March 14, 1930

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):

My hon. friend the Minister of Public Works intimated to me that the leader of the opposition, prompted by the article in the paper to which he has just referred, had directed his attention to this matter. As it relates to international relations, I might be permitted, on behalf of the government, to make reply. The question of providing improved navigation facilities between lake Ontario and Prescott has certain international aspects that have been under consideration with the government of the United States but no final reply has as yet been received by our government from that country.

Topic:   ST. LAWRENCE WATERWAY IMPROVEMENT OF CHANNEL BETWEEN LAKE ONTARIO AND PRESCOTT
Permalink

IMPORTATIONS OF COAL


On the orders of the day:


LAB

Herbert Bealey Adshead

Labour

Mr. H. B. ADSHEAD (East Calgary):

Mr. Speaker, I would like to ask the Minister of National Revenue (Mr. Euler), if he has any evidence or knowledge that United States coal is being sold to Winnipeg dealers at a price lower than it is being sold in the country of origin; that is, if there is actually dumping of this coal.

Topic:   IMPORTATIONS OF COAL
Permalink
LIB

William Daum Euler (Minister of National Revenue)

Liberal

Hon. W. D. EULER (Minister of National Revenue):

Complaints came to the department some months ago regarding the alleged dumping at Winnipeg of American bituminous coal. Careful investigation was made and it was established that in the case of every shipment received during last August at Port Arthur, Fort William and Winnipeg, the invoice price corresponded with the price at which the coal was sold in the country of origin.

For the information of my hon. friend and of the house, I would say that the importations of bituminous coal two years ago amounted to something like 176,000 tons, but that importation has dropped during the last nine months to about 36,000 tons.

Topic:   IMPORTATIONS OF COAL
Permalink

EXPORT ACT AMENDMENT

REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN


Right Hon. W. L. MACKENZIE KING (Prime Minister) moved the second reading of Bill No. 15 to amend the Export Act. He said: Mr. Speaker, before I begin to speak on the second reading of the bill which is before the house, might I ask if hon. members would be so kind as to permit me to make my statement with as little interruption as possible. If there are any questions to be asked, I shall be very pleased to answer them at the end of the time which I wish to devote Export Act-Mr. Mackenzie King to making my remarks. If by any chance I should make a statement which, in any particular, may be inaccurate, I would of course, be very glad to be immediately corrected. Apart from that, I should like to have the privilege of making my statement as free from interruption as possible. As explained at the time I introduced the bill, which is intituled An Act to Amend the Export Act, the amendment proposed is to authorize officials of the Dominion government having charge of liquor in bond and the granting of clearances to vessels to refuse to release such liquor, or to grant such clearances where the granting of such release or clearance in any case, would facilitate the introduction of intoxicating liquor into a country where the importation of such liquor is forbidden by law. First of all may I direct the attention of the house to the fact that this is a Canadian measure and relates exclusively to Canada. It has to do with our own government officials: it does not in its provisions go beyond controlling the actions of Canadian government officials. It is an act for the governance of officials who have to do with releasing liquor or intoxicating beverages for export, or the clearing of vessels carrying liquor or intoxicating beverages for export to any country the laws of which prohibit their importation. It is a law to prevent the instrumentalities of government being used by persons who for purpose of unlawful gain are engaged in breaking the laws of another country. May I point out also, that in no particular can the bill be construed as a prohibition or temperance measure. It has nothing whatever to do with the question of temperance in Canada, and nothing to do with the question of prohibition so far as Canada is concerned. If this bill i3 passed, it will in no way restrict in any particular the right of any Canadian to purchase whatever he may wish to purchase, and is permitted to purchase, in the way of alcoholic or intoxicating beverages. In that regard it cannot be classed among those measures which in any way directly or indirectly are concerned with temperance legislation or the enforcement of temperance legislation so far as Canada is concerned. The measure is one which aims at the prevention of smuggling, and it might be described as an act to assist in the prevention of international smuggling. It might be described also as an act to prevent the official countenancing of smuggling upon the part of the government of Canada or of any agents of the Canadian government. That, in short, describes the essential features of the bill. 2419-3SJ Perhaps I could not better explain the significance of the act than to give to the house in as brief form as I can the procedure which at the present time is followed by the Department of National Revenue in regard to the sale of liquor for consumption in Canada or the sale of liquor for export out of Canada. In this regard may I say, first of all, that the Department of National Revenue is concerned primarily with the collection of revenue. It is a department for the purpose of collecting revenue derived, in addition to other ways, as a consequence of duties imposed in the form of excise and customs duties. I wish hon. members to keep that point very clearly in mind, because in considering the procedure of the department and the work of its officials, it will make a great difference in the way in which their actions are capable of being viewed if we understand that under the law as it is to-day their duties are simply to help to collect in accordance with the laws of the land, such revenue as it is possible so to gather, and to prevent in as many particulars as they can any loss of revenue to the treasury. The customs and excise laws were enacted in this country long before any other country-had laws which prohibited the importation of liquor into its territory. That point also should be kept in mind, because the legislation under which we are working to-day in the Department of National Revenue relates to laws which were drafted, for the most part, at the time when liquor could be freely exported to any country in the world, and at a time when there were no prohibitions on the part of any country upon the importation of intoxicating beverages. . The department, as I have said, in dealing with intoxicating liquors, is concerned solely with the collection of excise upon their sale for domestic purposes, and with their release for export purposes. In regard to the sale for domestic purposes, the procedure adopted by the department is something as follows: Parties who wish to obtain liquor for consumption, apply first of all to the department, either on their own behalf or through the distillery or brewery concerned, for the right to enter the desired articles for the payment of duty. The articles are entered for the payment of the excise duty, the official makes a record, and when the duty is paid the articles are released, and permission is given to remove them from the brewery, the distillery, or from whatever premises at which they may be located to the point where the purchaser may desire to have them delivered. For the most part in the different provinces of Canada, the sale of liquor is controlled by



Export Act-Mr. Mackenzie King liquor control acts. That is true at the present time of seven provinces out of the nine, and when Nova Scotia puts into final effect the law which she is contemplating, that province also will be under liquor control with respect to the sale of liquor within its territory. Prince Edward Island is a prohibition province, and as a consequence the laws there are somewhat different. Therefore to-day, where there is a desire on the part of anyone to procure liquor for consumption, he is obliged in the different provinces to do so through the agency of the liquor control offices. In Ontario, for example, the commission controlling the liquor traffic is the body which alone has the right to purchase from distilleries or breweries any liquor for sale for the purpose of consumption in the province. Let me deal now with the matter of the sale of liquor for export. I would like to speak first of the law as it relates to export to any foreign country other than the United States. I say "other than the United States," because since the United States has become a prohibition country the situation with regard to that country is a little different from what it is with regard to the others. In the latter, where there is a desire to obtain liquor for export, application therefor is made to the national revenue officers. Inasmuch as the liquor is for export no excise duty is imposed upon it. After the application is received the goods are entered for export, but the department instead of requiring an excise payment, exacts from the parties who wish to export the liquor a bond, for double the amount of the excise. The excise duty [DOT]on liquor sold for domestic consumption is $9 a gallon. That would mean that in the case of liquor for export toforeign countries a bond to the amount of $18 a gallon would be exacted by the department. After the bond has been secured by the department, the liquor is released on a permit issued by the department to be used in transporting it out of the country, and from the port of shipment to the foreign country to which it is destined. When a certificate of the landing of the liquor in the foreign country to which it is destined has been obtained, it is returned to the department and if on examination it is found to be satisfactory, thus affording to the department a guarantee that the liquor has actually been landed in the country to which it was shipped, the bond is then cancelled. That, I think, is the procedure generally with regard to export. In the case of the United States for some years past, a different procedure has been JMr. Mackenzie King.] followed. Where it is desired to ship liquor into the United States an application to that effect is, as in the case of liquor for consumption in Canada or for export, made to the department in the first instance. The application states that the liquor is to be exported to the United States, and the place in the United States to which it is to be exported is named. In that case the department exacts, before the liquor is released, the payment of excise to an amount similar to that which is required on liquor to be sold for domestic use. In other words, the person applying to have liquor taken from a distillery or bonded warehouse for shipment into the United States has to state in his application that the liquor is to be shipped to the United States. This requirement having been met, the Department of National Revenue demands that when the goods are entered for duty the applicant shall pay $9 per gallon excise on liquor thus destined. When the excise has been paid, a permit is granted to take the goods out of the distillery or bonded warehouse, or wherever they may be, to one of a certain number of named ports in the Dominion itself. The goods are transported there under this permit, which states that they are destined for the United States. When they reach the end of steel nearest the port from which they are to be shipped, they are taken from the transportation agency by which they are brought to the wharf or dock whence they are to be shipped, and are put on board vessels known to be sailing to the United States. After they have been put on board they are inspected by a customs officer, who makes certain that the goods so put on board correspond with the goods named in the permit given by the customs officials. When he is satisfied on that point, the permit is removed and the clearance is then given to the owner or master of the ship permitting him to take those goods to the destination named in the United States. There is this additional feature with respect to liquor being shipped into the United States; when the Department of National Revenue issues the permit to take the liquor from the distillery to one of those ports for export, the department sends to officials designated by the Ontario Liquor Control Board a copy of that permit. Thus the Ontario Liquor Control Board has full knowledge that the liquor is being shipped from a distillery in Canada to the United States, and when the shipment is made the commission is advised of the fact, as are the officers of the federal government. There has come up in that regard a question which, I 'believe, is capable of explanation Export Act-Mr. Mackenzie King but which is apt to give rise to some confusion. It is perfectly clear that the Ontario Liquor Control Board must regard as liquor for purposes of export, liquor which the Department of National Revenue at Ottawa regards as liquor to be sold for consumption in Canada, because only liquor that is sold for consumption in Canada pays this excise duty. All liquor for export other than liquor that is going to the United States is exported without payment of any excise duty; the bond to double the amount of the duty is all that is required. May I again pause to say that all I have described relates to a situation which has to do with the collection of revenue and nothing more? Distilling and brewing is a perfectly legal and legitimate business in Canada, and is so regarded. The laws of this country as they stand require that the government shall raise revenue from excise in the case of intoxicating beverages for consumption within the country, and this is the method which the department takes, through its officials, of collecting the revenue and making perfectly sure that it is collected. At every stage the Department of National Revenue, rightly and properly, safeguards the revenue of the country. The purpose of issuing the permits, of requiring the examination of shipments at the dock and elsewhere, is to see to it that the liquor is not shortcircuited and sold for domestic consumption; that it actually will be exported out of the country. The reason that the Ontario government is supplied with copies of those permits is that its officials also may see that in no particular _ is this liquor shortcircuited back into Ontario. That would all be simple enough and subject to no question from any point of view provided the process related in no particular to imports into a country which, it is known, prohibits the importation of liquor. However, the government of Canada, its ministers, its officials, the members of this house who vote the appropriations to pay the salaries of the officials, know that liquor cannot be imported legally into the United States, that liquor can get into the United States from distributors in Canada only through the agency of rum runners, of bootleggers, of criminal gangs which make their profits out of violating the laws of that neighbouring country. Such being the case, the whole process, which is perfectly legal from the point of view of the collection of the national revenues, becomes, to say the least, a very questionable process when adopted in relation to the exportation of liquor from Canada to the United States, with the laws of that country what they are to-day. In other words, to state the matter as I believe some so regard it, the officials of the government of Canada themselves become the necessary link between the breweries and distilleries that wish to export liquor into a country into which it cannot legally be imported and the bootleggers and rum runners and criminal gangs that make their profits out of importing the liquor into the coimtry prohibiting its importation. That is a condition which I believe the citizens of this country, once they understand it aright, will not wish to have countenanced or continued for a single day. The fact that it has continued has undoubtedly been due to the circumstance that the aspect which I am now describing has never been fully comprehended, or indeed so much as thought of by many who have given much thought in other particulars to this very vexing problem. Again may I point out the connection which the officials of the government make between the distillery and the rum runners. The liquor to be exported is for the United States. The application is made to the excise officials to enter liquor for export to the United States. That liquor cannot get out of the distillery or the brewery until it has been entered for payment of excise. The official who has to do with that matter knows in performing his legal duty that he is entering for payment of excise, liquor which is to go" to the United States and which because it is prohibited entry to that country by the laws of the country cannot enter the United States except by violation of the laws of the United States through the agency I have described namely that of bootleggers, smugglers and rum runners. Similarly, when permits are issued they bear on their face that the liquor is destined to the United States. The officials who make out these permits while performing their legal duty, know that the liquor cannot legally enter the United States, nevertheless they are obliged to sign the permits because as the Canadian law stands at the present time there is nothing in it which makes illegal the shipment of liquor into the United States. When it comes to the matter of export at the docks, there again the officials in the discharge of their duty legally performed clear vessels knowing that the liquor is going to the-United States. They have the evidence before them in documentary form, they know that the liquor can enter only in violation of the laws of the United States and by the criminal agencies I have described and yet in the discharge of their duty they are not able to do other'than clear in accordance with 598 COMMONS Export Act-Mr. Mackenzie King the law as it is to-day, because at the present time it is not in Canada illegal to ship liquor into a country which prohibits its importation. The purpose of this bill, Mr. Speaker, is to make that sort of thing impossible in the future. It is to prevent the countenancing by officials of anything in the way of smuggling, or of that which involves smuggling into another country. This bill declares that hereafter excise officials shall not release from any distillery or brewery liquor known to be destined to any country which prohibits its importation or to clear any vessel known to have aboard liquor destined to such a country. In other words, if an application hereafter is made for the export of liquor to the United States, so long as the laws of that country remain what' they are, the applicant will be told that parliament has passed a law which prohibits the export of liquor into a country which prohibits its importation, and that the application cannot be received or entry made for that purpose. If a permit is requested to transport liquor from a brewery or distillery to an export dock, and that permit requires a statement to the effect that the liquor carried by it is going to the United States, it will not be legal for such a permit to be issued. Similarly, if anyone asks for the clearance to the United States of a vessel which is known to have liquor on board, that clearance will have to be refused. In other words, our excise service, our preventive service generally, will hereafter in no particular countenance the export of liquor into a country into which its importation is known to be prohibited. I would like, if I may, for the sake of accuracy, to place on Hansard in abbreviated form the procedure with respect to the sale for consumption in Canada to a provincial liquor control board, and the sale to a purchaser for export to a foreign country other than the United States as for example the West Indies or the Argentine, and the sale to a purchaser who purchases in order to export to the United States. I have prepared with the supervision of an officer of the department a statement which in three parallel columns sets out the procedure which I have briefly outlined. If the house will permit me I would like to have it placed on Hansard just in the form in which it is: Governmental Procedure in Case of Sale of Liquor by Distillery The primary concern of the Federal Government in the case of sales of liquor, as in the case of sales of tobacco or any other commodity on which an excise duty is levied, is simply to collect that duty. The procedure followed vanes somewhat according to the purchaser and destination. I. Sale for consumption in Canada, e.g., to a provincial liquor control board II. Sale to a purchaser for export to a foreign country other than the United States, for example the West Indies or Argentine III. Sale to a purchaser who purposes to export to United States1. Board makes bargain with a distiller for purchase of liquor in a bonded warehouse. 2. Purchaser or distiller notifies collector of desire to remove liquor for consumption (which becomes liable to excise duty on removal) and provides by entry for payment of duty, say $9 a gallon. 3. Collector issues a "Permit to remove spirits" (T. 204) after duty is paid. Purchaser makes bargain with a distiller for purchase of liquor in a bonded warehouse. Purchaser or distiller notifies collector of desire to remove liquor for export; he furnished a bond in double duty, S18 per gallon, (D.57), and files entry for export. Collector issues "Permit to remove spirits'' after bond is filed. Purchaser makes bargain with a distiller for purchase of liquor in a bonded warehouse. Purchaser or distiller notifies collector of desire to remove liquor for export (which becomes liable to excise duty on removal) and provides by entry for payment of duty, say $9 a gallon. ' Collector issues "Permit to remove spirits", in duplicate, after duty is paid. In say, Ontario, one copy of permit is sent to Ontario liquor commission.[DOT]r.Mr. Mackenzie King.]MARCH 14, 1930 599 Export Act-Mr. Mackenzie King Governmental Procedure in Case of Sale of Liquor by Distillery-Concluded The primary concern of the Federal Government in the case of sales of liquor, as in the case of sales of tobacco or any other commodity on which an excise duty is levied, is simply to collect that duty. Ihe procedure followed varies somewhat according to the purchaser and destination. I. Sale for consumption in Canada, e.g., to a provincial liquor control board I. Sale to a purchaser for export to ] a foreign country other than the United States, for example the West Indies or Argentine II. Sale to a purchaser who purposes to export to United States4. Dominion officers have no further concern. rhe liquor is transported, still "in bond", under control of federal officers, to the port of exit. The exporter fills out an entry form for export to a specified foreign port. One copy is sent by the collector at the warehouse point to the collector at the port of exit; this is returned immediately after export is completed, with endorsement of evidence as to export. Another copy goes to the agent of the exporter, is endorsed by the master of the vessel on which the liquor is loaded, and is later endorsed by the collector or British Consul in the foreign country and returned. The bond for double duty is can* celled upon its return, provided upon examination by the federal authorities at Ottawa it is found satisfactory. The Dominion officers have now collected their excise duty, and might be supposed to have no further concern till the liquor reaches a port of exit. They do however direct the procedure to be followed in transit. See Memo 689C (issued May 15th, 1929, following conference with Sir Henry Drayton) "for the guidance of licensed distillers and brewers when shipping intoxicating liquor upon which duty has been paid for export to the United States via the St. Clair and Detroit river frontiers". The memo provides: "The original permit when issued to the distiller, or brewer, is to be attached to the bill of lading, and it is important that it accompany the goods to avoid detention and delay during transportation. . The duplicate copy is to be mailed immediately by the officer in charge of the brewery to the provincial official designated by the Chief Commissioner, Liquor Control Board of Ontario, Toronto." It also specifies certain docks at which customs officers will be stationed and from which alone liquor may be exported. The exporter at the border point fijf in export entry form B. 13, statithe quantity and kind destination. The master of the ship (or ro^r* boat) fills out a "Master's Report Outwards", giving quantity, description, consignees, etc. The customs officer takes these two statements, goes on board, checks the cargo, and issues a clearance (C.8) giving the name of the master, number of crew, name of vessel and itemized cargo. [DOT] The original permit, ("after it has served the required purpose, namely, showing that the liquor is legally in transit") is surrendered to the customs officer for cancellation and filing. 500 COMMONS Export Act-Mr. Mackenzie King I should also like to place on Hansard a department, and in that connection I hold in copy of the permit which is issued by the my hand permit T-204, which is the one used. Excise Act Permit T. 204 General number Local number Permit the removal in(') from(') to(*) of the undermentioned spirits, equal to(I * * 4 *) gallons of the strength of proof being the property of(6 * * *) of(*) and about to be transferred into the possession of(J) of(*) the duty having been (*) , This permit is valid for(10) days from date and no longer, and on or before the expiration of the said (") days it is to be delivered into the hands of the collector or sub-collector of customs and excise for the port of (ls) and cancelled 1 2 3 4 5Number and marks of barrels, casks, kegs, or puncheons Numbers and gallons in each package Strength Number of gallons of the strength of proof Name of person or corporation in whose custody the spirits will be during removalNo. Gallons No. Gallons No. Gallons No. Gallons Permit granted at. This day of 19.... Collector of Customs and Excise I would draw the attention of the house to the fact that it requires the owner to state in full his name and occupation and place of business, the name and occupation in full of the person into whose possession it is to be transferred, his place of business and the number of days which in the opinion of the officer granting the permit may be necessary for the removal; the period named for the removal; the port into which the spirits are removed or in which the removal from one place to another takes place; the mode of conveyance, as via the Canadian National railway or steamer, or whatever it may be; the warehouse, its locality, and the place to which the spirits are to be removed. In other words, I want to make clear that on the face of it the permit carries with it the mention of the country to which the goods are destined. I have in my hand a copy of what is known as circular 689C of the Department of National Revenue, issued on May 15, 1929. It may help to illustrate what I am seeking to make apparent as to the different effect the wording of these circulars may create when it is understood that in some cases they may relate to countries to which liquor may be exported, and in other cases to countries to which liquor may not be exported. It is Export Act-Mr. Mackenzie King a circular signed by George H. Taylor, the Commissioner of Excise, dated May 15, 1929. It is addressed to the collectors of national revenue and others concerned, and reads: Departmental Regulations Respecting Exportation of Duty-Paid Intoxicating Liquors You are advised that the following regulations are issued, effective forthwith, for the guidance of licensed distillers and brewers, when shipping intoxicating liquor, upon which duty has been paid, for exportation to the United States, via the St. Clair and Detroit river frontiers. Certain docks have been established and operated at which customs-excise officers will be stationed for the acceptance of entry and clearance of such goods for export. In other words, the chief of the excise department, the Commissioner of Excise, in accordance with what is essential for the collection of revenue and wholly legal under the law as it stands, instructs his officials that certain rules have been laid down for the guidance of distillers and brewers to enable them to export to the United States, though it is known that the liquor cannot legally get into that country, and they are given directions which will facilitate the liquor in reaching the United States in the only way in which it can reach that country, namely through the medium of rum runners and smugglers. Section three of this circular has the following: (3) Intoxicating liquors may not be exported from any place, dock or premises along this frontier, other than those defined in the preceding section as customs-excise officers will be stationed only at these points for this purpose. (5) During transportation and upon arrival of the intoxicating liquor at the ports designated above, the provincial officers will exercise such supervision as deemed necessary to ensure that same is discharged in entirety at the docks named in section 2, and in accordance with the marks and numbers on the packages containing such goods, as detailed in the permit. (6) When entry (form B-13) is presented for the exportation of the goods, the customs-excise officer stationed at the dock will check the cargo to see that it agrees with the export entry and master's report outwards, before issuing a clearance to the vessel. These export entries are to be sworn to by the exporter, or his duly authorized agent, and when checked, as above, are to be certified by the officer clearing the goods for export, as per instructions previously issued in that regard. (7) In order to provide for the proper identification of the packages thus shipped, and to enable the provincial officials to maintain requisite control, each case of spirits delivered for exportation from the distillery duty paid shall, in addition to the usual excise numbers shown thereon, be legibly and indelibly marked with a serial number, commencing with No. (1) in each fiscal year, these serial numbers being shown accordingly on the official permit issued under the provisions of section 173 of the Excise Act. Then as respects beer permits: (9) Brewers shipping for exportation to the United States are required to legibly and indelibly number each carton of bottled beer, or bag, or wooden package, with a serial number, commencing with No. (1) in each fiscal year. These serial numbers are to be shown accordingly on the beer permits. (11) The original permit when issued to the distiller, or brewer, is to be attached to the bill of lading, and it is important that it accompany the goods to avoid detention and delay during transportation. The duplicate copy is to be mailed immediately by the officer in charge of the brewery to the provincial official designated by the chief commissioner, liquor control board of Ontario, Toronto. (12) After the permit has served the required purpose, viz., showing that the intoxicating liquor is legally in transit, it is to be surrendered to the collector at the port of destination for cancellation, as indicated thereon, and for file. (15) Officers in charge of the respective breweries are authorized to issue permits on the official form and to sign same for the collector, care being exercised to ensure that they accurately correspond with the requisition. (16) While the foregoing regulations have special reference to exportation of duty-paid liquor, via the ports mentioned, to the United States, they shall, so far as applicable, be observed as respects all exportations of duty-paid liquor via the frontier ports in the province of Ontario. May I point out that the designation of certain docks as the only places from which liquor can be shipped into the United States was in accordance with the desire of the national revenue department to ensure more completely the collection of revenue, and also to avoid the short circuiting of these shipments. Incidentally, it was believed that this procedure might also help the United States officials to watch for liquor that was being shipped into their country if the docks from which it could be shipped in accordance with the regulations of the Department of National Revenue were definitely known and restricted in number. Then I should like to draw attention also to a memorandum, No. 222, of the Department of National Revenue, dated Ottawa, 15th of May, 1929, and which refers to the particular circular which I have just read. It is signed by Mr. R. W. Breadner, commissioner of customs, and is addressed to collectors of national revenue, agents of railway and steamship lines, and others concerned. The memorandum is headed: Department of National Revenue, Canada, (Customs Division). 602 COMMONS Export Act-Mr. Mackenzie King The paragraphs to which I wish to draw attention are the following: A system of permits to be issued on release of intoxicating liquors from distilleries and breweries for exportation has been adopted for the purpose of safeguarding such goods and preventing diversion during shipment to the port of exit. In this connection see circular No. 689-0 excise, bearing this date. The export entry (form B. 13) shall in such case be made at customs at the port of exit from Canada and the customs officer supervising export and receiving the export entry shall carefully check the goods laden on the outgoing vessel or other conveyance or vehicle to see that the goods laden correspond with the goods described in the entry. Then, Mr. Speaker, I should also like to place on Hansard form B. 13, which is used in connection with the clearing of vessels, and to draw the attention of the house to the circumstance that the form distinctly provides that the country of final or ultimate destination must be given in filling out the form. Export Entry Report No Entry No Form B. 13-(Amended 1928.) 1,000,000-1-29 Customs, Canada (Place of lading) Entry and list of articles of domestic production and foreign articles, which are not subject to export, customs, or excise duties, delivered by. (Address of owner or agent) to for exportation to (Name of railway or vessel, &c.) (Country of final or ultimate destination) via consigned as below: (State if shipped via United States port or direct from Canadian port) N.B.-Goods must be described accurately as "Canadian" or "Foreign," and correct details must be given of quantities, values and ultimate destination of exports. Address of consignee and marks on packages Number of packages Articles Describe the articles fully as, canned pork, printed cotton cloth, printing presses, apples, oats, wheat, &c. General terms such as meats, dry goods, machinery, prints, &c., will not be accepted Quantity State number of pounds, tons, gallons, yards, &c. Value at time and place of shipment Domestic products, including imported goods re-manufactured in Canada Foreign or imported products in same condition as imported Stamp of port of exit I (owner, shipper or consignor), hereby certify that the above is a full and true statement of the kinds, quantities, values and destination of all the articles delivered by me for exportation as aforesaid. Signed by Residence Date Officer of Customs and Excise Regulation 7 of the instructions which appears on the back is as follows: The country of ultimate destination to which the goods are destined for a market is to be stated in the export entry as the country to which exported, and this rule is to be strictly observed. There is also the form of clearance and the report outwards. Taken together, it will be observed that what is aimed at by the Department of National Revenue-and I cannot make this too clear-is the collection of revenue in the surest and most effective way. Export Act-Mr. Mackenzie King That is the business of the Department of National Revenue. But, Mr. Speaker, when we consider the effect of these regulations in their international bearing-and that is why I am introducing this bill in my capacity as Secretary of State for External Affairs as well as Prime Minister-when we consider their effect in relation to the actions of rum runners, smugglers and bootleggers, they come to have an entirely different significance and one which is anything but satisfactory. In a word the system devised for the sake of obtaining revenue becomes a system which affords, in the person of government officials, a series of links between the distillers and breweries which wish to export to countries into which importation is prohibited and the criminal gangs that are required to get the liquor through into the country to which it is destined and into which its entry is prohibited by law. Mr. Speaker, I think I need hardly do more than explain the situation as it actually is for hon. members to see that our country cannot afford to have its position in this matter capable of interpretation in any such light either in our own eyes or in the eyes of any other country in the world. Certainly it was never intended that regulations made for the purpose of collecting revenue for one government should be made to serve the purpose of defeating the laws of another government by facilitating the operation of criminal groups of the most desperate character in their efforts to make gain by illicit traffic in liquor. The question which naturally will present itself to the minds of all who have listened to what I have just been saying is, I am sure, this-and it is, I am equally sure, what my friend the leader of the opposition (Mr. Ben-net) will direct his attention to when he speaks: How is it, if such is the situation, that this has been permitted to go on for so long? Why was not immediate action taken to prevent the possibility of anything of this kind?


?

Some hon. MEMBERS:

Hear, hear.

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
LIB

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

Liberal

Mr. MACKENZIE KING:

I hear hon.

gentlemen saying "hear, hear," and it is a very fair and proper question to be asked. In reply, may I say, first of all, that new practices created as a result of conditions heretofore not existing do not grow up in a moment; they develop over a period of time, and the most effective way in which to meet them is not always apparent at the outset. Indeed, in seeking to meet a problem in one way it is often found that the remedy proposed may be even worse than the disease. Other and many remedies are frequently essential in order effectively to deal with a new situation

The question of smuggling, rum running and bootlegging into the United States came up for consideration in a prominent way first of all, not in relation to anything that had to do with the frontier between Canada and the United States, but rather in relation to the shipments of liquor into the United States from the Atlantic. And here may I pause to say that, according to American authorities themselves, the total amount of liquor that goes from Canada into the United States does not exceed 5 per cent, and may not exceed 2 per cent of the total liquor sold in the United States. According to their own authoritative statement, that, I believe, is the view which the Americans themselves take. The great quantity of liquor that is illegally sold in the United States is either manufactured there or is brought in by means of rum runners and bootleggers from the Atlantic ocean.

As I have said, the question came up first in relation to the shipments on the Atlantic, and it came up not through representations by the United States government to the gov-vernment of Canada but by representations of the United States government to the government of Great Britain. When the imperial conference of 1923 was held in London, one of the subjects that came up for consideration was the request of the United States government to the government of Great Britain that they, the United States, should be given the right of search of vessels on the high seas that were suspected of being in the business of rum running; that there should be, in addition, the right of arrest where it was found that such vessels were engaged in that kind of traffic in violation of the laws of the United States. If there is one principle above another which Great Britain has stood for, it is the sac redness of the three-mile limit in regard to all matters that affect the seas. To ask Great Britain, the mistress of the seas, as she has been called, to allow another country to search ships carrying her flag at a distance not of three miles from shore but of twelve miles from shore, which was the request, seemed to be going pretty far. However, that was the request which the United States made to Great Britain, as a friendly country, to assist the United States in carrying out her laws with respect to prohibition. When that matter came before the conference it was referred to a special committee, and of that special committee the Right Hon. the Marquis Cur-zon, at the time Foreign Secretary of Great Britain, was the chairman. All the dominions were represented on that committee; I had

Export Act-Mr. Mackenzie King

the privilege of representing Canada on the committee. I remember very well the discussions which took place with respect to the matter in Lord Curzon's office at the Foreign office, and also in the conference itself.

The result of the work of the committee and of the conference as a whole was to recommend that the request of the United States government should be met. It was not thought desirable to specify a distance of twelve miles, inasmuch as often it might be difficult to agree exactly upon what is twelve miles from a coast line that varies considerably; instead there was substituted the equivalent of an hour's sailing from shore, which would be determined by the oapaciy for sailing of the particular vessel that might be concerned. As a result of the unanimous recommendation of the conference, which included the dominions of Australia and New Zealand; South Africa, the Irish Free State, Newfoundland, Canada, and of course, Great Britain herself, a treaty was negotiated with the United States and subsequently ratified by His Majesty the King. I have in my hand a copy of the treaty. It is entitled: "Convention between His Majesty and the President of the United States of America respecting the regulation of liquor traffic, Washington, January 23, 1924; ratifications exchanged May 22, 1924."

May I pause to remind hon. members who were not in the house between 1921 and 1925 that this treaty was before the House of Commons of Canada, and before the Senate, and was approved by both. It was approved by the House of Commons on March 21, 1924, and by the Senate on April 4, 1924. I shall read only a paragraph or two from the treaty:

His Majesty the King of the United Kingdom of Great Britain and Ireland and of the British Dominions beyond the Seas, Emperor of India:

And the President of the United States of America; _

Being desirous of avoiding any difficulties which might arise between them in connection with the laws in force in the United States on the subject of alcoholic beverages;

Have decided to conclude a convention for that purpose;

May I commend to the consideration of hon. members in the wording of the preamble to the treaty, the purpose of it:

Being desirous of avoiding any difficulties which might arise between them in connection with the laws in force in the United States on the subject of alcoholic beverages;

Listening to some of the discussion in different places on this question, one would be inclined to think that in our relations with the United States the last thing we should aim at is any endeavour to avoid difficulties with that country as a consequence of its prohibi-

tion laws. But may I remind the house and the country that the British Empire, as a whole, has in this treaty laid down as a principle, and it is sacredly enshrined there, the desire to avoid any difficulties which might arise between the British Empire and the United States in connection with the laws in force in the United States on the subject of alcoholic beverages.

Now, what are the provisions of the treaty? Article I:

The high contracting parties declare that it is their firm intention to uphold the principle that three marine miles extending from the coastline outwrards and measured from low-water mark constitute the proper limits of territorial waters.

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
?

Article II:

(1) His Britannic Majesty agrees that he will raise no objection to the boarding _ of private vessels under the British flag outside the limits of territorial waters by the authorities of the United States, its territories or possessions in order that inquiries may be addressed to those on board and an examination be made of the ship's papers for the purpose of ascertaining whether the vessel or those on board are endeavouring to import or have imported alcoholic beverages into the United States, its territories or possessions, in violation of the laws there in force. When such inquiries and examination show a reasonable ground for suspicion, a search of the vessel may be instituted.

(2) If there is reasonable cause for belief that the vessel has committed or is committing or attempting to commit an offence against the laws of the United States, its territories or possessions, prohibiting the importation of alcoholic beverages, the vessel may be seized and taken into a port of the United States, its territories or possessions, for adjudication in accordance with such laws.

(3) The rights conferred by this article shall not be exercised at a greater distance from the coast of the United States, its territories or possessions, than can be traversed in one hour by the vessel suspected of endeavouring to commit the offence. In cases, however, in which the liquor is intended to be conveyed to the United States, its territories or possessions, by a vessel other than the one boarded and searched, it 6hall be the speed of such other vessel and not the speed of the vessel boarded which shall determine the distance from the coast at which the right under this article can be exercised.

That treaty, which is in force at the present time, is the expression of the views of the British Empire as a whole as to the attitude which should be adopted towards the United States in relation to its laws prohibiting in that country the sale of intoxicating beverages.

Not only are we a party to that treaty, but we have made with the United States a treaty of our own.

When the matter was discussed in 1924, at which time there was a conference between

Export Act-Mr. Mackenzie King

United States and Canadian officials, it was believed that an arrangement whereby the customs officials of both countries would exchange information in regard to anything in the nature of attempted smuggling or rum running might prove sufficient to meet the situation. That view was embodied in the treaty which was made at that time. It is known as "A treaty for the suppression of smuggling operations along the international boundary between the Dominion of Canada and the United States, to assist in the arrest and prosecution of persons violating the narcotic laws of either government, and for kindred purposes." It was signed at Washington in the month of June, 1924, on behalf of Canada by the Minister of Justice of the present administration (Mr. Lapointe), and by Hon Charles Evans Hughes the present Chief Justice of the United States for the United States. It was approved by the House of Commons of Canada on March 3, 1925, and by the Senate of Canada on March 11 of the same year. It was ratified by His Majesty the King on July 17 of that year.

Let me at this point read the preamble of the treaty to which I refer, and in doing so may I again direct the attention of the house to the fact that the aim of the government In all these measures has been to suppress smuggling and rum running along the international frontier. This parliament has committed itself over and over again to that principle, and by means of treaties and in other ways it has repeatedly given expression to the course it thought wisest in the furtherance of that aim.

The preamble of the treaty is as follows:

His Majesty, the King of the United Kingdom of Great Britain and Ireland and of the British Dominions beyond the Seas, Emperor of India, in respect of the Dominion of Canada, and the United States of America being desirous of suppressing smuggling operations along the boundary between the Dominion of Canada and the United States of America, and of assisting in the arrest and prosecution of persons violating the narcotic laws of either government, and of providing as to the omission of penalties and forfeitures in respect to the carriage of alcoholic liquors through Alaska into the Yukon territory, have agreed to conclude a convention to give effect to these purposes and have named as their plenipotentiaries:

Article 1 follows:

The high contracting parties agree that the appropriate officers of the governments of Canada and of the United States of America respectively shall he required to furnish upon request to duly authorized officers of the other government, information concerning clearances of vessels or the transportation of cargoes, shipments or loads of articles across the international boundary when the importation of the cargo carried or of articles transported by land is subject to the payment of duties; also to

furnish information respecting clearances of vessels to any ports when there is ground to suspect that the owners or persons in possession of the cargo intend to smuggle it into the territory of Canada or of the United States.

(2) The high contracting parties agree that clearance from Canada or from the United States shall be denied to any vessel carrying cargo consisting of articles the importation of which into the territory of Canada or of the United States, as the case may be, is prohibited, when it is evident from the tonnage, size and general character of the vessel, or the length of the vovage and the perils or conditions of navigation attendant upon it, that the vessel will be unable to carry its cargo to the destination proposed in the application for clearance.

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

Why not have prohibited clearances to the United States at that time, and ended the matter?

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
LIB

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

Liberal

Mr. MACKENZIE KING:

I hope my

good friend from St. Lawrence-St. George will be kind enough not to interrupt until I have finished my remarks.

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

I beg your pardon.

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
LIB

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

Liberal

Mr. MACKENZIE KING:

I thank my hon. friend; I knew he would be so kind. I will answer his question, however. The reason why at that time clearances were not prohibited was that it was believed by those who had to do with the negotiation of the treaty that the exchange of information as provided by that treaty would be sufficient.

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

Assuming that the United

States would utilize that information, which they never have done.

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
LIB

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

Liberal

Mr. MACKENZIE KING:

My hon. friend will have his chance to speak a little later on.

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

What is the date of that treaty?

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink
LIB

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

Liberal

Mr. MACKENZIE KING:

It is dated July 17, 1925. That is when it was ratified, but it was negotiated during the year 1924.

There are two features to which I wish to direct attention. First, there is the obligation on the part of our officials to supply officials of the United States government with data respecting vessels laden with liquor wishing to clear, and also the undertaking that the government authorities would not permit clearance of vessels for foreign ports where it was evident that the port was one that the vessel, owing to its size and the perils of navigation, could not be expected to reach. At that time rum running was carried on to a great extent by vessels leaving certain ports for destinations such as the West Indies, described as foreign ports other than those of the United States. These were vessels of a size which it was perfectly apparent could never hope to get

606 COMMONS

Export Act-Mr. Mackenzie King

that far on their voyage. They were at the outset cleared in the regular way, because they made out their statements to the effect that they were going to these foreign ports, but instead of doing so they would put in at some port along the United States coast. At that time it seemed that stopping this practice and exchanging information might be perhaps sufficient to enable the practice of rum running to be suppressed along our international frontier. As representations were made from time to time as to the manner in which liquor was reaching the United States from Canada, other steps were taken to meet the situation. As these matters came to the attention of the government they were dealt with individually. For example, for a long time we had bonded warehouses to which liquor was brought from foreign countries and stored, and it was found that much of this liquor was finding its way out of those warehouses into the United States by a system of smuggling. The Minister of National Revenue, carrying out the wish of the government in the matter, decided to abolish altogether those bonded warehouses, and that has been done. It was found also that vessels were in the habit of coming into ports such as Halifax with liquor aboard and after staying in port a short time, unloading the liquor for subsequent smuggling into the United States or for smuggling into our own country. The departmental officials required that a double bond be given guaranteeing its export in order to prevent the liquor from being brought ashore and thus finding its way into the United States through ports in Canada being made a base for smuggling operations. It is quite true that all the steps taken were not adequate, from the point of view at least of the United States, to enable it to cope with the smuggling evil along the international frontier, and to our government the question of what it was most advisable to do became more and more a matter of very grave concern.

With regard to many matters, but particularly with respect to such matters as those which relate to temperance and are considered by many as moral rather than legal questions, there is the necessity of an administration having the backing of public opinion before it can effectively take any step whatsoever. It sometimes takes a little while for public opinion to ripen sufficiently to make itself felt throughout the country. When, but a few days ago, it was announced that the government contemplated taking the step which we are taking to-day, there was a feeling, I think, in many quarters that we were still ahead of public opinion, that we were

moving altogether too rapidly, and that any administration which attempted a step of the kind would find that it vras doing something which would be disastrous to itself. Certainly such would appear to be the view of the Conservative press even to-day. As I have said, in all these matters time is a factor, as well as all the existing circumstances. When over a year ago we were debating in Council the question whether or not we would then take the step which we now propose, information was brought to our attention of a character which to-day aroused the ire of the hon. member for St. Lawrence-St. George (Mr. Cahan), and which was to the effect that notwithstanding the fact that we were, through our officials, giving information to the United States officials concerning vessels which were clearing from Canadian ports with liquor aboard, no attention was being paid to that information. In other words, the United States officials were not seeking, as far as we could see, to enforce their own laws. We went the length of offering to the United States the opportunity of placing their officials upon our docks where they would be immediately given a copy of the clearance of every vessel as it left the dock, and I confess that when the United States government refused to avail itself of that opportunity, I for one felt that before we took another step forward we would have to be pretty well assured of the real intentions of the United States government with respect to the smuggling of liquor into that country. The course adopted by the government at the time was to bring the whole matter to parliament, to disclose the situation openly to hon. members of the house, and to invite a full and free discussion as to how far in the circumstances the government should go.

At the express wish of the government my hon. friend the Minister of National Revenue (Mr. Euler) last year gave to this house a straightforward, candid statement of the entire situation as it had been disclosed to us in the cabinet, and he asked hon. members to express their views as to what further steps, if any, should in their opinion, be taken by the government. I did not hear the hon. member for St. Lawrence-St. George advocate at that time that we should discontinue entirely the granting of these clearances. I do not think I heard any hon. gentlemen from the other side of the house suggest that the government should go any farther than it was going at that time, but the invitation was there and it was made with a desire of ascertaining-

Topic:   EXPORT ACT AMENDMENT
Subtopic:   REFUSAL OF RELEASES AND CLEARANCES TO COUNTIES WHERE IMPORTATION OF LIQUOR FORBIDDEN
Permalink

March 14, 1930