April 12, 1910

LIB

George Gerald King

Liberal

Mr. KING.

the truth known may be represented on the board of investigators. In the first place, the parties who have preferred the complaint will be asked to name their representative, the parties complained against will be asked to name their representative, and these two ^ representatives, chosen in this fashion, will be called upon to choose as the chairman of the Board of Investigation, a judge of some court. In the event of either of the parties failing to name an individual member of the board, or in event of the two members failing to agree upon a judge as chairman, then the government will make the appointment of the person needed to complete the board. In this way it is hoped to fashion a board of investigation composed of experts from both sides, who will have the power to- examine into all facts having a bearing on the case, and to make their report. The essential feature of this measure is that it provides this means of getting at the truth before giving publicity to the facts, it has an important industrial and social bearing, its machinery is simple, and it has been constructed with a view to being absolutely fair and impartial to both sides. ***** fs a result of an investigation by one of these boards, it is shown that a combination exists and has operated in a manner adverse to the public interest, the measure provides certain remedies which may ,apPliedi and I think it can be shown - "hat by the machinery provided by this legislation any limitations or defects which are to be found in the law as it stands today will be supplemented or rectified.

It is now desirable to briefly outline the place which this legislation holds in the scheme of legislation already devised by this parliament to deal with the evil or possible evil which this measure seeks to remedy. This will occasion a brief historical retrospect. In the speech from the throne it was stated that the legislation to be introduced was to render more effective existing legislation. If we omit such legislation as has to do with the control of railway rates or the like, and confine ourselves to that which has been aimed more particularly at combines, trusts, etc., this legislation will be found to be embraced in sections 496, 497 and 498 of the Criminal Code. These sections embody the legislation enacted originally in this parliament in 1889 for the prevention and suppression of combinations formed in restraint of trade. The next legislation is the combines clause in the Customs Tariff Act, assented to on June 29, 1887, as

amended by an act respecting the duties of customs of 1907, 6-7 Edward VII., Chap 11, assented to on April 12, 1907; and lastly, there is an Act to amend the Inland Revenue Act, 4 Edward VII., Chapter 17, assented to August 10, 1904.

Many members of this House will re-Mr. KING.

member the interest taken by the late Mr.. Clarke Wallace in the subject of trusts and combines. When he was a member of this House he brought the question up, and at his instance a select committee of the House of Commons was appointed to take evidence on the question and to examine into the need of legislation on the subject. That committee did its work in a very effective and thorough manner. I think Mr. Wallace was the chairman of the committee, and great credit is due to him for the exceptionally able and thorough way in which the inquiry was conducted. A large number of witnesses were called and examined, and a report, a copy of which I hold in my hand, of between 700 and 800 pages, was presented to the House. The interesting feature of that report is that although the committee sat for only two and a half months, they were able during that short time, to disclose to the country the existence of some thirteen different combines. I will not read what the report has to say, but hon. members will find it worth their while to peruse this report and to see just what the results of investigation in this way are likely to'be. No stronger evidence in support of the measure which the government is bringing down at the present time could be had than is. to be found in this very report. After all, the essential work of that select committee was investigation. In their report the committee were able to put out something pretty substantial. Not only that, but an examination of the report will show that while the committee were at work, some combinations which were believed to be operating to the detriment of consumers in this country ceased their operations to avoid the publicity which an examination before that committee would entail. It was also shown by Mr. Wallace, when he spoke on the subject in the House the following year, that a combine which had existed during the time the inquiry was taking place, as a consequence-of the publicity givefl through that inquiry, ceased to keep up its prices unduly. If we refer to page 5 of the report of this committee, we shall find' that they found that a large combine Existed among coal dealers-in both Ottawa and Toronto. Speaking of the results of this investigation on the second reading of the Bill, Mr. Wallace said:

We find that these coal organizations are still in existence, we find the organization m Toronto and we find it in Ottawa, but in Ottawa public opinion has been brought so strongly to bear that coal which was sold ft $8-50 a ton during the whole winter of 1887 and 1888 was sold at about $6 or in some cases $5.75 a ton during the present winter (1889). We know that the price of coal in the United States was almost the same this year as last year, and that the cost of freight was almost precisely the same, and the fact of coal being sold in Ottawa for at least $2.50 per ton less shows either that the deal-

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J2. 1910


ers were very magnanimous or generous this year, or that they were robbing the public last year. It is to be noted that there-were no prosecutions in this connection. The result was brought about simply through the force of the report of the committee of the House of Commons influencing public opinion; and it is to be noted further that Mr. Wallace credits public opinion with the whole result. A word as to the significance of the sections in the Criminal Code which come down to us from the legislation introduced in the House by Mr. Clarke Wallace in 1889. Gentlemen opposite may be inclined to assert that much credit is due to the party to which they belong from having been the first to enact legislation to deal with trusts and combines. I am prepared to concede high praise to the late Mr. Clarke Wallace for the earnest, and diligent manner in which he helped to bring this subject to the attention of parliament, and the country, and in particular for the able manner in which he presided over a special committee appointed by the House on his recommendation, to inquire into the nature, extent and effect of certain alleged trade combinations. This committee appears to have done its work expeditiously and thoroughly, and no stronger case could be made out for the desirability and advantage of investigation as a means of dealing with combinations and trusts, or of the effects of publicity in desiring to remove the evils incident to these large organizations than the work and report of this committee. It [DOT] might have been expected that as a result of this inquiry and all that it revealed of the merits of investigation, and publicity alike, the government of the day would have seized the one obvious conclusion of the whole inquiry, and have brought in a measure making provision for the exercise, as future conditions might require, of these powers of inquiry an8 publicity which had proved so effective in the inquiry and publicity which had proved so effective in the inquiry just concluded. Instead of this, however, the government contented itself with the measure which has come down to us as part of the Criminal Code. In regard to this measure, it is to be noted that in reality it enacted nothing new, but was merely declaratory of the law as it stood, and had stood for years before the question had ever been one of concern to the administration. This was very clearly brought out by the late Hon. David Mills, at that time member for Bothwell, and who subsequently became Minister of Justice, and I must add was as clearly, and candidly admitted by the late Honourable Sir John Thompson, the then Minister of Justice, who had charge of Mr. Wallace's Bill. Referring to ' Hansard,' page 1437 of the debate which took place on April 22, 1889, it will be seen that Sir John Thompson spoke as follows in reference to the Bill: I think it is, as the honourable gentleman (Mr. Mills) has said, mostly declaratory of the common law. ... It frequently is the case to declare the common law with respect to matters which are offences I have said candidly to the honourable gentleman who has had charge of this Bill from the first that I think his Bill, as now framed, would add no new penalty, no penalty which could not already be inforced, and will not create any new offence. So far, therefore, as the contribution by gentlemen opposite to legislation affecting trusts, combines, monopolies, and mergers is concerned, it might be well to keep in mind the words of the late distinguished Minister of'Justice and Prime Minister that it added ' ho new penalty, no penalty which could not already be enforced, and will not create any new offence.' But if I were to go further and examine more closely the effect of this legislation, I would be forced to argue that it is at least questionable whether its existence on the statutes has not operated rather as a protection1, or shield to individuals in their endeavours to make unfair exactions from the public and consumers through the medium of large organizations of capital in the nature of trusts and combines; that, instead of being a deterrent factor, it has actually served as an aid to the possible machinations of these powerful concerns. It has done this by succeeding in large measure in stifling investigation and publicity, the first of all essentials in arriving at the existence of improper practices and methods, and of effectively restraining them. That Sir John Thompson 'was right in his opinion at that time was apparent when the subject came up for discussion some years later. The hon. member for Bast Grey (Mr. Sproule), in moving the first reading of his Bill of 1899 to amend the combines clause of the Criminal Code, said that he was seeking these changes: For the simple reason, we are told, tliat it would be iaipossible under the existing law as it stands to secure a conviction of any persons guilty of combining in restraint of trade. It would put upon a prosecutor the onus of proving a great many things which it would be very difficult to prove. How can one prove what undnly enhanced the price or restrained trade. . . . This law has been . on the statute-book many years, and efforts have been made from time to time to get the attorneys general of the provinces to prosecute under the Act, and several times applications have been made to private individuals to do so, and they all raise the same objection that it would be impossible to secure a conviction under the law as it reads.



The hon. member might have quoted at that time as a true phophecy the words of the Hon. Sir Mackenzie Bowell, who, in speaking on July 17, 1889, on the proposed amendments to the Criminal Code, said: You are enacting a law which, like some Pjmers, will he very harsh in its character it literally interpreted, and will, therefore, become a dead letter. I think I have shown the House that the legislation of 1889 has not been effective in dealing with the evil of trusts and combines, but that, on the contrary, its real effect in some cases has been to prevent investigation which would otherwise have taken place. The necessity of branding as criminals any body of men joined together for commercial purposes before you find out whether or not they have been guilty of a criminal offence, is a step which many a man will hesitate to take, no matter what grounds he will have for believing such men to be guilty of a public wrong. There is no doubt that this necessity has .prevented many an investigation which would have been in the interest of the public. Therefore, this measure does not propose to place these parties in the position of defendants in /a. criminal court, but treats them as persons whose business for the time being is being examined into just as is the business of a railway company or a bank to-day to see whether or not it is being carried on in a fair and proper manner. ' I will hot say any more with regard to the sections of the Criminal Code, but will pass on to the next step in legislation by this parliament. In 1897, just a year after the present government came into oflice, new legislation was enacted in the tariff resolutions. That legislation is to the effect that whenever the Governor in Council has reason to believe that a trust, combine or association exists among manufacturers, which is unduly enhancing prices, he may appoint a judge to conduct investigations into the business of the alleged combines; and if it be found that a combine does exist and is benefiting by the existence of the customs tariff, at the expense of the public, that the tariff may, either in part or in whole, be modified so as to offer to the consumers that redress to which they are entitled^ This legislation marked a very material step forward. There are certain evils which, it is. easy to believe, can be better removed by publicity than by penalty. There can lie no doubt also that, in many questions of this sort, the bringing to bear of a certain amount of publicity cannot fail to have a beneficial effect. Therefore^ the legislation of 1897 looked rather to the interests of the consumer than the punishment of the wrong-doer for a particular class of wrong-doing, and from that legislation we have had some beneficial results. The House will remember that a few years Mr. KING. ago the Canadian Press Association claimed that there was existing among the paper manufacturers and dealers in this country a combine which unduly enhanced the price of paper. That complaint was brought to the attention of the government by a resolution from the Canadian Press Association of May 18, 1900. The complaint was considered by the Minister of Finance, and an order in council was passed on April 22, appointing the Hon. Mr. Justice Tas-chereau as a commissioner to ascertain whether such a dangerous association or combine did exist. The commissioner presented his report on November 27, 1901, and found that a combine existed which was illegal ' both by the express enactment of the customs tariff which forbids the act complained of and authorizes direct government action if it is committed,' and by section 220 of the Criminal Code, to say nothing of common law on the matter.' The report of the commissioner, having been placed before His Excellency in Council, an order in council was passed in February of the following year reducing tne duty on news printing paper from 25 per cent to 15 per cent, which reduction has remained up to the present time. As a result of this investigation, rendered possible through the legislation of 1897, the consumers of Canada have profited to the extent of a ten per cent reduction in the duty on paper ever since, and it is difficult to say how many cases this successful operation of the Act against such a powerful combination as the Canada Paper Manufacturers may not have prevented in like combinations among other manufacturers or attempts to reap an unfair advantage at the expense , of the public in the case of those already in existence. One would have thought that legislation of that kind would have received the heartiest endorsation of both sides of the House, and one is surprised to find, therefore, looking over the debate on that measure, the extent of the opposition to it, and the grounds on which the opposition was based. Moreover, since that legislation has been on our statutes, there have been complaints from different sources that it is not sufficient and that something elsb is necessary, and it is the purpose of this measure, which the government has introduced, to supply any deficiency. I propose to point out in a few words the grounds of opposition to the measure of 1897, and to show wherein the present Bill removes these objections and makes good1 any deficiencies in the law at present. In the first place, the main attack against the Act of 1897 was that it put the government in possession of a weapon io be used for the purpose of intimidation and to serve political ends against friends and foes alike by leaving to the discretion of the government the initiation of proceedings and the giving of power to remove customs duties. It was claimed that the Governor in Council, having power to remove customs duties, might threaten a particular firm with the exercise of this power if they happened to be political opponents. On the other hand, if they were friendly to the administration, they would receive exemption from attack.


CON
LIB
CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

There was one case brought twice to the attention of the House and which was first started by the Hon. Judge Garrow. It was the case of a leather combine, which was clearly established, and in which an appeal was made to the government to take action, and the government never did anything.

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LIB

George Gerald King

Liberal

Mr. KING.

If my hon. friend considers such a case to have been proven, he will .probably be the first to recognize wherein .the legislation now being introduced will effectively overcome any objection of that kind in the future. My hon. friend put the case as strongly as he could in the_ debate which took place in 1897 on the legislation then introduced. He then said:

It puts in the hands of a few men the power to harass or annoy or interfere with the operations of business men in the country ... to put the traders and manufacturers of the country under the control of the government to such an extent as to keep them in perpetual dread of being attacked under this law. It might be used as a means of levying on men political contributions or blackmail to any possible extent.

I think my hon. friend will be the first to admit that the charge there made has not been born out by the facts. I feel certain that no one in this House will say that the government has ever attempted to exercise in such a way the power given it.

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CON

Richard Blain

Conservative (1867-1942)

Mr. BLAIN.

Has there been any other investigation except the paper investigation?

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LIB

George Gerald King

Liberal

Mr. KING.

I am not aware of the extent

to which representations were made to the government as to the necessity for other investigations.

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CON
LIB

George Gerald King

Liberal

Mr. KING.

I purpose to refer in a moment to an investigation'regarding an alleged tobacco combine in this country. That, however, did not take place under the section of the law to which I have just referred. I am not aware that there have been other investigations under this particular measure.

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CON

Uriah Wilson

Conservative (1867-1942)

Mr. U. WILSON.

We know that the rubber combine is one of the strongest in the country. At one time I took occasion to bring it up in the House and called the attention of the hon. the Finance Minister to the fact that dealers were forced by that combine to buy from it at certain times of the year under penalty of paying 15 per cent more for their goods. The answer I got was that he would furnish the court if I would furnish the evidence.

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LIB

George Gerald King

Liberal

Mr. KING.

I think the hon. gentleman must admit the Act would hardly have contemplated action on the part of the Governor in Council in regard to evey matter that might be brought up in the House. Some more effective means of showing the neces- 1 sity for action on the part of the government should be necessary. ,

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CON

Uriah Wilson

Conservative (1867-1942)

Mr. U. WILSON.

I do not see how anything could be stronger than the combine on rubbers, and all the government had to do was to investigate it in the slightest degree to find it existed, because those who were dealing with it were fully aware of its existence.

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LIB

George Gerald King

Liberal

Mr. KING.

Unquestionably individuals may have strong opinions and may be quite right in them, but a government, _ responsible to the whole people for its action, would have to be very careful in moving against any particular concern, considering the responsibiltiy on it for that action, and for that reason _ it seems to me that the manner in which a complaint _ is preferred is an all-important consideration in deciding whether it should be acted upon. . .

I was mentioning the opposition to the existing legislation on the ground that the government might use this power politically, that the power to remove duties and institute an investigation, being in the hands of the government might be used for political purposes. The present legislation proposes to do away with that discretionary power on the part of the government, and in the event of parties believing a, combine to exist unfairly, enhancing the prices or restraining trade, these parties, represented by any six of their number, may go before a judge, and having submitted their reasons by declaration to the judge, are entitled to make out a case in that way, so that it cannot be said that the government is standing in the way of investigation.

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CON

George Taylor

Conservative (1867-1942)

Mr. G. TAYLOR.

In clause 5 it says: Where six or more persons are of opinion that a combine exists. _ Who _ are the six persons, those engaged in similar business at different points, or a merchant with six clerks, who may have a quarrel with the manufacturer and may put him to any I amount of trouble? These six persons

should be persons engaged in the same line of business and living in different points.

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LIB

George Gerald King

Liberal

Mr. KING.

There may be something in what the hon. gentleman has stated, but that is one of the points that could be better taken up in committee. What I want the House to see at the moment is that one of the aims of the legislation is . * to remov^ entirely the objection that has come from certain quarters that the law as it now stands may be burked by the Governor in Council. That objection is removed by enabling the parties themselves to start the machinery before a High Court judge.

Another objection somewhat similar, was that the Governor in Council having the appointment of a particular judge to conduct the investigation might use their discretionary power to appoint some political friend, and I believe some hon. gentlemen went so far as to reflect on members of the bench in connection with the manner in which they would likely be expected to discharge their duty, it being hinted that the government having appointed a particular judge, that judge would carry out his duties, not as a judge would be expected to do, with an eye single to the justice of the case, but rather with a view of pleasing the government by which he was appointed. I think there has been nothing in that objection, but this measure removes the possibility of such an objection being raised in that it leaves the parties themselves to agree on a judge to be the chairman and also to go before any High Court judge they may desire in presenting their application in the first instance, so that if a judge does not act fairly in the matter the parties themselves must be responsible for selecting him at the outset as the one before whom they wished to prefer their complaint.

Another objection which has been urged to_ the legislation of 1897 is that it is discriminating in character, that it affects only-such articles as are affected by the tariff. al*^ has nothing to do with combines in relation to commodities not protected by the tariff. Of course the obvious answer to that is that it is only those industries that receive any advantage through the tariff that are likely to be affected, or that could be affected by the legislation as it stood, they being affected only to the extent of the advantage they had over other industries in virtue of the tariff itself, so I think there is no ground for stating that there is undue discrimination. On the other hand, there seems to be a limitation in the legislation in that it does not take account of the possibility of combines in commodities other than those protected, . and the present measure seeks to do away i with that objection by placing no restric-

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CON

George Taylor

Conservative (1867-1942)

Mr. G. TAYLOR.

tion on the class of business, but providing that if a prima facie case is made out in regard to any particular class of industry, then the inquiry may proceed under the law as it is proposed. Strong objection was raised by Mr. Dupont, of Bagot, a former member of this House, at the time the measure was introduced, who contended that the consumers were in a better position to know whether injustice was being done by a particular combine than the government, and he thought that, therefore, the government should not have to decide whether or not an investigation should take place, that the consumers should have the strongest say. The present legislation meets that objection, which I think is a very real and substantial one, by providing that the consumers themselves may make out their case in the first instance before a High Court judge, and if they make out a prima facie case there the state itself takes up the inquiry and carries it on. So much for the objections to the measure of 1907 at the time of its introduction.

There remain the objections as to its non-effectiveness in all particulars since its enactment. In this connection, it has been pointed out that the Governor in Council is slow to act and exception is taken on that ground. There may be very strong reasons why the Governor in Council should be slow to act. In the first place, the Governor in Council has a great many things to consider. The question of the existence of a combine is only one among a multitude of questions, and it is inevitable that, the business of the government being what it is, any question that comes up for consideration should be dealt with cautiously, and not with the degree of alacrity that would be expected in other cases. On the other hand is this further point, that for the Governor in Council to take action against a particular concern gives to the whole proceeding a kind of false glamour. It practically puts the case before the country as that of the government against an individual corporation, and that of itself affords ground for the Governor in Council hesitating before taking the initial step. So in the present measure it is provided' that the institution of proceedings shall not rest with the Governor in Council, but with the judge of a high court and with the persons who prefer their complaint before him.

Then in the next place, it has been pointed out. that the expenses in connection with the conducting of an inquiry under the present law are very considerable, that the expenses of prosecution under the Criminal Code and of conducting inquiries before a judge in the investigation of a combine, are very considerable." The Press Association, I be-

lieve, was put to about $2,000 expenses in conducting its inquiry; and it is claimed that where it is in the public interest that an investigation should take place, it is not right that practically all the expense should be left to fall upon the few individuals who may be patriotic enough to take up the work on behalf of the country as a whole. That objection seems to be a fair one; and so the present measure provides that where a prima facie case is made out, where it has become apparent to the judge of a high court that there is reasonable ground for believing that a combine has been unduly enhancing prices, and where the judge is of opinion that it is in the public interest that an investigation should take place, it is the state itself, and not the individual, who bears the cost of the inquiry.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

What does the hon. gentleman mean by individual? Does he mean the individual who is prosecuting and who is complaining shall not be bound to pay the expense? Supposing the defendant is acquitted, does he propose to pay the cost of the defence? The hon. gentleman knows, I fancy, that in the celebrated Beckett case the defendants were put to about $12,000 expense.

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April 12, 1910