1946-07-02

REPORTS OF COMMITTEES


[Stage Direction]
Mr. W. A. TUCKER (Rosthern) presented the tenth and eleventh reports of the special committee on veterans affairs, and moved that the tenth report be concurred in.
Motion agreed to.

[Stage Direction]
Mr. RALPH MAYBANK (Winnipeg South Centre) presented the second report of the special committee on radio broadcasting, and moved that the report be concurred in.
Motion agreed to.


[Stage Direction]
Bill No. 201, for the relief of Marie Olivette Marthe Pepin Giguere.-Mr. Maybank.
Bill No. 202, for the relief of Evelyn Helen Deeb Kouri.-Mr. Maybank.
Bill No. 203, for the relief of Rose Dawson Brady.-Mr. Stuart (Charlotte).
Bill No. 204, for the relief of Shirley Boyd Fuller Dichow.-Mr. Maybank.
Bill No. 205, for the relief of Beatrice Emily Young Crane.-Mr. Maybank.
Bill No. 206, for the relief of Martin Thomas Walsh.-Mr. Maybank.
Bill No. 207, for the relief of Anna Blumen-thal Gillman.-Mr. Maybank.
Private Bills
[Stage Direction]
Bill No. 208, for the relief of Annie Solomon Birnbaum.-Mr. Maybank.
Bill No. 209, for the relief of Katherina Demidovich Zouikin.-Mr. Maybank.
Bill No. 210, for the relief of Herbert Beat-son De Gruchy.-Mr. Maybank.
Bill No. 211, for the relief of Luc Chadillon. -Mr. Stuart (Charlotte).
Bill No. 212, for the relief of Mary Innocent Gorman Martin Gillean.-Mr. Weir.
Bill No. 213, for the relief of Maurice Olivier Singfield.-Mr. MacLean.
Bill No. 214, for the relief of Myrtle Ethel Anderson Hamil.

Mr. Maybank.
Bill No. 215, for the relief of Allan Reginald Duncan Woolley.-Mr. Maybank.
Bill No. 216, for the relief of Ida Portnoi! Clarke.-Mr. Maybank.
Bill No. 217, for the relief of May Andria Thistle Shirres Richardson.-Mr. Maybank.
Bill No. 218, for the relief of Florence Margaret Louise Jekill Wiggett.-Mr. MacLean.
Bill No. 219, for the relief of Pauline Frances Beaton Bridgeman.-Mr. Maybank.
Bill No. 220, for the relief of Mildred Helen Cavers Watson.-Mr. Maybank.
Bill No. 221, for the relief of Paul Martial Chevalier.-Mr. Maybank.
Bill No. 222, for the relief of Dorothy Catherine Benson Hunter.-Mr. Stuart (Charlotte).
Bill No. 223, for the relief of Pauline Francesca Evans Gladwish.-Mr. Emmerson.
Bill No. 224, for the relief of Mary MacDonald Short Browne.-Mr. Maybank.
Bill No. 225, for the relief of Solomon Shulman.-Mr. Maybank.
Bill No. 226, for the relief of Robert Patrick Warren;-Mr. Maybank.
Bill No. 227, for the relief of Elsie Alvina Hirsch Sidaway;-Mr. Maybank.
Bill No. 228, for the relief of Sadie Joseph Saikaley Charles.-Mr. Maybank.
Bill No. 229, for the relief of Arthur Corey Thomson.-Mr. Maybank.
Bill No. 230, for the relief of Jean Wilbur Cassils Dawes.-Mr. Maybank.
Bill No. 231, for the relief of Jean St. Claire Macdonald Routledge.-Mr. Maybank.
Bill No. 232, for the relief of John Anderson Hutchins.-Mr. Maybank.
Bill No. 233, for the relief of Ivy May Baylis Lariviere.-Mr. Maybank.
Bill No. 234, for the relief of Muriel Gertrude McKnight Carroll. Mr. Maybank.
Bill No. 235, for the relief of Ermina Taccani Roncarelli.-Mr. Maybank.
Bill No. 236, for the relief of Violet May Armour Smith.-Mr. Maybank.
Bill No. 237, for the relief of Beatrice Caroline Lock Norman.-Mr. Maybank.

Bill No. 238, for the relief of Blanche Belanger Mullin.-Mr. Maybank.
Bill No. 239, for the relief of Alfred Goodman.-Mr. Maybank.
Bill No. 240, for, the relief of Charles Thomson.-Mr. Maybank.
Bill No. 241, for the relief of Hannah Green Turton.-Mr. Maybank.
Bill No. 242, for the relief of Ida Solomon Caplan.-Mr. MacLean.


[Stage Direction]
Hon. HUMPHREY MITCHELL (Minister of Labour) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to amend the Unemployment Insurance Act, 1940, to provide for clarification and re-arrangement of its provisions and of the procedure to be followed thereunder; generally to enlarge the scope of the Act to extend the application of the provisions and benefits of the Act and of the qualifying period for insurance to certain veterans and merchant seamen.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I might give the house a little information with respect to the matters of price control in the United States and the attitude of this government towards the possible consequences thereof.
On June 30, the emergency legislation in the United States which authorized price, rent and rationing controls expired. As I understand it, the consequence is that there is at the present time under federal law no price control, no rent control and, with the possible exception of sugar, no rationing in the United States. There are, of course, certain states and municipalities which have taken emergency measures or maintained existing regulations which are not affected by the. expiration of the federal law.
This situation has, not unnaturally, raised certain questions in the minds of many Canadians. The government feels that the first opportunity should be taken to assure parliament and the country that there is no intention of abandoning similar controls in Canada.

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Developments affecting prices in other countries, particularly the United States, are, of course, not without their effect upon Canada. Our policies have, in the past, and will, in the future, necessarily continue to have such developments in mind.
Price control, rent control and the control of supplies existed in Canada before they were adopted in the United States. Canadian regulations, while similar in objective to those in the United States, have often differed quite widely both as to their form and their nature. In other words, we in Canada have followed our own course, which we believe is well adapted to Canadian conditions and to the Canadian economy. We shall continue to follow policies which we believe to be in the general interest, making, from time to time, such modifications as seem to be required in the light of internal and external conditions as they develop.



FOREIGN EXCHANGE CONTROL


[Stage Direction]
Hon. DOUGLAS ABBOTT (for Mr. Ilsley) moved the second reading of bill No. 195, respecting the control of the acquisition and disposition of foreign currency and the control of transactions involving foreign currency or non-residents.
Mr. J. M. MACDONNELL (Muskoka-Ontario):: Mr. Speaker, I would like to make one or two comments on this bill. I rather anticipated that there would be a statement from the minister. I had understood that there was to be a motion to refer the bill to the banking and commerce committee. Did I misunderstand?


Mr. ABBOTT:: No; that is correct. I had intended to say a few words, Mr. Speaker, although I have no intention of making a speech on the second reading, because the Minister of Finance (Mr. Ilsley), when the resolution preceding this bill was introduced, made an extended statement outlining the purposes of the bill. He indicated at that time that after being given second reading the bill would be referred to the banking and commerce committee. That is the intention of the government, and the motion for second reading as put should include that the bill be referred to the banking and commerce committee. As the minister indicated, there is no desire to curtail debate on the second reading, although in the interest of expediting the business of the house I perhaps might express the hope that the greater part of the discussion and questions with respect to this rather technical bill might well take place before the banking and commerce committee.


James MacKerras Macdonnell: Mr. Speaker, I agree with the suggestion of the minister and I wish to make just one or two brief comments.
This bill is one of very great importance, not only because of the matters contained in it, but because I think it is another step towards the further control of our lives by experts. Now experts are very good poeple, and in the last several years we have had to submit to them in many ways, and we are not going to get rid of that for some time. But I do feel that in considering a bill of this kind we should bear in mind its far-reaching implications, and that it is, whether we wish it or not, another step to a controlled economy.
In particular I want to make one suggestion, which can be further considered in the committee, but I am making it now in the hope that possibly it may not become a matter of party difference. The suggestion I make is that this bill should not be made of indefinite tenure, but that it should be for a limited period. The emergency powers bill was for a limited period, and I suggest it would be very desirable that this bill be for a limited period, for this particular reason: if it extends for an indefinite time it just goes on and on, and people get used to the idea, and there is no opportunity for it to be reviewed. It becomes part of the landscape. I do suggest, and this is the only point on which I shall take up the time of the house, that the government might very seriously consider whether this bill, like the emergency powers bill, might not be made for a special period. Then it could, if necessary, be extended. That would have two results. First of all, the act will have to come up and justify itself. Secondly, and perhaps most important, if it is for a special period, then those in charge of its administration will almost automatically have moral pressure put upon them to try during that period to work towards a situation where it may no longer be necessary to continue it.


Mr. ANGUS MacINNIS (Vancouver East):: Mr. Speaker, it is not my intention to discuss the bill at this stage. We believe that the proper procedure is the procedure being followed, to have the banking and commerce committee deal with the bill, and if there is anything further we wish to say, we can say it when the bill is reported back to the house.
There were two points made by the preceding speaker (Mr. Macdonnell) on which I should like to comment briefly. He said that this was perhaps just another step in the control of our lives by experts. Well, if there is anything that is worse than being controlled by experts it is being controlled by people who
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are not experts and that is what I imagine we had prior to the creation of the foreign exchange control board. I am sure the hon. member for Muskoka-Ontario would be the last one to suggest that foreign exchange control when it was first introduced did not serve a useful purpose at a very critical time. As it is apparent that that critical time has not yet passed, I think the measure should be extended for a further period. Whether a time limit should be provided in the bill itself, I am not prepared to say; it is one of the things that can be discussed in the banking and commerce committee. I am willing to
save that point until the committee reports.


Mr. VICTOR QUELCH (Acadia):: Mr. Speaker, I have just a few comments to make regarding the general principle and purpose of the bill, because after all we do endorse the principle on second reading. On the resolution stage, on June 17 last, I stated that this group believed it would be in the interest of Canada to maintain the foreign exchange control board as a peacetime measure. We believe that the board served this country well during the war, and that it can have a very important part to play in the future. But when I said that I made it quite clear that I did not mean that in supporting the principle we approved all the policies of the board in the past or as it operates to-day.
There is one statement in the preamble which I would like to read, and then explain the situation with regard to it. At line 13 of the preamble we find the statement:
And whereas it is desirable to provide means for achieving orderly exchange arrangements and in general discharging the obligations of Canada as a member of the international monetary fund.
When the Bretton Woods agreement was before the house for discussion last year, I think we of this group made it quite clear that we were opposed to that agreement. However, parliament decided , that we should become a member of the international monetary fund, and also of the bank of reconstruction. A sufficient number of other nations agreed to join the fund, and therefore it is understood that we are going ahead with the Bretton Woods agreement, and that the machinery for the fund, and the bank, are being set up. That being so, although we are still of the same opinion, that it would be a good thing for the world at large if the Bretton Woods agreement were dropped, nevertheless, in view of the fact that it is being gone on with, we think it important that everything possible should be done to make the fund work in the interests of Canada and of the world as a whole. But we emphasize the view that we should be

very careful not to sign any more agreements which will still further restrict the action of the foreign exchange control board. In saying that I have especially in mind the United States proposals for expansion of international trade.	.
We are convinced that the Bretton Woods agreement will not prove a success unless the creditor nations are prepared to make far-reaching changes in their trade policies. Unfortunately there does not seem to be any sign on the part of the creditor nations that they intend to make those changes. The Minister of Finance, in his speech on June 17, seemed very uncertain regarding the future condition of international affairs. He seemed to have grave doubts in his mind as to just what was going to happen. I should like to quote his remarks in that regard, to be found on page 2547 of Hansard:
I should like to summarize what I have said in this way. The general character of the international financial and economic relations between nations which is going to prevail in the future is still uncertain. We hope that it will be one which does not call for restrictive controls and we shall do evertyhing in our power to bring this about. But we cannot be certain that the world we are going into will be what we would like to see. It may be a world of economic friction instead of cooperation.
I should like to pause there to say that I wonder whether if the minister thinks that capitalizing on the distress of certain nations resulting from the war, to force those nations into adverse, even suicidal agreements such as that of Bretton Woods, will help to remove that friction I wonder whether the minister really thinks that to force nations into these agreements helps to establish good will, restore confidence and prevent the development of the kind of friction which he seems to be afraid of. I would further ask whether the discussions which have already taken place between the United States and Great Britain on the proposed loan have helped to increase good will between those nations. I believe everyone who has read the discussions which have taken place about it in the United States and Britain must agree that the situation has been further aggravated and more friction has developed. I proceed with the minister's speech:
We cannot demobilize our main economic defence without being absolutely certain that it will not be needed. We cannot leave ourselves in a position where our choice of domestic economic policies has to be influenced by the consideration that one policy or another may lead to capital withdrawal by foreigners or capital flight by Canadians.
Let me say here that if that is true of Canada, as a gold producer and as a nation which in the past has been able to maintain a favourable balance of payments for a number

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of years, how much more true must it be of those nations which are not gold producers and have had the experience of a chronic unbalance of trade in the past.
But the next statement of the minister is one to which I particularly wish to draw the attention of the house, because it appears to be a very peculiar statement to make at this time:
We have no intention of using this exchange control legislation to restrict anything but certain types of capital movement.
This is the point I want to refer to:
We expect to be able to avoid any interference with current account transactions.
Why should the minister say that we expect to avoid any interference with current account transactions? He knows very well that by the Bret ton Woods agreement we have to avoid it whether we like it or not; we have no power under the agreement to interfere with current accounts; therefore why does he say that we expect to be able to avoid this interference? Is he starting now to doubt whether we can carry out the Bretton Woods agreement?
Mr. BLACIvMORE:	Perhaps he understands it a little better now.


Victor Quelch: The Minister of Finance was under the impression that we would be protected under article VII, which provides that when a scarcity of currency develops we are allowed to place restrictions against the imports of nations whose currency is scarce. But unfortunately article VII applies only when a scarcity of currency develops in the fund; it does not apply when a scarcity of currency develops within any one nation. The mere development of scarcity of currency within one nation does not permit that nation to place a restriction against the imports of the nation whose currency is scarce.
The minister in his speech proceeded to emphasize the need for the stabilization of exchange. But I think he must be careful not to confuse effect with cause. Fluctuations in rates of exchange, apart from speculation, are very largely the effect of adverse trade balances. Nations in the past have devalued their currencies in order to expand exports and thereby balance their trade. The monetary fund definitely limits that pow-er under articles IV, V and VI, and under article VI proceeds to penalize a nation which is unable to balance its trade over a period of time.
Take the position of Canada prior to the war, and again to-day. The minister refers to it on page 2540 of Hansard. He states:
With the United Kingdom, the rest of the sterling area, and with the continent of Europe, we had a surplus; with the United States wo had a deficit.
Surely the logical solution of a condition of that kind would be an attempt to expand our imports from the United Kingdom and the rest of the sterling area, in order to make it possible for them to balance their trade with us, and either expand our exports to the United States, or, if they refused to buy, curtail our imports. Unfortunately, however, we no longer have that power. Under the Bretton Woods agreement we have given up that power, so that we are unable to restrict imports from a nation which insists upon having a favourable balance of trade with us. Under the United States proposals for the expansion of trade, that power will be still further restricted. Of course, so far as I understand it, Canada has not signed the United States proposals. Britain was forced to sign them in order to get her loan, and I think it is generally understood that Canada intends to sign as well. But again I say that if we want to make the Bretton Woods agreement succeed we should be very careful not to place any further handicaps on our foreign exchange control board.
While the minister refers to the fact that, under article VII, when a currency becomes scarce the nations are allowed to place restrictions against imports, on the other hand the nation which everyone has in mind when talking about scarce currency is, of course, the United States of America. Personally I am very doubtful indeed whether the United States will allow her currency to become scarce, because if she were to allow a scarcity of her currency with the fund, then the nations of the world would be allowed to place restrictions against imports from the United States. It is far more likely that the United States will expand her loans to other countries, or buy gold, thereby preventing her currency from becoming scarce in the fund, and thereby preventing other countries from exercising any controls or restrictions whatsoever against imports from her. Of course, by making loans, they gradually buy up the capital assets of the debtor nations, and you have a vicious form of American imperialism in operation.
One of our main complaints against these proposals is that they do not provide in reality for the stabilization of the currency at its real value, but merely in terms of gold; because no provision whatsoever is made in the Bretton Woods agreement- or in the United States proposals for the stabilization of price levels. And of course the real value of money must be based upon the purchasing power
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In order that Britain may meet her obligations under the Bretton Woods agreement and under her loan from America, we are told that she has to expand her exports by seventy-five per cent. We are entering into competition with Britain for markets in Latin-America, and we are also trying to expand our exports. That is bound to result in keen competition. With that kind of policy I am not surprised that the minister states he views with some alarm the kind of world which may be developing, because Canada is taking an active part in helping to develop international friction. The statement goes on:
Markets must be found for $1,750,000,000 to $2,000,000,000 worth of exports if Canada is to maintain employment and income at desirable levels, according to the opinions of dominion economists.
The United States is expected to continue, in the long run, as Canada's best peace-time customer. The United Kingdom, which formerly tied sometimes with the United States for first place in Canadian trade, -will be unable to approach her pre-war purchasing rate unless pending loans from the United States and the dominion are approved.


Douglas Charles Abbott: Would the hon. member permit a question? Where is this magazine published? I got the name but I did not hear W'here it was published.


Victor Quelch: I have not seen it before. It is an interesting weekly magazine on world affairs. I think all hon. members received a copy of it.


Mr. MacKINNON:: Published in the United States.


Victor Quelch: Was this sent out with the compliments of the Minister of Trade and Commerce ?


James Angus MacKinnon: Not by me personally; it may have come from my department.


Victor Quelch: I do not know who sent it, but they told me to read page 34, and page 34 is worth reading.


James Angus MacKinnon: I imagine that was the opinion of the person who sent it to the hon. member.


Victor Quelch: Yes. I presume this article was written by a Canadian, a member of the Department of Trade and Commerce. At any rate it was written by somebody thoroughly familiar with the figures.


James Angus MacKinnon: To keep the record straight, I think the article is an observation of a United States writer in a United States magazine.


Victor Quelch: And the information was supplied, I suppose, either by the Department of Trade and Commerce or by some confident-

ial source. I will not suggest that any official secrets have been disclosed. By way of comment on it I would say that the only way Britain can expand her trade and meet her obligations is by Canada and the United States buying more goods from Britain. Apparently we are not so much interested in that as we are in expanding our exports, because time and again the Minister of Finance has stated in this house that we shall use large amounts of our sterling balances not for the purpose of buying more goods from Britain but in order to meet obligations to the United States. One wonders just how Britain will be able to meet her obligations if the United States adopts the same tactics.
I was quite interested in a Canadian press dispatch which appeared in the papers under date of June 26. The heading of the article is:	"United States Opposition May Delay
Anglo-Canadian Wheat Pact", and it reads as follows:
United States opposition to the proposed Anglo-Canadian wheat agreement may delay negotiations but will not prevent an agreement being reached, officials in touch with diplomatic and market aspects of the question said to-day.

It was freely admitted, however, that the United States has presented to the Anglo-Canadian negotiators a number of factors that must be considered:
These are:
1.	The reaction in the United States if the purchase agreement enables Britain to buy wheat from Canada over a long period at a price little more than half that which American farmers are receiving.
I am specially interested in the next point:
2.	The inconsistency of such a bilateral agreement in the light of the white paper issued by the State Department last December and endorsed by Britain calling for an international effort to remove trading discriminations and put world commerce under control of multilateral agreements ensuring free opportunity to all.
It is understood the British negotiators, led by Food Minister John Strachey. were asked to consider what the effect of a bilateral agreement to purchase Canadian wheat would be on the congressional debate over approval of the $3,750,000,000 loan to Britain.
I read that because I am interested in the view expressed by officials of the United States, that they consider this agreement to be a contravention of the white paper. When we were discussing the Bretton Woods agreement last year we warned that by signing the agreement we would be making it difficult for Canada to make trade agreements with countries in Europe; that these trade agreements might be regarded by the United States as a contravention of the Bretton Woods agreement. Now when the first major agreement comes up, the United States apparently is objecting to it on the ground that Britain

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is breaking her obligations under the white paper. I take it that the white paper is not the Bretton Woods agreement but the United States proposals for expansion of world trade. Maybe that is the proposal which Britain signed, .but so far we have not signed it. But an agreement must be between two people; it cannot be on the part of one only. Therefore if the countries in Europe are bound by an international agreement with the United States, it becomes impossible for us to make a contract with them which is a violation of their agreement with the United States.
Another point I want to bring out is that we are asking the farmers at the present time to accept prices considerably lower than world market prices, on the understanding that we will have a long-term agreement for the future under which they will receive good prices. Now apparently we are finding it difficult to make these long-term agreements. Again I emphasize that we must be very careful, not to sign the United States proposals for an expansion of world trade until certain amendments have been made to those proposals.


Mr. BLACKMORE:: We have signed too many already.


Victor Quelch: Yes, but we do not want to make it worse by signing more. If anything, we should try to amend the existing agreements, though I know that is practically impossible. The important point is that control of foreign exchange should be for the purpose of helping to maintain the development of a nation's resources at an optimum level. As long as nations are willing to balance their trade, there need foe no difficulty in stabilizing the rates of foreign exchange. On the other hand when creditor nations refuse to accept payment in goods, thereby forcing other nations into debt, currency devaluation is bound to ensue as a necessary protection. That was one of our main complaints against the Bretton Woods agreement-that while it removed a nation's defence, it did not remove the causes which made a nation want to make use of that defence. Therefore I would say the consequence of the Bretton Woods agreement and of all these international agreements may very well be not an expansion of international trade but a reduction of imports and an intensification of economic nationalism. Already we are seeing that very thing take place in Great Britain; it has been referred to on more than one occasion by Prime Minister Attlee. He has spoken of the need to reduce imports in order to meet their foreign obligations, and the need to develop their own resources to a greater extent so that they will
not have to depend upon the resources of other nations. That is the attitude Britain is taking to-day after signing an agreement supposed to be for the purpose of expanding trade. Already in Britain it is having the effect of intensifying economic nationalism. So I would go so far as to say that the inevitable consequence of the operation of these various international control measures will be an intensification of economic nationalism, unless there is a complete change of policy on the part of the creditor nations, of which there is no sign at the present time.
Under the Bretton Woods agreement the Canadian dollar is to be valued in terms of the United States dollar or gold; and I understand it will be largely the responsibility of the foreign exchange control board to maintain, that relationship. Suggestions have been made by a number of people, and suggestions were made in this house on June 17, that it would be in the interests of Canada to maintain the Canadian dollar on a parity with the United States dollar. When the hon. member for New Westminster (Mr. Reid), I think it was, made that suggestion on the 17th I stated that I did not think it would be to the advantage of Canada to maintain parity with the United States. Unfortunately at that time Hansard dropped the word " not," giving my words the opposite meaning; but on every occasion this matter has come up in the house I have objected to the suggestion that the Canadian dollar should be placed on a parity with the United States dollar. My reason for taking that position is this: If that parity is established, either Canadian exporters will receive ten per cent less for their exports or the foreign purchasers will pay ten per cent more. In either case Canadian exports will be discouraged; and in view of the fact that the United States is our main, or perhaps I should say our only, creditor, the present need is to encourage our exports to that country rather than the reverse. If we raise the value of the Canadian dollar, in terms of the United States dollar, by ten per cent, then under the Bretton Woods agreement our currency will be raised ten per cent in relation to the currency of all nations, not merely that of the United States, because all currencies are convertible under the Bretton Woods agreement. So our primary producers may be at a serious disadvantage in competing with nations such as Australia, the Argentine, New Zealand, and perhaps in the future Russia, because of the fact that their currencies are already depreciated considerably below the Canadian dollar. Moreover, Australia, Newr Zealand and Russia have not signed the Bretton Woods agreement; therefore in
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future they will be able to devalue their currency to any extent they see fit, while we, having signed the Bretton Woods agreement, would be able to devalue our currency only ten per cent below the rate set when we joined in the agreement. Therefore it does seem to me that as long as we are under the Bretton Woods agreement, which in my opinion represents nothing more or less than laissez-faire capitalism, cut-throat competition and American imperialism, we must protect ourselves by maintaining the Canadian dollar below the United States dollar, because once we set the value of the Canadian dollar we are allowed to vary it by only ten per cent one way or the other without the permission of the fund.
So let us hope the day will come when the creditor nations will recognize their responsibility to balance their trade. Then and only then, I believe, the exchange rate of the Canadian dollar with any other unit of currency can be established on the basis of the internal price level in Canada as compared with the corresponding price levels in other countries. Then one of the main causes of international friction and international trade restrictions will be eliminated, and international trade may help promote good will and friendship. Then perhaps the minister will be able to look to the future with less fear than he looks to it to-day.


Douglas Charles Abbott: I have only a word to add


Mr. SPEAKER:: Order. If no other hon. member wishes to speak the minister will close the debate.


Mr. BRACKEN:: I have just one question, with respect to procedure. I understand this bill is to go to the banking and commerce committee; that it will not first be considered in committee of the whole, but that after it comes back from the banking and commerce committee it will come up for consideration in committee of the whole?


Douglas Charles Abbott: That is correct.


Mr. H. R. JACKMAN (Rosedale):: May I say just a few words in regard to this bill before it. is referred to the banking and commerce committee. I have no fixed opinion as to the rightness or wrongness of continuing the foreign exchange control board, whether temporarily or permanently, though I might say that as far as one can see from the bill it is the intention to continue the board for ever. Certainly one could not have any strong objection to continuing the controls we now have until the Bretton Woods agreement conies into operation and we have at least that slight uncertainty out of the wa5r. How-

ever, sir, I do approach the question of all these government controls from the point of view that the fewer we have of them the better off we are; and that applies to foreign exchange control as well as to any other control. There may be some advantages to some types of business men in having controls, some inefficient business men as well as some efficient ones, but on the whole I believe business men wmuld rather do without them. I think it is in the best interests of all our people that we should have free, competitive business wherever possible; and it is a sign of weakness that we should have to resort to controls in regard to our foreign exchange. The United States, which is a strong monetary power as well as a strong physical and industrial power, does not have to resort to foreign exchange control to protect its currency or its national economy.


Douglas Charles Abbott: It is the only country in the world that does not.


Harry Rutherford Jackman: We are adjacent to the United States. I take it my hon. friend the Minister of National Defence (Mr. Abbott) is acting for the Minister of Finance in his absence; and if he thinks the United States is the leading nation in the world I suppose there is no reason why we should not follow in the footsteps of that country in regard to foreign exchange control, just as of necessity, because of our similar economic conditions, we follow in the footsteps of the United States in other ways.


Douglas Charles Abbott: I did not say she was the leading nation in the world.


Harry Rutherford Jackman: You said it was the only nation that did not have to resort to control. Certainly we all know that because another great country had taken on financial responsibility in connection with the war, by force of circumstances, the United States alone had a currency which had convertibility everywhere in the world. The Minister of Public Works (Mr. Fournier) and I both remember that when w-e were in Portugal. The value of the pound in American currency was about $2.40, but the American dollar, which I believe was on a gold basis at that time, was the medium of exchange that could be depended on, that obviously had purchasing power. If you had an American dollar you knew you had something. I should like to see our Canadian dollar on the same basis. There may be a fear at the present time that the Canadian dollar will go to a premium over the American dollar, because intrinsically our dollar is a stronger dollar; it has more purchasing power at the present time.

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Mr. MITCHELL:: It is a sounder dollar.


Harry Rutherford Jackman: The minister, speaking on his own behalf, although I am sure he shares the confidence of the cabinet, says that our dollar is the stronger dollar. Why should we prefer to have it at a ten per cent discount? That is an artificial situation. Many of our industries, such as newsprint, find that the profit on their product, which is sold largely in the United States, depends upon the exchange. The United States dollar commands a premium now, and there might be great repercussions if we allowed our dollar to go to a premium over it.
This brings me to the point which I mentioned earlier, that I am quite willing that we should have control until we find out where we are going to be after Bretton Woods, which, as I understand it, will have to do with the setting of what the interrelationships of foreign exchanges are to be. Until that time let us continue it, because we may find that the Canadian dollar will not sell at ten per cent discount vis-a-vis the American dollar and ten per cent premium vis-a-vis sterling.
I should like to point to one or two considerations which are in my mind as we consider this bill, which is to be sent to the banking and commerce committee. First I should like to ask how much better off Canada would have been in 1939 than she was had we had foreign exchange controls during the thirties, with all the nuisance of the forms and regulations which foreign exchange control entails. The government of the day did a very good job in 1939 in clamping on the controls and freezing all capital movement and current account movement between Canada and other countries. We were thus able to conserve our currency, and subsequently by means of the Hyde Park agreement Canada was able to exercise a beneficial control over her international exchange account. How much better off would we have been had we had foreign exchange control prior to 1939? How much better off shall we be if we continue foreign exchange control now, with all the nuisances that accompany it, if at some future time an emergency such as a war should arise? Shall we be better off with that control than we would be if we allowed exchange to take its normal course, and clamp on the control when an emergency arises? It seems to me that if we maintain controls now, there is some validity in the comparison of a nation keeping a standing army in peace time. There are certain things a nation can afford and certain things it cannot afford because they are not worth while.
While there is relative freedom on current account as far as international trade is concerned, that is in anyone getting foreign exchange in order to purchase goods abroad, and also in selling foreign exchange which we receive for goods we have sold abroad- there is not much difficulty in connection with current account-on capital account transactions, however, there are definite restrictions. In other words if a Canadian wishes to make a new investment in the United States or some other country, he is prevented from doing so by the regulations now' in force.
May I just make an observation here which I think has some consequence. I do not think it is too much to say that the fact that Great Britain through her early history had a free capital market whereby her nationals could invest money anywhere in the world, the fact that she had built up a large foreign investment reserve, the fact that that reserve was available at the outbreak of the war before the United States adopted lend-lease and when Great Britain had to pay cash on the barrel head, saved civilization. I do not think it is an exaggeration to make that statement. It certainly gave Great Britain a chance to get goods and munitions to hold off the enemy and give the rest of us on this side of the Atlantic a chance to arm for the conflict.
While some reasons may be advanced why foreign exchange control on capital account should be maintained, I wonder if we fully understand the advantages of having a free capital market. If we were so unfortunate as to become engaged in another war and found that our nationals had large investments abroad, or across the border, we could realize on those investments and immediately get goods or munitions into our country' where we would need them. It would be much more valuable than to have foreign investments than it would be to have the money or capital in our own country. You are able to control your own country anyway, but you cannot tell Uncle Sam or someone else what his nationals are to do. If you have gold or investments in their countries they will be quite willing to take those investments and ship you the necessary goods. I raise this point and perhaps those in charge of the foreign exchange control board will be able to answer me satisfactorily.
There are only one or two other points, some of consequence, which I wish to raise. First, foreign exchange control is a frightful nuisance to a business man and to individuals. If you want to send a magazine subscription to the United States, or pay dues of some sort, you have to send to the bank and fill out
Foreign Exchange Control

forms. If you want a larger amount for . travelling, you have to write to the board and submit everything to scruthty.


Douglas Charles Abbott: I have forgotten the limit, but I think one can get anything up to $25 without any permit.


Harry Rutherford Jackman: You have to go over to the bank and fill in the forms.


Douglas Charles Abbott: No. You can go into a post office and get a post office money order in United States funds.


Harry Rutherford Jackman: I wanted $6 to send over as a registration fee to a meeting I was attending in Boston, and I know my secretary had to go and fill in those forms. Then I wanted some money for travel in the United States, and it was necessary to fill out other forms. You must surrender these forms when you cross the border.


Douglas Charles Abbott: That is for travelling.


Harry Rutherford Jackman: I have found that the minister sometimes is not so well informed on these matters.


Douglas Charles Abbott: I am not omniscient, but I do know that you can get up to $25 or $50 for ordinaor purchases in the United States without filling in any form.


Harry Rutherford Jackman: It is a matter of fact, and there is no use arguing about it. Neither of us is certain. I am only reciting my own experience. If you want a substantially larger amount for summer vacation purposes in the United States it is necessary to write to the foreign exchange control board and have them pass upon it. Then you go through the procedure of actually filling in the forms to get the exchange. If my hon. friend does not believe it, let him try it.


Douglas Charles Abbott: I have done it without
oing that.


Harry Rutherford Jackman: I was not aware there was any ministerial pull.


Douglas Charles Abbott: I just went into the bank in the ordinary way and filled out a form.


Harry Rutherford Jackman: These are matters of 'act which the minister can find out himself.
I leave it to him to find out. I am simply reciting my own experience in the city of Toronto.


Douglas Charles Abbott: Everything is different
there.


Harry Rutherford Jackman: However, I will say this on behalf of the board. It is convenient for traders on international account to know that they can buy foreign exchange at a fixed rate and sell it at a fixed rather than a fluctuating

rate. But the danger is that if these rates are artificial and are sometimes subjected to severe readjustment-the Canadian dollar is now selling too low in world markets-the readjustment to a proper value if it comes suddenly may cause real hardship, which would be avoided if the readjustment came gradually and the higher level of the dollar was foreshadowed by gradual increases in its value.
A point of more significance than the forms in which the Minister of National Defence is so well versed is the fact that Canada is becoming the third or fourth largest trading nation in the world. We must therefore have a very large volume of foreign exchange passing through the board and through the banks. At the present time we are well on the road to becoming in a fairly substantial way an international money market, but we shall never become an international money market so long as we have regulations which prevent the free deposit and free withdrawal of money in this country, particularly on capital account. When I speak of capital account I have in mind the fact that international exchange markets have always been subjected to money which flows from one market to another, upsetting them, and I have no objection to a stabilization fund being maintained which will offset that danger to some extent at least. There is a real source of revenue for Canada in becoming a money market but if we insist on retaining the foreign exchange control board we lose all possibility of having an international money market as compared with the United States, where there is complete freedom.
Again, as one reads the bill, one sees in it a further tendency to a managed economy. There are many people in this country, I think the great majority, who do not wish to have everything regulated for them by the government. But some people, once put into power, never want to give it up, and they always find good and substantial reasons why their controls should not be relaxed. Of course there are always dangers. I never expect to live in a world without uncertainties. There are too many complications at the present time and too many different ideologies around us for us to have what some of us believe to have been the state of things in the Victorian era. If the government says that we must have controls and a managed economy because there are so many uncertainties facing us, I say that if many of these matters are left to the natural working of economic forces, which will in the long run prevail anyway, we shall know what our position is; we can plan as individuals much better than the government can ever plan,

Combines Investigation
and the planning by individuals will bring about for our people a better standard of living than can ever be achieved under a managed economy.


Douglas Charles Abbott: Mr. Speaker, a number of points have been made in the course of this debate on which I should like to say a word. The hon. member for Muskoka-Ontario (Mr. Macdon-nell) and the hon. member for Vancouver East (Mr. Maclnnis) have pointed out that whether a time limit should be placed on the operation of the bill is a question which may well be considered by the banking and commerce committee, where the pros and cons can be gone into.
I have no desire to review in detail the various points raised by the hon. member for Acadia (Mr. Quelch), or to argue the case for the Bretton Woods agreement, or whether residents of the United States have been allowed to purchase greater quantities of Canadian securities than they should have. These are matters that can be discussed before the banking and commerce committee. I do wish to refer to one statement by the hon. member for Acadia. If I understood him correctly, he said that Canada was attempting to force other nations into suicidal agreements. Let me: say that so far as I am aware Canada is not attempting and has not attempted to force any other nation into any agreement.


Victor Quelch: Is it not true that the
Minister of Finance in supporting strongly the Bretton Woods agreement said that we were actually pushing it?


Douglas Charles Abbott: I do not dispute that the government is supporting the Bretton Woods agreement, but I do take issue with the statement that the Canadian government is forcing any other government into any agreement, suicidal or otherwise. I take it, it is not the desire of the majority of the members of this house that we should not enter into any form of international agreement, but I gather from the remarks of my hon. friend that he is against international agreements of any kind.


Victor Quelch: Oh, no; only certain ones.


Douglas Charles Abbott: Only if they relate to monetary or trade matters.


Victor Quelch: If they are of a restrictive character.


Douglas Charles Abbott: I do not want to labour the point. But I do say that the Canadian government is in favour of international agreements which will make for greater freedom of trade.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.


[Stage Direction]
Right Hon. L. S. ST. LAURENT (Minister of Justice) moved the second reading of bill No. 193, to amend the Combines Investigation Act.
He said:	Mr. Speaker, I have just a few
remarks to make in amplification of what I said on the introduction of this bill and its first reading.
As hon. members know, the Combines Investigation Act provides for the investigation of trade combinations, monopolies, trusts and mergers which are alleged to have operated to the detriment of the public through limiting production, fixing or enhancing prices, preventing competition or otherwise restraining trade. Organizations of this kind which are against the interest of the public are defined by the act as combines, and participation or knowing assistance in the formation or operation of such combines is an indictable offence.
In outlining the purpose of the amendment on the first reading of the bill on June 5, reference was made to the report "Canada and International Cartels", which was tabled in the house at the last session, and which reported the results of an inquiry into the nature and effects of international cartels and other types of trade combinations. In that report it was submitted that need existed for strengthening the Combines Investigation Act "in certain matters of procedure including the avoidance of unnecessary impediments or delays in the conduct of proceedings under the act", and for "more adequate provision for the initiation of inquiries by the combines investigation commission into restraints of trade and unfair trade practices." The amendments now proposed are designed for that purpose. They do not alter the definition of the offences against which the act provides. The proposed amendments deal with certain matters of procedure for the investigation and prosecution of offences, which are at present defined of collusive, monopolistic and other unfair trade practices which unduly restrain or injure trade. The purpose of the amendments is to provide improvements in the procedure now made available for dealing with trade offences of this class, with a view to facilitating deterrent action respecting the commission of these offences.
The principal changes proposed by the bill are to be found in sections 2 to 6 and section 9. Perhaps I might make a brief reference to these sections, as it is what they contain that determines the nature and extent of the bill.
Combines Investigation
[Stage Direction]
Section 2 provides for the appointment of deputy commissioners who may exercise the powers of the commissioner, subject to control by regulations made by governor in council. It is felt that if the act is to be effectively administered the commissioner cannot possibly conduct all the inquiries which should be made, and the appointment of deputy commissioners would enable them to act in his stead and carry out some duties which the pressure of business might make it impossible for him to attend to personally. It is not intended to provide that the governor in council shall appoint these deputy commissioners; they are to be appointed under the civil service commission, but one of them can be designated by the governor in council after appointment by the civil service commission to perform the duties of the commissioner in his absence or inability to act.
Section 3 authorizes the commissioner to make studies of cartels or other monopolistic conditions, and to report the results to the minister. It is felt that it is apt to be necessary after the abolition of the wartime controls to have studies made of the operations of these large trade organizations so as to prevent if possible, rather than to punish after the fact, conduct of organizations which might be injurious to trade. The impression is that business men in general do not want to be lawbreakers, and if these conditions are inquired into and representations are made to them as to the likelihood of their being in breach of public laws they will most often desist and modify their proceedings in such way as not to fall foul of these provisions of the law.
Section 4 would permit the commissioner to investigate complaints which may indicate breaches of sections 498 and 498 (a) of the criminal code. The several kinds of offences against which the Combines Investigation Act and these two sections of the criminal code provide are very closely related. It will be remembered that in 1935 the dominion trade and industry commission was given jurisdiction to make inquiries under the Combines Investigation Act and also into suspected breaches of these two sections of the criminal code. Then, after the hearing before the courts in 1937, the jurisdiction over the application of the combines act was removed from the dominion trade and industry commission, but it was left with jurisdiction to make inquiries into breaches of sections 498 and 198 (a>
of the criminal code, frequently into the same matters which might be handled under the Combines Investigation Act. It is felt that it will be more convenient and avoid

duplication to have investigations under control of one agency, whether nominally they be under the Combines Investigation Act or under sections 498 and 498 (a) of the criminal code. The chairman of the dominion trade and industry commission warmly approves the transfer of this jurisdiction to investigate under the articles of the code to the commissioner under the Combines Investigation Act, and his recommendation is concurred in by the Minister of Trade and Commerce (Mr. MacKinnon), under whose jurisdiction the dominion trade and industry commission operates.
Mr. DIEFENBAKER:: Will the minister permit a question with regard to the new section 10A?
Mr. ST. LAURENT: I am coming to that.


John George Diefenbaker: But it is section 4 of the act. Since the purpose of these amendments is to have machinery which will operate quickly and more effectively than that previously in operation, why is it provided that only the attorney-general of Canada or the attorney-general of the province within which an offence is alleged to have taken place has the right to institute proceedings? W'hy, if enforcement of this act is desired, should not any group of persons have the right to lay an information under the act?
Mr. ST. LAURENT: It is my impression, Mr. Speaker, that anyone would have the right to lay complaints, but here, if an information is to be laid as the result of an investigation conducted by the commissioner, it is felt that that should be on the responsibility of the attorney-general of a province or the attorney-general of Canada. My hon. friend knows what prejudices may sometimes exist about certain practices which appear to be monopolistic. We had an illustration of that in the investigation of the royal commission on coal policy. At more places than one people went before the commission and attempted to make out that there existed monopolies operating in the coal trade to the detriment of the public. There had been a few years ago an investigation by the commissioner under the Combines Investigation Act; at that time it was found that there were practices which were contrary to the policy of the code and of the Combines Investigation Act, and proceedings were instituted on behalf of the attorney-general of the province of Quebec. They constituted quite a considerable undertaking. I know something about it, because I was retained by the attorney-general of Quebec to prosecute, and a very large bill was incurred in the prosecution of those offences. Whenever there is an

Combines Investigation
investigation and there are revealed things which are detrimental to the public, it has been the policy, since the act was first introduced, in 1910, to make it the responsibility of the attorney-general of the province concerned or the attorney-general of Canada to institute the proceedings and to finance them to a judgment. A charge could be laid by anyone on his own information, on his own belief, under section 498 or 498(a) of the criminal code, if one saw fit to do so. However, for the purposes of setting in motion the action of the courts as a consequence of investigations made by the commissioner it was felt that it would be desirable to have the matter under the control of one of the attorneys-general representing the whole public.
Section 5 authorizes the commissioner in certain circumstances to initiate inquiries, and thus restores a provision to the same effect which had been in the section from 1923 to 1937. It is felt that as government wartime controls are removed there will be increasing need to avoid unnecessary delays in seeking the facts as to any private restrictive agreements that might prevent or unduly limit the supply of goods or enhance their prices unreasonably. Most of these inquiries are not extensive and are intended to be rather preventive and advisory in character, and it is the view that administration rvill be more effective if the power to initiate such inquiries, without the necessity of producing a complaint by six persons, is restored.
In section 6 of the bill, the first proposed subsection 2A is to consolidate and revise a restriction placed in the act in 1937. It restricts the power to enforce orders on witnesses to attend and testify, which is an ordinary and needed formal power of a commissioner conducting investigations under any statute or commission. The mere existence of this power is usually sufficient; it has been used only once under the act since 1923, and may never have to be used again, because, when it exists, one does not usually attempt to resist and require that enforcement proceedings be taken.
Here the restrictions left in this provision of the bill are quite substantial. They are not found in any other statute. It was felt, however, that in view of their insertion in 1937, after a commissioner sentenced for contempt one who happened to be a lawyer, they should be retained in substance, and it may be a good safeguard to have to apply to a judge before resort to these enforcement provisions, which are usually in all other statutes authorizing inquiries.
Subsection 2A of section 6 is intended to replace section 42 of the act as it now exists. Subsection 2B would authorize a justice, on application of the commissioner, to transfer to the commissioner things that are seized pursuant to a search warrant issued by a justice under the provisions of the criminal code. It may be necessary for the commissioner to retain for the purposes of the prosecution the papers found on execution of the search warrant, and it was felt here again that the matter should not be left to the arbitrary decision of a commissioner but that he should be required to justify before a justice the propriety of retaining the things found in the execution of the search warrant.
Section 9 represents the principal substantive change in the bill. It authorizes the exchequer court to issue an order revising or cancelling patent licensing or pooling agreements or agreements relating to the use of trade marks or patents when these have been used to the detriment of the public. The cartel report showed how patent rights may on occasion be used as pretext and shields for activities which would be clearly illegal under the Combines Investigation Act if patents were not involved. Trade marks may be used as an adjunct to restrictive patent licensing agreements or employed by themselves to enforce arrangements as to the division of markets. This section is designed not to interfere with the proper use of trade marks or patent rights or deprive patentees of rewards for their inventions. It is intended to provide a means for ensuring that trade marks and patents will not be used to control an industry to the detriment of the public at large, and to furnish a workable way of preventing persons from extending patent rights beyond their legitimate bounds by using them as instruments for restrictive cartel arrangements and for the exercise of wider and unreasonable private monopoly controls. A close analogy to the type of exchequer court order proposed already exists in certain sections of the Patent Act which are designed to prevent abuses of patents by way of failure to work the patents in this country. The proposed section has a wider purpose which makes it desirable to place it in this act rather than in the Patent Act.
The general form of procedure and order is not at variance with established court procedure respecting patents. This would allow the exchequer court, instead of making an order cancelling a patent or cancelling the registration of a trade mark, to make a lesser order, if it were felt that a lesser order than absolute cancellation would prevent the undesirable effects of the use being made of the
Combines Investigation

patent or trade mark. Previously, one had to make out a case that appeared sufficiently grave to the court to justify the cancellation of the patent; whereas here, the court will not have to go to that extreme. It may be that it will be sufficient for the court to enjoin a certain form of use of the patent or trade mark.
The principal effect of section 10 is to permit the attorney general of Canada to arrange for prosecution of a combine without in practice having to wait at least three months, as under the existing section, to determine whether the attorney general of a province concerned is going to take action. Under the act as it stands, a report has to be made to the attorney general of a province and the attorney general of Canada has to wait three months to see whether the provincial attorney general will act or m.t before authorizing action himself. There may be cases where it would be found desirable to proceed without waiting for that length of time for a decision from the provincial attorney general. There may be such things as extend to more than one province, where it might not be right to expect that the attorney general of one province would undertake the prosecution of all those concerned in a widespread combine or restrictive arrangement. In the past the prosecution has been taken with the assistance or under the direction of the attorney general of Canada. The provincial departments have usually required the attorney general of Canada to undertake financial responsibility for the proceedings. Some of the recommendations of the report are being carried out as a result of the supply voted to the department for the combines investigation branch; and there have already been organizational changes designed to implement parts of the report of the commission. It is felt that if the house sees fit to make these amendments to the statute, we shall then have a fairly effective instrument to carry out the objectives indicated in this cartel report, which, after it was tabled in the house at the last session, obtained wide publicity and, I believe, fairly wide approval throughout the country. It is felt that there is now a responsibility upon the commission to put itself in shape to do those things which it recommended and which seem to have met with pretty general approval throughout the country.


Mr. C. C. I. MERRITT (Vancouver-Burrard):: In my view this is an important measure. The principal act, of course, is itself most important and in principle it has my most thorough approval. I support the original act and this amendment on the ground that it is one of our most effective safeguards

against socialism. Even those who are as enthusiastic supporters of the free enterprise system as I am will not deny that under free enterprise, as under any economic order, we have weaknesses. I believe that the Combines Investigation Act is one practical means of ensuring that free enterprise shall continue to be the enterprise of liberty and not of licence. Over one hundred years ago Edmund Burke said, "Liberty must be limited in order to be possessed." I hasten to add now that in my view the only proper limitation to liberty is a limitation imposed by parliament and not by any other agency, but perhaps that is by the way. It is this direct form of limitation, this direct action against particular weaknesses of our economic system, which will best purge free enterprise of what I call its Achilles heel, and will at the same time save us from the burdens, repressions and restrictions-and in particular from the danger to political liberty-which are always inherent in any general form of regulation such as socialism.
The weakness of the free enterprise system has always been that it has failed to solve completely the problems of equitable distribution of wealth. One of these problems, and not its least, is the control of combinations and monopolies which act against the public interest. The fact that these problems have not been solved before is not, I believe, due to any evil which exists in the Canadian people but rather because of the great difficulty of devising proper measures for their control. Therefore to say that because these problems exist and have not yet been completely solved we should embrace socialism is to step from the frying-pan into the fire; because apart from its most important threat to political liberty, without which no economic benefits would be of much use, nor would they be lasting, it is my view that socialism would aggravate rather than assuage the problems which confront us with respect to the distribution of wealth. Although under free enterprise the distribution of wealth may be imperfect, the fact remains that under that same system we have been able to create a system of production which has never been equalled by any other economic order and which, I believe, can never be so equalled. That ability to produce wealth to maximum quantity under free enterprise is, perhaps, the reason which makes it possible to bear our present admittedly defective system of distribution.
It is interesting to reflect that in fact we are living under socialism now and that we have, as we might expect, underproduction and an unwieldy and bureaucratic system' of

Combines Investigation
distribution. Under any other form of socialism practised by any other party I feel sure that we would have the same unwieldy and bureaucratic system of distribution which would be worse than the difficulties which I have admitted to exist under the free enterprise system.
It is interesting to note that in the last report of the Department of Labour for the year ended March 31, 1945, it is stated that this monopolistic danger which is inherent in all controls may be enhanced by the wartime prices and trade board. No less an authority than the chairman of the board is quoted in these words in the report to which I refer:
In some cases the continuance of such controls beyond the emergency would have the effect of restricting competition and production, and of strengthening the position of established busi-nesess. I think you will agree that this would be most undesirable. To create a healthy and prosperous economy more competition and more freedom for newcomers to start up in business is needed-not less. That is one of the principal reasons why such controls have to be eliminated as soon as feasible and before the emergency is quite gone rather than after.
I may say that during the past few months I had occasion to investigate and to bring to the attention of the Minister of Finance (Mr. Ilsley) one small case in which the principle referred to by the chairman of the board was, in my opinion, in fact operating to damage the small businessman in relation to his greater competitors. Therefore I believe this act goes in the right direction.
At this time I wish to say that in the commissioner of the Combines Investigation Act we have a public servant who is performing a great service to the country. One has only to meet him to recognize two things about him: first, that he realizes the importance and the far-reaching effect that his job has if it is properly done; and, second, that he also recognizes what a delicate position he is in and how carefully he must guide himself in carrying out the provisions of the act without becoming a burden upon or an irritant to the business community. I believe that Mr. McGregor has a clear realization of those essential principles.
I believe that the day is surely going to come in this country when business relationships and practices such as we are dealing with here, as well as industrial relationships, labour-management relations, will be regulated by as clear a code of laws as now govern the personal relationship between man and man. Time was when such things as slavery, duelling, child labour and many less obvious malpractices between human beings were supported by law and were considered to be
perfectly proper things. That time, of course, is no more. Likewise it is my belief that the time will come when all of us will recognize the evils to self and to society generally which are inherent in many trade practices which at the present time are considered, and widely considered, to be perfectly proper means of doing business. When that time comes; when we all have that realization, I am quite certain these malpractices which are themselves partly the cause of our inequitable distribution of wealth, will disappear. I feel we must all work toward that end, but in the meantime we must resist the temptation to follow the seeming short-cuts but actual blind alleys of socialism. I believe the proper regulator of ordinary business relationships and practices, and of labour-management disputes, is the same authority that now regulates our personal relations as between ourselves; and when I speak of that authority I mean public opinion translated into law, not actions of the executive government.
Before I turn to the actual bill before us, I want to make one observation as to the dangers always inherent in the other form of monopoly, what one might call public monopoly or the commodity agreement. It is very proper that under this act the commissioner does not inquire or investigate into a combination which has received the approval of this house or of any provincial legislature. I wish now simply to observe that the fact that there is no check over monopolistic practices on the part of a public body, through the Combines Investigation Act or in any other way, places upon this house and upon provincial legislatures an added responsibility to make sure that in bringing about any such combination, or in giving it their approval, for a seemingly good purpose they are not running counter to the principle expressed in this bill.
Turning to the bill itself, I want to say that I believe it really does not go far enough. Section 30, which is the only substantial alteration of the law in the bill, is very good as far as it goes, but it is entirely adjective law. It is a strengthening of the procedure and penalties laid down for the punishment and check of breaches of the law; but I see in the bill no new departure in substantive law, no development of the law in the light of our experience in business over the twenty or thirty years since the Combines Investigation Act was first enacted. It is my view, following definitely along what I said in principle, that together with its enforcement duties an equal function of this department should be the development of what one might call the legal science respecting combinations and business
Combines Investigation

practices. In other words, this department should be an educational agency as well as an enforcement agency; and out of this department should come the new substantive law which will enable'our business men to regulate their practices with greater certainty and less chance of having their ordinary business interfered with by investigation or executive action. I realize that the problem of developing new and substantive law in this connection is very great. It- is difficult to isolate what are bad business practices from those that are tolerable; and it is my suggestion to the minister that an attempt might be made around the fringes of this whole subject so that the malpractices which we know to exist but which we cannot translate accurately into law may be confined and narrowed by the isolation of those which are clearly immoral, if you like to use that term, and which can be prohibited by law. In that connection I want to refer to a footnote at page 209 of Mr. Bladen's "Introduction to Political Economy," where in dealing with this question of the public knowledge of what is or is not evil in business practice he gives three quotations:
See J. Finkelman, "Combines and Public Policy":
"One of the gravest faults of the whole legislation is that owing to the uncertainty and obscurities of the law a person may be accused and convicted of having committed a criminal offence when he was doing no more than what he considered desirable to forward his own interests in the manner generally approved in the industrial society in which he operates. The line between what is legal and what is illegal is very fine, and his guilt or innocence may depend to a large extent on the social and economic views of the registrar, or the commissioner, or the judge and jury. It is highly desirable in the interests of justice that the offender be not punished unless he has been warned that his conduct is unsocial and until he is given an adequate opportunity of reorganizing his enterprise."
Then the author refers to the remarks of L. M. Singer, organizer of the amalgamated builders' council and other guilds, who said:
Every court and every jury may reach a *different decision upon the same facts. Until they speak it is not known whether the accused is a malefactor or a benefactor.
Then he refers to the editorial comment in the Financial Times of August 1, 1941, on the [DOT]conviction of a group of tobacco manufacturers and wholesalers:
The "crime" for which the companies have been convicted is one that has been considered for many years good business and merchandising policy.
In reading these words I do not want it thought that I entirely agree with all the [DOT]conclusions at which those persons arrived. Bather I quote them only to show what is
| Mr. Merritt.]
in fact the case, that there is considerable uncertainty in the minds of many people as to what is or what is not an offence under the law as it stands at present in relation to business practices. That is a justification for the views I have read. On the other hand, one could say what I said to myself after reading that footnote, which was that the only time I had heard this before was in the old adage, "I didn't know it was loaded". That revolver analogy is quite interesting, because the time was when in this and in all countries the possession of a revolver or a firearm in a private home was absolutely necessary for the protection of life. At that time the law was not so developed that the individual householder could feel safe under its protection and he had to provide means of protecting himself. Thus we all had revolvers or other firearms in our homes. However, that day has gone, and now all of us can feel perfectly safe and know that we shall be properly protected by the police without the necessity of our having revolvers in our homes. The result is that now we are harder on people who do not know it was loaded than we were, say one hundred years ago. By the development and strengthening of the law relating to business practices we could then be harder on those who do not know that the industrial revolver is loaded.
We must consider the problem of creating new law and the new public opinion which should precede or accompany that law. We must consider the difficulty of education in this field. I do not think that can be done through the national film board, the newspapers or any other similar agency. I would throw out the suggestion that the best possible educator would be the isolation of malpractices and their prohibition by law. We should have these safeguards as well as the general provisions that are now to be found in the criminal code and the act.
If you examine the history of investigations and prosecutions under the Combines Investigation Act since it was established, I believe in 1910, you cannot avoid being impressed with the number of cases where the commissioner felt that either combinations or improper trade practices existed but where no prosecution followed or where the courts, on prosecution being instituted following the report of the commissioner, acquitted the accused. There, again, we can see difficulties in our substantive law. In my opinion the reason for the acquittal is quite evident. Where the words "unduly or unreasonably to restrict" are found in section 498 or where in the Combines Investigation Act there are found such words as "or is likely to operate to the detriment or against the interests of

Combines Investigation
the public, whether consumers, producers or otherwise," there is thrown upon the court, not the duty of determining that a certain fact or agreement exists but rather the duty of determining what we in this parliament so far have been unable to determine, whether the agreement or the facts as found by the court are in the interests or against the interests of the Canadian people. Everyone knows that very descriptive quotation, "Our lady of the common law is no economist." In a few words that is the reason why convictions are not obtained in some cases after the commissioner has found evidence of malpractice.
I have one or two suggestions to make with regard to the need for the development of substantive law, which may show the way in which these forward steps could be taken. Hon. members will recall that in the two investigations into alleged combines in connection with fruit distributors in western Canada the commissioner passed unfavourably upon the existence of control by the jobber or by the distributor over the broker who sells to the jobber and who is actually the agent of the grower. In both investigations the commissioner pointed out the danger of the exercise of that control over the broker by his natural antagonist in business. The broker would be disposed to favour the jobber to the disadvantage of the grower, whose agent he was.
If the commissioner's findings were so in fact, and I believe in the first case they were held to be so by the court upon prosecution, it would seem to me that there is a clear case which could be isolated and which could be enacted into substantive law in order to ensure that the business agent will have a single loyalty and not be controlled by the person to whom he is selling.
Then, again, we have cases of price fixing at the retail level by the wholesaler or by the manufacturer or by associations of wholesalers and manufacturers. It is my view that we should set our face against price fixing in business. I do not like public price fixing in principle, and I certainly like it less in private. Prima- facie a lower price to the consumer brought about by competition is a good thing, and the lower the price can go, the better. If at any time, particularly in times of depression, there is need for collective action to prevent the demoralization of a market, then I suggest that application could be made to parliament by those interested-this application should not be to the government or to a commissioner but to parliament itself-for 63260-193
the institution of a marketing board to regulate prices, preserve the market from demoralization and perhaps to maintain employment.
It is my view that only in depression times would such an application be necessary. In normal times of buoyant business one does not find these combinations arising so much, nor does one find that prices go down to such a level that demoralization sets in. It might be interesting to consider what happened in British Columbia where we had a peculiar situation in pre-depression time in the marketing of fruit. Our markets were far away and they were difficult of access to the grower. There was created a natural products marketing board under provincial legislation to assist that body of our economy which had a clear need. Later on, when the depression set in and all markets were becoming shaky and tending toward demoralization we had a succession of boards set up on the Pacific coast covering milk, potatoes and many other products. Of course we have a great example of price fixing approved by the government with respect to the pulp and paper industry in Quebec and Ontario. It is my view, although I do not pretend to have studied the matter to a finality, that we might well simply make unlawful private price-fixing agreements, and allow those whose markets are so peculiar as to require collective action to go to their respective legislatures or to this parliament for the necessary authority.
In this field of legislation we cannot expect miracles all at once. What I should like to see is steps taken progressively over the years in prohibiting those malpractices which are capable of isolation. As we go along over a period of years I think we would find that such a course would have a beneficial effect on the distribution of the wealth of the countiy.
Great emphasis should be placed by the minister upon the education * of the public through the development of substantive law and also by action of parliament and of the judiciary to check those practices which tend against the public interest. He should particularly avoid the extension of action by the executive, which in my view amounts to regimentation, whereas the action of parliament and of the judiciary amounts to wholesome and progressive regulation.


Angus MacInnis: Mr. Speaker, I am sure that the hon. member for Vancouver-Burrard (Mr. Merritt) will not mind if my first words are words of congratulation upon his progress in social thinking since he came into this house. But I regret that I am not able as yet to congratulate him on the clarity of his thought. He began by saying

S05fi
Combines Investigation

that he favoured this measure because it was a means of combating or retarding socialism, and then before he had made much further progress with his speech he told the house that we have socialism already. If we have socialism already, obviously the thing to do is not to retard' it but to do everything we can to facilitate its development and make it more and more useful.
I cannot, however, agree with his conclusions because they were negative. He would use the law, the courts and the police to stop the malpractices and the exploitation of the community by corporations which have got control of our means of life and are using it not for the purpose of providing the community with what they need but to make private fortunes for themselves out of the needs of the community. Obviously the remedy is not the appointment of more policemen but to take over the operation of these industries by the people themselves and operate them for the benefit of the people.


Charles Cecil Ingersoll Merritt: You mean, by the government.


Angus MacInnis: The government is a
government of the people and acts on behalf of the people.
I can agree with my hon. friend that this bill does not go far enough. In so far as it goes it is made necessary by the public demand, and the effect which that public demand has on the government, for some form of control over monopolistic corporations.
There is another thing in which I agree most heartily with the member for Vancouver-Burrard, and that is in his remarks with regard to the commissioner. It is my good fortune to have known the commissioner for almost the fifteen years or so that I have been in this house. I have watched his work in his department, and I can agree with the hon. member that he has done a good job in so far as the law would allow him to do it.
Canada is relatively a young industrial country. Within the lifetime of the older members of this house and perhaps of those like myself who are not so old we have seen this country develop from a nation of handicrafts to an industrial nation with huge combinations and monopolies. As far back as 1910 we had our first combines law. Since then, we have had a number of commissions investigate industrial conditions in Canada. Perhaps the most notable of them was the price spreads and mass buying commission, the chairman of which was the Hon. II. H. Stevens, who was the first minister of trade and commerce in the Bennett government. The com-

mission was appointed in 1934. In the introduction to its report made in 1935 the commission says:
At first sight, indeed, it appeared that the separate and distinct problems which emerged in the evidence called for separate treatment and almost separate reports. On closer study, however, it became clear that many of the grievances complained of, and the problems disclosed, were manifestations of one fundamental and far-reaching social change, the concentration of economic power. This idea, therefore, runs through the whole of our report and gives it a certain unity which it might not otherwise possess.
The Combines Investigation Act in the first instance was brought into being because of the power of combines to control and use the means of production in this country, not for the benefit of the people, but for their own profit. There was an amendment to the act in 1935, and the late leader of this group raised the question of giving publicity to the commissioner's reports. My memory is that the government of the day was opposed to doing that; I am not sure whether it was made the law or not. I should like to read a very short statement by the present Minister of Finance (Mr Ilsley), who was a member of the price spreads and mass buying commission. He did not sign the whole report, or at least he signed it with reservations.
He said, as reported in Hansard of 1935, page 3474:	-
I just want to add to what I said that the evidence before the price spreads commission revealed a startling concentration of business in Canada, great numbers of large corporations and what the experts call monopolies and quasimonopolies. Times are changing. It may have been quite proper twenty or thirty years ago to be very careful as to what publicity you gave to matters of this kind, but it is highly important in these latter days that the public have all the facilities possible for coping with these great concentrations of industry, and to that end it seems to me important that the public be acquainted with the true state of affairs.
Then he continued:
This act is being amended not only to cover combines but to give better facilities for coping with monopolies such as mergers and the like, and it is exceedingly important that tile public be acquainted at once on the conclusion of an investigation with the true state of affairs. If for instance 85 per cent of the packing industry gets into the hands of one company, which is what would happen if two of the largest companies were to merge at the present time, that is a fact which the public should know, and know ' at once.
I wanted to read that because it shows how strong monopolies are in this country and what very slight moves are necessary on their part to make them even stronger.
Again, in the report of the Rowell-Sirois commission on dominion-provincial affairs, which was later than the price spreads report, I find this at page 148 of book 1:

Combines Investigation
Business organization has everywhere become increasingly monopolistic. In Canada industry, commerce and finance are highly centralized and in many branches a few enterprises dominate the field. Under such conditions the maintenance of prices is possible in the face of declining demands. The monopolistic producers may consider that they are better off by selling less at higher prices than by selling more at lower prices.
That, of course, has always been the main purpose of a monopoly, a combine or a cartel -to sell less for more. You are not going to eradicate that tendency by the policeman's baton or by the fear of a term in gaol, particularly when corporations have such great financial means at their command to protect them from going to gaol. This report continues:
Consequently, the burden tends to fall upon the workers who lose their jobs through the reduction in output and on the exporters whose costs are thus held rigid while their prices on world markets are sharply reduced.
I am not surprised that, as the hon. member for Vancouver-Burrard studies these things, while he is still bracing himself against socialism, he agrees that we have to do something. To doubt is the beginning of wisdom.
I need not say anything more to show that Canada is the home of many monopolies and perhaps cartels as well. I imagine that hon. members have read the report on "Canada and International Cartels" which was tabled in this house at the last session. This group have been drawing these matters to the attention of parliament in season and out of season ever since we have been here. We continued to do so during the war. Cartels did not decline during the war; they prospered and are stronger than ever they were. At the beginning of 1943 a special parliamentary committee was set up to hear evidence regarding the Aluminum Company of Canada and a special depreciation of S164 million which was given to it by this government in addition to the wartime profits that were made by the company. The committee admitted in the report to the house that an international holding company, located in Switzerland, limited world production of aluminum, fixed world minimum prices, and, further, that the German producer was a member of this holding company. It further pointed out that from 1935 this aluminum, cartel, by agreeing to restrict production to the needs of domestic markets, allowed Germany to expand aluminum production enormously. The cost of that may or perhaps may not be computed in the lives needlessly lost during the recent war. Recently the United States court of appeal ruled that the Aluminum Company of America' and Aluminium Limited of Canada were engaged in cartel agreements. In 63260-193i
addition to this, the cartel's report to which I have referred, a report ordered by the Canadian government, may I point out, states, at page 34:
The aluminum industry throughout the world has been dominated by a small number of firms since it became of commercial importance toward the close of the nineteenth century. The first cartel was formed in 1901 and the latest, and most effective, Alliance Aluminum Company of Basle, was set up under an agreement made in 1931 and renewed in 1936. The present Canadian producer. Aluminium Limited, or its predecessors entered into each cartel. Aluminium Limited was formed in 1928 and received from the Aluminum Company of America practically all its foreign properties in return for common stock, which was then distributed to shareholders of Alcoa. The new Canadian company, Aluminium Limited, became a member of the Alliance Aluminum Company of Basle with a production quota of 28-58 per cent, compared with 21-36 for the French producer, 15-42 for the Swiss, 19-46 for the German and 15 for the British. Aluminum Company of America was not a party to the cartel arrangement, but it seems to have been accepted that Alcoa would not upset the market outside the United States while the cartel arrangement would preclude any competitive sales in the American market.
The control of the world trade in- aluminum was to be achieved by the Alliance through three devices:
(a)	by fixing an Alliance buying price at which it would purchase aluminum from any member producing within its quota;
(b)	by regulating the production quotas of its members, thus protecting, itself against actually having to buy raw aluminum at the price fixed under (a);
(c)	by holding surplus stock off the market (the 1931 agreement provided for the purchase, at a stated price, of surplus stocks in the hands of members).
Then, at page 35, we find this:
In view of the monopolistic character of the aluminum industry in most producing countries and the national interests involved, some positive form of intergovernmental action may be required in this field in the post-war period to avoid undue restriction of production.
I submit that positive action means not merely action through the courts. Then, again, we have C.I.L., that is, Canadian Industries Limited, which is a wholly-owned- subsidiary of du Pont of the United States and Imperial Chemical Industries of the United Kingdom. It was stated in the press a few days ago that the United Kingdom government was making plans to nationalize Imperial Chemical Industries in that country. In 1939 the directors of du Pont passed a resolution permitting this Canadian industry', that is Canadian Industries Limited, to export during the war. If they could permit this Canadian company to export during the war, it -meant that the Canadian company had- not the right to export before the war. Here is a flagrant example of pre-war restrictive policies on- the part of the -mono-
Combines Investigation

polies-a private company in one country deciding what one of its branches in another country shall or shall not do.
I doubt whether there is in the bill before us, when it is passed by this parliament, anything that will prevent that kind of thing. It is stated in the report that international cartels rest upon and arise out of national monopolistic organizations. There must first be a monopoly of a national character and that monopoly extends to the international field.
I quote again from the report:
The restrictive practices^ followed by international cartels are similar in character to those engaged in by domestic trade combinations. In fact, the agreements are in most cases made effective through the actions of domestic combinations or monopolies. '
The report goes on to cite a number of combines, and one of the examples mentioned is that of fertilizers, particularly potash, nitrogen and phosphorus, of which Canada imports about $4,000,000 or $5,000,000 worth annually. That was before the war. Prices were deliberately kept high for this product. Production of the materials was restricted, with the ultimate result that the farmers suffered; and when the farmers of a country suffer, the whole population suffers. Another example given was that of magnesium refractories. However, since all this is in the report I will not take up the time of the house to deal with it. Let me quote briefly from page 55:
To the extent that cartels attempt to resist change and maintain the status quo, to prefer security to progress, they tend to impoverish the world. In the post-war world this will be a particularly undesirable attitude. In the first place, the great technological advances of the war period must be applied to peace-time industries. New competitive products and new sources of supply of old products will emerge. Such new developments must not be throttled at birth hy defenders of the status quo.
If my hon. friends think they are going to prevent that sort of demonstration of power by court action and not by positive action, in the form of creating industries which these people will not build, they will be greatly disappointed.
In the second place, the development of backward countries must take place if the promise of "freedom from want" is intended to apply to more than a small fraction of the world's population . . . Industrialization of undeveloped countries will provide immediately new opportunities for investment and the sale of capital goods, and should assist initially in maintaining a high level of employment in the older industrial countries.
But that will not be possible as long as we are thinking in terms of high prices rather than in terms of quantity of production; and monopolies-indeed all private business- must, because of their very nature, think of prices rather than of quantity and quality.
[Mr. MacInnis.I


Mr. KUHL:: The corner'grocery store too?


Angus MacInnis: Yes. That is why we have to have inspectors of weights and measures.


Walter Frederick Kuhl: You do not want to socialize the corner grocery store.


Angus MacInnis: The corner grocer is in that business not because he wishes to be but because of the competitive struggle in which he is engaged. By reason of that struggle he thinks it is his best way of making a living. But these corner grocers go bankrupt by the thousand every year under the competitive system. It was only during the war years when we were all prosperous that such bankruptcies fell to a very small number.


Walter Frederick Kuhl: There was a lot of money afloat then.


Angus MacInnis: I do not care to enter into an argument with my hon. friend over this because when he talks he mostly talks over my head.


John Horne Blackmore: That is obvious.


Angus MacInnis: That is why I said it.


James Horace King: Order. The hon. member who has the floor must not be interrupted without his permission.


Angus MacInnis: May I read another passage from page 66:
The allocation of markets through restrictive arrangements made by private interested parties impinges on government authority over foreign trade and may nullify national trade policies developed to serve wider public markets. Government policies to encourage either imports or exports may prove ineffective if private barriers to such trade are erected by cartels. The reservation of the domestic market to particular producers may be as effective as the prohibitory tariff in barring imports. The allocation of import or export quotas by cartel agreement subjects foreign trade to quantitative limitation, though such control may run counter to public policy. Ways must be found to prevent private business organized as cartels from supplanting government in the establishment of such commercial policies.
I submit that there is nothing in the Combines Investigation Act and nothing in the amendment before us that provides ways of preventing private business organized as cartels from supplanting governments in the establishment of commercial policies.
Then again:
Cartel arrangements which impede industrial innovations and slow down the effective development of new opportunities for investment tend to diminish the supply of goods available for human use. Attempts by cartels to protect old investments by limiting the introduction of use-

Combines Investigation
ful new techniques and new production would have a prejudicial effect on government policies to secure high employment.
At a time when, the purpose of this government, as stated by them almost every day, is to secure high employment, the first thing that they should do-and they may not succeed even in that-is to make sure that their policies are not impeded by the control over the resources of the country, both industrial and natural, by a few individuals or corporations.
I shall give another quotation from page 68, which reads as follows:
The following might be considered in the further development and application of Canadian policy relating to both domestic and international practices in restraint of trade:
(a) The full utilization of Canadian legislative powers with respect to criminal law,-
That is what the hon. member for Van-couver-Burrard is advocating.
-including investigations, publicity and prosecution under the Combines Investigation Act, tariffs, import and export trade, _ taxation, patents, trade marks, public ownership, including crown companies and the disposal of war assets, and public regulation, in so far as such powers may be constitutionally applied.
This report was not made by a C.C.F. commission, but by a commission of experts appointed by the government. They had full information on what was happening to the Canadian economy and to world-wide economy. According to this statement, they were convinced that legislation in itself, so long as it is confined to investigation and prosecution, is not sufficient to meet the situation. What has happened in Canada is happening in every industrial country in the world.
In May, 1944, Wendel Berge, then attorney general of the United States said:
Make no mistake-the war has not interfered with cartel plans. Cartel agreements invariably provide for the contingency of war. Long before the war, cartels worked out a modus vivendi-a method of continued existence-for they felt that their relations must be preserved, war or no war. Thus we find American and British cartelists agreeing to preserve the German position in Latin American markets after the war. Agreements between the cartel members of the countries now at war provide for a resumption at the war's close.
I think I have said-and I merely quoted from publications which are available to every hon. member-sufficient to prove to us that it is desirable not only that we pass this legislation but that we give every facility to the commission or commissioners who may be appointed to carry on the work which they have done so well during the years, having regard to the limitations imposed upon them. We must also take more positive steps if we are to make the natural and industrial
resources of this country available to the people so that wealth production will be limited only by our willingness to work.


Mr. J. E. MATTHEWS (Brandon):: I wish to commend the Minister of Justice (Mr. St. Laurent) and those associated with him for having introduced these amendments to the Combines Investigation Act. I think they will serve the public interest and they are, therefore, a step in the right direction. Without any hesitation I should like to endorse the remarks made by the hon. member for Vancouver-Burrard (Mr. Merritt) when he referred to the splendid work done by commissioner F. A. McGregor. I often think that few people in Canada are aware of their great indebtedness to that official.
In speaking on this topic this afternoon let me say at once that, generally speaking, I have no quarrel with combines or cartels as such. It is only when certain combines conflict with the public interest, when for selfish purposes they attempt to restrain trade, when by so-called "gentlemen's agreements" or otherwise, they endeavour to eliminate competition, thereby to gain monopolistic privileges; it is when that sort of thing is attempted that I am prepared, as I believe thousands of other Canadians are, to fight to the limit any such cartels, no matter what label they bear.
I am particularly interested in the attitude of what appears to be two such combines operating in Canada at the present time, but I shall discuss only one of them to-day. I may return to the other at a later date. Here I want to emphasize the fact that I do not for a moment believe that all combines are operating on purely selfish principles. Far from it; on the contrary, I believe that combines or unions among business or manufacturing firms often result in lower operating expenses than might otherwise be possible. If a reasonable percentage of the reduction is passed on to consumers without any restraint of trade or where there is no suggestion of monopolistic practices, the existence of a cartel may be amply justified. At the same time the individual retailer, to whom some reference has been made by the last speaker and some others, operating on his own, in a centre large or small, should not be forgotten, and it must be kept in mind that other factors frequently enter into the community picture, more important perhaps than a trifling difference in the cost of commodities. No one will deny that many a retailer, because of his initiative, his business ability, his fine public spirit, is of untold value in his community.
I do not wish to take up time in generalities, but I want to make special, and I trust, fair reference to the cartel which I have
Combines Investigation

in mind. In view of a situation existing in the western provinces, which would seem to be completely unjustifiable, and desiring to have correct information at the proper time, I placed upon the order paper on March 28, 1946, a number of questions which were duly answered as follows:
1.	Where are the head offices of Canadian Industries Limited, located?
Answer: (from the Secretary of State Department)
Letters patent incorporating Canadian Explosives, Limited, dated 18th November, 1910, provided for the head office of the company to be at the city of Montreal, in the province of Quebec. By supplementary letters patent dated 20th June, 1927, the corporate name was changed from Canadian Explosives Limited to Canadian Industries Limited. The annual summary of the company filed under the provisions of section 121 of the Companies Act, as at the 31st March, 1945, recites its street address as 1135 Beaver Hall Hill. Montreal, Quebec.
2.	Is this company associated with any nonCanadian companies that are members of an international cartel? If so, what companies and what cartels?
Answer (from Department of Justice)
Canadian Industries Limited has been associated with Imperial Chemical Industries, Limited, of Great Britain, and E. I. du Pont de Nemours and Company of the United States in the general field of chemicals and chemical products. Canadian Industries Limited had agreement with other non-Canadian companies respecting patents or manufacturing rights including an agreement with National Lead Company of the United States with respect to titanium compounds.
Then questions 3 and 4:
Are any of the products of Canadian Industries Limited protected by Canadian tariffs? Is the manufacture of small arms ammunition so protected? If so, at what rate?
The answer from the Department of National Revenue was:
The rates of duty on small arms ammunition
are as follows:
British preferential tariff....10	per	centIntermediate tariff	27i	per	centGeneral tariff	30	per	cent
When the product or manufacture of Great Britain and imported direct to Canada, there is a discount of 50 per cent from the British preferential tariff, or 5 per cent net.
Then question 5:
What has been the total amount of small arms ammunition imported into Canada each year from 1943 to date?
The answer by the Department of Trade and Commerce was:
With reference to part 5 of the question by Mr. Matthew's (Brandon), notice of which appeared in Foies and Proceedings No. 2, part 1, the dominion bureau of statistics do not classify small arms ammunition separately for statistical purposes.
Those were the questions I asked, Mr. Speaker, and that is the information I received from different government departments.
At six o'clock the house took recess.

After Recess
The house resumed at eight o'clock. PRIVATE BILLS



COOPERATIVE LIFE INSURANCE COMPANY

[Stage Direction]
Mr. W. A. TUCKER (Rosthern) moved the second reading of bill No. 197, to incorporate Cooperative Life Insurance Company.
Mr. GRAYDON:: I take it that the sponsor of this bill, the hon. member for Rosthern, will want an opportunity to explain this measure more fully than he did on its introduction.


Mr. TUCKER:: The purpose of this bill is to incorporate a group of cooperators in Saskatchewan now incorporated as a provincial company. They desire to extend their activities into other parts of Canada. When the dominion company is incorporated it will take over the business of the provincial company. The bill provides that this can be done only with the approval of the treasury board and on a vote of two-thirds of the shareholders of the provincial company called together for that purpose. They cannot enter into business until a notice to that effect has been published in the Canada Gazette by the superintendent of insurance after he has satisfied himself that all the requirements of the act have been complied with. It will be my intention to move that this bill be referred to the banking and commerce committee where any other details may be gone into. I have been informed by the superintendent of insurance that he has no objection whatever to. this bill receiving the assent of this house.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the committee on banking and commerce.


James Horace King: I have the honour to
inform the house that I have received the following message:
Canadian Parliament Ottawa
The fourth Hellenic revisionist chamber on a motion voted unanimously salutes through you the courageous Canadian nation friend of Greece on the occasion of its national holiday. Common ideals for the liberty and prosperity of men bind us closely forever, and as often as necessity requires, our peoples will be capable of giving joyously the example of sacrifice and virtue. We pray you to convey to the Canadian people our friend and ally the sentiments of brotherly friendship and the good wishes of the Hellene people.	_
Theotokis, President.

Combines Investigation
With the consent of the house I intend to send the president of the Hellenic Chamber the following message in your name:
The members of the House of Commons of Canada wish to express their appreciation for the message received from the fourth Hellenic revisionist chamber extending their sentiments of friendship and their good wishes to the Canadian people, on the occasion of their national holiday, and beg in return to convey to the Hellene people the assurance of their everlasting admiration for the sacrifices so generously and courageously contributed by them to the cause of peace in the world.



COMBINES INVESTIGATION ACT


[Stage Direction]
The house resumed consideration of the motion of Mr. St. Laurent for the second reading of bill No. 193, to amend the Combines Investigation Act.
James Ewen Matthews: Mr. Speaker, prior to the house rising at six o'clock I was citing some questions which I had placed on the order paper last March and the answers given to them. My reason for having asked those questions, bearing directly as they did upon Canadian Industries Limited, was due to a situation which is set forth and explained by Merchants Consolidated Limited, an old and reputable wholesale firm in the city of Winnipeg of which some four hundred retail merchants in western Canada are members. As hon. members know, I am not in the habit of trespassing unduly upon the time of this house; but because of the number of people interested in this matter, and particularly because of the principle involved, I desire to take the time to place upon the record a brief, issued by Merchants Consolidated Limited so that the Canadian public may judge for themselves the strength or weakness of the situation. I do this not necessarily in the interests of Merchants Consolidated Limited but because, as I have suggested, there is a principle which should be ventilated in discussing the bill now before the house. Here then is the position of Merchants Consolidated Limited as set forth in a letter from them dated November 7, 1945. This letter tells an interesting story, and is as follows:	[DOT]
To our shareholder merchants:
As instructed by the board of directors and the shareholders of Merchants Consolidated Limited, we are writing to advise you of the situation that we face in regard to our ammunition supplies.
In 1914, a number of the better type oi general store and hardware merchants of Manitoba and eastern Saskatchewan, noting the inroads being made into retail distribution by the corporate chain-mail-order houses, and
realizing that this type of distribution was detrimental to the community centres of the prairies, met together to discuss the possible establishment of their own wholesale house, with the object in view of establishing economies in the operation that -would result in a more favourable scale of prices to the consuming public and a continuation of prosperous community centres on the prairies.
Merchants Consolidated Limited was organized a few weeks later. A wholesale house was established in Winnipeg and a stock of groceries, dry goods, shoes and hardware merchandise accumulated.
Opposition to a company of this type was early in evidence, and for some years a substantial percentage of the time of the company's management and buyers was devoted to an endeavour to gain for the company recognition as legitimate wholesalers by Canadian, British and American manufacturers.
This was accomplished early in the 1920's in both the grocery and shoe divisions of the company's business, and, with one notable exception, also in the dry goods field.
Recognition, however, was not gained nearly as rapidly in the hardware branch of the company's activities, but, nevertheless, substantial progress was made.
Prior to the war, the company was forced, in order to supply a full range of hardware items to its merchants, to purchase a limited number of lines in the United States of America, although these lines were made in Canada, but were denied to the company by the Canadian manufacturers of them.
The declaration of war, and the institution of a very high rate of exchange for United States currency, and the adoption of a ten per cent war tax. raised the company's costs on these commodities. However, in spite of this, and in spite of the war needs of the United States government, the company was reasonably successful in supplying its merchants with these lines of merchandise.
A number of years ago, the company endeavoured to purchase its ammunition on the same basis as other western wholesale hardware houses from the one and only company making this type of merchandise in Canada-Canadian Industries Limited, with head office in Montreal. The company's management was unsuccessful in persuading this organization to recognize the company as legitimate wholesale buvers at that time.
In order to obtain supplies from a service standpoint, the company was forced to buy from a competitor, at. of course, substantially higher costs than those enjoyed by the company's competitors engaged in a similar line of business.
From time to time, representation was made to Canadian Industries Limited, without satisfactory results.
Shortly after the commencement of the war, it was pointed out to the company that one of the reasons that the company had failed to gain recognition as legitimate hardware wholesalers, with every Canadian manufacturer, was because of the general nature of the company's business. It was suggested that if the company segregated the hardware division from the general business, the company's few purchasing problems would be solved.
Early in 1944. the company obtained a charter for. and established Falcon Hardware Limited, a wholly-owned subsidiary of Merchants Consolidated Limited, and purchased a large building close to the company's premises, and established therein the new company.
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In the fall of 1944, after this had been accomplished, the management of the company called upon the official in charge of the explosive division of Canadian Industries Limited, at the head office of the company in Montreal, and informed him of the company's action, and once again requested recognition as legitimate wholesalers.
During the course of the discussion, the Canadian Industries Limited official pointed out that ammunition was not denied to the company, as the company had made arrangements to purchase its supplies through a competitor. Your management pointed out that the company was penalized by the amount of profit taken by the competitor on the company's business and that the company, as a legitimate wholesaler, was entitled to buy on a direct basis.
It was further pointed out by the Canadian Industries Limited official that shareholder customers of the company could purchase ammunition from the other wholesalers of the west. The management pointed out, in reply, that over 400 of the leading retail merchants of the prairies had invested substantially in a wholesale company for the privilege of purchasing their goods through that company, and they desired to enjoy this privilege in any and every line of merchandise.
A further meeting with this and other officials of the company was set for the following day, but due to the sudden passing of one of the joint general managers of our company, it was necessary for the engagement to be cancelled.
Early this spring (1945) the management once again called upon the official in charge of the explosive division of Canadian Industries Limited, and after discussing the matter for over two hours failed to obtain a satisfactory reply, and also failed to obtain a satisfactory reason for the manufacturer's attitude.
Your management pointed out to this official that there are in the city of Winnipeg five wholesale hardware houses, including Falcon Hardware Limited, that the other four are on the direct list for ammunition and that he was at a loss to understand why the boycott against the company was persisted in.
Canadian Industries Limited were well aware of the company's purchases through the competitor, and under date of September 11, in reply to a telegram from the company, requesting that they transfer the company's allotment of ammunition to a direct charge to Falcon Hardware Limited stated-"in view of many factors involved in your proposal we would like to postpone a reply regarding 1946 policy until mid-October when we look forward to full discussion with you in Winnipeg."
Early in October, two officials of the explosive division of Canadian Industries Limited called upon the management of the company at Winnipeg and after a lengthy discussion, the company was informed that no change whatever would be made in the policy of the explosive division of Canadian Industries Limited towards Falcon Hardware Limited, although no sound reason for such action was advanced and that Canadian Industries Limited would not sell ammunition to Falcon Hardware Limited.
Canadian Industries Limited enjoy a customs tariff protection on ammunition against manufacturers in the United States of America of 274 per cent and, of course, in addition, the benefit of 104 per cent exchange. This very substantial protection makes it impossible for Falcon Hardware Limited to import into Canada ammunition at competitive prices.

On the high power shotgun shell, made by an American manufacturer in Minnesota, which is comparable in quality to the Imperial shell made by Canadian Industries Limited, the price f.o.b. Minneapolis, less trade discounts, is $31.70 per thousand. The exchange of 104 per cent amounts to $3.33, the import duty of 274 Pet cent is $9.63, the sales tax of 8 per cent is $3.57 and freight $1.10, making a laid down Winnipeg cost ot $49.33 per thousand.
It is the company's understanding that the cost of imperial shells laid down to wholesalers in Winnipeg, who are on the direct list, from Canadian Industries Limited, is $41.87 per thousand.
According to a suggested price list governing selling prices of Manitoba wholesalers to retailers, effective January 2, 1941, and still in effect, imperial 12 ga. shells are listed at $53 per thousand. This represents a mark-up of 26-53 per cent as profit to the wholesaler.
It is obvious from the above-mentioned facts that the company is being discriminated against by the explosive division of Canadian Industries Limited and for which no satisfactory explanation has been advanced. It can further be pointed out that all other divisions of Canadian Industries Limited recognize the company as regular wholesale buyers and extend to the company all terms, discounts, et cetera applying to legitimate wholesalers.
It is the considered opinion of the board of directors of the company that Canadian Industries Limited should either desist from the present discrimination and boycott, and sell its ammunition to Falcon Hardware Limited on the same basis as they sell to all other wholesalers or that the customs tariff on ammunition should be reduced immediately from 274 per cent to 74 per cent, to enable Falcon Hardware Limited and any other Canadian buyer who is being treated in a similar way, to lay ammunition into Canada at prices no higher than those charged by Canadian Industries Limited.
Further, it is the opinion of the company's board that no manufacturer in Canada, enjoying tariff protection, should be permitted now, or at any time in the future, to withhold goods from any legitimate distributor, particularly if the manufacturer enjoys a complete monopoly in his field as does Canadian Industries Limited on ammunition.
Yours very truly.
Merchants Consolidated Limited. November 7, 1945.
If that brief by Merchants Consolidated Limited, a firm that has done business in this country for thirty-two years, does not impute restraint of trade and discriminatory practices, I do not know what does. Surely Canadian Industries Limited have an explanation. Well, they have what purports to 'be an explanation, and here is what they say: I quote from the submission they made under date of January 26, 1946:
The two main objectives of our distribution policy on sporting ammunition have been
1.	To obtain the widest possible retail distribution of our product through hardware and sporting goods outlets.
2.	To supply the largest possible share of Canada's relatively small ammunition market, as maximum volume is necessary for low cost production and maintenance of employment in our

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factory at Brownsburg, Quebec, where 350 employees are normally engaged solely in the manufacture of sporting ammunition.
I suggest that those two objectives when you analyse them may be reduced to one simple sentence, namely this:	"We want to
obtain the widest possible retail distribution of our product." Well, no one could very well condemn that ambition on the part of any firm. I suggest that in the stand I am taking to-night I am trying to assist C.I.L. in a wider distribution of their product rather than to curtail them. But if C.I.L. are really yearning for expansion as they would suggest, why do they refuse to sell, except at a higher price level, to the wholesale firm of Falcon Hardware company of Winnipeg, which in turn would be distributing to approximately 400 business firms in the western provinces who are stockholders of the Falcon, and whose thousands and thousands of customers are at present deprived by C.I.L. of advantages enjoyed by other Canadian citizens? It would look to me as though C.I.L. is missing a substantial channel for increased distribution, and I can only guess, but I think it is a fairly good guess, as to the reason.
Later in their submission, C.I.L. point out that in keeping with their policy of adequate distribution, a worthy policy I admit, they now sell to eighty wholesalers, who in turn supply 7,000 retail outlets. Well, if their professed policy of adequate distribution is to be genuinely and sincerely adhered to, does it not seem passing strange that C.I.L. in their yearning for expansion are, as I have said, unwilling to increase their wholesalers from eighty even to eighty-one, their retailers from 7,000 to 7,400 or more, and their customers by many thousands? I must say that I have never in all my life seen what seems to me to be a more glaring or a more stupid contradiction in two attitudes as expressed by any firm. I confess that I have tried, but tried in vain, to reconcile those two attitudes, but always with the one result, that is to recall those ancient words, "consistency, thou art a jewel." In theory, anxious to sell, so they say, but in practice refusing to sell except under discrimination. The Canadian public cannot accept any such clumsy explanation as that.
But then the C.I.L. bring up another point which perhaps from their angle would have been more wisely left unsaid:
The choice of distributors is, at best, a difficult one for any manufacturer, particularly when the manufacturer finds himself the sole Canadian producer in competition with numerous imported brands. Our position in this respect has not been created by any combination of interests, but presumably exists because the market is too small (normally less than 1,000,000 per annum 63260-194
divided over 200 types and loads of ammunition) to justify two plants for a product that requires a very large capital investment.
I should like to ask, is this a dog-in-the-manger attitude, or is it not? Does it mean that C.I.L. object to make any outlay for increasing their limited output but yet expect to retain what may be regarded as a monopoly in what they do produce? Are we to infer from their observation that C.I.L. have reached their maximum production? Such a condition would hardly coincide with their urge for adequate distribution. And the last paragraph of their submission seems to be only another contradiction. Here it is:
In order to reach a settlement with Merchants Consolidated Limited we are prepared to submit a proposition for selling them direct on terms which we feel would be fair and reasonable, although ammunition is still in short supply, and we are not able to take care fully of the current needs of our present distributors. We are now attempting to arrange a meeting with Merchants' Consolidated Limited to discuss our proposition . . .
This submission was made by C.I.L. on January 26, 1946. Resulting from it, another letter, dated May 5, was sent by Merchants Consolidated Limited to their members, as follows:
To our shareholder merchants:
Further to our letter to you of November 7, 1945, regarding the refusal of Canadian Industries Limited to recognize Falcon Hardware Limited as legitimate wholesale buyers of ammunition.
On January 26. we received a letter from the sales manager of the "Dominion" ammunition division of Canadian Industries Limited in which he stated that his company was now in a position to discuss the matter with us.
Later, this official wrote to state that he would call upon us either on the following Thursday or Friday. On Friday, February 8 he and his assistant called upon us and presented a letter addressed to this company under date of February 4, in which Canadian Industries Limited agreed to sell to the company on the basis of their "A" list, copy of which they attached to their letter. They stated that this list would be subject to a discount of 2J per cent on carload orders. They also set forth the quantity of ammunition they would be in a position to supply to us in the year 1946.
The prices on the "A" list are 5 per cent higher than the regular list applying to wholesale buyers. In other words we are expected to pay 5 per cent more for ammunition than our competitors.
In view of the fact that the executive committee of our board of directors was to meet on the Monday following the interview, it was decided to leave the matter in abeyance until that meeting.
A report was made to this meeting and, in view of the fact that a general meeting of shareholders of the company had been called for Wednesday, February 13. the executive committee decided that the matter should be taken up at that time with the shareholders.

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The matter was duly reported to the shareholders and, after some discussion, it was the unanimous opinion that it would be entirely too dangerous for the company to establish a precedent that in effect was that the company was prepared to pay 5 per cent more for its goods than its competitors, and the company was instructed to endeavour through every means possible, to obtain what they originally requested, viz., that the company either be placed on the regular wholesale list by Canadian Industries Limited, or that the rate of customs duty be reduced from 27J per cent to 74 per cent.
Yours very truly,
Merchants Consolidated Limited.
It will be noted from what I have quoted that Merchants Consolidated Limited did not ask for the segregation of their hardware branch under the name of Falcon Hardware Limited, or any other name. The segregation was suggested to them, as stated in their brief.
I suggest that Merchants Consolidated Limited is either a wholesale organization, or it is not. There is no halfway station. I am acquainted with many of the shareholders, and they are the type of men who know their rights, who ask no more, and whose rights they will maintain.
Merchants Consolidated Limited, as hon. members have heard, have been doing a wholesale business in western Canada for thirty-two years. Access to other manufactured products has already been accorded them-dry goods, boots and shoes, groceries, small wares, and many others. Therefore I ask, who is this C.I.L. in Canada, who is this cartel outside Canada having the audacity to set up its own standard of discrimination in this our free country? I know who the members of Merchants Consolidated are and I stand firmly in a demand for justice in their behalf.
This attitude of C.I.L. is not altogether a new thing in Canada. I have some recollection of a similar incident some years ago when another firm enjoying tariff protection declined to sell their products to a wholesale house. I believe that the matter came before the then tariff board and the manufacturers were given their choice of selling the goods as requested, or of having the tariff removed. I need scarcely add that a decision was quickly arrived at. I speak for a multitude of people in this country when I say that C.I.L. should be given the same choice, to be acted upon immediately, namely, to sell to Falcon Hardware in the same way and at the same price as they sell to other hardware firms, or to have the duty removed from similar goods imported into this country. In other words, they should be told to play the game or forfeit their protection. To my mind there is no alterna-

tive. Let it not be forgotten that the Canadian people as a whole, not any one section of them, grant protection to C.I.L. Therefore I say most emphatically that the Canadian people as a whole are entitled to share in the advantages, if any, which accrue from that protection. I would be most reluctant to make demands upon any firm struggling for its existence; but I learn, in fact I have learned to-day, that the common stock of C.I.L. is selling for from S240 to S250 for a $100 share and that a half yearly dividend of three per cent has already been declared for the first half of 1946. It would look, therefore, as if the people of Canada have been reasonably good to C.I.L. and that that firm is not by any means headed for bankruptcy.
I am less fortunate than a good many hon. members in the fact that I am not learned in the law. But I am to some extent learned along certain other lines, perhaps equally as good in their way as that of law. By long and sympathetic observation and by close and friendly contact with my fellow men I have learned something of those principles which are right and just, honourable and desirable in a community and in a nation; and I find it difficult to include in that category any tendency toward discrimination among our people, or the restraint of legitimate trade.
I therefore, with every confidence, ask urgently the Minister of Justice (Mr. St. Laurent) and the Minister of Finance (Mr. Ilsley), both able lawyers, to take such steps, either individually or jointly, by the present amendment or by added amendments, as may completely eliminate those unfair conditions to which I strenuously object, and to which I shall continue to object until t'he situation is corrected.
Mr. DAVID A. CROLL (Spadina): I too want to commend Mr. McGregor, who was the commissioner appointed under the Combines Investigation Act, for the comprehensive report which was tabled here last session. The suggestions made in the report as to control and abolishment of cartels are most useful, and I think it is well that before we get into the discussion I should give the house some of the recommendations made by the McGregor commission. A summary states that the cartels were guilty of having:
1.	Limited production and impeded the most efficient use of world resources.
2.	Raised or maintained certain consumer prices.
3.	Restricted the import and export of certain commodities.	_
4.	Restricted the use to which certain commodities might be put.
5.	Nullified external trade policies in certain
respects.	[DOT]

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6.	Restricted technological advances in certain fields.
7.	Created patent pools or monopolies covering wide fields of endeavour.
8.	Assisted the formation of private industrial empires which tended to supplant governments in the determination of certain national commercial policies.
I think it is fair to say that it is common knowledge that cartels exist, but how they operate is far less familiar, and what is often lost sight of is their effect upon the national economy of this country. Cartels are defined as private business arrangements to reduce or regulate competition in international trade. Their method of operation, or their usually understood method of operation, takes three farms: first, by agreements, written agreements, and if written agreements are found undesirable, there are oral agreements or, as they are termed in the trade, gentlemen's agreements, if you will; second, by membership in associations, wherein they form associations and limit the membership, as I shall indicate to the house a little later on; and, third, by centralized selling agencies, by which they demand that certain products be sold through a central agency.
Usually they divide a territory so that a member may have a sheltered territory in which he becomes a monopolist. Again, they often place restrictions upon process production, usually by patent agreements. The league of nations report in 1937 stated in part that thirty-two per cent of international trade was controlled by marketing controls; and the United States Department of Justice report in 1939 indicated that there were 179 cartels operating in that country. We in Canada have not escaped from the octopus of monopoly cartelization. As a matter of fact, we all know that every day in every way we are paying tribute to cartels in hundreds of ways.
A few glaring examples I take from the cartel report indicate that farmers are discouraged from mixing their own fertilizers by the fact that the potash and nitrogen cartels keep prices for direct sale to consumers exorbitantly high. Through cartel agreements, the price of sulphur was maintained at SIS a ton for seventeen years and then reduced to $16 a ton which became a new fixed level, and the average profits during this time to the cartel members varied from 13 to 29 per cent. The price of sulphuric acid was forced upward during good times and bad from $12 a ton to $17 a ton, although in a free market the natural tendency is for competition to send prices down. Instead of passing on to consumers the benefits to be had from newer and improved electric light bulbs, General Electric deliberately reduced the life of bulbs from 63260-1944
35 to as much as 62$ per cent, and instead of promoting the use of fluorescent lighting, which is better and cheaper than the old-fashioned bulb, General Electric and Westinghouse agreed to defer the development and marketing of the product as long as possible. A cartel agreement gave the Eddy Match company a virtual monopoly of the domestic market, foreign competition being barred by the policy of the match cartel; and through a cartel controlling plastics, du Pont of America agreed with the I. G. Farben Industries to fix the price of plastic powder for dental use at $45 a pound, although exactly the same product was sold to commercial moulders at 85 cents a pound.
That is the way cartels agree, according to the commissioner, to cripple and hamstring the economy of a country and force the public to pay through the nose for the essentials of life. The Americans have been awake to the situation, and I notice by the Globe and Mail of June 19 that:
The United States Department of Justice has started civil and anti-trust monopoly proceedings against the wealthy International Nickel Company of Canada Limited and its American subsidiary International Nickel Company Incorporated.
From the Globe and Mail of June 28 I see that they have also started proceedings against Electro Metallurgical Company of Canada Limited. But what is more important is a decision which has just been handed down by the United States supreme court dealing with the tobacco trust. I would ask hon. members to pay particular attention to it to see how well it fits into our situation. I quote from the research institute of America of June 14:
A far-reaching decision which can force revision of buying and selling practices in many industries has just been handed down by the supreme court. In a 6-0 ruling involving major tobacco companies the court has extended the revolutionary type of reasoning begun in the Alcoa case. While the earlier decision dealt with the monopoly aspects of a single firm- the new ruling applies virtually the same tests and finds an illegal monopoly where three firms exercised similar controls.
The court makes it clear that actual exclusion of competitors (from interstate or foreign commerce) is not necessary to a finding of unlawful monopoly. It is sufficient if all three of the following conditions occur:
1.	Some members of an industry "combine" to get or keep the power to exclude competitors. The court pointed out that although there was no express agreement among the defenders their action indicated a clear course of dealing. This in itself seemed convincing evidence of a combination or plan to fix and maintain prices and prevent future competitors from getting into the industry.
2.	The group has the "power" to exclude present or future competition from the field. The court noted that the defendants controlled over two-tliirds of the entire domestic cigarette
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field and over eighty per cent of comparable cigarettes. Following the Alcoa precedent, which uses percentage of control as an index of monopoly power, the court said that "comparative size on this great scale inevitably increased the power of these three to dominate all phases of their industry."
3.	The group "intends" to use this power to maintain a monopoly. Evidence of such intention was found by the court in a wide range sf buying and selling practices of the three companies.
Both combination and intent to exclude competitors were inferred from a wide range of parallel purchasing and sales tactics engaged in by the companies-for example:
(a)	Buying methods. Each of the three majors refused to make any purchases of domestic leaf tobacco unless the other companies were represented on the market. Before markets opened, they placed limitations on the prices which their buyers were permitted to pay and formulated grades so that there frequently was no competition between them. The companies determined in advance of each season what portion of the entire crop each would buy-then spread purchases evenly over the different markets throughout the season. At the time when manufacturers of low-priced cigarettes were beginning to manufacture in quantity, the majors made large purchases of the cheaper leaf needed for the low-priced cigarettes.
(b)	Selling methods. The companies charged identical list prices and gave identical discounts for their cigarettes. They also raised and lowered their prices at the same time. At one point, for example, all three raised their prices on the same date in the face of declining cost and market trends. When the majors were faced with competition from cheaper brands they sold for a while at a loss. Later they insisted that retailers maintain a fixed differential between the quality and the low-priced brands.
RCA observation 1: While no one of these practices taken alone would have been evidence of monopolistic exclusion tactics, the entire pattern is one that could get a group of quasicompetitors into trouble. In this case, for example, fines totalling more than a quarter of a million dollars were imposed.
I point out the steps which our friends to the south of us are taking to deal with this important problem. I have already told the house that in his report Mr. McGregor indicated that cartels restricted production. Restricting production might be beneficial to a cartel, but surely it cannot be beneficial to the economy of this country; for I ask hon. members how restriction of production can ever be socially desirable. It is true the report says that they prevented cyclical fluctuations in prices. As was indicated this afternoon, the aluminum cartel kept prices at fixed levels in good and bad times. I ask hon. members, where is the social advantage if the price is fixed above the average of fluctuating prices which would be permitted in a free economy?
At this particular time we must pay some attention to a problem which arose during the war in order that we might examine the extent
[Mr. Croll.l
to which big firms were able to influence government regulations against the interests of smaller competitors, especially by placing men in key federal agencies. Further, we must examine the degree to which concentration of economic power has increased under war conditions and make certain that we do not permit wartime powers to be used as a cover for anti-social peacetime associations. Individually and collectively the effects of cartel agreements are a bottle-neck in economic progress. After all, what purpose is there to the united nations organization, to the Bretton Woods agreement, to the various trade agreements which we have? If the lifeline between nations, trade relations, is to a great extent under the control of international industrialists; if we are to achieve national unity in this country-and that is our purpose-then we must make sure that wealth is distributed more equally in Canada; that industry is decentralized or in turn compensation is given to the maritimes, to the prairies and to British Columbia for their lack of industries. We must also make sure that the people of the country have an equal standard of living. The only way to do that.is to clear the channels of trade, both domestic and foreign, for we no longer have an agricultural economy in Canada.
We are a great industrial country. A few hours ago an hon. member said that we were the fourth trading nation of the world. Hon. members well know that we are the third largest industrial nation of the world; and if we are left to our own initiative, unshackled and with the know'-how which we have gained during the war, the world is our oyster, particularly when it is realized that we are now reaping the benefits of our price control, of our monetary stability, of our differential in the cost of raw material. To-day we have an advantage over the United States in the markets of the world to the extent of from twenty to thirty per cent. Although we have that advantage we are now starting in to wrestle in public and we shall probably lose the advantage. In the meantime, it seems to me that there is a first-class opportunity to gain some of the markets of the world so long as we are unshackled.
To-night I wish particularly to call attention to an abuse which has crept in, namely, the Canadian Radio Patents Limited, which already has a membership of seventeen and was formed for the purpose of licensing. It is a licensing agency organized by the industry to deal with radio patents. Radios are pretty w'ell standard equipment in Canada. I am told that in Toronto 93 per cent of the homes have radios and 87 per cent in Montreal. I

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have no doubt that the percentage is just as high throughout the country. To-day radio is an essential to every home, not only for educational purposes but for entertainment and cultural purposes. It is sometimes alleged that it is useful for political purposes. But here is a company having as its objective the prevention of foreign competition and the bolstering of domestic prices; which owns over six hundred radio patents, many of them basic, without which it is impossible to manufacture or sell radios; and which has a financial set-up all its own. They demand from a member $10,000, and at the same time the member must show that he is financially worthy to the extent of $100,000. Even after this has been done, they still have the right to refuse that member admission to the company, on the ground that he has curly hair or pink eyes, or for that matter, on any other ground. To-day, as a result, they are in absolute control of radio patents which are essential for the manufacture of radios in this country. The house may say that we can import radios, but when one realizes that there is a 25 per cent tariff, in addition to the sales tax, excise tax and exchange tax, it will be seen that this is hardly feasible. What is more, under our patent laws, even if a radio is brought into this country, this company have the, rights to charge a royalty on it, and as a matter of fact they have warned many people they would1 do exactly that.
We are getting far away from business as we used to understand it. I remember the time when it was said if you built a better mouse-trap the world would track a path to your door. It seems to me that the people who want to go into the radio business and take their chance ought to be permitted to do so, by paying the ordinary royalties that one pays for the use of patents, basic or otherwise.


Mr. RICHARD (Ottawa East):: Is the hon. member aware of the fact that Radio Patents expired some time ago; that this agreement is not in force at present; that anybody is free to license himself under any patent formerly owned by Radio Patents?


Mr. CROLL:: I can only answer that by saying that as late as a week or ten days ago my information was to the contrary, and that is why I am bringing this matter to the attention of the house. If Radio Patents Limited are out of business and no longer in control of these patents I am sure the house would be glad.


Jean-Thomas Richard: It is a fact.


David Arnold Croll: I have indicated the evils, which are quite apparent to the house. In the United States they have the Sherman anti-trust law, which to some extent prohibits and at least sets up machinery for the purpose of dealing with trust agreements. Up to the present time Canada has been a bit of a happy hunting ground for cartels; and I think it is undeniable that the time has come for us to make certain that restrictions on production, restrictions on scientific achievement, restrictions on competition in trade, are no longer to be tolerated. As I have pointed out, there is an easily recognized handful of sand being thrown into the machinery. We in this house do not run the machinery,' but we make it possible for the people of Canada to enjoy fully the fruits of their labours.
To me the action to be taken by this house is clear. We must pass an act or acts which will tear down the walls erected by these powerful combines between our factories, our farms, and our markets beyond the seas. We must curb restrictive actions which bar our exports, reduce our national income and cause unemployment in this country. We must maintain full production to meet the needs of our own people, and we must make better use of our natural resources. We have two ways of going about this. We can do something at the international level and we can do something at the domestic level. We are members of the economic and social council of the united nations. We have a representative there. The matter will come before that council for some discussion and action; and it is well that our delegate, whoever he may be, should be instructed as to the action he should take. In so far as this house is concerned, parliament can deal with this matter realistically. Our objectives are good. What we need is a law with teeth. As a matter of fact we have had some experience with cartels. I think most hon. members will remember that when the radium cartel was under the control of the Americans the price was from $100,000 to $170,000 a gram. Then came the Belgians, who reduced the price to $70,000. Then, after discoveries made in the northwest territories in 1938, we brought down the price to $20,000 a gram. Whether that price is fair or unfair I do not know, but it came about as the result of action by this government.
At the present time it seems to me we are merely nibbling at the problem. It is a large problem, a very large one. In the vigorous and tumultuous future it will require more than policing. To fine these companies a quarter of a million dollars, as they do in the United;
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States, is merely to have that fine passed on to the consuming public in one way or another. We must take action in a more direct and more constructive manner. This measure goes far; it may work out, but it seems to me that it does not go far enough. A great deal will depend on how it is administered. I am hoping that the Minister of Justice will see that it is administered by such men as Mr. McGregor, in whom we have all confidence, and that he is given adequate facilities and assistance so that when we come back here again, whenever that may be, a report may be presented to this house indicating not only that action has been taken but that results already have been achieved from this legislation. Otherwise we shall feel that we have merely gone through the motions.


Mr. SKEY:: The hon. member for Spadina, speaking to the Combines Investigation Act, spoke of placing men in key federal positions. I am merely seeking information. I should like to know what he meant.


David Arnold Croll: I said "agencies."


Lawrence Wilton Skey: Yes, the appointing of men in key federal agencies. I should like to know what the hon. member meant by that phrase.


David Arnold Croll: I meant just that.


Lawrence Wilton Skey: May I ask another question?


James Horace King: Order. I must remind the hon. member that we are on second reading of the bill, and not in committee.


Lawrence Wilton Skey: I merely want to address another question to the hon. member.


James Horace King: That would not be in order.


John George Diefenbaker: I have listened, as has the house, with great interest to the speeches made this afternoon and this evening, and in particular to the two last hon. gentlemen who spoke. The hon. member for Brandon (Mr. Matthews) clearly showed the existence of a combine in restraint of trade. The hon. member for Spadina (Mr. Croll) not only read from the report of the inquiry into international cartels and other trade combinations, but added information he himself had gleaned as the result of personal investigation. All who have read this report must be impressed with the fact that to a degree never before known in this country cartels in many commodities and in full restraint of trade have been operating. As a matter of fact it is difficult for me to imagine that anyone could have made a more terrific indictment of the government than is made in the sixty-nine pages of this report made by a commission appointed by the government.
[Mr Croll.)
The commission reports that in regard to various commodities cartels have been continuing in restraint of trade for a good many years and that they are to-day operating. While we are speaking about the subject in this house, the evidence has been secured and put together by a commission to whose chairman high and proper tribute has been paid. The law is on the statute books in the form of section 498 of the criminal code. This section gives wide powers for the laying of informations against any company or individual who unduly limits facilities for transporting, producing, manufacturing, supplying, storing or dealing in any article or commodity which may be a subject of trade or commerce, who restrains or injures trade or commerce in relation to any such article or commodity, or who unduly prevents, limits or lessens the manufacture or production of any such article or commodity, or who unreasonably enhances the price thereof, or who unduly prevents or lessens competition, and certain other matters covered by the section in question.
The Combines Investigation Act was amended in 1935 to permit prosecutions being taken without the necessity of establishing that what was being done was being done in a manner that could be described as unduly. The hon. member for Spadina says that we should put teeth in the law. I see nothing in the amendments before the house at this time that will put any more teeth in the law than exist to-day to prosecute these companies that are acting in restraint of trade for their unlawful actions. The hon. member for Spadina said, and I paraphrase his words, that every day in every way we the people of Canada are paying a tribute to these companies which have taken undue advantage of the people of Canada.
We have had the law up to now. We have had the recommendations and the information contained in this report since October 10, 1945. I ask the Minister of Justice (Mr. St. Laurent): what has the government done since then to punish the wrongdoers who are referred to in the report made by the McGregor commission and who could rightly be convicted of wrongdoing if the statements contained therein are correct? I have looked over the record since 1935 for the purpose of ascertaining just how far this government has gone in carrying out the promises made by the Prime Minister (Mr. Mackenzie King) on the election night of 1935 when he said, or words to this effect, "Now the forces of monopoly and privilege will be shown their place, now the moneyed interests will be brought to task and to account."

Combines Investigation
The McGregor report sets out in detail the existence of cartels in fertilizers, to which reference was made by the hon. member for Spad-ina, in tanning materials, flat glass, sulphur, dyestuffs, tools, titanium pigments, chemicals, electric lamps, radio tubes and so on. The indictment is there. Not only have we the recommendations and the evidence of a commission appointed in Canada; but in the United States, as the result of investigations by the Arnold committee and also of a committee of the United States senate, it has been shown that international cartels exist and have been carrying on their practices in Canada while under indictment in the United States. They have been allowed to remain free and still carry on their nefarious work in this country.
Let me point out what has taken place since 1935. All these cartels have been in existence for ten years or more and yet none has been prosecuted. Here is the record since 1935. An inquiry was made into anthracite coal on February 3, 1937. A combine was reported and proceedings were taken. The anthracite coal importers were fined $48,500. Then on August 31, 1938, a report was made on the distribution of tobacco products in Alberta and elsewhere as being in contravention of the combines act. Prosecutions took place and various tobacco companies were fined. Upon appeal the convictions were set aside on the ground that two offences, one under section 498 of the criminal code and the other under the combines act, were joined together in the one indictment. It strikes me as passing strange that when that conviction was quashed on technical grounds the government has not yet seen its way clear, provided that a combine had been established in connection with these companies, of taking action and proceeding in the courts.
The next report made under this act was with respect to the manufacture and sale of paperboard containers and related products. On March 14, 1939, a combine was reported and prosecutions took place in that year. Fines to the extent of $165,000 were imposed. Finally, on October 31, 1939, wholesale shippers of fruits and vegetables in western Canada were found to be operating a combine in contravention of the act. They were brought before the courts and acquitted. The record shows that proceedings were taken against only small combines in comparison with these international and national combines which are set out particularly in the report of a commission appointed at the instance of the Minister of Labour (Mr. Mitchell).
I should like to ascertain from the Minister of Justice (Mr. St. Laurent) the attitude of the government in Canada in regard to
combines. In October, 1945, there was a meeting in Washington of the Anglo-American financial conference at which the question of cartels was discussed. There was a difference of opinion as between the United Kingdom representatives and the representatives of the United States of America. The Americans proposed, and I quote:
The Americans proposed that a multilateral agreement be concluded among all the major trading nations, and eventually among all others, under which each country would morally commit itself to take whatever steps were necessary to prevent its nationals from entering into combines, etc., in restraint of trade through fixing prices, sharing markets, and similar measures.
The British were prepared to go part way on this thesis. They considered certain cartels were in restraint of trade, but they also felt that others were not. They proposed that efforts should be made to eliminate bad cartels 'out instead of outlawing all cartels, they favoured having a consultative body set up to which a country could complain against a cartel that it considered wras acting in restraint of trade.
I ask the Minister of Justice this:	What
is the attitude of the government of Canada? Does it intend to prevent all cartels and to punish all cartels in restraint of trade? Or does it intend to follow the British practice as suggested by the responsible minister of the British government, that only such cartels should be interfered with as are necessarily illegal?
Before the second reading is over, I think the Minister of Justice should indicate to the house and the country to what extent the companies referred to in the commissioner's report are to be proceeded against. The evidence is here. Mr. McGregor, the commissioner under the Combines Investigation Act, places his name on this report, indicating clearly that in his opinion prosecutions should take place. As a matter of fact, as I listened to the hon. member for Spadina referring to electric lamps, these words in the report, at page 22 struck me:
The production of electric lamps in Canada and the United States is largely controlled by the General Electric Company, a United States corporation, which directly or through its subsidiary International General Electric lias agreements with the principal foreign producers (in England, Belgium, Holland, France, Germany, Japan, et cetera) which provide for crosslicensing of patents, exchange of information and allocation of territory. The agreements exclude the foreign producers from the Canadian market, which is reserved for those manufacturers in Canada licensed under Canadian patents, who are likewise barred from exporting to other markets.
Surely any agreement to that effect, to prevent Canadians from importing from another country, is in restraint of trade. The report
goes on:
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Canadian manufacturers of electric lamps appear to be governed by much the same type of control as to manufacture and sale as has been established by the General Electric Company in the United States. In such an important factor as the length of life, the specifications for lamp construction appear to have been drawn up in the interests of manufacturers. Long life bulbs which have been produced in other countries, in Holland for example, are not permitted to be marketed in Canada.
The report goes on to deal with radio tubes and sets and says:
In its investigation of the radio industry in 1939 and 1940 the tariff board found that Canadian consumers were being unduly exploited through the arrangements then in effect.
There is the report of a body set up by the government, and in order to reinforce its opinion it goes back to 1939 and states that the tariff board at that time found that, in so far as this company was concerned and those associated with it, it was unduly exploiting the Canadian consumer.
Reference has already been made to radio tubes and sets. In the western provinces we find that most of our farmers require a radio as do farmers and other people all over this country. Yet we are unable to get small radios in this country and we are unable to import them. We are denied the opportunity and privilege. The companies in Canada under cartel arrangements are forbidden to manufacture small radios in this country. I will read the particular portion of the report bearing on this, and again I say that this report is an indictment, not of the law as it now stands, but of the government for its failure to act when its responsible representatives and those appointed by it demand that it act. All the action we get in response to that demand is a matter of a few moments, to which particular reference will be made when we go into committee, because we are denied the opportunity of dealing with them on the second reading when only the principle of the bill is at stake. What does this report say about radio tubes and sets? It says:
Arrangements of a like character

Like the arrangements with respect to electric lamps.
-exist with respect to the allocation of world markets for radio sets and radio tubes . . . The arrangements for the exchange of patents and licences protect Canadian manufacturers from outside competition, while the establishment of holding companies to control Canadian patents restricts competition among Canadian licensees.
That is the finding of a responsible committee which was set up under the chairmanship of a -man who has earned the approbation of my hon. friends on all sides of the house and who must have had the evidence before him on which to make findings like that.

I point out now what the radio situation is. Considerable investigation was made of it last January by Mr. Chester Bloom of the press gallery. In an article he sets forth exactly what is happening in this country and explains why people cannot secure the small types of radios. I am going to quote from his words and then I am going to appropriate them as my own. He says:
This patent pool is operated under the name of Thermionics, Ltd. Complaints concerning its operation have been numerous in the past yet no government action has ever been taken to open up the small radio market to free competition.
Is it not fair to interpolate at this moment and ask the government why? There is a demand across this country for small radios. This condition of affairs cannot be explained away as having been in existence only since the war because it dates back to 1935, and possibly even earlier. The fact remains that no consumer in this country has been able to get a small radio. Why? Simply because the things we condemn in the statute are carried on by the companies named in the indictment which is in the form of a commissioner's report. Mr. Chester Bloom goes on to say:
Particularly discriminated against in this respect are farmers who have individual power plants operated by gas engines or wind power. There are some 20,000 such plants on farms in the prairie provinces.
The standard voltage for radios on farms with such individual power service is 32-volt.
Why then, not import such 32-volt radios from the United States?
Then he goes on to state the reason. One reason is that there is a patent pool existent in this country, and the patent pool goes back, he says, to the 1930's. Some might ask, why cannot one write to the United States, buy a radio there, pay the duty on it and bring it in? The answer given by Mr. Bloom is this:
The initial deposit required for an import licence from Thermionics, Ltd. is so high, the importers allege, that it is prohibitive when coupled with the subsequent royalties which must also, of course, be included in the price to the individual purchaser.
That is very much in line with what the hon. member for Spadina said in regard to radio parts in this country.
But suppose-
He says.
-an individual buyer attempts to import such a radio, what happens? He receives at first a tactfully written letter informing him he has fractured the patent laws and is subject to prosecution. If that doesn't suffice, a writ is issued against him. But, according to people who have had this experience, seldom is the case ever taken to court. The writ is merely allowed to stand as an impairment to the credit of the would-be importer . . .

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There have been instances where Canadian distributors have endeavoured to induce United States radio manufacturers to set up a plant in Canada and manufacture competitive radios in this country. One such manufacturer said frankly he could take all the Canadian market but why should he? He said he would not make any more than he was then with 15 per cent of the Canadian business which he was getting under a gentleman's agreement.
These are not statements loosely made. These are statements reinforced not only by the findings of the McGregor commission but also as a result of the investigations which Mr. McGregor has made over a period of years. But I think we in this house and the country are entitled to find out this: in how many cases did Mr. McGregor or anyone acting on his behalf, since 1935, indicate that there were combines in this country, and in how many cases did prosecutions take place as a result thereof? Because, sir, the position is this: no private individual in this country can take proceedings under the Combines Investigation Act, but only the Attorney General of Canada or, in turn, the attorneys general of the provinces in which the alleged offence has taken place. The result is this, that if the Attorney General of Canada, because, as was pointed out to-day, of the very high costs of taking proceedings, decides not to take proceedings and hands over the ball to the provincial attorney general, do you think it would be reasonable that the province would feel like proceeding with an action when the dominion had decided, apparently, that the cost of prosecution would be so prohibitive that it would not proceed?
Mr. ST. LAURENT: Will the hon. member permit me a question?


John George Diefenbaker: Yes.
Mr. ST. LAURENT: Is he suggesting that it is after the Attorney General of Canada has taken a decision that the facts are brought to the attention of a provincial attorney general? Does he not know that under the statute the facts are required to be first brought to the attention of the provincial attorney general and that the Attorney General of Canada is required to wait for three months for his decision, and that that is a provision which it is proposed to amend?


John George Diefenbaker: That is perfectly true; there is no argument about it.
Mr. ST. LAURENT: Then why say anything else?


John George Diefenbaker: I have not said anything else.
Mr. ST. LAURENT: The hon. member said quite the opposite of that.


John George Diefenbaker: I can well understand the annoyance of my right hon. friend the Minister of Justice. However, he has not been Minister of Justice very long and he can excuse himself-
Mr. ST. LAURENT: He has no reason to offer any excuse.


John George Diefenbaker: -for his failure to act. I appreciate that. I will deal with that in a moment. His failure to act can be explained away on the ground that the war was on. But, sir, he says he will not say that, he will accept his responsibility. Then I ask him, why, having regard to what has taken place, and the fact, that there has been a report since October and goodness knows how many reports were sent on to the Department of Justice before October by Mr. McGregor after investigations which he has taken, is it the situation that in a period of eleven years the total number of prosecutions in Canada under the Combines. Investigation Act has been in respect of only four matters?
I should like to ask him too in regard to the international situation. The hon. member for Spadina referred to certain prosecutions which have taken place in the United States. I pointed out one to which I think he made-some reference-the match monopoly. On May 2, 1944, the department of justice of the-United States of America charged ten companies with having contravened the Sherman antitrust act. One of these companies was a Canadian corporation. Those proceedings were gone ahead with, in the United States.. I ask the minister this, is there any collaboration, is there any intercommunication as between the government of the United States and the government of Canada when, as a result of an investigation in the United States it is ascertained that international combines carrying on business in these two countries are operating in- restraint of trade; and, if so, is. there any manner whereby joint prosecutions can take place? Certainly, across the line in the United States large volumes of evidence have been piled up as against two or three corporations operating in Canada, but as yet none of us has heard of any prosecution taking place in this country with regard thereto.
Just one other matter to which, also, reference was made to-day by the hon. member for Spadina, the question of fertilizer. That report is an indictment that affects every farmer in this country either directly or potentially as a possible user of fertilizer. The report reads as follows:
Prices of principal fertilizer materials, potash, nitrogen, and superphosphates, have been controlled under various cartel agreements, some world-wide in extent. The cartels have divided
Combines Investigation

markets and allocated export quotas among members. The resale of potash was deliberately kept high to prevent farmers from mixing theii own fertilizers.
Here, I suggest, is one matter which affects the farmers of this country, and I ask in the very kindest manner possible, what are you going to do about it? My hon. friend the Minister of Labour (Mr. Mitchell) laughs.


Humphrey Mitchell: I said, "in a kindly way".


John George Diefenbaker: I appreciate that. Since my hon. friend the Minister of Labour started using that expression "in a kindly way", the atmosphere of this house has improved very greatly, and everybody is using it.
He certainly was the motive power that started the investigation. He is the one who set up this committee and gave it power to act. He has discharged his responsibility. I ask the Minister of Justice, when may parliament and the country expect that in so far as the fertilizer industry is concerned the prosecutions will be taken, to the end that no longer will Canadian farmers be prevented from mixing their own fertilizers by an illegal agreement in restraint of trade and designed with one purpose in mind, to maintain the price at such a height that the largest possible return will come to an international organization?
To-day the Minister of Justice stated that the purpose of the amendments was, if I paraphrase him correctly, to provide the machinery for accelerated action, or, in other words, to provide means whereby prosecutions can be launched and proceeded with, with the greatest possible dispatch. He had the support of every member of this house, and we shall look forward to the acceleration of prosecutions. Certainly no one can characterize in favourable terms the activities of the combines investigation branch of the department since 1935. Of course one of the difficulties has been that Mr. McGregor has had neither the necessary staff nor the necessary appropriations. As I understand it, he is to have a staff of ten experts, and really they are going to set up an organization which is intended to act. I think parliament and the country have the right to know at this time what is to be done when this power of accelerated action has been granted under the amendments asked for under this measure.
As to individual sections, some of these I shall refer to when we come to discuss them in committee. At this time only the question of principle is at stake. I do not see where the new provisions put many teeth in the law as it now stands. To me they look like false

teeth. They are merely the padding of certain sections that can have no effect beyond the effect of the law as it stands at present, because, while they provide new machinery, they do not in any way provide for a change in the nature of the evidence that must be secured in order to found a conviction. In other words, you still have to establish under the criminal code that whatever is done is done unduly. A private individual cannot lay the information. I appeal to the Minister of Justice again. If he desires to secure the power to act, why does he not give the individual consumer, the forgotten man in this country, an opportunity of laying an information under the Combines Investigation Act? As a matter of fact, recommendations have been made in the past to provincial attorneys general that they proceed to prosecute a combine and no prosecution has taken place.
I remember very well, though I speak from memory, that about twenty years ago a potato combine was found to exist in one of the maritime provinces. The matter was turned over to the attorney general of that province and no prosecution took place. The greatest deterrent that any of these corporations can suffer, who are taking undue advantage-and there are only a few of them-is to have publicity given their activities. The greatest police is an aroused public opinion with knowledge and information. When a farmer realizes that he is being unfairly dealt with in the matter of fertilizer, what is the use when he is denied the opportunity of going into a court and himself taking proceedings on the basis of recommendations that have been made by the McGregor commission.
Certainly to-day the situation is such that on the evidence which the McGregor commission has gathered together upon which to found its report, I do not think there would be any great difficulty for an individual having the power to lay the information, to gather together that evidence, having as he would have behind him Mr. McGregor and those associated with him in obtaining the evidence upon which the charges made in the report of the commission were founded.
We can pass laws; but if laws are not enforced they bring the administration into disrepute; they bring justice and fairness and equity into disrepute. We have had the law, and we have had the amendments passed in 1935 to cover some of the abuses that came to light in the price spreads investigation. We have the law; yet with the law at our disposal with a responsible man and a man of experience in charge of the department, with investigations going on and recommendations being made, I say once more that it is not good

Combines Investigation
enough that, with a record such as we find set forth in that report, after eleven years there have been only four prosecutions,-two successful, one reversed on appeal and the other registering an acquittal.
Right Hon. L. S. ST. LAURENT (Minister of Justice): In closing the debate, I wish first of all to express my gratification at hearing members on all sides of the house pay such a well-deserved tribute to Mr. McGregor, the commissioner under the Combines Investigation Act. I am not going to make a political speech, nor am I going to make a speech to try to impress anyone. I brought the bill to parliament because I thought it would enable this house to provide more effective machinery to do something which it is necessary to have done in the public interest, and it is principally with that consideration that I am concerned. It seems to me that this tribute which is being paid to Commissioner McGregor is the best earnest that, if we give Commissioner McGregor the kind of machinery he requires in order to do his job, he will do it and do it in an efficient manner.
I am sure the member for Lake Centre likes to make these indictments upon the government of the day. They probably do provide some headlines; they do provide some passing interest. But it does not last very long, and the hon. member and I know that what really counts is what is done, rather than what is said.


John George Diefenbaker: That is it.
Mr. ST. LAURENT: The hon. member knows, in spite of the speech he made to-night, that this bill will provide machinery to do some of the things about which he has complained. For instance, he has dilated upon the serious effect upon the Canadian public of the misuse of patents when they are pooled and licences are issued with conditions attached to them which do hamper the possibility of the Canadian consumer obtaining some of the things he would like to get. This bill provides for giving jurisdiction to the courts to deal with that kind of arrangement and to say what portion of such pooling and patent agreements will not operate and will not have the effect of which the hon. member complained and to which also the member for Spadina referred.
The hon. member for Lake Centre says, "Why don't you allow anyone to lay an information?" I will make this bargain with him. When we get into committee, if the committee will take out of the act the restrictive provision which the Right Hon. Mr. Meighen put in there in 1935, I will agree to takg out the provision restricting the laying of information
to the attorneys general. But I will not agree to taking that provision out if it is to remain there merely to allow sham proceedings to be instituted against lawbreakers and then have a clause that no other proceedings can be instituted against them on the same set of facts.


John George Diefenbaker: Mr. Meighen was not here in 1935.
Mr. ST. LAURENT: He was in the senate; it was in the senate that this was introduced; and it came here the day before the last of the session and had to be taken in that form or nothing at all would have been obtained. If in committee the house will agree that the restrictive provision which prevents the institution of more than one set of proceedings be deleted, then I shall be quite prepared to accept a motion to delete from the Combines Investigation Act the subsection that has been there since 1923, which reserves to the attorneys general of the province or the Attorney General of Canada responsibility for taking action following an investigation under the act. The hon. member knows that would be something of little substantial effect. He pointed out in his speech that there are very few individuals who are going to undertake, at their own risk and at their own expense, a long struggle with a powerful corporation to establish that its manner of doing its business is illegal. But there will be no objection to having the law framed in such a manner that if such a courageous, public-spirited citizen wishes to do it on his own account he will be privileged to do so. He already has had the right to do so under section 498 or 498A of the code.
The matter to which the hon. member for Brandon (Mr. Matthews) referred is one which, on the facts stated in the brief he submitted, would clearly constitute a violation of section 498A of the code. It is a matter which is being carefully investigated by Mr. McGregor. Mr. McGregor has not yet come to the conclusion that he should recommend that proceedings be instituted, but he has had the matter under consideration. He has had correspondence with the interested parties and is giving it serious attention. But apparently Merchants Consolidated Limited, made up of four hundred individual merchants, would prefer to have the government undertake the risk and expense of bringing Canadian Industries Limited to time than do it itself.
With respect to international cartels, the hon. member for Lake Centre knows, as I know, that we cannot prosecute for offences committed in foreign parts; that arrangements
Combines Investigation

to that end have to be negotiated internationally, and the matter is on the agenda of the meeting called originally by the United States government and which has now been placed under the aegis of the economic and social council of the united nations. Joint action is required there. We cannot prosecute anyone here in Canada because he has to charge for the components of fertilizer which he imports into this country a price which gives him some margin over the laid-down cost at the Canadian port of entry. That is something which we cannot effectively deal with here. We can refuse to take these component parts at all, but that would not give us the fertilizer. It so happens that, in spite of the serious situation disclosed in this report of the commissioner on cartels, we still prefer to have the fertilizer at the price we have to pay than to do without it. But the purpose served by making these facts public is to prepare the way for the international agreements we hope to be able to make which will bring about by international action the curbing of such activities.
Here we are asking for amendments to the legislation which appear to be necessary to enable the commission, as it is being reorganized, to function in an efficient manner. During the war there were price ceilings which afforded some protection. It is known to members of the house that the commissioner under the Combines Investigation Act was on loan to the wartime prices and trade board and was, up to a few months ago, in charge of the enforcement of the regulations of that board. Since the beginning of the year he has returned to his former job of giving his time and attention to the matters to which the Combines Investigation Act applies. I think most hon. members have in him the confidence which was expressed by those who have taken part in the debate, and they believe that if he is given the statutory legislation he requires, and is not hampered in his operations, he will do an efficient job.
I can say to the hon. member for Lake Centre that there have been no reports from the commissioner to the Department of Justice not acted upon, and I am informed by the Minister of Labour (Mr. Mitchell) that since 1939 there were no reports to the Minister of Labour from the commissioner under the Combines Investigation Act which were not acted upon.
While this act is administered under the Department of Justice and I happen to be there I can give the house the assurance that the efforts of the commissioner will be fully seconded in every possible way to eliminate, to the extent to which it may be feasible, the

detrimental effects of these monopolies, trusts and cartels referred to in his report. I therefore suggest that this bill might be given second reading and that we might consider then the clauses it contains; and if it is, as I hope it will be, the feeling of the house that section 28 of the bill of 1935 be repealed I shall then be quite prepared to accept an amendment from the hon. member for Lake Centre to repeal the provision which makes the laying of informations the sole responsibility of attorneys general.


[Stage Direction]
Motion agreed to, bill read the second time,, and the house went into committee thereon, Mr. Golding in the chair.
Section 1 agreed to.
On section 2-Deputy commissioners.
Mr. FLEMING:: How many deputy commissioners does the minister propose to appoint under the provisions of the new section 6?
Mr. ST. LAURENT: I asked the commissioner that question and he gave me the information. He is just entering the chamber and I shall have him repeat it to me because I want to be absolutely accurate in giving the answer. At the present time the intention would be to have three appointed and it might perhaps be four. The commissioner tells me that what he is considering at the present time is three.


Donald Methuen Fleming: I take it they will be fulltime deputies and not simply ad hoc appointees from time to time?
Mr. ST. LAURENT: No; they will be fulltime deputy commissioners appointed under the Civil Service Act, and one will be designated by the governor in council as the deputy who will replace the commissioner in his absence or if at any time he should be unable to act.


Mr. HACKETT:: Will the minister state the number of personnel at the present time, and by how many they will be augmented when the three additional commissioners have been named?
Mr. ST. LAURENT: At the present time there are ten combines investigation officers. The present intention would be to have three of those officers designated as deputy commissioners.


John Thomas Hackett: My question was, by how many will the personnel of the department be increased by reason of the appointment of the three deputy commissioners?
Mr. ST. LAURENT: It would not necessarily increase the number at this time. The present intention would be to have three of

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the combines investigation officers appointed by the civil service commission as deputy commissioners. That, of course, would be subject ' to the findings of the civil service commission, which will fix the qualifications required; and it is hoped that it would be from the existing combines investigation officers that the three deputy commissioners would be selected.


Mr. COCKERAM:: What salary does the minister propose to pay these deputy commissioners?
Mr. ST. LAURENT: These salaries are fixed by the civil service commission. It is a matter which is at present under consideration by the civil service commission, which probably is awaiting the report of the special commission under Mr. Gordon as chairman, which report is expected very shortly, in relation to salaries for key positions in the civil service.


John George Diefenbaker: How many investigations have taken place in the last ten years? A while ago the minister mentioned that in no case had a recommendation, made by the commissioner not been acted upon. How many investigations have taken place, and in how many cases was a combine reported as in existence?
Mr. ST. LAURENT: In the two years from 1935 to 1937 no investigation reports were made. In 1939 there was the investigation of Container and Materials Limited, and the shipping case, Materials Manufacturers' Association, which cases went on until 1942. In 1940 and 1941 there was the investigation into tobacco manufacturers and wholesalers. In 1939 there was the investigation into the western fruit and vegetable combine. The commissioner repeats to me the assurance I gave the house, that during this whole period no reports were made that were not acted upon. A number of informal investigations were conducted; representations as to what was the law were made to those investigated; if they immediately complied with the law, the investigations did not end in a formal report being submitted by the commissioner to the minister.


John George Diefenbaker: Is that right, then, that in certain cases investigations are conducted by the commissioner and that, once he arrives at a settlement or a satisfactory arrangement, no report is made on what has taken place?
Mr. ST. LAURENT: The commissioner reports the facts he ascertained, that there were practices which appeared to him to be undesirable and that those who were responsible had agreed to eliminate them, so that further action appeared to be unnecessary to protect the public interest.


John George Diefenbaker: How many of those were there in the period I have mentioned?
Mr. ST. LAURENT: The commissioner informs me that from 1935 to 1937 there were no cases. From 1937 to 1939 there were the three major cases which were investigated, where he found combines which he reported and in respect of which prosecutions were instituted, while there were other investigations where he did not find there were combines.


John George Diefenbaker: But how many of those were there? I should like to find out the extent to which investigations are made. How many of these investigations were made in which, after the matter was brought to the attention of the alleged wrongdoers and they gave the assurance that changes would be made, no further action was taken? What was the number of those cases?
Mr. ST. LAURENT: I am told I was wrong in saying they had to give assurances that changes would be made. What followed as the result was that there were not sufficient grounds to charge that a combine existed. In the two fiscal years from April 1, 1938, to March 31, 1940, some fifty-two such investigations were made. In the five fiscal years from April 1, 1940, to March 31, 1945, some forty-two investigations were made. That was during the war period.


John George Diefenbaker: In regard to this question of radio tubes and sets, and Canadians being unable to get small radio sets, when was that matter first brought to the attention of the commissioner or those charged with the administration of this act?
Mr. ST. LAURENT:	Allegations of the
existence of a combine with respect to the manufacture of radio tubes and receiving sets were received toward the end of 1930 or the beginning of 1931, and the greater part of this investigation was carried on in 1931. The registrar reported a combine of radio tube manufacturers. It was alleged that common selling prices had been fixed at an unreasonably high level and that competition had been otherwise lessened to the detriment of the public. The attorney general of Ontario, to whom the case was referred, decided that no prosecutions should be instituted.


John George Diefenbaker: In addition to that report, there was a further report which seemed to bring the matter right to the

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attention of the commissioner. This is referred to on page 24 of the report. This is right up to date; it is not back in 1931. The report states that on investigation of the radio industry in 1939 and 1940 the tariff board found that Canadian consumers were being unduly exploited through the arrangements then in effect. That having been found out in 1939, why were no proceedings taken with regard thereto?
Mr. ST. LAURENT: At that time the matter was being handled by the tariff board, and the proceedings referred to there are proceedings before the tariff board where apparently an application had been made for a reduction in the protection because of the prices that were prevailing in Canada.


John George Diefenbaker: Did'the tariff board not report to the combines commissioner that they had found that Canadian consumers were being unduly exploited by the arrangements which were in effect?
Mr. ST. LAURENT:	The commissioner
tells me, it did not. The tariff board reports to the Minister of Finance and there was no report to the commissioner. This was knowledge that the commissioner obtained for the purposes of this report, but it was not through a report made to him by the tariff board.


John George Diefenbaker: That seems difficult to understand because it shows a lack of collaboration and cooperation between departments that is quite serious. The Minister of Finance finds out in 1939 and 1940 that the radio industry was unduly exploiting the Canadian consumer, and yet nothing is done because apparently the Minister of Finance or those connected with him did not report to the officer in charge of the investigation of cartels or monopolies or unfair practices. Something should be done to draw to the attention of the departments the necessity of passing on information that is as well authenticated as this was. This should apply to the Department of National Revenue as well as to the Department of Finance. The tariff board made a lengthy finding on the matter, and that should have been communicated to the officer in charge of protecting the Canadian people from such exploitation.
I am not going to read all that appears on page 24 because I do not believe in reading long quotations, but it is all set out there quite clearly. Apparently it was known to the board and to the Minister of Finance in 1939 and 1940 that these serious matters were going on. I am sure that there should have been some exchange of information between departments which would bring such startling

information to the attention of the man charged with preventing wrong-doing of that kind.
Mr. ST. LAURENT: I would call the attention of the hon. member and of the committee to the fact that this is not a finding of a combine or monopoly, it is a finding that because of a situation which existed there were being taken from Canadian users higher royalties than were being taken in other countries. That is precisely one of the things which one of the later sections of the bill is intended to correct. In 1935 the Combines Investigation Act and sections 498 and 498A of the criminal code had been placed for investigational purposes under the control of the dominion trade and industry commission. That was the situation until 1937 when investigations under the Combines Investigation Act were restored to the commissioner, but investigations under sections 498 and 498A remained under the dominion trade and industry commission. It is proposed by this bill to restore the jurisdiction and responsibility for investigations under sections 498 and 498A to the commissioner of the Combines Investigation Act so as to have only one responsible official for investigations under both statutes.


Alan Cockeram: The minister stated that there were ten investigating officers at the present time, but according to the estimates for this branch there are only six.
Mr. ST. LAURENT: The estimates were prepared before the schedule for the reorganization of the branch had been drawn up. If the hon. member was here when the estimate was passed he will remember that I declared I would have a substantial supplementary estimate to enable the commission to carry on according to its plans. Just before the main estimates were considered in the committee I had signed a recommendation to the treasury board to approve a substantial supplementary estimate for this combines investigation commission.


Lawrence Wilton Skey: Did the commission have
sufficient personnel to carry on fully in the past the investigation of all informations that were brought before it?
Mr. ST. LAURENT: From 1935 to 193-jurisdiction was taken away from the commissioner and transferred to the dominion trade and industry commission. 'In 1937 the commissioner got back part of his jurisdiction under the Combines Investigation Act, but the remainder, which came under sections 498 and 498A remained with the dominion trade and industry commission. By this bill it is

Combines Investigation
proposed to put them both back under the commissioner and he is enlarging his staff. He feels that for the present ten investigating officers and the clerical staff required to assist them will enable him to carry out his duties. From the beginning of the war to the end of 1945 the commissioner was on loan to the wartime prices and trade board as enforcement administrator of the wartime regulations.


Lawrence Wilton Skey: The minister has not answered my question. I asked whether the commission had had sufficient staff to carry on investigations in all cases of informations that had been laid before it.
Mr. ST. LAURENT: I took the hon. member's question to refer to the period 1935 onward. If it referred to a prior period I would state that frequently ad hoc investigators were appointed as assistants to the commissioner to make investigations. The commissioner informs me that at no time was he prevented from obtaining all the assistance he required to carry out all the work that he felt it was proper to do.


Donald Methuen Fleming: The minister a few minutes ago, in giving statistics as to the number of inquiries since 1935 made by the commissioner, indicated that three had resulted in an extensive investigation leading, I take it, to prosecutions, and that approximately one hundred inquiries had been made which had not issued in reports. That ratio of about three to one hundred apparently represents the number of complaints received by the commissioner having a substantial foundation. Section 13 of the act, as amended by the 1935 statutes, chapter 54, section 7, provides:
If, after such preliminary inquiry as the commission deems the circumstances warrant, the commission is of the opinion that the application is frivolous or vexatious, or does not^ justify further inquiry, the commission may decide that no further inquiry is justified . . .
In how many of these cases was the power in section 13(1) exercised? Or do those one hundred cases approximately represent those in which the commission, although not finding that the application was frivolous, or vexatious, or not justifying further inquiry, went ahead and made an investigation, but nevertheless found no justification for the charge and no ground for prosecution or report to the minister.
Mr. ST. LAURENT: I am not sure that I fully got the gist of my hon. friend's question, but possibly this information may supply an answer to it. I understand that since 1923 there have been 5S5 complaints or requests or occasions for investigations. Of these all but
twenty-one were on formal or informal complaints coming from members of the public, and twenty-one were on matters initiated by the commissioner himself. There were during that period eighteen formal investigations and prosecutions in ten main groups of cases. In all but two there were verdicts obtained against some of the defendants and in one more, the tobacco case, the verdict was upset on appeal.


Donald Methuen Fleming: That is, eight out of ten.
Mr. ST. LAURENT: There were two acquittals and one case where the conviction was reversed on appeal.


Lawrence Wilton Skey: Did I understand the minister to say that there were 564 complaints from the public and only eighteen formal investigations of those 564 complaints?
Mr. ST. LAURENT: No, there were fifty-seven formal applications for investigation. There were 507 matters brought in the form of a complaint to the attention of the commissioner by members of the public who felt that they were being required to pay more than they should pay or that they were not getting commodities that they should be enabled to get.


Lawrence Wilton Skey: What is the difference between a complaint and a formal complaint?
Mr. ST. LAURENT: A formal complaint is an application by six persons for an investigation under the act. That is one method which is provided for b3r the terms of the statute. It has to be supported by a statutory declaration of the facts set out in the application. In 507 additional cases there were representations made by individuals to the commissioner asking him to look into1 a certain thing which appeared to the writer to be wrong.


Donald Methuen Fleming: I do not wish to prolong this discussion, but in the light of the statistics furnished by the minister it looks as if the people of this country have obeyed pretty faithfully the terms of the statute when after twenty-three years of experience with the act there have been some 500 odd complaints and only ten cases that went to the courts, and of those ten only eight resulted in verdicts. That is a pretty good record for obedience to the law, I should say.
Mr. ST. LAURENT: I think that in general the business community of Canada does not want to breach the laws which parliament has enacted in the interest of the public. These cartels have not always been things that those engaged in them lookedl upon as wTong. That is confirmed by the citation which the member
Combines Investigation

for Lake Centre made this evening that the United States authorities wanted all cartels to be eliminated as wrongful, whilst the British attitude was that each one of them should be individually looked into to determine what it was accomplishing and that, unless it was found to be bringing about harmful results, it should not be eliminated.


John George Diefenbaker: Is that the policy in this country?
Mr. ST. LAURENT: That has been the policy in this country. There have been principles asserted by our courts, and a combination has to be shown to be undue to come within the terms of the law; there can be a limiting of actual competition that is not undue and that is not harmful to the public.


Mr. BOUCHER:: The minister said that some 500 odd complaints were made and only fifty formal complaints. Would that indicate that there was not sufficient leeway allowed to make complaints and have an investigation? I wonder whether the minister feels that the provision that six people must swear by deposition under oath before an investigation can be started should be retained? What surprises me to-night is the number of complaints which have been made, the few formal ones, the very few convictions, and the number of cases that have been investigated in which no report whatsoever has been made to the minister. It seems to me that a little more action might be taken than has been the case hitherto. Has the minister some suggestions in that regard, because the situation seems to me alarming?
Mr. ST. LAURENT: If the hon. member is patient he will find there is a provision in the bill to enable the commissioner to act now as he used to act before 1935, on his own initiative, without requiring the formal complaint of six persons.


George Russell Boucher: I appreciate that, but I do not think it cures the situation we have now, wherein some 550 complaints have been received but only a baker's dozen of investigations have actually been made. It seems to me that more initiative could be shown. The commissioner is allowed to go ahead on his own initiative, and I think there should be some means of requiring that he shall go ahead.


John George Diefenbaker: I asked a question to which the minister omitted to reply, which has to do with the prosecution of the tobacco companies in Alberta in 1941 and 1942. A great deal of evidence was heard in those prosecutions. The case went on for a very [Mr. St. Laurent.l
long time; a conviction was registered, and-I speak now from recollection; I thought I had the case here, but I have not, it is just one of the interlocutory matters referred to in this volume-a fine of some 8220,000 was imposed. The matter went to the court of appeal of Alberta, and the court allowed the appeal on a technical point, one which, although perfectly justified, was nevertheless technical, that there should not have been conjunction of certain charges under the criminal code with those under the Combines Investigation Act. Then there was an endeavour on the part of 'the crown to appeal to the Supreme Court of Canada, and, as I remember it, the application for leave to appeal was denied because there was no such right having regard to the decision made by the court of appeal of Alberta. The case is still spoken of, and one frequently hears the question asked, why were no further proceedings taken? Certainly the allowance of the appeal in the Alberta court of appeal under the circumstances would scarcely afford a defence of autrefois acquit; and naturally, having regard to the striking evidence which was given of monopoly control and interference with the rights not only of consumers but of retail dealers, it is difficult to understand why something has not since been done. I should like to ascertain from the minister why no further action has been taken; why, in view of the fact that the government saw fit to retain most eminent counsel to prosecute that case-Mr. McRuer, now chief justice of Ontario-nothing further was done, and to all appearances no particular changes have taken place since in the matter of the handling of a commodity in such general use.
Mr. ST. LAURENT: I asked for a report on that case, because, as the hon. member says, it did attract considerable attention at the time. The report I got on it was this:
Existence of an alleged combine in the distribution of tobacco products in the province of Alberta and elsewhere in Canada was reported by the commissioner in August, 1938, after an investigation commenced in March, 1938. A system of price-fixing agreements, stop-lists, boycotts andl related trade restrictions operating to the detriment of the public was reported to have been put into effect in Alberta and other provinces by certain, tobacco manufacturers and wholesalers. Prosecution proceedings instituted in Alberta in 1938 under section 498 of the criminal code subsequently were stayed by the crown and charges were laid for offences under the Combines Investigation Act. Thirty-six companies and individuals engaged in the tobacco business,

Combines Investigation
including wholesalers and seven, manufacturers, were convicted by a jury at Edmonton in July, 1941, of offences of participation in a combination to fix and enhance prices of tobacco products and operation of a merger, trust or monopoly substantially controlling tobacco distribution throughout Canada to the detriment of the public. Sentences imposed by Mr. Justice Shepherd of the Alberta supreme court totalled $221,500 and ranged in individual amounts from $25,000 to $250. Appeals against conviction by thirty-five of these accused were allowed by four members of the Alberta court of appeal in February, 1942, on the ground that certain of the accused had been previously charged under section 498 of the criminal code and on other technical grounds of procedure at the trial. An application on behalf of the attorney general of Alberta for leave to appeal to the Supreme Court of Canada was dismissed in May, 1942. Reductions of some ten per cent in prices of a number of leading brands of tobacco products, exclusive of tax changes, were made after institution of the court proceedings in these cases.
In May, 1942, most people were otherwise engaged than in proceeding against combines in restraint of trade in the domestic market.


John George Diefenbaker: They were engaged in the same way in July, 1941.
Mr. ST. LAURENT: No, not to the same extent. The year 1942 was a pretty dark period; and the attorney general of Alberta did not choose to start over again. The grounds on which the proceedings under the Combines Investigation Act had been quashed in the court of appeal were that under this section 28 of the 1935 statute there could not be any other proceedings; proceedings which had been instituted under the article of the code were an obstacle to other proceedings being taken under the Combines Investigation Act.


John George Diefenbaker: Does the minister say that the reason no further proceedings were taken is that the attorney general of Alberta did not want any further proceedings taken?
Mr. ST. LAURENT: There were no doubt many factors that entered into the decision not to proceed further. The wartime prices and trade board was then in control of prices, and it may have been felt that no useful purpose would be served by continuing the proceedings. Then there was the difficulty which arose out of the 1935 statute which provided in terms that-
"No person shall be charged with, tried for or convicted of an offence against this act,"-


John George Diefenbaker: What section?
* Mr. ST. LAURENT: It is section 28 of the 1935 statute.
-by the same information, upon the same evidence or at the same time as he is charged with, tried for or convicted of an offence against section 498 of the criminal code.
There was some question as to whether, if the proceedings under the criminal code were withdrawn, that would not give rise to a plea of autrefois acquit, and the court had decided that unless they were withdrawn the fact that they were stayed did not allow proceedings under the Combines Investigation Act to be instituted and carried on.


Charles Cecil Ingersoll Merritt: Does the result of that case, therefore, lead us to this position-


The ACTING CHAIRMAN (Mr. Golding):: We ought to try to keep to the section, which is section 2.


Charles Cecil Ingersoll Merritt: The discussion on this point has gone on for a considerable time and I have a question to ask which I am sure the minister would answer.
Mr. ST. LAURENT: By common consent we have treated this as the section on which a general discussion might take place.


Charles Cecil Ingersoll Merritt: Is the committee to understand, from the total result of the case to which the minister and the hon. member for Lake Centre have been referring, that the price-fixing agreements and other practices of which the commissioner complained are now tacitly approved by the result of the proceedings, and have those practices been altered in any way, to the knowledge of the minister?
Mr. ST. LAURENT: They are certainly not tacitly approved. They were not felt to be operating to the detriment of the public. There had been this reduction of about ten per cent in the prices of the principal brands of tobacco in the western provinces, and the wartime prices and trade board had fixed ceilings beyond which such products could not be sold. It was not felt that at that time they were operating to the detriment of the public. But as soon as controls were removed, if like practices are persisted in, they will continue to be in violation of the statute. It is hoped that this embarrassing provision of the 1935 statute will have been eliminated, and if it is found that the practices are persisted in, proceedings could be resumed and carried to a successful conclusion.
30S0
Combines Investigation


Charles Cecil Ingersoll Merritt: That is really the essence of my complaint against the provisions of the statute as it now stands. Apparently a reduction of ten per cent or of some percentage in the price may make an agreement, which would otherwise be illegal as against the interests of the public, one that possibly would be in the interests of the public, and to my mind it is the existence of the agreement to fix prices which should be the illegal thing. It should not be left to a question of what the actual effect is on the prices. Would the minister give an opinion and say whether he thinks we can ever get anywhere when one has to look into the actual effect on prices of each particular agreement which might be the subject of investigation?
Mr. ST. LAURENT: At the time the investigation was made and these practices were ascertained, it was quite apparent that they were impeding competition and preventing certain companies from getting their products to the consumer. Then there came about this reduction in price. Then there was set up the wartime prices board which stabilized prices, and at the same time the demand for tobacco products became so great that no one was interested in the elimination of competition. There was a greater demand than there was capacity to produce by all the producers, so that it became a matter that did not have the same interest for the public as it had when the investigation -was started.


Charles Cecil Ingersoll Merritt: Do private agreements still exist?
Mr. ST. LAURENT: I am not in a position to say whether they exist. As a matter of fact, they do not appear to have been operating. The market appears to have been open to anyone who could supply tobacco products.


Mr. WRIGHT:: Some time ago the minister stated that there were fifty-two firms that had been investigated in respect of whom no action was taken. Apparently the commission thought that no action was necessary. Was there any change as a result of the investigation in connection with any of these firms in which certain practices were followed?
Mr. ST. LAURENT: The commissioner informs me that though he had not found enough to justify prosecution there were quite a number of cases where there were practices that looked questionable and to which the attention of the administrators of the firms was called; he has no doubt there were some of these things which did not suffice in his opinion to justify prosecution but which nevertheless were eliminated after the attention of Ihe administrators had been called to their objectionable aspect.


Percy Ellis Wright: In that case it would look as though there were bargaining between the firms and the commission as to what they should do to avoid being prosecuted. There is an opening left for that.
Mr. ST. LAURENT: I do not believe that Mr. McGregor would bargain, and I do not think those who paid tribute to him this afternoon feel that he would bargain away the rights of the public with those whom he was investigating.


Percy Ellis Wright: I am not saying that he did or that he would, but I am saying that it leaves it open to that construction, which I think is a serious position to leave the commission in.


John Horne Blackmore: Would the hon. member suggest how it could be avoided?


Donald Methuen Fleming: How many inquiries are pending at the present time?
Mr. ST. LAURENT: The commissioner informs me that there are from twelve to fifteen cases under consideration at the present time. He would not like to give any more information about them than just to state that about twelve or fifteen are under investigation at this time.


John George Diefenbaker: I do not wish to press this unnecessarily, but I am surprised at the explanation given the hon. member for Vancouver-Burrard regarding the circumstances connected with the decision made that no further proceedings would be taken against these tobacco companies. They were charged with having in 1938 and previously done many acts in restraint of trade, having indulged in unfair practices. According to the minister there was justification for the charge; because, if I understood him rightly, the evidence was to that effect. He said that the reason they did not proceed against them after they got away on technical grounds in the court of appeal on another charge was that the wartime prices and trade board was operating then and that, therefore, there was no danger of these companies taking advantage any more. In any event, they reduced their prices by ten per cent. What it amounts to, therefore, is this, that they were not proceeded against any more, after having won a new trial in the court of appeal on a technical ground, and they were not proceeded against because they said they would not do wrong any more; or the attitude of the authorities was, "They cannot do wrong any more because of the action of the wartime prices and trade board." I ask the minister this pointed question:	Did not the chief counsel for the
government, Mr. McRuer, request the Department of Justice to proceed, and did he not

Combines Investigation
give it as his opinion that further prosecution would not be defeated by reason of the fact that an information had been laid earlier and withdrawn?
Mr. ST. LAURENT: No; there was no such opinion given to the Department of Justice. The commission was not under the Department of Justice at that time; it was operating under the Minister of Labour. I have no knowledge of any such opinion having been given to the Department of Labour.


John George Diefenbaker: The minister does not know.
Mr. ST. LAURENT: There did not come to my knowledge in the Department of Justice any such opinion.


[Stage Direction]
Section agreed to.
On section 3-Duties of commissioner.
Charles Cecil Ingersoll Merritt: Section 3 is the only part of the amending bill which makes any reference at all to the conclusions of the McGregor report. Section 3 permits the commissioner to compile further information with regard to monopolistic conditions arising either from the operations of international cartels or otherwise. I should like to know, first of all, whether any further investigations are being made along any particular channels which have not been explored by the McGregor commission and whether there is an appropriation and a staff to give effect to this new section. Why does this bill not contain some measure to control international cartels? Either on second reading or after we got into committee I understood the minister to say that until some international agreement was reached with other nations it would be impossible to deal with the Canadian sections of international cartels. I cannot understand why the new section 30 and the old section 2 cannot be made applicable at the present time to international cartels. If so, I should like to know whether proceedings implementing the McGregor report are being taken under these sections.
Mr. ST. LAURENT: We have not yet come to section 30. Section 30 is being asked for precisely for the purpose of enabling the commissioner to deal in Canada with that part of an international cartel arrangement which would operate here. As to providing in this bill curbs or provisions to implement international agreements with respect to cartels, we were not able to devise anything which would have been other than a provision empowering the governor in council to take such action as might be required to carry out an international agreement. I felt that I
would not ask parliament to empower the governor in council to do that; that parliament would probably want to know what the agreement was before it would give authority to implement it. Even if it did take a little more time, it was better to wait until we had the agreement and then come to parliament and ask parliament to provide for it to be implemented instead of asking for a blanket authority in advance to carry out such agreement as might be arrived at. My experience at the last session of parliament made me feel it was better not to ask parliament for such blanket authority, even if it did involve taking a little more time to accomplish our purpose.


Charles Cecil Ingersoll Merritt: The other part of my question was, is there a staff to carry out these additional duties of compiling information and making studies as well as actual investigations?
Mr. ST. LAURENT: There is a staff which the commissioner feels will be able to do everything which he envisages at present, but I do not think this staff is going to stay at ten officials. I believe it will grow as its work develops.


Mr. HAZEN:: Has any attention been given to the advisability of defining the words "international cartels" or "international cartel"? I do not think there is any definition of "international cartel" in the act.
Mr. ST. LAURENT: No, and I do not think it would be prudent for parliament to try to define what is an international cartel. I am sure that if we did, the things which would be set up afterwards would not come within the definition. I think we are better off with the expression "international cartel", because we know what we have in mind; whilst if we set up a definition there would be a form of arrangement arrived at which would not be within the terms of the definition.


Douglas King Hazen: AVe were good enough to give a definition to the word "combine".
Mr. ST. LAURENT: AAre were dealing there with organizations in our country, and we defined "combine" in pretty broad terms; but at this time I think we would be going beyond what we should do if we tied ourselves down to a definition before we have these discussions with others who are interested like ourselves in curbing the activities of such organizations.


Angus MacInnis: The commission on Canada and international cartels made a number of recommendations which are at the end of the report. Do these amendments to the Com-
Combines Investigation

bines Investigation Act make provision for all the specific recommendations made in the report, or is further legislation to be introduced to put the recommendations into effect?
Mr. ST. LAURENT: There are recommendations which require to be implemented by international agreement, if international agreement can be arrived at. If it is found that international agreement can be arrived at, we shall then have to come to parliament for authority to carry out our part of the international agreement, and we shall know just what the international agreement amounts to. If international agreement cannot be arrived at, then we shall try to devise some means to get along without it and to achieve the objectives recommended in the report in some other way. But this bill is to deal with things which can be brought before the courts of justice of this country at this time. There is, in addition, this provision in section 3, making it the responsibility of the commissioner to keep himself advised of what is going on in the way of international cartel arrangements and to advise the government and parliament constantly of his findings in that respect.


Angus MacInnis: Outside of what must be done by international agreement, are all the other recommendations which can be carried out without international agreement, included in this measure?
Mr. ST. LAURENT: I am informed that the commissioner felt that all the legislative amendments which were required were provided for in this bill; that the other part of his recommendations will require organizational changes which are provided for in the estimates, or will be provided for in the supplementary estimates which will be brought down.


Gordon Graydon: As the minister knows, the economic and social council of the united nations, to which some reference has already been made in this debate, has some powers which could hardly be described as having very sharp teeth. That council, of course, is set up for the purpose of initiating studies, making recommendations and so on; but there are no operative provisions in regard to enforcement or anything of that kind. From what the minister says, I take it that there is in contemplation some sort of international agreement with respect to the question of international cartels. Will that agreement be initiated or entered into under the aegis of the economic and social council, or will it be a separate agreement among certain nations particularly interested in the subject?

Mr. ST. LAURENT: My understanding is that the United States government put out its proposals for expansion of world trade and employment; that those proposals had been communicated to several governments and had been given tentative approval; that at the general assembly of the united nations a decision was made that the social and economic council would take the responsibility of convening this meeting of the nations to discuss the proposals put forth by the United States government, which among others contained proposals for the elimination of cartels; and that it is hoped the governments participating in the conference would agree upon terms to eliminate these international cartels or to control them in such a manner as to prevent their harmful effects upon the economies of the participating nations.


Gordon Graydon: It seemed to me that unless there was some agreement among the governments interested in the suppression or control of the cartel situation at the international level, two things might result which would be prejudicial to our national organization as well as to the international organization. That is, if we allow in the world some superauthority which is seemingly beyond the power of governments themselves to control, as international cartels at certain stages actually seem to be; if that condition were allowed to continue it would seriously affect the international organization which has been set up, and, in addition, would weaken the position of our own government and our own parliament in dealing with that matter at the domestic level. The evidence clearly shows that at various stages these international cartels weave themselves into the very fabric of our own domestic situation and our own economic structure; and I should fancy that one of the principal advantages in the reform of cartels would be to see that international cartels are dealt with at that level in the manner in which they should be dealt with. In other words, there should be no higher authority and no higher power than the government which represents the people of a nation, though there seems to have been some evidence in the past, in any event, that governments have been unable to cope with a situation having so many international ramifications that it almost overpowers governments which are supposed to represent the people themselves.
I make these remarks only because I wanted the point clarified with respect to the part played by the economic and social council. If the matter is to be simply left to that council, certainly under the united nations charter the

Questions
council has not sufficient power to enable it to do anything in connection with cartels except to initiate studies and make recommendations. If, however, at the world trade conference a proper agreement is reached, of course that alters the picture entirely, so that eventually we may hope for some teeth in the procedure for dealing with this affair on an international basis.
Mr. ST. LAURENT:	I am sure there will
be no difference of view between the government of the United States and the government of the United Kingdom as to the desirability of there being no commercial or industrial power greater than the power of governments to determine what the economy of the respective nations should be.


[Stage Direction]
Section agreed to.
On section 4-Transfer from D.T. & I.C. Act of provisions re certain complaints.
Gordon Graydon: This section contains a number of features which I think perhaps require a little more extended discussion than we shall be able to give to-night. It is very close to eleven o'clock, so that perhaps this section might be allowed to stand, because I am afraid we cannot complete it this evening.
Section stands.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, July 3, 1946