1936-04-21

Mr. SPEAKER:: I have the honour to inform the house that a message has been received from His Majesty the King, signed by his own hand; also a message from Her Majesty Queen Mary, signed by her own hand:
Buckingham Palace.
Members of the Senate and of the House of Commons of Canada:
I thank you sincerely for your kind message of sympathy with me on the death of my dear father and for the moving tribute which you pay to his memory. His example will ever be my guide and my encouragement in the task which lies before me.
I deeply appreciate your assurances of loyalty and devotion to me on my accession to the throne. Under Divine Providence, it shall always be my earnest endeavour to promote the happiness and to protect the liberties of all my peoples.
Edward R I.
7th April, 1936.
Buckingham Palace.
Members of the Senate and of the House of Commons of Canada:
I am deeply touched by your kind words of sympathy with me in my great loss. I have been comforted and strengthened at this sad time by the knowledge that my sorrow is shared by all the peoples of the empire.
I thank you from my heart for your affectionate message.
Mary R.
7th April, 1936.



UNEMPLOYMENT RELIEF


[Stage Direction]
Hon. NORMAN McL. ROGERS (Minister of Labour): I desire to lay on the table the report of the Dominion Commissioner of Unemployment Relief concerning the administration of the Relief Act of 1935, which act expired on March 31 last. Section 9 of the

Unemployment
Relief Act of 1935 provided that a report should be laid before parliament within fifteen days after the expiration of the act, or, if parliament was not then in session, should be published and made available for distribution by the Department of Labour, containing a full and correct statement of moneys expended, guarantees given and obligations contracted under the act. Owing to the Easter recess it was not possible to table the report on the 15th day of April, but I do so now. Copies of the report will be distributed to members of the house.

[Stage Direction]
On the orders of the day:
Mr. THOMAS REID (New Westminster):: I should like to address a question to the Secretary of State (Mr. Rinfret). According to press dispatches I understand that an international conference in connection with copyright is to be held this year at Brussels. My question is whether the government of Canada will be represented at that conference, and if so, by whom.


Hon. FERNAND RINFRET (Secretary of State):: In reply to the hon. gentleman, who was kind enough to give me notice of this question, I may say that the conference will take place at Brussels commencing on the 7th of September, 1936. The Canadian government has been invited to send a representative, and will be represented.



UNEMPLOYMENT


[Stage Direction]
The house resumed from Monday, April 20, consideration in committee of Bill No. 19, to assist in the relief of unemployment, the promoting of agricultural settlement and rehabilitation, and in the development, conservation and improvement of certain natural and other resources-Mr. Rogers-Mr. McPhee in the chair.
On section 11-Duration of act.
Mr. McGEER:: Mr. Chairman, at the close of last evening's session I was placing before the committee the tribute paid by Lloyd George to President Roosevelt on his effort to achieve recovery and increase employment by breaking the bondage of money power that has been established in that country, pointing out that if Roosevelt succeeded he would have accomplished for the people of the United States more than Lincoln did when he abolished a more limited slavery. Lloyd George proceeded to say:
But his task is even more formidable, for the hierarchy he has challenged is powerful and its janissaries in all lands are federated in a well knit, well drilled and well equipped brotherhood in arms. They play into each other's hands-they fight each other's battles. If they fail, they will share each other's ruin -if they succeed, they will divide the loot among themselves.
In London and in Paris they are unassail-ably entrenched. To adopt the scriptural quotation, Judas is their law givenj industry is their wash-pot and over successive min-isteries have they cast their shoe."
The President of the United States has resolved that this verse shall no longer apply to American governments and American producers.
It is also well to note that the same powerful forces are deriding the Roosevelt program that jeered at Lincoln and assailed Thomas Jefferson.
I have placed before the committee a summary, brief but definite, of the recovery programs in Great Britain and the United States. I have done this because I think in those countries, With widely different economic conditions, programs of definite relief such as I think are available to us have been undertaken and have achieved some measure of success. Now I should like to refer briefly to the program of recovery that has been adopted in the Argentine, a country with conditions somewhat similar to our own, and a country which provides a definite measure of competition in our greatest international tTade activity. Time does not permit me to review the recovery programs undertaken in Australia and New Zealand, but they are very similar to the program that has achieved success in the Argentine. Three years ago the Argentine displayed all the phenomena of world depression; low commodity prices, unemployment, debtors faced with foreclosure, an unbalanced budget and a declining foreign trade. To-day the Argentine has emerged from the crisis to a greater extent than any other American country. The domestic measures grew out of the determination of governments to set their house in order, and included a variety of expedients, many of them inspired by the policies of the Roosevelt administration in the United States.
In the spring of 1935 the congress of that country enacted a thoroughgoing reform of the monetary and banking systems. A central bank has been created with an initial capital of 30,000,000 pesos. It is given the exclusive privilege of issuing bank notes, and is operated as a public utility. The central bank serves as the depository and financial agent of the government, and as adviser in foreign and domestic credit operations and in the issue and control of public loans. In
Unemployment

other words the Argentine bank is functioning as a public bank, issuing currency and credit and managing tihe circulation of credit in terms of public need. In other respects the new deal in the Argentine has been remarkably successful in putting the country on the road to recovery. It has included control of grain prices and of foreign exchange debt conversions, restriction of imports, increase of exports through bilateral trade treaties, financial aid to industry and agriculture, a mortgage moratorium and a general measure of reduction in interest rates on public and private debts, as well as a vast program of public works. The profits of the government from exchange transactions, estimated by bankers at about 200,000,000 pesos, were used to finance the grain operations, and later for other purposes, such as subsidizing meat exports to Italy and paying bounties to dairy farmers and others. Imports from countries with which the Argentine had unfavourable trade balances were not permitted. The contention of that government is that purchases of Argentine products by any country must provide exchange sufficient to cover the Argentine debt payments to that country before any exchange can be granted for the importation of merchandise from it. This policy has imposed the greatest hardship upon the trade of the United States.
We are in a somewhat similar position. In the countries I have mentioned, Great Britain, the United States, the Argentine. Australia and New Zealand, these are some of the major things that have been undertaken: Interest rates on all debts have been reduced. A managed currency system has been established. A wide program of wage distributing public works and social services has been inaugurated. Measures for the regulation, development and balancing of trade have been instituted. Assistance to commerce, industry and agriculture, as well as to farm and home owners, has been extended wherever needed and practicable.
Knowing that many fear inflation I think it may not be out of place to read into the record some conclusions included in a news bulletin of the international labour bureau, established in Geneva as complementary, I think, to the League of Nations. The bulletin states:
The importance of public works as a device for stimulating economic activity and hastening recovery from the depression is emphasized by Mr. Harold Butler, director of the International Labour Office, in his annual report to the International Labour Conference which opens at Geneva on the fourth of June, 1935. Such works must, if they are to be successful, be associated with a general expansionist monetary policy; they should be undertaken
[Mr. McGeer.J
on a large scale and they should be financed by loan rather than by taxation. These principles have been applied in a number of countries to a more or less considerable extent
In Japan the combined monetary and public works policy seems to have been very successful. Expenditure on works was considerably expanded in 1933-34 and amounted to 365 million yen in that year as compared with 205 million yen in 1932-33. In 1934-35, however, when recovery was well on the way, the estimated expenditure was reduced to 264 million yen. These sums were mainly raised by borrowing.
A very similar policy has been pursued in Sweden, where, in 1933-34, the budget was deliberately unbalanced for the purpose of financing public works by borrowing. The situation is almost normal, thanks to the policy of cheap money, public works, and ixpanding imports.
Germany has also had considerable success with its works policy. Other countries in which a good deal has been done in the way of speeding up public works are Italy, Poland and Switzerland. In Italy a long range program has been carried out for many years, and in 1933 work was provided for 51 million man days as compared with less than 22 million in 1926. In Poland about 100,000 men found employment on works in 1934, financed by the employment fund, the investment fund and the Ministry of Social Aifairs. In S%vitzer-land public works are carried out by the confederation, the cantonal authorities and the communes, and these together were estimated to cost about 1,000 million Swiss francs in 1934 as compared with a little over 500 million Swiss francs in 1933.
I quote again from the News Bulletin of that labour bureau, which probably is more competent to say what has been effected by public works developed on an expansionist program than any other authority in the world. In the issue of June, 1935, we find the following:
Admittedly the experience so far gained from the provision of public works as a remedy for unemployment does not justify the claim that they offer the sovereign and complete cure; still less, however, does it warrant the assertion that they have failed to furnish any aid to the solution of the problem. The knowledge derived from what has been attempted in the past few years makes it possible to draw a few elementary distinctions and to outline a few tentative principles.
First of all, it is clear that public works cannot produce any substantial effect unless undertaken on a large scale. Where they have been thus undertaken, e.g., in Italy, in Germany, Sweden and the United States of America, it can hardly be disputed that appreciable results have been obtained both in the stimulation of economic activity and in the provision of employment.
Again we find this statement from tihe same authority:
The question of the national distribution of income is closely connected with the controversy between the expansionists and the deflationists. It would seem that the expan-

Unemployment
sionist experiments have so far given better results than the deflationist, and it may be noticed that in some countries, such as Australia, Germany and Italy, better results were apparently obtained when deflationary were gradually supplanted by expansionist measures. In any case it is difficult to doubt that the steps talien in Sweden, the United States and other countries to develop purchasing power through the expenditure of public money gave an impetus to industry at a moment when confidence was at its lowest.
I simply want this main point to be established: on the authority of the bureau of labour at Geneva we have a clear finding that in the years of depression actual experience has found a program of recovery. That program is based upon the scheme of planned economy based upon controlled inflation adopted in Great Britain, the United States, the Argentine, Australia, and other countries.
It can be adopted in Canada. There is no reason why we cannot go forward out of the depression on a sure and charted course as has been done by these nations. The legislation now before us opens the way to doing that, provided the policy has the will to do behind it.


The CHAIRMAN (Mr. McPhee):: Shall section 11 carry as amended?


Gerald Grattan McGeer: May I just put on record
two statements that I did not have time to put in? I think the statement showing the funds appropriated-


George Washington McPhee: The hon. member has exhausted his forty minutes.


Gerald Grattan McGeer: I will not take a minute; I just want to put these on the record.



FUNDS APPROPRIATED AND ALLOCATED FOR RECOVERY AND RELIEF, EXPENDITURES THEREFROM, AND UNEXPENDED BALANCES (UNITED STATES)

[Stage Direction]
February 29, 1936
Organizations
Agricultural aid:
Agricultural Adjustment Administration	
Less processing tax	
Net	
Commodity Credit Corporation®	
Farm Credit Administration®	
Federal Farm Mortgage Corporation	
Federal land banks:
Capital stock	
Paid-in surplus	
Reduction in interest rates on mortgages...
Relief:
Federal Emergency Relief Administration	
Federal Surplus Relief Corporation	
Civil Works Administration	
Emergency conservation work	
Department of Agriculture, relief	
Public Works (including work relief):
Boulder Canyon project	
Loans and plants to States, municipalities, etc.®.
Loans to railroads®	
Public highways	
River and harbour work	_	
Rural Electrification Administration	
Works Progress Administration	
All other	
Aids to home owners:
Home-loan system:
Home-loan bank stock	
Home Owners' Loan Corporation	
Federal savings and loan associations	
Emergency housing	
Federal Housing Administration	
Resettlement Administration	
Subsistence homesteads	
Miscellaneous:
Export-Import Banks of Washington®	
Federal Deposit Insurance Corporation	
Administration for Industrial Recovery.
[Stage Direction]
Reconstruction Finance Corporation-direct
loans and expenditures®	
Tennessee Valley Authority	
Total	
Unallocated funds:
By the President	
By Public Works Administration	
Grand total	
Total
appropriation
$ cts.
1,856,573,023 45 *[DOT]941,639,669 90 914,933,353 55 496,874,306 20 589,378,356 63
200,000,000 00
125.000.	000 00
145.000.	000 00
58,950,000	00
3,087,464,756 70
833,965,000	00 1,269,833,395 25
92,845,000	00
78,464,960 63 926,942,368 93 192,219,506 00 1,193,532,181 76 484,509,978 68 10,425,512 00 1,298,805,718 00 1,294,948,269,89
125.000.	000 00
200.000.	000 00
50.000.	000 00 135,832,550 00
40.000.	000 00 235,127,719 20
6,811.963 10
36.250.000	00
150,000,000 00
24.461.000	00
3,929,784,418 39
75.000.	000 00
18,302,360,314 91
28,214,203 16 9,266,766 29
18.339,841,284 36
Expenditures
Fiscal year 1936
$	Ct8.
418,289,549 95
67,211,001	85 351,078,548 10 181,531,090 88 839,640,860 39
83,046,185 00 18.218.414 72 20,970,540 04
476,440,432 39 9,049,881 15 497,476 92 400,881.545 11 2,384,000 42
9,216,625 66 24,349,693 58 883,850,055 84 164,718,090 40 103,080,507 94 416,652 34 534,474,244 86 256,718,749 49
16,050,000 00
19,625,729 28 20,599,374 61 9,653,688 66 45,366,353 00 428,232 02
3,580,220 16
5,108,813 40
872,984,322 09 27,814,668 09
2,502,732,149 90
2,502,732,149 90
Fiscal year 1935 and prior years
$ cts.
1,033,276,980 00 874,428.668 05 158,848,311 95 104,197,869 99 423.395,524 25
200,000.000 00
124,958,815 00 74,493,662 75 19,506,931 74
2,443,115,494 42 \ 116.624.322 74 j 816,450.155 96 767,449,494 45 80,561,249 99
43,265,888 68 216,303,647 21 136,969.752 95 585,238,957 71 220,375,133 11 16,820 93
460,640,362 40
81,645,700 00
200,000,000 00 30,241,584 08 6,849,186 88 15,963,873 02 1,761,663 06 6.034,250 40
37,827 52
150,000,000 00 19,129.222 30
2,276,434,748 49 47,185,331 91
9,827,695,783 89
9,827,695,783 89
Unexpended
$	cts.
405,006,493 50
405,006,493 50 211,145,345 33 205,623,692 77
3,087,370 00 52,287,922 53 18,472,528 22
42,234,626 00
17,017,367 12 101,502,355 69 9,899,749 59
25,982,446 29 686,289,028 14 139,099,808 89 443,575,133 65 161,054,337 63 9,992.038 73 764,331,473 14 577,589,158 00
27,304,300 00
132,686 64 108,383,988 51 14,382,438 32 187,999,703 14 349,480 68
32,631,952 32
222,964 30 1,726,333,991 99
5,971,932,381 12
28,214,203 16 9,266,766 29
6,009,413,350 57
[Stage Direction]
Unemployment
[Stage Direction]
Debt of Dominion Government, Provincial Governments, Municipalities and Corporations
at indicated periods
(Prepared by The Bureau of Statistics, April 20, 1936)
Net debt of dominion government, March 31, 1935	$2,846,110,958
Guaranteed debt, March 31, 1935 (disregarding guarantees under Relief Acts of '
$104,525,860)	 1,136,355,501
Gross direct liabilities of provinces at end of fiscal year, 1934	 1,541,469,837
Indirect liabilities of provinces, 1934	 231,138,055
Total direct liabilities of municipalities (less sinking funds), 1933	 1,502,727,935
Corporation and other railway bonded debt, 1933-34*	 2,033,176,481
Total	$9,290,978,767
* The railway and corporation bonded debt was compiled at $3,668,000,000 in 1933. Deducting the railway guaranteed debt and the amount of loans and advances due to the dominion government in 1934, we get $2,033,176,481.
Mr. TUCKER:: It appears that the hope for recovery entertained by the government is the hope that private industry will absorb unemployment, and that this program is designed to take up the slack in the meantime. Now I have been following some of the newspapers, as doubtless other hon. members have from time to time. I find that one of the industries in which there should be a great deal of employment during the coming year is the housing industry. In the city of Toronto, according to the report of Lieutenant Governor Bruce, there are no less than 2,000, possibly more than 3,000 dwellings which by reason of unsanitary, verminous and grossly overcrowded conditions constitute a definite menace to the health and decency of the occupants, and "if reasonably full employment were to return and marriages delayed by the depression were to take place it is probable that a shortage of some 25,000 dwelling units would become apparent." In other words, in the city of Toronto there should be the possibility of building 25,000 dwelling units at once.
In the Saskatoon Star-Phoenix of April 4 last, Mayor Pinder of Saskatoon is reported as saying that Saskatoon spent on relief in 1935 the sum of $209,000, and he said further:
There was a great shortage of housing accommodation in the city, His Worship told those present, impressing listeners that a program affording work to those now on relief and at the same time providing better housing accommodation was needed badly.
Then I find this further article in the Star-Phoenix of April 3 last, from North Battle-ford:
"Fifty small modern houses are urgently needed here if we are to retain in this city people whose logical business centre is North Battleford, but who are being obliged to live elsewhere on account of the house shortage," Mayor W. M. Bowers declared this morning.
There is a note at the end of that article that Yorkton also has reported a shortage of houses. And so it goes; all over the dominion

there is a shortage of housing. If the housing needs of this country were to be supplied by a real building program within the next year or so, thousands of men to-day out of work would be employed, those engaged in the heavy industries would have more work, and housing conditions throughout the country, which to-day in parts of many cities and towns are a disgrace, would be remedied. When there is this great need for housing, why is it that private enterprise is not entering the field? Something was said about the housing program in England where so many houses have been built during the last few years and so many people have been absorbed into industry by virtue of that great building program. I believe one of the reasons the housing program has flourished in England is that the cost of the dole-the equivalent of unemployment relief here-is largely carried by the central government, whereas in Canada we have placed a large part of it upon the municipalities. The chief means by which the municipalities may raise money is by impositions upon improvements and real property. If we are going to place the main burdens of this unusual era upon real property and upon improvements to real property, burdens in the way of increased interest payments, increased expenditures for unemployment, and so on, how can we expect private industry to invest its wealth in a building . program when the buildings, the result of such programs, may face confiscation as a result of undue burdens placed upon municipalities. That is the situation confronting the committee.
We take the attitude that the present unemployment problem is only temporary. Very well; if it is temporary let the dominion government through means of taxation which it has and which do not bear upon improvements and private real property absorb the burden of these unusual conditions. In other words we would relieve the municipalities from Halifax to Vancouver of the burden

Unemployment
which is preventing private enterprise from entering the building trades. By our attitude of failing to consider the problem as a temporary one and to look after it through the efforts of our national government we are bidding well to make it permanent.
For a moment or so I should like to deal with some figures which I suggest bear out my contention that the tendency is to confiscate improvements on real property. I have in my hand a clipping from the Winnipeg Free Press of March 17, in which it is indicated that the gross total arrears in taxes in the last ten years has risen very much. Although the table is given I shall not take time to read it. I will however read the figure for 1929. In that year the arrears of taxes in Winnipeg amounted in round figures to $7,550,000 and in 1935 had increased to $12,040,000, or an increase of about $5,000,000 or almost seventy per cent. What is the result? The article goes on to state:
More property was sold for taxes last year than in any previous year. The taxes standing against it amounted to $580,304. The property sold for taxes in each of the last ten years was as follows-
And then the article goes on to give figures showing the amount of taxes against property sold for taxes in Winnipeg. In 1929 the taxes due on property sold for taxes amounted to $199,662. The taxes against property sold in 1935 had risen to the sum of $580,304. The statement continues as follows:
Just what the taxpayers have been up against is seen from the tax sales of the last three years. The property sold for taxes in those years had more than $1,500,000 of taxes against them. They were worth considerably more than that. And the amount of improved property, business places and homes going into the tax sale has greatly increased.
The article continues later on:
But more improved property is passing through the tax sales now. and the city may be expected to obtain title to an increasing number of such properties.
Then, may I read an excerpt from an editorial of the Free Press of March 17 last:
The taxes actually collected under last year's budget were nearly three-quarters of a million dollars less than in 1931, in spite of the imposing of a new tax on motorists, an increase in the water rates for general revenue purposes, and an increase in the business tax. A large amount of property again passed into the city's hands at the last tax sale, and hundreds of small home ow'ners again asked for the privilege of working on the streets to earn their tax money and save their homes.
And later:
There are thousands of individual taxpayers who find it extremely difficult to pay the levies on their homes and many have lost their homes to the city or mortgage company.
Why do we have this confiscation of money invested in private homes throughout Canada? One of the reasons is shown in a tabulation prepared by Professor H. Carl Goldenberg, M.A., B.C.L., F.R. Econ. S. I shall read only a few figures to indicate what is happening in Canada. I submit that sitting here in parliament it is our duty to face and study the facts, and to base our opinions upon facts, and not upon theory.
Since I have come to the House of Commons, on many occasions I have heard the statement that there is no royal road out of the depression, that there is no easy way out of it. The statement is made that there is no panacea. Are we to shut our eyes and refuse to face the facts, or are we to look the facts in the face and try to find some solution? It is not sufficient to oppose reform far-reaching enough to meet our problems because it is said there is no royal road or no panacea. Of course that is exactly what has stopped progress in the past. There has been the old cynical cry, "There is no royal road." I submit it is up to the House of Commons to find some road out of our present situation, whether it is a royal road or not.
I find on page 2 of the report figures which indicate that the decline in the assessed value of real property has been accompanied, in many cases, by an increase in the tax rate. For example, in 1929, the tax rate in Kitchener was 36-75, and in 1935 it had increased to 41-7. In Ottawa the rate in 1930 was 31-35 and in 1935 it was 36-80. In Montreal the tax rate in 1931 was 24-8 and had risen in 1936 to 27-7. Coming to western cities we find that the rate in Winnipeg in 1929 was 33, and in 1935 it was 34-5. In Saskatoon the rate in 1933 was 42-9 and in 1935 it was 44-9. The tax rate was recently struck for the year at slightly over 45. That means a tax of almost five per cent on real property in Saskatoon, and five per cent on sixty per cent of the improvements thereon. Coming to Calgary we find that in 1929 the rate was 44-5 and that in 1935 it had risen to 50. In Nanaimo the rate in 1929 stood at 47 and in 1935 had risen to 55.
There is the situation. We have a confiscatory tax on real property and improvements. The increase in tax rates has brought about an increase in tax arrears. What do we find in connection with arrears? The tax arrears are a first charge on the real property or the homes of the people of Canada. We find that in the city of Montreal tax arrears in 1931 amounted to $15,650,000 and in 1936, to $23,083,000, an increase of about $8,000,000 which stands as a charge against the homes and business places of Montreal, wiping out
Unemployment

the equity of the owners to that extent. The arrears for the city of Oshawa, which in 1929 amounted to $230,301, were $601,559 in 1936. The figures for the city of Winnipeg indicate arrears of $4,818,000 in 1931 and $6,288,000 in 1934. For Saskatoon the figures are $1,134,000 in 1929 and $2,969,000 in 1935, an increase of more than 100 per cent in that city. The figure for Edmonton increased from $1,754,000 in 1932 to $2,130,000 in 1933. This increase represents a charge against improvements and against the homes of Canadian people. The tax burden of the municipal taxpayer has been inoreased because these people have had to shoulder the burden of looking after the unemployed and meeting the ever increasing interest of their public debt.
I should like now to deal shortly with another set of figures without giving them all. I have here a table showing municipal expenditure on unemployment relief and how it has grown. The expenditure on unemployment relief in the city of Montreal, for example, which in 1931 was $2,309,000, had risen in 1935 to $6,324,000, an increase of more than 200 per cent, an increase of more than $4,000,000 for the city of Montreal alone. In the city of Winnipeg in 1931 the expenditure on unemployment relief amounted to $905,750, and in 1935 it had risen to $1,886,000, an increase of 100 per cent. In Saskatoon-and here are some striking figures-the expenditure on unemployment relief in 1930 was $4,231; in 1935 it had risen to $290,000, in a city of about 40,000 people. All that extra burden was placed upon the people and had to be met largely by taxation on real property and improvements, and yet we expect people faced with that ever increasing burden on their homes, the future extent of which burden is unknown to go into a building program. There is the situation, and it is something which the house should recognize. We have this ever increasing burden of unemployment; more and more homes are being sold to carry that increasing burden, and yet we expect people to go into an increased building program.
Just for a moment I should draw to the attention of the committee our attitude towards those who in the past have invested in homes and in industry in this country as compared with those who have invested their capital in bonds. Let us take a citizen with, say, $10,000 to invest. Suppose he puts $5,000 into a home and $5,000 into some industrial enterprise giving work to people. We will suppose that his neighbour across the road says: I will not do that service; I will not bother risking my money in an industrial enterprise, nor will I build a house; I will

buy government bonds. Just let us see what is the difference in our attitude towards these two citizens. To-day the man who put $5,000 into a house in the city of Edmonton, for example, will have to pay roughly $250 a year, a five per cent tax on that home. On account of the heavy taxation upon industrial enterprise in this country a great many industries are not making anything at all with which to pay interest on the bonds they have issued, and the result is that the man who invested in industrial enterprise in many cases has lost his income from that source. How has that come about? Because above all things the dominion government has so far refused to adopt a more advanced policy in regard to banking and monetary reform. Instead they say: We will force the municipalities to borrow from private institutions at high rates of interest; we will not help them out at all in that regard. And so they have had to devote a large part of their revenues to payment of debt charges. There has also been placed to a great extent upon the backs of the municipalities the burden of looking after unemployment, without any promise on the part of the dominion government to relieve them of that burden. On the other hand the man who put his $10,000 into government bonds draws his interest regularly, while his neighbours are being sold out. Homes have had to foe sold because their owners were unable to meet the increased tax burden, yet all the while the government bondholder continues to draw almost five per cent on his $10,000 of government bonds; in other words, his neighbour must lose his home and his position in order that he shall be paid the $500 interest on his bonds every year. It seems to be quite all right to confiscate the capital invested in homes, but if we suggest that we should leave the bondholder his principal intact and take only some of his interest in order to lighten the burden on the home owner and the factory owner, we are told that is confiscation.
I put it to you this way. On the one hand, the home owner has his home, his capital, confiscated. There is no thought of his income, for that went long ago. On the other hand, the bondholder has his principal intact, and he howls to high heaven if you touch even his interest. You are selling out the home owner and the factory owner in order to pay interest to the bondholder.
I submit to you, Mr. Chairman, that this high court of parliament must now look that situation right in the face. It cannot afford longer to accept dictation from the financial interests of this country. It must put the best interests of the people ahead of the dictation

Unemployment
of any financial interest in the whole of Canada, in order- to save the homes of this country, in order to encourage private enterprise. It must lift this intolerable burden from the backs of the home owners. It is, I think, the duty of this government, if it believes that this is only a temporary problem, to treat it as such, and to lift off the backs of the municipalities the burden of looking after unemployment. Then people will see that the burden against their homes or against any houses they may build under the government program will not become intolerable. Can you expect people to put money into houses when they see the rapidly rising tax rate against them? Unless there is a change of policy they are going to say: No, apparently the thing that is always going to be protected in this country is government bonds; we will not put our money into homes or industrial enterprise because people who have done so in the past have lost what they put in; we will put our money into government bonds where the principal is safe, and the interest on which will be paid even if the government have to use the entire police force of the country to see that we get it.
Is not that what we are saying to the people of this country? Is it not time that we faced that situation? Is it not time that we saw that if we continue to tax and in effect to confiscate the money that is put into homes, people will not put money into homes? We must take steps to lift that intolerable burden from municipalities if we expect them and their citizens to put their money into enterprises which will provide labour for their fellow citizens.


Mr. FOULIOT:: Mr. Chairman, I would like to ask the minister if the government will be bound by the recommendations of the commission.


Mr. ROGERS:: I think it appears quite clearly from the wording of the National Employment Commission Act that the answer is in the negative.


Jean-François Pouliot: Thank you. But if the government is not bound by the recommendations of the commission, no one sees the use of it. I wonder if during the last election one single Canadian took into consideration the national employment commission when registering his vote. I do not think it affected his vote one way or the other, and for a very good reason. At the time no one knew what the commission would be, and Canadians are not very strong for abstractions; they prefer concrete facts. In my constituency the suggestion of an employment commission did not
change a single vote. The people voted to defeat the late government because of its responsibility in regard to the increase of unemployment in this country. I cannot understand why no one has yet brought to the attention of the house the responsibilities of the late government in regard to the increase in unemployment. They are many. I shall be very brief, but I cannot let this debate come to an end without mentioning some of them.
First, in 1930 the leader of the opposition (Mr. Bennett), before he became Prime Minister, stated that he considered seasonal employment as permanent employment. Second, when unemployment was only a municipal problem, he made it a federal issue. Third, he made it a question of dollars and cents when it should have been considered from the social point of view. I should like to repeat what was said by the hon. member for Fort William (Mr. Mclvor), that this matter should be considered not only from the point of view of common sense, but from the point of view of Christian common sense. I commend those admirable words to the attention of the committee.
Fourth, the right hon. gentleman thought that unwarranted and uncalled for high tariffs would cure unemployment. Does the committee remember the special session of 1930, at which time employment was normal and even better than it was in the previous year, according to the statistics published in 1931 by the then Minister of Trade and Commerce (Mr. Stevens), when the leader of the opposition said: "We will cure unemployment by high tariffs?" He gave us high tariffs and we had more unemployment. I do not doubt his sincerity, but he was very badly informed. He made many mistakes in judgment; he gave us wrong advice, and the country suffered. He said: "I will end unemployment or perish in the attempt," but he probably never thought that it was the country that would perish while he would survive. Fifth, he imposed a heavy burden of expenditure upon the provinces and the municipalities, a thing entirely wrong from the constitutional point of view. Sixth, he imposed upon the railways a program of new and branch line construction at a time when it was not necessary in the public interest. Seventh, he was responsible for the construction of unnecessary works by joint dominion, provincial and municipal expenditure, when such works should have been spread over a period of years. Eighth, he overestimated the spending power of the provinces and municipalities and induced them to spend beyond their means and capacity
Unemployment

to pay. Ninth, he shifted the accounting for relief from one fiscal year to the other and used red tape in order to make dominion contributions to private and public works. Tenth, he took advantage of the relief legislation to give several dominion guarantees to public bodies, to Newfoundland, a foreign country, and to private corporations, without authorization of parliament.
All this is very serious. It is not simply a matter of procedure; it is not simply a matter of interpreting one word this way or that. The country has been destroyed, and to paraphrase the words of Georges Sorel when speaking of Jaures, the right hon. gentleman has been a profiteer of popular illusion. In my bumble view a change of government does not consist merely in the moving of a few pictures from the opposition caucus room to the government caucus room or from one lobby to the other. The people of this country meant it when they voted for a change.
I do not see how this legislation can be submitted to parliament. I am against it. I am a Liberal and at times I fought alone against the Tory machine. I am not ashamed of that; I am proud of it.
There is much satisfaction in being a member of this house. We meet many good friends from all parts of the country and we are able to speak freely for the benefit of the country as a whole and try to take the country out of the hole which was dug by the previous government. The motto of hon. members should be not only the motto of Raymond's jams and preserves, "We aim to please"; it should be "Ich dien," the motto of the Prince of Wales. We are here to serve.
It is most unpleasant to have to disagree at times, because we generally like to agree with our friends; but the greatest joy and satisfaction that a man can have is to be able to speak freely according to his best judgment. That is one privilege we have here. A member does not represent only his own constituency; he represents Canada as a whole, Canada at large.
This legislation has been drafted very badly. What can be said about Bill No. 19 can be said also about Bill No. 14. This legislation seems to have been drafted along the same lines as the social legislation of 1935. It has been drafted by people who apparently wanted to please both major parties in order to save their skins because of their failure last year to draft good legislation. We are here principally to pass legislation. That is why we assemble in this chamber and the Senate assembles in another part of this building. It would be better

for the country, even if a session lasted six months, that parliament Should pass only one good piece of legislation, even if it took up only one page. We must remember that the commandments of God are only ten in number of two lines each. Twenty lines of commandments have governed mankind since Moses came down from the mount.
The other day the comments of two great Canadians, Mr. Pitblado and Mr. Bradshaw of Toronto, were quoted in connection with legislation. When legislation is brought before the house it should be well and clearly drafted. It would seem that this legislation has been copied from the legislation of other countries, but it should be remembered that conditions in other countries may not be the same as they are here. We should consider the facts. I take this opportunity to warmly congratulate the Minister of Labour on having given us plain facts, Canadian statistics. Everyone can make mistakes and I made one last year when I censured high officials of the Department of Labour; I have put the blame on them. Every one is apt to make mistakes and I must admit mine when I make any. But I have noticed that the reason why it was impossible to get information last year was that instructions had been given by the previous government to keep us in the dark with regard to the real facts abount unemployment. It was for that reason that a member of the house had to communicate with the municipalities in order to obtain information which was refused him by the Department of Labour, under the instructions of those who now pontify from the other side of the house. This is very bad, and since it has occurred there has been a change in the Department of Labour; a new minister has come in and has opened the windows, and now it is easy to get some information from that department. These men who did nothing under the previous government are now doing very well and they should be congratulated on the very excellent forms which they have prepared in connection with the classification of the unemployed. I repeat, they have done very well. In that regard the minister deserves praise, and they also are deserving of commendation; for praise should be given to those to whom it is due. But, sir, what is the use of having these able men if they have nothing to do? What is the use if advantage is not taken of their capabilities to assist in framing a policy for unemployment relief?
I firmly believe in what the Prime Minister -I mean the present one-said during the last capaign with regard to parliamentary control. Here we are, 245 members represent-

Unemployment
ing every part of the country, ready to speak on behalf of our own people, whose interests may diverge at certain angles, but who should understand one another for the common good. Speaking of parliamentary control, there are two major parties-there are other groups or parties in the house. Every one has an opportunity to express his views, whether here, in caucus or elsewhere, by letter or otherwise, and to make suggestions. In my humble view, this is the way in which legislation should be drafted. There are caucuses of every party and it is the privilege of members on the government side to submit their suggestions to the government in party caucus. And the same can be done in opposition caucus. I suggest that the government of the day should take advantage of all these recommendations to frame a policy which should be submitted to caucus; legislation should be submitted to caucus and then brought into the house, and by way of amendments, constructive suggestions could then be offered to the government and to the committee of the house. Then, sir, when there is a very important piece of legislation it should be referred to a special committee composed of members of the house from each province, who can call in witnesses and have the facts presented which they have not already obtained. The same thing could be done in the senate, and legislation would then be better than when, according to the words of the present leader of the opposition, it is prepared by the officers of the crown who know nothing about the conditions of the country at large, and when legislation prepared in that way is boldly forced upon the house by the government and left to the courts to be decided upon. What kind of legislation have we then? We have unworkable legislation. I have great confidence in the present Minister of Labour and most of his colleagues. I have respect for them and in my humble view he has a great responsibility with regard to unemployment relief. He should therefore dispense with this commission and should decide the whole thing with his colleagues of the cabinet. This is the way it strikes me. In this way the government would not be faced with any obstacle when it came to deciding yes or no, and the government would be more respected for that reason. There are promises that are serious and others that are not. In my humble view the employment commission scheme is in flat contradiction of the statements of the present Prime Minister with regard to parliamentary control as against the blank cheque, and to the effect that parliament should be responsible for every expenditure that is made. I know what the answer will be; the answer will be that the first bill creating the employment commission is a matter of investigation - investigating the causes of unemployment. I remember distinctly that last year or the year before, in the month of June, I quoted a speech which the leader of the opposition made in Calgary late in December, 1930, or early in January, 1931, a very admirable speech in which he said that it was the duty of the government to find the causes of unemployment. I congratulated him on that speech; but through the chair he prevented me from reading the entire quotation from his speech. It was probably the best speech he has made in the last ten years, because it was sensible; he spoke sensibly. I wonder if that is the reason why he objected to my quoting his utterances, so full of common sense.
Now here we are; the government has a very important policy to carry out, and that policy should not be that which has been left as a legacy by the previous government; it should be a new, bold, red-blooded Canadian policy, a Canadian policy for the relief of those who have been plunged into distress by the silly policies of the previous government. This is what the country is asking, Mr. Chairman, and I know this statement will be approved by the great majority of those who on October 14 last voted to defeat the former government.
Having put these considerations before the committee I need not elaborate them, but it seems to me it would be much more satisfactory to the minister concerned, to the government and to all of us if that legislation were dropped so that the country might be governed as it should be governed, under parliamentary control, under which the minister would not be responsible for the mistakes and blunders that may be made by the commission. In addition, Mr. Chairman, I have an offer to make to .the minister. I do not see the need of a commission to classify the unemployed, because the member for Temiscouata did it by himself in two months. The actual work was done in two weeks; it took a month and a half to gather the information, because the member for Temiscouata had no sanction. The minister has that sanction; he can say to the provinces and municipalities? "If you do not supply that information you will not get a cent of relief," and they will send the information right away. That is the minister's sanction. It is different from the sanction of the bureau of statistics, which says that those who refuse to give information are liable to fine or imprisonment. That is Tory coercion.
Unemployment

On the other hand the minister, who has power to tell the provinces, the municipalities and all those concerned that if the information is not supplied no relief will be granted, will be sure of a prompt response, much more so than will be the case with this new commission. So, Mr. Chairman, I do not see the use of having that commission, which is to be presided over by a man who may be a very excellent gentleman but who is associated with big American interests and who is interested in explosives. I do not see why he should come here and burst in this country. He may be a very good man, but there are good Canadian citizens who could do the job very well, and one of them is the Minister of Labour. He could be helped by his staff, on which there are some very able men, and it would be so much the better for the country at large.
This is my humble protest, Mr. Chairman, but it is in line with what is being said by many people throughout the country, humble people if you like, who have no titles or wealth with which to impress. No, but a humble man can have the good sense which may be refused to millionaires. These people think the best way for them to be heard is by having as chairman of the commission, instead of a millionaire from a big city, a gentleman from the ranks of the people who has been sworn in by .the representative of his majesty as one of his constitutional advisers. At times I regret very much that some people show so much learning about matters of no concern while on the other hand they seem to have forgotten their alphabet. You know, when one goes to school he has to begin by learning his alphabet. That is something that should not be forgotten, because if the alphabet is forgotten it is pretty hard to read scientific books on economics.
I wonder if this humble suggestion will be accepted. It is given in all good faith and for the good of the country.


Mr. CHURCH:: In connection with this last section of the bill, which I think is the most important section of the measure, before it is too late I should like to plead wtih the government to add) some rider or subsection with regard to the obligations which are to be created under this, the largest blank cheque ever to be issued by parliament. This is nothing but a blank cheque. There are no estimates of the cost or of standard plans, as there are in the United States; there are no detailed estimates. It is just a matter of creating obligations. Instead of naming March 31 next year as the day on which
(Mr. Pouliot.l
these obligations must be wound up I think it would be far better to name April 1, because as far as I can see April Fool's day would be more in keeping with the spirit of this measure.
I agree with much that has been said by the hon. member for Rosthern (Mr. Tucker) and the hon. member for Vancouver-Burrard (Mr. McGeer). I am very glad to hear some government supporters assert their rights and prerogatives as private members, because private members are the connecting links between the government of the day and the electors, and when they sit at their desks here and cease to function all parliamentary government is at an end.
May I say, Mr. Chairman, that the statement read to-day is only a partial statement of the situation with regard to the municipalities as far as Ontario is concerned. Under the British North America Act the government of this province is paid a cash subsidy of about 83,000,000 for the maintenance of provincial institutions, and other provinces are paid proportionate sums. In all the provinces with the exception of Ontario something is done to help maintain municipal institutions; for example, some of the provinces give subventions to the municipalities for the maintenance of courthouses, gaols, registry offices, land title offices, schools, hospitals and so on, and some of these institutions are constructed with provincial aid. In Ontario that has not been done. In the thirty-two years during which Sir Oliver Mowat was premier of Ontario the government of this province went outside the four corners of the federal subsidy grants' and loaded all these provincial burdens on the municipalities, with the result that to-day the home owner is practically ruined. In the days of Macdonald and Laurier we were a nation of property owners and Canada's citizens were becoming proletarian, but now no one wants to hold real estate. Taxes are so high as to amount practically to a rent in themselves. Not only have the municipalities been loaded up with federal and provincial burdens of this kind; in addition the right to impose income tax has been taken away from them. The field of income tax was a purely and exclusive municipal field, the exclusive prerogative of the municipalities; it helped to maintain municipal institutions from 1867 to 1918. Then this parliament imposed a duplicate income tax in 1918. Then along came the province and imposed a triplicate income tax, with the result that business has become so burdened by taxation that not only is the home owner losing his property but the intolerable burden on business is such

Unemployment
that it is hard for a business man, as the hon. member for Parkdale (Mr. Spence) said the other night, to carry on business. I take this last opportunity to plead with the minister and the government to put a clause in this bill to protect the government and enable them to deal directly with the larger municipalities. The government are going to hand out this money; it is given to the provinces, and what do they do? They deduct from what is supposed to go to relief a large amount which does not go to relief at all. With the conditions imposed by the provinces the municipalities do not get the amount allotted by this government for relief. The provinces deduct overhead and other charges, and federal funds thus do not go directly in toto to be handed out to people on relief. The result is the municipalities have bad to cut down on bread, sugar, tea, and many of the necessaries of life, and hospital charges are curtailed. It would be safer for the government to lend money directly for relief to the municipalities than to the railways or some of the bankrupt provinces, from which it never comes back. Some of the railways and harbours do not pay even the interest and sinking fund back. It would be far safer to lend the money to the municipalities on a suitable definite plan to get people off the dole and back to work and for a surburban areas plan where they can have an acre or two of land and maintain themselves in part out of the small crop. It will take a little federal aid for two or three years, but that would be far better than lending money to railways Did you ever hear of a railway paying back money? Go over the grants to the railways of this country; read the Drayton-Acworth report about what was paid back and not paid back. I venture to say the government has a far better chance of getting back money that they lend to the municipalities. In 1919 the government of the day did lend money to the municipalities for housing, and it got back from the municipalities ninety-five per cent of that money. Some of the railways and harbour commissions have never paid even a dollar of interest. The municipalities have many of them about reached the end of the game; they cannot any longer have this federal burden loaded upon them; property will not stand it. Taxes have been going so high that not only does no one want to own property but there is such a burden of debt that the municipalities are starved; they have not a dollar for capital charges to build municipal requirements for the future.
I believe this whole matter is wrapped up very largely also with lower bank, mortgage and insurance rates in their relation to unemployment and lack of building. You can lower your relief costs a great deal and help many home owners to retain their property. Last night criticism was expressed of the United States government, but the United States home owners' property act has saved a million workers' homes from foreclosure. No government in this country has done anything like that. And the minister has given us not one line as to what the cost is going to be. Where is the standard plan? What is he going to do about decreased bank interest and mortgage rates, and prevention of foreclosure, and the high cost of life and fire insurance? What is he going to do about the shark loan companies that are charging seventy-five per cent, according to the survey given before the Ontario Teachers' Association last week in Toronto. Action on these matters of home owners' protection certainly would get people off relief; if the government would wield the big stick on some of these lending corporations the poor home owner would be enabled to hang on a little longer. In the United States the insurance companies are doing something to aid the home owner. The New York Life at Gravesend Beach in Brooklyn last year lent S25,000,000 for the building of small homes.
I ask the government once more, where is the plan? When parliament meets next year we shall see the haphazard manner in which these arrangements are made and money handed over to the provinces because the provincial governments are friendly to the government of the day. If the government wants to save itself and its friends let it hand some of this money over to the larger municipalities that have to deal with the burden of relief and that are being driven bankrupt by this government imposing on them a burden that does not belong to them If there was a war the municipalities would not be asked to pay the expense. There is a war in this country for the industrial workers who have lost their jobs, and we load the burden on the municipality. The municipalities have always repaid money lent to them. In Italy the federal power is lending money to build municipal institutions for the needs of the next forty years: trunk sewers, breakwaters, schools, courthouses, registry offices, hospitals, irrigation schemes and public buildings of all kinds. Yet we have not one line in this bill which enables this government to deal directly with the bodies that are responsible, the municipalities, which under the 1919 legislation paid back every dollar up to ninety-five per cent of what they owed this government by way of guarantee for housing. This bill is going
Unemployment

to be a flat failure unless the government has a way of escape by adding a clause giving it power to make direct agreements with cities of over 50,000 population.


Mr. COLDWELL:: While there seem to
be many divergent views on some points, I believe that everyone in this committee is seized of the tremendous problem which faces the Minister of Labour. A few minutes ago I was looking across from my desk and saw a headline in to-day's paper. It simply stated, "The Men Are Cracking." It referred to the situation in Nova Scotia. But when I saw that headline I thought that if we as a people had the will and the determination to end this problem of unemployment and find remedies for it to the same extent as that group of noble men in Nova Scotia have the will to bore through the rock to rescue three men, we could find a way. The difficulty is that we are discussing theories and panaceas, as someone has said, when there is an immediate and real problem confronting us. I say to the Minister of Labour that although I do not believe the setting up of another commission is going to assist very much, nevertheless if the minister can succeed in marshalling the resources of this country in a manner similar to that in which resources have been marshalled at Moose River during the past few days, I am quite sure that we shall reach at least a measure of success in regard to this problem. I speak on behalf of men and women on the farms of this country who are cracking, men and women in the cities who are cracking too, men and women who are looking to this parliament for assistance at the present time, that we may be able, through a consensus of opinion rather than through a fruitless discussion of things which perhaps are not of immediate moment, to arrive at something that can be done at once to assist the people in this hour of need.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Mr. MACKENZIE (Vancouver):: I have
the following amendment to section 2:
That section 2 be amended by adding thereto the words "and whenever used in this act, the word 'Minister' shall mean the 'Minister of Labour.'"


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
George Washington McPhee: Shall
the preamble carry?


Ian Alistair Mackenzie: I have
an amendment to the preamble. I move:

That the first three lines of the preamble be deleted and the following words substituted therefor: "Whereas it is in the national interest that Canada should cooperate with its provinces, and with certain organizations and individuals in their"


[Stage Direction]
Amendment agreed to.
Norman McLeod Rogers: Yesterday the hon. member for Weyburn (Mr. Douglas) directed attention to what he described as an apparent discrepancy between figures in a sessional paper and figures I had given indicating the monthly cost per man in relief camps. I told him then that I would be pleased to look into the matter, and that I felt sure there would be no difficulty in giving an explanation. On examination of the sessional paper I find that the figure quoted by the hon. mem'ber was the figure not for the relief camps maintained by the Department of National Defence but for those maintained by the Department of the Interior. The monthly figures for the Department of National Defence relief camps indicate an amount of $36.80 for 1934 and $39.80 for 1935. These figures agree wdth the daily figure submitted by me during the course of the discussion yesterday afternoon.
Preamble as amended agreed to.
Bill reported.



CUSTOMS ACT AMENDMENT

[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue) moved the second reading of Bill No. 11, to amend the Customs Act.
He said: Mr. Speaker, perhaps I should make a few observations on the motion for second reading of the bill. A brief explanation was given on the introduction, but I propose to have some amendments moved and for that reason believe it would be well to say a few words at this stage.
The bill deals first with the provisions agreed upon between Canada and the United States at tire time of the negotiations in connection with the reciprocal trade agreement between the two countries. It will be recalled that Mr. Wrong wrote a letter to the Hon. Cordeill Hull, Secretary of State of the United States. The letter is dated November 15, 1935, and in the first part of it the undertaking was given that in certain particulars the Customs Act would be amended. The first few paragraphs of the letter are as follows:
Canadian Legation,
Washington,
November 15, 1935.
Sir:
At the moment of signature of the trade agreement between Canada and the United States of America, I am directed by the Secretary of State for External Affairs to

Customs Act-Mr. Ilsley
state for the information of your government that it is the intention of His Majesty's government in Canada to invite parliament at its next session to enact legislation amending the provisions of the Customs Act presently fixing the methods of determining the value of merchandise for duty purposes, as a step toward the realization of their declared objective of eliminating arbitrary executive interference with the normal courses of trade. They propose, at the first opportunity, to press forward with the reform of the administrative provisions of the Customs Act with this end in view, and believe that the modifications which they have had in mind and which have been discussed with representatives of your government will stabilize and safeguard the value of the mutual concessions in rates of duty incorporated in to-day's agreement.
In revising the methods of determining the value of merchandise for duty purposes the following principles, among others, will be incorporated in the contemplated amendments to the Customs Act of Canada:
(a)	The value for duty established under authority of section 36 (2) will not include an advance for selling cost or profit greater than that which in the ordinary course of business under normal conditions of trade, is added, in the ease of goods similar to the particular goods under consideration, by manufacturers or producers of goods of the same class or kind in the country of export.
(b)	No rate of discount established under section 37 will operate to increase the value for duty of any goods beyond the price at which such or similar goods are freely offered for sale to purchasers at the time and place of shipment in the country of export, in the usual quantities and in the ordinary course of trade.
(c)	In the case of any value for duty which may be established under authority of section 43, other than those provided for in schedule I of the trade agreement signed to-day, opportunity will be afforded for appeal to the tariff board respecting any such Value in order to ascertain and make public the finding whether, to what extent, and for what period, such_ value may be required to prevent the importation of the goods into Canada from prejudicially or injuriously affecting the interests of Canadian manufacturers and producers.
Pursuant to these undertakings the amendments in the bill are placed before the house for consideration and approval. There will be an amendment to section 36(2). May I explain that section 36 of the Customs Act is that section which provides that the value for duty purposes of goods imported into Canada shall not be less than the cost of production in the country from whence imported, together with a reasonable advance for selling cost and profit. Exporters in the United States and importers in Canada have complained during the past few years that in determining the cost of production in the country of origin and a reasonable advance for selling cost and profit the Department of National Revenue have arrived at an unreasonably high value for duty purposes, the result
being that if an ad valorem rate were applicable it worked out to too large an amount. Also, provisions of section 6 of the Customs tariff were brought into play, with the result that a special or dumping duty was payable. We propose to amend section 36(2) so that in future the advance added to the cost of production for selling cost and profit will not be unreasonable. Specifically it will not be greater than that amount which in the ordinary course of business and under normal conditions of trade is added in the case of goods similar to the particular goods under consideration, by manufacturers or producers of goods of the same class or kind in the country of export.
Section 37 of the customs tariff is the section which provides that the governor in council may fix a discount from the published or list price. Discounts were fixed in the case of three commodities, automobiles, radios and softwood doors. The discounts were smaller than the discounts which were allowed in the country of origin in these cases, with the result that the manufacturers of these articles in this country were given a higher degree of protection than the tariff schedules contemplated. This provision will make that impossible in the future. In fact, the amendment to the Customs Act which I will lay before the house is for the repeal of section 37. It is proposed to eliminate it from the Customs Act altogether.
The other amendment namely to section 43 is very important. I may say that not only in the trade agreement with the United States did we undertake to propose these amendments but we did the same thing in the settlement of the trade dispute between this country and Japan. In the letter from the Prime Minister of Canada to the Japanese government appear these words in clause 5:
Opportunity will be afforded for appeal to the Tariff Board of Canada respecting any value for duty which may in future be established under section 43 of the Customs Act. In the event of such an appeal the value for duty in force will, upon the expiration of three months after the date of appeal, cease to have any force or effect unless the tariff board, following a public inquiry, finds that such value or some lower value is required to prevent the importation of the goods into Canada from prejudicially or injuriously affecting the interests of Canadian producers or manufacturers. If a lower value is found by the tariff board to be appropriate, such lower value will promptly be made effective.
The amendment before the house implements this undertaking as well as that given to the United States of America. These three amendments are perhaps the most important provisions of the bill, the second reading of which is now being moved.
Customs Act-Mr. Ilsley
[Stage Direction]
There are some miscellaneous provisions which it may not be necessary to refer to now in any detail. They are designed to correct certain unworkable or undesirable features of the act as it exists at the present time, and can be discussed more fully in committee.
There is, however, one class of amendments to which I must refer specifically. Those are the amendments which refer to the territorial waters of Canada. The bill as printed defined the territorial waters of Canada for certain purposes, but after the bill was printed certain representations were made on behalf of the government of the United Kingdom, and as a result and on a further consideration of the amendments by the department it has been decided not to put forward those amendments at the present time. A motion will accords ingly be made for the deletion from this bill of the sections which have to do with the territorial waters of Canada. It may and probably will be necessary later in the session, when the matter has been more fully considered', to introduce a bill into this house which will deal thoroughly and fully and satisfactorily with that question. It is one which presents a great many difficulties and has a great many ramifications, but at the moment it is not proposed to ask the house to enact the sections which refer in any way to the territorial waters of Canada.
I think, Mr. Speaker, that that is all I need to say at this stage of the legislation. If the house desires to go fully into these various sections, it can be done in committee of the whole.
Hon. C. H. CAHAN (St. Lawrence-St. George):: Mr. Speaker, the Minister of
National Revenue (Mr. Ilsley) has referred to the most important amendments to the Customs Act which are proposed in this bill. As stated by him, they are the repeal of section 36, subsection 2, of the Customs Act, the repeal of section 37, the amendment of section 41, subsection 1, clause (e), and the addition to section 43 of a new subsection 3.
I shall not refer to the sections dealing with the Territorial Waters Act because I understand from the minister that these sections will be struck from the bill and a new bill will probably be introduced this session dealing with these matters, when there may be a full discussion. Otherwise I should have dealt with them at some length.
The amendments which are now proposed, as the minister states, are proposed to carry into effect two collateral agreements made by this government, one with the government of the United States, which is collateral to the trade agreement made with that country, and the second to an agreement made by

the Prime Minister, as Secretary of State for External Affairs, with the government of Japan.
The minister has read the letter of Mr. H. H. Wrong, Canadian Charge d'Affaires, addressed to the Hon. Cordell Hull, Secretary of State of the United States, dated November 15, 1935, and the extract from that letter to which I desire particularly to refer is this:
I am directed by the Secretary of State for External Affairs to state for the information of your government that it is the intention of His Majesty's government to invite parliament at its next session to enact legislation amending the provisions of the Customs Act presently fixing the methods of determining the value of merchandise for duty purposes, ...
The house will note the deference to parliamentary institutions and to the rights of parliament in this letter, which states that it is the intention of the government to invite parliament at its next session to enact certain amendments to the Customs Act, but in another letter which I shall read shortly, addressed to the Japanese government, it will be noted that that condition is omitted from the letter. This implies that the collateral agreement made with the United States is subject to the approval of parliament, but it will be noted later in the Prime Minister's letter to the Japanese government, which was in part read by the Minister of National Revenue, that no such reservation of the rights of parliament is made, and that the Prime Minister in his letter to the Japanese minister assumes to exercise supreme authority without reference to or regard for the legislative jurisdiction of the parliament of Canada. This, as will appear later, is a very significant omission in the letter addressed to the Japanese minister.
In order that we may more clearly understand the nature of these amendments I shall refer to certain sections of the existing Customs Act. Section 36, subsection 2, of the present act, reads as follows:
(2) Provided that the value for duty of new or unused goods shall in no case be less than the actual cost of production of similar goods at date of shipment direct to Canada, plus a reasonable advance for selling cost and profit, and the minister shall be the sole judge of what shall constitute a reasonable advance in the circumstances and his decision shall be final.
That provision with regard to the exercise of a certain judicial discretion by the Minister of National Revenue has characterized our customs legislation for many years past. The change proposed in the letter of the Canadian charge d'affaires of November 15 last to Mr. Hull is as follows:
(a)	The value for duty established under authority of section 36 (2) will not include

Customs Act-Mr. Cahan
an advance for selling cost or profit greater than that which in the ordinary course of business under normal conditions of trade, is added, in the case of goods similar to the particular goods under consideration, by manufacturers or producers of goods of the same class or kind in the country of export.
That proposition to Mr. Hull certainly is that the value for duty will not include an advance over the selling cost or profit greater than that which in the ordinary course of business under normal conditions is added, in the case of goods similar to the particular goods under consideration by the manufacturers or producers of goods of the same class or kind in the countiy of export. I suggest that it does include the selling price of goods for export and does not apply to goods sold for consumption in the United States. There is a very distinot difference between the low costs or prices at which United States exporters sell for export and the higher costs or prices at which they sell for consumption in their own country. I may deal with that later. The amendment proposed in this bill is to carry into effect the Prime Minister's engagement with the United States, since the charge d'affaires at Washington was acting on behalf of the Prime Minister as Minister of External Affairs in writing to Mr. Hull. The proposed amendment reads:
36. The value for duty of new or unused goods shall in no case be less than the actual cost of production of similar goods at date of shipment direct to Canada plus a reasonable advance for selling cost and profit, such advance not to be greater than that which in the ordinary course of business under normal conditions of trade, is added, in the ease of goods similar to the particular goods under consideration, by manufacturers or producers of goods of the same class or kind in the country of export.
That section, will serve Canadian interests if it is cleauTy and distinctly stated that the addition or advance should in no case exceed that which is added by manufacturers or producers of goods of the same class or kind in the country of export for consumption and use in the country of export. A considerable difference is made by manufacturers in the United States between the prices which they charge when they wish to sell in competition with the industries of another country and the prices which they charge to dealers for consumption and use in their own country.
It will be noticed that in the section now proposed the words "and the minister shall be the sole judge of what shall constitute a reasonable advance in the circumstances and his decision shall be final" have been eliminated from the existing text. These words are struck out by the terms of the bill now
before the house, but I should like to suggest to the minister that when we enter upon a full discussion of these sections in committee of the whole he should be prepared to state who is to determine the component parts of the fair market value for duty under the engagement which the Prime Minister has made with the United States if he, as Minister of National Revenue, is no longer authorized to determine what is "the actual cost of production of similar goods at date of shipment direct to Canada, plus a reasonable advance for selling cost and profit." Is the proposed change an indication on the part of the Prime Minister of his lack of confidence in the Minister of National Revenue, or his lack of confidence in the advisers and expert assistants of the Minister of National Revenue, or his lack of confidence in the good faith of all combined? Possibly it is the intention of the government that subsection 4 of section 35 will still apply. We should like an explanation of this when we come to discuss the exact terms of the proposed amendment.
Section 35 reads as follows:
35. Whenever any duty ad valorem is imposed on any goods imported into Canada, the value for duty shall be the fair market value thereof, when sold for home consumption, in the principal markets of the country whence and at the time when the same were exported directly to Canada.
2.	In the case of importations of goods the manufacture or produce of a foreign country, the currency of which is substantially depreciated, the value for duty shall not be iess than the value that would be placed on similar goods manufactured or produced in Great Britain and imported from that country, if such similar goods are made or produced there.
3.	If similar goods are not made or produced in Great Britain, the value for dpty shall not be less than the value of similar goods made or produced in any European country the currency of which is not substantially depreciated.
4.	The minister may determine the value of such goods, and the value so determined shall, until otherwise provided, be the value upon which the duty on such goods shall be computed and levied under regulations prescribed by the minister.
I understand that it is not proposed to amend or to repeal that section. If the section is still to stand and is to be acted upon by the minister and bis expert advisers, then I suggest that the engagement or undertaking made by the Prime Minister through the charge d'affaires at Washington with Mr. Hull cannot be carried out in good faith.
The letter dated November 15, 1935, from the Canadian charge d'affaires to Hon. Mr. Hull, Secretary of State of the United States, also declared that:
Customs Act-Mr. Cahan

(b)	No rate of discount established under section 37 will operate to increase the value for duty of any goods beyond the price at which such or similar goods are freely offered for sale to purchasers at the time and place of shipment in the country of export, in the usual quantities and in the ordinary course of trade.
The government propose to solve questions of "price," "usual quantities" and "ordinary course of trade" by repealing section 37 in its entirety.
A most important amendment is proposed to section 43 of the Customs Act. That section now reads as follows:
43 (1) If at any time it appears to the satisfaction of the governor in council on a report from the minister that goods of any kind not entitled to entry under the British preferential tariff or any lower tariff are being imported into Canada either on sale or on consignment, under such conditions as prejudicially or injuriously to affect the interests of Canadian producers or manufacturers, the governor in council may authorize the minister to fix the value for duty of any class or kind of such goods, and notwithstanding any other provision of this act, the value so fixed shall be deemed to be the fair market value of such goods.
(2) Every order of the governor in council authorizing the minister to fix the value for duty on any class or kind of such goods, and the value thereof so fixed by the minister by virtue of such authority, shall be published in the next following issue of the Canada Gazette.
These provisions of section 43 still stand, despite the amendments proposed in this bill. This government, in its letter of November 15, 1935, to the Secretary of State of the United States, declares that:
(c)	In the case of any value for duty which may be established under the authority of section 43, other than those provided for in schedule I of the trade agreement signed today, opportunity will be afforded for appeal to the tariff board respecting any such value in order to ascertain and make public the finding whether, to what extent and for what period, such value ihay be required to prevent the importation of the goods into Canada from prejudicially or injuriously affecting the interests of Canadian manufacturers and producers.
That letter from the government of Canada to Mr. Hull, Secretary of State of the United States, did not override the well considered policy of successive governments in Canada with regard to hearings before the successive tariff boards. It is quite consistent with that letter that an opportunity should be afforded to any dissentient to appeal to the tariff board and that, as hitherto, an inquiry should be had by the tariff board, a report made by that board to the minister, and that report laid upon the table of the house, leaving parliament free in the exercise of its discretion as to the extent

to which that report and that finding should be enacted in the customs legislation of Canada. In other words that letter merely implied that an opportunity would be afforded for an appeal to the tariff board in respect of the value for duty fixed by the minister under section 43, subsection 1, and that the finding of the tariff board would be available for the consideration of the minister and of the government. There is no suggestion in the letter of November 15, 1935, that the tariff board would be empowered to make a final decision overruling the decision of the Minister of National Revenue previously given under the authority of an order in council of his government. But when the government came to consider the controversy which had arisen with the Japanese government it made concessions to the Japanese government which are not in accord with the policy which the previous governments of this country have hitherto followed in relation to investigations and reports by the successive tariff boards. In order to comply with the demands of the Japanese government the Prime Minister went further, and without legislative authority, without any suggestion that parliament had any right or discretion in the matter, he gave a pledge which I suggest is unprecedented in any previous government's dealing with the Customs Act and the customs regulations of this country.
The letter of December 26, 1935, from the Prime Minister to the Japanese government contains the following:
Sir.-I have the honour to inform you that the Canadian government, in accordance with its general policy respecting trade and tariff matters, has decided to make the following modifications in its customs regulations.
I suggest that if that bad been an accurate statement it would have Tead:	"I have the
honour to inform you that the Canadian government, dealing in an unprecedented manner with the general policy which has hitherto prevailed respecting trade and tariff matters, has decided to make certain modifications in the customs regulations," for the special benefit and advantage of Japanese producers and exporters.
The letter proceeds:
Opportunity will be afforded for appeal to the tariff board of Canada respecting any value for duty which may in future be established under section 43 of the Customs Act. In the event of such an appeal the value for duty in force will, upon the expiration of three months after the date of appeal, cease to have any force or effect unless the tariff board, following a public inquiry, finds that such value or some lower value is required to prevent the importation of the goods into Canada from prejudiciously or injuriously

Customs Act-Mr. Cahan
affecting the interests of Canadian producers or manufacturers. If a lower value is found by the tariff board to be appropriate, such lower value will promptly be made effective.
Even there, although that pledge implied that there should be an. appeal to the tariff board and that the tariff board should have the right of investigation, the right of making a finding and the right of overruling and destroying the effect of an order in council of the government and a decision of the Minister of National Revenue under that order in council, still it might have left the impression that such lower value would be promptly made effective by a submission to parliament thus safeguarding the rights of parliament. But certainly that is not the clear and distinct pledge which was intended to be made by the Prime Minister on that occasion. I ask the minister, in all sincerity: When did it become the general policy of the government of Canada that the value for duty of imported goods should be finally fixed by the tariff board of Canada? When, in the past history of customs regulations, under either the previous tariff board or the present board, did it ever become the general policy of Canada that the fixing of its tariff should be taken away from parliament and vested in a tariff board appointed either under the old tariff board act or under the present act? I suggest that the answer to that question is that it never became the general policy but the special policy of this government only when the Japanese government made an unprecedented demand, in compliance with which this government suddenly decided to make concessions to Japan which were unprecedented in the tariff history of this country.
When goods are imported into this country it is provided in section 38 of the Customs Act that the customs appraisers shall, by all reasonable ways and means in their power, ascertain, estimate and appraise the true market value of the goods at the time of exportation and in the principal markets of the country whence the same have been imported into Canada. Then it is provided in subsection 4 of section 38 that the board of customs may review the decision of the appraisers as to the fair market value of goods for duty purposes. Section 11 of the Tariff Board Act of 1931 provides that whenever in any act of parliament the board of customs is mentioned or referred to, the tariff board shall be substituted therefor. Upon the insistence of the present Prime Minister during the debate on the Tariff Board Act these words were added to subsection 2 of that section:
Any right of appeal from decisions of the board of customs shall continue as provided by the Customs Act.
The present Prime Minister, then leader of the opposition, was then insistent that there should be no radical change of policy; that the tariff board, substituting for the customs board, upon investigation might render a report, but that such report would be valid and have force and effect only when approved by the Minister of National Revenue. So I repeat, lest we forget it, that the present Prime Minister was most insistent that the decisions of the tariff board should not be final. Subsection 4 of section 38 of the act, therefore, as really in effect, amended by the Tariff Board Act, and omitting the irrelevant words, may be properly read as follows: "The tariff board may review the decision of any appraiser or collector as to the fair market value of goods for duty purposes, and the decision of the tariff board in regard to the value of goods for duty purposes in any case or class of cases shall, when approved by the minister, be final and conclusive except as otherwise provided in this act." We are cow inserting a new provision, under which that finality which was expressed only by the approval by the minister of the decision of the tariff board shall now come into effect without any reference to the minister, to the governor in council or to the parliament of Canada.


Mr. ILSLEY:: If the hon. gentleman will permit me, that is only as to valuations under section 43.


Charles Hazlitt Cahan: Well, we are dealing with valuations for duty and that is all section 38 previously dealt with.


James Lorimer Ilsley: No, section 38 (4) deals with valuations under an entirely different section; it deals with valuations under section 35.


Charles Hazlitt Cahan: Perhaps so; we will discuss that when we come to it. I am now dealing with this point, and the minister cannot contradict me; it is now provided by this proposed amendment that the decision of the tariff board, if a decision is given, is final without regard to the minister or the views of his technical advisers and without regard to any approval or disapproval by the government or parliament of Canada. This bill provides that section 43 of the Customs Act is to be amended by adding a new subsection 3. I think 1 have read section 43 into the record; under subsection 2 of section 43 it is provided that when an order of the governor in council authorizes the minister to fix a value for duty purposes, then the value thereof so fixed by the minister, by virtue of such authority, shall be published in the next following issue of the Canada Gazette. Such fixation in itself is a finality
Customs Act-Mr. Cahan

under the sections as they now read. The proposed new subsection 3 of section 43 reads:
(3) In the case of any value for duty established under the provisions of this section ...
That is, the prior subsections of section 43.
. .. after the first day of January, 1036, any interested party may apply to the tariff board by way of appeal therefrom. The tariff board shall thereupon conduct a public inquiry and issue its declaration as to whether such value or some lower value is required and for what period the same is required to prevent the importation of the goods into Canada from prejudicially or injuriously affecting the interests of Canadian producers or manufacturers.
I have no objection to that, but the amendment proceeds:
If a lower value is found by the tariff board to be appropriate, such lower value will become at once effective. If appeal is made to the tariff board such value authorized by the minister shall in default of any declaration by the tariff board in the meantime cease to have force and effect upon the expiration of three months from the date of any such application to the tariff board.
The explanatory note for this new subsection states:
This amendment is rendered necessary to comply with undertakings entered into with the United States and Japan.
I suggest that this note might have been modified to this extent, that in order to comply with the undertaking entered into with the United States this amendment is not necessary, but it is necessary, and only necessary, to implement the undertaking entered into between the Prime Minister and the Japanese minister.
I should like to remind hon. members that before the great war Germany made a demand upon Canada; in fact, if I may use the vulgar phrase, Germany attempted a similar bluff against Canada, in the days when Mr. Fielding, as Minister of Finance, was in charge of tariff legislation. But Mr. Fielding had sufficient determination and courage to call that bluff, not only with the hearty support of the parliament of Canada but with the unanimous approval of the people of Canada. No government of Canada ever before accepted such humiliating conditions as those demanded by Japan and expressed in this proposed amendment.
Under section 43 the governor in council, on the report of the minister, with the assistance and advice of the expert officers of his department, must first be satisfied that goods are being imported into Canada under such conditions as prejudicially or injuriously to affect the interests of Canadian producers or manufacturers. That frequently must lead to

a prolonged investigation of fact, with the assistance of such expert advice as can be obtained by the minister not only from his own department -but from the Finance department and the Department of Trade and Commerce. Then the governor in council, having been so satisfied as to the facts, under the present act authorizes the minister to fix the value for duty of any class or kind of such goods. But as provided in the amendment, any interested party, the Japanese government or any Japanese exporter, is thereupon authorized to appeal to the tariff board from the decision of the government and of the minister, and on such appeal the tariff board may, as provided in this amendment, conduct an inquiry and declare its decision overriding the prior decision of the government and of the minister, and the declaration of the tariff board when so made is final.
I should like very much to know what would be the opinion of the hon. member for Ontario (Mr. Moore) with regard to such a radical change as that in the tariff legislation of this country. I should like to hear that opinion, in view of the long study and investigation of customs matters which he made under a previous government. If this proposed amendment is enacted, then neither the government nor parliament may revise the declaration of the tariff board as to the value for duty, even though such declaration overrides the value fixed by the minister with the approval of the privy council of Canada. This amendment presumes that both the government and the minister have acted improperly. It presumes that they have not investigated the facts as they were in duty bound to do, or that they have not in good faith fixed the value for duty under the statute as at present existing. Furthermore the amendment provides that in default of any declaration by the tariff board within three months from the date of application to the board, then the value for duty fixed by the minister with the government's approval shall cease to have force and effect. In other words, for the first time in the history of this country legislative authority is given to a tariff board and it may decide by its own default. I would like to suggest that in oriental countries "saving of face" is essential to the preservation of the reputation of and respect for governments and individuals in all social, political and commercial dealings. "Saving of face," as it is known in the east, preserves one's own selfrespect by ensuring the respect of others with whom one has either political, commercial or social dealings. I am confident that when the Japanese government received the Prime Minister's letter of December 26 last, and again

Customs Act
when they received a translation into the Japanese language of this section of the bill which is now before the house, the members of that government and the Japanese manufacturers and merchants interested found it difficult to restrain their personal feelings of derision, or their secret contempt for a government and a country which would prove so complacent under the circumstances. We are next-door neighbours to the great empire of Japan, and we shall have in the future even more complicated political and commercial relations with its government and its people, but I am convinced that it was a sorry day for Canada when the Prime Minister wrote the letter of December 26 last, and that if this amendment is enacted by parliament in its present form it will seriously impair, if not preclude, the possibility of the Canadian government maintaining in the future this country's just rights in any political or commercial controversy which may hereafter arise between Japan and Canada.
I certainly regret, and I think that upon careful study of the facts a great number, even a majority of the members of this House of Commons, although they may not feel free to express their opinion, will regret the letter which was sent to the Japanese government dealing with this matter, and which has bound this country to make certain concessions in favour of Japan that are not in accord with the existing legislation of this country, and which I think will tend to place this country for a long time in an inferior position in dealing with the government of the great nation of Japan, which is almost our neighbour, being divided from us only by the North Pacific ocean.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. McPhee in the chair.
Section 1 agreed to.
On section 2-Territorial waters of Canada.
James Lorimer Ilsley: I have a motion to delete the section.


Mr. EULER:: I move:
That sections 2, 3, 9, 12 and 13 of the bill be deleted, and that the numbers of the remaining sections be changed as follows:
Section	4	to	section	2.Section	5	to	section	3.Section	6	to	section	4.Section	7	to	section	5.Section	8	to	section	6.Section	10	to	section	7.Section	11	to	section	8.Section	14	to	section	9.Section	15	to	section	10.Section	16	to	section	11.Section	17	to	section	12.12739-129	
Section 18 to section 13.
Section 19 to section 14.
Section 20 to section 15.
Section 21 to section 16.


Mr. LAWSON:: Are we to understand that the information contained in the explanatory notes is accurate? If so, section 2 appears to be covered by the mere matter of dropping the provision with respect to territorial waters. My understanding is that the reason the amendment is asked for is that it is alleged there is difficulty in handling prosecutions, because the master of a vessel is not required to keep records specified in section 3 of the bill.


James Lorimer Ilsley: Well, that was the reason for proposing the amendment. There is a reference in section 2 and further references in other sections to "territorial waters of Canada" to be deleted. For reasons which I could discuss at the present time, although I do not think such a discussion would be necessary, it was thought best to deal in one bill with all these changes in connection with territorial waters of Canada. The considerations are important. Representations were made by the government of the united kingdom, and as I said in my remarks on second reading it would be better not to use the phrase "territorial waters of Canada." For that reason we are now taking out all the sections in which the phrase occurs, and will later bring in a bill dealing with them all together.


James Earl Lawson: This session?


James Lorimer Ilsley: Yes.


Mr. BENNETT:: The real point the hon. member made was that there is also a provision with respect to manifests.


James Lorimer Ilsley: Yes, I understand.


Richard Bedford Bennett: Regardless of territorial waters. Surely we do not wish to lose that.


James Lorimer Ilsley: It will not be lost; it will be in the bill to be introduced.


Richard Bedford Bennett: Would that be a proper place for it?


James Lorimer Ilsley: I think so, because the provision in the section is that the master of every vessel arriving in the territorial waters of Canada from a port or place outside of Canada and of every vessel found within the territorial waters of Canada shall do so and so. There would be no objection to making some provision with respect to manifests carried by vessels within the three mile limit.


Richard Bedford Bennett: I had that in mind.


James Lorimer Ilsley: But if we are going to do what we hope to do the obligation to carry

Customs Act

manifests will extend to certain vessels within the nine mile belt outside the three mile limit.


Richard Bedford Bennett: The only point I make is as to whether the minister desired to retain the benefit of what he suggests within what we might call the narrow three mile limit, rather than the twelve mile limit established by the decision of the privy council.


James Lorimer Ilsley: I understand the point made by the right hon. gentleman, but it would involve what is sometimes described as taking two bites to a cherry.


[Stage Direction]
Amendment agreed to.
George Washington McPhee: Then,
sections 2 and 3 of the bill are deleted, and section 4 becomes section 2.
On section 4 (now section 2)-Entries by bill of sight.


James Lorimer Ilsley: There seems to be a rule of some standing that sections are to be amended in such a way that the whole section is repeated in the act. That point has been brought to our attention.


Richard Bedford Bennett: That is done for convenience in administration.


James Earl Lawson: Are we dealing with section 4 of the bill?


James Lorimer Ilsley: Yes, section 4.


George Washington McPhee: It is
section 2, under the amendment.


William Daum Euler: I move:
That all the words after the word "is" in line twenty-three be repealed, and the following substituted therefor: "repealed and the following subsection is substituted therefor:-
24. (1) If the importer of any goods, or the person authorized to make the declaration required with regard to such goods, makes and subscribes a declaration before the collector or other proper officer, that he cannot, for want of full information, make perfect entry thereof, and takes the oath in such cases provided, then the collector or officer may cause such goods to be landed on a bill of sight for the packages and parcels thereof, by the best description that can be given, and to be seen and examined, by such person and at his expense, in the presence of the collector or other proper officer, or of such other officer as is appointed by the said collector or other proper officer, and to be delivered to such person, on his depositing in the hands of the collector or officer a sum of money sufficient in the judgment of the collector or officer to pay the duties thereon."


James Earl Lawson: Is it the view of the minister that the effect of this amendment is to make applicable to specific duties the same provisions as were previously applicable to ad valorem duties only?
I Mr. Ilslev.]


Richard Bedford Bennett: It applies to all oases.


James Earl Lawson: Whereas before it applied only to ad valorem duties.


James Lorimer Ilsley: Yes; the explanatory note makes it clear. When the section was enacted special or dumping duty, sales tax and special excise tax on importations were not in existence. It is necessary now on entering goods at customs to declare their value whether the duty is ad valorem or specific.


Richard Bedford Bennett: Quite so.


James Lorimer Ilsley: That is all that the section does.


Richard Bedford Bennett: It makes all sight item goods liable to treatment in that way.


James Lorimer Ilsley: Yes.


Richard Bedford Bennett: And before it was only ad valorem.


James Lorimer Ilsley: Yes.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 5 (now section 3)-Cost plus reasonable profit.
George Washington McPhee: Section 5 now becomes section 3. Shall section 3 carry?


Richard Bedford Bennett: I think the minister
and the committee should give some consideration to the observations made by the hon. member for St. Lawrence-St. George (Mr. Cahan).


James Lorimer Ilsley: I agree with the right
hon. leader of the opposition that the criticism of the hon. member for St. Law-renee-St. George is readily understandable, but I want to say just a word about these three sections, 35, 36 and 43. We aTe not dealing with section 35 but it is the basis of our valuations for duty purposes.


Richard Bedford Bennett: It is the first that deals
with valuations.


James Lorimer Ilsley: Yes, and it is the basis.
In ninety-nine cases out of 100, in 999 cases out of 1,000, the value will be fixed under section 35, and this is what the section says:
Whenever any duty ad valorem is imposed on any goods imported into Canada, the value for duty shall be the fair market value thereof, when sold for home consumption, in the principal markets of the country whence and at the time when the same were exported directly to Canada.
Sections 36 and 43 are modem sections. They are applied only in exceptional cases.

Customs Act
The normal method of valuation for duty purposes is under section 36. We try to arrive at the fair market value of the goods when sold for home consumption in the principal markets of the country of origin at the time the goods are exported directly to Canada. The hon. member for St. Law-rence-St. George was quite right when he said that the minister's decision was final on the question as to what was the fair market value of the goods in the country of origin.


Richard Bedford Bennett: That is under section
35.


James Lorimer Ilsley: Exactly, and it is clear that it is final when the provisions of section 38, subsection 4, which the hon. gentleman read to the committee, are consulted. There is under section 38, subsection 4, an appeal to the tariff board, but the determination of the tariff board-, called the board of customs, under section 38, subsection 4, is subject to the approval of the minister. That is the normal course.
When we come to sections 36 and 43, it is true that we are departing from what has been the rule in the past. The rule in the past has been that under sections 36 and 43 the minister's decision as to value shall be final. We are changing that. That is a concession which we are making to the United States and to Japan. It is a concession which I do not think should cause any apprehension.


Charles Hazlitt Cahan: When did you make it to
the United States?


James Lorimer Ilsley: The hon. gentleman takes
the position that we did not make it by the note to the United States, but I submit that the provisions of the note to the United States to which the hon. gentleman referred are subject to two interpretations. It was stated in the note:
Opportunity will be afforded for appeal to the tariff board respecting any such value in order to ascertain and make public the finding whether to what extent and for what period such value may be required to prevent the importation of the goods into Canada from prejudiciously or injuriously affecting the interest of Canadian manufacturers and producers.
I am quite confident that -the addressee of that letter would take it that we would consider ourselves bound by the finding of the tariff board, even if we did not say so in express terms; at least that is the whole spirit of the provision. I do not think it was meant that there would be merely an idle appeal which would have the effect of giving some publicity to the matter. I think it meant that there was to be an effective 12739


appeal, and if there was to be an effective appeal, a provision such as this is necessary in order to make the appeal effective.


Charles Hazlitt Cahan: But that is an entire reversal of the policy that has prevailed under every government in Canada since the time when we first imposed customs duties. I can understand an appeal being made in order that all the facts may be elicited and brought to the attention of the government, through the minister, for the final consideration of the government or of parliament, but I certainly do not place upon this section the same interpretation which the hon. gentleman does.


James Lorimer Ilsley: The section may be ambiguous in that respect. It is an extraordinary section. It gives the minister power to make arbitrary valuations.


Charles Hazlitt Cahan: An extraordinary section,
and therefore it makes an extraordinary precedent.


James Lorimer Ilsley: It gives him power to make arbitrary valuations that do not necessarily have any relation whatsoever to the fair market value of the goods or their cost of production. The minister or the government may, if they wish, increase the protection a thousandfold to protect certain interests in this country without any rhyme or reason or principle at all. I was not engaged in the negotiations between this country and the United States, but I assume that the negotiators of the United States said: If you are going to continue to retain this power to fix these values we want a judicial tribunal to have the last say as to their necessity.


Charles Hazlitt Cahan: I think if that suggestion
were really made to any minister of the Canadian government- there is a full and complete retort. That criticism in respect of fixing values for duty purposes never could emanate from a minister of the government of the United States who had any respect for the example which that country sets to other countries.


Richard Bedford Bennett: May I suggest to the
minister that it must be taken for granted that when this letter was under consideration as a matter of negotiation, those advising the United States had full knowledge of what our decisions were. As the law stood there was the right of appeal to the tariff board because the act creating the tariff board substituted it for the old board of customs. Therefore it must be taken for granted that those who negotiated for the United States knew that they had the right of appeal to the board of customs on appraisals and matters of that sort, that board now being the tariff board
Customs Act

of Canada under the statute. We have a decision on that point by the Supreme Court of Canada. It is not -intended by the statute to confer either legislative powers or powers of finality upon the tariff board. That board exercises its powers subject to the approval of the minister.


James Lorimer Ilsley: It bad no powers.


Richard Bedford Bennett: That is the point I am
trying to make-and my hon. friend will say it is not unsound; I think it is the rule that governs the courts-that when two parties are negotiating and there have been decisions on the subject matter under negotiation, it is taken for granted that both know what construction has been placed by the courts of their respective countries upon the subject matter, and therefore it must be taken to be known by those who negociated for the United States that the Supreme Court of Canada had decided that the tariff board acting as a board of customs or a board of review, if you will, had no power of finality in dealing with these matters, but that that power rested with the government. As the minister says, under section 35, it is subject to the approval of the minister, which means the government, because all this is an extraordinary power, and it is predicated upon the assumption that it is used to give effect to the policy of the government with respect to particular matters. That is what has been giving me concern.
I think the second point made by the hon. member for St. Lawrence-St. George was a far more important one. It will be seen that the section which now becomes section 36 contains the words "goods of the same class or kind in the country of export." We all know that even in the days of free trade with Great Britain the export and domestic prices of goods were not the same. The reason given by whoever wrote the explanation to this bill is the reason which was always given in Great Britain, namely, that advertising charges and matters of that sort are cared for by the importer abroad and therefore the exporter is relieved from the burden. In connection with his trade at home he does a certain amount of advertising and has other overhead charges to meet, but when he ships abroad he is able to sell cheaper than he does at home. The explanation given in the bill goes into this rather fully and makes it quite clear. The hon. gentleman knows to what I refer. The explanation given to section 7 is as follows;
The change consists in the addition of the words underlined. As an example of conditions different though not unusual, an exporter may sell in the home market to consumers, dealers or wholesalers only, while for export he may sell to distributors, jobbers or dealers

who undertake certain marketing expenses not borne by the purchasers in the home market, but borne by the manufacturer, and in consequence the exporter may sell at a lower price and claim such lower price as a fair market value though it is not a value as actually sold for home consumption.
I think the point raised by the hon. member for St. Lawrence-St. George with respect to this matter was a perfect one. This becomes a matter of some significance when one considers possible competition with the home producer. If the standard of measurement is to be the price to the exporter, you have one set of considerations; if the domestic consumer's price is to be the standard, you have another set of considerations. The use of the word "export" in the last line of this section 36 would seem to me to indicate that the basis of price for comparison purposes is to be the export price from the United States to Canada of these goods. If that is so, it appears to me that the point raised is worthy of careful consideration.


Mr. MacNICOL:: I should like to make an observation or two in connection with this section. I have in mind at the moment the great number of companies in the United States which are equipping their plants with more advanced and much faster machinery. The manufacturers of these machines have still on hand a large number of new and unused machines of the same type as those that are now being thrown out of United States plants. Naturally, these can be sold at a lower price for export to this country and Canadian companies have brought in such machines which, they believe, will take care of the amount of production they have. In many cases the machines being imported are obsolete to a certain extent, especially when compared with the high speed equipment being installed on the other side of the line. As I understand this section, these machines would still be estimated for duty purposes at the cost of manufacture in the United States notwithstanding that they are obsolete to a certain extent.


James Lorimer Ilsley: Is the hon. member referring to new or unused machinery?


John Ritchie MacNicol: Yes.


James Lorimer Ilsley: Which is nevertheless obsolete?


John Ritchie MacNicol: Certainly. There is much unused equipment that is obsolete. You have only to visit plants in the United States manufacturing machinery to find that they have put out new lines of machinery to take the place of lines recently sold. They still

Customs Act
have in stock some unused machines of the lines recently sold and these would be obsolete when compared with the new machines.


William Daum Euler: Is the hon. member suggesting that these new machines which he calls obsolete should be permitted to come in at a price lower than the cost of manufacture?


John Ritchie MacNicol: Provided they are not manufactured in Canada, yes. A few days ago I visited a plant with a line of machinery nearly 800 feet long. Some of that machinery would come under this category when Canadian companies are compared with companies which are manufacturing similar lines in the United States and which have new equipment.
I do not see in this bill any protection against dumping. On the other side of the line and in other countries outside Canada there are many types of goods made in enormous quantities as compared1 with the production in Canada. I have in mind the manufactures of iron and steel and cast iron. I know of plants in the United States which melt approximately 500 to 1,000 tons of iron a day and which manufacture a line similar to that manufactured by plants in Canada melting only twenty-five to 100 tons a day. For instance, take the manufacture of motor car parts. What protection has the Canadian motor parts manufacturer who melts only twenty-five tons a day against the dumping of parts manufactured by a company in the United States melting 500 to 1,000 tons a day?
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock.



PRIVATE BILLS


[Stage Direction]
Bill No. 39, respecting The Northern Trusts Company.-Mr. Maybank.
Bill No. 40, respecting The St. Lawrence and Adirondack Railway Company.-Mr. Chevrier (Stormont).
Bill No. 41, respecting The Ottawa and New York Railway Company.-Mr. Chevrier (Stormont).
Bill No. 42, respecting The Trust and Loan Company of Canada.-Mr. Vien.
Bill No. 44, for the relief of Ruth Fitz-randolph McMaster-Mr. Jacobs.
Bill No. 45, for the relief of Agnes Mercer Daniels.-Mr. Jacobs.
Bill No. 46, for the relief of Gerald Thompson Miltimore.-Mr. McKay.
CUSTOMS ACT AMENDMENT The house resumed consideration in committee of Bill No. 11, to amend the Customs Act-Mr. Usley-Mr. Johnston (Lake Centre) in the chair.
On section 5 (now section 3)-Cost plus reasonable profit.
John Ritchie MacNicol: When the committee rose I had begun to make one or two observations in reference to section 5, which is the new section 36 having to do with cost plus reasonable profit. I was asked, by the Minister of Trade and Commerce, I believe, this question: Is the hon. member suggesting that these new machines which he calls obsolete-my words were, "obsolete to a certain extent"- should be permitted to come in at a price lower than the cost of manufacture? I believe I replied to that, "yes"; but I did not mean: Yes, lower than cost of manufacture. What I meant was: Lower than this section would call for. What I had in mind was that the following words are struck out of the section as it stood and do not appear in the new section:
...and the minister shall be the sole judge of what shall constitute a reasonable advance m the circumstances and his decision thereon shall be final.
These words, which have been deleted from the new section, constituted in my opinion a protection inasmuch as, on the one hand, they prevented this market from being flooded with cheap material and, on the other, did not prevent the importation at a reasonable price of machinery that would not be made in this country because of the small demand for it. The section as it stood would not prevent the importation of such machinery at a price which the minister would determine as representing a reasonable amount of profit over cost. In connection with the prevention of imports into Canada of material made in very large quantities, principally in the United States, at prices with which Canadian manufacturers cannot compete, I felt that the words that had been struck out afforded a certain amount of protection to Canadian employment. All I have in mind in the remarks I am making is the safeguarding as far as possible of employment in industry in Canada. Last week in Toronto I came across a circumstance which, I think, will illustrate my point. I am referring now to a well known line of faucets or taps or bibs used by plumbers and steamfitters, a fairly high class line which is made in this country and was sold to the trade at approximately S7.50 a pair. I am informed that similar lines are now brought into Canada and sold
Customs Act

here at $4 a pair. The Canadian employees of a company manufacturing a similar line of taps, faucets and bibs will be up against a loss of employment to the extent of such importations. Under the old section the minister was the sole judge of what constituted a reasonable advance, and his decision thereon was final. The minister had the power to prevent the dumping on the Canadian market of such material, whereas under the new section I do not see where employment is safeguarded to the same extent. Perhaps I have not interpreted the seotion properly, but I cannot see where under it the same protection is given to employment that was afforded under the old section. Perhaps the minister can enlighten me in that regard.


James Lorimer Ilsley: This amendment does not make any difference at all in principle in the section that heretofore existed. Section 36, as it has existed up to the present, provided that the value for duty should not be less than the cost of production plus a reasonable advance for selling cost and profit, and the only criticism was as to the method of administration of that section. The criticism of importers in Canada and exporters in the United States was that an advance was being added that was unreasonable, and that it was being added for the purpose of giving more protection to manufacturers in this country than the section itself contemplated. The only change that is being made is the provision that hereafter such advance is not to be greater than that which in the ordinary course of business, under normal conditions of trade, is added, in the case of similar goods to those under consideration, by manufacturers or producers of goods of the same class or kind in the country of export. There is a point as to the discretion of the minister being removed by the proposed amendment. The intention is that in case of a dispute as to whether a proper advance is being added to the cost of production in the country of origin, there should be a resort to the tariff board instead of to the minister, just as is done under section 43. I should like to point out that sections 36 and 43 are comparatively new sections which apply to a very small proportion of the importations into this country.
To meet specifically the points he has raised my hon. friend has approached the problem from two opposite starting points. In the first place he has suggested that the values for duty fixed for machinery which, though new or unused, is obsolete or nearly so, in future must be too high with that section in the Customs Act. That was the point my hon. friend was making before six o'clock.

Perhaps there may be some difficulty there in theory, but only in theory. The hon. gentleman will realize that if the machinery is not machinery of a class or kind made or produced in Canada that special duty, the dumping duty as it is popularly called, does not apply at all, so that any fear of dumping duty is out of the way and the problem is confined to the ad valorem rate which, in the case put, he fears might be reckoned on too high a value.


John Ritchie MacNicol: I have in mind item 427 of the tariff, which affords a protection of about 27i per cent.


James Lorimer Ilsley: But what would happen in practice would be this:	In all probability
we would take the invoice value. There would be no occasion for an investigation as to cost of production in the case put by the hon. member; as a matter of practice such an investigation would never take place. These investigations into cost of production take place, as a matter of practice, on the complaint of manufacturers in this country, who say that they are being subjected to unfair competition. If they do say that, we have to put in motion the machinery of investigation in the country of origin, and our investigators try to arrive at the cost of production there. But in the case put by my hon. friend his fears are purely fanciful, if I may express it in that way. It would never work out as he suggests.
Now, with regard to the point raised by my hon. friend just now, namely his fear that, with the ministerial discretion removed, the values may be fixed too low, I am unable to follow his reasoning. The minister is just as likely to fix the values too 'high as too low, and it is a question as to who is to fix them, whether the final court should be the minister or the tariff board. We think that for the comparatively rare cases that will arise under this seotion there is no objection to the tariff board having the final say instead of the minister.


Mr. STEVENS:: I hardly expected this
bill to get to committee to-day, and I have not under my hand certain material that I wished to bring to the attention of the minister and of the committee when dealing with this section. The point I wish to raise- and it is something that has been in my mind for a good many years-is that in the administration of customs affairs in Canada there has grown up a practice-I am going to put it rather crudely and sharply in order to bring out the point at once-of tariffs

Customs Act
being made by officials of the department. I will demonstrate to the minister what I mean, and I trust that in putting it in that way it will not be considered that I am attacking the officials of the department or the department as such, because I think it is a practice which has grown up over a great many years.
_ The committee will notice that by section 5 of the bill, which refers to section 36 of the Customs Act, part of section 36 is deleted. The minister read that section a moment ago, but I will read it again and perhaps indicate to the hon. member for Davenport another point of interest in connection with it. The operative part of this section has been retained; the part that has been dropped, for which another part has been substituted, is the qualifying part. In the part that remains we read the following:
The value for duty of new or unused goods shall m no case be less than the actual cost ot production of similar goods at date of shipment direct to Canada plus a reasonable advance for selling cost and profit ...
For the purpose of my argument I want to stop there and, by the way, in order to make clear something I shall say later on, the part that has been deleted, referring to the ministers control in the past, operated only when appeal was made to the minister. In other words the operative part of this section was administered by officials through departmental bulletins, not under the sanction of an order in council, not under sanction of the statutes, but as a part of the ordinary administration or administrative action of the officials. The reason I said a moment ago that I am sorry the subject is up now is that I had a short time ago a bulletin, I have forgotten the number, but if I remember rightly it was 4035, issued in 1933. I sent it away to get verification of prices of certain articles mentioned; therefore I do not have it here to present to the committee. This bulletin refers to certain classes of goods, certain types of rubber treated cloth, imitation leather; there is a technical term for it-some hon. member in the furniture trade may know what I refer to-pyroxylin I think it is. It describes a certain type of treated cloth which may be used as imitation leather. I think, for instance, railway car blinds are made of it. I cannot put my finger on the item without having the documents before me, but there is in the tariff an omnibus item in which several years ago a number of different kinds of commodities were included; part of the item is clothing, part is rubber treated cloth and part is this imitation leather, and so on. To my mind it should not be so included, but there it is. Now the department issued this
bulletin in 1933 fixing value for duty on about thirty or forty descriptions of this class of material, dividing them into certain classes and then subdividing them again by weight, and in this bulletin they fixed a value for duty, without any sanction by order in council but as an ordinary matter of administrative action. For this particular item a value of sixty cents was fixed. I am informed on good authority-and it was to verify that that I sent away for certain information-that this article can be purchased in the United States for twelve cents. There is only one manufacturer of it in Canada, that is Canadian Industries, a subsidiary of British Chemicals and of Duponts. That is British Chemicals, Canadian Industries and Duponts are all more or less interlocked, and there is pretty much of a cartel and division of territory.
I have now had a copy of this bulletin handed to me by some kind friend. It is bulletin No. 4035, and the tariff item is No. 532. The spelling of the word in this bulletin is wrong, it is "proxylin," but the correct spelling is, I believe, "pyroxylin." The official title of the bulletin is appraisers' bulletin No. 4035; the indexed subject is rubber-coated fabrics and pyroxylin coated fabrics and papers from the United States; it is signed by Robert Breadner, for the guidance of customs and excise officers, and refers to file No. 176210 and current values for duty. It then goes on to say:
From the information before the department, rubber-coated fabrics and pyroxylin coated fabrics and papers imported from the United States may be appraised under section 36 (2) of the Customs Act, in accordance with the following net prices-
Then there is a long list of prices; I am taking one on the back page:
Sheetings (bookbinding and novelties) five to eight ounces, sixty cents a pound.
That is an instruction to all collectors of customs that they must value this article coming into Canada at that price. I am told that this material is manufactured in Canada by Canadian Industries, and in the United States by Dupont. I am told also that it can be bought in the United States from the manufacturers for twelve cents and up. I am told that it can be landed in Canada duty paid, apart from this special valuation for duty, with the excess special charge and the poundage charge which amount to sixty-eight per cent, at these excessively high rates- sixty-eight per cent is pretty high-at around fifty cents. Nevertheless the bulletin says that it shall be valued at sixty cents at the point of shipment in the United States, which is of course absolutely wrong.
Customs Act

Now I come to the other point that I have already mentioned. While it is manufactured in Canada solely by Canadian Industries, it is manufactured in the United States by Duponts, the parent, or brother or sister company of Canadian Industries, but it is also manufactured over there by four or five other companies, so that there is competition in the buying market, but there is no competition in the selling market. Now, if the appraisers of the government fixed this price of sixty cents as a fair value by reference to Duponts in the United States, unquestionably the Dupont people would fix the value at a point which would suit the purposes of the affiliated company here. I do not think there is any question about that. But had a search been made of the different manufacturers in the United States I am satisfied that the department would have found an entirely different story.
That is only one illustration. I have not had time to check a number of others but I understand there are others in this bulletin, perhaps not quite as striking but more or less of the same kind. The minister will know what I am particularly labouring here, that apart altogether from the qualification in this clause, whether it is the new one or the old one, bulletins of this kind were sent out, I understand, quite frequently and as a matter of course. Now I stand subject to correction, but I shall have to be definitely shown that I am wrong-


James Lorimer Ilsley: You are right.


Henry Herbert Stevens: I think I am right. So far as I could see this bulletin had no sanction in an order in council or in any statute, except an assumed power under section 36 by the appraisers' division. What I want to suggest to the government is-and I wish the Prime Minister were in his seat, because this is a practical application of the doctrine he has frequently enunciated-that parliament shall not delegate its power recklessly. Certainly no official, no department or no branch of a department should be permitted to fix values for duty by issuing a bulletin, without a definite sanction by law and through an order in council.
The Prime Minister has frequently criticized the fixing of tariff rates by order in council, and in a measure I share his view, except to the extent that conditions may arise when it is necessary to take prompt action in order to stabilize a market. Such conditions would arise in connection with fruits and vegetables in the spring of the year, and under such circumstances fixation by order in

council may be justified. But certainly in connection with manufactured articles of this kind, among which are trench cloth, quarter lining, raincoat material, hospital sheeting, which no doubt is a rubber sheeting, combined sport fabrics, sheeting, drills, sateens, moleskins, sock linings and so on, values should not be fixed by bulletin.
May I say that I do not believe that condition is remedied by the amendment. I imagine that with the attention of the government drawn to the condition instructions will probably be issued to the effect that no more bulletins of the kind shall be sent out without sanction or authority by order in council. That would be the natural action. But as a matter of fact I understand this bulletin is now in force, and I was startled when I received that information. I had known of extreme powers being exercised, and particularly a few years ago when the late Mr. Breadner wras in charge, although I do not like to reflect upon a man who is no longer here. However, he had certain stem views. Under such circumstances too much is left to the decision or the whim of an official when he is left with authority to issue a bulletin of this kind. I believe the minister should have a careful examination made of all outstanding bulletins, of which I believe there are hundreds. I am speaking without a great deal of detailed knowledge, but I do suggest that an examination be made and the practice of fixing duties in that way should be abandoned.
Before leaving the subject we have been discussing may I direct the attention of the minister to item 532 of the tariff which covers the class of goods to which I have been referring. In that item we shall see how we have brought into one item a mass of unrelated articles such as clothing, wearing apparel and articles, made from woven fabrics, and all manufactures, wholly or partially completed composed wholly of cotton n.o.p.; fabrics wholly of cotton, coated or impregnated, n.o.p., 25 per cent, 30 per cent and 35 per cent, plus a special duty per pound of two cents, three and a half cents and four cents.'
A few days ago I saw a number of samples of what is known as impregnated or coated cloth coming under this item, and I learned that a great variety of manufactured products come under it. It is associated with clothing, wearing apparel, articles made from woven fabrics and so on, so that a great many items come under it. To give a power such as that exercised in the bulletin to which I have referred is in my opinion all wrong.

Customs Act
My point in rising is to direct the minister's attention to the fact that while the amendment does limit the advance that can be placed upon valuation it does not remove what hitherto has given authority for the issue of these bulletins. I should like the minister to take special note of that fact, because I believe it is a purely administrative matter rather than one calling for an amendment. The section states:
Such advance not to be greater than that which in the ordinary course of business under normal conditions of trade, is added, in the case of goods similar to the particular goods under consideration, by manufacturers or producers of goods of the same class or kind in the country of export.
That simply means that they are permitted to add a fair profit and handling charges to the costs of production, and I can see no great objection to the provision. Nor do I believe anything is lost-and I do not make this observation in disrespect of this or any other minister-by the repeal of the former wording, namely:
-and the minister shall be the sole judge of what shall constitute a reasonable advance in the circumstances and his decision thereon shall be final.
As I understand it, the practice has been that the minister's decision in these matters was given only when there was an appeal to him against the normal activities and practices of the department. In that respect I should like to say-and I might as well say it now, while this clause is under discussion-that we have set up a tariff board to perform certain functions. Under the present chairman I believe the tariff board has proven to be an effective body. I believe it is a body which is winning public confidence, and such a body must have time to establish its record, its practices, its methods and its decisions before it is able to win public confidence. I do believe the present tariff board is doing that and I believe further that as an institution it is sound. Undoubtedly, however, the Minister of Finance has received great numbers of applications in connection with the present tariff. He will correct me if I exaggerate when I state that possibly he has received thousands of applications.


Mr. DUNNING:: Correct.


Henry Herbert Stevens: Obviously no Minister of Finance could cope with such a situation. I understand that he and those who have preceded him in office, in the few months preceding the presentation of a budget are literally swamped with delegations and with demands with which it is not humanly possible to deal. Nor could the minister's officers deal with
them, because the time they should be spending in studying the items and their merits is spent in receiving delegations. I venture to say that at this time the minister is almost at his wits' end to know how to deal with the applications made to him concerning the tariff. For these reasons while we are amending the act I believe we should extend to the tariff board the reference of matters pertaining to the revision of the tariff or changing rates of duty, customs and so on. My suggestion is that in that respect we should enlarge the powers and duties of the tariff board. I venture to say that if when this house sits as a committee of ways and means the Minister of Finance could come before it and say that the item had been studied by the tariff board, and that the board had made certain findings, such item would pass with very little question, unless a matter of policy with respect to general tariff duties was involved. On the other hand, if the minister is not fortified in that way, there will be more critical examination of the items that are presented to the house. So it will be far better if the annual revision of the tariff such as we have from time to time should be the product of the tariff board, and therefore I entirely agree with the minister in his observation of a moment ago that when there is any question under this particular section it should be settled by way of appeal to the tariff board. I think it is quite the proper thing to drop this final and unalterable decision of the minister in accordance with the act as it previously stood.


James Lorimer Ilsley: I thank the member for Kootenay East (Mr. Stevens) for bringing the case of pyroxylin to my attention. There is no question in my mind that there are cases such as that where the values were fixed some years ago. From the terms of the bulletin which he has read to the committee I should think the values must have been fixed at least three or four years ago.


Henry Herbert Stevens: It is dated Ottawa, April 22, 1933.


James Lorimer Ilsley: Yes. Undoubtedly it is desirable that the values fixed under section 36 should be reviewed as fast as we can deal with them. A great many of them have been reviewed and a number of them have been changed. The section is not so very much different from the one that was in existence at that time. Undoubtedly the officials of the department will have to do the work of investigating and fixing these values, and if anyone brings any mistake to the attention of the department the matter will certainly be gone into and the values brought into line with the
Customs Act

facts. If the cost of production in the United States was from twelve to fifteen cents, and the value was fixed at sixty cents, that was illegal action on the part of the departmental official who did this. It is for that very reason, because there were such extravagant advances on the cost of production, that this amendment to the section has been introduced. As the section stood, the minister had unrestricted discretion to say what was a reasonable advance over selling cost and profit. Now we provide by law that such advance shall not be greater than that which in the ordinary course of business under normal conditions of trade is added in the case of goods similar to the particular goods under consideration by manufacturers or producers of goods of the same class or kind in the country of export. This amendment is designed to meet the situation which the hon. member has placed before the committee. He is quite right in saying that a change in the law will not in itself be sufficient unless we actually go to work and apply it. All I can say is that it is certainly my purpose to try and get rid of all these extravagant valuations under section 36, just as we have got rid of most of them under section 43.
Since six o'clock I have given consideration to the criticism of the section that was voiced by the hon. member for St. Lawrence-St. George and the leader of the opposition, that the section does not make it sufficiently clear that the advance in question is to be the advance added when sold for home consumption.


Richard Bedford Bennett: Domestic consumption as distinct from export.


James Lorimer Ilsley: It was the intention that that was the advance to be added, and therefore I am going to ask my colleague the Minister of Trade and Commerce to move an amendment to make it quite clear.


William Daum Euler: I move, Mr. Chairman, that section 5 as printed, now section 3, be amended by adding at the end thereof within the quotation marks the words "when sold for home consumption."


Richard Bedford Bennett: That covers it.


[Stage Direction]
Amendment agreed to.
James Earl Lawson: Can the minister inform
the committee whether or not there was under the United States customs or tariff laws a provision similar to that of our section 36 as it now stands?


James Lorimer Ilsley: I have no knowledge of
that, but so far as I am aware there is no such provision.


James Earl Lawson: Might I assume, then,
that so far as this government is concerned there has certainly been no arrangement with the government of the United States that if there are such provisions in the United States laws suitable amendments will be introduced similar to those introduced here?


James Lorimer Ilsley: So far as I know there
have been no complaints whatsoever by Canadian exporters similar to those that were voiced by Canadian importers with regard to these provisions.


James Earl Lawson: I am afraid my hon.
friend has not conferred with many Canadian exporters. I shall not take up tihe time of the committee to detail some of the difficulties they meet with in endeavouring to export to the United States, but in addition to the point raised by the leader of the opposition and the hon. member for St. Lawrence-St. George, which has now been dealt with, there is in connection with this section something else which is giving me considerable concern, and that is the ambiguity of its language. I am sure the minister as a member of the bar is desirous that legislation should be clear and specific in its terms. I am much concerned as to what is the meaning of the words "in the ordinary course of business under normal conditions of trade."
I think in order to make my point clear to the minister I must review very briefly something that was said this afternoon. The minister pointed out this afternoon that the general section of the Customs Act with respect to values was section 35, which starts off by saying "whenever any duty ad valorem is imposed on any goods imported into Canada," certain conditions shall prevail. Now that must apply to all goods imported. Section 36 says, "The value for duty of new or unused goods shall in no case be less than the actual cost of production," and so forth. The minister stated that this section did not apply generally but applied only in a limited number of cases, if I understood him correctly. I think with respect to that he must be in error; surely if the section means anything at all it means that despite the provision with respect to any goods contained in section 35 where the goods are new or used goods, the value shall not be less than the actual cost of production plus selling cost and profit. It seems to me that no matter what may have been the intention at the time of its enactment this section has, in large measure, in the administration of the department been used to deal with importations into this country by subsidiaries of American parent companies. That

Customs Act
has been the main purpose of the section according to my experience, and the difficulty arose that a parent company would export to a subsidiary in Canada goods at any prices they chose to fix as between themselves. It matters not to the parent company at what price the goods are sold because they own all the stock in the Canadian company. But that Canadian subsidiary may be in competition with other Canadian concerns, which may or may not be fully Canadian owned but which are not direct subsidiaries. The markup, as it was called in the vernacular of the department, was to produce a fair price when the parent company sold. I say that during the past four or five years, if not previously, that section has been used with respect to a large part of our imports. It must have been when we consider that, according to the statistics I had three months ago, there are in this country 1,800 subsidiaries of American companies.


James Lorimer Ilsley: Where a fair market value
has been established in the country of origin, this section would not be needed.


James Earl Lawson: I am dealing with the invoice at which an exporter would export goods to the importer in Canada.


James Lorimer Ilsley: If that were less than the
fair market value in the country of origin the dumping duty would apply without the application of this section.


James Earl Lawson: That is the very reason
why an importer in Canada desiring to import goods from a United States parent company came to the department and said, "I can buy my goods for this price in the United States, how much do you say I must mark them up to cover the items of selling cost and profit?" Under the old section someone in the department, subject to the approval of the minister, had definite power to fix that price. What happens now? This section now reads:
-such advance not to be greater than that which in the ordinary course of business under normal conditions of trade, is added,
Am I to take prices during a period of depression as prices under normal conditions of trade? The (minister may say that that is not what the section means at all; that it means the normal conditions of trade in any particular group of industries dealing in that product in the country of export at the time of export. Well, then, I say to my hon. friend, if that is so-we will assume that there is an allegation that prices are being slaughtered for the time being in the country of origin because of competition in the trade-who is going to say what is the fair market value, plus the selling cost, plus profit? Who is
going to determine what should be the margin of profit? Who is going to determine whether there should be a one per cent return on the capital invested, a two per cent return, a three per cent return and so on? All this is left indefinite and ambiguous under this provision. Under the old section the minister had power to fix this; under this section, apparently the only person who has the power to fix it is a collector, an appraiser or sotoe departmental official.
The hon. member for Kootenay East complained a moment ago about the past administration of some of the officials. If there was trouble in the past when it was definite as to who had the ultimate power, surely under this ambiguous wording the problem is going to be confusion confounded. The minister may say that the collector or appraiser has the power to make the fixation and if someone disagrees with it they can go to the tariff board under subsection 4 of section 38. I think my hon. friend will agree that if we get down to the point where .the tariff board, an administrative body, not a representative of the government, not a minister of the crown, fixes what shall be the profit and what shall be the selling cost, we are creating the tariff board into a legislative body. The supreme court has determined already that they cannot be a legislative body. If that decision is good, we are left with a section under which there is no one who has the legal capacity to determine ultimately what shall be "in the ordinary course of business under normal conditions of trade." I am not attempting to quarrel with the policy of the government; I disagree with it, as I made clear when speaking on the Canada-United States trade pact. I am dealing particularly with the proposed amendment, and I suggest to the minister that if these words should come before the courts for construction, they will have extreme difficulty in determining what this legislative body was endeavouring to say when it used the words, "in the ordinary course of business under normal conditions of trade." I suggest to the minister that he should consider seriously getting a more specific definition as to what is intended.


James Lorimer Ilsley: Mr. Chairman, the hon. member who has just spoken (Mr. Lawson) has made a valuable contribution to the debate, which contribution I appreciate. His argument has been to some extent legal and a little technical. Undoubtedly under the amendment proposed to the committee, the department in the first instance fixes the value for duty purposes under section 36. The hon. gentleman said that that would be done by a collector or an appraiser, but I
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submit that it would really be the minister. Under section 2 of the act setting up the Department of National Revenue, known as the Department of National Revenue Act, the minister is given the management and direction of the department and is to hold office during pleasure. The difference between the old and new sections is that the minister's decision as to value is not necessarily final. The old section stated that the minister shall be the sole judge of what shall constitute a reasonable advance in the circumstances and his decision thereon shall be final. It is the intention of the government that instead of the minister's decision being final, as heretofore, the importer shall have the right to go to the tariff board on this point. It is possible that the tariff board has not jurisdiction under the existing sections, in view of the decision to which the hon. gentleman referred, but that is a matter which can be remedied very easily. Subsection 4 of section 11 of the Tariff Board Act reads:
The board shall have such powers and perform such duties under this part as are assigned to it by any act of the parliament of Canada or by the governor in council.


Richard Bedford Bennett: This act will confer jurisdiction under the provisions of the Tariff Board Act. That act says that the board shall have such jurisdiction as may be conferred upon it by any act of parliament.


James Lorimer Ilsley: I do not know whether I understand my right hon. friend's argument, but I say that if there is any difficulty as to jurisdiction, it can be remedied by an order in council under section 11 of the Tariff Board Act. Because of the reasons stated by the hon. member for Kootenay East, I submit that that is a very just arrangement. We told the United States negotiators that this would be the way we would apply this section from now on and there might be objections to inserting a provision that the minister's decision in the matter would be final in view of the well known fact that a great many of these values are now, or have been in the past, too high. We are trying to review them to bring them into line. If we agreed to put into the act a provision that they shall be reasonable, and immediately couple this with a provision such as was heretofore in the act, stating that the minister's decision would be final, it would appear as if we were not carrying out the spirit and intent of the agreement into which we entered with the United States. I do not see any objection in the world to leaving that matter in the hands of a competent board to decide, and the question of jurisdiction can be dealt with at any moment if the jurisdiction is defective. The other

point is involved, as to the meaning of the words "in the ordinary course of business under normal conditions of trade." As I understood the hon. gentleman, he said that in some transactions there is no ordinary course of business; there are no normal conditions, because the parent company is selling to its subsidiary and not selling to a similar body in the United States. That, I believe, is the basis of his argument.


James Earl Lawson: It might be selling to other companies in the United States.


James Lorimer Ilsley: If it is, then there is an ordinary course of business; there are normal conditions of trade, and there is no difficulty whatsoever in applying the section. If there is an ordinary course of business; if there are normal conditions of trade, then you try by investigation to arrive at what the reasonable advance is under these conditions then you apply it and obtain the value for duty purposes. If however there is no ordinary course of business and no normal condition by reason of the uniqueness of the transaction, then you have to fall back on the word "reasonable" and apply a reasonable advance on the cost of production. I do not know why I should defend the section at such length. I see many objections to the section, and have in the past, but I think we should retain it for the time being at least to see how it works. I do not think, however, that the objections advanced by the hon. gentleman are unanswerable.


James Earl Lawson: Let me put to my hon. friend a specific instance. A parent company in the United States is selling an article to a subsidiary in Canada at a unit price of ten cents. In the market at the place from which the article is exported directly to Canada the ordinary selling price under the conditions of trade then prevailing is ten cents. Now the conditions of trade then prevailing are these: Because there is in the country of export a production far in excess of demand there is tremendous competition and all concerns manufacturing that article and selling it dn the country of export at ten cents a unit get from it cost of production plus cost of selling, plus one-half of one per cent on the total capital invested. I ask my hon. friend this question: Under this section, is that a normal condition of trade, or is it the normal condition of trade that the price should be eleven cents a unit in the United States, let us say for example, so as to pay on the capital invested a return of three per cent? Which is it? Under these words "normal conditions of trade" I do not know,

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and I ask my hon. friend, unless he knows, if he does not think we should have some more specific provision in this legislation. I want to make it clear that I am not disagreeing with him on a matter of policy; that is the government's affair. I am trying to deal with a section which has to be administered in this country by administrative officials, and no matter how excellent they may be we must at least give them some definite instructions on which to proceed. The minister says that the only purpose of the amendment is to take away from the minister his power to be the sole judge of what constitutes reasonable advance. I suggest that this could be done by cutting out the words "sole judge" and simply declaring that the minister shall have the power.


James Lorimer Ilsley: He has it anyway, under the Department of National Revenue Act. My hon. friend has put a question, and if I were asked to answer that question specifically I should say, under the circumstances stated by him, that the conditions of trade were not normal. But that is a matter which would have to be given some consideration. The hon. gentleman suggests that these words are not definite; I think they are just as definite as anything that could be put into the act. These words have come before me on one occasion at least; I tried to adhere to them as closely as they could be adhered to, and there was not very much difficulty. We had to fix, under section 36, a value which would be cost of production plus a reasonable advance over selling cost and profit under normal conditions of trade in the ordinary course of business, and factors such as the hon. gentleman has mentioned were taken into consideration.


Richard Bedford Bennett: I observe that the language used is exactly that used in the letters exchanged between the Minister of External Affairs, speaking through the Charge d'affaires, and the department at Washington:
The value for duty established under authority of section 36 (2) will not include an advance for selling cost or profit greater than that which in the ordinary course of business under normal conditions of trade, is added, in the case of goods similar to the particular goods under consideration, by manufacturers or producers of goods of the same class or kind in the country of export.
We have merely enacted the terms of the letter and made it into a statute-there is no doubt about that-adding to it the words which have been added this evening as an amendment. In other words, the government's view is that it is essential to use the
exact language used by Mr. Wrong in writing to Mr. Hull, and that in using that language they have kept faith with the United States. Shortly, that is the story.


James Lorimer Ilsley: I think the language is very good.


Richard Bedford Bennett: Knowing Mr. Wrong's capacity to use excellent English I should say there is no doubt about that. With respect to the general question, may I observe that there is nothing more fatal than to compare incomparable things. To compare prices in 1936 with prices in 1933 and to complain of the terms of values fixed by Mr. Breadner is a wholly improper thing to do. As a matter of fact Mr. Breadner in 1933 was acting under the instructions of his minister, who fixed the values, and in 1933 we were attacked in this country, as we had never been in our history, by goods from parent companies in the United States seeking markets here. In our endeavour to keep plants working in this country to supply Canadian requirements rather than to bring in goods from the United States, we had recourse to this section, as the hon. gentleman knows, and I think I heard him complain about it at the time. He thought we went too far, but as a matter of fact, rightly or wrongly, it was the only method by which we saw any opportunity of retaining in Canada work for those who supplied Canadian requirements in that class of goods. It is also well to remark that in some instances there has been a vast expansion of industrial activity on the part of those who supply certain types of goods that were covered by the bulletin of the appraisers in 1933. I might also observe that under our very statute it is the collector at a given point, through the appraiser, who makes the original valuation for duty. This is not done by the minister; it is not done by Ottawa, and we amended the statute because of complaints that were made as to the amendment of entries. The hon. gentleman will remember that it was contended that men had to pay additional duties because of variations brought about by references to head office which would issue instructions to the collector for the purpose of rearranging an erroneous entry that he had made. The result was that people were called upon to pay additional duties after they had sold their goods, which was a very great injustice as far as they were concerned. I think the hon. gentleman will recall that we amended that provision so that within a limited time, which I do not carry in my mind though my memory is that it was three months-
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William Daum Euler: Three months.


Richard Bedford Bennett: -the entry must be
amended or left as it was. That had the effect of giving some form of stability in the administration of the act. The second point is that there is in the law to-day, and always has been, a provision whereby if one is dissatisfied with the appraisement and the amount of duty levied he may bring an action in the courts for the purpose of getting back his overpayment. As a matter of fact I think the hon. gentleman will recall that this has been done in one or two cases within the last few years, one of the cases going to the privy council. That is a right established by statute, and as far as I know it has been part of the law of this country ever since we have had a customs act, or at all events for a great many years. That is the right of the man who pays under protest to recover from the crown the overpayment he has made.
This new provision, of which I shall speak in a few moments, departs from the general principles which heretofore have been observed, namely the granting of authority to another party to overrule the minister. It is quite clear that in all these cases what the minister said this afternoon and again this evening is quite true, that finally the act is the act of a minister, which is the act of a government. In other words there must be approval by the minister, antecedently or subsequently, before any action is taken in connection with these matters. Inquiries were made in some instances as to selling prices in 1932 and 1933, not only in this country but in other countries as well, and the minister of that time did approve the bulletin which the commissioner of customs sent out for the purpose of fixing values on importations not only from the United States but from other countries as well. That provision is based upon the assumption that the minister, which means the government, exercises the power.
Then there is the third point to which, I think, attention must be directed, because it is our duty at least to point out what the results are going to be. Originally this provision was made by reason of an exchange of letters between the governments of the United States and Canada. Now it applies to every country in the world. It is no longer limited to the United States; it is of general application, and what was originally a mere exchange of communications looking to a new procedure with respect to administration as between two countries has now in fact become part of the general law of the country, applying to importations from all countries, wherever there has been an application of the

principles of section 36. That, I think, is abundantly clear. That is why the right to go to the tariff board is no longer a right conferred only upon the United States of America or upon Great Britain, as it was by treaty; it is a right now that belongs to every country in the world that exports goods to Canada. By reason of this section, there being no limitation imposed upon it now although it was so intended originally, we have a condition under which the minister and the government are to be overruled by the tariff board and by effluxion of time. They are overruled by the provisions of the statute 'that is now before us. That is, if the period of three months expires, within which time no effective action has been taken by the tariff board, then under the statute as I read it the effect is that the original entry stands. That being so, the minister is thus overruled by the tariff board in one case, acting within the provisions of the statute and the Tariff Board Act, and in the other case by the mere effluxion of time. I did not have the statute before me, but the minister was good enough to read section 11 of the Tariff Board Act, and if I heard -him aright it confirmed my memory of what we placed in that statute, a provision that in any act hereafter passed in which a duty was imposed upon the board, that should operate as the conferring of jurisdiction, or this might be done by order in council. That is right, is it not?


James Lorimer Ilsley: That is correct.


Richard Bedford Bennett: Then my recollection is
fairly clear. So it is obvious that the minister need not worry about the question of jurisdiction, because in this statute he has imposed a duty upon the board, and by virtue of section 11 of the Tariff Board Act the imposition of that duty confers jurisdiction just as effectively as it could be done by order in council. That is my understanding of the matter.


[Stage Direction]
Section agreed to.
Section 6 (now section 4) agreed to.
On section 7 (now section 5)-Special cases of difficulty.
James Lorimer Ilsley: I think this section requires a slight amendment in order to make it workable.


William Daum Euler: I move that there be inserted between the word "goods" and the word "are" in the first line of paragraph (e) the following words: "by reason of the fact that the circumstances of the trade render it necessary or desirable."

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Richard Bedford Bennett: Perhaps, Mr. Chairman,
you will be good enough to read the section with the amendment.


The CHAIRMAN (Mr. Johnston, Lake Centre):: The paragraph would then read:
(e) such goods by reason of the fact that the circumstances of the trade render it necessary or desirable are sold under conditions or to a class of purchaser under or to which similar goods are not sold by the exporter for home consumption-
And so on.


John Ritchie MacNicol: I should like to pass a
word of comment on that section. I will read it first, leaving out the amendment. I still have not the amendment, but at present this paragraph reads:
(e) such goods are sold under conditions or to a class of purchaser under or to which similar goods are not sold by the exporter for home consumption-
I have in mind a line of goods that would not be covered by the wording as it now stands or as it is to be amended. Take, for instance, cast iron water and steam boilers. Let us say that in the United States a large boiler company manufacturing in the eastern states sells to another boiler company manufacturing in the western states. The boiler company in the western states does not make a line similar to the line that will under my supposition be manufactured in the eastern states. But the western manufacturer undertakes to do every servicing for the boilers he purchases from the eastern boiler company that the eastern company would do itself. I know of a similar experience here in Canada in which a company imported boilers from the United States; the Canadian boiler company undertook to do all the servicing for the boilers that they imported just as the parent company would do in the United States. Now, coming back to the United States side, the company in the western states would do the same thing that I have explained the Canadian company would do, and by reason of that would buy at a lower price than, I assume, would be permissible under this section.


James Lorimer Ilsley: No; this section renders it permissible; that is the very object of the section.


John Ritchie MacNicol: It says, "are not sold by the exporter for home consumption." I am taking the case where they are sold for home consumption.


James Lorimer Ilsley: I think I can explain that to the satisfaction of the hon. gentleman. This
is an amendment to section 41; and we have to read section 41 to see the effect of the amendment. Section 41 reads:
Whenever goods are imported into Canada under such circumstances or conditions as render it difficult to determine the value thereof for duty because
(e) such goods by reason of the fact that the circumstances of the trade render it necessary or desirable are sold under conditions or to a class of purchaser under or to which similar goods are not sold by the exporter for home consumption; or such goods are sold or imported in or under any other unusual or peculiar manner or conditions;
When that is the case; when the foreign exporter is selling to the Canadian importer under conditions or to a class of purchaser under or to which similar goods are not sold by the exporter for home consumption, then the minister has power to determine the value for duty of such goods. It does not necessarily have to be the fair market value thereof in the country of origin. This enables an importer in this country who is really a national distributor or who does something such as the hon. gentleman suggests, that is services the goods instead of having them serviced by the parent company, to get a higher discount than he would be able to get under the law as it exists at the present time.


John Ritchie MacNicol: In other words he gets the same discount as the purchaser in the home country that I referred to as being in the western states?


James Lorimer Ilsley: Yes. In the case the hon. gentleman has put we really do not need the amendment, because it would be provided for as the act now stands, or should be. If it is a sale from the parent company in the states to a western distributor who gets a big discount because he is going to service the boilers, then, I think, under the law as it exists at the present time our department would permit the importer in Canada who services the boilers to get that same discount. No change is made in that situation by this amendment. But there are cases where there is no western distributor in the United States, where the manufacturer in the states in selling directly to dealers, but may wish to market in a different way in Canada by selling to a distributor here, and we provide that, if the circumstances of the trade render it necessary or desirable he may get a distributor's discount.


John Ritchie MacNicol: I understand what the minister has just said, but I was not able to see it in the wording of the clause as it stands:
-similar goods are not sold by the exporter for home consumption-
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I am convinced of this, that if the act permits what the minister has just said-I now take his word for it-that very clause in our Customs Act has resulted in a great deal of manufacturing in Canada. I will give the committee a case in point. I know a company that for a while imported large numbers of boilers into Canada at a price similar to that paid by a company such as I referred to in the western states which also did the servicing of the boilers. They worked up in this country a substantial market for the said boilers, and in time commenced to manufacture them here. They first began to make the repairs, sections of boilers, grates and so forth, in time worked up a substantial business and finally began to manufacture the boilers here, giving employment to a large number of men. That also resulted in the boiler business of this country rising to a higher level. I will not say that I was afraid this clause would interfere with such a possibility of increased employment, but I am glad to hear the minister say that it does not.


James Lorimer Ilsley: It is expected that this will affect importations from Great Britain much more than importations from the United States.


Richard Bedford Bennett: Yes, and from some other countries as well.


James Lorimer Ilsley: That may be so.


[Stage Direction]
Amendment agreed to.
Charles Edward Johnston: Shall the section as amended carry?


Charles Hazlitt Cahan: No. I have listened carefully, but I cannot understand it clearly. Would the minister give a single clear instance in which in his opinion the circumstances of the case render it necessary or desirable?


James Lorimer Ilsley: I am reluctant to take a particular commodity, but I can give the general class of case that will be covered by this section. It is a case where an English manufacturer finds it desirable, in order to market his goods in Canada, to sell to a national distributor in this country. That is the only practicable way in which he can market his goods in Canada, or it is the necessary or desirable way, as we say in the language of the section.


Charles Hazlitt Cahan: Does he send them on consignment?


James Lorimer Ilsley: No, he sells them. He allows the distributor here a discount off the list price.


Richard Bedford Bennett: A distributor's discount.


James Lorimer Ilsley: A distributor's discount. In the home market he will not be dealing with that class of person at all; he will be selling his goods to a dealer in England perhaps, and he may allow that dealer twenty per cent off the published or list price in England. The manufacturer possibly will be doing the advertising; he will be rendering some service that the national distributor will render in this country. Therefore it is only fair and proper that the discount off the published or list price to the Canadian buyer, the national distributor, should be greater than the discount allowed in the country of origin. Under conditions like that, where you cannot apply section 35 or section 36, you have to have some power which will enable the minister to fix a value for duty which is not quite normal, which cannot be fixed under any other sections because the goods are sold under conditions or to a class of purchaser under or to which the goods are not sold by the exporter for home consumption. That is the reason for the section.


Charles Hazlitt Cahan: He sells in that case to a dealer for distribution in England?


James Lorimer Ilsley: Yes.


Charles Hazlitt Cahan: Well, is he not selling to a dealer for distribution in Canada? Should not the price at which he sells in England to dealers who distribute the goods be deemed the fair market value for duty in the case of a sale on consignment or selling directly in Canada for distribution?


James Lorimer Ilsley: In a great many lines of
trade the functions of a distributor are recognized as different from those of a dealer. The distributor in Canada would sell to the dealer. He is another link in the chain of distribution. Distributors' discounts are one thing and dealers' discounts another.


Charles Hazlitt Cahan: I have a fairly wide knowledge of wholesale dealing in Canada. Would the minister give me an instance of the sale of goods manufactured in England to a so-called distributor in Canada, in which the market value at which the goods are actually sold in England would not properly be deemed the market value for duty in Canada?


James Lorimer Ilsley: English motor cars, and
drug supplies. These articles are sold to dealers in England direct, but if they were brought into this country the only practicable way would be through a distributor.


Charles Hazlitt Cahan: I do not agree with the
minister when he suggests that the trade recognizes a difference between distributors and dealers. The dealer in Canada in such

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case is a wholesale purchaser or a wholesale dealer, and is therefore a wholesale distributor. But simply because he buys wholesale in England and distributes in Canada, why should he be able to import goods from England and sell them in Canada at a lower rate than that at which' they are sold in England? It seems to me that clause gives scope for improper and unfair practices.


James Lorimer Ilsley: I believe I have already
stated the reason, and I cannot state it more clearly. The reason I gave was that the distributor renders a service which the manufacturer himself renders when he sells in the country of origin.


Richard Bedford Bennett: One thing I congratulate the minister upon is that with his usual skill he has shown a power of adaptability which does not surprise me, but upon which I congratulate him, because if two years ago he had said in this house what he has been saying this evening he would have been speaking on the government side, and not as a member of the opposition. Therefore it is gratifying to find that thus early he has found in practice that the only way one can deal with the situation is the way in which he is dealing with it, and he will find, as he goes along, that will be true to a greater extent. The exceptional conditions which prevail in world trade to-day make it essential that the minister must have the power which he is now taking and which he says himself he must exercise to deal with these extraordinary conditions.
The best illustration is the one which he gave a moment ago in connection with motor cars. It is one I know something about because it was brought to the attention of the government last summer. The effect of this will be to increase a certain type of trade with Great Britain, and with other countries as well.	I am much concerned
about what the effect will be on our trade in some other countries. One of the great difficulties we have in dealing with matters of this kind, having regard to the favoured nation treatment we must accord to all countries, is that when we proceed to make an agreement, unless it is an agreement within the British empire, we are at once confronted with the favoured nation treatment. This very measure now before us illustrates the point better than anything else. We have interchanged letters with the United States for the purpose of effecting a given end. That end is now accomplished by this statute, and the statute applies to every country in the world. What we paid by making concessions to obtain the advantage has been paid to
the United States. AIL other countries which have a similar trading arrangement with us will now receive the benefit of this statute. There is no favoured nation provision in connection with it; it applies to all countries; the section we are adopting applies to every country of the world. This is one of the things we paid to the United States for the purpose of getting concessions from them. This illustrates 'better than any words I could use one of the difficulties under which we labour in dealing with matters of this kind. Every country of the world, Czechoslovakia, Singapore, and the Malayan states now become subject to the provisions of the section. Some of these countries could ship rubber goods into this country at prices which would make it impossible for us to know what to do, and could sell tennis shoes in Canada at prices which -would threaten the closing down of our factories. That is one of the difficulties the minister will discover among the many complexities of administration with which he has to deal. It is one more burden added to the many burdens he will have to bear. Nothing has given me greater pleasure than to observe the minister's statement that it would be admitted that the minister must have the power to fix these prices. I congratulate him.


Charles Hazlitt Cahan: In selecting motor cars the
minister selected one of the two or three known cases. I suggest, however, that the amendment would be far better if worded "by reason of the fact that exceptional circumstances of the trade render it necessary or desirable." I believe the word "the" before the word "circumstances" might be omitted, and the word "exceptional" inserted. Otherwise the section is open to grave abuse.


James Lorimer Ilsley: If so, it would continue to be so under the proposed change.


Charles Hazlitt Cahan: No; it would have to be shown to the minister that the circumstances were not usual, because the word "desirable" has its own import and meaning. I suggest "by reason of the fact that exceptional circumstances of the trade render it necessary or desirable" and so on. That would be a broader and fairer provision.


James Lorimer Ilsley: I listen with great respect to any suggestion by the hon. member, but I am afraid I cannot accept the present one. The section is drawn to cover "the circumstances of the trade," not "exceptional circumstances." The circumstances of the trade between a foreign country and this country render it necessary or desirable that, for ex-

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ample, there be a national distributor here. The insertion of the word "exceptional" would alter the meaning. When it came to administration the effect would be precisely the same.


Charles Hazlitt Cahan: I doubt that. In his amendment the minister has not covered the case of exceptional circumstances in the trade between a foreign country and this country. He deals now simply with the circumstances of the trade in one country or another, and if this is to have the effect suggested by the minister the circumstances should be exceptional.


[Stage Direction]
Section agreed to.
On section 8 (now section 6)-Application to tariff board.
James Lorimer Ilsley: Attention has been called to the fact that the draft amendment to section 43 does not precisely follow the terms of the note to the United States.


Richard Bedford Bennett: I was going to mention that.


James Lorimer Ilsley: There is one eventuality not covered by the section, and that is possibly that before the expiration of three months the tariff board might decide that no fixed value was required. It was contemplated in such event that they would have the right so to declare and thereupon the fixed value would disappear. In the section as drafted it is quite possible there is only one way in which the fixed value may disappear, that is by lapse of time, and so I am proposing to alter the section to comply with the language of the note.


Richard Bedford Bennett: That is the Japanese
note?


James Lorimer Ilsley: No; this is the note to the United States.


Richard Bedford Bennett: That is paragraph (c)?


James Lorimer Ilsley: Yes; and the words are
"whether, to what extent, and for what period." Those words are not used in the proposed amendment.


Richard Bedford Bennett: I agree. There is one
other point. The minister will observe that in line 21 the word "declaration" is used. It says, "issue its declaration." That is an incorrect term. "Its finding" is the term used in the note, and I think "finding" is the correct word. After all, the tariff board is a court and it gives a judgment or finding, not a declaration. It is not a declaratory judgment; it is a finding.


Mr. ROSS (Moose Jaw):: Is the board
made a court by this act?
[Mr. Ilsley.l


Richard Bedford Bennett: No, by the Tariff Board
Act itself.


James Lorimer Ilsley: The reason the word
"declaration" is used is because it is the word used in section 54 of the Customs Act. Section 54 says:
The board of customs may declare the rate of duty payable on the class of goods in question,
And so forth.


Richard Bedford Bennett: That is another matter.


Charles Hazlitt Cahan: That is a declaration as to
the rate of duty.


Richard Bedford Bennett: Yes, on appeal from the appraiser to the customs board.


James Lorimer Ilsley: If it is proper for them to make a declaration as to the rate of duty, I should think it is equally proper for them to make a declaration as to whether a value is required.


Charles Hazlitt Cahan: One is a declaration of fact, and the other is a finding of fact.


Richard Bedford Bennett: The declaration contemplated by section 54 is a declaration that the duty to apply is under 226 instead of 243, we will say. That is merely a declaratory judgment. But this is an appeal, and when you use the word "appeal" I think the word "finding" or "judgment" would be preferable. I want the minister to understand that I am not in any sense suggesting that any word I have in mind is better than another, but "declaration" I do not think is an appropriate term to apply to an appeal taken by an interested party to a court. That is the point I was endeavouring to make.


Charles Hazlitt Cahan: It is a finding which the
board makes after investigation.


Richard Bedford Bennett: Exactly.


Charles Hazlitt Cahan: And in line 26 we say, "If
a lower value is found by the tariff board."


James Lorimer Ilsley: It is quite possible that
would improve the wording, and I have no objection to using in line 21 the words "make its finding" instead of saying that the board shall "issue its declaration," and then at the beginning of line 30 the word "declaration" could be changed to "finding." I think that will cover it.


William Daum Euler: I move, Mr. Chairman, that the following subsection be inserted in lieu of subsection 3 of section 8:
(3) In the case of any value for duty established under the provisions of this section after the first day of January, 1936. any interested party may apply to the tariff board by way of appeal therefrom. The tariff board shall

Customs Act
thereupon conduct a public inquiry and make its findings as to whether, to what extent and for what period such value is required to prevent the importation of goods into Canada from prejudicially or injuriously affecting the interests of Canadian producers or manufacturers. If no fixed value is found by the tariff board to be required, or if a lower value is found to be appropriate, the finding of the tariff board will become at once effective. If appeal is made to the tariff board such value authorized by the minister shall in default of any finding by the tariff board in the meantime cease to have force and effect upon the expiration of three months from the date of any such application to the tariff board.
Amendment 'agreed to.


Mr. JACOBS:: I wonder whether it is necessary to warn my hon. friends on this side to beware of the Greeks when they bear gifts.


Richard Bedford Bennett: Yes, but what about the Hebrews?


Ian Alistair Mackenzie: They
never bear any.


Charles Hazlitt Cahan: This amendment is clearly made by reason of the note of December 26, 1935, from the Prime Minister of Canada to the Japanese minister. Now, let us consider the case. The Japanese government appeals to the tariff board. Before making that appeal it has an inquiry in its own country and has all the evidence prepared. It may take three or four months in the preparation of its case. To meet that case the government of Canada has to go to Japan, make a similar investigation and have the results of that investigation brought back to Canada and presented to the tariff board. My suggestion is that under those circumstances three months is not an adequate period for the preparation by this government of its case, the result being that if the Japanese government prepares its case with great care, and has all- its evidence available for presentation here, it will be almost impossible for the Department of National Revenue to meet that case within three months, and if its case is not prepared within three months and heard and decided by the tariff board, then decision is given against this government. by default. I think that is a condition of affairs which is to be deprecated, and it is impossible to understand this change except, on one suggestion, that is, that this government made up its mind to have an agreement with Japan on Japan's own terms, and when Japan said, "Sign on the dotted line," this government signed without due consideration of the vast import of the pledge they were giving.


Richard Bedford Bennett: Affecting all countries.


James Earl Lawson: I should like to support very strongly the argument presented by the bon. member for St. Lawrence-St. George by pointing out to the committee what actually happens in actual practice before the tariff board, as some members may not have appeared before the tariff board in hearings as I have. When application is made to the board they require a written submission, and the person making the application is virtually in the position of plaintiff. In the case we have in mind it must be borne in mind that as a pferequisite to the existence of the duty which is to be attacked -the government of this country has functioned and1 determined to its own satisfaction that there is an injurious effect on the interests of Canadian producers or manufacturers; being of that opinion it authorized its minister to do something, and he has functioned. Now, as pointed out by the hon. member for St. Lawrence-St. George, the tariff board makes copies of the applications as filed, with the reasons therefor, and it is under obligation to circularize and send them to every interest in Canada affected. It asks those interested for a return, in other words for a brief or a factum as against that which has been alleged by the plaintiff. It naturally takes time for this to be prepared, and when the tariff board has before it that which I shall call a factum, for want of a better term, it then determines whether or not there is a necessity for a public hearing. In this case it provides that there shall be a public hearing, but even though there is an obligatory provision for a public hearing, if the tariff board is to proceed intelligently with that public hearing it must have before it the allegations, or arguments, or facts. Generally speaking, subject to these necessary delays, the plaintiff has the conduct of the proceedings.
Let us assume that it is a private party making an application so that we shall not be making any allegation against any foreign government. By devious means at his command, that person can delay the hearing. All he has to do to succeed in his case is to prevent its being heard for a period of three months. In the first place, I say that three months is far too short a period for the involved questions which are bound to arise. In the second place, I say that a term which automatically benefits the plaintiff in the event of his own delay, which bonuses him for delay, should certainly not appear in this bill. If, in order to carry out the terms of the obligations contained in the letter to the Japanese government, this government- feels
Customs Act

that it must insert this most unusual provision in a statute, then I say that at least there ought to be some provision to make it incumbent upon the person who is going to attack or appeal from the duty as fixed by the minister to give some notice of his appeal.


Richard Bedford Bennett: To do it within a certain time.


James Earl Lawson: To do it within a certain time; to serve his allegations, his notice of appeal; to do something to protect those Canadian producers and manufacturers who must prima facie be prejudicially or injuriously affected. I ask the minister as the representative of the government to consider seriously the implications in the last clause of this section which automatically sets aside that which the government and the minister have determined by the mere failure of the tariff board to function.


James Lorimer Ilsley: There are just two points to which I should like to direct attention. In the first place, I should like to say to the hon. member for St. Lawrence-St. George (Mr. Cahan) that this is not and cannot be an inquiry into the cost of production in the country of origin. There is no necessity for the government making any investigation as to the cost of production, say in Japan. That situation could not arise at all. The tariff board addresses itself to one question of fact only, whether the value fixed by the minister is necessary to prevent the importation of goods into Canada from prejudicially or injuriously affecting the interests of Canadian producers or manufacturers.


James Earl Lawson: Surely the cost of production and the exchange rate must be factors in determining that?


James Lorimer Ilsley: The cost of Canadian product; ;n, not the cost of foreign production.


James Earl Lawson: Of necessity, both must be factors.


James Lorimer Ilsley: I do not understand the
observations of the hon. member for York South (Mr. Lawson). Where goods are coming m, it is the price at which they are quoted, not the cost a>t which they are produced, that concerns the Canadian manufacturer.


Richard Bedford Bennett: The price at which they are offered for sale.
Mr. ILSLE1 : That is what the Canadian manufacturer is concerned with, not with the cost at which they are produced. It is a matter which can be determined quite speedily; it does not require any investigation in a foreign country. That is the first point. With regard

to the point brought out by the hon. member for South York, that the time is not sufficient, I think we must assume that a court such as the tariff board will act with some sense of responsibility and regard for propriety. The idea that they would permit an importer to prevent them from making the declaration until three months had gone by is something beyond the realm of possibility.


Charles Hazlitt Cahan: That is exactly what you are providing for.


James Lorimer Ilsley: The provision of the three months' term is to impose an obligation upon the tariff board to act promptly so that the interested parties may not be tied up for an indefinite period and the government be subject to the accusation that they had put something in there that was not workable.


Charles Hazlitt Cahan: I suggest to the minister
that if this section goes into effect there will be times when a sufficient number of appeals of this character will be before the board to make it impossible for that board to function with respect to all of them.


James Lorimer Ilsley: There are not going to be many appeals because there are not going to be many fixed values.


William Daum Euler: If that takes place; if there is a delay beyond the three months and the valuation lapses, it will be a simple matter for the department to make another valuation which will be good for at least another three months.


Charles Hazlitt Cahan: Not with respect to that same item.


William Daum Euler: I do not see why not.


Charles Hazlitt Cahan: That could not be done
and good faith still be preserved with the foreign country.


Richard Bedford Bennett: There is still the difficulty to which the hon. member for York South made some slight reference. The application should be made within a certain period of time, and this matter divides itself into two branches: First, the public revenue and, second, the conduct of business. For instance, if duties are paid on a rate which is subsequently found to be improper, it is obvious that refunds must be made and the question of revenue is affected. That is one side of the matter. The other side is the question of the convenience of the people concerned. In all our provisions about appeals from summary convictions we provide that the appeal must be made within fourteen days of the date of conviction or that certiorari must be taken within so many weeks or days. We

Customs Act
are fixing a period of time after which the appeal is discharged. The minister says that he has made up his mind that he will not make many fixed valuations, but in these uncertain economic conditions he cannot tell when he may be almost driven to do this. We sometimes have the habit of thinking that these things affect only one country when, in fact, they affect every countiy in the world.
As an illustration, let me mention Czechoslovakia. Our exports to that country have been practically nothing. The late government had under consideration whether or not the agreement with that country should be permitted to continue. We buy substantial quantities of goods from Czechoslovakia, but we ship practically nothing. If one takes the trouble to look inside the pair of gloves he is wearing to see where they are made, he will most likely find "made in Czechoslovakia." This applies to other countries on this continent, such as the United States. A substantial portion of a certain class of footwear is imported from Czechoslovakia. It will be remembered that the great Bata who met his death in an aeroplane accident, established a factory near London and created a great deal of difficulty. His old firm shipped substantial quantities of goods into this country. That, in my judgment, is one of the reasons why we should fix the time within which appeal should be taken.
Then there is the other side of the matter which I once more urge upon the minister. I wonder what any member of this committee would think if he were told that when a conviction had been made by a court, in the event of an appeal being taken, instead of the appeal lapsing by non-prosecution or by effiuxion of time, resulting in the original conviction standing, although a minister of the crown had exercised his discretion honestly and to the best of his ability, it is no longer his discretion that stands but the appeal, which becomes effective by effluxion of time. I venture to say that in all our statute laws in the British empire you will not find anything like it. I have read a great many of them from necessity-I do not say that I have read them all-and certainly, if you propounded that proposition in connection with an ordinary matter, one would think it unbelievable.
Let us take a case. The minister deals with an importation that comes from Czechoslovakia, an importation of rubber boots and shoes, tennis shoes, and he finds that the ad valorem duty is so insignificant, and his officials advise him, that it is desirable and necessary to place a fixed value upon these 12739-131
shoes. He does so; he places a fixed value which, for the sake of argument, we will say is fifty cents; that sounds very easy. The invoice price, as a matter of fact, was only twenty cents. The importer here at once takes an appeal to the tariff board. The tariff board is very busy; it does the best it can; it hears a part of the evidence and is unable to arrive at a conclusion; rushed with business it does not observe very closely what the time was, so that the three months go by from the date the appeal was taken, and on the day after the passing of the three months the twenty cents becomes the operative price at which these goods are to be valued for duty purposes. The minister had declared that Canadian industry was prejudicially affected because any value as low as twenty cents was unfair and prejudicial to Canadian manufacturers, and therefore he fixed a value of fifty cents. Now, instead of the result of the lapsing of the appeal being a valuation of fifty cents, the invoice price from Czechoslovakia of twenty cents will stand as the value. The minister has exercised honest discretion and yet he finds himself overruled in that way. I do not think you will find anything of that sort in the history of appeals. If, for instance, an appeal in the supreme court is not prosecuted it is dismissed for lack of prosecution; the appeal is dismissed automatically. In this case, by the mere effluxion of time, after the short period of three months, the appeal stands; it is not dismissed but allowed. The appeal is allowed and the original valuation of twenty cents stands.
I ask the minister in all seriousness to consider the point. I have done my duty as far as I see it in directing attention to the matter as clearly as I can, and I submit that he should not make a departure and establish in the statutes of the country a precedent which I at any rate have not heretofore seen. There may be cases

I do not say there are not, but I have not seen any-in which nonprosecution results in the allowing of an appeal. I think there should be an amendment in that sense.
I direct attention, only as a matter of form, to the desirability of having the language uniform throughout the section. In one case reference is made to the appeal and in another instance reference is made to the application. It might be well to refer to it in uniform terms. One of the rules which draftsmen have laid down is sound, because sometimes it is necessary to see that a word is given the same meaning throughout an entire section. At the end of the section reference is made to "three months from the date of any such application," and in another case reference is

Customs Act

to the appeal. I mention that as a matter of the use of words and not because it is very important.


James Earl Lawson: In view of the fact that, barring unforeseen contingencies, the present minister will probably have the administration of this act, I cannot let him go on with any assumption that merely ascertaining cost of production in this country as against price quoted by a foreign country can determine the question which the tariff board must determine in any one of its appeals. I should dislike to find my hon. friend preaching such a heresy to the Liberal doctrines as enunciated by his party. Let me give him a concrete example. It is very easy to determine cost of production in this country, but it has developed in cases already before the tariff board that the cost of production in Canada in some particular industry may be unduly high because of inefficiency of production, because of obsolete machinery, because of inadequate methods of operation. How can the tariff board determine what is the cost of production in this country-let me say, efficient cost of production-except by ascertaining-


Richard Bedford Bennett: That is the sense of the statute.


James Earl Lawson: As a matter of fact that is the provision of the statute, if my recollection is correct. How can the tariff board determine that question without ascertaining what is the cost of production in other countries, the methods, the wage scale, the machinery used and so on? I say to my hon. friend, from actual experience before the tariff board, that I know the board cannot determine some of the questions that must of necessity arise in appeals such as those contemplated here without ascertaining the cost of production in other countries, the efficiency of production, and so on. This tariff board, in my experience, has functioned particularly efficiently and I can assure my hon. friend that industries in Canada would have an easy time before the board in resisting applications for reductions in the tariff and in urging their own applications for increases if all they had to do was to prove cost of production under their method in Canada as against quotations from foreign competitors. I suggest to the minister that that factor as well as those suggested by the leader of the opposition and by the hon. member for St. Lawrence-St. George should be seriously considered before he asks this committee to adopt the section in its present form.


Charles Hazlitt Cahan: The minister dealt with the question of price and cost. Those are not

exclusively the conditions that may be prejudicial. Section 43, subsection 1, relates to goods being imported into Canada either on sale or on consignment under such conditions as prejudicially or injuriously affect the interests of Canadian producers. I suggest to the hon. gentleman that he will not need1 to exercise his imagination for any length of time before he conceives of conditions which are not entirely dependent upon the invoice value presented by the importer.


Charles Edward Johnston: Shall the section carry?


Charles Hazlitt Cahan: On division.
Section agreed to on division.
Section 10 (now section 7) agreed to.
On section 11 (now section 8)-Witness failing to attend, et cetera.


William Daum Euler: I beg to move that all the
words after the word "is" in line 16 be struck out, and the following substituted therefor:
repealed, and the following subsection is substituted therefor:-
4. Every person who-
(a)	being required to attend in the manner in this section provided, fails, without valid excuse, to attend accordingly; or
(b)	being commanded to produce any document, book or paper, in his possession or under his control, fails to produce the same; or
(c)	refuses to be sworn or to affirm, or to declare, as the case may be; or
(d)	refuses to answer any proper question put to him by such officer;
shall, on summary conviction before any police or stipendiary magistrate, or judge of a superior or county court, having jurisdiction in the county or district in which such person resides, or in which the place is at which he was so required to attend, be liable to a penalty not exceeding four hundred dollars and not less than fifty dollars.


Charles Hazlitt Cahan: I am not going to raise the objection which was raised against me in one of the early years of the last government. The preparation of this bill has not conformed to the rules, because under the rules of the house with regard to the printing of bills you cannot amend by merely adding certain words to a section. I am not raising that as an objection, but I wish to state to the minister that one hon. gentleman associated with him in opposition not so long ago compelled me to withdraw and reprint a bill simply because the same mistake was made that has been made in drafting this bill for presentation to the house.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 14 (now section 9) agreed to.﻿APRIL 21, 1936	2049
National Harbours Board
On section 15 (now section 10)-Or removed before examination and payment of duties, if any.
Charles Hazlitt Cahan: There is the same objection to this section, which I am not going to press. It does not conform to the rules of the house with regard to the preparation and presentation of bills.


[Stage Direction]
Section agreed to.
Sections 16 to 21 inclusive (now sections 11 to 16) agreed to.
On the title.
Charles Hazlitt Cahan: I suppose these amendments have been suggested by the officials of the department for the better enforcement of the terms of the statute.


James Lorimer Ilsley: Yes, that is correct.


Richard Bedford Bennett: The amendment with
regard to conspiracy, I take it, is a result of the recent cases that have arisen in the maritime provinces, to make it clear what you are enabled to do in the cases that were considered? I was going to ask that as the section was passed.


James Lorimer Ilsley: I do not know whether it
is entirely due to those cases, but it is a desirable power to have owing to the importance of conspiracy now as an oSence.


[Stage Direction]
Title agreed to.
Bill reported.


[Stage Direction]
The house resumed from Friday, March 27, consideration in committee of Bill No. 17, respecting the national harbours board-Mr. Howe-Mr. Young in the chair.
Section 1 agreed to.
On section 2-Definitions.
Mr. VIEN:: As yet we have not the reprint of the bill.


Hon. C. D. HOWE (Minister of Marine):: It has been circulated.


Thomas Vien: Then will you please wait a
moment until I see it?


Ian Alistair Mackenzie: I move
that paragraph (d) be amended by striking out the word "the" in line 14 and inserting after the word "schedule" the word "A." I also move that this section be amended by adding the following paragraph:
(g) "raft" includes any raft, crib, dram or bag boom of logs, lumber or lumber of any kind, and logs, timber or lumber in boom or being towed.
These amendments appear in the bill as it has been reprinted.


[Stage Direction]
Amendment agreed to.
Charles Hazlitt Cahan: I do not object to the
amendment carrying, but I suggest that the clause as amended be held over. There is no Minister of Transport; you cannot pass a bill dealing with the Minister of Transport until you have such an officer, and that office is not created under this bill. Second, when we come to consider the meaning of "corporations." I think it will be found that some clearer definition can be made use of than that which appears in paragraph (d) of clause 2. Therefore I suggest that the clause as amended be held over.
Mr.	MACKENZIE	(Vancouver):	There
were two amendments sent	up. The second
amendment was not put by the chairman.
The	CHAIRMAN	(Mr.	Johnston,	Lake
Centre):	The other amendment is, that the
said section be amended by adding the following paragraph (g):
"raft" includes any raft, crib, dram or bag boom of logs, lumber or lumber of any kind, and logs, timber or lumber in boom or being towed.


[Stage Direction]
Amendment agreed to.
The	CHAIRMAN	(Mr.	Johnston,	Lake
Centre): Shall the section as amended carry?
Richard Bedford Bennett: No, the section should
not carry. You cannot carry a section defining something that does not exist.


Ian Alistair Mackenzie: The section stands.
Section stands.
On section 3, subsection 1-Board constituted.


Mr. BERTRAND (Laurier):: Upon this
bill the consensus of opinion in the province of Quebec through all the newspapers is that one commission is not enough, even if seven are too many. In Quebec we have great confidence in the Prime Minister. I think we proved that we had confidence, since he was chosen as leader of the Liberal party. We also have great confidence in the new Minister of Marine (Mr. Howe); we think he has great business ability. But in view of that general consensus of opinion I think constructive criticism cannot hurt the bill, and I have the honour to propose an amendment to section 3, reading as fellows:
National Harbours Board

That subsection (1) of section 3 be amended by striking out all the words after the word "minister" in line 22 on page 1 down to the end of the said subsection, and substituting therefor the following:-
"three national harbour boards, known as
(a)	The Atlantic harbours board,
(b)	The St. Lawrence harbours board, and
(c)	The Pacific harbour board,
each consisting of three members, namely a chairman, a vice-chairman, and a third member who shall be appointed by the governor in council and who shall hold office during pleasure."
I regret in one sense to have to present this amendment against a bill of the government, but as I said on second reading, it is the general consensus of opinion in Quebec that we should have a board for the St. Lawrence river. I have received from the electors of Montreal at large, without any solicitation, over 315 letters stating that we should oppose this principle. There is no reason why the government cannot control the finances of all these three commissions just as well as they would control the finances of only one commission.


Clarence Decatur Howe: I feel that the hon. member who proposed this amendment has not given the situation very careful study. For example I can imagine the situation if we had a harbour board for the ports of Halifax and Saint John; we could easily get one commissioner from Halifax and one from Saint John, but I am not sure that Halifax would give the third member to Saint John, and I am equally doubtful whether Saint John would give the third member to Halifax, so there would be some practical difficulty there. Then we come to the St. Lawrence where we have four harbours, and only three commissioners to be appointed. I am not sure that Montreal would be satisfied to be in the minority on that commission, and I doubt whether Quebec would be, but I am sure that Chicoutimi would not agree to have her affairs run by harbour commissioners from Montreal and Quebec.


Richard Bedford Bennett: To say nothing of Sorel.


Clarence Decatur Howe: Sorel might object as well, and Three Rivers I am sure would demand pretty fair representation. It might work well at Vancouver. However I do not know that we need to go into this more deeply. I have not spoken at length on the subject of harbours, but I have before me a volume which I compiled with some little trouble, going back over five years of harbour commissions of various ports. To me it shows the most shocking betrayal of public trust I have ever read in my life. I feel in one way that it should be put on Hansard so that the people of this country might learn something about

harbour commissions; on the other hand I dislike to do this because it would certainly give the people a very unfortunate idea of how public affairs are conducted.
However we are out to make progress, and the objections that apply to seven harbour commissions would apply also and in equal measure to three. Without pursuing the matter further I must ask that this amendment be not accepted.


Ian Alistair Mackenzie: I must rise to -a point of order. The hon. gentleman
who proposed the amendment moved for three different harbour boards. Subsection 5 on page 2 provides that:
Each member shall be paid such sum for his services as the governor in council may from time to time determine.
Obviously it is a matter that affects the revenues of the crown.


Thomas Vien: On the point of order, I do
not believe that the amendment is in conflict with the principle of the bill. The bill proposes to reduce seven commissions to one; the amendment tends to reduce the seven commissions to three. Therefore the underlying principle of the bill is not destroyed but only modified, and the amendment is not at variance therewith.


Ian Alistair Mackenzie: That is not the point of order at all. May I repeat it? The point of order is that the bill as such provides for three harbour commissioners, and the amendment provides for three different harbour boards. If hon. members would read subsection 5 of section 3 of the bill they would find that each member is to be paid. I suggest, therefore, that by a private member's amendment we are making provision for a payment of six more commissioners, and thereby we interfere with the duties of the crown.


Thomas Vien: The point of order is not well taken. At the present time there are seven harbour commissions and the bill proposes to reduce the number to one. The amendment does not propose to increase the expenditure of money, but simply tends to reduce the cut which the bill proposes to make in the present expenditure of money. The amendment does not involve an expenditure of money, but simply reduces the cut indicated in the bill, by maintaining three commissions instead of one only, as in the bill. You cannot find in the amendment a proposal to increase the present expenditure of money. The amendment simply reduces the cut effected by the bill. I should like to have a ruling, Mr. Chairman.

National Harbours Board


Ian Alistair Mackenzie: I am out of order in speaking again, but with the permission of the committee I should like to say another word. The bill was preceded by an antecedent resolution. Certain expenditures were authorized by resolution from His Excellency the Governor General, and such expenditures cannot be increased on motion of a private member.


Jean-François Pouliot: Speaking to the point of order may I say that there must be some understanding about money bills. When a bill providing for the expenditure of money is submitted to parliament it must have the consent of the representative of his majesty. In turn the representative in Canada, as does his majesty in England, gives a blank cheque to the government. In such bills on most occasions there are no definite specifications with respect to expenditures. For instance, if the salary of the commissioners and members of the board are mentioned in the bill there must be additional expenditures for the stag. Very seldom in a money bill do we find anything definite regarding amounts of expenditures. For instance, when the bill was submitted to set up the employment commission no definite salaries were mentioned, although there was a provision for expenditure of money. On that occasion His Excellency the Governor General gave a blank cheque to the government for expenditures.
Further, we are in committee, and I suggest that when an hon. member moves an amendment accepted by the committee, the government must stand behind it, even if the ministers have to make an effort to swallow it. When the government introduces legislation providing for the expenditure of money it is the privilege of any hon. member in committee to suggest any changes he may wish, and it is up to the committee to decide whether or not the change shall be accepted. May I point out that what has been said so far is strictly in order. Further, it is the privilege of any hon. member to suggest a curtailment in expenditures. Any hon. member may move an amendment to decrease an expenditure, in which event the yeas and nays are taken and the majority rules. If Such action can be taken to decrease an expenditure it may also be taken to increase it. I have listened to the observations of the Minister of National Defence and I say he has not shown that the amendment of the hon. member for Laurier would have the efiect of increasing an expenditure. He has said nothing to satisfy the minds of hon. members that the amendment would have the efiect of increasing expenditures. I submit,
therefore, that hon. members who have spoken against the amendment were not in order and were all wrong, and I suggest, further, that the amendment is strictly in order and should be accepted by the committee.


Henry Herbert Stevens: I cannot agree with the point of order raised by the minister, but I believe, nevertheless, that the resolution is not in order. May I draw the attention of the committee to the reading of the resolution which preceded the bill introduced on March 16. Votes and Proceedings record the resolution in this way:
That it is expedient to bring in a measure to provide for the constitution of a board to be known as the national harbours board, with jurisdiction to administer and control public harbours in Canada, and to provide for the salaries of the members of the board and of the officers, clerks-
And so on. Then it goes on to say:
Whereupon Mr. Howe, a member of the King's Privy Council, informed the house that His Excellency the Governor General, having been informed of the subject matter of the proposed resolution, recommends it to the house.
The bill was preceded by the resolution, part of which I have read. It was submitted: to His Excellency the Governor General, received his approval and was submitted to the house. Following that, a bill was introduced to set up one harbour board. As I said before, there may be . a question in my mind as to the advisability of that action, but in so far as the point of order is concerned may I suggest chat it is raised upon the point that the amendment departs from the principle enunciated in the resolution which preceded the bill, and is indeed a definite alteration in the principle of the bill. I do not believe it is advisable for the house always to accept a point of order raised in connection with a money bill, because I believe we are getting too much into the habit of ruling amendments out of order simply because a bill may refer to the expenditure of money. I suggest that a great deal of care should be exercised in curtailing the privileges of a member in that regard. On the other ground however I think the amendment unfortunately is out of order.


Thomas Vien: On the point of order, if the bill purported to create a new harbour commission and did only that, I suggest that the point raised by the hon. gentleman who just preceded me (Mr. Stevens) might be well taken, but that is not the purport of the bill. The bill purports to abolish seven harbour commissions or rather to amalgamate them
National Harbours Board

all into one commission. The purport of the amendment is to reduce these seven commissions to three instead of one, and therefore I believe it is strictly in accordance with the general principle of the bill, except that it does not go as far as the bill itself.
As to the point raised by the hon. minister (Mr. Howe), I suggest that the amendment does not increase the present expenditure of money, but instead of reducing it to the extent involved in maintaining only one harbour commission, it reduces it only to the extent of the expenditure involved in maintaining three harbour commissions. I suggest that in respect of both the expenditure of money and the principle of the bill, the amendment is in order.


Ernest Bertrand: Furthermore, section 37 of the bill declares that the corporations and the board are hereby declared to be amalgamated, so that the principle of the bill is to amalgamate a certain number of commissions, and we are simply asking that there be three commissions instead of seven.


The CHAIRMAN (Mr. Young):: The
amendment provides for three boards instead of one. Whether the government would pay to the members of three boards what it would pay to the members of a single board is a very difficult point for the Chair to decide, but it does seem to me that inasmuch as three boards are proposed instead of one the expenditure naturally would be increased. Therefore I am inclined to the view, and so rule, that the amendment is not in order.


Mr. WALSH:: Coming back to the point raised by the Minister of Marine, I have already, as this house knows, endorsed the principle of this bill with certain qualifications. I have also intimated to the house the high esteem in which I hold the present Minister of Marine. But during the course of his brief remarks he made a statement to which I must take exception. I do not think it is fair to cast a reflection upon the harbour boards that have displayed considerable efficiency and public zeal over a period of twenty to twenty-five years by a statement such as this, "a shocking betrayal of public trust." That might refer to certain boards in certain localities, or to certain members of certain boards, but I do not think the Minister of Marine would care to make such a sweeping statement in connection with all harbour boards that have been in existence in connection with our national harbours or in respect of all members of those boards. In justice to these men who have so faithfully dis-

charged their duties and in justice to those boards that have displayed considerable efficiency I feel that the minister should, and I hope that he will, qualify his statement and qualify it considerably. I know there are harbour boards and certain individuals against whom we could level such accusations, and probably in some cases they would be well founded, but I must say this: I do know certain members of certain harbour boards; I am conversant with the administration given by certain harbour boards in certain of the larger cities of Canada, and I must say that the minister's statement cannot apply to certain harbour boards and to certain individuals who have served on those boards. I refer particularly, of course, to the harbour board that has just ceased to exist in Montreal. I refer particularly to the chairman of that harbour board. He is a man in whom I have the utmost confidence. There are others that I could name in other cities, and no doubt other hon. members are interested in harbour boards in their own particular cities and could cite numerous examples on whose behalf exception should be taken to the minister's statement. I would ask the minister if he would place on Hansard a qualification of his statement so that all harbour boards will not be included and so that all gentlemen who have served on harbour boards will not be included in such a sweeping and general statement.


Clarence Decatur Howe: I say at once that I did not intend my statement as reflecting on individuals, but I have made a careful study of the record of harbour boards as found in the Department of Marine and I am unable to distinguish between the records of harbour boards. If my hon. friends would care to have me do so, I will give them the history of any one. I may say that it is confined to no particular period and to no particular party. They are all about the same. I shall be very glad to give my hon. friend the record if he doubts my statement. It is not my purpose to dwell on that side of the matter. I think everybody who is familiar with harbour boards knows something about the back-bone of the thing, and that the system of control is wrong. I hope that qualification will suit my hon. friend, but that is as far as I care to go.


Richard Bedford Bennett: The minister has said either too much or too little, one or the other. He has condemned the character of decent Canadians. He has charged them with malfeasance in office, with breach of trust, with dishonourable conduct in the performance of their duties, and he cannot produce sheets of paper ex parte without giving these men a

National Harbours Board
chance to be heard. What is he proposing to do? To read certain documents he takes from certain papers with reference to harbour boards and members of harbour boards scattered all over this country from Halifax to Vancouver, men who have given their lives to the service of their country? Does he assail Professor Brock, whose life is gone? He assails him. He assails decent men in Montreal, Halifax, Saint John, men who have given their very best to their country. He now says that this is the most shameless breach of trust that has ever happened in the Dominion of Canada. He has said too much or too little, and if he makes that statement he cannot read from a document without these men having a chance to be heard and offering any explanation they desire. These men cannot be charged ex parte. There must be an opportunity afforded by a parliamentary committee for these men to appear and make their explanation. The minister says that his remark applies to no period and to no particular board. Therefore it is universal. It covers all the harbours we have in Canada. It covers their administration for years before he was in Canada. His statement refers to men who value their reputation just as much as he values his, men who are as honourable and have as decent a record as business men as he has, men whose reputation will stand the closest investigation that may be brought to bear upon it by any tribunal. These men have a right to be heard. I thought when the minister rose that I would hear a decent explanation with regard to his statement, but he not only repeats it but emphasizes it. Now it is quite clear that these men must have a chance to be heard. It is no good to say: I have here a lot of information. That is not under oath. What importance can one attach to that?
We have had cases of this kind before in this country and we know perfectly well that opportunity for defence must be given. During the last parliament charges were made with respect to the Montreal harbour. Charges were made in the press with respect to the guaranteeing of securities amounting to $19,000,000 for the building of a bridge in that harbour. One of the first things we did after coming into office was to appoint a firm of auditors, Price, Waterhouse and Company, to make an investigation. They did investigate and made a report which was tabled in this house and which contained a detailed history of the expenditures for the construction of that bridge. It was alleged by an hon. member who sat for a western constituency that there were improper things in connection with it, but we satisfied ourselves from facts that were produced to the auditors that we would have to go entirely beyond Canada in order to deal with what was alleged, and we had no jurisdiction.
In connection with the harbour at Halifax there was an investigation that was partly completed. This was carried on under Mr. Justice Orde, who has since died. I notice an item in the estimates providing for the payment of certain accounts which were incurred. These men and their successors are now suffering under that charge. The men at Saint John and their successors are in the same position, and the same applies to the men at Three Rivers, Chicoutimi and Quebec and their successors. Is that fair? I do not think there is any harm in saying to the minister that he is inexperienced. No minister would ever think of making a charge of that kind against men who cannot be heard, who are not here, who have not an opportunity to appear, who have wives and families, whose honour and good names are just^ as valuable as the hon. gentleman's Their children are proud of their fathers and no one has a right to make a charge of that kind without giving them a chance to be heard. There is only one way in which this matter can be dealt with; it should be referred to a proper committee for the purpose of investigating the charges which he makes against these men during the years they have administered these harbours as commissioners.


Jean-François Pouliot: How many children of
these men have been affected by the words of the minister?


Clarence Decatur Howe: I made it quite clear when
replying to the hon. member for Outremont (Mr. Vien) that I was not mentioning any names. The documents I referred to are public documents, the files of the harbour commissions. I simply say that the system is not one that should be perpetuated. I do not know that I went any further than that, and I do not think the right hon. gentleman was called upon to go just as far as he did go in his last statement.


Richard Bedford Bennett: How could I do anything else?


Thomas Vien: On the second reading of this bill I expressed my opinion as to the merits and demerits of the principle involved therein. I suggested then to the government that every section of the country should retain as much local autonomy as possible. Very little good can accrue to Canada from the centralization of the control of our harbours in the hands of three government officers sitting in Ottawa. No matter how
National Harbours Board

distinguished, how alert or how efficient they might be, these gentlemen could not accomplish as much as three local boards, one on the Pacific, one on the Atlantic and one on the St. Lawrence river. The minister suggested difficulties which might arise in the appointment of the commissioners. He suggested that in the maritime provinces a difficulty might arise as between Saint John and Halifax and on the St. Lawrence, between Quebec, Three Rivers, Montreal, Sorel and Chicoutimi. These difficulties, in my opinion, are insignificant as compared with the discontent which will certainly arise in these various cities over the loss of the autonomous government of their harbours
There is much colour and substance in the statement made by the minister as regards certain things needing correction. The harbour boards were not infallible and I am free to admit that mistakes were committed. As long as we shall have to rely upon human beings to administer our harbours, mistakes will be committed. The three men to be selected by the government, no matter how carefully selected, will not be infallible and they will make mistakes. But I submit that well selected men, conversant with local conditions, would be of greater service than three government officials sitting in Ottawa. No matter how devoted these men might be in the discharge of their duties, they could not possibly be as efficient as men chosen in the locality.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.