1937-04-02

[Stage Direction]
Fifth and final report of the standing committee on railways and shipping.-Si't Eugene Fiset.

Right Hon. W. L. MACKENZIE KING (Prime Minister) moved:: That the recommendation submitted by the Civil Service Commission under section 12 of the Civil Service Act for the change in the compensation of the editor of French debates and chief of French reporting staff, laid on the table of the house on Monday, March 29, 1937, be approved.


Mr. BENNETT:: Perhaps the Prime Minister will explain this.


William Lyon Mackenzie King: The title of this position was changed by resolution of the house in the session of 1929 from associate editor of debates and reporter (French) to editor of French debates and chief of French reporting staff. The civil .service commission has classified the position at the salary mentioned in the report laid on the table of the house. This classification involves an increase of S180.


[Stage Direction]
Motion agreed to.

William Lyon Mackenzie King: That the recommendation submitted by the joint librarians of parliament for a change in the organization of the staff of the library, laid on the table of the house on Thursday, April 1, 1937, be approved.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to introduce a measure to authorize the guarantee by the government of Canada of principal and interest of loans made by chartered banks and guaranteed by the provinces of Alberta, Manitoba and Saskatchewan, respectively, for the purchase of seed grain and for providing other assistance to farmers in connection with seeding operations during the spring of 1937; such loans not to exceed in the aggregate the sum of $1,600,000 in respect of Alberta, $750,000 in respect of Manitoba, and $6,600,000 in respect of Saskatchewan.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Broadview):: I wish to ask a question based on an article in the Montreal Gazette of March 23, in which it is reported that Major Gladstone Murray said:
There is a very important development connected with public service broadcasting in Canada, and the whole of Canada must realize that we have two parent languages. We must be ready and willing, and we should be anxious to accept the heritage of these parent languages with their storehouses of literature and history. The Canadian Broadcasting Corporation is pledged to make Canada bilingual, to eliminate all these differences of opinion.
I should like to ask the government whether that is the policy of the government, and was the head of the commission speaking for the government. The other day I got no reply but "no." The extract from a newspaper article in the question as drafted had been struck out.

Quebec Fisheries


Mr. HOWE:: That question was answered the other day-


Richard Bedford Bennett: No, it was not answered.


Clarence Decatur Howe: -that the government had no knowledge of the speech.


Richard Bedford Bennett: There is a serious issue involved in connection with this. The hon. member showed me the answer he received, which was not an answer to his question at all. He submitted to the clerk before placing it on the order paper a question which contained an extract from a newspaper. The clerk struck it out and put on the order paper a question of his own making, which was not satisfactory to the hon. member; however that has nothing to do with this. But the answer does not deal with the question. The hon. member has shown me the extract from the newspaper, which is in quotation marks, a declaration of policy by the head of the broadcasting commission, for which the government now assumes full responsibility, in view of what was said last session, and the question whether or not that policy is authorized by this government is a proper question.


Thomas Langton Church: It is contrary to the British North America Act.


William Lyon Mackenzie King: As to who
authorized the statement, I would say that the commission made its own statement, without any knowledge in advance on the part of the government. As to the question having been altered by the clerk, I may say the government had no knowledge whatever of that.


Richard Bedford Bennett: I am quite certain as to that. But that is not the question; the question is whether or not that statement made by Mr. Gladstone Murray, shown in quotation marks in the Gazette, is a statement which he was authorized to make. I understand the Prime Minister to say he was not. If he was not he certainly should be dismissed at once.


Mr. LAPOINTE (Quebec East):: There is a rule of the house which states that answers to questions must be accepted as given.


Richard Bedford Bennett: He should be dismissed for making that statement.


Ernest Lapointe: The government answered the question and it should be accepted as it is. I would have been surprised if some hon. member had not tried to bring up some question of this kind before this session ended. We have been free from it so far.


Richard Bedford Bennett: Is there any reason why the minister should himself violate the rule to which he has just directed attention?



QUEBEC FISHERIES

[Stage Direction]
On the orders of the day:
Mr. VITAL MALLETTE (Jacques Cartier) (Tmanislajtion):: Mr. Speaker, I wish to make am inquiry of the hon. the Minister of Fisheries (Mr. Michaud). The Montreal Gazette of this morning, April 2, 1937, reports, on page 3, column 3, certain remarks made in the Quebec Legislature yesterday by Hon. Onesime Gagnon, Minister of Fisheries of that province, concerning the relations between his department and the Dominion Department of Fisheries. I should like to know whether the minister has seen these remarks and whether he has a statement to make to this house regarding them.


Hon. J. E. MICHAUD (Minister of Fisheries) (Translation) :: I thank the hon. member for having informed me of hie intention to bring to my notice a statement said to have been made in the Quebec Legislature yesterday by Hon. Oinesime Gagnon, Minister of Fisheries, respecting certain words attributed to me by an official of that provincial department. Upon hearing of Mr. Gagnon's statement, yesterday afternoon, I sent him the following telegram.
Informed by telegram that you stated in the legislature that I said to Mr. Gibault, in the course of an interview with him a few days ago: "Not a cent for Quebec." That is contrary to the facts, as can be proved by my deputy minister who w'as present at interview. I said to Mr. Gibault that the province of Quebec could not be treated differently from other provinces whose fisheries are not federally administered and who receive no subsidies or assistance. I told him that we intended to carry out our obligations in respect of the Magdalen island fisheries which, while in Quebec, are under federal jurisdiction.
I cannot believe that Mr. Gagnon did make the statement attributed to him by this morning's papers. I am still wondering why he should have made use of a subordinate's report to pass judgment on my attitude regarding the administration of fisheries in Quebec, when he could so easily have reported the conversation I had with him, barely a few weeks ago, in his office in Quebw, in the presence of his deputy minister. Hon. Mr. Gagnon certainly cannot say that during that conversation I gave any indication of hostility. On the contrary, I left Ottawa to confer with him regarding the Quebec fisheries, the administration of which is still under his exclusive jurisdiction. This incident goes to show how difficult it is to cast off the old
Privilege-Mr. Stevens

man. If Mr. Gagnon did say about me what this morning's newspapers report, I cannot but think that it was the former T6ry minister rather than the present National minister who was speaking. It seems to me that I have always shown myself ready to cooperate with the Quebec Minister of Fisheries, and this incident can only make more difficult the settlement of a question that should be of far greater interest to the fishermen of Quebec than the provocation of a conflict between the dominion government and the Quebec government.



PRIVILEGE-MR. STEVENS PROCEEDINGS IN BANKING AND COMMERCE COMMITTEE ON THURSDAY, APRIL 1

[Stage Direction]
On the orders of the day:
Hon. H. H. STEVENS (Kootenay East):: I rise to a question of privilege. I have been a member of this house for some twenty-six years, and I have always sought to do my duty in the house and on committees as fairly as I can. There are occasions when I have held strong views and supported them as vigorously as I have been able to do, and I do not intend to retreat from that position at any time. In the press this morning is a statement supported by the record of what occurred last night in one of the committees of this house. I shall read the dispatch in the press, and upon that base my protest and question of privilege:
Dunning Hits at "Minority" in Committee Charges Attempt Being Made to Prevent Decision on Bill
Then the dispatch quotes the minister as follows:
I protest against the idea evidently dominating this committee that no decision is to be reached. .	.	. Parliament has the right to
dispose of a bill as it will, or make no decision, but it is carrying it rather far to prevent parliament deciding for itself.
The bill referred to was the Central Finance bill, which was referred by this house to the banking and commerce committee on Tuesday the sixteenth day of March. I now direct your attention, Mr. Speaker, to the fact that since that date there have been only eleven effective parliamentary days, and obviously the committee could not sit every day. Furthermore a number of other committees are sitting at this time. It is no argument, in referring to the committee, to say that the session is drawing to a close. This has been a short session, and there is ample time in the future to consider all matters before parliament. I can quote from the record as to exactly what the minister said, to support the
fMr. Michaud.]
published statement. I quote- from the stenographic report of the proceedings of the committee last night:
Mr. Dunning: -


Mr. DUNNING:: Mr. Speaker, I suggest
that there is no report from this committee before the house. I have not the right to quote from the proceedings of a committee, and therefore I presume my hon. friend has not the right.


Henry Herbert Stevens: I am speaking to a question of privilege. Under the rules of the house the proceedings of a committee cannot be quoted in the house while the matter is still before the committee. That is perfectly true, but on a question of privilege, when the matter has been published and broadcast in the press, I think a member has a right to quote from the record in order to support the accuracy of his statement. I am in the hands of the Speaker.


Ernest Lapointe: I believe my hon. friend has the right to deny the accuracy of the report, but I do not think he can quote the proceedings of the committee.


Henry Herbert Stevens: Well, then, Mr. Speaker, I wish to deny it in these terms: At five different meetings of the committee no quorum was obtained until half an hour after the time for which the committee was called. I and a few others appeared at the hour fixed for the meeting of the committee, and on five diffeiremt occasions no quomum was in attendance for at least half an hour after the time fixed. That is one thing. In his statement the minister said it was clear by the votes of the committee. I have not the votes of the committee before me, but I have this record in mind:	On one occasion it was
six to eleven; on another it was five to ten-


Charles Avery Dunning: My hon. friend is again quoting from the proceedings of the committee.


Mr. SPEAKER:: I do not think the hon. member can quote from the proceedings of the committee, because they are not before the house.


Henry Herbert Stevens: I am not quoting from the records; I am quoting from memory. A third vote was nine to nine, which indicates that it was not a small minority of the committee, but that there was a division of interest.
In the second place, Mr. Speaker, I submit this to you and the hon. members of the house. When this bill was referred to the committee it was with the distinct understanding that the committee would go into the

Combines Investigation Act
whole question of small loans as far as it desired, and I resent and deny the statement of the minister that there have been blocking tactics in order to deprive parliament of an opportunity of deciding the question. I say further that as yet adequate consideration has not been given to the subject or to the bill.
Hon. CHARLES A. DUNNING (Minister of Finance): I submit, Mr. Speaker, that there is no question of privilege involved in what has just been stated by the hon. member for Kootenay East (Mr. Stevens). What I said in the committee last night was my opinion as a member of that committee. I submit that I had a perfect right to state it, and to state also my belief that it was not desirable that bills should be talked out in committee, thus depriving the House of Commons of its privilege of deciding what should be done with the bills. My opinion may not meet the views of others, but surely as a member of the committee I had a perfect right to'state it and to state it here again now.


Henry Herbert Stevens: Mr. Speaker, I rise again to a question of privilege. Neither the minister nor any other member of this house has any right to impute motives to any other hon. member, and the minister states brazenly now that he repeats it.


Charles Avery Dunning: I rise to a point of order-


Walter Edward Foster: I do not think the Minister of Finance has imputed any motives to the hon. member for Kootenay East. The minister is simply expressing his opinion.


Charles Avery Dunning: I ask for the withdrawal of the word "brazenly," which is out of order.


Henry Herbert Stevens: I am speaking to a question of privilege. The minister stated it was clear from the minority votes of that committee-


Charles Avery Dunning: No, I made no such statement. My hon. friend is again contravening the rules of the house by purporting to quote from the proceedings of a committee, and is distorting the words which I used. I submit that the matter is out of order.


Henry Herbert Stevens: Will the minister and the house permit me to read the record?


Some hon. MEMBERS:: No.


Walter Edward Foster: I think the hon. member has stated his point of privilege sufficiently
to suit his purpose; the Minister of Finance has made his statement, and I do not believe there is anything further to add.



COMBINES INVESTIGATION ACT


[Stage Direction]
The house resumed from Thursday, April 1, 1937, consideration in committee of Bill No. 41, to amend and consolidate the Combines Investigation Act and amending act-Mr. Rogers-Mr. Sanderson in the chair.
On section 20-Investigation into business of alleged parties to combine.
Richard Bedford Bennett: With respect to this section, no doubt the minister will recall the Wilkes case and the declaration of law made in England in connection with the issue of warrants, general warrants, search warrants and matters of that sort. Here, without anything other than this statement in the section, we are authorizing the commissioner to enter premises and seize books. I followed the remarks of the minister yesterday, and I agree that it is desirable that in your desire to protect the rights of the subject you should not so protect them that the law cannot be enforced or administered. On the other hand, however, this British country has been extremely careful about that. While I can understand this statute being passed in the form in which it was at the time in question, it is a little difficult in this day to understand why we should be asked to authorize a man to enter the premises of another and take his books, documents or records without warrant other than this.
The criminal code provides for a warrant, and it provides the procedure that has to be followed in order to secure a warrant. During the night I happened to think of the Wilkes case, which is on all fours with this sort of thing. Public opinion was very much agitated by the Wilkes case and the conclusion at which the courts arrived in connection with it. I think it was Lord Ellenborough, although I have not had time to look it up this morning, who delivered that great judgment with respect to the issue of warrants. Here, without a search warrant, without anything in the world, the commissioner has authority, not to deal with the person against whom he has a charge, but " any person who the commissioner believes may be a party or privy to " it. He may walk straight into that person's office, including the office of the solicitor who lie may believe has assisted in the formation of the combine. Not only he, but his duly authorized representatives may enter and ex-
Combines Investigation Act

amine the premises, books, documents and records, and make copies of or retain any of such books, and keep the books of the man whom he suspects as being privy to the combine, or to have assisted in it.
The amendment to the section is striking at this particular time. I can fancy how, under different circumstances, if legislation of this kind had been passed there would have been cries of invasion of the rights of the people. If the judgment in the Wilkes case, which up to the present has been respected, is not to be considered; if the provision of the criminal code with respect to search warrants is to be disregarded, and if without any evidence in the world other than his belief the commissioner is to be in a position of exercising the power of a policeman with a search warrant under the criminal code, then I do submit to the minister it is going too far. That is all I can do.


Mr. ROGERS:: I recall the objections made yesterday by the leader of the opposition, and I can assure him that in the interval we have given further thought to them. I would point out in the first place that any action taken under this section is taken pursuant to an investigation which has been authorized under the provisions of the act following the application of six persons or at the instance of the minister. I think that disposes of the suggestion that the commissioner may, of his own volition, carry out-


Richard Bedford Bennett: Surely the minister has not read the section. Section 20 covers all that, up to the word "commissioner," but now we have it that the commissioner may believe such person is party or privy to the combine. The minister has nothing to do with it, neither have the six people.


Norman McLeod Rogers: The commissioner does not do it of his own volition.


Richard Bedford Bennett: But he does. He does it of his own volition; he does it because he believes somebody may be a party to it. It says:
The commissioner shall have authority to investigate the business-
And then it goes on-
[DOT]-of any person who the commissioner believes may be a party or privy to ... a combine.
All he has to do is to say, "I have the belief"-and nothing else. The minister knows nothing of it. It is simply that the commissioner believes someone is privy to it, including the solicitor, and he may walk in and, without a warrant, take the books. Certainly for over a hundred and fifty years the Wilkes case has been the governing case in matters
[Mr. Bennett.!
of this kind. Of nothing have we been more careful than the liberty of the subject with respect to his property, and the obtaining of a search warrant to invade his property, so that it may be taken from him. Just because this man believes something, he can do these things. Surely the minister would hardly say that either the six people or the minister have anything to do with it. The commissioner believes; all he has to do is to believe it, and there is no remedy in the world against his belief.


Norman McLeod Rogers: Perhaps I did not make myself clear. What I had in mind was to emphasize that this was pursuant to an investigation which previously had been authorized.


Richard Bedford Bennett: Yes, quite.


Norman McLeod Rogers: On the further point as to whether or not it is wise to have this section in the act, may I emphasize that it is not an entirely new provision. There is some change from the previous provision touching the same matter, but from the beginning we have had sections of this kind in our anti-combine legislation. In other words, the warrant is here. I agree that perhaps it is in the nature of a general warrant, but let us remember that all we have in view is to secure evidence in an investigation upon which a criminal proceeding may follow in the courts. I do not think this is entirely unknown in the legislation of parliament. Under the Food and Drugs Act, and under the Precious Metals Marking Act, which was before the house the other day, there are provisions-


Richard Bedford Bennett: Not like these.


Norman McLeod Rogers: -under which officials of the government may enter the premises and take articles which are not in conformity with the provisions of the act, keep them and use them as evidence in subsequent criminal proceedings. My right hon. friend will recognize that that is true with respect to the Food and Drugs Act and also the Precious Metals Marking Act.


Richard Bedford Bennett: There is no similarity between them.


Norman McLeod Rogers: What we are seeking to find is the evidence upon which a future proceeding may follow. If the evidence is not disclosed, obviously no proceeding can follow. This is not a departure from what has been done in previous years. Rather it is a recognition that some warrant of the kind is necessary in order to secure all the facts in an investigation.

Combines Investigation Act


Richard Bedford Bennett: Mr. Chairman, I have been endeavouring to deal with this matter as one of public interest and public concern. The fact that something has been done does not in any sense detract from wihat I believe to be the force of the statement of the real position. The section is not a reproduction of the former one; there are modifications of it. I should like the Minister of Justice to look at the language of the section. The commissioner, who is Mr. McGregor, shall have authority-


Norman McLeod Rogers: Surely the leader of the opposition is not entitled at this time to say who will be the commissioner.


Richard Bedford Bennett: I am talking about the present one.


Norman McLeod Rogers: He is the registrar.


Richard Bedford Bennett: Well, "registrar."


Norman McLeod Rogers: And he enjoys that position, I might say, by order in council, and not by any provision of the Dominion Trade and Industry Commission Act.


Richard Bedford Bennett: I am familiar with that. It was provided in the statute that his superannuation should be protected, and that sort of thing.


Norman McLeod Rogers: Well, it would be better to assume only that there will be a commissioner.


Richard Bedford Bennett: If in any sense it annoys the minister, I will treat the argument purely as one which has to do with A or B or C.


Norman McLeod Rogers: It is not a case of annoyance at all.


Richard Bedford Bennett: The commissioner, Mr. A-

shall have authority to investigate the business or any part thereof, of any person who the commissioner believes may be a party or privy to or have assisted in the formation or operation of a combine.
That is one thing. All you have to do is to have a commissioner who says, "I believe that Mr. Bennett, the solicitor, had to do with the formation of a combine," and thereupon he may walk into my office and take my books. But it does not stop there. He may sign a paper to let somebody else do it. That is the section as it reads. In this twentieth century we are asked to agree that this commissioner, simply because he believes something, may sign a paper and send John Jones into my office to take my papers. Then the next point: He may examine the premises, books, documents and records of or in the possession or control of the person whose premises he searches. He may make copies of them, or retain any of such books or documents which he believes may contain information regarding the offence. I cannot think that the minister seriously urges that we do that. Here is the law with respect to search warrants, the criminal law of Canada. There is nothing about which we have been more careful. We have provided the machinery by which a search warrant may issue. All these provisions are to be embodied in this section, which provides that a man or a representative named by him-not on sworn testimony, not on an affidavit such as would be required in a civil action, but simply on the statement of his belief-may walk in and take the books and records. I cannot think that is sound.


Norman McLeod Rogers: I can only repeat that this is not essentially a new power being given to the commissioner under the Combines Investigation Act. In past years it has been found necessary to have some power of this kind in order to secure evidence upon which the existence of an illegal combine may be established. I believe similar power is given by other legislation. As the leader of the opposition has suggested, there is the celebrated Wilkes case in England with regard to general warrants. In connection with a number of matters we have had to act differently in view of the marked change which has taken place in our industrial life and also in view of the practices which have been associated with certain aspects of our industrial and commercial life. I do not think it would be wise to deprive the commissioner of the powers necessary in the course of his investigation. I would emphasize that all that is done here is done pursuant to investigation. There can be no conviction until the matter has been brought before the courts. I think one is justified in assuming that the power so held will be exercised by the commissioner with due discretion.


Richard Bedford Bennett: I am looking up the provisions of the criminal code with respect to search warrants. This section can go forward now and I shall speak to the matter later.
Section agreed to on division.
On section 21-Powers of commissioner as to witnesses.


Mr. CAHAN:: I would say that section 21 nullifies the necessity of section 20. Section 21 provides that the commissioner may make such orders as are necessary to secure the attendance of witnesses and the production of books and documents. If the commissioner can summon before him any person to produce documents and to give oral evidence with respect thereto, that may be all that
Combines Investigation Act

would be necessary in conducting an investigation of this kind. A dozen attorneys in the city of Montreal may have been associated in their professional capacities in the formation of what is believed to be a combine and under section 20 the commissioner may proceed to their offices and seize all their papers, although they are confidential, with respect to the organization of certain companies or associations. These may be retained by the commissioner. Section 21, which gives the commissioner authority to summon in an official way persons for the production of papers and the giving of evidence with respect thereto should be quite sufficient.
Subsection 2 provides that any person summoned by the commissioner shall be competent and may be compelled to give evidence as a witness. I submit that that can be enforced only with regard to a breach of the existing criminal law. This parliament has no legislative power or competence to authorize an investigation, to summon witnesses and to compel the production of papers unless it be an investigation into a subject matter within the legislative competence of this parliament. The mere belief of a commissioner is not a matter within the legislative competence of this parliament. There must be a violation of some existing criminal law. The whole matter of the rights of contracts and the rights of individuals to conduct their business and to organize companies under the civil law of the province-dealing especially with the organization, of companies under provincial legislation-are not infringements of criminal law with respect to which this commissioner may act. He has no authority and this parliament can give him no authority to investigate a civil matter, except it be a matter such as banking, insolvency or some other matter which is within the special classes of subjects under the legislative jurisdiction of this parliament. This commissioner can have no power and this parliament is incompetent to give him any authority to deal with matters which primarily and nominally are under the legislative jurisdiction of the provinces.


Mr. THORSON:: The answer to the remarks just made by the hon. member for St. Law-rence-St. George has been given by the judicial committee of the privy council. The judicial committee held that the Combines Investigation Act was intra vires of this parliament.


Charles Hazlitt Cahan: Certainly.


Joseph Thorarinn Thorson: Does it not follow that
the powers necessary to the proper administration of the act and the proper investiga-

tion into whether there is or is not a combine are also within the jurisdiction of this parliament?


Richard Bedford Bennett: As being ancillary.


Joseph Thorarinn Thorson: Yes. I think that follows as a matter of course. The whole purpose of this act is to provide machinery for investigation into combines. Once parliament has adopted that principle it ought to provide proper and adequate machinery to accomplish the purposes of the act. It does so by giving certain powers to the commissioner, who is the officer appointed under the provisions of this bill. That is the justification for section 20 and section 21. Admittedly section 20 gives wide powers, and section 21 provides for the calling of witnesses and the production of documents. If an investigation is to be conducted properly and thoroughly, witnesses must be called and documents must be produced, because usually the essence of a combine is the making of an agreement of some kind or other, and in many cases that agreement is evidenced by a document. That document is therefore the basic document, and we ought to provide in this bill for the machinery which will enable that document to be produced, so that the commissioner may make the thorough investigation that ought to be made if the principle of this bill is to be applied.


Charles Hazlitt Cahan: In reply to that I would
say that a combines act has been declared to be within the competence of parliament, but not this combines bill. The contemplated act is very different. As I attempted to explain yesterday, it is much wider in its application than the combines act which was before the judicial committee of the privy council. Secondly, the basis on which the old combines act was declared to be within the competence of parliament was that it was dealing with an investigation into certain sections of the criminal code to ascertain whether crimes had been committed in respect of those provisions of the code. What I stated yesterday by citation of the acts is. I think, quite sufficient until the amendment proposed by the minister is brought down, and I need not now go into it further. But this proposed combines bill has never been before the judicial committee. Possibly the implication which this bill contains is necessary and inevitable, but it is only by implication that this commissioner is proceeding preliminary to or during an investigation when he proceeds as suggested in sections 20 and 21 of this bill. But assume that he is proceeding with respect to an investigation: in the act which was confirmed by the judicial

Combines Investigation Act
committee of the privy council there was no provision for his forcible entry into offices and seizure of their papers. He could summon witnesses, he could compel the production of papers, but he had no authority under the previous act to seize private property.


Richard Bedford Bennett: I wonder if the Minister of Justice (Mr. Lapointe) would give me his attention for a moment, because now I have the relevant section dealing with search warrants under the criminal code. Section 20 of this bill contemplates the commissioner being himself the executor of the search warrant. That is the first distinction; he himself executes his own warrant, the warrant being this section, as the minister puts it; I decline to accept that view. Let me read the provisions of the existing law:
629. -Any justice who is satisfied by information upon oath in form 1, that there is reasonable ground for believing that there is in any building, receptacle, or place,-
(a) anything upon or in respect of which any offence against this act has been or is suspected to have been committed;
That, could easily be done here. It could be provided that the commissioner upon application to a justice may obtain a warrant under the same provisions as in the criminal code.
or (b) anything which there is reasonable ground to believe will afford evidence as to the commission of any such offence; or
(c) anything which there is reasonable ground to believe is intended to be used for the purpose of committing any offence against the person for which the offender may be arrested without warrant;
may at any time issue a warrant under his hand authorizing some constable or other person named therein to search such building, receptacle or place, for any such thing, and to seize and carry it before the justice issuing the warrant, or some other justice for the same territorial division to be by him dealt with according to law.
If the building, receptacle or place in which such thing as aforesaid is reputed to be is in some other county or territorial division, the justice may, nevertheless, issue his warrant-
And when it is endorsed it becomes effective Here are the notes in the 1935 edition of Crankshaw, page 698. I believe the minister will realize their importance:
The above section, 629, authorizes the issue of a search warrant, whenever the justice is satisfied by information upon oath that there is reasonable ground for believing that there is in any premises, 1, anything upon or in respect of which any offence has been or is suspected to have been committed, or, 2, anything which there is reasonable ground to believe will afford evidence as to the commission of any offence, or, 3, anything which there is reasonable ground to believe is intended to be used to commit any offence for which the offender may be arrested without warrant.
To justify a magistrate in granting a search warrant to search for stolen goods, the information made before him need not allege that the goods have been actually stolen, but it is sufficient if the information can be fairly understood as alleging reasonable grounds for suspecting that the goods have been stolen.
An information to obtain a search warrant under section 629 need not be signed by the complainant-
He may make his statement on oath.
It has been held, in an English case, that the search warrant need not specify the goods for which search is desired. It is not necessary that the premises directed to be searched should be described in the search by metes and bounds-
Et cetera. In executing a search warrant the officer must have the warrant with him.
There is a point to which I direct attention with reference to the present statute. The complainant has made his oath and the justice has issued a document, which document is the authority for entering the premises, it being expressly provided by a paragraph of section 40 of the code that:
"It is the duty of everyone executing any process or warrant to have it with him, and to produce it, if required."
But paragraph 3 of section 40, ante, declares that a failure to fulfil either of the two duties mentioned in paragraph 1 of the section shall not of itself deprive the person executing a process or warrant of protection from criminal responsibility.	.
The constable to whom a search warrant is directed and to whom it is entrusted should use great caution in the execution of it. He should be accompanied to the premises by the owner of the property or by some other person able to point out and swear to the goods in question. If the premises are closed and the constable is denied admission after making demand of admission and disclosing his authority and the object of his visit, the premises may be forced open by him.
It has been held that a formal demand of admission by an officer is sufficient before breaking into a house.
In making the search, care must be taken that no other goods than those designated in the warrant, or such as have been actually stolen, be seized.	.
Where a constable has searched premises it will be presumed that he acted under a proper warrant, in the absence of any evidence on the point.
Where evidence obtained from a search has been admitted without objection the presumption is that the officer searching had a proper warrant and the onus is on the accused. . . .
Then, on page 699:
Where a discretion is given by statute to a magistrate issuing a search warrant, the court of appeal will not interfere where there were grounds upon which the magistrate could exercise his discretion.
The proceedings upon which a search warrant is issued and the warrant itself may be brought before the court on certiorari, and if the warrant is deemed to have been improperly issued, it may be quashed.
Combines Investigation Act

It is essential that an information for a search warrant should set forth the "causes of suspicion," in order to satisfy the justice that there is reasonable ground that the articles to be searched for are associated with the crime charged. If the information does not pledge the informant's oath to such belief and state the cause of his suspicion, it is insufficient, and a search warrant granted upon it is bad and should be quashed.
A search warrant based upon an information which is not sufficient to satisfy a reasonable man that there is reasonable ground to believe the existence of what is alleged, will be quashed.
A search warrant which does not show the offence in respect of which the search is to be made is bad and will be quashed on certiorari.
The warrant is regular if the search is authorized "at any time," such authority being authority to search at night and valid under section 630.
Then there is a provision, as we know, as to when the warrant should be executed.
Every search warrant shall be executed by day, unless the justice shall by the warrant authorize the constable or other person to execute it at night.
I now put to the minister these questions. In a proceeding authorized by parliament for the purpose of gathering evidence upon a preliminary investigation for a criminal offence, which is, as far as that is concerned, very much like the provisions of the criminal law of France, is it desirable-I put it on as low a level as that-that we should depart from the established principles that have always governed our law since the time of Wilkes in connection with search warrants? Look at the difference. This section provides that a commissioner shall exercise the power here contemplated upon his mere belief that something exists. He makes no oath, he does not place himself on record, as a man would have to do if seeking a search warrant in a million dollar transaction or in a case of theft or anything of that sort. There is no oath, no appearance before a legal authority; but merely because we have said in this parliament that if he believes that somebody is privy to a certain transaction he can walk in and take that person's books and his property. Section 629 of the code, which has been our law for years, certainly does not make provision for any such absolute power being exercised as is indicated here.
May I suggest what the proper course should be-and I am not trying to burke the bill. I merely offer a suggestion as to the way in which it should be dealt with, without claiming that the suggestion is in any sense a complete solution of the difficulty. The commissioner, when he believes so-and-so, may apply to a justice for a search warrant, and then you have all these provisions of the law; in other words, we have safeguarded in the

transaction the persons whom we are proceeding against, in the same way as other persons are protected by the law. We have not, that is to say, the mere unsupported belief of an individual authorized to exercise great powers, but we have embodied in our statute the common experience of our institutions. He makes his oath that he believes so-and-so, setting out the grounds for that belief, and when he has done that the search warrant issues and he goes and takes possession of the documents. He has a constable do it. As it stands now, however, and as I pointed out to the minister a few minutes ago, the commissioner exercises the powers of a justice, without an affidavit, and he authorizes his representative to walk into somebody's premises notwithstanding that our law provides that a constable or peace officer shall be beside him with an authority, namely a warrant, which warrant can be obtained only upon an affidavit disclosing reasonable grounds. And it has been held by the courts-whether properly or improperly it is not my business to say-that if the warrant has been obtained without reasonable grounds being stated, that is, if the affidavit does not disclose reasonable grounds, such a warrant may be quashed; and such warrants have been quashed frequently.
What have we here by contrast? A belief on the part of one man, merely a belief, not backed up by oath or any such statement, and he walks in, himself, and if he cannot do it himself he signs a paper and sends somebody else to do it, without any evidence at all except that inward belief which is not manifested by any expression of opinion either under oath or otherwise. Is that right or just? I do appeal to the Minister of Justice not to place upon the statute books, now that we are revising an act, a principle that is at variance with every rule that has been recognized, since the great Wilkes case at any rate.


Ernest Lapointe: It is there already.


Richard Bedford Bennett: No, it is somewhat different. But if it were-


Ernest Lapointe: It is the same principle.


Richard Bedford Bennett: Well, the fact that it is there only makes me feel all the more strongly that it should not be there. Because in days past we placed upon the statute book something that should not be there is no reason why to-day I should admit its soundness. That argument, to use the language I once heard a lord chancellor use, would deny the possibility of reform.

Combines Investigation Act


Ernest Lapointe: I know; but my right hon friend stated that it was a new principle that violated something that had been recognized for centuries.


Richard Bedford Bennett: Perhaps I should put
it this way. It embodies in its suggested form, as well as in the section to which reference has been made as having been in the statute since 1923, a violation of well-established rules, and it shifts the whole theory of our criminal law.


Joseph Thorarinn Thorson: Does not my right hon. friend think that in a statute such as this there ought to be a wide power to obtain basic documents?


Richard Bedford Bennett: Certainly, and I said so yesterday. I follow the argument made by my hon. friend as well as by the minister, and I approach the matter from the standpoint of there being a necessity for it. But in the exercise of the power, to give effect to that necessity, let us at least recognize the accepted principles of our criminal jurisprudence.


Joseph Thorarinn Thorson: But ought there not to be a wider power than that provided in the criminal code in respect of search warrants in view of the complexity of the operations that are being investigated and also in view of the fact that this is an investigating rather than a prosecuting statute?


Richard Bedford Bennett: Yes; but it is an investigating statute the effect of which, not to anticipate, is certainly very serious for individuals. In other words we are going back to the theory that has obtained on the continent; a man is charged with an offence and brought before a judge and he has to prove his innocence. That is not wholly lacking in many provisions of our law where you have something that is presented to you as prima facie evidence of an offence having been committed. But that is not the case here. This is an investigating act, and in the course of the investigation it is thought desirable that books and documents should be obtained, and I do say that it' should not rest upon one man's belief, which may be prompted by malice or anything else, to exercise the power here conferred. He may become annoyed, he may be angry at the difficulties that he has had to meet. Let us leave all that aside and decide to stick to the established rules, and if he wants to obtain certain documents-there is no publicity about it-he merely walks round to a justice, makes an affidavit, discloses his reasons for believing so-and-so, and gets the warrant. But the hon.
member for Selkirk (Mr. Thorson) will agree with me that when you apply it to a person who is not declared upon oath to be privy to something, but who somebody believes is privy, and on the strength of that have a commissioner exercise the power here contemplated, the position is different. I do say that that principle is unsound, and it would not make any difference how many times it had been enacted as far as my judgment is concerned.
I adopt the language of the Minister of Justice. No measures of this kind that violate fundamental principles in dealing with the liberty and property of the subject have ever yet been successful in British countries. They have not been successful for the reason that they at once arouse animosity and antagonism, which are reflected in the minds of a jury if the case goes before one. I do appreciate the view stated by the hon. member for Selkirk, but in the acceptance of it I ask the committee to apply the principles that have stood the test of time with respect to the sanctity of a man's property, his office, and his home. For this is without limitation as to either.


Ernest Lapointe: I do not minimize the weight of the representations made by my right hon. friend. I think he puts the question properly when he says that this is a change from what is generally done under the sections of the criminal code, when we prosecute or intend to prosecute offenders. But is it desirable to effect that change? That is the whole question. It is more a question of public policy than of law. This act-and these remarks will apply to other sections as well as this one-is directed to the suppression of combines which may be detrimental to the public interest. It is the public interest which governs this legislation and which we have in view in enacting every section of it. Apparently this parliament thought in 1923 and since, as well as in 1935, that a provision of this kind was desirable in order to come to ascertain the facts, in order to find out whether there really is a combine detrimental to the public interest. I agree entirely with my right hon. friend in what he says about the liberty of the subject, that the home of a citizen is his castle and in ordinary cases should not be invaded without warrant. But here it is an investigation which does not start until and unless application is made by a certain number of citizens or there is an order by the minister. For the purpose of carrying on that investigation, which is not an ordinary proceeding under the criminal code, parliament has thought it proper to give those
Combines Investigation Act

powers for the examination of documents and so on. It is a question of policy. It is for parliament to decide whether it is better that this power should be given.
The fact that it is only one man, that the commission as provided for under the 1935 act is replaced by a commissioner, whoever he may be, does not alter the principle. I do not think it makes a very great difference whether there are three men on the commission or only one commissioner. I do not find in this bill many differences from the existing law.


Charles Hazlitt Cahan: You have only to compare these two sections.


Ernest Lapointe: To avoid all these troubles perhaps it would have been wiser merely to reenact the old legislation, simply substituting for the word "commission'' the word "commissioner."


Charles Hazlitt Cahan: Hear, hear.


Ernest Lapointe: My hon. friends opposite would, I suppose, have accepted what they voted for and what is their own work.


Richard Bedford Bennett: No, I would not accept this principle.


Ernest Lapointe: Not
even if my right hon. friend endorsed it two years ago?


Richard Bedford Bennett: It was a reenactment of an existing statute. I certainly have been opposed to this provision all my life.


Ernest Lapointe: As I have stated, however, it is really a question not of law but of policy. There are many provisions in the federal statutes for the enforcement of federal laws which are quite different from the sections of the criminal code. Take for instance the income tax act; the officers of the Minister of National Revenue do not require a search warrant to go and examine books and documents in the offices and stores and property of any citizen of Canada. If they could not do so the law would be futile and they could not carry on their work.
I repeat, this is merely a question of policy. There is considerable weight in the objection of my right hon. friend, and I am not very strong at any time for arbitrary measures. But I really hope that this section will not be criticized any more than the one that existed before.


Mr. KINLEY:: Does the Minister of Justice (Mr. Lapointe) not think the whole aspect of this act is somewhat changed? It repeals certain sections of the Dominion Trade and

Industry Commission Act of 1935. I understand that one section was found ultra vires by the privy council. That section provided:
14. (1) In any case where the commission, after full investigation under the Combines Investigation Act, is unanimously of opinion that wasteful or demoralizing competition exists in any specific industry, and that agreements between the persons engaged in the industry to modify such competition by controlling and regulating prices or production would not result in injury to or undue restraint of trade or be detrimental to or against the interest of the public, or where such agreements exist and in the unanimous opinion of the commission but for their existence wasteful or demoralizing competition would exist in any specific industry, the commission may so advise the governor in council and recommend that certain agreements be approved.
At the present time no cooperation of this kind can be approved. It leaves it in a condition of uncertainty. That is the point.


Norman McLeod Rogers: I think we are on section 21. Perhaps the remarks of my hon. friend would be more relevant to another section.


John James Kinley: The relevancy is this, that if you are treating industry as provincial statutes deal with organized crime, and provide no way whereby people in industry can put themselves right and make themselves immune to the act, it is very drastic legislation.


Joseph Thorarinn Thorson: There is nothing illegal about an arrangement of the kind that my hon. friend suggests. The only arrangement that is illegal is one that either has operated or is likely to operate to the detriment or against the interest of the public.


John James Kinley: That is fundamental in the act.


Joseph Thorarinn Thorson: The reason section 14 which my hon. friend quoted was held invalid was that it had relation to a matter which was not ancillary to the criminal law. In other words the decision of the judicial committee recognized the validity of that kind of arrangement, but stated that the dominion parliament had no authority to pass that kind of legislation.


John James Kinley: I do not propose to argue corporation law or constitutional law, but I say it did decide in advance what it was right and proper to do.


Richard Bedford Bennett: Just a word in answer to the Minister of Justice. I have always had the strongest possible view with respect to granting the right, without affidavit or oath, to any person to go into my office and take my books. I believe it is fundamental to my British citizenship that this should not happen. If my books disclose that I have

Combines Investigation Act
advised clients in what turned out to be an illegal and improper thing, that is protected by the traditions of the profession. On the other hand, to clothe one man with authority may be necessary for the purpose of securing information, but surely if he is clothed with authority he should not be set beyond the law that has been established for centuries but should be made to conform to the settled practice that deals with matters of that kind, namely making an affidavit and securing a form of instrument that authorizes the entrance into my home or my office and the taking of my books.
The law that this replaces did not authorize the taking of the books. What my hon. friend from St. Lawrence-St. George (Mr. Cahan) was pointing out so strongly was that under the statute as it formerly existed copies could be made, but now the books can be taken away and kept. The words are:
*-and make copies of or retain any of such books, documents or records which the commissioner or his duly authorized representative believes may contain information-
Not satisfied with the inspection he makes, if he believes they may contain information -and there is no oath or anything like that- he may take away my books and disorganize and disturb my business, while I have no recourse. The question of returning these books arises only after the case has been disposed of. When a search warrant is issued the justice has certain powers in connection with stolen property or whatever may be seized, but that is not the case here.
May I ask the Minister of Justice just to look at this. Section 21, which we are now considering, converts this commissioner into a judge, with wider powers than are possessed by the judges of the county or the superior courts. It gives him power; and he has no legal training. The hon. member for Winnipeg North Centre misunderstood what I said about a mind untrained in law. I meant he had no appreciation as to whether this was or was not a legal matter; I was not dealing with the question of the effectiveness or the efficiency of his training, but merely with the fact that he was not the type of man who could be appointed a judge, so far as this statute is concerned. I put this to the minister:	Look at the closing words of subsection 1 of section 21 and see what judicial powers are conferred upon this commissioner. In the first place we have him with the books; he has given notice and he has possession of them. Then listen to this. He may make use of the evidence so obtained and may otherwise exercise, for the enforcement of such orders or punishment for disobedience
thereof, all powers that are exercised by any superior court in Canada for the enforcement of subpoenas to witnesses or punishment of disobedience thereof. Again I ask the Minister of Justice if he thinks he can justify that.


Charles Hazlitt Cahan: He should have at least ten years' experience practising at the bar.


Richard Bedford Bennett: That is what a judge must have. There is nothing more difficult than these questions of contempt and disobedience. I know some very sound lawyers who say, "I instruct my client to entirely disregard this, and I will go to the privy council on any question that may be raised." The result is that they usually manage to get out of the difficulty. But does my hon. friend from Selkirk think that a commissioner, with no qualifications in dealing with legal matters, should have conferred upon him the power of a judge of the superior court for the purposes of committal and the punishment of disobedience? Surely we have not reached that stage in this country. The question of the competency and compellability of witnesses is dealt with and then witness fees are provided for. We now have a court, not an investigating tribunal. I do direct the attention of the minister to subsection 4. This commissioner has power to issue commissions-


Ernest Lapointe: Of course under the Inquries Act our commissioners have those powers.


Richard Bedford Bennett: But not powers such as these.


Ernest Lapointe: To compel people to give evidence.


Richard Bedford Bennett: But I am not talking about the compellability of witnesses. Look at this section as it stands. Here you have an absolutely unskilled person issuing commissions, and there is no statutory provision as to his qualifications, as there is in some cases. For instance, we cannot appoint anyone to the bench who has not had ten years' legal experience.


Norman McLeod Rogers: That does not apply to any royal commission set up under the Inquiries Act.
Mr. BENNETT Certainly not, but one would not think of setting up a commission under the Inquiries Act to investigate the conduct of a judge, because there is a limitation imposed upon the kind of person who should make such investigation. Look at subsection 4. Anyone who has practised law and has applied to a judge for a commission to examine witnesses abroad realizes the techni-



HEVISED E1IITI0N

[Stage Direction]
Combines Investigation Act
[Stage Direction]
cal questions that have to be considered as to why we should get the commission, the character of the evidence to be given, and so on. Such section 4 provides:
The minister may issue commissions co take evidence in another country, and may make all proper orders for the purpose and for the return and use of the evidence so obtained.
That is the minister; that follows with respect to what has gone before. Then subsection 5 provides:
Orders to witnesses and all other orders, process or proceedings, except such as are provided for in the last preceding subsection, shall be signed by the commissioner.
This country has power to appoint judges, but also it has imposed a limitation upon the kind of people it can appoint to the bench. That person must be a lawyer and he must have had a certain experience. As this reads now, however, we are conferring judicial powers upon a person who is without statutory qualifications. I wonder if that is a valid exercise of the federal power. Can we do that? He is a judge. The fact that a man is called a judge does not have anything to do with it, but the fact that he acts as a judge is allimportant. Here he acts as a judge, discharging, as I think the Minister of Justice will agree, very difficult functions. I recall one particular commission in which I was engaged when I was younger, and I know the difficulties in connection with the whole question of obtaining a commission, the affidavits that have to be made and what has to be disclosed. Leaving that out, however, it provides that he shall have all the powers that are exercised by any superior court in Canada for the enforcement of subpoenas to witnesses or punishment for disobedience thereof. Surely that means a judge. Those of us who have followed with particularity that noted decision with respect to contempt will realize that to confer upon a commissioner of this type the power to deal with contempt is going a very long way. I think there was a case in Manitoba some years ago of some importance along that line. Contempt in the presence of the court is distinguished from contempt in not obeying a subpoena, and the punishment is sometimes a fine and sometimes imprisonment. Now we are conferring upon this person the right to punish for disobedience, which is a power to fine and to imprison.
As a matter of fact, Mr. Chairman, in no country in the world are they so particular about it as they are in England, where it is difficult to avoid a fine for non-attendance to a subpoena. There have been cases, of course, as legal members of the committee know, in which even more severe treatment [Mr Bennett.]
has been meted out. But let us look at what we are asking parliament to do. Parliament is saying that Mr. A, without legal qualification as far as the statute is concerned, shall exercise the powers of a judge of the superior court and punish for disobedience, which is the highest judicial quality that a judge has to exercise. He has to have that untrammelled, unrestricted, and without any limitations further than those stated. I do suggest that the proper course is to say that in section 20 we will reenact the provisions of the criminal code with respect to search warrants. With respect to witnesses, non-attendance in giving evidence would be prejudicial to the case of the man affected. Then everything is presumed against him. But when we talk about punishment and the granting of a subpoena-under whose name will the subpoena be issued?
Joseph Thorarinn Thorson: It is called an order, is it not?


Richard Bedford Bennett: It has the same power as a subpoena. I think there is not a member of the committee who does not regard this as a usurpation of authority under a statute, placing judicial functions upon a nonjudicial person.


Norman McLeod Rogers: I wonder if the leader of the opposition has placed side by side these provisions and those under the Inquiries Act, because there is no material difference between them.


Richard Bedford Bennett: Oh, yes.


Norman McLeod Rogers: We understand certainly
that in connection with the appointment of commissioners under the Inquiries Act there is no requirement that a person so appointed shall be learned in the law.


Richard Bedford Bennett: No.


Norman McLeod Rogers: For some investigations it is desirable that we have a commissioner with legal training, but there are other investigations including, I submit, the type contemplated under this measure, which do not of necessity require legal training. Much has been said yesterday and to-day about the disadvantage under which a commissioner would labour if he did not possess wide legal knowledge. I am one who fully appreciates the advantages of legal training. On the other hand-


Richard Bedford Bennett: For a judge.


Norman McLeod Rogers: On the other hand, I also remember that Ramsay MacDonald once said that the most profound philosopher he had known was a shepherd in the highlands of

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24S3
Scotland, and I myself heard Sir John Simon on one occasion say that even judges were prejudiced and that their greatest prejudice was the belief that they were entirely free from prejudice. I think there is some truth in that statement. What we require here is not necessarily a legal mind. What we do require in a commissioner is a judicial mind, and I submit it is possible find judicial minds even among those who have not had the advantage of legal training.


Richard Bedford Bennett: Quite.


Norman McLeod Rogers: Now, if I might turn-


Richard Bedford Bennett: The minister's observations prove our case.


Joseph Thorarinn Thorson: But not judicial in the narrow sense of the term.


Norman McLeod Rogers: Not judicial in the narrow sense at all.


Richard Bedford Bennett: I am glad the hon. member for Selkirk rushed in with that observation, because that changes the purport of it.


Norman McLeod Rogers: I had hoped the leader
of the opposition would draw the natural inference. Let me refer to section 4 of the Inquiries Act:
Lhe commissioners shall have the power of summoning before them any witnesses,-
And remember, this is not a commissioner with a legal training-at least, he may not be a judge or barrister.


Richard Bedford Bennett: But the minister knows
the limitations the courts have imposed upon the Inquiries Act. Under that act one can deal only with such matters as the parliament of Canada might deal with. To that extent it is a creature of our own making, and its effect is negative.


Norman McLeod Rogers: In recent months we have
carried out an inquiry under the Inquiries Act touching essentially the same kind of investigation as is contemplated under this bill.


Charles Hazlitt Cahan: Are you referring to the
textiles commission?


Norman McLeod Rogers: I am referring to the coal
inquiry.


Richard Bedford Bennett: That was an effort to investigate one man, and it cost between $25,000 and $30,000.


Norman McLeod Rogers: I think the amount is incorrect; it was $15,000.


Richard Bedford Bennett: But there is another
item in addition.


Norman McLeod Rogers: I accept that statement;
my right hon. friend is correct. To continue with section 4:
31111-157J
The commissioners shall have the power of summoning before them any witnesses, and of requiring them to give evidence on oath, or on solemn affirmation if they are persons entitled to affirm in civil matters, and orally or in writing, and to produce such documents and things as the commissioners deem requisite to the full investigation of the matters into which they are appointed to examine.
5. The commissioners shall have the same power to enforce the attendance of witnesses and to compel them to give evidence as is vested in any court of record in civil cases.
It does not seem to me that there is a material distinction in the two cases.


Richard Bedford Bennett: Is there anything in the
Inquiries Act about punishing for disobedience?


Norman McLeod Rogers: The bill says:
. . . and may otherwise exercise for the enforcement of such orders or punishment for disobedience thereof, all powers that are exercised by any superior court in Canada.


Richard Bedford Bennett: I am talking about the
Inquiries Act.


Norman McLeod Rogers: There is a difference as
to that.


Richard Bedford Bennett: Yes, a great difference.


Norman McLeod Rogers: But with respect to the
compulsory enforcement of attendance of witnesses, and compelling them to give evidence, there is no distinction.


Charles Hazlitt Cahan: Except that you are giving
to the commissioner himself the right of search, in defiance of every principle of civil liberty. If the minister were to examine the recent enactments of Germany against the Jews he would not find any more arbitrary powers given to the German police than are given here to the commissioner. This is a purely nazi or fascist attempt to override civil liberty in this dominion.


Joseph Thorarinn Thorson: Surely the hon. member
is not serious in making that statement.


Charles Hazlitt Cahan: I am speaking seriously. It
is an attempt to override civil liberty in the dominion. As a matter of fact it is only the person who cannot afford to contest the extraordinary powers of the commissioner who will be affected. He will be affected by intimidation, and through not having the means to appeal to the courts. But the minister does not mean to assume that any company with the means to go to court could not prevent the exercise of such powers by the commissioner? As a matter of fact if the commissioner himself, without some clear means of identification, should force his way into my home or my office, and, in the protection of my home or office, my servant were
Combines Investigation Act

to inflict injury upon him, I think any jury in the land would say the servant was perfectly justified.


Richard Bedford Bennett: Because he has no document in his hand; the law says there must be a warrant.


Charles Hazlitt Cahan: Yes. I am not supposed to open my office to everyone who says, "I am commissioner so and so" or "I am constable so and so." I ask, "Where is your warrant?" and he has to show a judicial warrant authorized under the criminal code by a judge in his judicial discretion, before the person so authorized as a constable can forcibly enter my home or office. Otherwise if he gets a bullet through him he can have no complaint; the person who resists him is justified.


Joseph Thorarinn Thorson: How do the examiners under the income tax act operate when they wish to see the books or documents of a firm about which they are inquiring?


Charles Hazlitt Cahan: I am not going into the powers under the income tax act. Under this measure there are powers of seizure of private property, powers which are not contained in the Inquiries Act and were not in the old Combines Investigation Act.


Joseph Thorarinn Thorson: I should like to say a few words in support of what the minister said a few moments ago. I am entirely in agreement with the leader of the opposition in deprecating anything that is bureaucratic and arbitrary, but I do not agree with him in his criticism of the powers given the commissioner under the provisions of this bill. The Inquiries Act, which has for its purpose the institution of investigations into a great many matters, leaves the authority of the day free to appoint anyone as a royal commissioner. The royal commissioner under the Inquiries Act does not have to be a judge; he ought to be the person best qualified to pursue the particular inquiry that is contemplated. In some cases he may be a judge, in other cases he may be an economist, in still other cases he may be a business man, and we have even had members of parliament appointed as royal commissioners under the Inquiries Act. In many cases a person who is not a judge may be better qualified for the purpose of conducting inquiries such as are contemplated by the Combines Investigation Act, than a judge would be. The person appointed as commissioner under this statute ought to have the qualities of good sense and good judgment, and he ought to be a thorough-going investigator. If we appoint a man as commissioner under this statute who has had long experience of investigations

and who has shown thoroughness and good judgment in the investigations which he has made, then I think we are better off than if the commissioner were a judge having no experience and being untried in investigations of this kind. If we are going to give the investigator the necessary powers to make the proper inquiries, then we must give him some authority: we must vest him with power to enforce obedience to his orders. This is the justification for giving him the powers set out in this bill. These powers have been in the statute since 1923.
With regard to the question of the issuance of a commission, it will be noted that the bill proposes an amendment to the effect that the minister may issue commissions to take evidence in another country. The previous legislation gave the commission power to issue commissions to take evidence in a foreign country. The Minister of Labour has at his disposal the advice of the Department of Justice and the law officers of the crown and I submit that with such assistance he may be trusted to see that adequate steps are taken for the proper conduct of a commission in a foreign country.


Richard Bedford Bennett: I just want to quote the authority for what I said a minute ago. It is:
In executing a search warrant, the officer mu6t have the warrant with him; it being expressly provided by the first paragraph of section 40, ante, that it is the duty of everyone executing any process or warrant to have it with him, and to produce it, if required.
Once more I direct the attention of the minister to the point which is raised. If this commissioner goes to the office of any person he has no warrant. The minister says that this statute is his warrant, but he has nothing that clothes him with the authority or power of a constable or a peace officer. If he is resisted, what is the authority for the exercise of this power? He has not any. That is that point. But another point is raised by the hon. member for Selkirk (Mr. Thor-son). If a witness declines to give evidence, what happens? What is the commissioner going to do? According to the contention just advanced he is going to send him to gaol. Is that the theory of this jurisdiction now to be established?


Ernest Lapointe: No.


Richard Bedford Bennett: That is what happens.


Ernest Lapointe: We are
not establishing it; it was the law in 1935, under the statute introduced by my right hon. friend.

Combines Investigation Act


Richard Bedford Bennett: The 1935 act was simply different in the general principle. I did not mean to put it that way. I am referring to the bill we are now considering. Possibly my views are extreme, but I cannot and never have been able to bring myself to the view that by passing a statute you can clothe an individual with the powers that are contemplated in this bill. The hon. gentleman knows that not only did I hold those views but that I followed them up with a very unpopular proceeding under the conscription act. I had a man released by the supreme court of Alberta and I was censured for having done so. However, I had the judgment of at least one man, Lord Shaw in the House of Lords, as to the necessity of preserving the right of liberty and civil freedom even in a time of great stress. I cannot say that this action brought about the best feeling in the community, but I held that view then and I hold it now. I think it is desperate to clothe this man with this authority. It is little short of an outrage to all our theory of government. If it were, as my hon. friend says, a mere investigation, one would understand it, but it is not that at all.


Joseph Thorarinn Thorson: I think my right hon. friend! is exaggerating.


Richard Bedford Bennett: It ceases to be that. If we are going to do this thing, why not do it in accordance with recognized principles? We should see that when the commissioner believes such is the case he should go and make an affidavit, get his search warrant and have it executed. Imagine a commissioner with all the power of sending a man to gaol searching my office and getting my books. To-day he is going to seize my books, tomorrow he is going to pass judgment on me. He may say, "I do not like the way you are giving your evidence." He is going to have the power of committal for contempt because I do not obey him. All this in the same man. On the one hand he is the constable, and on the other he is the judge. He is his own peace officer and he is going to investigate questions of law under this act.


Charles Hazlitt Cahan: And his only qualification is that he has no legal experience.


Richard Bedford Bennett: That is the essential.


Norman McLeod Rogers: We have spent some little time on these sections, because they are closely related.


Richard Bedford Bennett: They are related, yes.


Norman McLeod Rogers: I can recall the early weeks of the year in which the combines act of 1935
was enacted when the leader of the opposition spoke most strongly in favour of vigorous legislation of this kind.


Richard Bedford Bennett: And I have said so here again.


Norman McLeod Rogers: And he has said so here again. Are we not entitled to assume that the expressions given in the Combines Act of 1935 represent the views of the leader of the opposition with regard to what constitutes a rigorous enforcement of the combines act?


Richard Bedford Bennett: No.


Charles Hazlitt Cahan: The enforcement of an act is a different thing.


Norman McLeod Rogers: I am afraid I am somewhat disconcerted by the statement of the leader of the opposition.


Richard Bedford Bennett: If the minister had followed what took place he would know that in the closing days of the session we said that we would reenact the provisions of the law and substitute " commissioner " for " commission."


Norman McLeod Rogers: Surely a government bringing down a bill of that kind must assume all responsibility for its provisions. We have to assume responsibility for the provisions of this act.


Richard Bedford Bennett: There is no doubt about that.


Norman McLeod Rogers: And this has been, with respect to the point brought out by the leader of the opposition, the reenactment of the provisions of 1935-


Richard Bedford Bennett: Oh, no.


Norman McLeod Rogers: -with respect to these particular matters.


Richard Bedford Bennett: Yes.


Norman McLeod Rogers: Let me quote-


Richard Bedford Bennett: There is no change in section 21.


Norman McLeod Rogers: As to giving a commissioner power in connection with punishment, and the enforcement of orders, it is precisely the same. I quote from the 1935 act:
The commission may order that any person resident or present in Canada be examined upon oath before, or make production of books, papers, records or articles to, the commission or before or to any other person named. . . .
Then I come to the latter part:
. . . and may otherwise exercise, for the enforcement of such orders or punishment for disobedience thereof, all powers that are exer-
Trans-Canada Air Lines

cised by any superior court in Canada, for the enforcement of subpoenas to witnesses or punishment of disobedience thereof.
I cannot see any material difference.


Richard Bedford Bennett: There isn't-not the
slightest.


The CHAIRMAN:: Shall clause 21 carry?


Richard Bedford Bennett: No, but we will not waste further time about it-on division.
Section agreed to on division.
Section 22 agreed to.
On section 23-No witness excused from giving evidence on ground it may incriminate him.


Joseph Thorarinn Thorson: Perhaps, Mr. Chairman, you will call it one o'clock.


Richard Bedford Bennett: Is the hon. member going to speak on section 23?


Joseph Thorarinn Thorson: Yes.


Richard Bedford Bennett: Then I want to say something about it.
Section stands.
Progress reported.
At one o'clock the house took recess.
The house resumed at three o'clock.



TRANS-CANADA AIR LINES ARRANGEMENT WITH CORPORATION RESPECTING LINES AND SERVICES FOR TRANSPORT OF PASSENGERS, GOODS AND MAILS

[Stage Direction]
Hon. C. D. HOWE (Minister of Transport) moved the third reading of Bill No. 74, to establish a corporation to be known as Trans-Canada Air Lines.
Richard Bedford Bennett: I had hoped that possibly on consideration the government would provide that this enterprise should be owned entirely by the public, especially in view of the fact that the minister is providing that fifty-one per cent of it shall be owned by the Canadian National Railways. I suppose it is too late now to do more than reiterate that hope, but I would point out that notwithstanding the care that was taken last evening we did leave out one word. It was mentioned but it does not appear in the bill. I refer to section 6, "who is not a British subject continuously resident in Canada." The word "continuously" does not appear although it was mentioned last evening. Perhaps in another place it can be added.


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


[Stage Direction]
Hon. C. D. HOWE (Minister of Transport) moved the second reading of Bill No. 88, respecting Department of Transport stores.
Richard Bedford Bennett: The minister might explain the bill.


Clarence Decatur Howe: As I said on the first reading, this is to simplify the bookkeeping and handling of stores in the Department of Transport. We believe that inevitably it will reduce the inventory of stores which are now carried on the books as an asset of the dominion. The difficulty to-day is that there are some ten separate appropriations in the department, and stores under each appropriation must be carried as separate stock. The only means by which stores can be moved from one appropriation to another is by process of sale, which involves extensive bookkeeping. The result is, as I said, that we have sixty store depots from coast to coast, as many as three, and in one instance four, depots in the same city, and in these depots there are five or six separate compartments. Goods must be purchased and placed in one compartment and used in that compartment under the appropriation and cannot quickly be transferred to any other compartment where the same goods are required.
Our annual purchases of stores are about
83,000,000 and our stocks to-day are $1,500,000, which of course is an absurd figure. I have gone into the matter in an effort to have the stocks reduced and it has been explained to me that it is impossible to reduce them without legislation of this sort so that they may be combined for the various services.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Sanderson in the chair.
Section 1 agreed to.
On section 2-Department of Transport stores account.
Richard Bedford Bennett: Will the minister give
the particulars showing what stores are involved?


Clarence Decatur Howe: In the lighthouse service there are twenty boats equipped with the usual provisions and supplies. The lighthouses themselves are handled under a separate appropriation. We have the dominion steamers and the lighthouse service, and there again we have stores. In connection with the canals

Department oj Transport
there is a large amount of operating equipment and all the supplies required for repairs, including such items as cement and gravel, steel cable and materials of that sort. Then there are the aviation supplies, and the equipment which has been used in the past in landing fields. Some of it is obsolete but it is still carried in the stores at the purchase price. There are some ten appropriations all of which involve considerable stores. We have the radio telegraph branch, and there we have considerable stores of electrical equipment.


Richard Bedford Bennett: And the buoy service, I suppose.


Clarence Decatur Howe: Yes. In connection with the aids to navigation service we have large supplies. In many cases the supplies are duplicated for the reason that they are: bought under separate appropriations and cannot readily be transferred.


Richard Bedford Bennett: You are to arrive at some value of these stores, some of which are obsolete. I followed the minister's statement with care because I want to get an idea of the way in which he will state it in his books. The section provides that the minister:
. . . shall not thereafter be required to maintain records with respect to the source of acquisition of the stores acquired prior to April first, 1937.
The minister will open a stores account for the first time and take over all these stores, some of which he tells us are obsolete. At what price will they be carried on the books?


Clarence Decatur Howe: The bill provides that the Minister of Finance and the Minister of Transport shall agree upon an initial price. That is necessary because some of these stores go back fifty years though they are still carried at cost price. One of the first things to be done to facilitate the consolidation of the stores depots is to dispose of stock that is obsolete and useless, and that will be done to the best advantage. A value will be put on the stock as of the initial date and thereafter all transactions must be at cost.


Richard Bedford Bennett: Perhaps the minister has not looked at the section. It is because of the language used that I direct attention to it in his own interest. He is to take over the stores acquired by the various services comprised in the Department of Transport and may charge the value of such stores at cost. Obviously if he does that he is in a difficult position having regard to what follows. Contrary to his general conception of
his duty, as evidenced by the Canadian National bill, he will be showing an asset at much more than its value. If the stores are twenty or thirty years old, and some of them even fifty years old, that would be a misleading method of accounting from the standpoint of the country, because they are to go into the consolidated balance sheet as an asset, and it would be unfair to the department to be charged with them at cost and unfair to the country to be credited with them as an asset on that basis. Does the minister see that?


Clarence Decatur Howe: I think my right hon. friend will find it covered in paragraph 4.


Richard Bedford Bennett: That does not help. That is for the advances. This is the only section I can see that touches the point I have in mind. The minister will find it is unfair to his department and it is unfair to the country to credit as an asset, at cost, stores that are thirty, forty or fifty years old, when setting up an account for the first time as of April 1, 1937. I think what the minister intended to do was to have a cut-off as of April 1, 1937, have the value of these stores fixed by some method, credit that value as an asset and charge his department with it. Thereafter the account is charged for such advances as he receives and credited with the goods requisitioned from time to time, depleting the goods on hand. I gather that that is the intent of the bill.


Clarence Decatur Howe: Quite. I would point to section 3:
As and when an inventory of the stores stocks on hand as at April 1, 1937, is determined by the Department of Transport and approved by the comptroller of the treasury, the value of same may be credited in public accounts to consolidated revenue fund and a corresponding asset account may be established.


Richard Bedford Bennett: I hope the minister still sees his difficulty; "the value of same may be credited," and the value is the cost. The bill contemplates a cut-off as of April 1, 1937. On that date an inventory is made of all the stores the minister has in his department. They are then to be credited as a national asset and the department is to be charged with them. The second section states that they shall be valued at cost. My point is that it is unfair to the country to value them at cost, and it is unfair to the department to charge it with something that will be a continuing sore as long as it is there, because obviously the cost is not the value. I cannot do more than direct attention to the point.
Department of Transport


Clarence Decatur Howe: I think the difficulty is that these are now carried as an asset at book value. This bill was worked out over quite a period with the comptroller of the treasury, who was anxious to have the accounts consolidated. Perhaps at the next session we may come back and write it down, if that proves to be necessary. I think the first thing is to permit the consolidation of the account.


Richard Bedford Bennett: It will be an incorrect account, but nothing new from last year.


[Stage Direction]
Section agreed to.
Sections 3 to 7 inclusive agreed to.
On section 8-Stores accounting limited to actual purchase cost and transportation charges.
Richard Bedford Bennett: We are rushing this rather fast. The advance of a million dollars as provided by section 5 requires some explanation. We have had many conflicts in this house as to the advance of $700,000 to the Department of Public Printing and Stationery. It was a larger sum; we reduced it to that amount and have kept it there. I say to the minister in the light of experience that there is nothing more inviting to permanent officials than the possibility of having an advance of great proportions. The ease and facility with which they begin to buy supplies is known to everyone who has had to do with the department. If the minister can keep that item below $1,000,000 I think he should do so.


Clarence Decatur Howe: To-day the stocks are one and a half million. It will be my aim to see that at the end of the year there are no surplus stocks. Whether that is possible I do not know, but it was put at a million as a figure that will probably be necessary for a turnover of $3,000,000 of supplies.


Richard Bedford Bennett: The difficulty is that section 6 says it "shall not" exceed. That is a peremptory statement to put in a statute, that the minister's inventory must be reduced to what it was at the beginning of this year.


Clarence Decatur Howe: I think it is far too large.


Richard Bedford Bennett: But if in the course of business you do not find it possible to reduce it, you are confronted with a statute which says you shall do it.


Clarence Decatur Howe: We are going to insist that no new purchases shall be made as long as we have anything in our total inventory suitable for the purpose. This consolidation will allow us to ship goods from our present stores to any part of the country where they are required.
(Mr. Bennett.]


Charles Avery Dunning: I am hoping that the minister will get it to even lower figures. I think he should be able to do so, having regard to the diverse nature of the present stores.


Richard Bedford Bennett: Quite so, but it works both ways. The fact that they have to be scattered over the whole of Canada makes the aggregate necessarily quite large.


Charles Avery Dunning: Five stores in the same town.


Sir GEORGE PERLEY:: I should like to ask a question regarding clause 4. I see the Minister of Finance is to advance the amounts required by the Minister of Transport from time to time. I presume that applies to this year only. After that I take it the amounts will be in the estimates granted to the department.


Charles Avery Dunning: It is the same principle as the king's printer's advance.


Clarence Decatur Howe: The $1,000,000 is a revolving fund. It is intended to purchase all supplies for stores, and then, as they go out they will be charged to the appropriation and the money will be applied from the appropriation to restore the $1,000,000 fund.


Richard Bedford Bennett: But it will have to be by appropriation.


George Halsey Perley: Section 4 provides:
The Minister of Finance may from time to time authorize the advance to the Minister of Transport out of the Consolidated Revenue Fund of Canada of such sums of money as the Minister of Transport may require. . . .
I take it that means for this year only, and for subsequent years the amounts will be in the estimates.


Charles Avery Dunning: No.


George Halsey Perley: Why not?


Charles Avery Dunning: Not for this purpose, any more than for the king's printer's advance. The amounts represented by what is taken out of the king's printer's advance are voted for the various services which in turn purchase from the king's printer. The amounts are voted, but not in the form of an advance. The advance is set up by statute, as in this case, and the amounts needed for the various stores will be in the individual appropriations asked for by the minister from year to year, but they will be supplied out of this revolving fund.


George Halsey Perley: There will have to be subsequent amounts every year. We now vote them, I understand, for the different branches of the Department of Transport.

Canada-Uruguay Trade Agreement


Charles Avery Dunning: And will continue to do so.


George Halsey Perley: But section 4 would authorize the Minister of Finance always, without appropriation, to make advances from the consolidated revenue fund whenever it is required to buy stores.


Charles Avery Dunning: No, to maintain SI,000,000 worth only.
Sir GEORGE PERLEY': It does not say so.


Charles Avery Dunning: The way the matter will work is precisely the same as in the case of the king's printer's advance. That is to say, each year each branch of the Department of Transport will have in its vote what it requires for stores, but when it comes to purchasing them it will have to purchase from stores account, so it will be charged to the appropriation account of the department and credited to the stores account. The Minister of Finance is authorized to keep these stores up to $1,000,000 but no greater amount.


Richard Bedford Bennett: To provide a working capital of $1,000,000.


Charles Avery Dunning: A working capital of

Section agreed to.
Preamble agreed to.
Bill reported, read the third time and passed.



CANADA-URUGUAY TRADE AGREEMENT

[Stage Direction]
Hon. W. D. EULER (Minister of Trade and Commerce) moved the second reading of Bill No. 86, respecting a certain trade agreement between Canada and Uruguay.
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
Section 1 agreed to.
On section 2-Trade agreement approved.
Richard Bedford Bennett: Perhaps the minister will give us the particulars as to what benefits accrue to Canada and what is the most favoured nation treatment given to Uruguay.


Mr. EULER:: Perhaps I may be permitted to make a brief statement as to the purposes and implications of the agreement.
This bill is the ratification of a trade agreement -signed in August of last year between Canada and Uruguay. It is for a term of three years, and unless six months' notice is given before the termination of the three-year period it will continue in force until six months' notice is given some time thereafter.
The agreement provides for mutual most favoured nation treatment with respect to tariffs which, by the way, are of no benefit to Canada, as I shall explain. It also provides that there shall be no discrimination so far as the application of exchange control or the imposition of quotas are concerned. Preferences to other parts of the empire are excluded from the operation of the agreement, together with any preferences that may be given by Uruguay to neighbouring countries such as Bolivia, Brazil, Paraguay and Argentina.
The trade with Uruguay is quite small. Canada's sales in the year ending March 31, 1936, were $368,000, while our purchases from that country amounted to $206,000. Our chief exports are both free and dutiable. The important free exports are newsprint and farm implements, though from the latter should be excepted plows. Our dutiable exports are rubber boots and shoes, tires and tubes, automobiles and sewing machines, together with some other small items. The benefits that will accrue to Canada are not, as I intimated previously, by way of tariff concessions, but this agreement accomplishes the removal of what I may call a potential menace so far as our treatment by Uruguay is concerned.


Mr. WOODSWORTH:: Would the minister say what are our chief imports?


William Daum Euler: I shall give those in a moment. A few years ago the parliament of Uruguay empowered the government of that country to impose a fifty per cent increase in duty on the countries which did not accord her most favoured nation treatment. That has never been applied against Canada, though it has been applied against some other countries and there was always the possibility that it might be applied to Canada. By this agreement that menace is removed. Uruguay has also agreed not to discriminate against Canada in the application or allocation of exchange control and, as I mentioned previously, she will not discriminate against us as far as quotas are concerned. That is, we are to receive treatment relatively equal to that accorded any other country.
The benefits that accrue to Uruguay are that she obtains most favoured nation treatment, as far as our tariff is concerned. After the provisional agreement was signed last August she immediately obtained the benefits of our intermediate tariff. By granting her most favoured nation treatment she gets in addition any benefits that may accrue by reason of the trade agreements that have been made with the United States, France and Poland. She sells to us more particularly canned meats, on which we have reduced the

Canada-Urugvay Trade Agreement
duty from 35 per cent to 30 per cent; wool, on which the duty has been reduced from 15 cents to 10 cents per pound; lard and lard compounds, on which the duty has been reduced from 2 cents to 1| cents per pound, and hides and skins, which continue on the free list. Flax seed, bearing a rate of 10 per cent under both the intermediate and general tariff, is not reduced under this agreement.
To sum it up, Uruguay is granted the same rates under the most favoured nation arrangement as are given to other countries which are her competitors.


Richard Bedford Bennett: Has there been any
visible effect upon our trade?


William Daum Euler: Very little. I may say to
my right hon. friend that I really have not had an opportunity to look into that.


[Stage Direction]
Section agreed to.
Sections 3 and 4 agreed to.
On the schedule.
Richard Bedford Bennett: From the little investigation I have been able to make-I am bound to say it was very slight; I just looked up the figures the other evening-the real truth about it is that the agreement does away with a potentiality rather than bringing about any present benefit, and the minister has been very frank about it.


William Daum Euler: That is quite true.


Richard Bedford Bennett: There is no doubt about the fact that at the moment Uruguay purchases from us a small quantity of goods, only some 8350,000 worth, and our access to the markets of that country will be no easier after this measure passes than it was before. But Uruguay took the right, as several other countries in South America did, to impose upon us what was practically a surtax because she did not enjoy most favoured nation treatment. Now, having been accorded that treatment, she has freed us from the possibility of such a surtax being imposed.


William Daum Euler: Yes, and in addition she
will give us equal treatment with other countries as far as exchange and quotas are concerned.


Richard Bedford Bennett: I notice that, but it is
reciprocal; we say we will do the same for her also.


William Daum Euler: We have no exchange
control.


Richard Bedford Bennett: With respect to exchange and quotas.


William Daum Euler: We have no quotas either.
TMr. Euler.]


Richard Bedford Bennett: No, but we might have. It is all based upon that. The other phase of it is that at the lowest tariff enjoyed by any country of the world trading with Canada will be enjoyed by Uruguay. That is a short way of putting it, is it not?


William Daum Euler: Excepting from the British
Empire.


Richard Bedford Bennett: Yes, with the exception
of the British Empire.


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

[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved the second reading of Bill No. 85, to revive and amend the Business Profits War Tax Act, 1916.
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1-Act revived. Administration validated.
George Halsey Perley: Will the minister explain the bill?


Charles Avery Dunning: The Minister of National Revenue explained it when the resolution was introduced, and the explanation is on record.


[Stage Direction]
Section agreed to.
On section 2-Certain provisions repealed.
Charles Hazlitt Cahan: That does not preclude an explanation at the present time.


Mr. ILSLEY:: I gave a long explanation when the resolution was moved, and that explanation appears in Hansard. It is exhaustive and elaborate, but I could make it again.


George Halsey Perley: Briefly.


James Lorimer Ilsley: The bill is to revive the Business Profits War Tax Act, 1916, so far as taxes are concerned which are exigible for the period between 1915 and 1920, to which period the Business Profits War Tax Act applies. The necessity for the bill arises from the fact that the measure appears in a schedule of acts which are described as " spent," in the revised statutes of 1927. I think it is admitted that it was not intended to relieve any taxpayers from taxes which fell due during the period between 1915 and 1920. It is questionable whether the inclusion of this act in the list of " spent " acts does effect a repeal. There is a difference of legal opinion upon

Customs Act-Draivbacks
the point, but to put the matter beyond doubt the act is now revived. The remaining clauses of the bill have to do with procedure on appeals.


[Stage Direction]
Section agreed to.
Sections 3 and 4 agreed to.
Bill reported, read the third time and passed.


[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue) moved the second reading of Bill No. S4, to amend the Customs Act.
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1-Governor in Council may order that import, excise and other duties and taxes be disregarded.
Charles Hazlitt Cahan: What is the explanation of this?


James Lorimer Ilsley: There are certain countries which are imposing very heavy import taxes for revenue or other purposes. Chiefly, I believe, they are for revenue purposes. As the act stands at present the value for duty of goods imported from those countries must include these import duties or taxes, no matter how heavy or abnormal they may be. It is deemed unfair that such should be the case in all instances.


George Halsey Perley: Unfair to whom?


James Lorimer Ilsley: Unfair to the importers in this country. It prevents importation. The charges would be very much like the processing taxes of the United States, although they were domestic, rather than import taxes. The values of certain goods are greatly enhanced by the imposition of processing taxes in the United States. Therefore in arriving at values for duty purposes those taxes were left out of account. That is the law as it stands to-day. Those taxes are included under the heading of excise and other taxes.
I have not the Customs Act before me at the present time, but it was found that there are certain countries -which import articles and, for purposes of revenue, impose very heavy duties. If they attempted to export those articles to Canada they would find it impossible to do so if we in valuing those articles for duty purposes included these very heavy import duties. This bill gives the governor in
council power, whenever it is deemed expedient so to do, to order that these import duties and taxes, in whole or in part, shall be disregarded in estimating the value for duty of goods of any kind imported into Canada from any specified country. It is not intended to disregard import duties generally, because that would be at variance with our whole system of valuation for duty purposes, but it is desired to take the power in special cases to deal with the situation. Otherwise trade with certain countries would be at a standstill.


George Halsey Perley: How do those countries treat Canada in similar circumstances? Do they make the same allowance to us?


James Lorimer Ilsley: I do not think Canada has any duties of the type I have in mind. But, answering the question specifically, most countries of the world value goods on a c.i.f. rather than an f.o.b. basis. There are only four or five countries which follow our system of using as the value for duty purposes the home market price of the goods in the country of origin. Most countries take the actual cost of the goods landed in the country of importation, including the freight, upon which to base their duty. If that were the case, then this point would not arise. For instance, a country using the e.i.f. basis of valuation can quote just as large a figure as it likes, and that price plus the freight to destination is used as the basis for duty. Under this provision we would have to take the home market price if for certain reasons a country had an abnormal import duty which enhanced the domestic price of the goods to a poiqt where it ,was perhaps doubled or trebled. As the law stands at the present time that country could not export to Canada because we would have to take as our value for duty purposes this very high value.


Richard Bedford Bennett: The answer is: let them reduce their import duty.


Charles Avery Dunning: It might be an internal tax.


Richard Bedford Bennett: That is another thing.


George Halsey Perley: If we import material and manufacture and ship it out to another country, the value of our goods would include the import duty on the material so imported?


James Lorimer Ilsley: No. We give a drawback.


George Halsey Perley: This section leaves it to the option of the minister. I am not speaking personally, but whatever minister happens to be in office could do that.
Customs Act-Drawbacks


James Lorimer Ilsley: The governor in council.


George Halsey Perley: It is left to his discretion to recommend to the governor in council that these import duties shall not be considered. In other words, in one case he may recommend that the import duties be considered, and in another case he may arrive at a reverse decision.


James Lorimer Ilsley: That is so, and it casts a heavy responsibility both upon the minister and the governor in council. I think it is just as necessary to have this section as it is to have the section which enables us to disregard domestic taxes, which we have had for some years.


Richard Bedford Bennett: The effect of this is that if I receive an invoice from country A for $100 and the duty is twenty-five per cent, the excise three per cent and the sales tax eight per cent, for the purposes of value I shall not take the import duties imposed by that country or the excise taxes?


James Lorimer Ilsley: No.


Richard Bedford Bennett: That is what it says. In other words, if we did that we would be legislating in our own jurisdiction. If we legislate in the way suggested we would be legislating for some other country. The section reads:
The governor in council, whenever it is deemed expedient to do so, may order that import, excise and other duties and taxes, in whole or in part, shall be disregarded in estimating the value for duty of goods of any kind imported into Canada from any specified country.
As the section reads, that is our import taxes, our excise taxes and other duties. When I come into Halifax and hand them an invoice of goods I purchased while I was out of the country, they assess the duty. Then they assess the excise tax and the sales tax on the value for duty, being the cost of the goods plus the duty. This section provides that we may order that the import, excise and other duties and taxes, in whole or in part, shall be disregarded in estimating the value for duty of goods of any kind imported into Canada. Whose business is it? If a country wants to run its business in one way, why should we conduct our business in another? If country A desires to run its business in that way, why should we accommodate ourselves to their method of doing business? What country have we in mind?


James Lorimer Ilsley: The Netherlands.


Richard Bedford Bennett: The Netherlands is one of the richest countries in the world. If they want to put on import duties which make it

impossible to sell their goods in this country, why should we encourage them to sell in this country at our expense?


James Lorimer Ilsley: It is not a fair value for duty purposes.


Richard Bedford Bennett: It is the duty we apply to other countries. If they want to fix up their tariffs in such a way and put on such taxes as to make it impossible for us to buy their goods, why should we so adjust our regulations as to give them the same chance as other countries? What do we get by that?


James Lorimer Ilsley: We sell them a lot of goods.


Richard Bedford Bennett: On what basis?


James Lorimer Ilsley: On a c.i.f. basis.


Richard Bedford Bennett: What do you mean by c.i.f.?


James Lorimer Ilsley: We can sell as low as we like to them.


Richard Bedford Bennett: No, we cannot.


Charles Avery Dunning: There is no country of origin.


Richard Bedford Bennett: We sell our goods on the invoice price and we pay a duty on the invoice cost. Unless the Netherlands have changed, they used to have a provision by which a value could be fixed by the arbitrary act of their customs officials. It is difficult to understand why Canada should pass a statute to enable a foreign country to sell its goods more readily in this country by our disregarding the general principles which have governed. We are saying that we will take off all their internal taxes for the purpose of ascertaining the value of their goods. We are saying that the import, excise and other duties and taxes, in whole or in part, shall be disregarded. In other words, the Canadian will be able to buy these goods at thirty or forty per cent less than the price paid by the citizen of the Netherlands. This is done in order that the manufacturer in the Netherlands may more readily sell his goods in this country. That is very much at variance with the so often declared political economy of the minister. It is very much at variance with his ideas with respect to the freedom of trade.


James Lorimer Ilsley: Some things I do may be, but this is not.


Richard Bedford Bennett: The poor Netherlands consumer must pay whatever they see fit to charge him in order that the Canadian consumer may get his goods a little cheaper.


James Lorimer Ilsley: I admit that I have not had the Netherlands consumer in mind in framing this legislation. The objections raised by the

Customs Act-Drawbacks
right hon. leader of the opposition could have been raised with equal force against his own legislation of 1934 with respect to the United States processing taxes. He might very well have said then " we cannot import these goods with these high taxes, but we have no power to disregard them."


Richard Bedford Bennett: I am simply pointing out the inconsistency of the action of the government. I have succeeded in getting the government to come to the defence of the very action which we took ourselves, and I am content. I have listened all through this session up to to-day to a continuous approval of what was done in the five years from 1930 to 1935. At that time the opposition opposed this action hour after hour and day after day.


James Lorimer Ilsley: We never opposed that one.


Richard Bedford Bennett: Now I have it in black and white.


Ernest Lapointe: My right hon. friend must be proud of it.


Richard Bedford Bennett: I am.


James Lorimer Ilsley: We certainly never opposed that section.


Richard Bedford Bennett: Oh, yes.


Charles Hazlitt Cahan: This section states that the
governor in council, whenever it is deemed expedient to do so, may order that import, excise and other duties and taxes, in whole or in part, shall be disregarded. The reference is to import, excise and other duties and taxes of the foreign country from which goods are imported. That is clear.


James Lorimer Ilsley: Yes. .


Charles Hazlitt Cahan: It is not with respect to
import, excise and other duties in Canada.


James Lorimer Ilsley: No.


Charles Hazlitt Cahan: Then if it is the import, excise and other duties and taxes of any foreign country that shall be disregarded, why not say so?


James Lorimer Ilsley: The answer to that is that
it cannot be read in any other way.


Charles Hazlitt Cahan: Oh well, I think so.


James Lorimer Ilsley: No. It would be meaningless to say that the import, excise or other duties and taxes imposed by the Canadian government shall be disregarded in estimating the value for duty of goods imported into Canada. You could not possibly take into account the import taxes on goods coming into Canada in estimating the value for duty
of goods coming into Canada, therefore it must be clear to anyone reading the section that it means the import taxes of another country.


Charles Hazlitt Cahan: 'Why leave it to implication when the insertion of the word "foreign" will make it so clear that there can be no other meaning?


James Lorimer Ilsley: Well, there has never been
any difficulty about section 36A of the Customs Act, which reads as follows:
The governor in council, whenever it is deemed expedient to do so, may order that excise duties and excise taxes in whole or in part shall be disregarded in estimating the value for duty of goods of any kind imported into Canada from any specified country and may vary or rescind such order.
All we have done is to add the word "import."


Richard Bedford Bennett: Which, I think, is a
serious thing to do. What is involved in the Netherlands case in the way of import taxes?


James Lorimer Ilsley: Principally rice.


Richard Bedford Bennett: No, I mean the rate.


James Lorimer Ilsley: I am sorry I have not the
rate, but it is an abnormally high rate, away out of line with the ordinary import duties. It is what they call a monopoly tax.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
On section 3-Certain values for duty deemed lawfully fixed.
Mr. SPENCE:: I am utterly opposed to
so much power being given, ostensibly to the minister, as is proposed to be conferred by this bill. I am speaking with reference to importations of food, which are the products in which I am most interested. If this power were to be exercised by the minister I would think nothing about it, but it is given to the appraiser at the port, and if the appraiser is arbitrary-minded he can make a lot of trouble. I understand that these officials are intended to serve the convenience of business men, not to trouble and harass them. These actions appear to me to be illegal and now you are trying to make them legal through this house. Time after time cases have arisen where values which were arbitrary have been put on goods by appraisers, and the trade were forced to pay, under protest, those extra duties. If a car of strawberries or some other perishable goods comes in in the morning, and your business starts at seven o'clock, your deposit is made at the customs house, the
Customs Act-Drawbacks

men. at the port will open the car for you, and you go ahead and pay the duty and do business. Before ten o'clock, when the customs opens, you have the contents of your car partly sold, and then a dispute may arise which forces you to pay extra duty when you should not do so. I know of a case at Toronto where some imported product, I think it was lettuce, was bought f.o.b. at $1.50, and the appraiser, by arbitrarily putting on it a value of $2.00, forced the importer to pay an extra thirty per cent duty, equal to fifteen cents per half dollar. Things like that are happening all the time, and I do not think it is right for the government so to harass and worry people in trade, because goodness knows they have enough other matters to worry them. Things are getting to such a pass that a business man can spend half his time fighting regulations and changes in regulations under the customs law, and I hope the minister will give these people some consideration. A number of men in the trade in Toronto, and probably others in Montreal and Ottawa, have coming to them, legally, a certain amount in rebates, and one purpose of this bill is to deprive them of what is coming to them. It is absolutely unfair thus to make legal an illegal act. I have always upheld the dignity of this house, whether the government in power was Conservative or Liberal, but by doing things like this we are resorting to the kind of tactics one sees in the Ontario house. I ask the minister not to do something which will harass the trade and steal out of their pockets what they are entitled to get in the way of rebates. That is what the whole thing means, and one might as well say so plainly.


James Lorimer Ilsley: I think this section requires some explanation. The hon. member for Parkdale (Mr. Spence) has brought the matter forcibly to the attention of the committee. Certain practices were resorted to by the ministers, commissioners and assistant commissioners of customs in 1931 and 1932 and the following years to which importers took objection, and there has been some protest against the manner in which fruits and vegetables were valued for duty purposes.


Richard Bedford Bennett: Perhaps the minister would state the details of it, because I think it would be well to have it on Hansard.


James Lorimer Ilsley: I may say that two petitions of right have been-


Richard Bedford Bennett: I do not mean that; I mean as to how the values for duty are fixed.
fMr. Spence.l


James Lorimer Ilsley: Shortly before Great Britain went off the gold standard our currency was at a discount as compared with United States currency, and certain values for duty purposes of fruits and vegetables were fixed under section 43. The commissioner of customs of that time interpreted the order of the minister as fixing the values in United States rather than in Canadian currency, and gave directions accordingly to the collectors. The result was that more dumping duty was collected than would have been collected had the orders of the minister been interpreted as referring to Canadian currency, and the amounts of duty that were calculated on that basis were taken in the period between November, 1931, and May or June, 1932. Those dumping duties are the basis of a petition of right which was filed in 1936. A fiat has been granted and the ease is pending in the exchequer court at the present time. That is one irregularity which is complained of by a certain number of exporters. Certain other irregularities or alleged irregularities in the imposition of these dumping duties are complained of. They are these:-
1.	That valuations were fixed without authorization by the governor in council, the contention being that once a value has been fixed the authority is exhausted.


Richard Bedford Bennett: As a matter of fact there was an order in council that authorized the minister to fix, the contention being that that applied only to a single case.


James Lorimer Ilsley: That is the contention
of the importers, and refund claims have been presented to the department based upon that alleged illegality or irregularity.
2.	That the orders in council authorizing the fixation of values were not published in the Canada Gazette, as required by statute. My information is that the department was late in publishing a few of the orders, but that all of them were actually published.
3.	That the values fixed were not published in the Canada Gazette as required by statute; that is, within the time required by statute.
4.	That no authority existed for a ruling to the effect that the values were fixed in terms of the currency of the country of export.
5.	That the fixing of values at an advance on the invoice value does not constitute a fixation as contemplated by section 43 of the customs act. Section 43 authorizes the fixing of values, and the Department of National Revenue fixed these values by a certain method, that is, an advance on the invoice

Customs Act-Drawbacks
value whatever that invoice value might be; and it is now contended that that is not a compliance with, the section in that it is not authorized by the section.
6.	That no authority exists for the inclusion of the weight of the container in computing values fixed under section 43 of the Customs Act.
The order related only to the weight of the goods; the weight of the container could not be included.
7.	That no authority exists for computing fixed values on railway billing weights.
The department took the railway billing weights instead of weighing the packages themselves.


Richard Bedford Bennett: And that, of course,
included the packages?


James Lorimer Ilsley: Yes.
8.	That certain valuations which were stated to be applicable "all year" should have been interpreted to mean until the end of the calendar year, rather than all year around as interpreted by the department.
There is a difference of opinion as to the meaning of the language. The department used the term " all year " as distinguished from a certain number of months only. It regarded the words " all year " as meaning the whole year and every year.


Richard Bedford Bennett: As warranting a continuing operation of the Statute.


James Lorimer Ilsley: Yes. Then:
9.	That certain bulletins setting forth fixed valuations failed to exempt shipments purchased and in transit to Canada at the time the bulletins were issued, which practice had been followed on other occasions.
That is alleged in one of the petitions of right but manifestly it is not a ground for the return of any duties. It is a mere allegation of discrimination, an allegation that certain importers were treated differently from others.
These are the grounds that are set out and many of them are quite technical. The point I wish to bring to the attention of the committee is this. The importers knew at a very early stage what view the department took of the meaning of these orders in council and of the orders the minister made under the orders in council, and governed themselves accordingly. Knowing the practice of the department and the view it took of what the proper practice was, nevertheless the importers placed their orders for a period of years-it has been five or six years-and paid the dumping duties required by the department.


Richard Bedford Bennett: And passed them on to the consumer. [DOT]


James Lorimer Ilsley: 
James Lorimer Ilsley: Yes, under the same order in council.


Richard Bedford Bennett: So that it affects not only the operation of the statute under the late administration but also the continued operation since under the same order in council.


James Lorimer Ilsley: Yes. Some of the practices complained of were peculiar to the last administration-the one in regard to currency, for example. Some of them are not; they are going on at the present time.


Mr. LOCKHART:: With regard to duties paid on shipments in the last two or three years, was any protest lodged with the department to any extent at the time they were paid?


James Lorimer Ilsley: No, not to any extent.


Norman James Macdonald Lockhart: I was informed that they had been paid under protest.


James Lorimer Ilsley: Not to any extent. The odd situation might have arisen which brought forth a protest, but as a general rule they have been paid without protest since I have been minister.


Mr. PLAXTON:: I want to lodge a protest against this particular section and I cannot state it more succinctly than by reading a telegram I have received from the Toronto Wholesale Fruit and Produce Merchants' Association. With the indulgence of the committee I should like to put it on record:
All members this association comprising twenty-three firms importing annually over twelve thousand cars fresh fruits and vegetables respectfully protest type of legislation placed before house Thursday to retroactively amend section forty-three of Customs Act thus usurping functions of exchequer court where this matter is at present being handled on case of McCart v. the King and the ease of Ontario Produce Co. Ltd. v. the King. We suggest this type of legislation dangerous unconstitutional and unnecessary which bars the rights of citizens to recover through the courts for moneys illegally collected and retained by Department National Revenue. Please advise.


James Lorimer Ilsley: Do you mind telling me who the traffic manager is?


Hugh John Plaxton: I do not know the officers of the association.


Mr. BETTS:: I protest against this legislation on the strength of the minister's own statement. He tells us there is an accumulation of claims, and frankly I do not see that he is in a position to prejudge them. He says that these claims, if recovered, will not inure to the benefit of the people who paid the tax. Even if that is true in regard to some 
claims I do not see how he can make that general statement positively of all the claims. One thing is manifest: there is machinery whereby these claims can be adjudicated upon by the courts, and any further legislation that steps in and deprives the courts of their functions is extremely undesirable. We have seen in Ontario recently an example of the powers of the courts being usurped, with very unhappy results, and we should steer clear of thait sort of thing in this forum. I wish to put on the record, in the form of a telegram, a protest which I have received:
As president of the Canadian Fruit and Vegetable Jobbers Association of Canada I humbly protest the type of legislation introduced by the hon. Minister of National Revenue in yesterday's bill wherein he proposes to bar all claims by act of parliament also to amend section 43 Customs Act and to have parliament retroactively validate and confirm all values for duty previously fixed. I question if this is constitutional and consider this a dangerous type of legislation. I beg you to vigorously oppose this bill which usurps the functions of the supreme court.
J. H. Langford.


[Stage Direction]
Section agreed to.
Sections 4 to 7 inclusive agreed to.
On section 8-Regulations. Drawback on duty-paid goods exported.
Richard Bedford Bennett: Section 8 raises a very old question, about which many views are expressed from time to time. This is a new section, which gives to the governor in council authority, under regulations made by him, to-
(a) allow, on the exportation of goods which have been imported into Canada and on which a duty of customs has been paid, a drawback equal to the duty so paid. . . .
And the other subsection applies although the materials are manufactured into goods in Canada. Many discussions have taken place in this house on this whole question of drawbacks. It has been argued that we have gone too far. When an application is made for information as to what drawbacks have been paid we are told it is not desirable to let the business of those who receive the drawbacks become known. I confess that I have had grave doubts whether we have not carried that too far. I do know that successive ministers of finance have endeavoured to reduce this drawback item to a minimum. I think the limitation should be placed in the statute at the top of page 4, and not in the regulation. I know we are bound to have these drawbacks as long as we are an exporting country importing raw material on which duty is paid. But I do think-and not to-day for the first time have I suggested

Customs Act-Drawbacks
it-that there should be a statutory limitation of the time within which these drawbacks may be claimed. I dare say the minister knows that on more than one occasion difficulty was experienced in checking claims for drawbacks. It is disconcerting to the accountants. ^ The validity of the claims was not in question but checking them became extremely difficult. By placing in the statute a limitation on the time within which application could be made we should be doing a service not only to the country but also to those who are claiming drawbacks.


Charles Avery Dunning: It would certainly be a service to the treasury.


Richard Bedford Bennett: During my time I saw one claim that came in not months but years after, and when pressed as to why it was not made sooner the reply was, "Oh well, we are very busy," and that sort of thing. Nobody knows better than the minister that such claims are extremely difficult to check. I should like to see the time limited to six months, though perhaps six months is too short.


Charles Avery Dunning: In some lines it is too short.


James Lorimer Ilsley: The suggestion is that it be put in the statute?


Richard Bedford Bennett: At the top of page 4. Say "the period within which such drawback may be allowed shall be limited to one year," if the minister thinks six months is too short.


James Lorimer Ilsley: There is a good deal of
merit in the suggestion. It is the intention, however, to review the whole Customs Act during the next twelve months and see whether we cannot revise and consolidate it; we are making plans for that now.


Richard Bedford Bennett: Perhaps Mr. Tanton will be cared for by that time.


James Lorimer Ilsley: The suggestion can be considered in the revision of the act. I think that would be preferable to carrying the limitation rifffit- now.


George Halsey Perley: If there is no doubt that a year is plenty of time, why not insert it in the act now?


James Lorimer Ilsley: It is a matter that should be considered. Conditions in different industries vary a great deal, and it is impossible to turn over in one's mind in a minute or two the great variety of industries that claim drawbacks and the conditions under which they operate. At the moment I cannot think of any reason why a year should not be long enough, but I have an impression that in some industries it might not be.


Charles Avery Dunning: In the case of home
consumption drawbacks, stocks are held from time to time until they qualify.


Norman James Macdonald Lockhart: I should like to add a further word about the telegrams of protest as read. The minister has to a large extent admitted that there is a possibility that many of these claims may be justified. If he makes it retroactive to the extent of permitting only the two cases, those in which claims have already been filed or are before the courts, it will be a hardship to force that upon dealers in all cases; because while they may not have filed official protests with the department I know there have been opinions expressed throughout the country that this is discrimination to a certain extent. I think the minister should not go too far. The courts could deal fairly with such cases. The suggestion of the minister to impose a limitation might be adopted, and the matter could be cleared up in the future. If, however, the interpretation given by the commissioner' the minister or others has been wrong, an adJustment should be due those who have paid the duty.
The minister's contention may also be justified that the drawback may not in all cases be passed on to the consumer, but I gather from conversation with many men engaged in business that they have entered protests against paying the duties imposed and feel that they should be given equal consideration along with those cases which are at present m the courts.


[Stage Direction]
Section agreed to.
On section 9-Drawback on exported goods manufactured of imported materials and of materials of domestic manufacture of the same class.
Richard Bedford Bennett: Will the minister make it clear what he has in mind? The old statute dealt with pig iron; this does not. Some would say it dealt with half of that term and not the other half.


James Lorimer Ilsley: It is not necessary to refer to pig iron specifically; it is included I think in the general language of the new section. The explanation of the section is found in the explanatory notes:
The effect is to extend to other goods the provisions contained in the present subsection as to pig iron.
This practice has been followed heretofore under authority of regulations made by the governor in council.

Customs Act-Drawbacks

And there is a provision at the end of the section which is important:
Provided that such drawback shall not be allowed unless a like quantity of materials c, the same class, whether imported or of domestic manufacture or production wras used in, wrought into or attached to articles manufactured in Canada and exported.


Richard Bedford Bennett: The reason for pig iron being the subject matter of the section is well known. We have no iron ore in the country capable of producing steel and we import iron ore from which we do produce a type of steel. Pig iron is an article that enters so largely into the industrial life of the country that a special provision was made for it. I say frankly to the minister that this is capable of the greatest possible abuse. I wonder if he will just concentrate on what it means. It means the mixing of material brought into the country with material in the country and claiming a rebate with respect to that material which comes in, after it has been wrought up, on the assumption that it is exported. How can you clearly and without question separate the export goods and the domestic goods when you have a mixing of the imported pig iron and the domestically produced ingots for the production of the steel that is used? It is a wholly wrong principle to expand it beyond pig iron. There was a very great effort made with respect to that-I think Mr. Fielding did it- and it was done with extreme reluctance for reasons I think the minister will appreciate at once.	*
Just look at it. You bring in some raw copper on which you pay duty. Then you mix that copper with domestic copper, and you have a product which is used for both domestic requirements and for export, but the duty is rebated only on the part of the material that was imported and subsequently exported. Then the proviso is that such drawback shall not be allowed unless a like quantity of materials of the same class, whether imported or of domestic manufacture or production, was used in, wrought into or attached to articles manufactured in Canada and exported. That is, fifty per cent of the resultant product must be Canadian and must be used with fifty per cent imported for the purpose of permitting the drawback to apply to that part of the resultant product that is exported. In the name of heaven how can that be done successfully? Pig iron was capable of being traced, but other materials beyond that cannot be traced. That action was taken in connection with pig iron for the reason that it resulted in steel being produced by industries in Canada. But take chemicals.
[Mr. Ilsley.l
You see, it is putting a premium on lessening Canadian production or maintaining it at its present level. It means an increase in imports if you are going to have one-half of all the material that is utilized in the production of a given commodity imported, thereby securing a rebate on exported goods. Instead of the whole production being carried on in Canada only one-half is contemplated as being made in Canada. That is the effect of it. The action in connection with pig iron was taken because we had no iron ore in this country with which to make the better qualities of steel; ore from Newfoundland was the only iron ore we had that was capable of producing the type of steel required in industrial activity.


James Lorimer Ilsley: I am informed that there
will be no difficulty in administration in connection with the provisions of this section; in fact I was under the impression that this was being done now. If it were necessary to identify the raw materials in the finished products as exported with the raw materials imported, that would not be possible in a good many instances where the manufacturer buys half of his raw material in Canada and imports half of his raw material. It may be that in the finished product which is exported some of the raw material domestically produced and some of the raw material imported will be used, but so long as the manufacturer exports sufficient to use up a quantity equivalent to that imported, why should he not have a drawback on what he imported? It seems to me only fair and just and in accordance with the principles underlying the drawback system. Otherwise he would have to separate his manufacture in some way into what he manufactured for export and what he manufactured for domestic consumption, and he would have to separate his raw material and use the imported part in what he exported, in order to get a drawback. There is no reason why he should not buy part of his raw material in Canada and import part of it, use the raw material in his manufacture and get a drawback on what he imported provided he exports enough to use up the quantity which he imported.


Richard Bedford Bennett: It goes a bit further than that; he must use a like quantity of materials of the same class. That is going a good deal further than we have gone previously in this country, and it is fraught with great racket possibilities.


[Stage Direction]
Section agreed to.

Customs Act-Drawbacks
On section 10-Regulations of imports and exports of arms, etc.
James Shaver Woodsworth: Mr. Chairman, on the whole I think the government is to be commended for having introduced a provision of this kind. Undoubtedly the arms industry occupies a place by itself, and private individuals ought not to be allowed to import, export or transport arms without any regulation whatever. I am glad also that this section provides not merely for the licensing of arms but also for any articles " deemed capable of being converted thereinto or made useful in the production thereof." That will include certain articles which undoubtedly should be included. It does not seem to me, however, that the section goes anything like far enough to control armament production, and on the other hand it does place enormous power in the hands of the government.
As I see it there are three or four groups whom we would have to consider in this connection. There are groups of private individuals who may be importing or exporting arms. There are friendly nations to whom we might export arms. There are enemy nations to whom some armament firms might try to export arms, and then there are the neutral nations. Before such great powers are given into the hands of the government we ought to have some sort of policy laid down with regard to how these different groups are to be treated. For example, are we to allow practically wholesale export of arms to neutral nations? I do not think that matter has ever been discussed in this house. There should be some fairly clear understanding with regard to government policy before such great powers are put into the hands of the government. Further, while one does not like to think of any sort of undue influence being exerted by armament firms, I do urge that with the millions of dollars which may be here involved the situation is perhaps not carefully enough guarded. Let us look at the penalties under the second subsection:
(2) Any goods imported or exported contrary to the provisions of this section or of any order of the governor in council hereunder or regulation established thereunder shall be seized and forfeited; and any person importing or exporting the same or causing or permitting them to be imported or exported shall be guilty ot an offence and for each such offence be liable on summary conviction before two justices of the peace to a penalty not exceeding two hundred dollars and not less than fifty dollars, or to imprisonment for a term not exceeding one year and not less than one month or to both fine and imprisonment.
31111-158*
May I point out that in the manufacture and export of armaments millions of dollars are involved. This penalty is altogether inadequate.


James Lorimer Ilsley: Read the last part of the section.


James Shaver Woodsworth: I shall.
Mr. ILSLE\ : A million dollars is not involved when the value is only $200.


James Shaver Woodsworth: It reads:
If the value of such goods is two hundred dollars or over, the person so offending shall be guilty of an indictable offence and be liable on conviction, in addition to any other penalty to which he is subject for such offence, to a penalty not exceeding one thousand dollars and not less than two hundred dollars, or to imprisonment for a term not exceeding four years and not less than one year or to both fine and imprisonment.
Surely in comparison with the greatness of the crime involved in the violation of this section, the penalties are very small indeed. One can imagine the millions of dollars involved in the production of armaments, and if a man can go on violating the law with a penalty as slight as this one, it is almost an encouragement to such violation.
There is another and more important matter which I wish could have been introduced by the government. I should like to see not only licensing of the export or import or transport of armaments, but legislation making it impossible for private individuals to make profits out of war. I think that is the least that can be done to-day. At this late stage of the session I do not wish to go into any general discussion of this question, but all hon. members know that many private investigations with regard to armament profits have taken place. The League of Nations has reports in the matter, and not so very long ago there was an investigation in Great Britain. Further, there was an elaborate inquiry in the United States. The enormous fortunes made out of war are now pretty generally known by the public, and the people are also beginning to get a glimmer of the crooked methods used to foment war scares in order that such profits may be made.
With war such a horrible business, and in \ iew of the fact that the last war almost wrecked civilization, bringing even our own country to the verge of bankruptcy, we must not take the matter too lightly. When war breaks out we are asked to send tens of thousands of our best young men to fight; yet we have allowed armament profiteering'. We allow a course of action which may precipitate war. In my judgment the least that

Customs Act-Drawbacks
can be done is to see to it that no individual is permitted to make profits out of this business which so disastrously may affect a nation. The present measure does not make any provision to prevent the making of profits out of war.
Only to-day I received a letter from the editor of The People's Weekly, a labour publication in the city of Edmonton. Several weeks ago this paper undertook to circulate a petition with a view to having it presented to parliament. The editor writes:
Under separate cover in three parcels we are sending you the petitions to take the profit out of war which have been received in this office. There are 27,781 names on the sheets mailed from here. They are mostly from Alberta, although a few are from Saskatchewan and British Columbia.
The writer goes on to state that he understands that The Western Farm Leader is sending a batch of petitions. The letter then proceeds:
You will notice that the kinds of sheets used are varied in size, shape and condition. They have been carried around in farmers' pockets and workmen's overalls. While there was no organized circulation of the petition, nevertheless hundreds of individuals expended much time and effort in securing names. The letter accompanying a petition with one hundred and thirty-three names read:	I have had to
walk close to one hundred miles to get these few names, part of it on snow shoes. I only encountered one who refused to sign. This last sentence is contained in almost every letter received. There is usually one person in a community who will not sign. Of course the petition has only been circulated where the People's Weekly is known. The daily papers have not mentioned the campaign. But where it has been circulated practically everyone has signed. I would say that the experience of those who circulated the petition indicates that if every person in Canada had had a chance to express themselves on the matter the result would have been an almost unanimous vote to take the profit out of war.
May I say that in addition to this campaign in Alberta a number of similar petitions have been circulated in other provinces. I have some of these containing tens of thousands of names, and all have not yet arrived. So far I have not had a chance of presenting them to the house, but I would say that with very little organized effort, and through the initiative of a few individuals in the west, all these people have volunteered in their respective communities to try to do what they could to impress upon the government the necessity of taking profit out of war. _
May I avail myself of the opportunity afforded by this piece of legislation to urge upon the government that they supplement it by a more drastic and far-reaching measure. It is only fair to the great masses of our people that no one be allowed to profit

from a future war. To-day we read about certain companies doing businesses which, in themselves, are perfectly legitimate, but through which because of the war preparations in Europe, they are making tens of millions of dollars. I have in mind the nickel companies and their enormous profits. Undoubtedly a very considerable portion of their production is to-day going into war munitions. I cannot see why, in a world troubled with such unrest that there is danger that Canada may be drawn into war-unrest to such an extent that this government has thought it necessary to spend millions of dollars to guard against possible contingencies-I cannot see why any group in Canada should be permitted to make money out of that kind of business. All I can do is to urge that this legislation be supplemented by other more drastic measures. Would the minister tell the committee whether something further is contemplated, and what general lines of policy will be followed in the administration of the section under discussion?


James Lorimer Ilsley: I was under the impression that a complete statement on the whole subject was made by the Prime Minister (Mr. Mackenzie King) at an earlier stage in the session. I am not in a position to state what the government contemplates, but undoubtedly in the event of this country being involved in a war extraordinary profits will be guarded against. I can say that that matter has been fully considered. The hon. member will recall that during the period of the last war and shortly afterwards the Business Profits War Tax Act became operative, and that it was one of the measures adopted at that time to prevent private industry from profiteering to too great an extent.


James Shaver Woodsworth: The minister would not call that effective.


James Lorimer Ilsley: I have not made a study of that act, as it was long before my time in this parliament. However, that is one method which could be adopted. The hon. gentleman suggests the taking of profit entirely out of dealing in war materials, or taking the profit entirely out of war. I recall listening attentively to the debate which took place in the early stages of this session. I heard the hon. gentleman and other hon. members speak in that debate, and if I remember correctly, it was pointed out that no one could make a profit out of the growing and selling of wheat to belligerents, or out of the selling of foods and a wide range of materials to belligerents or to others who might be con-

Customs Act-Drawbacks
nected with a war. It was pointed out, and I think quite properly-I ana not anxious to get into a controversy-that to take the profit out of war there would have to be the complete socialization of all industries, large and small. When that was suggested, the hon. member said it would suit him.


James Shaver Woodsworth: I do not know that I said that, but I should like to ask the minister whether wheat and other foodstuffs would be included in this section?


James Lorimer Ilsley: The answer is yes. Under paragraph (b) the governor in council takes the power to prohibit, restrict or control the exportation, generally or to any_ destination, of provisions or any sort of victual which may be used as food by man or beast.


James Shaver Woodsworth: Would that mean
that a man could not grow wheat without a licence?


James Lorimer Ilsley: It does not mean that.


James Shaver Woodsworth: May I ask what
it does mean?


James Lorimer Ilsley: This legislation is permissive only. It will be up to the governor in council to state whether a licence or permit shall be required. This authorizes the governor in council to restrict or control the exportation of food.


James Shaver Woodsworth: That is clear. Should a crisis occur, the government could take the power of not allowing our farmers to grow wheat without a licence.


James Lorimer Ilsley: It says nothing about growing. Mr. WOODSWORTH: To sell.


James Lorimer Ilsley: Under this legislation they have the power to prohibit, restrict or control the export of wheat, not the growing.


James Shaver Woodsworth: I think the minister will concede that only in the most extreme circumstances would the government undertake to prohibit the export of foodstuffs. I think the minister will agree also that munitions are in a different category from foodstuffs and have always been so regarded. It seemed to me that there was an evasion or side-tracking of the main issue when this question of food was brought up. I know that everything in the world is related to everything else, but most of us know what we mean when we speak about armaments and materials of war. My presentation to-day is limited to what are generally known as munitions and materials of war. I ask that they be taken out of the category of things from which men can make fortunes


William Lyon Mackenzie King: For some
months past an interdepartmental committee has been going very carefully into the whole question of the control of profits with respect to munitions of war. That committee has been working in conjunction with members of the government. The line upon which we have been proceeding is to attempt to draw a distinction between war materials produced in times of peace and what may be necessary in times of war. Unquestionably special legislation would be required in times of war. At the present time, in a time of peace, the government is proceeding on the theory of permitting competition with reasonable remuneration, the work to be subject to inspection and audit. Different forms of control have been suggested by the departments. Members of the interdepartmental committee are working together with a view to effecting just what my hon. friend has in mind. I can assure him that the whole question is one to which the government is giving careful consideration, and that it will continue to do so. We agree with him in asserting the principle that no profits should be made out of war.


Richard Bedford Bennett: As such.


James Shaver Woodsworth: Has the government any policy with regard to the matter I mentioned, that is the export to friendly warring nations?-of course, we would not be exporting to an enemy nation-or to neutrals? Is there any line of policy that the government intends to follow with regard to these matters? We have dealt with one particular case, that of Spain, but no general policy has been laid down so far.


William Lyon Mackenzie King: Some of these
matters are better dealt with as the situations arise. For example, with respect to-Spain, there was no difficulty in determining exactly what in the public interest was most advisable. However, to state in advance the principle which would govern with respect to situations, as they may affect different countries at different times is something which might not be wholly wise. This is especially so where the general policy is one of seeking an effective control.


James Shaver Woodsworth: Will a report be
made to parliament covering the production, transportation and exportation of war materials? Will the facts be given to the public?


William Lyon Mackenzie King: All I can say
at the moment is that when the estimates of
departments affected are being considered, we shall seek to give -the desired information so
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far as may be possible. As to any special report being prepared, this has not been considered up to the present, but I shall be glad to see that the suggestion is taken under consideration.


Richard Bedford Bennett: I have to make a few observations with respect to this section from an entirely different standpoint. I have been accustomed over a period of many years to hear denouncements of the power vested in the executive and the exercise thereof by the governor in council. When such power as that mentioned in this section has been vested in the governor in council of this country, I do not know. We sometimes talk about vesting power in the governor in council in connection with relief matters touching the health and happiness of our people; but here the whole problem mentioned by the hon. member for Winnipeg North Centre (Mr. Woodsworth) is to be dealt with by the governor in council by regulations.


William Lyon Mackenzie King: Can my right hon. friend suggest a better way?


Richard Bedford Bennett: Yes. There should be placed upon the statute books a provision that on and after a given date, in the event of hostilities these things should operate. Action with respect to matters of war should not be left to the executive; that should be a matter for parliament. It should become operative the minute war is declared.


Mr. MACKENZIE (Vancouver):: This
provision would have to be in effect when we are not involved in any hostilities.


Richard Bedford Bennett: This government or any other government is not likely to interfere with the movement of materials from Canada to a neutral country. We will not by an act of parliament prevent trade; at least,
I have never heard anyone suggest we are likely to do that. That is a question as between neutrals and ourselves.


William Lyon Mackenzie King: What about the position of Spain?


Richard Bedford Bennett: We are selling goods to Spain to-day.


William Lyon Mackenzie King: We are controlling the export of certain classes of munitions.


Richard Bedford Bennett: We are selling goods to Spain, but there are certain classes of goods intended for war which are controlled.


Ian Alistair Mackenzie: Goods
could be sent to a neutral country and reexported to Spain.


Richard Bedford Bennett: That was one of the things connected with the exercise of control which the late war indicated quite clearly. A matter of great dispute between Mr. Page and Lord Haldane and the present Lord Cecil, who was then in the foreign office, was the question of the shipments of goods to one country which might finally find their way to a warring country. The Minister of National Defence (Mr. Mackenzie) will remember that that was particularly true with respect to Scandinavian countries; but I will not go into the details of that. This is conferring a power of tremendous extent upon the governor in council. I direct attention to one particular clause, subsection (b):
The governor in council may . . .
(b) prohibit, restrict or control the exportation, generally or to any destination, directly or, indirectly, or the carrying coastwise or by inland navigation, of arms, ammunition, implements or munitions of war, military, naval or air stores or any articles deemed capable of being converted thereinto or made useful in the production thereof, or provisions or any sort of victual which may be used as food by man or beast.
That is the answer to the question which was asked by the hon. member for Winnipeg North Centre regarding wheat. The governor in council has now taken the power to prohibit the exportation of wheat and any other victual which may be used as food by man or beast.
I must say I did not like the word "victual," and that is the reason I sent out to get a dictionary, to look at it; I think a more apt word might have been used; but that is neither here not there. The important thing is the extent of the power conferred.
If you look at other subsections of the section you will find somewhat the same extreme power. For instance, the power of licensing is there, and I do not think anyone will greatly complain of the use of the licensing power with respect to some matters. But the governor in council may:
(d) provide for the registration or licensing of persons engaged in the business of manufacturing, exporting or importing arms, ammunition or implements of war and prescribe fees, regulations, conditions and exceptions in respect thereof.
I take it that that is regarded as being necessary from the standpoint of possible operations of war, but I cannot think that anybody will be led to import war munitions into this country; if we ever again reach that unfortunate stage, the country itself will utilize its facilities for that purpose. I content myself with pointing out how frequently governments in office find that positions taken in opposition cannot be sustained or maintained when you have to rely upon an exercise of powers by

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the governor in council to accomplish your purpose. I suggest that the enactment of legislation would have been a better course, and that the legislation should become effective at once upon the happening of a certain event. However, the main thing is that provision is made for it. I suggest to the minister that he should add to the section some such words as these in order that no doubt may arise: The regulations thus made shall have the force and effect of law, and shall be published in the Gazette-within whatever time may be regarded as necessary for their promulgation. The question of authorizing regulations to be made under order in council, without making any provision that they shall have the force and effect of law, is one that has been discussed in courts of law. It will be remembered that a few days ago the hon member for St. Lawrence-St. George (Mr. Cahan) pointed out the desirability of that being done, and it was done. Where there is no provision that gives regulations the force and sanction of law, you may have some questions regarding proof and matters of that kind. The Minister of Justice (Mr. Lapointe) knows the form of enactment that has been used for that purpose.
One other point, wherein I am in accord with the hon. member for Winnipeg North Centre. This morning we were considering a bill dealing with combines, and we provided that an individual who was found guilty under that measure could be fined $25,000, and a corporation $100,000; or a term of imprisonment could be imposed, or both penalties. But we provide that those who are guilty of infringing the provisions of the law under consideration may be fined or imprisoned, and if the goods are worth over $200 the individual may be fined up to $1,000. Having regard to the character of the offence charged I think the fines are wholly inadequate.


Ernest Lapointe: Do you
mean, in the bill?


Richard Bedford Bennett: Yes. It is the penalty
clause of this bill. I think it is inadequate, and that is the reason I have compared it with the penalties contained in the other bill. In view of the far-reaching character of the regulations, which greatly exceed the general provisions of the bill, it would be desirable to add the words I have indicated or others to the effect that the regulations shall have the force and effect of law as though enacted as part of the statute, and that they shall forthwith be printed in the Gazette.
The hon. member for Winnipeg North Centre dealt with the question of profits made out of war. I have made many inquiries on this subject, as no doubt he has. The business
profits war tax in Great Britain, for instance, was a considered method of dealing with the problem of war profits. No one knows better than the hon. member who has spoken on the matter that there were a large number of people in Great Britain who believed that no profits should be allowed. A manufacturer on a Very large scale with whom many hon. members of this house came in contact from time to time said, "We will operate our plant for a ten per cent profit, which will cover depreciation and everything else." After very careful consideration of the whole matter by committees and by business men, Mr. Lloyd George expressed himself as being strongly of the opinion that the best method was to let the manufacturers make all the money they could, and then take it away from them by taxation; and it will be recalled that Sir Josiah Stamp drafted the Business Profits War Tax Act, which we in Canada followed to some extent. I recall very distinctly talking about this question to a gentleman who told me that seventy out of every hundred dollars of profit was taken by the state, and it was not thought that thirty out of one hundred dollars was more than a reasonable amount, as the Prime Minister said, for what might be regarded as the normal profit of the enterprise as distinct from that which was referable purely to war activities.
The contention of the hon. member for Winnipeg North Centre is that all money made from war should belong to the state. That was the general principle which was in the mind of the British government, and the principle which Sir Thomas White adopted here after it had been in operation in Great Britain. I daresay that most hon. members have read the circumstances connected with the enactment and the evolution of that law in Great Britain.
The question of maintaining the industrial life of a country during war as distinguished from its purely war activities is one which, as the Prime Minister said, is not as simple as it looks; on the contrary, it is extremely complex, for certain types of industry through the expenditure of small sums of money can be made available for producing war materials, yet that work dislocates and in some instances destroys the normal business of the enterprise. It was that fact, I believe, which was the determining factor that caused the government to proceed in the way that it did, rather than by nationalization of the whole effort in the manner advocated by the hon. member for Winnipeg North Centre, who would be glad to see it accomplished because it means socialization of industry. It
Customs Act-Drawbacks

is a problem which is easier to talk about than to solve. I suppose there is not a member of this committee who has not given thought to it. But the reason which led to the enactment in Great Britain of a business profits war tax was that it first encouraged industry to develop to the ninth power, and then took away from it practically the entire amount of profits referable to the war.


James Shaver Woodsworth: May I ask the
leader of the opposition this question? In this country we never really followed the lead of Great Britain in this respect, did we?


Richard Bedford Bennett: We did not carry it to the same extent, but we did apply the principle. For instance, I recall one gentleman m this country telling me that the taxation imposed-as a matter of fact I saw it in the directors' report-amounted to S70 out of every $100. In other words, $70 out of $100 of profits went to the state.


Mr. HEAPS:: In Canada?


Richard Bedford Bennett: 
Mr. McNIVEN:: A good many representations have been made to me similar to those referred to by the horn, member for Winnipeg North Centre, only some go further. I would ask the government to take the necessary steps to control the profits that are being made by manufacturers of war materials which will be accumulated for defensive purposes.
Wheat was mentioned a moment ago and is included in this measure. During the great war, wheat was the only commodity I know of in connection with which any such measure was taken. In February 1917 the price of wheat on the Winnipeg market was $3.05 a bushel. The Winnipeg grain exchange was closed and the government of Canada took over wheat at $2.20 a bushel, and the export of wheat except through a government agency was prohibited. A western farmer could have exported his wheat to the United States at that time and received a very much higher price. If the price of wheat had not then been controlled, it is conceivable that wheat would have gone to $4 or $5 or evep $6 a bushel. I am not complaining about that, but it had quite definitely the reverse effect in the years following. Farmers purchased land at $75, $100 and $125 an acre, and they were justified in so doing with wheat at a price of $2.20 per bushel. But when, within a year of the cessation of the war, the price of wheat tobogganed to between 65 and 90 cents a bushel, these farmers found it impossible to pay for the lands which they had purchased at prices ranging from $75 to $125 an acre; and that very situation is the basis of much of the debt adjustment that is necessary in the western provinces to-day.
So far as manufactured products and other commodities are concerned, I do not know that there were any similar control, and the manufacturers ever went so far as to exploit the home market. That became apparent, because in 1919 the board of commerce was created and a commission was sent throughout the country to investigate the prices that were being charged for various commodities
Reference has been made to taxation, and I think it will be generally conceded that there was insufficient taxation on war profits during the war years. That has resulted in the very large national debt we have to-day and the heavy interest charges we have to pay on it.
I commend this measure and hope that the government in the intervening months will be able to amplify it so as to ensure control of war profits.

Customs Act-Drawbacks


Mr. COLDWELL:: I am glad to hear the Prime Minister say that possibly, as further estimates are considered, additional statements -may be obtained from ministers regarding the interdepartmental committee which has been looking into this particular matter. I am sure we shall all look forward to asking further questions when the appropriate estimates are before us.
While I commend this bill as a step in the right direction and agree wholly with the hon. member for Regina, I believe that the question of war profits and the control of exports of raw materials that may be used in the fabrication of munitions ought to be considered apart from war conditions, and that some steps should be taken to control the export of potential war materials to countries that may be at least potential enemies of Canada. We know, too, that sometimes bogies are placed before the Canadian people, who are told that certain nations are potential enemies not only of Canada but of the British commonwealth of nations. I know, as other members know, that some such nations have been particularly active in the last few months in buying scrap iron and things of that sort in various centres of Canada. A good deal of scrap iron has been sent lately from western Canada to the Pacific coast.


Richard Bedford Bennett: Up to $30 a ton.


Major James William Coldwell: Quite so. It is difficult, I admit, but some attempt should be made to control profits made out of the export of such materials to potential enemy countries. In the last war we saw the dreadful spectacle of British and other soldiers being killed by bullets which possibly were encased in Canadian nickel.
I agree with those who have spoken with regard to the penaltj'. Last night in the banking and commerce committee when we were considering a money-lending bill, the penalty provided was S5.000 for violation by the directors of any of the provisions. In this particular instance the penalty is only
SI.000.	With the leader of the opposition, I believe that the punishment should be made to fit the crime, and possibly the fine should be tantamount to confiscation of everything obtained for the export of -munitions in violation of the act.


Richard Bedford Bennett: The law does provide that.


Major James William Coldwell: I had not noticed that.


Richard Bedford Bennett: Yes. "any goods imported or exported contrary to the provisions of this section."


Major James William Coldwell: does and parliament to have greater control than contemplated under the provisions of this bill, which in my judgment places too much discretionary power in the hands of a government.


Mr. JOHNSTON (Bow River):: I am in favour of the general principle of this bill, but there are changes I would like to see made. I recall the Prime Minister, speaking not long ago about our defence program, assuring us that Canada's defence program was to be purely defensive. This section provides for the control of export of arms. I cannot conceive how a real defence program could be carried out if we are going to manufacture arms or munitions for export. I would like to see greater control of the export of war materials.
As far as profit is concerned, as I mentioned once before. I do not think you can take all the profit out of war; but excess profits can certainly be taken out, and I am pleased to hear that the minister is investigating that question now, by means of a committee I think he said. I should like to see that committee become much more active. Now is the time when we should have a thorough investigation of these munition manufacturing plants, and not wait until war breaks out, because then they will have made their profit to a large extent. These arms manufacturing plants should be allowed a fair commission for their work, for we do not contend that they should manufacture these things gratis for defence purposes; they should receive a commission, but not profits to the extent of the millions that have been suggested. It is true that no farmers ever made millions out of the production of wheat for war purposes, or any other purpose. I am strongly in favour of the general principle of control of these things, but would like to see more action


James Lorimer Ilsley: Suggestions were made in regard to the amendment of this clause which I think have merit. One was the matter of the penalty. It does appear that a fine of SI,000 is small for a substantial offence. Of course, it must be borne in mind that the goods are confiscated-


James Shaver Woodsworth: Is not that just one shipment? A man might have shipped goods previously and have been doing it for months.


Richard Bedford Bennett: But you do not catch the goods; they get away.


James Shaver Woodsworth: But you can catch the profits made out of the illegal export.


Ernest Lapointe: By a higher penalty.
LMr. Coldwell.]
Mr. ILSLEY; Yes, I think the penalty might be higher for shipments in the higher category. I would suggest $10,000. That is a great increase over $1,000, but the justification for such a large sum would be that it is not too large for a serious infringement of the section. Moreover, it is not compulsory; that is the maximum; the penalty may range from $200 to $10,000, leaving the court to exercise discretion. So I am prepared to have that $1,000 changed to $10,000, and will have a colleague move that in a moment.
The other suggestion made by the leader of the opposition was that force of law be expressly given to the regulations. I was not aware that that was necessary, particularly when there is in the section a provision such as appears in subsection 2, namely:
Any goods imported or exported contrary to the provisions of this section or of any order of the governor in council hereunder or regulation established thereunder shall be seized and forfeited. . . .
Those words really give to the regulation the force and effect of law for all practical purposes, I should say.


Richard Bedford Bennett: No, that only makes it an offence to contravene the regulation. I am not urging it; I do not urge anything; I merely make a suggestion.


James Lorimer Ilsley: I think there is no objection to adding a clause that such regulations shall, when made, have the force and effect of law as though enacted as part of this statute, and shall be published in the Canada Gazette.


Richard Bedford Bennett: Yes, I think the public should know of them as soon as possible, because after all, it is legislation by the executive that is not in the public statutes.


James Lorimer Ilsley: Then the question arises whether the regulations are established under the next subsection until they are published in the Gazette. I would think they are established as soon as they ame made.


Richard Bedford Bennett: Unless you provide, as has sometimes been done, that they shall not be effective until after so many days elapse from publication. In the absence of any provision to that effect they become effective the moment the assent of the governor general is given,


James Lorimer Ilsley: I have not given a great deal of thought to that phase, but I can imagine a situation in which events are moving very rapidly where it might be necessary to pass an order in council, and then within the next half hour make regulations and notify persons affected that these regulations had been made. Then they would have to govern themselves accordingly.

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Richard Bedford Bennett: The publication in the Canada Gazette does not touch that. They are published in the Gazette subsequently, merely to indicate what the regulations are.


Norman McLeod Rogers: I move that section 10 be amended by adding the following words immediately after the word "elsewhere" in line 44:
Such regulations shall, when made, have the force and effect of law as though enacted as a part of this statute, and shall be published m the Canada Gazette.


[Stage Direction]
Amendment agreed to.
Norman McLeod Rogers: I have another amendment. I move that the word "ten" be substituted for the word "one" in line 10 on page 6 of the bill.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On the preamble.
Donald Alexander McNiven: I wonder if the committee would grant me an indulgence so that on the preamble I might discuss a matter of particular interest .to the prairie provinces, which more properly should have been discussed under subsection 5 of section 2, which reads:
The operation of the value for duty of any fruit or vegetable fixed pursuant to this section may be suspended by the minister in the case of such fruit or vegetable imported into any specific region or part of Canada.
I am not sure whether in its practical working out this provision is intended to end the application of dumping duties as applied during the last five or six years or whether it is intended to perpetuate that practice.
So far as the application of dumping duties on fruits and vegetables is concerned, as a resident of western Canada I have no objection to the application of that principle to the province of Ontario, if the residents of Ontario so desire. I have no objection to the application of the same principle to the maritime provinces or to British Columbia, if the residents of those areas so wish; but I have a very emphatic and definite objection to the application of the dumping provisions of the Customs Act to fruit and vegetables going to the prairie provinces, as a protection for industries that have no existence in those provinces. It may afford a certain amount of protection to industries in other parts of Canada, but I am informed, and I think correctly, that the maritime provinces do not ship fruit or vegetables to western Canada. There was a time when the gravenstein apple was a household commodity in western
Canada, but at the present time that apple is a scarcity there. I am also informed that practically no vegetables, and only comparatively small quantities of fruit, are now shipped to western Canada from the province of Ontario. If the people of Ontario desire the dumping provisions of the Customs Act in order to preserve the Ontario market for their vegetable and fruit growers, that is a matter of immediate concern to them, and I do not take issue with it. But I do object very definitely and emphatically to the dumping provisions being applied to fruits and vegetables in western Canada, with the result that two and a quarter million consumers are required to pay an increased price for those very necessary table and household commodities.
The dumping provisions were applied last year, and I am going to give the dates when they were applied in the maritime provinces and the prairie provinces. The dates are as follows:
	Prairie	Maritime
	provinces	provinces
Cucumbers.. ..		J une 5
Lettuce			June 5
Beets			June 29
Cabbage			June 29
Cauliflower.. ..		June 29
Strawberries ..	.. June 10	June 24
May I pause here to say that as soon as the dumping duty was applied to strawberries, the price was increased here in the province of Ontario; as a matter of fact, the price was increased in the parliamentary restaurant in this building.
Carrots	
June	12Green peas	
June	12Cherries	
June	22Raspberries	
June	29Loganberries .. .. June	29Celery	
June	29Plums	
June	10Canteloupes	
June	12Peaches	
June	12Pears	
June	22Prunes	
June	29
June 30 June 30 July 3 July 3 July 3 July 10


James Lorimer Ilsley: Has the hon. gentleman the dates when the values were removed? My impression is that he is quite correct, that the values go on earlier in the west than in the maritimes, but I believe they are taken off earlier also.


Donald Alexander McNiven: I have not the dates when they were removed, but the point I want to make is that these commodities are not produced in the prairie provinces in commercial quantities, and that what production there is in that area does not to any degree supply the demand. While I admit that this provision is designed to protect the
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British Columbia market particularly, we find in western Canada that the producers of British Columbia are not able to supply these commodities in sufficient quantities to supply the market in the west. For example, I am credibly informed that British Columbia was not able to supply the demand of western Canada for plums, peaches and prunes, and that when these fruits were ordered in British Columbia the wholesaler or producer said they could be shipped only in limited quantities. When a carload was ordered, the buyer was instructed that he would have to take a composite car. He might have to take one hundred, one hundred and fifty, or two hundred and fifty cases of plums, peaches or prunes, and the rest of the car would be made up of other commodities.
Dealing particularly with peaches, after the dumping duties went into effect the price increased by forty cents a case in the Regina market, and by similar amounts throughout Saskatchewan.


Richard Bedford Bennett: In 1936 or 1935?


Donald Alexander McNiven: In 1936.


Mr. TOLMIE:: What was the price before the dumping duty?


Donald Alexander McNiven: I understand about SI .20, and after the dumping duty it went up to S1.60. The point I want to emphasize is that if the Canadian pnodrtcer is not able to supply the western' market there is no justification, if indeed there is under any circumstances, for the application of dumping duties. The application of those duties to two and a quarter million consumers means that the government of Canada is collecting a revenue from these consumers on these particular commodities. I do not think it is the desire of the government that a section of the country which has been subjected to one type of calamity after another should be required, through dumping duties, to pay revenues into the exchequer of Canada where articles of food are concerned. It seems to me the ordinary duties authorized by parliament with regard to fruits and vegetables are sufficient protection for Canadian producers. I hope that under this subsection the minister will find it in his power to create a region where dumping duties will not be applied, and that region should include the three western provinces. If the representatives from Manitoba and Alberta do not concur in the suggestion, then I ask most definitely that it apply to Saskatchewan.


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


[Stage Direction]
Bill No. 95, to incorporate the Canadian Mercantile Insurance Company-Mr. Fontaine.
Bill No. 96, for the relief of Norah Clara Simson Warden-Mr. Jacobs.
Bill No. 97, for the relief of Evelyn Mc-Caughn McBride-Mr. Jacobs.
Bill No. 98, for the relief of Marie Liette Fortier Mickles-Mr. White.
Bill No. 99, for the relief of Cecile Snyder Rashback-Mr. Betts.

Walter Edward Foster: I have the honour to inform the house that the clerk of the house has received from the chief electoral officer certificate of the election and return of the following member:
Of John Allmond Marsh, Esquire, for the electoral district of Hamilton West.



COMBINES INVESTIGATION ACT


[Stage Direction]
The house resumed consideration in committee of Bill No. 41, to amend and consolidate the Combines Investigation Act and amending act-Mr. Rogers-Mr. Sanderson in the chair.
On section 23-No witness excused from giving evidence on ground it may incriminate him.
Joseph Thorarinn Thorson: I would be very glad to yield precedence to the right hon. the leader of the opposition on this section.


Richard Bedford Bennett: I have nothing further to say; I have said it so often. This is the clause about which discussion took place between the Senate and the House of Commons, I take it?


Norman McLeod Rogers: Yes.


Richard Bedford Bennett: The contention is that, as it stands at this time, it is to prevent the use of documentary evidence in criminal proceedings. This purports to cure it; that is as far as I understand it. I have seen documents which were thus secured used in criminal proceedings; in fact, I was associated with a case in which they were used. But, of course, I think there is a misunderstanding as to how they can be used. The mere fact that they are in the possession of the investigator does not imply his right to keep them. They should be returned to the people from whom they were taken.

Combines Investigation Act
The same question, may have been in the minds of those in the other house. There is no right to keep a man's documents because you have the right to take copies of them, unless the right is specifically given. Under the suggested proposal he may get only a certified copy, whereas before he was entitled to the documents.


Charles Hazlitt Cahan: He could seize them.


Richard Bedford Bennett: The question as to the use of them has been discussed times without number. I see no reason why documents properly in the custody of the crown should not be used against the person from whose custody they came. I have seen that done, but I understand that eminent lawyers take another view. I have nothing to add to what I have said already.


Joseph Thorarinn Thorson: This is an exceedingly
important section of the bill, and in view of the controversy which has taken place between the House of Commons and the Senate I think it might serve a useful purpose if the history of this section were placed on the record. The Combines Investigation Act was first introduced in 1910 by the Prime Minister (Mr. Mackenzie King), who was then I believe the Minister of Labour in the cabinet of Sir Wilfrid Laurier. In that act there was no provision at all governing the admissibility or inadmissibility of either oral or documentary evidence. Then the Combines Investigation Act of 1923 was passed. When that act was first introduced into the House of Commons on March 9, 1923, section 18 read as follows:
No person shall be excused from attending and giving evidence and producing books, papers, or records, in obedience to the order of the registrar or commissioner, on the ground that the evidence or documents required of him may tend to criminate him or subject him to any proceeding or penalty, but no such evidence or documents shall be used or receivable against such person in any criminal proceedings thereafter instituted against him, other than a prosecution for perjury in giving evidence upon such investigation, inquiry, cause or proceeding.
It will be noted that the section in the bill as it was first introduced made reference to both evidence and documents. When the bill came into the house for second reading on May 7, 1923, the Prime Minister intimated that he desired to move an amendment to section 18, deleting the words "or documents" in the phrase "no such evidence or documents." The Prime Minister's statement, which appears on page 2521 of Hansard of 1923, is as follows:
There is one other slight amendment which is to strike out the words "or documents" that appear in section 18, line 42, of the act. The
section as drafted makes it obligatory upon any person to give evidence before a registrar or commissioner and to produce documents. It goes on to state, however, that whoever gives testimony cannot be bound in a court of law by the oral testimony so given. The clause as it now reads goes beyond granting protection as respects oral testimony and includes documents. The effect of the bill as drafted would be that where any incriminatory documents might be disclosed in the case of an investigation, subsequently, when court proceedings were held, a combine might find its means of escape from the just penalty of its illegal actions, by having these documents protected. It is, therefore, my purpose to meet such a possible situation by providing that the words "or documents" shall be deleted.
When the bill went to committee the Prime Minister moved to delete the words " or documents." His statement appears on pages 2631 and 2632 of Hansard of 1923, as follows:
Mr. Mackenzie King:	I have an amendment
to this section, Mr. Chairman, that I mentioned it was my intention to introduce. I move to amend the section by inserting the word "oral before the word "evidence" in line 40 and by striking out the words "or documents" in line 42 and substituting therefor the words "so given." The section as it stands protects in the event of a criminal prosecution any person as respects the oral evidence which he may have given and also as respects documents he may have introduced. It is quite clear that unless the words "or documents" are stricken out, the clause would only serve to protect the combine in the matter of the evidence that was needed at the criminal prosecution.
Mr. Murdock:	I would point out in that
connection that it will be necessary to insert the word "oral" in line 4.
Mr. Mackenzie King: That is what I have done.


[Stage Direction]
Amendment agreed to.
For some reason or other which I have not been able to ascertain, only one of those amendments was actually made, namely, the one to strike out the words "or documents." The word "ora-l" before the word "evidence" was not inserted. Therefore, section 18 of chapter 9 of the statutes of 1923 reads:
No person shall be excused from attending and giving evidence and producing books, papers, or records, in obedience to the order of the registrar or commissioner, on the ground that the oral evidence or documents required of him may tend to criminate him or subject him to any proceeding or penalty, but no such evidence so given shall be used or receivable against such person in any criminal proceedings thereafter instituted against him, other than a prosecution for perjury in giving evidence upon such investigation, inquiry, cause or proceeding.
Then an interesting case came before the courts.
Charles Hazlitt Cahan: I have been following my hon. friend. I have not before me chapter 9 of the 1923 statutes except as it is found in chapter 26 of the Revised Statutes of Canada.
Combines Investigation Act


Joseph Thorarinn Thorson: I shall come to that in a moment. The case of Rex v. Symington was tried in 1926. That was the fruit combine case. In the course of the trial it was intimated-indeed I think I may say, held- that the term "evidence" as it appeared in section 18 of the Combines Investigation Act of 1923 included both oral and documentary evidence. Counsel sought to produce a document, and the court ruled that he might have produced that document except for the statute. The language of the court on that occasion, in reply to counsel who sought to use a document, was to this effect: I am inclined to think the act takes away from you something you would have without the act. In consequence of that decision-


Richard Bedford Bennett: What judge was that?


Joseph Thorarinn Thorson: I do not recall the name of the judge. In consequence of that decision the_ commission that was charged with the revision of the statutes in 1927 caused the word "oral" to be inserted before the word "evidence" in the sixth line of section 18.


Charles Hazlitt Cahan: When was that inserted? Mr. BENNETT: In the revision.


Joseph Thorarinn Thorson: It was inserted in the course of the 1927 revision.


Charles Hazlitt Cahan: I could find no special act dealing with that insertion.


Joseph Thorarinn Thorson: I have merely traced the history of the section, and I find section 18 in the Combines Investigation Act of 1923 as I have set it out to be.


Charles Hazlitt Cahan: Quite so.


Richard Bedford Bennett: Did not the hon. member make an error? He said the word "oral" did appear in 1923.


Joseph Thorarinn Thorson: No, it did not appear.


Richard Bedford Bennett: He intended to say it did not, but he said it did. But it did appear in the revised statutes.


Joseph Thorarinn Thorson: An amendment was introduced in committee in 1923 that the word "oral" should be inserted, but for some reason or other it was not inserted, and the word "oral" did not appear in the statutes of 1923 as the statutes were published. However, the commission charged with the revision of the statutes in 1927 caused the word "oral" to be inserted before the word "evidence"; and in the revised statutes of 1927-


Richard Bedford Bennett: It is section 24.


Joseph Thorarinn Thorson: -section 24 of the Combines Investigation Act as it appears in the [Mr Cahan.]
revised statutes of 1927 repeats section 18 of the Combines Investigation Act of 1923 with the addition of the word "oral" before the word "evidence" in the sixth line thereof. That remained the state of the law until 1935, when the Combines Investigation Act Amendment Act was passed.


Richard Bedford Bennett: Section 17.


Joseph Thorarinn Thorson: Chapter 54 of the statutes of 1935. Bill 79 passed the House of Commons on June 20, 1935. This statute transferred the administration of the Combines Act to the Dominion Trade and Industry Commission that had been established under the Dominion Trade and Industry Commission Act of 1935, and section 24 of the-


Richard Bedford Bennett: Chapter 54 of 1935.


Joseph Thorarinn Thorson: -section 24 of the Combines Act as it appears in the revised statutes of 1927 was amended. The words "the registrar or commissioner" were struck out, and the words "the commission" were substituted. The bill passed the House of Commons and went to the Senate. The Senate made two amendments to the section as it came from the House of Commons. The Senate struck out the word "oral" as it appeared immediately prior to the word "evidence" in the sixth line of the section, and it added the words "or documents" after the word "evidence," and it also substituted the word "required" for the word "given." So that after the Senate had amended section 24 in 1935 in the manner which I have indicated, section 24 read as follows:
No person shall be excused from attending and giving evidence and producing books, papers or records, in obedience to the order of the commission. ...
Section stands.
Progress reported.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



FREE FOREIGN TRADE ZONES

[Stage Direction]
Mr. HERMAS DESLAURIERS (St. Mary) moved the second reading of Bill No. 45, to enable the establishment, operation and maintenance of free foreign trade zones.
He said: Under this bill, the second reading of which I now move, seconded by the hon. member for Victoria, B. C. (Mr. Tolmie), any province, municipality, or local public organization might apply for the establishment,

Free Foreign Trade Zones
maintenance and operation of a free port at its own expense, subject to the approval of the Departments of Transport and National Revenue.
I am quite aware that the time of. the house is most precious in view of the fact that both sides are anxious to prorogue as soon as possible so as to permit their representatives to leave in ample time to attend the coronation of His most gracious Majesty George VI. I would ask, inasmuch as the bill is not mandatory and does not in any way commit the house to the principle, that it be sent to a special committee. I know that the railway committee will be engaged in the consideration of highly important measures until prorogation, and I therefore think it would be more practical to send this bill to the banking and commerce committee, following the example of the Senate. The Senate Hansard contains voluminous evidence and extensive reports on the question, and that information could be taken into consideration.
I would point out that in the last two years, during the time this bill has been under consideration by the Senate, where there are many who are very careful about dotting there i's and crossing their t's, not one amendment has been proposed. The bill being merely permissive, I would urge the house to send it to any standing committee that may be decided upon, with instructions that it report to the house. In order to save the time of the house I now move the second reading of the bill.
Simon Fraser Tolmie: Perhaps I should say a few words in support of the bill. As the mover has clearly pointed out, it does not involve any expenditure of government money; it is a private enterprise. It is proposed that the government shall give to each province the right to establish one free port somewhere within its boundaries. The request must come from certain organizations within the province, which must make all expenditures that are necessary for equipment to maintain the free port. The proposal will then be submitted to the federal government for acceptance.
On the Pacific coast we are particularly interested in this question because we look upon the free port as a new venture affording an opportunity for the development of Canadian enterprise, without any cost to the dominion government. Free ports have been quite successful in some parts of the world where they have been thoroughly tried out. Recently New York, fully realizing the importance of an establishment of this kind, had opened a free port on Staten island. On the Pacific
coast we are particularly interested in this question because we are a new country situated on an ocean on which two-thirds of the world's population live. We have excellent waterways. Victoria city being located in the strait of Juan de Fuca, every steamer going through the strait must pass that port. Moreover, the quarantine station is located near that city and all deep sea shipping destined for Canadian ports must pass Victoria. We have ample wharfage both in Victoria harbour and in the adjoining harbour of Esquimalt, and deep water facilities with four piers located where there is approximately thirty-five feet of water at low tide. We do a great deal of shipping off shore, sending products to all parts of the world, at a rate never before experienced in the history of the province, ships laden with lumber and other commodities; and quite often these ships come back with cargoes that could be landed in a free port area to great advantage and at less cost than they are handled through the customs. The free port area would enable these goods to be placed without having to conform to any customs regulations, and involving little expenditure of the shipper's money, the only cost involved being the maintenance of the port.
This bill, as the mover has clearly pointed out, passed the Senate without opposition, and in my opinion, at this late date, the sooner it is submitted to a committee of this house where it can be gone into thoroughly the better it will be. I have pleasure in seconding the motion.


Henry Herbert Stevens: I believe it was in 1930 that I introduced a bill for the establishment of free port zones in Canada, so that I have had a deep interest in this subject for many years. There are many advantages in free port zones, and at the same time there are some reasons that might be advanced against such a measure, and I desire to refer to both of these.
The advantage of a free port is that those operating within such a zone are permitted to bring in materials from any part of the world free from customs imposts. There they may assemble, fabricate or refabricate or reprocess the materials brought in and export them to any part of the world, but more particularly of course into the country in which the free port zone is established. This facility or privilege has many advantages. It is my opinion that in Canada we are singularly deficient in that sort of business, whether it be in a free port zone or under the present system; that is, we have not developed in this country concerns which merchandise goods,
Free Foreign Trade Zones

Jsing the term in its old sense, and redistribute them. That is one of our weaknesses. The establishment of a free port zone in any province would undoubtedly give further impetus to the establishment of such facilities.
There are, of course, some arguments against it. One is that if you establish this free port zone near a city which has established industries, the industries in the free port would be competing with the regular industries of the country. But it must be remembered that before the goods processed in the free port zone can pass into the country they must pay the regular customs duties. So there is not much force in that argument.
On the other side, it may be pointed out that the establishment of these free zones would encourage the employment of a larger number of men in the country, because they could pass freely into the zone to carry on their day's work and pass out of the zone in the usual way. Some have argued that a free port would tend to increase smuggling; but that has not been the experience elsewhere.
There are numerous examples of the benefits of a free port or free port zone, which is virtually the same thing, and perhaps the most outstanding illustration in the world is Hamburg. Hamburg is a lineal descendant of the old free cities of Europe, the Hanseatic league, and it has maintained its freedom right down to the present day. Hamburg has a distinct advantage over many other places because it has almost at its door the Netherlands. Belgium, Germany and France, with Great Britain and other European countries close at hand. So that Hamburg as a free port area has access to probably ten or fifteen immediately adjacent customs areas. This gives it a decided advantage, and warrants beyond question the maintenance of such a system there. It is argued that in Canada we are adjacent to only one other customs area, the United States, and it is said that a free port zone, say at Halifax, or Victoria, where my hon. friend (Mr. Tolmie) is so anxious to have it, or the younger city of Vancouver-


Charles Avery Dunning: Or New Westminster.


Henry Herbert Stevens: Or New Westminster, the hon. member for which (Mr. Reid) is absent to-night-that a free port zone in any one of these ports would not have the same range of opportunity that a port such as Hamburg has. Nevertheless, there is this advantage, that it could draw its raw materials from any part of the world, and although it would have only our big neighbour to the south as its main foreign market, it could also ship

its goods abroad to more distant countries. Another of the great free ports is Hong Kong. But most of the free ports that have been established for many years past are adjacent to a number of foreign customs areas.
I am in favour of trying out a free port area in Canada. In principle I endorse the bill before us. It is a bill which would permit of a test of a free port zone somewhere in Canada. The bill is perhaps unique in that it proposes that parliament should authorize the government to permit the establishment of such a zone; in other words this is purely a permissive measure. The principle involved is whether it is wise for parliament to grant permission to a province, or to a port under its jurisdiction, to establish a free port zone. I see no objection to that. The bill is not in the form which I originally had in my own mind, but it is capable of being translated into an experiment at least. So I see no great objection to that part of the bill.
There is one feature which might receive scrutiny by the committee, if it goes to a committee, and that is the provision that not more than one such permission shall be granted in any one province. I can easily understand how in the maritimes or in the great province of Quebec, supposing you had applications from say Quebec, Sorel and Montreal, it might be difficult to say that only one of the three should receive consideration. That is a matter to which the government would need to give some thought. The same thing applies to the Pacific, where you have Victoria, Prince Rupert, Vancouver, New Westminster, North Vancouver, and all these areas might be ambitious enough to ask for the establishment of free port zones. If the bill is sent to a committee, that feature can be considered later.
I rose simply to say after many years of study of this subject that I believe it is desirable to provide facilities for testing the free port zone system in Canada. I see no harm that could come from it, and I can see great possibilities for good. It might be well for the government to keep the power within its own discretion so that the government itself might try out the plan in one of the great ports of the country, or accept an invitation from some particular place to give it a trial. On that I am not going to offer any opinion. I simply declare my own support of the promoters of the bill who desire to test the establishment of a free port system in Canada, and I trust that the bill will go to a committee. Is the minister going to speak?


James Lorimer Ilsley: Yes.


Henry Herbert Stevens: That is what I was hoping, so that we might have some information on

Free Foreign Trade Zones
the attitude of the government. Certainly I would urge the minister to allow the bill to go to a committee, if possible.
Hon. J. L. ILSLEY (Minister of National Revenue) Mr. Speaker, the bill before the house is very interesting and deserves, I think, some little attention on the part of members of the house. No one has said very much about the bill itself, and I should like to take a few moments to place on record the main provisions of this measure.
It provides that a public authority may apply to the governor in council for the right to establish, operate and maintain a free foreign trade zone. It is not quite clear from the bill what "a public authority" is. It is defined as a province or a municipality or a lawfully authorized public or private agent. I suppose those words would include any person or body corporate.
Next, the governor in council may grant to the applicant the right to establish a free foreign trade zone, and if this right is granted and the zone established, goods may be landed in such zone free of customs duties. The goods may be stored, exhibited, broken up, unpacked, repacked, assembled, distributed, sorted, refined, graded, cleaned, manufactured, treated or otherwise manipulated and mixed with any other goods of whatever origin and be exported from the zone in the original package or otherwise.
Some question has been raised as to the desirability of permitting goods to be manufactured in the zone. I may say that in the free foreign trade zone which has been established by the United States, the manufacture of goods is not permitted, for reasons which are easily understood and which it probably is not necessary to go into here. Neither are goods permitted in the United States foreign free trade zone at Staten island to be exhibited ; that is, in the sense of being placed on exhibition.


Henry Herbert Stevens: If the minister will permit me to interrupt, the establishment of a free port zone in the United States is comparatively new, is it not?


James Lorimer Ilsley: The free trade zone at Staten Island in the United States was established very recently, and began its operations on the first day of February of this year. It is still in the experimental stage there.
In the case of goods manufactured in the free zone, where this is permitted, it is not clear from the bill whether the duties are to be payable on the manufactured goods or on the materials in the form in which they enter the free trade zone; in other words it is not clear on what basis the duties would be payable if the goods should leave the foreign free trade zone and enter this country. That question was raised before the Senate committee, and it seems to have been left in some doubt.
The grantee of the privilege must provide adequate equipment and facilities. One can merely speculate upon the expense of furnishing such equipment and facilities, but the initial expenditure at Staten island is said to have been between four and five million dollars. It is a very substantial undertaking to establish a foreign free trade zone and requires an immense amount of capital. The expenditures at Copenhagen and Hamburg have been very much greater than the expenditure referred to as having been incurred a.t Staten island. It would be difficult to imagine a Canadian free port worthy of the name which would not involve an expenditure of several million dollars. That money is spent on piers, warehouses, et cetera. The warehouses at Staten island have a total floor space of 1,500,000 square feet. Railway facilities must be supplied as well as docking facilities, also cranes, and equipment of all sorts for handling and storing goods.
The grantee of the privilege may, with the approval of the Minister of National Revenue, under uniform regulations permit any person to erect within any zone, buildings and other structures. Rates and charges for all services or privileges within any zone shall be fair and reasonable, and shall be subject to the control of the board of railway commissioners. Every zone shall be operated as a public utility, and all persons using the zone are to have uniform treatment. Provision is made for surrender of the privilege of operating the zone after ten years. The surrender, it appears, is not compulsory but optional with the grantee, and finally the act provides that it shall not come into force until date of proclamation. That very briefly summarizes the provisions of the bill now before the house.


Simon Fraser Tolmie: Is it not mentioned somewhere in the bill that any expenditure involved will not be government money but private money?


James Lorimer Ilsley: Yes; it is also provided that the government is not to incur any expenditure. It is necessary to have that provision either in the bill or implied from the bill; otherwise the bill would have to come before the house sponsored by the government, and not as a private bill.
I was about to say that so far as I can see, the bill is exceptionally well drafted. I fancy it is based upon the United States act,

Free Foreign Trade Zones

though I am not sure about that as I have not examined their statute. The principle of the bill, I think, may be stated in these words: that it is or may be desirable to establish free ports in the Dominion of Canada. And now that the bill is before this house it appears to me that the government should face that principle, and declare its position with reference to it. It may be said, as speakers in the Senate and in this house to-night have said, that the government should accept this bill and send it to a committee for study, because it is only permissive ; but I do not think we should shield ourselves behind the permissive character of the legislation.


Henry Herbert Stevens: I am inclined to agree.


James Lorimer Ilsley: Nor do I think we should take advantage of the fact that there is a provision in the bill that the same shall not come into effect at all unless it is proclaimed. I think we must consider the arguments for and against the establishment of free ports in this country under conditions as we know them here or that reasonably may be expected to arise in the future.
In order that I may be a little more definite as to just what a free port is, perhaps I should read the definition of free ports which is contained in a publication of the United States tariff commission. This is the definition, which I think is explanatory as well as defining free ports:
A free zone may be defined as an isolated, enclosed and policed area in or adjacent to a port of entry, without resident population, furnished with the necessary facilities for lading and unlading, for supplying fuel and ship's stores, for storing goods and for reshipping them by land and water; an area within which goods may be landed, stored, mixed, blended, repacked, manufactured and reshipped without payment of duties and without the intervention of customs officials. It is subject equally with adjacent regions to all the laws relating to public health, vessel inspection, postal service, labour conditions, immigration, and, indeed, everything except the customs.
The arguments for the establishment of free ports are these: It is pointed out by the advocates of free ports that there has been a steady growth in the number of these ports throughout the world during the past fifty years. There are many free ports in Europe. They are found in Germany, Denmark, Italy, Roumania, Spain, and I think perhaps in one or two other countries whose names do not occur to me at the moment. There are none in Great Britain, France, Belgium or the Netherlands. Two of these free ports of Europe have admittedly proved successful, namely, those of Hamburg and

Copenhagen. If members of the house are interested in conditions at Hamburg particularly, and in free ports generally, they might advantageously consult a statement made by the present leader of the opposition (Mr. Bennett) when he was Prime Minister. His statement appears in the debates of Wednesday, June 27, 1934, at page 4350, and contains much useful information on the subject of free ports.
I presume the free port of greatest interest to Canadians is the one on Staten island, New York, which is still in its experimental stage. It is a significant fact, and one cited with satisfaction by the advocates of free ports, that as the years go on, more and more of them are established. The advantages of a free port are easily stated, and may be summed up in the observation that the fewer restrictions there are on trade, the more trade there will be.
I have before me a statement of some of the activities which might reasonably be expected to be carried on in free ports. The kind of foreign trade zone handling which could be expected in connection with wool manufactures would be: Storage, breaking down of cases, repacking, dyeing and water proofing, and re-exporting. In connection with tobacco there would be: Curing and processing, blending, sorting, grading, transshipping and re-exporting. In connection with cotton there would be: Storage, breaking down of cases, dyeing, bleaching, mercerizing, repacking and re-exporting. Details could be given in regard to a long list of articles I have in my hand, all of which might be expected to be handled advantageously in free ports.
It is reasonable to assume that if goods can be landed without payment of duty and reexported without the red tape involved in bonding, releasing from bond, and drawbacks, the import and export of goods into and out of a country would be facilitated. This fact has been developed fully by advocates of free ports before the senate committee of last year, which sat again this year, and in a large amount of literature on the subject. I think that perhaps more could be said in favour of free ports than I have said, but substantially I believe I have presented the argument for their establishment.
Against the establishment of free ports in Canada, there are some very strong and forceful arguments. The opponents of the proposal state their criticisms mainly under four heads. In the first place they say that conditions in Canada would not make for the success of free ports here. Hamburg and

Free Foreign Trade Zones
Copenhagen are successful because there are twenty-five or twenty-six customs areas in Europe near them. The hon. member for Kootenay East (Mr. Stevens) has pointed out that fact. Most of those areas have no ports possessing the facilities of either Hamburg or Copenhagen, nor do they have the steamship services which are as good as those services touching Hamburg and Copenhagen. It is natural for the exports and imports of Europe to go by these fine steamship services to these great ports where facilities are adequate, and there be landed, reassembled, manipulated or redivided and sent here and there to the various customs areas which surround and are not far from the free ports of Hamburg and Copenhagen. As a matter of fact, I believe I have read that at Copenhagen the water is considerably deeper than it is in many of the other ports, so it can readily be understood how advantageous it would be to use a port like Copenhagen under conditions such as those.
One finds it difficult to imagine a similar situation here in Canada. It is not reasonable to assume that we would reexport a very large quantity of goods to the United States from our free ports, because if goods are destined from overseas to the United States they are more likely to be shipped directly to a port of that country, which would be as well equipped as ports in Canada, would be fully adequate, and the steamship service of which would be as satisfactory and efficient as that connecting with Canada.
So the conditions which exist in Europe and which have been responsible for the success of some of the free ports there, notably those of Hamburg and Copenhagen, do not exist in Canada. I do not know that there are many other countries to which transshipment from Canada could reasonably be expected. I am told the steamship service connection with South America is excellent, and South American ports are good; but it is questionable whether goods would be sent to Canada to be divided up and put together again in different combinations and be sent to South America.
So far as reshipment to British dominions is concerned, we now have drawback provisions which enable reshipment without the payment of duty We do not even have to manufacture goods in Canada for reshipment to ports of the British Empire in order to qualify them for the payment of the drawback. What is true on the Atlantic coast I believe is true also on the Pacific coast. In other words, conditions in Canada are not parallel to those in Europe which have been responsible for the success of free ports there.
31111-1S9J
The second consideration advanced by the opponents of free ports is that our bonding facilities and drawback system render free ports of little additional value in Canada. I have had a memorandum prepared setting out bonding provisions in Canada. I may say that our bonding system is modelled on the English system. It is frequently said, and I believe truly, that it is because of the excellent bonding system of Great Britain that free ports have not been established there. It is sometimes said that the reason free ports have not been established in Great Britain is that when Great Britain was on a free trade basis the whole country was a free port. However, a great many articles have always been dutiable going into Great Britain, and I think the real reason why free ports have not been established there is to be found in the facilities they furnish for bringing goods in, putting them into bond, and then shipping them out again from bond. We have modelled our bonding system on that of Great Britain.
It is provided: by section 75 of the Customs Act that any goods imported into Canada may, without payment of duty thereon be entered for exportation or for warehouse. An importer may obtain a bonded warehouse upon providing suitable premises for the storage of goods which he does not desire to enter for duty. The owner of any warehoused goods may remove the same in bond from one warehousing port to another warehousing port, or from one warehouse to another in the same port, and there may be transfer of property in warehoused goods.
The owner may sort, pack and repack goods in bond, and make any lawful arrangements respecting such goods and take samples therefrom without payment of duty. That is provided by section 84.


Henry Herbert Stevens: Does the provision of the act covering repacking permit of repacking to an extent other than repairing the package, or putting the goods into better shape in their present form? Does it permit what might be called reprocessing or dividing the packages into entirely different packages, or bottling, or the packaging of bulk goods?


James Lorimer Ilsley: I cannot just tell my hon. friend how far it goes. There is no doubt that it does not include what is called " processing," but it does cover packing and sorting and repacking, which would permit the division of goods.


Henry Herbert Stevens: The minister will correct me if I am wrong, but I was under the impression that it was limited to dealing with

Free Foreign Trade Zones
the original packages, to repairing or reconditioning the package rather than making a new package.


James Lorimer Ilsley: I should think the words would cover further operations than that. I am not just familiar with the exact limits of the bonded warehouse. If there was any demand, I have no doubt it could be extended within the wording of the present act.


Charles Avery Dunning: Some goods are bottled in bond.


James Lorimer Ilsley: If the goods imported are for home consumption, the duty provided by the customs tariff is paid; but if they are taken out of bond and exported from the country, no duty is paid. Those are the bonding facilities which we provide in the dominion. Many persons who have made a study of this matter regard this as abundantly adequate to cover the requirements of the situation.
Then we also have the drawback system in this country. Regulations made under authority of sections 286 and 287 of the Customs Act permit the repayment of ninety-nine per cent of the duty paid on imported goods manufactured or wrought in Canada and exported from the country. This permits. the manufacture of goods in this country without payment of duty on the materials. The duty is paid, but when the goods in processed form are exported from the country the duty is returned by the government. The result is that those desiring to manufacture in this country for export find it easy to do so. The worst that can be said about this system is that the duty is tied up for a while. The government keeps one per cent, I presume as a charge for supervision or for checking and finally paying back the money.


Richard Bedford Bennett: For the book-keeping entries.


James Lorimer Ilsley: The drawback system of this country is designed to encourage manufacturing for export. This system is quite extensive. It does not apply only to manufacturing; it applies to certain other operations such as the repairing of ships, which it is not necessary to go into at this time. There are several orders in council regarding drawbacks.
The third objection put forward by the opponents of free ports in this country is that their establishment would undoubtedly complicate and render difficult the work of the customs division of the Department of National Revenue. There are some minor difficulties which possibly could be straightened out by legislation. One is the question that would immediately arise as to which one of our three tariffs would apply to goods assembled or manufactured in the free port zone.

The question of whether the general, intermediate or British preferential tariff would apply would have to be dealt with by legislation.	I have no idea which tariff would
apply under our present legislation. It would be something like an importation from Canada into Canada, and I do not know whether the British preferential would apply. This is not covered by the existing legislation, but I do not suppose the difficulty is insurmountable.
The chief objection from the customs standpoint is the necessity of expensive policing. It must be remembered that a free port, is for customs purposes, a bit of foreign country within one's own country. A situation of this sort gives the greatest possible opportunities for smuggling. In Hamburg there are forty-one customs stations between the free trade zone and the German territory adjoining. On the waterfront there are sixteen miles of palisades, including one mile of floats. At New York the most elaborate safeguards against smuggling have been provided. I believe the area is walled in, and that there is also extensive flood lighting at nights. All this would be very expensive if done in Canada and would impose a substantial additional charge upon the government. If a free zone was established at Montreal, Halifax or elsewhere, near some city, and was filled with goods upon which the duty had not been paid, the greatest care would have to be taken, and at great expense to prevent smuggling.
The fourth objection is that these free port facilities would be in competition with our present harbour facilities which have been provided at great expense to the country in many of the ports of Canada. Canada has spent huge sums upon developing its existing harbours. While the bill imposes no expenditure from the public revenues of Canada, it would appear to me to be almost inevitable that if the dominion once granted the privilege of operating a free trade zone or zones, the grantees and their friends would demand federal assistance. They would want to know why millions should be spent for the benefit of those using the ordinary harbours and customs ports while nothing was being spent for the benefit of those using the free ports. I do not think this is a fanciful objection. If a free port proved a failure financially and was on the point of being dismantled, undoubtedly the dominion government would be called upon to save it by subsidies or take it over and operate it direct. This objection is urged by the opponents of the scheme with considerable force.

Free Foreign Trade Zones
There is one feature of this bill to which I desire particularly to direct the attention of the house. So far as the government is aware there is no demand for these privileges on the part of any person or group of persons who are prepared to make any investment or expenditure whatsoever. This enactment is not to meet a current situation. There is an academic air about it. We are being asked to put it on the statute books and then some day someone may see the bill and say: Possibly we can take advantage of that. This is out of line with the ordinary run of legislation with which we are acquainted. Ordinarily a bill is introduced to meet the exigencies of a current situation. The danger of passing a bill under circumstances such as these is that when a situation arises requiring the application of the' bill, the bill is usually found to require vital amendments. Without having any actual situation in mind, we are being asked to place on the statute books a measure which may be found entirely inapplicable when a definite demand arises.


Simon Fraser Tolmie: Is it not a fact that at the present time an offer exists to establish a free port in Montreal?


James Lorimer Ilsley: Not so far as we know.


Simon Fraser Tolmie: The press has reported that there are several million dollars available. Whether it is true or not, I do not know.


James Lorimer Ilsley: I have heard the rumour, but so far as the government is concerned we know of no one who is prepared to advance any money for the establishment of a free port at Montreal or elsewhere. The Montreal board of trade have made the strongest possible report against this measure. The board of trade of Halifax, which might be expected to be interested in this measure, has stated that it does not desire to commit itself. I was reading the other day a telegram sent by that board to the Senate committee, and contained in its records. Toronto, of course, is against it, and the board of trade of Vancouver is also opposed. I do not know how representative the board of trade of Vancouver is, but I have on my file a telegram from that organization expressing its opposition to the establishment or to legislation authorizing the establishment of free ports in the Dominion of Canada.


Mr. MacNEIL:: Has the minister not received a communication from the board of trade of North Vancouver requesting a free trade zone in that area?


James Lorimer Ilsley: I did not notice anything from North Vancouver in this file, and I do not think any such message is here.


Ernest Lapointe: From the leading boards of trade.


James Lorimer Ilsley: There is a request from
Victoria for such legislation. It is supported by a long brief, with which, I know, the hon. member for Victoria (Mr. Tolmie) is familiar, but the purport of the brief is rather this, that if free ports are established anywhere, one should be established at Victoria, and there is not the slightest evidence that anyone in Victoria is prepared to advance any money for the purpose or that the city of Victoria itself is willing to go to any expense in this direction.


Simon Fraser Tolmie: I ask the minister if there is any disgrace about trying to insist that a free port be placed in Victoria, because I represent the constituency. Just another point. The matter was brought up after I had left for Ottawa, and the brief was prepared by the board of trade of that city.


James Lorimer Ilsley: I have not the slightest
reason for thinking that Victoria would not be the ideal site for a foreign free trade zone. But the point I am attempting to make at the present time-


Charles Avery Dunning: Did the minister notice: the horse laugh from Vancouver?


James Lorimer Ilsley: -is simply this, that while Victoria would not object to the dominion government establishing a free port at Victoria, there is apparently no idea at all that the province or the municipality or any private interests would expend money upon the establishment of such a port.


Simon Fraser Tolmie: I think the minister must admit that we must first be given the opportunity to establish a free port before it can be judged whether the money will be forthcoming or not.


James Lorimer Ilsley: I do not think so. With regard to the attitude of boards of trade generally, the chamber of commerce of the Dominion of Canada have presented a brief opposing this legislation. I do not say that the attitude of boards of trade is conclusive, but I think it is significant that there is nowhere in the whole dominion any group of persons, so far as we are aware, that would take advantage of this legislation and invest any money in the establishment of free ports. If some one would come forward with a definite project and satisfy us that those whom he represented meant business, cer-
Free Foreign Trade Zones

tainly it would be our duty to consider whether or not facilities should be provided by legislation, but until something of that sort takes places it is doubtful whether the government would lend itself to a measure which under present conditions is largely academic.
With regard to what the government should do about this measure, I listened to what was said by the hon. member who moved the second reading, and I understand it to be his wish that the bill should go either to the Committee on banking and commerce or the committee on miscellaneous private bills. Had the bill got before this committee at an earlier stage, that, I conceive, would have been the right thing to do with it; and I have been prepared for the last three or four weeks, when we have been discussing on Tuesday and Friday nights these loan company bills, not to concur in my hon. friend's motion but to move that the bill be not read at the present time but that the subject matter thereof be referred to the standing committee on banking and commerce. However, it appears to me that to make such a motion at this stage of the session would be unwise; it would not mean very much. If this measure is gone into by a committee it will take much longer than three or four days; it will require several weeks, for it will be necessary to go into the matter fully. I know that a great many hon. members are interested in the subject, and it would be unfair to send it to a committee just before we are about, as we hope, to prorogue and expect it to receive any adequate consideration. So I do not think we should take that course. The government is not prepared at this stage to accept the bill, although under ordinary conditions it would be prepared to have the subject matter of the bill considered by one of the standing committees of the house.


Mr. RYAN:: Has the minister received any communication with reference to this matter from the Saint John board of trade?


James Lorimer Ilsley: I will look over these communications. Personally I have not had any communications from boards of trade.


William Michael Ryan: I have had some correspondence on the subject, and I think the Saint John board of trade is in favour of the principle, but my impression is that they feel that the government should establish the free port.


James Lorimer Ilsley: If the hon. member will permit, I will see if there is any telegram to the Senate committee from the Saint John board of trade. I do not recall having seen any. I do not see here any communication from the Saint John board of trade. I think I
[Mr. Ilsley.}
said that the Halifax board of trade wired that owing to not having had sufficient time to study the bill, the council of the board of trade was not prepared at present to commit itself.


Mr. ISNOR:: What is the date of that telegram?


James Lorimer Ilsley: The date is not given here. The telegram came to the Senate committee this year. There are also rather long telegrams from the Vancouver board of trade and certain other boards of trade.


Walter Edward Foster: It being nine o'clock, the house will revert to the business under consideration at six o'clock.
Motion stands.



COMBINES INVESTIGATION ACT


[Stage Direction]
The house resumed consideration in committee of Bill No. 41, to amend and consolidate the Combines Investigation Act and amending act-Mr. Rogers-Mr. Sanderson in the chair.
On section 23-No witness excused from giving evidence on ground it may incriminate him.
Joseph Thorarinn Thorson: Mr. Chairman, at the six o'clock adjournment I was dealing with the action taken by the Senate in 1935.


Richard Bedford Bennett: And you were just reading the section of the bill as finally passed.


Joseph Thorarinn Thorson: I was reading the section of the statute as it was finally passed. Section 24 reads as follows:
No person shall be excused from attending and giving evidence and producing books, papers, or records, in obedience to the order of the commission, on the ground that the oral evidence or documents required of him may tend to criminate him or subject him to any proceeding or penalty, but no such evidence or documents so required shall be used or receivable against such person in any criminal proceedings thereafter instituted^ against him, other than a prosecution for perjury in giving evidence upon such investigation, inquiry, cause or proceeding.
* When the Senate amendment came back to the House of Commons the leader of the opposition, then the prime minister, asked the House of Commons under protest to accept the amendment made by the Senate.
The law has remained in this position since that time. In the session of 1936 the present Prime Minister introduced on June 11, Bill No. 97. That bill received its first reading

Combines Investigation Act
on that date, and on June 12 it came before the house for second reading. The bill consisted of two sections, the one in question being:
No person shall be excused from attending and giving evidence and producing books, papers or records, in obedience to the order of the commission, on the ground that the oral evidence or documents required of him may tend to criminate him or subject him to any proceeding or penalty, but no such oral evidence so given shall be used or receivable against such person in any criminal proceedings thereafter instituted against him, other than a prosecution for perjury in the giving of such evidence.
An effort was made in this bill to restore section 24 of the Combines Investigation Act to the form which it had had in the Revised Statutes of 1927. The bill received second reading, went through the committee stage, and received third reading on June 12 without any opposition, and indeed without any debate other than the remarks of the Prime Minister; in the course of his remarks he read a letter dated May 6, from George H. Sedge-wick, chief commissioner of the Dominion Trade and Industry Commission of Canada. I shall refer to that letter presently.
The Senate rejected the amendment proposed by the House of Commons and restored the legislation as it had been enacted by them in 1935. When the Senate amendment came back to the House of Commons, on June 20, I believe it was, the House of Commons passed a motion of non-concurrence, in these words:
That a message be sent to the Senate to acquaint their honours that this house disagrees with their amendment to Bill No. 97, an act to amend the Combines Investigation Act, for the following reason:
Because the amendment of their honours would have the effect of exempting documents which are ordered to be produced during an investigation from use in any subsequent criminal proceedings against the person producing them, thereby rendering impossible effective enforcement of the Combines Investigation Act.
This motion was passed unanimously by the House of Commons on June 20, 1936. The same day the matter came before the Senate again, and the leader of the government in the Senate moved that the Senate do not insist upon its amendment. This motion made by the government leader in the Senate was negatived and the Senate insisted upon its amendment.
The situation therefore is this, that the Senate has on three occasions refused to accept the legislation passed unanimously by the House of Commons-once in the session of 1935, when the leader of the opposition was Prime Minister, and twice last session.
A very serious question of principle is involved. I submit that the Senate amendment, as I shall term their action, takes the heart out of the Combines Investigation Act. So long as the Senate amendment remains as part of the law of this country it is impossible for any person charged with the administration of this act to conduct a thorough investigation without rendering almost impossible a subsequent successful prosecution. The commissioner who will be charged with the conduct of investigations under the provisions of this act will now be placed in this dilemma: either he cannot safely make a thorough investigation, or, if he makes a thorough investigation, the chances of a successful prosecution are very remote. Indeed, the more thorough the investigation, the less chance there is of a successful prosecution.
These are not merely my own opinions. In the submission which I make, I am supported by opinions the weight of which is very great. I referred a moment ago to a letter written by George H. Sedgewick, chief commissioner of Dominion Trade and Industry Commission of Canada, addressed to the Right Hon. W. L. Mackenzie King, Prime Minister, and dated May 6, 1936. The whole of that letter is set out at page 3651 of Hansard of June 12, 1936. I do not intend to quote the whole of the letter but I shall make reference to certain portions of it. Judge Sedgewick 6tates:
In my opinion it would be absolutely unsafe to go on with an investigation

at least an investigation which might be expected to result in a criminal prosecution-without an amendment to section 24 of the act.
Further on he makes this statement:
I am quite satisfied in my own mind that the Dominion Trade and Industry Commission -of which I am chief commissioner-would not risk having an investigator require the production of any documents until this act is amended.
That is the opinion of a distinguished judge. Judge Sedgewick goes on to say:
I hope it may not be considered presumption on my part to say the amendment suggested is indispensable to a proper administration of the Combines Investigation Act.
The law officers of the crown have expressed the same opinion. The Justice department gave an opinion to the Prime Minister which the Prime Minister read to the house on June 20, 1936. It appears on page 3992 of Hansard of 1936, and reads as follows:
With respect it is suggested that there is a misapprehension on the part of the members of the Senate as to the effect and purpose of the amendment to section 24. As the section now stands if a person investigated is required to produce the agreement which is objected to
Combines Investigation Act

as offending against the act, section 24 renders this agreement thereafter inadmissible in a prosecution of such person. Surely such a document should be admissible against him if properly proved, i.e., by oral evidence other than his own.
And I understand that is the view taken by the right hon. leader of the opposition (Mr. Bennett).


Richard Bedford Bennett: That is the view I expressed in the house.


Joseph Thorarinn Thorson: The Department of Justice opinion goes on to say:
The purpose of the amendment _ is not to render admissible documents otherwise inadmissible, but to provide that admissible documents are not inadmissible.
If the section stands, the best thing that could happen to a person guilty of combining in restraint of trade is to be required on investigation to produce the documents proving the offence. Thereafter he will be immune from conviction by means of the agreement.
Then the Deputy Minister of Justice wrote to the government leader in the Senate on June 18, 1936. The letter to Senator Dan-durand reads as follows:
In reply to your letter of the 18th instant I mav say that the view expressed by Judge Sedge'wick in his letter to the Prime Minister of the 6th May, 1936, is that which I have entertained from the outset with regard to this matter. I am of opinion that if the Combines Investigation Act is to be effectively administered section 24 should be amended so as to provide that documents the production of which is ordered by the commission in an inquiry under the Combines Investigation Act should be admissible in any subsequent criminal proceeding.


Richard Bedford Bennett: Perhaps that is too broad.


Joseph Thorarinn Thorson: With deference I would take some exception to his use of the word "admissible."


Richard Bedford Bennett: Quite.


Joseph Thorarinn Thorson: I propose to deal with that point in a moment.
Now Bill No. 41 is before the committee. Section 23 reads as follows:
No witness who is required by the commissioner in an investigation under this act to answer any question or to produce any book, paper or record shall be excused from answering such question or producing such document on the ground that the answer or document required of him may tend to criminate him or subject him to any proceeding or penalty; but no oral evidence given by such witness in such investigation shall be used or receivable against him in any criminal proceeding thereafter instituted against him, other than a prosecution for perjury in giving evidence in such investigation or proceeding.
It will be noted that this section differs slightly from the section that was introduced last session. The difference is this, that last

year the following phrase was used-"no such evidence so given," and this year, the phrase used is " no oral evidence given." I submit that the present section therefore gives to a witness who appears before the commissioner even greater protection than was given by the section contained in the bill last year in respect of oral evidence.


Richard Bedford Bennett: There is not much difference ; " so given " and " given " do not differ much.


Joseph Thorarinn Thorson: The additional protection given is this, that in the bill presented to the house last year protection was given only to oral evidence that the witness was required to give. That protection is now extended to any oral evidence given by the witness, even if he volunteers that evidence.


Richard Bedford Bennett: I think that would be too narrow a construction, because he is summoned before the commissioner.


Joseph Thorarinn Thorson: There may be a difference of opinion with regard to the submission which I now make, but I do submit that even greater promotion in the matter of oral evidence is given by this bill than was ever given before. But of course the bill now before the committee does not extend that protection to documents. A year ago the leader of the opposition expressed himself in agreement with the Prime Minister. He made this statement, as reported at page 3992 of Hansard, 1936:
Mr. Speaker, it will be recalled that last year I asked the house, under protest, to accept the amendment made by the Senate. It was in the closing days of the session and I disagreed with the view taken by the Senate but in order to close parliament the general sense of an amendment similar to this from the Senate was adopted. I disagree with the action taken by the Senate now, and I think a conference is highly desirable. I have thought a good deal about the matter and the only explanation I can give-and I say it with deference-is that there is a confusion in terms, and they have used the word "admissible" in a wrong sense.
Then when the matter came back from the Senate, after they had made their amendment, the leader of the opposition commented upon the action of the Senate again. He said:
I think the Senate is entirely in error in rejecting the proposals we have made in the measure we passed. I think so for the reason I gave in the house the other day, and I will not repeat it. I also feel confident from my knowledge of the members of the Senate as reasonable men, that if they understood clearly the effect of our proposal they would not so summarily reject it.
That was the opinion expressed by the right hon. leader of the opposition last year and, as I understood him this afternoon, concurred in by him now.

Combines Investigation Act


Richard Bedford Bennett: Quite right.


Joseph Thorarinn Thorson: I have read the whole of the debate that took place last year in both houses, and I am inclined to agree with the opinion expressed by the right hon. leader of the opposition that there was confusion in the mind of the Senate last year. Certain arguments were put forward in the Senate last year and I think it might be useful to examine these arguments and determine whether they are well sustained or whether they are ill-founded. As I do so, I would appreciate the assistance of hon. members in correcting me if I make any statements that are incorrect.
The view was expressed a year ago in the Senate that it was a fundamental principle of British jurisprudence that no man should be compelled to convict himself. Throughout the debate in the Senate that view was expressed, and it was intimated that the amendment proposed by the House of Commons would violate that principle and compel a man to convict himself.


Richard Bedford Bennett: They drew a distinction also between seized papers and papers voluntarily produced, did they not?


Joseph Thorarinn Thorson: Yes, but at the moment I am dealing with this point. It was urged that an accused person was being deprived of his defence. I submit, Mr. Chairman, that the amendment proposed in section 23 of this bill does no such thing. It does not violate the fundamental principle of British justice to which reference was made, and when the argument is advanced that it does violate that principle, there is a misconception of the purpose and effect of the section. The amendment that is now before the committee does not propose to make anything admissible that was not previously admissible.


Richard Bedford Bennett: No, it does not purport to make anything admissible; it leaves it to the courts.


Joseph Thorarinn Thorson: I shall deal with that point in a moment. It does not propose to make anything admissible-


Richard Bedford Bennett: Quite.


Joseph Thorarinn Thorson: -by itself. It does not dispense with proper proof of the document. The misconception that existed in the Senate was that it was there assumed that merely because a person had been required to produce a document and had been asked questions with regard to the document and the signature to the document, the document was automatically proof against that person in a subsequent prosecution. No such thing is possible under this proposed amendment. This amendment does not bar any valid ground of objection to the admissibility of the document on the ground of relevancy. If a document is irrelevant, that ground of objection may still be taken.


Richard Bedford Bennett: It does not affect any ground which under the laws of evidence would warrant its rejection.


Joseph Thorarinn Thorson: Exactly. The proposed amendment does this: It protects the person who is required to produce that document from everything he says about the document. Whatever he says about the signature of the document, or about the form of the document, or about the circumstances attending its execution-all that is protected. Nothing that he says about the document can be used or received against him in a subsequent prosecution. What he says about the document is neither usable nor receivable, and the protection is as complete as it could be as regards oral evidence. The document does not become automatically admissible in a prosecution. I believe if thought were given to this fact the misconception that was in the minds of the Senate would be removed.
The Senate amendment goes further. Not only does it protect a person from what he said with regard to the document; it also protects him from what he actually did. If a person is required by the commissioner to produce a document, that is, a necessary document, he is immune from prosecution as long as the Senate amendment remains in force. He is immune even if the document can be proved by someone else or in some other way, for the Senate amendment makes that document inadmissible. It follows, therefore, that if a man is charged with being privy to a combine and the essence of the combine is the making of an agreement, and he has been required by the commissioner to produce the document that proves the agreement, thereafter it cannot be proved against him that he was a party to that agreement because the best proof of there having been an agreement is the production of the document; and if the document may not be used or received against him it is impossible to prove that he was a party to the agreement.


Richard Bedford Bennett: They may call the other party to the agreement with his copy of the document.


Joseph Thorarinn Thorson: But it cannot be used against him.


Richard Bedford Bennett: It can be used against the other man.


Joseph Thorarinn Thorson: I propose to deal with that point in a moment, and I think I shall
Combines Investigation Act

be able to show that where parties are tried together, if the document may not be used or received against one of the parties, it may not be used or received against the other.


Richard Bedford Bennett: Quite so, but I was talking about separate trials.


Joseph Thorarinn Thorson: Well, sometimes if resort must be had to separate trials there will be complete failure in the prosecution, particularly in such a crime as conspiracy.


Richard Bedford Bennett: In conspiracy, yes.


Joseph Thorarinn Thorson: And the element of conspiracy is frequently to be found in combines.


Richard Bedford Bennett: Yes, but this statute deals with other than conspiracy, remember.


Joseph Thorarinn Thorson: Yes. The Senate amendment makes the document inadmissible once the person has been required to produce it. It has this effect: It makes a document inadmissible that was previously admissible under the previous law.
Mr. Chairman, the amendment made by the Senate in 1935 is, I submit, an indefensible amendment, for these consequences will result, as long as the Senate amendment is part of our law. If a commissioner is conducting an investigation he will not dare to require the production of the basic document, the document proving the agreement that may he the essence of the combine, because if he does require the production of that basic document, such basic document will not be available in a subsequent prosecution. How, then, can the commissioner who does not dare call for the production of the basic document make a proper investigation if he has not before him that basic document? How can he, then, form an opinion as to whether there has been a combine or whether there has not been a combine? Yet, if he makes a thorough investigation and requires the production of the basic document, then the basic document cannot be used against the witness, and the chances of a successful prosecution are very remote.
If a thorough investigator desires to do his duty and requires the document to be produced, which is the only real proof of the agreement which constitutes the combine, then the witness is immune from prosecution if he obeys the order of the commissioner and produces the basic document. Mr. Chairman, that destroys the whole act. It takes the heart out of the Combines Investigation Act.
There are a number of other matters that I think ought to be placed upon the record.

The argument was made a year ago that the proper step to take by a commissioner conducting an investigation under the provisions of this act was to take out a search warrant, and obtain possession of the necessary documents under that search warrant. Now apart from any question of doubt there may be as to the right to issue search warrants under the Combines Investigation Act, let us suppose that a search warrant has been taken out, and that under the search warrant possession has been taken of a document. The document is found; the witness is called; he is required to answer certain questions. The document is presented to him, and he is questioned with regard to it. He is asked whether he signed the document; he is asked questions relating to the execution of the document. What he says about the document may not be used or received against him in a subsequent prosecution, if the document is found as the result of the issue of a search warrant, any more than if the witness is required to produce it. The witness is no better off, and no worse off, whether the document is produced to the commissioner in obedience to the commissioner's orders, or whether the document has been found as a result of a search warrant and then presented to the witness for questioning. The only difference between the procedure of issuing a search warrant, and of asking a witness to produce a document, is that one is a haphazard method and the other is a regular method. There would be less disorder and less confusion to the person who has the document if he is required to produce it than if it is taken from him under a search warrant.


Richard Bedford Bennett: There is no protection in a criminal proceeding if it is taken under a search warrant. It can be produced as evidence at subsequent proceedings.


Joseph Thorarinn Thorson: Yes. But my point is that the mere production of the document does not make it proof.


Richard Bedford Bennett: Quite.


Joseph Thorarinn Thorson: And what the witness says about it cannot under any circumstances be used or received against him.
A further argument was advanced in the Senate a year ago. The question was asked: What distinction is there between oral evidence and documentary evidence? If we protect a man from his oral evidence why should we not protect him also against documentary evidence? The distinction is a very important distinction because of the nature of the act which may constitute the offence in this particular case.

Combines Investigation Act
Usually in the case of a combine that is a combination, the essence of the offence is the making of an agreement. The best evidence of the making of that agreement is the agreement itself; that is, the document of agreement. Now because a person is protected from having what he said used or received against him in a subsequent prosecution is no justification for extending that protection against what he actually did. Yet that is what the Senate amendment does. It not only protects the person who is required to appear before the commissioner from what he said; but it also protects him from what he actually did. That is so for this reason, that if he is required to produce the document, then the document is inadmissible; and then if he is subsequently tried it will be impossible to prove that he made the agreement, because the only proof of the agreement, namely the document of agreement, is rendered non-usable and non-receivable by the Senate amendment. He cannot be prosecuted under those circumstances as long as the Senate amendment remains.
There was one other incorrect statement of law expressed a year ago in the Senate. It was stated that the Senate amendment had no application to companies. I am surprised that that statement should have been made, and I challenge its accuracy. Let us suppose that a corporation is being investigated and that the corporation has been party to an agreement that constitutes a combine, and the commissioner desires to obtain the production of the document proving such agreement. If he issues an order to the secretary or some other officer of the corporation to produce that particular document, the secretary or other officer may say, and quite properly: "That is not my document. That document is not in my possession and I will not produce it." The secretary or other officer could not be committed for contempt for refusing to obey the order of the commissioner because the document was not his document and was not in his possession. It would be a document belonging to the corporation and in the possession of the corporation. If the commissioner desired to obtain that document he would have to issue an order directed to the corporation, and the corporation would have to obey. The corporation could make production of that document only through an individual, but when such individual produced the document it would be the act of the corporation. The corporation would be acting through him, and it would be the corporation that was producing the document.
If the Senate amendment stands and that document is produced by the corporation
through its secretary or other officer, then the , corporation is protected from that document and the corporation is immune from prosecu

 tion if the document is essential to the prosecution.
The Senate amendment is designed to make a thorough investigation impossible or, if the investigation is a thorough one, to make a subsequent successful prosecution impossible. The more thorough the investigation is the less possibility there is of successful prosecution. The authority whose duty it is to administer this act, and to conduct the investigations that ought to be had under it, are put in the dilemma of either not being able to investigate properly or of not being able to conduct a successful prosecution. The Senate amendment puts those persons who are guilty of a combine in a stronger position, after an investigation has been made than they were in before. This is an intolerable position.
The complaint is made that rights are taken away by this bill. May I point out that the Combines Investigation Act was passed for the purpose of protecting the public, whether producers or consumers. It was an act passed for the public welfare and to protect the public interest. I totally disagree with the remarks made this afternoon by the hon. member for St. Lawrence-St. George (Mr. Cahan) when he described this legislation as being dictatorial. We have reached a stage in this country when it is desirable to provide adequate machinery for thorough and complete investigation into alleged combines. Industry is well organized and can look after itself. If it conducts itself properly, industry has nothing to fear from this bill. An agreement does not necessarily become a combine. The conservation of property does not necessarily create a combine within the meaning of this bill. Persons engaged in business may associate with one another for the purpose of eliminating extravagant or wasteful competition and for the purpose of conducting their business in a more efficient manner. They will have nothing to fear so long as their organization has not operated or is not likely to operate to the detriment of the public. The public interest is, however, paramount and the purpose of this legislation is to protect the public interest and to protect all the people of Canada. One of the purposes of this bill is to ensure that competition shall be free. If persons combine unfairly and in such a manner as to endanger the welfare of the public by eliminating free competition, they will be infringing the provisions of this bill. The argument has been made that this legislation goes too far. May I
Combines Investigation Act

point out that where business becomes intricate and complex, it is necessary to devise adequate machinery to check possible combines. We have many examples of legislation of this kind.


Frederick George Sanderson: I do not like to interrupt the hon. member, but he has exceeded his time considerably.


George Halsey Perley: Let him finish.


Norman McLeod Rogers: Mr. Chairman, in the circumstances I would ask that the hon. member be permitted to continue.


George Halsey Perley: If the hon. gentleman wishes to take a few minutes longer to finish, I think the committee will be quite willing to halve him do so.


Mr. BLACKMORE:: I should be pleased if the hon. member were permitted to finish. He has been doing very well.


Frederick George Sanderson: He can do so only with unanimous consent.


Joseph Thorarinn Thorson: I thank the committee for its indulgence. The question is intricate, and I thought it would be desirable to have all the facts on the record. A number of provincial statutes have been passed for the purpose of conducting investigations. Under the provisions for investigation contained in the acts of the various provinces for the prevention of security frauds, documents produced in an inquiry are not thereby rendered inadmissible in any subsequent criminal action against the person who produced them. These acts are similar to the Combines Act in respect of the fact that they provide special means for investigation to determine whether certain classes of business operations are being conducted in an illegal manner.
Subsection 1 of section 15 of the Security Frauds Prevention Act of New Brunswick, which contains the provision of that act by which it is indicated definitely that no person shall be entitled to claim any privilege in respect of documents required on the ground that he might be incriminated thereby, reads as follows:
15. (1) The board, or any person or persons to Whom as its representative or representatives it may, in writing, delegate such authority, may examine any person, company, property or thing whatsoever at any time, in order to ascertain whether any fraudulent act or any offence against this act or the regulations has been, is being or is about to be committed, and for such purpose shall have the same power to summon and enforce the attendance of witnesses and compel them to give evidence on oath and to produce documents, records and things, as is vested in the supreme court or a judge thereof for the trial of civil cases, save that the pro-{Mr. Thorson.]
visions or rules of court or of law relating to the service of subpoenas upon and to the payment of conduct money or witness fees to witnesses shall not apply, and save further

And this is the important part.
-that no person shall be entitled to claim any privilege in respect of any document, record or thing asked for, given or produced, on the ground that he might be incriminated or exposed to a penalty or to civil litigation thereby, and no evidence given shall be privileged except under the Evidence Act and the Canada Evidence Act, and save further that no provisions of the Evidence Act shall exempt any bank or any officer or employee thereof from the operation of this section.
There is similar legislation in each of the provinces. In Nova Scotia there is the Securities Act, which was passed in 1930, where the corresponding section to the one which I have read in the case of the New Brunswick act is section 10. There is also the Securities Act of Quebec, passed in 1925, section 10; the Securities Act of Ontario, passed in 1930, section 10; the Securities Act of Manitoba, passed in 1929, section 9; the Security Frauds Prevention Act of Saskatchewan, passed in 1930, section 9; the Securities Act of Alberta, passed in 1930, section 9; the Securities Act of British Columbia, passed in 1930, section 10. Every one of these provincial acts contains provisions similar to the provision of the New Brunswick act that I have just cited.
Section stands.
Progress reported.



WAYS AND MEANS


[Stage Direction]
The house in committee of w-ays and means, Mr. Sanderson in the chair.
Customs tariff-398b.	Tubing of iron or
steel, not joined, not more than inch in diameter, with one end swaged, or swaged, split and spread, but not further manufactured, when imported for use in the manufacture of fishing rods: British preferential tariff, free; intermediate tariff, 7i per cent; general tariff, 15 per cent.
_ Mr. DUNNING: This is an entirely new item to provide rates of free, per cent and 15 per cent on certain small steel tubing used in the manufacture of fishing rods. The tubing is not made in Canada. It was dutiable formerly under the general item at 15, 27i and 30 per cent.
Item agreed to.
Customs tariff-409e. (ii) Fruit and vegetable grading, washing and wiping machines and combination bagging and weighing machines, and complete parts thereof; machines for top-P1J*g vegetables, and machines for bunching and/or tying cut flowers, vegetables and nursery stock, and complete parts thereof; egg-graders

Customs Tariff
and egg-cleaners, and complete parts thereof, not including aluminum parts: British preferential tariff, free; intermediate tariff, 5 per cent; general tariff, 10 per cent.
Charles Avery Dunning: This item just adds egg-cleaners to the other items mentioned in the wording; it is to extend the same privileges to egg-cleaners as to egg-graders.
Item' agreed to.
Customs tariff-410d. Well-drilling machinery and apparatus, and complete parts thereof, for .use exclusively in drilling for water, natural gas or oil, or in prospecting for minerals, not to include motive power; well-packers and complete parts thereof, for oil or gas wells; seamless iron or steel tubing of a class or kind not made in Canada, for use in casing water, natural gas or oil wells: British preferential tariff, free; intermediate tariff, free; general tariff, free.


Some hon. MEMBERS:: Carried.


George Halsey Perley: I think the quickest way would be foir the minister to say a few words in brief explanation of each item.


Charles Avery Dunning: This is a revision in the wording of the existing item, which has been in the tariff for a number of years. The old item covered well-drilling machinery and apparatus of a class or kind not made in Canada, and seamless iron or steel tubing over eight inches in diameter, for use exclusively in drilling for water, natural gas and oil, and in addition covered well-packers for oil and gas wells. By the rewording of the item the qualification of "a class or kind not made in Canada" as applicable to well-drilling machinery has been removed. The effect of this is to reduce the rates of all such machinery, much of which would be dutiable under 427a at free, 27^ and 35 per cent to free under all tariffs, and action to this end has been taken primarily in the interests of the development of the natural resources and in the knowledge that there is very little if any production in Canada of the heavier and more expensive type of well-drilling machinery. In addition, the item as now reworded does away with reference to any diameter of seamless tubing which is now described as of a class or kind not made in Canada. This will permit the customs authorities to permit free entry of material which, by reason of length or some other feature, is known to be not available from Canadian mills.


Henry Herbert Stevens: This is a composite of
two previous items. According to the explanatory note one item was free right across and the other 15, 27i and 30 per cent; the two are now combined. The qualifying words
"of a class or kind not made in Canada" are carried into this item, but it is made free under all listings. What item would apply to seamless iron or steel tubing of a class or kind made in Canada?


Charles Avery Dunning: 
[Stage Direction]
Item agreed to.
Charles Avery Dunning: I have a resolution
rendered necessary by the rewording of the item which preceded this. This will be 410e.
Customs tariff-410e. Rope twenty-one hundred feet and more in length, designed for use in drilling wells two thousand feet and more in depth, of four inches and more in diameter, and of raising and lowering casing more than four inches in diameter for such wells, for use exclusively in drilling for water, natural gas and oil, and in prospecting for minerals, not to include motive power:	British preferential
tariff, 5 per cent; intermediate tariff, 5 per cent; general tariff, 5 per cent.


Mr. CARDIN:: I move accordingly, Mr. Chairman.


Henry Herbert Stevens: This does not seem to
be different from the present item 410e.


Charles Avery Dunning: It omits reference to
machinery, formerly named with rope. Machinery is now 410a.


[Stage Direction]
Motion agreed to.
Item agreed to.
Customs tariff-431b. Adzes, anvils, vises, cleavers, hatchets, saws, augers, bits, drills, screwdrivers, planes, spokeshaves, chisels, mallets, metal wedges, wrenches, sledges, hammers, crowbars, cantdogs, and track tools, picks, mattocks, and eyes or palls for the same: British preferential tariff, 10 per cent; intermediate tariff, 35 per cent; general tariff, 35 per cent.
George Halsey Perley: What is the
change in this item?


Charles Avery Dunning: It appears in schedule IV of the United Kingdom trade agreement which we passed when dealing with that item. It will be remembered that we altered the British rate on files and rasps to free. This is to bring about a separation, maintaining the existing rates of duty on the rest of the item.
'Item agreed to.


Charles Avery Dunning: With respect to item 434 I have a resolution dealing with a minor matter. In the budget resolutions of Febru-
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ary 25, item 434a, motor rail cars or units for use on railways and chassis for same, were made free under the British preferential tariff. Such cars were previously dutiable for the most part under item 434, under the phrase "motor cars for use on railways." The resolution I am about to propose is for the pirn-pose of deleting this phrase "motor cars for use on railways" from the existing item 434, where it would obviously be a redundancy by reason of the new tariff item. It reads:
Resolved that schedule A to the customs tariff, as amended by resolution No. 2 on February 25, 1937, be further amended by striking thereout tariff item 434 and by inserting in lieu thereof the following item:
434. Locomotives for use on railways, chassis, tops, wheels, and bodies for the same, n.o.p.: British preferential tariff, 15 per cent; intermediate tariff, 30' per cent; general tariff, 35 per cent.


Pierre-Joseph-Arthur Cardin: I move the resolution, Mr. Chairman.


Henry Herbert Stevens: I do not see this in any of the proposed resolutions If it is an entirely new interjection I wish the minister would explain it. It certainly changes the item as it appears in the tariff.


Charles Avery Dunning: The elimination of motor cars for use on railways is made necessary because of the insertion in item 434a of motor rail cars or units for use on railways. We did that in passing the British agreement, and I am asking for the elimination of the words in item 434, because otherwise there would appear in the tariff two different descriptions of the same article in two different items. It is not a change, but merely a correction in wording.


George Halsey Perley: It is to bring it into line with the British preference.


Charles Avery Dunning: Yes; it is the modern description of the article.


[Stage Direction]
Resolution agreed to.
Item agreed to.
Charles Avery Dunning: Now we reach one of the items of which notice was given in the Votes and Proceedings of March 30. If hon. members will turn to the Votes and Proceedings of that date they will find notices of motion with respect to various reports received from the tariff board since the budget came down. In the budget I indicated that we should probably have some tariff board reports while the house was still in committee of ways and means and that the government would give consideration to these reports, and, if it were deemed advisable, give notice of resolutions to implement them at this stage of the

proceedings. The government has given consideration to the reports of the tariff board which have been received, and the result is the notice appearing in the Votes and Proceedings of March 30.


George Halsey Perley: The minister might give some explanations.
Customs tariff-438b. Bearings, clutch release; bearings, graphite; bearings, steel or bronze backed, with non-ferrous metal lining; bushings, graphited or oil impregnated; ceramic insulator spark plug cores, not further manu- . factured than burned and glazed, printed or decorated or not, without fittings; commutator copper segments; commutator insulating end rings; discs of hot rolled steel, spun or forged, with or without centre hole, for disc wheels; distributor rotors and cam assemblies; door bumper shoes; electric wiring terminals, sockets, fittings and connectors and parts thereof, not to include battery terminals; gaskets of any material except cork or felt, composite or not; ignition contact points; keys for shafting; lenses of glass for head, tail, dome, signal and cowl or parking lamps, and for light reflectors; lock washers; piston ring castings in the rough, with or without gates and fins removed; rails of lock seam section, corners, locks and catches, unplated ventilators and parts thereof, the foregoing being of metal other than aluminum, for the manufacture of window sashes for bus bodies; steel bolts, capped with stainless steel; switches for lamps, heaters and defrosters and parts thereof; vacuum control assemblies; vulcanized fibre in sheets, rods, strips and tubing; all of the foregoing when of a class or kind not made in Canada and for use in the manufacture or the repair of the goods enumerated in tariff items 424 and 438a, or for use in the manufacture of parts therefor:	British
preferential tariff, free; intermediate tariff, free; general tariff, 30 per cent.


Charles Avery Dunning: I shall be glad to explain this item. The additions are of minor parts of automobiles, which represent a further addi-, tion to the list of parts on which tariff concessions are granted to manufacturers of automobiles, motor vehicles, electric trackless trolley buses or chassis enumerated in 438a and 424, not to include wireless receiving sets, et cetera. The board says:
With respect to tariff items 438b and 438c, the board has considered requests for the inclusion of additional articles and materials in the enumeration thereof. The additions made in the suggested tariff items are in the opinion of the board, in accordance with the purpose of the items, namely, to afford free entry, for repair or original equipment, of automotive parts of a class or kind not made in Canada.
Many of these are parts for which there was no description when the automobile tariff was last revised.


George Halsey Perley: Will these concessions make motor cars cheaper or will the benefit accrue to the manufacturer?

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Charles Avery Dunning: In the opinion of the board the inclusion of these items would tend to reduce the cost of manufacture of automobiles not to a great degree, depending somewhat on the particular make of car and the degree of manufacture in Canada. But I would say not in excess of SI.50 or $2 a car.


George Halsey Perley: If that is so it seems to me the benefit will accrue entirely to the manufacturer.


Charles Avery Dunning: Yes.


George Halsey Perley: So we are giving up revenue which will not benefit the consumer in the least.


Charles Avery Dunning: That is true.


George Halsey Perley: What reason is there for that?


Charles Avery Dunning: My right hon. friend evidently has not read the whole of the tariff board's report on automobiles, so perhaps I should put upon record that part of it which will answer his question.


George Halsey Perley: Are these two items exactly as recommended by the tariff board?


Charles Avery Dunning: Yes. It will be remembered that during the year the automobile reference to the board of a year ago was continued. The board has been reviewing automobiles during the year, and in paragraph 15 of the summary of the report they say:
In spite of the fact that automobile production in 1936 was in all probability less than in 1935, the operations of the automobile manufacturers based on figures relating to the first ten months of 1936 have been considerably more profitable in 1936 than in 1935. This improvement in operating results is attributable in some measure to the economies in production which were made possible by the enactment of the 1936 automobile schedule.
The reduction in selling prices that the board had to some extent anticipated in the report submitted last year did not take place, and it is to be noted that even if some decreases have been effected in some makes of automobiles, that trend has not been general in the industry. After giving effect to the increase in the incidence of taxes and to the advance in the consumers' selling price brought about by certain conditions in distribution which are discussed in paragraph 11 of this summary, an analysis of schedules 19, 20 and 21 will show that the relation of selling price in Canada to the corresponding United States prices has not been materially altered. Furthermore, as shown in schedules 25, 26 and 27, computations based on the net amounts received by the manufacturers in Canada and the United States from the sale of corresponding models indicate that the net return to the Canadian manufacturer is fairly generally in excess of that same net return to the United States manufacturer, plus the advance represented by the existing duties and taxes computed on the United States dealer's price.
The board is of the opinion that the present protection computed on the dealer's price in the United States substantially equates the difference in production costs for home consumption of low priced large volume automobiles between Canada and the United States, and the board is further of the opinion that if the present price differential between Canada and the United States continues to be maintained with respect to large volume automobiles, and having in mind that Canadian dealers cannot import the said models from the Canadian manufacturer's parent plant in the United States, the governor in council might consider invoking section 17 of the Customs Tariff Act to effect such a readjustment in prices as may be deemed proper.
I call the attention of the: committee to that recommendation in reply to the question of my right hon. friend.


Henry Herbert Stevens: I think this is a good point at which to bring up a question which has been worrying me for a considerable time. I take this item as an example, there are many others, but this is a long item including forty or fifty different articles.


Charles Avery Dunning: Most of which are not new.


Henry Herbert Stevens: I am not suggesting that. It closes with the words "when of a class or kind not made in Canada." I have in my hand a return showing some 1,400 changes in the tariff. I sometimes wonder whether parliament is aware that the tariff really is not made in parliament at all; the tariff is made in the offices of the customs department, and to a very large extent by officials of the department, rather than by the minister or by order in council. That may seem an extreme statement. In making it I am not reflecting upon the officers of the department as of to-day; it is a custom or system that has grown up over the years. I have in my hand an official return, No. 105, and it gives a record of some 1,400 changes in the tariff-or bulletins that went out that affected the tariff would perhaps be more accurate. I have checked them and I find a most extraordinary situation. For instance, over half of these orders or bulletins are confidential, so of course I and others have no access to them. Of the 1,400, 130 are made by authority of order in council and the minister, and 22 by order in council alone, making a total of 152 bulletins authorized either by the minister or by order in council.
The others are not authorized by order in council or the minister; they are bulle-
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tins by the department. It may be said that they are routine. I am going to delay the committee only for a few minutes, but in that, few minutes I can give information which I think ought to shock hon. members of this house. Let me say again to the Minister of National Revenue that I am not casting any reflection upon him or upon the department; I am speaking of the system that has been in operation for years and years and has become a fixed practice which I contend supersedes the law of parliament. For instance, I turn to bulletin No. 4155, which according to my return has no authority. That deals with goods of a class or kind not made in Canada. It says:
From information before the department the following articles are of a class or kind not made in Canada:
(a)	tableware of china, porcelain, semiporcelain, white granite ware or ironstone, except undecorated teapots with other than a white body or fracture.
(b)	other earthenware or art pottery, with a white body or fracture, except lamp bases and chambers.
The following articles of earthenware are considered to be of a class made in Canada:
(a)	teapots, not decorated, with other than a white body or fracture, such as Rockingham ware.
(b)	other earthenware or art pottery, with other than a white body or fracture, such as Rockingham ware, except tableware.
(c)	lamp bases and chambers, decorated or not.
And this becotaes law. The point I am making, Mr. Chairman, is that a concern may go to the department and say: These goods are now made in Canada. We will take this item under consideration, 438b, which is now free in two categories, with a duty of 30 per cent under the general tariff. They may say: These goods should no longer come in free; they must be classified under another item which imposes a duty.
My submission is that it has been declared over and over again in this house that parliament fixes the tariff. Indeed, the tariff has been a bone of contention between the two great parties in this country from time immemorial. Personally I think the margin of difference has been very narrow; there has been a little lowering here or a little there, as the case might be. But the tariff is being changed every day, not by parliament, but by the rulings of the department. What I am urging is that no change in the tariff as created by this parliament should be made unless there is a public hearing before the tariff board or a body of that kind. The minister sits back and looks a little weary.

Probably he is, and he may resent my bringing this question forward at this time but this is one of the most important matters that can engage the attention of parliament.


Charles Avery Dunning: I am listening to my hon. friend with great interest, but at this point I might remind him that there is provision for an appeal to the tariff board by any interested party.


Henry Herbert Stevens: I admit that, but it does not amount to the snap of your fingers; it does not amount to anything.


Charles Avery Dunning: Some people have demonstrated that it does.


Henry Herbert Stevens: If my hon. friend would study that return a bit, as I have done, he would see how ludicrous the whole system is that we have been following. For instance, consider what came to our attention not very long ago; in order not to transgress the rules of the house I will not state what it was, but some hon. members will recognize it when I give the particulars. Here was a great, powerful firm importing tremendous quantities of goods, ten or fifteen million dollars' worth in a year. They go before the department and get the margin of discount varied from about 17 per cent to 25 per cent. Another firm producing absolutely the same articles and importing goods to the value of millions of dollars pays a different discount. Can any member of the government or any member of a previous government, under which the practice also obtained, say that such a situation is fair? I venture to say that within the next six months this government will be faced with claims for the refund of thousands, possibly hundreds of thousands, of dollars wrongfully extracted because of the differential in that allowance.
Let me give some further items, and I could give dozens. Here is one headed "Current values for duty." There is no authority for this bulletin, which deals with flashlight cells; standard 6 inch dry cells; standard 6 inch dry cells in assembled units of two or more; standard 45-volt radio B batteries; heavy duty 45-volt B batteries: 45-volt B batteries (special) cells other than cylindrical. Here is another, also dealing with flashlight batteries and so on. It may be argued that these things have been considered, and all that; but my point is that under the practice that has become established it is within the power of departmental officials to change the tariff without reference to the parliament of Canada. Furthermore, a study of these matters shows that in almost every instance

Customs Tariff
the change results in the tariff being raised.
I am not going to say that I am opposed to all that has been done; not at all. The chances are that with most of it I would agree, but I say it is done in an improper way.
Take the instance I gave a moment ago. It was ascertained that the competing firms- and there were many, though I mentioned only one-never knew that there had been a change in the rate of duty, because that is what it meant to the first firm. The others did not know a thing about it; they had no opportunity to appear before any body, and the public did not know anything about it. There was no hearing. It was done by regulations passed by the department, without reference to the tariff board, the customs board, or any other board. It was done in the way I have indicated and, Mr. Chairman, I direct the attention of the Prime Minister to this:	Fourteen hundred
bulletins are mentioned, and I asked for specific information as to the date issued, the authority, and the date repealed or suspended. All the information is here, and it shows that in only 152 cases out of some 1,400 was there authority of the minister or by order in council.
I contend, Mr. Chairman, that that is not in accordance with the spirit of the Customs Act or the customs tariff. I think the theory of tariff in this country has been that if there is one thing sacred to parliament it is the fixing of the rates of duties on goods, but by the strange wording of these items in the tariff the authority of parliament is flouted and the power of parliament to control and fix duties is disregarded.
Earlier in the session I had intended to go into this matter with much greater care. I hold in my hand, for instance, a folio containing dozens of orders issued within the last few months. Again let me say to the Minister of National Revenue that I am not reflecting upon his administration. I am calling in question the practice that has grown up in this country over the years. Let me examine just one or two of these orders that have been passed recently.
Here is one dated December 3, 1936. I am not saying this cannot be justified; but this is the change. This order is headed "Made in Canada Rulings," and in one case after another the same thing applies. It is that little word slipped into the item to which I object. Without any reflection upon hon. members of this house I venture to suggest that there are very few who really appreciate 31111-160
the significance of those words in an item. And how common the practice is to change an item.
Furthermore, I have known instances in the past where a firm would come along, and under the law they are supposed to be manufacturing to supply the Canadian market, and they would claim that they were doing so, when in fact they had not even started to manufacture. They had some of the facilities to do it, and they declared they were going to do it, and undertook to do it; and it was a question whether they could supply the market.
I call attention to this fact: Canada is a vast country. If a small firm in the eastern or in the central section of Canada says: "We are going to manufacture" or "we are manufacturing this article, and therefore the tariff on imported goods should be under a higher, instead of a lower rate," that little firm does not supply the market in the west. It could not supply it. It could not supply the market in the maritime provinces. On . the other hand, if it happened to be in the west it could not supply the east. And yet, possibly because they manufacture to a certain extent, the commodity is changed from the item under which parliament placed it, and carried into another item.
It may be argued that care is taken, and all that, but what I submit is this: This matter should never be left to the judgment and authority of the officials of the customs department.


James Lorimer Ilsley: With whom would you leave it?


Henry Herbert Stevens: I would leave it with a
public body such as the tariff board.


James Lorimer Ilsley: Anyone may appeal to the board. The tariff board could never get through with its rulings. I was informed the other day that we had made something over six hundred rulings since I have been minister, ruling articles "of a class cr kind not made in Canada." That is part of the ordinary routine of the department. Rulings have to be made nearly every day.


Henry Herbert Stevens: And I will tell the minister another thing-and again I am not reflecting upon his administration: I will guarantee that if he will make or have made an investigation, he will find that there are in ports in this country half a dozen different forms of rulings on the importation of goods. I know that is a pretty strong statement.


James Lorimer Ilsley: That is a different point.

Customs Tariff


Henry Herbert Stevens: Yes, I will come back to the other one. It is argued that when an item goes in, it applies equally to all people. How in the name of Heaven can an appraiser -how many ports are there in Canada where there are appraisers?


James Lorimer Ilsley: I do not know offhand.


Henry Herbert Stevens: There would be seventy-five, anyway. How can seventy-five appraisers be kept up-to-date with thousands of orders? When I asked for this return, officials of the customs department phoned me that it would take over four thousand, to give me the whole list. I agreed that there should be a limitation. I am not objecting to that, because I saw the magnitude of it. But I will venture to say that there are extant and operating to-day 5,000 bulletins that affect or vary the tariff. Some are very trivial, but they do affect the tariff. Hundreds-yes, I w ould venture to say a couple of thousand of them effectively vary the tariff. Now that is not what parliament understands. That is not what should be.
The minister asked me who is to attend to these things. My contention is this: In the first place we are now dealing altogether too loosely with the privilege extended by parliament, I think almost unconsciously, in connection with the words "of a class or kind not made in Canada." Those few words throw the tariff wide open. Along comes a new firm which makes out a case complying with what the department considers necessary. They make their product in Caanda. A bulletin goes out to all these ports-bulletins, bulletins, bulletins, by the hundreds of thousands, go out. Do you mean to say that the collectors, the appraisers, and the long-room clerks, working for S120 a month, are going to have in their heads all these bulletins? They turn to the tariff as a rule, and pass it as it is in the tariff. They try to watch the bulletins; but they cannot do it. There is not a human being in this country who can do it; it cannot be done, and it is not done.


James Lorimer Ilsley: What is the remedy for it?


Henry Herbert Stevens: The remedy is this, to stop the issuing of bulletins as we are issuing them to-day.


James Lorimer Ilsley: Then you would have no uniformity in the tariffs at all.


Henry Herbert Stevens: You have not now.


James Lorimer Ilsley: Oh, yes.


Henry Herbert Stevens: No. I can go out tomorrow morning and get an article which will
[Mr. Usley.j
be covered under half a dozen different items in the tariff, in the different ports of Canada. I know that can be done; I have seen it done. I know what I am talking about. And I say that should not be. So I say this whole system of bulletins is wrong. True, it has grown up-


James Lorimer Ilsley: What is the alternative? If you do not send out bulletins, you merely add to the lack of uniformity.


Henry Herbert Stevens: The alternative is this- but may I interject this bit of philosophy, if you like to describe it as such, that tariffs are not made for the convenience of individual firms in Canada.


Mr. ROSS (Moose Jaw):: Should not be.


Henry Herbert Stevens: Let us take what the general theory of the tariff is, and that is that duties shall be imposed upon imports coming into Canada on all alike, and that any protection given an industry shall be protection given to all that are in that line of industry, irrespective of what the firm may be. That, I think, is the theory. But thait is not the practice, though. I am asked what the alternative is. I say (1) cease the general practice of issuing bulletins; and (2) my own opinion is that this whole tariff schedule ought to be revised and reconstructed.
Let us pause at that point for a moment and look at some of these schedules we happen to be dealing with at the present time. We find an item divided up into 41a, b, c, d, e, x, y, z-all through the alphabet. There are subdivisions, and then they are resubdivided, and each item includes a lot of detailed names. Take this item now before us-I shall not read it all, but just part of it to give some sort of idea of it:
Bearings, clutch release; bearings, graphite; bearings, steel or bronze backed, with nonferrous metal lining; bushings, graphited or oil impregnated; ceramic insulator spark plug cores, not further manufactured than burned and glazed, printed or decorated or not, without fittings; commutator copper segments; commutator insulating and rings;
And so on, and so on. There are forty or fifty items. As a parliament, it is time we paid some attention to the construction of the tariff. I am not suggesting it can be done now, but I do put in a plea for the changing of the system. Let the tariff first be made by parliament, and let it be understood that it is not changeable by departmental officials. When an application is made by an industry or manufacturer in Canada for a change in the tariff, let that industry or manufacturer go before the tariff board; and let those who are

Customs Tariff
opposed to it or competing with it have the same opportunity in the hearing as the applicant has. That is not done to-day.
Then there may be minor things; but no minor thing should be passed without an order in council. That is the least that can be done When I repeat to the house that in this return, officially given on the order of parliament, only 152 items out of about 1,400 bear the imprimatur of order in council, it is enough to alarm the house as to the chaotic condition into which we in Canada have drifted in dealing with our customs administration.
Again I say, so that there may be no misunderstanding and no question as to my motives, that I am not reflecting on the present minister. On the other hand, I will say to his credit that I happen to know he is giving consideration to this question. Last year I brought to his attention that notorious order No. 4035, and some months after his examination, the minister recalled the order.
What did bulletin 4035 do? I will tell you what it did. That was the value for duty purposes bulletin, referring to coated fabrics such as cover these chairs and are used in the manufacture of railway window blinds and that sort of thing. A firm in Canada applied to the department for a special ruling on the value for duty. An investigation was made, and where did they go? They went to the head of the world cartel which controlled this industry. There were four or five independent manufacturers in the United States making these goods who were willing to export them at prices considerably lower. But their price lists were not considered. The price lists considered were those supplied by the head of the cartel in the United States, and those prices were adopted in Canada as being the fair market value. When goods were shipped in by the independent manufacturers they were faced with a dumping duty. We talk about parliament controlling the tariff. The minister very properly repealed that order, I think in December last.
I shall not detain the minister any longer, but I say to him and to the Prime Minister and to the government that some time during this recess the whole question of the made-in-Canada provision in the tariff should be studied, and the system of issuing bulletins unauthorized by order in council, and not covering appeals to the tariff board, which affect and change tariff items and the impost of duties should be abandoned. I know that this will be a difficult task, but it is of major importance. It is about time that we as members of parliament awakened to the fact that there has unconsciously grown up in 31111-160}
this country, not under this government alone but under previous governments as well, a system of control of tariffs which is not in the hands of parliament.


Charles Avery Dunning: My hon. friend has
quoted an item as an illustration of the confusion which he says should be removed. I should like to call to his attention and to the attention of the committee the fact that the item we are now discussing is one which was evolved by the tariff board after hearings stretching over two years. If we are to get away from confusion by using the method my hon. friend advocates, this is what it brings. After exhaustive examination the tariff board was of the opinion that in order to administer the tariff with respect to automobile parts, the description which the hon. member ridicules as confusing was a necessary description.


Henry Herbert Stevens: That is not what I said, and I shall answer the minister in a minute.


Charles Avery Dunning: My hon. friend read
with great indignation a number of the items in this particular item we are now discussing. He told us in what a confused mess the tariff was, and how necessary it was that parliament should take hold of it.


Henry Herbert Stevens: I read with great indignation the words, "of a class or kind not made in Canada," and I referred to the method of interpreting those words.


Charles Avery Dunning: My hon. friend referred to ammeters, arm rests, wheel housings and so on, of a class or kind not made in Canada. These are included in the recommendation of the tariff board which was made after the investigation to which I referred. This tariff board was appointed by the government of which my hon. friend was a member. I am not quarrelling with that. I simply say that ive are going around in a circle if we say that parliament should take hold of this thing, should try to simplify the tariff, should do this and do that, and should do so and so after examination by the tariff board. We have here an item which follows one of the most exhaustive examinations ever made by the tariff board, and then it is not right.


Henry Herbert Stevens: I did not say that.


Charles Avery Dunning: That is the conclusion I reached. With respect to the other matter, my hon. friend made it quite clear that his criticisms of the Department of National Revenue and its rulings were not confined to the present administration.
Customs Tariff

I would point out to him one important reform which this government instituted with reference to the interpretation of the effect of the clause, "of a class or kind not made in Canada." I think he overlooked it when he spoke. The government was made the subject of criticism when we arranged that in order to be ruled as being of a class or kind made in Canada an article would require to be made in sufficient volume to take care of at least ten per cent of the normal Canadian consumption. I submit that that was a very great step forward. My hon. friend comes along a year later and levels criticism at the government; but he does not say one word about that tremendous advance which was made. Is that fair to the Minister of National Revenue and to the government?
There has been an important reduction in the number of the orders which he criticizes so severely. I venture to say that the number of orders dealing with articles of a class or kind made in Canada was never so great in the history of this country as it was between 1930 and 1935. I am not criticizing that, I am simply saying that the inauguration by this government of the ten per cent control feature operated to reduce very materially the number of orders issued with respect to that phase of the customs tariff. I doubt very much if we can get away from the necessity of having somewhere an authority to define what goods come under this or that classification. At the present time any individual or corporation who regards himself or themselves as prejudiced by any interpretation made by the Minister of National Revenue has a remedy in the form of an appeal to the tariff board.


Henry Herbert Stevens: How can they appeal if they never hear of it?


Charles Avery Dunning: Then they certainly cannot be injured.


Henry Herbert Stevens: They did not hear of it until it was publicly exposed. I know the law.


James Lorimer Ilsley: We are not speaking about the made-in-Canada ruling now.


Henry Herbert Stevens: I am referring to the discount.


Charles Avery Dunning: I am referring only to the made-in-Canada ruling. I am trying to stay in order by discussing what relates to the item before the committee. The discount is a feature under the control of my colleague. This is the amendment which was made, I believe last year:	.

Provided when it is established that any articles, though of a class or kind made or produced in Canada are not offered for sale to the ordinary agencies of wholesale or retail distribution or are not offered to all purchasers on equal terms under like conditions, having regard to the custom and usage of trade, such articles may be exempt from the special or dumping duties.
I submit to my hon. friend that it was quite an advance to make that amendment to the section of the customs tariff. It is of great assistance to the minister in preventing abuses which may arise with respect to that made-in-Canada feature. I admit at once that that is a difficult matter to administer, but I doubt very much if it would be practicable to submit all such rulings to the tariff board in the first instance. I submit that it is a normal procedure for an investigation to be made, and a decision to be rendered by the minister as to whether or not certain goods are of a class or kind made in Canada, and to make that public to all those affected. They can appeal to the tariff board if they disagree with the ruling so given. I submit that that procedure is much more simple than to have a hearing by the tariff board, in the first instance, with respect to which many could not possibly be advised or be aware of just what bearing it might have on their interests. If they have the ruling before them, they know where the shoe pinches and can get the situation remedied by appeal if they wish.


James Lorimer Ilsley: We provided last summer for appeal to the tariff board. Up to that time the tariff board did not have jurisdiction. The department's determination whether an article was of a class or kind made in Canada was final; but under the Tariff Board Act an order in council was issued conferring upon the tariff board jurisdiction to hear appeals in that class of cases.
I wish just to add that there is nothing more difficult in the administration of the customs tariff than making "made-in-Canada" rulings. A whole branch of the department is occupied with "made-in-Canada" questions. The rulings involve investigations which are sometimes very expensive, and naturally the conclusions that are arrived at are contested. The reason that it is very important to decide whether an article is of a class or kind made in Canada or of a class or kind not made in Canada is not the reason stated by the hon. member for Kootenay East (Mr. Stevens). Usually it does not change the tariff rate, but the reason manufacturers are so anxious to have articles made by them ruled as of a class or kind made in Canada is that importations of these articles are then sub-

Customs Tariff
jected to the dump duty. That is of very great importance. There are very few decisions to guide the department. The number of articles in commerce is legion. I do not know how many articles there are in ordinary use in this country, but it would probably run into the hundreds of thousands, and there is a tremendous volume of work in classifying these articles. The question goes before the department and the department makes hundreds of these decisions.
As I said a few minutes ago, I think that since I have been in charge of the department there have been over six hundred decisions which ruled that articles were not of a class or kind made in Canada. There does not seem to be much to do except to go ahead and make these decisions as best we can and give the tariff board jurisdiction, as we did about a year ago, to decide whether we are right or wrong.
Mr.STEVENS: The minister rather adroitly drew the discussion away from what I have been seeking to impress upon the committee. I did not cite this as confusing; I cited it to show how broad a single item in the tariff might be. I emphasized the fact that there were probably fifty different articles in the item, and then I went on to say that this was subject to the provision respecting a class or kind not made in Canada; then I went on to show' that innumerable bulletins are issued, most of them without authority of order in council, and a great many, indeed most of them, without reference to the minister.
Now the minister says: We have changed that to a certain extent; they must be able to supply ten per cent of the home market. I ask the Prime Minister, from his long record of advocacy of low tariff policies, does he think that the supplying of ten per cent of the market in Canada is sufficient for the changing of the tariff without an order in council or a hearing? I ask him to think that over.	-
I have said over and over again that I am not reflecting on the present minister; I made it clear that this is something wdiich has grown up over the years. The Minister of Finance (Mr. Dunning), who is supported in this by the Minister of National Revenue (Mr. Ilsley), says that they do not see how any other system can be adopted; he says these bulletins are issued. In these bulletins occur these vmrds, and this is the justification for the policy that has grown up over the years: " The following ruling transferring goods from the category of a class or kind not made in Canada to that of a class or kind made or produced in Canada is issued in accordance with the government's undertaking to give
adequate notice to parties concerned." It does not say so here, but the inference is that they will notify parties concerned.
But, Mr. Chairman, you will at once appreciate, as will other hon. members of the house, that though the collector of customs in Montreal or Toronto or Vancouver is notified that such a change is made, he does not send out a copy of each of these bulletins to everybody who may be concerned. It cannot be supposed that he can possibly know ten per cent or even five per cent of the people concerned. That is the point I am making. There is no public knowledge of these bulletins, and I will venture this statement without fear of contradiction, that there is very little knowledge of them among the skilled officers themselves, because the number of bulletins is so great that there is not a human being who could keep them all in mind.
Twice this session it has been proved that firms, big firms, one which imports ten or fifteen million dollars' worth of goods into this country, and another that has been doing business for forty years, did not know of these things, and the departmental officer said: It is rather unfortunate, but these firms ought to have known. But the firms did not know. They are not "dumb"; they are among the best, firms operating in this country. Then how can an ordinary little firm which has a very small turnover be expected to know? I can assure the house that some of the largest firms in Canada had no knowledge of changes that have affected competitors favourably, and so were prevented from getting the same benefits. It is not good enough to say: Well, you have an appeal to the tariff board. How can a man appeal to the tariff board if he never heard of it?
Sir GEORGE PERI,EA : Is that, on a question of discount?


Henry Herbert Stevens: One is a question of discount, and the other is a question of the value for duty. Let the government get this:	The
minister says that I am criticizing. I am not criticizing the government in a political sense.


Charles Avery Dunning: I did not use the word in that sense. I took what the hon. member said in good faith.


Henry Herbert Stevens: I heard what the minister said. I was a minister in a government, and the minister taunted me with that. What has that got to do with it? I said that this practice had grown up under all governments for many years. I thought that was a broad enough statement to invite consideration by the present government. They have been in office only two years. I am not referring to what
Questions

may have happened when they were in office before. I have served in three different governments in this country. At one time I was minister of customs, and the minister may say to me: Well, why did you not see to it then? I was just getting to it when I was kicked out; that is all. But this custom having grown up and become prevalent, I ask the committee- never mind the government if they are not concerned about it-to take notice of these facts.


[Stage Direction]
Item agreed to.
Progress reported.
At eleven o'clock the house adjourned without question put pursuant to standing order.
Monday, April 5, 1937