March 14, 1930

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 was mistaken. There is the record at any rate. The point I wish to make clear is that this House of Commons itself was the body which declared that steps should be taken

Export Act-Mr. Mackenzie King

similar to those which we are taking at the present time.

The present government when it came into office appointed a royal commission to continue the work of investigation into the administration of what was then known as the Department of Customs and Excise. This commission was appointed, amongst other things, as the fulfilment of a pledge which was given by myself during the campaign of 1926. The orders in council respecting the appointment of a commission will be found under date of July 20, 1926,-this, the first order, having been passed by hon. gentlemen opposite; the next is dated September 28, 1926. The final order was put through by the present administration on January 14th, 1927, under it three commissioners were appointed to go fully into the various phases of the situation. Let me quote a paragraph from the last order:

that a supplementary commission do issue to the said the Honourable James Thomas Brown, the Honourable William Henry Wright, and the Honourable Ernest Roy, authorizing them, in addition to the powers already conferred, to inquire into and report upon all matters coming under the administration of the Minister of Customs and Excise which affect the public revenue of Canada or relate to the operations of any person or corporation owning, operating or employed in connection with any business carried on under the provisions of the Excise Act or the Customs Act or any regulations made thereunder, or which are incidental or closely related to any of the matters or things hereinbefore or in the said commission mentioned or referred to. and that they be authorized by the said commission to be issued in that behalf to exercise all or any of the powers mentioned in section 11 of the Inquiries Act.

At page 24 of the report of that commission will be found the following recommendation:

We also express our entire concurrence in the recommendation of the special committee of the House of Commons as contained in paragraph 10 of that committee's report. An effective method of carrying out the intent of the treaty referred to would be to prohibit clearances to vessels or vehicles of all kinds carrying a cargo of liquor to the United States, contrary to the laws of that country.

There is more of the authority or "dictation," if there be such, under which the government is moving in this matter-dictation from this House of Commons, dictation from a royal commission appointed by the government itself; in no sense dictation from any authority beyond the country's borders.

There remains only to consider the other arguments, if there be any, which can be urged against a step of this kind. Let me first of all briefly review what has already been referred to. There is the argument that 2419-39i

this is a prohibition measure. I think I have effectively disposed of that argument by making it clear that in no sense does this act restrict or affect in any particular the rights of any individual in Canada to purchase intoxicating beverages.

Then there is the argument that this step is taken at the dictation of the United States.

I have just referred to this and, I hope, satisfactorily disposed of it as well.

Then there is the argument that this will mean loss of revenue. Well, supposing it does? It will mean loss of some revenue. But is there any hon. member of this house who will stand in his place and say that the government ought to raise revenue out of association of its officials with rum runners? Is there any hon. member of this house who will say that we should raise our revenues by the known violation of the laws of another country? I think I need not more than state the position, now that it is known that liquor cannot possibly get into the United States except by the aid of rum runners and smugglers, to assert that there is no desire, so far as the present administration is concerned, and, I believe, so far as the country is concerned, to raise any revenue in that way.

Then we have been toilid that the enforcement of a law of this kind will mean an enormous expenditure. Those who put forward that point of view seek to construe the purpose of the government as a law to enforce the laws of the United States. I have made very clear, I think, that this law is intended solely to control the conduct of our own officials, its provisions once enacted instead of adding to expenditure will do away with a great deal of expense that at the present time the country is being put to in the administration of its excise and customs laws. After this law is 'passed there will be, as respects liquor destined for the United States, no further need for entries with respect to liquor for export from breweries and distilleries, there will be no further necessity of issuing permits, there will be no occasion to have officials at the docks to certify to the liquor that is being cleared and to give clearance to vessels carrying liquor to the United States; all of that and the expense incidental thereto will be done away with. We believe that one of the effects of the measure will undoubtedly be to make it easier for United States officials to enforce their laws; but certainly so far as any expense to Canada is concerned, it will be lessened rather than increased by the enactment of this law.

Then it is said1 that the manufacture and sale of liquor for consumption and export is under our laws a perfectly legitimate business.

612 COMMONS

Export Act-Mr. Mackenzie King

I do not dispute that for one minute. But all domestic business, whether it relates to intoxicating liquors or anything else, is subject to great national considerations that are of paramount concern, and also necessarily subject to great international considerations that in their importance are of world concern. Any business, no matter what it may be, if so conducted that it involves violations of the laws of another country, must to the extent that this may be the case bow to the superior, paramount consideration of the national interest as a whole.

I have already touched on the question of national morality. May I say this further word? Apart from the possible effect upon the morale of our public service, it is a pretty serious thing to contemplate what in the long run, if the present practice is permitted to continue, may be the outcome of allowing this country to be made the base of operations of criminal gangs such as the people engaged in this rum running business comprise. From a small illicit traffic in liquor the business of bootlegging and rum running has come to be one of the most gigantic highly organized criminal businesses of the world to-day. That this country should countenance anything of that kind along its borders, that it should lend assistance through the instrumentalities of government to the people who seek to make money in that way, or to facilitate their activities by actions, however innocent, of its own officials is something too abhorrent to contemplate-I think the mere suggestion brings its own denial. No one who has at heart the well being and the interests of this country could tolerate for one moment or view with any favour a possibility of the kind. A frightful nemesis would certainly await a nation that was indifferent to the moral right or wrong of a situation such as is involved in a procedure of the kind. One of the worst things that could possibly happen to our Dominion is that in any way we as a government or as a people should allow this international smuggling to gain any foothold along our frontier.

May I come now to another argument, and it is one implied in the question which was asked by my hon. friend from Fort William (Mr. Manion). He asked whether Great Britain has prohibited clearances. In answer to that I say, each country like each individual must be the keeper of its own conscience. It is not for us to ask what another country is doing; it is for us to ask ourselves what ought to ibe done by us. And if there be something in the way of example needed it seems to me that the greatest thing this country can do is to offer to the rest of the world the right kind of example.

I said at the outset, Mr. Speaker, that fundamentally, the question we are considering is one of international relations, and it is one which involves important international considerations. As Secretary of State for External Affairs it is my duty to advise my colleagues, and to advise parliament, with respect to any situation of an international character which because of its seriousness I have reason to feel should be brought to the attention of the cabinet and of parliament. It is my duty, further, to direct the attention of the government and of parliament to any dangers that I see in any existing situation. May I say this, that I think the dangers which Lord Curzon foresaw-the danger of possible delicate and difficult situations arising between Britain and the United States over rum running incidents on the Atlantic-are as nothing compared to the delicate and difficult situations that at any moment may arise on our international frontier if this linking of distilleries and rumrunning through the agencies of government is permitted to continue. May I say, Mr. Speaker, that so perilous do I believe the situation to be that I would not longer assume responsibility in the matter of external affairs were I not assured of the support in this parliament of a policy which I believe to be necessary to the avoidance of a condition which might any day prove perilous to this country; or failing the support of this parliament in a matter as grave as this is, the support of the people of Canada. I say, Mr. Speaker, that I regard this matter as one of grave concern to the people of Canada as a whole. I have stated the position to parliament as I see it. It is now for parliament to express its view in regard to the legislation that has been placed before it.

May I add that I have no fear as to what parliament will do in the matter. I venture to say there is not a member of this house if he has regard for the feeling of the constituents he represents, who will rise in his seat and vote against this measure. Hon. members cannot afford to ignore what they know to be the sentiment of the constituencies, and the sentiment of the nation as a whole, in regard to an issue of this character. As members of this parliament we are here as lawmakers, not as law-breakers of our own laws or the laws of any other country.

May I say this final word? We on this continent have in our international relations, worked out something of which we are justly proud, something with which nothing else in the affairs of nations is comparable, namely, a system of international relations between neighbouring nations which is an example to the world in friendliness and good-will. For

Export Act*-Mr. Bennett

over one hundred years we have lived side by side with the United States, with a frontier extending for four thousand miles from sea to sea and our boast is that during that century and longer not a shot has been fired in international enmity, not a single fortification erected which could mean aught in the nature of a menace to the other country. Are we to let this international frontier, the problems of which are dealt with by the International Joint Commission-a commission that on the one hand is being heralded as an example to the nations of Europe and on the other to the nations of the orient-become a by-word and a hissing, or is it to remain as it is, a monument to civilization itself? That is the question which this parliament is called upon to decide, and I have enough faith in my fellow members of the House of Commons, and above all in my fellow citizens of the Dominion of Canada, to know that when that question is put to them the answer will be that they wish to have done what is fair and decent and right by their neighbour.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Hon. R. B. BENNETT (Leader of the Opposition):

Mr. Speaker, in common, I

fancy, with most members of this house, I have listened with profound amazement to the speech that we have just heard. If "the delicate and disagreeable" situation referred to by Lord Curzon existed in 1923, where has the Prime Minister (Mr. Mackenzie King) been since that he has not told the Canadian people of it? If the integrity of this country has been menaced by the attitude of our friends to the south, why should we, for the first time to-day. on the eve of an election, hear of it from the Prime Minister? Why should seven years have passed since Lord Curzon- now dead-sitting in the foreign office in England. told the committee of the imperial conference of the danger, if that be true, and we have not heard of it. before? Why is it, if as the Tight hon. gentleman says an understanding existed by which reports of such proceedings were not usually made known, he now ventures to use them to influence the action of the Canadian parliament?

I shall endeavour-and it will take some little time-to strip from the right hon. gentleman that mantle of assumed virtue that he has worn to-day. Remember, sir, that - the Prime Minister who has spoken is the same prime minister who but for a few months has been Prime Minister of this country since 1902. 'Remember, it is the same prime minister who received the report's of the special committee of the House of Commons on customs and excise. Remember it is the same prime minister, siir, who appointed a royal commission of three judges to deal with this matter. It is the same prime minister who assumed the mantle of righteous virtue in 1926, and in a full page advertisement of the Toronto Globe of September 11, 1926, told the Canadian peqple over his signature that if returned to .power he would continue relentlessly the investigation of the customs sendee, and carry out without fear or favour the needed requirements. The Globe has said, that the needed requirement was the prohibition of clearances, and now in 1930, wrapped in the mantle of righteous indignation and perfervid eloquence as to the virtue of the cause, the right lion, gentleman asks us to do what he promised he would do in 1926 when seeking the support of the electors of Canada. And, sir, it is a matter of some satisfaction to some of'us who sit t-o the left, who were on the special committee, which made that recommendation, to know that at least we can support that measure which we could not introduce under the rules of this .parliament, but which we have waited four years to hear introduced.

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?

Some hon. MEMBERS:

Oh, oh.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Before I conclude my observations hon. gentlemen who were not in the house at that time will understand the matter. In those days they sought support from and alliance with those whom they now condemn. The evidence given before the royal commission, for which Hon. N. W. Rowell acted as counsel, brought out the fact that it was the contributions of the same men that are now being attacked in this house that enabled the government to defray the election expenses. Here is the evidence given before the royal commission under Mr. Rowell's questioning as to the "rat fund." That was the term used when Mr. Rowell was questioning the witness. He said, "We called it the rat fund." Then he was asked, "What happened to the rat fund," and I have here the names of men who secured the fund, and the amount they received when liquor was sent across the boundary. They received so many cents a case for beer, and so much for hard liquor. For what purpose? It was partly for the persona! enrichment of the gentlemen who received it, and partly for the campaign funds of the Liberal party of Canada. Here are the words with respect to it. Mr. Rowd.l said to the witness, "We did not think it was fair to leave Windsor after taking the small ones without taking you." The answer of the witness was, "I think it is quite nice for you to come to Windsor so that we may tell about the rat fund. You had a snake fund down east, and we 'had a rat fund here."

Export Act-Mr. Bennett

Then he told the story of the rat fund; he told who was the big fellow to whom the money ultimately went-the custodian of funds for the Liberal party during the election of 1926 and the .preceding .election. These men, sir, who are now denounced in words of righteous indignation, were those who supplied the necessary funds to 'carry on the campaign when the hon. gentleman was seeking position and power. Is it any wonder that the people of this country who read and understood the evidence given before that royal commission are getting a little weary of this high, moral indignation about conditions at the boundary line? Is it any wonder they are getting a little weary when they hear these reiterations about international goodwill and moral delinquencies when all the time, with their tongues in their cheeks, the Liberal party are the beneficiaries of the very men whom they now condemn.

Let us look at these things fairly. I have in my hand the summing up by Hon. N. W. Rowell before that commission with respect to these matters; I have the precis of the evidence given by those witnesses at the border points as to what took place, as to how money was paid the times they made their contributions and what they made them for. Those statements are here, and now in a fine frenzy of moral indignation we are told that to save Canada from a war with our good friends to the south-who never thought of it-we must be prepared to adopt this measure. It is hard for the Minister of Finance to keep his face straight, the silence is so impressive.

Let us remember what is the crux of the * matter. The American republic, for reasons of its own and within the exercise of its powers, adopted a constitutional amendment known as the eighteenth amendment. That amendment provided in clear terms that there Should be no longer any importation into or manufacture of liquor in that country. Let me read the terms of that amendment in order that .we may fairly begin this discussion:

fl) After one year from the ratification of this article the manufacture, sale or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for .beverage purposes is hereby prohibited.

(2) The congress and the several states shall have concurrent power to enforce this article by appropriate legislation.

(3) This article shall be inoperative unless it shall have been ratified as an amendment to the constitution by the legislatures of the several states, as provided in the constitution, within seven years from the date of the submission hereof to the states by the congress.

That .resolution was duly submitted to congress and to the several state legislatures, and on. January 29, 1919, the United States

Secretary of State proclaimed its adoption by thirty-six states of the union, and declared it to be in effect on January 16, 1920. So on the last mentioned date the eighteenth amendment to the United States constitution, familiarly known as the prohibition amendment., came into force.

The right hon. gentleman indicated this afternoon that some time elapsed before we were advised as to what the attitude of the Unified States might be in connection with this matter. I find, however, on reference to the parliamentary proceedings as reported in Hansard for June 25, lQ28i, that in the preceding year the United States had directed attention to the question of the enforcement of the smuggling laws between that country and Canada. On the date I 'have mentioned the Right Hon. Arthur Meighen, then leader of the opposition, called attention to a despatch from Washington, and Right Hon. W. IL. Mackenzie King, then and now Prime Minister, said:

I am obliged to my right hon. friend for bringing up the matter, because, having read the despatches to which he refers, I think they are calculated to create an entirely erroneous impression. It is true, the government has received from Washington a communication asking if it would be possible for the Canadian government to assist in promoting the observance of certain liquor laws of the United States. The communication relates to matters particularly appertaining to the export of liquor. When the communication was received it was referred to the departments of government concerned. The reply sent to Washington related exclusively to a statement of the law as it stands and the position of the Canadian authorities in meeting the request that has been made. There has been nothing sent forward to Washington with respect to the government's policy in the matter of endeavouring to cooperate with American authorities in securing observance of their laws. So far as the government's policy in that matter is concerned,

I would say that we have every desire to cooperate with the American authorities in helping them to secure the observance of their laws in precisely the same manner as we would hope to have the American authorities cooperate with ns in securing the'observance of our laws. Such action as has been taken up to the present has been entirely of a departmental character.

Then the leader of the opposition asked! a further question as to when the request had been received, and .the re.pf.y finally given by the Prime Minister was:

My impression is that it was about three months ago, the request was received. There was no intention of delay in the matter. It was dealt with entirely departmemtally. As regards the larger question, that of policy, the government would like to be able to view all sides of the situation before taking final action.

Export Act-Mr. Bennett

So that three years alter this amendment to the constitution of the United States became effective, the right hon. gentleman was still in the cloudland of conjecture and doubt as to the high moral issues involved. His mind was not then settled; his opinions were not then made; an election was not to be held the following year. It was not important that he should frighten the Canadian people into the belief that they were menaced by the great republic to the south. On the contrary he said, "Our opinion is not formed, our policy is not settled." That was in June, 1923, three years after the constitutional amendment had become effective in the United States.

Then the Imperial conference was held in London, at which the right hon. gentleman attended, and we are told now that at that conference-it is the first time we have been told so publicly, but he himself admits it- when that great foreign secretary of Great Britain, Marquis Curzon, was dealing with the question of the right of search by American coastguard ships of British vessels carrying liquor, and other kindred and allied matters, he indicated that this situation was "so delicate and disagreeable" that it involved consequences of the gravest character. But Great Britain did sign the treaty and this country ratified the treaty made between Great Britain and the United States. The right of search was extended, as you will remember, for a distance of an hour's run of the ship out to sea. As was stated by the right hon. the Prime Minister to-day, there were three matters to be considered, one of which was British commerce. Inasmuch as British ships plied between New York and the cities of the old land, it became necessary that it be determined whether or not they would be permitted t.o enter the harbour of New York with liquor in their stores, and I fancy that if he were so minded the right hon. gentleman could tell this house what is so well known by those who have taken the trouble to ascertain, that the commercial side of the situation became one of the most potent factors in bringing about the end obtained. It was quite clear that British ships would not be permitted to enter the harbour of New York even with their liquor sealed, unless some arrangement were made whereby the United States might search ships suspected of carrying contraband liquor within a distance of one hour's steaming from shore. That was in 1923.

What do we find in 1924 and 1925? There was an election in 1925, and what condition do we find obtaining in this country at that

time. A part of the evidence is the report of the royal commission arising out of the proceedings before a select committee of this house, which sat in 1926. That evidence disclosed a condition the like of which had not been disclosed heretofore in any part of this count,ry, and to which the right hon. gentleman alluded a moment ago when he was dealing with the report made by the committee. The report of the committee as amended was adopted by a majority of ten in this house at a time when the house was very closely divided along party lines. That majority comprised a group of members who were not actuated by strong partisan feeling, and in view of the fine frenzy of this afternoon, I would ask the house to keep in mind the following words contained in that report as amended:

The evidence further discloses that ministerial action has been influenced by the improper pressure of political associates and friends of the minister, or acting minister administering the department, resulting in the suspension and in some instances the abandonment of prosecutions against those charged with violation of the statutes and in the loss of revenue to the country. Moreover successful appeals have been made to the minister and acting minister administering the department to improperly interfere with the course of justice between the conviction of the offenders and the execution of judgment thereon.

I ask if, in any condemnation that has ever been made of a government of this country, you can find words such as appeared in that report, as follows:

The Prime Minister and the government had knowledge for some considerable time of the rapid degeneration of the Department of Customs and Excise, and their failure to take prompt and effective remedial action is wholly indefensible.

Remember, sir, that is the report.

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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:

What the hon gentleman is reading from is an amendment moved by the Conservative party.

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?

Some hon. MEMBERS:

Order, order.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I am quite willing to listen to any questions asked by the right hon. the Prime Minister, because I know he is seeking onlly for information and I Shall be glad to gratify his desire. The right hon. the Prime Minister has asked if this was not an amendment1. Certainly it was, and it was adopted by the House of Commons by a majority of 10.

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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:

An amendment of the Conservative party.

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?

An hon, MEMBER:

While you were the Prime Minister. ,

Export Act-Mr. Bennett

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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:

Nfo, it was not while I was tlhe Prime Minister.

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LIB

Lucien Cannon (Solicitor General of Canada)

Liberal

Mr. CANNON:

Carried: by a government which was defeated a few weeks afterwards by the peopfle of Canada.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I am glad the Solicitor General (Mr. Cannon) has1 spoken.

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LIB

Frank S. Cahill

Liberal

Mr. CAHILL:

That is not the report of the committee.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is what I said.

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LIB

Frank S. Cahill

Liberal

Mr. CAHILL:

It is an amendment to the report.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I think so.

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LIB

Lucien Cannon (Solicitor General of Canada)

Liberal

Mr. CANNON:

They were kicked out: a few weeks afterwards.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

After these very happy observations which have been made by hon, gentlemen opposite who feel so keenly about the matter, may I direct the attention of the house to the fact that the vote was 119 to 109. The Conservative party did not at that time number in this house any such strength as 119; it was the great body of independent thought in this House of Commons which condemned the Prime Minister and the government, and not the Conservative party. Had the Conservative party had 119 votes in this house, it would have been in power from the early part of that year instead of in June. Had they elected 119 members to the House of Commons they would have been in power but it was the independent members, some of whom still sit to my left, the men and the woman who weighed that testimony and recorded their judgment as a judgment upon the government and the right hon. the Prime Minister and his associates. That was the judgment of parliament, to which the right hon. gentleman referred. It is true, as the Solicitor General (Mr. Cannon) said, that that government was defeated a few months later, but this vote shows that they were defeated by the active support of the forces-

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?

An hon. MEMBER:

There is the evidence.

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LIB

Ernest Lapointe (Minister of Justice and Attorney General of Canada)

Liberal

Mr. LAPOINTE:

You cannot help smiling when you say that.

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March 14, 1930