1928-05-16

[Stage Direction]
Third and final report of the select standing committee on industrial relations, with the evidence upon whidh the reipont is based- Mr. McIntosh.


Mr. A. W. NEILL (Comox-Alberni) moved:: That as it appears by the Minutes of the Proceedings of the Senate of April 25th and 26th, 1928, that the preamble of Bill No. 16, an act respecting certain patent applications owned by the British Steel Piling Company, Limited, was reported as not proven by the committee on miscellaneous private bills of that house, the fees and charges paid thereon be refunded, less the cost of printing and translating the said bill.


[Stage Direction]
Motion agreed to.
Mr. DAVID SPENCE (Parkdale) moved:: That, in accordance with the recommendation contained in the eighth report of the select standing committee on miscellaneous private bills presented on the tenth instant, the additional charge paid on the following bills be refunded, namely:
Bill No. 262 (Letter F7 of the Senate), intituled: "An act for the relief of Louise Morris Hays Grier," and
Bill No. 282 (Letter B8 of the Senate), intituled: "An act for the relief of William Henery Leonard Gale."


[Stage Direction]
Motion agreed to.


[Stage Direction]
Hon. CHARLES STEWART (Minister of the Interior) laid on the table of the house the evidence taken before Alexander Smith on the charges of R. A. McClymont.

Questions


Hon. J. A. ROBB (Minister of Finance):: Mr. Speaker, yesterday the hon. member for Ontario (Mr. Kaiser) made an inquiry regarding civil service superannuation and contributions to the superannuation fund, and I promised him a reply to-day. The information I have is that the matter is now being assembled by the Department of the Secretary of State; the work is not yet completed.
May I take this opportunity of saying to hon. members who probably are peeved at the delay in bringing down returns, that we are advised by the different departments that the extraordinary number of returns required this session and their voluminous character have added materially to the expense of carrying on the work, and we are further advised that some of the departments must have either more time or more help to enable them to complete the work.



PRIVATE BILL


[Stage Direction]
On motion of Mr. Ryckman, Bill No. 314, respecting the Dominion Fire Insurance Company, was read the first and second times and referred to the select standing committee on banking and commerce.

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

[Stage Direction]
Mr. MAYBEE.
1.	Did R. S. Robertson. K.C., of Toronto, act as counsel representing the government in Toronto civic harbour enquiry?
2.	If so, who appointed him, who requested his appointment, and what amount was he paid in fees, expenses, or otherwise?
3.	How- much has been paid the said Robertson by the government or by any department of the government in the years 1922, 1923, 1924, 1925, 1926, and 1927?
4.	Has any money been paid the said Robertson in 1928, and is any money now due him from the government or any department thereof?
5.	Is the said Robertson at the present time acting for the government or any department thereof in any litigation or otherwise?
Mr. RINFRET:: 
MR. GERHARD ENS
Mr. WILSON (Wentworth):: 1.	Has Gerhard Ens of Rosthern, Saskatchewan, been appointed to any position in the public service of Canada?
2.	If so, to what position and on what date?
3.	At what salary?


Mr. RINFRET:: 1.	Gerhard Ens is at present employed with the Land Settlement branch of the Department of Immigration and Colonization.
2.	Appointed to visit all Mennonite settlements in the west, report on the conditions of the settlements, and advise incoming settlers of the Mennonite type as to where they can secure suitable land for settlement-His engagement is to continue for three months from March 29, 1928.
3.	$100 per month.	,
, PORT OF AMHERTSBURG, ONT.


Mr. GOTT:: 1.	Was any wrork done by the Canadian government at the port of Amherstburg, Ontario, during the year 1927?
2.	Does the government propose doing any dredging at Amherstburg during the navigation season of 1928?
3.	Has it been reported to the government that the east bank of the channel in front of the town wharf leased by the D. & W. Ferry Company at Amherstburg has been upheaved by stranded steamers?
Questions

4.	Will the government make endeayour to have the shoal removed as quickly as possible if investigation discovers an existing reef?
5.	What is the depth of water, clear or supposed depth from the east channel bank to the wharf at Amherstburg?
6.	In view of the location of the town, being the first port in lake Brie, will the government give consideration in making expenditures, large or small to the plans of the Canadian Deep Waterways Association of having a channel from the head of the lakes to the ocean?
7.	Has representation been made to the government from any person, association, firm or organization from the town of Amherstburg to deepen to the Amherstburg wharves from the east channel bank so that the heavy draft steamers might fuel at Amherstburg?
8.	Has an estimate ever been made as to the cost of the aforementioned work?
9.	If so, what is the estimate?
10.	If not, will the government proceed with same, in view of proposals of the Canadian Deep Waterways Association?
11.	Can any assurance be given that the survey will commence during the 1928 season of navigation?


Mr. RINFRET:: 1.	No.
2.	Matter under consideration.
3.	No.
4.	Yes.
5.	16 feet.
6.	Yes.
7.	Yes.
8.	No.
9.	Answered by No. 8.
10 and 11. Survey will be undertaken when considered advisable and necessary.


EDMONTON INCOME TAX OFFICE STAFF
Mr. SPENCER:: 1.	What is the total number of officials employed in the income tax office, Edmonton?
2.	As regards the clerks and stenographers in this office: (a) what are their names, (b) what are their grades, (c) what are their salaries, and (d) when were they appointed?
3.	Were these positions advertised?
4.	If so, how many applications were received ?
5.	If not, who were the applicants recommended?
6.	Was there any examination held as to physical and mental requirements?
7.	What safeguards were taken to insure that appointees were of good character?
8.	Were candidates who had passed the civil service examination for the various positions offered positions?
9.	If not, why?


Mr. EULER:: 1. Number of employees, 12.
2.
Name of Employee (a)
Arnett, Jean	
Bates, John Thomas	
Belanger, Theresa	
Doyle, Loretta Irene	
Lessard, Marie Albertine.. .. McKnight, Kathleen Cora.. Walker, Dorothy Lucille.. ..
3.	No.
4.	Answered by No. 3.
5.	Answered by No. 2 (a).
6.	Yes.
7.	Investigations of local inspector and chief inspector.
8.	Inasmuch as the income tax division does not come under the Civil Service Commission, no examinations were held by the commission.
9.	Answered by No. 8.


UNOPPOSED MOTION FOR PAPERS
Mr. STEVENS:: For a copy of all correspondence, reports, memoranda, advertisements, decisions, ratings, and other documents in possession of the Civil

Grade	Salary	Date of Appointment(b)	(0	(d). I	$ 720	1928 13th Mar.. II	960	17th Apr.. Ill	1,260	14th Dec.. I	720	13th Mar.. I	780	2nd Apr.. I	720	19th Mar.. I	720	18th Apr.
Service Commission and the Post Office Department relating to the recent promotional competition to fill the position of principal postal clerk in the Ottawa city post office, involving the appointment and rejection of one R. E. Hall.


TRADE AGREEMENT WITH RUSSIA
[Stage Direction]
On the orders of the day:
Mr. HENRI BOURASSA (Labelle):: Will the Prime Minister (Mr. Mackenzie King) lay on the table, first, the orders in council which preceded the trade agreement between Canada and Russia, and, secondly, the notes exchanged in London relating thereto? I might observe, with regard to the latter documents, that they are referred to in several of the despatches which have been brought to the house on motions by the hon. member for Battle River (Mr. Spencer) and the hon.

China-Japan Relations
member for North Winnipeg (Mr. Heaps) respectively. Regarding the orders in council, there is no objection to tabling them right away; and so far as the notes are concerned it should be only a matter of form to have them brought down after communication with London.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I see no objection to
promising to lay the orders in council on the table. I do not imagine there will be any objection to tabling the notes either, but I should like to communicate with the British government first.


STRUCTURAL STEEL WORKERS
[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Toronto Northwest):: I wish to call the attention of the Minister of Labour (Mr. Heenan) to a very serious strike of structural steel workers employed on an important public work in Toronto, which strike is likely to spread throughout Canada. These workers do not come under the Industrial Disputes Investigation Act unless both sides consent. What is the situation, and what has been done or is being done by the minister in the matter? The minister, I understand, is going away to-morrow. May I inquire what action will be taken?


Hon. PETER HEENAN (Minister of Labour):: The government has done now
about all it can do in the matter. We have no authority but we have offered our offices between the parties to the dispute, and I expect to have them on the telephone within an hour in order to discuss the matter with them again.


Thomas Langton Church: That is not going very
far.


Mr. SPEAKER:: Orders of the day.


Thomas Langton Church: I should like to find out
who is the acting minister.


Hewitt Bostock: Order.
STATEMENTS OF R. MoOLYMONT


ATTENTION CALLED TO PUBLICATION OF ADVERTISEMENTS IN THE PRESS
[Stage Direction]
On the orders of the day:
Hon. R. B. BENNETT (Leader of the Opposition):: I should like to direct the
attention of the right hon. the Prime Minister (Mr. Mackenzie King) to the fact that for some ten days or more a series of advertisements has been appearing in local newspapers which reflect seriously on the honour
of members of this house. I refer to advertisements that have been signed by one Richard McClymont. Obviously that sort of thing should not continue indefinitely, and while I do not expect the Prime Minister to give an answer immediately, because he might like to consider the matter, I think it of sufficient importance to direct his attention to these advertisements and to ask him whether he does not think some action should be taken to protect, if not the members of this house, at least the vast number of civil servants that are affected by implications in the statements that are made in the advertisements in question. I leave the matter with the Prime Minister for his consideration.
Right Hon. W. L, MACKENZIE KING (Prime Minister):	Everyone who has seen
the advertisements must have formed in his own mind some impression of the individual who is inserting them and spending his money for such a purpose. I really think it is attaching undue importance to him to direct any attention to the matter.


SEVEN SISTERS FALLS
[Stage Direction]
On the orders of the day:
Richard Bedford Bennett: May I ask the Minister of the
Interior (Mr. Stewart) whether or not the Seven Sisters waterfalls has been leased, alienated or parted with?


Hon. CHARLES STEWART (Minister of the Interior):: I can say the Seven Sisters
are still intact and have not been leased.


CHINA-JAPAN RELATIONS
[Stage Direction]
On the orders of the day:
Mr. J. S. WOODSWORTH (Winnipeg North Centre):: The other day I asked a
question in regard to the trouble between Japan and China and the Prime Minister (Mr. Mackenzie King) replied that he had no official information. As I understand it, Canada is to-day a member not only of the assembly but of the council of the League of Nations, and it seems to me that by this time we should take some cognizance of the situation which is commonly known to exist. Article X of the Peace treaty reads:
Members of the league undertake to respect and preserve, as against external aggression, the territorial integrity and existing political independence of all members of the league.
In view of this provision I should like to ask the Prime Minister what action is being taken in this very serious situation.
Member Voting Inadvertently


William Lyon Mackenzie King: The situation in China,
as I understand it, is in the nature of a civil war, and the action to which my hon. friend refers is not so much, from the point of view of Japan, active external aggression as it is action taken to defend some of its nationals in a particular area. China and Japan are both members of the League of Nations, and if China felt that she was being attacked aggressively I assume that she would have made some representations to the League of Nations. The provisions of the league require that when any request of the kind is submitted all countries which are parties to the league shall be so informed. Canada has received no information from the secretary general of the league that any representations have been made by China that she is 'being attacked, and certainly this government has not felt that Canada has any special responsibility to take action while all other nations refrain from so doing, or await representations by China on her own behalf.
MEMBER VOTING INADVERTENTLY On the orders of the day:


Mr. T. W. BIRD (Nelson):: Yesterday while a vote was in process the hon. member for Toronto Northwest (Mr. Church) voted contrary to his intention. Beauchesne states the usage of the house very clearly on this point, and it is a fact that when a member makes a mistake of that kind his vote must stand as originally recorded. In this case the rule has been ignored; I notice that the reports in Hansard and in the votes and proceedings record this vote according to the intention of the hon. member. I am aware that Your Honour made some remarks in explanation of the mistake, but I do not think those remarks could be construed into an order to change the record. However, if that is the case, I would ask if this ruling will change the usage of the house in future. Hon. members will remember that two years ago this rule was applied to me with all its rigour, in cons'equence of which I became the victim of certain gentlemen whose idea of sportsmanship is somewhat attenuated at election time.


Hewitt Bostock: The ruling I gave in the case of the hon. gentleman was a sound ruling, and I will live up to it in the future. Last night, when I saw the hon. member for Toronto Northwest (Mr. Church) rising I felt very sure, as everyone felt, that he had not heard the question as put. I need not stress that point; the hon. gentleman is deaf and therefore did not hear the question as put,
[Mr. WoodsworthJ
because he had expressed to me and to others his desire to vote against the bill in all its various stages. However, his vote should not have been changed in the votes and proceedings, because May, Bourinot and all the other authorities on parliamentary procedure state that once a vote is registered in the House of Commons it cannot be changed in the report.


Mr. HOCKEN:: As I recall the circumstances, the conditions in this case are quite different. My hon. friend from Toronto Northwest voted both ways, but the hon. member for Nelson (Mr. Bird) was paired when he voted.


DEPARTMENT OP NATIONAL REVENUE ACT AMENDMENT
[Stage Direction]
Hon. W. D. EULER (Minister of National Revenue) moved the third reading of Bill No. 291, to amend the Department of National Revenue Act.
He said: Although I am asking now for the third reading of the bill, I have requested my colleague the Minister of Finance (Mr. Robb) to move the house back into committee for the purpose of introducing an amendment. In the debate yesterday I was asked whether in the appointment of certain officers specified in the bill by the governor in council, or by the Civil Service Commission, returned men would receive the preference. I think I stated very distinctly and emphatically that we did so intend to continue that preference provided other conditions were equal with regard to the qualifications necessary. It was suggested, I think by my hon. friend from New Westminster (Mr. McQuarrie), that this might be very well included in the bill itself. I felt at the time, and I am not sure that I have really changed my mind, that it was not necesary so to do, but I think possibly it may meet the wishes of most of the members of the house, and perhaps the returned men themselves will be more reassured on the point, if such a clause is inserted in the bill. The amendment which will be later moved in committee, if the house goes into committee will provide for that.
James Alexander Robb: At the request of my colleague, the Minister of National Revenue, I beg to move, seconded by Mr. Dunning, that Bill No. 291 be not now read a third time but that it be referred back to the committee of the whole with instructions that they have power to amend by adding the following paragraph to subsection 4 therein:
Provided that in the appointment of officers under the provisions of this subsection, other

National Revenue Act
qualifications being equal, preference shall be given to persons who have been on active service overseas on the military forces or who have served on the high seas in a seagoing ship of war in the naval forces of His Majesty during the war, who have left such service with an honourable record or who have been honourably discharged.


Richard Bedford Bennett: I congratulate my hon. friend the Minister of National Revenue on having tardily recognized the soundness of the suggestions made to him yesterday. Had he adopted them then it would not have been necessary to move his bill back into committee. It is very satisfactory to know that the minister has discovered that after all some good may come out of Nazareth, and that we on this side of the house at times do make suggestions which are sound and in the public interest. I congratulate the minister for having accepted our suggestions in that regard.
Motion agreed to and the house went into committee, Mr. Johnston in the chair.
On section 1-Minister may nominate certain officers.


The CHAIRMAN:: An amendment has
been moved by the Minister of National Revenue, as follows:
Provided that in the appointment of officers under the provisions of this subsection, other qualifications being equal, preference shall be given to persons who have been on active service overseas on the military forces or -who have served on the high seas in a seagoing ship of war in the naval forces of His Majesty during the war. who have left such service with an honourable record or who have been honourably discharged.


Mr. POWER:: I think the minister will agree that he should add such words as would indicate that these men should have served in the military forces of Canada. I do not know the feeling of other members of the house with regard to this matter, but personally I am very much opposed to men who have served anywhere in the military forces of the empire coming here to Canada and taking positions which belong to Canadians.


Mr. EDWARDS (Frontenac):: In my judgment there is a weakness in the wording of this amendment, as far as the returned soldier is concerned; apparently it holds out to the returned soldier a preference because of his service overseas, but it is not so worded as to give him that preference beyond any doubt. I refer particularly to the words, "other qualifications being equal." It would be very easy to tell a returned soldier, "Yes, you have the qualifications necessary to fill this position, but your qualifications are not so great as
the qualifications of another man." It does seem to me, if you want really to give the soldier the preference to which he is entitled, you should specify that he possesses the qualifications necessary to fill the position. For example, you might have a returned soldier who was thoroughly qualified to fill the position. He might be put in competition with a man applying for the same position, and who was a graduate of a university. From an educational standpoint, I suppose the second man would be superior to the first, and yet the returned soldier might possess all the qualifications required satisfactorily and effectively to perform the duties of that office. It leaves it open to the minister or to the board to get out of giving the returned soldier the preference to which he is entitled.


Mr. CLARK:: I would just like to say a
word with regard to the suggestion of the member for Quebec South (Mr. Power), and point out that many Canadians served in the British army, and did not serve in the Canadian army at all; he would discriminate against them. Similarly, many Englishmen and Scotchmen served in the Canadian forces and, if his principle were adopted, we would discriminate against them. Personally, I am opposed to any such idea being embodied in the legislation of this country. Let us treat on the same basis all residents of the empire who served the empire in the Great War.


Some hon. MEMBERS:: No.


Charles Gavan Power: Would my hon. friend be
prepared to allow Americans who served in the Great War to receive preference? Under the amendment, as proposed, I think they would.


John Arthur Clark: The hon. member's proposal
would do that very thing. We all had Americans serving in our units, and they are eligible, under the proposal of the member for Quebec South. The Canadians who served in the British army would be barred by the suggestion of the member for Quebec South.


Charles Gavan Power: I am prepared to go so far
as to say that residents of Canada who served in the British army shall be eligible. After all, the principle underlying my suggestion is that positions in the civil service of Canada shall be open to Canadians.


John Arthur Clark: What are you going to do
with those who are in the service already?


Mr. McGIBBON:: Might I remind the
member that the Civil Service Act protects them; they must be Canadian citizens.


Joseph Henri Napoléon Bourassa: Since no devout supporter of the government has
National Revenue Act

enough gratitude in his heart to congratulate the opposition, I think it belongs properly to one who is not affiliated with either party, to outline once more the curious influence which Toryism exercises upon certain departments, and upon certain members of the government.
The question of whether the returned soldier should be given preference or not is a very wide one. I think we have gone far enough in that direction. I am second to none in rendering honour to Canadians who served in the army, but, at the same time, there are many good Canadians who served their country by working in Canada and for Canada. We are undermining to a large degree the sense of patriotism and citizenship by always bringing to the front the soldiers, whether they belonged to the Canadian army or to the British army, as people who deserve gratitude and preference over the Canadian citizen who has worked all his life in perhaps a simpler capacity, but certainly in as useful a capacity, as far as Canada is concerned, as by serving in the army.


Some hon. MEMBERS:: A safer capacity.


Joseph Henri Napoléon Bourassa: Safer for Canada, yes.
I fail to see where many of the most outspoken and especially noisy upholders of everything militaristic have, either in the last war or in preceding wars, given evidence of their desire to serve in a non-safe capacity. I have noticed very frequently that the real soldier, the man who went to the fields and fought battles, is usually more modest than the politician who makes such a noise about it. That is one point.
The other point is the one raised by the hon. member for Quebec South (Mr. Power). Are we going to allow the habits of the administration to grow to the extent where no difference is to be made, in preferment, or otherwise, as between the men who acknowledge themselves servants of Canada primarily -whether they believe in the co-operation of Canada in British wars or not, whether they take the point of view of Canadianism or that of British imperialism and Imperial cooperation, is an entirely different question- and the British soldiers?
Consider what the government of Great Britain does for its own people, and what the government of Australia does. I do not think you will find in any statute of Great Britain or of Australia any disposition to put on the same footing as their own people Canadians who may have served accidentally in the army of Great Britain or the Australian militia. You would not find it in India; you would not find it in South Africa, and you would not find it in any British statute. Quite properly, the British look to their own 
people first; Australia looks to its people first, and South Africa does the same. I think the Canadian government and the Canadian parliament should look to their people first also.
Therefore, the proposal made by the hon. member for Quebec South should recommend itself to the attention of the house, and I think to the attention especially of the members sitting to the right of the Speaker. Perhaps the Minister of National Revenue (Mr. Euler) may be able to take some little inspiration from his friends, rather than to give way so complacently to the opponents of his government and of his party.


Charles Gavan Power: I have an amendment to
the amendment, as follows:
That the said amendment he further amended by adding in the fifth line thereof, after the words "military forces", the words "of Canada".
Mr. EDWARDS (Frontenac). I would suggest to my hon. friend from Quebec South that he call this question especially to the attention of the Postmaster General (Mr. Veniot). My reason for that is that his remarks a short time ago seemed to be generally accepted by hon. members on that side of the house. The Postmaster General was not present. If he had been present he could not have given his approval in view of the action which he has taken in times past and, indeed, not very long past, because I can give the committee a case where the Postmaster General turned down the application of several Canadians who served overseas in the Canadian army and gave the position bo a man who served in the British army.


Some hon. MEMBERS:: Order.


John Wesley Edwards: What is
out of order in that? I do not know whether hon. gentlemen opposite characteristically want to exercise their lungs or not, but there is no reason or common sense back of their cries. I am calling the attention of the committee to the fact that a few months ago the government itself did not feel inclined to follow out the suggestion made now by the hon. member for Quebec South (Mr. Power) and I am prepared to give a specific case in which they departed from that very principle which is now so loudly applauded on the other side of the house.


Charles Gavan Power: It may be a reform from
within.


John Wesley Edwards: The policy
followed by the government in the past has not been that proposed by the hon. member for Quebec South. The policy has been on

National Revenue Act
the contrary to recognize returned soldiers who served in the British army and who after the war came to Canada and took up their residence here in preference to those who served in the Canadian army.


Mr. ROSS (Kingston):: Does the amendment to the amendment include Canadians who served in the air force?


Charles Gavan Power: My amendment is by no means perfect. I am going only as far as I can in the short time I have at my disposal. If any hon. member wishes to add any other class, I have no objection to giving that my support.


Arthur Edward Ross: Perhaps the hon.
member had better hold his amendment for a while and make it perfect. If these men are not included I wish to protest because some of the best Canadians served in the air force. As there was no Canadian air force they served in the British army and we have hundreds of them here. The bravest, most courageous Canadians served in that force and I obj eet to their omission from the amendment.


Charles Gavan Power: Will my hon. friend agree
to some such subsection as this:
Or being resident in Canada at the outbreak of the war, served in the forces of His Majesty.
Or some words which would indicate that they are Canadian citizens and not citizens of any other country:
Or being resident or domiciled in Canada at the outbreak of the war, served in one or other branch of His Majesty's forces.
I am prepared to add that to my amendment.


Mr. KAISER:: The subamendment is not
clearly understood. I am first and foremost a Canadian. Nothing appealed more to me than to find so many native-born Canadians enlisting in various branches at the time of the war and I would be inclined to give a preference to Canadians who were resident and domiciled in Canada at the outbreak of the war over any other returned soldier who may have later on become a Canadian.
Mr. McQUARRIE. I appreciate what the minister has done but it is not entirely in accordance with the suggestion that I made. What I suggested to him was that he would include in his bill the provision in the Civil Service Act in regard to returned soldiers. The section to which I referred is subsection 4 of section 29 of the Civil Service Act. As it is rather long I will not read it, but there
is one class that is not taken care of in the amendment. It is included in these words:
Or when any persons who have served as aforesaid have died owing to such service, the widows of such persons.
The widows of those who served in the war should be given a preference but they are left out. I would suggest that the minister include subsection 4 of section 29i of the Civil Service Act in his bill.


Mr. EULER:: My hon. friend would hardly think widows would be acting in the class of officers such as are mentioned in the bill, namely, preventive officers. [DOT]


Mr. LAVIGUEUR:: I wish to second the amendment of the hon. member for Quebec South and I congratulate him upon bringing forward such an excellent amendment. We all say that charity begins at home; but too often we find that our returned soldiers are not given the preference but that some who served in the British army and who are not citizens of Canada are given the preference. The hon. member for Frontenac-Addington stated a few minutes ago that the preference was not always given to the returned soldier.


Arthur Edward Ross: Would the hon.
member consider changing the word "charity"? I do not think any soldier wants charity.


Henri-Edgar Lavigueur: I think we have confidence in the minister that he will not make such a mistake as the Civil Service Commission too often makes and that he will see that the preference is always given to returned men resident in Canada.


Mr. McQUARRIE:: In regard to the remark of the minister that I could not expect the widows to be employed in the preventive service, I might point out that women are now employed in the customs service and also in the preventive service. It seems to me that in some cases they would be very useful.


John Frederick Johnston: The amendment moved by the hon. member for Quebec South now reads:
That the said amendment be further amended by adding in the fifth line thereof after the words "military forces" the following words:
"or being resident or domiciled in Canada at the outbreak of the war, served in His Majesty's forces".


[Stage Direction]
Subamendment agreed to.
Section as amended agreed to.
Bill reported.
National Revenue Act
[Stage Direction]
Mr. EULER moved the third reading of the bill.
Richard Bedford Bennett: In amendment to the motion
for the third reading of the bill now proposed by the minister, I propose, seconded by Sir George Perley, the following amendment:
That the said bill be not now read a third time, but that it be referred back to the committee of the whole with instructions that they have power to amend the same by providing that (a) customs appraisers of all classes whether serving at the various ports and places of entry or as dominion appraisers; (b) All officers in the customs-excise preventive service; and (c) All officers assigned to duty as investigators of values and claims for drawback, shall be appointed by the Civil Service Commission after public competition and examination by the Civil Service Commission in association with such representatives of the department as may be named by the minister and any others that he may think necessary to properly determine their qualifications.
I do not propose to trespass upon the time of the house further than to say that it is essential that we should maintain in its integrity the principle of appointments to office being made by the Civil Service Commission. I yesterday directed attention to t)he observations made by the hon. Minister of National Revenue (Mr. Euler) when as a member of a select committee in 1921 he pointed out that technical and professional positions dhould only be filled after consultation between the Civil Service Commission and the deputy head or head of the department that might be affected.
The amendment which we now propose is one that in practice has been found to work out satisfactorily. Upon inquiry I find that only within the last three weeks or less it has been necessary to appoint appraisers, and that an examination was conducted by the Civil Service Commission, with the aid of officials named by the department, together with two business men in Toronto, who assisted in determining the qualifications of the various applicants.
What we ask is that in a matter of this kind, where very important interests are involved, there should be afforded the opportunity by public competition to select those persons who, by reason of the examination they have passed, and the demeanor they have shown before the minister or the deputy or the persons named by him and such other persons as may be selected for the purpose by the minister, have demonstrated their fitness to discharge the duties of the position. Appraisers, drawback investigators, and those in the preventive service, will thus be selected from a body of men whose political faith need not and will not be considered at all. The
[The Chairman.]
bill as it now stands provides that the recommendations shall be made in a certain way, and that really the minister himself shall determine who shall be appointed, and the Civil Service Commission is merely mentioned for the purpose, as I said yesterday, of permitting some use to be made of its name without in fact any value being attached to what it may do. Under these circumstances, without trespassing further on the time of the house in view of the engagements of the minister, I merely content myself with moving the amendment, and protesting against removing from the jurisdiction of the Civil Service Commission the appointment of these appraisers and drawback investigators, who will deal with very important matters in which political consideration may prevail, as well as in the performance of their duties by members of the preventive service, which is so very important.


William Daum Euler: The hon. leader of the opposition was very kind a few moments ago to congratulate me upon accepting an amendment which supposedly came from the other side of the house, and for which I was rather mildly censured by my hon. friend from Labelle (Mr. Bourassa), but which, by the way, leaves me quite unmoved. I wish I could congratulate my hon. friend similarly upon the introduction of his amendment, but I regret that I am not able to do so. I am not going to rehearse the arguments advanced yesterday. There is really nothing new in what the hon. leader of the opposition has suggested. He has simply put into formal words the objections which were voiced yesterday and to-day. I think there is nothing to be gained by arguing the matter any further. I would merely say this, that if the amendment were accepted, it would absolutely negative and defeat the purpose of the bill. There would really be nothing left. The purpose of the bill is to place in hands other than those of the Civil Service Commission the appointment of this small class of officers. That is the effect of it, and if the amendment were accepted, it would merely leave these appointments exactly where they were before, and for that reason I cannot accept it.


Mr. E. J. GARLAND (Bow River):: I do not feel that I can allow this bill to be finally decided upon by the house without at least placing myself on record with respect to it. I was somewhat astonished at the closing remarks of the minister who is in charge of this bill. He has just said that the amendment of the hon. leader of the opposition (Mr. Bennett), if accepted, would negative the whole purpose of the bill. A hasty scrutiny

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of the debate yesterday rather led me to the momentary conclusion that the minister's whole argument yesterday was that the purpose of the bill was to improve, if possible, the personnel of his staff.


William Daum Euler: Quite so.


Edward Joseph Garland: In other words, that he would maintain the merit system. That was the impression he intended to give to the house. But now he says that the actual application of the merit system under the Civil Service Commission would negative the purpose of the bill.


William Daum Euler: I say nothing of the kind.


Edward Joseph Garland: That is the effect. I think it would pay hon. members, it would pay me at least, to scrutinize for a moment or two the bill itself, and to find out where it is going to lead us. We find, in the first place, the motive behind the bill, and we conclude that the Minister of National Revenue must have no confidence in the present Civil Service Commission. If he has confidence in the Civil Service Commission and in their ability properly to examine and select the individuals required by his department, then naturally there would be no object in this bill whatever. Therefore I am fair in asserting-I await contradiction from the minister if I am wrong-that he has no confidence in the present Civil Service Commission, in so far as their ability to select the personnel of his staff is concerned. All right. That being the case-


William Daum Euler: You are assuming too much.


Edward Joseph Garland: -the minister says, I am going to erect a suitable body of examiners within my own department. I am going to establish an examining body within the Department of National Revenue, and ask them from time to time to examine and make selections from those who may apply for these positions. That will be a body in which I have confidence, and naturally I shall feel that the persons they select will be of value to me. But before adding - them to the personnel, I shall refer their names to the Civil Service Commission for a decision from that incompetent body from which I am taking away the whole administration of this work. He is in effect saying: I have a board within my department in which I have confidence, and which is competent to select the proper applicants, but in order to delude the public, in order to blind their eyes to the real facts of the matter, I am going to refer their names to the Civil Service Commission with the proviso that if
within fifteen days they do not approve of the nominations by the departmental advisory board, the governor in council shall decide. Well, Mr. Speaker, I have my own opinion about the decisions of the governor in council. In effect, this is patronage at its very worst. The situation then, briefly, is this. The minister is going to place these particular positions which are mentioned in this bill definitely under the administration of wide-open patronage.
I think it would be as well for the minister before voting finally on the bill-although I have no hope of changing his course-to turn his attention for a moment or two to the situation in the United States. It is not all that it might be, but it is a good deal better than it was some time ago. We all know of course that whatever government is in power seeks to restrict the operation of appointments under the merit system. All governments, irrespective of party, desire more definitely the restoration of the patronage system, but particularly is this the case with the present government. In fact its predecessors introduced the merit principle. In the United States I find that exactly the same excuses were used for the continuation of patronage in making appointments to the civil service that the minister is now using for wide-open patronage in his department. When the Volstead Act was passed by congress appointments to the prohibition enforcement bureau were exempted from the provisions of the civil service law, on the plea that it would be necessary for the executive to be free to get men of character to enforce the law. I need not call the attention of the house to the results. They were certainly notorious and hopeless, and were best descirbed in the organ, known as Good Government, published by the Civil Service Reform League of the United States, in these terms:
Everyone knows that a large proportion of that force is composed of grafters, thugs and miscreants, who not only take bribes, but are guilty 'of unlawful acts of violence.
And further:
In the beginning the league pointed out the probability of this result if the positions were exempted from the provisions of the civil service law, and has endeavored constantly to procure an amendment of the law which would classify the entire prohibition force without covering in the present members. . .
Certainly a force appointed after competitive civil service examination, and investigation of the character of the applicants by an independent body such as the Civil Service Commission, would eliminate a large proportion of such scalawags as are now appointed on political recommendations, and would vastly improve the character of the service.
The Winnipeg Tribune1, commenting upon that article, states:
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Abandonment of the merit system and resort to patronage in precisely that arm of the service which is most exposed to temptation, and resort to patronage where the work demands the most absolute integrity, is inexcusable. It is amazing to find responsible cabinet ministers so blinded by partisan prejudice and so selfcomplacent.
Very strong words. They are words that I would accept and voice as my own. It is not necessary, of course, to convince students of political science that the patronage system is not the system by which you will get men of high moral character and the best qualified for responsible positions. Contemporary history shows us that. As an illustration- I think it was used by the hon. member for Vancouver Centre (Mr. Stevens) yesterday- I was interested in finding out just how many of those persons who were recommended for dismissal by the customs commission had been appointed under the old patronage system or by -the Civil Service Commission. I wrote to the commission under date of April 17 last, and I have their reply in my hand, signed by the secretary, Mr. Foran:
Dear Mr. Garland,
In reply to your letter of the 16th instant, I beg to say that of the customs employees who *were recommended for dismissal or retirement by the customs committee, not one was an appointee of the Civil Service Commission. As regards the other employees who were mentioned in the evidence before the committee, I am not in a position to say whether or not any of them were appointees of the commission, but if you could furnish me with the names in question, I should be glad to have the necessary inquiry made,
Yours sincerely,
W. Foran,
Secretary.
Not one was an appointee of the Civil Service Commission. I am not going to be so discourteous to my hon. friend as to suggest for one moment that the appointments he is likely to approve of will be of the scalawag or the notoriously immoral or bad type; but I say definitely to him now that he is opening the way to the widest kind of patronage,, which in the very course of human nature will lead to just that condition of affairs at some time or other-possibly not during his control of the department. I hope not, at least, for I have a good deal of confidence in him. But he is weakening not only the position of the government with respect to the Civil Service Commission, but their declarations of their belief in the merit system.
The organ to which I referred just now, Good Government, reported in its issue of December, 1922 that:
The federal grand jury of New York denounced as "disgraceful" the management of the federal prohibition offices in New York city under the two chief enforcement officers, and 
gave as the reason for this condition the fact that appointments of prohibition agents and inspectors are made without competitive civil service examinations.


William Daum Euler: It may not be pertinent at
this point, but may I ask my hon. friend this question:	Would he say that the service
in the province of Alberta from which he comes, and the government of which he supports, is so bad? Because there, I understand, it is entirely a matter of political patronage.


Edward Joseph Garland: I seek no
shelter in the matter. I am absolutely opposed to political patronage in my own province, and I am using every effort I can with my own colleagues and friends to institute a civil service commission in Alberta. I am absolutely in favour of the merit system. The hon. gentleman can never frighten me with any references of that kind.


William Daum Euler: I disclaim any such intention.


Edward Joseph Garland: Note this.
-by _ an examining board on which the various interested parties would be represented. These would include the Department of Customs and Excise, presumably in the person of the chief of the preventive service

And in the event of appraisers, the chief of the appraisal staff.
-or such other officer-


Mr. DUNNING:: My hon. friend is partly reading from a letter and partly interpolating something of his own. Does that letter refer to the appraisers?


Edward Joseph Garland: I had not
even gone to the trouble of securing an expression of opinion in writing from the Civil Service Commission in regard to the appointment of appraisers, but about a week ago I went over there personally and interviewed Doctor Roche and Mr. Foran on the matter and they stated definitely that exactly the same system of examination will apply to appraisers that applies to the preventive service. That answers my hon. friend's question.


Charles Avery Dunning: It is much better to read the letter.


Edward Joseph Garland: I am glad
my hon. friend has called my attention to the point. The letter states:
These would include the Department of Customs and Excise (presumably in the person of the chief of the preventive service, or such other officer as might . be designated by the deputy minister), the Commercial Protective Association, or such other body or bodies as might be necessary to represent the interested manufacturers and retailers of Canada, and the Civil Service Commission; and assistance from the Royal Canadian Mounted Police and trained investigators such as Mr. Walter Duncan would also be enlisted.
i. The factors on which applicants would be examined and on which the selection for appointments would be made would include: experience in investigational work; intelligence and powers of observation; knowledge of criminology and customs problems; integrity and good moral character. I need not add that an examination is not necessarily academic in character, but that its subjects vary according to the qualifications required for the proper performance of the work, and that "scholarship" in the accepted sense of the word, "essay writing" or "ability to count in decimals," as quoted in your letter of March 19th last, would form no part of an examination for this type of position.
5. Those candidates finally selected would be subject to a rigid investigation as to their integrity and trustworthiness; and on the basis of an examination conducted as above, with the sole aim in view of securing the best possible men available in Canada for this important work, and with freedom from pressure of personal or other considerations, I am confident that the right type of officers, satisfactory alike to the department and to the public, could be secured.
There was one other point which, as it happened, I took care to raise with the commission-a point that was raised last year. I refer to men whose names, because of the nature of the occupations they fill, the department prefers as far as possible not to make public. I took up that point with the Civil Service Commission and the following is the answer:
The necessity for the publication of the names of the successful candidates in the Canada Gazette could readily be obviated by the insertion in the item of the estimates providing the necessary appropriation of a clause "These appointments shall be made under the Civil Service Act except as regards section 39 (1),"
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this being the clause in the act providing for the publication in the Canada Gazette of the names of the successful candidates.
Yours truly,
W. Foran,
Secretary.
That, to me at least, provides a conclusive answer to practically every argument raised by the Minister of National Revenue yesterday.
Now I am not going to quote what the Minister of Justice (Mr. Lapointe) has said in the past, nor am I going to quote the Prime Minister (Mr. Mackenzie King), the Minister of Immigration (Mr. Forke), and others whose statements have already been given. But I do not think that the complete statement of the Minister of National Revenue has yet been put on Hansard this year. It would not be fair to him to have a sentence or two torn from the context and the public left to draw their own conclusions therefrom. I shall therefore quote from Hansard, pages 4414 to 4417, June 1, 1921. The Minister of National Revenue, then plain Mr. Euler, said:
For my part, I believe that the amendment proposed to section 38 of the present act does make it possible to destroy the vital principle of the act, namely, the abolition of political patronage ... I am under the impression that the commissioners have tried to carry out the act honestly and in accordance with what was expected of them by parliament.
The only change that has taken place in the commission since that day is that two of the members of the then commission have been dismissed and their positions filled by my hon. friends opposite. The hon. member continued:
It is quite conceivable that we may have n majority of the members of the Civil Service Commission composed of men who honestly believe that the civil service should be controlled by political patronage. There are members of this house who believe that and they have a perfect right to that belief. But if we had that condition we would necessarily fim' that the commission would divest itself of all its powers and the whole civil service would lapse back into the old practices of political patronage. I do not see how it could be otherwise.
Mr. Calder then interrupted:
The hon. gentleman forgets that parliament sits from year to year.
Mr. Euler: If, as I begin to suspect, a good many members are rather in favour of the return of political patronage, that perhaps would not be a safeguard.
Mr. Sexsmith: Is it the hon. gentleman's information that under the old law political patronage was done away with?
Mr. Euler:	I am not qualified to speak
on that but I know it is done away with as far as I am personally concerned. I never was

given the opportunity to exercise it, nor do I desire it . . . So far as I am personally concerned I am opposed to the system of political patronage as it obtained in the past. ... It is nevertheless true that the advantages of that system are far outweighed by its disadvantages.
Those are the words of the Minister of National Revenue who to-day is asking the house to give third reading and sanction to a bill which has within it the widest type of political patronage in its very worst aspects, because not only does the minister quite frankly come out and say, "I am seeking political patronage in the matter and I want to have the administration of all appointments in my department", but he attempts to befog the question in a peculiar paragraph wherein he undertakes to refer to the Civil Service Commission for a period of three weeks or fifteen days, the names of those whom he has selected.
Let me say frankly that I have known the hon. gentleman for some seven years and have admired his political record. But I had not thought that he would ever, simply by joining a government such as the one we have opposite, come to such a pass as to attempt to deceive himself, in spite of his own convictions, in a matter of this importance. I had placed in my hands this morning a little note with reference to this question. It is of such merit that I feel it ought to go on the record. It reads:
This is the age of wonders! Among the more recent marvels is a new complete compilation of the Standard Dictionary, Noah Webster's and all other kinds of English speaking vocabularies. Supporters and voters of the present Liberal government will hear with justly inflated pride that this work is being undertaken by the cabinet of the present administration. Slow but sure is the motto, or one word at a time, and the launching of the plan has been entrusted to the Hon. Mr. Euler, Minister of National Revenue. The word he has chosen for the initiation of his prodigious effort is the word "merit."
The former and now archaic meaning of "merit" is well known. As applied to government service it used to imply competition for positions, open and free to all alike, and the Civil Service Commission was utilized to see that this was done.
Our modern Sir Galahad of pure English has changed all this. In future Mr. Euler will write as follows to the Civil Service Commission:
"Dear Commission:-Some of our good friends in the maritimes, who are staunch adherents of our heaven-born party, have asked me to appoint a zealous party worker as an appraiser, in the civil service. His name is Hurry Makem-vote. I will be obliged if you will put your convenient rubber stamp on this name within 15 days, or, if you do not, I will have the governor in council do so for me."
We are familiar with the Liberal arts and artifices. J7ow observe the fine, complex of

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this Liberal-party rendition of generic definitions. Mr. Euler elucidated his expansive theory as to the new meaning of the word "merit" in the House of Commons on Tuesday, the 8th instant. Referring to the plan outlined in the above proforma letter to the commission, he said:-"There is to be no interference with the Civil Service Act."


William Daum Euler: May I ask my hon. friend
from what he is quoting?


Edward Joseph Garland: I am just
quoting a letter which an indignant supporter of my hon. friend's party placed in my hands this morning, and I suggest that it shows the public attitude in regard to this matter.


William Daum Euler: Surely if my hon. friend is
going to read a letter in this house he should state from whom he received the letter.


Edward Joseph Garland: Let me put the mind of my hon. friend at rest by taking responsibility for it myself.


William Daum Euler: Then my hon. friend wrote
it to himself?


Edward Joseph Garland: We will so
assume, for the purpose of this discussion. Now if my hon. friend is satisfied perhaps we can continue:
Old meanings are as chaff to this new Liberal school of thought. The magician has waved his wand and presto! words renounce their parent derivations and become converts to the exact reversal of their original meaning.
That is the fact; that is why I noted with astonishment the opening and closing remarks of my hon. friend this afternoon in answer to the leader of the opposition.


Charles Gavan Power: I rise to a point of order.


Edward Joseph Garland: Just wait till I finish.


Charles Gavan Power: I am rising to a point of
order. Some years ago Mr. McMaster, the then member for Brome, read what was said to be an imaginary letter having reference to the actions of a certain Mr. Wigmore.


Edward Joseph Garland: This is not an imaginary letter; it is right here, and my hon. friend can see it with his own eyes.


Charles Gavan Power: It was said to be an
imaginary letter, or at least a letter written by some person with an imagination. A letter somewhat similar to that which the hon. member now seeks to place on Hansard was read by Mr. McMaster. Debate with regard to the propriety of such an action took place in the house and the Speaker, Hon. Mr. Rhodes, ruled that this letter could not be read into Hansard, and I believe on the following day 56HJ3-195
he ordered it to be deleted. I now ask Your Honour for a ruling in connection with this letter.


Hewitt Bostock: If the hon. gentleman has reference to a letter written by a former Minister of Customs, I may say that I read that letter myself in the course of a debate in this house.


Mr. CANNON:: That was the letter which brought on the incident, but it is not the letter to which my hon. friend is referring.


Hewitt Bostock: What is the point of
order? What is the objection to the hon. member reading the letter?


Charles Gavan Power: The point is this:	I am
under the impression that my hon. friend is reading into Hansard an unsigned letter which he says we may take as coming from himself. For all practical purposes it is an unsigned letter, and the hon. gentleman refuses to reveal the name of the author. I submit, sir, that he has no- right to read such a letter into Hansard. If he is making a speech of his own, let him do so, but if he reads a letter he must say from what source it comes.


Edward Joseph Garland: The letter which I am reading is one for which I take the full responsibility, and if it will ease the mind of my hon. friend I will sign a copy and give it to him as a souvenir.


Charles Gavan Power: I do not think my hon.
friend can write letters and pu-t them on Hansard.


Hewitt Bostock: A moment ago I heard
the hon. gentleman say that the letter was from himself; if he now says the letter is unsigned it is a different matter. Such a letter should not be read into Hansard; all letters when read must be signed and they become part of the documents of the house. Am I to understand that the hon. gentleman has not signed the letter?


Edward Joseph Garland: If that is
required to comply with the rules I have no objection to signing the letter.


Hewitt Bostock: Very well; there is no
objection.


William Daum Euler: I would like to know whether the hon. gentleman will say whether or not someone else has signed that letter.


Edward Joseph Garland: No, it is
unsigned.


Mr. LAPOINTE:: Then how can you say
it is from an indignant supporter of the government?

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Edward Joseph Garland: I would
refer the minister's obtuse mind to the extraordinary terms used in the letter; if that does not satisfy him that the supporter is indignant, nothing will satisfy him.


Ernest Lapointe: He may be indignant,
but it does not satisfy me that he is a supporter of the government.
Mr. SPEAKER. I understand that the letter is signed by the hon. member?


Edward Joseph Garland: Yes.


Mr. MacLEAN (Prince):: May I ask to
whom the letter is addressed?


Edward Joseph Garland: My hon.
friend should not worry so much about it; the letter is not addressed to anyone. The continuation of this excellent contribution to this discussion deals with the remarks made by the Minister of Justice, the Prime Minister, the Minister of National Revenue and others, in this way:
Mr. Lapointe said in 1921, "I do not believe in political patronage."
Now we begin to see just exactly what he did mean. We really thought at the time he did not believe in patronage, but now we find that he is going to vote for this bill, which is nothing else but political patronage. We find that the Prime Minister a few years ago said that he stood strongly for the merit system, but now we find him throwing those sentiments to the winds. What did he mean? Then the Minister of National Revenue stated, in absolutely unequivocal terms, that he never wanted to exercise political patronage in any shape or form, but now he sets up a system within his department under which he brings within his control or the control of the cabinet the appointments to these positions.


William Daum Euler: Does the hon. gentleman
say that the Minister of National Revenue is deliberately doing this in order to exercise patronage?


Edward Joseph Garland: Not at all.


William Daum Euler: That is the impression my
hon. friend is seeking to leave.


Edward Joseph Garland: There is
no doubt that patronage will be exercised; I am sure the minister has no delusions in the matter. I ask him frankly to state definitely to the house that patronage will not be exercised and that he will not befriend his friends.


William Daum Euler: There is only one primary
principle which will be observed, as I said yesterday; efficiency will be the determining factor in the appointment of these officials.


Edward Joseph Garland: I have
suggested to the minister a method by which the Civil Service Commission can make these appointments with exactly the same result.


William Daum Euler: Does my hon. friend think
the evidence of prejudiced parties should be received with the same respect accorded evidence from anyone else?
Mr. GARLAND (Bow River). Is not my hon. friend a prejudiced party?


William Daum Euler: The minister is responsible
for the department, while the Civil Service Commission is not.


Edward Joseph Garland: They are both government bodies. Arguments of that kind are ridiculous, and indicate the paucity of argument which can be found in support of this bill. The conclusion to which I have come, and to which I have been coming during some seven years in this house, is that the Liberal party have definitely foresworn their alleged adherence to the merit principle as far as federal politics are concerned, due to the very force of opinion within the party. The ministers are slowly and steadily invading the rights of the commission, depleting those rights and emasculating that commission so that, if this government remain in power much longer, when they are defeated there will be no Civil Service Commission left, or such a useless commission that it will be a joke to the public of this country.


Charles Avery Dunning: Will my hon .friend
permit a question there? He has been speaking of the principles of political parties in relation to this matter. What are the principles of the United Farmers of Alberta in this regard?


Edward Joseph Garland: I have
stated exactly my position.


Charles Avery Dunning: I asked my hon. friend
his party principles; he has been discussing ours.


Edward Joseph Garland: I do not
know. I do not represent the United Farmers of Alberta in the provincial house. I represent an organization which has declared, time and time again, definitely against patronage in any form.


Charles Avery Dunning: There is then a difference in the United Farmers of Alberta?

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Edward Joseph Garland: The minister is attempting to draw a herring across the trail, but he cannot do it in this case; he is not going to delude me at all. I will say to the Minister of Railways that I believe, if he were permitted to undertake the organization of a proper civil service commission, in which he would have some control and could oversee the appointment, he would, having the experience he has had in this country in respect to the question of political patronage, support the merit principle. I think he will admit that he is behind the merit principle himself.


Charles Avery Dunning: Any man who is responsible for the administration of any business wants to apply the merit principle, but he may desire to apply the merit principle by appointments in connection with which those who have responsibility for the administration will have something to say. The question is not one of the merit principle, but it is as to who shall determine who has the necessary merit; that is all. We may not be so far apart as my hon. friend may think.


Edward Joseph Garland: I have
given the minister an excellent illustration from the Civil Service Commission themselves of how they can serve the purpose to the very end which the government state they have in view; yet they reject that and proceed with this scheme. The appointment of appraisers, preventive officers and investigators is to be accomplished within the department. The department will refer the names they may select to the Civil Service Commission, but if they do not appoint them within fifteen days, then they will be appointed by the governor in council. I heartily support the motion of the hon. leader of the opposition, and I hope this bill will be voted out.
Hon. CHARLES A. DUNNING (Minister of Railways and Canals):	I would just like
to say a word in connection with the arraignment of the political parties by the hon. member who has just sat down.


Edward Joseph Garland: I rise to a point of order. I did not criticize the political parties; I have criticized, throughout my entire statement, the application of patronage by political parties.


Charles Avery Dunning: My hon. friend arraigned the Liberal party, and I am in the judgment of the house whether he did or not. I asked a question as to what principle the United Farmers of Alberta followed in regard to this matter, and my hon. friend's answer was in 56103-1954
relation to his own personal principle. I would respectfully point out that apparently the United Farmers of Alberta have one policy provincially, and the policy advocated by my hon. friend with reference to federal affairs is another policy in connection with the same matter.
When my hon. friend is accusing me on this side of the house, belonging to this party, as being insincere in the matter, and using the expressions that he has, I think it is only right and just that there should be given, as a matter of public record, the position of his own party in the matter.


Mr. IRVINE:: Will the minister describe
how the United Farmers of Alberta appoint civil servants in Alberta?


Charles Avery Dunning: I know very well that
principle advocated by the member for Bow River does not exist in Alberta-my hon. friend from Bow River will be the last to deny it, because he admits himself his party is not operating in Alberta by the application of what he describes as the merit principle -because if my hon. friend is advocating, in the provincial field, the application of such a principle, surely that is evident that it does not exist there to-day.


William Irvine: It does.


Edward Joseph Garland: It does not exist to the extent that we have not yet a civil service commission. My information is that the Alberta government has a committee appointed for the purpose of deciding whether it will be advisable to have such a civil service commission there or not.


Mr. JOHN EVANS (Rosetown):: Looking on this bill, as I do, as being a retrograde step on the part of the government, after the operation for some years of the Civil Service Commission, I may be pardoned if I wish to take a few minutes in recording my views on this question. I would ask also that the views of the customs officials of my own province, and other western provinces, be recorded.
The Minister of Railways just asked what was the principle of the United Farmers of Alberta regarding this question. I think that he of all men should know that the large organized farmer bodies in western Canada have for years advocated the adoption of the merit system. He has been a member of these bodies, and the Canadian Council of Agriculture has for many years maintained as one of the planks in their platform abolition of political patronage.
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I cannot help but remark that there has been a tendency for some years to discredit the work of the Civil Service Commission, and the cabinet now seems disposed to make all the appointments possible, and to ignore the Civil Service Act. It is surely admitted that since confederation the need has been felt for one central co-ordinating body, to take cognizance of the various departments of the public service, to harmonize and to give system and unity to the whole administrative organization.
In looking up this question during the past few days I find that Sir George Murray, in his report of 1912, emphatically declared that duplication and topheaviness in the various departments was due to the want of some co-ordinating authority empowered to deal with the staff and organization of the departs ment, so as to secure the utmost eoonomy and efficiency in the public service. I feel that the present dissatisfaction-indeed, I was going to say chaos, and perhaps that word is not too strong-is due to the want of a body whose authority and jurisdiction would cover the whole service. I think it is wrong at the present time to undermine the work of the Civil Service Commission by an act of this kind.
In the report of the commission in 1918 regarding the printing bureau, I find they said that under any but governmental ownership the sheriff would long ago have closed the door. In the report of the parliamentary committee of 1923, the question of the co-ordination of the activities of the government was dealt with at considerable length, and several precedents were quoted. In this connection the following recommendation was made:
Another proposal which merits exploration, is an appropriate adaptation of the so-called "Business manager plan" which has evoked universal commendation in its application to municipal government.
It is to be feared that during the life of the last parliament some of the evils were accentuated by the fact that too many appointments were made notwithstanding the Civil Service Act. I cannot look upon the present bill but as a part of a plan for the continuation of that practice.
A man who has been in the civil service in Ottawa for a good many years came into my office a little while ago and said that he was tired of the whole thing. He stated that in the room in which he worked there were as many as eleven employees and he assured me that seven or less would be sufficient to do every bit of the work that was needed to be done in that roorp. He was an honest boy
[Mr. Evans.l
and the impression he left was that he was never allowed to do his best and that he was tired day after day of having to kill time.
Instead of the government taking upon itself the appointment of civil servants to administer certain branches in the several departments, it should without delay so augment the commission, if need be, that some co-ordinating method might be adopted in the service either by a kind of general manager or some central authority who could oversee the work of all the departments and branches without the terrible waste and overmanning which now exist and which in themselves are not only very expensive for the country but degrading to the employees themselves, as the effect must be detrimental to the character of everyone. As I said the other day, it has surprised me that a bill of this kind has come forward, especially seeing the views of the ministers so well recorded in Hansard some years ago. I first of all look at the words of the present Minister of Justice (Mr. Lapointe), who expressed himself on March 11, 19211, as follows:
Mr. Speaker, I endorse the remarks of the hon. member for Maisonneuve (Mr. Lemieux) and I am opposed to the resolution moved by the hon. member for Victoria. I do not believe in political patronage. It has been tried in many countries of the world, and it has been found wanting everywhere. I think that positions should go to merit and never to influence, on the part either of the candidates themselves or of their families, and I am opposed to nepotism in the distribution of public offices. . . There is one matter I wish to deal with for a moment or two, and that is the fact that this government is not giving proper support to the Civil Service Commission.
Those are the words of the present Minister of Justice. Then again I have the words of the present Prime Minister (Mr. Mackenzie King), and while I do not want to read the whole of the para,graph which I copied from Hansard some time ago, I will read one sentence. On May 2, 1921, lie said:
If there is need for consideration of any amendments to the Civil Service Act, let it be undertaken by a committee of the house formed for that particular purpose, but do not let us proceed with a series of destructive enactments in the form of a bill, everyone of which tends to weaken the scope, the authority and the usefulness of the Civil Service Commission.
Surely one cannot help wondering now that the whole cabinet are behind a bill of this kind which is absolutely contradictory to their own words, views and sentiments and, one would have thought at the time, to their action had they been in a position to put their words into effect. Instead of co-ordination and elimination, what do we find? There is a tremendous waste of time and money and many hon. members have advocated a return

National Revenue Act
to the old patronage methods. This is surprising to some of us on this side. It may be that in the past we have not had the right men on the Civil Service Commission, but before I would blame that body for all the ills existing in the public service to-day I would blame some of the shortcomings of the government in not upholding the hands of the commission in their duties. Moreover the commission undertook to direct a work that had been carried on for a number of years under perhaps the most debasing system that was prevalent in any country, the old political patronage system, which I believe was carried on to its fullest extent in this country with all its resultant work of favouritism and inefficiency. This class of appointment is the very last that should be put outside of the scope of the Civil Service Act and I am more than surprised at the Minister of National Revenue coming forward with this bill. I have looked on the debauch in the service of collecting the national revenue during these years as practically traceable to the patronage system and I am surprised that the minister himself to-day would want to assume responsibility for the appointment of those officers who perhaps are more responsible for the efficient collection of the revenue than any others.
According to the bill the Minister of National Revenue will have a board of examiners set up to determine the fitness of applicants, a board not responsible at all to parliament or in a way to himself, a board which will not be in any sense responsible for the work of the appointees. The Prime Minister, as reported on page 2847 of Hansard of May 2, 1921, used these words in a discussion on the Spinney bill:
This bill specifies three classes of appointments which are to be taken out of the hands of the Civil Service Commission and transferred to the government, thereby permitting the government's followers, in all certainty, to make recommendations which the governor in council will act upon. That is a step entirely in the wrong direction. .	. Now, Mr. Speaker,
these facts make it wholly apparent that if a measure of this kind is permitted to pass even the second reading it is setting back in a very real and substantial way the efforts of the past few years in the direction of civil service reform. .
If the whole responsibility of the civil service was on the commission, that body would at once take means to eliminate the overmanning, duplication and inefficiency. It is one of the most deplorable features of our civil service that all underlings are likely to be placed in a position that prevents any development in ability, because they are not allowed to do their best; and inefficiency must be the result. That this is the case
I have been convinced. Can anyone imagine what the detriment to the individual character must have been in the printing bureau before the last reorganization took place? From an editorial in the Toronto Globe of June 4, 1925, I gather that the sum of $744,000 was saved by that reorganization, and that economies and adjustments made in the Post Office department have affected a saving of $850,000. From the same paper, of the same date, I read these words:
If economies in the Interior department were effected similar to those in the printing bureau, as estimated by Dr. Roche, it would mean a saving of at least $1,000,000 or more a year.
Again, from another journal, a supporter of the government, I believe, the Ottawa Citizen, I read that it has been conservatively estimated that $25,000,000 could be saved by a thorough reorganization of the public service and the adoption of efficient business management. I think the average taxpayer would say that the money was needed, and was worth saving, and it could be applied to the reduction of the national debt.
From the tone of the government during the last six or seven years, one is bound to come to the conclusion that their desire is to return to the old patronage system. I should like to see the control of the civil service free entirely from party politics. There must be a connection somewhere, but in any event the Civil Service Commission should in no way be subject to the party in power, but should be composed of men who would make of the commission a body independent and responsible. A recapitulation of the facts of the last few years I think would show that our civil service is practically made subservient to partyism, and I think that the minister of National Revenue in the enactment of this bill is only creating for himself great difficulties in cleaning up his department of some abuses which we know to exist, and this bill will only make it harder still for him to get efficiency. That the civil servants who are in the customs service in Saskatchewan and Manitoba realize this is evidence I think that they see a danger ahead in this respect, and I would ask the government even at this late date to reconsider before placing an act of this kind on the statute book. I cannot but look on it as a part of a scheme to undermine the work of the Civil Service Commission. I felt that I could not let this opportunity pass and that I would not be doing my duty if I did not raise my voice in protest against such a thing.
Mr. HENRI E. LAVIGUEUR (Quebec-Montmorency) (Translation): Mr. Speaker,
National Revenue Act

if I am not mistaken this bill has for its object to amend the Act concerning the National Revenue Department so as to remedy the situation in regard to certain appointments among the higher officials in that Department. Among other things, it is stated:
"(4) The Minister may, after such examination as he may prescribe, select and nominate suitable persons for appointment by the Civil Service Commission, to positions appertaining to any of the following classes of offices,-
(a)	Customs appraisers of all classes whether serving at the various ports and places of entry or as Dominion appraisers;
(b)	All officers in the Customs-Excise preventive service;
(c)	All officers assigned to duty as investigators of values and claims for draw-back.
If such appointment is not made by the Commission within fifteen days from the date of notice to it of such selection and nomination, the Governor in Council may, on the recommendation of the Minister appoint during pleasure any such officer.
The officers so appointed by the Commission or by the Governor in Council, as the case may be, shall be paid such salaries or remuneration in accordance with civil service regulations as may be determined by the Commission or the Governor in Council respectively, and the Minister may appoint the times and manner in which the same shall be paid.
Mr. Speaker, what influenced the hon. Minister of National Revenue (Mr. Euler), to introduce this amendment to the Act concerning the National Revenue Department, was that after the famous inquiry on the administration of the Customs Department, the Commission carrying out this inquiry, recommended particularly to the government that a reorganization should be carried out.
Furthermore, such recommendations were made by the Commercial Protective Association. The minister accepted the recommendation of the Commissioners, and also those of the Association, and after giving them careful consideration, he thought fit to introduce this bill, so as to co-operate in the appointment of the higher officials in his Department. In my opinion, this does not take away from the Civil Service Commission the right of making the appointments, seeing that they are to be asked to make such appointments; but the Department would co-operate with the Commission in selecting the most capable, competent and qualified persons to fill these positions.
The Minister as well as the heads of his department are acquainted with the needs of the department; they have a knowledge of the important duties to be carried out; they certainly are in a position to advise the Civil Service Commission or the Governor in Council in regard to these appointments.

The hon. Minister of National Revenue in introducing this measure, thought it would be in the interest of both his department and the country. He informs us that it is not done with the object of bringing about political patronage; I am satisfied of this fact.
I find it strange that the leader of the opposition and his first lieutenants so strongly oppose this measure. Evidently these gentlemen do not always practice what they preach, because I remember that at the last general election, and previously, candidates of the opposition taunted us in this way: "You are in power since 1921. When we were at the helm of affairs we tried to decrease the powers of the Civil Service Commission, in 1921, by a bill introduced by one of our leaders the Hon. Mr. Spinney, and purporting to take away from this Commission, the authority of making appointments which it was not in a position to judiciously make, and you were opposed to it. You are in power since 1921 and you have kept up the Civil Service Commission. We pledge ourselves that should we be returned to power in 1926, one of the first acts of the conservative government will be to dismiss the Civil Service Commission.
I myself heard Conservative candidates make this statement and on many occasions at political meetings. To-day, the Minister of National Revenue in the interest of his department and the whole country, wishes, not to ignore the Civil Service Commission, but to co-operate with it in order to select the best officials available for his department, and this, as I have previously mentioned, to conform with the recommendations of the Commission of Inquiry and those of the Commercial Protective Association. Well, Sir, I repeat again to those who so strongly oppose this bill, that they are not sincere and consistent, since their candidates proclaimed the contrary at the last general election.
My views, Sir, as regards the Civil Service Commission are well known. I had the opportunity of referring to it many times in the house, and I shall never let the occasion slip by to state that I am absolutely opposed to that Commission.
I congratulate the hon. Minister of National Revenue who is seeking to remove a certain control and prerogative from the Civil Service Commission. I should like to see all his colleagues in the cabinet follow his good example and act in the same way for each of their departments.
Why do our hon. friends of the opposition, who are so strongly in favour of the Civil

National Revenue Act
Service Commission and taunt us when we dare criticize the Commission, not ask that all appointments be made by the Commission? Is it not a fact that all the most important appointments are made without consulting it. When it is a question of appointing a judge, it is not the Civil Service Commission that makes the selection but the government, and I believe that all such appointments have been judicious ones. When it is a question of selecting higher officials such as deputy ministers, the clerks of both houses, the Civil Service Commission has no word to say in the matter, they are appointed by the government. The same thing happens when ministers' secretaries are appointed and this procedure is followed for many other appointments.
Would our friends of the opposition approve of having all appointments made by the Civil Service Commission, even those of judges, senators and all positions pertaining to the administration of the country? Such is not my opinion and I have often stated so in this house. I think that the minister who devotes his time to the interests of his department and makes a complete and serious study of it, is better qualified than the Civil Service Commission to select the best officials for his department.
I feel confident, Sir, that the house will approve the request of the hon. minister of National Revenue and will support the measure which I consider of the utmost importance and in the interest of the whole country. I shall therefore give it my entire support.


Mr. BRADY:: I was paired with the hon.
member for Winnipeg South Centre (Mr. Thorson). Had I voted I would have voted for the amendment.


Mr. VENIOT:: I was paired with the
hon. member for York-Sunbury (Mr. Hanson). Had I voted I would have voted against the amendment.


Mr. TUMMON:: I was paired with the
hon. member for Chambly-Vereheres (Mr. Langlois). Had I voted I would have voted for the amendment.


Mr. TOBIN:: I was paired with the
hon. member for Toronto-Scarborough (Mr. Harris). Had I voted I would have voted against the amendment.


Mr. SIMPSON:: I was paired with the
hon. member for Pontiac (Mr. Cahill). Had I voted I would have voted for the amendment.


Mr. ANDERSON (Toronto-High Park):: I was paired with the hon. member for Hull (Mr. Fontaine). Had I voted I would have voted for the amendment.
Mr. McLEAN (Melfort). I was paired with the hon. member for Inverness (Mr. Mac-dougall). Had I voted I would have voted against the amendment.
[Mr. LavigueurJ


Mr. PECK:: I was paired with the hon.
member for Bagot (Mr. Morin). Had I voted I would have voted for the amendment.


Mr. BELL (St. Antoine):: I was paired
with the hon. member for Beauhamois (Mr. Raymond). Had I voted I would have voted for the amendment.


Mr. MERCIER (St. Henri):: I was paired with the hon. member for Hamilton (Mr. Bell). Had I voted I would have voted against the amendment.


William Garland McQuarrie: I was paired with the
hon. member for LTslet (Mr. Fafard). Had I voted I would have voted for the amendment.


Mr. BOWMAN:: I was paired with the
hon. member for East Middlesex (Mr. Hod-gins). Had I voted I would have voted for the amendment.


Thomas Langton Church: I was paired with the hon. member for Jaeques-Cartier (Mr. Rheaume). Had I voted I would have voted for the amendment.


Mr. GUTHRIE:: I was paired with the
hon. member for Chicoutimi (Mr. Dubuc). Had I voted I would have voted for the amendment.


Mr. MANION:: I was paired with the
Minister of National Revenue (Mr. Euler). Had I voted I would have voted for the amendment.


Mr. KAY:: I was paired with the hon.
member for Wentworth (Mr. Wilson). Had I voted I would have voted against the amendment.


Mr. GEARY:: I was paired with the hon.
member for Laurier-Outremont (Mr. Mer-cier). Had I voted I would have voted for the amendment.
Mr. PARENT. I was paired with the hon. member for North Simcoe (Mr. Boys). Had I voted I would have voted against the amendment.
Motion (Mr. Euler) agreed to on same division reversed, and bill read the third time and passed.



SUPPLY-DUMPING DUTY

[Stage Direction]
The house resumed, from Tuesday, May 15, consideration of the motion of the Minister of Finance (Mr. Robb) for committee of supply, and the proposed amendment thereto of Mr. Anderson (Halton):

[Stage Direction]
That all the words after the word "that" be stricken out and the following substituted therefor:
"In the opinion of this house the necessary action should be taken by the government forthwith to effectively control the importation into Canada, either on sale, or on consignment, of natural products of a class or kind produced in Canada under conditions which prejudicially or injuriously affect, or threaten to prejudicially or injuriously affect, the interests of Canadian producers."
Mr. C. H. DICKIE (Nanaimo):: I had
about concluded my remarks last evening but there is one matter to which I had not time to refer, and which I shall just mention to-day, because I presume the house will be ready for another division as soon as I am through. This was the asparagus situation in Canada. It will be remembered that a Mr. Fisher appeared with the representatives of the fruit growers in a meeting not long ago and inquired what action could be taken in order to prevent cars of asparagus from coming in after the asparagus in Ontario was ready for the market. I do not recollect what the answer was. However, the Ontario asparagus was ready for the market on May 4, and on May 7 one car of asparagus from California was unloaded at Montreal. There have been several cars since. The government might have taken cognizance in some way of the inquiry of Mr. Fisher. I have here a telegram protesting against the importation of Washington asparagus into British Columbia when our British Columbia asparagus is also on the market. This matter I will take up with the minister. With these few remarks I conclude.


Thomas Langton Church: Mr. Speaker, I was paired with the hon. member for Jacques Cartier (Mr. Rheaume). Had I voted I would have vited in favour of the amendment.


Leslie Gordon Bell: Mr. Speaker, I was paired with the 'hon. member for Beau-harnois (Mr. Raymond). Had I voted I would have voted for the amendment.


Hewitt Bostock: The question is new on the motion that the Speaker do now leave the chair for the house to resolve itself into committee of supply.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The house in committee of supply, Mr. Johnston in the chair.
The Copper Bounties Act, 1923, administration, $250.
Mr. MALCOLM:: I move that the committee rise and report progress, and ask leave to sit again.
Progress reported.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


PRIVATE BILLS
[Stage Direction]
Mr. RENE MORIN (St. Hyacinthe-Rou-ville) moved the third reading of Bill No. 43, respecting the Bell Telephone Company of Canada.
Thomas Langton Church: Mr. Speaker, I have an amendment to offer, seconded by Mr. Irvine, as follows:
That said bill be not now read a third time, but that it be read a third time this day six months hence.


Mr. MORIN (St. Hyacinthe-Rouville):: I
rise to a point of order. The amendment is not in order as no notice has been given. According to the rules, notice of motion must be given beforehand.


Hewitt Bostock: Standing order 113 reads as follows:
No important amendment may be proposed to any private bill, in a committee of the whole house, or at the third reading of the bill, unless one day's notice of the same has been given.
Has notice of this amendment been given?


Thomas Langton Church: I have another amendment of which I gave notice yesterday.


Hewitt Bostock: I declare the amendment out of order.


Charles Avery Dunning: The member for Toronto Northwest (Mr. Church) cannot now move another amendment. He has exercised his right to speak on the third reading in moving the amendment which has been declared out of order.


Edward Joseph Garland: There may be other amendments to which the hon. gentleman can speak later on.


William Irvine: In many respects I regret that I find it necessary to oppose the bill before the house. The chief reason why I regret it is I believe that the hon. gentleman who is sponsoring it has overlooked certain things in regard to it. His position in the house is not doubted by anyone, and I believe he is sincere and has the good of the public at heart. But while this bill was before the committee of the whole the hon. gentleman's actions were not the best that might have been hoped for. Such a bill as this involves the public interest to a very large extent, and should be discussed fully. I question very much whether it ought to be passed at all, but certainly it
fMr. Dickie.]

Bell Telephone Company
should not be passed in its present form. There are amendments which should be introduced, and which should have been moved in the committee of the w'hole where they could have been discussed thoroughly.
We in this corner of the house have been accused of talking the bill out. I want to dissociate myself from that insinuation. I think that hon. members should be free to offer any criticism which they feel should be made regarding any bill, without the imputation that they are adopting blocking tactics. Personally I have no interest at all in talking out this or any other bill, but certain things in connection with the public interest apply to this bill which I think should be fully discussed on the floor of this house.
When the hon. gentleman moved in the committee of the whole that this bill be reported, I do not think that was good tactics. One of Disraeli's biographers, in discussing Mr. Gladstone, said that people did not object to Mr. Gladstone so much because he usually had a trump card up his sleeve which he applied at the proper time, but they objected because he usually said that the trump card had been placed there at his disposal by Providence. I do not object to the hon. gentleman playing this trump card which he had up his sleeve, but when it is argued that such trump card is in the best interests of legislation, and the best interests of the country, I very much doubt it.
We are passing, Mr. Speaker, gradually from the old competitive system. The competitive system is yielding to great mergers and combines. When this system was at its height we had competition in services and competition in prices, which was an effective check upon overcharges. I do not wish to return to that old system where we had numerous small businesses trying to compete with each other; I think that day is well past. However, competition did check exorbitant charges, and since competition has yielded to large mergers, interlocking directorates, subsidiary companies, and so forth, there must be substituted some check to take the place of the competitive method which governed charges in the past. We have passed into a condition where monopolies are prevalent.
The company involved in the present bill is virtually a monopoly. The Bell Telephone Company is, I believe, controlled very largely by the American Telephone & Telegraph Company. In turn the Bell Telephone Company controls the subsidiary company from which it receives a great part if not all of its supplies. That subsidiary company practically controls the supply of all the supplies for
the telephone service, so that this monopoly, unless the government takes some definite action to control it, is left uncontrolled.
It is public knowledge that less than a year ago the railway commission, on the request of the company in question, increased the telephone rates in Ontario and Quebec. Those telephone rates were increased so that those provinces had to pay what might be regarded as a tax of some $2,600,000 extra last year for telephone service. I understand that the railway commission, when the rate question was before it, refused to allow representatives of the various provinces to present the case of those provinces, and the increase was granted. I presume it was granted on the grounds as presented by the company, namely, that their overhead and so forth warranted them in asking for the right to make higher charges, and I think it will not be difficult to see that if the present capital increase is granted the company will have a greater ground to ask for still further increases.
Let me come to the bill itself and the chief points in respect of which I wish to raise objection. The bill proposes to increase the capitalization of the company by $75,000,000. In this connection let me remind the house that the act incorporating the company was a special statute according to which the company must, if required, submit to investigation. We have a right to investigate that company as to how it has previously disposed of its stock. We have a right to know to whom the stock was sold, how much was paid for it and what was done with the proceeds. These questions in a utility of this kind, the profits of which are practically guaranteed by the public, should be thoroughly investigated. I suggest to the house that an increase of $75,000,000 in capitalization should not be authorized by parliament until a thorough investigation has been made into the company's history of stock selling. I believe at the present time the company has some $12,000,000 of unissued stock. It may be argued and argued successfully that a large company of this kind may have a legitimate right to ask for an increase of $75,000,000 in capitalization, but when we look at the facts we will begin to doubt whether or not this is so. In the past the company has had the habit of issuing its stock to its own shareholders at the par value of $100, while the market value has been ranging from $125 to $193. It can be readily seen that a much smaller issue of stock than $75,000,000 would bring into the coffers of the company the same amount of money that would be brought in by its past methods of issuing stock, so that we ought to be assured that the stock will not be issued to the shareholders of the company in this manner, but that it will be
Bell Telephone Company

left open to be purchased by the public in general. That is one of the amendments which should be passed if this bill is to go through parliament and now we have no opportunity even to move it. That is one reason why I wish to protest against the methods which were adopted in putting this bill through the house. In respect to what I have just said, I wish to quote a very short extract from an article in the Toronto Globe, written by Mr. Reid, who I believe was counsel for the province of Ontario before the railway commission when the matter of telephone rates was up for discussion a short time ago. He says:
The history of its stock issues shows that the company has been making a regular practice of issuing stock to its shareholders at par of $100 per share 'when it was listed and selling on the exchanges at market prices, forty per cent, fifty per cent, sixty per cent, seventy-five per cent, and in one instance in the year 1899 at ninety-three per cent higher than its ar value, and in each of such cases the share-olders were given a bonus of $40, $47, $50, $60, $75 and $93 per share, in addition to the regular dividend of eight per cent.
Parliament has a right to safeguard the public against the continuation of this practice. If the company really require $75,000,000 increase in capital we should know in the public interest whether that sum of $75,000,000 is to be divided out to its own shareholders at a par value of $100, when the stock is worth $193. If parliament allows the bill to pass without safeguarding the public in that respect, it will be remiss in its duty. It is clear to everybody that the dividends must be paid on the stock issue, and if dividends are to be paid on $75,000,000 worth of stock that may not be required, where are the dividends to come from? The dividends can come only from the telephone charges, so that if the telephone charges are not sufficiently high now to afford such dividends, another appeal will be made to the Board of Railway Commissioners for an increase and thus we shall be placing a still greater burden upon the users of the telephone system.
Let me come to the second point to which I object in respect to the bill. I have referred already to its subsidiary company the Northern Electric Company. This Company sells practically all the supplies which the Bell Telephone Company require. I am given to understand that it is possible-and perhaps there is more than a suggestion that this is being done- that in purchasing supplies from its own subsidiary company the Bell Telephone Company may pay a much higher price than it ought to pay were it buying at a fair market value. Thus it reduces the profits which will appear on the books of the Bell Telephone Company

and gives an excuse for increasing the rates, although meanwhile it is taking in its profits by means of the subsidiary company. With regard to the subsidiary let me remark that the hon. member for South Toronto (Mr. Geary) has before the house a bill which will grant the right to investigate telephone subsidiary companies. For some strange reason or another that bill is now under public bills and orders and it will not be reached this session, but if the bill under discussion is to become law, the bill to which I have referred should also foe passed this session. We ought to have a right to investigate the subsidiary companies in order to make sure that none of this sort of practice is going on, or, if it is going on, that it should immediately cease. But if we sit quietly by while a bill of this character is railroaded through parliament, what opportunity have we, as representatives of the public, to safeguard their interests in this respect? If the bill is to be proceeded with, we have a right to ask the government to guarantee to us that the bill to which I have referred shall be placed before parliament this session and that we shall have an opportunity to deal with it.
With regard' to the extravagant prices which are alleged to have been charged by the subsidiary company, I wish to quote a paragraph or two from an editorial in the Toronto Globe:
If the relations between the Northern Electric and Bell Telephone companies are such that the rates which the Bell Company charges are used in part to enhance unduly the returns of the former, telephone users are entitled to protection from the railway board. The public has sanctioned the operation of the Bell as a monopoly and is guaranteeing its dividends, and has a right to know whether it is paying its money for service, or also for the support of a subsidiary on which there is no cheek.
Further it says:
The public wants to know, first, why the vast amounts of materials which the Bell Company purchases come from the one source, and whether the conditions imposed are such that there can be little or no competition.
In this connection I desire to point out that it is alleged that the subsidiary company makes a practice of selling its old, secondhand, worn out goods to the Bell Telephone Company at first class prices. That is another method by which it is alleged this company may cover up its profits. I believe also that the western provinces, although they control publicly their telephone service, are practically compelled to buy from this subsidiary company of the Bell Telephone Company, and the charges of the publicly-owned telephones are consequently made higher through these overcharges.

Bell Telephone Company
I do not wish further to delay the business of the house. I think that my hon. friend will not charge me with trying to talk out this bill. I have placed before the house the two main points of objection I have to this bill: First, that the method of the company in issuing its stock is not sound, that it issues stock to its own shareholders at a par value of $100 when the value of the stock on the market is much higher, and in so doing not only slices a melon amongst its shareholders, but increases the charges for telephone service in order to pay dividends on unnecessary capital. Second, I say that the subsidiary company, the Northern Electric Company, is controlled by the Bell Telephone Company, and in selling its supplies to the Bell Telephone Company may overcharge, and thus excuse the company for seeking higher rates for telephone service. For these reasons I say that this bill should either be defeated entirely by parliament, or be so amended as to safeguard the public in the respects to which I have referred.


Mr. H. E. SPENCER (Battle River):: I
want to take this opportunity of expressing my sentiments in criticism, not only of this bill, but of the rules of this house as they have been used during the last two weeks to stop public discussion on bills that are of public importance.
There are certain rules that cut off public discussion when in committee. Such a rule has been used three times during the last few weeks. There is another rule which can be used, if need be, on the third reading to cut off discussion. This house is supposed to be a place of free discussion, where we can debate the merits of the various questions that come before us, but under the rules as they have been used of late we find ourselves in this position, that it is possible for the government with a majority of even one, if they care to bring in legislation in the names of private members, to press that legislation through the house from beginning to end and through the committees of the house without any discussion at all. That has been completely proved to us during the last two weeks.


Mr. McLEAN (Melfort):: In connection
with what legislation has that been proven?


Henry Elvins Spencer: Now that the hon. gentleman has called my attention to it, I would refer to one of the worst bills that we have ever passed, that with regard to the Niagara bridge.


Malcolm McLean: Government
legislation?


Henry Elvins Spencer: I did not say it was
government legislation.


Malcolm McLean: The hon. member said the government passed it through the house.


Henry Elvins Spencer: I said that the government could, if it saw fit, with a majority of even one, bring in legislation in the name of private members and press that legislation through the house irrespective of the opposition there might be to it.


Mr. YOUNG (Saskatoon):: How could the government do it unless the members of this house sanctioned it?


Henry Elvins Spencer: Fifty-one per cent can sanction it.


Alexander MacGillivray Young: The government do not happen to have fifty-one per cent.


Henry Elvins Spencer: They have more than fifty-one per cent of the membership of the house supporting them.


Malcolm McLean: Does the hon. member mean to tell this house that the government can pass public measures in the guise of private measures, and force them through this house without discussion?


Henry Elvins Spencer: I will tell my hon. friend exactly what I do mean. A private member may bring in what is termed a private bill4 but which is of public importance-


Malcolm McLean: But not the government.


Henry Elvins Spencer: A private member on the government side of the house and the government and its supporters may be behind that measure, and if they have a majority of only one in the house, then irrespective of what opposition there may be to that legislation, they can force that legislation through the house without proper discussion, and that has been done during the last two weeks.


Charles Avery Dunning: My hon. friend keeps using the word "government". What he really means is that fifty-one per cent of the membership of the house, wherever derived, may do that with respect to a private bill. But for the hon. member to keep on using the word "government" with respect to private bills is distinctly unfair.


Henry Elvins Spencer: I will put it in words that the minister can accept. I will say legislation that is supported by those on the right of the Speaker.


Charles Avery Dunning: My hon. friend will admit that the fifty-one per cent might, be
Bell Telephone Company

partly on this side and partly on the other, as in fact was the case with the very bill which my hon. friend has used as an illustration. He is reflecting unnecessarily on the government. He should reflect on the majority as it happened to be made up at the time.


Henry Elvins Spencer: I do not wish to reflect on the government in the slightest, but one can see the danger of the rules as they have been used in the last two weeks in shutting off discussion in this house. I do not take up much of the time of the house, but on two or three bills in the last two weeks I have wanted to speak for about ten minutes, and I was absolutely refused the opportunity of speaking to them. On two of those bills the discussion was cut off without a single clause being considered at all, and in the case of the third we were given the opportunity to vote on the legislation without proper discussion.
It has been claimed that the hon. members who sit in this corner of the house have been responsible for holding up legislation and talking out bills. I absolutely deny that, and an hon. member in this part of the house will in a few days put that on the record, giving actual figures and the amount of space taken up in Hansard. If they have talked to a bill, as they have a perfect right to do, it is because they have disagreed with it, and if* they have moved an amendment to a bill, whether public or private, that is also their right.


Mr. BRADETTE:: They have the right to kill it, too.


Henry Elvins Spencer: They have the right to kill it, if they wish. I do not object to any reasonable discussion on any bill, whether it is my own or anybody else's, but I am taking advantage of this opportunity to point out what I consider the serious position in which we are in under the rules as they have been used of late: first, which provides that a member may move that the bill under discussion be reported; and second, the rule in respect to moving the previous question. Not only can these rules be used in the house to cut off discussion, but they can also be so used in the special committees of the house. If we allow these rules to continue unchanged our proceedings become a farce. All business that comes before this house is supposed to be subject to full discussion, but this is not the case under what I might call these eccentric rules.


Malcolm McLean: I rise to a point of order, Mr. Soeaker. Has the hon. mem-
[Mr. Dunn inf "
ber's statement anything to do with the bill now before the house?


Henry Elvins Spencer: I well know that my remarks are probably not altogether pleasant to some hon. members who are trying to interrupt me.


Malcolm McLean: Mr. Speaker, on a point of privilege, I resent the hon. member's imputation. He knows that his statement is not correct as far as I am concerned. I ask for your ruling, Mr. Speaker, that what the hon. gentleman is discussing is not relevant to the bill, and is simply obstructing and blocking the business of the house, whether intentionally or not.


Hewitt Bostock: No hon. member should be accused of blocking or obstructing the business of the house. On the point raised by the hon. member for Melfort (Mr. McLean), I think the hon. member for Battle River (Mr. Spencer) is speaking to the third reading of the bill and complaining that he has not had sufficient enlightenment because there was no discussion of the bill in committee. He is perfectly in order.


Malcolm McLean: Mr. Speaker, on the question of privilege, do you rule that the hon. member for Battle River is in order in attributing motives to those who interrupted him?


Edward Joseph Garland: The hon.
gentleman himself attributed motives.


Hewitt Bostock: I do not think the hon. member for Battle River has said anything against the character of any hon. gentleman. In any event I hope he will not attribute motives.


Henry Elvins Spencer: Mr. Speaker, I appreciate your ruling. I am quite sure that were the hon. member for Melfort in my place, and had been shut off for the last few nights when he attempted to express his views, he would be just as determined to speak to-night as I am. I admire his ability, and I think I know him sufficiently well to be certain that he would not meekly submit to what he considers a wrong. Before dealing with the bill I should like for the moment to attempt-


Some hon. MEMBERS:: Oh, oh.


Henry Elvins Spencer: Before I
continue my discussion of the bill I wish to say a word to the hon. member for St. Hya-cinthe-Rouville (Mr. Morin) who is in charge of this measure. As has already been said, I do not suppose there is a member on either side of the house whose ability and sincerity

Bell Telephone Company
is more appreciated, and I do not wish to reflect on him for a moment; but I do think his tactics the other night were ill-advised. There is criticism of this legislation because the company seeking it is a semi-public company, and I think the hon. member was wrong in the course he took last night, which prevented the bill being discussed in committee, clause by clause.


Louis-Simon-René Morin: Now is the time to discuss the bill; you are doing it.


Henry Elvins Spencer: But not clause by clause. I think the hon. member was very wrong last night in cutting off discussion. This company is seeking power to increase its capital from $75,000,000 to $150,000,000. As I have said, it is a semi-public company. Its rates are regulated by the railway commission, and are so fixed as to insure a return of 8 per cent on the capital stock. That being so, I think the people through their representatives in this house, should have the fullest opportunity of discussing this bill. As we have been told, there are certain subsidiary companies operated more or less in sympathy with the Bell Telephone Company. A short time ago when the Bell company made an application to the railway commission for increased tolls, the municipalities who opposed the application asked permission to investigate the books of one of the telephone company's subsidiaries in order to support their contention that the application should not be granted, but the railway commission moved that under the Railway Act they had no power to investigate this subsidiary company. There is on the order paper a bill standing in the name of the hon. member for South Toronto (Mr. Geary) to amend the Railway Act so as to empower the railway commission to investigate subsidiaries of telephone and telegraph companies, and I think in fairness to the public that bill should have been proceeded with before this measure engaged our attention.
_ This increased capitalization of $75,000,000 is to be issued, I understand, in one hundred dollar shares, that is, 750,000 shares. The shares of the Bell company I thought were quoted at a premium of $60, but I am told that they are really at a premium of $90.


Louis-Simon-René Morin: No, the
statement is wrong.


Henry Elvins Spencer: I shall be glad to be corrected. Is the stock at a premium of $60?


Louis-Simon-René Morin: At the
present time the stock is selling at about $170.


Henry Elvins Spencer: To be well within the mark I will put the premium at $60. But these shares will be sold, not to the general public, but to the present shareholders at $100 a share. So we have this extraordinary situation, these 750,000 shares being sold to the shareholders at par, although the stock is at a premium of $60-in fact I understand it is $72 and a fraction to-day-which means a division among the shareholders of no less than $42,000,000. In other words, this is purely a case of melon cutting. It is manifestly unfair to allow any semi-public company to water its stock to this extent, when it is operating in a monopolistic way in Ontario and Quebec, and is allowed to charge tolls that will guarantee a return of 8 per cent on its capital stock. We Should first of all discuss this bill clause by clause, but before passing it we should deal with the bill to which I have already referred empowering the railway commission to investigate subsidiary companies of the Bell company. For these reasons I protest against this legislation having -been rushed through the committee stage last night, and I desire to direct the attention of hon. members to the fact that with the information at our disposal it is against the public interest to pass this bill in its present form.


Mr. M. N. CAMPBELL (Mackenzie):: Mr. Speaker, unlike the hon. member for Wetas-kiwin (Mr. Irvine) I have no regrets to express or apologies to offer for my opposition to this bill. Indeed, I consider the bill is not in the public interest, if I have any conception at all of what constitutes the public interest, and I would owe an apology to this house, to my constituents and to my conscience if I did otherwise than oppose its passage.
I wish at the outset to take issue with the Minister of Railways (Mr. Dunning), on the implication of his remarks, that the government accepts no responsibility for bills of this nature. In the case of every bill coming before this house, whether it be a public or a government bill, or a bill introduced by a private member, the moment the minister leading the government rises and takes a definite stand on it he gives a lead to his followers. And those of us on this side know that in almost every instance, no matter who is leading the government, should that minister take a definite stand on any measure, when it comes to a vote every man on the government benches supports it. Indirectly therefore it becomes a government measure and the government must accept the resDonsi-
Bell Telephone Company

bility for it. I say therefore that the government must accept responsibility for every measure before the house whether it be a private or a public bill.


Lucien Cannon: That is a new theory.


Milton Neil Campbell: The Prime Minister
(Mr. Mackenzie King) is fond of referring to what he calls the will of parliament. Theoretically, under the rules of the house, the Prime Minister is simply a member as I am, and my rights would seem to be the same as his. In reality, however, when I express my opinion I carry no weight-


Some hon. MEMBERS:: Hear, hear.


Milton Neil Campbell: -beyond that of a
private member; I say that quite frankly. I have no responsibility such as the Prime Minister has, for when he gets up he speaks as leader of the government and his followers naturally support whatever stand he take?. No one will seriously question that statement and therefore, I repeat, the government is responsible for this bill as well as for every other bill of a similar nature that comes before the house.


An hon. MEMBER:: Not a private bill.


Milton Neil Campbell: Yes, just as well as any other bill.


Mr. HEPBURN:: Does not the hon. gentleman's remarks apply to his own group? Whenever his leader gets up his followers support him.


Milton Neil Campbell: Not to the same extent. The fact is, the chief accusation which our hon. friends opposite have brought against us in the country is that we cannot be disciplined. From one end of the province of Saskatchewan to the other that is the argument that has been advanced to defeat the Progressive candidates-that we did not obey our leader. That is the principal argument. The hon. gentleman says that when our leader gets up we naturally follow him. Well, it does happen that we are elected on a common platform and that we subscribe to a common set of principles. That is true. But there are often variations and differences of view within that platform, and my hon. friend has only to look over the pages of Hansard in the last six years to confirm this statement. Our hon. friends opposite have used this argument against us in the country and they have always been able to quote Hansard to show where the Progressives have split and divided on various questions.
IMr. Campbell.]


Joseph-Arthur Bradette: Is the Prime Minister
responsible for divorce bills that come before this house?


Milton Neil Campbell: Bell Telephone Company

solve this problem by granting to the Board of Railway Commissioners the right to investigate such companies as the Northern Electric Company and determine whether or not the Bell Telephone Company is entitled to any consideration. I quote again from the letter to which I referred:
Professor Lamar Lyndon, one of the finest public utility experts in the United States, in his work on public utilities says: "The interrelationships of the local Bell companies with some district organization and of the district organization with the American Telegraph and Telephone Company make it almost impossible to determine true costs and overhead charges for a local exchange.
In fact, for accuracy, nothing short of an investigation of the entire Bell system, the American Telephone and Telegraph Company and the Western Electric Company would serve to disclose the exact facts.
That is the situation in the United States, and that is equally true of the Bell Telephone Company and its subsidiary, the Northern Electric Company, in Canada. The Western Electric Company manufactures all the material used by the Bell Telephone Company in the United States, and is practically the only source of supply.
Let me take a moment to consider the Northern Electric Company in Canada. Fifty per cent of the stock of that company is held by the Bell Telephone Company, 6 per cent or more by the directors of the Bell Telephone Company and the balance by the Western Electric Company in the United States. The Western Electric Company, in turn, is owned by the American Telegraph and Telephone Company, which owns the Bell Telephone Company and so on, so everything paid into the treasury goes to this company in the United States. Of course, to be fair I must say that that would not apply to any shares held in Canada, but these are comparatively few because the stock is controlled as I have outlined. Quoting again from this letter, I read:
The Bell Telephone Company of Canada purchases its telephone materials, apparatus, supplies, plant and equipment from the Northern Electric Company of Montreal. This latter company was organized, financed, and built up with the money, property and assets of the Bell Telephone Company. It was wholly owned originally by the Bell Telephone Company, but by some financial arrangement a large part of the assets of the Bell Telephone Company in this Northern Electric have disappeared to the extent of over 40 per cent, and this remains unexplained. What has become of the original 100 per cent ownership of the Northern by the Bell? Who profited by this transaction at the expense of the Bell Telephone Company of Canada and deprived it of its assets and property? This is a very serious matter. It remains shrouded in mystery.
IMr. Campbell.]
The policy appears to have been to keep the profits of the Bell Telephone Company at the very minimum, so that in appearing before the Board of Railway Commissioners the company would find no difficulty in obtaining authority to increase its rates. In that way they could hide their profits and keep them hidden indefinitely. This could be easily carried to a point where the Bell Telephone Company would show no profits at all, and even if we increased rates it could be still carried on so that no profits would be shown. That is, they could pay more for their equipment secured from the Northern Electric Company, leave all the profits there and get them by indirect means. Of course I do not say that that will be done, but unless something is done to prevent it that remains possible. Again I quote from this letter:
All this is done and is aided by hiding behind a 25 to 30 per cent tariff wall on telephone apparatus and equipment. It would still remain a monopoly without any tariff, and yet prevent the duty being added to the price. The government telephone services of the three provinces of western Canada are all tied by this same yoke.
That is where I have a very direct interest. It might be easily said that the Bell Telephone Company operates only in Ontario and Quebec and that this increase in rates affects only the people of those provinces, but I say that in a larger way this whole question which is opened up by the discussion of any concessions granted to the Bell Telephone Company does very materially affect the interests of the people of western Canada. Fortunately we have publicly owned telephone systems in those three provinces, of which we are proud; these systems are owned and controlled by the people and are giving splendid service. But, sir, of what avail is this to us when we find that the source from which we must obtain all our supplies is controlled by the Bell Telephone Company of eastern Canada? By raising the price they can make us pay whatever they wish for the use of our telephones in those three provinces, because they enjoy what is a monopoly in supplying telephone equipment in this country. In 1925 the Northern Electric Company sold $12,000,000 worth of supplies to the Bell Telephone Company. There is very little doubt that excessive prices were charged for these supplies to leave a profit in the hands of the Northern Electric Company rather than in the hands of the Bell Telephone Company. At the end of 1925, the Northern Electric Company had a reserve and surplus of $8,409,000, where the total value of the prop-

Bell Telephone Company
erty and plant was only $9,882,000; the surplus and reserve being almost equal to the entire value of their plant. I will quote from this newspaper again:
If we take the depreciation reserve alone for 1925, it is over 100 per cent, and nearly 125 per cent of the plant. For the year 1924 the depreciation reserve represented 100 per cent of the plant and equipment. For the year 1923 it was also over 100 per cent, for 1922 it was also 100 per cent, for 1921 it was also 100 per cent depreciation reserve in relation to their plant, while for the year 1920 the depreciation reserve represented 129 per cent of their plant and equipment.
This looks very much like the old scriptural tale of turning water into wine, only in this case it is turning water into gold. All these surpluses have been built up from profits and earniings made by the company, and contributions made to that end not by the security holders but by those who patronised the company; they have all been built up by profits made in the operation of the company.
On December 31, 1925, the statement of the Northern Electric Company showed a building and real estate surplus of $5,388,000; depreciation reserve of $5,564,000, and an undivided surplus of $2,844,000, nearly all of which was earned from the users of the Bell Telephone Company. There is nothing at all to prevent the Bell Telephone Company from earning no profits at all, allowing this to be done by the subsidiaries to such an extent that the original company would show no profit. If we permit this sort of thing to continue there will be an excuse for a regularly increasing scale of rates, which will have to be paid by the people of these provinces.
I would like to quote further from this letter. This particular paragraph refers to the question of giving the Board of Railway Commissioners power to investigate the subsidiary company, the Northern Electric Company. It reads as follows:
And that is just what we are going to do, with the help and assistance of the bill now before the parliament of Canada, and in this connection I may say that the United States senate recently ordered an investigation of this very same nature to be gone on with, and the city of Boston, and a number of other large centres have filed printed indictments and complaints with the Interstate Commerce Commission at Washington, asking for a United States-wide inquiry of these same matters for which the parliament of Canada is now being asked to pass a bill in order to commence a similar investigation in Canada.
The bill that we are now discussing provides for a new stock issue. This would be perfectly all right if the company sold its stock on the market and put the proceeds into its treasury to be used in the extension of its service, but we have no guarantee that this is 56103-1961
not just a means of hiding further profit. We have no guarantee that they are going to show some of this as profit, for, as the hon. member for Battle River (Mr. Spencer) has said, it will probably be sold at par value to the shareholders, and the opportunity for turning between $40,000,000 and $45,000,000 into the treasury will be lost. There is nothing to prevent them making a stock bonus, handing some of this sitock over bo the present shareholders, and using that as a means to pay out dividends on stock that was not covered by the investments of the security holders.
We have no right to pass this bill until such time as the operations of this company and its subsidiaries are thoroughly investigated. On December 31, 1925, the depreciation reserve of the Bell Telephone Company amounted to $23,295,000, and the surplus to $6,800,000-this in addition to the fact that a lot of their earnings have been withheld from them. In spite of that, we still find the company with this very comfortable surplus of nearly $30,000,000, all of which is built up not by the investment of the security holders, but by the tolls paid by the users of telephones in Ontario and Quebec.
We propose by this bill to give the company the right to capitalize their surplus, or what is ordinarily called stock watering. We propose to allow them to issue stock bonuses against this surplus, and allow them to capitalize it. I do not say that they will do so but the users of the telephones might easily ibe in the position of being compelled to pay dividends on the very surplus which their contributions to the company have created.
Western Canada, as I said, is indirectly interested in this whole thing, because we buy our supplies from the same source. As conditions exist to-day, the Bell Telephone Company is in the position of fixing the prices that our government-owned systems in the west must pay for the supplies they purchase from the Northern Electric Company.
May I quote again from the brief and argument on behalf of the province of Ontario, when they appeared before the railway commissioners to oppose an increase in telephone rates. This is what it says:
This is the most barefaced piece of villany and imposition ever attempted upon a free people, and its exposure before this honourable board will not be the last this corporate monopoly will hear about it.
This is not something that has come from the so-called radical farmer governments of the west; this is not a public statement by the hon. member for Rosetown (Mr. Evans), but it is a statement of the representative of the Conservative government of Ontario before
Bell Telephone Company

the Board of Railway Commissioners. The people of that province protested against an increase in rates, but it was put through in spite of that. That increase in rates has gone into effect, and I call upon my hon. friends to my right who come from the province of Ontario to stay behind their own government, representing their own people, and make some attempt to impose upon this company restrictions which will prevent increases of this nature in the future, and see to it that this company and its subsidiary will be properly investigated.


Mr. C. H. CAHAN (St. Lawrence-St. George):: I do not wish to take the time of the house to any great length. I am in favour of this bill, and I believe that the increase in capitalization asked for by the Bell Telephone Company is necessary in order that they may carry out and perform an efficient public service. At the present time they are under the control of the Board of Railway Commissioners. Their profits from telephone service are regulated by that board; their dividends upon their capital stock are, in a like manner, regulated. The basis of that regulation is that every $100 of capital stock shall be represented by $190 cash paid into the treasury of the company. That is secured by the bill in the form in which it is now presented to the house, and if the company is earning from its telephonic service as a public utility a larger rate of dividend than should be paid on a share of stock which represents $100 in cash, that is a matter which can and which will be from time to time regulated by the Board of Railway Commissioners.
I do not intend to discuss at the present time another bill 'before the house which would give to the Board of Railway Commissioners the power of investigating subsidiary companies. When that bill comes before the house I shall be prepared to discuss it. I do not believe in making invidious distinctions in such matters, and if the act constituting the Board of Railway Commissioners is to be amended, let us deal fairly with all public utilities coming before that board and let us make the same provision apply to all public utility companies. I see that grave distinctions may be drawn. I do not see why freight rates over the national railway system should depend upon the amount that its subsidiary companies, hotel companies, are earning. I do not see why freight rates on Canadian Pacific railway should be governed by the amount of profit on the Canadian Pacific steamship lines. There are such considerations which must receive from the house

due attention when it has before it that other bill to which reference has been made, which was introduced by the hon. member for South Toronto (Mr. Geary) and which, I have no doubt, will receive fair and adequate consideration by the house. But an increase in the capital of the Bell Telephone Company is in my opinion absolutely necessary in order that it may perform the public service which it has undertaken to perform, which the public are demanding should be performed in the way of extensions to its lines and to its business.
The matter of the relation of the Northern Electric Company to the Bell Telephone Company came before the Board of Railway Commissioners in 1921 and I will read just a very short extract from the decision of that board under date of April 1, 1921. The board said as to the relation of the Northern Electric Company to the Bell Telephone Company- and I am reading from the decision of the commissioner who gave the judgment:
As the matter presents itself to me, this is a phase of company management into which the board is not authorized to go. What the board is concerned with in the public interest is to see that reasonable prices have been charged, this having a necessary bearing on the question of the position from a net revenue standpoint of the company purchasing materials.
On consideration of the evidence, and bearing in mind the supplementary comparative material as to prices which the board has obtained, and which is referred to in an earlier connection, I am of the opinion that it has not been shown that the prices charged are unreasonable.
That is, the prices charged on the material purchased by the Bell Telephone Company from the Northern Electric Company. I am not going to follow the various judgments down to the present time, but I will call attention for a moment to an extract from the majority judgment of the Board of Railway Commissioners rendered on February 21, 1927. I prefer that majority judgment to the rather extravagant assertions of counsel 'for any authority who appeared before the board. At least, after the commissioners had heard the arguments of counsel, this was the considered judgment of a majority of the board:
It has been established that the prices charged by the Northern Electric Company, under the most favoured customer's clause, were lower than those which the Bell Telephone Company would have been obliged to pay to other manufacturers.
It also appears obvious that the Northern Electric Company is able, on account of its mass production and volume of trade, to manufacture and sell at a lower cost than the Bell Telephone Company could manufacture or purchase if it were limited only to its own requirements.
There is no evidence of any improper financial arrangements between the two companies,

Bell Telephone Company
and the agreement and the supplementary agreement which govern their relations are distinctly advantageous to the Bell Telephone Company.
The board can be concerned only with the effect of the Bell Telephone Company's purchase of materials, from the standpoint of its net revenue.
On consideration of the evidence, one is compelled to reach the conclusion that it has not been shown that the prices charged were unreasonable; on the contrary, it was shown that such prices were as low or lower than those charged to other customers.
In view of that considered judgment I think the house should not commingle the two considerations.
Mr. DUNNING; That is the point. I was just about to raise a point of order on the very matter that my hon. friend is now mentioning, because we are in danger of drifting into a debate, precipitated by the hon. member for Mackenzie (Mr. Campbell), on another bill which is on the order paper, and I am sure my hon. friend does not desire that.


Charles Hazlitt Cahan: No. I am simply returning to the consideration that in view of that considered judgment the house, with due respect to the judgment of its own court, should now eliminate all questions as to the purchase of materials, because those can and will be dealt with from time to time under other statutes. Therefore we have to come back to the consideration of the merits of the bill. This increase of capital is necessary. It was proved to be necessary to the satisfaction of the railway committee of this house and the bill was reported unanimously, if I remember correctly, by that committee. It has been considered and it has been reported by the committee of the whole house by a very large majority. Under those circumstances I do not intend to take further time to justify my position in voting wholeheartedly for the measure.


Mr. BROWN:: Before the hon. member
sits down, would he make a little clearer the point to which he referred in the beginning of his speech when he said that it was provided in the bill itself that for every $100 share, $100 should go to the treasury of the company.


Charles Hazlitt Cahan: Under the Bell Telephone
Company's acts of incorporation as they are amended down to the present time the stock can be issued only for cash. There are in those acts of incorporation no such provisions as we have seen in some recent bills before the house for the issue of stock for other considerations.


John Livingstone Brown: I ask that question because the objection has been raised that in this particular bill that is not made clear.


Charles Hazlitt Cahan: The whole scope of the act renders it impossible to issue stock for other considerations than cash.


Hewitt Bostock: Is the house ready for the question?


Edward Joseph Garland: I was under the impression, Mr. Speaker, that the sponsor of the bill was about to answer some of the arguments that have been levelled from this part of the house at the bill.
In the first place, let me say very definitely that I have examined at considerable length this bill and the affairs of both companies on which discussion has taken place, and I am not yet convinced that the increase in capital asked for is at all needed. I will give my reason for that in a sentence. At the present time the Bell Telephone Company has power to add to its capital to the extent of $48,000,000 without issuing one dollar's worth of new stock. It can increase its capital by $48,000,000 without any amendment to its original charter. The stock capital issued is about $62,000,000, and there is still allowed to be issued under the original charter about $13,000,000. The bond issue is $40,000,000. So the company can issue in bonds around $35,000,000 more, and $13,000,000 of stock, or a total of $48,000,000. Would that be good business? Is it good business for a corporation of this kind to carry fifty per cent of its capital in stock and fifty per cent in bonds? There is no question as to the opinion of authorities on that point; they are agreed that it is good policy. The company have even admitted that is good policy before the board of railway commissioners. So here you have a company that at the present moment has power to increase its capital by $48,000,000 coming to parliament and asking for the right to increase its stock capital by the amount of $75,000,000 more before it has exhausted its power in respect of the original capital by $48,000,000.
Let the house not forget this fact that every $100 share of capital stock carries eight per cent interest. That eight per cent is absolutely guaranteed by the Board of Railway Commissioners. It the company's earnings are less than eight per cent, all that it has to do is to make an application to the Board of Railway Commissioners and prove that it is not earning enough to pay eight per cent with the present rates for service, and immediately those rates are increased. So the effect of the whole regulations under which
Bell Telephone Company

this semi-public utility is operated is to guarantee to the shareholders of the company eight per cent on their stock. But the bonds carry only five per cent. Now I ask any hon. gentleman a simple question:	Will it be
better for the users of telephones in this country that the interest charges on the capital shall be five per cent or eight per cent? Obviously the rates must be higher the more stock that is out at eight per cent, than if that capital were out at five per cent. That is clear. Of course, another question may arise as to the proper use of bonds and stock, but that is not yet an important factor because the company has not yet brought its bond issue to the same amount as its capital stock issue.
Let us examine the company in some detail for a few years back, and find out what has been the percentage issued in bonds and stock:
Bonds Stock Per cent Per cent
1919	
33	671920	
47	531921	
38	621922	
34	661923	
30	701924	
26	741925	
38	621926	
38	621927	
43	57
It will be clear to the house that the company is rapidly coming to the point where the balance between the bonds and stock issued would, in the opinion of experts, be just about right for a company of this kind. Why then, should1 this house now increase the capital stock by $75,000,000, on which the company will have to pay eight per cent interest, thus increasing the overhead charges on the operations of the company, possibly leading to a further increase in the charges to the users of the service later oh.
There is a principle involved in this whole business to which the house should in my opinion direct attention, and that is whether we are going to permit any longer public utility corporations whose earnings are guaranteed, whose interest is guaranteed, whose cost of operation is guaranteed by the rates which they are permitted to charge under a monopoly, to issue stock to its own shareholders, who are now making excellent dividends, at present rates. A rate of eight per cent is not a rate to shut your eyes to. In addition to that, how long are we going to allow them to take from the users of telephones, gifts through the stock being issued to the shareholders at a lower price than the market price of the stock to-day? Let me give an illustration of what I mean. If this

bill passes, there at once becomes available a stock issue of $10,000,000. The shareholders can buy that stock at $100 per share, and under the present market valuation it is worth $172.50. So the shareholders-and this privilege of buying the stock at $100 per share is restricted to the present shareholders -by virtue of this first claim on the stock get not only $100 worth of stock earning eight per cent interest, but a gift of $72.50 as well.


Charles Hazlitt Cahan: Provided the market holds.


Edward Joseph Garland: It may be said at once that the market will not hold. I grant you that if you offer this stock for public subscription, the market will not hold. What will happen will be that the stock may slump to some degree, but immediately if the stock were offered to public subscription the coffers of the company would be benefited by $50 to $60 a share more than if the stock were issued at par to the private shareholders of the company. That is a principle which this house sooner or later will have to consider seriously with a view to amending the charters under which all such companies operate, in order to prevent the issuing of stock to its own shareholders at par. All the stock of companies of this kind should be sold at open auction, so that it can get out on the markets of the world. If that were done in the case of every company whose interest and earnings are guaranteed, there would be a greater return to the treasury of the company than there is under the present system of issuing stock.
Recently, as has been pointed out, the rates of the Bell Telephone Company were increased in the provinces of Ontario and Quebec to an extent that simply meant an additional burden of taxation upon the telephone users to the amount of $2,600,000 a year. I venture to assert that if the stock of the Bell Telephone Company had been selling on the open markets since the outset, there would not have been the necessity for this increase of rates, because there would have been more money in the company carrying a lower rate of interest if bonds were issued, and certainly there would be more money in the company if the stock had been sold at the market price instead of at the par value of $100. This application of the Bell Telephone Company for increased rates, which was acceded to by the Board of Railway Commissioners to the extent to which I have stated, was made really by the American Telephone and Telegraph Company of New York, but through, of course, the Bell Tele-

Bell Telephone Company
phone Company of Canada, which, it controls.
I am informed that the Board of Railway Commissioners definitely refused the people of Ontario and Quebec the right to argue their case in person, and that this attitude of the board was upheld, on appeal, by the government. Here is a condition of affairs, again, to which public attention should be directed. Here is a situation to which the public cannot be blind. Here was an application by a public utility company in which the public are very much concerned, and yet the public were denied the right to present their case in person.
It was conclusively proven at the same hearing to which I have referred that the Bell Telephone Company did issue its stock at par, $100 per share, to its shareholders. The hon. member for St. Lawrence-St. George (Mr. Cahan) is quite correct in stating that the stock was sold for $100 in cash, or its equivalent, and that that actually went into the coffers of the company; but the hon. gentleman did not add that in every case of stock issue that has come to my attention there has also been a gift, depending on the market price of the stock, ranging from $23 to $93 per share. In every case of that kind a part, if not all, of the increment should have gone into the treasury of the company, and so have prevented an unnecessary issue of stock. Hon. members do not require to examine into this procedure very far to see that if the company wants $15,000,000 of stock for development purposes, they can sell their stock at $150 on the market, and will not have to issue as much of it as if they were selling it to their own shareholders at $100 per share. In that way you keep down the fixed charges because of the lesser quantity of stock issued.
Under the present stock issue to the shareholders of the company, if it was all issued at the market valuation of to-day it would mean a gift direct to the shareholders^ of several million dollars, off the bat. That is a pretty nice little gift. In my opinion no public utility company should be allowed to do this. Its stock should not be available as a gift to the shareholders; it should be sold on the open market. Moreover, as I have said, less stock would be required if the company was obliged to sell it on the open market. This form of stock issue amounts to stock bonusing, although not by a direct stock bonus issue. It was largely because of this method of keeping the increment for the privileged shareholders that a larger stock issue became necessary than would otherwise have been the case, always followed, of course,
by a corresponding straining of the earnings to meet the dividends on the increased quantity of stock outstanding. It is therefore quite apparent, Mr. Speaker, that so long as this company is permitted to make presents of its increment of stock to its shareholders there will be maintained as high, or even higher, rates than are now charged the users of telephones. Inevitably in the long run the telephone subscribers must pay for these periodical gifts to the stockholders.
This is a special form of legalized brigandage of the highest order. The other day my attention was called to a press despatch from New York, from which I learned that some four or five men had raided a candy factory and made away with $7,500, if I remember correctly, but the pursuit of the police was too close and the alleged bandits abandoned their car and their booty. The police continued their chase and left the car standing in the road. The nice, good men in the street promptly helped themselves to the money, and when the police got back to the car there was only $200 left. In my opinion as between the two types of thieves, the man who frankly went out and faced society as his enemy and took his chance was more courageous and of as high moral standing as the sneak who stole the money from the car. So I say, Mr. Speaker, that members of the community in Canada or in other country who continue to steal, from the users of telephones, gifts in the way of stock issues of this kind are as much brigands-although within the law unfortunately- as the men who entered the car and helped themselves to what had already been stolen by' somebody else. The sooner this sort of thing is stopped the better it is going to be for the country. Therefore, Mr. Speaker, I now move:
That the said bill be not now read a third time, but that it be referred back to the committee of the whole for the purpose of amending it by adding the following section:
3. No issue of the capital stock of the Bell Telephone Company of Canada shall be made except by way of offering the same to the public for subscription.
Hon. members will notice that I am not giving the bill the six months' hoist, I am not attempting to block its passage. All I am asking is that the stock be made available to the public for subscription, instead of apportioning the stock to the shareholders at par when it has a value of $170 on the open market. It is a fair proposal, and I feel satisfied that the thinking element in this House will support it. I feel satisfied that hon. gentlemen who have the public interest at heart, and who believe in the interest of
Bell Telephone Company

the consumers rather than in the interest of the shareholders will support my proposal.
There is nothing further I can say on this matter, Mr. Speaker, except to urge that is would have been much wiser altogether for this house to have delayed the third reading of this bill until after we had dealt with the other bill that is on the order paper in the name of the hon. member for South Toronto (Mr. Geary). The .hon. Minister of Railways (Mr. Dunning) a moment ago was afraid that there might .be introduced into this debate another and entirely foreign issue. Into the merits of his objection I need not now enter. All I wish to say is that the two bills are absolutely inter-related; one inevitably affects the other. Whether this house would in its wisdom pass the Bell Telephone bill after we had sanctioned the bill of the member for South Toronto is a very serious question in my mind. I do not believe the house would pass the Bell Telephone bill until the railway commission had had an opportunity of investigating the affairs of the Northern Electric Company.
I cannot agree with all that has been said by one or two members that have preceded me with respect to the profits that may have been made by the Northern Electric Company from the sale of standard goods supplied to the Bell Telephone Company. I have studied the evidence in the matter, and I agree with a statement made by the hon. member from St. Lawrence-St. George. It has not been brought to my attention at least that there have been any excessive charges by the Northern Electric Company. But the principle of the thing is what interests me. It is wrong in my opinion that a subsidiary should be allowed the possibility of milking a parent company. That is what I object to. I wish to direct the attention of the Minister of Railways to a statement in a report of the Public Service Commission of Virginia. In 1922 that commission had occasion to deal with this very question and an order was made directing disclosure of the factory and production costs and profits of two companies affected, and ordering them to prove that the public was not being imposed upon. The commission in its judgment said:
To hold otherwise would be to hold that the American Telephone and Telegraph Company, a public service corporation, having obtained practically a monopoly of the telephone industry, may charter the Western Electric Company, a non-public service corporation, own 98 per cent of its stock, absolutely control its operation, policies and charges, and use it with impunity as a milkman to milk the funds of its local operating companies (which are public service corporations) into its own pail, without any possibility of control or restraint from this 
commission or any other governmental body, regardless of the extent to which the milking process might be carried.
Just in passing I would direct, as I say, his attention to statements of other commissions.


Charles Avery Dunning: If my hon. friend will permit me a question for my own information: He surely does not suggest that the same conditions apply in Canada, under the present law in relation to the railway commission, as are there depicted by the West Virginia body?


Edward Joseph Garland: I will answer the question by saying this: The Northern Electric Company in Canada has virtually a monopoly of the handling of standard telephone equipment. Yes, they have. The hon. member shakes his head, but he is absolutely incorrect.


Charles Avery Dunning: I have merely the experience of having been Minister of Telephones in my own province and of having bought equipment elsewhere than from the Northern Electric, having been able to get it in competition with them.


Edward Joseph Garland: My hon.
friend is incorrect. The Northern Electric has a virtual monopoly-those were the words I used-in this country, because of the nature of its standard equipment. I have a very vivid recollection of an attempt made not long ago by a British telephone manufacturing company to invade this country and set up in business. First of all it had to climb over a tariff wall of from 20 to 27^ per cent, and after it got here it had to face the concentrated efforts of this one great corporation which has practically a monopoly of standard telephone equipment in North America-in Canada certainly. That being the case, and inasmuch as the directors of the Northern Electric are the same men who are on the directorate of the Bell Telephone Company, does the minister mean to assert for a moment that it is beyond the bounds of possibility that these directors would milk the subsidiary Bell Telephone Company for the good of the shareholders of the Northern Electric? An hon. gentleman suggests that it is the other way around; it might be. The minister has too much knowledge of modern commercial practice to assert that it is not possible for them to do this. It is a common practice to-day, and the reports of commissions which I have will testify to it. I have given one. It may not be an absolute analogy but it is of the type of practice to which I have referred.

Bell Telephone Company
I do not wish unduly to delay this bill going to a vote, and I will conclude with this remark. It is my sincere hope that hon. gentlemen opposite who in the past have joined with us in our opposition to the undue inflation of stock and to the unfair milking of the consumer will now support a simple amendment of this kind. It does not prevent the bill from being passed; it does not prevent the bill going through and the company getting the increase in capital. All it provides is that future stock issues must be made available for public subscription and not be given in part as gifts to private individuals.


Henry Herbert Stevens: If much that has been said, and a great deal more that has been implied, regarding the Bell Telephone Company were accurate I should feel fully persuaded to resist this bill with all the vigour that has characterized the speech of my hon. friend from Bow River (Mr. Garland), who has just taken his seat. If the directorate of the Bell Telephone Company and the directorate of the Northern Electric were brigands and pirates-I believe that was the term used-then of course parliament ought properly to be alarmed at a bill of this character. I think however that possibly it was the anxiety of my hon. friend from Bow River to impress his views upon the house that led him to indulge in rather strenuous language in his expression of those views. The hon. gentleman is possessed of a degree of facility of speech which in my opinion made unnecessary the extreme statements to which he resorted.


Milton Neil Campbell: I would remind the hon. member that counsel for Ontario, before the board, used language just as strong.
Mr. STEVENlS:	I heard some language
read, emanating from an apparently very able legal representative before the railway board, and I must say I was mildly surprised, to say the least, at the vigour of it. I confess to having indulged in a similar practice myself occasionally, and I realize that when you have a rather weak case you can sometimes conceal its weakness by injecting into your language a little more mustard, shall I say, than perhaps would otherwise be necessary. I am free to say that it is with no great degree of pride that I look back upon those occasions upon which I have had recourse to this practice. And now that we are in this happy frame of mind, I may observe that the finest speech I ever made in my life, out of the few thousands that I have made, was of about five minutes' duration and of a character entirely different from that which I am now describing.


Ernest Lapointe: Give us another one.


Henry Herbert Stevens: I will try to do so, and I hope it will be as effective. There are a few points which I think the house might keep in mind in considering this question. In the first place, this is a public utility company, and under the statutes incorporating the company parliament has placed it, in so far as its rates and its dealings with the public are concerned, under the control and direction of the Board of Railway Commissioners. In all matters appertaining to its dealings with the public this company must submit itself to the railway board.
I propound to the house this question : Are we to accept the decisions of the railway board only when such decisions meet with our peculiar and particular views, whatever they may be? Let me make a slight personal reference by way of illustration. For many years I had the firm conviction that certain railway rates were inequitable and unfair, and yet those railway rates were on several occasions maintained by the railway board. It does not follow that you must refrain from appealing, logically, legally and reasonably, to the board to secure redress. That does not follow. But it does follow, I think, that we ought not in some other place to attack or discredit the decisions of the board. So far as this question is concerned, therefore, I take this position, that the railway board having dealt fully and carefully with this company in the matter of rates, I accept their decision,
In the second place, the railway board determined that it was fair to permit this company to earn 8 per cent on its investment For the moment that is not in question. It might be a proper thing to say that their finding in that regard was unfair to the public, and to go before the board and say, " We believe it should be 6 per cent or 5 per cent " That is a reasonable position to take. But I do not think that we should say that the company constitutes a form of brigandage which is " milking " from the public unfair earnings, so long as it keeps within the decision of the board.
Another question has arisen, the question of the market price of stock. I wish to say one or two words on that point. It has 'been stated that the present market price of this stock is $165 or $170; I do not know whether or not that is correct but it will do for the purposes of argument. It is said that the price being $165 or $170, this stock therefore, Should be issued only at that rate. What fixes the market value of stocks? There are two main factors, first the earning power of the stock, and then the value of money
Bell Telephone Company

in the money markets of the world. When money is being loaned at the rate of 4 per cent, when prime securities are earning 4 per cent in the money markets of the world, a stock with a fixed earning power of 8 per cent will sell at a good deal more than par value. That is Obvious. If in the course of a few months or a few days the money markets change, as they did a few years ago when government securities rose to 5i per cent or 6 per cent, that stock with a fixed earning of 8 per cent will drop correspondingly. So it will go up and down, not particularly because of the condition of the company but because of the value of money in the markets of the world, which will regulate to a large degree the price of that stock which has a fixed earning power of 8 per cent.
There is another point to be considered; there is the element of risk to the owners of this stock in regard to earnings. Someone described this as a guaranteed stock. Dt is not guaranteed at all; it is a stock upon which the railway board have said they will permit earnings up to 8 per cent. Let us assume that a period of depression sweeps over the country and a large number of people give up their telephone service, which naturally follows during a depression. In such a case the earnings of the company might fall; that might be reasonably expected, and the earnings upon the stock would fall correspondingly. The owners of the stock take that risk of a drop in the earnings of the company. It is true that at present Canada is a young and growing country and that this company is constantly expanding, but it is not unreasonable to expect that during some period in these alternate cycles of prosperity and depression the earnings of the company may fall much 'below 8 per cent.


Mr. ADSHEAD:: Then would they not immediately ask for an increase in the rates?


Henry Herbert Stevens: Possibly they would, and in such a case the railway board would take the whole situation into consideration and would determine as a judicial body whether or not that application should be granted. I think that is not a question with which parliament should concern itself. Seeing that the question has been raised, although it is not our business, perhaps we are justified in asking whether the rates are unreasonable. 1 have already said that we are not the body to determine that point; the Board of Railway Commissioners say the rates are reasonable, and I understand that they have in-

creased these rates within the last year. Perhaps it is interesting to note that the rates paid in the provinces of Ontario and Quebec where the chief operations of the Bell Telephone Company centre are lower than those charged by any other telephone system in this country. That is worthy of being taken into consideration. I do not offer that fact as evidence that rates are fair, because the Board of Railway Commissioners have determined that point, but I do say that it is evidence that the rates are not highly unfair; it is evidence that this company is not being controlled by a band of brigands, and I submit that point for the consideration of the house.
Now we come to the question of the distribution of this stock. Some hon. members say the stock should be sold only to the public. I confess that that sounds not unreasonable, because during the past years it has come to be a common practice for companies to cut melons, to use very ordinary language which will be understood by everyone. This company does not cut a melon; its stock is sold. The question then arises as to whether or not they are selling it in an unreasonable way. To whom are they selling it? It is being sold to their own stockholders. I have taken the trouble to look up certain information from what was placed before the committee and what appears in the records of the Board of Railway Commissioners, and I find that 95 per cent of the shareholders of this company are in Canada, and over 65 per cent of this stock is owned in this country. Some hon. gentleman said a moment ago that this company is controlled by the American Telephone and Telegraph Company; that is not the case.


George Reginald Geary: That is the case; it has
been so admitted by the Bell Telephone Company.


Henry Herbert Stevens: I will not argue with my hon. friend; I did not ascertain that from the evidence, although I frankly confess that I did not go through it very carefully.


George Reginald Geary: It has been admitted.


Henry Herbert Stevens: I will not dispute that,
but I will say that more than 65 per cent of the stock is owned in Canada. Further, I find that there are about 14,000 shareholders in this company, which is a fairly wide distribution of stock. Even more interesting is the fact that over 10,000 of the shareholders are employees of the company. It is true that they do not hold a very large proportion of the stock, but the aggregate is about

Bell Telephone Company
$4,000,000 or $5,000,000. That is an interesting fact which I think should be taken into consideration by this house.
Who are the people who will be benefited by this issue of stock? It is true that certain large shareholders will benefit; that cannot be disputed, but after when individuals or groups of individuals have given of their best to build up this company and this service and have taken their risks when times were not so good as they are to-day, surely there is nothing sinful or invidious in giving such people a fair chance for a return on their investment. But that is not all; there are over 10,000 employees, and of that number 8,000 are women who, under the distribution of the stock, are subscribers for and owners of stock in the company. These are the people who will benefit by this issue of stock at par.
I merely state these facts in order that we may have before us a picture other than that which has been already drawn. Here is another point. This company can only carry on extensions in two ways, one from the depreciation reserve and the other from new capital. The company must have new capital to make these extensions, and I understand from the evidence produced that the company has in contemplation a very large program of extensions. Surely, in the face of decisions of the railway board and after an examination by a committee of this house, it is not the business of parliament simply because this is a monopoly and a large company to throw obstacles in the way which will prevent the company from carrying on reasonable extensions.
Then there is another point with regard to the railroading of this legislation. I say at once that I do not agree with the method of moving that a bill be reported from the committee of the whole house; frankly I do not agree with it. The only time that power should be exercised is when it has become clearly evident that a certain small groun, whoever they may be, are determined unreasonably to block the fair consideration of legislation.


Louis-Simon-René Morin: A statement to that effect was published in the newspapers.


Henry Herbert Stevens: Surely the hon. member
will not suggest that I am trying to block the passage of the bill; I am trying to facilitate it. I simply say that I am not in accord with that method. I was not here the other night; had I been present I would have voted against the proposal, because these
facts should be borne in mind. This bill was introduced on February 15 and had its first reading on that day. That was a long time ago, and the bill was reported to the house from the committee on March 29. It has been on the order paper for weeks and weeks. This is my point: the house and the private bills committee exercise a dual function in regard to private legislation, first, judicial, and second, legislative-or the other way about, whichever way you like to put it. I submit that any private legislation has a right to be considered and to be passed through this, house, and not to be blocked or obstructed.


Charles Avery Dunning: To be dealt with one way or the other.


Henry Herbert Stevens: To be determined. There is also the question of the consideration of these bills when they return to the house from the private bills committee, or in this case the railway committee. When this bill went before the railway committee, although I was not present I have been informed that it had a normal and fair consideration; there was no attempt to railroad it through that committee, and nobody charges that. There is an old practice of parliament which was most scrupulously observed by the late Sir Wilfrid Lau-rier, by Sir Robert Borden, and by the other leaders of my day, namely, that where private legislation had been referred to a select committee of the house, and was reported by such committee, the house accepted that report as a decision of one of its committees to which had been delegated the consideration of that particular matter. That has been the practice of parliament for many years. It does not mean that all discussion is precluded in regard to the bill, but it does mean that normally parliament is supposed to accept the findings of its own committees appointed for the purpose. It is obvious that other members of the house who are not on these committees cannot hear in the house the evidence and the discussion which the members of the committee heard. The members of the committee are appointed, and it is their duty to determine these matters.
This bill, then, has been before parliament since February 15th. It has been considered by the railway committee. The activities of the company have been considered by the railway board. All of this being before parliament, the bill should receive at least fair consideration. I do not say that hon. members should vote for it-they can vote as they like; that is their privilege. But I do submit that the bill ought to have the opportunity of being determined by the house itself.
Bell Telephone Company

I am not going to detain the house further than to say that as far as I am concerned I have given this matter a great deal of thought. It is my intention to support the bill as reasonable legislation, believing firmly that every precaution has been taken by the measures that I have mentioned to safeguard the public interests.


George Reginald Geary: May I suggest to my hon. friend who has just taken his seat (Mr. Stevens) that for the most part the points he has raised are points that are not before us at all, points about which there is no controversy. My hon. friend asked whether we were to accept the decision of the railway board only when it happened to please us. No one, so far as my hearing goes, has ventured to dispute the railway board's determination as to rate. The dispute was carried through the proper channels to the governor in council, but the decision was not upset. There is no objection in this house to that decision, however much those of us who have to be consumers of the company's products in the provinces of Ontario and Quebec may object to the price that is being charged.
My hon. friend took occasion to dispute the statement that has been made that this was a stock with a guaranteed 8 per cent dividend, and that that devidend was not a high return to the shareholders, particularly when the risks taken by those who first ventured on the enterprise are considered. Mr. Speaker, this question has nothing to do with the matter under discussion. This company was incorporated and entered into business about 1880. It paid 8 per cent the first or second year of its existence, and has been paying 8 per cent every year since. It is not guaranteed in the sense that there is a sealed and delivered guarantee, but the railway board has clearly intimated that it will allow the earnings of the company to be regulated to permit the continuation of that dividend. We passed through a very severe period of depression during the war years, and the company still continued to pay 8 per cent, although it was before the railway board on three different occasions regarding its rates. There is at this moment no question before the house whether the rates are reasonable. I could detain the house for some time on the question of the reasonableness of the rates.
Just a word regarding the distribution of new stock. There is certainly a wide distribution of stock. It was admitted by the Bell Telephone Company, when it was before the railway board, that the American Telephone and Telegraph Company is the body

with control of the Bell company. There are other large shareholders, and I have no doubt a great many employees have been allowed to participate in the purchase of stock, probably on the instalment plan. They are most likely very small shareholders with a share or two apiece, and any dividend which comes to them in the way of an opportunity to subscribe to new stock at par is insignificant. In any case, significant or not, it has nothing to do with the merits of the proposal. It is only put into the discussion in order to draw sympathy for the company's proposition.
Regarding extensions, .the money for this purpose comes from two sources. I agree that it comes from the capital of the company. That capital is raised either by an issue of stock or by an issue of bonds. The company also has what is known as a depreciation withdrawal, amounting I think to about five or six per cent of its total gross income. This percentage is turned back into the company, not to be retained in cash, but for use in connection with depreciation, and repairs. The practice of this company is not to put that money aside, but to put it back into its plant. I have forgotten how many millions of dollars this five or six per cent of the gross income of the company amounts to, but it is used for financing extensions.
The company has been spending at a very great rate during the last few years on the installation of what is called the automatic system of telephones. It has been necessary to scrap many buildings and much equipment, and the depreciation piled up has probably not been equal to the amount of capital destroyed.
I do not expect, Mr. Speaker, the attention of the members on the other side, but I would appreciate not having all this distraction in the chamber, because it makes it quite difficult to talk.


Ernest Lapointe: Is the hon. member
referring to me?


George Reginald Geary: I just want to carry on, if
I may. The conversation is a little disturbing.


Ernest Lapointe: I did not think I was
disturbing the hon. gentleman.


George Reginald Geary: It is quite all right; I knew my hon. friend did not.
The expenditure of capital has been very serious during the last few years, but the company has maintained this expenditure by dint of certain stock issues, by dint of money got from depreciation, and by dint of certain issues of bonds on the market. The com-

Bell Telephone Company
pany has, as my hon. friend just stated, some $13,000,000 in unissued stock in its treasury, which will be taken up very readily. But more than that they can issue the same value of bonds as there is stock outstanding. If they issued this $13,000,000 of stock it would make $75,000,000 worth of stock. There are bonds outstanding to the amount of $40,000,000; therefore on a fifty-fifty basis they may issue $35,000,000 of bonds-that is, assuming their capitalization is made up of 50 per cent bonds and 50 per cent stock. This is much more than enough, with the depreciation money that comes in every year, to carry on their estimated extensions for, I should say, five years, three or four years even on the company's own statement. Therefore there is no immediate necessity for any authority to issue new stock. Under all the circumstances it is an extravagant thing for the company to ask that its capital stock be increased from $75,000,000 to $150,000,000. It is an extravagant claim, and I think the house might fairly examine it with caution before allowing it.
The company is in a peculiar position in that it is one of a ring of four companies. The parent company of course is that gigantic holding interest known as the American Telephone and Telegraph Company. It controls the Bell Telephone Company, holding some 32 or 33 per cent of its stock. It owns outright the Western Electric Company of Chicago. The Bell Telephone Company and the Western Electric Company in turn have acquired and own all the capital stock of the Northern Electric Company, of which the house has heard. The Western Electric Company make all the apparatus for the American Telephone and Telegraph Company, and the Northern Electric Company make all the apparatus for the Bell Telephone Company. It is idle to say that there is any competition. There is no competition. The Minister of Railways very properly cited a case where certain telephone equipment was bought in the English market.


Charles Avery Dunning: Very much of it too.


George Reginald Geary: In the city of Winnipeg one or two exchanges are supplied by the Northern Electric Company and one or two by the English concern, but my recollection, subject to correction-and I think I am quite accurate-is that by an arrangement made by the different manufacturers, the English manufacturer cannot come into the market in Ontario and Quebec.


Charles Avery Dunning: That I do not know. I do not know how you are going to prevent it.


George Reginald Geary: They have done it by arrangement. There were some lawsuits over patents that were settled in that way. Let us, however, leave that aside. The Bell telephone apparatus is absolutely standardized. The English company cannot make it; it is not allowed to make it, because the Northern Electric Company and the Western Electric Company own the use of the patents on the Bell telephone apparatus and nobody can make it outside of them. Therefore the Bell Telephone Company, whether it wishes to do so or not, is restricted to purchasing from its own creature, the Northern Electric Company, all its apparatus.
I am not going to enter into a discussion of prices; that will come when another bill is under discussion. But I say that no satisfactory proof has been given of the correctness of the prices charged by the Northern Electric Company to the Bell Telephone Company. The most that I can find in the judgment of the Board of Railway Commissioners is that the prices are not unreasonable. I do not know how they found that out, because the railway board, under a certain clause in the act which, they said, forbade them to go into the affairs of the Northern Electric, refused to inquire into the affairs of that company, and no one knows what is the proper price of the articles which are supplied by the Northern Electric Company to the Bell Telephone Company. This is rather lengthy and involved. All I want to say and really the only reason I have for referring to that phase of the situation at the moment is this. There is under public bills and orders a bill to which the hon. member for St. Lawrence-St. George (Mr. Cahan) has referred. That bill provides the one thing that the Board of Railway Commissioners found wanting, namely, the power for them to investigate this subsidiary company, the Northern Electric Company, in order to find out whether for the $12,000,000 of money being spent by the Bell Telephone Company over the counter of the Northern Electric Company, the former is getting full value, and whether, if it is not getting full value, it has the value tucked away in the Northern Electric Company, which value should be taken into account by the Board of Railway Commissioners as an asset or as a potential income, which in turn should relieve the consumers of the heavy charges which they are called upon to pay.
Under all these circumstances, and in view of the fact that municipality after municipality, I understand, in Quebec and, I know, in Ontario, have protested and have fought and are not satisfied in regard to the matter,
Bell Telephone Company

I submit to the house and particularly to members from other provinces than Ontario and Quebec that it is only fair that we should first deal with this matter by getting the powers of the railway board so extended that it can investigate the affairs, not of a hotel or a steamship company but of a company that subsists only by reason of its connection with and ownership by the Bell Telephone Company, a company that was started by the Bell Telephone Company, that was brought along by the Bell Telephone Company, that had its business given to it by the Bell Telephone Company, that prospered because of its relationship to the Bell Telephone Company, and that is, in conjunction with the Western Electric Company, owned by the Bell Telephone Company.


Louis-Simon-René Morin: If the bill which stands in the name of the hon. gentleman is adopted by the house, will it apply in case the capital of the company .is increased?


George Reginald Geary: Certainly, if we get it
passed. I think it is quite likely that the Board of Railway Commissioners will find, after the investigation which may be authorized by that bill, that there is no need of such capital expenditure as we are now considering and that they will not be called upon to authorize any increase. That really is the ground upon which I think the matter should be considered at the moment. No possible harm can be done by leaving it over if necessary for a year and certainly no harm can be done by leaving it over for a few weeks.
Perhaps at the risk of repetition-of which I am not fond myself and to which I know my hon. friends are not anxious to listen- I might go over once more this feature of the issue of stock that is going to be such a real deterrent to the affairs of the company. The overhead for fixed charges 'and dividends at present is $7,000,000, and for every $100 you allow to be issued by the company in stock, $8 comes from the consumer. For every $100 that the company gets on a bond, from $4.50 to $5 is borne by the consumer. Is it not therefore essential that those who are consumers and those of us who represent them should consider the matter very carefully? On only two occasions that I know of has the company _ failed to have any issue of stock taken up by its shareholders, and on those two occasions the company went into the market. On the first occasion the stock was down around par and they got in the market an average of $102.50; that is, for every $100, $2.50 more went into the com-

pany's coffers to build up its plant than would have gone had the shareholders taken up the stock. On the other occasion they sold the stock at $125, so that on that occasion $25 more was realized to the coffers of the company than would have been realized had the shareholders taken up the stock. While the stock may be borne down, while the market price may suffer if a large block is thrown on the market, it suffers inappreciably if we consider a recent issue of stock where the rights that accrued to shareholders-that is, the right to subscribe for one new share at $100 for every four shares held-have' been sold on the market at a premium. Those rights to-day would easily bring $10 per right. That is an extra dividend to the shareholder of 10 per cent which comes out of the consumer in the year in which the stock issue is made. That has been the practice with many companies, but this is a public utility company which has received great advantages from the parliament of Canada. It is allowed to go here and there at its own will and pleasure, planting its poles and stringing its wires without paying one cent for its right of way. Therefore, not only because of its peculiar situation in that regard, but because of the intimate nature of its dealings with the people and the necessity of the people patronizing it-, we are entitled to handle, not too roughly, not too tenderly, that creature of our own so that it may do business in a fair way, and I think the consumer who is obliged to consume its products should be treated as fairly as the company is treated. That, I think, is all anyone can ask, and I would submit that at this moment the fair way to treat this bill is to postpone this discussion.
I do not want to talk any longer. I do not want to run the risk of anyone suggesting that I am talking this bill out. I am doing nothing of the sort; I do not agree with that method; but I think this bill might well stand until the other bill comes up and is disposed of. No harm can possibly come by postponing this discussion, because the company has all the capital it will require, by any stretch of the imagination, for the next few years, and when the time approaches when more money is required and the issue of capital stock is an absolute necessity, then may be the time when we can deal fairly with the matter. I venture this statement, not as an authority on finance, but by every rule that I have heard, that it is good business to arrange your capital on the basis of 50 per cent bonds and 50 per cent capital stock. If 50 per cent is bonds and 50 per cent capital stock, you are doing the fair thing. The

Bell Telephone Company
people presented to the railway board the proposition, that- bonds should be 60 per cent and stock 40 per cent, but leaving it at bonds 50 per cent and capital stock 50 per cent-and the company has not come to that point, for many years at least-the company can then with very great advantage to the consumers raise all the money that is required at 5 per cent, instead of coming here and getting permission to go out and give bonuses to its shareholders and pay 8 per cent on every $100 they raise by issue of capital stock.


John Evans: This bill, innocent as it looks, is very far-reaching in its possible effects. It simply asks permission to allow the Bell Telephone Company to increase its capital stock from $75,000,000 to $150,000,000; in other words, to double its stock. I think it is the duty of parliament at this time to inquire carefully into every feature connected with this application before it is granted. This is, in fact, an application by a great American company which, like a vast great octopus, is reaching out to secure a monopoly of the telephone and telegraph business over the whole North American continent. Not only does it seek to control the rates of service to the people, but it has also a monopoly of all the supplies which are used by the parent company. This is being accomplished by the great American Telephone and Telegraph Company of New York, which is practically the chief owner of the Bell Telephone Company. Subsidiaries have been established for this purpose, and it is highly important, I think, that the people should know the full import and purpose of this application.
There is a bill before the House of Commons to compel an investigation into all subsidiary companies controlled or owned by the telephone or telegraph companies, subsidiaries such as the Northern Electric, which are manufacturing for and supplying the parent company. When a private company owns a public utility, it is surely right that the people should have all the data concerning the working of that company, and know whether it owns certain subsidiaries in which it can hide its vast profits, and thus furnish it with an excuse to ask for an increase of rates to bleed the public. It is certainly not in the interests of the people that the stock of any company should be indiscriminately increased. This allows the company concerned to hide its real profits.
In an article that appeared recently in the Toronto Globe, written by one Mr. R.
A. Reid, who very vigorously opposed the application of the Bell Telephone Company before the board of railway commissioners for an increase in its rates, and who is also opposing its application for an increase in capital, there is the complaint that with the sanction of the Dominion government and by order of the Board of Railway Commissioners the telephone rates of the Bell Telephone Company were increased to the provinces of Ontario and Quebec, putting an additional burden of $2,600,000 a year, through this public utility, on the people who use it. This was done ostensibly through the Bell Telephone Company, but really for the sake of the great American Telephone and Telegraph Company of New York. I think it is time that the people of Canada knew that the Bell Telephone Company is simply a name under which the American Telephone and Telegraph Company of New York is reaching out to exploit the people all over the North American continent. It adopts this method in order to avoid any feeling of prejudice against the parent concern as a foreign company.
This bill, in my opinion, seeks to make the greatest amount of plucking with the least squawking possible. In the matter of the application to raise its rates last year, there was no legal or logical reason, according to Mr. Reid, who has been writing in the Toronto Globe, for granting the increase. It was granted without any specific or definite evidence being presented by the company in the most important issues raised at the hearing before the Board of Railway Commissioners. To me it looked like a typical case where a company holds a charter to own and operate a public utility for the sake of gain. The wonder to me is that the people after all these years will still put up with it. Surely the evil of having a public utility such as the telephone in the hands of private companies is well illustrated in the application contained in this bill.
Another thing which we may well marvel at is that men in this house who at the last election pledged themselves on public platforms before their electors to look after the interests of the people particularly, now seem willing to barter the people's rights to powerful combines and interests in control of these public utilities. The first commercial telephone used in Canada was established in 1877 in the city of Hamilton, and it is rather strange that after all this time, fifty-one years,
Bell Telephone Company

the ownership and control of a public utility of this kind should be in private hands. One would have thought that public opinion would have expressed itself so strongly before this that it would have been impossible for a bill of this kind to come before parliament. Of course, parliament since that time seems to have existed very largely to find means of fleecing the people in the interests of some private concern or other.
In the west we have for a long time been dealing with this question of public ownership. Really public ownership has been forced on us in the three prairie provinces simply by the failure of private ownership. Looking back over the years since I came to Canada, it does seem to me that not one public utility in private hands has ever been a success; either the people have been fleeced to meet undue profits, or else through incompetency there has been failure. This has been true in western Canada ever since the Canadian Pacific Railway gave to grain companies who would construct elevators on their sidings a monopoly of their oars to handle the farmers' grain. Through that procedure we have suffered all kinds of abuses, and farming in all the western country has been made a most precarious calling down through the years. The people had no way of redress; in weights, grades, dockage and prices they were simply robbed of their earnings. Indeed1 we can look at other great public utilities too, suoh as the railways, private ownership of which has landed us in the financial perplexity which we as a nation are not clear of yet. When we talk to-day of the tremendous cost to the country of the Canadian National Railways as a public utility, it should be borne in mind that it was due to their failure under private ownership.
Now, seeing that the telephone business is a public utility, since it can be so readily established by the people themselves, it is a wonder that a bill of this kind is before parliament. I know it will be said that a great sacrifice was made for the sake of western Canada in respect of many public utilities which we now enjoy, particularly the railways; but the west never landed this country in the tremendous amount of debt which we have had to meet on these great public utilities as did eastern Canada. As an example, take the old Grand Trunk Railway Company, which has cost Canada untold loss, which was not all a direct financial loss either, great as that was, but indirectly a loss of national prestige, something that we are now endeavouring to buy back.

But the Canadian National Railway redemption is not all that our railway service has cost the Dominion. If everything be reckoned, the Canadian Pacific Railway has cost the people perhaps more than the Canadian National Railway ever did. This was due to the tremendous mistake away back in the eighties of letting that great public utility fall into private hands. We must count the cost of some twenty-six million acres of the best of our land, to say nothing of railway lines completed and handed over, to which must be added twenty years' taxes bn that land, and the tremendous inconvenience to settlers in establishing those essentials of civilization, good roads and schools, on which they had to pay the taxes themselves.
Now, it seems strange that men can be found who will favour these exploiting concerns and grant charters to companies who own public utilities for private gain. When we count the cash paid out for the redemption of what is now the Canadian National Railway system, it is a very little thing indeed compared with the cost of these things. I apologize for even mentioning the railway question, but I do so to show the debacle we are landing ourselves in through private ownership of other public utilities. In Saskatchewan we have had government ownership of our telephones practically from the start, and I would advise the people of Ontario and Quebec to lose no time in securing control of this great public utility, which has become a necessity in our complicated civilization as compared with the days of not very long ago. In that western province, with its much more scattered population than eastern Canada and no big cities, we have a telephone service at a cost that is surprisingly low when it is remembered that we have to go much further to find a subscriber than would be the case in rural Ontario. The installation of a rural telephone line is spread over a number of years, and the debentures are redeemed by a tax rate which is hardly felt. At the present time we pay about $28 for a city telephone. I find that in the city of Ottawa the people are paying $39.60 for a desk phone. Our telephone lines cover practically the whole province. Only in the newer settlements are the people without this utility.
I do not think anyone in western Canada today would think of going back to private ownership in relation to the telephone service.
If parliament passes this bill it will be another means of robbing the worker of his earnings and concentrating the country's wealth and giving a power obtained by money

Bell Telephone Company
control, and it will make a still further dividing line between the worker and the government. From the Globe of March 29 last I clipped the following from a letter written by R. A. Reid:
It was shown and conclusively proved at the recent Bell Telephone rate case hearings that this concern has continuously over a period of years issued its stock at par value of $100 to its shareholders, when that same stock was selling on the market at prices ranging from $125 up to $150 per share.
Will anyone say in the face of this that this bill should be passed'? It is rather strange to me, since this statement has been published in a paper like the Toronto Globe, that the people are not even now organizing to promote public or government ownership. If what I have read is true-and I have never seen it refuted-it means that when this stock is selling on the market at $150 per share and is issued to the shareholders at $100, as it usually is, every issue of $10,000,000 worth of stock represents a bonus or a present of $5,000,000 to the shareholders. The result is that every user of telephones on their lines, be he rich or poor, must continue in his sweated labour to pay for it. This is a practice which should not under any circumstances be allowed. The telephone business here, connected as it is with the American Telegraph and Telephone Company of New York, is virtually a monopoly, and to me it is rather a sad fact that a Liberal government of Canada should further a monopoly which has in view the fleecing of the entire public. The company has been able to do as it pleases so far as rates are concerned. In the United States it does over 72 per cent of the telephone business and dominates all the others. The same journal says, further, that it has worked the " holding company " device to an extent unrivalled in any other industry. This holding company device is a legal scheme for confusing the public and investigators and for getting something for nothing.
I trust that even yet the people of this country, and this parliament will see better than to support a proposal of this nature and to pass a bill like this, which is nothing more than an attempt to give power to a great monopoly to fleece the public of its earnings.


Thomas Langton Church: The amendment proposed by the hon. member for Bow River (Mr. Garland) asks that this bill be not read the third time but be referred back to the committee of the whole to be amended by adding section 3 to provide that no issue of capital stock of the Bell Telephone Company Limited shall be made
except it is offered to the public for subscription. I may say in connection with this amendment that the whole subject was before the Board of Railway Commissioners and considerable objection was taken to the methods pursued by this particular company. The stock has been quoted at 170 and the company has made handouts to a few favourites within the charmed circle-so much so that in the opinion of many the company is not altogether complying with the law. Let me point out in the first place that the American Telephone and Telegraph Company owns 98 per cent of the stock of the Western Electric. This will give you an idea of the way these various companies are interlocked. In the second place the Western Electric Company owns 48 per cent of the Northern Electric. The third point I wish the house to grasp is that the Bell Telephone Company owns 52 per cent of the Northern Electric. And in the fourth place the American Telephone and Telegraph Company controls them all. In other words, all these these concerns constitute a combine in restraint of trade. That is all they are. They are interlocked and are a part of this gigantic trust-the American trust to which I have referred. We seem to be very fortunate in this country in our trusts; we make it possible for them to flourish in Canada, so that they may exploit the people in connection with telephones, telephone apparatus, pulpwood, power and so on. Canada is the happy hunting ground for speculators from the other side. They come here and by means of agreements drawn up by clever lawyers they get around our financial statutes. The result is that many of these companies are an affliction worse than the family compact.
Let me give a little bit of the history of this corporation to show the way they have been jockeying with the law. Its record justifies the very wide amendment proposed by the hon. member for Bow River (Mr. Garland). We had a parallel case in the history of the gas company of Toronto, in connection with which an appeal was made to the legislature to prevent the adoption of just such a principle as is laid down in this bill. It would be interesting to know what regulations the Board of Railway Commissioners have over the issue of stock by this company. I fail to see any regulations regarding the sale of this $75,000,000, or any regulations providing for subscription to this stock. Dear knows to what extent the American Telephone and Telegraph Company are interested in this $75,000,000. In view of all that, and in view of the existence of this trust which flourishes in Canada like a green bay tree, I think we

Bell Telephone Company

should know something of the. history of the various issues of stock of this company. The company was incorporated in 1880. They came back to parliament in 1882 asking for authority to issue more stock, and in 1884 they came back again. They seem to have come back every five or six years, after changes of government, looking for amendments to their charter and for authority to issue additional stock. However, I have yet to find that the stock was sold by public subscription, as is proposed in the amendment before the house. In 1892 they again came to parliament and received authority to issue more stock; in 1894 they renewed their application, and returned again after a change of government in 1896. In 1902 they had a new act passed conferring various powers on them. Four years later they returned again and were given power to increase their stock issue, but nothing was said as to how the stock should be issued. Then in 1920 they had another act passed by this parliament giving them power to deal with their stock again. Now they are back again asking leave to increase their capitalization from $75,000,000 to $150,000,000, but they give no intimation of what they propose to do with the stock or why it is necessary to issue these, additional shares, although they say they wish to undertake extensions. Is this new stock issue to go to the present shareholders, or is it to be divided up all along the line? When you pay for hydro electric power you simply pay the cost price; in Ontario the rate per kilowatt hour is only It- cents as compared with oi to 4 cents in Buffalo and Montreal. This company is under the control of the railway commission, who have failed in their duty by not making some regulations to cover the disposal of this stock.


Lucien Cannon: I rise to a point of order. The hon. gentleman may say whatever he wishes so long as he observes the rules of the house, but under the rules he cannot criticize the Board of Railway Commissioners as he has been doing.


Hewitt Bostock: The Board of Railway
Commissioners is a court of record, and therefore may not be attacked except by way of impeachment. This has been decided twice by this house within my knowledge.


Thomas Langton Church: In order to show that
public subscription should be allowed I think it only fair that I should refer to the history of past issues of stock by this company, to show how the stock was sold then. I notice some hon. gentlemen are smiling; this is not going to be a laughing matter to the poor people of Ontario and Quebec who will have to pay an additional charge for the use of their telephones. Some of these gentlemen who

are now smiling would do better to stand up and support this amendment in order to prevent the stock being parcelled out among the favourites and insiders of the company.
Now I would like to refer to the way in which previous stock issues have been disposed of. On December 31, 1925, the authorized capital of this company amounted to $75,000,000; of that amount $50,000,000 had been issued. In December, 1899, stock was sold privately to a few favourites at $100 per share while the market price was $193, and the very same thing will be done with this next issue of stock if this amendment is not adopted. In 1900 the company sold $50,000 worth of stock at a net premium of $35,105, and in May of 1902, $1,000,000 in stock was sold to the inside people for $125 per share, although the market price was $176. From these figures the house will see how the people of this country have been held up. Where do the consumers and the general public come in when this sort of thing goes on?



BUSINESS OF THE HOUSE


William Lyon Mackenzie King: Before the house adjourns, may I say it has been suggested to me that in regard to the sitting of the house on Saturday next it would meet the convenience of members to a greater extent if instead1 of meeting at three o'clock in the afternoon and sitting in the evening the house were to sit from two o'clock until six. I have spoken to the' leaders of the different parties and to different members of the house and I gather that this would suit the Convenience of members better than sitting late Saturday evening. If the1 house will give its consent I should like to move:
That on Saturday the 19th instant the house shall meet at two o'clock in the afternoon.
That is with the understanding that we will adjourn at six o'clock, and applies to this coming Saturday only.


Hewitt Bostock: This must have the
unanimous consent of the house.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Mr. L. P. BANCROFT (Selkirk) moved that the following bills from the senate be now read a first and second time and referred to the select standing committee on miscellaneous private bills.

.ludgp.s' Salaries-Report
Bill No. 315, for the relief of Irene Matilda Ballinger.
Bill No. 316, for the relief of John Hare.
Bill	No.	317,	for	the	relief	of	Helena
Martyniuk.
Bill	No.	318,	for	the	relief	of	Francis
Mairmaduke Steele.
[Stage Direction]
Bill
[Stage Direction]
No. 319, for the relief of Rose
[Stage Direction]
Tlustie.
[Stage Direction]
Bill
[Stage Direction]
No.
[Stage Direction]
320,
[Stage Direction]
for
[Stage Direction]
the
[Stage Direction]
relief
[Stage Direction]
of
[Stage Direction]
Robert
[Stage Direction]
Anderson Traill.
Motion agreed to on division.
At eleven o'clock the house adjourned (until Friday, May 18) without question put, pursuant to standing order.
Friday, May 18, 1928