May 24, 1932

CON

Pierre Édouard Blondin (Speaker of the Senate)

Conservative (1867-1942)

Mr. SPEAKER:

The hon. member for Bow River has spoken forty minutes.

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LAB

James Shaver Woodsworth

Labour

Mr. J. S. WOODSWORTH (Winnipeg North Centre):

Mr. Speaker, after the very excellent presentation of this subject by those who have already taken part in the debate, it does not seem necessary to enter any more fully into its legal and constitutional aspects. For two years when this subject has been under discussion I have had the honour of supporting the contentions of the member for Acadia (Mr. Gardiner), the member for Bow River (Mr. Garland), and I should like once again to give whatever support I may to their point of view. Further than that, my colleague from East Hamilton (Mr. Mitchell) in his election campaign promised the electors that if possible he would press for a further inquiry into this whole matter. Up to the present we have not been able to bring the matter before the house, and unfortunately my colleague owing to another engagement is not able to be present this evening. So I should like on his behalf to say a few words with regard to the question.

Last year when I returned to my own city of Winnipeg I found myself the subject of a good deal of criticism, not because I had participated in debates on this question but rather because I had not gone far enough in urging immediate action. So far as the press represents public opinion, I may say the Manitoba Free Press urged that the matter should not have been left where the committee left it last session; and the Tribune-which generally supports the Conservative government-came out very strongly indeed with the view that some plan had been hatched in the committee to prevent the public getting at the real facts of the case. The two papers were inclined to denounce some of us Independents because we had not done more in attempting

to force action on the part of the government.

I should like to read the statement which I gave to the house last session on the 31st of July, just after the report of the committee was presented:

-to-day the public demand several outstanding things. First of all the punishment of (a) those who have defrauded the public; (b) those who have been guilty of bribery, and (c) those who have betrayed public trust.

I think undoubtedly the general public did believe there was going to be some sort of justice in regard to these matters in which corruption had been shown. I submit that although these months have gone by there has been no punishment of the guilty parties.

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UFA
LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Unfortunately last

year the reference was so narrow that the committee could not follow up its investigations as far as they should have been followed; further, I suppose owing to the party warfare it was not possible for the majority of the committee to be free to go very far; also, as members will recognize, there were several representatives from the provinces present, who as soon as anything that touched the provinces came before the committee objected strongly on the ground that these were provincial matters; and so the inquiry did not go very far. The same thing happened to some extent, I believe, in the provincial inquiry; it stopped before the fullest investigation had been made. I think the same criticism may be made with regard to the investigation in the Senate, which was largely confined to the conduct of certain senators. So that so far as meting out punishment is concerned, the only action taken has been to force one senator to resign his position.

Mr. LaVERGNE: He committed suicide.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Last July I also

said:

Second, I think the public demand a further i nvestigation,-

I am still of that opinion. It seems to me that in attempting to move his amendment to-night, the member for Acadia was along right lines when he suggested a royal commission. I do not believe parliament is a suitable body to make an investigation of this character. We all recognize that party feeling runs high, that the past government had a good deal to do with this matter, that the present government may or may not have administered it in just the right way, and so party considerations undoubtedly enter into any parliamentary investigation, and certainly

Beauharnois Power Project

would enter into the report of any special committee. It would seem to me that there ought to be a judicial investigation.

I submit, Mr. Speaker, there is a very grave danger at the present time that the public will lose all confidence in parliamentary institutions and will come to the conclusion that parliament is intent on shielding rather than exposing corruption when it involves the great corporations. Since no subject has aroused greater public interest than this Beauharnois scandal, interest extending over the past two years, it seems to me that the government would be well-advised to accept this suggestion to appoint a royal commission to go into every aspect of this affair, and particularly, as the attempted amendment puts it:

Especially with regard to all moneys derived from the sale of the $13,000,000 of collateral trust bonds issued by the Beauharnois Corporation Limited.

I suggested thirdly:

a very large section of the people demand government control of the whole Beauharnois enterprise.

I know there are those in the province of Quebec who have been very strong in their advocacy of provincial rights in this matter, and who at the same time have been very strong-until recently at least-in urging private ownership.

Mr. LaVERGNE: They are not very numerous.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Possibly, as the

hon. member for Montmagny (Mr. LaVergne) suggests, they are not very numerous. But I do believe there is a growing number of the people across Canada who are convinced that the only way to settle this matter properly is by government control of the whole Beauharnois enterprise. Then I suggested:

Further, at least the more thoughtful part of the public demand legislation that will prevent similar occurrences in the future.

I believe that that too is an increasing demand on the part of the public. So far we have had no legislation. When on various occasions this session some of us have raised the question of watered stock we have been told that it was practically impossible for the government to do anything in the matter. The lid has been lifted a little bit in this Beauharnois question, and we have seen how the public has been defrauded and exploited. But those who know anything about the way a great many corporations have been carried on will recognize that Beauharnois is not by any means an isolated example of exploitation and corruption, and whether or not these other cases are investigated as fully as Beauharnois, at

least we should have such legislation as would prevent this kind of thing in the future. It is, however, very difficult for any private member to introduce legislation of that kind. Only to-night we had an example of how strictly the rules of procedure are interpreted, in that no matter may be brought up by a private member if it involves in any way the expenditure of public moneys, nor even any resolution which expresses the opinion of the house on a certain course that might involve the expenditure of public moneys. Under these circumstances it is next to impossible for any member to propose legislation; all we can do is to appeal to the government to take action along this line.

In concluding my speech on this question on May 26 last year, I ventured to summarize the points which I had been trying to make, and as I have not the time to-night to argue the case, I should like to read this summary', which I think is in line with the presentation just made by the hon. member for Bow River (Mr. Garland) :

The claims of this corporation are based essentially on the old claims of the Roberts. The Dominion government owns the Roberts' works, as is shown by the fact that the present corporation is paying a nominal rental charge to the Dominion government.

That fact was brought out very clearly in the factum to which reference has been made; indeed, it was the reading of the factum that largely converted me in the matter. I could not read that presentation as made by the Attorney General and others on behalf of the late administration without believing that there was a very strong case for the dominion ownership and operation of the water-powers of the St. Lawrence.

Under the British North America Act, public works on the St. Lawrence -were definitely put under Dominion jurisdiction.

It was a surprise to me when I read the British North America Act. It may be said- I know it has been said-that the clauses cited related to certain particular powers, but I am still of the opinion that, since the claims of the present corporation are based entirely on the rights of the Roberts, from the legal standpoint these powers are still within the jurisdiction of the Dominion government. I further urged:

Moreover, the province can incorporate only such companies as contemplate distinctively provincial objects.-and the objects of the Beauharnois corporation are decidedly not provincial but, in fact, interprovincial in character.

That is one of the points just discussed by the hon. member for Bow River, and the

Bcauharnois Power Project

other point I have mentioned is alsb elaborated by him.

The St. Lawrence system is essentially a great dominion project, and if we are ever to carry it through successfully we cannot allow anything to stand in the way. Finally, this whole question involves our international obligations.

I still believe I was right in the position I took a year ago. I quite admit that there is ground for dispute as between the dominion and the province. As a matter of fact, it is rather curious that in this particular instance the jurisdictional dispute arises with respect to two distinct aspects of the same enterprise. The province claims the water powers, which claim a great many of us cannot concede and which the factum already quoted disputes. But the province claims-

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LIB

Joseph Philippe Baby Casgrain

Liberal

Mr. CASGRAIN:

May I ask the hon. gentleman a question? I understand that my hon. friend refers to the factum that was presented on behalf of the Attorney General of Canada. Has he been made aware of what the decision of the supreme court was on that factum as presented? If my contention is correct, the point of view of the provinces was upheld.

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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

Oh no; as a matter of fact the weight of opinion was against the province.

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LAB
LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

Could you

understand it?

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I was going to say that the decision, as I understand the matter, was left very indefinite. But the point I was emphasizing was that the case as presented by the representatives of the Dominion government still stands. There is nothing to offset that, and it still stands. While the province has claimed the water-powers, and while the Dominion government at that time put in a claim for them, there is no doubt that the canal comes exclusively' under the jurisdiction of the Dominion government. So that at best we have the dispute relative to merely one aspect of the project.

I am inclined to think that the province of *Quebec secured a great strategic advantage when, apparently without consultation with the dominion, and without waiting for any judicial decision whatever, it granted a charter to a company to go ahead and develop the water-powers the possession of which was under dispute.

Mr. LaVERGNE: It is assuming a lot to say that there was no consultation.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

The hon. member may' know more about that than I do; at any rate, nothing has been brought out in public to show that there was such consultation. I was giving the late administration-

Mr. LaVERGNE: The benefit of the doubt.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Yes, the benefit of the doubt, especially after reading the strong presentation in the factum. However, I say that the province of Quebec undoubtedly secured a great strategic advantage in immediately granting the charter and permit-ing a company under provincial charter to develop these water-powers. But we have reached the stage where this corporation is not able to carry the enterprise through. It is in difficulties to-day, and here it seems to me is the Dominion government's chance. Up to the present time the Dominion government has not done a very great deal in the matter, but one thing that has been done is this: the 80,000 shares issued to the Sterling Corporation have been turned in for cancellation in accordance with the demands made by the government. I give the government credit for that. I do not know just how much these shares are worth, nor do I know under what pressure they were turned in, but I do think that is a good thing, more especially as it seems to me to establish a precedent for the confiscation of watered stocks. I should like to think that this will be done with other shares in this corporation, and with shares in other corporations as well. However, that much has been done, for which I give the government credit. Further, the government has declared that the ownership of the canal is with the Dominion government. That too is a good thing, although I do not know that in reality it amounts to a great deal, because the canal, although it was not owned before by the government, had to operate under the supervision of the Dominion government. I do not know that there is any financial change involved, and it seems to me that in this matter the government has not made anything more than a technical gain.

On the other hand the government have assumed enormous responsibilities; they have backed the banks, they have, as it were, underwritten the scheme. Since the bondholders do not appear to be in a position to carry through the enterprise for themselves, there is a great danger of the whole undertaking falling into the hands of some one person capable of putting it through. The name of that one person is on the lips of all-Sir Herbert Holt. It would be a very sorry triumph indeed if the net result of the ex-

Beauhamois Power Project

posures in this house is that the Dominion government will be obligated to carry the canal through to completion, whereas under the old arrangement it would have been completed without any government financial responsibility, and further that the enterprise is to be taken out of the hands of a financially small man like Mr. Sweezey and thrown into the hands of a big financial man like Sir Herbert Holt. If that is the net result of it all, it will be most unfortunate and disappointing.

It does seem to me that it is now quite possible for the government to take over this whole scheme as a dominion enterprise; in fact I do not see any other way in which it can be saved. Even if we conceded the claims of the province of Quebec to the water-powers, the government might still take over the enterprise, considering the financial obligations they have already incurred. They undoubtedly have the right to construct the canal. If it were found that Quebec had certain rights in the water-powers, those surplus powers not needed by the dominion for canal purposes could be turned over to that province for distribution. The same thing could be done in connection with the water-powers in the province of Ontario. If it is found that the dominion has not the rights which many of us think it has to the water-powers, let the dominion continue this undertaking as a great public work; let it carry on the development; let it use what power it needs for canal purposes, and then turn over the residual amount to the provinces.

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UFA
LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Certainly, on proper terms. That could be done even if the provincial rights are conceded, but I do not see why those claims should be conceded without a reference to either the supreme court or the privy council. When the Prime Minister (Mr. Bennett) was making a statement a few weeks ago I asked if it were not possible to present another case to the courts. I do not know that I am sufficiently familiar with legal terms to state properly what I have in mind, but it seems to me that if the Dominion government went ahead and quietly assumed control, they could then go to the courts and have a better chance of a decision being arrived at. I think the chances would be better than if a 'hypothetical case were presented, as was done the last time the matter was referred to the supreme court. Let us go ahead and seize this undertaking; let the government go ahead with its canal project-

that will involve the development of the dams and other facilities necessary in the development of water-power-which it has an absolute right to do, and then, if the .provincial government challenges the government's action, there would1 be an actual case to be presented to the supreme court or the privy council.

In the few moments that remain to me I should like to run over very briefly one or two of the points contained in the amendment which the hon. member for Acadia (Mr. Gardiner) was not permitted to place before the house. There is no doubt a good deal of public money is involved and more that wall be needed before this project is completed. That in itself seems to me to warrant active interference on the part of the government. Only the other d'ay I was approached by several bondholders who were anxious to know what the government could possibly do in the matter. The affairs of this project are now in rather a critical state and the government by taking a strong line of action could settle the matter without any great difficulty.

I have already urged the nationalization of the whole project, and I do not know that it is necessary to say more in this connection. The hon. member for Bow River has quoted the words of the Prime Minister in connection with radio. If it is necessary to prevent radio from being exploited, it is surely neces-sar}' to prevent our water-powers from being exploited. If it is wise that radio should be maintained as a heritage for our children, it is surely wise that these great water-powers should also be retained as a heritage for our children. The suggestion is made that a federal hydro-electric commission be appointed, and I cannot see why that suggestion would not be feasible. With our transportation systems in such serious condition, it is highly desirable that there should be a correlation of all our various means of communication and transportation.

Another point is in connection with the question whether or not the act passed by the province of Quebec which granted the charter to this company is ultra vires.

Mr. LaVERGNE : There is no doubt it is.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

The hon. member across the way says that there is no doubt it is ultra vires, and that expression of opinion is on the lips of a great many people to-day. That should afford a legal basis for the carrying out of other definite and constructive measures. If I may venture to speak not only for my own constituency but to express what I know is the feeling prevailing in the western

Beauhamois Power Project

provinces, I would say that the people of the prairies realized very keenly that Beauharnois is a matter which concerns not only the east but the west as well.

Mr. LaVERGNE: That is also the opinion of Quebec.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I am glad to hear that it is also the opinion of Quebec. If that is true, then theTe seems to be no reason why we could not get action along these lines. Further than that, I know that the west as a whole will stand stoutly behind public ownership and will back up any action on the part of the present government which will give us control over this great national heritage.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Hon. C. H. CAHAN (Secretary of State):

Mr. Speaker, I do not think it is necessary to follow the hon. gentlemen in all the extreme and exaggerated statements which they have made. The argument contained in the factum presented by the Attorney General of Canada to the Supreme Court of Canada seems to have convinced hon. gentlemen of the third party as to its sanity, soundness and logic but it failed utterly to have that same effect upon the supreme court. Fortunately it was the supreme court that had jurisdiction in the matter as well as the duty and obligation of rendering a decision in the premises. But I should1 be very reluctant that either this house or the country should take its final opinion on legal questions from either the hon. member for Acadia (Mr. Gardiner) or the hon. member for Bow River (Mr. Garland). The hon. member for Acadia this afternoon endeavoured to show, without any supporting argument, that it is illegal in Canada for our banks to make a loan on the bonds of an incorporated company-that was his suggestion-especially if that incorporated company held real estate or immovable property. No more absurd opinion, I suggest, could possibly have been rendered, and if the contention of the hon. member for Acadia were to be accepted, we would have very many financial problems added to those with which we are now faced. There can be no doubt that under the provisions of the Bank Act loans may be legally made by a bank on the security of bonds of an incorporated company.

But the hon. member for Winnipeg North Centre (Mr. Woodsworth) professed to be anxious to have the waters of the St. Lawrence within the province of Quebec declared to be a national interest and taken over and administered by the federal government of Canada. He suggested that all the provinces of the west were entirely in favour of such action. Such advocacy would have had more influence upon my opinion had it been publicly made some years before the water-powers of British Columbia within the railway belt, which water-powers were undoubtedly within the jurisdiction of the dominion, were, at the request of western members, transferred to that province, they contending day in and day out that British Columbia demanded that the water-powers within its borders should be administered by the provincial government. In recent years I have been in the house during two or three sessions when members from the provinces of the middle west, Manitoba, Saskatchewan and Alberta, have demanded most vociferously that the natural resources, including the water-powers, of those three provinces, which were undoubtedly vested in His Majesty in the right of the dominion, should be transferred to those provinces, not merely as a property right but so as to bring those water-powers within the legislative jurisdiction of those respective provinces. I did not hear the hon. member for Winnipeg North Centre raise his voice against that transfer to his own province of Manitoba, which he then represented, nor did I hear a voice raised from either of the other two provinces, Alberta and Saskatchewan, against such a transfer. It was made with the almost unanimous approbation of both sides of the house, and it remains to-day as a transfer which vests those natural resources, including water-powers, in His Majesty in the right of these several provinces.

The provinces are rather jealous of their rights. Ontario has persistently claimed that the right to develop one-half of the flow of the St. Lawrence river within the international section is vested in the crown in the right of that province, and public and legal opinion in that province has almost unanimously approved that contention. In our province of Quebec, we are rather sensitive with regard to our rights. That province has insisted not only that the water-powers on the great rivers within its borders are vested in the crown in the right of the province, but that the water-powers on the St. Lawrence where it flows through Quebec are vested in the crown in the right of the province. It is not for me to say that that contention is valid until it is finally passed upon by a judicial court of final appeal. But when the hon. member for Winnipeg North Centre suggests that we should take that property and that right, leaving the province to contest our taking of its property, that is simply making the appeal which the ordinary burglar makes when he enters a house and takes property which he knows does not belong to him, leaving it to the householder to put the burglar out and to protect his chattels. I feel some-

Beauharnois Power Project

times in sympathy with the hon member for Winnipeg North Centre when he suggests, in regard to the protection of labour in this country, certain social improvements, but that proper end cannot be attained by burglary and theft such as he has advocated in this house to-night.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I rise to a point of order. The hon. member has suggested that I have been advocating burglary in the house to-night. I have not advocated anything of the kind. I have suggested that the Dominion government has certain rights. The hon. member differs from me. He has a perfect right to differ, but he has no right to say that I have advocated burglary, and I ask him to withdraw that expression.

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CON

Charles Hazlitt Cahan (Secretary of State of Canada)

Conservative (1867-1942)

Mr. CAHAN:

Perhaps I should withdraw my nomenclature for the subject matter which the hon. member advocated, but he and I differ as to what burglary and theft mean. What is clear to me is that by reiterating scandal when it serves no good purpose, what mv hon. friend has in mind is not tihe preservation of national rights. If that preservation were his sole object, I could approve it, but it seems to me, from time to time when his argument is brought home, the hon. gentleman deliberately, earnestly and persistently seeks to break down parliamentary institutions and responsible government in this country. In that end and purpose I certainly cannot agree with him.

First, I shall deal with the argument that simply because section 12 of the act incorporating the Beauharnois Light, Heat and Power Company provides that "the company may supply, sell and distribute light, heat and power in anyr direction within a radius of forty miles from the town of Beauharnois," and assuming that forty miles from the town of Beauharnois would extend across the United States border, therefore, it is asserted, this act is ultra vires of the province, because it provides that a provincial company may transmit its power across the border. I do not think that either the Supreme Court of Canada or the Judicial Committee of the Privy' Council will place that interpretation upon it, which was clearly' not the interpretation placed upon it by the government and the legislature at the time the act was passed. I would suggest that the Supreme Court of Canada or the Judicial Committee of the Privy Council might well interpret that section to mean that the company is authorized to supply, sell and distribute light, heat and power in any' direction within the legislative jurisdiction of the province of Quebec within a radius of forty .miles from the town of Beau-

harnois. But to suggest to this house that the whole act is ultra vires because of the extreme and exaggerated construction placed upon that single section seems to me to be absurd.

With regard to Beauharnois, I regard this debate as exceedingly inopportune. This house has decided by the statements made by the leaders of opinion on both sides that no active step should be taken to prevent the holders of the collateral trust bonds of the Beauharnois Company from realizing upon the security which they have for their bonds, or from placing themselves in a position where they' can approach the government of the province of Quebec and also approach this parliament, so far as it has legislative or its government administrative jurisdiction, to procure our sanction for measures whereby they may carry on to a conclusion and a completion the undertaking of that company. These bondholders have had to wait while another house of this parliament has been considering the Beauharnois scandal. They have had to wait until a commission appointed under the legislative authority of the province of Ontario had finished its investigation into certain features of the so-called Beauharnois scandal. But now I say to hon. gentlemen, give to these bondholders an opportunity without further obstruction or further reckless and immature criticism to meet together, as they seek to do, to form their proper committees, and take such measures as are within their jurisdiction as bondholders in order to place this undertaking on a sound and secure basis. The trustee for the bondholders at their request has called a meeting at Montreal for the tenth of June, 1932, and these bondholders are meeting there for the purpose of examining into the undertaking, business and affairs of the company and of taking such measures as will enable them to preserve their rights and interests. It would be, I think, not only inopportune but improper for the government of Canada, while we ask them and have asked them to take these measures to protect their own interests, to intervene and obstruct and preclude them from taking those measures which are necessary in order to preserve their property rights.

The hon. member for Acadia suggested that all the Beauharnois legislation we have passed is utterly illegal and invalid because the word "limited" is used after the name of the Beauharnois Light, Heat and Power Company'. Well, Mr. Speaker, that is so frivolous that one finds difficulty in dealing with it. Anyway I will say this, that in drafting the statute, chapter 20 and chapter 19 of last y'car,

Beauharnois Power Project

the Beauharnois Light, Heat and Power Company was described as a limited company. It is a limited company in effect although the word limited is not in its name, but that that statute did not definitely describe the company incorporated and organized under the legislation of the province of Quebec, which was therein referred to, I absolutely deny; and I doubt if my hon. friend could find a sane and sound lawyer throughout the length and breadth of this country who would say that that statute is invalid in consequence of the objection my hon. friend has raised.

The hon. member for Acadia suggests that because this canal has by section 1 of chapter 20 of the statutes of 1931 been declared to be a work for the general advantage of Canada, therefore the government of Canada is entitled to go in and take possession of the company's property and confiscate it and forfeit it to the crown in the right of the dominion. Otherwise his argument seemed to me to be absolutely without effect.

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May 24, 1932