March 28, 1916

LIB

George William Kyte

Liberal

Mr. KYTE:

The Solicitor General is very smooth. I assume he does not altogether neglect his English classics and consume all his midnight oil in thinking out how he is going to trap the other fellow's client by wily and subtle technicalities. I would advise him to read " Ten Thousand a Year," where he will find a description of the legal firm of Quirk, Gammon & Snap, and then let him tell me what he thinks of the application of Oily Gammon to the present situation.

I am not going to say that the absolutely incorrect figures given by the Solicitor General were quoted by him with a deliberate intention of deceiving the House. I do not say that, because the rules of debate do not permit me to say it. But the result upon

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

You have yet to check me up.

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LIB

George William Kyte

Liberal

Mr. KYTE:

No, I am not going to say that he deliberately deceived the House. I will just say that he resorted to the Manitoba Tory methods of reckless statement. Roblin got away with it for twelve years in the Legislature of Manitoba. For twelve years Six Redmond Roblin could get up in his place in the House of Assembly and, with all the importance and influence of his position as Premier, make statements that were absolutely reckless; and, owing to the manner in which business was conducted, he got away with it. But the time came when Roblin could not get away-except to California where he went to recuperate in order that he may be in a better position to face his accusers in a criminal dock. The Solicitor General thought he was in Manitoba, and that he could get away with these statements in the House of Commons; but he has not succeeded.

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

You are a brave man.

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LIB

George William Kyte

Liberal

Mr. KYTE:

Now, we will come to the subject of fuses. With regard to fuses, on March 14, the Solicitor General, on page 1824 of Hansard, said:

I cannot tell what they delivered in the third week of January; but I do know that they delivered practically 400,000 fuses when the hon. gentleman spoke in this House on the 9th of March, and when he stated that they had never delivered any fuses.

Let us see what the hon. member for Carleton did say. According to the Soli' citor General, the member for Carleton, when he spoke in the House on March 9, stated that they had never delivered any fuses. I turn to Hansard and I read what the hon. member for Carleton said:

The result is that the Canadian manufacturers are furnishing the fuses, exactly as per contract, for $3.50 each, whereas the American manufacturers, who have received over $3,000,000 of good British and Canadian money, have never furnished a fuse, hut have simply sublet the contracts to the friends and confreres of J. Wesley Allison, and I do not think. Sir, you would have to make half a dozen guesses in order to name his principal confrere.

The Solicitor General, in pretending to quote the statement of the member for Carleton, said that the hon. gentleman's

statement was that they had not delivered any fuses. What the member for Carleton did say was that they had not furnished any fuses, but had simply sub-let the contracts to the friends and confreres of J. Wesley Allison.

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

In two other places he said that there had been none delivered.

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LIB

George William Kyte

Liberal

Mr. KYTE:

Is the hon. Solicitor General getting uneasy? If he is not, he ought to be. I am going to read now the respective statements made by the hon. member for Carleton, the Solicitor General, and the Chairman of the Munitions Board in this regard. The member for Carleton stated that on January 26 orders were given to the American Ammunition Company for 833,334 time fuses at $4.50 and 1,666,666 graze fuses at $4, and that the number of deliveries made was nil. The Solicitor General said that this company received a contract for 2,500,000 time fuses and 1,666,666 graze fuses.

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mi. MEIGHEN:

No, I did not.

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LIB

George William Kyte

Liberal

Mr. KYTE:

And that on the 14th day of March 417,000 graze fuses were delivered. Hon. gentlemen will remember that the member for Carleton was not speaking of the 14th of March, he was speaking as of the 26th of January. Mr. Flavelle, the chairman of the Munitions Board, says: Date of order, June 19, 1915; number of time fuses delivered, nil. In that respect he agrees with the member for Carleton. He says also that on the first day of February,

160,000 grade fuses were delivered. In respect of the International Arms and Fuse Company of New York the member for Carleton said that 2,500,000 time fuses were ordered and that the number delivered on January 26 was nil. The Solicitor General is absolutely silent on that question. Here is one case where [DOT] he thought that silence would be golden. The chairman of the Munitions Board agrees with the member for Carleton that on the first day of February there was not a single fuse delivered, and that on March 14 6,000 time fuses had been delivered out of 2,500,000.

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

Where did I contradict that?

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LIB

George William Kyte

Liberal

Mr. KYTE:

following automatic guns with tripod mount: 2 spare barrels for each gun, 1 loading machine for each gun, and 36 feed belts for each gun, in addition to the four that go with each gun, and a sufficient number of asbestos mitts or gloves for the men in charge of the above.

Tours truly, -

(Sgd.) J. Wesley Allison.

*p.S.-The verbal order which this confirms was for 50 Colt automatic guns.

So you see that Col. J. W. Allison, having ordered fifty machine guns from the Colts people on the first order, was authorized to order the 250 Colts machine guns which were provided for by the Order in Council which I have just read and which Order in Council was signed by the Prime Minister. Thus we see that Col. J. Wesley Allison has been through the machine gun transaction as the representative of the Minister of Militia and Defence. At page 14 I read the continuation of Mr. Brown's examination:

Q. Do you remember seeing Col. Allison at any time?

A. At that time?

Q. During the time that these orders were going to the Colts Company?-A. Yes, I saw Col. Allison several times in the office in 1914.

Q. In the department?-A. Yes, sir.

Q. Discussing supplies for the Militia Department?-A. Oh, well, he was in and out; he was not in my office very often.

Q. But you know he was seeking business?- A. Yes, 1 have seen him there.

***** ***

Q. Do you regard him as the agent of the Militia Department?-A. Yes.

We have a further statement of the Minister of Militia and Defence speaking in the House of Commons on March 2:

On tri-nitro-toluol, picric acid, copper, brass, zinc, ammunition of various kinds, Col. Allison undoubtedly saved upwards of $50,000,000 to Great Britain and Canada. Even when the British Government wanted a hundred rifles for testing purposes, they applied to Col. Allison for them.

I wonder on whose recommendation. I wonder if the Minister of Militia and Defence could give any information to this House as to who suggested that the British Government should employ 'Col. Allison to buy the picric acid. Speaking in the House of Commons on the 26th of January, the Minister of Militia said:

I may say further concerning Col. Allison- I shall refer to the matter of fuses in a very short time-that in all his dealings with business firms in the United States he has in each instance, so I am informed and believe, given those with whom he dealt the following letter, or one similar:

May 14, 1914.

Confirming my' verbal statements to you of yesterday and in order that there can not he any room for misunderstanding, I now reaffirm

[Mr. Kyte.l

in writing my position in connection with the fuse question.

I have been and am doing my very best to secure the lowest prices possible for the Government, and, above all things, wish to do whatever I can to aid them in procuring the best workmanship, lowest prices, and largest deliveries possible; and if you are bidding for the manufacture of this fuse for the Shell Committee or the Canadian Government-.

Col. Allison must have known that the Canadian Government had something to do with it.

*

I want it distinctly understood that I do not want any profit added, to the price under any conditions, with the intention of providing a commission for me, as I would not under any circumstances accept a commission of any kind from anybody, in connection with this matter.

Very truly yours,

(Sgd.) J. Wesley Allison.

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LIB

Frank Broadstreet Carvell

Liberal

Mr. CARVELL:

What is the date of that?

Mr. KYTE; That was a circular letter which he sent out to all parties who were proposing to take these contracts and it is dated May 14, 1915. The House will remember that Sir Charles Davidson was appointed to make inquiries in connection with war contracts and to make some investigation in particular as to the purchase of pistols and other munitions and supplies for the Shell Committee.

. In the month of January, I believe it was, the Minister of Militia and Defence appeared before Sir Charles Davidson in the city of Ottawa, arid asked to make a statement : [DOT]

By Sir Charles Davidson :

Q. Do you know if that would apply to revolvers or pistols?

Sir Sam Hughes: We have nothing to do with pistols. The deal was made through American officers, or friends-perhaps I should, not use the term " friends "-but at all events, he had nothing to do with the pistols in any sense whatever.

" He " referred to Col. J. Wesley Allison. The Minister of Militia and Defence, therefore, stated in January last to Sir Charles Davidson that Col. Allison had nothing whatever to do with pistols in any manner or form. We now come to the evidence of Col. Allison. He was called as a witness, and this is the evidence he gave upon this point:

Q. Did you sell any revolvers to the Canadian Government?-A. No, sir.

Q. Or pistols?-A. No, sir.

Q. Were you the agent of any person who sold revolvers or pistols to the Canadian Government?-A. No.

Q. Or are you the agent of any company who sold any revolvers or pistols to the Canadian Government?

A. No.

Q. Did you profit by way of commission on any revolvers or pistols that were sold to the Canadian Government or to the Department of Militia and Defence?-A. No, sir.

Q. Not in any way?-A. No.

Q. Neither directly nor indirectly?-A. No.

Q. Did you receive any commission on any clothing sold to the Militia Department of the Canadian Government?-A. None whatever.

Sir Charles Davidson: Was there a memorandum with respect to this?

Mr. Thompson: Yes, sir; that is the information ; I have asked the witness with reference to the information coming to me.

We have here the denial of the Minister of Militia and Defence that Col. J. Wesley Allison had anything whatever to do with the purchase of Colts pistols, and we have the evidence of Col. Allison himself that he had nothing whatever to do with Colts pistols. Then the Director of Contracts was called:

Mr. Thompson, K.C.:

Q. Would' you produce from your file the document showing how this contract for Colts automatic pistols and revolvers was given?-A. So far as I know, there were no orders given for revolvers. The only orders I know of, I am speaking from memory, were dfrders for automatic pistols.

Sir Charles Davidson: The revolvers were only a small matter compared with the other.

By Mr. Thompson, K.C. :

Q. What orders were given for automatic pistols?-A. The first order is one for 1,000 automatic pistols given on the 5th September to Col. J. W. Allison, by authority of an Order in Council of that date. I have the Order in Council here before me.

Mr. Speaker, do hon. members of this House who hear these declarations realize what they mean? Do the people of this country realize what these declarations mean? Col. J. W. Allison, the friend and confidant of the Minister of Militia and Defence, the agent of the Department of Militia and Defence for the purchase of machine guns and automatic revolvers, to m say nothing of all the other things he was concerned with, states upon oath that he had nothing whatever to do with the purchase of these pistols. The Minister of Militia and Defence, with all the responsibility and authority that he bore as Minister of Militia, tells Sir Charles Davidson that Col. Allison .had nothing whatever to do with pistols. And yet here is an Order in Council authorising J. W. Allison to purchase those very pistols. Is perjury an extradictable offence? I am not sure whether it is or not, but I think the Solicitor General had better look up the. Criminal Code, and if he finds it an extradictable offence, he had better get busy and bring Col. J. Wesley Allison across the border.

In order not to trespass too much on the time of the House, I shall not go into further evidence that I have as to Col. Allison's relations with the minister and with the Munitions Board, and I pass on to another subject. Yow will remember, Mr. Speaker, that a few minutes ago I read from the sworn evidence of Col. Allison, that he had never received any commission whatever, directly or indirectly. I read his letter addressed to those who were furnishing shells and fuses, also the statement of the Minister of Militia that he had the assurance of Col. Allison that he would not receive a dollar from anybody in respect of his services; and the Minister of Militia hoped that he would keep his hotel and railway bills so that after the war he could be compensated for these little items of expense at any rate. In the month of January, I think it was, Mr. Stone, the President of the Colts Company, happened to be in the city of Ottawa, and was summoned before Sir Charles Davidson for examination. He was examined under oath, and his evidence is as follows:

Sir Charles Davidson: Do you know of any commission having been paid by your company in connection with these Canadian Government orders?

Mr. Stone: Not a direct commission applying to the Canadian Government orders alone.

Sir Charles Davidson: What do you mean

by a direct commission?

Mr. Stone: I mean that we have in our employment-

" Our employment," mind you.

-men who negotiate Government business tor us and who are working to secure Government business year in and year out, in various territories. We have one man who has done a great deal of business 'for us in continental Europe, during the last two years, looking to the securing of contracts from three or four governments there. That man was very instrumental in assisting the Canadian Government in the securing of these arms, and to him we have given what I may call a present, or paid him an amount of money which is in return for general services rendered, or in negotiating or securing business at large, and trying to get business which he sometimes does not get. So that it may, in a sense, he called a present; whatever we consider a man of that kind to have been worth to us, we give him a payment for it.

Sir Charles Davidson : And that purely has to do with relations between the employer and the employee? ,

Mr. Stone: Quite so, that is entirely so. I might say that any moneys we have paid to any persons who have represented us, or assisted us, in securing business of this kind in Canada, or from Great Britain, or from France, or from Russia, or any of the Allies, has no hearing whatever on the price at which the respective governments buy the arms; any money we have paid in that respect is not at the expense of the buyer at all.

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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

Who got the other four dollars?

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LIB
CON

William Thoburn

Conservative (1867-1942)

Mr. THOBURN:

Who paid the commission? Was it the American manufacturer or the Canadian Government?

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?

Some hon. MEMBERS:

Both.

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LIB

George William Kyte

Liberal

Mr. KYTE:

I know that the Canadian Government paid $4 more than they should have paid for each Colt automatic pistol. I wonder if the hon. member for North Lanark (Mr. Thoburn) can guess who got the difference.

As I was going to say before I was interrupted by my hon. friend, there is the evidence of Col. Stone that Allison was their agent to sell Colts pistols and machine guns to the Canadian Government. Here is the evidence of the Minister of Militia and Defence 'and the evidence of the Director of Contracts that Col. W. J. Allison was the agent, of the Government to buy those pistols and those

10 p.m. machine guns, and here is the evidence of Col. Stone that he paid Col. Allison for selling those pistols and machine guns to the Government. Have hon. gentlemen opposite forgotten about the Secret Commissions Act? We used to hear a good deal about that Act in the old days when my right hon. friend beside rne was leading the Government. I suppose the Secret Commissions Act is as effective to-day as it was then. Had not the Solicitor. General better get busy and look up that Act? and, if a violation of that section of the Criminal Code is an extraditable offence, I think he had better bring back Col. Allison to Canada. Col. Allison is a criminal and a perjurer before the world. He is now a criminal in rdspect of the Secret Commissions Act. Yet hon. gentlemen opposite will say: "There is

nothing to investigate; no interests have been sacrificed.'' Has there been no wrong-doing when an employee of the De* partment of Militia and Defence, who is also- an employee of the Shell Committee, has committed a criminal breach of trust, to say nothing else, in taking a commission from a company from which he was purchasing goods, and who has committed perjury before Sir. Charles Davidson's Commission? Hon. gentlemen opposite should take the night to think the matter over before they decide to vote against this resolution.

Now, we will proceed to the contract for making fuses between the Shell Committee and the American Ammunition Company. I have here a certified copy of the letters of incorporation of that Company. It was in-

corporated in the state of Virginia and was afterwards registered in the State of New York. I will read only a portion of this document. This is the certificate:

This is to certify that we do hereby associate ourselves to establish a corporation under and by virtue of the provisions of an Act of the General Assembly of the State of Virginia, entitled " An Act Concerning Corporations," which became a law on the 21st day of May, 1903, for the purpose and under the corporate name hereinafter mentioned, and to that end we do, by this our Certificate, set forth as follows:

First: The name of the corporation shall

be American Ammunition Company, Incorporated.

Second: The principal office of said corporation in the state of Virginia shall be located at No. 700 East Franklin Street, in the city of Richmond.

Third: The purposes for which the corporation is formed are as follows.

And it goes on to enumerate a considerable number of purposes, amongst others:

To manufacture, produce in whole or in part, ouy, import, contract for, or otherwise acquire, and to sell, exchange, export, or otherwise dispose of, deal in and deal with any and all kinds of war materials and supplies, ammunition, projectiles, shells, shrapnel, torpedoes, cartridges, bullets, gunpowder, balls, bombs, shot of all kinds, dynamite, guncotton, cellulose and its derivatives and compounds, and other explosives and combustibles of eveiry kind and description, cannon, mortars, guns, revolvers, and firearms of all kinds and description, fuses, percussion caps, chemicals and chemical compounds ; raw and [DOT] manufactured materials, and all like or kindred products.

The fourth clause is: "

The maximum amount of the capital stock of the corporation shall be $1,000,000, to be divided into shares of $100 each, and consisting of 5,000 shares of preferred stock at $100 per share, and 5,000 shares of common stock at $100 per share, and the minimum amount of the capital stock of the corporation shall be $1,000 divided into ten shares of the par value of $100 each.

This tremendous corporation which was going to manufacture shells, fuses, submarines, torpedoes, was to begin upon a capital of $1,000. The seventh clause says:

The names and residences of the officers , and directors who, unless sooner changed by ' the stockholders, are for the first year to manage the affairs of the corporation, are as follows:

Officers.

Andrew D. Christian, President, Richmond, Va. W. G. Lt. McClure, Vice-President, Richmond, Va. Ernest B. Flippen, Secretary and Treasurer,

Richmond, Va.

Directors.

Andrew D. Christian, Richmond, Va.

W. G. L. McClure, Richmond, Va.

Ernest B. Flippen, Richmond, Va.

Tenth: Given under our hands and seals

this 25th day of May, 1915.

(Sgd.) Andrew D. Christian, (L.S.)

W. G. L. McClure, (L.S.)

_ Ernest B. Flippen, (L.S.)

State of Virglna,

City of Richmond, to wit:

I, O. Raymond Brown, a Notary Public in and for the city and State aforesaid, do certify that Andrew D. Christian, W. G. L. McClure, and Ernest B. Flippen, whose names are signed to the foregoing writing, bearing date on the 25th day of May, 1915, have acknowledged the same before me in my city aforesaid.

Given under my hand this 25th day of May,' i915.

My commission expires November 18, 1917.

O. Raymond Brown,

Notary Public.

This is one of the munitions companies to which the Shell Committee gave a contract for 2,500,000 fuses, and gave them in advance $1,500,000, to which I shall refer more particularly later on.

I have also a certified copy of the letters of incorporation of the International Arms and Fuse Company-and this, I may say, is the concern in which we are particularly interested:

We, the undersigned, all being persons of full age and at least two-thirds being citizens of the United States, desiring to form a stock corporation, pursuant to the provisions of the Business Corporations Law of the State of New York, do hereby make sign, acknowledge and file this certificate for that purpose as follows:

First: The name of the proposed corporation is International Arms and Fuse Company, Inc.

Second: The purposes for which said corporation is to he formed are to do any and all of the things hereinafter set forth, to the same extent as natural persons might or could do, viz:

To manufacture, purchase or otherwise acquire and to sell, deal in or otherwise dispose of guns, cannon, rifles, revolvers and firearms of all kinds and description's.

To carry on the trade or business of manufacturers of ammunition of all kinds, and for that purpose to manufacture, purchase or otherwise acquire and to load, sell, deal in, and otherwise dispose of, cartridges, cases, detonators, fulminates line fuses, percussion fuses, bullets shot, and projectiles of every kind and description.

They have power to buy or lease buildings and:

In general, to do any and all things and exercise any and all powers which may now or hereafter be lawful for the corporation to do or exercise under and in pursuance of the Business Corporations law of the State of New York, or of any other law that may be how or hereafter applicable to the corporation.

Third: The amount of the capital stock is one million five hundred thousand dollars ($1,500,000). .

Fourth: The number of shares of which the capital stock shall consist is fifteen thousand (15,000) of the par value of one hundred dol-

lars ($100) each; and the amount of capital with which said corporation will begin business is three thousand dollars ($3,000).

Dated this 9th day of June, 1915.

Marcus R. Peppard.

John C. Aisenbrey.

James A. McCann.

They begin the business of manufacturing $10,000,000 worth of fuses, the contract for which they received from the Shell Committee, upon a capital of $3,000.

This is registered on the 11th of June:

On this 9th day of June one thousand nine hundred and fifteen; before me personally came Marcus R. Peppard, John C. Aisenbrey, and James A. McCann, to me known and known to me to be the persons described in and who executed the foregoing certificate and severally duly acknowledged to me that they executed the same.

The certificate of the Deputy Secretary of State, to the effect that this was duly recorded in his office, is appended.

Both these companies received contracts from the Shell Committee for the manufacture of fuses. These contracts are the same, and they are somewhat long, so I will not weary the House by reading them both, but will take one as representing both.

Memorandum of agreement made in duplicate this 19th June, 1915-

Nine days after they were incorporated:

-by and between E. B. Cadwell, its president,_

Bear that name in mind for we shall hear of it again.

-and Frank Callahan, its secretary, hereunto duly authorized, party of the first part; and

The Shell Committee, a body appointed by the hon. Minister of Militia and Defence of Canada-

Here is a contract entered into by the Shell Committee in pursuance of authority which, it says, it received from the Minister of Militia and Defence of Canada.

* for the purpose of purchasing munitions of war for the British Government hereinafter called the "purchaser", and acting herein by Brigadier General Alexander Bertram, its Chairman, party of the second part.

Whereas the company is prepared to manufacture fuses, and the purchaser is desirous of purchasing fuses from the company on the terms herein contained. .

Now, therefore, this agreement witnesseth:

1. The company agrees to sell and the purchaser to purchase one million six hundred and sixty-six thousand six hundred and sixty-six (1,666,666) No. 100 loaded fuses, and eight hundred and thirty-three thousand three hundred and thirty-four (833,334) No. 80-44 loaded fuses, to be in accordance with the drawings and specifications to be furnished by the purchaser, namely, drawings Nos. R.L. 20590 (L) three sheets, and R.L. 20920 (1), R.L. 16603-C (1) and R.L. 21070-A (1) ; and specifications Nos. L-3406 and L-3478. The gains are not to be supplied. The company at its

option may use either steel or brass for the body, cap and adapter, or any part thereof, of all or any of said No. 100 fuses. All steel parts thereof are to be either tinned or nickeled.

2. The price of said fuses shall be four dollars and fifty cents ($4.50) per fuse, in lawful money of the United States of America in New York funds, in respect of fuse No. 80-44 design, and four dollars ($4) per fuse lawful money of the United States of America in New York funds, in respect of fuse No. 100 design. Design No. 80-44 to be complete with cover. All fuses shall be packed as hereinafter provided, and shall be delivered f.o.b. at the company's or its subcontractors' works for shipment to shell loading factories designated by the purchaser.

That ie, they were to get $4.50 for each time fuse and $4 for each graze fuse.

3. The company shall begin to make deliveries of fuses under this agreement not later than five months from the date of the execution of this contract-

That would be on the 19th of November.

-and deliveries shall then be made at the rate of at least five thousand (5,000) fuses per working day on an average thereafter, and shall continue at such rate until two months later-

Which would bring it to the 19th of January, 1916.

-when deliveries shall be increased to not less than twenty thousand (20,000) fuses per working day on an average thereafter, and shall continue at said rate until all of said two million five hundred thousand (2,500,000) fuses shall be delivered. The total of said two million five hundred thousand (2,500,000) fuses shall be delivered, however, not later than April 30, 1916.

Provided, however, that if ninety per cent of the fuses to bJ delivered hereunder shall have then been delivered by the company to the purchaser, the company shall be entitled to a period of grace not exceeding thirty days beyond April 30, 1916, to enable it to complete all of the deliveries of fuses not then made hereunder.

In estimating the average of five thousand (5,000) per day or twenty thousand (20,000) per day, as the case may be, it will be sufficient to deliver at least thirty thousand (30,000) or one hundred and twenty thousand (120,000), as the case may be, in any one week, but if deliveries in any one week exceed the said average called for, the company shall be entitled to have such excess applied in fulfilment of the stipulated quantities during subsequent weeks.

3. (a) Deliveries of No. 100 and No. 80-44 fuses shall be approximately in the proportion of two (2) No. 100 to one (1) SO-44 fuses, calculated on monthly deliveries.

4. The purchaser shall, under the direction of the Chief Inspector of Arms and Ammunition, provide for the prompt examination and inspection of the fuses parts at the factories where same are manufactured, and also the fuses at the factories where same are assembled and loaded. As soon as' the company shall notify the purchaser that manufacture hereunder has advanced sufficiently to require inspection, the purchaser shall keep at all times at each of said factories an inspector or inspectors, whose duty shall be to inspect all

of such parts and completed fuses and to promptly inrorm the company and the purchaser of the results of such inspection.

4 (a) The Chief Inspector of Arms and Ammunition, and all other inspectors appointed by him, or by the purchaser, shall at all times have access to the factories of the company, and of its subcontractors, and the company shall provide all necessary and suitable accommodations for the purposes of all inspections required at any such factories.

5. The company's manufacturing and inspection gauges shall be provided by the company, The inspection gauges may' be checked from time to time with the master gauges of the inspector of the purchaser.

6. The said fuses shall be proved with promptness by or under the direction of the Chief Inspector of Arms and Ammunition, or his duly authorized deputy at Quebec, or at such other place or places as may be designated by him in the Dominion of Canada or of the United States of America.

7. Lots of fuses (other than fuses selected for proof) to be delivered hereunder, shall not be required to be delivered for shipment to the purchaser, as hereunder provided, until all inspections and tests required by the purchaser in connection therewith shall have been completed, and all certificates required hereunder shall have been properly issued.

8. The decision of the Chief Inspector of Arms and Ammunition, or any of his duly authorized deputies, regarding the acceptance or rejection of fuses, or parts thereof, shall be final and binding between the parties hereto.

Then we come to the important part:

The purchaser shall make an advance to the company in New York funds of 15 per cent of the total amount of the purchase price at the following rates and'periods:

(a) 10 per cent on the execution of this contract and the delivery to the purchaser of the proper agreement guarantee hereinafter mentioned.

Over a million dollars was to be advanced to them the moment this agreement was signed. The next clause is:

(b) The remaining 5 per cent to be paid in equal monthly instalments over a period of four months from the date of the execution of this agreement, the first of such instalments to be paid at the expiration of one month from the date of such execution.

So that within four months they got over half a million dollars more; and altogether they got an advance of over one and one-half million dollars before ever a fuse was made or before they were in a position to furnish fuses to the committee. Section 10 of the agreement reads:

10. The purchasers shall also make from time to time on the first lots of fuse parts manufactured further advance payments to the company in New York funds (up to but not exceeding in the aggregate three million dollars) of sixty five per cent of the price of the finished fuses on the receipt of a certificate from the Inspectors of Arms and Ammunition or any of his duly authorized deputies of the completion and inspection of said lots of the complete sets of mechanical parts of said fuses and of the

shipment thereof for delivery to the company's assembling and loadfing factory or factories, which certificate the purchaser agrees shall be promptly furnished; provided, however, that if the amount of advances from time to time made under this paragraph remaining in the hands of the company unapplied towards payment for completed fuses as provided in paragraph 13 hereof shall reach one million dollars no further advances shall be made under this paragraph until said amount remaining in the hands of the company unapplied shall have been reduced by further applications thereof towards final payment under said paragraph 13, and then only in such sums that the total amount of said advances so remaining in the hands of the company unapplied towards final payment shall again reach one million dollars, and so on from time to time. The above advance payments being made for the purpose of aiding the company to finance this contract, shall not in any way constitute an acceptance of any completed fuses by the purchaser.

That means that this company shall at all times have one million dollars of the Shell Committee's money in their treasury, quite irrespective of whether the shells are there for delivery, over and above the million and a half they got when the contract was executed.

The above advance payment being made for the purpose of enabling the company to finance the contract.

The Shell Committee gives a contract to this mushroom company to manufacture shell fuses; the company have no factory, no capital, nothing; and the Shell Committee very complacently furnishes them with all the money to finance the undertaking. Then the contract proceeds to deal with factories and final payment :

The company shall be entitled at its option to draw on the purchaser for any moneys payable from time to time by the purchaser to the company hereunder by draft.

Pinal payments for lots of complete fuses accepted and shipped shall be due and payable by the purchaser to the company seven days after the date of mailing in New York to the purchaser at Ottawa, or at the option of the company seven days after the delivery in New York to the agency of the Bank of Montreal n New York of invoices in triplicate properly numbered, together with bills of lading therefor.

The company shall be entitled at its option to draw on the purchaser for any moneys pay-"able from time to time by the purchaser to the company hereunder by draft, payable seven days after date without grace in New York funds in the city of New York. In the case of the final payments mentioned in paragraph 11 hereof such drafts shall be accompanied by the invoices and bills of lading therein mentioned. All payments shall be due and payable in New York funds in lawful money of the United States of America or its equivalent.

The said advance payments mentioned in paragraphs 9 and 10 of this agreement shall be applied on the purchase price of lots of fuses delivered as follows: fifty per cent of such purchase price (or a lesser percentage if the bal-

2*282

Topic:   SHELL CONTRACTS.
Subtopic:   PROPOSED COMMITTEE OF INVESTIGATION.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

Is my hon. friend placing that contract upon Hansard?

Topic:   SHELL CONTRACTS.
Subtopic:   PROPOSED COMMITTEE OF INVESTIGATION.
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LIB
CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

My hon. friend

mentioned a guarantee clause in it. Will he please read the guarantee provision in the contract, if there is one? .

Topic:   SHELL CONTRACTS.
Subtopic:   PROPOSED COMMITTEE OF INVESTIGATION.
Permalink

March 28, 1916