April 12, 1910

LIB

George Gerald King

Liberal

Mr. KING.

I think the hon. gentleman is quite right in the point he raises, and that point has also received consideration. The expenses of both parties are met by the government in a measure, that is to say, that when the investigation is held in the public interest, the parties complained against and the parties complaining each name their representatives on the board, and the expenses of their representatives are met and paid in full by the government. If it is thought desirable to appoint counsel to act in the interest of the public in bringing out the whole facts in the investigation, the law provides that the expenses of counsel in such cases should also be met by the- government, and in that way all that is necessary in the way of expense to get at the facts is paid for by the state.

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CON

Edmund James Bristol

Conservative (1867-1942)

Mr. BRISTOL.

In case the interests attacked desire counsel, will their counsel be paid by the government as well as the counsel appointed to represent the public?

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LIB

George Gerald King

Liberal

Mr. KING.

There must be a point at which the government of the country in the administration of public funds must safeguard the expenditure; to allow no individual concern to engage whatever counsel they please, and any number they please, would be going certainly much further than any government would be justified in going. If hon. members would get out of their minds what has

come to be the customary method of looking at these inquiries as they have grown up under the Criminal Code, they will see wherein this measure puts a different complexion on the whole subject. Hitherto people have come to look upon investigations as criminal prosecutions. A prosecutor has been appointed, and it has become necessary for the parties to retain counsel, and defend themselves. Now that method is done away with altogether. Instead of there being a plaintiff and defendant, instead of there being prosecutions, there is an investigation by an expert representing each side on the board of investigation. The interests complained against appoints the man in whom it has most confidence, the man whom it thinks can best represent the interests of the concern, and his expenses are borne by the state. Similarly in the case of the parties who have made the complaint, they put on the board the person in whom they have the greatest confidence, and his expenses are met by the state. If these two agree on a judge, then his expenses are met by the state. Then if the board find they need counsel to assist them in getting further at the facts, and they recommend the minister to appoint counsel, and he does so, his expenses also are met by the state. But if the parties are not satisfied with that, and they want to go the length of bringing in an array of solicitors, they of course must pay them themselves. But so far as the investigation is in the public interest, the public exchequer will stand the whole cost that may be necessary in order to conduct it fairly, impartially, and with a due regard to the interest of both sides.

That brings me to another point. An objection is raised against the existing measure that it is unfair to put the onus on anybody other than the state to see whether the facts are as they are alleged to be. Similarly in regard to the point raised by the hon. member for Hamilton. I must say that personally I think a great injustice was done to the Grocers' Guild through the expense and annoyance to which they are subjected. For three or four years a group of prominent persons in this country were standing before the public in the light of so many criminals, defendants in a prosecution, and kept in that position for nearly four years, and finally a verdict was given which showed clearly that they should never have been put in that position at all. Now, had this Bill been upon the books, instead of a criminal prosecution conducted in that manner, the facts concerning the Grocers' Guild and their relations with the public, would have come up for investigation, the Guid would have been represented on that board of investigation by an appointee of their own, and the parties complaining

would have been equally represented, and these two would have had a judge sitting with them, and these three as a board would have come together, and have given out a statement to the public in the course of a few weeks which would at once have put the public mind at rest as respects any unfair criticism which might be directed against a combination of that kind. So I hope that the present measure, viewed in its proper light, will be seen to be as considerate of the interests that are being appealed against, or being inquired into, as it is of the interest of the consumers on whose behalf it is primarily instituted.

Then again there has been raised a point that a judge is -not the best person to conduct an investigation, it has been said that a judge having a particular training is not the best fitted to go into an inquiry which has to do primarily with economic, industrial and commercial conditions. There is a good deal to be said for, and against the employment of judges in work of this kind. In the first place, looking at the position from the point of view of a commercial interest, it seems to me there is a strong reason why a judge should be one of the most desirable of men for a board. It is the duty of all constituted authority to protect private property, also to see that there is no undue interference with individual liberty, and that is best done by those who are specially trained with a view to safeguarding these public and private rights. Where you have such large interests as those which are to be seen in these great commercial corporations it seems to me eminently - desirable that a judge should be one of the parties to protect _ those interests. On the other hand, looking at it from the point of view of those who are interested in preventing a combine from carrying on its work in an unfair manner, it would appear tq be to their interest that a judge should be appointed. Most of these combines operate, in so far as they operate successfully, through agreements drawn in a very skillful manner by the best legal intelligence which these large corporations are able to command, and a man with the training that a judge or a skilled lawyer is likely to have would be in a position to satisfactorily examine into the intricacies of the contract and agreement which might be an essential part of any big combination. So that, from the point of view of those who are complaining against a particular combine, and also of thO'Se who are members of a combine it seems to me that there is a strong reason for having a judge upon any board of investigation. But, there are equally strong reasons for having on these boards men who are specially skilled m the particular interest that they are examining into. Nobody could better inquire into the intrica-Mr. KING.

cies of a combine than the man who feels its effects, and if you leave to the individual who is suffering from a particular evil the choice of the man who is going to find out whether that evil is existing or not you give him the most effective means of getting at the truth of matters. Similarly, if you take a combination that thinks it has been unfairly treated at the hands of the public, and if you allow that combination the right to place on the board a man who knows the intricacies of the whole business, who is able to put the case before the public in such a light that the business of the combination will be clearly thrown into relief, something in the nature of justice will be done by such an examination. So, I say that this measure aims at doing justice, and meeting the points of view urged by both sides in this connection at securing a combination of legal, commercial and industrial intelligence for the purpose of the examination. A board better constituted for the purpose of cond'hcting such an examination. I think it would be impossible to devise. These are, I think, the main objections which have been taken to the legislation which is at present existing, and I think I have shown that this Bill as it has been drafted overcomes these particular objections. I have only one or two more points to bring out, and then I shall resume my seat.

In so far as any other limitation may be urged it may be said that the remedies which the law affords at the present time are not adequate or sufficient, that there may be a great variety of abuses, and that the law as it stands is not sufficient to meet those abuses. I think the House will agree with me that it is pretty difficult to devise any measure that will meet every kind of abuse that may arise, but certainly the first step towards getting at any remedy is to get at the facts. If you disclose an evil the remedy for that evil will reveal itself in the course of a very short time, but it is to get at the facts in the first instance that is a necessary and essential step in order to bring about a result, which, it is admitted, will do more to achieve the end desired than anything else.

To illustrate what I mean, wherein special remedies can be provided to meet special cases if the need be disclosed-in 1902 representations were made to the government that by the adoption of an exclusive contract system between the American Tobacco Company, Limited, of Canada, and the Empire Tobacco Company, Limited, these companies were able to prevent those who dealt in the class of goods made and supplied by them from selling the goods of other manufacturers, and thus creating a monopoly which seriously affected the interests, not only of other manufacturers in Canada, but also of the

giowers of tobacco. This was clearly a case of alleged combine in restraint of trade, but, as it was not alleged that the combine was one in relation to an article protected by the tariff, and which the existence of the tariff was helping to facilitate, an inquiry could not be ordered by the Governor in Council under that measure. Had this proposed measure been in existence the matter would have become one for consideration before a board of investigation such as is provided for under the Act. There being no such measure, however, it was necessary to fall back for the purpose of inquiry upon the General Inquiries Act, and to issue a Royal Commission for the purpose of investiga-ing this alleged combine.

His Honour Judge MacTavish, of Ottawa, was appointed commissioner. In

his report presented to the Governor in Council in April, 1903, the commissioner found that the contract system complained of by the parties did, in fact, exist and was in general use in the cigarette and tobacco trade in Canada, that the provisions of the contracts in question were not illegal either under the Dominion law or under any statutory law heretofore enacted by the parliament of Canada, but that the manufacturers of cigarettes and the growers of tobacco in Canada, other than the American and the Empire Tobacco Companies, were at a disadvantage in the distribution of their goods and in the prosecution of their business generally by reason of such contract -system.

The commissioner having made this finding, the then Minister of Inland Revenue, now my hon. friend the Minister of Marine and Fisheries (Mr. Brodeur) at the next session of parliament introduced, on October 4, 1904, a resolution which after being adopted was followed by an Act, Edward VII., c. 17, for the purpose of providing for the cancellation of inland revenue licenses where manufacturers holding the same sold goods under a monopolistic form of contract designed to prevent the purchaser buying goods from any other manufacturer or dealer.

Here was an effective remedy for consumers and an effective means of destroying combines which had been formed in virtue of special privileges gained through a license granted by the government for a particular kind of business.

Under the legislation that the government is introducing at the present time, that legislation of 1904 will be made more effective. A Royal Commission was necessary to disclose the combination which was shown in this particular case. Under the proposed law, an investigation by one of the boards established under the Act showing that a combination in restraint of trade existed, within the meaning of the law of 1904, would have the effect of making penalties under that Act applicable to a combination of that kind.

It is impossible to foresee al the circumstances under which combines injurious to trade or the people may spring up, but in so far as any may be known at the moment it is believed the present measure contains the means of affording effective relief to the consumers, and punishment to those who persist in deliberate wrong-doing, or a harmful course of procedure.

For example, somewhat analogous in its way to the monopolistic possibilities _ of licenses, are the monopolistic possibilities which patents confer.

There is reason to believe that a form of combination in the past which has worked considerable hardship in many directions is one which has grown out of an unfair use made, by the parties possessing the same, of rights which they hold in virtue of certain patents. It has been alleged, for example, that in some cases the holders of a patent which is more or less essential to an industrial process, have declined to sell this article to parties requiring it in connection with the work of manufacture, unless such parties would agree to purchase all other articles 'required in this connection, either directly from or through the holder of the patented article desired.

Of this nature was the case of Brunet and others versus the United States Shoe Machinery Company of Canada, which was the subject of considerable litigation in the courts of this country and was carried on appeal to the judicial committee of the Privy Council. The judgment of the Canadian courts were reversed on the appeal on certain points of law respecting contract, but Lord Atkinson in delivering the judgment of the Privy Council made the following significant statement in part:

If the monopoly established by the appellants and their mode of carrying on their business be as oppressive as is alleged (on which the lordships expressed no opinion) then the evil, if it exists, may be capable of cure by legislation or by competition, but in their view, not by litigation. It is not for them to suggest what form the legislation should take, or by what methods the necessary competition should be established. These matters may, they think, be safely left to the ingenuity and enterprise of the Canadian people.

It is claimed, too, that the holders of patented articles not infrequently make arrangements with dealers, binding them to sell only the articles made by the holders of some patented article, and not the article of a like kind of any competitor on

penalty of refusal to supply the patented article.

Through exactions of this kind, and I am inclined to believe that they are much more numerous than the public imagine, trade has been very seriously restricted. In some cases worthy producers and manufacturers have been ruined either in part or in whole, and in all cases there has been exacted from the consuming public a toll such as appears to have no justification whatever, especially when one considers that a patent is a special privilege granted by the public itself through a government which is responsible to it.

The present measure proposes to deal in a special way with combinations of this kind; in the only way that is calculated to afford effective redress, and to afford the kind of relief which Lord Atkinson in the case before the Privy Council which I have mentioned, indicated it should be attempted to cure by legislation rather than by litigation.

It is provided that in case the holder or owner of any patent issued under the Patent Act makes use of the exclusive rights and privileges which, as such owner or holder, he controls so as to restrict competition or enhance prices, the patent shall be liable to be revoked.

There is one broad section of the Act, No. 23, which provides a penalty of general application in cases where the board finding that a combination is existing, recommends that the combination shall change its methods, and the combination later fails to do so within a specified time. In such a case provision is made for a penalty with the view of preventing a continuance of these evils.

It remains only to consider the probable criticism of the measure now being brought forward, and the possible alternative plans which may be suggested. As the measure has been before the country for over t-wo months there has been ample opportunity for a full consideration of its several features, and for ascertaining through representations which have been made one way or another by correspondence, by personal interviews, by comments in the press and by resolutions, what are the alternative courses of procedure or lines of criticism which may have suggested themselves to those who have been giving serious consideration to this measure.

Omitting reference to such criticism, and comments as are merely of a combative, discursive or trivial nature, the objections to the measure appear to be based largely on the self interest of the parties making them, rather than on general public grounds. One group says that the proposed Act goes too far, the other that it does not go far enough; one that investigation is too easily obtained, the other that there Mr. KJNG.

is still too much' difficulty in obtaining investigation. Such expressions would appear to indicate that on the whole a fair compromise had been reached, and that from the point of view of the public the balances been evenly held. There are of course in this country as in every other those who fear investigation, who argue that it is harmful to business, prevents initiative, and destroys organizing capacity. To such it is perhaps a sulficient answer to say that the largest industrial organizations in the country at the present time are obliged to submit their affairs to inspection and investigation. The work of the Railway Commission is all in the nature of investigation, and the splendid service which has been rendered the country as well as the railways themselves Dy this body is one of the strongest arguments which can be advanced in favour of control through state agencies.

Similarly the banking business of the country is subject to important restrictions and regulations imposed by the state which involve much in. the way of publicity of their affairs. Some of the largest corporations have found it to their interests to invite publicity. The United States Steel Corporation is a case in point. Mr. Carnegie has openly proclaimed his belief in the right of the state to inquire into large businesses. Both Mr. Carnegie and President Gary have spoken in favour of governmental fixing of prices in monopolistic industries. The contrast between the manner in which the affairs of the United States Steel Corporation have been viewed by the public in the states as compared with those of Standard Oil is a sufficient commentary on the merits of publicity as opposed to secrecy in the management of large corporations. As a matter of fact, any business which is carried on in a manner that does not admit of its workings be-ine made public is one which should not be allowed to exist, and at any rate should not receive corporate rights and privileges at the hands of the state.

All the arguments that can be urged against any powers of investigation conferred in the present Act could be urged with equal strength against the powers which are given to boards under the Industrial Disputes Investigation Act, which the present Bill follows closely in many particulars. It was claimed when that measure was under discussion that the powers given to boards to summon witnesses,, compel the production of documents, and in other ways give publicity to their affairs would be harmful to the interests involved. During the past three years there have been some 80 boards established under the Act. These boards have had to do with the investigation of the affairs of many of the largest indus-

trial concerns in the country, including transportation companies, mining companies, and other industrial establishments, most of them having a more extensive business than any industrial combine as yet known in this country, yet in no case has it appeared that the 'board thus conferred has worked an injury to the business of the concern which has been made the subject of investigation. On the contrary, the access to truth which was been assured in this way nas Deen the one factor which has led to a settlement of industrial differences, and the avoidance of industrial war in over ninety per cent of the cases in which it has been employed. The truth is that a business, legitimately conducted, has everything to gain by an investigation of its affairs. The very best concerns may be wrongly judged by the public and an investigation may restore that measure of confidence so desirable in the management of any business. Mr. H. W. Clews, one of the ablest of New York financiers, at the time that business looked at its worst in the United States, come out with this interesting pronouncement with reference to the investigations which were being forced by the administration:

The check upon this tendency towards monopoly and excessive centralizations of industry -may, of course, be temporarily unsettling; in Wall street, hut the ultimate effect even upon investments will toe highly beneficial, for it will disarm much of the public criticism naturally aimed at the great corporations and monopolies which would surely continue to abuse the great power obtained without due restraint. It will he remembered that none of the calamities which were predicted in event of a decision against the Northern Securities Company ever happened. On the contrary, the decision was distinctly beneficial; it averted worse political agitation.

Businesses honourably conducted have nothing to fear from the present measure; even supposing as is highly improbable that they are very likely to become the subject of investigations under its provisions. On the other hand, the possibility of investigation will be of the greatest service in causing those entrusted with large investments to be conservative and careful in their management. Should business not be properly conducted and should the public be suffering a wrong in virtue thereof, it will hardly be denied that investigation in every sense of the word is in the interests of the public.

A business which is being carried on in a legitimate, fair and honourable way has nothing whatever to fear from the investigation which this law would provide. Many a concern that to-day is being unfairly criticised by the pubiie will be pro-218

tec ted by this very legislation 'because it provides ^ the means of bringing before the public the true facts of the case. On the other hand, this legislation does aim a preventing the mean man from profiting in virtue of his measures. The one end and purpose of this legislation is to prevent the mean man from profiting in virtue of his meanness, and I know of no way by which that can he more effectively done than by providing some kind of machinery which will enable an intelligent public opinion to be formed and focussed upon the particular evil which you are endeavouring to stamp out. Pen alties are frequently of no service towards that end, but publicity is all important and essential, and it is for that reason that in dealing with*this particular class of cases we had to endeavour to devise an instrument which would bring into play that most potent force in society, namely, an itnelligently formed public opinion which is so effective a factor in the regulation of commercial and industrial affairs.

Of the alternative plans which have thus far been suggested there are but two which seem to be deserving of careful consideration. Each has merits of its own, but each is also subject to distinct limitations under existing conditions. The fact that the present measure stands as it were midway between the two, combining the conditions of both without being handicapped by the limitations of either should help to afford a common ground for union to the advocates of these alternative views.

In the first place, it is suggested that the government should appoint a special agent or agents, whose business it would be to make the preliminary investigation wherever there was ground for believing that a combine injurious to trade might happen to exist. This view has been put forward by different persons. It has been expressed in its simplest frm by Mr. F. W. Thompson, the Canadian correspondent of the Boston 'Transcript':

The present critic inclines to think that the Bill might be bettered toy establishing an official whose duty should 'toe to take and to examine every complaint of ' combine ' alleged toy anybody.

The same view has been more forcibly expressed in an interview alleged to have been given by a leading Toronto lawyer, and which I find quoted in the Hamilton ' Spectator ' of January 24.

What would have been a more far better than the calling for an investigation toy six people or more who have reasons to. think that there is a combine, would toe for the government to appoint an official investigator. His duties would be to listen to all complaints,' and as soon as one is made, he should be

given the power to go to the offices of those supposed to be in combine and take full charge of the books. It would be a simple thing for him to decide whether there is a combine or not, in his opinion, and if he decides there is, then let the commission hold the investigation.

It must be perfectly apparent that if the government were to adopt that plan, not one but a host of investigators would be necessary. Moreover, the objection that has been urged against giving the Governor in Council power to remove officials in certain cases, could be urged with even stronger effect in this case. If the government came down with a measure of that kind, it would probably be asserted that the officers whom they would be likely to appoint would become mere tools of the government, and very little confidence would be placed in their investigation. No such [DOT]argument can be urged against a High Court judge.

The other alternative plan is to appoint a permanent commission, like the Railway Commission. There is much to commend that proposal; but the time has hardly come yet for taking such a step. One thing these individual boards may do: they will assist in revealing the necessity or non-necessity for the establishment of a permanent board to deal with the regulation of trusts and combines. More than that, they will reveal the best class of men to appoint on such a body should it he found desirable to appoint a permanent board. The United States, from which we have copied many good things, whose Interstate Commerce Commission I think suggested the idea of our Railway Commission, up to the present time has not found it desirable to appoint a permanent board to deal with trusts and combines; and we, with our more limited- experience, would be hardly justified in taking that step. Rather they have taken the step of establishing first a Bureau of Corporations in connection with the Department of Commerce and Labour, for the purpose of exercising greater supervision ov'er industrial corporations. The result of the examination of these bodies will be to show whether or not we in this country would be wise to proceed towards the establishment of a similar bureau of corporations, or whether it will he better to go in the direction of establishing a permanent commission.

I would have liked before closing, to have referred to some of the opinions expressed by the press of the country with regard to this measure. I think I am correct in saying that the general consensus of opinion of the press, representing all classes and all shades of political thought, .is to the effect that legislation, of this kind is what the country has been expecting for some time past, and should be enacted as speedily Mr. KING.

as possible. I have also received communications from a vartiety of sources. I might mention, for example, a communication from the Master of the Dominion Grange, in which it is stated:

As you are perhaps aware, the farmers' organizations of Alberta, Saskatchewan, Manitoba and Ontario have united their forces. One of the first acts of their united executive, of whom I am secretary, will be to take advantage of your Act, which meets with the most enthusiastic approval of our organization.

Our organizations number more than 25,000 members, and we are very much in earnest in this matter.

That is the view the farmers take of this measure. I have also a communication signed by the executive of the Dominion Trades and Labour Congress, representing a very large proportion of the labour organizations of this country. This body has asked for the insertion in the Bill of a clause, which I propose to move in committee. This communication states:

Should parliament see well to insert the safeguard herein suggested, we do not hesitate to say that the Bill would receive the hearty endorsation of the organizations which we represent, and which are some 628 in number and have a total membership of 40,728.

If, therefore, we have regard to the general expression of opinion which is taking place throughout this country, we shall see that this measure is demanded and endorsed by the most representative bodies of the Dominion as well as by the public generally.

In conclusion, let me say that it is not claimed for this measure that it will by any means abolish all the evils which are claimed to be the result of combines and trusts in this country. The most that can be hoped for any such legislation is that it may be a step in the right direction. Broadly viewed, it is in the machinery for investigation and for the framing and shaping of an intelligent public opinion which the measures provides, that its main features consist. It aims to get at the truth and to have the truth when ascertained, so presented that the remedy for a wrong disclosed will be self-evident. It is framed in the belief that once in possession of the facts which are of first importance to itself, the public will find a way of seeing that any evil under which it may be wrongfully suffering will be removed and that no situation, however complicated, will prove too intricate for a satisfactary solution, but- to ascertain the facts, to get at the truth, is the first of all essentials. It relies on the moral sense of the community as a ' compelling force,' when concentrated intelligently on a business wrong. Inteligent public opinion

will protect honest business and condemn unfair practices.

In the publicity, therefore, which this measure secures, not to private affairs of honest business men, as may be urged by those who are interested in thwarting legislation of this kind, but to the wrongful acts of mean men, lies its strength in securing the well-being of the people, which it is its purpose to maintain. It is an honest endeavour to grapple in a fearless, practical and thorough manner with what is, undoubtedly, the most complicated, intricate and far-reaching of those problems to which our present social, industrial and commercial life have given rise, and which presents, I believe, more difficulties than any single problem in the world to-day. If it does nothing more than restrain to some extent the aggressive tendencies of large aggregations of wealth, and to secure as respects those powerful interests, some measure of that social control which is essential to the protection of the wellbeing of the many, it will prove not only a benefit to this nation, but I believe, an onward step in the march of social progress.

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CON

Edward Norman Lewis

Conservative (1867-1942)

Mr. E. N. LEWIS (West Huron).

Mr. Speaker, allow me to congratulate the hon Minister of Labour upon his first lengthy deliverance in this House. I am sorry, Sir, as I am sure the hon. gentleman himself is, that Ihe has been handicapped by the rules of this House in not having been able to lay on the ' Hansard ' table the numerous quotations which he has made, and thus have shortened his time. We have been listening from 11 o'clock till half-past 4 to his very able deliverance. I have taken a great deal of interest in this ^matter of combines, and in ' Hansard ' of the present session, from pages 92 to 96, on November 15 last, I gave the resujts of my study of the question. There is no doubt that the people of this country are very much worked up in regard to the abuses of combines. The hon. minister did not see fit to mention any specific cases, but there are no goods in use by the plain people of this country, from tin tacks to rubber goods, from leather goods to wash goods, the cost of which is not enhanced by the combines, and these combines are only effective under the tariff regulations of the country. I have quoted the Minister of Finance on page 93 of ' Hansard ' of the present session in reference to that. While I join with the hon. Minister of Labour in regard to the general principle, I take issue with him on the law he is trying to promulgate, that is, in regard to the multiplicity of boards to deal with this matter. The main trouble is this. If a merchant-in this country finds that the goods he is selling are being imported at an under valuation, all he has to do is to mention the matter to a customs officer 218J

and the whole machinery of the Dominion of Canada is put into force to see that he is protected; but if a retailer desires to put into force the present law as to combines, or the law which the Minister of Labour has laid down, he has to go into court, and appear in the limelight, and if he does that he will be cut off from securing _ from the wholesalers any goods he desires to sell. I submit that there is only one remedy-one board of experts similar to the Railway Board.

Some time ago I brought before this House the suggestion that we should have two Tailway commissions, one in Winnipeg, for the purpose of facilitating the business of the country and relieving the people of the west from the necessity of coming to Ottawa to have their grievances remedied. The answer given me by the government was that if we had two boards, we would have two systems of jurisdiction and two different interpretations of the law. But how many would we have should this Bill come into' operation? There is much more reason for having two or three railway boards than two or three investigation commissions, or even fifty, as we may have under this Bill. The questions are not at all alike. All the disputes that come before the Railway Board have reference to grievances on railways and canals and1 the like, -which can be easily adjusted in whatever part of the country these difficulties arise, and where, for their proper understanding, the local situation and circumstances could be personally examined by the board. But the questions dealt with by this Bill are much broader, affecting trade and commerce, the adjustment of which in any particular locality affects the whole country, and, therefore, these can very properly be adjusted by a commission sitting in Ottawa. I submit, therefore, that the whole matter of the tariff, on which the existence of these combines hinges, should not be left for decision to the Minister of Finance, with his multitudinous duties, but to a commission of experts, men of experience above bias, which would investigate into these subjects and advise the Minister of Finance. The United States, which is now in the grasp of the combines and trusts, is the only protectionist country in the world without a tariff commission.

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LIB

Michael Clark

Liberal

Mr. MICHAEL CLARK (Red Deer).

I rise. Mr. Speaker, with very considerable fear and trembling, to put before the House my views on this subject, because I recall that, in the last general election in England, the only true representative remaining of the old Manchester school, lost his seat,. Nevertheless there are one or two things I would like to say in reply to the speech of very great ability, and not inconsiderable duration, to which we have just listened from my hon. friend the Minister

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"6863 COMMONS


of Labour (Mr. King). That speech seemed to me to bear the marks, from every standpoint, of two outstanding characteristics which my hon. friend has developed in a singular degree-great zeal in the public service and capacity for hard work.


CON
LIB

Michael Clark

Liberal

Mr. CLARK.

I am not sure,_ however, that the zeal was on this occasion mixed with quite the proper amount of discretion. I may say that I regret very much that the whole House was not present to hear that speech, because it was so very valuable a preliminary step in the investigation which was recommended that I am sure it will tax the digestive capacity of hon. members to fully absorb what has been given them.

I do not wish to put myself in opposition to what will probably be the prevailing sentiment of the House, but, in common with a good many members, who are suspicious that all roads lead to Rome, I have a little weakness on the question which, as I have already indicated, is not too widely shared on this continent; and before saying very briefly what I believe is necessary for me to say on this occasion regarding the real origin of combines, I would point out that, as a Liberal of the old school, I approach the question of.state control with veTy considerable suspicion. I commend the candour of the hon. minister. He used the phrase with considerable frequency and did not endeavour to conceal his conviction that such control was necessary in this particular case. I regret very much, on my hon. friend's account, to hear a young Liberal approach the subject of state control in so light hearted a manner because I recollect the fact that the progress of true Liberalism has been associated in the history of England with a gradual diminution of state control. The establishment of liberty is the work on which Liberalism has been engaged, and I regret that any one bearing the name of Liberal should approach the subject in a light hearted way. As a free tradeT I hailed that portion of my hon. friend's speech which could be fairly represented as a plea for cheapness. I have considerable hopes of my hon. friend the Minister of Labour, on the trade question. He has so broad and on the whole so open a mind, so attractive an intellect, that I am very sure that, when he gets time to bring the same? energy to bear on the trade question which he has bestowed on the question of combines, he will very nearly reach my position on that question. Of course I do not quite understand the plea for cheapness as being a very strong argument in a protectionist country, because I understand that one of the cries of protectionists is that dearness is a good thing. 1 understand that they believe in dearness. If that be so, I do not see how a plea for cheapness can Mr. M. CLARK.

very strongly recommend the investigation we are promised. My hon. friend said very truly that there is no harm in a combine in itself. The men from whom I learned Liberalism fought, in the middle of the last century, and fought hard, for the right of workingmen to combine in trade unions, and in the statement that there is no harm in combining in itself, I am in accord with the hon. minister. But the real evil which the government is trying to get _ at is the cause of the increased cost of living. That is the real trouble. I should hesitate very much to put any obstacles in the way of this committee or this proposed legislation at all. I would hesitate very much to do so because I am quite sure, as my hon. friend indicated in his closing words, that there is a large section of the public so appreciative of this evil that they will hail any attempt which is likely to give them relief from what is becoming unendurable. My hon. friend said that the increased cost of living was not necessarily an evil. I think that Bestiat, who was a little more exact in his thinking than my hon. friend, said that there are two kinds of dearness. That was pointed out long ago by the French economist. He specifically told what those two kinds of dearness are. One -was due to the limitation of supply. That of course every one knows will cause dearness. The other one, the good kind, is due to the increased demand.

The minister made what was to me an extremely interesting remark when he pointed out that in England, Canada and the United States, taken in that order, you have an increasing scale of the degree to which this evil is felt, that is to say it is not much felt in England. I read my British papers from day to day, and I cannot say that I understood it has been much felt there. A personal friend of mine, one of the most thoughtful men I have met in Alberta, who had been 25 years in the United States and Canada, went a short time ago to the old sod, and he wrote back that he had been able to strike for the first time in a quarter of a century a place where he got value for his money. In Canada it is felt a little more than in England and not nearly so much as in the United States. The feature in that increasing scale it strikes me is that in the same countries you have exactly the same relationship of the countries to commercial freedom. You have practically free trade in England, you have a moderate tariff here, and you have a high degree of protection in the United States. I do not know whether that will suggest to members any connection between protection and the high cost of living. The minister said that the first thing to cure the disease was to investigate it. I quite agree that diagnosis would precede cure, but I should like

to go a little further in the medical studies of my hon. friend and to say that the first thing to cure the disease is to eliminate the cause. If I have any objection on this ground to the policy that has been elaborated so ably by my hon. friend it is that the treatment it recommends is of a somewhat symptomatic nature. I do not think it goes down to the root cause, it partakes rather of the nature of the pill-to-cure-an-earthquake remedy. If a man has a rotten bone in his shin it might not do much harm to give him a hot bath, but the only thing that would give him a sound limb would be to get rid of the rotten bone with the surgeon's knife as soon as possible. The hon. gentleman, I think, admitted that protection was one of the very numerous causes he mentioned for the increased cost of living, and he went on to make a remark that it does not follow that protection in the long run is not a good thing. I was filled with regret at that remark, by reflecting that if the run is too long I will not be there to see it; if protection is only to be a good thing in the long , run and is a bad thing at the present time, we ought to get after it in our own lifetime; I should let the people living in the long run think for themselves and get at this particular cause of trusts. .

I resemble President Roosevelt, if I caught the minister's extract correctly, in doubting both the utility and the feasibility of this class of legislation. Mr. Roosevelt's language, as I caught it, was that legislation of this kind is likely to be noxious where it is not ineffective, and there are root principles for this. After all in a protectionist country-and I put this because a speech such as the minister has made is bound to call forth considerable comment, and comment coming

from a member of the - Manchester school on this continent cannot be taken too seriously-I would like to make one or two converts to my view on free trade before my removal from this sub-lunary sphere. The government in a protectionist country, by its fiscal policy, makes the -whole country a huge trust, that is to say it puts blue-coated, brass-buttoned gentlemen on the shore to shut out foreign competition. To that extent the country becomes a huge trust, and it resembles a trust in this that it takes from its consumers very much more money than what it gives in return is worth. I am not depreciating this government or the government that preceded it, but my point is that we buy-and I never heard a commercial man dispute this position-probably twice as much dutiable goods in Canada made in Canada as we import from abroad. We only get revenue on what we import from abroad, so that the government sets an example of high

prices in the shape of its taxation by taking $150 for every $50 that is spent on the public service. If that is not the high cost of living as a taxpayer I do not know what it is. There is the initial wrongdoing of protection, the government is a huge trust, the whole country is made a field for a combine, and my contention is that for a government to turn around and object to its individual citizens following its own example is very much like a father smoking a 50 cent cigar and lecturing his grown sons on the evils of an occasional cigarette. 'Grave questions arise in my mind, which I shall only indicate, as_ to how far it is right to restrict any price. You establish a set of conditions by your fiscal system; sharp men-and we have lots of them in Canada-take advantage of these conditions, and they push their enterprises to a point to where it is impossible to push them in a free trade country like England. In saying that, I should like to guard myself against being misunderstood as to the interest I take, more as a free trader than any protectionist can possibly do, in the interests of the consumers. I want to say that as a Liberal I believe in the greatest good of the greatest number, I believe in the greatest good of the whole number, and on this fiscal question the onlv way we can get at the whole number is by thinking of the consumer, because we all consume, every minute in our lives, every time we stand in our clothes, every time we take a meal or enter a house, we consume all manner of things, and the true Liberal who thinks of the whole people must think of the consumer all the time. The protectionist, on the other hand, thinks of the producers, and from this point of view he can never think of the whole people, because the producers are only interested in the particular class of gdods which they themselves produce. That is the meaning of a vested interest. Of course, I have no great fault to find with my Conservative friends who inherit the traditions of the Conservative party, of standing for vested interests of minorities which I have been, fighting all my life. A very quixotic career, but not one which readily leads to official position, because in democratic countries you can only get into office by making yourself solid with a majority

Now what is the correct price of an article? There is one case in which I believe it has been found necessary, owing to the peculiar rapacity of one particular type of human nature, of legal human nature, both in this country and in the old country, to have a strict observance as to charges. I understand that lawyers' charges are always looked into very carefully. On the other hand, it has never been found necessary to look after the charges

of medical men at all, they are kept very busy looking after their own; and it is a notorious fact that the medical man is left subsequent even to the undertaker in such cases as require a second party after the doctor has finished his work. I do not know, but that we should have a branch of this department to make investigations into that matter, and throw some light on the subject. It may be that we may require some department of this new method of investigation which would look after the compensation of medical men for the huge bad debts which they contract.

Now, I have asked the question: What is the proper price of an article? Well, the answer to that is that the proper price of an article is the highest price that it will bring, and that is the principle upon which all bargaining between man and man stands. Now I have pointed out that a government in a protectionist country creates a national monopoly, and inside of the large monopoly smaller monopolies grow up in spite of anything you can do. A great Irish theologian said that every effect has a cause, and effects will never cease so long as causes are allowed to operate. You create a monopoly within a monopoly. Our old friend Adam Smith, comes to our enlightenment at this point on the subject of prices, by saying that the price of a monopoly is always the highest, that can be wrung out of the consumer. The price of freedom on the other hand is always the lowest that can be taken consistently with carrying on- public business. Now I have said that there is not much heard of the high cost of living in Britain or of combines either. It may interest hon. members of this House to learn that our enterprising friends of an inquisitive turn of mind have not failed to make efforts to establish combines in Britain. A few years ago a certain type of American cigarette was advertised largely all over the board fences and street comers of the old country, and retailers were promised specially large dividends on their first sales. This was part of the machinery by which an American combine tried to introduce a tobacco trust into the old land. But under the freedom of commerce, Wills, of Bristol, brought out a cheaper, and better cigarette, and every man in Britain who smokes cigarettes began to smoke the Wills cigarette, and the American trust was reduced to the humiliating position of being sued by the retail dealers to whom they failed to pay the extra dividends they had promised them. At a later period Lever, of Sunlight Soap fame, united with eight or ten other soap concerns, and formed a soap combine. There were certain soaps advertised throughout the land as the non-trust soap, and every washerwoman in England bought the non-trust soaps, and Lever and oom-Mr. M. CLARK.

pany sent an advertisement to the leading newspapers saying that it had been found advisable to break up their combine as there were business reasons why it should not be continued. There was a cure without investigation, there was a cure without legislation, there was a cure based on the simple expedient of freedom of commerce. Recently I believe a similar attempt has been made with regard to beef, but it has failed also. These three efforts have been made to establish trusts in Britain, to my knowledge. The Minister of Labour has an expert knowledge of this question, and he may know more than I know on the subject. But those were three great attempts to establish a trust which failed.

Now we come to the practical point as to whether anything can be done. Well, I think the way that small trusts grow up under big ones cannot be better illustrated than by the point which was raised by tile hon. member for Pontiac (Mr. Hodgins). He pointed out that under this industry building the price of cement jumped from $1.50 to $2.09 at one leap. That is building the infant industry with a vengeance, but it is also building the high cost of living to the consumer to such an extent that I was told to-day of a small village in the west where a limited quantity of cement was being used for a public work, and under the recent jumped price, if that same amount of cement had been bought at the larger price, it would have meant $1,200 or $1,300 extra for that particular village. Now in that case there was, I think, apparently a very harmless rise in the tariff which accounted for it, I think it is a fact that there was a rise in the tariff, at any rate on cement bags, which made the tariff upon the whole quantity of cement larger than it had been formerly, and following that increase of the tariff you have of course the combination which is bringing up the expense to the consumers. I should like to offer a suggestion in this connection to the Minister of Finance. Without any investigation or any legislation, he may make a Tittle experiment for the benefit of Canada, and for the benefit of the world upon this question. Let him put cement upon the free list absolutely, and see what the effect will be upon prices. That would be a nice preliminary step towards a real effective investigation into the cost, and a cure of this evil of the high cost of living. As I have said, we read of the high cost of living in Germany, we read of it in France, in Canada and in the United States, but we do not read of it to any great extent in Britain, or Holland, or Belgium, which are also largely free trade countries. Some amusing illustrations have come to my notice of how this freedom of commerce slightly increase the cost of living. Britain has got the right kind of increased cost due

to an increasing supply, and an increasing demand, which ought to enable us to see how this thing operates.

When I was at home for the Christmas holidays, I talked to a firm in the town of Olds, near which I live, and I saw a barrel of apples in the store of that firm. The people who kept the store said to me: That is one of fifteen barrels which were sent out here as No. 1 and have been returned by the different individual purchasers. 1 looked at them and they did not, to my mind, represent exactly No. 1 stuff. As a matter of fact, I was fortunate enough, for many years before I came to Canada, to have a few barrels of northern spies' and county kinss sent to me from Ontario every year, and I can assure this House that I ate better northern spies and county kings in Newcastle-on-Tyne, England, than I have ever tasted in Alberta. It is notorious in the towns of the west that the best beef is the exception rather than the rule, and the reason for that is that the prime, choice steers go to poor benighted England, which has no weapon of retaliation and which was so commiseratingly spoken of by the hon. member for South York (Mr. Maclean) the other day. It is extremely kind of the other nations of the world to pave with their best the rough road that the backward British nation is taking in retaining the principle of free trade.

I.have no obstructive -comments to make upon what I may say was an extremely interesting speech, but I would sum up what I have said by saying that in my judgment there is no evidence in the history or experience of nations that tyranny ever cures tyranny, and state control, whether you call it protection or socialism, is only another form of tyranny. I have never been able to gather any evidence from any source that tyranny really cures tyranny. What really cures it is freedom, and- the nation which is the greatest trust _ buster is that which believes in and applies the principle of commercial freedom. I have indicated what I believe to be the cause of the condition with which this Act is designed to deal, and I am not prepared to place any obstacle in the way of any relief from the cost of living, which is making flaring headlines in almost every newspaper in this country, but I beseech my hon. friend the Minister of Finance (Mr. Fielding) to come to the assistance of the Minister of Labour on this question and show him, by a little experiment upon cement in the next budget, that after all young men are not always the wisest as to the early production of the -millenium.

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John Graham Haggart

Conservative (1867-1942)

Hon. JOHN HAGGART (South Lanark).

Mr. Speaker, it is refreshing to hear remarks like those which the hon. member who has just taken his -seat (Mr. M. Clark) has made. They are like echoes

of the past. At one time the. principles he has enunciated had the advocacy of all the hon. members I see on the front benches at the present time. They are a pleasing reminiscence, a recollection, of a former Ome. They have been forgotten, vanished, and it is with pleasure that I hear statements made and principles advocated which thirty or forty years ago were the principles of the gentlemen on the opposite side of the House.

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John Graham Haggart

Conservative (1867-1942)

Mr. J. HAGGART.

Now. let us deal with what is at the present time before the House. The hon. gentleman is not wanting in courage who can produce a Bill such as that which has been introduced, and if be can do, anything in the direction in which he- proposes to do it, not only those on this side of the House but those on both sides of the House would be glad to give him their most earnest support. But, I am afraid that he does not understand the difficulties that he is up against, This Bill is for the purpose- of punishing parties who enhance the prices of commodities which are useful to the community, such as food. Such legislation has been tried in the United States, and, as the hon. Minister of Labour (Mr. King) states, that legislation took the form -of legislation- against combines. I want to point out the difficulty there is in connection with this kind of legislation. You must state specifically what you intend to legislate against. _ That is one of the principles of law. It is not what the intent is. it is not what you suspect may be underlying, but you must be specific in your description- of the crime in order to punish it. That is the trouble with the Bill which the hon. gentleman has introduced here. What does he mean by enhancing prices? As I have stated, thev tried this in the United -States, where they passed an Act in reference to combines. You can reach a combine. The very fact of the existence of a combination for any purpose of that kind is sufficient to enable you to punish therm The English have adopted a principle which is logical. They keep the control of corporations under the common law and punish any one who transgresses it. 'They -have never attempted any legislation shell as this. In order to punish a party who enhances the price of an article, you appoint a hoard for the purpose of inquiring into the facts. There i3 a board of investigation which makes an inquiry t-o -see whether the article is being sold at too high a price o-r not. Do you not see that in order to make the law effective, there must be a standard of value or price fixed for the purpose of reaching the individual? You leave it to the individual to state whether an article should be worth a dollar or a dollar and a half. That is not I the principle upon which legal practice or

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Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LAURIER.

Is it impossible? *

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LIB

Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LAURIER.

Here is one suggested. -

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John Graham Haggart

Conservative (1867-1942)

Mr. J. HAGGART.

Publicity will not accomplish it. Under the English law, the buying of articles on the market for the purpose of increasing prices is a crime. If a corporation should indulge ip, anything of that kind, its corporate powers will be clipped. The difficulty is the defining, ^ or the fixing of what constitutes the crime and punishing for it. If the hon. gentleman's Bill should accomplish the object aimed at, and I hope it may, it will be a step in the direction every one wishes, and that is that every one who enhances the value of a public necessity for the sustenance of life, or the comforts of the people should be punished in some manner or another.

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Murdo Young McLean

Liberal

Mr. M. Y. McLEAN (South Huron).

Although this is certainly a very interesting subject, I do not intend to occupy the time of the House except for a very few minutes. Indeed, I do not think that any exhaustive discussion of the subject is at all necessary after the exceedingly able, comprehensive, and interesting address we have just listened to from my hon. friend the Minister of Labour.

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April 12, 1910