1939-02-09

[Stage Direction]
The order having been called for resuming the adjourned debate on the motion of Mr. MacNeil for reference to the public accounts committee of the agreement between the government and the John Inglis Company for the manufacture of Bren machine guns, and the amendment thereto of Mr. Stevens.
Mr. A. G. SLAGHT (Parry Sound):: Mr. Speaker, before the house proceeds, I desire to submit a question to the Minister of Transport (Mr. Howe). I have given him notice, but I am sorry to say-


Mr. SPEAKER:: The order of the day has been called, and we are proceeding with it. The hon. member cannot put a question unless he obtains the unanimous consent of the house.


Some hon. MEMBERS:: Go on.


Arthur Graeme Slaght: With the permission of the house, the question is as follows, directed to the Minister of Transport: Has the minister taken any steps to bring to the attention of the Canadian Broadcasting Corporation the technical regulations of the corporation which resulted in the refusal of permission to Mr. George McCullagh to broadcast addresses over privately-owned networks, the manu- ' script of which addresses he had offered to submit in advance?
I regret I have not given longer notice to the minister. I informed him only a few moments ago of my intention to put the question.
kivised EDITION
Bren Gun-Mr. Young


Hon. C. D. HOWE (Minister of Transport) :: Mr. Speaker, after the first broadcast I did call the attention of the general manager of the Canadian Broadcasting Corporation to the inconsistency of the ruling of the board as it worked out in actual practice. I also suggested that there had been a lack of notice, which had perhaps involved all parties to the broadcast in a rather untenable position. I suggested to the general manager that he should consult his board as to whether or not the new ruling was properly applied in the McCullagh case. The general manager did get in touch with his board, or with such of them as he could reach, and later advised me that the board had decided not to change its ruling in that instance.



BREN MACHINE GUN CONTRACT


[Stage Direction]
The house resumed from Wednesday, February 8, consideration of the motion of Mr. MacNeil:
That the agreement between the government and the John Inglis Company, of Toronto, for the manufacture of Bren machine guns, the report of the royal commission dealing with said agreement, and all related documents, evidence, vouchers and exhibits, be referred to the standing committee on public accounts; and the amendment thereto of Mr. Stevens.
Mr. A. MacG. YOUNG (Saskatoon): Mr. Speaker, when the house rose at six o'clock last evening I was discussing the Bren gun contract and pointing out the very strange tactics of the opposition. I should like in the few minutes I have left to sum up the argument I was making.
The motion before the house is to refer to the public accounts committee the Bren gun ;ontract and the report of the royal commission in regard thereto, so that it may be fully investigated, if further investigation be necessary. The Conservative party has very strenuously opposed the motion. Why, then, do they not accept the verdict of Mr. Justice Davis, the commissioner, who said that he could not find any evidence of wrongdoing on the part of the minister, his deputy, or any other official, or any member of the House of Commons or of the Senate? The commissioner went further and said-this is the limit to which any man could go-that there was not even a suspicion of any wrongdoing. This is the finest testimonial of character and high purpose which any man could receive.
As to form and substance of the contract the commissioner did say, "upon the whole

evidence, that is a question for the government and parliament to pass upon." Let us accept that view. Then what should we do? What has always been the practice in this house when a particular matter had to be investigated? Send it to a committee, of course, where all the evidence given before the commission could be studied and, in this case, in addition the further evidence which is now available. From press reports which I read carefully I noted that the commissioner did not think it necessary to admit evidence to say how good the contract was. I most certainly have no criticism to offer on that account. His conception of his duty was to find out if there was any wrongdoing on the part of anyone, not to find out how good the contract was. He found there was no wrongdoing or suspicion of wrongdoing on the part of the minister, his officials or any member of the House of Commons or of the Senate.
There is much evidence to be submitted to show this contract to be an excellent contract, and this is the reason why the leader of the opposition and his party do not wish this whole matter to go before the committee. They know that after all the evidence is heard the public will brand their speeches in this house this week, filled as they were with insinuations and veiled accusations, as being of a type used by cheap Tammany ward politicians. If there is honesty of purpose in their actions they should all vote to send this to the committee where the whole facts can be reviewed and where witnesses will have the right and the opportunity to be heard. Their tactics will be condemned not only by this house but by the people of this country.
Many references have been made to the fact that there was no competitive bidding on the contract. What did government counsel propose doing before the commission about this? They wished to bring contractors from this country and the United States to prove that in a contract such as the Bren gun contract competitive bidding would be impossible of accomplishment. The witnesses were all present and ready to give evidence. After considering this proposal the commissioner decided against calling such witnesses, and so did Colonel Drew. The experience of Great Britain for over a hundred years demonstrates clearly that in such cases competitive bids are impossible.
In conclusion let me say to the leader of the opposition and to his party:	In the interests of this country, stop this petty quibbling, these unwarranted insinuations. After all, the Conservative party in the past has had a noble tradition. The hon.

Bren Gun-Mr. Howe
gentleman is a new leader; let me suggest to him that he start on a high plane, and not in cheap ward politics. His party is really worthy of a better effort than is now being displayed.
Mr. MANION:: Mr. Speaker, I rise to a
point of order. I let the hon. gentleman get away with it when he said that our charges were like cheap Tammany ward politics, but he has just repeated that about myself and I demand that he withdraw his remarks.


Walter Edward Foster: I do not think the rules
would declare that remark offensive or unparliamentary.


Robert James Manion: The hon. gentleman applied the words directly to me. I let him get away with it once but I do not think he should be permitted to do it the second time.


Walter Edward Foster: I did not understand him to apply them especially to the hon. member, but rather to the whole party.


Robert James Manion: His first application was
to the whole party. I do not quite get the point that it is more offensive if applied to me personally. At any rate, this time he has applied it to me personally. However, if that is satisfactory to the hon. gentleman he is quite welcome to use it.


Mr. YOUNG:: I would suggest to the leader of the opposition that I am thinking of him as a leader of a party. I stated my conception of the whole argument advanced by the Conservative party during this week, and I believe I will be upheld not only by the members of this house but by the people of the country.


Clarence Decatur Howe: Mr. Speaker, this debate is certainly
the strangest that has taken place since I came into this house, and I believe it is one of the strangest on record. A magazine article appeared which caused a good deal of comment. The article confined itself to vague insinuations; it made no charge of wrongdoing.	However, the government felt that
since the matter had been brought before the public, the public were entitled to the fullest possible explanation of the situation behind the article. As a result a justice of the Supreme Court of Canada conducted an investigation which lasted for a number of weeks.	Throughout that investigation no
charges of wrongdoing were made. The judge submitted his report, and in it he said that there was no wrongdoing on the part of the minister, the deputy minister or any official of the department or any other person. Nevertheless, the report having been submitted,
71492-49J
we have had hon. gentlemen opposite discussing this matter for several days. Here again each member who gets up is careful to say that he makes no charge of wrongdoing. We have heard from the opposition only vague charges of inefficiency in dealing with this contract, and a blackguarding of the Minister of National Defence (Mr. Mackenzie). It is with the charge of inefficiency in connection with this contract that I wish to deal.
I may sav. and I think all hon. gentlemen will agree with me, that the purchase of arms and munitions has always been a difficult matter for a government to deal with, and the situation is far more difficult in peace time than it is in war time. In time of war, a volume of munitions can be contracted for which will warrant the setting up of the particular equipment and organization required for the production. Most of the buying for my own department, and I imagine the same thing applies to other departments of government, is a comparatively simple matter because generally the articles being purchased are in ordinary commercial use and are such as can be secured from the general stock of the manufacturer. But no one stocks arms and munitions of warfare of the type useful in the situation that confronts us at present. The result is that it is necessary to make special arrangements for the manufacture of these articles.
I have had some experience with this type of purchasing. Like the hon. member for Greenwood (Mr. Massey) I received a training as an engineer, but unlike the hon. member for Greenwood I practised my profession for many years. I practised it in a highly specialized field and in that practice I had to purchase equipment which was not of standard manufacture, but which had to be designed in my own draughting room and constructed in the factories of Canada. It so happens that a large portion of that equipment was manufactured in the particular plant under discussion, the plant of the John Inglis Company of Toronto. We have heard it referred to as a broken down plant, but I know it as one of the best equipped of the boiler plants and machine shops in the Dominion of Canada. In my practice it was one of three plants in Canada which was capable of turning out a large order of mechanical equipment for a grain elevator. In my practice it has supplied equipment of that type worth several hundreds of thousands of dollars. I took enough interest in the matter a short time ago to visit this so-called decrepit and broken-down plant, because I wished to confirm my opinion that it was still capable of efficient production. To my surprise I found
Bren Gun-Mr. Howe

that the Bren gun was not being made in the Inglis plant as I knew it. That plant was being used for the purposes for which it had always been used, the normal production of boilers and special types of mechanical equipment. But I found that a new plant had been built as an addition to the Inglis plant, and that this addition was of most modern factory construction, of concrete, and with the best of ventilating and lighting systems, and I learned that the Bren machine gun was to be manufactured in that new portion of the plant. I found that that plant was being filled with the special machinery required to carry out the Bren gun contract, with the most modem lay-out that could be used for that type of production. This, then, was the broken-down plant that has been referred to so frequently by hon. gentlemen opposite in this debate.
Hon. gentlemen opposite take the view that they were able to handle their purchases of munitions without any difficulty whatever, but I think we have only to look at the appropriations of the various years to find why that was the case. Going back ten years we find that the defence appropriation in 1929 and succeeding years was as follows: in 1929, $20,000.000; 1930, $22,100,000; 1931, $18,900,000; 1932, $15,000,000; 1933, $13,000,000-1 imagine the purchasing problem in that year was confined to buying postage stamps; in 1934, $13,3000,000;	1935, $17,000,000;	1936, $25,-
500,000; 1937, $35,500,000; 1938, $35,500,000.
There is one thing that I wish to call to the attention of the house, and that is that at this moment all of us are defence-minded. We have all seen the threat of war come almost to the boiling point and then cool down, and we have all felt very thankful that something was being done to provide an adequate defence for this country. I just wish to remind hon. members that it was the present Minister of National Defence who started the machinery which is bringing Canada into a position in which she can defend herself against attack.
Now let us examine the particular transaction under consideration from the point of view of lack of efficiency. In 1933 Lieutenant Jolley was sent to England to investigate the small arms situation. In August, 1935, he visited the Enfield plant in England, which was just then beginning to set up for the manufacture of the Bren gun. In July, 1936, Lieutenant Jolley returned to Canada and reported to his department that the Bren gun was a distinct advance on other types of machine guns and would be the type required in Canada for defence purposes.
Some two months later, two machine guns were received in Canada from Czechoslovakia,
IMr. Howe.]
sent out for inspection, I presume, by arrangement of the Department of National Defence officials acting on the report of Lieutenant Jolley. There was nothing secret about those guns. As I say, they came, not from England, but from Czechoslovakia. England at that time had not completed the equipment of her factory and had not produced a Bren gun. These Bren guns were set up for the inspection of the defence department. Major Hahn came to Ottawa about that time looking for business for his plant, as hundreds of others were coming to every department of the government looking for business for their plants. Major Hahn saw the gun in General LaFleche's office and immediately was interested in it; for he thought that that was a type of arms which his plant was equipped to manufacture.


Mr. CAHAN:: Equipped at that time?


Clarence Decatur Howe: I said he thought it was equipped-he was interested in it at that time.


Charles Hazlitt Cahan: I have a higher opinion of him than to think he had any such idea.


Clarence Decatur Howe: It was explained to Major Hahn at that time that the department had no plans for procuring this gun, that they had simply brought it out for inspection. However, Major Hahn decided that he would put himself in a position to manufacture the gun, when the time came, by the ordinary methods used by any manufacturer; that is, he determined that when the time came he would know more about the process of manufacture of that particular gun than any competitor in his field.


Mr. HOMUTH:: May I ask the minister how Major Hahn knew that that opportunity was going to come?


Some hon. MEMBERS:: Sit down.


Karl Kenneth Homuth: I won't sit down.


Clarence Decatur Howe: What is the question? Mr. Speaker, I object to interruptions from this bird of passage.


Robert James Manion: I rise to a point of order, Mr. Speaker. The minister has described an hon. member as a bird of passage. The hon. member who just sat down (Mr. Young) described me as a cheap Tammany Hall politician, and the hon. member (Mr. Howe) talked of our blackguarding the Minister of National Defence. All these expressions, I submit, are unparliamentary and I object to their being used of any members of this party. If that type of rough language is going to be used, we can use it too. I ask, Mr. FEBRUARY 9, 1939
Bren Gun-Mr. Howe
Speaker, for a retraction of that disrespectful remark, a bird of passage, made by the minister and applied to an hon. member of this house.


Clarence Decatur Howe: I withdraw the remark, Mr. Speaker.


Mr. LAPOINTE (Quebec East):: And the leader of the opposition should withdraw the threat he has just made. He has no right to threaten the house.


Robert James Manion: Better be a little more careful, then, of your language. We can use the same kind of language too.


Ernest Lapointe: Too much heat.


Robert James Manion: Not much light from my hon. friend.


Ernest Lapointe: Nor from you either.


Clarence Decatur Howe: Major Hahn proceeded with the thought in mind that he would put himself in a position to manufacture the Bren gun, and he proceeded to England to learn as much as he could of its manufacture. He had a letter of introduction, and we have been told that that letter of introduction was patronage. Now I once gave a letter of introduction. It was addressed to an acquaintance of mine holding an official position in England. The man to whom I gave it was interested in obtaining an order for aeroplanes. When he returned to Canada he told me that my letter had been most helpful; and I assume that on that ground I am charged with patronage. The letter I gave was given to a gentleman who happened to be, in 1930, the dominion treasurer of the Conservative party. That is how much " patronage " there is in that type of letter. I believe that any member of the government would be glad to give a letter to any man visiting England for a purpose which is beneficial to the Dominion of Canada.


Robert James Manion: And make him a representative of the government, as the Prime Minister did?


Walter Edward Foster: Order.


Mr. THOMPSON:: And pay his expenses?


Clarence Decatur Howe: That is not so, as my hon. friend knows. In March of 1938 the government was in a position to order Bren guns: in other words, it had reached a stage in its armament plans where it could afford to spend the money necessary to purchase this equipment. When the time came, Major Hahn was in exactly the position in which,
in 1936, he had started out to place himself. He knew the type of equipment required for the manufacture of Bren guns. He had so strongly impressed himself on the British government that he had a contingent order from Britain for an additional 5,000 guns, and he came before the Department of National Defence in a position in which no other Canadian manufacturer could possibly place himself. It is strange to be told that so manv plantc could manufacture this gun, when there is no information that any rival manufacturer had taken the slightest interest in this branch of manufacturing in the time intervening.


Mr. STEWART:: None of them knew anything about it.


Clarence Decatur Howe: We are told that there were any number of plants in Canada which could have manufactured this gun; that is, they could have just taken it in as a matter of routine.


Mr. STIRLING:: Oh, no.


Clarence Decatur Howe: That statement, of course, is absolutely ridiculous.


Grote Stirling: That is not being suggested.


Walter Edward Foster: Order.


Clarence Decatur Howe: I venture to say that, if any other manufacturer had been approached to manufacture the Bren gun, his first questions would have been, what do I have to do? What kind of equipment is required? What kind of lay-out do I need? Do I have to build a new factory? What is this all about? Major Hahn knew the answers to those questions, and as a result he got the order.
A contract was drawn up to cover this work. Obviously the work had to be on a cost plus basis. No factory in Canada would have been able to tender on any other basis, because the production costs of that piece of equipment could not possibly be known to any manufacturer. A price might have been obtained, but certainly it would have been made high enough to amortize all the equipment required and to ensure the manufacturer against all the hazards of this new type of production.
As I have said, a contract was drawn up. Mr. Justice Davis tells us his findings as to that contract. He says:
The contract is not for a fixed sum; it is on a cost plus basis. It is admitted that we do not know how much the guns are going to cost. There are, of course, adequate powers of inspection, supervision and control vested in the department under the contract and with the estimates from Enfield of what the guns there are costing it should be possible to keep actual cost here well within bounds. No substantial
Bren Gun-Mr. Howe

objection can be taken in my view to the provisions of the Canadian contract, though in the absence of any competitive bids or terms of manufacture I am unable to pass upon the substance as distinct from the form of the contract.
Mr. Justice Davis said he could find no objection to the terms of the contract.


Mr. ROSS (St. Paul's):: Oh, no-the form of the contract.


Clarence Decatur Howe: The hon. member for Kootenay East (Mr. Stevens) finds a great many objections to the form, but I must say that I have studied it and having some professional knowledge of contracts, I take the view of Mr. Justice Davis.


Mr. STEVENS:: Will the minister permit me? I objected not to the form of the contract but to the substance of it.


Clarence Decatur Howe: Well, I really do not know how the hon member distingushed substance from form.


Henry Herbert Stevens: They are entirely different.


Mr. CASSELMAN:: The commissioner did.


Clarence Decatur Howe: I should be interested if someone would pick out the substance and separate it from the form.
It has been taken for granted in this house that the contractor will receive as a result of his work a profit of about 7-6 per cent on his cost. I am not prepared to admit even that, because I notice a clause in the contract having to do with rejects. The contract provides that unless the number of rejects can be kept down to that of other plants in efficient operation, the cost of those rejects can be charged up to the contractor, and, in fact, his whole plant taken over and the contract completed by others. It seems to me that is a hazard, and a very serious hazard, to those who hold this contract, and one that might very easily call for insurance in the margin of profit allowed.
Having had some experience in placing these contracts, I venture to say that no manufacturer in Canada, who has a plant in actual production, would want that kind of contract. I have put it to a number of my friends in the manufacturing business, and I have never found one who, when he was pinned down to it, would admit that he would take this contract into his plant. I met in Ottawa one or two contractors who came here prepared to give their evidence before the inquiry that they would not want that type of contract in their plant, and that it was not a favourable contract as far as the contractor is concerned.
So much for the charge of inefficiency against the minister. We all know that when

a department is stepped up, from the level at which this department was operating in 1933 and 1934, to two and a half times the former expenditure, all details in that department may not be handled efficiently. When a departmental budget is enlarged to four or five times the size it was a few years ago, some additions of course are necessary. The Minister of National Defence had called the attention of the government to the fact that his purchasing staff was inadequate to handle the volume of work thrown upon it, and himself had suggested such a purchasing board as was in vogue in 1917. Mr. Justice Davis recommended in his report that type of board. I am sure that no hon. member on this side of the house, and least of all the Minister of National Defence, would quarrel with that finding of Commissioner Davis. Just how that can be twisted into a charge of inefficiency against the minister I am at a loss to understand.
Now, what is the effect of all this debate about the Bren gun contract?


Mr. DUNNING:: It has made one man a leader of the Tory party.


Clarence Decatur Howe: My hon. friend says that it has made one man the leader of the Tory party in Ontario; and I think that that fact has so strongly impressed itself upon others in tuis house that it has had a good deal to do with the length of this debate. One thing it certainly has done: it has tended to prevent the government from arriving at its goal of obtaining 7,000 Bren machine guns. The hon. member for Kootenay East said that if it had not been for hon. gentlemen opposite, this contract would now have been working smoothly. I am glad to be able to tell him, in consequence of my call at the plant, that the contract is working smoothly. I was told there that it was expected that parts for the Bren machine gun would be produced next June, fifteen months after the signing of the contract. So it has not had the effect it reasonably could have had in slowing down production on this particular contract; rather, it has had the effect of stopping the flow of orders from Great Britain for munitions manufactured in this country. Before this inquiry started munition orders were flowing here, small orders, it is true, because the buying of munitions in peace time must necessarily be made through small orders. If Canada should not be called upon to go to war, the present purchase of 7,000 Bren machine guns may last for a decade or two. If war comes, an immediate production of many times 7,000 will be required. No small part of the defence

Bren Gun-Mr. Stewart
of Canada is in building up the productive capacity of manufacturing plants to be available in time of war.
At the completion of this contract we shall have a plant built specially for the manufacture of Bren machine guns. When this contract is finished the plant will be turned to other uses, tout if at any time in the future more Bren machine guns are required, we shall have the plant that built them, the machinery that was used in their manufacture, and we will place that plant in production in short order. That is an important part of Canadian defence.
When Britain places an order for munitions or for aeroplanes to be manufactured in Canada the output is for Great Britain, but it does this for Canada: it establishes plants in Canada with productive capacity available to Canada in time of need; and whatever may be said about British orders in this country as a contribution towards relieving unemployment, they have a real use to Canada as a defensive weapon. It is a calamity to this country that this flow of orders from Great Britain should be stopped. If for no other reason, this matter of the Bren gun should be allowed to drop, and the defence department permitted to get on with its business, which is so important to the safety of the country at this time.
I could perhaps discuss some of the side issues-how much stock was sold and at what price; but what has that to do with the production of Bren machine guns? Does the buyer examine the financing of a company before placing an order with it? What a buyer is interested in is the productive capacity of a plant and the ability of the management to fill his order. If stock was sold, the sale of that stock was regulated not by this government but rather by the provincial government. A statement was made that there were street rumours in Montreal that the stock would sell at $20 a share. Those rumours could have been dispelled quickly if people had looked up the ruling of the Ontario securities commission limiting the sale price to $7.50 a share. I should be glad-but, no; I will not say anything more about rumours. I might have to retract.
I do not wish to pursue the matter further, but I do submit that the Minister of National Defence has been unfairly attacked from the point of view of efficiency in connection with this Bren machine gun order. I suggest that the requests for his resignation are an attack upon him personally which is not justified by anything that has happened in respect to this order. I sincerely hope that hon. gentlemen opposite will examine their position and ask
themselves whether they are doing something worth while for Canada in keeping up this propaganda. I trust that the defence plans of the country will be no longer held back because of this discussion.


Hugh Alexander Stewart: I hope
to be able to address the house briefly upon this important subject without calling names, without questioning motives, and dealing only with facts. The Minister of Transport (Mr. Howe) has taken another course; I do not propose to follow his example. He spoke about the appropriations in years gone by for defence purposes and compared them with the appropriations that have been made dur< ing the past few years.
Let me point out to him and to this house that the conditions are altogether different. When the appropriations to which he refers were made, the program of the British empire and of the dominions was, as he knows perfectly well, in the direction of disarmament. That is the program that was supposed to be in effect throughout the world. We were relying upon the collective security of the League of Nations and if he will look at Hansard he will find that there was considerable criticism of even those small appropriations. And much of that criticism came from the other side of the house.
As I have said, conditions have changed entirely. We have had to adopt another course, and following the example of Great Britain our appropriations for national defence have had to be substantially increased. There was some criticism of them even from that side of the house, in 1935 and even in 1936. The next session that opposition was not quite so strong, but I am not sure that the hon. gentleman will not find some criticism from his own side of the house of the appropriations for national defence. I hope that before the session is over we shall be able to find out just how much Canada has got in the way of effective preparation for the defence of the country out of these large appropriations.
The Minister of Transport says that he gave a letter of introduction, and that what was done in this case was nothing more than what he did. Well, the extraordinary character of the letter given in this case was that Major Hahn, to whom it was given, was made a representative of the Canadian government in this matter-made so by the Secretary of State for External Affairs, the Prime Minister (Mr. Mackenzie King) himself.


Mr. MACKENZIE KING:: That is entirely wrong, and my hon. friend knows it.
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Hugh Alexander Stewart: I do not want to argue
with my right hon. friend; the record is there. It has been read several times, and I submit that is the effect of it. I leave it to hon. members to draw their own conclusions as to the effect of that letter and the language used in it. That letter placed Major Hahn in an exceptionally favourable position, a position of which he took full advantage, a position in which no other possible competitor was placed, a position to which no competitor could attain. Then Major Hahn followed uft that advantage. He came back to Canada with that knowledge and maintained his preferred position.
The minister spoke about the increased expenditure of the last few years. I submit that the fact that expenditures have increased is a further reason for adhering to sound business principles; that the greater your appropriation, the more your expenditures increase, the more need there is for the observance by the government of sound business principles.


Mr. HOWARD:: As you did under the
Public Works Construction Act.


Hugh Alexander Stewart: Yes, all right; three or four years have passed and there has not been anything very wrong shown in connection with the expenditures on public works. No commissioners have been appointed to investigate, and there has been no adverse report.
Mr. FRASER The people gave you an adverse report in 1935.


Hugh Alexander Stewart: Yes, and they are going to give you one at the next election.
Again, the Minister of Transport said that the effect of this investigation might be to stop the flow of munition orders from Great Britain. I say that unless the situation is cleaned up, the manner in which this contract was dealt with will have done incalculable harm to the prospects of Canadian manufacturers getting business from Great Britain.


Mr. FRASER:: George Drew will have to answer that.


Hugh Alexander Stewart: Here again I am sure that the people will draw their own conclusions from the manner in which this contract has been let.
We have had rather a long debate on this subject, and it is difficult to summarize the arguments that have been made and to crystallize the opinion of the house in connection with it. The question is, what action should now be taken? The main facts are not at all in dispute. It is perfectly clear that in February, 1936, the Canadian high commis-

sioner in Great Britain notified the Canadian government, as set out on page 4 of the report, that the Bren gun was available, that it had been adopted as a weapon by the British government. And the report went on to say that:
Particular attention was drawn, in the high commissioner's letter, to the statement in the war office letter that in making the agreement opportunity was taken of including therein provision to enable his majesty's governments in the dominions, in the event of their adoption of the gun, to take advantage of the terms of the agreement should they desire to do so. The agreement covered the patented invention for the machine gun itself as well as a certain tripod from which the gun could be fired and a filling machine for use in connection with the gun. One of the conditions of the said agreement relating to the possible manufacture of the said gun by the dominions was that such manufacture shall be in a factory operated by the government in question.
Naturally the question arises right there: Why was this provision not followed up? Why was not this adopted as a matter of policy? That is only one of the questions which arises in connection with this contract.
The next fact that is perfectly clear is that the Canadian Department of National Defence, upon the return of Lieutenant Jolley in August, 1936, had full information in connection with this Bren gun, but no contract for the manufacture of the gun was awarded until March, 1938. It seems a long lapse of time. The evidence shows that Lieutenant Jolley had prepared plans of a building that might be used for the manufacture of this gun. The contract which has been the subject of investigation involved the expenditure of millions of dollars. If there is any principle that is well established in connection with the administration of public business it is that where possible public tenders should be invited, particularly where the amount involved is large.


Mr. MACKENZIE (Vancouver):: What is the hon. member's record?


Hugh Alexander Stewart: My record is there, and I point out to the Minister of National Defence (Mr. Mackenzie) that under the act I had no alternative whatever; it is provided in the public works act that for any expenditure over $5,000 public tenders must be invited. And they were invited in all cases.


Ian Alistair Mackenzie: I am speaking of the Department of National Defence.
Mr MeLARTY: That is not in the Public Works Construction Act.


Hugh Alexander Stewart: Yes, that principle was followed.

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Ian Alistair Mackenzie: Never.


Mr. EULER:: Will my hon. friend say that after tenders were received the lowest tenderer received the contract?


Hugh Alexander Stewart: Not in every case.


William Daum Euler: Not in any case.


Hugh Alexander Stewart: The contract was always awarded at the amount of the lowest tender.


Charles Benjamin Howard: Talk about patronage!


Mr STEWART:: It was not patronage at all. I may tell my hon. friend why that course was adopted.


William Daum Euler: We know.


Hugh Alexander Stewart: We thought it unfair, and I appeal to this house if it would not be unfair, to allow one contractor to have four or five big contracts and others not have any.


Clarence Decatur Howe: That is not the reason the treasurer would give.


Hugh Alexander Stewart: There was a distribution of these contracts, but always on the basis of the lowest tender.


Ian Alistair Mackenzie: Never, not in national defence.


Hugh Alexander Stewart: I am not speaking of national defence. I am speaking of public works, that is the point; and I know exactly whereof I speak.


Mr. POWER:: Will the hon. member deny that under the public works construction acts specifically the right was given to the government not to call for public tenders?


Hugh Alexander Stewart: It may have been, in some cases.


Charles Gavan Power: Certainly; it was given specifically.


Hugh Alexander Stewart: Given by the house, with the approval of the house.


An hon. MEMBER:: Not by the house.


Hugh Alexander Stewart: I was dealing with the fact that no contract was let until March, 1938, and that the contract involved the expenditure of large sums of money. But the sound principle of inviting tenders was not followed here. The Minister of National Defence admits that that principle is sound, but he thought it was not practicable in this instance. He said there was only one man who asked for the opportunity of tendering. Well, are we to have the principle applied that only those who ask are to have the privilege of tendering on contracts such as the one in question?
It is said the construction of buildings for arsenals would involve a large expenditure of money In giving his evidence before the commissioner the minister rather approved of the manufacture, where practicable, in government-owned arsenals. He said however that a very large expenditure would be involved and that his appropriations were small. The chief of staff made a report in which he outlined a plan for the construction of arsenals which would t,akp care of all requirements and which would have cost
320.000.	000 or 330,000,000.


Ian Alistair Mackenzie: It was
330.000.	000 or 335,000,000.


Hugh Alexander Stewart: We will not quarrel about a few millions.


Ian Alistair Mackenzie: And that was the former chief of staff.


Hugh Alexander Stewart: Yes, the former chief of staff. But the evidence taken before the commissioner shows that to construct a building suitable for the manufacture of Bren guns would not cost more than $120,000.


Ian Alistair Mackenzie: Where is that?


Hugh Alexander Stewart: In the report; in the evidence.


Ian Alistair Mackenzie: Where is that?


Hugh Alexander Stewart: It is there. That is substantially what is said.


Ian Alistair Mackenzie: Where? Please read it.


Hugh Alexander Stewart: At page 11 we find this:
During his testimony the minister said:
"I may say very definitely that the plan of government ownership as such has never been definitely abandoned; it has just been postponed because of the financial stringency which was particularly embarrassing to the Minister of National Defence."
And again:
But the testimony given before the commission established that only 60,000 square feet of space was necessary for the purpose of production of the 7,000 Bren guns for Canada as well as 5,000 guns for the war office and that an entire new building (apart from land) would cost approximately $120,000.


Ian Alistair Mackenzie: That is the building alone.


Hugh Alexander Stewart: That is what I said.


Ian Alistair Mackenzie: The building alone; not the plant.


Hugh Alexander Stewart: It does not take much land for a building of that sort.

Bren Gun-Mr. Stewart


Ian Alistair Mackenzie: That does not cover the cost of machinery, as the hon. member must know.


Hugh Alexander Stewart: The government had a lot of machinery. It was supplying a lot of it.


Ian Alistair Mackenzie: No, no.


Hugh Alexander Stewart: The government is supplying machinery in this instance.


Ian Alistair Mackenzie: Yes, but it did not have it.


Hugh Alexander Stewart: Whether the government had it or not, they are acquiring it and putting it into this plant.


Ian Alistair Mackenzie: The two governments.


Hugh Alexander Stewart: So there is no saving of expenditure in that connection. The next step was that the interdepartmental committee was appointed and set up. Major Hahn proceeded to advance his project, and matters moved along for a period of about a year. It was when they were getting down close to the letting of the contract that the interdepartmental committee came into the matter. This thought naturally occurs to one: Why were they not brought in much earlier? Why was it that it was not until just about the time the contract was to be closed that the interdepartmental committee was consulted? Their view at that stage was that tenders could and should be invited. It was intimated by the deputy minister that the British government were not in favour of inviting tenders. The committee suggested that a cable be sent, and that was done. Then they suggested that another cable be sent asking categorically whether the British war office had any objection to inviting tenders from a selected list. That was not sent. The position was taken by the deputy minister that the government assumed the responsibility for the line of action ultimately taken. The committee acquiesced in that, and tenders were not invited. Then the contract was awarded, and we are now dealing with the report of the commissioner made after investigation and consideration of that contract.
The suggestion has been made that the report and the contract be referred to the public accounts committee. Let us consider what would probably happen if that were done. I want to point out here that in the motion of the hon. member for Vancouver North (Mr. MacNeil) and in the terms of the notice of motion appearing in the votes and proceedings under the name of the Minister of National Defence there is a complete absence of any instructions or directions to

the public accounts committee as to what it shall do or how it shall proceed. In fact, the formula which has been followed for years in connection with the reference of the report of the auditor general to the public accounts committee has been adopted. We know what has happened in years past in this connection. No action whatever has been taken.
What is the public accounts committee to do? Are we to send the report to that committee and leave it to decide what course it shall pursue?	[DOT]


Ian Alistair Mackenzie: I rise to a point of order. A few minutes ago the hon. gentleman said that the second cable was not sent. I desire to refer the hon. member to exhibit No. 224 in which it is stated that two cablegrams were received by the war office from the deputy minister of national defence.


Hugh Alexander Stewart: In the evidence it is stated that it was not sent.


Ian Alistair Mackenzie: The
exhibit reads in part:
Later in the afternoon of February 2 I was called to Sir Harold Brown's office and was shown by him two cablegrams which had just been received from the deputy minister of national defence.


Hugh Alexander Stewart: In the report it is stated that that course was not adopted. Mr. Elliott in giving his evidence said that the final cablegram was not sent.


Ian Alistair Mackenzie: Look at the exhibit. I am sorry to interrupt the hon. member, but I wish to have the record clear.


Hugh Alexander Stewart: That is my recollection of it.


Charles Hazlitt Cahan: The minister is referring to an entirely different incident. The commissioner has reported upon one, and the minister is referring to another.


Hugh Alexander Stewart: This is found at page 41 of the report:
The committee pointed out that there had not been received from England a categorical denial that they would not deal with any other company. We therefore suggested a further wire or cable asking them, "will you or will you not deal with a selected list of companies?" That was quite a thing to raise, after the several cables that had passed.
The report then gives the dates of the cables, and continues:
He really felt so strongly about it that it amounted to a suggestion that we must not do it. And the committee accepted that.
The committee accepted the chairman's ruling that they must not do it, and it was not sent. Does the minister admit the accuracy of that?

Bren Gun-Mr. Stewart


Ian Alistair Mackenzie: Yes, and I shall deal with it later on.


Hugh Alexander Stewart: I was dealing with what followed after that. We come then to the point where this interdepartmental committee had to deal with the matter. Notwithstanding their strong desire, there was no change in the attitude of the deputy minister and the contract went to Major Hahn.
When interrupted I was dealing with the reference to the public accounts committee. Assume that by the adoption of a motion, whether that of the hon. member for Vancouver North (Mr. MacNeil) or that of which notice has been given by the Minister of National Defence, this report and the evidence is sent over to the public accounts committee. The reference will be made without any instructions whatever. Let us imagine we are having a meeting of that committee. How long will it take to determine the procedure? I can visualize that taking some days. We must not forget the small number of members who are not on the government side. These members are also on other committees and therefore may not be able to attend the meetings of the public accounts committee from day to day. Quite often there is a conflict in the times of meeting of different -committees. I wonder how long it will take the committee to determine what the procedure will be?
Then when that is determined, how long will it take to carry out that procedure? When that is done, how long will it take us to adopt a report? When a report is adopted, it will have to be brought back to this house, and then we will be right where we are to-day. I suggest that that course is a futile course. It will all come back and we will be at the same stage that we are at now.


William Lyon Mackenzie King: May I ask my hon. friend if in the circumstances he is going to vote to refer it to the committee?


Hugh Alexander Stewart: It will be seen in the end how we shall vote. As I have said, the report of the committee must come back to this house for final determination. We have had the evidence and we have had the report. The main facts are not in dispute, so why not face the situation and deal with it now? Why not decide whether the contract is good or bad, whether it should be approved, condemned or cancelled? I say that in the public interest we should have prompt action. I suggest to the Prime Minister that he consider introducing a resolution approving the contract so that the issue may be decided fairly and squarely and finally and without delay. There should
71492-50J
be no more uncertainty and futility. Let us choose between futility and finality in connection with this issue. Let us get it over with.
I was surprised that when the Prime Minister read this report he did not at once take proceedings to have the contract cancelled. I cannot think of anything that would have done more to restore public confidence in his government and in the Department of National Defence. The contract contains certain provisions dealing with possible cancellation. They are vague and indefinite, but I have no doubt that cancellation could be made on terms that would be fair to the contractor. At the same time that the contract is cancelled, let the doors of the courts be opened to the contractor, and if his hands are clean he can obtain damages or compensation on the basis provided for in the contract.
One firm and one firm only had a chance to tender for this contract. Let me ask three or four questions. Why was the recommendation of the British government that these munitions be manufactured in a government arsenal disregarded? Why were tenders not invited? Why was Major Hahn introduced to the department as he was, and why was he introduced by the department and by the Secretary of State for External Affairs to the British government and given a preferred position over all others? There is only one answer that fits all these questions, and that answer is consistent with the action taken by this government. From the beginning it was the determination and intention to give this contract to Major Hahn and to no other person. That is the only answer that is consistent with the whole record and with the findings of the commissioner.
I contend that having regard to the present state of public opinion with respect to profits from war expenditures that is a very bad situation. The public desire competition in the letting of contracts, and they are particularly insistent on that in respect of contracts having to do with war expenditures. In my opinion the best way to restore the confidence of the public would be to wash the slate clean and start all over on a sound basis of public competition or competition by a selected number of firms capable of doing work of this kind. This contract was given to a firm which had no experience, no plant and no equipment. Everything points to a determination and intention on the part of the government to give the contract to one firm and one firm only.
What should be done under the circumstances? I submit that this is not a matter for further investigation by the public ac-
Bren Gun-Mr. Stewart

counts committee. It is a matter for direct action, and that is the course I urge should be taken even at this late day.
I do not propose to take up any more time in a discussion of this matter. As I have said, the main facts are not in dispute. What action shall we take? I have the utmost respect for the public accounts committee, but I repeat that a reference to that committee without instructions would be pure futility. It will get us nowhere. The report will come back to the house in the dying days of the session and we will be faced with the veiy situation that faces us to-day. Let us clean it up now. Let us meet the situation and discharge our duty as members of this house.
If, sir, the suggestion of the Prime Minister is well founded that if we express an opinion on this question we would not be impartial and could not properly serve on the public accounts committee, I do not know how a quorum in the committee can be secured, because many hon. members have already expressed their opinions. For my part I have an opinion and I propose to express it. I believe, Mr. Speaker, that this contract was conceived in the iniquity of public patronage and born in the sin of disregard of public interest and public duty.


Mr. ANGUS MacINNIS (Vancouver East):: Mr. Speaker, we have been debating for a week the resolution of the hon. member for Vancouver North (Mr. MacNeil) that the report of the royal commission on the Bren gun contract, with other relevant material, be referred to the standing committee on public accounts. I had not intended to take part in the debate because I felt that the members who spoke from the group to which I belong had stated the facts clearly and fairly; but so many attempts have been made by members opposite to becloud and confuse the main point at issue that I think it is necessary that certain facts should -be emphasized so that the real issues involved may not be lost sight of.
First let me say that I am supporting the motion made by the member for Vancouver North to refer the report and other relevant material to the public accounts committee. We are opposed-and I am speaking now for the group as well as for myself-to the amendment because we do not think that the committee of the whole house is the proper or the best place to discuss such a matter.
This group was twitted yesterday by the hon. member for Cochrane (Mr. Bradette) for voting against your ruling, Mr. Speaker, on a former amendment.


Mr. BRADETTE:: Voting against your
own motion.


Angus MacInnis: I am coming to that.
The hon. member contended that we voted against our own motion. Our own motion, sir, was not in question. The matter in question was a ruling of the chair, and we voted on that as we saw fit. As a matter of fact, if the government wishes to annul the contract we have no objection, but we have no hope and we do not believe that the government will do that because they are too far committed now. We voted against the ruling of the Speaker because we did not intend to allow ourselves to be put in a false position before the country on this matter. Hon. members opposite may be incapable of learning, but we are not. We still can learn, and we have a vivid recollection of how our position on the Bank of Canada bill was misrepresented in the country by gentlemen opposite in 1935, when we voted to sustain the chair on a freak motion moved by the present Minister of National Defence (Mr. Mackenzie). We are not going to get into that jackpot again, and if hon. gentlemen opposite insist on playing that game we have no recourse but to do the same to protect ourselves.
The hon. member for Cochrane referred also to our support of collective security. I should like to tell him that we are not a bit ashamed of supporting collective security, and the reason we have increasing armament appropriations before this house is that collective security has broken down. Let my hon. friend remember this, that as surely as we are creating armaments, just as surely we are going to use them. I should also like to draw something else to his attention which perhaps he did not notice, and that is that there is very little likelihood that in the Dominion of Canada we shall have for very many years to come the need of 7,000 machine guns. But 7,000 machine guns are being produced, and it is not likely that they will be used by Canadian soldiers inside the Dominion of Canada.


Joseph-Arthur Bradette: How do you know that? How about 1914, at the opening of the great war? What did you do?


Angus MacInnis: What did I do? I minded my own business, and that met with the approval of the authorities.


Joseph-Arthur Bradette: My hon. friend misunderstood me. I was referring to the situation that developed in 1914. There was no personal reflection intended whatsoever.


Angus MacInnis: My conscience is so clear on the matter that no personal reference would touch me anyway.

Bren Gun-Mr. Maclnnis
We are convinced, Mr. Speaker, that the public accounts committee is the proper place in which to go thoroughly into every phase of the Bren gun contract and all matters relating thereto. We are making no bones about that, and we shall do everything we can to get all the information possible out of the investigation.
In the order in council appointing Mr. Justice Davis to inquire into this matter it is stated:
The Prime Minister i; of opinion chat a full and complete inquiry should be set on foot with the least possible delay in order that the public may be fully informed of the circumstances surrounding the making of this contract and the terms thereof.
I think the Prime Minister is to be commended for the prompt and decisive action that he took in the matter.
I wish to deal now with the commissioner's report, certain points of which I wish to emphasize, and it is because I wish to emphasize them that I am taking up the time of the house. If the report is not as full and complete as we would like it to be, I am sure that it is not the Prime Minister's fault; that is, it is not because of any fault arising out of the order in council appointing the commission; neither do I think it is the fault of the commissioner. From reading the press at the time of the inquiry I am convinced that the commissioner would have liked to make a more definite report than he did make, but he was impressed by the contrary opinions of counsel who appeared before him at the inquiry. I am confirmed in this opinion by the commissioner's own words at page 35 of the report. The commissioner states:
Having fully weighed the objection advanced on this ground,-
That is, that he could not make a report definitely implicating anybody or charging anybody with wrongdoing.
-as well as the weighty consideration brought to my attention by counsel that the rights of the individuals interested in the contract might become the subject of legal controversy elsewhere, I have come to the conclusion that it is inexpedient to comment upon the evidence in respect of its bearing on the conduct of the individuals concerned.
Not because there was nothing to comment on, but because, in his opinion, it was inexpedient so to comment. It seems abundantly clear to me that the reason the commissioner did not comment on the evidence was that to do so was not within the terms of the commission given him. However, in my opinion the commissioner did comment by inference, and commented so clearly that they who run may read and they who read may run. I read the report when it was first
tabled; I have, of course, referred again and again to certain parts of it since this debate began, and I am convinced that in his report, which, considering the length of the inquiry and the volume of the evidence, is a brief one, the commissioner dealt only with the pertinent issues in the investigation.
Naturally the steps leading to the signing of the contract are first touched on. The commissioner points out that the British government had acquired from the patentee the rights to manufacture the Bren gun, and that by the terms of the agreement the governments of the dominions had the right to manufacture the guns provided that they were manufactured in a factory or factories operated by the governments concerned. The report reads:
"The privilege of so doing-
That is, the privilege of producing the gun in Canada.
-was vouchsafed to the Canadian government by the war office w'hen it acquired the rights of manufacture from the patentee, the only stipulation being that such production must take place in a government-owned factory."
The commissioner then refers to the information which the Department of National Defence had or could have had with regard to the Bren gun. He refers at length to Lieutenant Jolley, of the Royal Canadian Ordnance Corps. This reference to Lieutenant Jolley is significant, because he gives to this one phase two pages of the fifty pages which constitute the report. He sets forth this officer's qualifications and experience, and states, on page 6:
During his study at Enfield, the Bren gun was not actually in the process of production, but plants were being made for its production at that time. "They were working crut the design of tools, fixtures, gauges, etc., and were planning the actual system or series of operations on each component which was to be used when the factory went into production on the Bren gun." They had not progressed sufficiently far to give him any indication as to the quantities of machines which they would require or to give him any details of the processes of production. However, he did get the range and types of machines which they were planning to use in the production of Bren guns. He saw the gun complete and studied it in detail "from the point of view of the design characteristics of the gun and the tolerances of the components and the general requirements of the finished gun." He put the date of his study of the Bren gun as June, 1936. He said he was particularly interested in the Bren gun because it was a new weapon that had just been adopted something like a year before (speaking of June, 1936) and everyone was very keen about it in Enfield as well as in other parts of England. He said he wanted to get as much information as he could, not only of the gun itself, but also of the production methods in case it might be required at some future date. Lieutenant Jolley, assumed
Bren Gun-Mr. Maclnnis

that it 'was quite likely that the .Bren gun would become standard equipment in Canada at some future time. He returned to Canada in August, 1936, with a general working knowledge of what might be expected if the Bren gun were to be produced in Canada. With the possible exception of other officers who had attended courses in England, he was the only Canadian officer who had seen the Bren gun at that time, as far as he knew.. Lieutenant Jolley has been employed since his return in the office of the Master-General of Ordnance.
Then the commissioner points out:
The Department of National Defence therefore had, on the return of Lieutenant Jolley from England in August, 1936, very considerable knowledge and information available to it for the consideration of the problem of the production in Canada of its actual requirements of Bren guns.
Despite that fact-I am quoting again from the report:
No contract for the purchase or production of the Canadian defence requirements of the Bren machine gun was made however until March 31st, 1938, when a contract was made between the Canadian government and John Inglis Company Limited of Toronto, a company incorporated and organized by Major J. E. Hahn and associates.
Why all this delay? From what later transpired and what has now been brought out, obviously the cause of the delay was that the Department of National Defence was so busy from August, 1936, to November, 1937, putting pressure on the British war office to allow the manufacture of Bren guns in a private factory, so that a special, selected contractor could get his feet in into the patronage trough, that they had no time to get on with the business of organizing, with the knowledge and information available, for production in a government-owned plant.
Hon. members opposite accuse us of delaying or hampering the production of munitions. We are not responsible for the delay; it took place long before we had any knowledge of what was going on.
The commissioner then comments on the fact that although the contract involved several millions of dollars, competitive tenders were not called. His own words, appearing on page 8 of the report, are these:
Notwithstanding that the contract involves the expenditure of several millions of dollars by the Canadian government, no industrial producer (other than Major Hahn) was consulted by the Department of National Defence as to the proposed manufacture of Bren guns for the Canadian government or invited to give competitive bids or terms of manufacture. Nor did anyone, so far as the evidence shows, ever visit any industrial plant (except Inglis) to consider the possibility of production of Bren guns in Canada.
Surely, Mr. Speaker, this is an amazing situation. For notwithstanding the factors

concerned, not the slightest attempt was made to get competitive bids, although several million dollars were involved. The commissioner did not comment on the conduct of persons, but in my opinion this paragraph in the report speaks volumes and it is one of the reasons why the report should be referred to the public accounts committee, to see whether we cannot find out the causes underlying this strange way of carrying on public business. The reason given by the Minister of National Defence in his evidence for this remarkable state of affairs passes all understanding and knowledge. The commissioner must have thought the reason strange. He emphasized it in the report. He calls attention to the question asked by Mr. Hell-muth:
You did not give anybody else a chance?
And the minister's reply was: "Nobody asked for it." I have not the pleasure of Mr. Justice Davis's acquaintance and I do not know how he would react when faced with an answer such as this, but I am almost sure that he must have made some inaudible, but emphatic comment. Could hon. members before this report appeared imagine a responsible minister giving such a childish naive answer to the question why government business totalling several million dollars was given to a favoured company without an attempt being made even to inquire whether other firms could do the work? Are we to understand that is to be the future policy of the government with reference to government contracts and business? If it is not to be the future policy of the government, why was it followed on this occasion? Are we to understand that before anyone can get business from this government he must be introduced by a Liberal member of parliament and have friends inside the service to push his case? That way of doing business is bad at any time and under any circumstances, but it is most heinous in a matter such as this.
The minister said that he favoured public ownership in connection with the manufacture of armaments, and he says that he still maintains that position. But his activities do not square with his assertions. He favours public ownership; that is what he says; and failing that he favours competition. But he ends up by adopting a policy which is neither public ownership nor competition but unadulterated patronage. He then tries to hide behind a smoke screen which he has laid himself-that he could not get the money. The commissioner however does not let him get out of sight. Of course, he does not comment; he

Bren Gun-Mr. Maclnnis
merely states the facts. I will read from the report. The commissioner's remarks will be found at pages 10 and 11:
The minister said that there were two very definite schools of thought in the department and that he assumed all responsibility. One school, he said, was headed by the then chief of general staff and the other by the deputy minister, for both of whom he said he had equally great admiration.
Evidently the chief of general staff did not have as much influence as the deputy minister of the department
The minister said that General Ashton (the then chief of the general staff) was very insistent upon the development of government arsenals and that the former chief of general staff, General McNaughton, evolved a very comprehensive scheme for Valcartier which would include practically all the requirements of the Canadian forces.
What he said was:
That was considered after I went into the department and I found that the cost of it would be something between $30,000,000 and $35,000,000. With my meagre $25,000,000 or $30,000,000, what could I do with a scheme like that?
The commissioner does not let him get away with that, although he does not make any comment on personal conduct. The commissioner says:
But the testimony given before the commission established that only 60,000 square feet of space was necessary for the purpose of production of the 7,000 Bren guns for Canada, as well as 5,000 guns for the war office, and that an entirely new building (apart from land) would cost approximately $120,000. In proposal \B" of Major Hahn (exhibit 11) of December 29, 1936, the building was shown at an estimated cost of $104,196.40.


Mr. McLEAN (Melfort):: Hoes my hon. friend think that the two are speaking of the same thing? Is not the minister speaking of an arsenal to handle all requirements, while the commissioner is speaking of a plant to handle small machine guns?


Angus MacInnis: That is the smoke screen. The minister is speaking of a complete plant, but this is not necessarily a complete plant. It is only a small part, and instead of requiring thirty or thirty-five millions, or two hundred or three hundred millions, as the Minister of Agriculture (Mr. Gardiner) said the other evening, it would take very much less. Possibly a million and a half or two millions would have started the thing going and we would be very much further ahead than we are now. It is pointed out to me that the commissioner said $104,000, but that is for the building. And in any event the Canadian government and the British government are paying for the machinery, and we do not know what it will cost.
This brings me to the queer case of Major Hahn. The appointment of Major Hahn as the government's representative at the war office in Great Britain is to me one of the most amazing things in the political history of Canada. First we hear of the major when he is introduced to the deputy minister, General LaFleche, by the hon. member for Trinity (Mr. Plaxton). According to the evidence General LaFleche had not previously met or had any communication with Major Hahn. This introduction of Major Hahn to the deputy minister took place on October 9, 1936. A few days afterwards we find that the Minister of National Defence had his first meeting with Major Hahn. He was introduced by the member for Trinity on October 19, 1936. On this occasion, according to Major Hahn's own evidence at page 18 of the report, he met the minister and said he was going to England and that he wanted a letter, and he got the letter. The minister had never seen the man before and when questioned some time later he did not remember having met him or having given him the letter. Consequently Major Hahn did not make much of an impression on the minister, which seems very strange.
Now we come to the Prime Minister. The Prime Minister had never met Major Hahn at all-I do not know whether he has met him yet. He did not even have the opportunity or pleasure of an introduction by the hon. member for Trinity yet we find the Prime Minister in his capacity as Secretary of State for External Affairs, on November 6, 1936, sending the following cablegram to the Canadian high commissioner in London:
Secret. Your cablegram 9th November 396. Have discussed matter with Minister of National Defence. You might request war office to give Major Hahn, as representing Canadian government in this particular, any information which they consider desirable and necessary to enable national defence to reach conclusion on possibility produce Bren gun in Canada. It is not desired to request furnishing of information on any article other than this gun.
It will be noted that the cablegram is marked " secret I do not know why. It was sent in code by the Prime Minister, and made Major Hahn a representative of the Canadian government at London, where he would have access to secrets of the war office.


William Lyon Mackenzie King: May I stop my hon. friend at that point? He read the cablegram quite correctly, but the inference he is drawing from it is not correct. Major Hahn was made a representative of the government for the purpose only of obtaining certain information to enable the defence

Bren Gun-Mr. Plaxton
department to make up its mind on a certain course; nothing else. My hon. friend has no right to go beyond what he read.


Angus MacInnis: I am glad to accept the right hon. gentleman's correction. Major Hahn was representing the government in a certain particular; I st,ated that,


William Lyon Mackenzie King: A particular
set forth in the cablegram, and for reasons specifically set forth in it. And in regard to the secrecy, I think my hon. friend will appreciate that practically all communications that pass between governments go as secret messages and in code, otherwise they would be open to every telegraph office in the world.


Angus MacInnis: But in view of the fact that no one knew who Major Hahn was I do not see the reason for the secrecy. That is the peculiar part about the whole thing. It is like the babes in the wood.
Now these are facts which cannot be contradicted: that the Prime Minister had never met Major Hahn and did not know anything about him except what he may have ascertained from the Minister of National Defence; that the Minister of National Defence did not know anything about Major Hahn except what he had heard from his deputy minister; that the deputy minister did not know anything about him except what he had heard from the hon. member for Trinity or was told by Major Hahn himself, as he said on the witness stand. Yet the proceedings were characterized by the utmost formality and secrecy. I have on occasions taken part in mock parliaments, but it seems to me this sort of thing reduces ordered government to a mockery and the administration of public business to a farce.
I mentioned earlier in my remarks that pressure was brought to bear on the British war office by the Department of National Defence, first, to allow the Bren gun to be produced by a private company, and, second, to have the war office place an order for 5,000 guns with a private company. That assertion is borne out by the commissioner's report at page 48, where he said:
It clearly results from the evidence that the department having introduced and" sponsored Hahn to the war office and the war office having in November 1937 (after a full year of pressure by the department upon it) expressed its readiness to negotiate with the Inglis company for the production of 5,000 guns, and the negotiations having proceeded to the point where on February 9, 1938 (exhibit 218) a draft contract with the John Inglis Company had been agreed in detail by the war office, the matter had been brought into such a posture that the department felt it was really not in a position to propose to the war office the consideration of another contractor.

That is why the interdepartmental committee fell down. And the year lost in putting pressure upon the war office is also the reason we are so far behind as we are at the present time.
In conclusion I wish to read the recommendation made by the commissioner, found on page 51 of the report. The minister and the government and the Liberal party claim that this recommendation exonerates the minister and the department from any and all blame in connection with this contract. In my opinion this, taken with the other points which I have dealt with, constitutes the most emphatic condemnation of the minister and the department. The commissioner states:
What is plain to me at the end of this long inquiry is this: that if the policy of private manufacture of war munitions and armaments is to be continued in this country (a question of administrative policy for the government and parliament to determine), once the requirements are determined by the Department of National Defence the negotiations leading up to and the making of contracts between the government and private manufacturers either for the purchase or production of such munitions or armaments should be put into the hands of an expert advisory group of competent business men

He goes on to state the kind of business men he has in mind, and continues:
These persons should constitute a board (which might be known as the "defence purchasing board") and be made directly accountable to the Prime Minister or to the Minister of Finance.
We must bear in mind that the commissioner was inquiring into a contract which came under the jurisdiction of the Department of National Defence. After careful and prolonged inquiry he recommends in effect that, if there are to be any more contracts, the negotiating of them should be transferred to the Department of Finance, or to a department directly under the Prime Minister himself. In my opinion this clearly indicates that the commissioner was not satisfied with the contract or the way in which it was negotiated by the Department of National Defence, of which the minister is the political head. That is the inference I draw from it. The report gives a very clear indication of what the commissioner would say, had he not thought, as he said, that it would be inexpedient to comment on the evidence in respect of its bearing on the conduct of the individuals concerned.
It is for these reasons that we of this group maintain that it is in the public interest that this contract and all related material should be referred to the standing committee on public accounts for further investigation.


Mr. H. J. PLAXTON (Trinity):: Mr. Speaker, I rise to declare my position before

Bren Gun-Mr. Fleming
the house in this matter. The motion which has been made for further investigation is thought by many to be unnecessary. However, a further investigation is to be held. I shall welcome it as I welcomed the previous investigation. I shall be available before the public accounts committee at all times when I may be required. I shall be glad to testify either under o-ath or under my responsibility as a member of the House of Commons.
It has been indicated by the Prime Minister (MV Mackenzie Ring) that the proposed motion to refer the matter to a committee will receive the support of the government. That being so I have carefully considered the proper course for me to adopt, and have concluded that I should reserve my address on this matter until after the hearings of the committee and until after the committee has reported back to the house. I may say I have reached that conclusion most reluctantly, because I have been here day after day since the debate began, ready to speak on the motion before the house. But I submit that to be consistent with the best traditions of British parliamentary practice, the course I have decided to adopt is in all the circumstances the proper one. Let me make it clear however that at the proper time, when this matter returns to the floor of the house,
I propose to make a very definite and full statement with regard to the entire situation.
I do ask the committee composed of members of the house of all shades of political thought to meet and to deal with the matter with every possible dispatch.
Until parliament has finally passed upon the matter I submit harm is being done to workmen in Toronto and to Canada's relationship to the British empire in respect to that most vital problem of to-day, rearmament and defence.


Mr. H. R. FLEMING (Humboldt):: Mr. Speaker, it was not my intention to participate in this debate or to speak respecting the Bren gun. But after listening to speeches made by hon. members of the opposition I felt I owed it to the people who have sent me to parliament as their representative, and to myself as well, to make some comments.
I suggest that the terms of reference to the public accounts committee should not be limited to circumstances surrounding the gun contract alone. The committee should have the widest possible powers to inquire into the entire, system of awarding government contracts. I am in complete accord with what was said on Monday last by the hon. member for Temiscouata (Mr. Pouliot), that all these
contracts should be referred to the public accounts committee. The Star-Phoenix, a widely read newspaper in Saskatchewan, states in a leading editorial that we should go the whole way, that the reference should go deeper than simply making an inquiry into the Bren gun contract, and should cover the entire period from the great war to the present time.
I realize that on the order paper, in the name of the Minister of National Defence (Mr. Mackenzie), there a resolution m which it is proposed to set up a defence purchasing board. I believe that board should have been set up at the very beginning. I was pleased yesterday to hear the minister say that that had been his idea, but that he had not so stated before the royal commissioner because as a responsible minister of the crown and a privy councillor he could not commit the government until he had consulted with the Prime Minister (Mr. Mackenzie King).
I say there should be a most careful examination not only of this contract, but, as the Star-Phoenix has pointed out, of other contracts as well. Yet, the mere fact that this contract has been brought to public attention is no reason for the government to jump, like a fly on a hot griddle, to any extreme measures. If one method of procedure has been found to be irregular-and there is nothing so far which shows that it was- there is no assurance that any opposite method would be completely satisfactory. That is to say, if the government intends to embark upon a policy of manufacture by the government of implements of war, or if it is proposed to establish a public arsenal at Valcartier, the question arises whether or not the location would be proper from a strategic standpoint.
Might it not be well to have public arsenals situated throughout the length and breadth of Canada? If such arsenals were set up, to all intents and purposes the employees working in them would be civil servants. We would have to provide them with schools, churches, places of recreation and medical and dental attention. Of course, if the arsenals were erected in well established communities we would not have to supply those facilities, because they would already be provided. If the manufacture of war materials becomes a public venture, we should not have all our eggs in one basket, but should scatter them throughout the length and breadth of the dominion.
If I had been placed in a position similar to that of the hon. member for Trinity (Mr. Plaxton) and an opportunity had been given to me to get work for the people in my
Bren Gun-Mr. Fleming

constituency, I am proud to say I would have been the first one to try to obtain that work for them, and would have raised heaven and earth in my efforts.
Many people seem to be of the opinion that any point in Canada would be a suitable place to set up one of these arsenals. May I point out, however, that in view of the advances which have been made in modem warfare, and particularly in air forces, we must be very careful to see that our arsenals are protected, and that they are placed at points where they will involve the least possible danger to the civilian population.
Then, too, the financial burden to be borne by the taxpayer must be considered. I have given the matter careful thought, and I can think of no place better suited for a public arsenal than the constituency of Humboldt, which I have the honour to represent. On various occasions in the house the hon. member for St. Lawrence-St. George (Mr. Cahan) has said that the present government is trying to destroy private enterprise. Mr. Speaker, here is a private enterprise, and this government is not trying to destroy it. While I can well understand the stand taken by the Cooperative Commonwealth Federation, with their belief in complete public ownership, I do say, in answer to those who have tried to create in the minds of the electorate ideas for the advancement of their own political ends, that the Liberal party should not be intimidated into formulating a hasty policy.
If I thought there was anything wrong with the contract; if I thought there had been any graft or corruption in connection with it, I would rise in my place to oppose it. I am not hidebound to any political party. Since I have come to the House of Commons I have had a free rein. Never once since I have been a member has my leader, or the minister from Saskatchewan, or any other member of the government, suggested to me what particular line I should take in connection with any question which has come before the house. If I had anything against any member of the government I would not be afraid to take a pot shot at him.


An hon. MEMBER:: With a Bren gun?


Harry Raymond Fleming: With a Bren gun. After all, this royal commission that was set up made a searching and far-reaching investigation. The report has been quoted quite often, but I should like to quote shortly from page 52, as follows:
All the sittings of the commission were public and your commissioner was pleased to hear counsel characterize the inquiry, at its close, as "a most searching and thorough inquiry." 
After reading that statement and after listening to the dignified and gentlemanly statement made some days ago by the right hon. Prime Minister, I fail to see where any blame can be attached to any member of this house, any member of the government, to any member of the Liberal party no matter what lowly position he may occupy. From the moment Colonel George Drew's magazine article appeared, suspicion was created in the mind of the public that graft and corruption were rampant in connection with the awarding of government contracts. Frankly I think irreparable damage has been done by that article. I am sure that if this contract were suddenly to sprout wings, some people would not admit it past the portals of heaven.
Politics and politicians are always suspect because certain individuals in order to gain political preferment are always ready to sacrifice truth upon the altar of wild statements. Even the opposition is exposed to that. A few days ago the hon. leader of the opposition (Mr. Manion) complained bitterly in this house that he had been accused of sabotage in connection with the Canadian National Railways. I would be willing to wager with him that for every person he finds who remembers his denial, he will find another who believes that there must be some truth in that allegation, otherwise it would never have been made. I am particularly concerned with this Bren gun contract because Maclean's magazine has a widespread circulation within my constituency. In his magazine article of September last, Colonel Drew made no direct charges. As the minister said, his article was filled with misstatements, half-truths and vicious innuendoes. No series of denials will ever wipe out entirely the bad taste which that article has left in the mouths of the Canadian electorate. It is just as difficult as trying to answer the question, "Have you stopped beating your wife?"
Without anticipating the findings of the public accounts committee, I wish to state emphatically that I believe the Prime Minister, the Minister of National Defence and all the officials of the government acted not only in good faith but in a manner which showed that they were attempting to obtain a good bargain and a good deal for the Canadian people. It must be remembered that we were in the initial stage of a development in connection with which Canada had little experience. The contract met with the approval of the British war office which has had hundreds of years of experience in, letting similar contracts.
Was there any reason to believe that the Canadian committee erred? That committee

Bren Gun-Mr. Fleming
was composed of a number of well known government officials. One member was a distinguished soldier and administrator, Major General LaFleche. Another member was Doctor O. D. Skelton, a former professor at Queen's university, from whom I learned my political philosophy. He is a man of the highest attainments and has been recognized as such by the leaders of both great political parties. Mr. Fraser Elliott, K.C., is a man who has few peers in his own field in the world. Doctor Clark is another former professor of political science at Queen's university whose capabilities are unquestioned. Surely no one can point the finger of scorn at any of these impartial civil servants.
It is difficult to understand why this storm over this contract has arisen except for the fact that it is meant to provide political capital. It is a bold-faced attempt to embarrass the government and the Minister of National Defence.


Mr. DOUGLAS (Weyburn):: Might I ask the hon. member a question? Did the committee he mentioned approve the contract?


Some hon. MEMBERS:: Sit down.


Mr. DEPUTY SPEAKER:: The hon. member for Weyburn (Mr. Douglas) may put a question to the hon. member who has the floor only with his permission.


Thomas Clement (Tommy) Douglas: The hon. member gave the names of different members of the interdepartmental committee. He told us that that committee had signified its willingness to approve the method by which this company obtained the contract.


Harry Raymond Fleming: Certainly they did. They are all high-minded public officials.


Thomas Clement (Tommy) Douglas: Doctor Clark objected to the contract.


Harry Raymond Fleming: He did not.


Malcolm McLean: That is not a question.


Harry Raymond Fleming: No one would believe him.


Thomas Clement (Tommy) Douglas: I rise on a question of privilege. The hon. member made a reference to myself which was quite audible in this part of the chamber, and that reference was most unparliamentary.


Malcolm McLean: What did he say?


Thomas Clement (Tommy) Douglas: He said that no one would believe me, and I ask him to withdraw that remark.


Harry Raymond Fleming: I heard the hon. member make statements during the last by-election in Humboldt which were absolutely untrue. He
told the people that if they elected the Cooperative Commonwealth Federation candidate, the price of wheat would go up ten cents.


Thomas Clement (Tommy) Douglas: And it did. I ask the hon. gentleman to withdraw that remark.


Frederick George Sanderson: If the hon. member for Humboldt (Mr. Fleming) made any such remark, I did not hear it.


Ivlr. FJLEMING:: I will withdraw it, provided he can substantiate his statement as to the price of wheat. There are certain sections of this country which will rise like fish to a bait whenever you mention graft and corruption. They believe that if you cry "wolf" often enough someone will be eaten. The attitude of the Tory party is so inconsistent. As long as I can remember I have seen the Tory party waving the union jack and wrapping the flag of freedom about them, and I cannot understand why they are now waving the red flag at the British government.


Mr. SPENCE:: Oh, you are talking nonsense.


Harry Raymond Fleming: The opposition has asked that we should bolster up our armaments; but no sooner does this government start to create defence consciousness in all parts of Canada, no sooner does it attempt to preserve private enterprise, than we hear the cry throughout the length and breadth of this country that there is wholesale profiteering. The Tory party are trying to choke their own baby to death in its cradle. Yet, Mr. Speaker, on thinking this over I am not surprised at the attitude of the Tory opposition because they are playing the same old game they played in 1917. We remember what they did in that year. They sent Protestant ministers to the old province of Quebec to try to make young French-Canadians enlist. The same old game is being tried at the present time. They are trying to catch the government between the scissors of nationalism and the necessity of rearmament. The government has tried to create in the minds of the public the necessity for rearmament and to have all parts of Canada united. The3r are not trying to ostracize one part of this country.
The Minister of Agriculture (Mr. Gardiner) the other evening mentioned a violent, vicious attack that was made by that slander sheet from Toronto, Maclean's magazine. The same magazine and its subsidiaries are preaching national unity to try to hold confederation together, but on each and every occasion they have tried to split confederation. If you will go back with me, sir, to 1923, you will find in
Bren Gun-Mr. Fleming

Maclean's magazine of July 1 of that year a most vile and vicious attack upon French Canada, one of the most vicious attacks that anj'one could ever read, and it appeared in a serial entitled, " The Bond Triumphant." It was an attack upon that saintly and world-famous member of the Catholic church, Bishop Laval. It was an attack against the religious orders in the province of Quebec. That, Mr. Speaker, was in 1923, and if you will read that article and a few subsequent editions you will find that it had to be taken out of the magazine because it caused such a revulsion of public feeling across the.whole north American continent.
Is it any wonder, then, that that scandal sheet would print this scandalous article which Colonel Drew wrote to make a vicious attack upon the only French-Canadian deputy minister in the public service.


Some hon. MEMBERS:: No.


An hon. MEMBER:: That is wrong.


Harry Raymond Fleming: I could say, Mr. Speaker, that that is cheap, or something like that. It is the same old tactics the Tories employed in 1917, when they tried to get their wedge in at a time when the government of this country was endeavouring to bring about a united Canada. Knowing the attitude of the present Prime Minister with regard to government contracts and all public expenditures, I ask what better statement could be made by any high-minded Canadian than that which was made by the Prime Minister at the time the order in council was passed, and which he repeated to the house on Friday last:
In the troubled world of to-day, the Canadian people reluctantly have shouldered what is, for them, a very considerable burden, for the purpose of national defence. The Prime Minister and the Minister of National Defence, and the government as a wTiole, desire that in all the defence measures that may be taken by the government, not only shall there be no wrongdoing, but no suspicion of wrongdoing. The Canadian people are entitled to this. The article published by Colonel Drew cannot but create suspicion on these matters in the minds of the Canadian people. For this reason the government desires that the inquiry be conducted as expeditiously and as thoroughly as possible.
We hear so much about political patronage, Mr. Speaker, that I was glad to hear someone rise in his place in the house the other day

I believe it was the hon. member for Temiscouata-and say that he was not afraid of government patronage. I have never been afraid of government patronage, and I do not think the hon. leader of the opposition (Mr. Manion) is afraid of it because the first job he ever got he obtained from the dominion

government, and that is according to his own book, "Life is an Adventure," where he says:
The Conservatives were in power at Ottawa, and Sir Sam Hughes (who after my election to the House of Commons, in 19X7, became one of my best friends) did not seem very willing to give a position to a Liberal candidate.
The hon. gentleman was a Liberal candidate at that time.
Considerable correspondence passed between us, but the wires I was able to pull were not very powerful, until at last, during a dispute in the house, Sir Wilfrid Laurier, the Liberal opposition leader of that day, taunted Sir Sam that most of his appointments went to Conservatives, to -which Sir Sam replied that if the Liberal leader w-ould name any man whom he wished appointed to a post in the army, he (Sir Sam) would appoint him.
That was government patronage. The hon. leader of the opposition has risen to a high place within his party, but he had to pull wires to get this job-


Robert James Manion: I am sorry to interrupt my hon. friend, but in justice to me he should make clear what position I was looking for. If he does not do so, perhaps he would permit me to say that the position I was seeking was to be a surgeon in the army.


Harry Raymond Fleming: Yes, a job in the army.


Robert James Manion: Not a job; I did not need a job in the army. I was doing a $15,000 cash practice, and I gave it up to become a medical officer in the army.


Harry Raymond Fleming: I correct my statement that it was a job. It was an appointment, and he had to pull wires to get this appointment.


Mr. MUTCH:: I would like to suggest to the leader of the opposition that some of us were able to get jobs in the army for very much less money without any contract or any pulling of wires.


Mr. ROWE (Athabaska):: Mr. Speaker-


Ian Alistair Mackenzie: If the hon. member for Athabaska (Mr. Rowe) will permit me, might I say that my good friend the hon. member for Humboldt (Mr. Fleming) did not quote quite accurately the statement I made to the house yesterday with reference to discussions pertaining to the proposed defence purchasing board. I want it to be very plainly disclosed to the house that my colleagues and myself and my leader discussed this matter as a question of policy before the royal commission on the Bren gun was ever set up or even thought of. It was considered to be a question of government policy for consideration by this parliament, and it was discussed, not as a result of this commission, but before the commission was even thought of. As a

Bren Gun-Mr. Rowe (Athabaska)
matter of policy, I thought it was not my duty as minister to make any suggestions on matters of policy to the learned judge who was appointed to make this inquiry.


Percy John Rowe: Mr.Speaker, the hon. member for Vancouver North (Mr. MacNeil), in addressing the house last Thursday on his resolution, made it very clear to hon. members that the commissioner had placed squarely before parliament the following issues:
1.	Whether the Bren gun should be produced by the government in publicly-owned factories or through private manufacture.
2.	Whether the conduct of the individuals concerned was above question.
3.	Whether adequate reasons existed for the failure of the interdepartmental committee to report back to the government when the system of supervision of contracts broke down.
4.	Whether the procedure followed in negotiating this contract protected the public interest.
5.	Whether proper steps were taken to ensure discharge of the responsibility assumed in the selection of a favoured contractor.
A number of government supporters have repeatedly pointed out that no finding of misconduct has been made against any individual. But the commissioner makes it very clear, on page 34 of his report, that having in mind the limitations imposed on him by the statutory authority under which the inquiry was held-to use his own words-
I have come to the conclusion that it is inexpedient to comment upon the evidence in respect of its bearing on the conduct of the individuals concerned.
Therefore I say that in my opinion the government supporters are quite in error in suggesting that the absence of charges by the commissioner means lack of justification for charges.
The Minister of Agriculture (Mr. Gardiner), speaking on February 6, said, as reported at page 679 of Hansard-.
I have yet to hear any condemnation of the contract itself from the individuals who have been addressing this house.
I have read the contract, and there are many features of it which I unhesitatingly condemn. But as my colleagues and others have thoroughly discussed most of the sections to which I also take exception, I shall deal only with the part relating to the stock transactions which finally resulted in the incorporation of the present John Inglis Company. This will involve the fourth point mentioned by the hon. member for Vancouver North.
In order to make clear just what the commissioner thought about the stock transactions,
I am going to place on the record, if I may, an excerpt from the original evidence, at pages 956 to 961 of the record.
This question was asked by Mr. Forsyth, government counsel, of Mr. C. F. Elliott, dominion income tax commissioner.
Q. There was some mention in your cross examination-I am not going to quote it- which I should like to call to your memory.
Tt wee suggested to you that there were a number of shares outstanding, as per the Dun and Bradstreet report. You made an answer to my learned friend Mr. Drew in which you referred to the fact that a stopper had been put in. I just want you to explain what you mean by the word "stopper."
The Commissioner:	I think I observed to
the witness that his evidence disclosed that he had information-it may have been accurate- that the company had 220,000 shares issued.
I asked him if he had interested himself, or if the members of the committee had interested themselves in knowing who were the holders of those 220,000 shares. That observation was made after the witness had spoken of the relation between the number of shares and the $1,280,000. I have his answer on that, which I need not repeat. I do not know that anyone asked him, and I am quite willing for you to do so, if any effort was made in the public interest to avoid having those 220,000 shares becoming the subject matter of transactions, we will say, on the stock exchange.
Mr. Geoffrion:	There is no evidence that
they will become the subject of transactions.
The Commissioner:	I am just asking if he
anticipated any such thing, or if the committee anticipated providing any protection. I see there is a clause in the contract and if you want to read that it will be all right. However, I do not think it has any bearing on my question at all.
Mr. Forsyth: I do not think you are referring to the same examination, Mr. Commissioner. I remember that Mr. Elliott developed the idea that the company could increase its capital and so on.
The Commissioner:	They have protected
against that by providing a clause in the contract that the company is not to issue or sell any shares, bonds, securities, etc., of the company, directly or indirectly, without the approval of the government. But that does not in any way affect the 220,000 shares issued and outstanding. The question I was trying to ask the witness this morning-I left the answer then because of the thought that they had no interest really in the directors or shareholders. What I was getting at was the fact that these 220,000 shares might be sold publicly on the market at a future date and I wanted to know if the committee visualized that problem and if they took any competent measures in the public interest to control that situation so that there would be no public trading of those shares.
Mr. Forsyth then questioned the witness as follows:
Q. Mr. Elliott, you used the word "stopper" in connection with this, and I presume you were referring to a clause in the contract. Have yor the contract before you?
A. Yes.
m

Bren Gun-Mr. Rowe (Athabaska)
Q. Would you indicate the number of the clause to which you were referring? Am I correct in assuming that you were referring to a clause as a stopper? .
A. Oh, yes. That is correct. It is the second paragraph of section 1. Shall I read it?
Q. If you do not mind.
A. This is a proviso which reads:
"Provided further, that notwithstanding the provisions of anything herein contained, the said licence shall be subject to cancellation if in the course of the period thereof the party of the second part should sell shares, stocks, bonds, debentures, notes or other like securities to the public, directly or indirectly, or through the medium of other companies the proceeds of which are not directly applied to the business of the party of the second part and there remain applicable for use in the carrying on of said party's business, then the licence shall cease unless before the issue of such security instruments the consent to the issue thereof has first been secured from the party of the first part."
Mr. Drew:	That section obviously has no
relation whatever to the 220,000 shares you have mentioned?
The Commissioner: Of course it is subject to argument, but it is perfectly plain that that clause refers to the issue by the company and sale by the company. I am not stopping you, Mr. Forsyth, but I must tell you that I am still groping in the dark to find out whether the committee ever visualized the problem that there was a possibility or a probability that the then issue of 220,000 shares out of the total authorized of 250.000 shares might become the subject matter of trading on the public exchanges or in a private way as war stock. I want to know if the committee ever visualized that and, if so, what did they do?
Mr. Forsyth: You have heard the discussion-
He is still questioning Mr. Elliott.
-and the question raised as to the possible disposition of the 220.000 shares of stock issued, as per the Dun and Bradstreet report. The possibility was mentioned in your cross-examination this morning of a further increased capital. The point now is: Did the committee visualize-to use the commissioner's words- dealings in the 220.000 shares already issued and which might be objectionable, from the public point of view? Is that a fair way to put it, Mr. Commissioner?
The Commissioner: Yes.
The Witness: They visualized that and many other related matters of a similar character.
By the Commissioner:
Q. In what way did you deal with it?
A. By inserting in the paragraph which I have just read.
Q. That is your answer to the question?
A. I would-
Q. That is either the protection you took or it is not?
A. That is the protection we took after discussing it at great length.
Q. As a merpber of the committee you had it in your mind that that was sufficient protection for the problem which you say you envisaged?
A. When you say "sufficient protection," if I were writing that myself I would catch the ideas as we had them presented that night in the committee. I would write it out and I would polish it and re-polish it until it would

contain fully all our views and all my comprehensions as to the various ways in which capital could be sold to the public, either by writing up the present stock, increasing it and so on. So that when you ask me if that was completely my idea or the committee's, the answer technically is, No. We would have liked to have had time to polish and re-polish it, but we had to pass it that night. I hope it carries the main idea of a means of stopping it, but technically I could not say that it is perfection. '
Q. Whatever your thoughts were that night, they must be plain to you now that that clause does not affect or attempt to affect the sale of the then issued 220,000 shares?
A. Not the 220,000, no, but it would affect, I think, a split of them and issuing three for one or something like that. That is perhaps a question of interpretation.
Mr. Forsyth: As a matter of fact I do not know that I would agree with you, Mr. Commissioner, or with the witness on that. I think it is a subject for later argument.
The Commissioner: I think it is as plain as day. I do not think there is any use splitting hairs as to what it says.
That is the opinion of the commissioner as to the protection of the public in the matter of disposing of the vendors' shares. I was surprised at the absence in the commissioner's report, of any extended comment on the stock transactions, but apparently he had in mind two things. The first was the limitations I have already referred to which he believed were imposed upon him by the statute under which the inquiry was held, and the second would probably be the fact that he did not want to clash with the jurisdiction of the Ontario securities commission. The great insistence of various counsel upon the point of there not being any comment indicated to me beyond question that they were perfectly well aware what kind of comment the commissioner would make if he felt privileged to do so. Anyone who reads the evidence and arguments of counsel relating to the financial and stock transactions, and noting the commissioner's comments thereon, will not be left in doubt as to what he thought. A clear profit of over 81,000,000 in the stock transactions alone plus 8467,000 of operating profit under the two contracts, or total profits of at least 81,467,000 on an investment which, including the proceeds of sale of treasury stock, was not more than $500,000, means profits of 285 per cent on that transaction. How could that be described as other than one of the most heartless and barefaced pieces of profiteering in the history of Canada? And this is the contract which the minister has described as one of the finest. If it is correct, that this is one of the finest contracts ever signed by the department, I tremble to think what we shall find when we come to look into others.

Bren Gun-Mr. Rowe (Athabaska)
To show that the government was in possession of complete information and knowledge as to how to prevent stock watering and excessive profits, I wish to place on the record part of a memorandum furnished the interdepartmental committee by Mr. Elliott, dominion income tax commissioner. Mr. Elliott explained that during the great war the department had considered the various ways by which firms and individuals who were profiteering out of war contract? had sought to evade payment of income tax. Among other things he therefore proposed the following in reference to the amount of capital to be employed. He said:
Let the amount of capital to be invested by the contractor be predetermined, certified by recognized authorities and approved by government officials before or at the time the contracts are made. Thus, inflation of capital assets, goodwill and other undesirable tendencies after the contract has been given might be avoided, and also there might be avoided an unfair and excessive profit based on inflated values. Make certain that the value behind the share is cash, or an asset having real value.
At page 2294 of the evidence, government counsel questioned the minister about this report. Mr. Ralston, examining the minister, asked:
Q. Now, Mr. Mackenzie, that report was transmitted to you. What did you do with it?
A. I carefully perused it personally-it was of great interest to me.
But after coming into possession of this carefully prepared information, which showed in precise detail exactly how to prevent this stock watering, what did the minister do? Well, the evidence shows that he did everything possible to assist this contractor in accomplishing his purpose. Despite the fact that the minister had repeatedly declared his belief in the public ownership and operation of plants for the manufacture of war materials-at page 10 of the commissioner's report we read that the minister said, in reply to a question by Mr. Hellmuth, that he believed in public ownership through and through-the evidence shows that his department exercised constant and unremitting pressure on the war office in England to have them negotiate a contract with Major Hahn, a private manufacturer, who had neither the equipment nor the experience to do the work. Evidence of this will be found on page 48 of the commissioner's report. Speaking in the House of Commons on April 2, 1937, the Prime Minister (Mr. Mackenzie King) said:
We agree with him in asserting the principle that no profits should be made out of war.
At page 2148 of the evidence, I quote as follows from a memorandum sent by the chief
of general staff to the master general of ordnance, under date July 11, 1936:
I still feel that a small arms and munition factory should be established capable of making revolvers, rifles, and automatic rifles including the Bren gun.
Why, in the face of all this, did the government not carry out its own publicly professed policy and the advice of its own technically competent civil service advisers? Surely no informed person would dare to denv that public opinion, in Canada is overwhelmingly in favour of eliminating profits from the manufacture of war materials. The only reason given by the minister is, to use his own words as quoted in the report at page 11, "financial stringency." Yet he signs a contract with a private manufacturer under which the Canadian taxpayers furnish this man with a complete outfit of machinery; pay him $10,000 a year, and in addition provide him and his associates with stock watering profits of over $1,000,000 and an enormous operating profit as well.
I have listened with amazement during this week, as speaker after speaker has unfolded this story of the plunder of the Canadian people, with the active assistance of the government. I want publicly to thank Colonel Drew for bringing this matter to light. At both the 1937 and 1938 sessions I placed resolutions on the order paper demanding that a committee be set up to study this very question, but each year parliament prorogued without even discussing it. Now we find that these shameful things were going on at that very time. Speaking in the house on Tuesday, February 16, 1937, just two years ago, I referred to the profits made during the last war by private firms in both the United States and Canada. I pointed out how twenty-two meat packing firms, sixteen cotton yam manufacturers, thirty-nine garment manufacturers, fifteen steel plants and rolling mills, and 135 coal producers in the United States reported to the government profits of 100 per cent or more, while twenty-one firms reported profits of over 500 per cent but under 1,000 per cent, and fourteen firms reported profits of over
1,000	per cent. I pointed out also how 21,000 new millionaires were created in the United States and between 600 and 700 new millionaires in Canada. And while this was going on, every day while the great war lasted, 20,000 men and boys were killed, wounded or taken prisoner, and during the course of the conflict 40,000,000 people died of wounds, famine and pestilence. To meet the total cost of the war, $337,000,000,000, would require a payment of $20,000 an hour from the birth of Christ to the end of the world war. Then, with particular reference to profiteering in Canada I said:

Bren Gun-Mr. Rowe (Athabaska)
What guarantee can the government give that there will be no war profiteering? What assurance is there that at this very moment our natural resources are not being turned into instruments of war? What firms in Canada are at present engaged in the manufacture of armaments, munitions and war supplies for Great Britain or any other countries? What profits are actually being reaped by Canadian concerns through the provision of such materials? And-perhaps more serious than all else-what guarantee have we that our youth will not be expected to face the very arms and be targets for the very munitions that are now being exported from this country?
The government did not answer these questions; they were not willing to take even a few days to investigate them in accordance with the terms of my resolution. I am therefore supporting the motion to refer this contract to the public accounts committee, where I hope we shall be given an opportunity to investigate these matters fully.
The Minister of National Defence (Mr. Mackenzie), speaking in Edmonton on March 6, 1938, is reported in the Edmonton Bulletin of March 7 as having stated, "The real evil is an unequal and uneven distribution of purchasing power," and he added, " Progressive Liberalism, animated by its basic belief in ' equality of opportunity and equality of sacrifice ' will relentlessly labour for a more equitable distribution of wealth." And the paper added that this statement was made amid ringing applause. I wonder whether that audience would have applauded so loudly if they had realized that, as a result of the policies of the Liberal party, after seventy years of " relentless labour" in support of those policies, at the very moment the hon. gentleman was speaking, 4,000 families in Canada were receiving average incomes of $150,000 a year each, 16,000 families were receiving an average of $39,000 a year each, 536 persons had in their bank accounts, on an average, $287,500 each, while at the other end of the scale Canada's 3,000,000 farmers were receiving an average income per family of $474, and 98 per cent of all the wage-earners in Canada were receiving an average income of $668 a year. The way the minister " labours relentlessly " for a more equitable distribution of Canadian wealth, based upon " equality of opportunity and equality of sacrifice," is to hand a fat contract to a bunch of stockbrokers, lawyers and armament racketeers to enable them to plunder the Canadian people out of a million dollar stock watering profit, besides enormous operating profits, to be added to their already large incomes.
Why is it that public opinion on this continent is so thoroughly aroused against profiteering in armament making? In my opinion it is undoubtedly on account of the

wide publicity given to the Nye committee findings in the United States, and to disclosures made in the French Chamber of Deputies and the British House of Commons. And Colonel Drew, in his article in Maclean's magazine and others which he has written in the past, and other writers of books and articles, have done a great deal to arouse public opinion -by bringing these matters to light. It was because of this aroused public opinion that our representatives at the League of Nations assembly have always advocated public ownership and operation of armament factories. We all know the story of Sir Basil Zaharoff, who made a fortune estimated at from two hundred million to a billion dollars from the sale of the instruments of death, and as a reward was knighted by the British government; how he was consulted in 1917 when there was a possibility of achieving peace through the intervention of the United States, and Lord Bertie, British ambassador to France, recorded in his diary, " Zaharoff is all for continuing the war jusqu'au bout." It is not surprising that an armament racketeer should want to continue a murder racket out of which he was making millions of dollars a month, but how do we explain the fact that he was a close confidant of the British Prime Minister; that he was consulted as to whether or not the war should go on; that he was knighted by the same Prime Minister as a reward for his " services " and that later from the hundreds of millions of dollars reaped in that harvest of death out of the blood, tears, agony, disease, debt and death of the world's common people, he endowed chairs in literature at Oxford university and the Sor-bonne, naming them the "Foch" and "Haig" chairs to perpetuate his gory fame?
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Percy John Rowe: 
Ian Alistair Mackenzie: Mr. Speaker, I desire
immediately to thank the Canadian Commons for the kind heart which it always retains. I think it is immediately a recognition of the most unfair attack made in the course of Canadian political history. In my judgment, sir,-and I desire to-night to discuss the issues as fairly, calmly and moderately as I can- there has never been in the whole course of our Canadian history-and I am a great lover of that history-a more sustained campaign of political calumny than has been directed against the present Minister of National Defence and the officials of his department.
I do not think the reputation or personality of a minister is very important in this debate. There is something far more vital and far more important to the Canadian people, and that is the permanence and the security of the department over which I temporarily preside. And that department is being assailed at the present time from two angles. During the course of this debate we have seen the most sinister alliance in this house, one attack coming from a peculiar political philosophy, to your far left, Mr. Speaker, a philosophy which has attacked my estimates in the last three years with a sustained malevolence, and the other coming from the old Tory party of Canada, which did more to destroy national defence between 1930 and 1935 than was ever done before in the history of the Dominion of Canada.
I feel like following the admirable course followed by the hon. member for Trinity (Mr. Plaxton) and deferring my observations until the standing committee on public accounts has reported back to this house. But I have been entrusted by my Prime Minister (Mr. 
Mackenzie King), as well as by my colleagues, with the support of this House of Commons and the confidence of this country. I want to assure my hon. friends in the Commons tonight that George Drew was not the Minister of National Defence for the Dominion of Canada. The splenetic dominie, the hon. member for Mount Royal (Mr. Walsh), is not the Minister of National Defence for Canada. This quibbling romancer, the hon. member for Weybum (Mr. Douglas), or his cynical colleague, the hon. member for Rose-town-Biggar (Mr. Coldwell), is not the head of the Department of National Defence. Mr. Ian Mackenzie, of loyal highland Scotch descent, is the Minister of National Defence for the Dominion of Canada.


An hon. MEMBER:: Scotland for ever.


Ian Alistair Mackenzie: Yes,
Scotland forever, and I do not need anything from the Prussian mentality of the hon. member for Waterloo South (Mr. Homuth).


Karl Kenneth Homuth: Mr. Speaker-


Some hon. MEMBERS:: Sit down.


Karl Kenneth Homuth: I rise to a question of
privilege. I never ask any quarter from any political opponent and I am not asking for quarter now. The hon. member has made-


Some hon. MEMBERS:: Question.


Karl Kenneth Homuth: He called me a Prussian.


An hon. MEMBER:: No, he did not.


An hon. MEMBER:: Prussian mentality.


Karl Kenneth Homuth: I was born a Canadian
and my people were bom Canadians. I want the minister to retract that statement.


Ian Alistair Mackenzie: As a result of the knowledge I have I say now that the hon. gentleman who arrived here only a week ago has never been loyal to party or principle in all his life.


Karl Kenneth Homuth: Mr. Speaker-


Walter Edward Foster: Is the hon. member for
Waterloo South (Mr. Homuth) rising on a question of privilege?


Karl Kenneth Homuth: I certainly am.


Ian Alistair Mackenzie: I want
to say to my hon. friend that when new members come into the Canadian House of Commons they are supposed to exercise ordinary courtesy and display ordinary decency and common sense.


An hon. MEMBER:: What about the
old ones?


Ian Alistair Mackenzie: I am in
the judgment of the house when I say that

Bren Gun-Mr. Mackenzie (Vancouver)
there has never been a more vindictive attack made upon anyone than that which has been made upon me by this man who has just come into the House of Commons.


Karl Kenneth Homuth: Try to refute me.


Mr MACKENZIE (Vancouver):: My hon.
friend has said nothing worth refuting.


Robert James Manion: I rise to a point of order.
I thought the minister was going to withdraw his statement.


Malcolm McLean: Withdraw what?


Robert James Manion: The statement was made that the hon. member for Waterloo South (Mr. Homuth) was never loyal to any party or principle in his life. If there is anything unparliamentary that could be said, that is it. I appeal to you, Mr. Speaker, to keep order in this house, and I submit that the minister must withdraw those words.


An hon. MEMBER:: Not at all.


Ian Alistair Mackenzie: Mr. Speaker-


Karl Kenneth Homuth: Mr. Speaker-


Some hon. MEMBERS:: Order.


Karl Kenneth Homuth: I rise again to a question of privilege. I ask the Minister of National Defence to withdraw the remark he made.


Ian Alistair Mackenzie: If those in opposition-


Robert James Manion: I want a ruling on the point of order.


Walter Edward Foster: I have not been able to hear what the minister has to say.
Mr. MACKENZIE	(Vancouver):	The
declaration of political principles made by the hon. member for Waterloo South in years gone by-


Karl Kenneth Homuth: And I have lived up to every one of them.


Ian Alistair Mackenzie: -in
which he attacked in the most unblushing terms the Tory party to which he now pays allegiance-


Robert James Manion: I appeal for a ruling on the point of order.


Ian Alistair Mackenzie: My hon. friends evidently desire to interrupt the course of my remarks.


Robert James Manion: Are we going to have a ruling?


Ian Alistair Mackenzie: I have
been under attack.


Walter Edward Foster: As I understand it, the hon. leader of the opposition and the hon. member for Waterloo South are taking exception to the remark made by the hon. minister regarding the loyalty of the hon. member for Waterloo South.


Karl Kenneth Homuth: No.


Walter Edward Foster: As I understand it, the loyalty of the hon. member has never been attacked by the hon. member who is speaking. He referred to certain matters which he knew about the hon. member, but that is not saying that the hon. member is disloyal.


Robert James Manion: He did not say he was disloyal. He said he had never been loyal to any party or principle. What kind of man is not loyal to any principle?


Walter Edward Foster: I did not understand him to say he was not loyal to principle. I understood him to refer to the political loyalty of the hon. member, which is a different matter.


Karl Kenneth Homuth: I rise to a question of privilege and ask that Hansard be read so we can see whether the hon. minister said that I had never been loyal to party or principle.


Walter Edward Foster: That has never been done before in the house.


Ian Alistair Mackenzie: I have been attacked and vilified for a whole week in this house and when I endeavour to assert my position-


Karl Kenneth Homuth: Mr. Speaker, I rise to a question of privilege to ask if you are going to rule whether the Minister of National Defence must withdraw the statement he made.


Walter Edward Foster: There was so much noise that I could not hear the last statement.


Ian Alistair Mackenzie: If it will assist in the obvious reluctance to hear the minister under attack, I shall be very glad indeed to withdraw the word " principle " in regard to the remark I made with reference to the hon. gentleman. I trust that will assist us all in proceeding with the discussion of the issues under consideration.
May I outline to my colleagues what has occurred with reference to the issues now in debate? In the first place, last September in a' nickel journal there was an article written by a man called Drew in which he did not have the manhood to make charges against the gentleman who is now addressing this house. Replete as that article was with insinuations, innuendoes, assumptions and allegations, when that man came before the
796	COMMONS
Bren Gun-Mr. Mackenzie (Vancouver)
royal commission which was appointed promptly by the Prime Minister he never called a single witness. He never .brought a single person, not one individual, in the whole Dominion of Canada, to prove any insinuation or assumption or innuendo or allegation that he had made in that article.
Hon. gentlemen opposite speak about tenders. There were present before that royal commission seven witnesses called by that most brilliant and gallant fellow, Layton Ralston.


An hon. MEMBER:: Another grafter.


Ian Alistair Mackenzie: There is not a finer Canadian to-day in any province than Colonel J. L. Ralston. So high was his sense of public duty and public service that he undertook his duties in this particular investigation without a single cent of remuneration to himself for the long ten or twelve weeks of the investigation here in the city of Ottawa. And yet somebody called a man like that a grafter.


An hon. MEMBER:: The hon. member for Parkdale (Mr. Spence).


James Houston Spence: He made thousands before that.


Ian Alistair Mackenzie: If he made them he had qualifications for making them, better than my hon. friend has.


James Houston Spence: No doubt, but he got them just the same.


Ian Alistair Mackenzie: The hon. member for Vancouver North (Mr. MacNeil) has moved a resolution to refer to the public accounts committee certain developments resulting from the royal commission. Let me recount what has taken place.
As soon as this article was published, the government immediately granted a royal commission presided over by one of the ablest jurists in the Dominion of Canada, and the only thing the Tory party has done in this debate in the Canadian Commons has been to attack the report of Mr. Justice Davis, who was appointed by their own administration in 1935.
Look at the consistency of this thing, Mr. Speaker. The hon. member for Vancouver North, who has done more to destroy the Department of National Defence than anyone else by his resolutions in the last three years moved a resolution to refer this question to what? To a standing committee of this house for further investigation. The hon. leader of the opposition (Mr. Manion) moved an amendment to have the matter discussed in this house. Well, while that amendment was

defeated, it was at the same time carried because they have had all the discussion and all the debate, and more than they wanted, as they know now to their cost, right here in the House of Commons.


Robert James Manion: No. You have had more than you want.


Ian Alistair Mackenzie: No, I
have not. I stand here to-night and I say I have nothing to retract, nothing to explain.
Then we find my ancient and honourable friend from Kootenay East (Mr. Stevens), whom I have met before in combats on the hustings, moving another amendment, and what was that? Yes, I will meet him again if he dare come into Vancouver Centre, and I challenge him to come and fight me there on this very issue in the next election. What was his amendment? It was an amendment to have this question referred to a committee of the whole house. Every member of this house knows that as soon as the estimates of the Department of National Defence are moved into committee of supply, every single detail of this and any other contract can be questioned in committee of supply. What do they want? Do they want a parade of the permanent officers of the department before the bar of this house, in committee of the whole? That is the silliest, most nonsensical, most ridiculous amendment ever produced for the consideration of this house. I am surprised and somewhat sorry that my hon. friend from Kootenay East, because I must commend the restraint and the dignity of his speech, was conscripted by his party to submit to this house an amendment of such a superbly and supremely asinine quality.
Here we have, Mr. Speaker, the hon. member for Vancouver North. Here we have that grand aggregation of red-flaggers.


Mr. COLDWELL:: Defend your position. Never mind us.


Ian Alistair Mackenzie: I am trying to defend Canada, and you are doing your damneddest to destroy my efforts. That is what you are doing, you and your ilk. We have the semi-communist wing of Canada-


Mr. WOODSWORTH:: Mr. Speaker, I rise to a point of order. The minister has designated our group here as a semi-communist organization. That is absolutely untrue, and I ask that that statement be withdrawn.


Ian Alistair Mackenzie: Mr. Speaker, I have the greatest pleasure in accepting the apology of the hon. member for Winnipeg North Centre.

Bren Gun-Mr. Mackenzie (Vancouver)


James Shaver Woodsworth: Mr. Speaker, I ask that that allegation be withdrawn. I am not one of the new members of the house; I have been here long enough to believe that on the whole the members of this house are fairly decent, and I think the Prime Minister will agree that it is not right that even his minister should be allowed to make statements that are untrue. I say that that statement is untrue, and I ask that the minister withdraw it.
Mr. MACKENZIE (YancouvCi). If my hon. friend objects to the appellation, "semicommunist," I do most willingly and with the utmost alacrity withdraw it; but I do say this, that there have been evidenced in Canada in recent months elements of a semi-communistic nature that have been endeavouring to tear down what this government has been trying to do, namely, to build up national security, national defence and national welfare in the Dominion of Canada.


James Shaver Woodsworth: Mr. Speaker, all I ask is that the statement made by the minister be withdrawn.


Walter Edward Foster: Is the hon. gentleman rising to speak on a question of privilege?


James Shaver Woodsworth: I rise to a question of privilege, Mr. Speaker, the same question of privilege. I have stated that the statement made by the minister is absolutely untrue and I ask that he withdraw it.


Ernest Lapointe: He has withdrawn it.


James Shaver Woodsworth: Unconditionally.


William Lyon Mackenzie King: I understood the minister to withdraw it.


James Shaver Woodsworth: I did not so understand it.


Ernest Lapointe: We all did.


Walter Edward Foster: I do not understand that the hon. member is in contravention of the rules of the house in speaking of certain elements that have been disruptive and doing work of a semi-communistic nature in this country. I do not think his remarks were directed to the hon. gentleman who has just risen.


James Shaver Woodsworth: As a matter of privilege, Mr. Speaker, the hon. member for Vancouver Centre went on to speak of certain elements that were creating difficulties. I have nothing to do with that latter statement of his, but previously the minister distinctly made the statement in reference to our group that we were semi-communist.


Charles Avery Dunning: He never mentioned your group.


William Lyon Mackenzie King: I do not think the member for Winnipeg North Centre heard what the minister said. He said that he would withdraw the remark with alacrity and he did so completely. Then he went on to speak of conditions in this country, not in this house.


Walter Edward Foster: I did not understand that those conditions applied to the hon. gentleman who raises the question of privilege.


Ian Alistair Mackenzie: If my
hon. friend has any doubts at all, I repeat the withdrawal that I made some minutes ago. But I say this-and I know whereof I speak-that there are to-day in this dominion elements that are endeavouring to tear down what we are endeavouring to build up for the security and welfare of our people. I say to my hon. friends of the Tory party opposite -and f know whereof I speak; for I have here the record of cold facts-it is all very well to speak about world ideas developing towards international disarmament, but between 1930 and 1935 the Conservative party in Canada did more to destroy national defence than has been done by any party since confederation. The facts speak for themselves. Last year they said, "Oh, do not put defence into politics". What have they done? Not only have they tried to destroy those gallant fellows, the permanent officials of national defence, who cannot speak for themselves; they have tried to destroy the minister. The minister is really of no importance except purely temporarily in relation to the conduct of national defence. There is something more vital, more enduring, more abiding for the security of the Canadian people. Do not disturb or destroy the morale and fibre of our great Department of National Defence.
I come to the motion of the hon. member for Vancouver North (Mr. MacNeil), to the first amendment of the leader of the opposition (Mr. Manion), to the second amendment of the hon. member for Kootenay East (Mr. Stevens), and, now, to the findings of the royal commission. What were those findings? There were two essential points. No wrong-doing-not the finding my hon. friends hoped for-and, nothing wrong with the form of the contract-which hon. members opposite have been attacking all week. Every Tory in the house has been attacking during the last five days the findings of Mr. Justice Davis.


Some hon. MEMBERS:: No.


Robert James Manion: We have been supporting his findings.
798	COMMONS
Bren Gun-Mr. Mackenzie (Vancouver)


Ian Alistair Mackenzie: The
leader of the opposition so far forgot himself, when he could not find anything to attack in the actual findings, as to picture imaginings, figments of his own fertile Hibernian imagination, in place of the findings of Mr. Justice Davis. I desire to say this: As far as my conduct of affairs has been concerned it has been honest, honourable, and devoted wholly to the public service and the public interest.
In my sworn testimony I told the royal commissioner how the letter of introduction was given; how Major Hahn went to England; how he found it impossible to get access there to information which he, in a spirit of great national service, offered to the national defence department-


Some hon. MEMBERS:: Oh, oh.


Ian Alistair Mackenzie: Hon.
members may laugh, but that is the truth.


James Houston Spence: No wonder we laugh at
that, coming from a brilliant man like the minister.


Ian Alistair Mackenzie: 
Charles Avery Dunning: This house was still in session.


Ian Alistair Mackenzie: It was presented to the Canadian Press and circulated all over Canada two months before this house rose.
Who dares accuse me of concealment or evasion? Again, in this house on June 22, 1938, the hon. member for Vancouver North asked questions which were fully answered. The hon. member for Winnipeg North Centre asked questions which were answered in detail and he was referred to the discussion that took place on the estimates. So that on five different occasions during last session every opportunity was afforded every member of this house to hear every single detail with reference to this contract. And now they say that the Minister of National Defence was endeavouring to conceal some of the essential elements and principles, and fundamental features of the contract.
In regard to the contract itself, I said in this house last year that I thought it was one of the best contracts ever signed for Canada; I say that to-night from my place in the house, and I know what the opinion of eminent business men is with regard to the contract. Even Drew before the royal commission, when he came to discuss the contract itself, spent exactly two and a half minutes in referring to its clauses and details. It is a contract that has been carefully prepared in the public interest of the dominion. It is a contract that is much stiffer in its provisions than the contract signed by the British government with the same contracting firm.
As regards the activities of Major Hahn, they ask, why select Hahn? I say, why not?


Some hon. MEMBERS:: Hear, hear.


Ian Alistair Mackenzie: Why not? He is a gallant Canadian soldier and a former intelligence officer, a man of principle, integrity and loyalty, an astute industrialist and an able business man.


An hon. MEMBER:: Good brains!


Ian Alistair Mackenzie: Yes, a man who served overseas. And then, because of some malign and nefarious motive which I cannot understand, it is said, " Oh, there is something sinister here; why select Hahn?" I do not know Major Hahn very well, but I do know from reports which I have received that the preparations of that firm with respect to their schedules having reference to this contract are up to date, and they will be delivering spare parts for the Bren gun by
July next, beating all records of Enfield and of Australia in connection with the production of Bren guns. That is the answer.
There is possibly not much more that I can say at this stage, but I want to repeat what I said at the commencement of my remarks. Since I was honoured by the most brilliant Prime Minister that Canada has ever had-


Some hon. MEMBERS:: Hear, hear.


Ian Alistair Mackenzie: Since I was honoured by him with the administration of a portfolio-it was not at that time as important as it is now, having been somewhat neglected by those who preceded us, but to-day it is second in importance possibly only to that presided over with equal ability by my colleague, the Minister of Finance (Mr. Dunning)-I have regarded the obligation as a matter of sacred public trust, and I still so regard it, despite the present attitude of the leader of the opposition.
Mr. Speaker, I have the greatest admiration for this country, for your wonderful race, who for one hundred and fifty years have been the pioneers of settlement, the race that has produced great missionaries; and in the last one hundred and eighty years my own people of the British motherland have given us our institutions of British freedom and our parliamentary liberties-


Some hon. MEMBERS:: Oh, oh.


Ian Alistair Mackenzie: -something which the Tories are trying to suppress and destroy at the present time. I say that a sinister combination of fascism and communism will never destroy the efforts of a free and unfettered Liberalism.


Thomas Clement (Tommy) Douglas: Profiteers will.


Ian Alistair Mackenzie: Will my hon. friend rise in his place?


Ernest Lapointe: Weyburn again.


An hon. MEMBER:: Make a charge.


Ian Alistair Mackenzie: Will he rise in his place?


An hon. MEMBER:: Shame; you haven't enough courage to make a charge.


Thomas Clement (Tommy) Douglas: Do you want me to help you with your speech?


Some hon. MEMBERS:: Stand up.


Walter Edward Foster: Order.


Ian Alistair Mackenzie: I repeat, sinister influences cannot destroy or disturb or impair or retard the considered conclusion
800	COMMONS
Bren Gun-Mr. Mackenzie (Vancouver)
and determination of Liberalism in Canada to provide such measures of national defence and security as will preserve the welfare and wellbeing of our Canadian people.
Possibly more than anyone else in this house I have endured the slings and arrows of outrageous Tories in the last few days, but personal attacks upon myself are of minor consequence. But when this debate is concluded; when a new measure is to be introduced for the establishment of a defence purchasing board for Canada, I do appeal to all parties, to all members in this house, to unite their voices and their forces to ensure that that board will be above any suspicion and beyond all reproach, and that in conjunction with it the Department of National Defence shall be permitted, after these malicious, vicious and meretricious attacks, to carry on its real work in preparing the defence of this dominion. I appeal to my hon. friends who have practically all spoken in this debate, except that grand old Nestor who is to succeed me, the hon. member for St. Lawrence-St. George (Mr. Cahan)-


Charles Hazlitt Cahan: Postpone the compliments, until you have heard what I have to say to-night.


Ian Alistair Mackenzie: I do
appeal to all my hon. friends opposite, when this debate has been concluded and these issues are decided; when these disputations are ended, to unite in that task which is the grandest of all, the defence and security of our common country and heritage.


Charles Hazlitt Cahan: Mr. Speaker, I trust that I shall
not be provoked, by the language which the minister has used, ostensibly in self-defence, into making any similar characterization of him or his colleagues. This debate on the report of Mr. Justice Davis, and the terms of that report, have served to bring into notice two or three facts which are commendable and satisfactory. It has revealed that in the person of Lieutenant Jolley of the Canadian ordnance corps, now employed in the ordnance branch of the department, we have a young officer who by his intelligence and industry has laid the foundation for what I believe will be a veiy successful career in the civil service and the military service of this country. I do not know him; but, on reading the evidence which he gave and having in view the circumstances under which he gave it, I am glad to have it known that there exists a young officer of his character and attainments in that branch of the service. Then there is another young officer, with whom I am not acquainted, Colonel Orde, judge-advocate general of the Department of Na-

tional Defence, who was called upon without any expert assistance to draft a very important contract. From personal experience I know something of the difficulties which he encountered, having no expert advice in that matter. I have no desire to commend myself in any way, but I have drawn more contracts dealing with munitions than almost any number of other lawyers in Canada. In the early months of 1915 I drafted contracts representing many tens of millions in value for which the British government was paying contractors in the United States. On account of having been one of the firm of attorneys formerly employed by the war department and the admiralty for some years, I was asked to see to the proper drafting of those contracts; contracts dealing with the intricate machinery of war, as delicate and complex, I have no doubt, as that of the Bren gun. But I had the good fortune, having so insisted, to have at my elbow some of the best expert advice, and to that expert advice is due the fact that those tens of millions of dollars worth of contracts, although some of them appeared in the courts, were never seriously brought into issue in the courts. Therefore I know something of the position of Colonel Orde, whom I judge by his evidence to be a young lawyer-


An hon. MEMBER:: Not so very young.


Charles Hazlitt Cahan: I do not know how old) he is, but I understand he is a young gentleman.


Charles Gavan Power: Aged forty-five perhaps.


An hon. MEMBER:: Or fifty.


Charles Hazlitt Cahan: Well, even that is young. I am grateful that they have these young men who are growing up and developing, for the performance of essential duties in that branch of Canada's service. Then there is another gentleman whom I knew quite intimately at one time as Colonel LaFleche; he is now General LaFleche. In the province from which I come General LaFleche and all those officers who served with him during the great war, and especially some of his colleagues in the famous 22nd regiment, are regarded with the highest possible esteem by all sections of our community. Having read a considerable part of the evidence, I suggest that no reflection can be cast upon General LaFleche, deputy minister of the Department of National Defence, who, loyal as he was in his military service, undoubtedly was equally loyal as the deputy of the present Minister of National Defence (Mr. Mackenzie). Knowing and appreciating General LaFleche to be a man of honour, I think it is clear that in all he did he believed he was carrying

Bren Gun-Mr. Cahan
out the policy of the minister of the department and the instructions which the minister had given in the carrying out of that policy. Therefore any criticisms of the actions of the deputy minister must be met by the minister himself, who in his evidence has said that he takes full responsibility.
The commissioner, Hon. Mr. Justice Davis, was appointed by order in council. In that order in council he was instructed to inquire into and report upon the steps to be taken to protect the public interest. He was dealing in a large way not only with the past, but with events of the past in relation to the future, so that the future policy of this department and of the government may be carried out effectively in the best interests of the country. This commissioner reported that he had spent thirty-six days in the taking of evidence and hearing counsel; that there ivere 4,122 pages of notes of evidence and 588 pages of the stenographic report of argument of counsel. To my mind-and I am expressing my own personal view-after that exhaustive examination into the facts, nothing essential to the discussion of the problem and our final decision upon the issues raised can be obtained by a reference to a standing committee of this house. In fact Mr. Justice Davis reported:
Your commissioner is satisfied that all available documents in any way relevant and material , to the subject matter of the inquiry were presented to the commission.
The real issue is, not whether more evidence is required in order thoroughly to elucidate this problem, but whether, taking into consideration the full report of the commissioner, there is evidence upon which the government of this country should take action, and, if there be failure on the part of the government, what action the parliament of this country should take, there being always in the background the knowledge that in the last resort the Canadian public will give their decision at the polls upon such issues as are presented. As a matter of fact, the Prime Minister (Mr. Mackenzie King)-and I wish to commend his actions in certain respects-early in the history of the. Bren gun was evidently anxious to ascertain whether or not the Department of National Defence was taking all due precautions to protect the interests of the government and thereby the interests of the country.
He had known, as we all know, that the Minister of National Defence (Mr. Mackenzie) came to us accredited as a brilliant student and a graduate of the university of Edinburgh, one which all we Nova Scotians hold in the highest esteem, because the univer-71492-51
sity which many of us attended and from which we graduated was really a branch of that great university of Edinburgh. In my day the professors, with few exceptions, were Edinburgh men. But the minister came also having some political experience in British Columbia, and I believe that he had some experience in the war, although I have no knowledge of what his war record was.
When he was appointed Minister of National Defence neither the Prime Minister and his colleagues nor the people of Canada knew whether this famous classical scholar from Edinburgh would prove adequate for the competent and effective administration of what was then becoming one of the most important branches of the administration of government in this country. It was a testing time for the minister. And I submit that the commissioner, well aware of the importance of that issue has decided-and I shall try to show where it is decided-that the Minister of National Defence has proved careless, negligent, incompetent and disqualified to carry out the administration of that high office, in the interests of the people of Canada and of the government which he represents.
Evidently the Prime Minister was somewhat anxious because he took what seemed to be the unusual course of appointing a special committee of which his own deputy, Doctor Skelton, was chairman.


Ian Alistair Mackenzie: General LaFleche.


Charles Hazlitt Cahan: I am talking about the Prime Minister's committee.


Mr. POULIOT:: No; it was Nestor.


Charles Hazlitt Cahan: The Prime Minister appointed a special committee, of which his own deputy was chairman, to inquire into certain matters with regard to the furnishing of munitions and contracts relating to munitions, with the various departments of government, especially the Department of National Defence.
Mr. Justice Davis states that that special committee reported to the Prime Minister that the problem appeared essentially to be one of administration. The problem in the mind of the Prime Minister was as to whether or not there was adequate and competent administration of that great department. To him that was not a minor care, but rather a chief care, because as Prime Minister he has a responsibility with regard to the general supervision of all departments. No sooner did that special committee of the Prime Minister report than the matter was again discussed in council by and between the Prime

Bren Gun-Mr. Cahan

Minister and his colleagues. While we are not admitted to council and have no shorthand report of the discussions which take place, we do know there was an order in council passed, namely order in council P.C. 439 of March 5, 1937, which was put in evidence before Mr. Justice Davis as exhibit No. 46.
This order in council provided for the appointment of a special interdepartmental committee to consider ways and means with respect to the letting of contracts, the preparation of contracts, the signing of contracts, and as to making due provision against profiteering in munitions contracts. That interdepartmental committee was appointed and proceeded to function. May I say now by way of commendation that, having read the report of what took place before that committee and the action taken by it from meeting to meeting, I think the Prime Minister and the government are to be congratulated upon having men in the civil service who have not only the intelligence and the experience but the courage necessary to take the action they did take, action which was a real condemnation of the policy which the Minister of National Defence proposed to pursue.


Hugh Alexander Stewart: And did pursue.


Charles Hazlitt Cahan: 
Clarence Decatur Howe: Not as well equipped as the
Inglis company.


Charles Hazlitt Cahan: My hon. friend does not
know very much about it. It was better equipped. Two experts were sent out from the naval department to see the machinery at Amherst and I saw the report they made to the naval officers to the effect that there was not a single factory in England, outside Woolwich, so well equipped for that work.


Charles Gavan Power: Will my hon. friend permit a question?


Charles Hazlitt Cahan: I am not answering questions at the present time.


Charles Gavan Power: I just wanted to know if
they called for tenders?
71492-51 i


Charles Hazlitt Cahan: They found out that this
company could do it.


Some hon. MEMBERS:: Hear, hear.


Charles Hazlitt Cahan: On that point I can give my hon. friend considerable information if he wishes it. They did call for a tender from the Amherst factory, and that tender was compared with the prices or the costs in the government factory. They found they could bp produced at Amherst fur less than they were-being produced at home.


Charles Gavan Power: Does my hon. friend approve that?


Charles Hazlitt Cahan: But we know what the practice is. There has been some question as to that; I can deal with it because after contracts to the amount of nearly $100,000,000 had been placed in the United States I was appointed as chairman of a board to see that those contracts were properly filled, and I know how the contracts were placed. They were placed, not by public tender in the United States, but we ascertained from the best information we could obtain the names of three or four or five companies who could manufacture the particular instruments required. Then we made inquiry into the financial standing of those companies; then competitive bids were obtained as between three or four or five competitive companies until we ascertained what bids were available; and in any doubtful case we compelled the prospective contractor to put up a bond of a guarantee company or a trust company for the due performance of the contract. I sometimes think that bonds of that kind in connection with work of that nature are futile because changes are often made as the work proceeds, and any change that is made in the terms and conditions and specifications tends to annul the contract. But there is this safeguard, that the guarantee company or the trust company which guarantees the contract has to make again, for the second time, a thorough investigation of the financial standing and mechanical ability of the company tendering. Nothing of that kind was followed here.


Mr. GLEN:: Will the hon. member permit a question?


Charles Hazlitt Cahan: I am not going to answer any questions. I ask the Speaker to maintain order, because my time is rapidly passing.
The Prime Minister realizes, he must have lealized because he is an experienced and competent administrator of the office of Prime Minister, what is necessary in such matters, and when the Minister of National Defence was off his job, as he appears to have been during the whole course and term of the Bren
Bren Gun-Mr. Cahan


Walter Edward Foster: I am sorry to have to
interrupt the hon. member, but I am told that he has exhausted his time to speak.


Charles Hazlitt Cahan: Might I be allowed a few
minutes more, Mr. Speaker?


Walter Edward Foster: The hon. member can
proceed only with the unanimous consent of the house.


Some hon. MEMBERS:: No.


Charles Hazlitt Cahan: Well, Mr. Speaker, I thank you. There will be ample opportunity again, because I can speak on the main motion, and I shall be glad to do so.


Mr. G. G. McGEER (Vancouver-Burrard):: Mr. Speaker, I do not know of any occasion in the House of Commons which is just as important as the one that is before the house in this debate. I say that because it is probably one occasion, and possibly the only one, when a major party in the house

Bren Gun-Mr. McGeer
has refused to accept the findings of a royal commission as determining an important public matter in an extremely critical time not only for our own nation but for the peace of the whole world.
When the matter first arose it came in the form of an article published by an outstanding Canadian public man in a journal of general circulation throughout the dominion. It was probably one of the most critical articles that had ever been published in condemnation of a minister of the crown and a department responsible for the defence of the nation. The course taken by the Prime Minister (Mr. Mackenzie King) has been commended by everyone.
This article, not by formulated charge but by innuendo and inference, was, I think, intended to and, I firmly believe, did convey to the minds of everyone who read it that the Minister of National Defence (Mr. Mackenzie) was unworthy of public confidence; that there had been a granting of contractual privileges and an expediture of public moneys that were not merely negligent but fraudulent and designed to injure the public well-being and the public treasury for the benefit of persons preferred as friends of the administration.
It is true that since this debate has developed in the house, and after the findings of the commission, the more moderate attitude adopted by the hon. member for St. Lawrence-St. George (Mr. Cahan) has been taken. The leader of the opposition (Mr. Manion) also changed from the attitude of the article. I want to say that innuendo can be more deadly against public men than direct charges, because there is no limitation to the imagination aroused by innuendo, and there is nothing defined for the one suspected to meet. So we find the leader of the opposition declaring, "I am not charging corruption, neither is George Drew doing so."
Well, Mr. Speaker, that is not in line with the statements of the distinguished colonel. He is on record. Let us look at what he has to say about General LaFleche, the deputy minister of national defence and one of Canada's most distinguished veterans. He has been described by the hon. member for St. Lawrence-St. George as "the most honourable of men." Let us look at the record. At page 4300, in his charge to the commission, Colonel Drew says:
Whether it be from the point of view of business interests, industrial efficiency or national security, nothing can be said, I submit, to justify this contract in any way. It was conceived in sin, born in iniquity and cloaked in fraud.


Ernest Lapointe: Shame.


Gerald Grattan McGeer: He could go no further than that, for that charge is all inclusive. No man associated with that contract so described could, in the mind of the distinguished gentleman making such a charge, be anything but guilty of creating and being the fraud that cloaked the whole contract. Let us look further. At page 4299 he deals more specifically with the minister and the deputy minister:
I submit that every step which LaFleche has taken in the negotiations leading up to the Bren gun contract is, on the evidence, open to very grave suspicion, and I ask you to so find.
I submit that for the part he played Mr. Mackenzie is open to even more severe condemnation.
At page 4294 he said:
I submit that from the beginning to the end LaFleche's evidence is not to be believed.
Is this not a charge of corruption?
Now, Mr. Speaker, I want to draw another matter to your attention. It has been stated that the commissioner was unable to find as he would have found with regard to individuals had it not been for the objection raised by the counsel for the government on the interpretation of section 13. To whom were those objections as to technical interpretation addressed? To some innocent individual who was to be influenced by the argument of counsel? No, Mr. Speaker-to one of the most gifted and distinguished members of the Supreme Court of Canada, who was better able to interpret the law, the order in council and the commission under which he was functioning than any counsel in the room. But what I want to point out is that, had the distinguished colonel been correct in his submission, it was the duty of the commissioner to report that fact to the government, because no man whose evidence from end to end could not be believed when it was taken under oath could sit or hold a responsible position in any department of the government service.
We got a finding upon that point, and the finding is clear. At page 51 of this report of which we have heard so much the distinguished jurist says:
I think it right to say that there is no evidence (nor is there in the evidence any ground for suspicion) that the minister or the deputy minister or any officer or official of the Department of National Defence was guilty of any act of corruption or anything in the nature of corruption.
It is important that if there is anything wrong in the administration of the Department of National Defence it should be corrected at this particular time or at any other time; but it is equally important that if there are
Bren Gun-Mr. McGeer

people in the land who are willing to cast suspicion and unwarranted condemnation upon the department at a time as critical as this they should be exposed. And that is why this matter should now go before the public accounts committee for investigation.
At page 642 of Hansard of February 6, the leader of the opposition says:
Mr. Justice Davis eliminated anything in the way of any suspicion of corruption. I accept that; . . .
Normally that would end the matter; but the leader of the opposition qualifies his acceptance of Mr. Justice Davis's finding, which finding completely exonerates the government, the contract, the minister, the deputy minister, the interdepartmental committee, Major Hahn and the John Inglis Company, the hon. member for Trinity (Mr. Plaxton) and every other member of the House of Commons and the Senate. The finding is a complete exoneration, but the leader of the opposition says this, and I think it will be regarded as one of the most extraordinary statements ever made on the floor of the house:
I say that Mr. Justice Davis, for reasons with which I shall deal briefly, felt that he could not come out and say distinctly that he condemned the minister or the government; he did exonerate them, of course, from anything in the nature of corruption. But in dealing with the methods by which the contract was put into effect ... he did it in a sort of subtle manner by painting vignettes which he hung on the wall for each of us to see and come to his own conclusion.
Mr. Speaker, you might open the commissioner's report at random and find that it condemns by inference the methods by which this contract was negotiated.


Robert James Manion: Hear, hear.


Gerald Grattan McGeer: The leader of the opposition says, "hear, hear"; but probably time and reflection will have their effect. I should like to take the time to congratulate him upon his distinguished career and to wish him success in the future; but I know something of the weaknesses and the failings, and something of the troubles to which dynamic Irish minds are subject, and therefore I say in all sincerity that, largely, his success is measured by the degree to which he uses the brakes that are necessary for all Irish leaders. That puts this matter in an extraordinary light because we are in a new world as it were; we are in a new land and time as far as judicial interpretation or the interpretation of judgments is concerned. By this process of reasoning which the leader of the opposition has developed, where you repudiate the considered, signed statement of "not guilty"-
I Mr. McGeer.]


Robert James Manion: So far as corruption is concerned, yes, that is correct.


Gerald Grattan McGeer: and by using pictures that illuminate the language of the author, you say to the judge, "Oh, yes, you said 'not guilty', but I am taking your vignettes, for therein I see 'guilty' Well, I think we are extremely fortunate in Canada in having a dual language nation. I am tardy myself in beginning, but I believe that every Anglo-Canadian in this dominion would be greatly improved if he learned to read, write, speak and think in the language of old France, just as I believe that every French-Canadian in this great dominion would not suffer from being able to do the same thing in the language of the other race. But I draw the line at this picture language. I do not want to have to plead, in courts where we are going to interpret judgments, in a language of pictures inspired and excited by Irish suspicion that travels at 200 words a minute. There is great danger in his introduction of new ideas; but I say, "Holy Moses, Mr. Leader of the Opposition, don't venture into new languages, we have enough now".
There is another matter in regard to which I think the leader of the opposition has erred, and it is this. He says that we must ignore the finding of the commission to the point of cancelling the contract. It is quite easy to assume the responsibility for cancelling contracts when you do not have to pay the compensation for the cancellation. This is, of course, a contract with the Canadian government. It may produce a profit and it may not.


Robert James Manion: Oh, yes, there is ten per cent plus anyway, so there is a sure profit.


Gerald Grattan McGeer: Well, let me say something else to my hon. friend: You will never listen yourself into difficulties; by your present remarks you have shown that you have not read the contract, or that you cannot understand what you have read. I think this contract is one of the most dangerous from the point of view of the contractor that was ever signed, particularly in the light of the attitude of the opposition and in the light of their hopes of the coming election which will take place before this contract is completed. And then there might be a Pharaoh come into power who knew not Joseph.


Mr. WALSH:: There will be, not might be.


Gerald Grattan McGeer: Another prophet! The
contract provides that all acceptances and rejections are under the control of the Department of National Defence. A comparatively

Bren Gun-Mr. McGeer
small percentage of rejections in a highly technical weapon could wipe out not only the company's entire profits on this contract but involve it in a very substantial deficit. Then, if this contract were cancelled by us, what would be the attitude of the British government? Our contract is complementary to theirs in that they get the benefit of a price much lower than it otherwise would be. They would say to this government, why did you cancel it? We could not say for fraud, because that has been cleared away. We could not say for default, because there is a finding of the commissioner on that point which more than clears the contractor. The evidence on that is found at pages 3105 and 3109, and was dealt with by the hon. member for Parry Sound (Mr. Slaght) last Tuesday evening. It shows that Mr. Gillespie, with thirty-eight years' experience in supervising the production of small arms for the British government, who was lent by the British government to supervise the establishment of this secondary base of supply in Canada, questioned by Colonel Ralston, answered as follows:
Q. And from your experience with them here what do you say as to their efficiency as engineers in charge of production, or in charge of planning for production of Bren guns?
A. I would say they are 100 per cent.
Q. 100 per cent?
A. Yes.
Q. Well that is pretty good.
And the commissioner intervened with this comment:
As the school boy says, it is not good, it is perfect.
What ground then is there for cancellation of this contract? There is no fraud; there is no default. And we have a finding from the commissioner that this contract contains every safeguard needed to protect the government in the matter of developing a correct and proper price, and further the Department of National Defence have Bren gun production costs in the British publicly-owned factory at Enfield to serve as a check on costs here. What more need there be?
But let us assume we are going to cancel the contract, as the leader of the opposition proposes; who is going to pay the bill? The government could not cancel the contract without expropriation proceedings; they could not cancel it without subjecting the cancellation to the review of our own courts and the ultimate review of the privy council. Cancel the contract and you become at once liable not only for the entire amount of the estimated profits to-day, but for the amount of the profits on the British contract as well. Would you wipe out anything else? Yes. One of the great advantages of this contract is something
for which we owe a great debt of gratitude to Major Hahn and the deputy minister of national defence. If hon. members will keep quiet and keep their ears open they will know more when I get through than they did when I started, because I propose to deal with this issue on the facts and on the merits. If hon. members on the other side will listen they will be more inclined to support the work of Major Hahn and the deputy minister than to condemn. They obtained from the British government a contract which makes Canada a secondary supply base for arms for the British empire. We have a finding on that, very definitely set out in the report of the commissioner. The commissioner also finds that by bringing this contract to Canada the 7,000 guns on order will be produced at a saving of S1,300.000 to the Canadian government. The commissioner points out that Mr. Elliott of the Department of National Revenue gave evidence that the saving on capital cost to Canada, which joins with the British government in buying the machinery and at the end owns it all, will be $551,000. That evidence was not disputed and was accepted by the commissioner. And the evidence of Enfield experts and others, which also is not disputed, was that the total cost of production of 7,000 guns under the joint contract will be $800,000 less than it otherwise would be.
Yet we are to throw that away. And what then is the message that goes from Canada to England if the proposal to cancel the contract arbitrarily on the basis of imagination and this picture language and suspicion were followed, what report goes to the motherland? That it is not safe to look upon the Dominion of Canada as a secondary supply base for arms for empire defence? Here is the error into which the leader of the opposition has fallen. To repudiate our Department of National Defence by cancelling this contract would carry with it the inescapable and appalling consequence that we at the same time repudiate the British war office, who signed an almost identical contract with the same company. If there is any justification for the statement recently made by the premier of Italy, that the democracies are too stupid to have any attention paid to them, such an act as that proposed by the leader of the opposition would justify that remark.
One or two other matters I would like to deal with. They say there was gross misrepresentation on the part of the minister and the deputy minister in that it was represented to the war office that this was a firm competent and qualified to produce arms and munitions. My hon. friends say that was false, but we have the findings of the commissioner on that.
80S
Bren Gun-Mr. McGeer

The commissioner finds that it was abundantly clear that long before the Bren gun contract was ever thought of, Major Hahn and his associates were negotiating for the purchase of the John Inglis plant. The John Inglis company plant consists of fourteen different buildings. It was the outstanding Canadian munitions plant during the last war, and its engineers declare that to-day its equipment is in better shape than it ever was.
What did Major Hahn do? Did he go to England and depend upon the letter of introduction and recommendation from Canada? No, not at all. He took with him a complete book of photographs showing every detail of the plant he proposed to use. He took with him, according to the findings of the commissioner, the blue-prints of every building and of every machine, and the capacity of each of them. He took also the reference of his bankers, the Bank of Montreal, of Canada. These records of the plant were handed over to the officials of the war department at Enfield for investigation. It was in the light of that situation, the placing of the facts openly before the war office, that he was able to secure the confidence of the war office officials, and on November 9, almost a year after they had secured the ownership of the plant in Toronto, to have a telegram forwarded to the Department of National Defence that the war office were prepared to let a contract to the John Inglis Company for 5,000 guns.


William Allen Walsh: Five thousand guns.


Gerald Grattan McGeer: Yes, 5,000 Bren guns.


An hon. MEMBER:: What does the hon. member think he said?


William Allen Walsh: The hon. member said
" dollars."


Gerald Grattan McGeer: No.
Mr. LAPOINTE[DOT] (Quebec East): No, no- bad hearing.


Jean-François Pouliot: The hon. member does not understand him.


Gerald Grattan McGeer: I shall have to put it in picture language. On top of that, Major Hahn then returned to Canada, and said, " Here we are; I have a contract from the British war office. If you are willing to come in with them we can go ahead and make Canada a secondary base of supply, thereby guaranteeing to the dominion at the lowest possible price these 7,000 guns which could not be secured in any other way."
What is wrong with that? " Oh, but," my hon. friends say, "you did not call foi tenders." Terrible! Let me say this: Any

man in Canada who had the initiative of Major Hahn could have got the same support and the same opportunity of going to England with the support of this government to bring contracts to put workmen to work in Canada. After he did that work, and produced results, my hon. friends turn round and say, " Well, now, you must let somebody else come in "- on this product of Major Hahn, and Major Hahn alone.
With whom did he compete? British labour opposed that contract coming to Canada. The Birmingham Small Arms Company insisted that it be let to a factory in Birmingham. Major Hahn was able to point out that there would be two great advantages in having this development under way in Canada. It would start the dominion towards developing its own means of defence, and it would provide something now recognized as essential to old country security, namely a base of supply in Canada which would be more secure than anything which exists in the British isles to-day.
That was the work which Major Hahn did. My hon. friends turn round and say, " Oh, well, they bought this old boiler factory." They bought and put into condition a plant with an appraised value of more than one and a quarter million dollars. They have capitalized it as a going concern at that value. They have put into the company $250,000 out of the $300,000 working capital which they agreed to raise in cash. They have sold no stock that has not been within the price fixed by the Ontario commission which has authority to say whether or not a company shall sell stock, and at what price. They are operating under conditions, not that they cannot sell stock, but that if they dare to use this contract or licence for the purpose of exploiting the stock market, such licence is subject to cancellation. What greater guarantee can the investing public have than, in addition to the securities commission of Ontario, this right held by the national government to cancel the licence and destroy the company if there is any exploitation of public funds of investors in Canada.
The Bank of Montreal is even more guilty than we are, because it has not only advised the war office that the company is qualified, capable and competent but also declared that it has personally investigated the finances of the company and knows that the company is quite qualified to carry out the contract. Yet, Mr. Speaker, they say "let us cancel the contract."
When the hon. member for St. Lawrence-St. George (Mr. Cahan) was advising our distinguished leader how to select ministers, and

Bren Gun-Mr. Hyndman
particularly a minister of national defence. I have the greatest respect and the highest regard for the hon. member, and I do think that to-night he has given us an exhibition of what elder statesmanship has to offer to legislative assemblies, in the dignity, in the reserve and in the repudiation of his own associates, who charge fraud, by innuendo, to the point of cancellation. But, Mr. Speaker, I could not help smiling a little. I wondered just what rules governed the appointment as Minister of National Defence of that great and distinguished statesman and soldier the late Sir Sam Hughes. Certainly he was a man of great energy, great ability and great force. He had all those qualities of stump speaking that the hon. member for St. Lawrence-St. George condemns as the reason why the present minister should go.
To anyone who has examined it, the purpose of the government is clear. The contract is not a public ownership contract, but as between private operation and absolute public ownership it stands out as an outstanding example of the Swedish compromise of partnership with the government, with absolute control in the government.
I do hope this matter will go to the public accounts committee so that it may be dealt with on its merits. I do hope that the house will recognize the seriousness of the situation which exists, and that it will also recognize that there are great problems of social needs, great problems of human welfare, great problems of municipal needs and other problems of development with which we might deal, and that this matter	will	not	be allowed	tomonopolize more	time	than	is necessary	tobring our national defence system into the highest state of	perfection.	The people	ofCanada are expecting the House of Commons to move into action on all the problems of the day, and we shall do little but serve the subversive forces of the nation if we haggle in parliament over partisan advantage. There are hustings for	that	kind	of thing. The
hustings would have been the place for most of the speeches we have heard from the opposition in this debate.
A little later on I hope to pay my tribute to the Minister of National Defence, to the deputy minister, to the Department of National Defence and to this government for the great change that has been made during the last few years in the defensive forces of this country. I believe that out of this debate will come a need for greater defensive power, a need which for the time being at least will compel us to forget the balancing of budgets and come to a realization that as other nations have found a need of great programs of 71492-52
defence and great programs of service, we in Canada must go along with the times and see that our monetary technique as well as our defence technique are adjusted to the needs of the nation.


Mr. A. B. HYNDMAN (Carleton):: Mr. Speaker, I do not intend to speak at length in this debate. At the outset I should like to correct the hon. Minister of National Defence (Mr. Mackenzie) who said that those of us who have spoken on this side have attacked this report. No speaker on this side of the house has attacked the report of the Bren gun commission. I have listened attentively to the speeches delivered from the other side of the house and from this side. In none of the speeches delivered from this side was anything said detrimental to the character of the Minister of National Defence or the deputy minister. The whole speech of the minister to-night consisted of praise for himself. Look out for the man who has to do that. We all know he is a Scotchman-
Some lion. MEMBERS:	Hear, hear.


Alonzo Bowen Hyndman: I can well remember
when there was not so much cheering after a speech by the hon. member for Vancouver-Burrard (Mr. McGeer). What we on this side of the house have been criticizing is the ignorance of the Minister of National Defence toward his duties, as has been brought out very clearly in the report of the commissioner. I notice that in their defence of the Department of National Defence the Liberal party put up a number of able lawyers to speak during the last day or so. They put up the hon. member for Parry Sound (Mr. Slaght), the hon. member for Temis-couata (Mr. Pouliot), and the hon. member for Cochrane (Mr. Bradette). What did they say in their speeches? The hon. member for Parry Sound did little but criticize the language of the contract. I well remember the provincial election of 1934 when the hon. member for Parry Sound said over the radio what he was going to do if the Hepburn party were returned to power. He said he would not charge any fees; yet he has drawn down close to 840,000 for the work he has done for the provincial government.
Then we had the hon. member for Temis-couata. I well remember when the report of the employment commission was brought in and how he received it. I remember he threw it on the floor of the house. Then he brought up the question of patronage. He mentioned the brother-in-law of the former



Bren Gun-Mr. Hyndman
Prime Minister, the Right Hon. R. B. Bennett. I want to tell the hon. member for Temiscouata that the Right Hon. R. B. Bennett is going to bring great honour to this country. If I am not mistaken he will become a member of the House of Commons in England, and it would not surprise me in the least if he became Prime Minister of England. Then we had the hon. member for Cochrane. In order to cover up this report, he started a flag-waving act. He introduced patriotism into this debate. Why should that be introduced? I wonder if the hon. member for Laurier (Mr. Bertrand) and the hon. member for Outremont (Mr. Vien) agree with the statement made the other day by the mayor of Montreal.


An hon. MEMBER:: No.


Alonzo Bowen Hyndman: I am glad to hear that. Nevertheless, they are the godfathers of the mayor of Montreal. They nominated him for the mayoralt}' and they supported him during his campaign. Why have they not risen in the house to condemn the mayor of Montreal for what he said the other day? He said that if England and Italy were ever at war the sympathies of the French-Cana-dians would be with Italy. Why has the Minister of National Defence not condemned that statement? I claim that that is a very unpatriotic statement by the mayor and that these hon. members whom I have mentioned should rise in their places and state whether or not they agree with it.


William Alexander Fraser: He was the leader of the
Tory party for a while.


Alonzo Bowen Hyndman: Let me tell the hon.
member who has just spoken that not only did the mayor have the support of the hon. members I have mentioned, but he was elected by the Liberal vote in Montreal and by the promise of this government to spend $12,000,000 on that hole in that city. That was the statement he made on the night of his election. The hon. member for Vancouver-Bur-rard told us to-night that others had a chance to get this contract. No one knew about the contract except Major Hahn. The members of the Liberal party who have spoken claim there was no reason for competition, but in spite of the advice which came to the Minister of National Defence from various sources which I shall enumerate, the contract was given to a private corporation.
First of all, we had a fine interdepartmental committee set up for this very purpose, and they recommended that the contract be awarded by tender. Second, we have Major

General Ashton, chief of the general staff, recommending a government-owned factory. Third, we have the British government insisting that the Bren gun be manufactured in a government-owned plant. Fourth, and not least, we have the Prime Minister (Mr. Mackenzie King) recommending that tenders be called, and we have the Minister of National Defence agreeing with him. Let me quote from page 11 of the report to bear out my statement. Speaking in the House of Commons on April 2, 1937, the Prime Minister had this to say regarding munitions contracts:
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. . . . We agree with him in asserting the principle that no profits should be made out of war.
I am sure every hon. member agrees with that. Then we have the Minister of National Defence agreeing with the Prime Minister. In his evidence before the commission the minister stated that that statement of the Prime Minister was in agreement with his own views. Yet when it came to awarding the contract they did not adopt that course. Why? Well might	we	ask	why,	and	thecountry at large is asking why. It appears that the reason was that the Minister of National Defence seemed set on giving the contract to Major Hahn. The minister in his evidence said that no one had asked for a contract. I think that is a most childish answer. Let me read the minister's evidence. He was answering	questions put	by	Mr. Hellmuth. Mr. Hellmuth asked:
You did not give anybody else a chance?
And the minister's answer was:
Nobody asked for	it.
Nobody asked for	it!	Mr.	Hellmuth went
on:
Q. Mr. Minister, what I want to get you to answer is this: You never did attempt in any method or any way to see what any one of these dozen or more well known companies, with skilled labour, skilled mechanics, who had been working in precision steel-well, let us take the automobile industry which makes the very closest parts and closest tolerances-no effort was made of any kind to see what they could do?
And the minister's answer to that was:
No.
I maintain, Mr. Speaker, that this is a peculiar way for any government to do business. There is a contract to be let; a member of parliament brings down a man, introduces him, and he gets the contract.

Bren Gun-Mr. Hyndman
Let us look at the contract and let us look at Major Hahn. I quote from page 15 of the report:
On seeing the gun both of them (Mr. Plaxton and Major Hahn) went over to it, looked at it and asked what it was. I told them it was the new Bren gun. I do not believe that either of them had ever seen the gun.
Some man to give the contract to for manufacturing the Bren gun when he had never seen it before! It was a man by the name of Major Hahn who was brought down and introduced by a member of parliament to the deputy minister, a man who, as has often been pointed out here, was a radio salesman. He had bought, I will not say an old boiler factory, but a boiler factory which had been closed, and he formed a company, which I must say at the present time looks a fairly good investment. The company consists mostly of Major Hahn with a few office boys and girls, and they will make on the 191,622 shares of stock alone, if they sell them at $7.50 a share, $1,341,634. I consider that really good business.
But what strikes me most in this report is that the Minister of National Defence did not know Major Hahn, and he did not know what was going on. I prove that by quoting from page 28 of the report, where Mr. Hell-muth is questioning the Minister of National Defence:
Q. I am asking you if you knew the personnel of the reliable group?
A. No.
Q. You did not know that?
A. No.
Q. I would like to have that question answered, with all due deference. I would like to know whether you knew whether Major Hahn had or controlled any plant or plants?
A. Not to my own knowledge-certainly not.
Q. Do you know whether he had any company at that time?
A. Not to my knowledge, no.
Q. When dill you find out that Major Hahn had associates, and who they were?
A. I did not know who they were until the article referred to in this investigation (i.e., Maclean's magazine).
So thank goodness that Colonel Drew, who has been under criticism in this house, did write that article because at least he drew this man Hahn to the attention of the Minister of National Defence. The evidence continues:
Q. So that we may say the contract-at the time the contract was signed you had no knowledge of who his associates were?
A. That is quite correct.
I think that proves, Mr. Speaker, that the Minister of National Defence-and he takes responsibility for this contract; he cannot
blame it on his deputy or anybody else- knew absolutely nothing about the contract and knew nothing about Major Hahn.
Let us look at the contract. As far as I can see, from looking over the contract, it has been drawn up by capable lawyers, and I venture to say that technically it is sound. But if I were a manufacturer I would be pleased indeed to get a contract such as this, because according to it, as I figure it out, the government provides everything and Hahn gets the cream. And who is he getting the cream from? He is getting it from the taxpayers of this country. They are the ones who are going to pay the bill. And what confidence, I ask, are the Canadian people going to have in the minister and in the Department of National Defence when he comes to parliament and asks for $63,000,000 to be spent on national defence?
I am going to make two recommendations. They are recommendations that have already been made. They are very brief, and I agree with both of them.
First, I am going to make the recommendation that Mr. Justice Davis makes on page 51 of his report, where he says:
The purchase or production of such munitions or armaments should be put into the hands of an expert advisory group of competent business men-a capable and experienced manufacturer, a commercial lawyer who has had a wide practice in dealing with large commercial contracts, a representative of labour, and say a chartered accountant who has had experience in the examination of substantial business transactions. These persons should constitute a board (which might be known as the "defence purchasing board") and be made directly accountable to the Prime Minister or to the Minister of Finance.
In that last sentence the commissioner is advising the setting up of a board responsible to whom? Responsible to the Prime Minister and the Minister of Finance. If he could see nothing the matter with this contract, why did he not say that the board should be responsible to the Minister of National Defence? But no, he advises that it be taken out of the hands of the Minister of National Defence and put under the Prime Minister and the Minister of Finance.
The other suggestion is this:	We have the
Prime Minister in the speech from the throne suggesting that at this session-[DOT]
Legislation will be introduced .to establish a defence purchasing board with power to purchase equipment for the defence services and to ensure that, where private manufacture is necessary, profits in connection with such are fair and reasonable, and that the public interest is protected.
Bren Gun-Mr. Hyndman

I contend that these two statements, the one from the Prime Minister and the other from Mr. Justice Davis, are enough in themselves to cause criticism of the workings of the Department of National Defence. I agree with the suggestion that has been made by my honoured leader. I would not go so far as to say that the Minister of National Defence or his deputy should be discharged, because in a way they-especially the minister-knew nothing of what was going on, but I will say, and I. think the Prime Minister will find that the people are demanding it, that this contract must be cancelled. We must restore the confidence of the people in the national defence department. One has only to refer to what happened in the old country. When inefficiency was shown in the department [DOT]charged with defence matters, the British Prime Minister was not long in discharging the responsible minister, Sir Thomas Inskip. To restore the confidence of the people in the department, I repeat, this contract must be cancelled.


Mr. C. G. MacNEIL (Vancouver North):: Mr. Speaker, by reason of certain statements made during the course of the debate I am prompted to say a word or two in an attempt to clarify certain issues. I moved the motion of reference to the public accounts committee, and in doing so, endeavoured to state in the simplest possible terms the reasons for the introduction of that motion. The debate since that time has traversed a very wide field, a much wider field than was anticipated. I desire, as I have said, as briefly and simply as possible to bring the discussion back to the central issues, issues which have been largely disregarded, issues which have not been fully and adequately explained and concerning which in some respects no explanation at all has been offered by supporters of the government's policy.
I feel it necessary to explain to the house the motives which prompted me to discuss this contract. I do so because the suggestion has been made by hon. gentlemen opposite that this has been something of a monstrous conspiracy to embarrass the Minister of National Defence (Mr. Mackenzie), to defame his character, and to harass him at this time as he is attempting to repair the defences of this dominion.
There is no such conspiracy. But if the minister is in touch with public opinion to-day; if he is alert to discern what is taking place throughout the country, he must realize that this very effort he has made to make Canada defence-conscious has, by the same token,

impressed upon the country the importance of his duties and responsibilities. A strict accounting may be demanded for every move he makes, because of the extraordinary power he wields at this time on behalf of the dominion.
The Minister of Agriculture (Mr. Gardiner) took pains to refer to the Ross rifle deal in the last war. It is significant that he did so, in view of the fact that the veiy machinery which manufactured the Ross rifle has been shipped to the factory of the John Inglis Company in Toronto.


Mr. GARDINER:: I should just like to point out, in view of some newspaper publicity which has been given to the idea just now expressed, that what I stated was that you require more than machinery in order to make good guns of any kind, and Mr. Hahn was an addition to the machinery.


Charles Grant MacNeil: Well, the minister can
explain his own statement. I just said it was significant he referred to that in view of the fact that the machinery used in manufacturing the Ross rifle was shipped to the John Inglis Company in Toronto. I mention this to point out that this deal is almost on all fours with the Ross rifle deal of years ago: that at that time there was the definite determination to rely on private manufacture; that at that time there was the definite effort to secure a complementary order from the British government; that the deal was proceeded with by the Canadian government of that day largely because of patronage considerations, with the result that British government inspectors were rejecting rifles which were issued to the Canadian troops-issued with results which were well known to all those who served in the great war.
If the house will pardon a personal reference, I desire to say that I was privileged to serve as a machine gunner in the last war. The machine guns with which we were originally equipped were provided by private manufacture; and in looking up the record of this house, the journals, and copies of the orders in council dealing with the purchase of the machine guns, I find that through patronage influence sales were made in opposition to the opinion of the British war office. What was the result? I participated in the result, and for that reason I am concerned as to the outcome of the deal which we are discussing to-day. At a crucial moment, when we were required to protect the infantry occupying a position which was almost untenable, we could not make four guns do the work of one under

Bren Gun-Mr. MacNeil
active service conditions, by reason of faults in design, construction and manufacture; and the mudholes which we occupied at that time became a veritable shambles because of the failure of that equipment to operate. Prominent senior officers were cashiered over that episode, and I should not be blamed by the Prime Minister and the Minister of National Defence if I hold vividly in recollection the memory of comrades who went gallantly to their deaths because they were furnished with faulty equipment by private manufacture resulting from a deal of this kind.
I have in mind a conversation with a gentleman having some responsibility to the reading public of this country, who introduced himself to me. " MacNeil," he said, " I hope this matter will be cleared up to the satisfaction of the people of Canada. Despite all rumours in circulation as to my motives in giving some publicity to sensational statements, I want to make clear my personal interest in this matter. I have a son, MacNeil, of military age, and God forbid that he should be called upon to serve in the defence of this country while the back-door of the Department of National Defence is open to a lot of grafting leeches." And I said, "Amen." Many hon. members in all quarters of the house echo " amen " in their hearts in regard to such a situation. The point at issue is this, that a department susceptible to influences made manifest through the negotiations leading up to the execution of this contract, is certainly a department susceptible to influences which led to such ghastly results in 1915.
I am reminded of the statement made in this house by a gentleman who was then the member for Red Deer when he pleaded with the Prime Minister of the day to take suitable action that the gaze of the men in the field would not be turned on the horrors exposed in the public accounts committee of 1915.
I did hope that instead of the undignified performance in this house to-night by the Minister of National Defence, he would, by some guarantee, some frank explanation, by action rather than by blustering rhetoric; assure the people of Canada that there would be no recurrence of the terrible state of affairs which existed in 1915. When hon. gentlemen opposite say that charges should be made beyond those already contained in the commissioner's report, I wonder if our standard is lower than it was in 1915. It is within the memory of members of this house that when the seventh report of the public accounts committee was tabled in 1915 and the motion for concurrence was made a short
debate ensued in which Sir Robert Borden and Sir Wilfrid Laurier participated; and the then Prime Minister of Canada rose in his place and made it clear and unmistakable that he would not condone or compromise in any way with any suggestion of irregularity or fraud in war purchases. Although no charges were formulated; although no members had been named up to that time, as far as I am aware, he expressed his grave disapproval of the actions of two well-known members of his party, with the result that they were drummed out of public life.
If one reads the memoirs of Sir Robert Borden it is interesting to note that he made it clear that he would not only refuse to compromise with irregularity in the matter of war purchases but would insist, as in fact he did insist, and so instructed the Minister of Militia and the then Solicitor General, that there should be no dealings with middlemen, brokers and promoters, and that their profits would have to be cut out. And never have his political opponents suggested anything against his personal integrity. On many occasions, acting as Minister of Militia, he did enforce his rulings in that regard.
I trust that the Prime Minister will make available to succeeding generations important documents in regard to which a full disclosure may not be made at this time, in order that the verdict of history may deal fairly with the crises of our day. But I do appeal to him that a definite guarantee be given now, a guarantee which has not yet been given, and that a frank and full explanation be made. All that I ask is a clean deal for men who may have to take arms in defence of the country. But there is no clean, straightforward dealing when we have, as we now have, financial manipulation, bartering with company promoters and lack of faith in established Canadian industries.
I do not wish to prolong this discussion, but the Minister of National Defence suggested in the course of the debate that no one has done more than I have to destroy defence. Surely he did not mean that. I share his pride in highland Scotch ancestry and his pride in the contribution made by the highland Scotch to the upbuilding of this dominion. I am not so certain that I have the same pride after listening to the emotional outbursts which to-night characterized almost his entire speech. I also share with him appreciation of the fine qualities of our French-Canadian compatriots, but if he reads carefully the record of the statements that I have made in this house he will recognize that
Bren Gun-Mr. MacNeil

I have never, at any time, opposed all defence. I could not be disloyal because of the very roots of my existence. I am Canadian-born and the background of all my activities is associated with the development and welfare of this country. I have stated repeatedly that it is the responsibility of any government to provide reasonable defence against external danger, but I did question defence expenditures because of the lack of policy which made it impossible to distinguish between defence and offence. I also questioned the competency of officers because of the definite evidence similar to that which is now disclosed in the commissioner's report, that men in high places disregarded the policies enunciated in, and accepted in good faith by, the House of Commons.
The minister says that there is not even the shadow of political patronage in connection with this contract. May I ask him: If there was no political patronage, why did he take this matter in 1936 out of the hands of the interdepartmental committee set up by the Prime Minister to guarantee the Canadian public against such deals, and practically until 1938 refrain from consultation with that committee with respect to the particular contract which was negotiated? Why did he delay consultation with that committee until he was committed to a contract with the John Inglis *Company? What conclusion can we reach after reading the evidence given before the commissioner, when we read of the way in which Major Hahn was introduced to the department under the most favourable political auspices? Major Hahn wanted the hon. member for Trinity (Mr. Plaxton) to accompany him to England because he might be useful, and suggested that his expenses might be paid. These facts appear in the evidence which has been tabled. How can he possibly deny that there is any shadow of political patronage? What evidence has he introduced to refute the statements made on this side that political patronage was the predominating consideration throughout the negotiations prior to 1938? The minister carefully refrained from giving an explanation with regard to the main issue. My respect for the minister would have mounted considerably if he had taken the issues one by one and made a frank statement and explanation.
He said in this house, as on the stand, that he stood for the policy of public manufacture so far as the primary implements of war are concerned. This country was committed at Geneva to the public manufacture of armaments. The Prime Minister has repeatedly assured the house that he intended to pursue
{Mr. MacNeil.]
such a policy. That is the issue, an issue which the minister made no attempt tp discuss. He did not explain why he deviated from the policy of public manufacture. It is true he mentioned the limitation of appropriations made by parliament. He said he had an estimate furnished him that called for $30,000,000 or $35,000,000, and when that was traced to the minutes of the defence council it was found that the estimate related to a group of manufacturing establishments that would meet the entire requirements of all the Canadian forces. The evidence of the chief of general staff and of other senior officers shows that they urged, as the British government urged, for public manufacture in factories operated and controlled by the government. Without an explanation to the public he abandoned only too readily the policy which he enunciated in the house.
No explanation has been given by the minister as to why he deserted the system of competitive bids. He said on the stand that it was the next best alternative to public manufacture. Why, then, did he abandon it when the interdepartmental committee set up by the Prime Minister to protect the public interest urged repeatedly that comparative prices be obtained? He has challenged us from time to time to name firms competent to manufacture Bren guns. Well, the experts on the interdepartmental committee named five or six firms. After a survey made of industrial institutions, government plants, in this country, why did he not seek to avail himself of the machine shops under the control of the government-for example, the machine shop at Prescott equipped for the production of lighthouse instruments, the machine shops of the Canadian National Railways, the equipment already at Yalcartier and Lindsay?
And he proceeds to declare, without relation to the evidence, that this contract has saved this country something like a million and a half. It does not require a lawyer or an expert accountant, but just a little common sense, to understand the situation. Consider the evidence given by Gillespie, who has been quoted frequently. Gillespie explained that at Enfield they had two years investigation and testing in cooperation with the factory in Czechoslovakia and when they proceeded to manufacture the component parts of the Bren gun at Enfield they found themselves practically half-way there, because they had the machinery and equipment. I should like to hear the minister explain why, with any established firm as suggested by the interdepartmental committee, it would not be possible to use the equipment they had for

Bren Gun-Mr. MacNeil
working with precision steel, provide them with the equipment that the government had at Valcartier, with reimbursement as promised in the contract by joint arrangement with the British government for new machinery required, and secure deliveries at a much earlier date than possible with the John Inglis Company.
In this connection I am interested in the manner in which the hon. member for Parry Sound (Mr. Slaght) skirted round this point in quoting from the evidence. Speaking of the ability of the John Inglis Company to manufacture this Bren gun, as reported on page 720 of Hansard, he quoted from the evidence given by Gillespie. No one questioned Gillespie's competency, but I point out that in reading his evidence it is clear that Gillespie was referring then only to the ability of three engineers, Ainsworth, MacLaghlan and Gazey. He said they were quick on the uptake; sure they were, 100 per cent; but that had nothing to do with the ability of the John Inglis Company to go on with the manufacture, because a few pages further on in the evidence he states that they were making satisfactory progress and perhaps they might be able to make deliveries according to schedule. Why are these matters not dealt with more frankly?


Arthur Graeme Slaght: Mr. Speaker, if the hon.
gentleman desires to quote Gillespie accurately he will read his evidence to the house, because Gillespie said nothing of the sort. He did not say "perhaps" they might; he said they were up to their commitments 100 per cent, and would have no difficulty in producing full results.


Charles Grant MacNeil: I read the evidence as reported on page 3105, and I am quite as capable of drawing my own conclusions from the evidence as is the hon. gentleman who has interrupted me. My point is that the portion of the evidence quoted by the hon. member for Parry Sound related to the ability of three engineers now in the employ of the John Inglis Company. But later Mr. Gillespie gave evidence which showed that they were not at that time equipped as my hon. friend desired to give the house to understand when he spoke.


Gerald Grattan McGeer: Would the hon. member-


Some hon. MEMBERS:: Order.


Gerald Grattan McGeer: On a question of privilege, I ask the hon. member if he will allow me to quote the report on that.


Charles Grant MacNeil: Yes.


Gerald Grattan McGeer: The record of that is to be found at page 3109 of the evidence.


Walter Edward Foster: There is no question of privilege in that.


Gerald Grattan McGeer: I understood that the hon. gentleman said he would grant me the privilege of quoting the record.


Walter Edward Foster: If the hon. gentleman
consents I have no objection.


Some hon. MEMBERS:: Go ahead.


Gerald Grattan McGeer: Surely hon. members of the opposition cannot deny me that right.


Some hon. MEMBERS:: We are telling
you to go ahead.


Gerald Grattan McGeer: Mr. Gillespie said:
I have said before the people who are handling it are quick on the uptake, I think they will be able to produce the work all right. I have no fear in that direction at all.
Q. No fear in that direction at all?
A. No, they will work to the program.
There is no "perhaps" about it.


Hugh Alexander Stewart: They "will."


Charles Grant MacNeil: If the hon. member reads on, he will find that they were not then equipped to proceed with the manufacture of Bren guns. Mr. Gillespie was dealing solely with the ability of three engineers.


Mr. DUPUIS:: The hon. gentleman was
not equipped to come to this house.


Some hon. MEMBERS:: Carried.


Some hon. MEMBERS:: Question.


Charles Grant MacNeil: The minister has given
no adequate explanation with reference to the definite statement of the commissioner that the system of supervising the contracts broke down. The minister said in answer to a question in the house yesterday that he had received reports from the interdepartmental committee and he transmitted those reports to the defence committee of the cabinet. At page 2364 of the evidence he is reported as saying:
The only report I ever received was from the deputy minister who was chairman of the interdepartmental committee.
And we find him referring definitely to the fact that the minister received reports not from the committee as such but from the deputy minister in relation to the activities of the committee.
I see, Mr. Speaker, it is eleven o'clock.

Bren Gun-Mr. MacNeil


Charles Avery Dunning: No, it is not. Question.


Some hon. MEMBERS:: Question.


Walter Edward Foster: Only with unanimous
consent.


Charles Grant MacNeil: Owing to the interruptions I have been unable to conclude the remarks I intended to make and I ask you to call it eleven o'clock.


Walter Edward Foster: If the hon. member
calls it eleven o'clock and wants to speak tomorrow, I cannot prevent his doing that, under the rules of the house.


William Lyon Mackenzie King: The hon.
member adjourns the debate, does he?


Charles Grant MacNeil: I desire to conclude my
remarks, but it being eleven o'clock-


William Lyon Mackenzie King: Move the adjournment of the debate.


Charles Grant MacNeil: -at least I have the privilege of moving the adjournment of the debate.
Motion agreed to and debate adjourned.



ADJOURNMENT-BUSINESS OF THE HOUSE

William Lyon Mackenzie King: In regard to
to-morrow's business I assume the first order will be to continue the present debate. That will be the first motion called. But Friday is not a very good day on which to take a division of the house on as important a matter as this, and I understand a number of hon. members would much prefer that the debate should be continued on Monday rather than to-morrow. Therefore it would be the government's intention to-morrow, after the hon. member who has just spoken has finished his remarks, to have someone follow and adjourn this debate and then continue with the orders of the day which appear under government orders.
In that connection I should like to ask hon. members whether, provided we get through the government orders before the day is over, they would not permit us to go into committee of supply to take up some of the estimates of the Department of Agriculture and the Department of National Revenue.


James Shaver Woodsworth: No.


William Lyon Mackenzie King: The only object of asking this is to expedite the business of the house. We can easily adjourn the house if that is preferable to hon. members, but I

would point out that so far the government has not been able to take up one single item of business. We have been here over four weeks and all the time has been taken up with private discussions; there has not been one item of government business taken up thus far. I am asking if we might begin tomorrow with supply if we get through the few resolutions which are on the order paper.


Robert James Manion: I do not wish to start
an argument at this time of night, but the right hon. gentleman says we have not taken up any public business. I consider this the most important business-


William Lyon Mackenzie King: No, I did not say public business, I said government business. I am pointing out that we have now had a month in which private members have practically had control of the house, and the government have had no chance to get on with any of its business. We should like, if we can, to fill out a full day to-morrow, if that is agreeable. We are, however, entirely in the hands of the house.


Robert James Manion: It is understood then that to-morrow, after the hon. member for Vancouver North (Mr. MacNeil) has finished his remarks, this debate is adjourned until Monday.


William Lyon Mackenzie King: It will be adjourned by the speaker who follows him. What about supply? Is there any objection on the part of hon. members to having supply taken up to-morrow-not more than one item? We need not take the whole day; but what the government would like to do is to run through the order paper, paying attention to those items appearing under government orders. We would not take up the act to amend the Pension Act, but we could take up the other two bills on the order paper. Then we could consider the resolutions which are there, exclusive of the one respecting the defence purchasing board. Then, when we have concluded the resolutions, if time permits we would like to occupy the balance of the day with the committee of supply, Department of Agriculture.


Henry Herbert Stevens: Is the Prime Minister not rather optimistic in thinking he can get through all those resolutions?


William Lyon Mackenzie King: I may be, but I do not think they are contentious.


Henry Herbert Stevens: Some of them are.


William Lyon Mackenzie King: If they are, of course we shall not get into supply.

Death oj Pape Pirn XI


James Shaver Woodsworth: I do not think at this stage the Prime Minister should ask that. One or two private members' days have been ruled out already, and the order paper is full. It is becoming a weighty document. And this very matter which is being put off, through no fault of hon. members in this group-we are willing to take a vote to-morrow, as far as that is concerned-


Charles Avery Dunning: We wanted one to-night.


James Shaver Woodsworth: I am willing to stay here and take it, as far as that goes.


Some hon. MEMBERS:: Question.


Some hon. MEMBERS:: No.


Charles Hazlitt Cahan: Eleven o'clock.


Hugh Alexander Stewart: The debate is adjourned.


Some hon. MEMBERS:: Question.


Robert James Manion: The house stands adjourned.
On motion of Mr. Mackenzie King the house adjourned at 11.05 p.m.
Friday, February 10, 1939