May 8, 1923

COMBINES, MONOPOLIES, TRUSTS AND MERGERS


The House resumed from Monday, May 7, the debate on the motion of the Right Hon. Mr. Mackenzie King for the second reading of Bill No. 54, to provide for the investigation of combines, monopolies, trusts and mergers.


LIB

James Murdock (Minister of Labour)

Liberal

Hon. JAMES MURDOCK (Minister of Labour) :

Mr. Speaker, in proceeding further with the discussion of Bill No. 54, I would like to refer briefly to what would appear to be a studied campaign which has been carried on in various parts of Canada during the past few weeks to discredit the provisions of the bill. Almost invariably hon. members who have discussed this measure from the opposition benches have, in respect to claims and contentions made, found refuge in that campaign of, I think, entire, but I hope not deliberate, misrepresentation. I want to refer to some of the statements that have been made in that connection. Here is one coming

from the jurisdiction of the hon. member for New Westminster (Mr. McQuarrie) which says:

The Criminal Code of Canada, in one of its sections, has penalties which fit the crimes, known as trusts, mergers and combines, whenever these are in restraint of trade, and does it in a much simpler way than the Premier's bill, as well as providing heavy penalties. It should be sufficient for the purposes without the enactment of legislation that will handicap trade and make burdensome interference with the conduct of private business. The great objection to his bill is that it is wholly inquisitorial, and that "any person resident in Canada of the full age of twenty-one who is of opinion that a combine exists, or is being formed," may start an investigation which, on mere suspicion will subject business men to no end of trouble and expense.

There is a wholesome truth in the old saying that a half truth is worse than a falsehood. Then, we come to another one from the jurisdiction of my hon. friend for London (Mr. White), which says:

One curious clause makes it illegal to fix a resale price.

It is not true, but it gets over in an editorial just the same.

In other words, a manufacturing firm which does a national business and advertises from end to end of Canada its products at one price could not fix this price.

Nothing in the bill suggests the accuracy of that statement, unless it could be conclusively shown that the fixing of that price was a detriment to the public, to the consumer, to the producer. Then, this same article pays me a compliment by saying:

That bold trust-buster, Hon. James Murdock, the Minister of Labour, has machinery he needs now if he will only make use of it.

An absolutely unqualified misstatement of fact, as every hon. member familiar with the legislation which has for some time been on our statute books, knows. Yet that kind of bunk gets over from the Opposition press, and, may I say without disrespect, is parroted by hon. gentlemen from the Opposition benches.

Then, we have another one. Listen to this: It comes from not very far distant:

The process, too, is simple, the laying of an information before a competent magistrate puts the accused on their defence, creates the opportunity for bringing out the facts, and if there has been guilt, provides adequate punishment. The government bill is' of a type that appeals to those who confound fuss with efficiency and noise with progress.

That listens very nicely, to the uninitiated, but it does not fool any hon. member or any other citizen of Canada? Who ever dreamed for a moment of the feasibility of his approaching some magistrate and suggesting that there was a combine detrimental to him or to other consumers or producers, and then

Combines-Mr. Murdock

getting proper redress at the hands of the court? All hon. gentlemen know how far he would get. One thing these editorials and various others that might be quoted overlook is the fact that the provisions of the criminal code dealing with combines have been useless since the days when my right hon. friend and his colleagues took good care to make the Combines Investigation Act moribund and of no effect. It has been impossible, therefore, to use the provisions of the criminal code, section 498, in dealing with the most dreaded or contemptible combine that might exist in Canada.

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LAB

William Irvine

Labour

Mr. IRVINE:

Would the minister care to state from which papers those editorials were taken?

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

British Columbian, New Westminster, B.C., London Free Fress and the Montreal Gazette.

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LIB
LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

If my hon. friend for Vancouver Centre (Mr. Stevens) will pardon two or three additional references to the statements which he made in his speech on this subject I should like to deal first with this. The hon. gentleman said:

Now I turn to what is my chief criticism of the bill, that in effect it declares to be a crime that which is, without question ordinary, sound business sense.

With my hon. friend I agree and am ready to assume that condition prevails so far as the great majority of combinations existent in Canada to-day are concerned, and I am ready to charitably assume that many of those combinations are not combines carrying on their operations to the detriment of the public whether consumeis or producers, but I would call the attention of my hon. friend to the fact that Professor Alfred Marshall, the leading economist in the world, stated in Principles of Economics at page 447:

But perhaps the public show too much indulgence to those who argue that a trade combination or a trust is the only means available for securing reasonable steadiness of prices.

Then my hon. friend for Vancouver Centre went on to argue at considerable length as to what might happen to certain dairy industries, and I want to remind him of some of his previous views in that regard. The exact statement of the hon. gentleman was:

It was shown beyond all peradventure that the Ottawa Dairy, while a distinct monopoly under this clause, did operate in the interest of the public.

Let us read the record to see what was the trend of the hon. gentleman's mind when

that particular inquiry was being made. At page 304 of the examination of Alderman W. Guertin, before the Special Committee on the High Cost of Living, I find this:

By Mr. Devlin.

Q. Do you know anything about the Producers' Milk Company?-A. Yes, they endeavoured to lower the price of milk in Ottawa.

Q. When did they go into business?-A. About 7 or 8 months ago.

Q. This spring?-A. Not this spring, 7 or 8 months ago. That would be last year.

Q. Had the fact of their going into business and putting teams in the streets delivering milk the effect of reducing the price?-A. We found that the fact of their going into competition was reducing the cost of milk. The manager was telling me that they were going-

Q. We will not mind hearsay evidence, but from your own personal examination by how many cents was there a drop in milk?-A. There was a drop, through competition of two cents-three cents I should say because the Ottawa Dairy started by lowering to 11 cent3, then the Producers retaliated by lowering to 10 cents, then it was lowered to 10 cents.

Q. What is it now?-A. 10 cents.

Mr. Stevens: You are a mighty lucky city. It is fifteen or sixteen cents elsewhere.

Which would almost convey to the uninitiated or casual reader that there was an expression of regret in the hon. gentleman s language that the traffic was not being made to carry all that it would bear.

I desire now to make some further references to the speech of my right hon. friend the leader of the Opposition. One of his statements was:

Everything is here which is going to pile harass-ments, vexation and expense on legitimate business: that is all in the measure,-investigation after investigation, circle after circle, but never any goal.

That was the summing up of the right hon. gentleman in regard to this particular measure. Then he goes further and reviews anti-combine legislation, and states that in 1888 parliament first sought to enact anti-combine legislation and apppointed a committee to work out some effective measure. I assume that that is justification for believing that the right hon. gentleman conceives that there has been as far back as 1888 the necessity for dealing with combines detrimental to the public interest. I happen to have in my hand a copy of the budget speech of 1878, and I find printed as an appendix to that budget speech some illuminating evidence as to conditions in those years gone by, indicating that there was even at that time marked necessity on this North American continent to deal with combines detrimental to the public interest. This appendix refers to an extract from the message delivered by the Governor of the state of New York to the legislature of that state at Albany in 1878. I read a portion cf it to show just what it is

Combines-Mr. Murdock

the public has been complaining of, and what it is believed this particular Bill No. 54, will to a very substantial extent protect the public from. After noting one of the causes of the currency inflation in the States the governor went on to say:

At the same time, another great evil was strongly developed; individuals and corporations engaged in various branches of manufacture, taking advantage of the necessities of the government, rushed to congress, and by every means in their power procured for their own benefit the levy of what we call protective duties under the false pretence of raising revenue for the government, but really to compel consumers to pay exorbitant prices for the favoured article thus protected.

So that was regarded in 1878 as being the underlying cause of certain combinations detrimental to the public interest. Then my right hon. friend inquires, in a manner such as no other member of the House could inquire What is this sacred sanctimonious principle?" and he was very properly advised by the hon. member for North Essex (Mr. Healy) that what is proposed is a square deal to everyone in this country. I am willing, however, to let my hon. friend (Mr. Healy) take the responsibility of answering that question of the leader of the Opposition, but I shall quote the right hon. gentleman's own words before he became a right honourable. We find that on July 4, 1919, the Combines and Fair Prices Act was before this parliament. Let me quote from Hansard what happened on that occasion:

On the motion of Hon. Mr. Meighen, Bill No. 167, concerning the Investigation and Restraint of Combines, Monopolies, Trusts and Mergers, and the Withholding and Enhancement of the Price of Commodities, was read the second time, and the House went into eommittee thereon, Mr. Boivin in the chair.

On clause 2-definitions. "Combine":

Mr. McKenzie: Perhaps the work of the committee might be abbreviated by the minister stating wherein this bill differs from the old Combines Act or is it practically the same?

< ^ my hon. friends to follow me closely in this quotation to ascertain where some things came from.

Mr. Meighen: No, it is very different. I think, however, the committee already has a pretty full idea of the intent and scope of this measure from the discussion in a previous act. I direct the attention of the committee to the clause:

The expression "combine" is used in this act with intended relation to articles of commerce, and it shall be deemed to have reference only to such combines, immediately hereinafter defined, as, with relation as aforesaid, have, in the opinion of the Board of Commerce of Canada (or of a single member thereof acting under authority of and for the purposes of section eight of this act) operated, or are likely to operate, to the detriment of or against the interest of the public, consumers, producers or others and, limited as aforesaid, the said expression as used in this act shall be deemed to include,-

(a) mergers trusts and monopolies, so called.

TMr. Murdock.]

That is to say, the scope of the operations of this board as affecting combines shall be directed against such combines as are detrimental to the public interest. In other words, this act recognizes the fact that there may be combines, and there may be purposes of combines, that are in full accord with the public interest, in the interest of the country. For example, combinations of capital, and combinations for the purpose of working together towards increasing export trade The greater our export trade the better to the country, that is a good, laudable practice and a good reason for amalgamation, because there are times when it can be better secured, indeed almost always, by that means. But if that same combination operates for the purpose of keeping down the wages of its employees, combines for that purpose, or for the purpose of putting up the cost to its consumers, above what is reasonable to those purchasers that is detrimental to the interests of the public, and for so doing a combine comes within the operations of the act and is answerable to this board.

Mr. Speaker, I submit that is fairly good Liberal doctrine and is sufficient to justify the proposal to incorporate practically the same definitions of a combine detrimental to the public interest as are found in the proposed bill No. 54, now before the House. My right hon. friend also states as his opinion, that the Privy Council's judgment really does not assail or impugn part one of the Combines and Fair Prices Act which is now on the statutes books of Canada. In that statement I>

as f layman, concur and I think my friend for Vancouver Centre (Mr. Stevens) would also concur. But I want to make some inquiries. If that is so why has it been possible for the people of Canada to be denied the protection accorded by part one of the Combines and Fair Prices Act during all of the later months of the late government's regime? Why was not something done to continue the protection or to appoint some tribunal that would take care of the combines detrimental to the public interest that might exist? We find my right hon. friend on June 29, 1920. twelve days before he had reached the goal of his very commendable ambition to become the Prime Minister of Canada, making this statement in regard to the Board of Commerce :

Why in the first place, there is a law conferring certain powers and imposing certain duties on a board, a law written and planted on the statute books, known to the board when they took office, a law with the operation of which nobody can interefere, a law which they have the courts of the land at their disposal to enforce.

Mv right hon. friend, of course, did not intend to make a statement that was incorrect but the statement contained in the quotation which I have given is absolutely incorrect, as I propose and undertake to prove. This was the 29th of June, 1920, and no one knows better than my right hon. friend that the Board of Commerce had been a wooden gun, so far as protecting the interest of the consumers,

Combines-Mr. Murdock

the public, and others against unfair combines, for more than four months prior to that particular day. No one could know that fact any better than my right hon. friend, and yet we find him getting up in parliament and making the statement referred to. The reason for that fact is, that four months prior to that date the chairman of the Board of Commerce had resigned-to be exact on the 23rd day of February, 1920-had resigned hurriedly, and from that very moment the Board of Commerce, to the extent of protecting the public against combines detrimental to it, ceased to function under the language of the law. In other words, prosecutions could not be instituted without a chief commissioner. The law has been so framed, whether unintentionally or purposely I do not know. The latter part of subsection 2 of section 9 of the Combines Investigation Act says:

In the case of an investigation ordered the chief commissioner shall fix the time and place for such investigation, of which the secretary shall notify in writing the applicant or his authorized counsel.

And so as the weary weeks and months had gone by-four long months-without the board being permitted to do anything or get anywhere in relation to the things for which presumably it was paid, we find the right hon. gentleman on the 29th June rising in the House-as he also did last night-expressing surprise and inquiring wherein the board had been interfered with by absolute prevention on the part of certain honourable gentlemen, or by failing to place the board in a position to do things which the Combines and Fair Prices Act, in part one, provided should be done in the interests of the public. My right hon. friend, capable legal gentleman he is, should be very familiar with that fact.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

I am sorry I am not. Will the minister tell us what we failed to do that the act called on us to do?

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

The right hon. gentleman failed to do anything that the act called on him to do. That is only another very delightful way which my right hon. friend has of dodging the real point.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

I do not know what the issue is. The minister says they could not do anything because they were prevented, and to show that they were prevented he says that the minister would not do what he should have done in order to enable the board to act. I want him to tell me what it was. I do not know. I want him to establish what he says and show that it was our duty to do it.

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

The act, of course, as the right hon. member would try to convey, does

not provide that immediately on the chief commissionership becoming vacant, if the board is to proceed to function in the interests of the public as by law intended, a chief commissioner shall be appointed, but the language of the act was so fearfully and wonderfully prepared, either inadvertently or intentionally, that that was the net result, and that fact was called to the attention of hon. members at that time sitting on the treasury benches of paliament, not once but repeatedly.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

The failure then was to appoint a chief commissioner to succeed Judge Robson. That is what I understand. Does the minister say that, in the absence of Judge Robson, or upon his resignation, the commission as it existed then had not power to act?

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LIB
CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

He says what is wrong.

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

The claim that is made- and I am sure my right hon. friend is aware of this, and if not he can get unlimited legal advice to that effect-is that in a more important aspect of the intended functioning of the board, that board was powerless to proceed without a chief commissioner.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Not at all. That is not the fact. Although the minister, with all his talents, was on the board, the board was just as powerless before as after the resignation.

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LIB

Samuel William Jacobs

Liberal

Mr. JACOBS:

It was a board of the right hon. member's creation.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

The minister was not.

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LIB

James Murdock (Minister of Labour)

Liberal

Mr. MURDOCK:

There is considerable in what the right hon. member says, that the board was practically as useless before the resignation as aftewards. Again, I am not informed as to whether this was inadvertently or intentionally done.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Will the hon. member not admit that it was an act of the board committed or performed after the resignation of Judge Robson, that was called in question before the courts, and that the courts in their judgment in no way even referred to the absence of the chief commissioner as affecting the validity of the act? It was just as vaild after as before. It was the hon. member that was wrong-not the act.

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May 8, 1923