March 18, 1903

CON

Uriah Wilson

Conservative (1867-1942)

Mr. WILSON.

Do I understand that only ] those messengers who have passed the civil service examination are entered in the regular list and have their salaries paid out of the salaries vote, but these others must be paid out of contingencies ?

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The MINISTER OF FINANCE.

Temporary clerks are paid out of contingency fund. The only persons in my department who have not civil service certificates are two messengers who have been there for several years.

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CON

Uriah Wilson

Conservative (1867-1942)

Mr. WILSON.

That applies to all departments ?

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The MINISTER OF FINANCE.

I cannot answer for all departments, but it applies to mine.

Department of Inland Revenue-salaries, $37,460.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

I must congratulate the Minister of Inland Revenue. 1 think he is the only one of the ministers who gets along without violating the Civil Service Act. There is an increase of $2,000. Perhaps he will be good enough to explain that.

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The MINISTER OF INLAND REVENUE.

That increase is made up of the following items: Statutory increases, 5 first-class

clerks at $50; the names are : J. F. Shaw, J. A. Doyon, T. Westman, Geo. Fowler, R. Quain; 5 second-class clerks at $50 each; the names are : L. E. Hudon, P. A. Hughes, A. McCullough, W. A. Halliday, R. E. Bon-chette; 5 second-class juniors at $50, $250; L. G. Roy, B. Chevrier, E. M. Lawless, B. Hagerty, E. Charbonneau; 2 messengers, R. P. Yetts and Napoleon Potvin, one at $20 and the other at $30. In my estimates for next year I propose to ask parliament for two additional second-class juniors. For many years back we have been in the habit of employing what they call temporary clerks. I have two or three in the department who have received salaries under other heads, and I propose to ask for $1,200 more in order to place the salaries of these two second-class juniors at $600 a year, according to the Civil Service Act. In regard to contingencies, there is a decrease of $300; I suppose the hon. gentleman will not blame me for that.

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CON

William Humphrey Bennett

Conservative (1867-1942)

Mr. BENNETT.

Last year I asked the Minister of Inland Revenue a question with reference to the purchase of wood alcohol by his department. May I now ask the minister to explain in detail what is the principle of the purchase of this so-called article, wood alcohol.

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The MINISTER OF INLAND REVENUE.

Some five years ago a contract was entered into with the Standard Chemical Company for the supply of wood alcohol for the department. That contract is still running, Mr. BORDEN (Halifax).

and will expire, if I am not mistaken, in July next.

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CON

William Humphrey Bennett

Conservative (1867-1942)

Mr. BENNETT.

In order to aid the minister to give the desired information, I will place a few facts before him. In the township of Rama, which is situated in the county of Ontario, there is a concern owned by this Standard Chemical Company, and I find on reference to the Auditor General's Report last year that no less a sum than $22,605 worth of this article was purchased by the department from this company. I am not surprised at the statement made by the minister that a long contract was made with this company. Perhaps before the matter closes the minister will explain the nature of that contract. It is a contract of considerable importance in view of the large sums of money paid by the government to that company. Perhaps the minister knows that the owners of this concern are very prominent Liberals, and in a recent election in that riding the owners of this concern exerted themselves vigorously on behalf of the government candidate. Let me read for the benefit of the minister a statement made by one of the officials of this company, which appeared in the ' Globe ' newspaper of March 3rd :

He desired to start his present business before the change of government. He wanted a little help, and went to Ottawa thinking that as an old Conservative he would have little difficulty in his lobbying. He found it impossible to even see several of the ministers on whom he called, and he came away quite disheartened. After the change of government he went down again. He had no difficulty in seeing the ministers, received a fair and businesslike hearing, and he found that when the ministers were shown a reasonable proposition and one that was likely to be of benefit to the country, they would assist it. Assistance was promised him, and the result was the establishment of his business in five Canadian towns, and the expense of several millions of dollars. He did not know that the industry would have been started if there had not been a change of government. He thought the government were an honest government, and that the prosperity of the present time was largely due to them. Some manufacturers were complaining that they wanted a higher tariff. This, he thought, was something of a joke. The government would be wise to make no change until they saw some person losing money or going to smash.

Now this statement is made by one of the stockholders of this company, and it is quite plain that having, as he has, the contract with the government, on fair terms, his company are quite satisfied with the tariff. Now, what is the position 1 One of the leading members of this company is Mr. Tudhope, the Liberal member in the local legislature for East Simcoe. As this gentleman, Mr. Peuchen, stated, he found it impossible to make terms with the former government for the manufacture of wood alcohol; but when he came down here, the other gentlemen associated with him being

good Liberals, be found no trouble whatever in making terms with the government for the production of this article. I find In the answer given by the minister last session, that he stated :

I understand that the price was fixed by the department. The department is entirely free to buy where it pleases.

Now, it is a most extraordinary state of affairs that here a number of gentlemen have applied to the former administration, and on the terms they were proposing were unable to make a contract, but with the new government they very easily made a contract. These good Liberals come down here and by reason of their influence-and a very powerful influence they no doubt had, which they exerted to the utmost- they are able to make a contract with the government without tender, without any public competition, practically fixing between themselves and the minister the price of this article; and if report is correct, the profits on this business are something enormous. What does the minister propose to do with Mr. Smith, and Mr. Jones, if they start a business ? Are they going to have competition with this company, or is this company to have a monopoly of the business ? It is one of those cases that we find going on all over the Dominion to-day. Here are a few favoured Liberals who come into the field, and without any tender, not in the open market at all, as should be the case when public money is being disbursed, these gentlemen are practically given their own price, and the result is that they secure an enormous sale of over $22,000 worth of their product last year to the department. What do they do in return ? Well, the figures of the last contest answer. In this neighbourhood, at the time of a general election, or at ail events of a prior election, the powerful influence of this company went for nothing; but now since they are backed up and buttressed by this government, the result is that, with the aid of this bounty, or subsidy, or whatever you may call it, they succeed in increasing the Liberal vote in that vicinity by 100, in round numbers. Then the Postmaster General comes back and says it is a great triumph for a lower rate of protection. One of the greatest changes in the whole riding of North Ontario was made in this very district where a company of friends of the government are paid a handsome subsidy, and where pressure was brought-because there has been pressure brought-of course it is fair to the minister to state that at*the time he was not the head of the department. But I think it is fair to the House and to the country to explain how it was possible that, without any competition, the government should give to a party of their friends a contract which enures to the benefit to the tune of over $22,000 in a single year. I think the matter is one for fair discussion 81

and comment; and 1 ask the minister now to explain what is done with all this wood alcohol, and what is its selling price after it is purchased by the department ?

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The MINISTER OF INLAND REVENUE.

If the hon. gentleman had thought proper to wait until we reached the item which concerns that article, I would have been in a better position to satisfy him with the information he desires to get. I have stated that a contract was made with the Rath-bun Company and the Standard Chemical Company about five years ago by which the government was to buy from these firms the wood alcohol needed for the manufacture of methylated spirits. The price agreed upon, if I am not mistaken, was $1.40, with the condition that if the company could not supply the quantity required the department would be at liberty to buy the same article in the United States or elsewhere. The contract has been running since 1898 ; and I am surprised to hear to-day that the Standard Chemical Company, or some members of it, took an active part in the last election campaign. By-elections have taken place, and general elections have taken place since the contract was made, and these gentlemen who are said to have exerted great influence in that section of the country in the last election, do not seem to have exerted the same influence in elections in days gone by. I presume my hon. friend will not hold me responsible for any change of opinion that may have taken place in North Ontario, any more than I would hold him responsible for the persistence of opinion in the province of Quebec. But if my hon. friend desires to have more information with regard to that matter, I advise him to wait until we reach that item later on in the estimates, when I will be glad to give him all the information I have in the department. I may add that under this contract the department purchases every year from the above companies wood alcohol to the value of about $20,000. At the time that contract was made there was no other concern in Canada in a position to supply the government with wood alcohol, except the Rathbun Company at Deseronto, which, I understand, was afterwards merged with the Standard Chemical Company. That explains how it is that this contract was given to the combined companies.

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CON

William Humphrey Bennett

Conservative (1867-1942)

Mr. BENNETT.

Now that the minister has thrown a little light on the subject we understand why this company exerted their influence. Some two years ago, I understand, the company did nof interfere in the same manner in which they did on this last occasion. According to the ' Globe,' the Postmaster General was present at that meeting, which was addressed by other members of the company, and perhaps the fact that the contract would expire next year might not be renewed on similar terms, was an inducement to that company to act

in the way they did, pitching into the fight and muzzling their men as they did on that occasion. Of course the minister is not aware of that. But the fact remains that here is the department making a contract with party friends, without public tender, without public competition at all, a contract for a five years' term; and it is a well-known fact in the neighbourhood that the undertaking has been a very profitable one to those gentlemen. And the fact that the term is about to expire, and that the company were looking for a renewal of the contract will probably explain why they put the screws on as they did in this last election, and brought about such a change of the vote in North Ontario. There was no change in any other district of the county to the same extent, and 1 think it is reasonable to conclude that the change was owing to the active influence of this company, bon-used, or subsidized, or subventioned, or whatever you may term it, by the government.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

How is the price ascertained ?

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The MINISTER OF INLAND REVENUE.

I understand that the price agreed upon was exactly the same that we had to pay when we imported the article from Germany. There is almost a prohibitory duty on the same article imported from the United States, $2.50, I think. When the contract was made, that was the only concern in a position to supply wood alcohol.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

Do I understand that $1.40 is the price at which a similar article could be imported from Germany without paying the duty ?

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The MINISTER OF INLAND REVENUE.

I am informed that before the contract was awarded a contract was entered into with a Montreal firm who used to import the same article from France and Germany, and who sold it at $1.40. The same price which we pay to the Standard Chemical Company.

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CON

Richard Blain

Conservative (1867-1942)

Mr. BLAIN.

Is it the intention of the government to ask for tenders at the expiration of this contract ? I think some notice should be given to the public so that other parties may have an opportunity of making offers for the supply of this article.

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The MINISTER OF INLAND REVENUE.

The department has not yet taken any action

as respects that matter. I presume before the session closes we will ask for tenders, but the department has not yet concluded what course to adopt.

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CON

Richard Blain

Conservative (1867-1942)

Mr. BLAIN.

Has there been any correspondence with the company with respect to a renewal of that contract ?

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The MINISTER OF INLAND REVENUE.

No.

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CON

Richard Blain

Conservative (1867-1942)

Mr. BLAIN.

Has the manager of the company interviewed the government on that point ?

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March 18, 1903