June 24, 1926

CUSTOMS INQUIRY

REPORT OF SPECIAL COMMITTEE-MOTION FOR CONCURRENCE AND AMENDMENTS THERETO


The House resumed from Wednesday, June 23, consideration of the motion of Mr. Mercier (St. Henri) for concurrence in the report of the special committee appointed to investigate the Department of Customs and Excise, the proposed amendment thereto of Hon. Mr. Stevens, and the proposed amendment to the amendment of Mr. Woodsworth.


LIB

Hewitt Bostock (Speaker of the Senate)

Liberal

Mr. SPEAKER:

I am now in a position

to give a ruling on the point of order raised last night. [DOT]

On the motion of Mr. Mercier (St. Henri) for concurrence in the final report of the special committee appointed to investigate the Department of Customs and Excise, Mr. Stevens moved that said report be referred back with instructions to add thereto certain clauses purporting that ministerial action had been influenced by improper pressure, with the knowledge of the Prime Minister and government, and that the oonduct of the Hon. George H. Boivin in the case of Moses Aziz is entirely unjustifiable; and also deploring the practice of certain public men to direct appeals to the minister to relax and depart from the proper administration of his department for reasons of political expediency; and concluding

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that such a practice is detrimental to the best interests of the country and prejudicial to the administration of the department.

To this amendment a sub-amendment is moved proposing that certain words be struck out and replaced by others providing for the appointment of a judicial commission with full powers to continue and complete investigating the administration of the Department of Customs and Excise and to prosecute all offenders; stating that the practice of members of parliament and others appealing to the minister to relax departmental regulations was done also for personal advantage;

Suggesting that the administrative duties of the department be wholly entrusted to the executive officers;

And finally, recommending that R. R. Farrow's services should be dispensed with.

A point of order was raised by the Right Hon. Mr. Meighen on the ground that an amendment to an amendment must deal with nothing but the subject matter of the amendment. It was also argued that the adoption of the sub-amendment would prevent the Housei from pronouncing on the proposal contained in the amendment.

There can be no doubt in my mind as to the relevancy of the sub-amendment.

According to Bourinot (page 321) the law on the relevancy of amendments is that if they are on the same subject matter with the original motion, they are admissible, but not when foreign thereto.

The only exception to this practice, as the House is aware, is on the question of going into supply or ways and means.

The object of an amendment is to effect such an alteration in a question as will obtain the support of those who, without such alteration, must either vote against it or abstain from voting thereon, or (vide May 13th edition, page 283) to present to the House an alternative proposition either wholly or partially opposed to the original question.

The effect of making an amendment is for the time being to link the amendment with the main motion so that the subject matter of both is thereby placed under the consideration of the House.

Bearing this principle in mind, there can be little question in this instance that both the amendment and the sub-amendment refer to the inefficiency of administration in the Department of Customs and Excise. The bon. member for Vancouver Centre proposes a general censure of the ministerial conduct, and of the failure of the government to take prompt and effective remedial action. The proposal of the hon. member for Winnipeg

]Mr. Speaker.]

North Centre would eliminate that censure for the time being at any rate, and while appreciating all the existing evils as to smuggling, he asserts that only a portion of the illegal practices have been brought to light, and therefore recommends the appointment of a judicial commission to continue and complete the investigation. This is an amendment to an amendment, which affords the House the opportunity of voting upon an alternative proposition. There -is no reason why such an amendment should be pronounced to be out of order.

It has been represented in the course of the debate on the point of order, that the possible elimination- of the amendment would result in depriving hon. members supporting it from the right of directly recording their views by a vote -in the House.

This is contradicted by long practice which is inherent to the British parliamentary system. May, page 254, 13th edition, says that it can not be contended that such a practice is unfair. After all, in the last analysis, the decision of the House is supreme. A-s long as Mr. Stevens has asserted his right to express his views by making his amendment he suffers no prejudice if Mr. Woodsworth using the same right, submits a sulb-amend-ment asking the House to accept an alternative proposition.

My ruling, therefore, is that the sub-amendment is in order.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister) :

During the past five

months an important committee of this House has been inquiring into the administration of the Department of Customs and Excise, and has made a report to the House which contains a number of far-reaching recommendations looking to the improvement of methods for securing the revenues of the country and for the suppression of the evil of smuggling, which has come to be one of the great evils of modern times, and one of the greatest problems with which this country is faced. The House has before it the report of that committee, with a motion on the part , of the chairman (Mr. Mercier, St. Henri) that the report be concurred in. May I say at once that, with respect to every recommendation in that report, the government is in entire accord. The government is prepared to give to the recommendations in the report as made the full force and effect which it was hoped by the members of the committee they would have. We accept the report as it comes, believing that it creates what, in the opinion of the members of the

Customs Inquiry-Mr. Mackenzie King

committee of this House, is most necessary in the interests of our country at the present time.

In addition to the report before the House there are two amendments, one an amendment moved by the hon. member for Vancouver Centre (Mr. Stevens), which I think I might at once classify as a political amendment, as a partisan amendment and as a destructive amendment, and another-a subamendment-which you Mr. Speaker, have jtist ruled is regular in every particular and which I might classify as a constructive amendment, as a non-partisan amendment, as an amendment intended to further the work of the investigation which the House committee has been engaged upon and designed to make more effective the smuggling and revenue laws of our country. The House is called upon at this time to consider to which of these two amendments it will give adherence.

Before I go in any detail into the amendment, may I direct the attention of the House to the nature of the problem with which the committee has been dealing as well as its scope and magnitude? The problem in its essence is one created largely by a new condition that has developed on this continent within the last few years, grown, I think hon. members will agree, out of legal enactments in the country to the south of us and in our own country, which have made extremely difficult, particularly in relation to liquor and narcotics, the matter of protecting effectively the revenue laws of the country and preventing smuggling. May I remind the House that this problem is not peculiar to Canada? The United States of America has had to face this problem, and those of us who have any knowledge of the difficulty which the United States has had to contend with in facing it will be able to appreciate the great difficulty which confronts this country in relation to the same problem. May I draw the attention of the House to this fact: the boundary line between this country and the United States extends over a distance of something like 4,000 miles. We have in addition, as they have, a large boundary line contiguous to the ocean, and part of the boundary line between our two countries is in the nature of lakes and rivers, and part of it is simply coterminus territory; mountains, forest, prairie, and all other phases of physical geography go to make up this boundary line extending, as I say, 4,000 miles across the continent. To enforce the customs laws in this country that entire boundary has to be properly protected. If it is a difficult thing for the United States government to

protect its boundary line against Canada, how much more difficult is it for our country to protect its boundary line against the United States? We are a people of nine or ten million sparsely settled and the United States a people of one hundred and ten million, with an infinitely larger production and denser population in their country. Our nine or ten million have to find officials, and have to form an administration which can protect this country against smuggling across that boundary of the Dominion from the larger number of people and the larger production on the other side. The Americans on their part, having a larger number of people, are in a position to afford a much more liberal and. extensive preventive service than this country is able to afford, though they have not against their border the same pressure as we have from the other side. I mention this in order that the House may get a correct perspective of the magnitude of the problem.

The United States have found, that in order to cope with the question of smuggling, it has to increase its preventive service enormously. It has had to take measures of a class and character never hitherto contemplated by any other country. When it was my privilege to be present at the Imperial conference in England three years ago, one question that came before the conference was a request from the United States that for the purposes of the suppression of smuggling operations the right of search on ships should be extended to a distance of twelve miles, that the marine league should be extended so to speak, the distance of twelve miles, for the purpose of permitting vessels that were likely to be engaged in the rum-running business to be searched or apprehended by craft of the United States. There was a very important departure from anything which the British government had ever countenanced theretofore. England above all others has prided herself on her control of the seas and on the freedom of the seas, and the demand from another country that England should give up that right, even for any purpose, to extend the marine league from three to twelve miles, to permit vessels to be searched when under suspicion of rum running and the like, shows how considerable in extent and importance the governments of the two countries regarded this problem. I think I am not wrong when I say that the representatives of Canada at that Imperial conference appreciating the magnitude of this problem, helped not a little to bring about the decision which was ultimately reached, whereby the British Empire, with respect to vessels of British

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register, agreed to allow the American authorities that extension of the marine league from three to twelve miles, so that the abuse of smuggling might be more effectively combatted. The United States in the effort to combat that abuse and to stamp out the evil have found it necessary to employ part of their great navy and vastly to increase their preventive service on the high seas as well as on land. If the United States, as I have said, having a larger population than we have, have found it necessary to go to the extremes to which they have gone in the matter of seeking to prevent the evil of smuggling, this House will, I hope, appreciate the problem which the Department of Customs and Excise of Canada has had before it within the last few years in seeking to deal effectively with that problem. The number of officials in the Customs department is, I believe, something like 5,000. According to our theory of government the Minister of Customs is responsible for the administration of the affairs of that department, and if we are to judge from what has been said in the course of this debate his responsibility extends to the behaviour of every one of those many officials. I just put this before the House in order that hou. members may see for themselves something of the scope of the problem with which the government is faced.

May 1 add this further feature? From the days of confederation down to within the last couple of years our customs laws have not been materially changed; they have remained practically the same. Owing to the new conditions that have grown up there have sprung into being new evils which never existed before. When the United States as a great country declared for prohibition it created immediately on this continent a new problem with respect to the smuggling of liquor. That problem never existed in the same manner before; it fell to the lot of the present administration to cope for the first time, may I say, with all the evils that arose out of that situation because hon. gentlemen opposite while they were in office made no change in the laws in any particular; they kept the laws just as they were from the days of confederation down to the present time. This government undertook to face that problem and to seek to meet it. Therefore I contend that instead of being criticised for lack of ministerial attention to this matter, when the facts are known this House will discover reasons for congratulation that the government has been more than vigilant in coping with this menace.

r.Mr. Mackenzie King.]

May I invite the attention of the House for a moment to evidence in support of what I have just said? Our attention was first directed to this question of smuggling between the two countries in connection with an effort to negotiate between the United States and ourselves a treaty which would be helpful to both countries in suppressing smuggling across the international frontier. I will not go into the details of the negotiations that were conducted; but I hold in my hand a treaty for the suppression of smuggling operations along the international boundary between the Dominion of Canada and the United States and assisting in the arrest and prosecution of persons violating the narcotic laws of either country and for kindred purposes.

That treaty was negotiated during 1923; it was signed at Washington on the 6th day of June, 1924. That treaty of itself and the convention which supplemented it between His Britannic Majesty in respect of the Dominion of Canada and the United States for the extradition of offenders against . the laws for the suppression of traffic in narcotics-those two international agreements are evidence irrefutable of the fact that the government of this country was seeking to deal with this problem of smuggling across the borders in the manner in which it could be most effectively dealt with, namely, by agreement between the two governments as to steps that were to be taken to secure the enforcement of revenue laws.

After the negotiation of those international agreements the attention of the government as a government was drawn for the first time to the growth of the smuggling evil as it affected commercial interests in this country by a group of gentlemen who came to Ottawa to interview the administration with reference to the growth of smuggling in Canada. Mr. Sparks was chairman of the group who came to interview the government. My recollection is that this was in the fall of 1924; it may have been and possibly it was earlier in 1924 that this delegation representative largely of the manufacturing interests of the country, came to Ottawa and drew the attention of the government to the circumstance that owing to the smuggling of liquor coming to be the problem it was, numerous persons had become engaged in that traffic in an illicit way. Having become engaged in it, to all intents and purposes they had become professional smugglers and. while seeking to export liquor in one direction, they were seeking to bring back in the other direction, namely, to Canada, other commodities. Silks, auto-

Customs Inquiry-Mr. Mackenzie King

mobiles, tobacco, narcotics were, I think, the items that were specially mentioned.

The point that was developed in the course of the meeting with that body of gentlemen was this: That in their opinion the matter

could be effectively met only if the government were prepared to co-operate with a voluntary association which they were ready to bring into being if that was agreeable to the government. I wish the House to keep this clearly in mind because it lies at the basis of all that has since developed. The government was asked by this association, representative mostly of large manufacturing interests in this country, whether it would be agreeable to having a voluntary association formed to work in co-operation with the government for the apprehension of offenders against the revenue laws, for the suppression of smuggling, and for bringing about more effective legislation to meet that evil.

What was the attitude of the government towards that delegation? Did the government say: No, we have our own preventive service, our own Customs department, our own officers. We ourselves will look after the suppression of smuggling and the protection of the revenue laws. The government did not take that position. It took the position that it would welcome any and every co-operation that could be given in helping to suppress this evil and finding more effective means of preventing it. The government took the position that those gentlemen were all financially interested in seeking to suppress smuggling, and that being financially interested, they were the ones most likely to be able to make suggestions that would most effectively help to deal with the situation.

How did the government show its bona fides in this matter? The association had its own officers. First the government agreed to co-operate and then to assist financially and in other ways. They asked the government if it would place other officers at their disposal. They wanted secret service men. The government undertook to give to them the one secret service man in the Department of Finance, Inspector Duncan, a detective who is known throughout the length and breadth of this country as one who has been for many years inspector of police forces in Ontario. I need not enlarge on Inspector Duncan's standing as a detective in this country. The government said: We will

turn over to you Inspector Dunoan if he is the one you want. We will lend him to you; we will give him authority to engage other detectives to assist him, and we will cooperate in every way with you and him in

seeking to find out where this evil of smuggling is latent, to suppress it in every way and to enact better legislation.

The Commercial Protective Association went to work with Detective Duncan and two or three others whom he employed. They brought criminal experts from different parts of the continent and had them working as a body on this problem day and night. The point I wish to call to the attention of the House is this: Inspector Duncan and his cooperators were to report to the Commercial Protective Association and in this the government did not seek to restrain them. On the contrary, the government strove to give to the association the freest hand to make out its case, and to facilitate the placing at the disposal of the Commercial Protective Association all the information that could possibly be secured, knowing that the association would come to the government again with measures which in their judgment it was essential to have enacted. That was the form of co-operation adopted. One of the first requests made after the detective forces had begun to work in the manner I have described was that power to arrest should be given to these detectives similar to those of the regular preventive officers in the customs service. It was deemed necessary to empower the detectives to make arrests on the spot whenever they found anyone guilty of violating the laws. That power was granted to enable the detective organization co-operating with the Commercial Protective Association tc cope with the situation under the most advantageous conditions.

What was the next step? Members of the Commercial Protective Association then waited upon the government in a body, and afterwards, through Mr. Sparks its representative, communicated with the government in writing regarding the need of special legislation. I desire to direct the attention of the House particularly to that point. After the matter had been investigated by detectives and trained criminal experts throughout the course of a number of months, the Commercial Protective Association came to the government and represented that what was most needed was legislation to make punishable, by imprisonment rather than merely by fine, infractions of the customs and revenue laws. Indeed, they went further; they declared that, until the law was so amended it was impossible effectively to meet the situation. They stated that 90 per cent of the entire evil could be met provided the laws were amended in accordance with suggestions which they were prepared to submit to the

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government. How was that request received? I shall give in a few minutes from the correspondence proof of what I am now saying. The government met that request by asking the Commercial Protective Association to draft such legislation as its officers thought would be most effective. Now I ask, could the government possibly have taken a more effective way of dealing with the problem than by requesting those most concerned to draft the legislation themselves? I was asked by the chairman of the association whether the government would be agreeable to having the association's legal adviser undertake the work of drafting the legislation, and this request was also acceded to. As a matter of fact, every single request made in that regard was met to the full. And not only did the government concede to the protective association and its legal advisers the drafting of the law, but we came to this parliament with the law so drafted, the only intervention on the part of the government being this: that the legislation was submitted to the Department of Customs in the first instance for any criticism of a technical character and then transferred to the Department of Justice to be put into proper shape for presentation to the House. In every respect the law brought down in this House at the last session was the law which the Commercial Protective Association suggested would meet 90 per cent of the evil.

I need not recall to those who were in the House during the last session that I stood up in parliament myself and strongly advocated the enactment of that law. I called the attention of the House to the fact that the country was face to face with a condition in relation to smuggling of a magnitude such as few could comprehend, and I urged from my place here that that legislation should be immediately passed. When the legislation was before the House it was opposed by some hon. gentlemen opposite as being too drastic, as going too far. One has only to refer to the debates to find that more than one hon. gentleman opposite complained that it was too drastic and was going altogether too far. But the position which the government took in that regard was that all along they had promised co-operation with the Commercial Protective Association, having indeed asked that association to draft the legislation. The government was therefore prepared to give the proposed legislation a fair trial and if it was too drastic it could be amended.

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

I do not remember anyone on this side opposing the legislation at the time. I may be mistaken and perhaps the Prime Minister will mention an instance.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

Possibly I

could give my hon. friend the pages of Hansard at which hon. gentlemen opposite are reported.

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IND

William Findlay Maclean

Independent Conservative

Mr. MACLEAN (York):

I do not think

the minister piade it plain whether or not the association accepted his offer of co-operation. If there is any document to that effect it might be well to have it.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

The association accepted the proposal and thanked the government very much for it.

The hon. member for York-Sunbury (Mr. Hanson) was one of the members of the House who objected to the legislation. I find in Hansard, page 3775, the following:

Mr. Hanson: What is the reason for doing away with the power of remission? I presume it is intended to make it a 'Jittle more stringent, but I can suggest cases in which it might be out of proportion. Suppose it were a trifling article which might have a certain value of affection; to take away from the minister the power of remission might result in hardship. I presume the object is to prevent the minister 'being harrassed to death by friends of the smugglers. After all, tha minister can use a wise discretion in matters of this kind- I think it is perhaps going too far to provide that there shall be no power of remission. I think it is misplaced and I object to it on that ground.

What was the reply of the Minister of Marine and Fisheries (Mr. Cardin) then Acting Minister of Customs?

Mr. Cardin: I quite agree it is very severe, but it has been prepared with a view to meet representations made by people interested in 'legitimate trade. Complaints coming from the trade are very numerous, and they are very insistent in this matter. These amendments have been practically suggested by persons who have been in the trade, and we thought that doing away with the powers of remission woulld act as a sort of deter rent.

Elsewhere the hon. member for York-Sunbury is reported as saying:

It developed in the course of the next few days that the American vendor had undervalued the machines. He had got his cheque and passed out of the country and the machines were seized. They were released on the deposit of a large sum of money. I think the Commissioner of Customs demanded $30,000. After a good deal of negotiation we got that sum reduced to about $10,000, which was about double duty, if I recollect rightly.

He cites a case of which he had special knowledge as evidence that the power should not be taken away.

Then I have before me the words of Mr. Baxter, the then member for St. John and Albert the present Premier of New Brunswick.

Customs Inquiry-Mr. Mackenzie King

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Surely the Prime Minister does not suggest that this inquiry by the hon. member for York-Sunbury as to the nature of the legislation could be looked upon as opposition to its enactment? I would remind the right hon. gentleman that this legislation was offered to the House without publicity, shall I say, and we were requested as a whole to give support which my right hon. leader and others of us cheerfully accorded. The inquiry of the hon. member for York-Sunbury was an intelligent one as to the possible working of the act.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

The words in Hansard speak for themselves. This government brought down legislation proposing to do away with the power of remission. The report at present before the House allows the power of remission up to a certain amount. There is now submitted an amendment suggesting that the power should be done away with altogether. That amendment was moved by my hon. friend from Winnipeg North Centre (Mr. Woodsworth) and I for one shall support it. In that particular it proposes what this government wished to have enacted before. The concluding part of Mr. Hanson's remarks are as follows:

The rules of the department, the Customs Act, and the regulations under which they work are very rigourous at .present, but this seems to me to be going the limit, and in the case I suggest it would create a greet hardship.

Then Mr. Baxter, now the Premier of New Brunswick, and who was formerly Minister of Customs in the administration of my right hon. friend, says:

I want to urge him-

That is, the minister.

-to strike out the words which deprive the minister of the power of remission. I do not think it is likely to happen that we shall have a minister of the crown who would use the power of remission unfairly.

Then he goes on to say:

During the very short experience I had in the department which the minister is now administering I came across one or two cases in which, without the slightest representation from the parties themselves, but merely on reading the evidence that accompanied the papers for formal signature to confirm the forfeitures, I felt that it was morally unjust to impose the whole penalty.

That is the former Minister of Customs in the administration of my right hon. friend. Let me repeat his words:

I felt that it was morally unjust to impose the whole penalty.

He continues:

In one case I felt it was unjust to impose the penalty at all, while in the other I did not think it should be imposed to the full.

There we have the Minister of Customs in the administration of my right hon. friend very clearly stating that he felt that where penalties had been imposed he should exercise certain discretionary power, and he admits that he exercised it in part in one case and to the full in the other. We were suggesting at that time that this discretionary power should be taken away from the minister. We were prepared to enact that, and the only reason it did not become law was due partly to the opposition of hon. gentlemen in this House, which was not wholly successful, and partly to the bill being amended in the upper chamber so as to exclude the more rigorous clauses that we had introduced.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

I ask the Prime Minister if he has been careful to look that up. My recollection is that an amendment was moved by Senator Belcourt and seconded by Senator Beique, and pressed for considerable time. Neither of those gentlemen are Conservative senators. Finally the amendment was withdrawn under pressure from the Commercial Protective Association, and the bill went through.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

I think if my right hon. friend will look at the legislation as it came back from the Senate he will find

it was amended in the particulars I have mentioned.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

What particulars?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

That the bill

when it came back was not as drastic as when it went through this House.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

In what particular?

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

With respect

to remission.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

The Prime Minister is

wrong.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

My right hon. friend can speak later. I would refer hon. members to the bill as it passed this House and to the act as it is now in force. They will, I think, find the result is as I have indicated.

Mr. STEVEN'S: The Prime Minister is

mistaken there.

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LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Mr. MACKENZIE KING:

I am not mistaken, Mr. Speaker, in the language I have read from Hansard with respect to the debate that took place in this House. The point I want to make perfectly clear is that this government was seeking in the fullest way to meet the requests and the demands of the

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Commercial Protective Association, with which it had 'been co-operating, for the purpose of making as effective as possible the law with respect to smuggling and the prevention of offences against the revenue law.

What I have just told the House, Mr. Speaker, is confirmed by the correspondence, some of which has been read, in part, by hon. gentlemen opposite. The hon. member for Vancouver Centre (Mr. . Stevens) read this extract from a letter dated Ottawa, February 4, 1925, addressed to me by Mr. Sparks:

Some months ago a large representative deputation waited upon you and members of your cabinet .pointing out that smuggling and under-valuation for duty purposes were causing an immense loss of revenue and seriously interfering with the business of legitimate traders and manufacturers.

On that and similar statements he tries in his amendment which is now before the House to have it appear that the ministry had full knowledge of what was going on in the way of violation of the smuggling laws, and that it ought now to be subject to censure because it did not meet the whole situation. Assuredly the protective association brought to the attention of the government the evils of smuggling as they have described them. I have not to go further than my speech in this House when we were putting through the law, and which has been repeatedly referred to in the course of this debate, to make it dear to hon. members that I accepted everything the protective association said to me with regard to smuggling and sought to meet their wishes in having the law made as nearly in (full accord with them as possible. But my hon. friend did not read the next paragraph of the letter from which he quoted:

Subsequent to that time this association was organized-

In other words, a group of men came to the government and asked if we would be agreeable to have an association formed and to work in co-operation with that association. We said yes, and that was the agreement we then made. The association was formed, and the Minister of Customs and Excise undertook to co-operate with its officers in the work they had in hand.

Subsequent t-o that time this association was organized for the purpose of assisting the Department of Customs and Excise in t/he prevention of smuggling and under-valuation and to make certain investigations of tiheir own into this problem. In this regard-

This is what my hon. friend did not read.

In this regard we are pleased to 6ay that both the Minister and Deputy Minister of Customs have welcomed our co-operation and have facilitated in every poss hie way the investigations we have made into the smuggling problem.

Now wh.en hon. gentlemen attack the government and say we were aware of a great deal of degeneracy in the administration of the Customs department, I wish to tell them that on February 4, 1925, the date of this letter, the Commercial Protective Association, which knew more about the situation than any other body, said to the government-let me repeat the passage:

In this regard we are pleased io say that both the Minister and Deputy Minister of Customs have welcomed our co-operation and have facilitated in every possible way the investigations we have made into the smuggling problem.

Then they say:

These investigations have even moire strongly impressed the business men who have given close attention to this work with the magnitude of this traffic and the necessity of prompt and drastic action.

Under the present law smuggling is not an indictable offence, although the minister has the right to take cases of smuggling into the civil courts. It has, however, been the practice ever since confederation to settle departmentally practically all seizures for smuggling or under-valuation.

I ask hon. members to notice that phrase, " ever since confederation."

We believe that this practice has had the general effect of what might not be improperly described as contempt for the law .in this regard.

There is a practice that has existed from the time of confederation, and it was the practice which we sought to change, and did change, and as a result of our efforts we improved the law governing the Department of Customs and Excise. The letter continues: We respectfully submit that, in order to maintain respect for the law and to correct the abuse of its infraction, all cases of fraud whether by way of smuggling or under-valuation under the Customs Act should be dealt with by the civil courts, and, in the case of what might be described as commercial smuggling, that is smuggling of goods for resale of a substantial value, say $100 or over, the offence should be made punishable by imprisonment without tihe option of a fine. The various penalties as set out in the act at present are entirely inadequate. The preventive service as at present constituted is quite unable to cope with the situation, handicapped as they are by existing laws and regulations which interfere with effective preventive work.

Now I ask hon. members, is the government to be blamed for that system which has been in existence ever since confederation? Is the government to be blamed for the fact that, as this letter states:

The preventive service as at present constituted is quite unable to cope with the situation, handicapped as they a.re by existing laws and regulations which interfere with effective preventive work.

Those are the laws we were working to change, those are the laws we have changed, and we welcomed the co-operation of this

Customs Inquiry-Mr. Mackenzie King

association towards that end. Now may I read another sentence in this same letter:

We believe the only solution, oif the problem will be found in drastic punishment for smugglers when caught.

That was the one note continually emphasized by this association. Now, to make the position clear, may I say this. If the government had turned a deaf ear to these representations we might well stand here subject to censure by an amendment of hon. gentlemen opposite, but 'instead of turning a deaf ear we did the very opposite. We co-operated to the full; I do not say we promised to cooperate, we have on the statutes legislation passed last session the evidence of the effectiveness of that co-operation. Let me read one more paragraph:

It is respectfully submitted that the conditions herein set forth are sufficiently well known to the government and to its departmental officers and t'he requested forms of relief so necessary and reasonable as to justify t'he government to take immediate action, by instituting the required departmental changes and submitting to padiament bills providing for necessary legislative enactment, or, if the government is not satisfied as to the necessity of action and the action which should be taken, it is respectifully submitted that a parliamentary committee should be appointed immediately to inquire into the necessity of departmental and legislative changes.

The government was satisfied from the representations of the association that legislation was necessary; the government being satisfied introduced legislation and had it passed through this House.

Other passages have been referred to and quoted. Here let me pause to say that wlrile the enactment of legislation was the main objective of this association there was one additional factor brought to the attention of the government by Mr. Sparks. He contended that the preventive officer at Montreal, Mr. Bisaillon, was not discharging his duties properly and should be dismissed. So far as I am aware this was the only official named by Mr. Sparks or the association in any communication to the government eitheT written or verbal, and the correspondence, while it relates to this officer, 3 p.m. relates also to the larger question of legislation. I will deal in a moment with the case of Mr. Bisaillon, but I mention it now so hon. members may see that when the government was being interviewed by Mr. Sparks the two questions were put to the fore, and the one to which the greatest prominence was attached was the matter of legislation.

On February 26 Mr. Sparks wrote to me as fallows; this was also quoted by my hon. friend opposite:

Might I take the opportunity of stating that, after four months investigation by a staff of trained criminal

investigators, we are convinced that at least half of the smuggling now going on could he prevented within a month by an energetic policy on behalf of thie department, and further that, with necessary amendments to the act, ninety per cent of the smuggling could ultimately he prevented. Might I further express the opinion that smuggling is increasing at an alarming rate, rather than decreasing, as the minister states.

The reason for the comment on the minister is that one afternoon in this House the Minister of Customs and Excise apoke of the difficulty of coping with the situation, and made the remark that he believed it to be impossible effectively to combat the evil, but he believed it to be lessening. That comment was taken up by Mr. Sparks in the manner here mentioned. The meaning of the minister's woids was subsequently explained to the House by the Hon. Mr. Graham. I am directing the attention of the House to the fact that what the association was anxious to secure, and what they stated would remedy 90 per cent of the evil, was the necessary amendments to the law.

I will not take the time of the House in attempting to go through the correspondence, but I submit that the correspondence as a whole discloses that in every particular the government was seeking to meet Mr. Sparks and the protective association in the proposals which they made. One hon. member opposite drew attention to the fact that some of these letters were not fully acknowledged. May I say, and I think hon. members will appreciate the fact, that, these letters were written and received while parliament was in session. Anyone who appreciates the position I am holding at the moment will reali.se that it is not possible for a prime minister with the many other matters he has in hand, to keep up correspondence day by day, particularly correspondence as voluminous as this. Especially is this not necessary if a more effective means of dealing with the situation is at hand. During the period of this correspondence, as is showm by the correspondence itself, not on every occasion, but I think on most cases when 1 received a communication from Mr. Sparks I had my secretary call Mr. Sparks over to my office. He would meet me and we would discuss the matter in my office, and I would make verbal answer to his communications. Of this there is ample evidence in the correspondence. For example, when Mr. Sparks spoke about the necessity of amendments to the law I told him that we would welcome suggestions from the association. Take the letter o! March 13:

In furtilier reference to your suggestion (that we shouk put before the committee of the cabinet concrete suggestions as to the amendments to ithe Customs Act

4948 COMMONS

Customs Inquiry-Mr. Mackenzie King

dealing with .the matter of smuggling, I beg to say that we are now prepared to do this at any itime that suits your convenience.

If agreeable to you, I would be glad to have Mr. H. D. McCormick accompany me as a technical adviser.

And then he goes on:

I am taking the liberty of enclosing a copy of a resolution passed at the annual meeting of the Canadian Association of Garment Manufacturers, which you will note expressess appreciation of the efforts already made by the government to prevent this traffic and urges further action.

I understand Mr. Sparks at the time was president of the Canadian Association of Garment Manufacturers. Here is a resolution passed at the annual meeting of that association held at the Chateau Laurier, Ottawa, on March 11 and 12, 1925. Let me read the concluding words, in order to show how, from the point of view of Mr. Sparks and his association, the matter stood1 in March of last year:

This association further desires to put on record its opinion that the only satisfactory method by which this illegal traffic can be lessened and prevented is such changes in the Customs Act as will increase the penalties against those convicted of smuggling or undervaluation, and that, in the case of wholesale smuggling of merchandise for resale, the penalty should be a sentence to jail without the option of a fine.

This association desires to go on record as expressing appreciation of such action as has already been taken by the federal government to lessen this evil, end endorses the suggestion made to the government by the Commercial Protective Association for further action in reference to amendments to the Customs Act and strengthening of the preventive service.

I ask the House to consider whether that resolution indicates that in the mind of Mr. Sparks himself at that date the government was remiss in the administration of the Department of Customs and Excise or in what it was seeking to do to improve the revenue laws of this country. I venture to say that that resolution, was drafted by Mr. Sparks himself. The truth of the matter is that the protective association did believe and were night in believing that the government was doing its utmost and was co-operating with them to the fullest possible extent.

Mr. CA'HAN: May I ask the date of that resolution?

Topic:   CUSTOMS INQUIRY
Subtopic:   REPORT OF SPECIAL COMMITTEE-MOTION FOR CONCURRENCE AND AMENDMENTS THERETO
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June 24, 1926