well bury any estimate in that way. The minister admitted the point himself in the House a few days ago. I recall it myself. He thanked the hon. member for West York for making it clear. The law under which he paid the money made no provision for refund at all. Consequently the money is in consolidated revenue, properly so under that law, and not subject to any refund. Now he wants it refunded and the only way to refund what was paid in under the other law is by an estimate.


James Alexander Robb: I will be prepared to report to parliament the amount of refund and the names.


Arthur Meighen: That is all right, but it does not appear in the estimates, and the minister's leader gets up and tells us what the payments are; but all this will be paid out, just the same as the branch lines money will be paid out, and there will be no opportunity to correct it.


Samuel William Jacobs: The hon. gentleman can
correct it when it comes up.


Arthur Meighen: I cannot correct everything.


Samuel William Jacobs: Why do we have a leader of the opposition?


Arthur Meighen: To get things right when he can, and he would like to get the cooperation of the hon. member for George Etienne Cartier (Mr. Jacobs). Why does my hon. friend waste his time sitting away in the back, when he might put things right?


Samuel William Jacobs: Would the leader of the opposition promise me a front seat?


Arthur Meighen: The front in all good works.


Henry Lumley Drayton: Why has the
minister departed from what he himself said?


James Alexander Robb: I have looked into it and I think this is the simplest way to do it. I shall be prepared to give to parliament the refunds and all the names.


Henry Lumley Drayton: Why not put it in the estimates?


James Alexander Robb: We do not know what it is, we cannot put it in the estimates.


Henry Lumley Drayton: The same
suggestion was made before, and I pointed out to my hon. friend that the estimates were only estimates because we did not know the amount. Everything is an estimate. If we are to understand that the estimates are not to include the cost of carrying on the country, all right, let us understand it.


James Alexander Robb: We must have legislation of this kind, otherwise we could not provide for this refund. We have consulted with the officers of the department, and they consider that this is the best and simplest way.


Henry Lumley Drayton: It is the simplest way to get out of showing the financial condition of the country. It is the simplest way of evading the necessity of putting down in black and white just what this precious legislation is costing the country. It is the simplest way of bedevilling the country's bookkeeping, so that nobody will know where we are. And there are other things going on just the same. My hon. friend, if I remember rightly, told us that there was no reason why it should not appear in the estimates. That being the case, why has he changed his opinion? Surely he will tell us at eight o'clock why he has done so.


James Alexander Robb: I have consulted the officers of the department and they inform me that this is the better way.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


George Newcombe Gordon: When the committee rose at six o'clock we were considering section 8.


[Stage Direction]
Section agreed to.
Bill reported.
Mr. SPEAKER:: When shall the bill be read a third time?

Supply-Steamship Services


James Alexander Robb: I should not like to press for the third reading now as the ex-Minister of Finance (Sir Henry Drayton) is not in his seat.


Hewitt Bostock: Next sitting of the House.


TRADE AND COMMERCE
[Stage Direction]
The House in committee of Supply, Mr. Gordon in the Chair.
\lail subsidies and steamship subventions-local services- vote 180-Eaddeck and Iona, steam service between, $10,500.
Mr. LUCAS:: Where is this service carried on?


James Alexander Robb: This is down along the coast of the Bras d'Or lakes in Cape Breton. It is one of those points where they have no railway communication.


Mr. BROWN:: Have they a mail carrying contract?


James Alexander Robb: Yes.


Mr. GARDINER:: Are they paid extra for carrying the mails?


James Alexander Robb: No.


[Stage Direction]
Item agreed to.
Trade and Commerce-Canada Grain Act, administration of, $1,100,000.
' Mr. GARDINER:	I understand that the
elevator at Vancouver is under the control of the Harbour Board, and that the Grain Commission have very little to do with it. Is it the intention of the minister to allow that elevator to remain under the control of the Harbour Board, or will it be put back under the Grain Commission?
Thomas Andrew Low: The operation of the elevator is under the control of the Harbour Board. The weighing and inspection is under the control of the Canada Grain Board.


Robert Gardiner: Is the control of rates under the Grain Commission or under the Harbour Board?


Thomas Andrew Low: The rate is fixed by the Harbour Board, which operates under the Marine and Fisheries department.


Robert Gardiner: Without any reference to the Board of Grain Commissioners?


Thomas Andrew Low: Yes, without any reference to them.


Robert Gardiner: What rates are being charged for handling grain at that point?


Thomas Andrew Low: That comes under the Marine and Fisheries department. The Minister of Marine and Fisheries will be able to give my hon. friend tthe information he asks for.


Mr. SALES:: Is it not a dangerous thing to create a harbour board and give them a virtual monopoly of the whole of the business, nobody else having anything to say as to what rates they shall charge? It seems very unfair that all the elevators at the head of the lakes should be under the Grain Commission and have their rates fixed while in the case of other elevators the Harbour Board should have control. Take the port of Montreal, for instance: the receipts last year were $1,630,745.39, and the operating expenses $689,855.03, leaving a balance over and above operations of $940,890.36. That is, more than half the total revenue at the port of Montreal is derived from the handling of grain. It is not in the interests of the farmers that harbour boards should have the sole power in these matters; that nobody should have the right to regulate their rates. So far as I can find, no report is issued by harbour boards such as those at Montreal and Vancouver. I do not agree with the minister that this should not come under his department. I do not see how the Minister of Marine and Fisheries should have anything to do with the handling of grain.


Thomas Andrew Low: The Montreal Harbour Board
handles large quantities of American grain, so that much of the earnings would come from that source. As to the fixing of rates, that is subject to the approval of the Minister of Marine and Fisheries.


Robert Gardiner: Under present legislation a certain percentage of the overages goes to the federal government. Have there been any overages in the Vancouver elevator, and if so what is their amount?


Thomas Andrew Low: There has not been an official
weighing since the Harbour Board took over the elevator. There will be one, though, in the course of the year.


Mr. WARNER:: How do the charges at
Vancouver for the handling of grain correspond with those at Montreal and the lake ports?


Thomas Andrew Low: I am informed that they are
slightly less than at Montreal. I am not altogether sure, but that is my information.


Mr. KNOX:: What are the charges per
bushel at each port?


Thomas Andrew Low: If my hon. friend will put
that question to the Minister of Marine and

Supply-Canada Grain Act
Fisheries when his estimates are under consideration I am sure he will be glad to give the information. The matter is under his department; we have nothing to do with the fixing of rates.


Mr. FORKE:: It is very strange that when we are considering the Canada Grain Act we are told that everything has to be answered by the Minister of Marine and Fisheries.


Thomas Andrew Low: Nevertheless the matter of
the fixing of rates is under the control of his department. It is only a question of deferring the inquiry for a day, when hon. members will be able to get the information from the minister in charge of that department.


Thomas Sales: I would like again to protest against any harbour commission having a monopoly such as the Montreal Harbour Commission or the Vancouver Harbour Commission have. In 1922 the Montreal Harbour Commission had a balance of $973,741. Now, when the grain is contributing a balance of nearly a million dollars a year to the Harbour Commission at Montreal, the question arises in the minds of the farmers whether it is not contributing too much. I think it would be in the interests of everybody, and especially of the farmers if all the elevators in the country were under one control, and that control the Board of Grain Commissioners, with power to fix rates; and any overages coming from these transfer houses at Montreal, Vancouver, Prince Rupert or elsewhere should belong to the people and should be taken care of by the Grain Commission. I say it is a dangerous principle to create a monopoly of this kind and have the board responsible apparently to nobody except the Minister of Marine and Fisheries.


Thomas Andrew Low: My hon. friend would not say
that a surplus of $94,000 in the thirteen years ol operation is too much. We could scarcely figure any closer than that.


Thomas Sales: Is the minister referring to
the surplus for operating these elevators by the Board of Grain Commissioners?


Thomas Andrew Low: Yes. Spread over the thirteen
years there has only been a surplus of $94,-
000.


Thomas Sales: I want to understand this clearly. Does the minister mean that the operation of the Canada Grain Act by the Board of Grain Commissioners has resulted in only $94,000 profit?


Thomas Andrew Low: In a profit of $94,000 in the
thirteen years.


Thomas Sales: By the Board of Grain Commissioners?


Thomas Andrew Low: The Board of Grain Commissioners.


Thomas Sales: I am very, very sorry to have to appear to be teaching the minister his business, but I have a report here from the office of the Department of Trade and Commerce giving the revenue and expenditure under the Canada Grain Act since 1911. I will read the figures year by year, because I notice that on May 19th the minister stated that there had been a considerable loss in the early years of operation under the Grain Commission. Here is the statement I received from the Trade and Commerce department:
Statement showing the revenue and expenditure under the Canada Grain Act, Board of Grain Commissioners
Year	Expenditure	Revenue1911-12	.. $ 226,894 75	$ 230,173 871912-13	.. 340,294 82	330,430 491913-14	.. 450,737 57	510,184 101914-15	.. 527,773 83	517,034 631915-16	.. 659,062 48	913,616 461916-17	.. 884,999 27	1,459,811 401917-18	.. 1,007,989 04	1,499,875 881918-19	.. 937,521 33	1,082,069 631919-20	.. 925,597 28	1,092,605 591920-21	.. 1,059,565 35	1,483,277 571921-22	.. 1,235,000 00	1,937,323 031922-23	.. 1,386,803 74	2,364,037 481923-24	.. 1,720,781 06	2,308,254 05Total.. ..	.. $11,363,02052	$15,728,694 18
That shows a surplus of revenue over expenditure of $4,365,673.66.


Thomas Wakem Caldwell: Who was that report
prepared by?


Thomas Sales: I asked the Department of
Trade and Commerce to give me these figures, and this statement was forwarded to me by Mr. Parmelee, for the Deputy Minister of the Department of Trade and Commerce. That is the amount the farmers of this country have contributed to the consolidated revenue fund through the administration of the Grain Act. I was not in the House when the minister's estimates came up the other day, and I was surprised to read his statement that there had been a considerable loss in the operations of the Grain Board during its earlier years. Needless to say, when I got these figures from the Trade and Commerce department I was still more surprised. Then, in addition to that surplus, there is the $550,000 residue of the wheat board funds. We are trying to organize a marketing pool in the western provinces, for there is nothing more important to us, Mr. Chairman, to-day, than the marketing of our products. Our provincial governments have all passed resolutions asking that these wheat board funds should be returned, but as I understand it,
Supply-Canada Grain Act

the Acting Minister of Finance, whom I am pleased to see in his seat, has taken the stand that he is going to hold that money because some of our people have not paid for their seed. I do not think that is at all fair. When we add this $550,000 of wheat board funds to the surplus of revenue over expenditure of $4,365,000, it makes nearly $5,000,000 which the growers of grain, those selfish people my hon. friend from Fort William (Mr. Manion) was referring to the other day, have contributed-


Mr. MANION:: That will pretty nearly
pay for the estimate this year.


Thomas Sales: And pretty nearly for the
Hudson Bay railway, too I do hope that in the face of the figures I have given, the Acting Minister of Finance will reconsider his decision and accede to the requests of the provincial governments for the return of these wheat board funds, at least. That is all I have to say at the moment.


Richard Burpee Hanson: In the light of the figures the hon. member has just given, it seems to me that an explanation, and an adequate explanation, is due to the committee from the minister, because there is such a wide variance in the figures quoted 'by himself and those given in the return supplied by his department.


Thomas Andrew Low: I intended to answer the
question but my hon. friend (Mr. Hanson) rose too soon. I propose to stand by the statement I made a few nights ago, that the surplus amounted to $94,000 as a result of the operations of the Canada Grain Board during the period of thirteen years and ten months. During that time the total revenue amounted to $8,366,155.15. The total expenditure was $7,849,124.94, leaving a surplus of $517,030.17. Deducting the provisional bonuses allowed to the grain staff during the years 1918-19, 191920, 1920-21, 1921-22, 1922-23 and 1923-24 to the 31st January, amounting to $442,622.62, the net receipts for the period of thirteen years and ten months referred to amount to $94,407.55.


Thomas Sales: Will the minister explain how he arrives at these figures?


Thomas Andrew Low: The trouble with my hon.
friend is that he is mixing the figures for the operation of the elevators with the figures under this item. The elevators are not under consideration at the present time they will come up under item 379. I have not looked the matter up to see what the revenue and expenditure amount to in that case, but the item will be under discussion some time this 
evening, or at a later date. However, I stand by my statement of a few nights ago that the total revenue under the administration of the Grain Act amounted to $94,407.55.


Thomas Sales: I should just like to read
this:
As requested I beg to attach herewith statement showing the revenue and expenditure under the Canada Grain Act and Board of Grain Commissioners, as per calendar years 1911 and 1912 and 1923 and 1924.
Those are the figures I have quoted from a statement signed by Major Parmelee, who is assistant deputy minister, I understand.


Thomas Andrew Low: The hon. gentleman was not
in his seat, I think, a few nights ago when I made my statement. In the past the estimates for the administration of the Canada Grain Act and for the management and operation of the grain elevators, have been combined. In the last fiscal year the amount in the estimates was $1,558,839. This year the combined vote for those services is $1,520,000, covered by votes 372 and 379 a decrease in the two items combined of $38,839. If my hon. friend will allow the matter he has been discussing to stand until we take up item 379, where it should properly be considered, I am sure he will have ample opportunity to present any figures which he wishes to bring to the notice of the committee.


Robert Forke: If the minister had made that explanation at first some little time might have been saved.


Thomas Andrew Low: May I inform my hon. friend
that this item was discussed for an hour or an hour and a half some nights ago. The hon. member (Mr. Sales) challenged the statement that I had made and I had no desire to prevent him from speaking. However, if I had known he was going to enter into this discussion I would have asked him to defer his remarks.


Mr. SPEAKMAN:: In connection with the management of grain elevators at different ports, I presume the elevators at the head of the lakes are under the direct control of the Board of Grain Commissioners, whereas the elevators at Montreal and Vancouver are under the control of the Harbour Commissioner of those ports?


Thomas Andrew Low: Yes.


Alfred Speakman: I cannot quite see
the reason for that difference. Although I do not class myself as a grain expert I can see that there is a greater similarity between the elevators at Vancouver and at the head

Supply-Canada Grain Act
of the lakes, than there is between the Vancouver elevators and the Montreal elevators. I understand that at Montreal the elevators are more or less transfer elevators. That is, practically no farmer's grain is received there; whatever grain is received is transferred there for transhipment?


Thomas Andrew Low: Yes.
Mr. SPEAIvMAN:	At Vancouver, however, the elevators are terminal elevators in the true sense of the term-that is they are not only used as shipping elevators but as receiving elevators for farmers' grain. At Montreal practically no mixing can be carried on; there are no mixing elevators there but simply transfer elevators. On the other hand, mixing operations can be carried on at Vancouver just as they can at the head of the lakes. I am speaking now from the point of view of the men who raise the grain, and after all they are the men who are chiefly interested in elevators, and who should have the greatest voice in their management. It seems to me that control by the Grain Commission is absolutely essential where the mixing can be carried on. I certainly concur, and concur most heartily, with the sentiments expressed by other hon. gentlemen on this side that it is vital that where proper terminal elevators are erected, where grain is received and where mixing operations may be carried on, the elevators should be under the control of a responsible body of men who are trained for the work and understand it thoroughly.


Thomas Sales: I should like to have a little further explanation from the minister. I do not want to dispute his figures at all but the figures I have quoted are taken from the general report. I find there, certain items of receipts which give a total of $2,444,175.70. That includes grain inspection and weighing fees for which the farmers undoubtedly have to pay. It also includes the registration and cancellation of warehouse receipts and the sale of grain samples. Undoubtedly these items appertain to the farmers also. There are likewise included-license fees for terminal elevators, storage fees, miscellaneous collections, and so on. If, by some other method of bookkeeping the minister arrives at a conclusion different from that to be drawn from the figures I have presented, my contention still is that the farmer must bear the cost of these different items which go into the consolidated revenue. The minister may alter his method of bookkeeping, but I do not think in the end he will dispute the facts I have presented that from one 195
source and another the receipts have amounted to nearly $4,500,000 during the last thirteen years.


Thomas Wakem Caldwell: More than cost?


Thomas Sales: Yes, over and above the
cost of operation.


Henry Elvins Spencer: Have the Board of Grain Commissioners anything to do with setting the freight rates on the Great Lakes and the regulation thereof?


Thomas Andrew Low: No, the government has nothing to do with fixing the rates on the Great Lakes, but if, in the opinion of the board these rates are too high, they can step in and fix the amount. So far they have not done so.


Henry Elvins Spencer: Is the minister aware
that the charge to-day between Canadian ports, where the distance is much shorter, is higher than the charge from the Canadian ports to American ports? In other words, where there is no competition the shippers are being held up. Wherever there is competition they are cutting the price. I quoted some figures the other day which are referred to in the Grain Growers Guide, and I believe in other papers. An editorial in the Grain Growers Guide reads as follows:
The patriotic Canadian lake shippers, who enjoy a monopoly under the coasting laws,' are soaking the shipper who exports wheat through Canadian channels. Where they have a monopoly they charge 2J cents: where they face American competition -they charge 1| cents. They charge 42 per cent higher rates on wheat by the all-Canadian route.
Could the minister give us some information in regard to these figures and let us know if they are true or not.


George Newcombe Gordon: I am inclined to think the hon. member is hardly in order under this item.


Henry Elvins Spencer: If I am not in order I can bring it up some other time. I asked this question the other day and the minister informed me that when he brought down his estimates I would have an opportunity to ask the question.


Thomas Andrew Low: I have no objection to the hon. member's asking the question. There are various reasons why the rates to American ports are lower. Competition is the regulating factor in all these rates but the .vessels have more ore and coal to handle when going to American ports than when destined for. Canadian ports, and I am told by some vessel owners that the facilities for handling grain at Buffalo and other American ports are such

Supply-Canada Grain Act

that the cost of handling is less than at the Canadian ports. Whether that is the fact or not I am not prepared to say but that was one of the reasons given. I wired the Canada Grain Board yesterday asking them if they could give me any reason why the rate to Canadian ports should be higher and why there should be a higher rate where there was no competition assuming the statement quoted to be true, but up to the present time I have not received an answer. When that reply comes I shall be very glad to hand a copy to my hon. friend.


Mr. HOEY:: Can the minister tell me
whether the dispute with reference to the overages at terminal elevators has been settled? Has the court given its decision as to the right of the government to take the overages at certain terminal elevators?


Thomas Andrew Low: It is still pending in the courts.


Robert Alexander Hoey: It has been in the courts a
long time.


John Livingstone Brown: In the meantime nothing
has been collected on overages; is that the situation?


Thomas Andrew Low: I think the hon. gentleman is
asking me a question in connection with some private companies.


John Livingstone Brown: In the meantime is the government receiving anything from overages as provided for in the statute?


Thomas Sales: Will the minister tell us
what the apple growers and potato growers pay for their inspection?


An hon. MEMBER:: One at a time.


Thomas Andrew Low: That matter should be discussed under the Department of Agriculture estimates.


Mr. COOTE:: Do the salaries of the Board oif Grain Commissioners come under this item?


Thomas Andrew Low: Yes.


George Gibson Coote: Are the salaries of the
Board of Grain Commissioners included in the amount which the minister quoted in answer to the hon. member for Saltcoats (Mr. Sales).


Thomas Andrew Low: The salaries of the commissioners and secretary are included in that item.


George Gibson Coote: Are the salaries of the staff at Montreal included in that item?


Thomas Andrew Low: The salaries of the eastern
inspection division come under this item. They amount to $21,402, expenses, $1,000,
IMr. Low.]
and printing and stationery $1,800. The Grain Commissioners come under this as well. The vote covers the salaries of the officials, both permanent and temporary, all contingencies under the administration, the various officials in the eastern and western grain inspection divisions, salaries and contingencies of the Board of Grain Commissioners, and salaries and contingencies of the grain research laboratory, except the salary of the chief chemist.


Mr. MARTELL:: Are there inspectors in
other branches, such as mixed farming, apple growing and so on, whose salaries are paid by the department?


George Gibson Coote: Do you know of any other
department under which these services come?


Thomas Andrew Low: They are under the Agriculture department. My hon. friend must ask the Minister of Agriculture about the inspection of fruit.


Thomas Wakem Caldwell: There is a fruit commissioner.


George Gibson Coote: Does the minister know of
any other department of the government that is engaged in the growing of any agricultural produce which returns a profit under its operations?


Thomas Andrew Low: The hon. member will have
to ask the Minister of Agriculture. He has a number of inspectors under his department.


Lewis Herbert Martell: Would the minister tell
me whether gypsum comes under the Department of Agriculture? If it does, it is a new idea. If the department provides a commission for grain inspection, they should have a commission for the inspection of apples and fruit, and there should be a commission for the inspection of gypsum. The whole thing seems to be for grain; everything is done for grain and nothing else.


George Gibson Coote: Would the minister be good enough to give me some information regarding an answer to a question which he gave a few weeks ago? My question was as follows:
What were the total receipts and expenditures respectively incident to the inspection and weighing of grain by the Board of Grain Commissioners for the years ending August 31, 1921, 1922 and 1923?
I give the minister's answer, adding in each case the surplus as shown in the difference: Year ending Aug. 31, 1921-
Receipts	$1,011,678 84
Expenditures	 742,314 98

Supply-Canada Grain Act
Year ending Aug. 31, 1922-
Receipts	$1,263,253 47
Expenditures	 847,186	90

Year ending Aug. 31, 1923-
Receipts	$1,433,984	32Expenditures	
972,631	16

This makes a total of $1,146,782. Will the minister please explain those figures to the extent of telling us just what is covered in the expenditures? Is he now trying to give the House the impression that there are other expenditures that are not shown in this statement?	.


Thomas Andrew Low: The item covers the salaries of the Grain Commissioners, weighing inspection services, contingencies of all kinds, temporary staff, and research laboratory, with the exception of the chief chemist.


George Gibson Coote: The minister admits that
there is a surplus in the last three years of some $1,147,000.


Thomas Andrew Low: Why does not my hon. friend go back a few years? The year immediately previous to the first one that he has given showed a deficit of $215,993 and the year previous to that a deficit of $221,415; and for six or seven years prior to that, again, there were deficits. If the hon. gentleman will include those figures he will find that the amount I gave him of $94,000 of a surplus for the thirteen years and ten months is correct.


George Gibson Coote: Is the minister prepared to
recommend to the Board of Grain Commissioners this year to reduce the fees in view of the surplus of $461,000 odd which was shown last year?


Thomas Andrew Low: I should be glad to recommend that reduction to the government if we were sure that we should have the same amount of grain to be inspected in the coming year. In the nature of things we are obliged to keep a permanent staff, and it is quite possible that through some misfortune we might have a deficit instead of a surplus. If we were sure that there was going to be a surplus each year I should be very glad to recommend to the government that there be a reduction in the fees; but in view of the uncertainty that necessarily prevails I cannot do that. The surplus this year up to January 31, 1924, is $242,036.


George Gibson Coote: I would suggest to the minister that he consult the Minister of Agri-195-J
culture (Mr. Motherwell) who is very strong on faith; if he did that, perhaps he would be inspired with enough faith to risk the consequences of a reduction in the fees.


Andrew Ross McMaster: Faith without works is dead.


George Gibson Coote: Let me draw the attention of the minister again to the fact that last year there was a surplus of $461,000, the previous year a surplus of $416,000 and in the year 1921 a surplus of $269,000. How long does the minister expect to wait before he recommends the reduction, or how big a surplus must there be in order that the fees should be reduced?


Thomas Andrew Low: It all depends on the amount of grain we have to inspect. If we were sure that the quantity would be the same this year as last year I would have no hesitation in making a recommendation to the government. We are anxious to help the farmers in every way possible, and I have no doubt that before this session is over the farmers will receive as much benefit from other services as they would get by a reduction in the fees.


George Gibson Coote: Does the minister think that this board was established as a money-making proposition?


Thomas Andrew Low: If my hon. friend will glance over the figures for the past thirteen years I think he will be satisfied that the government that organized the Grain Board had no such thought in mind.


George Gibson Coote: They did not expect that it would be a paying proposition the first year, surely.
Mr. 'LOW: For ten years there was a continuous deficit, but the government always made provision for it in the hope that some day things would come out even; and in thirteen years and ten months there has been the surplus which I have already mentioned.


John Livingstone Brown: Any deficit that might be incurred in this particular branch would be offset by a surplus in some other direction.


George Gibson Coote: I would call the minister's attention to the suggestion which the hon. member has just made. Although we have a great many kinds of agricultural products in Canada which are graded by the government, grain is the only product for the grading of which we make any charge; it is the only product in the grading of which the government secures a revenue. I want to ask the minister now whether he would have any

Supply-Canada Grain Act
objection in handing over the administration of the Canada Grain Act to tiie Minister of Agriculture. Possibly if he did that we might have the inspection done for nothing, because the Minister of Agriculture inspects apples, potatoes, butter and eggs free of charge. On what grounds does the minister justify the making of a profit out of the grain farmers.


Thomas Andrew Low: The farmers of the West receive benefits in other ways. At Saskatoon we have an elevator that cost $2,500,000, but there is no account of that taken in fixing the rates. There is another one at Moose Jaw and another at Calgary; and we are about to erect one at Edmonton at a cost of probably $1,250,000. Yet no provision will be made for the amount invested in that elevator in fixing the rates; no fixed charge will take care of that capital expenditure.


Arthur Meighen: What is the one at
Prince Rupert?


George Gibson Coote: On what ground would the minister justify the building of an elevator at Edmonton, the capital charges of which are to be taken care of by the inspection of grain at Fort William or Vancouver? Is that his argument?


Thomas Andrew Low: Possibly some of the members sitting not very far from the hon. gentleman would be best able to answer that question in regard to the Edmonton elevator.


George Gibson Coote: Is the minister refusing to answer the question? Am I to take the inference in his first statement as being correct?


Thomas Andrew Low: It is not an insinuation at all; I merely say that there is no provision made for separate outlay and charges as capital expenditure in connection with these elevators. A large elevator at Fort William was built in the same way, and I am sure that if my hon. friend benefits from the elevator at some other point he will not object to hon. gentlemen living in another district benefiting in the same way.


George Gibson Coote: Will the minister tell us
whether the charges at Fort William are the same as at the elevators at Calgary and Saskatoon?


Thomas Andrew Low: I might remind the hon. member once again that this question is properly to be discussed under vote 379.


George Gibson Coote: Mr. Chairman, it was the
minister himself who tried to sidetrack the question on to the interior elevators by explaining the way the profits made at
[Mr. CooteJ
Fort William were used, saying that they were really going to pay the capital charges on the internal storage elevators. Is not that the fact?


Thomas Andrew Low: I endeavoured to answer my
hon. friend's question, and that is the answer.


George Gibson Coote: Then we can take it as an answer that the profits on the weighing and inspection of grain at Fort William are being used to cover the capital charges at other elevators?


Thomas Andrew Low: They are spread to absorb the charges and losses on all the elevators. We cannot single out any one elevator and operate it alone; we combine them all, and the result is what I am placing before the committee tonight.


Thomas Sales: In order to clear up the situation, if there was only $94,000 profit in thirteen years, will the minister explain where the other $4,200,000 came from, and under what heading it is to be found? He will not deny that over $4,000,000 has been received altogether?


Thomas Andrew Low: I have not even looked at the elevator figures to see how they are worked out; when we reach that item I shall be glad to answer the hon. gentleman.


Thomas Sales: I am sorry to differ with the minister. He says that this question will be discussed under item 379, which I find is "Elevators, operation and management of the Canadian government." Is that the item?


Thomas Andrew Low: The elevators are not under discussion under this item; they come under item 379.


Thomas Sales: Then has the $4,200,000 come from the operation of the elevators?


Thomas Andrew Low: I do not know where my hon. friend gets the item of $4,000,000 odd. I have not looked at the elevator item; it is keeping me busy discussing the item before us at the moment.


Thomas Sales: I got the figures from your own department; that is all I can say.


Thomas Andrew Low: I will present the total figures when the elevator item is under discussion.


John Livingstone Brown: If I caught the minister
aright, he said that this item includes money spent for the research laboratory, with the exception of the chief chemist's salary. Does that mean Dr. Birchard?


Thomas Andrew Low: Yes.
.TUNE 11, 1924
Supply-Canada Grain Act


John Livingstone Brown: Then are we to take it
that he is not to be continued in the employ of the department?


Thomas Andrew Low: His salary comes under civil
government estimates.


Mr. MILLAR:: There has been some discussion as to whether the elevators at Vancouver should be under the jurisdiction of the Board of Grain Commissioners or of the Harbour Commission. When I was in Vancouver last winter I attended a meeting of the Board of Grain Commissioners when this matter came up for discussion. Going back further, I may say that when I got in touch with the harbour commissioners at Vancouver I found that there was a great deal of prejudice against the inspection and weighing departments and against the officials generally at Winnipeg. For this I am convinced there is no good1 foundation. I am satisfied that the chief inspector and the chief weigh-master are quite willing to give ample opportunity for development of the grain movement at the port of Vancouver. Those who have read some of the evidence taken recently before the Grain Commission, as reported1 in the papers, have perhaps formed a fair idea of why there was this prejudice. I rather hesitate to mention the name of the company which has been discussed so much, but I think perhaps there is no reason why I should not do so. It appears that Smith and Davidson did not succeed very well at Fort William and Port Arthur and moved tc Vancouver, and I am afraid that they had something to do with creating suspicion of the motives of the Board of Grain Commissioners. This matter of the mixing elevators is one of vital importance, millions of dollars being involved. At the meeting of the Board of Grain Commissioners in Vancouver to which I have referred, the member for Vancouver Centre (Mr. Stevens) sat close to me, and he gave figures to show that grain shipped out by the port of Vancouver, bought on grade but sold on sample, brought five cents a bushel more in some cases than it would have brought if it had been sold on grade. Why should grain sold on sample and shipped out from Vancouver bring more when it reaches Liverpool, and the buyers see the actual grain, than when it is sold on grade? I will try to make this perfectly plain, but before doing so let me say that a ship's captain stood up and corroborated the figures given by the member for Vancouver Centre, mentioning the names of those who had purchased the grain. Another gentleman did the same thing. I think the fact is established beyond doubt that Alberta grain shipped out
of Vancouver and sold on sample brought five cents a bushel more than it would have brought if sold on grade. Remember, the port of Vancouver last year-the first year of any considerable grain movement westward-shipped out only 19.000.000 bushels; this year the business jumped to 55,000,000 bushels. Since this is a new grain-shipping port, people in Liverpool and London who are buying grain placed their bids on Vancouver grain on the basis of the grain they had been receiving in past years over the eastern route. Now,
I think it becomes quite plain and I believe nobody can deny the fact, that they were placing their bids on the basis of the grain they had been receiving over the eastern route, where it. is mixed and adulterated; consequently the grain shipped out from Vancouver in its purity was worth five cents a bushel more than if it had been mixed. Some may say that Alberta grain was better than the grain of Saskatchewan and Manitoba-. Now, a gentleman who stood near me at the meeting, the representative of a large grain firm, made this statement, although it will not sound well to my Alberta friends. He said:	"We do not get our strong grain from
Alberta but from southern Saskatchewan and southern Manitoba." It will be remembered that our Alberta representatives have frequently spoken of the superiority of their grain and! how it has taken so many prizes, being the best grain in the world. Well, as a matter of fact, they have only just started; we in Saskatchewan and Manitoba have taken more prizes than Alberta will take in the next five years! But that is aside from the question. The fact is that the grain sent out of Vancouver is not better than that which goes by the eastern route, but it is pure; the other is mixed.
Let me show the effect of mixing. When | we took evidence before the Agricultural committee on the wheat board question several of the leading millers of Ontario were asked:	" Do you as readily take grain from
the mixing elevators as from the public elevators?" And they one and all replied: "No, we will not take grain at ^11 from the mixing elevators if we can get it elsewhere." How is the mixing done, and what does it mean?
It simply means that the poor grain is taken into the mixing elevators and the good grain is mixed with it in such a way that in no case does the percentage of inferior grain go j beyond the requirements of the Grain Act. The act is followed very closely to see how much sprouted, how much bleached, how much ; frosted, how much shrunken and how much , pie-bald grain is allowed, and this inferior j grain is pumped in in '*he fullest proportions I
Supply-Canada Grain Act

allowed. Can any one argue for a moment .that good' grain can be mixed with inferior grain and still retain its original value? It is impossible.
Some have argued that because the farmer has already received his pay it makes no difference to him what is done with his grain. But it makes this difference; those who buy grain in the Old Country market buy it on its actual value, buy it for what it is; and if it has been lowered in value by mixing they pay that much less. The result is that the farmer when he delivers his grain to the country elevator will receive that much less, because what he gets is based on the Liverpool price less carrying charges. Our chief inspector was in England last year and when he returned he stated before the Grain Inquiry Commission that the British importer and miller were quite satisfied with the condition in which our grain was arriving. To those not familiar with the situation that might be misleading; it might give the impression that the grain they were receiving over there was as good as the farmer was delivering. But it does not mean anything of the sort; it simply means that the grain they are receiving in the Old Country is up to the price they have been bidding, and the price they have been bidding is based on the quality of the grain they have been receiving during preceding months. It simply means that the grain as received is uniform; that when they buy No. 3 they get what they they pay for, and so on.
The fact that the grain out of the Vancouver elevator sells for five cents a bushel more than it would if sold on grade indicates the extent of the damage done to our grain by mixing at Port Arthur and Fort William. The grain goes into the terminal elevators at the head of the lakes as Nos. 1, 2, 3, 4, 5, 6, but it goes out as Nos. 1, 2, 3, 4; in other words, 5 and 6 have entirely disappeared. How is it possible for millions of bushels of grain of grades 5 and 6 to be mixed in with grades 1, 2, 3, and 4 and not lower its value? It is absurd to argue anything of the kind.
I admit there are types of grain that by scientific treatment may be improved in value. If a grain that should be No. 1 has some removable defect it is quite possible by scientific treatment to put it back into No. 1 without doing harm to anyone. But does that apply to grain that is No. 6 and cannot be anything else but No. 6? No scientific treatment can improve its milling value. When it is put off in this way it must simply be put in in a small stream with the higher grades, and that is what is done.
Vancouver is a new port and these mixing elevators are not yet established-well per-

haps I should not say they are not yet established because one is already started. The Woodward elevator was purchased for that purpose as advertisements that appeared in the Vancouver papers indicated. Other elevators also are starting and those who are erecting them are going into the mixing business; that is where the money is. But I assure the department and the minister that if steps are not taken to prevent our grain from being deteriorated-and I speak particularly of grain from Alberta; I do not think much Saskatchewan grain will go that way-if steps are not taken to prevent this evil from getting a foothold and to prevent millions of dollars from being invested in the private mixing elevator business an enormous injury will be done to the grain growing districts of the prairie provinces. Now is the time to stop it; now is the time to prevent it before it gets a good start.
As to placing the elevators under the Grain Commission, I am sure that that would bring about greater confidence in the prairies. I discussed this matter with the harbour commissioners when there. Certain statements appeared in the press, conversations with citizens, and I could plainly see that the tendency would be to create a great elevator system which would work out for the benefit of the city of Vancouver, while those who grew the grain would be largely forgotten. I feel that is exactly what is going to take place unless the management of these elevators is placed under the Board of Grain Commissioners. There was some talk at that time of establishing different inspection divisions and of creating different standards; at least, that is what was implied. That would be a great mistake. We want a national standard; we want a national grain handling system; we want Montreal as well as Vancouver placed under one managing body, one chief inspector and one chief weighmaster. You will remember that about 1907 the United States had state inspection and they were very desirous of making such changes as would bring into force an inspection system similar to that of Canada. Their grain was arriving in Great Britain in a very unsatisfactory condition. I remember a remark of one grain importer in Liverpool: speaking of the port of Baltimore, he said they tried hard to regain their lost reputation -the grain was arriving in all sorts of conditions. He said that for many months they sent forward their grain in very good condition, and then all at once it fell off, and as much was lost in one cargo as was gained in three or four. The United States has since gone to a national system of inspection. To create in Canada separate inspection divis-

Supply-Canada Grain Act
ions, different in the East from the West, would be a retrograde step; it would be going back to a system which the United States discarded because it was unsatisfactory.
With regard to the work of Dr. Birchard, does that come under this vote?


Thomas Andrew Low: His salary is included in the
civil government estimate, but his work comes under this vote.


John Millar: I would like to say a word in regard to that. It is a work of vast importance. We have certain types of wheat that are not getting justice. I make bold to say that one can take No. 1 northern wheat, dampen it for twenty-four hours and make it grade No. 3. The wheat itself is not damaged in the least, but it becomes so discoloured in the bran that it goes into No. 3. The Americans are buying on the protein test. They are picking out our strong wheats, and the millers are doing the same. Everywhere great importance is laid on the strength of our wheat, yet the farmer has no means of knowing the strength of the grain he is selling. One improvement made during the time that Dr. Birchard has been at work was the raising of the moisture test, having to do with the amount of moisture the grain will carry and yet not be damaged in storage.
It has been raised-I am speaking offhand -a little over two per cent. What does that mean? It means that thousands of cars that were formerly graded tough, and would thereby lose six or seven cents a bushel, are now graded straight since the moisture test has been raised to 14 or 14.2, and that in itself is a great gain. I believe the chief inspector should have this official right at hand all the time to give him every assistance. Their work should be brought as close together as possible. There have been some reports, I do not know whether they are any more than rumours, that there was some thought of taking this work to a greater distance than it is now, even of doing it at the Agricultural College. Let me say that if the work is done at the Agricultural jCollege, some two or three miles away from the inspection department, it might as well be closed down, in fact better, because we would get no benefit while there would be a pretence of giving us protection. I believe that millions of dollars would be saved to the producers of this country if the work that Dr. Birchard is doing was developed still further. Some of the other parts of the Dominion may say they would not like to pay so much, that it would be too expensive. I think the test of that would be this:	Would those who are
to reap the direct benefit of this work be
willing to pay for it themselves, provided they were relieved from paying the bills of others in other parts of Canada? I am sure they would be willing to pay for the work if it was properly done. Some of the work that has been done will take years to come to fruit. This work should be continuous; it should be encouraged and developed, and as
I	said before, it should be kept as closely in touch with the chief inspector as possible.
II	I read aright the evidence of the chief inspector before the board of inquiry, he strongly approved of that; he was very much in favour of the work being carried out, and considered it a great help to him. I am quite convinced I saw that in the press reports. I have confidence in the minister. The stand he took in a certain matter has greatly pleased me. A certain matter came before him and had to be dealt with decisively, and his action in that case gave me confidence in him. I believe he will do the right thing in respect of this work also when he comes to understand it thoroughly, and I would ask him before he comes to any decision as to doing away with this office or moving it to a distance from the inspection department, that he take the advice of those who are in the best position to know. I suppose the Grain Inquiry Commission will report on this; the Board of Grain Commissioners and the chief inspector also know the value of the work, and I am quite convinced that when the minister has studied the matter, instead of the : office being disbanded, he will be quite willing to spend more money on it, and he will be satisfied that it is money well spent.


Robert James Manion: I should like to ask the
hon. member a question, 'and I do so entirely in good faith. He mentioned Davidson and Smith, and I rather gathered that his remarks reflected upon them. I happen to know them; they were constituents of mine for a long time, and I should like to know if my hon. friend meant it that way, or whether he just mentioned their names incidentally. I should like to know what he did mean, because his remarks sounded like a semi-charge against Davidson and Smith.


John Millar: I would like to say to the hon. member that perhaps a year ago I would have been reluctant about mentioning their names at all. But let me tell my hon. friend this:	A cargo of grain that
went out of Port Arthur a year or perhaps two years ago to Buffalo was held up there, re-sampled by the inspection department, and graded 4 tough. When it went out of the Davidson and Smith elevator, it went out
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Robert James Manion: Is that action still in the
courts?


John Millar: Yes, it was taken about
ten days ago. In addition to that their names have also been brought up in this inquiry that has been going on. They have appeared in connection with what has mow become known as the Maharg Spout at No. 1 elevator, at Vancouver. It seemed rather strange when it was discovered that the only other spout like this one appearing in the Vancouver elevator was in the Davidson and Smith elevator at the head of the lakes. That was another step that helped to break down my confidence. As to the rest, I think you might go over the newspapers. The names of this company have come up before the board of inquiry all over, at Vancouver, Winnipeg, and elsewhere. They have come up time and again. A number of the men who worked for Davidson and Smith at Port Arthur were engaged by the Harbour Commission at Vancouver. I myself heard the man who was responsible for placing this spout in No. 1 elevator admit responsibility for it, and he also had worked for the Davidson and Smith people. It is not surprising, therefore, that the Grain Inquiry Commission thought it wise to investigate this a little further and find out what connection there was between the two. I think they went so far as to find out how many who now work foT the Harbour Commission at No. 1 elevator at Vancouver had worked for the Davidson and Smith people. There has been so much said about this matter in the papers that I have no hesitation in saying that their record is not of the best.


Robert James Manion: I have no brief for Davidson and Smith. At the same time, I have known both gentlemen for a great number of years. In fact, I grew up with Jack Smith, and Jack Davidson, I have known for twenty or more years. While there have been some such general statements made about them as my hon. friend has just mentioned, I db not know of a single case of shady dealing of any kind that has ever been proven against them. My hon. friend pointed out that a case is now pending against them in the [Mr. Millar.l
courts, so I do not suppose we have a right to prejudge that case. So far as charges about handling grain are concerned, I think we all remember-I am not making any charge, but if we wish to retail newspaper talk in the House here, I think we all remember-a charge of false bottoms being used in elevators at the head of the lakes, and not in Davidson and Smith's elevator. I say this in justice to them. They are two young men who certainly have made good from a business point of view in western Canada. Whether there are charges against them of a disreputable character that can be proved, I know not, but none have been proven.


Thomas Sales: What does the hon. member
mean by "made good?"


Robert James Manion: In the sense that my hon. friend has made good; they have made a good deal of money.


Thomas Sales: Then they are different from me.


Robert James Manion: They may have made it
differently from my hon. friend, but that is what I meant by making good, that they have made a good deal of money, as I understand' my hon. friend has done. I do not know that there should be in this country to-day any reason for looking down upon a man because he happens to make money. My hon. friend mentioned certain of these men. I hold no brief for them but personally I do not think it is proper to imply that because any man makes money he does so crookedly. There are a great many men in this country who have made large sums of money and done so honestly. I simply rose for the purpose of making this remark because my hon. friend from Qu'Aippelle, who is usually very fair, mentioned these men's names, and as he later explained meant to mention them in a tone of suggestion. Without knowing anything at all about the case and without having any brief for them in any shape or form, but knowing them personally, and having known them for a great many years I have made these remarks. I feel it is perhaps not wise to make suggestions about men who cannot defend themselves here unless there are facts to lay before the House in regard to the matter.
Unless my hon. friend (Mr. Millar) desires to make some explanation at this point, I wish to say a few words about the subject under discussion myself. If I understood the minister correctly the Board of Grain Commissioners had in the past thirteen years made $94,000 profits. That is, they are ahead of the

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game, if I may use the expression, to that extent. But my hon. friend from Saltcoats (Mr. Sales) gave figures showing that the Board of Grain Commissioners were really ahead to the extent of $4,500,000. Now, I simply wish to see if I understand the facts correctly. My understanding is this:	The
$94,000 which the Board of Grain Commissioners have made in their operation for the past thirteen years has reference to their direct work in seeing to the inspection of grain, sampling, and so forth. On the other hand the $4,500,000 to which my hon. friend (Mr. Sales) refers was the money-I take it that the figures are correct-made by the Grain Commissioners in handling grain as elevator owners for the people of Canada.


Thomas Sales: Altogether, I think.


Robert James Manion: Including the $94,000? Of
course that is a small part of the $4,500,000. At any rate that is what I understood the figures to mean. I have no interest in the question myself. I do not wish to put myself up as having a special knowledge of the subject, but being at the head of the lakes where a great deal of grain is handled I have heard the question discussed a great deal. I take it that if those figures are correct, and I presume they are, the $4,500,000 has been made through the handling of grain through the elevators, has been made in exactly the same way as in the case of any of the other grain handling companies. For instance, the Bawlf Grain Company of Winnipeg, mentioned by one hon. member, have handled grain for a great many years and have done very well in a business way. Then too the Grain Growers' Grain Company have elevators through which they have been handling grain for some years and have been making, I think, reasonable profits. I take it, therefore, that the explanation I have given would account for the difference; that the $4,500,000 has been made in the handling of grain through elevators, and is a separate account. I think the minister will probably support that statement in a general way without looking up the item.
The only question that comes up is this: I can understand the contention of hon. members to my left and I think they have good grounds for arguing that that $4,500,000 should go back to the pockets of the farmers. I would thoroughly agree with them in that contention. At the same time there is the difficulty that if the Board of Grain Commissioners through their elevators changed their rates for handling grain it means that the rates will have to be the same in the case
of the other elevators, because if particular elevators have lower rates than others it is natural that everybody would wish to ship his grain through those elevators. I presume that would create a difficulty. At the same time I should like to say 'that I thoroughly agree with my hon. friend's suggestion that whatever profit is taken out of the grain-which really comes out of the farmers-should later go back to the farmers. I say that not because we had some little argument here last evening but because it is entirely my own view.
There is another question mentioned by my hon. friend from Qu'Appelle-he stated it indirectly I thought-which has caused a good deal of discussion throughout western Canada in the past year, that is the question of sample markets. He spoke of grain bringing more money by being sold through the port of Vancouver because it was sold on sample. As I say, there has been a good deal of discussion throughout the West during the past year-partly engineered by some who wish to start a sample market-in regard to sample markets. Now, according to my understanding there is on the statute books of Canada to-day, and it has been in existence for a number of years, legislation permitting the establishment at Calgary and Fort William of sample markets! Am I not right in regard to that?


John Millar: Will my hon. friend allow
me to explain that I am very much against a sample market because such a market as established by law carries with it mixing privileges which has an evil effect at Port Arthur and Fort William at the present time. The grain that went from the port of Vancouver went from a port where there is no sample market and no mixing privileges. It was actually sold on sample. That is, after it reached Liverpool the grain was seen and its value was such that it brought five cents a bushel more than if it had been bought on grade. In that case there were no mixing privileges; it was grain that had left the farmer's wagon in its pure state.


Robert James Manion: I understand my hon.
friend's point. I am not, however, thoroughly familiar with the question so I do not advance my opinion very strongly. I do not know that a sample market would necessarily imply mixing privileges. It is true that mixing is carried on at the head of the lakes at the present time, but mixing is done by the private elevators. It is not supposed to be done, according to law, at the terminal elevators. That is, not according to the Canada Grain
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Aot. I am quite certain I am right in this statement that the terminal elevators are not supposed to do any mixing whatever; whatever mixing is done is done at the private elevators. My hon. friend spoke of wheat which became damp and the grade of which was in consequence lowered. They buy wheat such as my hon. friend spoke of and dry it, and at the same time buy other low grades of wheat affected by damp or other cause. Then they hospitalize this grain and by drying, cleaning, and various other treatments the wheat is improved and put into a very much better grade. There is no doubt in my mind that so far as these mixing elevators go they afford an opportunity to the farmer who has low grade wheat.


John Millar: Most of the damp grain
that goes into the mixing elevator is not dried but is simply mixed with dry grain.


Robert James Manion: I was not aware of that.
At any rate the grades are raised, and what I was about to say in finishing my sentence was this: According to a statement of the grain trade, and I rather think it is correct, these mixing elevators are a great advantage to the farmers in that they often give a market for grain from the west which is either damp or of very low grade owing to bad sorts of seed, and other causes. In this way the low grade wheat is given a market which it could not obtain otherwise.


John Millar: There is a market for a
small quantity of "off grade" grain, but about 80 per cent of our crop is of the higher grade, one, two and three.


Robert James Manion: There is a market for the "off grade" grain, as my hon. friend expresses it owing to these hospital elevators that otherwise the farmers might not have.


John Millar: At the cost of the higher
grades.


Robert James Manion: I do not quite see that
point.


John Millar: There is a gain on 22
per cent as against a loss on 78 or 80 per :ent.


Robert James Manion: My hon. friend means that low grade grain is mixed with higher grade grain?


John Millar: Yes.


Robert James Manion: On some occasions no
doubt that is done. However, I think I am right in saying that if certain low grades are subjected to these processes of improvement-I have no knowledge of the matter,

I am only speaking on the question because it came up-there is a market for them which otherwise would not exist at all. It is proved that they take good grain at the same time and mix it, but they do take off the hands of the farmer a grade of grain that he would not otherwise be able to get rid of.


John Millar: What authority has the
hon. member for saying that he would have no market for that grain? Was all this grain not sold before the mixing elevators were established?


Robert James Manion: Oh, yes. Perhaps I should not have used that expression. It might be sold for feed, but the farmer would not have as good a market. These private elevators compete with each other in the purchase of the grain, and the farmer has a better opportunity than he has had in the past to unload the grain into elevators of that kind. I do not say he gets all he should get, nor did he in the past get all he should get out of the terminal elevators. I think the farmer has been in the unfortunate position of dealing to a great extent individually, and has made a great many losses which he probably should not have made, and that the improvement in the Canada Grain Act will gradually eliminate those losses. So far as I am concerned, though I live in a district where we have the greatest grain elevator centre in the world, I am willing to support any legislation that will improve the chances of the farmer to get more out of his grain than he has obtained in the past. I believe many elevator companies did receive-quite legitimately, because of the looseness of the act-more profit out of the handling of the grain than probably they should. I think possibly my hon. friends to my left are a little inclined-and I only say this in the kindest spirit in the world- to criticise. I am referring to some of the hospital elevators at the head of the lakes, and in the case of these hospital elevators, it would be better if possible to enact legislation under which we could improve them, so that the farmer could gain even more than he gains to-day, because I think to a certain extent he does not get all he should out of the elevators at the present time.


Mr. GOULD:: Does my hon. friend recollect the Price Waterhouse report which was brought down to this House a few years ago? I believe he was a member of the House at the time. On that occasion he did not show any interest in regard to bringing down legislation which would benefit the farmer.

Supply-Canada Grain Act


Robert James Manion: I took no part at all. I certainly opposed no legislation brought in for the good of the farmer. I do not think my hon. friend has a right to make such an insinuation. He implies that I opposed legislation for the good of the farmer.


Oliver Robert Gould: It was not my intention to impute such a motive to the hon. member. I say the hon. member was a member of the government at the time the Price Waterhouse report was made.


Robert James Manion: I was not a member of the government.


Oliver Robert Gould: My hon. friend was not a minister but a member of the party in power at that time.


Robert James Manion: My hon. friend was a member also at that time.


Oliver Robert Gould: No.


Robert James Manion: My hon. friend came in at a by-election a little while after I came in.


Oliver Robert Gould: I came into the House in 1920. The Price Waterhouse report was presented to the House at the time the hon. gentleman was in parliament supporting the then government. His interest was not in evidence at that time, and that was the time in my humble opinion that legislation should have been brought down which would have resulted in many benefits to the farmer. That report was almost suppressed.


Robert James Manion: No, not suppressed. I
remember distinctly the Price Waterhouse report being thoroughly aired on the floor of this House. I do not remember when that report came in. but I remember it being fully discussed. So far as my having anything to do with the legislation which was enacted at that time, I may say that I came into the House in the year 1917, and I think the report was presented about 1917 or 1918, just before or just after I came here, and naturally being a new member, I could hardly be expected to bring forward legislation, especially when I was not a member of the government, but at no time in my life have I ever opposed legislation for the benefit of the farmer,-except it be free trade.


Some hon. MEMBERS:: Oh, oh.


Robert James Manion: I knew that would bring
a little applause from my hon. friends. I should like to point out to my hon. friend from Assiniboia (Mr. Gould) that the government of my right hon. leader, and the government which preceded that government did bring in legislation and improved, to my mind,
the working of the Canada Grain Act to a gieat extent. It is because of the Price Waterhouse report that at the present time the overages are not allowed to the grain elevators as they were allowed in the past. Would my hon. friend tell me what government introduced the legislation to change the overages? Was it not the government which I supported at that time?


Oliver Robert Gould: What government was it?


Robert James Manion: Was it not the government that I had been supporting?


Oliver Robert Gould: I am willing to accede to
that statement, but I wish to point out that the amendment to the Grain Act was put through by order in council, not introduced and discussed on the floor of the House.


Robert James Manion: If that amendment was
good legislation, surely my hon. friend will not criticise it because it was brought in by order in council?


Oliver Robert Gould: If my hon. friend will study
the figures revealed in the Price Watethouse report and compare the faulty amount of legislation which he says was beneficial to the farmer, I am sure his impartial mind will agree that the farmers were not given the legislation which was warranted by the Price Waterhouse report.


Robert James Manion: I do not say that all
the legislation which might have been introduced was brought in, because the Canada Grain Act was only put into force a few years ago, and it will be improved until it is perfect, but I think my hon. friend will be good enough to admit that if the legislation which improved the Grain Act and permitted the farmers to get more out of the overages was enacted by the government I supported, he should withdraw his suggestion that I did not support legislation which was beneficial to the farmer.


Oliver Robert Gould: My hon. friend is labouring
under a delusion when he makes the statement that the farmers received more out of the overages. In so far as the legislation was concerned in covering the matter of overages, those overages go to consolidated revenue and do not go to the farmer.


Robert James Manion: If the grain elevators received less the farmers would receive more.


Oliver Robert Gould: No.


Robert James Manion: This 84,500,000 will go
back to the hands of the farmers.


Oliver Robert Gould: I am referring to the legislation brought down by the government of
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the day in connection with overages that my hon. friend spoke of. I reiterate the statement that all the legislation simply provided for taking away the overages from the farmers and putting the amount to the credit of the consolidated revenue, and the farmers did not receive any benefits from it. We argue that the overages have been wrongfully taken away.


Robert James Manion: I agree with that but
whatever legislation was brought in to do away with the overages was introduced by my right hon. leader (Mr. Meighen), and the government which preceded him. May I add, there will be no better opportunity than that, which has been presented since 1921 for the government which he supports, indeed which his group controls to bring in legislation which will be beneficial to the farmers. However, instead of criticising the legislation of the past, let him get busy, and let him. be as quick to criticise the other side of the House as he is to criticise hon. members who sit in this corner of the House. I will support him in any legislation he brings in for the good of the farmers.


John Millar: I wish to state that I do not object-and I think those sitting in this corner of the House agree with me-to the hospital elevator. They look upon it as a necessity, but once you differentiate between the hospital elevator and the mixing elevator, the process is entirely different.


Robert James Manion: The two classes of
elevators are to a great extent the same. I think the hospital and mixing elevators are combined.


George Gibson Coote: For the edification of some
members of the committee, I would like to bring to the attention of the committee, and
particularly to the attention of the genial member for Fort William and Rainy River (Mr. Manion), some of the operations of the Davidson and Smith elevator for the years 1921-1922. First I want to point out that there is a distinct difference between a hospital elevator and a private terminal elevator.


Robert James Manion: I know that.


George Gibson Coote: And a public terminal
elevator.


Robert James Manion: I know that also.


George Gibson Coote: The figures I am going to quote are the result of the operations of private terminal elevators for the year 192122, by these gentlemen, Davidson and Smith. They take in' to the elevator a great many different grades of grain. I would not want to weary the House by giving all the different grades they take in but I have compiled this statement and limited the number of grades to eight. They took in eight different grades of grain, and I will give the committee the total amount of each grade they took in. Some of the grades were as follows: Straight grade grain; feed grain; tough grain; damp grain and rejected grain.
They took in all these grades, and I have here the figures of the different grades, 1, 2, 3, 4, 5, 6, feed and no grade. I will first give the receipts and then the outgo of the elevator and the hon. member for Fort William and Rainy River (Mr. Manion) will, I hope, note the splendid business ability displayed by Davidson and Smith in the operation of this mixing house, which they call a private terminal elevator. As an hon. gentleman suggests, they made good in this case. The following is the statement of receipts and output:
-	No. 1	No. 2	No. 3	No. 4	No. 5	No. 6	Feed	No gradeReceipts	1,050,911 1,327,066	1,038,576 3,409,543	4,618,623 3,780,926	1,932,706 1,320,770 77,295	970,041 131,044	238,424 None	60,604 None	68,694 NoneOutput	Overages	276,155	2,370,967	Shortages	837,697	534,641	838,997	238,424	60,604	68,694
Shortages	 2,579,057
Overages	 2,647,122
Overage
68,065
68,045

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Summing up all these shortages-I have not the total receipts-the total is 2,579,057 bushels. The overages in No. 1 and 2, which were the only grades in which they had any overage, totalled 2,647,122, leaving a total overage for this elevator of 68,065 bushels.


Robert James Manion: That was the total overage?


George Gibson Coote: That was the total excess of overage over shortage. I am referring to No. 1 and No. 2.


Robert James Manion: I thought it was more than that; I merely wanted to help my hon. friend out.


George Gibson Coote: This. is in excess over all shortages.


Robert James Manion: The hon. member has a lot of figures before him. Can he give us the overages for the Grain Growers' Grain Company for the same year, or for any other elevator or any of the other co-operative elevators? I ask the question quite candidly because I think my hon. friend will find that the overages during the same years were pretty much in the same proportion in the case of the other concerns. My hon. friend from Assiniboia (Mr. Gould), I notice, has returned with the Price Waterhouse report which he rushed upstairs to get; no doubt he will be able to enlighten the committee on this matter. I remember seeing that report myself and I could not pick and choose very much; I thought that the government elevators, the Grain Growers' elevators, the elevators of Davidson and Smith, and others were all about fifty-fifty in this respect. I shall be glad if the hon. member will tell us what the Grain Growers' overages were.


George Gibson Coote: I have the Price Waterhouse report myself, and if it were not that it would weary the committee I should not hesitate to quote from it.


Robert James Manion: Go ahead; we will wait.


George Gibson Coote: The figures I am quoting are not from the Price Waterhouse report; they are figures for the year 1921 and the Price Waterhouse report was made in June, 1918. I made a note of these figures over a year ago, when I knew nothing whatever about Davidson and Smith, and they will be found in the report of the proceedings of the special committee which was appointed to inquire into, agricultural conditions last year. I took the trouble to compile reports of one or two of the elevators mentioned in that report, and this is the one which in my opinion showed the most glaring example of overages in the high grades and shortages in all the
others. This was the very worst case in the whole report and that is why I took it. At that time, I say, I knew nothing more about Davidson and Smith than I knew of any other firm. I am opposed to private terminal elevators and I want to impress that fact on the minister. There is no doubt in the world that they raised feed wheat at least up to No. 5, because they shipped nothing lower. They must have raised a great quantity of No. 4 and No. 5 up to No. 21 and I do not think this should be permitted. In the end, this practice of mixing must certainly result in a lowering of the standard of grain shipped out and consequently in a lowering of the price. I want to say just a word or two in regard to the Price Waterhouse report. As I said before, it was made in June, 1918 and I do not think it was ever published. The government of the day did not see fit to publish it. Possibly not one of those gentlemen who were in the House at the time asked that the report be published, and therefore they must all share the blame. It was unfortunate, in my opinion, that the report was not published.


Robert James Manion: The hon. member for Marquette (Mr. Crerar), as well as a number of other Progressive members from the prairies, were in the House at that time; and, as a matter of fact, the member for Marquette was a member of the government.


George Gibson Coote: I am sure my hon. friend wants to be fair; I just said a moment ago that possibly all the members of the House at that time were to blame.


Robert James Manion: I know my hon. friend said
so, but I wanted to be sure that the gentlemen of my hon. friend's party shared in the responsibility.


George Gibson Coote: I can trust my hon. friend to see to that. I hope the hon. gentleman will get the report and read it, because if there is one man who ought to be interested in the success of the grain producers in Canada and in the proper operation of the elevators at Fort William, it is the hon. member for Fort William and Rainy River.


Robert James Manion: I am interested.


George Gibson Coote: As pointed out by the hon. member for Qu'Appelle (Mr. Millar), or at least one may draw the inference from his remarks, the grain trade may possibly be diverted from Fort William and Port Nelson and directed to Vancouver if these mixing elevators are allowed to carry on at Fort William, while they are excluded from Vancouver. I want to point out to my hon. friend that there is at least one difference between

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the operation of the Davidson and Smith elevator and that of the United Grain Growers', or any other farmers' company, in that there are thirty or forty thousand shareholders in the United Grain Growers' Company who get some benefit from the business.


Arthur Edward Ross: Is it a virtue because there are more profits distributed?


George Gibson Coote: If a profit is made out of
shipping grain surely it should come to the men who own the grain. Will the minister tell us in this connection how many public terminal elevators at Fort William have been turned into private elevators during the last six or seven years?


Thomas Andrew Low: I would first point out to hon. members opposite that the subject which has occupied the last hour and a half is being investigated by the Royal Grain Commission, and that an interim report will probably be placed upon the Table within the next few days.


Arthur Meighen: Does not the minister
think we can finish the subject before the Royal Grain Commission is likely to?


Thomas Andrew Low: Well, if the Royal Grain Commission were travelling all over the world, like some commissions appointed by my right hon friend, I do mot think it would be well for us to wait for the report.


Arthur Meighen: I think they hold the
world's marathon record now by quite a distance.


Thomas Andrew Low: I do not agree with my right
hon. friend. I recall a commission appointed by him and an injunction had to be obtained from the courts to get the members stopped.


Arthur Meighen: That is when the grain
companies did the suppressing which was in the mind of the hon. member for Assiniboia (Mr. Gould). But that commission did not last more than a tenth of the time which this Royal Grain Commission is taking. Is it a fixture? Are we going to provide annual salaries for its members?


Thomas Andrew Low: It is making a real investigation,-


Arthur Meighen: It must be.


Thomas Andrew Low: -and we hope to derive some real benefit from the report to be presented to this House.


Arthur Meighen: Can we not investigate
the commission to see what is wrong?


Thomas Andrew Low: The Vancouver matter is being investigated by the Royal Grain Commission. I might point out to my hon. friend from Qu'Appelle (Mr. Millar) Ithat government elevators are not permitted to do any mixing; that grades Nos. 1, 2 and 3 are fixed by the Canada Grain Act, and that grades 4, 5 and 6 are fixed by the Board of Standards. From various sections of the prairie provinces a number of bags of grain are received, a sample is taken from each, these samples are mixed together, and grades Nos. 4, 5 and 6 are determined for that particular year.
Now a word in reply to my friend's reference to Dr. Birchard. We have no desire to curtail any expenditure that will be for the benefit of the farmers of the prairie provinces. As an eastern manufacturer, I realize that we must do something to make the western farmer more prosperous than he is to-day, and so increase his buying power. I am one of those who believe that our interests are bound up together, that what is good for the eastern manufacturer will be good for the western farmer, and vice versa. I think Dr. Birchard was appointed in 1913, and since that time we have spent $118,000 in connection with his work. The government does not regret that expenditure, but believe that it is possible to carry on the work in a more efficient way so as to produce greater results. We have no desire to discontinue the work if it is found necessary and advantageous. I have no doubt that when the Royal Grain Commission reports it will say something about the office at Winnipeg. We are carrying on a number of experiments to-day through the Research Council. We are just entering upon a more rapid development of research work in connection with the rust problem; we are carrying on special research on the winter killing of wheat under Dr. Newton; under Dr. Snell a research on the cause and treatment of soil acidity in Quebec and the Maritime provinces; another on the relation of soil acidity to nitrogen-fixing bacteria, under Dr. Harrison; and we have appointed a committee of agriculturists under the chairmanship of Dr. Grisdale, the Deputy Minister of Agriculture, to ascertain the best methods for determining accurate results in testing varieties, strains and treatments of grains. This will establish the fact that we are not cutting down expenditure; we are simply seeking to spend the money more advantageously. I can assure hon. gentlemen that if there is a surplus, and if we can see our way clear towards making a reduction in the inspection or any other charges, I shall be only too glad to recommend such reduction to the government.

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Robert James Manion: With regard to the remarks of my hon. friend from Macleod (Mr. Coote),
I wish to put a few figures on record. He was good enough to lend me the Price Waterhouse report which he had in his hand. He pointed out that the Davidson and Smith elevator, which was reflected upon by the member for Qu'Appelle had overages and he gave figures for the year of about 68,000 bushels. Is that correct?


George Gibson Coote: Yes.


Robert James Manion: I am going to read the
overages for a number of years of the Grain Growers' Company, a co-operative elevator company, handled by farmers on behalf of farmers, and having at its head the hon. member for Marquette (Mr. Crerar).


George Gibson Coote: I was quoting those figures to show how they had raised the grade, and I hope if the hon. member quotes the overages he will quote them all.


Mr. LEADER:: I move that this whole
report be embodied in Hansard, to facilitate the proceedings.


Robert James Manion: It is rather too large to incorporate in Hansard, consisting of over 100 pages, but if my hon. friend will have patience I will give the overages to which I have referred. I understood the quotation of my hon. friend from Macleod, but after the discussion by my hon. friend from Qu'Appelle of the Davidson and Smith elevator, his quoting these overages looked suspiciously like showing a reason for Davidson and Smith being suspected. That was my conclusion from his remarks.


An hon. MEMBER:: They advance the
grades.


Robert James Manion: Well, it does not matter
whether they did or not. If they had not advanced the grades they could not have had any overages. Now, these are the overages-


Thomas Sales: They did not get the overages. It is a matter of grades.


Robert James Manion: Please remember the overages of the Davidson and Smith Company in 1913, according to the hon. member for Macleod, amounted to about 68,000 bushels.


Mr. MORRISON:: Can my hon. friend
say how many bushels the Davidson and Smith Company handled?


Robert James Manion: I do not know that. If
my hon. friends will just have a little patience I will get this line read. The report says:
The Grain Growers' Grain Company had overages in 1912-13 of 67,875 bushels.
That is within 125 bushels of the Davidson and Smith figure for the year to which my hon. friend referred.


John Evans: Are the figures the same on the grain they handled?


Robert James Manion: I do not know that; I
have not the figures at hand. They were both terminal elevators. I am simply giving the overages. The Davidson and Smith people may have handled much more, I do not know. In the following year, 1913-14, the Grain Growers' overage was 33,360 bushels; there was not quite so much profit that year. The following year, 1914-15, the overage was 54,758 bushels, and they were improving, because the following year, 1915-16, it amounted to 105,699 bushels, nearly double what the overage of the Davidson and Smith people was. In the following year, 1916-17, their overage was 156,901 bushels, nearly three times the overage of Davidson and Smith, so they could have handled three times as much grain and still have been in the same proportion as the Davidson and Smith people.


Mr. CAMPBELL:: May I ask my hon.
friend-


Robert James Manion: Now, just a moment; I
will give my hon. friend the floor in a minute and I will quit for the rest of the evening when I am through. I do not want to be understood as opposing any legislation that is favourable to my hon. friends. But I believe in fair play, and when the hon. member for Qu'Appelle made his implied suggestion about Davidson and Smith and the hon. member for Macleod (Mr. Coote) gave his overages I remembered this report: I remembered glancing over it at the time and noticing that nearly all the elevators had overages, some even much higher than-


George Gibson Coote: Does the hon. member realize that the overages I quoted with respect to Davidson and Smith were all of No. 1 and No. 2 wheat and that all the shortages I quoted were of lower grades, 3, 4, 5, and 6?


Robert James Manion: What was the year of the
Davidson and Smith overages that my hon. friend gave?


George Gibson Coote: 1921-22.


Robert James Manion: What was the price of grain at that time? It had gone down considerably, had it not, in 1921-22? I think it would take about three bushels of overages in 1921-22 to equal one bushel in 1916-17, when the Grain Growers' had their largest overages. However, I do not wish to debate this question. I just wish to be fair to Davidson and Smith and to show my hon. friends that their
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own Grain Growers' Grain Company had greater overages in one elevator than the Davidson and Smith Company had. I repeat that I am entirely in favour, as the minister said a moment ago about himself, of doing everything possible to help the prairie farmers, with the exception of ruining some other section of the country in order to help them- that I am not in favour of. But I am in favour of any other legislation that will help them in any possible way, because I think the progress and prosperity of Canada depends very largely on the progress and prosperity of the Canadian grain growers.


Oliver Robert Gould: The hon. member (Mr. Manion) stated that I had gone to get the Price Waterhouse report. I feel that I must accept the invitation, because that is what I did. I am sorry that as much use was not made of that report on the floor of this House on former occasions as was made this evening; otherwise we might have had better legislation. Certainly we deserved much better legislation than we have as a result of the report. The fact is that this report, brought down in 1918, was so ill legislated upon that it became necessary to appoint another commission, which is working at the present time. I propose to ask the indulgence of the committee while I place upon Hansard some proofs at least of the genius of these companies. I have no apologies to make for any of the grain companies in the investigations I have made, and I have made some. I am not prepared to say that any company doing business at Fort William is possessed of greater virtues than any other; I believe I am absolutely correct and unbiased in stating that one is just as bad as the other, and worse- something of that nature.
The Price Waterhouse report is an audit of the books of the terminal elevator companies from 1912 to 1917 inclusive, and it reveals that these companies were making, through their screenings, overages and various other things, in some cases as high as 50.65 per cent, 41.70 per cent, 35.27 per cent. These are common figures as showing the profits these companies were making, and if anyone outside of the companies themselves will justify the taking of these profits at the head of the lakes or anywhere else, then he is not the friend of the man who is producing the grain. It was on account of these exorbitant profits that the government appointed a commission of investigation, and I am sorry to be obliged to relate that the government after having that report and the figures which I now present, did not bring down legislation to remedy the evils which caused them to appoint the commission.

I will give the names of the companies that were investigated at that time. First, there was the Consolidated, who gave the original cost of their elevator as 8594,081. They put in the plea to justify the huge dividends they were getting that the present valuation should be set at $922,102. You see, they increased the valuation so that it might be a justification for, in a manner, reducing what they considered their profit. It is also revealed in this report that these companies in all the years of their existence had not written off one dollar's worth of depreciation, and some of them had existed so long that had they written off the natural depreciation their plants would have been wiped out-that is, the expense of their plants. But in spite of that, they increased the valuation, as I have stated.
Next is the Empire, who gave the cost, including land, at $556,611 and put in the present valuation as $858,256. The Thunder Bay Company, whose original cost was $532,383 put in a valuation of $743,331. The Fort William Elevator Company gave an original cost of $851,069 and a present valuation of $979,011. The Ogilvy Company put in their original cost at $554,823 and the present valuation they stated to be $958,100. The Western Terminal Company gave original cost as $722,737 and raised their valuation to $1,235,848. The Canadian Government gave their original cost as $1,315,767 and raised their valuation to $2,105,228.
Observe, the governments did exactly what the private companies were doing. For the
C.N.R. "A" and "B" the cost was approximately $1,981,000, and they raised the valuation to $2,925,135. The original cost of the Grand Trunk Pacific elevator was $1,949,437, and the present valuation which they submitted is $2,625,925.
Now, Mr. Chairman, as I stated before, these companies when requested to (show cause why they were taking these huge profits from the growers of grain gave as a reason the valuation of their sites, and they mentioned that the land had been included. I find by the Price Waterhouse report that the land on which the elevators were built was in the majority of cases given to the companies; there was sometimes an absolutely free gift of land; the land was exempt from taxation in many cases, and in all the other cases only a nominal price was paid by the companies for the elevator sites. Now, when it was made plain that the elevator companies had wilfully increased the valuations, as I have shown by this table, they give another table showing the reproductive value,

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which is a little higher value than that represented here. Price Waterhouse and Company investigated that table and compared it with the assessed values in the cities of Fort William and Port Arthur, and it was found that the valuations which the companies submitted in that table were, in some cases, from to 3 times more than the valuation upon which they were assessed. I mention that as an example of the ingeniousness of the companies, and to show how necessary it is for the minister to have legislation to circumscribe these people so that they may no longer be a law unto themselves, but shall give to the people who produce this grain justice and what is their right.
I believe that I stated in the House on a former occasion that we, as taxpayers, provide the dredges to dredge the channels all along the waterfront where these elevators are built, and yet, whenever the government of Canada sends a dredge there the elevators add the cost to the valuation of their plant. These people have no right whatsoever, to add that valuation to their plant, and the minister and the government are absolutely warranted in enacting legislation to circumscribe these people. I am not asking for legislation at the present time, but I have been interested in asking that the report of the Royal Grain Inquiry Commission be tabled, and when that is done I hope we shall have a very interesting time, and I hope the Progressives in this House will assert themselves on that occasion and will endeavour to have placed on the statute book a law in regard to the grain trade that will do justice to the people who produce the grain and who make the wealth of this country.


Harry Leader: Will the hon. member
also give the overage figures for the government elevators, as given in that report of Price Waterhouse and Company?


Oliver Robert Gould: The report does not give
the overages for the government elevators. It covers 14 terminal elevators. Now we have 25 terminal elevators doing business at Fort William and Port Arthur. The report of the special committee on agricultural conditions last year is much broader in scope than the report of Price Waterhouse and Company.


Robert Alexander Hoey: Does not the hon. member
think that if the wiheat pool that is at present being organized is successful, it will eliminate in the process of time these evils he speaks of far more effectively than any legislation could do?


Oliver Robert Gould: I believe that to be a fact. Without being egotistical, I might say that I made a similar statement when I gave evidence before the Royal Grain Inquiry Commission in Winnipeg, and I went so far as to say on that occasion that if the government did not circumscribe the manner in which these elevators were taking undue profits from us, we had already built elevators once, and we were strong enough to build them again and handle the whole thing ourselves.


Robert Gardiner: I would like to return
to the situation in Vancouver for a few moments, and draw the attention of the minister to a question that I believe requires his attention. He will remember that some time ago the Harbour Board bought what is known as the Woodward elevator in Vancouver, and they proposed to spend $650,000 in completing that elevator. They have rented it to a grain company known as the Oriental Grain Company, composed of Edmonton men, and I understand that this particular company proposes to go into the mixing business, just the same as is done by the elevators at the head of the lakes. I would like to ask the minister whether that elevator will be controlled by the Harbour Board, or will come under the Board of Grain Commissioners for Canada.


Thomas Andrew Low: The leasing of the elevator, of course, will come under the Department of Marine and Fisheries. The inspection and weighing will be under the Department of Trade and Commerce.


Robert Gardiner: Then I take it there is
no intention at all of placing this mixing elevator under the Board of Grain Commissioners?


Thomas Andrew Low: Not so far as inspection and weighing is concerned. The operation of the elevator will be under the Harbour Commission. I was not aware that the elevator had been leased until my hon. friend mentioned it; this is the first intimation I have had of it.


Robert Gardiner: There is another question I would like to bring to the attention of the minister, and this has to do with the inspection and weighing department. I hold in my hand some information furnished by the Board of Grain Commissioners for Canada to the special committee appointed to inquire into agricultural conditions at the last session of the House. I turn to page 926 of the report to illustrate to the minister just exactly what I mean. This had to do with
Supply

Canada Crain Act

the mixing elevator, the private terminal elevator of Davidson and Smith Company at Fort William, in the year 1917-1918. I dealt partially with this question during the budget debate, but I want to deal with it further to-night because it has to do with the inspection and weighing department over which he has control. On this side of the page are shown the different grades that go in. There are 48 different grades shown as going in there, and inspected by the inspection department. On the other side is shown the number of grades that go out, and this shows that only 5 grades went out of that elevator, although 48 grades went in. This inspection department is under the minister's control, and I therefore hope that he will take cognizance of this important matter.
Then referring to the weighing department, when this grain was weighed in I find that 704,283 bushels and 50 pounds was weighed in. When it was weighed out it amounted to 831.000 bushels, or a difference in weight of 126.716 bushels and 10 pounds. If the members of this committee will turn up the Auditor General's report they will find that the farmers of western Canada pay all the expenses of the Board of Grain Commissioners which includes the salaries for the weighing and inspection department. As we are paying the salaries of these gentlemen naturally we would expect to get a fair deal. But when I bring these facts to the attention of the minister he will realize that the farmers of western Canada are not getting fair treatment from these men whose salaries they pay. I should therefore like to ask the minister what he proposes to do under these conditions?


Thomas Andrew Low: I have only been in charge
of the department for about eight or nine months, but I hope to be able to work out some plan which will remedy the evils of which my hon. friend complains.


John Millar: Is the minister's decision
final in regard to the elevators at the coast operating directly under the Trade and Commerce department rather than under the Board of Grain Commissioners, or is that course being taken only for the time being and until the report of the Grain Inquiry Commission has been received?


Robert Forke: The Department of Marine
and Fisheries.


John Millar: No, I am leferring to the
inspection and weighing. This is a matter of vital importance.


Thomas Andrew Low: The whole matter will be reviewed when we receive the full report of the Royal Grain Inquiry Commission.


Milton Neil Campbell: For the information of
the hon. member (Mr. Manion) who asked a question a few moments ago I should like to quote the statement from the Price Waterhouse report that the Canadian government elevator in the season of 1916-17 had overages to the value of $326,187. I may say for the same year the Canadian government would appear to have earned a profit of 36.72 per cent.


Henry Lumley Drayton: Before the item is carried I may say that I do not notice any vote in the minister's estimates this year in connection with the lake rates.


Mr. GRAHAM:: That matter will be dealt with by legislation.


Henry Lumley Drayton: If this vote were in the department of my hon. friend the Minister of Railways I would take his word for it, but there is nothing here about lake rates.


Thomas Andrew Low: If my hon. friend examines
item 383 he will find the amount there.


Henry Lumley Drayton: That is for the administration of the Inland Water Freight Rates Act.


Mr LOW:: Yes.


Henry Lumley Drayton: That is not what I was looking for. I was looking for an item which would rather make it appear that the government were going to try and do something to undo the present tangle. Is nothing to foe done? Is the mess to remain just as it is? Is there no proposition, for example, to return, in some way or other to the farmers of western Canada the extra freight rates paid in September and October of last year, amounting to $3,000,000, on the grain actually moved'? Is there no step to be taken in that direction?


Thomas Andrew Low: My hon. friend could not have
been in the House a few days ago when I made the statement that an amendment would be made to the act relating to lake freight rates some time during the session. With reference to the complaint of my hon. friend about excessive freight rates in 1923, may I point out to him that the freight rates were about the same in that year as they were in 1922.


Henry Lumley Drayton: 
Milton Neil Campbell: I agree with the ex-
Minister of Finance (Sir Henry Drayton) regarding the seriousness of the situation, but not in regard to the remedy. I do not think he will agree with me that the way to remedy the situation is by a repeal of the coastal laws, but that is the only way it can be dealt with. We find that at the present time, while the distance from the Canadian head of the lakes to Buffalo is much greater than it is to bay ports, the grain is being carried by Canadian as well as American vessels to Buffalo at from one-half to one cent a bushel less than to bay ports. There is only one reason for this, and that is because there is competition. The American boats, on account of the coastal laws, are unable to carry the grain between different Canadian ports. Canadian boats, in order to get some of the trade, are willing to carry our grain into the American ports for considerably less than they are willing to carry it to Canadian ports. I have some figures furnished by the Bureau of Statistics showing the amount of grain shipped from the head of the lakes up to the end of the 31st of May. The amount is seventy-six and a half million bushels, and about half or a little over half of that went to American ports. I am quite sure that if there had been no coastal laws in effect and if the American boats had been able to ply between the head of the lakes and Georgian bay ports, the same as Canadian vessels, a very much larger volume of grain would be handled in Canadian ports over our Canadian railways, and would go out to the sea without being contaminated as a great deal of our grain is, by going through American sources at the present time. The seriousness ,of the situation last fall is indicated by a quotation from a telegram sent to the government by the Premier of Saskatchewan as follows:
The government of Saskatchewan believe that the federal government is justified in taking the strongest possible measures to stop the profiteering operations of these international pirates.
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Supply-Canada Grain Act
That is very strong language, and I do not agree that the legislation of the past year was responsible for the trouble. If you want to deal with the situation, by getting rid of the coastal laws we can do away with a great deal of the trouble and the traffic between the head of the lakes and Canadian ports will be greatly improved. I know that the argument is used that in carrying grain to Buffalo, vessels have a return cargo of coal. I interviewed some of the officials of the Bureau of Statistics, and I find that there is a very small volume of coal, or of any other commodity coming back from Buffalo at the present time. So that it means that any vessel loading at Port Arthur for American ports is basing the rates on the assumption that the vessel will come back empty. They are not basing the rates on any return cargo, because they have no assurance that they will get any such return cargo.


Mr. McBRIDE:: I contend that this discussion is entirely out of order. The freight rate question comes under another item altogether, item 383.


George Newcombe Gordon: I agree with the hon. member for Cariboo (Mr. McBride) that the discussion is altogether outside the item.


Henry Lumley Drayton: Before you rule, Mr. Chairman, I desire to make one observation. The administration of the freight rates, as is shown by the precious list that we find contained in a report of the carriage of freight on the Great Lakes, is shown to be entirely in the hands of the Grain Commission, and this is the view of the Grain Commission, who apparently are looking for this business. My hon. friend said he would sooner have this matter discussed under another item.


Thomas Andrew Low: I have no objection to the matter being discussed now under the present item.


Henry Lumley Drayton: I do not want
to have it said when we reach another item that we cannot discuss this question.


Thomas Andrew Low: Discuss it now. I have no
objection.


Milton Neil Campbell: I desire to emphasize
the fact that this situation will never be properly cleared up until the coastal laws are repealed. What are we doing? In order to enable the lake shippers to make the profits which the Grain Commission showed they were making last year, which were enormous profits, we are depriving our own ports and our own railways, our own working men and our business men, and all the others in-
[Mr. Campbell.1
terested, of the work of handling our own grain. Year after year one half or more than half of our grain goes out to the United States, and our principal objection in the West to this course is that the grain is being contaminated. We are not judging this merely from a national standpoint, but from the other standpoint as well. We know that the grain does not reach the Old Country in the same form in which it leaves the head of the lakes starting for American ports. I think it was in 1921 or 1922 a special committee of the Senate was appointed to inquire into the reason for the diversion of Canadian grain to American ports, and I want to emphasize one particular recommendation which this committee made, and that was that the rates over the Transcontinental to the city of Quebec should be reduced to the level of the prevailing rates in the West. We have almost a double rate from the head of the lakes to Quebec over the Transcontinental. I believe the regular prevailing rates in the prairies applied on the Transcontinental to the city of Quebec would make a basic rate, a maximum rate, and that it would keep these lake shippers to a large extent under control.


Thomas Sales: Mention has been made of
why Canadian grain goes through American channels. There are various reasons. I have found one, and I think the people of the country should know it.
The hon. member for Qu'Appelle (Mr. Millar) stated in his remarks that Baltimore was trying to get back its reputation. I am going to read a letter w'hich has been submitted to the Royal Grain Commission from a grain handling firm in Baltimore, which was received by the New York offices of the James Stewart Export Company, a subsidiary firm of the Saskatchewan Co-operative Elevator Company. The letter says:
As some of our clients have made inquiries as to the proportions of Manitoba wheat which could be used in mixtures for federal inspection of No. 1 dark northern spring wheat,-
That is an American grade.
-we are passing along to you the requirements as at present laid down by our inspectors.
Mixtures can be made on the following basis: first, equal parts of No. 2 Manitoba and No. 4 Manitoba; second, two parts of No. 3 Manitoba with one part of No. 4 Manitoba; third, 30 per cent of No. 2 Manitoba; and 30 per cent of No. 3 Manitoba; with 40 per cent of No. 4 Manitoba.
This will make No. I dark northern, which will be passed by the federal inspector in the United States.
Inspection and weighing charges of about 35 cents per 1,000 bushels will apply on total quantity mixed. All

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the grain for mixing must be in the same elevator. We therefore request you to route your Manitoba for. . . elevator delivery here for best results or authorize us to do so.
Here is one sentence to which I would ask the committee to pay particular attention:
Any loss occasioned by mixing will be considered by the government as an in transit loss and duts' would not have to be paid on same.
I should like to know exactly what that means; this is in the country where they are trying to protect the farmer, the poor deluded fool! Now I come to the question as to whether the farmer here really gets the intrinsic value of his wheat. I went to the trouble of tabulating these mixtures, and I found that in the case of the first mixture our own figure was 97 1-4 cents; No. 2 would be 96 3-4 cents, and the third mixture, 97 5-8 cents for 1 dark northern. Then I consulted a Chicago paper and got the price of No. 1 dark northern in Minneapolis and I found that the quality for which our farmer would get 97 cents was worth to the American, on May 21, SI .15 7-8 to $1.18 7-8, from 22 to 24 cents a bushel more than the Canadian farmer was getting, I began to wonder what our millers were able to do in competition with the Americans who were milling No. 1 dark northern. I am sorry I have not the price of No. 1 dark northern in the Old Country; I have written for it because I am interested to know howT that wheat is valued there in comparison with our own No. 1 northern. This is the kind of thing that is going on in the United States. Is there any wonder that so much of our wheat finds its way through American channels when they take it there and pay no duty? The sooner Canada devotes its attention to the marketing of its crop through its own channels exclusively the better for Canada and for the reputation of our wheat. I do not like this sort of thing, I regret that the minister did not admit those figures of mine, because I was going to make a suggestion to him. The minister said that we might as well discuss the matter at length, and we will, if he is agreeable. The suggestion I was going to offer him was that he might earmark some of that $4,000,000 for the purpose of really assisting the western farmer.


An hon. MEMBER:: By building the
Hudson Bay railway.


Thomas Sales: No, let the Hudson Bay
railway line alone for the present. I had the pleasure of meeting the minister on his trip out West and I am sure from the remarks he made that he is anxious to assist the western farmer; I am bound to give him credit
for that intention. I do not know really where agriculture ends-take live stock, for instance-and trade and commerce begins; the two seem to me to be so similar. I want to draw the attention of the minister to one respect in which he can really assist the farmer, and that is in the marketing of cattle. At the present time under existing freight rates and ocean rates conditions are not very favourable to this phase of agriculture. I happen to know the minister has tried to do something to reduce ocean rates but he has not been successful; apparently there is no hope for a reduction of the rates on live stock, and unless some alternative method of marketing is found there is only one thing I can advise the western farmers to do in the cattle business, and that is to quit it. It costs over $60 to ship live cattle from the West to Liverpool. The Department of Agriculture has given us certain figures but they are not quite correct; it gives us carload lots from Lethbridge, Qalgary, Winnipeg and such points, but I would inform the committee that the man who ships cattle from North Battleford has to pay a local freight rate to Winnipeg which is higher than the rate he pays from that point to Montreal. The hon. member for North Battleford (Mr. Davies) is here and he can bear me out in the statement that -the freight rate, from that point to Winnipeg is $1 per hundred pounds whereas from Winnipeg to Montreal it is 85 cents per hundred pounds. I have worked the whole thing out and I find that the freight on a 1,200 pound steer from Saskatchewan to Liverpool comes to $56.91, on a 1,300 pound animal $58.76, and on one of 1,400 pounds, $60.56. Now, when the farmer has fed a steer for three years, to say nothing of feeding the mother before it is born, and then turns that animal over to the transportation companies for three weeks, and he has to split fifty-fifty there is nothing very attractive in the process; that is a business I do not want to engage in. It is hopeless so far as the western farmer is concerned. And let us bear in mind that meat in the Old Country to-day is sold at an abnormally high price which we cannot hope to continue. The minister could therefore help both the western and the eastern farmer by assisting in the development of a chilled meat trade; I would suggest that he take a portion of the $4,000,000 for the purpose of helping to develop a market for chilled meat. It would cost only $22.07 to take an animal over, killed and in the chilled state, as against $56.91, and if the farmer could benefit by that difference of $34 it would be well worth his while. It is

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true that a number of experiments have been carried on in regard to the shipping of chilled meat and in connection with this matter I have a report from the Harris Abattoir Company. They made shipments and lost money, but in my opinion they did not give the enterprise a real trial; the shipments were very spasmodic, one shipment being made this week, another shipment in three weeks' time and so forth. If the trade in this direction is to be really developed we must ship chilled meat every week of the year so that the butcher on the other side may feel assured of a regular supply on which he can absolutely depend. There is no country except the United States which is in a position to-day to ship real chilled meat to England. The Argentine is three or four weeks distant and shippers there have to send their meat across the equator; to do that they must freeze it, and there is a lot of difference between frozen meat and chilled meat. I hope the committee will excuse a personal reference, but having been in the business I know that the Englishman likes his beef 12 or 14 days old, which is just about the time it takes us to get our beef from this country to the customer in England; we can do it in 14 days. I should [DOT]like to have the minister's attention if he is interested; if not I will sit down.


Thomas Andrew Low: I am very much interested.


Thomas Sales: At the present time the United Grain Growers are carrying on a pool system of cattle shipment. I would suggest that the government guarantee the men who put their animals into the chilled meat trade the same price they would obtain if they shipped them alive to Liverpool. Nothing more than that as an experiment. On looking over the figures of the Harris Abattoir Company, I find that when they carried on the business steadily the beef was gaining in favour with the English people, but the shipments were allowed to become irregular. In spite of the fact that the company lost a lot of money, I think the committee will be interested to hear what Mr. McLean said about the experiment. These are his words;
The losses became so heavy that we were forced to discontinue the shipments. However, an analysis of the results gives some ground for optimism. The loss on the shipments was equivalent to about one penny farthing per pound. We were convinced that the chilled beef which we shipped was worth on the British market two pence per pound and probably three pence per .pound more than we actually received for it. And we were further convinced that had conditions been such as to permit continuous shipments this Canadian chilled .beef would very soon have commanded a price relatively much higher than that received for our experimental shipments.

He also stated, and it is absolutely true, that the British butcher was not selling this as chilled meat at all, but as English meat. It may be necessary for this country to do the same as Argentine and New Zealand,- establish a shop or two over there to sell our product and so let the people of England really know the quality of Canadian beef. I do not think objections should be raised by any member about somebody else paying for the experiment for the benefit of the farmer. As I pointed out to-night, farmers have contributed to the revenue $4,000,000- it does not matter what head the money goes under, it has gone into the treasury-and I think it would be only right and proper, especially to-day when those engaged in the cattle trade are finding themselvs in a deplorable condition, for the government to take action along this line. Surely it is worth something to the country that our farmers should not go out of the cattle business. But, as I said before, unless some relief can be found, unless rates can be brought down -and I very much doubt if they can be-the only relief is in the development of this chilled beef business.


Arthur Edward Ross: Has the hon. member any figures in regard to the Australian meat shipments to England? Is not theirs chilled meat?


Thomas Sales: I would inform the hon. member that it is impossible to bring chilled beef to England from such a distance as Australia. As I stated earlier in my remarks, Canada is the only country outside the United States which can furnish the British market with real chilled beef-not frozen. It is kept at a temperature of about freezing point for ten or twelve days. It is not frozen, it is merely chilled.


Arthur Edward Ross: I asked the question because I thought Australia had been sending chilled beef to the British market for twenty years.


Thomas Sales: Frozen meat, sir; a different
thing altogether. Frozen meat has to be thawed out, when all the juices are lost, with the result that it is tasteless as compared with the fresh meat that the Englishman likes.


Andrew Ross McMaster: Does chilled beef keep its flavour?


Thomas Sales: Yes, and it does not require to be thawed out, which makes all the difference in its flavour. I am convinced that the

Supply-Canada Grain Act
development of this business might possibly prove a solution towards helping our western farmers at this stage.


Henry Lumley Drayton: In connection with the remarks of my hon. friend (Mr. Sales), there is a good deal of difficulty in supplying the British market, the English people being strongly prejudiced against frozen beef. There is a marked difference between the price of fresh and frozen beef.
I have not the exact figures before me, but I looked into the matter some years ago, and at that time there was a range from four-pence to sixpence a pound in the Smithfield market between frozen meat and fresh, as I recollect it. What the hon. gentleman has said about prices is absolutely right, in fact I do not think he has stated the difference to the full extent. Chilled beef, properly looked after, ought to command just as good a price as is paid for freshly killed British beef as soon as its quality is known. In fact it ought to get a slightly higher price, for the reason that in the Old Country meats are conditioned before they are sold-in other words, they are hung for several days, the time depending upon the state of the weather. The Englishman does not like tough beef. Our beef, if treated in the way the hon. gentleman describes, would reach the British butcher in the condition that he best likes his beef-ready for the market. Further than that, it ought to be in just as good condition as his own prime beef after he has been at the pains of hanging it perhaps a fortnight. He is saved all that cost and trouble.
My own idea was that we ought to go into the business, that the government ought to do something in connection with it. I think if the suggestion that we establish proper conditions is given effect to, and it ought to be, we would have such a condition of affairs that the Smithfield butcher would know by Dominion government certificate that the carcass he bought was killed upon such and such a day, that it was then received into a cooling warehouse and submitted to such and such a temperature, then shipped in refrigerator cars at such and such a temperature, then put into cold storage at such and such a temperature and carried across the Atlantic at a similar temperature. Hon. gentlemen may think there is a lot of red tape about this; there is not. Frozen beef is no good in the British market, that is to say, you will lose possibly as much as sixpence a pound, depending upon the amount of beef and the season of the year. Nor again is beef of
much use in that market which has not been subjected to a steady temperature and properly looked after, otherwise you get chemical reactions which lay the foundation for ptomaine and other poisons. The business should not be run by guess. In order to make a success of it the English butchers ought to know that they had the stamp of the Dominion of Canada behind the product.


Mr. PELLETIER:: If they know their
business they will know when they see the beef.


Henry Lumley Drayton: They should
have a better guarantee than that, and there is no reason why they should not have it. Nothing more useful could be done to assist agriculture in Canada-and it needs it-than the taking of the necessary steps in connection with the railway services, steamship services and refrigerator services. There is no reason why the Americans should have a monopoly of the sale of chilled meat on the British market. It is the best market we can get and it is a market that will stay with you when you get it. It would not take such a great deal to start it. We already have our government inspectors in the abattoirs, and it would only be necessary to see to it that we had proper services. It is necessary that there should be a continuous supply of that beef on hand. There is no use in trying it as an experiment, in a sporadic way; you have to stick to it. This government understands bookkeeping and should have no trouble in raising money to look after this matter; it really would mean so much to the country as a whole.
I do not know why my hon. friend a little further down the line objected to my remedy in connection with the high freight rates, because I did not mention any remedy. All I did was to express the hope that perhaps the government which was responsible for this situation would do something to alleviate it.


Milton Neil Campbell: The hon. member suggested that the legislation passed by the government last year was the cause.


Henry Lumley Drayton: Well, we will
take that; it is obvious that it was the cause. In fact, it is so obvious that it is not worth our while arguing the point. If it was not the cause, why was it that when the law was abrogated and American bottoms could come in in the ordinary way, prices came down at once? In September rates from Canadian ports were up. Usually they are the same to Buffalo-I will come to my hon. friend's other point in a minute or two-I am now talking about Buffalo deliveries in each
Supply-Canada Grain Act

case. Ordinarily the Duluth rate to Buffalo is the same as the Fort William rate. In this instance, because the American bottoms would not come in, with the law as it was, the rate was 2i cents more. In October it got up as high as 6 cents from Fort William to Buffalo as against 3 cents from Duluth to Buffalo. Now, these are the facts, and it is something that never occurred before. As to the other point that my hon. friend is mixing up with this question, there is no doubt that we have a higher rate to the Canadian ports, and I regret it as much as he does. But I regret also that the grain growers of our Canadian West when they wanted to get into Buffalo had to pay 5 cents as against 2i to 2-J cents from Duluth in September and as high as 6 cents as against 3 cents in October. But the things have nothing to do with each other; I am afraid my hon. friend1 was too anxious at the moment to excuse government legislation. He loses sight of the fact that there is a real commercial interest of tremendous size in the West that ought not to be bothered with political considerations. It means something when the farmers of the West, as a result of ill-considered, ill-digested, ill-advised legislation, have to pay 2| cents more to reach the Buffalo market because their wheat is in Fort William instead of in Duluth. I agree that it would be a splendid thing if we could cut down the rate to the Canadian port, and I hope my hon. friend will do something to assist in getting that done. I agree also that the club which we have in connection with the coastal privileges is a good one, but I believe in using it. Why, there were higher rates not only this year but last year to Canadian ports. As soon as the Crowsnest rates came into effect, up went the lake carriers' rates. In 1912 we had the same condition, and just as soon as those rates went up the club was lifted1; the coastal laws were abrogated and the rates came down. There is no trouble about that to-day.


George Gibson Coote: My hon. friend does not
mean to say that the law was abrogated, does he?


Henry Lumley Drayton: I mean to say it was suspended. It does not pay this country to be without a lake marine any more than it could be without railways, but it is a good thing for this country to see that their lake marine behave and that if they hold up the business of the country by excessive prices their privileges shall be suspended. That is what was done in that instance.


George Gibson Coote: Why not abrogate it entirely?
(Sir Henry Drayton.]


Henry Lumley Drayton: If my hon. friend did that he would have to address all his complaints to Cleveland. He would no longer get any redress, tardy though it might be, from the Minister of Trade and Commerce. He would have no say whatever as to the rates on grain carried on the lakes.


George Gibson Coote: Never had any say.


Henry Lumley Drayton: Oh yes, we had it in 1912. The hon. gentleman's memory is short. But he was not here, so I will not blame him. These are the facts. Now, the question still remains, what does the hon. minister propose to do about that legislation?


Thomas Andrew Low: I will tell you when that item is under discussion.


Henry Lumley Drayton: I am not going to be so unkind as to ask him to attempt to describe all the twisting and the shifting and the dodging that had to be undertaken in order to get the business back on a proper basis. But surely we should have it put on a business basis; that is all I ask. There is a loss in these rates of from two and a half to three millions of dollars.


Thomas Andrew Low: If my hon. friend will allow me to correct him I will do so in a word. I have listened to the hon. gentleman discussing these lake rates. He said in his opening remarks that he did not think I had quite understood lake freight rates. I make no pretence of having the mathematical mind of my hon. friend the ex-Minister of Finance, but I shall endeavour to handle the figures in the ordinary way that a business man would.
In 1923 the rates were very slightly higher than for 1922. My hon. friend mentioned the rates from Fort William to some American ports. Let us examine the rates from Fort William to Georgian bay ports, for instance.


Henry Lumley Drayton: I never touched that at ail, and my hon. friend knows I did not.


Thomas Andrew Low: I quite understand why my
hon. friend did not touch those rates; they would not suit his purpose, but I am going to give the House the benefit of the statement of the rates just the same. In the month of September, 1922, the rate from Fort William to Georgian bay ports and Goderich was 3 cents per bushel; in 1923 the rate was 3.54 cents, or about half-a-cent higher. In the month of October, 1922, the rate was 3.88, as against 4.39 in 1923, about half-

Supply-Canada Grain Act
a-cent higher again. In November, 1922, the rate was 5.65, as against 3.82 in 1923, or almost 2 cents per bushel less in November, 1923, than in the corresponding month of 1922.


Arthur Meighen: That was after the act
was abrogated.


Thomas Andrew Low: Let us see how it worked during the whole season.


Arthur Meighen: Just take it when the
act was in effect. What difference does it make how it worked after the act was abrogated? If you want to compare months, compare the months when the act was in effect, in order to get the effect of the act.


Thomas Andrew Low: Let us compare the whole
season of 1922 with the whole season of 1923.


Arthur Meighen: What good does that
do?


Thomas Andrew Low: That is making a proper comparison of the period when the act was not in effect with the period when it was in operation.


Arthur Meighen: Oh no, it is not.


Thomas Andrew Low: The act was not in operation
in 1922


Arthur Meighen: Nor for the most of
1923. The minister abrogated the act in October, 1923, so what is the good of taking rates after that? Compare the rates before he abrogated the act, and the rates the year before, and he will see the rates were far higher.


Thomas Andrew Low: I have already quoted figures
to show that they were only very slightly higher during the months to which my hon. friend refers than in the corresponding months of 1922.


Arthur Meighen: They were far higher
up to the time the act was abrogated.


Thomas Andrew Low: In September, 1923 there was
no change; in October, 1923, there was no change.


Henry Lumley Drayton: No change?


Thomas Andrew Low: No change in September; not
until about the 1st of October. Take these very months to which my hon. friend refers. They are only very slightly higher then than they were in the previous year. In August, 1923, the rate to Port Colbome was 3.33, as against the same rate for the year 1922. In September the rate was even lower in 1923 than it was in 1922.


Arthur Meighen: Oh, no.


Thomas Andrew Low: November I should have said; was lower; the rate was slightly higher in September 1923-only 1 of a cent. The rate in 1922 was 3.72 as against 3.99 for 1923, a very, very slight difference. In August the rates were exactly the same. In the month of October there was a difference of only one-quarter of a cent. In the month of November the rates were half a cent lower in 1923 than in 1922.


Arthur Meighen: The act was gone then.


Thomas Andrew Low: Taking the whole season of
1922 as against the whole season of 1923, there was a difference of two-thirds of a cent a bushel. To Georgian bay ports there was a difference during the whole season of one-tenth of a cent a bushel.


Henry Lumley Drayton: In September
last, were not the Duluth-Buffalo rates from 21 to 2f cents a bushel? Does my hon. friend deny that?


Thomas Andrew Low: I have not the American rates before me. I am more interested in the Canadian rates.


Henry Lumley Drayton: I can quite
understand why he would not have the American rates, where 62 per cent of the whole movement went. I am going to ask my hon. friend another question. Will he deny this fact, and it is a fact, that on September 20th the Fort William-Buffalo rate was 5 cents?


Thomas Andrew Low: During the month of September the rate averaged 4.57 cents.


Henry Lumley Drayton: That was going up pretty well. My hon. friend corroborates me pretty well, I think; 4.58 as against 21 and 2f; that is the only harm, according to my hon. friend, the act did. Will he deny this, that in October the Fort William-Buffalo rate reached 61 cents?


Thomas Andrew Low: It may have reached that, but the average was 5.24.


Henry Lumley Drayton: Are you sure
of that?


Thomas Andrew Low: Quite positive.


Henry Lumley Drayton: He will not deny that it reached 61, but it averaged 5.24 for the month, as against 3 cents Duluth-Buffalo. That is going up pretty well. Does my hon. friend deny the Duluth-Buffalo rate was 3 cents?


Thomas Andrew Low: I have already said that I have not the Duluth-Buffalo rates before me.
Supply-Canada Grain Act


Henry Lumley Drayton: There is just the loss on the great majority of the movement.


Thomas Andrew Low: If I had those rates before me I might find they were just as inaccurate as the figures my hon. friend has just quoted.


Henry Lumley Drayton: The figures I
have quoted are not wrong Mr. Chairman. So far my hon. friend has not said one is wrong. What is the use of insinuating that any of them is wrong when he cannot deny one of them? He said a moment ago he could not tell whether the rate had reached 6| cents for the month; he could only say the average was so and so, and the average was bad enough.


Thomas Andrew Low: I have given you the figures
from Canadian ports to Canadian ports.


Henry Lumley Drayton: What is to be
done about it?


Robert Forke: There is one matter I would like to bring to the minister's attention. The total cost of handling 1,000 bushels at Port Colborne is given here as 4.35 cents, and for handling 1,000 bushels at Buffalo 14.70 cents. That is a very great advantage on handling charges in favour of Canadian boats carrying grain to Canadian ports. Has that matter been looked into?


Thomas Andrew Low: No, but the ex-Minister of Finance will be able to answer that.


Robert Forke: It shows a very great advantage in favour of the Canadian boats in handling charges. I was surprised at the attempt the minister made to-night to show that there were no high rates for carrying wheat during the fall of 1923. Those who ship early in the season found it a serious matter. They had to pay very high charges at that time. Of course matters were not so bad when the minister made arrangements whereby American boats could carry Canadian grain; but we know from experience what the charges were in the early part of the season.


Thomas Andrew Low: But the facts do not bear out the statement of my hon. friend from West York. The rates were only very slightly higher.


Robert Forke: Probably on the average.


Thomas Andrew Low: On the average during the
month.


Robert Forke: But if you had happened to be one of the early shippers that would not have done you much good.


Arthur Meighen: Why did the minister
ibrogate the act? He had no right to, it was a straight piece of autocracy.


Thomas Andrew Low: He did not abrogate the act.
He accepted the interpretation of the chairman of the Canadian Grain Board.


Arthur Meighen: The interpretation was
that there was no act.


Thomas Andrew Low: My right hon. friend knows
that lawyers differ. Because he holds one view is no reason why another member of the bar should not hold an entirely different view.


Arthur Meighen: I suppose not, but no
lawyer nor no human being ever held the view that the hon. minister gave. He does not hold it himself. He knows that the act was the most costly blunder and piece of humbug that was ever put through this House. It was not as big a humbug as the Wheat Board but it was just as big a blunder -just a stupid, costly blunder. He as a business man saw that he had to get some way to extricate himself from the hole in which he found himself, and he took this round about way of getting an interpretation. Everybody laughed at it; the minister is laughing at it himself-the putting of an interpretation on a clause in the act. Now, what is the minister going to do? Why does he not come here and repeal the act and tell the House the government made the mistake which they know they did make?


John Millar: I believe that what has
been said about the act being rather immature and not being sufficiently considered last session is perfectly correct. I believe also that the resistance shown by the vessel owners did cause a raise in rates in the early part of the season; but I think some of the figures that have been given are rather misleading. We all know that in the month of September, when very little grain is passing down the lakes, our Canadian rates are low, lower than later on.


Henry Lumley Drayton: Does the hon.
gentleman know the tonnage moving in September?


John Millar: I have not the figures by months, but I can give the average for the year.


Henry Lumley Drayton: But the figures by the month are the figures that count. It is something like twenty-four millions.


John Millar: The figures for the calendar year and the figures for the crop year are entirely different. One needs to know what set of figures he is comparing. It may be of interest for the purpose of comparison to give the rate for 1915. The average rate from Fort

Supply-Canada Grain Act
William to Port Colbome in that year was 1.71. The average rate for 1922 was 4.05 and for the calendar year it was 3.81. For the calendar year 1923 the average was 4.24, so that while the rate may have been higher in certain months the variation was not very great.
I may say that while this controversy was going on I sent a wire to the minister suggesting that he intercede with the railways in order to have the all-rail rate from Armstrong to Quebec lowered. I have never been able to understand why the rate from Armstrong, directly north of Fort William, to the city of Quebec, a distance of 960 miles, is 21 cents. That used to be the figure and I believe it is still. Let me point out to the minister that if grain were carried from Armstrong to the city of Quebec at the same rate it is now carried from Calgary to Fort William the figure would be 11 cents. Now, when we have built this railway at enormous expense-with a road bed that is excellent and a grade that is good

and when we have a terminal in the city of Quebec with an elevator capacity of 2,000,000 bushels, that was at this time only partly occupied, why should the railway rate be prohibitive? It would be wise, if such a difficulty occurs again and the shippers are determined and defiant, for the minister to take steps to set aside and suspend the coasting laws. I knew when I sent this wire to the minister the proposition would be only a partial remedy, for the reason that even if the rates on the railway were lowered at once the rolling stock would be lacking; it would not be possible to get sufficient rolling stock to carry any very great quantity of grain down to Quebec.
One thought I should like to express is this:	The minister has been severely criticised for interceding with the American and Canadian shippers, and it has been suggested that he practically invited them to break the Canadian law. I do not feel like seriously condemning the minister for that course because grain was coming down from Winnipeg at the rate of a trainload of forty cam every thirty minutes, night and day. You can see what that meant. For that grain to be tied up, even for a week or a month, meant enormous loss. Therefore I would rather approve the course the minister took, even if he had to pocket his dignity for the time being, in order that he might save that enormous loss. I did not at that time, and I do not now, feel like seriously condemning the minister, even if he took this-I will not say undignified course, for it was rather a
case of bottling his pride I suppose. It has been spoken of as rather ridiculous by some hon.. members, but considering the enormous amount that was at stake and the financial condition of those who would suffer, those who were growing grain, I was glad the minister took any steps that might be necessary in order to permit the grain to proceed down the lakes. I shall not attempt to discuss this matter very fully because later on when the Welland canal estimates are being considered I shall deal with the question of the freight rates and the reason why Canadian grain passes through American channels to the extent that it does.


Thomas Andrew Low: I do not understand how my hon. friend, from Brandon (Mr. Forke) could interpret my remarks as an attempt to justify the rates in force on the lakes last fall or at any time. I was simply endeavouring to point out to the hon. member for West York (Sir Henry Drayton) that the rates last fall, or during the shipping season in 1923, were not higher than they were in 1922.
My hon. friend from Saltcoats (Mr. Sales), made some reference to the marketing of grain. I wish to say that there is no subject occupying my mind more than that of trying to work out some plan that will permit the marketing of the grain of the Canadian West at a lower cost than is the case at the present time. My hon. friend has apparently jumped to a conclusion. He made the remark that I had been carrying on negotiations with the ocean vessel owners and had apparently been unable to accomplish anything. I want to inform my hon. friend that it is true I have been carrying on negotiations regarding ocean freight rates on cattle, but before this session is closed I hope to work out some solution that will lessen the cost very materially of carrying the cattle from Canadian ports to English ports.


Robert Forke: I would like to say in explanation that I was not exactly blaming the minister; in fact I agree to some extent with the remarks of the hon. member for Saltcoats (Mr. Sales); but what did vex me last fall was that there seemed to be a trial of strength between the Canadian government and the Canadian Government Merchant Marine, and something had to be done. I think probably the minister took the proper steps and I would like to see this government and Canada in such a position that no group of shipowners could dictate just exactly what is to take place on the Great Lakes, a result that could be brought about by abrogating the coastal laws.
Supply-Canada Grain Act


Milton Neil Campbell: I was glad to have the assurance of the minister that this question of securing lower transportation for our grain is occupying a good deal of his attention; but still I am not quite satisfied with the way the coastal laws are being handled. I agree that when we have a club it should be used, and if this were used! as a club at the proper time, we would not be asking for the repeal of the coastal laws. That is the whole issue at stake. If the government were prepared to use it at the critical time it would be all right. But the reason we object to the very existence of the coastal laws is that it is only at long periods that this weapon is ever used at all. The minister said himself that competition was one of the things that regulated freight rates. We had a very good proof of this in the insurance rates. I think the government felt that the practice of vessel owners handling insurance was wrong, and it was done away with. As a result I see to-day that 6| cents per hundred dollar value is the rate from the head of the lakes to Buffalo, where formerly it was 30 cents for a hundred dollars. That makes quite a difference. The hon. member for West York (Sir Henry Drayton) thinks that if we repealed the coastal laws we would have no merchant marine left. If one studies the report of the royal commission appointed to inquire into the lake freight rates on grain and insurance, he will find that these Great Lakes shippers are making a great deal of profit. Page 36 of the report deals with the Great Lakes Transportation Company, and the commission makes some rather interesting deductions. The company has shown 11 per cent as the actual return on their investment. Now the deductions of the commission would show that it was actually about 45 per cent.


Arthur Edward Ross: What company was that?


Milton Neil Campbell: The Great Lakes Transportation Company. They value one vessel at $525,000, and the commission values it at $125,860.


Arthur Edward Ross: What is the capacity of the vessel?


Milton Neil Campbell: I do not think they
give the capacity. The Mathews Steamship Company show an accounting of 10-24 per cent and in connection with this company

the commission quote a letter that was issued by Mr. Mathews, the manager, on August 20th, 1922, as follows:
The average annual net earnings derived from operation, after depreciation and taxes for the five years ending January 31, 1922, amounted to almost five times the total interest charges on the bonds now outstanding including the present issue. Preliminary figures for the first half of the year 1922, indicate that the earnings for this year may be considerably in excess of the above proportion.
The commission goes on to report:
The bond issue was $700,000; the interest on that would be $49,000. Five times that would be $245,000; but in exhibit 277 the company claims that its operations for the year 1922 up to the first of September resulted in a loss of $29 709.61.
It is quite apparent from those figures that their supposed earnings of 10.24 per cent are a long way from being correct; the figures would show they are making very substantial profits, and I think there is very little danger indeed of our losing our Canadian Merchant Marine through the repeal of the coastal laws.


Henry Elvins Spencer: Can the minister tell me
if Mr. George Hill is still the superintendent
at Calgary?


Thomas Andrew Low: Mr. George Hill was suspended, but has been reinstated. The matter was investigated. The reason of the suspension was that he wrote a letter to a gentleman in Alberta that I did not think was a proper letter for him to send out. The matter was investigated, and he has been reinstated. I will read a portion of the letter so that the House may have some idea of the reason for his suspension for a time. It was addressed to Mr. M. G. Gudlangson, and reads:
When my duties call upon me to answer such correspondence as you send me, t/hen I will quit of my own accord. Were I to tell you that my grading was no poorer than Winnipeg, you no doubt will not believe it, nor could you understand if I was to explain. I was raised on a farm and never saw the 'lights of a city until I was over eighteen years old. I used to accumulate a grouch like yours on the farm, because I had to spend my hours when not at school cleaning out the cowsheds and pigpens.
That letter was forwarded to me by the gentleman who received it. I immediately looked into the matter and found that Mr. Gudlangson had written to Mr. Hill and myself upon the same date. I replied to Mr. Gud-langson's letter. Mr. Gudlangson wrote three letters to Mr. Hill. To the first one Mr. Hill paid no attention. He wrcfte another letter and Mr. Hill paid no attention to it. When he wrote a third letter Mr. Hill con-

Supply-Canada Grain Act
descended to answer him by the letter I have read. I felt that any man who would write such a letter to any citizen in Alberta or any other province should be suspended at once. I ordered an investigation, and the matter was investigated. The chairman of the Canada Grain Board reported to me and gave reasons why Mr. Hill had answered in such a manner. He stated that he was working under high tension and a nervous strain.
I replied to him that many men are working under high tension or high strain but they find opportunities to answer letters in a courteous and civil manner. I was informed that Mr. Hill regretted his action very much; so I told them to give Mr. Hill another trial.


Henry Elvins Spencer: Out of what vote will
the expenses of the Royal Grain Commission be paid?


Thomas Andrew Low: There was a vote last year
which has not covered the expenses, and an amount will be placed in the supplementary estimates to provide for it.


Arthur Edward Ross: Are there any
grain hospitals at the foot of the lakes?


Thomas Andrew Low: I cannot answer that question.


Arthur Edward Ross: Has the minister
any information as to the amount of grain lost at the foot of the lakes?


Thomas Andrew Low: We have no knowledge of any losses; any losses that occurred would be through private elevators.


George Gibson Coote: I want to correct a statement made by the hon. member for Port William and Rainy River a little while ago so that the correction will appear in the same Hansard that reports his remarks. He was quoting the overages of the United Grain Growers in certain years taking the figures from the Price Waterhouse report. The hon. member is very well versed in some things but he has yet something to learn about the grain trade. He gave certain figures purporting to be the number of bushels of overages which this company had in certain years but in looking up the report I find that the amounts he quoted were the proceeds of the overages in those years. So that those who read Hansard may have some other overages to compare with the figures quoted by the hon. member, I want to quote the figures in regard to one other company in the same year, the Empire and Thunder Bay. In 1912 their overages amounted to 160,821; in 1913, 169,622; in 1914, 59,066; in 1915, 236,223; in 1916-17, 309,643.
I might further point out that in the five years covered by this report the total overages of the elevators under supervision showed a total receipt of $5,304,367. I would quote more figures but the hour is late. I should also like to say something regarding the coastal shipping law, but I may bring it up under the other vote. I will defer my remarks.


[Stage Direction]
Item agreed to.
Dominion Bureau of Statistics, including 6th Census, $200,000.
Arthur Meighen: Surely the minister, having got through a vote of a million dollars does not wish to go further at midnight? How can we stand this day after day?


Thomas Andrew Low: We have wasted considerable
time discussing something at present under investigation by a royal commission, and I do want to get one or two items through.


Arthur Meighen: The main item is through.


Robert Forke: In regard to the minister's
remark, if the House were assured of an opportunity of discussing this question when the report of that commission is submitted, thi3 discussion need not have taken place. But this is the only opportunity we have of taking up the matter.


Arthur Meighen: What can we discuss if
we are to keep away from, the things that are before royal commissions?


Thomas Andrew Low: The door has been left wide
open for the discussion of everything that does not relate to this particular item. All the other items that will be voted at a later date were discussed in connection with this vote and I raised no objection.


Henry Elvins Spencer: I am sorry the minister
thinks we have wasted a lot of valuable time; I think we have made good use of the evening and have secured a good deal of information.


George Gibson Coote: Why has the minister reduced the expenditure under this item? I believe that the expenditure on the Bureau of Statistics is one outlay which can be justified; this is money well spent.


Thomas Andrew Low: The decreases are in the staff
and in the completion of the census. A number of machines have been installed that do the work otherwise performed by in-
Supply-Canada Grain Act

d'ividuals. There are also about 20 unnecessary publications issued monthly including preliminary bulletins the elimination of which will represent no loss.


George Gibson Coote: You do not contemplate
cutting down the service?


Thomas Andrew Low: No. Let me give my hon.
friend the benefit of an investigation I made myself. I had a letter from a friend who wished to have a certain person in the department re-classified. On investigation I found that this gentleman had under his charge some 12 employees. I made an examination of the work carried on by that particular branch, and having some little knowledge of what a stenographer or an office hand should be able to do I decided that instead of recommending an increase in the salary of the gentleman in charge of the office there should be immediately dispensed with the services of 5 out of the 12 persons under him. I thought that 7 would be able to carry on the work efficiently and satisfactorily.


Arthur Meighen: I will certainly support
the minister in any contraction he may make and I hope he will pursue the good work further. I will give him a hint now as to what he might do by association with his colleagues. We made a persistent eflort to get all statistical work concentrated in the one service;
I thought it was practically complete and successful. I find now that there are statistics branches almost everywhere; I do not know whether new ones have grown up or whether this is a revival of the old ones. For example, there is a statistics branch in the Labour department. What in the world is the need of that? The statistics should all be in one office, and then there could be economy as well as efficiency. Let me give the minister an illustration. I got from a business man just lately a letter in which he refers to some correspondence with the statistics end of the Labour department. This business man had given out certain facts in his own literature, and important and interesting they were. They had reached the Labour department. The Labour department statistics office wrote and asked where these statistics had been secured; they would very much like to have them. He wrote back informing them that he got the figures from the Statistics branch of the Department of Trade and Commerce. Here was one government department writing to a business man to find out where information was secured that came from

another government department just across the road! What is the common sense of maintaining those two offices, especially when one does not know what the other is doing? Had I known this matter was coming up I would have brought the correspondence down it is really laughable. Let the minister have a talk with his absent colleague, the -Minister of Labour, to see if he cannot close up the factory there and use one central statistics office.


Thomas Andrew Low: I quite agree with the right
hon. leadter of the opposition that there are many branches in various departments that might well be combined. But he knows that it is a condition which we inherited-I am not finding any fault with that-


Arthur Meighen: I think you have developed it.


Thomas Andrew Low: -but I hope that during the
time we are in office we will be able to remedy this condition.


Arthur Meighen: It is getting worse.


Thomas Andrew Low: I do not think so.


Mr. SHAW:: What power or authority can the chief statistician exercise to secure statistics from the various departments?


Thomas Andrew Low: I am sure that would be a
very simple matter to work out. The Statistics Act covers the duties of the bureau and additional services may be assigned to it, from time to time.


Joseph Tweed Shaw: Has he any authority to
demand statistics from the departments? I understand that he has not. I should like to know.


Thomas Andrew Low: Arrangements can be made to
provide for co-ordination.


Robert Forke: Some time ago I asked for
statistics from the Bureau of Statistics, and was told I could only get the information from another department.


Thomas Andrew Low: I suppose there are some instances like that to which my right hon. friend referred.


Robert Forke: I have never got the information yet.


Thomas Andrew Low: Well, if you ask our department you will at least receive a reply.


Arthur Meighen: The minister should not have said that he inherited the condition.

Questions
The whole unification from beginning to end took place under the late government; there was no chief statistician before. Now, I do not say that in the Labour department there was not perhaps some relic left.


Thomas Andrew Low: I am sure my right hon. friend
is not objecting to the chief statistician?


Arthur Meighen: No, I am not; he is one of the best officials any government ever had. But I am inclined to the belief that there is growing up a sort of second crop in the various departments, and why an the world there need be, especially in the Labour department, I am at a loss to understand. If there is not power in the chief statistician to get data from the other departments, there certainty should be. I was under the impression that he possessed such power.


Thomas Andrew Low: I quite agree with my right
hon. friend that there should not be duplication in the other departments.


Joseph Tweed Shaw: I want to direct the attention
of the minister-perhaps he has already had the matter under his observation-to the report of the Haldane Commission in Great Britain some three or four years ago with regard to the reconstruction of the ministry, m which the essential and vital importance . of statistical work is outlined and a procedure is suggested by which it can be made a really effective and centralized function of government.


[Stage Direction]
Item agreed to.
George Newcombe Gordon: Marine and Fisheries
-the minister wants to call one item in order to get on to-day.


Arthur Meighen: We will not stand for
it. I move that the committee rise.


Hon. P. J. A. CARDIN (Minister of Marine and Fisheries):: I will not press the item, but
I want it called in order to be in a position to proceed Thursday and Friday.


Arthur Meighen: I will not permit an
item to go in to-night, but so far as I can see now I would not object to the minister proceeding on Thursday and Friday. If I find I have to object, I will let him know in the morning.


Pierre-Joseph-Arthur Cardin: Tres bien. That is all
right.


Thomas Andrew Low: I move the committee rise.
Progress reported.
On motion of Mr. Graham the House adjourned at 12.10 a.m. (Thursday).
Thursday, June, 12, 1924