1935-06-17

[Stage Direction]
Hon. C. H. CAHAN (Secretary of State) moved for leave to introduce Bill No. 109 to amend the Dominion Franchise Act.
Some hon. MEMBERS:: Explain.


Mr. MACKENZIE (Vancouver):: Is this another elections act? Are we to have one every day?


Mr. CAHAN:: Mr. Speaker, as the explanation would be somewhat lengthy I prefer to state si-mp'ly the purport of the bill and give the details on second reading. This bill provides for a new subsection 5 to section 32 of the Dominion Franchise Act which section deals with the hearing by a judge of appeals from the decisions of a registrar. The amendment is to the effect that, in making an order. for the retention of names cn or the removal of names from the list, the judge must have before him affirmative evidence showing that the person is disqualified and nonresident or that he is qualified and resident. This will affect prospective appeals in connection with 4,000 cases in one constituency alone. The next amendment has been suggested by the

law clerks of this house and is to make a change in one word in the French version. The French law clerk says that this is merely a clerical correction. The word "removal" is used in the English version and he contends that this should be translated as "demenage-ment" intend of "destitution."


Mr. LAPOINTE:: Will the first amendment referred to by the minister apply to the present revision?


Charles Hazlitt Cahan: It will if this bill is passed before June 30. If hon. gentlemen desire me to go into details I am perfectly prepared to do so but otherwise I prefer to leave that discussion until the second reading.
Motion agreed to and bill read the first time.



JUVENILE DELINQUENTS ACT

[Stage Direction]
Hon. HUGH GUTHRIE (Minister of Justice) moved the first reading of Bill No. 106 to amend the Juvenile Delinquents Act.
He said: This bill which comes from the Senate proposes to amend the Juvenile Delinquents Act by a clause limiting the time for the bringing of prosecutions. It proposes also to amend the section with regard to probation officers, which section does not apply to Alberta. The government of that province have requested that this section be made applicable to Alberta. There is another slight amendment adding some words to the clause which provides that it is no defence if a child does not eventually become delinquent.
Motion agreed to.

[Stage Direction]
Hon. HUGH GUTHRIE (Minister of Justice) moved for leave to introduce Bill No. 107, to amend the criminal code.
Some hon. MEMBERS:: Explain.


Mr. GUTHRIE:: This is another bill
passed by the Senate. It provides for the amendment of two sections in the criminal code having regard to offences against the delinquency act which now appears in the code. It is to make the bills correspond.
Motion agreed to and bill read the first time.



QUESTIONS

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

Mr. RALSTON:: 1.	How many mail contracts are there in Shelburne county, N.S., which will expire from this date to December 31, 1935?
2.	What routes are they?

Questions
3.	Who are the contractors for the respective routes?
4.	What is the contract price for each route?
5.	Have any of these been offered to be renewed to the present contractors or to other person or persons, without public tenders being called for?
6.	If so, to whom and for what price or amount of contract?
7.	Will public tenders be asked' for any of these renewals, and if so in what newspaper or newspapers will such advertisements be published ?


Mr. SAUVE:: 1.	19.
2,	3 and 4.
Name of Service-Contractor-Contract price Barrington and Brass Hill-Mrs. E. M. Garron-$300.
Birchtown and railway station-E. G. Mahoney-$62.60.
Cape Sable Island south side and North East Point wharf-Everett Chase-$705.68.
Churchover and railway station-E. G. Mahoney-$195.
Clark's harbour and North East Point wharf-Everett Chase-$500.
East side of Ragged islands and Rockland -M. Huskins-$132.
Gunning cove and railway station-J. E. Goulden-$100.
Jordan bay east side and railway station- J. C. Sears-$125.
Jordan Falls and railway station-D. P. Holden-$336.
North West harbour and railway station- A. Doane and Frank McKay-$305.
Port Clyde and Upper Port LaTour-E. R. Reynolds-$350.
Port Saxon and railway station-Walter A. Thomas and H. S. Greenwood-$190.
Rockland and railway station-M. Huskins
-$200.
Roseway and railway station-C. D. Hagar -$150.
Sable River and railway station-Earl L. Giffin-$219.10.
Sable River west and railway station-Earl L. Giffin-$209.
Shelburne and Upper Clyde river-C. Hip-son-$156.
Shelburne No. 1 R.R.-J. M. Bower-$475. Stony island and North East Point wharf -E. Cunningham-$295.
5 and 6. Yes.
Birchtown and railway station-Stillman Acker-$62.60.
Cape Sable island sc jth side and North East Point wharf-E. Chase-$705.68.
Churchover and railway station-Stillman Acker-$195.
Clark's harbour and North East Point wharf -E. Chase-$500.
East side of Ragged islands and Rockland -M. Huskins-$132.
Gunning cove and railway station-J. E. Goulden-$100.
Port Clyde and Upper Port LaTour-E. R. Reynolds-$350.
Port Saxon and railway station-Walter E. Thomas and H. S. Greenwood-$190.
Roseway and railway station-C. D. Hagar -$150.
Sable river and railway station-Leslie Freeman-$200.
Sable river west and railway station-Leslie Freeman-$200.
Shelburne No. 1 R.R.-Jas. M. Bower- $475.
Stony island and North East Point wharf 

E. Cunningham-$295.
7. Yes.
Barrington and Brass Hill.
Jordan bay east side and railway station.
Jordan Falls and railway station.
North west harbour and railway station.
Shelburne and upper Clyde river.
Department has discontinued practice of advertising contracts in newspapers.


MELFORT, SASK. ARMOURY
Mr. DONNELLY:: 1.	Is an extension being made to the armoury at Melfort, Saskatchewan; if so, at what cost?
2.	On whose recommendation is this work being undertaken, and for what purpose?


Mr. STEWART (Leeds):: 1.	Tenders for alterations and additions to the public building at Melfort, Sask., which contains the armoury, will be received on Tuesday, June 25, 1935, at 12 o'clock noon. Actual cost will not be known until tenders are received.
2.	Requested by Melfort board of trade in May, 1931, by Post Office Department August 21, 1934, and by National Defence department September 22, 1934, to provide adequate accommodation for Post Office Department and National Defence department.


SAINT JOHN, N.B. PIERS
Mr. VENIOT:: 1.	Have tenders been called for the reconstruction of piers one, two, three and four at Saint John, New Brunswick?
2.	Were tenders called by public advertisement or by private invitation to certain persons or corporations?
3.	If no tenders have yet been called, will they, when made, be by public advertisement?


Mr. DURANLEAU:: 1.	Yes.
2.	By invitation.
3.	Answered by 1 and 2.
Questions


HALIFAX, N.S. GRAIN ELEVATOR
Mr. RALSTON:: What quantity of grain was handled through the grain elevator in Halifax during each of the years 1931, 1932, 1933, and 1934?


Mr. DURANLEAU:: The following information has been furnished by the Halifax harbour commissioners:
Receipts	Shipments
1931..	.. 1,224,192 bushels	1,126,787	bushels1932..	.. 2,562,080 "	1,695,420	U1933..	.. 2817,367 "	2,741,797	U1934..	.. 3,407,715 "	2,517,046	u


GUELPH, ONT., POST OFFICE
Mr. BLAIR:: 1.	Was property purchased for a post office site in Guelph?
2.	If so, at what price?
3.	Who owned the property before the purchase was made?
4.	What is the estimated cost of the post office?


Mr. STEWART (Leeds):: 1.	Yes.
2.	$45,000.
3.	The Cutten Co. Ltd.
4.	$159,038 exclusive of interior fittings, furniture, etc.


CAMPBELLTON-GASPE MAIL SERVICE
Mr. MICHAUD:: 1.	Do the mail clerks on the Campbellton-Gaspe railway mail service receive full mileage remuneration for the distance covered by the postal ear?
2.	If not, why?


Mr. SAUVE:: 1 and 2. The railway post office operates between Gaspe and Matapedia.
Railway mail clerks are paid full mileage for the distance covered by the railway post office.


OWL RIVER, ALTA., MAIL SERVICE
Mr. STEWART (Edmonton):: 1.	Has a post office been opened in the Owl river settlement. Lac La Biche, Alberta?
2.	Who has been appointed as postmaster and on whose recommendation?
3.	Has the same postmaster received a contract as mail carrier for this post office and on what terms?
4.	Was a petition received from a large majority of the settlers of this district regarding the location of a post office and the appointment of a postmaster?
5.	If so. were the recommendations accepted, and, if not, for what reasons? '


Mr. SAUVE:: 1. Post office authorized but not yet reported as opened.

2.	Edmond Tournier recommended by district superintendent of postal service, Edmonton, and P. G. Davies, MR.
3.	Yes. $150 per annum.
4.	A petition bearing twenty-seven names was received in September, 1933, recommending R. W. Lacroix. Another petition with twenty-eight signatures was received in February, 1934, recommending John Viksush.
5.	The district superintendent submitted information that Mr. Tournier was the most suitable applicant.


SOUTH BAT MOUNT-MANITOULIN ISLAND, DOCK
Mr. SANDERSON:: 1.	Has the building of a dock at South Bay Mouth on the Manitoulin island been completed?
2.	What was the total cost?
3.	Was it built by tender and contract; if so, what is the name and address of the contractor?
4.	Was the building of this dock recommended by the departmental engineers?
5.	Did the government purchase a dock at South Bay Mouth, Manitoulin island, before the building of the new dock; if so, from whom was it purchased and the price?


Mr. STEWART (Leeds):: 1.	Yes.
2.	$10,511.55 exclusive of cost of dock expropriated.
3.	(a) By contract.
(b) L. R. Brown & Company, Ltd., Sault Ste. Marie, Ont.
4.	Yes.
5.	(a) Yes.
(b) Expropriated from William Ainslie Jr., an offer $900 being made for same.


QUESTION PASSED AS ORDER FOR RETURN
[Stage Direction]
st. John's military school
Mr. RHEAUME:: What are the names of persons or companies who secured contracts at the military school of St. John's, Quebec, from January 1, 1934, to June 1, 1935, to supply (a) meat; (b) vegetables; (c) groceries; (d) ice; (e) fuel; (f) hay, straw and grain?


MOTIONS FOR PAPERS
Mr. GOTT:: For a copy of all correspondence, letters, telegrams and other documents, exchanged between the Mininster of Finance or any officers of his department and any minister or official of the Ontario government, regarding the Farmers' Creditors Arrangement Act, since the coming into effect of the said act to date.

Privilege-Mr. Sanderson


NATIONAL RESEARCH COUNCIL
Mr. SANDERSON:: For a copy of all the correspondence between the government and Dr. H. M. Tory, concerning the retirement of Dr. H. M. Tory, as head of the National Rerearch Council.


CIVIL SERVICE GRADE FOUR
[Stage Direction]
On the orders of the day:
Miss AGNES MACPHAIL Southeast Grey):	I wish to direct to the Secretary of
State a question based upon a letter I have received from .the Canadian Federation of University Women, signed by Mrs. J. L. Savage. It has to do with the establishment of a new grade of civil servants, grade 4, which seems to provide for the passing of highly qualified university graduates directly into this grade of the service. This letter informs me that only men and not women are to be accepted in grade 4. I should like to have a statement from the Secretary of State.
Charles Hazlitt Cahan: I shall have to examine the documents and make reply at a later date. I will reply as early as conveniently possible.


B.C. RELIEF CAMP STRIKERS MOVEMENT OF SOLDIERS INTO CALGARY TO PROTECT GOVERNMENT PROPERTY
[Stage Direction]
On the orders of the day:
Mr. E. J. GARLAND (Bow River):: May
we have an answer from the Minister of National Defence as to whether troops were moved1 into Calgary at the request of the Alberta government or not.
Hon. GRO'TE STIRLING (Minister of National Defence):	On the 6th instant the
district officer commanding, consequent on information which had reached him., decided to bring back a small party of Lord Strath-cona's Horse, thirty-seven in number, to the barracks in Calgary. They were so moved on the 7th. On the 8th the attorney general telephoned him from Edmonton, asking him whether troops were available should they be required. That message was in consequence of a communication which he had received from the mayor of Calgary. The district officer commanding informed the attorney general that troops were available but could not be moved except at his request or in accordance with the proper precedents. He could not supply troops at the request of the mayor of Calgary. The attorney general then informed the district officer commanding that he was then informing him that the situation might become such as would make
it necessary for him to request that troops should be provided. The district officer commanding informed him that the troops were there and, if the proper course of procedure was followed1, would be made available.


Edward Joseph Garland: The point then is that there was no direct request from the Alberta government for the movement of these troops.


Mr. STIRLING:: It had not reached the
situation where the attorney general saw fit to ask for the assistance of troops.



PRIVILEGE-MR. SANDERSON

[Stage Direction]
On the orders of the day:
Frederick George Sanderson: I rise to a question of privilege. I was not in Ottawa on Friday, the 14th, and on my return to the city this morning I read Hansard of Friday, June 14. I wish to refer to the remarks of the Right Hon. the Prime Minister (Mr. Bennett) on Bill No. 98, with reference to the Canadian grain board. As reported in Hansard at page 3640, the Prime Minister made a statement in regard to a meeting of the banking and commerce committee on March 212, 1934, a committee of which I happen to be a member. I would bring to your attention, Mr. Speaker, the fact that on March 22, 1934, the standing committee on banking and commerce met at four o'clock in the afternoon, adjourned at six o'clock, and had another meeting in the evening at eight o'clock. I assume that the Prime Minister is referring to the afternoon session of that committee, and he is reported as saying:
The committee voted, with eastern Canada Liberals forming the minority, not to have Mr. McFarland give that information.
The information is in connection with the holdings of wheat by Mr. McFarland.
This is from the morning Citizen of March 23, 1934. The following Liberals voted to disclose the figures:
Hurtubise, Nipissing; Raymond, Beauharnois; Lapointe. Quebec East; Power, Quebec South; Mackenzie. Vancouver Centre; Ralston, Shelburne-Yarmouth; Howard, Sherbrooke; Donnelly, Willow Bunch; Duff, Antigonish-Guysborough. Conservatives. Progressives and the remaining Liberals on the committee opposed the publication.
I take exception to that last remark of the Prime Minister, that Conservatives, Progressives "and the remaining Liberals"-I am referring especially to " the remaining Liberals on the committee"-opposed publication. I am surprised that the right hon. the Prime Minister-


Some hon. MEMBERS:: Order.
Privilege-Mr. Sanderson


Mr. SPEAKER:: The foon. member will
please state the question of privilege.


Frederick George Sanderson: Am I not within my rights?


Pierre Édouard Blondin: Not to discuss a statement made by the Prime Minister. If the hon. gentleman wishes to state his position, he may do so.


Frederick George Sanderson: I am attempting
to do that. I am only referring to remarks of the Prime Minister on Friday last when he said-


Pierre Édouard Blondin: I have heard them read by the hon. member, but he was continuing to say that he was surprised at something. Will he be good enough to make whatever correction he wants to make?


Frederick George Sanderson: My surprise is this, that the Prime Minister in referring to a vote of a standing committee of this house, should take the vote from a newspaper rather than from the recorded vote of a committee of the house. I am attempting, if Your Honour will permit me, to refer to the recorded vote.


Pierre Édouard Blondin: Will the hon. member kindly state the point to which be wishes to take objection? I presume he wishes to make the correction if he did not vote.


Frederick George Sanderson: I would prefer to make my own statement.


Pierre Édouard Blondin: Will the hon. member be kind enough not to make a speech, but to make the correction he wishes and confine his remarks to that.


Frederick George Sanderson: I am not attempting to make a speech. I want to put on record that I was not at that meeting on March 22 as a member of that committee. I was not in Ottawa and consequently was not at the meeting. The recorded minutes of that meeting-and I have them under my hand-of Thursday, March 22, 1934, show that there were forty-four members present at that meeting out of a total of fifty. I was one of the absentees; I was not there and consequently I did not vote. My point is that the Prime Minister has no right to count me as opposing the motion in regard to publishing the quantity of wheat that Mr. McFarland and his associates had on hand. Had I been at. that meeting, I would have voted to publish the report.


Pierre Édouard Blondin: The hon. member has no right to make a statement like that. He can make a correction, but he should not make 3uch a statement.



CANADIAN GRAIN BOARD


[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: May I ask the Prime Minister, who is chairman of the committee to which the grain board bill has been referred, if he will kindly advise the house as to when the committee is to be called together?


Right Hon. R. B. BENNETT (Prime Minister):: I am not chairman of it. The committee selects its own chairman.


William Lyon Mackenzie King: I assume the right hon. gentleman will be.


Richard Bedford Bennett: The right hon. gentleman should not make any such- assumption. The point is I am not the chairman of the committee; it will select its own- chairman, but I have ascertained that the course to pursue is to try to give notice for it to meet tomorrow morning. As my name is the first alphabetically and the convener, I have asked that the members of the committee be communicated with as far as possible to meet to-morrow morning at half past ten o'clock.



AIR TRANSPORTATION

[Stage Direction]
On the orders of the day:
Hon. W. D. EULER (North Waterloo):: In the absence of the Minister of Railways (Mr. Manion), I should like to ask the Prime Minister whether it is a fact that the two railways, the Canadian National and the Canadian Pacific, have formed an organization for the purpose of carrying on the business of transportation by air?


Richard Bedford Bennett: I have no advice to that effect, nor
had I heard of it until the hon. gentleman raised the question. Both the Canadian Pacific and the Canadian National were shareholders in Canadian Airways, each having subscribed-and this was I think before we came into office-for $250,000 worth of stock in that enterprise. It is possibly that to which the hon. gentleman refers.


William Daum Euler: It may be.


Richard Bedford Bennett: That is some time ago.



PERFORMING RIGHT SOCIETY

[Stage Direction]
On the orders of the day:
Mr. A. W. NEILL (Comox-Alberni) :: Might I ask the Secretary of State when he expects to receive the report of Judge Parker who

Weights and Measures Act
was appointed to investigate charges against the Canadian Performing Right Society? When he does get it, will he make it available to the house?


Charles Hazlitt Cahan: I have no knowledge of when the proceedings will be terminated. They are being carried on as rapidly as possible and, as I understand, are approaching a conclusion, but so soon as I ascertain that the investigation is closed and I receive a report, I shall announce that fact to the house.



FIRST NARROWS BRIDGE

[Stage Direction]
On the orders of the day:
Mr. A. E. MUNN (Vancouver North):: On behalf of the promoters of the First Narrows bridge at Vancouver I wish to ask the Prime Minister a question. This application has been before the government for several months and in the meantime the promoters have spent upwards of a million dollars working on a townsite in West Vancouver. My question is: If as suggested, the south pier of the proposed First Narrows bridge, as shown on the plan, be moved fifty feet north, giving full 1,500 distance between piers, will the government consent and give authority for the promoters to proceed with the construction?


Richard Bedford Bennett: The hon. gentleman sent a note to
my office this morning stating that he proposed to ask this question. I have not had an opportunity to look at the map, so I shall endeavour to give him a detailed answer tomorrow. The sole question is whether the north pier is sufficiently far north to prevent the possibility of its being said during the seventy-five years that will elapse in the lifetime of the bridge, that the widest possible channel is not available for navigation in the narrows fairway of the harbour of Vancouver, whether it cannot be moved to a sufficient distance to prevent further dredging to widen the channel. The question from time to time has been whether the pier would be moved so far north that it could not be moved further north, so as to make it impossible to contend that the channel has been unduly narrowed. That is the whole story. At any time the promoters satisfy the government that the pier cannot be moved further north so that the narrows fairway cannot be enlarged in the future, the matter is ended. I tried to make that clear to the hon. gentleman some months ago.



PENSIONS FOR THE BLIND

[Stage Direction]
On the orders of the day:
Alan Webster Neill: Might I ask the Prime Minister a question? Last week a motion to concur in the report of the committee dealing with' old age pensions for the blind was stood over at his request. Does he intend to let it proceed or to make some statement in connection with it?


Richard Bedford Bennett: The matter has been engaging the attention of the government. If the report is adopted in the terms in which it now stands, this involves a radical departure from parliamentary procedure, and no decision has been reached as to just what action should be taken.



MAJOR GENERAL ASHTON

[Stage Direction]
On the orders of the day:
Frederick George Sanderson: I have a question to direct to the Minister of National Defence. Major General Ashton has been appointed chief of staff of the minister's department. What salary will he receive, and if he is on a 'contract for a number of years, will the minister kindly state the terms?


Grote Stirling: The salary of General Ashton on assuming the duties of chief of general staff is $7,500. It is not under contract.



WEIGHTS AND MEASURES ACT


Hon. R. B. HANSON (Minister of Trade and Commerce):: The Senate have made to Bill No. 70, to amend the Weights and Measures Act, several amendments, all of which except one it is desired to concur in. The first amendment is to section 1 of the bill, adding to the statute a new paragraph (f) defining the expression "pre-packaged goods." The proposed amendment is to add the following as subsection 2 of section 1:
(2) Section two of the said act is further amended by adding the following as subparagraph (f)- _
(f) the expression "prepackaged goods" or "prepackaged articles" includes any article which is packaged or made up in advance ready for resale in a wrapper or container, and where any article packaged or made up in a wrapper or container is found on any premises where such articles are packaged, kept or stored for sale, the article shall be deemed to be packaged or made up in advance ready for retail sale unless the contrary is proved.
There is no difficulty about that.
Weights and Measures Act

The next amendment proposed by the Senate is to section 8 of the bill, page 3, where in line 25 the word "and" is struck out and replaced by a comma in the interests of charity and good English. That amendment may be accepted without question.
The next amendment is to section 10 of the bill, page 4, which amends section 63 of the act which by the bill is repealed and a new section substituted therefor. Section 10 of the bill is the section that sets up new penalties for short weights, measures or counts. In the bill as drafted and passed by this house the minimum penalty for a first offence was a fine not exceeding $50, and the Senate have amended that by reducing the minimum to $10. For a second offence the minimum set up by the bill as passed by this house *was $100 and the Senate amendment reduces that to $50. That is accepted.
The Senate have also amended section 10 by adding thereto a new subsection (4) which provides:
(4)	No proceeding shall be taken under the provisions of this section in respect of prepackaged goods or articles if the person proceeded against has already been convicted under section twenty-three of the Food and Drugs Act, of a breach of the provisions of section seven, paragraph (f) of the said act in respect of the same goods or articles.
The idea is that a person accused should not be convicted under two different acts for the same offence. I think that is perfectly sound.


William Lyon Mackenzie King: The minister in reading the amendment said section 17, but the amendment reads section 7.


Richard Burpee Hanson: It is section 7 of the Food and Drugs Act. Perhaps the right hon. gentleman did not catch my statement. The idea is that if the person against whom the proceedings are taken under the Weights and Measure Act has been already convicted under a similar section of the Food and Drug Act no proceedings shall be taken on the same set of facts. The two acts more or less overlap, and that amendment I think is quite in order.
But the Senate have added a further subsection (5) to section 63 of the Weights and Measures Act with respect to an alleged deficiency of weight or measure of prepackaged goods. I will read the amendment as passed by the Senate:
(5)	In any proceedings under this act in respect of an alleged deficiency of weight or measure of any prepackaged goods, the court shall disregard any inconsiderable variation in the weight or measure of a single article, and
[Mr. R. B. Hanson.1
shall have regard' to the average weight or measure of a reasonable number of other articles of the same kind, if any, sold or delivered by the defendant, or in his possession for the purpose of sale or delivery, on the same occasion.
Very considerable thought has been given to that proposed amendment by the departmental officials. The subsection put into the act by the Senate is substantially similar to a section of the imperial Sale of Foods Act, 1926 (Weights and Measures) 16 and 17 George V, chapter 63, and was placed in the imperial act as "a safeguard to traders." In the imperial act this safeguarding section is unquestionably justified, as that act establishes two offences: (a) sale of prepacked article short weight; (b) having in the trader's possession for sale or delivery, prepacked article short weight. Section 10 of the imperial act gives weights and measures inspectors authority to inspect prepacked articles and to compel the sale of any short weight article disclosed on any such inspection. In view of the offence created by paragraph (b) mentioned above this safeguarding section is quite reasonable.
It is pointed out that the Canadian Weights and Measures Act establishes only one offence, namely, sale by short weight, and the weights and measures inspectors, if short weight in prepacked goods is disclosed upon inspection, have no authority to compel sale to secure evidence of an offence, such as they have in the English act.
In this connection I am advised by the field officers that the trader generally refuses to sell short weight prepacked articles to them for evidence, in which he is quite within his rights in our statutes. It is submitted that this safeguarding section is unnecessary and should be deleted. Should it remain it is pointed out that the enforcement of section 63 as amended by the Senate is going to be seriously handicapped and the courts placed in a quandary in applying this section to any offence taken to prosecution, in which the accused may set up the defence that the articles in question were prepacked and claim the protection of the section.
The offence of sale by short weight under our act is disclosed by test purchases made by the independent shoppers. In a test purchase of four items, should two be short weight an offence is undoubtedly established. If these two short weight items be "prepacked" then this section applies, and the following difficulties will have to be considered: (a) How can the article in hands of an independent shopper be identified as a

Weights and Measures Act
prepacked article (b) How can "reasonable number of other articles of the same kind"- that is the language of the section-be inspected and found short weight "on the same occasion"-those are the words in the English act-when only one was purchased.
I need only point out that difficulty to gentlemen of the legal profession to have them appreciate the point (c) Should the short weight item be brown sugar for instance, would a package of tea short weight for the second item be an "other article of the same kind" under this section? (d) Would short weight in the trader's store, found on an inspection after the test purchase was made, be on "the same occasion"? These difficulties as set out, it is submitted, practically nullify section 63 of the act in so far as it applies to its enforcement against prepacked articles, and it is thought by the officers of the department that we cannot accept the Senate amendment.
Other amendments made by the Senate are such as can readily be accepted. For instance, section 15, page 5 of the bill, has been amended by the Senate by inserting the words "guilty of an offence and." Also the same words have been inserted in section 16 after the words "shall be" in line 7. I may say that I suggested the insertion of these words myself but the draftsman said they did not matter and he overruled me as I did not like to enforce my own opinion against his.
The next amendment is to section 17, page 6 of the bill, where the Senate have struck out the section altogether, and the officers of the department agree that section 80 of the existing act should be repealed. That has to do with the sending of inspectors from one district into another. If the section is repealed the limitation which was on the authority of the inspectors to go from one district into another will be removed entirely. The section as drafted in the bill gave authority for the inspectors to go in, but it is pointed out that if we repeal the section altogether there will be no question about their authority.
Then the Senate have amended section 18, page 6 of the bill, by inserting the word "lawfully" in line 26 of the new section 82A. I would have assumed no regulation would be of any effect unless it was made lawfully, but if it is considered that the word "lawfully" should be used, of course there is no objection.
The Senate have added another section to this bill at the end thereof, section 19.


Mr. ELLIOTT:: There is no section 18 in
the original act.


Richard Burpee Hanson: I think
there is.


Mr. BOTHWELL:: I think that was added when the bill was in committee.


Richard Burpee Hanson: Yes, it
was. Section 81 (a) was added in committee and the bill was reprinted before it went to the Senate. A new section 19 was added by the Senate, as follows:
The said act is amended by inserting the following section immediately after section eighty-two thereof:
82a. In prosecutions under sections sixty-three and sixty-four of this act-
Those are the short weight and unjust scales sections, the two important sections of the act.
-although absence of mens rea shall not be a defence it may be deemed to affect the amount of penalty to be imposed in the circumstances and as to that issue it may be proved.
It will be recalled that in the Canadian Weights and Measures Act there is no necessity of proving intent to deceive. In the English act they have inserted the principle of mens rea. This is a compromise position, I should say, between the two points of view. The officers of the department take the ground that if you have to prove guilty intent you will never get a conviction. This proposed amendment provides that while it is not necessary to prove guilty intent the absence of mens rea may be taken into consideration by the magistrate in amelioration of the offence. I think perhaps that is quite right, and I think this house will agree to the amendment.
I think I have covered all the amendments, with one possible exception. In section 16, amending section 77 of the act, they have added the words, "guilty of an offence" in the twenty-first line. That is agreeable to the government. In view of that, therefore, I move:
That all the amendments made by the Senate to amend the Weights and Measures Act. be concurred in except subclause (5) of section 10. proposed to be added to the bill by the sixth amendment, which is not agreed to for the following reasons:
If allowed to stand, this section would practically nullify section 63 of the Weights and Measures Act in so far as its enforcement in connection with prepackaged articles is concerned.
Evidence of short weight under the Weights and Measures Act must be obtained by a test purchase, usually made by independent shoppers.
Such being the case, it is pointed out that to get the "average weight or measure of a reasonable number of other articles of the same kind on the same occasion" is clearly impossible. It is not practicable to purchase wha.t might be considered "a reasonable number of articles of the same kind" and an
Weights and Measures Act

inspection of prepackaged articles in a store by an inspector, either before or after the making of a test purchase, is not "on the same
occasion."
The trad'er is adequately safeguarded against picayune or vexatious prosecutions, by the fact that all proceedings under section 63 of the act must receive the consent of the Minister of Trade and Commerce in writing.
The amendment proposed' by the Senate is substantially the same as section 10 of the imperial Sale of Foods Act. In addition that act provides that an inspector can compel the trader to sell him short weight articles as evidence for prosecution when short weight in prepackaged articles is found on inspection on the trader's premises.
Such authority is not contained in the Canadian Weights and Measures Act, which renders the proposed amendment unnecessary while making the enforcement of section 63 extremely difficult in so far as prepackaged articles are concerned.
And I should add:
And that a message be sent to their honours acquainting them with the attitude of this house.


Alan Webster Neill: Mr. Speaker, I regret that under our rules we do not go into committee on these amendments, and that they are not subject to debate. I believe there is another bill coming down to which fifty-three amendments have been made, and I do not think we can adequately consider those amendments without going into committee on them. I should like to ask the minister, if he will allow me to do so informally-I know I am not within my rights- if it would not be better to put in the English translation of those words "mens rea." Some of these prosecutions no doubt will be conducted 'before justices .of the peace, and it is hard to explain to a couple of country J.P's in a remote place, just what mens rea means. It would be quite easy to put in the correct English interpretation, so why not do it?


Mr. HANSON (York-Sunlbury):: If I may be allowed to speak, I would refer my hon. friend to any legal gentleman in the house, who probaby will tell the hon. gentleman that the term is so well understood in the legal profession that I do not think we should change it. I suppose "guilty intent" would be a fair interpretation or translation of the words, but I think we had better leave them as they are. I think everyone knows or should know what mens rea means.


Alan Webster Neill: I am willing to gamble a small sum with the minister that the average country justice of the peace could not give a correct definition of mens rea.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. HUGH GUTHRIE (Minister of Justice) moved the second reading of Bill No. 88, to amend the Admiralty Act, 1934.
Some hon. MEMBERS:: Explain.


Hugh Guthrie: There are two amendments proposed. The first is to correct what was evidently la mistake in the act passed last year, in section 24, where the word "debtors" was inserted where the word "creditors" should have been inserted. The second amendment is in regard to appeals from a 'local judge in admiralty. The bill as passed provided for an appeal to two judges of the exchequer court. The president of the exchequer court has informed us that it is very seldom that both exchequer court judges are in the city of Ottawa at the same time, since they have to travel about the country, and he requests that the act be left as it was formerly, with the appeal to one judge of the exchequer court.


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

[Stage Direction]
Hon. E. N. RHODES (Minister of Finance) moved that the house go into committee to consider the following proposed resolution:
That the governor in council be authorized to raise by way of loan under the provisions of the Consolidated Revenue and Audit Act, an amount not to exceed in the whole the sum of seven hundred and fifty million dollars, for paying or redeeming the whole or any portion of loans or obligations of Canada, and for purchasing and withdrawing from circulation unmatured securities of Canada.
Motion agreed to and the house went into committee, Mr. Morand in the chair.
Ian Alistair Mackenzie: May I ask the minister if there is any substantial change from the resolution pasced last year?


Mr. RHODES:: Mr. Chairman, this resolution and the bill which will be founded upon it are in precisely similar terms and amounts to the borrowing 'bill passed in the year 1933. It will enable us to take care of maturing obligations and certain refunding operations, as the opportunity may present itself during the course of the year, and projecting into the following year. It merely makes provision for the necessary legislative authority for such funding and refunding.

Redemption Loan


Ian Alistair Mackenzie: Has the minister before him the details of the amounts refunded by the administration during the last year?


Edgar Nelson Rhodes: I am sorry I have not at the moment, but I shall give the hon. member the information when I move second reading.


William Daum Euler: What sums actually mature?


Edgar Nelson Rhodes: 
William Daum Euler: What is the total?


Edgar Nelson Rhodes: The two amounts, that is the total of the maturities in Canada and New York, make $356,298,457.52. As a matter of fact, at the moment we have not legislative authority to refund anything like that sum. Then, in addition to that there are maturities of Canadian National Railways obligations.


William Daum Euler: I should like to draw attention to what some of us have advocated in the past, repeatedly,, namely, that the government should undertake the refunding of unmatured obligations at a lower rate of interest. I would be very glad if one might infer that with the amount over and above the actual maturities of about $400,000,000 the government intends at least to attempt to refund obligations they are not compelled to refund, with a view to getting interest rates down. I wonder if the minister would tell us whether or not in the resolution there is anything more than he has already indicated. Is it merely asking the same authority which was given last year, under which they did not exercise the powers given-powers which I would like to see exercised, no matter which party may be in power.


Edgar Nelson Rhodes: The government is eagerly availing itself of every opportunity to exercise the callable provisions in bond issues which, at the moment, it is in a position to do. The hon. member will realize that wherever
possible we have always sought to refund, and have been very successful in that respect.
I have not the figures before me at the moment, but upon second reading I shall present figures which will indicate that we have made very substantial savings in interest, and I believe we have not lost any available opportunity to refund so as to take advantage of the market situation, and we have always refunded at a lower rate of interest.


Ian Alistair Mackenzie: Have
any tax free bonds matured during the present year?


Edgar Nelson Rhodes: Speaking offhand I think,
not.


Ian Alistair Mackenzie: On
second reading would the minister give details as to dates of maturity?


Richard Bedford Bennett: I believe it is 1937.


Mr. SPENCER:: Is it the intention of
the minister to take full advantage of the clause in the Bank of Canada Act permitting us to borrow. It is well known, of course, that the only money which goes to the shareholders is the 4) per cent, and that the profits beyond that will come back into the treasury. Therefore, to the extent borrowing is done through that system it will be done in the oheapest possible way.
Then, I should like to ask the minister this question: Does he intend to do any borrowing outside of Canada? Personally I am opposed to the dominion government borrowing, at all. However if it is going to borrow I hope it will do so within and not outside of Canada.


Edgar Nelson Rhodes: I regret I was unable to
hear the first portion of .the question, but I shall consult Hansard and answer upon second reading. With respect to the second portion of the question, which I did hear, I must advise the hon. member that in every instance, where possible it has been the policy of the government to issue only in Canadia and to have our maturities payable in Canadian funds. The hon. member will realize that if we have maturing obligations in London or in New York we may not at that time be the arbiter as to the character of the new issue. The fact of the matter is that if they are payable in New York they are payable in New York funds, and if they are payable in London they are payable in London funds. However in all instances wherever possible it is the' policy of the government to refund in Canada and in Canadian funds.
Redemption Loan


Richard Bedford Bennett: In addition to what the Minister of Finance has said wit'h respect to callaJble bonds, the hon. member for North Waterloo must also know that the price at which bonds have been sold permits such a low yield that it would not be possible to purchase them in the open market and retire them at a lower rate of interest. That condition we experienced two years ago, when the price of bonds became very high and the yield1 rate became very low, making it impossible to purchase outstanding issues, because they were then being sold on the basis of the current- value of money.


William Daum Euler: I believe the resolution provides for an amount of about $400,000,000 in excess of the amounts maturing. I take it from what the Minister of Finance and the Prime Minister have said that they will deal only with those bonds that are callable. Perhaps the Prime Minister is quite right when he states that at the moment returns are so small one cannot buy outstanding bonds and refund them. What I was going to ask was this:	Is there an
amount as large as $400,000,000 that is callable? I would judge there is not that much outstanding that is at all callable, because I understand the greater part of our obligations are not callable.


Edgar Nelson Rhodes: I shall be glad to give
complete details upon- second reading.


Henry Elvins Spencer: In what are these
moneys going to be paid? Are they going to be paid in gold, or in anything the dominion government may decide to pay them?


Edgar Nelson Rhodes: Maturing issues?


Henry Elvins Spencer: Yes.


Edgar Nelson Rhodes: They will be paid in the terms of the document.


Mr. POULIOT:: Will the $750,000,000 include the redemption of tax-free bonds?


Edgar Nelson Rhodes: The hon. member for
Temiscouata will appreciate that we seek only the ordinary and customary legislative authority .to enable the government from time to time to fund and refund.


William Daum Euler: I have in my hand a bill
of the Bank of Canada issued since we went off the gold standard. It contains these words, "The Bank of Canada will pay to the bearer on demand." What would1 happen if I were to demand payment for this one dollar bill? What would I receive for it?


Edgar Nelson Rhodes: 
Jean-François Pouliot: I regret that the Minister of Finance (Mr. Rhodes) has not decided to redeem the tax-free bonds outstanding, even though they mature in 1937. It is most absurd that the government should lose this large amount of income. The suggestion has come from this side of the house in order that the revenue should be increased. The government should follow this suggestion as it would be appreciated throughout the country. I ask the Prime Minister (Mr. Bennett) who were holding these bonds but I received no answer. When the by-election was being held two years ago in Restigouehe-Madawaska I told the electors the particulars of the questions I had asked to which I had received no satisfactory answers. The limit of taxation has been reached and as the Prime Minister said, not this year, not the year before but two years ago, it is time that those who have the money should pay. At the present time those who have no money have to pay it all. This country is becoming alarmed because of the advantages given to the privileged few who are exempted from taxation while the common man, the man on the street has to pay for everything. Even members of parliament who have no means at all have had a cut of ten per cent in their indemnity until this year, when it was reduced to five per cent. We must pay this while our responsibilities are so great. The government should be strongly censured in this connection.


Edgar Nelson Rhodes: Whether it was wise to
issue these bonds tax-exempt is a matter beside the question but the fact is that they were issued tax-exempt and we must honour our obligations in that respect until they mature. This government has issued no tax-free bonds nor have any been issued for many years. If my hon. friend would apply his very astute mind to the problem of finance I can assure him that he will discover that if we were to go into the open market to buy these bonds at the price at which they are now selling we would lose money. That procedure would cost us much more than to redeem them at par value when they mature in 1937. It is a question of dollars and cents and if the government could save money by entering a transaction of that kind it would gladly do so.


Jean-François Pouliot: That is a very nice answer but it is ambiguous. One must consider the time when these bonds were issued. They were issued during the war to give an opportunity to the profiteers and the sharks to take advantage of the treasury of this country by not having their profits taxed. It must be remembered that it was the Toiy union government which issued these tax-free bonds

Trade and Industry Commission
in order to give a chance to the profiteers to keep their profits without carrying a part of the burden of taxation. This is what was done with loan after loan. The government was not imposing much taxation, it was borrowing money and the next Liberal administration had to look after the payment of the debt of Canada which was out of all proportion.
We hear a lot about the sanctity of contracts but what about the sanctity of the British North America Act which has been destroyed by this government. This government has had no regard at all for the constitution of this country but when it comes to protecting profiteers they invoke the sanctity of contracts. It would seem as though the Minister of Finance was a high priest. This government reminds me of Lytton Strachey who spoke about a crank who thought he was Adam, Melchisedec and the Lord himself. That is what the Prime Minister thinks, that he is Adam, Melchisedec and the Lord himself but it does not impress me at all. I can speak just as loudly as he can. Very often the Prime Minister speaks in a loud tone to prevent people from seeing that his knees are trembling. I can speak just as loudly as he can; I do not suffer from a heart attack and he does not either; I can speak even louder than he can. I want to be heard by all hon. members, I want to be heard by the Prime Minister even though he feigns sleep at the moment. Let me wake him up when I tell the people of this country that he cannot protect the profiteers by being unwilling to redeem these tax-free bonds.


Henry Elvins Spencer: Are all the tax-free bonds falling due in 1937?


Edgar Nelson Rhodes: Yes.
Resolution reported, read the second time and concurred in. Mr. Rhodes thereupon moved for leave to introduce Bill No. 110, to authorize the raising by way of loans of certain sums of money for the public service.
Motion agreed to and bill read the first time.	[DOT]



TRADE AND INDUSTRY COMMISSION


[Stage Direction]
The house resumed from Tuesday, June 11, consideration of the motion of Hon. Mr. Hanson (York-Sunbury) for the second reading of Bill No. 86, to establish a dominion trade and industry commission.
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Morand in the chair.
Section 1 agreed to.
On section 2-Definitions.
John Campbell Elliott: Can the minister give us
the figures in connection with the fines levied under the various acts referred to in subsection (h) and particularly under the Weights and Measures Act?


Richard Burpee Hanson: I have not those figures here but I can supply them to the hon. gentleman. I gave certain figures when the weights and measures bill was under consideration with respect to fines collected but I shall be glad to furnish the hon. gentleman with full information. He could get it himself from the public accounts but I do not want to put him to that trouble.


[Stage Direction]
Section agreed to.
Sections 3 to 8 inclusive agreed to.
On section 9-Officials of tariff board to be officials of the commission.
Richard Burpee Hanson: I wish to add a subsection for the protection of those members of the staff, under the Combines Investigation Act, who are now being transferred to the tariff board. The amendment has reference to the question of superannuation, and I think it is only fair that these employees should be protected in the manner proposed. I would therefore ask my colleague to move:
That section 9 of Bill No. 86, an act to establish a dominion trade and industry commission, be amended by adding the following subsection as subsection (3):
(3) A civil servant who prior to or at the time of his appointment under the Tariff Board Act was or is a contributor under the provisions of the Civil Service Superannuation Act _ shall be eligible, notwithstanding the provisions of the Civil Service Superannuation Act, to continue to be a contributor under the said act; his service under the Tariff Board Act shall be counted as service in the civil service for the purposes of the Civil Service Superannuation Act and he, his widow and children, or other dependents, if any. shall be eligible to receive the respective allowances or gratuities provided by the said act; and in the event of his being retired from his office or position under the Tariff Board Act for any reason other than that of misconduct, he shall be eligible to receive the same benefits under the Civil Service Superannuation Act as if his office or position had been abolished.
The employees of the tariff board are not under the Superannuation Act but certain bodies of civil servants being about to be transferred to the tariff board are under that
3698	COMMONS
Trade and Industry Commission
act and their rights should be protected. If this section is not adopted they will not be permitted to continue contributing to the superannuation fund.


Mr. ILSLEY:: It does not make any difference to the present employees of the tariff board?


Richard Burpee Hanson: No; the
present employees of the tariff board are not under the Superannuation Act. A group of employees under the Combines Investigation Act-the registrar and his staff, for whom we vote a sum every year-are about to be transferred by this bill to the tariff board. They are now under the Superannuation Act, and I am advised that unless an amendment of this kind is inserted, while they will be still under the Superannuation Act after their incorporation into the tariff board, they will not be permitted to contribute further to the fund and therefore will not be entitled to the increased superannuation which they would receive if they continued their contributions from now on. They would be in a static condition. It is only fair, I think, that they should be allowed to continue contributing. This is for their benefit and nothing else.


Sir EUGENE FISET:: Will these clerks
be transferred with the same classification and the same salary which they enjoyed in the past?


Richard Burpee Hanson: I cannot
answer that question; I do not know enough about classifications in the civil service. They are going into the tariff board and I assume that the chairman of the board will deal with that; and the civil service commission will no doubt have something to say. These employees are under the civil service commission.


Eugène Fiset: That is why I asked the question-whether they were going to be transferred with the same classification.


Richard Burpee Hanson: I would say so, but I am not in a position to answer with certainty.
Sir EUGENE FIS'ET:	The minister
realizes, of course, the awkward situation that will arise. They are being transferred from a permanent department to a department that does not come under the civil service commission, and provision is being made simply for their pension. They are going to contribute five per cent towards their pension, notwithstanding the salary they may be receiving later on. But how will they be

classified? Will they continue to be under the civil service commission for purposes of classification or promotion? It is rather a queer situation which the minister is creating.


Richard Burpee Hanson: My understanding is that they are now under the Civil Service Act and I assume they will continue to be, but the hon. gentleman is asking me to give an opinion on a matter of law, and I cannot do so without consultation. I assume, however, they will continue to be in the same classification they now hold, unless the commission orders otherwise.


Eugène Fiset: That is all I was asking. Their future classification will depend entirely on the commission.
Mr. BLL'IOTT: Do I understand that all those who are now employed in the Combines investigation activities will be taken over?


Richard Burpee Hanson: I think that is the intention.


James Lorimer Ilsley: Does the minister propose any amendment to this act which will enable the present registrar under the Combines Investigation Act to continue to make investigation himself?


Richard Burpee Hanson: I have given some consideration to the question but I am not announcing any amendment at the moment. The commission under this act will make preliminary investigations. It may be that it will be necessary at some future time to have some arrangements made for the conduct of preliminary investigations, but we have not set up any tribunal at the moment apart from the commission itself.
Mr. ,ILSLEY: I think that is a distinct step backward. I know that the act contains a provision by which any one of the commissioners may make an investigation, but none of them has the experience of the present registrar of combines. I suggest that the commission should be enlarged so that the present registrar of combines should have the status of a commissioner.


Richard Burpee Hanson: The present registrar, who will go into the staff of the tariff board, may be used for that purpose if the commission so decides. There is no reason why that should not be done. The question of enlarging the personnel of the commission is one to which the commission itself will give consideration if, as and when they meet with difficulty, not being able to

Trade and Industry Commission
devote to matters the time considered necessary. At the moment, I understand, it is the view of the chairman of the commission that he will be able to do this work in addition to the work he now performs, notwithstanding the opinion expressed in other quarters.


Mr. YOUNG:: What advantage is it to transfer the activities of the combines investigator and his staff to the tariff board, if they ate going to be transferred also and do the same work?


Richard Burpee Hanson: That opens up a very large question. The royal commission advocated that the work of administering this act should be transferred to a commission and they also advocated the setting up of what is considered to be a very expensive commission. The whole matter was considered most carefully, and it was decided that the tariff board as presently constituted or as it might be constituted hereafter was admirably fitted for the work of this commission including investigatihns under the Combines Investigation Act. I would suppose that it would perhaps be better fitted for the work of administering that act than would the registrar himself who, while he has had a very wide experience under the act since he went into that department, is not a lawyer. But I would point out that there will be the advantage of having all the experience and ability of the registrar, an officer under this board. This was an effort to meet the principle of the recommendation of the royal commission without going to the expense of setting up a new commission.


John Campbell Elliott: It strikes me that the suggestions made by the hon. member for Hants-Kings as well as by the hon. member for Weyburn deserve a good deal of consideration when we are making the changes that are now being made. The tariff board was established under an arrangement by which a tariff board was to be established to perform certain duties. At times that board with the duties it now has, will be very busy. At times in the past the party who is investigating, the registrar, or in some cases where he did not make the investigation, some other investigator, has had to spend days and, I might say, months on one investigation. The act is so important and the investigations are of such an important character that to say that the tariff board should conduct those investigations is going to create difficulty in the case of long investigations.


Richard Burpee Hanson: I do not know that I can add anything to what I have already said. That is a matter of point 92582-235
of view. Perhaps it might be necessary to do something another year in regard to it if the difficulties that are suggested arise. At the moment it is not thought there will be any difficulties.


[Stage Direction]
Section agreed to.
Sections 10 to 12 inclusive agreed to.
On section 13-Duties of commission.
William Lyon Mackenzie King: I think this section is a mistake. It proposes to transfer to a commission, which is to be the tariff commission as has just been said, the administration of the Combines Investigation Act. The minister a moment or two ago stated that the government was seeking to carry out the recommendations of the royal commissicn on price spreads.


Richard Burpee Hanson: Of course that is not quite what I said; there was a limitation on that. If the right hon. gentleman will permit me, what I said1 was that the bill sought to carry out the report of the royal commission without setting up a new com,mission. I think that is a fair statement.


William Lyon Mackenzie King: That only strengthens what I was about to say. The essence of the report as I read it, is that the Combines Investigation Act is the important act, and what the commission recommends is that its provisions should be strengthened as much as possible. Had the government extended the provisions of the Combines Investigation Act so as to put its administration under a commission specially qualified and appointed for that purpose, it would then have been carrying out the intent and purpose of the royal commission in the matter. But what the government is doing now, instead of appointing a commission that will be primarily charged with the important function of administering the Combines Investigation Act, as was the price spreads commission's intention, is to place that act under a body already in existence for the purpose of dealing with the tariff, thereby subordinating the Combines Investigation Act and the carrying out of its provisions in a very material way. In other words, the tariff board has already pretty much all the business it can attend to if it is going to attend to it properly. It will be found, I think, if the tariff board is asked what length of .time it will take to complete the work it has already on hand, the reply will be that there is enough on hand at present to keep the board busy for another year. To add to the functions of the board the business of carrying out the provi-



Trade and Industry Commission
sions of the Combines Investigation Act is simply to sidetrack the Combines Investigation Act altogether. The Combines Investigation Act is the important measure, and while there may be the strongest reasons for extending its provisions in a way that would serve to bring into being a special commission in the nature of a trade and industry commission to carry out the provisions of the act more effectively, this particular method of dealing with the matter is, as I have said, simply negativing in large part the benefits that already exist under the act.
Members of the tariff board are, I think admirably qualified for some of the work they are doing at the present time; at least the chairman is; I am not speaking of the other members. But I question very much whether even the chairman has the sympathy with the Combines Investigation Act that will incline [DOT] him to give most of his time and attention to its provisions, rather than to deal with matters affecting the tariff as he has been accustomed to doing since his appointment to that office. The administration of the Combines Investigation Act is of such importance that whoever has charge of the administration of that measure should be particularly concerned with protecting the public interest in the manner in which the act makes evident it was the intention that the public interest should be protected; in other words, that the interests of the community at large should in every particular override where they come into conflict with those of any special interests. I may be wrongly informed, but if I am not mistaken the chairman of the board himself has been acting for some of those interests in the past, not that I believe this would make the slightest difference to his attitude in administration, but it does suggest that in the government's mind there has not been the effort to secure for the administration of the Combines Investigation Act the type of person who the public generally would feel was the one who . should be specially charged with the administering of that measure. What I want to stress is that the tariff board with what it is already doing has just about all it can do if it is going to do that properly. Under this bill it is not merely the administration of the Combines Investigation Act that is being added to the duties of the tariff board; it is going to have to do with the administration of such other matters as price and production agreements, commodity standards, prosecution of unfair trade practices, fair trade conferences, cooperation with boards of trade, investigation into general economic and social fMr. Mackenzie King.]
conditions, and the supervision of security issues. When all of these obligations are added to the board's present obligation, I think the Combines Investigation Act will pretty well fade out of the picture.
But may I point out to the minister that the tariff board has already had the power to hold inquiries similar to those which are being held under the Combines Investigation Act, but in all the years the tariff board has been in existence, nothing of that character has been referred to it or attempted by it. Subsection 4 of section 4 of chapter 55 of the statutes of 1931, establishing the tariff board, reads as follows:
The governor in council may empower the board to make any investigation or hold any inquiry authorized by the provisions of the Combines Investigation Act, or of a relative nature, and for these purposes the board shall have all the powers, authority and jurisdiction vested in the registrar or in a commissioner appointed under that act to hold investigations.
The tariff board has already all these powers and there is no need to confer these powers upon it for the administration of the Combines Investigation Act because the board already has those powers, although it has never exercised any of them. If the government had reason to feel that the Combines Investigation Act was not being administered as effectively as it should be by those in charge of it, it might have taken advantage of this provision, but it never did do so. It can do so in future, under existing legislation, if it so desires. While I sympathize with the government's desire in not wanting to have an undue number of commissioners, it seems to me that they have appointed new commissions where there was no need of any, and here where there would be justification for enlarging the provisions of the Combines Act to place its administration under a commission specially for that purpose, in view of the obligations cast upon it, they are taking the opposite step. I think the government is making a great mistake.


Olof Hanson: Mr. Chairman, I have listened to all the observations of the right hon. gentleman and I have no fault to find with the manner in which he has voiced his criticism, but it was for the very reason that the tariff board already had jurisdiction that parliament thought the board would be the proper body to take over these duties rather than setting up a new commission. It is a matter of opinion whether the tariff board as presently constituted or as it may be constituted in the future is the proper body to do this work, but parliament

Trade and Industry Commission
has already put its approval on that, and from my knowledge of the chairman of the board extending over a period of thirty-five years, ever since he was at the same university with me, I think he is admirably qualified to do the work of investigation and carry out to the fullest degree the administration of the Combines Investigation Act.


William Daum Euler: If he has time.


Richard Burpee Hanson: My hon. friend says he has no time.


William Daum Euler: If he has time, I said.


Richard Burpee Hanson: I beg
pardon. There is much virtue in an "if." The chairman of the board thinks that with the necessary assistance that will be given to him by the transfer of the staff, that work can be done. I do not think the right hon. gentleman has any right to assume that the work of investigation under the Combines Investigation Act will be subordinated to the present work of the tariff board. I think we have the right to assume that a board with the character of that board will carry on conscientiously and do whatever work comes to their hands to the very 'best of their ability. For the moment I think we can very well allow this phase of the bill to go through, and then if it is found that they cannot do the work it will be very easy at another session to add one other member to the personnel of the board. It might be a legal man or one versed in combines investigation work, or the board might act in two divisions. That is what I have had in my mind since I have been delegated to take charge of this bill. I do not think anybody ought to question the ability of the tariff board to do the work. It is merely a question of operating, and if it is found that they have not the time to do it, it would be a simple matter to set up another commissioner and perhaps have the board work in two divisions, as has sometimes happened on the railway commission.
Let us try this for a year anyway. As the right hon. gentleman says, the tariff board has already been clothed with these powers of investigation of combines, although that question has never been referred to them because there was the machinery set up under the Combines Investigation Act; but if that were the intention of parliament at the time the tariff board was created this is quite in line with that intention. If we can save three or four hundred thousand a year which I anticipate would be spent if we set up a new and expensive commission I think we ought to do it. We may be accused of parsimony. I think 92582-235*
it would cost a substantial sum of money to set up a new branch. There is the sum of 822,000 in the main estimates this year for the present staff of the registrar. In addition it will cost probably 8100,000 for investigations under this statute because you will have to hire auditors and certified accountants and others, and there will be travelling.
I think this is a reasonably good start, and I do not think there is any doubt as to the ability of the tariff board to carry on the work. With all due resipect I do not think it is correct to say that this important work in connection with the Combines Investigation Act will be in any degree subordinated to other work of the tariff board.
Just one other observation. The chairman of the tariff board, although in days gone by a very active practitioner, has never shown that he has been influenced in the slightest degree by his former associations. That is one thing we are proud of in the judges we appoint, that they entirely dissociate themselves from the associations of their private practice the minute they go on the bench. I do not think my hon. friend meant just what he said in that connection.


William Lyon Mackenzie King: I agree with what my hon. friend says in that regard.


Edward James Young: I cannot see how you expect to save three or four hundred1 thousand dollars a year by this arrangement. The great bulk of the expense in connection with the establishment of the trades and industries commission will not be the salaries of the commissioners themselves but of the enormous staff that will be necessary, and that staff will be the same whether they operate under the tariff board or under the Combines Investigation Act or under any other commission.


Richard Burpee Hanson: One man's guess is about as good as another's about the expense. None of us knows what the expense will be. We can only take the best advice we can get from the best quarters available. My idea is that the present set-up will be very much less expensive than the setting up of an independent body as proposed by the royal commission. I have been here a long time and I have noticed that when you set up an independent body it immediately begins to extend and aggrandize itself and to grow and grow, and there is no limit at all unless someone has strength enough to say:	This
sort of thing shall not go on any longer. That is bureaucracy in government, and we have had many illustrations of it in Canada. I cannot say any more than that.

Trade and Industry Commission


Richard Bedford Bennett: I think no one complains of the terms of the criticism of the hon. gentleman opposite. It is only fair to say that this question gave the government a very great deal of concern. Take the railway commission, for instance. There is a commission that has at least three or four .members with nothing to do; that is a fair way to put it. I am not disclosing anything I think I should not say when I say that I consulted the chairman of the tariff board whether he thought he could discharge these duties or not, and he believes he could. Parliament will meet again within a reasonable time from now, and if it is found that the work is too onerous for the board a second division could be created or an appointment could be made by adding a few sections. I desire to point out, however, that possibly the right hon. gentleman has not given sufficient consideration to that part of the bill dealing with combines and investigations. I did not desire to interrupt a moment ago and take part in the discussion with regard to the registrar, but it will be observed that the section which deals with investigations provides:
The commission shall on application made under the last preceding section or on its own motion whenever it has reason to believe that a combine exists or is being formed, cause an inquiry to be made-
My understanding, of course, is that this would enable the use of the present registrar who is being transferred to this commission under the circumstances mentioned by the minister in charge of the bill. If these two acts are read together I think it will be found that without incurring any unnecessary expense in the first instance the recommendation that a commission should be charged with the responsibility of dealing with the problem with which the price spreads commission dealt, has been carried into effect. It is intended to utilize an existing bodjq not to subordinate the duties that will thus be cast upon it to their other duties, but to bring about coordination, co-extension and coequality so far as jurisdiction and the power to aot is concerned.
It may be observed that one of the differences is that at the present time the commission reports to the president of the council, on the assumption that you thereby get the closest communication between the government of the day and the commission itself. That, of course, is in the act which it was suggested the other evening should stand until this act was considered, but the two acts must be read together and as you read them together I think you will conclude that there
rMr R. B. Hanson.]
is a very earnest effort on the part of the government to give effect to the proposals that have been made that there should be a body charged with the .responsibility, and that this body should report directly to the president of the council. It does not follow, of course, that the president of the council is the Prime Minister, but it has been so in this country in a general way, with few exceptions. If when the bill is before the house it is thought desirable that the words "Prime Minister" should be substituted for "president of the council" it will be quite satisfactory.
This may enable me to take this opportunity to correct the impression that the words "Prime Minister" have no place in the statutes of Canada. The other evening my hon. friend the former Minister of Justice asked who drew that statute concerning the economic council, which makes reference to a Prime Minister. I am responsible for that. The hon. gentleman said that certainly the law officers of the crown would not make any such mistake. If he had taken the trouble to turn up the supply bills for the last few years he would have found that they contain reference to the Prime Minister's department, so we have that authority for the use of those words. Since the Prime Minister of Great Britain was given the status of third private citizen of the country, by act of the king, the words "Prime Minister" have come into use, and in the greatest of all our bills, namely, the supply bills, you will see those words used.


Ian Alistair Mackenzie: They are not used in the British North America Act.


Ernest Lapointe: If I made a mistake I had good company, in the leader of the Senate and another good friend of my right hon. friend in this house.


Richard Bedford Bennett: I am quite well aware
that my hon. friend the Secretary of State was of that opinion. The matter was mentioned to me while I remained indoors and at that time I had not an opportunity to turn up the statute, but I directed my colleague's attention to the fact that the supply bill does provide for the Prime Minister's department, in place of the old designation, which was the office of the privy council. I am quite well aware of the provisions of the British North America Act, but I have indicated why that expression was used. It may be that the house will think it better to provide for the first minister in the Combines Investigation Act. I only desired to point out that this is merely an effort to give effect to that recommendation, without establishing a new commission, to see to what extent it may be

Trade and Industry Commission
possible to utilize the services of those at present in the service, designating them for that purpose by the name indicated in the measure now before the committee. Then if in practice it is found necessary, in the interests of those concerned, the body may be expanded by the addition of new members or a new body may be created.


William Lyon Mackenzie King: The Prime
Minister has referred to the section which places this act under the president of the privy council. I had intended to refer to that point when we reached that section, but we slipped by the section so quickly that I had not a chance to do so. Personally I think that is a mistake. This session we have heard a good deal about the extent to which the Prime Minister is overtaxed in connection with the duties of his office and the many obligations Which attach to it. During my right hon. friend's absence from the house because of ill health occasioned by overwork we had a long discussion here on the very question as to whether some arrangement might not be made with respect to the Prime Minister's office which would give him more in the way of assistance to carry out the duties of that office. Now this act proposes to place on his shoulders the responsibility for the tariff board which is to have additional obligations with respect to the administration of the Combines Investigation Act and other matters.
I think that is a mistake. I am assuming that whoever holds the office of Prime Minister will also hold the office of president of the privy council, and I do not think it is possible for the Prime Minister, in his capacity as president of the privy council, to give the attention that should be given to the administration of acts of this character. They ought to be under separate ministers of the crown. To-day the Minister of Finance has the responsibility with regard to the tariff board and the Minister of Labour has the responsibility with respect to the Combines Investigation Act. In questioning the Minister of Labour in regard to the Combines Investigation Act we discovered that he was not as familiar with what was being done under that measure as this house had reason to hope and expect he would be. I cannot see how the Prime Minister is going to find it possible to devote to this additional work the time and thought which should be given to it. There again I think that the government by ithis measure is subordinating the importance of the Combines Investigation Act and the significance that should be attached to its work.
I can sympathize with the view of the government in not wanting to appoint more
commissions than are absolutely necessary. I do not know whether or not the government considered giving the officers now charged with the administration of the Combines Investigation Act additional help in the way of some legal assistance. I think if the act had been amended to make provision for a director of prosecutions and possibly a director of publicity, two such officers functioning under the new provisions of the act would have been infinitely more effective in carrying out its intent and its provisions than any staff, no matter how large it may be, which may have to do with the act as transferred for purposes of administration to the tariff board. I feel that here there is a move in the wrong direction. I am glad to gather from what the Prime Minister says that there will be an opportunity to test out the arrangement during the ensuing year, that he sees the need for further consideration of and no finality in the present step. I hope in that interval, while this transfer is taking place, the matter will not be left in such shape thait the whole effect of the Combines Investigation Act will be nullified for the time being, or in any degree for all time. That is one feature to which I shall wish to direct attention a little later on, but I think it should be kept in mind at this time.


John Campbell Elliott: I think at the present
time, when the change is to be made, it is a great mistake not to take something in the way of a definite step towards increasing, if possible, the efficiency of the administration of the Combines Investigation Act instead of decreasing it.


Richard Burpee Hanson: Why do
you say this bill does that?


John Campbell Elliott: If my hon. friend will
permit me, it is on that point that I am going to endeavour to convince him. It was my privilege, as Minister of Labour for a time, to have charge of the Combines Investigation Act. At the time the fines were levied on the fruit men I happened to be Minister of Labour, and I happen to know something of the great amount of work that was entailed in that prosecution. The prosecution was instituted before I came to that office. I do not see how this provision could do other than weaken the efficiency of the Combines Investigation Act.


Richard Burpee Hanson: That is
an assertion, not proof.


John Campbell Elliott: Well, the minister is
merely making an assertion, and one of which he cannot give proof. The Combines Investigation Act, under this bill, would) be

Trade and Industry Commission
handled' by the tariff board. I can. agree with the minister's observations concerning the efficiency of the chairman of that board, but because a man is efficient as chairman of a tariff board is not sufficient reason for loading him with the administration of several other acts, including one as important as the Combines Investigation Act.
One of the most important recommendations of the price spreads commisison has reference to this very act. Looking through the activities of recent years I am bound to say that it would appear as though the Combines Investigation Act has not been as actively enforced as it was some years ago. In this connection I shall refer hon. members to some observations of the hon. member for Dufferin-Simeoe (Mr. Rowe). Speaking a dhort time ago, his observations are reported at page 3300 of Hansard as follows:
They might mention the Combines Investigation Act, which was a justifiable and sound piece of legislation, but my hon. friends, in all their nine years in power, never made use of it. They pigenholed it and it has been there, dusty, ever since.
I point that out merely to indicate


Richard Burpee Hanson: Perhaps
the hon. member-


John Campbell Elliott: Would the minister kindly control himself, for a moment. I have pointed out these observations as an indication of the extravagant statements not founded on fact made by hon. gentlemen opposite.


Richard Burpee Hanson: You never make them, of course.


John Campbell Elliott: I shall now draw the
minister's attention to the manner in which prosecutions have been carried on, so that he may realize something which I believe he does not now know. If hon. members will turn to page 3229 of Hansard they will find reported figures indicating amounts received from fines under the Combines Investigation Act, as stated by the Minister of Labour. The total fines imposed and collected) between July 1, 1924, and July 1, 1930, amounted to 1226,500, making an average for those six years of $37,750. An additional $44,900 in fines was collected after July 1, 1930, as a result of investigations commenced prior to that date. The total fines collected as a result of investigations begun between July, 1924, and July 1, 1930, amount to $271,400 or an average for the six years of $45233 per year. That is, investigations begun in those six years brought in fines aggregating $271,400.


Richard Bedford Bennett: Practically all from the
one source, namely, the fruit companies. Take that out and you will have very little left.


John Campbell Elliott: Take that away and you
have left nearly double t'he amount of all the fines collected as a result of prosecutions since the present government took office.
Fines collected as a result of prosecutions begun since the present government took office total only $45,000. This is less for those five years than the average for one year resulting from prosecutions commenced between July 1, 1924, and July 1, 1930.


Richard Burpee Hanson: Does the
hon. member suggest that the amount of fines collected is a criterion of the work done under the act?


John Campbell Elliott: That is not necessarily
the sole test, but it is one of them.


Richard Burpee Hanson: I would not think so.


John Campbell Elliott: I believe it is perhaps the best test.


Richard Burpee Hanson: Oh, no.


John Campbell Elliott: Another complaint under the present administration arises from the lack of publicity. After all, I believe exposure to the light of day of what has been taking place is just about as effective as a fine. The people of Canada, and particularly hon. members in this chamber have complained about prosecutions being instituted and the findings not being made public.


Richard Burpee Hanson: Does the hon. member suggest that the law has not been carried out in accordance with the manner indicated on the statute books?


John Campbell Elliott: I will answer the minister. Let us, for example, consider the investigation into the tobacco combine. The law was not changed between the time the minister in charge refused to table the report and the time it was actually tabled. For months members of the opposition endeavoured to have the findings of the investigator tabled, and later on they were tabled. The reason given for the delay was that the investigator was not really a commissioner. I believe that point should be cleared up while the bill is under consideration, because after all the investigation of combines is a very important matter. I believe we should have before us the findings and information as to the fines imposed, together with any publicity that may be given, because there is a feeling

Trade and Industry Commission
abroad to-day that in recent years there has not been as active prosecution under the Combines Investigation Act as there was formerly. The result of the prosecutions would indicate that that is so. I have been induced to obtain these figures, partly as a result of the statement I have already read made by the hon. member for Dufferin-Simcoe. I believe that quotation is sufficient to indicate how unreliable and extravagant are the statements made by hon. gentlemen opposite. By burying prosecutions under this act along with prosecutions under other acts, and the work of the tariff board, we will not improve the administration of the Combines Investigation Act. On the contrary I am satisfied its efficiency would be greatly curtailed.


Richard Bedford Bennett: I believe the hon. member will observe that the price spreads commission did recommend that the act be under the control of the president of the council. So far as I can ascertain, the only reason for that being done was to make sure that there would be a medium of communication between the commission and the government. It was never intended that the president of the council as Prime Minister or otherwise should be responsible for action, but merely that he should see that in accordance with procedure in the council a matter might be referred by him to the Minister of Trade and Commerce, the Minister of Justice or that minister responsible for the matter. That is the ordinary practice which governs in matters of this kind. I take it that the president of the privy council was suggested for that reason, not that he would do it but that he would merely make a reference to the appropriate head of a department to deal with the matter. It might be a matter affecting trade and commerce or something else, or he might make a notation "refer to the Minister of Justice." I take it that the reason the president of the privy council was suggested as the member of the cabinet to whom the commission should communicate was in order that there might be a clear and certain line of communication between the commission and the government.


Richard Burpee Hanson: I should like to refer to one matter to wihioh the hon. member for West Middlesex (Mr. Elliott) has referred, the question of publicity. Under section 28 of the Combines Investigation Act there was some question as to publicity when a preliminary investigation had been made by a commissioner or the registrar. I should like to point out to the hon. member that the situation to which he referred in connection
with the tobacco investigation has been cured by the repeal of that section by Bill No. 79 and the enactment of section 28 of this bill, which provides:
(1)	The commission shall within fifteen days after making any report, recommendation or finding under this act make the same public in such manner as seems desirable unless the commission is unanimously of the opinion that the public interest would not be served by publication or that the public interest would be better sei'ved by withholding publication.
(2)	Wherever possible the commission shall with the report, recommendation or finding make public the reasons and the facts upon which the decision is based.
It will be observed that this bill which provides for the setting up of this new commission provides also for the publication of certain reports unless the commission is unanimous that it would not be in the public interest to publish such reports. I think any such case would be a very strong case.
The hon. gentleman indicated that he thought this government was suppressing the operations of the act but I would direct his attention to, the fact that every case handled under the act has gone through the usual operations after 1930 as well as before. I am not charged with the operation of the act. I have no doubt that if the Minister of Labour (Mr. Gordon) were in his seat he would be able to set the hon. gentleman right. Perhaps the most celebrated case under the Combines Investigation Act was not the one to which the hon. gentleman fell heir as stepfather; it was the coal case which was started by this government and carried through by the administrative officers of the province of Quebec, and then carried on to the privy council with the results known to everyone.


John Campbell Elliott: My hon. friend points out that I became the stepfather to some case but he is not even a stepfather. I know of no investigation which has been conducted since he assumed his duties.


Richard Burpee Hanson: I do not expect there will be because if I can help it I shall never be Minister of Labour.


William Lyon Mackenzie King: I should Like to ask the minister a question in connection with the registrar and his staff. A moment ago the minister moved an amendment to safeguard the registrar and his staff as far as the provisions of the superannuation fund are concerned but I should like to know if anything else is being done to safeguard their positions in the public service of Canada. At the present time they are members of the civil service and subject to the Civil Service Act but they are

Trade and Industry Commission
being placed under the operations of a temporary 'board which has a life of only ten years. Is any provision being made which will ensure these members of the civil service continuing as such?


Richard Burpee Hanson: The statement of the right hon. gentleman that this board is a temporary board is not quite correct. If he will allow me to correct him, 'the fact is that the board is not a temporary board although the incumbents have been appointed for a period of years. I am not unmindful of certain observations which were made at the time this board was set up as to what would happen under certain contingencies but this board is like any other board set up by parliament. I have no other idea than that the registrar and his staff are going to 'be properly taken care of. As far as I know he and his staff will function just as they have in the past under the direction of this commission. Instead of being queried about this matter I think we should be commended for what we are trying to do.


Ernest Lapointe: Well, well.


Richard Burpee Hanson: Well, well. We are safeguarding them and' the price spreads commission did not suggest that we should do that. We are putting them under the superannuation act so that their positions will be 'looked after. I assure my right hon. friend that nothing sinister is intended, on the contrary we want to preserve their positions in ithe service. I am giving that as a bona fide statement.


William Lyon Mackenzie King: I was not assuming that my hon. friend would act in any other way. I simply wanted to direct attention to the fact that certain members of the public service would naturally wish to have their positions in the service definitely secured and have this right.


Richard Burpee Hanson: As far as I know, I think they are.


Mr. MOTHERWELL:: Section 13 provides for the placing of just one act under the administration of this commission but I should like to know what is to be done in connection with the other acts referred to in subsection (h) of section 2. What will be the procedure in order to prosecute under those acts? For instance, an offence migjht be committed under the Seeds Act; what will be the procedure to have that offence handled by this commission?


Richard Burpee Hanson: I am afraid the hon. gentleman has not read the bill.


William Richard Motherwell: The minister is
here to give information.


Richard Burpee Hanson: If the hon. member had read the bill he would not have asked that question. Section 13 deals with only one situation, the administration of the Combines Investigation Act. If the hon. member will look at the other provisions of the bill and read them in conjunction with subsection (h) he will see that in certain contingencies in connection with unfair trade practices these acts are dealt with by section 20. This section reads:
The commission shall receive complaints respecting unfair trade practices-
That is, the unfair trade practices referred to in the acts mentioned in subsection (h) as well as in this bill-
-and may investigate the same and, either before or after an investigation, if of opinion that the alleged practice constitutes an offence against a law prohibiting unfair trade practices, shall communicate the same to the Attorney General of Canada and to the director of public prosecutions or to the attorney general of the province within which the offence is alleged to have been committed.
Of course the acts referred to in subsection (h) are not transferred to the jurisdiction of the board except in the sense that they contain provisions with respect to unfair trade practices or in the sense that regulations have been or may be made in connection with any of these acts. This commission is to investigate unfair trade practices.


William Richard Motherwell: Will the officers of any of these departments that have charge of these bills not initiate action?


Richard Burpee Hanson: Surely.


William Richard Motherwell: Then you will 'be a long while getting action taken if you have to go through that rigmarole. I know there is a lot of routine to be carried out now.


Richard Burpee Hanson: The hon. gentleman misunderstood me.


William Richard Motherwell: No, I understand all right.


Richard Burpee Hanson: These
statutes should be enforced, as they are to-day, by the officials of the appropriate departments. But if complaint is made that under any one of these sections unfair trade practices have been engaged in by anyone in violation of any of these statutes mentioned, then another course may be followed; but it does not derogate from the powers of the departmental officials to enforce the statutes now. I am not saying that I have personal knowledge of any failure, but it might be

Trade and Industry Commission
argued 'that there has been failure on the part of departmental officials to enforce all the regulations against unfair practices for which provision is now made, and this is an additional power and authority for investigation, and then direction to the public prosecutor, to the Attorney General of Canada or to the attorneys general of the various provinces.


Alan Webster Neill: I had intended to reserve my remarks for section 20, but as the matter has been brought up I may say a few words here. Will the minister point out where in the bill there is a definition of unfair trade practices; and if it is not in the bill how is he going to define it? It is no use giving his individual opinion, because when the question- comes before the courts they will have to deal with a specific act or a specific regulation, and the word "unfair" is so very vague. I have. a business difference with someone; we both want to be fair but each thinks the other fellow unfair, and according to our own -lights we are both right. It may be said that the courts will deal with it. But the business of the court is merely to determine whether a definite and specified offence has been committed. It is not the jurisdiction of the court to define the offence, apart from the confines of the act itself. This is an important question; it is given a headline by itself-unfair trade practices. If you say that each court will deal with the matter then we shall have a different version from each court. If the minister will turn to section 2, paragraph (h) he will find that there are enumerated -twenty-five different acts and some thirty sections of the criminal code, which are defined as laws prohibiting unfair trade practices. But surely it is not suggested th-at any infraction of any one of these laws in any degree constitutes an unfair trade practice. For example, we find the Electricity Inspection Act mentioned, the Maple Sugar Industry Act, the Patent Act, the Precious Metals Marking Act, the Water Meters Inspection Act, and so on. Can one readily conceive wherein the Water Meters Inspection Act prohibits an unfair trade practice? It may be that some of them do, the Live Stock Act, for instance; but the majority of them do not define in so many words what an unfair trade practice is, and if you have no definition anywhere in the act it becomes an important question as to how the matter is to be dealt with. Section 22, in this connection, institutes the office of director of public prosecutions, whose business it is to institute criminal prosecution for violation of any of the laws prohibiting unfair trade practices. If some section of these acts creates a trivial technical offence, in connection with the inspection of electricity, for instance, will it be dealt with as an unfair trade practice?


Richard Burpee Hanson: The hon.
gentleman cannot have read the concluding part of subsection (h) of section 2. I do not want to break in on his speech but I desire to correct him on that point. In subsection (h) of section 2 he will find, not a definition of unfair trade practices but reference to laws prohibiting unfair trade practices, meaning all those different statutes set out, including the criminal code and regulations under the act. Then these words follow:
... which provisions prohibit acts or omissions connected witli industry as being fraudulent, misrepresentative or otherwise unfair or detrimental to the public interest.
It is only the commission of these prohibited things which may in certain circumstances be deemed to be unfair trade practices; but not all prohibited acts are unfair trade practices.


Alan Webster Neill: "As being fraudulent, misrepresentative or otherwise unfair or detrimental to the public interest." It is difficult to find out where you will get a reasonable definition of unfair trade practice from a statute dealing with electricity, or even from the patent law. However, we have not yet got down to the point which I rose to make. What is the definition under this act, under section 20 and under section 2, subsection (h) of unfair trade practices?


Richard Burpee Hanson: The price spreads commission wrestled with that, and I do not think that any lawyer could put in legal language a concrete definition of unfair trade practice. It might be held that certain practices were unfair trade practices, and that is what we have attempted to do. It is the same with the definition of negligence; no lawyer or judge so far as I can recall has ever yet been able to give a concrete definition of negligence, though there have been hundreds of them in the last hundred years. It is one of the most difficult things in legal draftsmanship which I know of, to define such matters as negligence or unfair trade practices. Any lawyer in this house who has read Beven on Negligence will find a dozen definitions set out by judges with respect to specific cases, but I do not think you can define unfair trade practice. I am advised that the departmental officials came to the conclusion that you could not define in legal phraseology what was exactly an

Trade and Industry Commission
unfair trade practice, but you can do what has been done here; you can bring under the statute unfair trade practices set out in all the acts, and I think they did pretty well.


Alan Webster Neill: Are unfair trade practices
mentioned in these acts?


Richard Burpee Hanson: That is
getting back to the same .thing. I do not think that unfair trade practices are specifically mentioned in the act, but these acts contain provisions prohibiting acts or omissions connected with industry as being fraudulent, misrepresentative or otherwise unfair or detrimental to the public interest. It can only be described generally; that is as far as the draftsman can go.


Alan Webster Neill: I am willing to state that
none of these acts define anything as "unfair." Are you going to leave it to the individual judge to decide what is unfair? You might as well leave it to him to decide what is improper or unkind or unfeeling. What kind of code of decisions will you have when it is left to the individual judge to say whether a thing is unfair or unkind or unjust? We should at least approximate to some definition. Are there not a long series of decisions defining what negligence is in relation to certain actions?


Richard Burpee Hanson: There is
one statute mentioned in subsection (h) of section 2, the Unfair Competition Act, which does define in a degree and in certain specific cases what is unfair competition. But this, I submit, is as far as we ought to go and as far as parliament can go.


Alan Webster Neill: That act has to do with unfair competition; I am talking about unfair trade practices.


Richard Burpee Hanson: We have
not attempted to do it.


Mr. HEAPS:: As far as I understand the
act, it deals with the marketing of commodities under fair conditions. I know how difficult it is to define what fair conditions are; what might be fair in one province might be unfair in another. I understand that this act is specific and lays down certain instructions as to how the commission shall go about its work, but I see nothing in the bill which gives to the proposed commission any power to investigate the labour conditions under which the goods are produced. If that is not mentioned in the act I should take it that the commission would not have the power to make such an investigation; for after all it may be that under certain labour conditions the most unfair trade practices may be en-lMr. R. B. Hanson.]
gaged in by various industries. I wonder if the minister could tell us whether under this measure the proposed commission would have power to investigate labour conditions which are brought to its attention?


Richard Burpee Hanson: I should
think this commission, generally speaking, would have power to investigate anything relating to production, which certainly would include labour. If that is not a satisfactory answer, then I suggest that the commission would have power, as commissioners under the Combines Investigation Act and under the Industrial Disputes Investigation Act, to investigate conditions of labour. I do not think the objection is well founded, if it be an objection.


Abraham Albert Heaps: While the minister feels the
commission may have such power under the bill, does he not think it would be far better if there were inserted a clause which would definitely give to the commission the powers which he considers it may have under the measure?


Richard Burpee Hanson: A general power is very much better than a specification of special powers.


Abraham Albert Heaps: I do not think the commission would go beyond the powers set forth in the bill, and if there were conditions relating to labour that the commission wanted to investigate and it found nothing in the bill to give it such power, it might claim that parliament did not give it power to make such an investigation.


Richard Burpee Hanson: I think
there is in the bill full power to investigate labour conditions.


Abraham Albert Heaps: Under what clause will the
commission have power to investigate labour conditions?


Richard Burpee Hanson: Section
13 would give it those powers. Then under section 14 there is "price and production agreements." If the hon. member wants more specific information, I would say that the commission has power under the Combines Investigation Act and under the Industrial Disputes Investigation Act to investigate anything relating to production, which includes labour.


Abraham Albert Heaps: Do I understand from the
minister that this commission could become an arbitration board or a conciliation board under this bill?

Trade and Industry Commission


Richard Burpee Hanson: No; that
is under another law.


Abraham Albert Heaps: But the minister mentioned
that act just now.


Richard Burpee Hanson: I did not,
say that the commission would 'be an arbitration board; what I said was that it would have power to investigate labour conditions. That is as far as I went.


Abraham Albert Heaps: In spite of the minister's
statement, I think it would be far more satisfactory if something of a specific nature were inserted in this bill so as to give the commission those special powers which personally I do not see mentioned anywhere in the bill.


Richard Burpee Hanson: I do not
think I can add anything more to what I have said.


William Richard Motherwell: I was wondering what would happen to this bill if section 13 were dropped out altogether. It selects one particular law out of about thirty or forty and says that this shall come under this commission. It says nothing about the other thirty-nine or whatever the number may be. Then when section 20 is reached, would that section not cover them all?


Richard Burpee Hanson: Section 13 is quite different; it is inserted because of the specific recommendation of the royal commission itself; that is the reason why the Combines Investigation Act is specifically mentioned. The other statutes are mentioned in the definition of laws relating to unfair trade practices so as to be enabling, so as to enable investigation of unfair trade practices that may arise by the commission of offences or prohibited actions under all those various acts now on the statute books. The direct answer to the hon. member's question is that this was one specific recommendation of the price spreads commission; that is why it is specifically mentioned in the way in which it is.


William Richard Motherwell: It is a concession to the commission, and really not necessary in the act.


[Stage Direction]
Section agreed to.
On section 14-Agreements regulating price and production.
James Lorimer Ilsley: This is a controversial clause. I just want to repeat what I said on the second reading. As a minority member of the price spreads commission I am opposed
to this clause as are the other Liberal members of the commission. It authorizes the formation of agreements regulating price and production; that is to say, it authorizes the sanctioning of combines by the governor in council on the recommendation of this commission. Perhaps the major activity of the dominion trade and industry commission is the prevention of combines, the enforcement of the Combines Investigation Act, and this clause to a very considerable extent may effect the nullification of that act. Clause 14 is a sort of echo of the NRA; it makes this body into a code forming or code sanctioning authority and authorizes what has always been illegal in this country, that is the formation of combines in industries for the purpose of enhancing prices and limiting production, which inevitably is to the prejudice and detriment of the consumers. I went into this question fully in my remarks on the second reading of the bill, and it is not necessary for me to repeat what I said then.
I admit certain safeguards have been inserted in this clause. Apparently those who drafted it realized that they were doing something very drastic when they introduced this principle into legislation; it is not anywhere else on the statute books except in the Natural Products Marketing Act. They drafted it so that the commission must be unanimous, and they also by the last words of the last subclause indicated that under some circumstances prosecutions for violations of the Combines Investigation Act might be possible even though those who had entered into the price and production agreement were merely following out the agreement. The concluding words of the clause are entirely inconsistent with the purpose of the clause itself. But I am not objecting to those concluding words; I am objecting to the whole clause as entirely at variance with the principle of the Combines Investigation Act, and unwise, unnecessary and injurious. The Natural Products Marketing Act was passed to authorize producers of natural products to enter into such agreements. It went further and authorized manufacturers of products made from natural products to enter into such agreements. Therefore you have this absurd situation: two code sanctioning authorities set up within the last two years to authorize combines which are monopolies. The whole tenor and principle of the price spreads report, the whole doctrine that underlies it, is that one of the greatest evils in Canadian contemporary life is monopolies and monopolistic combines. The introduction of this provision in the statute implementing the recommendations of the

Trade and Industry Commission
price spreads report, while it does follow the recommendation of the majority, is something which in my judgment should not be done. I could not say any more than that if I talked for a long time.


Richard Burpee Hanson: I quite
understand the hon. gentleman's point of view, and he has put it forward both on the second reading and again to-day in a very moderate way. But I disagree with him when he suggests that this is not a beneficial thing. I should like to point out to this committee and to this house and the country that this section of the bill is aimed at cut-throat competition. It is an attempt to give effect to agreements which will not be detrimental to the public interest, and then only after the fullest investigation and report.


Mr. HANBURY:: Detrimental to what
portion of the public?


Richard Burpee Hanson: I am
using the word generally-not detrimental to the public interest. The hon. member for Hants-Kings (Mr. IMery) says there is an inconsistency in the language of the section when you read the first one or two subsections with the last subsection. But I suggest there is no inconsistency, because if the agreements are such that they are not detrimental to the public interest, then they are not in violation either of the Combines Investigation Act or of the criminal code, and no offence has been committed. Subsection (1) reads:
II. (1) In any case where the commission, after full investigation under the Combines Investigation Act, is unanimously of opinion that wasteful or demoralizing competition exists in any specific industry, and that agreements between the person engaged in the industry to modify such competition by controlling and regulating prices or production would not result in injury to or undue restraint of trade or be detrimental to or against the interest of the public, the commission may so advise the governor in council and recommend that certain agreements be approved.
That is one thing-investigation and recommendation. Then subsection 2 provides for approval and review by the governor in council. It says:
The governor in council may, if of opinion that the conclusions of the commission are well founded, approve of any such agreement, and shall make regulations requiring the commission to determine from time to time whether the agreement is resulting in injury to or undue restraint of trade or is detrimental to the public interest.
Then subsection 3 provides for information and rescission of approval, which of course is a safeguard; and subsection 4 provides that

there must be the consent of the commission for prosecution. I should like to put this to the committee. We have had in this country for a number of years now cut-throat competition in newsprint production. Our production of newsprint, apart from the small percentage that goes into domestic consumption, about which I do not think there is very much trouble, is largely for export. It is one of the products which Canada produces in large quantity and exports, bringing new wealth into the country. We all know, if we know anything at all or are interested in and 'have been following the newsprint situation in recent years, the tremendous cutthroat competition there has been in that industry to the detriment of Canada; I think that is a fair statement-to the detriment of this country. If we had had the machinery in the last five years or longer under which we could have had governmental approval of fair trade agreements respecting newsprint for the export trade, I think it would have been to the great benefit of Canada.


Mr. DUFF:: What about meeting competition in the foreign market?


Richard Burpee Hanson: They will take care of that. I say that if we had had anything like that, then in my humble opinion, and I am putting it forward with great humility, it would have been of great benefit to the newsprint industry, and consequently of benefit to Canada. I can think of other examples. Look at the situation of the furniture industry in Canada to-day-every reserve of every company wiped out. Ask our colleague across the floor what is the position of the furniture industry in Canada today as a result of cut-throat competition. I put this query to the committee: Is it in the public interest that an old established industry in Canada like the furniture industry-I see my hon. friend from Weyburn (Mr. Young) is ready to spring; I may possibly bo stirring up trouble-should be subject to such conditions as have existed in the industry for the last few years. The public have no right to get their stuff below cost.
Mr. HANBURY': That is a new theory.


Richard Burpee Hanson: I will say this; as a general rule the public have no right to get the stuff below the cost of production.


Wilfred Hanbury: What about efficient industry?


Richard Burpee Hanson: That is another story.

Trade and Industry Commission


William Duff: The consumer is the forgotten man.


Richard Burpee Hanson: How can fair wages be paid under those conditions? Are we to lower the standard of living? I apologize, Mr. Chairman, for getting off on this angle, but 'I do suggest to the committee that this clause has some merit.


William Lyon Mackenzie King: If power is to be given to permit of agreements for regulating prices and production has the minister considered the wisdom of receiving the approval of parliament rather than that of the governor in council? If these agreements are to be in the public interest it seems to me th.at parliament is the right body to give its approval in a matter that goes the length of establishing a combine.


Richard Burpee Hanson: That I understand was the minority report, but I suggest that you would never achieve anything by that method because of the delay. Anybody who has had any experience in business knows that if it was necessary to await the approval of parliament, it simply could not be done. You simply would not get anywhere; it is not practicable. It may be a good democratic theory to suggest, but from my knowledge of business I would say that it is not practicable; it cannot be done.


William Lyon Mackenzie King: The British parliament has found it practicable to approve of various agreements, and it has vaster affairs than ours.


Richard Bedford Bennett: Not of this kind, I think.


William Lyon Mackenzie King: Very similar, they are agreements of less important and less significance than these.


Richard Burpee Hanson: Yes, under their marketing act.


William Lyon Mackenzie King: And those
agreements would be less extensive than the ones my hon. friend suggested relating to the newsprint or furniture industry.


Richard Bedford Bennett: The steel cartels were not approved of by parliament in England?


William Lyon Mackenzie King: I cannot say as to that. May I direct attention to another subsection of this act. I think the minister went further than he intended. Subsection 4 of section 14 says:
In any case where the governor in council has approved an agreement under this section, no prosecution of a party to such agreement
shall be instituted' under the Combines Investigation Act or the criminal code for an offence arising in the performance of such agreement, except with the consent of the commission.
Should there not be some restricting or limiting words before or after "criminal code"? Should the section not read "the provisions of the criminal code relating to combines" or should the sections of the code not be specified? Otherwise a party to such an agreement could not be prosecuted for an assault.


Richard Bedford Bennett: You could say "the
relevant sections of the criminal code."


Richard Burpee Hanson: I think
the right lion, leader of the opposition is rigdit.


William Lyon Mackenzie King: There is that danger in leaving it as it is.


Edward James Young: Mr. Chairman, this section
provides that wherever wasteful or demoralizing competition is found to exist in an industry, those engaged in the industry may be permitted to formulate agreements to regulate prices and production, in other words to form some sort of combine. Now, wherever wasteful or demoralizing competition exists in an industry it is generally the result of overexpansion, and overexpansion is generally the indication of a lack of judgment on the part of somebody engaged in the industry. When we find that condition existing should we permit those who have been guilty of this lack of judgment and have overexpanded their industry to come together and form an agreement to regulate production and fix prices? Should we not in that case be doing something that was detrimental to the public interest? We are deliberately keeping more people in an industry than the country can afford to maintain in it, and by that very act we are doing something against the public interest.
The minister mentioned the furniture industry as an example. Let us take that industry. In this country we had a great many furniture factories producing furniture which the people of Canada were buying. Then, with the coming of the depression, the people lost a large percentage of their purchasing power. They simply could not buy as many goods as they had been buying, and furniture was one of the things they could do without, so furniture was one of the things they first stopped buying. If this clause had been in effect at the time and our furniture manufacturers had1 come together to form an agreement to limit production and fix prices, what good would it have done them? The people would not have bought their furniture in any case, and the higher they kept their prices the

Trade and Industry Commission
less furniture the people would have bought. The only way furniture went into consumption at all was by cutting prices. I know of a young man in this very city who got married and wanted to furnish a house. The depression was on and he saw that prices were coming down, but he said, "We cannot buy our furniture yet, but presently prices will come down." So he waited and waited, but apparently some understanding was arrived at among the furniture dealers of this city and this young couple could not buy their furniture until they discovered that someone in Toronto was selling furniture at lower prices. So they went to Toronto and bought their furniture for less money, and in that way they gave employment to people in the furniture industry which they never would have done if there had been an agreement such as this.


James Lorimer Ilsley: I should like to say a word about the pulp industry. The Minister of Trade and Commerce is a much more experienced and an older lawyer than I am, but my understanding of the Combines Investigation Act is that it does not prevent any producers in this country from entering into a combine for the export trade.


Richard Bedford Bennett: That is not clear.


Richard Burpee Hanson: If my
hon. friend could satisfy some people in this country on that point I think they would be very much obliged to him.


James Lorimer Ilsley: There would be no one
to take any proceedings at all, because the pulp and paper people combined only in regard to the export trade. That is the rule in the United States.


Richard Burpee Hanson: They
have a special act over there.


James Lorimer Ilsley: But the public interest must be affected before the combine becomes a criminal enterprise, and by the most elementary rules of interpretation that means the public of the Dominion of Canada. I never heard the point disputed until to-day. Now the minister says that if five years ago there had been a provision such as this the pulp industry could have saved itself by a combine in regard to export trade. They could not have done it any better than they could do it now. This provision does not impose any penalties; it merely removes the penalties that otherwise would exist under the Combines Investigation Act. It is not the place of the commission to enforce a combine entered into under section 14 or to prosecute for the violation of an agreement; they could not do that. You are simply leaving it to [Mr. Young.l
the producers here to agree among themselves, and you are saying .that under certain circumstances they may enhance prices and limit production, and the penalties that otherwise would follow under section 498 of the criminal code or under the Combines Investigation Act will not attach while that agreement is in force. So with considerable deference I submit that the opinion of the Minister of Trade and Commerce is unsound so far as it applies to the pulp and paper industry.


Richard Bedford Bennett: I endeavoured to follow
the facts as they were presented .to the commission of which the hon. gentleman who has just taken his seat was a member. As I understand it the commission had before it evidence which satisfied it that unrestricted competition had destroyed a large number of smaller companies or people and that the survival of the fittest had been brought about by a competition that involved loss on the part of the ultimate survivors at the expense of the others.


James Lorimer Ilsley: It was overexpansion that
did it, rather than competition.


Richard Bedford Bennett: I am coming to that.
I realize the soundness of that statement, but all one has to do is take the history of the railways of the United States in the years 1850, say, to 1880. There is a classic work upon that subject. They were unrestrained and unrestricted, and the traffic had to pay what it could bear. I think those were the words of one of the famous creators of railways in the United States. Then there was a great system that gave rebates to one of its largest customers. They were secret rebates, known only to the railway company and the customer. That history is a matter of record. The result was that the people of the United States came to the conclusion, as did the people of England, that there ought to foe a body created that would fix the same rate for the same service for all railways. As a result we in Canada have the Railway Act, which was drawn up by the present vicechairman of the board of railway commissioners.


James Lorimer Ilsley: You could not apply that principle to the furniture industry.


Richard Bedford Bennett: I am just pointing out what the result was with respect to carriers. They were common carriers competing with one another in the same area for traffic, at any price at which they could get it, ostensibly showing certain rates which in fact they overcame by giving secret rebates. As I say, that history is one of the most interesting that one

Trade and Industry Commission
could read. The United States found it necessary, as did Great Britain and Canada, to set up a board that would fix the same rate for the service rendered, having regard to what is called water competition east and west and the other factor, that is, where you have traffic to be carried to two ports, one of which is a little greater distance' than the other, the rate to the further distant port is the same as it is to the lesser distant port. Without going into details those were the principles.
Now let uls go a step further. Then came what are known in the United States as the great packer cases. In that country it was found that the packers drove out of business the small butcher who bought and killed local cattle and sold them in his own market. He was being driven out by the car that stopped at the siding. Usually before that took place the padker offered the local man the chance to sell out; sometimes he sold and sometimes he did not. The whole matter was reviewed by the Supreme Court of the United States, and the oil cases were also reviewed by that court at great length. The result of unrestricted and unrestrained competition was the creation of monopoly. The very thing my hon. friend from Weyburn (Mr. Young) aims to prevent was brought about by unrestrained and unrestricted competition. In the end the survival of the fittest meant a monopoly, with great resources, with many branches and with activities extending to all parts of the world. Now let us see what we had in this country during the years to which reference has been made. My hon. friend from Hants-Kings (Mr. Ilsley) said it was a case of over expansion. In very buoyant days the prospects of high profits from certain forms of industrial activity so affect others that they go into the business when purchasing power is high and large, and there being no reserves set up to meet the situation because of the effect of continuing competition there is undoubtedly great over production in periods of depression. The real truth is that because our combines act read as it did there came about large numbers of mergers. The mergers were the direct result of unrestrained competition, resulting in one corporation that created a monopoly in many communities and afforded no protection at all to the consumer. They were within the law, because twenty, thirty or forty plants had been carried into one plant, which did not come within the combines act. Therefore they could no longer be investigated as combines. I say to the hon. members for Hants-Kings and Weyburn, does it not come down to a choice between one of two things: Shall we permit the creation of a condition that will prevent the growth of monopolies and the creation of monopolies, by adequate restriction and regulation, or dhall we permit the unrestrained operation of free competition to the destruction, ultimately, of all but the fittest?-and I am using the word "fittest" in the sense of meaning the largest resources. That is the position, as it appears to me-and I regret to say that I have come to this conclusion, because all my life I have followed with some interest this class of transaction. Hon. members who are members of the legal profession, and who will take the trouble to read the judgment of the Supreme Court of the United States will recall that the former ambassador to Great Britain, Mr. Kellogg, acted in several of these actions. There you have an illustration of another phase of the matter. Take tobacco, take oil, take packers, take the steel industry-all these matters were carefully considered and investigated; litigation was launched, in some cases with success and sometimes with failure. In the supreme court reports you will find in very comprehensive detail all the matters to which I have referred.
In this country we make no distinction between export and domestic business, so far as combines are concerned. The hon. member for Hants-Kings has suggested that there might be no opportunity for prosecution-


James Lorimer Ilsley: I go farther; I say it is not an offence.


Richard Bedford Bennett: If a combine is bad, then it is bad whether it is applied to export or to import business.


James Lorimer Ilsley: It must be to the detriment of the public.


Richard Bedford Bennett: The public interest of
Canada, yes. But, just to finish what I was going to say: The Sherman Act, so-called in the United States, was an act not unlike our Combines Investigation Act-I say, not unlike it. In general terms the decisions of the Supreme Court of the United States would apply with equal force to the provisions under our combines act.
There is an important distinction between the principles which govern British law and those governing the law of the United States. The great case in English law was the Great Mogul steamship case, where the ship lay in harbour and could not get a cargo. Certain prohibitions were brought about, and the House of Lords decided as there was no statute in the matter it could not be said to be against the public interest to do what was being done, because there was a regulation of trade and

Trade and Industry Commission
commerce in accordance with what they conceived to be a good and sound principle, and they did not interfere in that case.
About the same time in Brantford, Canada, there was a case in which a decision was arrived at indicating that under the provision of the criminal code there was no liability. A little later I defended what was known as the lumber combine case in the province of Alberta. I can recall the facts vividly, although it must be twenty-five or more years ago. When the papers were submitted to me I was clear that upon eleven counts they could be acquitted, but that upon the twelfth count I saw no chance of acquittal under the statute as it stood, because they were enabled to fix a price, inasmuch as they endeavoured to limit the creation of lumber yards by saying that a new yard should not be opened at a given point, without their permission. If ft was opened without their permission there was no opportunity for the unfortunate man who opened the yard to secure a supply. In my judgment it was quite obvious that that violated the provisions of the secticn. Accordingly the case was tried before Chief Justice Sifton, and he acquitted my client upon eleven counts and found him guilty upon the twelfth count. That is an illustration of what I conceive to be proper conviction, because the regulation undertaken by t'he industry within itself was not such regulation as was in the public interest. In other words, it placed in the hands of the industry itself-I shall put it this way-the power to determine the terms and conditions under which people should be able to buy what is a necessary product in that province, namely lumber.
Here the commission had to deal with the importance of testimony which established clearly (1) that unrestrained and unrestricted competition, whether brought about by overexpansion or overcapitalization, or how else brought about, resulted, in the ultimate analysis, in the creation of a monopoly. That is an unfortunate tiling to say, but it is true.


James Lorimer Ilsley: Only in certain industries. There are many industries where there cannot be a monopoly.


Richard Bedford Bennett: That is what I wish to say. I thank the hon. member for Hants-Kings for mentioning the point, because it meets my view. There are many industries in which monopoly may be beneficial and not otherwise.


James Lorimer Ilsley: I did not say that. I said "in which there cannot be a monopoly."


Richard Bedford Bennett: Oh, I thought the hon. member said "in which there can be monopoly." I did not understand him. There are many things in connection with which there cannot be a monopoly. I have seen with my own eyes the destruction of competition by the powerful, advanced and efficiently managed concern squeezing out the small competitor by underselling him, and then getting control of the market and1 regulating the price according to its own sweet will. That is bound to happen where you have unrestrained and unrestricted competition. That problem is the most difficult one with which public men of to-day have to grapple. How are we going to do it? Are we to say that men shall not arrive at an agreement providing a reasonable profit? We know the weaknesses of humans, in their greed, their avarice and their desire for large returns.
But I do submit that the evidence heard by the commission satisfies me upon one point, and that is this, that what the minister described as cut-throat competition, but which I would describe as unrestrained or unrestricted' competition, has in many instances created a monopoly which in the end has been injurious to the consuming public.


William Lyon Mackenzie King: I believe the commission has described it as "imperfect competition."


Richard Bedford Bennett: Quite so; I thank the right hon. gentleman. I think the adjective hardly gives the correct description.


William Lyon Mackenzie King: That is the phrase they used.


Richard Bedford Bennett: Yes, that is what was said. I have this to say: We are here to make a choice between one of two courses, the first of which is to prevent monopolies and .the -second to create if possible a situation which- will ensure in the public interest that a reasonable price is paid by the consumer for his product. That is what we are endeavouring to do.
Let us leave out a discussion of the desirability or otherwise of monopoly. None of us wants monopolies; we do not want them in these days. Of course there are monopolies respecting telephones, and various other matters of that kind. That question- has been discussed in a judgment delivered by the House of Lords in which the whole economic situation was reviewed. But, leaving that for the moment, we come to the second problem which -confronts us: How can we create a condition by legislation which

Trade and Industry Commission
will ensure the benefits of a reasonable price to the consumers and at the same .time prevent the maintenance of monopolies? In other words, how can communities 1, 2, 3 and 4 continue to operate, thereby maintaining the economic life of communities 1, 2, 3 and 4 as against the baneful effects of competition which would destroy communities 1 and 4 and leave 2 and 3 in control? How can we do it? Is there any way other than that suggested in the bill?


Richard Burpee Hanson: I believe the expression "wasteful and demoralizing" is used1.


Richard Bedford Bennett: Yes. I put that to the committee. How otherwise can we do it? One, two, three and four arrive at an agreement. The agreement is that the profits resulting from their efforts shall not exceed either a percentage upon the turnover or a rate upon the business transactions, but shall be according to some agreement that commends itself to the commission as being reasonable. I believe the hon. member for Vancouver-Burrard (Mr. Hanbury) was right, namely, that we should not provide for inefficient business. We have always objected to inefficient business being made the standard of measurement with respect to operations, or anything else. There is nothing more injurious than, as was done in one case in Canada, to the detriment of every consumer, to take an inefficient 'business and make it the standard1 for the determination of tariff assistance or aid. You cannot do it. Efficiency is the first factor in determining whether or not there shall be a grant of tariffs to an industry. Speaking about inefficiency, I have in mind a case which was brought to my attention since I have been in office where the complaint was made that they could not make money. The answer was clear: "You cannot make money with obsolete machinery." You cannot make money or you cannot have a return unless you have good management and unless you have proper machinery. The unfortunate position is, as we have it in industry to-day. that you cannot do by man power that which is being done more effectively by machinery by a competing company. For instance in the cotton industry there are great mills. One mill in Canada is possibly equal to any mill in the world. But, what has been the result in Japan? Why is Japan in such a fortunate position to-day? Because Japan has efficient machinery and management, and in some cases is working in competition with old and worn out machinery.
The problem, I repeat, is this:	How can I
save one, two, three and' four by ensuring that they get a relative share of all the business, and at the same time prevent the destruction of one, two and three by number four, which has a monopoly of the whole business and takes one, two and three out of production. I know of no way in which it can be done other than by providing that these people make arrangements among themselves. That is, if they do it amongst themselves, that we do .not mark them as criminals for so doing.


William Daum Euler: Would it have to be unanimous?


Richard Bedford Bennett: That is a matter about
which I shall not express an opinion.


William Lyon Mackenzie King: It will have
to be settled at eight o'clock.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


Richard Bedford Bennett: I had about concluded all that I desired to say except to point out that I know of no method by which the end aimed at could be accomplished except by use of an agreement such as this. It will be observed that the ' agreements relate first of all to a specified industry; they must be arrived at by the persons engaged in that industry and are to modify existing competition by the control and regulation of price and production. If by so doing the action should result in injury to, that is one, or undue restraint of trade, two, or be detrimental to the public interest, three, or against the pulblic interest, four, the governor in council must take official action, which means that the government approves of the action taken.


William Lyon Mackenzie King: My purpose in rising is not to question what the Prime Minister (Mr. Bennett) was saying earlier in the discussion with respect to unrestrained and unrestricted competition having led to mergers and monopolies but to take issue with what my right hon. friend said as to the combines act having in any way been responsible for the creation of mergers. That statement has been made by hon. gentlemen opposite from time to time, and, I think, wholly without any justification. Mergers have been part of the order of the day during the last quarter century or more and they certainly had become extensive at the time the Combines Investigation Act was first



Trade and Industry Commission
introduced in 1910. The purpose of that act was not to preclude mergers or combines, as it was recognized that, with world competition what it was becoming, large combinations of capital as well as of labour were part of the inevitable trend. In the light of that it was felt desirable that there should be enacted legislation which would prevent those large combinations which were likely to become more numerous and more powerful from operating in a manner which would be detrimental to the public. The offence was not the formation of a combination, a monopoly or a merger; it was the operation of these powerful combinations in a manner which was detrimental to the public interest. This whole question was gone into fully before the price spreads commission and in the light of the frequent representations from some hon. gentlemen opposite, including the former Minister of Trade and Commerce (Mr. Stevens), the commission made a very definite statement on the point. In dealing with the administration of the combines act, the commission report on page 266 as follows:
We regard the first, a rigorous enforcement of the combines act, as most important.
And continuing:
The act does not by its terms, or by the manner of its present enforcement, hamper any combination that would operate in the public interest,-
That statement could not be more definite, and that is made, I gather, as the result of the discussion and consideration of that very point. My right hon. friend mentions that the combines act is very similar to the Sherman anti-trust act and that the Sherman anti-trust act had been directed specifically against combinations as such. That is perfectly correct with respect to the purpose of the Sherman act, but at the time our Combines Investigation Act was introduced the difference on the point in question between the Sherman act and our act was made clear to the house when it was considering the measure. It is true that certain provisions of both measures are very similar, for example those that have to do with investigations. The difference is that in the Sherman act a trust qua trust is an offence and is considered a combination detrimental to the public interest whereas under the Canadian Combines Investigation Act it was set forth frankly at the time of its introduction that in the order of things it might be expected that these large combinations would increase and that it was therefore necessary to prevent their exercising their power against the public interest. The offence that was set forth was the antisocial practices of any species of

combination. The. Combines Investigation Act might equally well have been called the mergers investigation act or the trusts investigation act or the monopolies investigation act as all were placed exactly on the same footing in the original act and are exactly on the same footing in the present act.
While I am speaking on this section there is another point I should like to bring up with reference to the report of the price spreads commission. The commission emphasized emphatically the necessity of the need of more effective control of monopolies and especially the enforcement of one or two provisions of the present combines act with respect to the lowering of tariffs or the withdrawal of certain patent rights in the event of offences occurring under the act where a remedy might be afforded through either of these methods of redress. I do not see anything in the legislation which the government has brought forward thus far to indicate that it is taking any action with respect to the recommendations of the commission as to the control of monopolies. I may not have seen all that is forthcoming, but that would appear to be one of the phases of the commission's report that is certainly deserving of careful consideration in the light of the tendencies of the day.


Richard Burpee Hanson: I should like to refer to the suggestion of the right hon. gentleman that there might be an improvement in the draftsmanship of subsection 4. This subsection reads:
In any ease where the governor in council has approved an agreement under this section, no prosecution of a party to such agreement shall be instituted under the Combines Investigation Act or the criminal code-
Perhaps this should read, "under the provisions of the Combines Investigation Act or under the provisions of the criminal code." If I got the right hon. gentleman's suggestion correctly, I believe that will cover the matter.


William Lyon Mackenzie King: The minister has not got my meaning. 'It should refer to those provisions of the criminal code which have to do with agreements which are against the public interest. As the section now reads a man might be guilty of any offence under the criminal code but if he was lucky enough to be a party to an agreement he could not be prosecuted under the code. My hon. friend would meet what I have in view if he would insert the words, "sections 4(96, 497 and 498 of the criminal code." Those are the sections of the code which relate to offences under agreements in restraint of trade.

Trade and Industry Commission


Richard Bedford Bennett: We had that in originally but as the numbering of the sections of the criminal code is changing so frequently I suggested this wording. It is limited to offences arising in the performance of such agreements and I think it would be construed by a court to mean an offence of that nature. In view of what the right hon. gentleman has said, we might put in the words, "or the appropriate sections of the criminal code."


Mr. HACKETT:: Does not the definition in (h) cover that?


Richard Burpee Hanson: By unanimous consent this section might be amended to read, "or sections 496, 497 and 498 of the criminal code." If there is any difficulty in connection with the numbering, it could be made to read, "or the appropriate sections of the criminal code."


William Lyon Mackenzie King: Or "the
relevant sections."


Richard Burpee Hanson: "Or the relevant sections." I suggest that amendment.


Edward James Young: This afternoon, when the
Prime Minister (Mr. Bennett) was speaking, he referred to competition leading to monopoly and I .think his argument was something like this: that where you have free competition the more efficient gradually gobble up, shall I say, the less efficient, and the numbers of those engaged in the industry are gradually reduced until the more efficient have a monopoly of the business. I wonder how many monopolies we have in this country that have grown up and have perpetuated themselves on that basis and that basis alone. Apart from what we might call natural monopolies, such as railways, telephones and so on, have we a single monopoly in this country that has not been fostered and is not living to-day by reason of some special privilege granted to it, aside from the efficiency of the operation of that business? I doubt whether we have a single one. As business grows bigger it becomes harder to manage and ultimately it reaches the point where efficiency is impossible in that business. One of the chief causes of inefficiency is 'bigness; there is a limit to what the human mind can manage. I was talking the other day to a man engaged in the warehousing and trucking business, the manager of a small company, and he told me he was in direct competition with one of the largest concerns in the dominion; and he said, "We can undersell them, we can undercut them everywhere. We can handle at 40 cents a ton a commodity which would cost them 70
92582-236J
cents." I asked him how this was possible and he replied, "Because of the very size of the concern. It costs a tremendous amount of money to be efficient."


Richard Burpee Hanson: And you
accepted that as proof?


Edward James Young: I accept it as an example of what happens; it is perhaps not sufficient for proof, but it is an illustration of what happens. Now how will you secure efficiency in an industry which is not exposed to competition such as that? The competition of the smaller concern will force the larger concern to become efficient or go out of business, or will undermine the larger concern in the end. Without that competition, and with such an arrangement as is contemplated in this bill, how will you provide that efficiency for the larger business? It cannot be done. The competition of the other concern is the only thing that will drive them to it. Mr. Carlisle, president of the Goodyear Tire & Rubber Company, came before the price spreads committee and told us that in 1920 a 30 x 3| tire sold for $25.35; to-day that same tire sells for $3.96 and the mileage, he said, had been doubled. What has been the driving force 'that enabled the tire makers of this country to put that tire on the market at a mere fraction, about one-sixth of what it cost fifteen years ago?


Richard Burpee Hanson: Science.


Edward James Young: Science?


Richard Burpee Hanson: Absolutely.


Edward James Young: We will grant that. The
development of science, improvement of methods and so on have made it possible to do that. But what has passed on to the consuming public of the country the advantage of that development? Competition.


Richard Burpee Hanson: Mass production.


Edward James Young: If the company that first improved its methods and took advantage of all those improvements had had no competition, it would have charged the same price and put the excess in its own pocket; and what would have been the result? We should now be paying as much as ever for our tires and there would not be as many men employed in making them to-day. But because there were competitors, because one man found a way of improving his methods and selling his tires a little cheaper, in order to get business, he forced his neighbour to do the same thing, and one working against the other forced the price to what it is to-day, with the result that
3718	COMMONS
Trade and Industry Commission
the public get the benefit of the advancement and workmen get the advantage of a wider market and more employment. Failing that, the benefit would all have gone to a few proprietors, capitalists as we call them, and there would have been less employment and less use of tires in the country.
The problem, said the Prime Minister, is this. You have industries 1, 2, 3, 4, located in communities 1, 2, 3, 4; are you going to allow competition to destroy industry No. 1, industry No. 2 and industry No. 3, and the communities that depend on those industries? Are you going to allow competition to destroy them and 'build up No. 4?


Richard Bedford Bennett: Unfair competition.


Edward James Young: Well, we have first to define what is unfair competition. I want to ask this question. Are you going to set up in this country an industrial system under which, because communities 1, 2, 3, 4 are located where industries 1, 2, 3, 4 are operating, and because those communities are dependent upon those industries, industry must never change? Will you pass a law to provide that competition shall never be allowed to destroy industry 1, 2, 3 or 4? If you do you will petrify industry in this country

and I mean just that word. Not only will you stop it growing but you will drive the life out of it; you will ruin, and kill industry in this country, because it is impossible to maintain industry on that basis and keep it going forever.
The Prime Minister referred to the competition of the Japanese textile makers, and what he said was most interesting. He said that the reason we find it so hard to compete with the Japanese is that they have the most up to date machinery, efficient workmen and efficient management,


Richard Burpee Hanson: He said those were some of the reasons.


Richard Bedford Bennett: I did not specify the real reason.


Edward James Young: Well, those were the reasons he did specify, and he said that against that we are trying to compete with obsolete 'machinery and a capital structure that had been resold to the public three times.


Richard Bedford Bennett: I was talking about Lancashire.


Edward James Young: Lancashire?


Richard Bedford Bennett: Yes; I was not talking about Canada at all at that moment.


Edward James Young: I did not think my right bon. friend mentioned Lancashire.


Richard Bedford Bennett: I think I spoke of the Lancashire people. We have not had a recapitalization of these industries as they have had in Lancashire.


Edward James Young: I think we have some obsolete machinery in Canada.


Richard Bedford Bennett: We have some of the most up to date machinery in the British empire.


Edward James Young: Well, I was going through
a factory in Montreal and they Showed me an immense room full of second hand machinery which they were bringing in from the United States. Now, by laws such as we are proposing to put on our books, or by the tariff structure, are we going to continue forever to protect any industry, simply because it is Canadian, against the efficient industry of Japan, or shall we rather say to the Canadian industry, "If you want to survive in this country you must become efficient, just as efficient as the Japanese or anyone else, and the test of that efficiency is to put you in competition with these people."


Mr. STANLEY:: Starvation wages.


Richard Burpee Hanson: Yes, 15 cents for women and 25 cents a day for men.


Edward James Young: My hon. friend is guessing.


Richard Burpee Hanson: I am not guessing.


Edward James Young: This is the evidence that came before the .price spreads committee, given by a Canadian textile man himself. He said that the people in Japan who were engaged in this industry were living well and were well treated; and that is more than can be said for the people engaged in the same industry in Canada.


An hon. MEMBER:: Living on rice.


Edward James Young: When the textile manufacturers came to the government in 1930 and asked for higher duties on their products, assuring the government at the time that they would not take advantage of those higher duties to charge a higher price to the people of Canada, I wonder whether they told the government then that if their request were granted, the people of this country would not be able to wear as many clothes as they had been doing. No, they did not. If they had told the government at that time that they would not be able to supply us with the same quantity and quality of goods we had been using before at the prices we had been paying before, they would not have got the protection even from my right hon. friend. But they did not tell him that; they told

Trade and Industry Commission
him that they would not raise the price. Technically they did not, but practically they did by reducing the quality, with the result that the people of this country had to wear fewer clothes than they were wearing before and the wages paid by the industries were reduced. Although imports of textiles from other countries were shut out, the Canadian manufacturers did not supply the deficiency, and I frankly accuse them of breaking faith with the government; for when they come and ask for a market for themselves, they are under a moral obligation to supply that market without any decrease in the supply or in the value.
Under this legislation it will be possible for those people to come together and agree on prices and terms which will make it unnecessary for them to compete with efficient producers in either their own country or abroad. As I said before, as concerns get bigger and bigger, it is harder and harder for them to become efficient. Left as they had been, if there were no competition from abroad, more efficient concerns would develop in this country and force them out of business or to become efficient. But under this legislation, once they reach a certain point they can get together; all they have to do is to cut prices under one another and then they can get permission under this legislation to form a combine and have a gentleman's agreement which will fix prices and make the people pay on the industry's cost of production and not on a basis of efficient production.


Richard Bedford Bennett: I do not want to leave the hon. member for Weyburn (Mr. Young) under a misapprehension; if what I said to-day left the impression that I was dealing with Canadian industry, I was not; I was talking about the recapitalization of business that had been sold to the public so many times in Lancashire. It will be recalled that at the very time we were dealing with the problem, there was a reduction by the courts in England in the capital structure of one of the enterprises by a sum that amounted in our money to millions. I am mentioning that only lest there should have been a misapprehension.
All trusts popularly so-called have not been offences against the Sherman act. The steel trust, so-called, won its case in the Supreme Court of the United States; Mr. Kellogg was able to convince the court that it did not contravene the provisions of the Sherman act. In this country what the leader of the opposition has said is true: the question of the public interest has been the test to be applied under the combines act's powers.
In the criminal code we still use the word "undue." I daresay many members have read Mr. Herbert's Misleading Cases in which he refers so humorously to "the reasonable man" that no one has ever been able to discover, who determines the issue in al cases. That is what is meant by the difficulty of determining what is unfair, undue. I purposely did not touch this point this afternoon because it is not a proper thing to compare the scale of wages and things of that sort in other countries with that which obtains in our own. If the hon. member will take the trouble to read the Sunday number of the New York Times of two weeks ago yesterday, he will find a complete report upon the whole situation with respect to the cost of production. One of the very difficulties we are labouring under to-day in connection with our dealings with Japan is the question of cost production.
As regards efficient machinery, I desire to repeat that there is in Canada a cotton mill that has as efficient machinery as there is in the British empire, if it is not more efficient than any other. The second hand machinery thajt my hon. friend referred to and .that came into Canada was efficient machinery, but it was because of the shifting of the business from northern United States to the south where cotton is produced, that the very best machinery that could be manufactured had to be sold and either moved down to where the cotton was grown or else brought into this country. That so-called second hand machinery contains the last word in manufacture in the way of patented methods for 'the production of textiles cheaply, just as the shoe making machinery that was sold by this continent to the countries of Europe has enabled them by improving on it to sell their boots in once free trade England and other parts of the world in successful competition against evpry other producer. I refer to the Battle Shoe Company of which my hon. friend has knowledge.


Edward James Young: How will the right hon. gentleman provide for efficiency in the absence of competition?


Richard Bedford Bennett: Just as I suggest would be done here-make the most efficient the standard of your agreement. Then you have a measure of competition. Some people think there is no competition among the banks. They say there is no competition among the elevator companies. There was a time in western Canada, as the hon. gentleman knows-he has been there as long as I-before we had a statute to regulate the charge that could be
3720	COMMONS
Trade and Industry Commission
made by elevator companies, when every man sought to charge just as much as he could get. Then a statute was passed by which a fixed charge was established. No one will say that because of that competition has ceased; on the other hand competition is extremely keen and the character of the business has been improved by that competition. You get competition under these agreements even if you do maintain the price, because each man will be struggling to advance his own interests by the service that he gives the customer.


Edward James Young: Under this legislation let us take the case of my right hon. friend with industries numbers 1, 2, 3 and 4. Number 1 is, we will say, the most efficient, so it becomes the standard. Somebody else, not in No. 1, 2, 3 or 4, might devise a more efficient method of production, but under this legislation an agreement could be entered into by numbers 1, 2, 3 and 4 by which No. S could not come into the field at all, and thereby you would bring industry to the point where further production was impossible.


Richard Bedford Bennett: There is nothing to stop No. 5. This deals only with those now in the business.


Edward James Young: The agreement stops progress.


Richard Bedford Bennett: It does not have anything to do with No. 5, that does not at present exist.


Edward James Young: How is production regulated if others come in?
Mr. BENNETT This applies only to those that are in existence.
Section agreed to on division.
On section 15-Duties of commission.


Mr. OOOTE:: Will this commission have power to set standards for motor oils and gasoline, for instance? It seems to me that would be a fine place to start if they have such powers. At the present time we are paying exorbitant prices at most service stations and garages for motor oils. We may pay the highest price that is asked for any oil and still have no way of knowing whether we are getting a high class oil. I would like to know what is contemplated as being possible for the commission to provide for us under section 15.


Richard Burpee Hanson: (York-Sunbury): Under
section 15 there is no provision for fixing standards as such of any commodity. The

duties of the commission are defined in subsection 1:
The commission shall be charged with responsibility for the prosecution of offences against acts of the parliament of Canada and regulations thereunder, relating to commodity standards-
That may be set up under another section. If the hon. gentleman will look at sections 16 and 17, he will find that the commission may refer to the research council for study, investigation, report and advice upon all matters relating to commodity standards. They may also on the request of the proper department of government make reports, and furnish any information desired. But there certainly will be no fixing of prices. Under section 18 there is such a thing as setting up a standard to be a national trade standard.


[Stage Direction]
Section agreed to.
On section 16-Additional powers.
William Richard Motherwell: I do not know whether I understand this section or not; I know the national research council formerly had a good deal to say on a great many questions, but this is going to make it almost a monopoly in regard to graded commodity standards, including agriculture. I should like to know how far it is meant to go. In section 15 the commission is charged with responsibility for the prosecution of offences- in regard to standardized products. Standardized products are defined in the interpretation section. It includes making the grades for anything, not only processed commodities, but commodities like grain, vegetables, fruit, eggs, anything. Has all that got to go to the research council as a final court of appeal, but first through the commission? If it has, we are going to have a terribly circumlocutory way of getting these grades established or changed.


Olof Hanson: It is purely permissive. If the hon. gentleman will read section 16 carefully he will observe that it gives additional powers to the commission to "request" the research council to do so and so. It arms the national research council with authority on the request of the commission from time to time to do certain things.


William Richard Motherwell: Where does the commission get the authority?


Richard Burpee Hanson: Not to the exclusion of other authority, such as the Department of Agriculture.

Trade and Industry Commission


William Richard Motherwell: It does not say that here.
Mr. HANSON (York-Sunbury); This very question was under discussion recently with the officials of the Department of Agriculture. Of course I quite understand that they want to preserve their jurisdiction and authority and power. I submit that there is nothing in the section which derogates in the slightest degree from the powers and authority conferred upon the Department of Agriculture or other departments of the government to do certain things. But in this section 16 power is given to the national research council to do certain things if requested by this dominion trade commission. Certainly if the national research council were not properly equipped to do the work, and a department of the government, such as the Department of Agriculture, was fully equipped, they would never ask the research council to do it. This is purely and simply an enabling clause; there is nothing compulsory about it. Neither, as I construe it, does it give any monopoly to the national research council to do certain things to the exclusion of any other authority.


William Richard Motherwell: That explanation does not explain at all to me, as there is no suggestion even that the various other departments first request the services of either the commission or the research council.


Richard Burpee Hanson: I am sorry.


William Richard Motherwell: In section 15 no reference is made to any department having any authority about it. The commission and the research council are the only bodies mentioned, and apparently they are the final court of appeal with regard to grading wheat, for instance-and I think we shall soon have to have something done about preserving wheat grades the way it is being administered. It all inferentially at least has to go to the research council. There is a monopoly being established right under our eyes.


[Stage Direction]
Section agreed to.
On section 17-Reports in respect of products forwarded.
Richard Burpee Hanson: I ask the committee to be good enough to allow clause 17 to stand, because at the request of the chairman of the national research council there has been drafted a very short subsection relating to their protection in case of adverse reports.
Section stands.
Sections 18 to 23 inclusive agreed to.
On section 24-Cooperation with boards of trade, et cetera.


Mr. GERSHAW:: Could the minister tell
us why boards of trade and chambers of commerce are especially mentioned here? Would it not be in order for the commission to assist responsible bodies in any community, the city council or otherwise?


Richard Burpee Hanson: My understanding of the reason for naming the boards of trade and chambers of commerce is that it follows the report of the royal commission. The draftsman followed that as far as he could, according to his instructions. Those bodies represent the commercial community rather than the community as a whole.


Frederick William Gershaw: The board of trade may not be a very responsible body. If the commission could assist a council or an elective body it might be more advantageous.


Richard Bedford Bennett: It is only in connection
with arbitrations, and the division of the Boards of Trade Act dealing with arbitrations.


Richard Burpee Hanson: I think if
the hon. gentleman will refer to the Boards of Trade Act under which these boards of trade are incorporated he will see what it means. This is only in reference to a particular object, that is commercial arbitrations, being conducted by or under the authority of a board of trade or chamber of commerce. They are the only body authorized by the Boards of Trade Act to conduct such investigations.


[Stage Direction]
Section agreed to.
On section 25-Investigations.
Richard Burpee Hanson: The
draftsman has called my attention to the fact that there should be a slight amendment to this section. The section at present reads:
25. The commission shall have authority, when so required by the governor in council, to study, investigate, report and advise upon questions relating to the general trend of social or economic conditions or to any social or economic problem of Canada, and shall cooperate, when so required, with the economic council in connection with any economic investigation.
I desire to have inserted after the words "economic council" in line 27 the words:
-established under the Economic Council of Canada Act, 1935.


Edgar Nelson Rhodes: I so move.


Alan Webster Neill: In that connection who is
to do the "requiring"? What body is to require the commission to take action?

Trade and Industry Commission


Richard Burpee Hanson: The governor in council.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 26-New securities issues.
James Lorimer Ilsley: This section I suppose is
to carry out the recommendation of the price spreads commission that there be a securities control board. But I point out that this board is not to function under this section unless requested so to do by the Secretary of State. My submission is that it may not function at all. This section may be a dead letter entirely. If it is to be a dead letter it should not be put on the statute book as a sort of pretence. It should be made a real live section and it should apply to security issues. There was no part of the Prime Minister's radio addresses in which he was more emphatic than this:
The searchlight of publicity must be focussed on every issue of securities offered to the public. Adequate machinery must be set up to inquire into and report on corporate developments which tend towards consolidation and concentration. In other words the door must be locked before, not after the horse is stolen.
That was taken by the people of Canada -it could only be taken-to mean that the door would be locked before the horse was stolen; that before securities were placed before the public for subscription some board or body would pass upon them.


Richard Bedford Bennett: It did not say that; it
was very careful not to.


James Lorimer Ilsley: I should be much interested to know just what the Prime Minister meant by that.


Richard Bedford Bennett: He can tell you in a
moment.


James Lorimer Ilsley: This section 26 may mean
nothing at all. When will the Secretary of State ask the commission to investigate and review the capital structure of a company? Will it be after there has been complaint throughout the country that investors have been taken in?


Richard Burpee Hanson: Surely
my hon. friend is not serious.


James Lorimer Ilsley: I certainly am. Let the
Prime Minister or the Minister of Trade and Commerce state what the section means.


Richard Bedford Bennett: Mr. Chairman, the hon.
gentleman is very suspicious. If he will read what I said in January he will find that I 
made no observations that possibly could) be construed as advocating the setting up of such a commission. I have given some little attention to this matter, notwithstanding what the hon. gentleman said the other evening. I have given some attention to this question for some years, for a period of twenty years ana more as a matter of fact, if that information is of any use to the hon. gentleman, and I will confess that whenever I found a government institution set up for the purpose of giving its imprimatur of approval to the issues of securities, it has created a difficulty because it is then relied upon. Notwithstanding all that you may say to the contrary, that fact remains. As will be observed, this section contemplates new security issues, which the Secretary of State may refer to this board for investigation. All new security issues do not require to be investigated; no one suggests that they do. A moment ago the hon. gentleman spoke of the door being locked after the horse is stolen. I am sure ne was not deliberately exaggerating when ihe made that statement; surely he has not looked at the provisions of the Companies Act, with respect to what I conceive to be the governing factor, namely the prospectus upon wnich securities may be sold. The law as it will be passed by this parliament will meet the difficulty that we have experienced! in times past, of prospectuses being issued wnich have avoided making tne statements that I conceive to be necessary tor tne purpose of informing the public as to the true condition of the companies wnose securities are being sold. I may say that at one time I thought the purpose would be served by endorsing across the face of the share certificate in red ink that the property covered by the security issues of this company cost the promoters so many dollars. The prospectus as outlined in the Companies Act, as it will be amended by the act now before the house, is far stronger than that. It goes further; it meets the difficulty I have always experienced, the difficulty that probably most of us who have practised corporation law in days gone by will clearly appreciate. That is this: When the exploiting promoter got hold of the company he secured all its common shares, its preferred shares and its bonds for so much money, without determining how -much was for bonds, how much for preferred shares and how much for common stock. Then he sold them as the purchaser of them, and the terms of the prospectus of the company, or the statement in lieu of prospectus, left him entirely out of the picture. As a result the

Trade and Industry Commission
public was 'hooked; that is the short way to put it. Now I do submit that the amendments proposed by the Secretary of State meet that situation.


James Lorimer Ilsley: If they are constitutional. I am not raising the point; the Secretary of
State raised it.


Richard Bedford Bennett: What the Secretary of State raised was the question whether it might not be an interference with property and civil rights in view of the fact that in the case before the privy council it was held that the security frauds act was intra vires of the provincial legislature in respect of provincial companies. It will foe recalled that the case arose in Alberta and part of the court was of opinion that we could not interfere with a federal company in connection with these matters. The privy council took another view; it held that the province had certain powers that it could properly so exercise. The Secretary of State has nothing to guide him with respect to what the effect of that decision may be upon our powers in that regard, but the Secretary of State has inserted the provision that any purchaser, any broker, who buys these securities now must buy them on the terms of that prospectus which must be in the terms set out in the statute. That is the most advanced legislation we have had so far in this country to protect the public against fraud with respect to these sales of securities. I suppose the hon. gentleman knows from his practice, as well as I know, how difficult it has 'been adequately to safeguard the investing public by any suggestions that may be made. I have seen one suggestion after the other brought forward and tried, and if my own observation may be worth anything it is that the security frauds acts as enacted by the provinces probably have gone as far as any legislation that has been passed in Canada in that regard, but we had to go another step forward. It is the old story of publishing a statement in lieu of a prospectus and then having the securities sold as I have indicated, that enabled the irregularities to be created that brought about the scandals to which reference has been made.
Certainly in the legislation now before the house we have overcome that difficulty as the Secretary of State has said. Without desiring to express an opinion that might be open to question, in view of the security frauds case, as to how far the provinces may go in that matter, my own view is that we have followed the principle of law laid down by the privy council that when you have power to create something you have power to impose the
conditions under which it shall exercise the powers that have been conferred upon it. When we create a corporation we say that one of the conditions under which that corporation may part with its securities is that the purchase of those securities by the promoters or the brokers shall be upon the terms of the prospectus, which shall constitute the terms of the bargain.
I think in fairness my hon. friend will regard that as a very distinct advance; I do, at any rate. The other evening the hon. gentleman indicated that I had no idea of my own intentions in the matter. Well, I am much older than he and I practised my profession for a considerable number of years before coming he.re. I have given a considerable amount of time 'to the study of that problem. Certainly I make no claim to any special knowledge of it, but I do say that in the discussions I have had with the Secretary of State for the purpose of trying to safeguard the public in connection with the sale of these securities, we believe we have gone further than anything that has 'been done before in Canada with that end in view. I do not intend to discuss the Companies Act to-night; that will come later, but I still think the section dealing with watered stock is one of the most difficult of all sections to deal with. I am still opposed to no par value shares, and if the price spreads commission had recommended that they be abolished I would have been glad to support that recommendation, but they were careful to suggest the alternative. They have given the imprimatur of their approval to no par value shares, to which I am opposed personally and against which I shall vote in this house i.f the opportunity arises. I a.m still against them.


James Lorimer Ilsley: You are the Prime Minister.


Richard Bedford Bennett: But the Companies Act
is an entirely different .measure from these others. That is an act in connection with which recommendations were made, and the price spreads commission were not specific in that sense. I said to the Secretary of State, as he stated to the house the other day, that I believed it was a measure of such a character that every member of the house should be free to express his views and take the course that might- suggest itself to him as the best way to serve the public interest. That is why the Companies Act is in that form. If the opportunity arises, however, I still will vote against no par value shares. There is an article in the last issue of the Canadian Bar Review, written I think by a gentleman in Montreal, which is well worth reading. He also
Trade and Industry Commission

is opposed to no par value shares as I am, but it does not follow that the price spreads commission may not have been right in saying that the alternative view is quite as sound as the view which I hold. Therefore I do not desire to say that I have any monopoly of wisdom with respect to that matter. It may well be that the members of the price spreads commission and those associated with that work were right in recommending the alternative suggestion to the Canadian people rather than the abolition of these shares, but the reasons given in the article to which I have referred I think are such as will commend themselves to anyone. So this country is able to have a revising, reviewing body in the case of new securities without giving the imprimatur of governmental sanction and without the necessity for referring to this body the issues of every new company created. If the law with respect to prospectuses is observed, and if the law with respect to watered stock is observed-and I shall discuss that phase of the matter when the time comes- under this section, namely:
The commission shall in any case, if requested by the Secretary of State, investigate and review the capital structure of any company incorporated by or under any act of the parliament of Canada, proposing to issue new shares, debentures or other securities to the public
-We cannot deal with the old ones. That is clear. They are done. And the injury which has been done by the issue of some of them we shall never be able to undo, particularly among some people who purchased them. But we can say this: If it is of sufficient importance, and if it is felt there is any doubt, something may be done. If the hon. member will bear in mind this single fact he will realize how difficult it is to carry into effect the regulations of a body to which all these matters would be referred: that the provinces have coequal powers with us in the creation of companies. That is our difficulty. At a conference I attended with provincial premiers it was agreed that we should have a uniform act; then when we began to discuss the terms the only uniformity was the uniformity of objections. They were very uniform indeed. To-day we cannot take that power away from them. If we set up a board and said that every company incorporated had to pass that board before it was allowed to be incorporated, the business in federal charters would be insignificant. But if we do it, as I believe we have, by imposing such restrictions upon the sale of securities as will prohibit their being sold unless under the terms of a prospectus, then I believe we have met the

difficulty. Our regulations for the issue of proapectuses are more stringent and those who issue them are asked for fuller information than is required in connection with prospectuses in any other country of the world. I say that, after some knowledge of British empire requirements, and those in the United States. I think after study it will be found that in no country of the world are there imposed as rigid and strict provisions regarding a prospectus and its contents, and the provisions for the sale of securities, as are found in our statutes. In this instance however if the minister in charge feels there is some doubt or difficulty he may refer the matter to the board, in respect of new securities.


James Lorimer Ilsley: I know the Prime Minister
has given a great deal of thought to this matter because I believe I read the first speech he made in this chamber, in 1911, when he made reference to the problem of watered stock and how it could be prevented. But that does not touch the question whether or not anything effective has really been done.
I was somewhat at a loss to follow the Prime Minister's argument. In one breath he states it .is unsound for any board to give the imprimatur of government sanction to the issue of securities; in another he states the section is to have that effect. If the Prime Minister had control of the administration of the act it would appear that there would be no references to the board, because that would be doing what is essentially unsound, namely giving the imprimatur of government sanction to security issues, thereby leading the public to think that the stock was not watered. That is just our objection. We fear that is the spirit in which the act will be administered, and that there will be no security issues referred to the tariff board at all. The tariff board, whatever can be said about the time it may have to investigate unfair trade practices, the set-up of commodity standards, and the supervision and enforcement of a great number of things, certainly will not have time to supervise the issue of securities by public companies incorporated under dominion charters. I am of the opinion that practically nothing will be done in this connection, and that we are just deluding ourselves if we think there will be. Certainly the "searchlight of publicity" being "focused on every issue of securities offered to the public" would be taken by the ordinary individual to mean something more than the filing of prospectuses. Last spring the Secretary of State said that he went as far as he could in providing for the filing of prospectuses, and last Friday he stated he was going farther, but

Trade and Industry Commission
that he was afraid further action would impinge upon provincial jurisdiction in the matter of property and civil rights, and that he had always been against the filching of provincial jurisdiction under the guise of criminal legislation, when the legislation was not in its essence criminal. So, altogether, my humble submission is that the promises of January last have not been fulfilled. I consider if we are going to have a securities control board wo should have a securities control board which would supervise all issues of securities to the public, and if we are not going to have a securities control board do not let us make a pretence of having one by passing an optional section which will impose upon the members of the tariff board, sometimes, and under some secretaries of state, a task which is beyond their ability to cope with, in view of their other extensive duties.


Richard Burpee Hanson: I am sorry the hon. member thinks so poorly of this section, because I have to confess that I drafted it. Having considered the whole position we came to the conclusion that it would be wrong and not in the public interest to set up a board which would give such approval as would enable the buying public to say, "This has the O.K. of the Canadian government." I think that would be radically wrong.


James Lorimer Ilsley: I believe the minister is overestimating the danger.


Richard Burpee Hanson: That is a matter of opinion in connection with which my judgment may be just as good as the hon. member's, or his as good as mine. However that is the view we took. The companies branch of the Department of the Secretary of State has always been very well operated, I believe. In days gone by I had considerable experience with that branch, and that was my experience. Under the present Secretary of State I have no doubt the branch has been well run, because I do not believe there has ever been in that position a gentleman who understood company law as well as the present Secretary of State understands it. It has been the practice under his aegis, during the past five years, to review all new applications, within the limitations of the Companies Act. Hon. members familiar with the companies Act and amendments thereto, particularly those relating to prospectuses, will know that it is not necessary to refer every new issue of stock. Take the case of a simple company with common $100 par value shares; why should it be necessary to have that new issue referred to a commission, such as herein
indicated, if the other provisions of the Companies Act are complied with? Where there are several kinds of securities, such as contemplated by the Companies Act, there may be occasions when investigations are required. And there are safeguarding provisions in the following subsections. That will take care of any situation which may arise. There is full power of investigation if the Secretary of State thinks it is necessary to have an investigation. There is power to disapprove or reject, which is very important. There is no power of approval, and in my opinion we should not give effect to the formal approval of any issue because I can see that such approval would be capitalized by every bond and stock salesman in Canada. They would go out and say, "This has received government approval," and the people would be duped by that sort of thing. I think this section goes a long way, and. I assure the committee that it was not put into the bill without the most careful consideration.


William Daum Euler: Will subsections 3, 4, and 5 apply independently of section 1?


Richard Burpee Hanson: No.


William Daum Euler: Subsection 1 reads:
(1) The commission shall in any case, if requested by the Secretary of State, investigate and review the capital structure of any company incorporated by or under any act of the parliament of Canada.
Should the Secretary of State not make that request, would the commission still be under the necessity of asking to be furnished with full information as provided by subsection 2?


Richard Burpee Hanson: Subsections 2, 3 and 4 follow on from subsection 1. If the Secretary of State requests the commission to investigate and review the capital structure of any company proposing to make a new issue, then subsection 2 would apply as an enabling provision, subsection 3 would apply as limiting the power, while subsection 4 would make it an offence for any person to be a party or privy to or assist in the issue of any securities which has been made without compliance with the provisions of this act.


William Daum Euler: If the Secretary of State makes no request to the commission as provided for in subsection 1, subsections 2, 3, 4 and 5 would not apply?


Richard Burpee Hanson: That is my understanding.


[Stage Direction]
Section agreed to.
Section 27 agreed to.
3726	COMMONS
Trade and Industry Commission
On section 28-Publication of certain reports.
Edward James Young: Does this section mean that the agreements as suggested in section 14 shall be published?


Richard Burpee Hanson: It means just what it says. The section reads:
1. The commission shall within fifteen days after making any report, recommendation or finding under this act make the same public in such manner as seems desirable unless the commission is unanimously of the opinion that the public interest would not be served by publication, or that the public interest would be better served by withholding publication.
If the agreements to which the hon. gentleman is referring are included in any report, recommendation or finding, then they must be made public.


Edward James Young: In the case of an agreement for the regulation of production and prices, would it not be better to have it published before rather than after it is entered into, in order to give any interested parties an opportunity to make representations?


Richard Bedford Bennett: The hon. member means after they are made but before they are approved.	,


Edward James Young: Yes, before they are
approved?


Richard Bedford Bennett: There is something in that.


Richard Burpee Hanson: That did not occur to me and I shall give consideration to the matter. Before the third reading I will read the remarks of the hon. gentleman, or perhaps I had better not take the bill out of committee.


[Stage Direction]
Section agreed to.
On section 29-When the act comes into force.
William Lyon Mackenzie King: Why has the minister selected the first day of October as the day upon which this act shall come into force?


Richard Burpee Hanson: Some time must elapse for the printing and circulating of the bill, but it could be September 1 or August 1, or it could come into force upon royal assent. This bill is being put in under the tariff board and some time must be allowed to them to make the necessary preparations.


William Lyon Mackenzie King: This bill must be considered in relation to the amendment to the Combines Investigation Act which as I

read it will come into force as soon as it is given the royal assent. Unless some change is made in the provisions of that bill there will be a hiatus during which there would be no body charged with the administration of the Combines Investigation Act.


Richard Burpee Hanson: I am
advised that they are to amend the other bill in order that they come into force simultaneously. With the consent of the committee I should like to revert to section 17 which has to do with the national research council. The national research council will have to make reports from time to time in connection with the ingredients of any commodity or any adulterants which a commodity may be found to contain, and subsection 2 states that these reports shall not be used for advertising purposes. It has been felt that as a report might contain statements with respect to the commodity of certain companies or individuals, the members of the council, which is a body corporate, should be protected against action. For their protection the following subsection is being suggested:
(3) No action or other proceedings may be instituted against the national research council or any officer or employee of the council in respect of any advice, information, or report given or made in good faith under this act or any other act of the parliament of Canada.


Edgar Nelson Rhodes: I move accordingly.


John Campbell Elliott: Under that subsection would the onus of showing good faith be upon the commission?


Richard Burpee Hanson: In my judgment the onus of showing lack of good faith would be upon the proponent.


John Campbell Elliott: Not as it is drafted.


Richard Burpee Hanson: I think that was the intention of the draftsman and I think it is covered by common law, as a matter of fact. I do not think this amendment would do any harm as it is being made at the request of the national research council.


John Campbell Elliott: It may not be very material but in my opinion the onus of showing good faith would be upon the commission.


Richard Burpee Hanson: I do not think that follows.


John Campbell Elliott: If that is not intended it should be made quite clear. In my opinion the man who brings an action would have to overcome the question of good faith; he would have to show bad faith.


[Stage Direction]
Amendment agreed to.
Progress reported.

Exchange Fund-Mr. Bennett


[Stage Direction]
Bill No. Ill, to incorporate The Community General Hospital, Alms House and Seminary of Learning of the Sisters of Charity at Ottawa, Canada.-Mr. Gagnon.

[Stage Direction]
Right Hon. R. B. BENNETT (Prime Minister) moved the second reading of Bill No. 101, respecting the establishment of an exchange fund.
He said: The present state of international exchanges gives cause for apprehension on the part of all persons, especially having regard to the chaotic values in the leading currencies. It was hoped in 1933 that some stabilization would be possible, and efforts, as is known, were made to that end. But alas, nothing was concluded between the great nations of the world, and the result is that there have been very great fluctuations in values-the pound sterling, the dollar abroad, and all the currencies of continental Europe.
In his remarks in making the budget statement- the Minister of Finance (Mr. Rhodes) referred to this fact; and it is in the opinion of the government desirable that machinery should be established that will at least serve some useful purpose if the occasion should arise to deal with a problem of this magnitude. Of course, it is only necessary for me to say that in Great Britain they have gone into the matter on a very tremendous scale. At one time they appropriated £150,000,000 to deal with this problem, and subsequently the amount was increased to £350,000,000 in order that the treasury might be able to take such action as might be desirable for the purpose of stabilizing the value of the pound sterling; and money for the purpose was obtained by the sale of treasury bills, that is, the sale of securities. During the last three years that fund has been operated with a very considerable measure of success. I will read from the statute, if it is desired, by which that fund was set up.
The government of the United States also provided for such a fund, resulting from the revaluation of the country's gold reserve from $20.67 to $35 an ounce. But that profit was not wholly used for that purpose; by a regulation passed in 1934 it was specifically provided that a portion of that fund might be available for that purpose, and the fund as established amounted to the very large sum of two thousand millions of dollars. It is entirely too early to express any opinion as to what the effect in that regard has been, but broadly and generally it must have served
some useful purpose. That being so, we have concluded that we can serve some useful purpose in this country at this time by revaluing our gold reserves and permitting the profit that would accrue to be held in the special fund instead of being deposited in the consolidated fund, and if the occasion arises recourse can be had to this fund to stabilize our dollar abroad.
Ian Alistair Mackenzie: Does
this entail an amendment to the Currency Act?


Richard Bedford Bennett: No, it does not. There
is no necessity for amending the Currency Act to accomplish the purpose we have in mind'. The bill, 'however, will make this permissive rather than obligatory; that is, this provision will come into force when proclamation to that effect is issued. But it is intended to proceed with the revaluation at once. That, of course, arises from the action that was taken last year in the Bank of Canada Act and the subsequent order in council passed', to which reference has already been made in the house.
The change from the S20.67 valuation to the current value of gold is, of course, largely a bookkeeping entry. It is known that the forty per cent of the gold held by the banks has by order in council been made available for their foreign balances and foreign business. The effect of the revaluation will be to enable the Bank of Canada to make the necessary bookkeeping entries and complete the transaction; but the resultant profit, as I have said, will not be dealt with as provided for in the Bank of Canada Act but retained as a fund which may be- available upon proclamation for the purpose of enabling whatever government is charged with the responsibility to utilize it for stabilization purposes.
It will be recalled that the gold purchases from the banks were on the basis of $20.67 per ounce. Some objection was made, but as a matter of fact all the gold was turned over to the Bank of Canada, and the reserves provided for under the Currency Act are twenty-five per cent in gold, under the Bank of Canada Act, with respect to our issue of paper money. This, of -course, will have the effect of extending to some extent the issue power, because twenty-five per cent on the new valuation will create more gold than under the old valuation of $20.67. I think it will be agreed that it is probably not regarded as good common sense for the bank to be -conducting business and making a report from month to month or week to week-I have the last week's beside me-on
3728	COMMONS
Exchange Fund-Mr. Mackenzie (Vancouver)
the basis of gold being valued at $20.67, as it has been doing ever since it came into being, when as a matter of fact in the markets of the world, alike in London, New York and Paris, gold has been sold at the figure of $35 and in some instances an odd cent or two more, in other instances an odd cent or two less than $35.
The provision of the bill does not contemplate any commitment being made in regard to the future policy of this country with respect to its monetary system. It is not intended so to do. It is rather to give effect by legislation to-dlay to the revaluation of our gold reserves and to provide by variation of the terms of the Bank of Canada Act that on proclamation this shall be available for the purpose of being utilized to support, if necessary, the value of our dollar abroad. As we proceed, I shall be prepared to answer any questions that may be asked as to the law prevailing in other countries, but I do not think I can say more with respect to the principle of the legislation than what 9 have already said.


William Daum Euler: What amount is made available under that rate?


Richard Bedford Bennett: Perhaps we had better
wait until we get into committee, and I shall give the information in detail.


Ian Alistair Mackenzie: 
Edward James Young: Are we sitting in on a poker game?


Ian Alistair Mackenzie: My point is that you cannot protect the Canadian dollar with such a small fund as this. My opinion is that you must protect the Canadian dollar by the expansion of Canadian trade. That is far more vital protection than is the creation of a stabilization fund of the proportions of this one.
I wish to deal with the second feature which arises in connection with this bill. This is very largely by way of companion legislation to the Bank of Canada Act of last year. We remember that under that act power was taken to take their gold from the banks and transfer it to the Bank of Canada. Under the operation of that section a sum of $37,480,404.46 was taken over. Last year there was inserted in the Bank of Canada Act a section which gave the governor in council discretion to decide what proportion of the gold taken over from the chartered banks of Canada would be entitled to the profit as between $20 67 and $35; that is the proportion required by the banks for their outside commitments or foreign obligations. I should like to refer the house to some questions I asked during the proceedings of the banking and commerce committee last year of one of the heads of a chartered bank in Canada. I asked whether the banks themselves could definitely decide or assess the percentage that was required of the gold they actually held then for foreign commitments. The answer was as given on page 379 of the proceedings of last year: "I am sorry I cannot give you even an approximate idea. It would be difficult to tell you what the percentage

Exchange Fund-Mr. Reid
would be." Despite the fact that the bank managers themselves, those who are running the chartered banks of Canada, were unable to assess the percentage of gold which was required for their external commitments, this government in its wisdom or unwisdom proceeded during the recess, on the 29th day of April, 1935, by P.C. 1110, to make an arbitrary assessment of 40 per cent to which the banks were entitled. Then it proceeded to give special concessions to two of those chartered banks, and the necessity for that is referred to, I must say, in the order in council, but has not yet been specifically explained to the house. As a result of the 40 per cent of the $37,480,404.46 I have mentioned, the amount of profit which will revert to the chartered banks would be $14,992,161.78, and to that must be added, according to the terms of the order in council, 60 per cent of the $300,000 to be returned to one chartered bank, or a sum of $180,000, and 60 per cent of $89,609 to another bank, or a sum of $53,765.40, or a total profit to be given back to the banks of $15,215,927.18, leaving the amount of gold with the Bank of Canada, which will be conjoined to the Finance Act gold for the purposes of carrying out the provisions of Bill No. 101, of $22,264,477.28. If we add to that the Finance Act gold which was also transferred to the Bank of Canada under the provisions of the legislation of last year, we have available for the purposes of the present bill a total of $91,670,500.31.
Last year we on this side protested very strongly against the principle of transferring not only the gold belonging to the chartered banks, amounting roughly to $37,000,000, but the Finance Act gold, the gold belonging to the taxpayers of the dominion, to a private corporation. Now we find that by Bill 101 which is before us for second reading, we have created a special fund, the profit arising from the revaluation of gold. I am very glad to see that in this bill most of the powers remain with the minister, with the government, except in regard to section 7 where there are some transactions and some powers given to the Bank of Canada in respect to certain negotiations concerning securities; in other words some negotiations affecting this gold are left, under the provisions of section 7, according to my interpretation, with the Bank of Canada. If they have left with the minister this power to deal with this contingent fund at a contingent date, I submit that the argument made last year is stronger than ever. This sum of $107,000,000 which has been transferred to the Bank of Canada will be worth to-day or to-morrow, whenever this
bill is proclaimed, not $107,000,000 but $180,000,000. On a basis of twenty-five per cent of metallic coverage, which was the basis adopted at the conference of 1933 at which the Prime Minister was present, without the slightest suggestion of inflation that gold reserve of $180,000,000 entitles the Bank of Canada, if that should be its policy, to issue notes of the Dominion of Canada up to a total of $720,000,000 on, a sound scientific principle. So I am sure the house will realize the tremendous power we placed in the hands of a private or quasi-private corporation last year, and I am glad that to a certain extent at least the government has abandoned some of its ideas of a year ago, and entrusted most of the control of this contingent fund to the minister, I presume the Minister of Finance.
I am not opposing this bill; as I have said before in this house I believe that we should use the note issue that is possible on a scientific basis due to the appreciated value of gold for the reduction of the national debt and for the substitution of non-interest bearing securities for maturing interest bearing bonds. That, however, is a suggestion that is not exactly germane to the principle of this legislation. I am not going to oppose the second reading of this bill; I hold as strongly as I did a year ago the opinion that the control of this gold, which belongs to the Dominion of Canada, should be vested in a bank that is under the control of the government of Canada, who are responsible to parliament which in turn is responsible to the Canadian people.


Mr. THOMAS REID (New Westminster):: Like the last speaker, I am pleased that the government, even at this late stage, are about to take steps to revalue our gold stocks. It is not my intention to delay the second reading of this bill; I wish only to say that I am indeed sorry that the government are not also at this time taking steps to value silver and to use silver as further base for currency. It is my intention when the bill is in committee to move some amendments, because it will be remembered that I endeavoured to introduce two bills not long ago, and I am indeed sorry that I was prevented from laying before the house and the government certain suggestions which I think should be adopted in the interest both of our mining industry and of our currency. I shall reserve my further remarks until the bill is in committee.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Morand in the chair.
Exchange Fund
[Stage Direction]
On section. 1-Short title.
Edward James Young: Will the Prime Minister explain how it is proposed to operate this fund?


Richard Bedford Bennett: That comes later.


[Stage Direction]
Section agreed to.
On section 2-Definitions.
Richard Bedford Bennett: The word "interpretation" comes out.


Henry Elvins Spencer: I think it was said that when we got into committee an explanation would be made.


Richard Bedford Bennett: 
Richard Bedford Bennett: The sixty per cent and forty per cent make one hundred per cent, and that is included in the sums I read.


Ian Alistair Mackenzie: Are the two sums of $300,000 and $89,609 respectively included in the total of $37,480,973 as the total amount taken over?
Mr. BENNETT; Yes.


Ian Alistair Mackenzie: So that all the gold was actually delivered to the Bank of Canada on the due date?


Richard Bedford Bennett: Yes, with the reservation that was made by the two banks with respect to these amounts.

Exchange Fund


Ian Alistair Mackenzie: But the actual gold was all delivered by the banks?


Richard Bedford Bennett: It was delivered in the sense that the Bank of Canada took delivery of it. I am not in a position to say that it was all moved from one place to another, for as a matter of fact much of it remained in the vaults in which it has been held for the last twenty-five years, but qua bank the Bank of Canada became the responsible custodian of the whole of the gold. I gather that is what the hon. gentleman asked. There therefore remained, as the hon. gentleman has just pointed out, something over $22,000,000 of gold in the hands of the Bank of Canada; that is, of the gold received from the banks, at $20.67, and the profit on that inures to the credit of the consolidated fund of the country. It amounts, as will be observed, to a fairly substantial sum of money at $35 an ounce instead of $20.67.


William Daum Euler: Might I ask a question? I take it from what the Prime Minister has said that the forty per cent rate was arrived at more or less arbitrarily, or was there any basis or any principle upon which they proceeded to fix that rate? While I am on my feet I might also suggest that in my judgment as between the various banks there would be a difference in the proportion of gold they had for foreign commitments. Were any representations made by the banks that some should get more or less than forty per cent, or why was the flat rate fixed?


Richard Bedford Bennett: It will be observed that some of the banks had very small sums of gold, but the banks contended that there was a liability that could be settled only in terms of gold because of dealings with countries still on a gold standard, bills of exchange and settlements of obligations which they had incurred. Those are the smaller ones. In the case of the larger banks, holding large amounts of gold, they presented elaborate claims based upon particular dealings over long terms of years and the necessity for being able to deal with a transaction on a gold basis. I cannot say that the banks were satisfied, but ultimately the minister concluded, after the most careful investigation, that forty per cent was all that he could possibly allow for the purpose of meeting foreign obligations, and he applied that principle to all the gold held, which as I say was a large amount in the case of three of the banks and a smaller sum in the case of one bank, of the others one had as little as $10,000, just the accumulation which goes on over a period of years. I supfMr. Bennett.]
pose it is true to say that it was an arbitrary exercise of power based upon all the information that it was possible to obtain under the circumstances.


William Daum Euler: My thought was that there must be a considerable variation between the various banks as to their foreign commitments, but the forty per cent was a flat rate.


Richard Bedford Bennett: With the exception of the two instances I have mentioned there was no variation, because each had a volume of business commensurate with its size and the magnitude of its holdings. Of the others one held $10,000, another $200,000, another $40,000 and still another $400,000, and it was not thought desirable to endeavour to differentiate between them. The minister concluded that a flat rate of forty per cent was reasonable.


Ian Alistair Mackenzie: Did I understand from the Prime Minister that a profit of $15,000,000 in round numbers was not transferred to the banks or not to be transferred, but was just to stand as a credit entry?


Richard Bedford Bennett: I think the hon. member misunderstood me. I say that the revaluation on the new basis will be a bookkeeping entry in the books of the Bank of Canada by crediting the banks with this credit which they will receive in the basis of valuation as fixed by the terms of the bill.


Ian Alistair Mackenzie: It has not happened yet?


Richard Bedford Bennett: No, it cannot, until this bill passes.


Mr. IRVINE:: What check will the government or the central bank have on the forty per cent gold to see that it will be used for the purposes for which the government has permitted its retention for foreign commitments?


Richard Bedford Bennett: It is absolutely impossible for the Bank of Canada, or any other body, to exercise that control. They must in their own interests take such steps as may be necessary to protect themselves against their foreign commitments. For instance, for the banks which have substantial business dealings on the continent of Europe, with some of the old gold countries-and there are not many left now-but with France, with the Netherlands, in connection with sugar importations and sales, and in connection with the Dutch East Indies, the matter becomes important. In connection with Switzerland, and the little business we have with that country, owing

Exchange Fund
to great differences and fluctuations in currency, it becomes important. I suppose it is known that last year those who had to go to Geneva found it necessary to pay an exchange rate of practically sixty per cent. That is, there was a sixty per cent exchange rate in dealing with the Swiss gold franc.


William Daum Euler: Would the Prime Minister give me an answer to my original question? What is the amount made available for the purposes of the bill? That is, we will get the profit by revaluation from $20.67 an ounce to $35 an ounce on the sixty per cent of the gold handed over by the banks, plus the full profit by way of revaluation on the gold handed over by the receiver general. What is the total amount?


Richard Bedford Bennett: We had $106,936,427.29 in gold coin and bullion on June 5.


William Daum Euler: Including the bank's gold?


Richard Bedford Bennett: 
William Daum Euler: That is the net amount?


Richard Bedford Bennett: Yes.


George Gibson Coote: I believe it quite proper for the government to take steps to protect the external value of the Canadian monetary unit, but the important point for us to consider at this time is the policy to be followed by the minister in administering this fund. That is, at what level is it considered desirable to hold the value of Canadian currency as expressed in terms of other currencies? I speak particularly of the American dollar and the British pound. It seems to me that during the past few years our currency has been at too high a level in other countries, so far as our exporters are concerned, and Canada's basic industries are to a great extent dependent, so far as their price levels are concerned, upon the price which they receive for their sales in foreign countries, and the value at which they can translate foreign funds into Canadian currency. Undoubtedly we have suffered in our attempt to compete with many other exporting nations of the world. To-night we heard considerable discussion as to why it was so difficult for Canadian and even English textile companies to compete with those of Japan. I noticed that no person mentioned that which I believe to be the most important factor, namely that Japanese currency to-day 925S2-237J
is depreciated in terms of Canadian currency by approximately seventy per cent. I think that is the greatest factor in favour of Japanese exporters.
Then, to come to the industry in which I am most interested, agriculture, our chief competitors might be said to be the Argentine, Australia, New Zealand and Denmark. In each of these countries we find that, compared with that of Canada, their currencies are depreciated to very marked degrees. In Denmark the currency has depreciated 22 per cent as compared with the value of our money; in New Zealand the figure is 23 per cent, and in Australia 24 per cent. The official rate for the Argentine is given as 24 per cent, but the unofficial rate is approximately 60 per cent. What is needed in Canada to-day is higher commodify price levels, and the easiest way to do it would be deliberately to depreciate our currency. We must do it frankly and honestly, as has been done by the other countries I have named. In Denmark, Australia, New Zealand and the Argentine the step was taken as a matter of governmental policy, and now that the Canadian government is setting up an exchange fund to be administered by the minister it seems to me we are taking a very positive step towards making the level at which our currency is held in foreign countries a matter of government policy. I am not suggesting that we engage witih any other countries in a race for currency depreciation, but we do require this depreciation to restore our price level's. There is a great deal of opinion expressed in financial papers in favour of stabilizing exchange rates of various countries. So far as I am personally concerned I do not believe that we can afford to stabilize our price structure at present levels. That would mean disaster for those engaged in most of our primary industries. It would mean that for many years to come they must carry an almost intolerable burden of debt. But with a currency depreciated to 'the level of most of our competitors our price level would be placed nearer where it really ought to be. I am sure even that would hardly restore the price levels of 1926. Some of the outstanding if not some of the best economists have said repeatedly in the last few years that a rise in the price levels to the point at which they stood in 1926 is absolutely necessary if we are to be able to continue to carry the present debt structure. We all realize the devastating effect of attempting to deal with debts in any other way. I think myself that that is the proper way to deal with them.
Exchange Fund

I should like to make it clear again that I am not opposing this bill, nor am I even criticizing it. I think the important point to be considered at this time is the policy of the minister who will be in charge of this fund. I hope it will not be used to stabilize price levels at where they are to-day and I hope it will not be used to keep our currency at its present high level if there are other factors which would operate to bring it down. I realize that this is a matter for debate and I have debated it in this house and have put my point of view before hon. members. I shall not repeat my views to-night at any length but I think it is realized by the majority of hon. members that there shouild be a rise in commodity price levels if we are going to compete with other exporting countries. Take the case of Brazil; their currency is depreciated forty-four per cent as compared with ours. Not long ago I was talking to a bank manager who had just returned from Brazil and he gave as one of his personal reasons why there had been no unemployment or distress in Brazil the fact that depreciation had taken place in their currency and they had maintained much higher price levels than otherwise would have been possible.


Richard Bedford Bennett: I take it the hon. gentleman knows the real reason.


George Gibson Coote: I suppose the Prime Minister is referring to the measures which they took to protect the price of coffee.


Richard Bedford Bennett: I refer to the fact that they have not paid the interest on their debt.


George Gibson Coote: No doubt that would be a big help. I shall not labour this point any further as I am sure the Prime Minister and the house realize the importance of this question. I have no objection to this bill. I suggest to the Prime Minister that he should amend the Currency Act to value gold at more than S35 per ounce and thus bring about a depreciation in our currency to at least the level of Australia, New Zealand and Denmark.


Richard Bedford Bennett: What is the value of the Australian pound in London?


George Gibson Coote: In Montreal it is given at $3.94 on June 15 and the British pound is given as $4.93. If we were on the same basis as Australia, so far as the value of the pound is concerned, it would give to agriculture that increase in prices which is so badly needed. I do not think there is anything which would do as much to bring back prosperity in Canada as the increase which could be secured in the price level for agriculture by a deliberate depreciation of our currency. I do not need /Mr Coote.]
to go into the method by which this can be done as I think the house, and particularly the Prime Minister, is well aware of what should be done. I approve of having the administration of this fund in the hands of a minister rather than under the control of the central bank, but I should like to urge the government seriously to consider a policy of depreciating our currency to the value of Australian currency.


Henry Elvins Spencer: I understood the Prime Minister to say that the larger banks of Canada had similar foreign obligations when the gold was taken from them to be deposited with the central bank. However, the figures he gave showed that of the larger banks two had $13,000,000 in gold, one had $6,000,000 and the other only $2,000,000. If their foreign obligations were similar why was there so much variation in the amount of gold on hand? Secondly, I should like to know if the forty per cent allowed the banks to permit them to meet their foreign obligations was in proportion to the gold which they had on hand to take care of their foreign obligations?
Mr. BENNETT': I tried to make it clear that the forty per cent was forty per cent of the gold transferred. In the case of the Bank of Montreal it was 40 per cent of $13,043,509 or $5,217,403. In the case of the Bank of Nova Scotia it was 40 per cent of $6,546,338, or $2,618,535. As to the variations in the amounts of gold held in Canada, it is only necessary to say that some of the banks with branches abroad held gold abroad to take care of the sudden fluctuations and our arm reached only to the gold in Canada.
In connection with the point raised by the hon. member for Macleod (Mr. Coote) as to our dollar being valued too high, I think it is only necessary to say that in terms of gold our dollar is worth only about sixty cents, if my memory serves me aright, and I am subject to correction. Does the hon. gentlemer know the figure?


George Gibson Coote: I imagine that is about right.


Richard Bedford Bennett: 
George Gibson Coote: Is the Prime Minister referring to government obligations or the total obligations of Canadians?


Richard Bedford Bennett: 
George Gibson Coote: With reference to the remark of the Prime Minister, that suggestions were made from this corner that the Canadian currency should be tied to the pound, I may say that in any statement I ever made in the House of Commons I was careful not to use those words. As a matter of fact, a friend of mine who lives in the metropolis of Canada urged me to advocate that very thing, to make the pound legal tender at S4.87. I stated to him at that time that that was much too low a level because this country must have a pound worth more than that unless a change took place in the pound sterling itself. When the imperial conference agreement was under discussion I used on that occasion this language: I said that our currency should be brought to such a level as would make the pound worth $4.87 here. That would have been a distinct advantage to us at that time. I have not the exact words I used but that is as I remember. I am sure I never used the expression "tying our currency to the pound."
There is one other point which the Prime Minister made to which I would refer, and that is the payment of foreign debt. The Prime Minister will agree that so far as actually paying off any of this debt is concerned, we can pay only by the export of goods, commodities and services-and in commodities I include gold. Of course, it may be easier for us to renew these obligations if we keep our currency at a certain level, at par with the United States.


Richard Bedford Bennett: It has been; that is a
fair way to put it.


George Gibson Coote: I notice, however, that
Australia was able to pay all her foreign obligations. I remember seeing a statement not long ago to the effect that in every case the Australian government's foreign obligations had been met in the terms in which they were expressed, and Australia has been able to borrow money in Britain at as good a rate as Canada. It is a fair subject for debate, but in my humble opinion Australia has followed the course that made it easier for her primary producers to carry on and meet their obligations than it has been for their Canadian competitors. I ' believe that Canada depends on the agricultural industry more than on anything else, and the financial policy which keeps our price level at a lower level than most of our competitors does make it very difficult for us to carry on.
Exchange Fund

Our price level has been pitifully low compared to what it was when our producers contracted their obligations. The prices of our products have fallen lower than the prices of the things we buy. I do not know of any other industry that has taken the same fall in the price level as agriculture has, and the thing for us to have done was to follow the method of our competitors, the Argentine, New Zealand, Australia and Denmark. They felt that they were forced to take this step, and I think we should be well advised to consider doing it even at this late date.


[Stage Direction]
Section agreed to.
On Section 3-Valuation of gold held by Bank of Canada.
Thomas Reid: I have an amendment to move to section 3 and I shall have another amendment in connection with a subsequent section. I realize that even if these two amendments were adopted they would not go as far as I should like in regard to the valuation or the use of silver. I am not unmindful of the fact that in Bill 101 I cannot go as far as I should like to go in advocating the adoption of silver. The amendment to section 3 is this:
Notwithstanding the provisions of section 29 of the Bank of Canada Act, all gold and silver held as reserve by the Bank of Canada shall be valued by the bank at current market prices.
The only change there is the adoption of the two words "and silver." According to my interpretation of the Bank of Canada act there is no provision in it for the valuation of silver at the market price. When the silver was being turned over by the government to the bank there were three specific clauses dealing with it. The first one, clause (b) of section 25, comes under the heading, "redemption of notes." This refers to silver held by the minister for the redemption of dominion notes valued at the market price of the fine silver content. That was transferring silver to the bank at the market price, and I understand that lias been done. But there was no silver held by the dominion for the redemption of notes. Why that was put in the act I do not know; at any rate that is the information given me by the department, because I inquired. The deputy minister states that no silver was held for the redemption of notes, and I am not quite sure why the act was so drawn up. If you proceed further in the Bank of Canada Act you will find in subsection 4 of the same section the use of the word "never." I think that is a very strong word to put in any act. No country
[Mr. Coote.1
stands to gain more than Canada by the adoption of silver. Canada is the third largest producer of that precious metal in the world, and yet we as a parliament passed last year an act declaring to the Bank of Canada, "You will purchase the amount required, under the London agreement entered into last year, namely, 1,671,802 fine ounces each year for three years, but never any more in any one year." That is a mandatory clause; it says to the bank that no matter what may happen with regard to silver, whether other countries adopt it or not, the Bank of Canada shall never purchase in any year any more than the amount required by the agreement we entered into in 1934.


Richard Bedford Bennett: That is only for those years.


Thomas Reid: That is quite correct, but we see at this very moment what is taking place throughout the world in connection with silver. By to-night's newspapers I see that Italy has taken steps to nationalize the metal, and according to the reports I have several countries are now using silver as coverage for their currency. I am speaking now of some of the leading countries, not some of the smaller countries, but such countries as the United States, Germany, France, Colombia, Cuba, Mexico, Peru, Roumania, and Italy, which has now taken steps to nationalize the metal. We now value gold at $35 an ounce in consequence of the action of the United States. But it may interest the committee to know what the United States is doing now with silver. So far as I can see, the action which she is taking in regard to silver will have the effect of raising the value of silver. The Silver Purchase Act of 1934 in the United States authorizes an increase of twenty-five per cent silver to that of gold in monetary stocks. The gold stock of the United States is valued at the present time at $8,230,000,000. The total silver requirements of the United States is 1,433,000,000 ounces. The United States has on hand at the present time, according to the latest figures I can obtain, 400,000,000 ounces of silver, so she has yet to buy over 1,000,000,000 ounces. When one realizes that more than 1,000,000,000 ounces is equal to over five years of the total world production of silver, the average being about 260,000,000 ounces a year, and that the United States has embarked on a policy not only of holding practically all the gold but going out into the world and purchasing all the silver she can, setting a price in that country at $1.29 an ounce, in my opinion the effect will be that silver will

Exchange Fund
also rise in price. Therefore, I believe this country would be doing well to take and should, I believe, take steps to take over the mine production of this country and to stop any further export of silver by way of either bullion or currency. We must eventually come to that. Nations are in a scramble just now to get proper coverage for their currencies; they cannot obtain gold, and have turned back to the use of the first precious metal, silver, which was used for currencies, and which has been used for ages.
It might interest the house also regarding the issue of the new Canadian silver dollar to know even today in Canada and in Vancouver particularly, it is at a premium of twenty-five cents. They are offering SI .25 just now for the new Canadian dollar; although there has been a. third' issue of $100,000, they have not yet reached the pockets of the people. Most of the issues have been taken up as souvenirs. When one realizes that out of every $100,000 issued, the government make a profit of $70,000, one cannot understand why they did not take the whole production of our mines and issue it as coinage or as coverage. The people are hungry for silver money and cannot get it. Of course I know the people are to-day hungry for any kind of money if they could get it, but here is the government making a profit of $70,000 on each issue of $100,000 and yet we are just putting this out in little driblets.


Richard Bedford Bennett: Just as fast as the machines are making it.


Thomas Reid: I hope they keep on as fast for many years. In connection with the new Canadian bill, I might point out that it costs about four cents to issue, and I would draw the attention of the Prime Minister to how fast the colours in the new bills are fading. Whoever did the printing on the dollar bill in my opinion did a very poor job; it means that in ten years it will cost the Canadian people about fifty cents for the issue of every paper dollar, whereas if the government issued silver dollars, these would last for practically all time. I maintain however that now is the time for the government to take the necessary steps and before silver goes up, because with the demand made for it by all countries,^ including the policy laid down by the United States, silver cannot do other than reach a higher market value.
My amendment-and I am not going to discuss it at very great length-provides that silver as well as gold be valued at the current price. There is nothing in the Bank of Canada Act or -any other act to compel the
Bank of Canada to value silver if it goes up. As I have said, the only thing it did was to provide that when- silver was transferred, it had to be transferred to the Bank of Canada at the then prevailing market price. We are looking these days for employment for our citizens. I believe if we went out after this precious metal silver, we would find employment for many thousands of our people, and we would not be as we are with wheat, wondering where we are going to find a market, because the countries of the world are just hungry for this precious metal and there will be no overproduction of it for many years to come. The annual production has dropped during the past few years. In this country at one time we produced 26,000,000 ounces, which dropped to some 16,000,000 ounces last year, of which amount I might -point out that British Columbia produced about fifty per cent.
We speak sometimes about the sanctity of -contracts, but I cannot help thinking what would have happened had the United States Supreme Court kept to the sanctity of the gold -clause. I am afraid we in Canada would not have been as well pleased or as well -off to-day because we have saved many millions of dollars by the fact that they said that although the bonds carried that gold clause it was not mandatory to pay it. If Great Britain had been asked to pay her complete war debts according t-o the sanctity of contract, I am afraid she would have been extremely hard pressed to pay.
I am going to ask the government to consider seriously the suggestions I have made.
I know the arguments I am using go beyond the scope of the amendments I have offered, but the present bill limits me to amendments I can offer with any assurance of their being adopted.


Richard Bedford Bennett: Perhaps the hon. gentleman has overlooked the provisions of paragraph
(a)	of subsection 2 of section 26:
1.	The bank shall always maintain a reserve, as hereinafter provided, as security against its outstanding notes and deposit liabilities.
2.	The reserve required by this section to he maintained shall consist of gold coin and bullion in the unrestricted ownership of the bank equal to an amount not less than twenty-five per centum of the ( notes and deposit liabilities aforesaid; and' may in addition include-
(a) silver bullion received from the minister under the next preceding section or purchased under the authority of subsection four hereof, valued at the market price of the fine silver content thereof.
So that the value for the purposes of the reserve statement issued by the bank is the

Exchange Fund
current market price. That refers of course to the fact that the bank is allowed to purchase only in 1935, 1936 and 1937 newly mined Canadian silver to the extent of 1,671,802 fine ounces in the year and shall not, during that period only, and not forever, purchase more.


Thomas Reid: That is quite true; the right hon. gentleman has quoted the act, but is it not a fact that in the purchase of this, the bank will have to pay the market price? Why not purchase all the silver at one time? We are going to make purchases for the next three years. The act says in subsection 4:
The bank shall never be required to purchase more than 1,671,802 ounces in any one year.
But they purchase it at the market price. When the first 1,671,802 ounces was purchased it was valued, I believe, at the market price of some forty cents.


Richard Bedford Bennett: A little higher.


Thomas Reid: It is going up now so that we stand to lose by our delay.
As regards the silver bullion received from the minister under the next preceding section, that is the silver to be turned over to the bank and held for the coverage of dominion notes, as I pointed out, we have no silver for the purchase or redemption or coverage of dominion notes.


Richard Bedford Bennett: Yes, we have.


Thomas Reid: There is silver by way of currency throughout the country.


Richard Bedford Bennett: Silver bullion.


Thomas Reid: We hold no bullion for reserves.


Richard Bedford Bennett: The statute says that we do.


Thomas Reid: Where is it?


Ian Alistair Mackenzie: It says " may include."


Richard Bedford Bennett: As a matter of fact that was specially added to the statute in view of what took place at the conference in 1933. Section 26 permits in addition to the holding of twenty-five per cent of the notes in gold- May in addition include-
(a)	silver bullion received from the minister under the next preceding section.
Some of the silver bullion transferred to the Bank of Canada cost this country, if my memory serves me aright, in the case of a few ounces as high as SI .50 an ounce many years ago.


Thomas Reid: Still, I maintain that the
amendment which I have offered is to value 
silver at the market price, to the advantage of the government. I claim that under the Bank of Canada Act there is no provision whereby the bank is compelled to value the silver at the then current price.


Richard Bedford Bennett: But there is.


The CHAIRMAN:: Shall the amendment carry?


Richard Bedford Bennett: No, it is already covered by the statute.
Amendment negatived on division.


[Stage Direction]
Section agreed to.
On section 4-Profit to be credited to minister.
Thomas Reid: I have an amendment to offer; I suppose it will meet the same fate as the other I submitted. I see that the attitude of the government is not in favour of any silver policy. I move that the words "and silver" be inserted after the word "gold" in lines 19 and 21. The section will then read:
(1)	Any profit resulting from the valuation of the gold and silver in accordance with the provisions of section 3 of this act, being the difference between the value of such gold and silver held' by the bank on the date of the coming into force of this act as computed on the basis established by the currency act and its value at current market price, shall be credited by the bank to a special account in the name of the minister:
Surely the Prime Minister cannot take any exception to this, because I am really providing some further value for the government, for silver as well as for gold.


Richard Bedford Bennett: We have already covered it by the Bank of Canada Act. In the reserve which the bank showed in its statement of June 5, silver bullion appeared at $1,230,279.09, and the statute says 'that it is to value that silver bullion at the current market price of the fine silver content thereof. That is subsection 2, clause (a), section 26. That is exclusive of subsidiary coin consisting of twenty-five cent- pieces and other pieces of money that the Bank of Canada has.


Thomas Reid: Subsection (a) reads:
silver bullion received from the minister under the * next preceding section or purchased under the authority of subsection (4) hereof, valued at the market price of the fine silver content thereof;
There will be very little silver received from the minister if the government does not go out and buy it.

Exchange Fund


Richard Bedford Bennett: But there was a substantial sum of bullion-I do not carry the figures in my head'-some of which cost $1.50 an ounce.
Amendment negatived on division.


[Stage Direction]
Section agreed to.
Section 5 agreed to.
On section 6-Control of exchange.
Edward James Young: Will the Prime Minister now explain how this fund is expected to work?


Richard Bedford Bennett: The fund is under the direction of the Minister of Finance. The reason it is under his direction is that under the Bank Act it was to go into the consolidated fund. Now it is to be maintained for a special purpose. It is still under his administrative control, for reasons that are obvious. Ultimately it should find its way to the purpose for which it was appropriated, as indicated by the hon. member for North Waterloo (Mr. Euler). The fund is set up for the purpose of endeavouring to control the external value of the Canadian monetary unit or of checking undue fluctuations in its exchange value, and the minister may directly or through such agencies as he may designate cause any balances in the special account to be invested'-a limitation as to the form of investment-in:
(a)	gold;
(b)	foreign exchange as defined in section 26. subsection two (b) of the Bank of Canada Act;
That means countries on the gold standard; and Great Britain as well:
(c)	balances with any bank in London or New York designated by the Minister of Finance!
(2)	gold or other investments purchased under the provisions of the preceding subsection may be resold on instructions from the minister.
(3)	This section shall not come into force until a date to be fixed by proclamation of the governor in council,
Under these circumstances I do not think any explanation is required as to how it is to operate. The limitation as to the form in which it is to be invested is made by the section itself. The amendment offered by the hon. member for Macleod was that the following words be added to the proposed resolution: "subject also to the establishment of parity of the Canadian dollar with the British pound." So that if he had had that done as he then asked, and for which the hon. member for Weyburn voted, the conditions would not have been exactly to the benefit of Canada during the intervening period.


Edward James Young: I do not think I ever advocated anything of that nature. But coming back to the operation of this fund, I understand that Great Britain has maintained an enormous fund for this purpose, and so has the United States and other countries. So far as I can learn, the operation of these funds is shrouded in mystery; no one knows what has been done. That is why I asked the government what they proposed to do in the matter. Apparently if they know they are not prepared to tell. How is the sum arrived at? This $64,000,000 is the profit on a certain transaction.


Ian Alistair Mackenzie: Read
section 10; there is the answer.


Edward James Young: 
Richard Bedford Bennett: I should be only too delighted to agree with my hon. friend about anything. But I point out that this section does not come into force except by proclamation, and if all his provisos are true he may have the responsibility of carrying out the operation.


Edward James Young: The hon. member for Macleod was to have it a few minutes ago.


Richard Bedford Bennett: Well, the honours may be divided. Undoubtedly what he says has a great deal of force. It is a small sum. But Mr. Chamberlain in Great Britain said the other day that he had not used any such sum as he was authorized to use; he had used it only "to iron out the wrinkles," I think were
Exchange Fund

his words, in connection with exchange transactions. This, as I tried to point out-I said it very poorly at the threshold of my observations-is to endeavour to place Canada in a position in which at a time of great difficulty we might have some fund that would be available for that purpose on proclamation. That is all. I cannot tell anything further as to the circumstances under which it might become necessary to use it. It is true its operations are shrouded in some secrecy; that was necessary in Great Britain, in the United States and in other countries. The very foundation of its use is that there should be no public knowledge, because its value would then become problematical. You know the circumstances under which the Bank of England was compelled to go off the gold standard. People sold securities in London and then went around with their cheques and got Bank of England notes and presented the notes and demanded gold for them. Of course there came a time when there was no more gold. That was the combination worked on that particular occasion. This is a fund to take care of extraordinary conditions to the extent that we may be able, and it will be done only if the governor in council is of the opinion that circumstances warrant its being done.


Edward James Young: If, as Mr. Chamberlain said, the fund in Great Britain has been used only to iron out the wrinkles, I believe other prominent men over there have stated that they were not able to use the fund to fix the pound at any given level, but only to make the ups and downs less violent. I do not see how this fund is going to overcome our difficulties. According to that theory we cannot fix our dollar at any given value.


Henry Elvins Spencer: I take it for granted that this bill will give the government power to increase that fund to any extent that may be desired if it is in the interests of the country to do so?


Richard Bedford Bennett: No, this bill does not go that far. This bill only goes to the extent of enabling a specific fund, namely, the profits from the revaluation of gold at $35 or the current market price as against $20.67, to be earmarked as a fund available on proclamation for the purposes indicated by the bilk No such powers as those suggested by my hon. friend are sought at this time, strange as it may seem.


Henry Elvins Spencer: I take it for granted that this small amount, as some members think it is, is only one chip in the poker game, and if

at some future time the country needs more chips, certainly ways and means can be found of getting them.


Ian Alistair Mackenzie: Would this amount increase under section 5 if world market prices should increase?


Richard Bedford Bennett: Yes.


Jean-François Pouliot: This follows the complete failure of the London conference of 1933. In a broadcast from London to Canada and the United States prior to that conference the Prime Minister said that unless the nations of the world came to an understanding with regard to the stabilization of currency the conference would be a failure. That was one of the four reasons for which the conference would have to succeed, and after the conference was over the right hon. gentleman said that he hoped1 the conference would meet some time later. At the time he said the conference had met too soon, that they were not ready for it. That was the famous world conference that the right hon. gentleman saved and which died a natural death three days later. It was a great success. It was just as great a success as the London conference of 1930 and the Ottawa agreements of 1932. Now \ve are told that it is the opinion of the governor in council that stabilization should be carried out by this government. The stabilization they should carry out is to give the Prime Minister a chance to remove himself from the picture. For years we have had fiasco after fiasco, but the government come here and tell us a lot about the success of this and that, and in a very serious way they speak of the stabilization of this and that, of sound money and of the attitude of the people. The right hon. gentleman said we should not look to the past, that we should look to the future. That was two years ago, but those two years have not been very successful. If the government want to continue their successful ways, let them drop out of the picture, and then public confidence will be restored for good.


[Stage Direction]
Section agreed to.
On section 7-Surplus funds how dealt with.
Ian Alistair Mackenzie: May I
ask the Prime Minister if this is purely in the discretion of the minister in charge? Does he direct the bank in regard to these securities, or has the bank a discretion in reference to them?


Richard Bedford Bennett: As the section stands this is a departure from the preceding section to

Exchange Fund
the extent that the minister may direct that a certain portion of the money be invested in Canadian securities.


Ian Alistair Mackenzie: Still the control rests with the minister.


Richard Bedford Bennett: Yes.


[Stage Direction]
Section agreed to.
On section S-Winding up of account.
James Layton Ralston: I wanted1 to ask the
Prime Minister if it is intended, when the special account is wound up, that it shall go to the consolidated revenue fund. I wondered if there was any doubt as to the actual ownership of the fund. The special account is in the name of the minister for the special purpose for which it is constituted, but when it is wound up where does the profit go?


Richard Bedford Bennett: It was intended that
it should go to the consolidated fund, as the hon. gentleman said. That is, if it should be wound up it should1 seek its original lodging place, namely the consolidated fund, to reduce pro tanto the debt of the country.


James Layton Ralston: The	original lodging
place would be the profit of the bank.


Richard Bedford Bennett: No,	the consolidated
fund. If I remember correctly the profit was to go to the consolidated! fund, not to the banks.


[Stage Direction]
Section agreed to.
Sections 9 to 11 inclusive agreed to.
Title agreed to.
Bill reported.
Pierre Édouard Blondin: When shall the bill be
read a third time?


Richard Bedford Bennett: By	consent I would
move the third reading now, so that the bill may go to the senate. That can be done only by consent.


[Stage Direction]
Motion agreed to, and bill read the third time and passed.
On motion of Mr. Bennett the house adjourned at 10.50 p.m.
Tuesday, June 18, 1935