June 10, 1935


On the orders of the day:


LIB

Jean-François Pouliot

Liberal

Mr. JEAN FRANCOIS POULIOT (Ternis-couata):

Mr. Speaker, may I draw the

attention of the Minister of Trade and Com-

merce (Mr. Hanson) to page 3451 of Hansard for yesterday, and particularly to a question having to do with the High Commissioner's office at London, and the expenditures in connection therewith. Yesterday when the question was called1 the minister called "Answered." To-day it appears in Hansard that he stated1 "Return babied forthwith." I have telephoned the office handling sessional papers, and I find that there are no papers in that office. May I ask what the minister meant?

Topic:   HIGH COMMISSIONER'S OFFICE
Subtopic:   INQUIRY CONCERNING QUESTION PASSED AS ORDER FOR RETURN
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CON

Richard Burpee Hanson (Minister of Trade and Commerce)

Conservative (1867-1942)

Hon. R. B. HANSON (Minister of Trade and Commerce):

I believe my answer was

not correct. I thought I was answering another question. I understand the question was ordered to stand as an order for return then tabled or to be tabled. However there will be no difficulty about it.

Topic:   HIGH COMMISSIONER'S OFFICE
Subtopic:   INQUIRY CONCERNING QUESTION PASSED AS ORDER FOR RETURN
Permalink

TRADE AND INDUSTRY COMMISSION

ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS


Hon. R. B. HANSON (Minister of Trade and Commerce) moved the second reading of Bill No. 86, to establish a dominion trade and industry commission. He said: Mr. Speaker, the bill now before the house for second reading is an honest, sincere attempt to give effect to such portions of the report of the royal commission on price spreads not otherwise provided for in legislation currently before the house and within the constitutional limitations of parliament. It will be recalled that chapter 9 of the report of the royal commission, beginning at page 248 of the report, deals exhaustively with the problem of state control of business, and the general recommendations of the report have been summarized under the following headings and recommendations: 1. The setting up of a federal trade and industry commission with a structure consisting of five members appointed by the governor in council as a semi-autonomous board under the president of the privy council; (b) its status both in its authority and in its relation to the responsible minister and to parliament to be similar to that of the board of railway commissioners. I shall allude to the question of the structure of the proposed board at a later stage in my remarks. 2. Functions of the commission. These were to be administrative, advisory and investigatory. I shall not go into the various sub- Trade Commission-Mr. Hanson headings of all these functions but would crave leave to have the summary of the general recommendations as they appear in the report printed in Hansard: Chapter IX The Problem of State Control General Recommendations 1. Federal trade and industry commission. 1. Structure (a) To consist of five members appointed by the governor in council, as a semi-autonomous board under the president of the privy council. (b) Its status both in its authority and in its relation to the responsible minister and parliament, to be similar to that of the board of railway commissioners. 2. Functions (a) Administrative- (1) Rigorous administration of an amended Combines Investigation Act, for the purpose of retaining and restoring competition whenever possible. . (2) On instruction from the governor in council, to regulate monopoly, when competition cannot or should not be restored or enforced. (3) On instruction from the governor m council, to a sanction and supervise agreements for industrial self-government. (4) To prohibit unfair competitive practices. (a) Such practices should not be set out in detail in the act setting up the commission, but a general definition of unfairness should be included. _ (b) A definition for this purpose is suggested. (c) Certain practices such as discriminatory discounts, rebates and allowances, territorial price discrimination and predatory price-cutting, should be included within this definition. _ (d) The commission should act by inquiry, hearings and where necessary, prohibitory orders. , (e) An appeal from these orders to the Exchequer Court of Canada, should be permitted. (f) The commission should be given adequate power, ,as outlined, for the enforcement of its orders. (g) In more serious cases, the commission might prosecute directly under the act for the offence of competing unfairly. (h) The results of its major findings should be published. (5) To supervise generally, or cooperate in the administration of existing laws relating to merchandising and business practices for which no other agency exists. (6) To administer new laws for the protection of the consumer. (7) To administer the regulation of new security issues for protection of the investor. (8) To cooperate with chambers of commerce and boards of trade in the development of commercial arbitration or the refereeing of business disputes. (9) To cooperate with other government agencies, whether federal, provincial or municipal. in the solution of trade and industrial problems. (b) Advisory- (1) To government- _ (a) To recommend to the governor in council the recognition and regulation of monopoly in 92582-223 special situations where competition cannot be restored. (b) If so requested by an industry, and after investigation, to recommend to the governor in council the granting of powers of "self-government" in special situations where competition seems undesirable. (c) To recommend to the governor in council such regulatory measures as each such situation seems to require under (a) or (b). (2) To industry- In cooperative trade practice conferences to advise industry and secure its advice about the elimination of unfair trade practices. (c) Investigation and pubicity-[DOT] (1) Full power to inquire into the organization and practices of any industry. (2) General economic investigation. (3) Full publicity to the results of any investigation. (4) Authority to require that firms or industries publish such information about prices or other matters as may be in the public interest. 2. Amendments to the Combines Investigation Act. 1. To facilitate the application of the act to single unit monopolies, as well as to combinations in restraint of trade, a definition of monopoly 'is given which should be included in the act. 2. Section 28 of the act should be amended to ensure that reports of inquiries by the registrar, when the inquiry has been such as a commissioner would make, should be subjected' to the same provisions in respect to publication as are commissioner's reports. 3. Proposals for the extension of the general statistical work of the dominion bureau of statistics. The second general recommendation relating to this problem of state control had to do with amendments to the Combines Investigation Act, and there were proposals for the extension of the general statistical work of the dominion bureau of statistics. For the purpose of the report, the commission divides industry into five different categories, namely: 1. Monopolies which could be subjected to complete regulation or government control. 2. Industries wherein competition could be satisfactorily restored by the enforcement of the Combines Investigation Act. 3. Imperfectly competitive industries wherein regulations must be resorted to rather than the restoration of competition. 4. Industries where competition is effective. 5. A few industries where competition is of such a cut-throat character that it must be modified. This is referred to at page 264 of the report. The commission recommended the setting up of a trade and industry commission under the president of the privy council and which was to have among others the following powers: A. Rigorous enforcement of the Combines Investigation Act. This is referred to at page 266 of the report.



Trade Commission-Mr. Hanson This recommendation is incorporated in clause 13, of the bill, which provides that the commission shall be charged with the administration of the Combines Investigation Act, and shall exercise ail the powers and jurisdiction and perform all the duties com ferred on the commission under the said act. Under this power, industries in the second and fourth categories above referred to, were to be dealt with. The commission pointed out that the Combines Investigation Act should be strengthened by rendering it more definitely applicable to "single company monopolies," as compared with combinations. A definition of monopolies was recommended which has been substantially adopted as one of the amendments to the Combines Investigation Act, bill 79, wherein under section 2 (4) "merger, trust or monopoly" is defined to mean and include "any combination resulting from the purchase, lease of, or other acquisition by any person of any control over or interest in the whole or part of the business of any other person; or any person or combination of persons engaged in industry or commerce who, in any particular area or district or generally in Canada, dominate or control any class of business; or any person or combination of persons possessing or exercising within any particular area or district or generally the sole right or power of manufacturing, producing, transporting, purchasing, supplying, storing or dealing in any commodities which may be the subject of trade and commerce." I submit, Mr. Speaker, that that is a very wide definition of merger, trust or monopoly. B. The second power to be given the commission was to regulate monopolies "where competition cannot or should not be restored. This is referred to at page 267 of the report. The commission recommended that specific industries should be declared by the commission monopolistic and exempt from the operation of the Combines Investigation Act, and subject to regulation by the commission. Under this power industries in the first and third categories are to be dealt with. In the bill as originally drafted and submitted to counsel for opinion, there was a provision which provided for the exemption from prosecution under the Combines Investigation Act or section 498 of the criminal code, of an industry which because of its monopolistic character should be regulated and controlled as the public interest would not be safeguarded by restoring or enforcing competition and it was the opinion of both counsel that such a provision could not be justified under the heading of "regulation of trade and commerce," by section 91 (2) of the British North America Act, and it was not an exercise of jurisdiction under criminal law. I may be permitted to quote the opinion of Mr. Tilley, dated May 15, 1935, in this regard, in which he says: This section (15) seems to be bad. It purports to authorize the commission to exempt an industry from the criminal provisions respecting combines of the Combines Investigation Act, and of the criminal code, because of the monopolistic character of the industry or the nature or dimensions of any of its Operations.... The dominion has been considered authorized to deal with combines under the power of criminal law and also under its power over patents and customs. Otherwise, as a previous decision showed, the dominion had nothing to do with the matter. This is clearly not criminal legislation. It is regulatory legislation and on that account seems to be bad'. Undoubtedly the Teamed counsel had in mind the board of commerce case decided by the privy council in 1921 and cited as the Attorney General for Canada versus the Attorney General for Alberta and others to be found in 1922 Appeal Cases, page 1. It will be recalled -that in 1919 parliament enacted two statutes called the Board of Commerce Act and the Combines and Fair Brices Act, to be read and construed together, under which it was proposed by the board to issue an order prohibiting retail clothing dealers from making unfair profits. The authority of the board was challenged and the Supreme Court of Canada was asked to decide two questions. First, whether the board of commerce had lawful authority to make such an order and, second, if so, whether they had lawful authority to require the Supreme Court of Ontario to make it a rulle of court. The Supreme Court of Canada was equally divided in opinion and special leave was granted to appeal to the privy council. The privy council held that the first question must be answered in the negative, that is to the effect that the board had no lawful authority to make an order prohibiting retail clothing dealers from making unfair profits. As a consequence the second question did not arise. The privy council decided that the legislation setting up a board of commerce with power to make such an order was, in the absence of exceptional circumstances, imperilling the peace, order and good government of the dominion beyond the powers conferred on the dominion parliament by section 91 of the British North America Act. It may be of interest to hon. members who are of the legal profession to study this judg- Trade Commission-Mr. Hanson ment which was delivered on- behalf of thieir lordships by Viscount Haldane. This reads: The regulation of trade and commerce did not by itself enable interference with particular trades in which Canadians would, apart from any right of interference conferred by these words above, be free to engage in the provinces. With reference to the criminal law he said that this power enables the dominion parliament to exercise exclusive legislative power where the subject matter is one which by its very nature belongs to the domain of dominion jurisdiction. It continues: It is quite another thing, first to attempt to interfere with -a class of subjects committed exclusively to the provincial legislatures, and then to justify this by enacting ancillary provisions designated as new phases of dominion criminal law which require a title to so interfere as basis of their application. The third power to be exercised by the commission was to give approval to price and production agreements between' the persons engaged in any industry where cutthroat competition was demoralizing the industry. This power of approval is now provided for by section 14 of the bill, which reads: (1) In any case where the commission, after full investigation under the Combines Investigation Act, is unanimously of opinion that wasteful or demoralizing competition exists in any specific industry, and that agreements between the persons engaged in the industry to modify such competition by controlling and regulating prices or production would not result in injury to our undue restraint of trade or be detrimental to or against the interest of the public, the commission may so advise the governor in council and recomend that certain agreements he approved. (2) The governor in council may, if of opinion that the conclusions of the commission are well founded, approve of any such agreement, and shall make regulations requiring the commission to determine from time to time whether the agreement is resulting in injury to or undue restraint of trade or is detrimental to the public interest. (3) The commission shall require persons engaged in the industry to furnish full information relating to operations within the industry under the agreement and may at any time, of its own motion and in its absolute discretion, advise the governor in council to rescind the approval of the agreement and the governor in council may rescind the approval. The fourth power recommended by the report related to the protection of the consumers, which was to be effected by two means: First, by the enforcement of the laws relating to weights and measures, trademarks, patents, commodity standards et cetera and, second, by improving and adding to commodity standards. Under section 20 of the bill the commission is given power to receive and investigate complaints respecting the 925S2-223f various laws which exist for the protection of the consumer, as well as others generally described in the bill as "laws prohibiting unfair trade practices," and enumerated in section 2, subsection (h) of the bill. I would direct the attention of hon. members to the large number of statutes presently existing and in force which are named in subsection (h) of section 2. It is surprising to find that there are already so many acts on the statute books prohibiting unfair trade practices. As will be observed these include the Agricultural Pests Control Act, the Canada Grain Act, the Combines Investigation Act, the Dairy Industry Act and a long list of I think twenty-eight others including sections 404, 405, 406, 415A and 486 to 504 inclusive of the criminal code itself, as well as those other bills which are now before the house for enactment. The enumeration of these acts, including the criminal code, and of the regulations made from time to time under most if not all of them, would indicate that there is a very large body of legislation now on the statute books which has for its object presently and now existing the protection of the consumer as well as others. It may well be that there is ground for the belief that in the past all of these laws and regulations have not been sufficiently or efficiently enforced and in order to remedy this defect, if defect there be, the bill gives authority to the governor in council under section 21 to appoint an officer to be called the director of public prosecutions and who shall be responsible for the prosecution of all these laws above enumerated, including the sections of the bill now before the house. It will be observed that under section 22 of the bill it shall be the duty of the director of public prosecutions under the superintendence of the Minister of Justice: (a) to institute, undertake or carry on, at the instance of the Attorney General of Canada or the commission criminal proceedings for violation of any of the laws prohibiting unfair trade practices in cases which appear to be of importance or difficulty or in which special circumstances or the refusal or failure of any other person to institute, undertake or carry on such proceedings appear to render the action of suck director necessary to secure the due prosecution of an offender; (b) to give such advice or assistance to t(he Attorney General of any province in connection with the prosecution of offenders against iaws prohibiting unfair trade practices as appears necessary to secure the prosecution of such offenders; (c) to assist the commission in the conduct of any investigation where it is alleged or complained that an offence against any of the laws prohibiting unfair trade practices has been or is likely to be committed.



Trade Commission-Mr. Hanson In addition to the foregoing the commission is given investigational and advisory authority in connection with commodity standards, as covered by sections 15, 16, 17, 18 and 19. The royal commission further recommended that the dominion trade commission should have authority to regulate trade practices by means of "cease and desist" orders directed to any person engaged in industry whose conduct seemed to the commission to be unfair. This same method of mandatory regulation had been resorted to by parliament when it enacted the Board of Commerce Act, 1919, chapter 37, 1910 George V, 1919, and the Combines and Fair Prices Act, 1919, chapter 45, 1910 George V, 1919. This legislation, which was to be read together, was held to be ultra vires by the privy council in the board of commerce case above referred to in which it was held that orders issued by the board of commerce prohibiting certain retail dealers from making unfair profits was beyond the jurisdiction of the federal parliament. The legislation setting up such a board with power to make such regulatory and mandatory orders was not clothed or made under exceptional circumstances imperilling peace, order and good government of the dominion. In this connection Lord Haldane makes the following observations: The first question to be answered is whether the dominion parliament could validly enact such a law. Their lordships observe that the law is not one enacted to meet special conditions in war time. It was passed in 1919, after peace had been declared, and it is not confined to any temporary purpose, but is to continue without limit in time, and to apply throughout Canada. No doubt the initial words of section 91 of the British North America Act, 1867. confer on the parliament of Canada power to deal with subjects which concern the dominion generally, provided that they are not withheld from the powers of that parliament to legislate, by any of the express heads in section 92, untrammelled bv the enumeration of special heads in section 91. In may well be that the subjects of undue combination and hoarding are matters in which the dominion has a great practical interest. In special circumstances, such as those of a great war, such an interest might conceivably become of such paramount and overriding importance as to amount to what lies outside the heads in section 92, and is not covered by them. The decision in Russell v. The Queen (7 App. Cas., 829) appears to recognize this as constitutionally possible, even in time of peace; but it is quite another matter to say that under normal circumstances general Canadian policy can justify interference, on such a scale as the statutes in controversy involve, with the property and civil rights of the inhabitants of the provinces. It is to the legislatures of the provinces that the regulation and restriction of their civil rights have in general been exclusively confined, and as to these the provincial legislatures possess quasi-sovereign (authority. _ It can, therefore, be only under necessity in highly exceptional circumstances, such as cannot be assumed to exist in the (present case, that the liberty of the inhabitants of the provinces may be restricted by the parliament of Canada, and that the dominion can intervene in the interests of Canada as a iwhole in questions such as the present one. Tor normally, the subject matter to be dealt (With in the case would be one falling within section 92. Nor do the words in section 91, tile regulation of trade and commerce," if .taken by themselves, assist the present dominion contention. It may well be, if the parliament of Canada had', by reason of an altogether exceptional situation, capacity to interfere, that these words would apply so as to enable that [DOT]parliament to oust the exclusive character of the provincial powers under section 92. In this connection I may observe that in the original draft of the bill three sections were included which had to do with the question of mandatory and regulatory orders, the publication of price lists and other things of a like character. Mr. Tilley, in his opinion submitted to the government, stated as follows; Sections 28, 29 and 30 are, I think, invalid. [DOT]By subsection (3) of 28 a person who omits to comply with an order of the commission [DOT]made under the section is guilty of an offence [DOT]and liable on indictment or summary conviction to a penalty. While this provision gives section 28 the appearance of criminal law, I am [DOT]of the opinion that parliament cannot under criminal law authorize a commission to declare [DOT]what practices are unfair and to issue orders [DOT]prohibiting the practice and then attach criminal consequences to a breach of the order. Where the matters dealt with are provincial in character, the provincial legislature can provide the sanction. Mr. Geoffrion in his opinion of May 15 states: Sections 28, 29 and 39 of the bill as originally drafted also appear to me to be bad. The dominion can deal with unfair trade practices [DOT]under its jurisdiction concerning criminal law [DOT]but that is not what it does here. I would [DOT]think that the judgment on the first combines act which is set aside would apply here. I am not unmindful of the decision in the privy council in the Proprietary Articles Trade Association case, reported in 1931 Appeal Cases, page 210, where it was held that the legislation in question, being in its pith and substance within enumerated heads of section 91, it was not material that it affected property and civil rights in the province . . . and it further decided that it was unnecessary to discuss whether the legislation was intra vires also under section 91, head 2, "The regulation of Trade and Commerce." The difference between the Board of Commerce ease and the PA..T.A. case in substance is that, in the first case, the legislation endeavoured to make the commission of a prohibited offence which was not Trade Commission-Mr. Hanson in. its pith and substance a crime, criminal legislation. In the latter case, according to the judgment of Lord Atkin, if the legislation in its pith and substance was criminal in character, it was intra vires. I submit, therefore, that the government was justified in not including in the bill presently before parliament provisions for the regulation of monopoly in the sense that I have outlined or for mandatory and regulatory orders such as is contemplated by the findings of the commission to which I have referred. Counsel have unanimously advised that the commission could not be clothed with these powers. However, amendments have been introduced in bill 73, an act to amend the criminal code, (clauses 5 and 6) to carry out the recommendation of the commission with regard to unfair trade practices in so far as this may be done. A further recommendation in this connection was that the commission might require any person to publish price lists and this too was thought to be ultra vires. The bill now before the house, therefore, naturally divides itself into five main departments of activity, namely: 1. Administration of the Combines Investigation Act. 2. Investigation of complaints respecting unfair trade practices. 3. Supervision of commodity standards. 4. Issue of new securities. 5. Price and production agreements. There is also the general power of investigation into unfair trade practices and provision for fair trade conferences, cooperation with boards of trade, and economic investigation, to which are attached enabling powers. A further outstanding provision of the bill is the initiation of the office of director of public prosecutions. Hitherto in Canada we have never had such an officer but in the United Kingdom they have had a director of public prosecutions with most beneficial results to the body politic, and I commend unreservedly this provision of the bill to the house and to the country. I have not hitherto made specific reference to the powers of the commission to investigate the capital structure of companies and the issue of new securities as recommended by the royal commission. In the Dominion Companies Act itself and in the amendments contained in the bill proposed by the hon. Secretary of State will be found provisions which, in my opinion, go a long way towards meeting the recommendations of the royal commission, and in section 26 of the bill it has been provided that the commission shall have the power, if requested by the Secretary of State, who is charged with the operation of the Companies Act, to investigate and review the capital structure of any company incorporated by or under any act of parliament proposing to issue new shares, debentures or other securities to the public. Ample provision is made for the furnishing of such information as the commission may require, and provision is further made that the commission may disapprove or reject any such issue but shall not give formal approval to an issue. These provisions, together with the provisions of the Companies Act as proposed to be amended, should go a long way to meet the recommendations of the royal commission in this regard. I should add that on page 272 of the report the royal commission further recommended that the commission should have investigational and advisory powers upon economic questions generally. This recommendation is implemented by clause 25 of the bill. In my opinion, however, that clause requires a slight amendment by inserting in the sixth line after the words "economic council" the following words: "Established under the Economic Council of Canada Act 1936." I am not unmindful of the fact that in its recommendations regarding the problem of state control, the royal commission recommended the establishment of a distinct trade and industry commission with a structure consisting of five members appointed by the governor in council as a semi-autonomous board under the president of the privy council, and with a status both in its authority and in its relation to the responsible minister and parliament, to be similar to that of the board of railway commissioners with administrative, advisory and investigatory functions. The structure of the commission set up under this act frankly does not carry out the terms of that recommendation but on the contrary constitutes a commission consisting of three commissioners, the members of which shall be the members for the time being of the tariff board as established pursuant to the Tariff Board Act, chapter 55, 1031, who shall by virtue of holding office as members of the said board and by virtue of the bill be the commissioners under this bill. Objection may be taken to this method of constituting a dominion trade and industry commission, but I assure the house and the country that the government has given the most careful consideration to this aspect of the matter, and has arrived at the conclusion that if the functions of a dominion trade and industry commission can be efficiently carried on by a presently existing board, it is in the



Trade Commission-Mr. Stevens public interest that this should be done. I have taken measures to satisfy myself that the tariff board as presently constituted, or as it may be constituted hereafter by an en-largment of its personnel, is fully capable of performing the functions imposed upon it by the terms of this bill. The whole matter is one of modus operandi, not of substance, and the method adopted should not be condemned because this provision of the royal commission report has not been translated into legislation. The tariff board, as presently constituted, is without question an efficient body and has performed most useful service to the people of Canada. If it is accepted as the dominion trade and industry commission the board will function efficiently and competently, and there will be the additional advantage of a saving to the public treasury of a large expenditure which would be necessary if a new and distinct board were to be set up. The dominion trade and industry commission will function as a separate branch of the tariff board, with its own officers and secretariat. It may be necessary in the course of time to increase the personnel of the tariff board for this purpose, but at this juncture it is not thought that we should set up in this country another new and expensive commission of the character indicated by the report. I commend the bill to the best consideration of the house, and will welcome constructive suggestions with respect to the substantive clauses thereof, always assuming that such suggestions are consonant with the legislative jurisdiction of this parliament.


CON

Henry Herbert Stevens

Conservative (1867-1942)

Hon. H. H. STEVENS (East Kootenay):

Before the bill is read the second time I should like to make a few observations. This bill is one of several offered to parliament with the declaration that it gives effect in an adequate manner to the proposals and recommendations of the price spreads and mass buying commission's report. It might be interesting at this point to indicate to the house a number of bills which purport to participate in the discharge of that duty. There were several bills based upon the peace treaty; No. 21 for the eight hour day, No. 22 for the weekly day of rest, No. 40 to provide for minimum wages-not directly associated with the price spreads commission report but indirectly related to the problems which were exposed during that inquiry-and the bill to establish an economic council. That bill and the unemployment and social insurance bill may be said to contribute in some measure towards

the discharge of that obligation although not directly associated with the report. Other bills, however, which I think may be said to arise out of the report are as follows. Bill No. 70, to amend the Weights and Measures Act, regarding which I have nothing to say except that it does, I think, add to the efficiency of that act; Bill No. 72, to amend the Live Stock and Live Stock Products Act, which I shall not discuss at this time other than to say that in my opinion it does not in any sense carry out the suggestions of the report-

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

Hear hear.

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

-or in any adequate

way give that measure of correction of the abuses and faults which were found to exist in connection with the marketing of live stock and live stock products. Bill No. 73, to amend the criminal code was debated yesterday and is still before the committee ,of the house. As I pointed out last night it was declared on at least two occasions by the Minister of Justice to be in some of its clauses at least of very doubtful value. I should think a measure launched in that spirit would not inspire very much fear in the hearts-I think they have not hearts, but in the minds of those who were most *guilty of violation of the ordinary ethics of business as employers. In addition to that the leading legal advisers and spokesmen of the opposition declared that it was so trivial that the house should not waste any more time considering it. That was not my own opinion, that was the opinion expressed by eminent legal authorities on both sides of the house. Bo one cannot take very much comfort out of the amendments of the criminal code. I made certain suggestions last night to the Minister of Justice (Mr. Guthrie), and I hope that when the matter is again taken up these clauses may be amended so as to make them more effective and perhaps contribute somewhat to the discharge of the obligation to which I have referred. Then there is Bill No. 75, respecting fair wages and hours of labour in relation to public works and contracts. That is quite commendable, and is simply placing in statutory form matters which in the past were supposed to be done by governments, this government and preceding governments, and I think this bill should be welcomed by the house and the country as at least a clearing up or making obligatory by statute of practices that ought to be carried out in any case. Bill No. 79 to amend the Combines Investigation Act simply brings the administration of that act under the trade and industry commission. It

Trade Commission-Mr. Stevens

does one or two other things as well, and to that extent I think should be commended. Then there is a bill to amend the Companies Act which has not yet been considered, which has to do with corporate structure, capitalization, prospectuses and so forth.

Then we have this bill, to establish a trade and industry commission. For the last couple of months I have been waiting patiently, I have scanned with great care the bills which up to the present time 'have been introduced, with the hope that the recommendations in the report of the price spreads commission would be put into such legislative form that we might expect effective remedies for the evils so completely demonstrated in the report. This bill now before the house I looked for with a great deal of hope and confidence, expecting that it would contain such provisions as would adequately take care of the case. It is a matter for regret to me and an extremely distasteful duty to have to say that I am deeply disappointed with the bill.

I had hoped for much more from it, perhaps I had hoped for too much; but I am very much disappointed. I shall try in the limited time at my disposal to indicate the reasons for that disappointment, and perhaps suggest where I think the bill might yet be made * more effective, in the hope that these suggestions may be received by the government with some measure of interest and consideration.

My hem. friend the Minister of Trade and Commerce referred to one or two matters with which I should like to deal before I proceed with the remarks which I have prepared for this occasion. My hon. friend cites the decision of Lord Haldane. Now I know that those who are of the legal profession rather resent a layman examining or offering opinions about decisions of the privy council or other courts. I do not do so with any desire to assert my authority, because I have none. Hon. gentlemen in this house constantly cite the decision of Lord Haldane on the Board of Commerce Act and its twin act as if it were the last word that can be said on the subject. But it will be noted from the very quotations made by the Minister of Trade and Commerce, who is a very able lawyer, that he pointed out that Lord Haldane'said that the dominion government was exceeding its jurisdiction when it interfered with the practice of individual retail traders.

The report of the commission, Mr. Speaker, and the argument that some of us are making, is not that we should interfere with the activities of an individual citizen or trader but that we should set up machinery that will formulate rules to govern trade and commerce as * whole in this country. We are seeking to lay a foundation that will build up rules of practice which all industry will respect.

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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UFA

Donald MacBeth Kennedy

United Farmers of Alberta

Mr. KENNEDY (Winnipeg):

In the public interest.

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

And in the public interest.

I shall come to a more detailed argument on that in a moment. We are not therefore, going contrary to what Lord Haldane cited in that instance; on the contrary we want to establish rules of practice for all. Then my hon. friend cited the decision of the privy council under Lord Atkin in 1931 or 1932, and if he will not think me impertinent I should like to correct his interpretation of that decision. My hon. friend suggested that the decision of the privy council under Lord Atkin was to this effect, that you could not declare a thing a crime that was not in its nature a crime. My hon. friend will correct me if I am wrong in my interpretation of his words. Let me read what Lord Atkin said, because I think if we are going to stand on legal precedents at least we should take the latest precedent. Let us see what Lord Atkin said:

The criminal quality of an act cannot be discerned by intuition; nor can it be discovered by reference to any standard but one: Is the act prohibited with penal consequences? Morality and criminality are far from ooextensive; nor is the sphere of criminality necessarily part of a more extensive field covered by morality-unless the moral code necessarily disproves all acts prohibited by the state, in which case the argument moves in a circle. It appears to their lordships to be of little value to seek to confine crimes to the category of acts which by their very nature belong to the domain of "criminal jurisprudence"-

May I emphasize those words:

It appears to their lordships to be of little value to seek to confine crimes to the category of acts which by their very nature belong to the domain of "criminal jurisprudence"-

That is precisely the reverse of what seems to have been accepted as his decision.

-for the domain of criminal jurisprudence can only be ascertained by examining what acts at any particular period are declared' by the state to be crimes, and the only common nature they will be found to possess is that they are prohibited by the state and that those who commit them are punished.

Let me pause there; any act prohibited by the state for which there are penal consequences is a crime. So Lord Atkin has said. That is not my opinion; that is the opinion of their lordships of the privy council.

Their lordships agree with the view expressed in the judgment of Newcombe, J., that the

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passage in the judgment of the board in the Board of Commerce ease, to which allusion has been made, was not intended as a definition.

There, sir, I have cited Lord Atkin. I am not presuming, in the face of men in this house learned in the law, to argue the pro or con of the legality of things, but I do think we have come to a position in this House of Commons where we have a right to make some sort of effort to legislate in the interests of the great masses of the people. And I say that in spite of the fact that one person has described me as an individual running amok. I say that, sir, because I know that the people of this country are looking to this house to bring about some measure of relief from the evils which are present with us.

I am not going to argue that point further, but I should like to point out this: In days gone by in this country there were laws regarding crime, just as there are today, but there was something else. There were standards of ethics; there were customs and practices in business which were recognized by and large as very largely controlling men in connection with their affairs. Do not let us forget that there was a much larger code of ethics than there was of laws. I would be doing business with another man; certain practices, customs and ethics governed me. That was all right so long as we had individuals in business, but what has happened? Let us face the fact. A complete change has come over the western world in the method >of doing business. The old relationship of myself with hon. gentlemen opposite or individuals here and there has largely disappeared, and what do the business men find1 to-day? I will ask any business man in any part of this house; he can answer for himself as to what he finds to-day. You meet some individual in connection with some business transaction; it may be the sale of goods, it may be in connection with a building contract or anything you like, and what do you find? Usually you find that you are dealing with some offioial of a large corporation and, as our report shows, that has extended not to a few great industries or utilities but to every branch of human activity. The corner grocery has largely passed out of the hands of the individual into the hands of great international corporations. The five cent article that a shop girl will buy to put in her ear is now associated with corporations worth scores and, indeed, hundreds of millions of dollars. You go into a dry goods store to buy a suit of clothes and you are dealing

with a corporation that has its tentacles spread over 171 different units, doing business all over the country, with a capital structure of S30,0000,000 or $40,000,000.

So, Mr. Speaker, we have a different method of orientation of business to-day, and I think it behooves parliament to face , the common facts. This has been an evolution, a growth. I am not complaining; I am not condemning parliament or anyone associated with the past government of this country for not having advanced quite as rapidly as this development, because it was not perhaps realized1 or seen. Yet the report shows, as anyone who desires to read it will find, that many of the abuses to which we have directed attention have existed1 for quite a number of years. It is only during the last few years-particularly during the depression, it is true, because that accentuated the burden or the suffering-that it has developed that certain abuses have crept in due to this condition to which I have referred. The report describes that as due to the concentration and the control of credit and industry, and I should like to spend a feiw moments to impress upon the minds of hon. members the fact that concentration is with us, and the degree to which that concentration has developed. First let me refer to the report, from which I should like to read one or two brief extracts. I quote from page 13:

The evidence ... has shown that a few great corporations are predominant in the industries that have been investigated; also that this power, all the more dangerous because it is impersonal-

I should like the house to note those words.

-all the more dangerous because it is impersonal, can be wielded in such a way that competition within the industry is blocked, the welfare of the producer disregarded, and the interests of the investor ignored.

Then there is another point to which I shall now direct the attention of the house.

In the years 1900 to 1933 there occurred in Canada 374 mergers, or, as it has been called by economic experts, consolidations, involving 1,145 firms. I am going to draw attention to a phenomenon which I think should be given close consideration and study. Of these 374 mergers or consolidations 246 occurred between the years 1904 and 1930, and 128 in the remaining 27 years. It will be noted that 1924 and the years subsequent to 1924 followed the passing of the Combines Investigation Act. I ask hon. members, Mr. Speaker, to give consideration to this point, because I am arguing at this time not to

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indicate that the Combines Investigation Act is responsible for the merger but to prove that in spite of the Combines Investigation Act the natural growth or evolution of business control and concentration went on and resulted in 246 consolidations. What does that mean? It means this that the Combines Investigation Act, while an admirable measure

and I wish to say at once that I stand for its continuance, but urge that it be placed under an effective board; I urge its continuance for the value that is inherent in it- it means that this Combines Investigation Act is not sufficient to control the situation. That has been demonstrated. It does not as a matter of fact to any extent deal with the situation which has arisen. This is an economic phenomenon outside the vision of the framers of this act, and calling for distinctive treatment by parliament.

Let us look at credit concentration. I shall give only a few illustrations, and since the time at my disposal is short I shall give them quickly. I should like to say to the house that in citing these facts I am not for one moment discussing the question whether the condition is good or bad; I am simply trying to indicate that what I describe is a factor in the economic life of Canada which we must face and with which we must deal. Four of the largest trust companies, three of the largest mortgage companies and six of the largest insurance companies have combined assets of $3,149,000,000, or seventy-five per cent of the assets of all such institutions doing business in Canada. Does that not indicate, sir, a growing concentration in Canada of capital control, of wealth control, of credit control? Then, turning to retail business I find that two concerns control 12-9 per cent, practically 13 per cent, of all the retail business in Canada. Probably 50,000 other concerns, or thereabouts, do the remainder of the business. There is good evidence of the development of powerful institutions within the activities of certain lines of business commerce and finance in Canada.

As was indicated last night by a speaker from the opposite side of the house I find that in the packing industry one concern controls 59 per cent of the business, two together controlling 85 per cent. There again, sir, you have a great concentration of power and control, and we have-how many?-we have 700,000 farmers who must do business under the shadow of that control. For the moment we are not interested in whether this is a good or a bad condition-although in fact we are deeply interested in it-but at this time we turn our attention to the terrific concentration of powerful control in certain lines of goods, on the one hand, as against the unorganized and diversified efforts of 700,000 farmers. Because, Mr. Speaker, nearly every one of those farmers is in greater or lesser degree interested in the meat packing business.

Let us now turn to agricultural implements. In this industry two concerns control 63 per cent of Canadian business-two concerns only. And without going into that in detail we know that the policy of those concerns-and again without debating whether or not it is good or bad business-has been one of expansion. They developed a condition under which there was a terrific overhead. Who bare that overhead? The farmer did. The purchaser of the implements had to bear it. You say, "Weill, that must be, because the overhead must foe considered." Well, if your sales drop from 850,000,000 down to $10,000,000 Obviously the unit of overhead is multiplied tremendously; but the farmer pays it all. Is it any wonder that the producer is asking for some measure of relief, is urging that this new orientation of business should be looked at by parliament and some steps taken to protect him against unfair exploitation?

Let us turn to the textile industry. In that there are two great concerns, each of which has one subsidiary. Between them they control 79 per cent of the business in their line. And so one might go on; I have a number of others which I shall not enumerate. These must serve to indicate), however, that the concentration in the control of industry has been going on apace, and what is of still greater significance so has the concentration of the control of credit.

Ait this point may I say a word or two about interlocking directorates and individual control. Sir, I could spend at least an hour demonstrating to this chamber a situation which is amazing, if not appalling. Again I say it is not a question whether or not these men to whom I refer are good or bad citizens. It is the terrific responsibility that they have assumed by acquiring control of such a large proportion of the business of Canada with which I am now dealing. The significant point is that it constitutes in my opinion a drastic, if not a revolutionary, change in our business methods. I have before me two or three examples which I should like to read hurriedly to the house, and which I have, worked out carefully.

I stated on another occasion, and I have the figures before me, that some twelve individuals by their position in the financial world control $9,800,000,000 of wealth in the

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form of company assets. These twelve individuals hold twenty-three presidencies, twelve vice-presidencies, three chairman-of-board-of-directorships, and forty-seven directorships. That is terrific control. As a matter of fact some individuals hold presidencies or the absolute control of companies to the number of eight, ten or twelve companies, any one of which would be sufficient to tax the energy and intelligence of a very able man. Yet they sit in control of these companies. No person could argue, as some attempt to do, "Oh well, they are only one on the boards of directors." I shall show you in a moment how boards of directors interlock. But that is not the point. Any person who knows, as I know, must realize that when these individuals walk into a board room they dominate the situation. One hias but to glance back over the list to realize that in this instance the old saying would hold true, "Where McGregor sits is the head of the table." Where these men sit at meetings of boards of directors is the head of the table. Their policy, their direction and their control is almost if not wholly absolute.

Here is one illustration. One man is president of a chartered bank, which I shall call A, and a trust company which I shall call B. The assets of these two institutions are in the one instance $768,000,000 and in the other $657,000,000, in round figure^, or a total of $1,425,000,000. One man is chairman of both boards. Analyzing these two institutionis further we find that bank A has a board of directors of eighteen members who hold a total of 189 directorships, and trust company B has a board of twenty-five members holding 222 directorships. Taking the two institutions combined we find that out of a total of forty-three directors, eighteen in the bank and twenty-five in the trust company, only twenty-nine persons bold the directorships of these two companies. In other words fourteen are on both concerns. Still taking the two together these twenty-nine men who hold forty-three directorships on these two concerns, a big bank and a big trust company, also hold 248 directorships in other companies. Oan it be said that there is no evidence of concentration?

Take another case, bank C and trust company D. These two have assets of $729,000,000 and $825,000,000 respectively, or combined assets of $1,555,000,000. The same person is president of both institutions, with another man vice president of both. These two men out of a list of twelve are members of both boards of directors. Taking them separately we find that 25 directors of the trust company

hold between them 261 directorships in other companies while 25 directors of bank C hold 252 directorships between them. Taking them together we find that 50 directorships of these two institutions are held by 38 men, 12 out of 35 on the trust company are also with the board of directors of the bank. Again, these 38 men who hold 50 directorships on the bank and on the trust company hold 346 directorships in other companies.

I will now take a life insurance company. We will call it E. It has a directorate of 17 members who hold a total of 156 directorships in other companies. The important point in this is that of 17 directors 10 of them hold 16 directorships in the four institutions above referred to, bank A, trust company B, bank C and trust company D, with six of them holding two apiece and four holding one apiece.

I am not going to pursue that further than to say this. I advance that as a very meagre illustration of the extent to which the concentration of the control of credit and industry in this country has grown. I notice that my time is slipping by and I must not spend too much on that phase except to say to the house that it would bear most careful and critical examination. I would ask hon. members before these bills are finally passed to give study to that section of the report dealing with this question of concentration. Incidentally, Mr. Speaker, I have just been told that I am not limited as to time, although I thought I was.

In regard to the trend towards concentration, it is much greater than it would appear on the surface, and the reason I say that is this: Many distinctive corporate names are used whereas the institutions or the personnel of the institutions are actually much the same. Then there is the question of interlocking directorates, to which I have referred, and there is another question of enormous importance, the question of credit control. There are industries the president or some prominent member of which sits upon the directorate of a bank, and it is well known that those who have that favoured position frequently get much better and more generous treatment in respect to the credit granted to their company than those who have not that favoured position.

Then there is the question of stock ownership scattered all over the country, with management control of the business, which is also another form of concentration.

There is also the practice of dummy directors. Frequently a powerful institution will appoint to the board of directors a person who is just a clerk or salaried employee, but he is

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merely a clerk voicing the opinion and discharging the orders of those who are more powerful but who do not wish their names to appear.

There is the question of motive, which is very well dealt with in the report. The motives may be said to be two: power, profit and prestige is one of the motives impelling men to secure a larger degree of concentration. There is also, of course, the motive of production and administrative economies and reduction in costs.

Constitutionally, politically, and nominally, Canada is a democracy, but actually Canada is ruled by a plutocratic autocracy. I know there are those who will consider that an extreme statement, but I think it is necessary for the House of Commons to look the facts squarely in the face. It is not a thing to laugh about. It is something, sir, that we in this house, the last fortress I might say of democracy, ought to take into very careful consideration, because if parliament fails in its duty to a democratic state then I hesitate to say what may be the consequence of its failure to discharge such a duty. This house must take notice of these developments.

What I am asking for is not the surrender of the constitutional rights of provinces, municipalities, or individuals; I am not asking for that at all. What I am asking is that this house recognize its duty to the country, to a democratic state, and exercise its powers to the limits of its constitutional rights; and I think we can do much within our constitutional rights to remedy evils of which complaint is made.

Sir, it has been said by some: Leave the problem to be worked out in the courts. That argument is frequently advanced, but in my opinion it is futile and weak. Private citizens cannot possibly appeal to the courts against great corporations. It cannot be done, and it will not be done. Let me give you an illustration, Mr. Speaker. Only a few days ago there was brought to my attention a violation of the criminal code provisions against false advertising. There was no particular need for anybody to write to me about it that I know of, but they did; for it was open to these individuals to go to the nearest police court and swear out an information, and in that way redress through the courts was available. That is in the law and has been there for years. But what individual, what business man is there among the members of this house who on seeing a glaringly false advertisement in the press to-morrow morning will go out and swear an information

against his competitor in his own town? It simply is not done; that is all. It is no use saying that it is the duty of a citizen to do it. I do not think it is his duty. It is the duty of some public official to see that the laws are administered.

But that is not all. What happens to the individual, to the small merchant with limited resources, who goes up against an institution with forty or twenty or fifteen or ten or five million dollars behind it? What earthly chance has he in the courts against a big institution like that? I care not how just the courts are; I care not how impartially justice is administered, as I believe it is administered by the courts; but what chance, I ask, has the individual or the small merchant when he attempts to carry on his competitive business against these powerful corporations? I had in my hands this morning a letter from a prominent business man in Toronto marked "strictly confidential" and "private," and in the body of the letter he said, "Mr. Stevens, do not under any circumstances disclose what I have written." Then he went on to give me all the facts of a case. But what can I do; What can any public man do in a case like that? He can do nothing. The only people who can do anything in the matter would be a properly organized government body. I agree with the proposal of the Minister of Trade and Commerce in this bill to set up a public prosecutor or official who will be in. charge of prosecutions. Let me point out the situation to the minister. My hon. friend very properly says that the governor in council may appoint an officer to be called the director of public prosecutions. That is a very high sounding name and would seem to be all right, but let us see what his powers are to be. Section 22 reads:

It shall be the duty of the director of public prosecutions under the superintendence of the Minister of Justice-

These things can be done to-morrow under the superintendence of the Minister of Justice (Mr. Guthrie) without the appointment of any new official. The Minister of Justice can retain a lawyer in any part of Canada, as he does every day, to prosecute under any existing law. He can do this directly through the officers of his department or he can retain an official to prosecute. The section continues to state what he is to do, as follows:

(a) to institute, undertake or carry on, at the instance of the Attorney GeneraJl of Canada-

First he is under the superintendence of the Minister of Justice and then he carries on at

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the instance of the Attorney General of Canada, who is the Minister of Justice. The section continues:

*-or the commission criminal proceedings for violation of any of the laws prohibiting unfair trade practices.

Wihat were we told yesterday by the Minister of Justice and by the eminent legal authority on the other side of the house? We were told that it is impossible to make a law to deal with unfair tirade practices. From the other side of the house we were told that it is so much eyewash and from this side we were told that it is doubtful. This prosecutor is to institute proceedings for viola^-tion of any laws prohibiting unfair trade practices. What I want to impress upon the Minister of Justice and the members of the government is that we should provide in this bill for a board to declare what are unfair trade practices. There is no definition of unfair trade practices. When members of the legal profession are asked to enumerate in legal form what are unfair trade practices, all of them will draw away from the task of making that definition and some of them will tell you that it cannot Ibe done. Let us see what the report has to say in that respect. I quoted from the report last night but I shall repeat the quotation. I ask hon. members of the house and the government to listen to this part of the report which along with the other parts is the product of careful thought with respect to all these problems. It reads:

We feel, further, that it would be unwise to attempt to write at present into statute law a rigid definition of what constitutes an unfair practice, _ with a list of such practices. Such a list, if appropriate at the present time, would probably soon be rendered obsolete by changing conditions. At the same time we recommend that the act creating the trade commission and giving it power to prohibit unfair competition should establish certain principles for the determination of unfairness. We recognize that there is a very real danger of confusing the economic, legal and ethical implications of "unfairness" and we feel that this danger might be removed to some extent if certain general criteria were laid down in the act.

Will hon. members and particularly hon. members of the government pause for a moment and consider this matter. It is clearly admitted in the report, and as a result of our study we know, that it is almost impossible to lay down in legal phraseology what are unfair trade practices. Through the centuries we have built up, shall I say, a code of ethics to govern the dealings between man and man, but in the face of the reorientation

of business, in the face of the concentration of the control of industry and finance in the hands of the few, we are confronted with a new situation. There is no code of ethics to determine the practice between myself and a great corporation. It may determine what is the truth and what is fair dealing between an individual in a corporation and myself, but that individual will say to me: I am sorry, Stevens; I would not do this of my own will, but the company whose head office is in New York, in Chicago, in Philadelphia, in Toronto or in Montreal tells me that I must do this. He is sorry, but who suffers? I suffer or the fellow who is not able to cope with them suffers. The rigid rule is: business is business. That is the rule laid down by the head offices of corporations at some distant point. This fact can no longer be ignored. It is all very well to say that the game will be played according to the rules, but how can you apply rules to a packing company which controls fifty-nine per cent of the business and which shuts up a factory here and a factory there? Will the rules apply to their dealings with ten, one hundred or three hundred farmers throughout the country? What rules have we to protect these farmers? None. What code of ethics controls the actions of the company? He is a fine man who runs the business, his relations are cordial with his staff, but when it comes to dealing on the part of the corporation with ten, twenty, fifty or one hundred other people, there is no code of ethics to enter into the proposition. What about the flour milling companies, whidh control sixty-three per cent of the capacity of this country; what about their relations with the three hundred and fifty odd small competitors? What does the head of the Ogilvie Flour Mills Limited care for the welfare of the three hundred and fifty small competitors in Ontario and Quebec? I tell you that there is no code of ethics, there is no control, there are no rules of the game. It is not a case of the survival of the fittest, as some have said; it is not the application of the law of supply and demand, it is the ruthless power of huge capital concentration against individual operations.

There is some need of a referee. There is some need of new rules of the game. We hear about business being conducted as a game of football or baseball is played, but that is not the case. We need a referee with the power behind him to enforce the rules. That is what is asked for in this report, that the house take bold of this situation earnestly and give the commission the right to lay

Trade Commission-Mr. Stevens

down rules of practice which will be respected, honoured and accepted by the people of this country. I am familiar with this matter and I speak with a great deal of confidence when I say that the great body of business men, the retailers, the wholesalers, the distributors and the manufacturers, are keen and anxious to have rules laid down and are willing to observe those rules. We have laws against murder, but we have murderers. We have laws against theft, but we have thieves. We have a constitutional right to pass laws against these things but we cannot control them absolutely. There will be the chisellers who will seek to evade these rules, but with the building up of practice, with the development of public opinion and with the establishment of the justice of your case you will gradually build up for commerce a set of rules and ethics of procedure which in my opinion will be more efficacious in carrying on the business of this country than mere statute law. I say to this house with great earnestness that this country is waiting for the House of Commons to lay down rules which will relieve countless thousands of our citizens from the unfair and predatory practices to which they have been subjected in the past.

Before closing I wish to refer to one or two things in connection with this bill. There is a certain inherent and in my opinion fatal weakness in the bill. I hope that the Minister of Trade and Commerce will not think me discourteous when I say that while I agree with him when he says that the tariff board is well qualified and efficient, I distinctly and definitely disagree with him in the suggestion that it is competent from the point of view of physical and mental effort and the time necessary to deal with this very important matter. I do not think it can be done. We have a customs tariff board presided over by one of the ablest judicial minds in Canada; so far as that is concerned no one can complain. Indeed, I think that the chairman of the board has added greatly to his laurels by the manner in which he has presided over its proceedings. But I venture this statement, that he has before him now specific duties outlined which will keep him and his colleagues busy for at least a year. I can cite matters that are crying out for consideration by that board, matters that will occupy them another year. Let me mention one. That board ought now, at the earliest possible moment, in anticipation of the falling in of the British-Canadian trade agreements, to be studying the whole textile schedule of our

tariff. They ought to be studying this subject, and they ought to provide the government, long before those agreements fall in, with some guiding principles that will enable them to remove from the Canadian tariff those measures which are objectionable to our British trade relations. It does not follow that a statement of that kind is a condemnation of the agreements, but it does follow that out of our experience with those agreements there is ample opportunty for adjustment, which will greatly enhance our standing in Great Britain. That is a task they can undertake. I suggest that when it is said that the tariff board are efficient and qualified you do them tardy justice; but I reiterate that they are not competent from the standpoint of time and organization to undertake this task, which is a tremendously important one.

We speak of the difficulty of prohibiting unfair practices. I have dealt with them pretty fully. It is not a question of drafting some narrow legal definitions of unfair practices and penalizing people for indulging in them. Rather, it is a question of building up a broad based catalogue of rules and practices that should govern commerce. Do that, and in the years to come you will attain a position similar to that which the interstate commerce commission has established for itself. On the other hand, I am not suggesting that it should be confined to what is in the interstate commerce act or in the American federal trade board act-not at all. I do say this however. Take a board established on the basis of the Canadian railway board, which acts as referee between the public and the railways-a board which in this instance shall act as referee between competitors in conflicting conditions, and between the business elements and the public- and you will have done the country a service. Can we not draft a law based upon the unity of Canada, upon peace, order and good government in Canada, and upon the provision for the regulation of trade and commerce? Do you mean to tell me, sir, an ordinary layman, that there are not legal brains in this house competent to draft a law within the ambit of these three principles to deal with the matter? Let me refer to them-I did last night. The preamble to the British North America Act lays down, as the principle on which the provinces came together, the unity of Canada. If you have a minimum wage law here and a minimum wage law there, and practices in one province that conflict with practices in another, to the extent that dis-

Trade Commission-Mr. Stevens

cord develops between provinces, surely it becomes necessary, it becomes the duty of parliament in the face of that situation to declare that in the interests of the unity of Canada, which is tlhe basis of confederation, thus and so shall be done. Then I come to the next point, peace, order and good government. Will anyone tell me that the practices which have been uncovered, the pitiful wages paid, due to mass buying pressure, and the ruthless action of many institutions in this country in carrying out their trade practices have not been conducive to the destruction of peace, order and good government in this dominion? Will anyone tell me that this country is so quiet to-day that we need have no fear? I pay this tribute to the people of Canada; it has been amazing during these terrible years of depression how well ordered the Canadian people have been, and this is due to their inherent characteristics. But it does not follow that there has not been provocation; the provocation is there. Here we are asking for recognition of the danger to the peace, order and good government of Canada and to have this power invoked as well. The third point is one T have already referred to; it is one to which !I notice the Minister of Trade and Commerce and others pay very little respect or. shall I say, attach little weight, namely, the mandatory power for the regulation of trade and commerce. It is exclusive; it is unrestricted as far as the British North America Act is concerned. But, as I have said in this house on at least two previous occasions, the trouble is that the dominion parliament has never attempted to occupy that federal field. Look over the history of the dominion for the last fifty or sixty years; we have done something with respect to external trade, but so far as internal trade goes, what have we done? Mighty little. And now we find ourselves confronted with an entirely new method of trading, different from what it wras twenty years ago, something never thought of before; yet we are unprepared to meet it by reason of the fact that no use has ever been made of the power conferred upon the dominion parliament. Let us invoke that power. Based on these principles-the unity of Canada; peace, order and good government in this realm; the regulation of trade and commerce and the recognition of undisputed rights-based upon these principles, I ask that the house give power to this commission to formulate rules and practices, to define what unfair practices are, and to enforce the order to cease and [Mr. Stevens.l

desist. I am convinced, in spite of the very learned arguments made by legal gentlemen in this house, that, given the will to do it, this parliament can effectively meet this great emergency, because it is an emergency, which is confronting us in this country and which is so clearly set forth in the pages of this report.

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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LIB

Samuel Factor

Liberal

Mir. SAMUEL FACTOR (Toronto West Centre):

As a former member of the price spreads commission I feel it is my duty to say a few words concerning the proposed bill.

I followed with much interest the speech of the hon. member for East Kootenay (Mr. Stevens) and with much of what he said I am in complete agreement, particularly in reference to the concentration in industry. I often wonder, though, and I have had occasion to hear the hon. member a number of times, why he omits in all these addresses to emphasize the fundamental thing concerning the disclosures made in that investigation and the problems raised. I think we can agree that there is no single cause responsible for the distress both of the primary producers and the working people of Canada so great as the loss of our external trade. I have never yet heard the hon. member discuss that problem. I venture to suggest that if all the corporations and the present concentration of industry were disbanded and dissolved and all their wealth distributed among all the people it would not increase our total national wealth. If our external trade remains at its present low level or sinks to lower levels, nothing will help our primary producers and the working people of Canada. It seems strange that in all the speeches I have heard the hon. member deliver he does not recognize this problem. I suppose he does not because he was for a number of years a member of a government which pursued policies which destroyed our trade with the countries of the world.

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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?

Some hon. MEMBERS:

Oh, oh.

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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LIB

Samuel Factor

Liberal

Mr. FACTOR:

Hon. members perhaps do not like to hear that statement, but the facts speak for themselves. I venture to suggest that if we had continued for the last five years on the same level of trade that we had in 1928 and 1929, we should have had approximately five billion dollars more trade than we had, and one can easily see the effect of that on the prosperity of our primary producers as well as our secondary industries. Hon. members can well realize that with the

Trade Commission-Mr. Factor

loss of our external trade the purchasing power of the primary producers was destroyed, as pointed out by the hon. member for Wey-burn (Mr. Young) in his minority report, to the extent of almost one billion dollars between 1928 and 1934. This loss of purchasing powier was immediately felt by the secondary industries, with the inevitable result of unemployment, under-employment and shocking conditions in employment.

May I also make a second general observation before I follow the argument of the hon. member. This investigation has been called a mass buying investigation, but may I suggest that in some of the shocking conditions of labour that were disclosed therein mass buying played no part at all. I propose to show in a few minutes some of the conditions both of low wages and long hours in industry in which mass buying played no part. I am not prepared to say that mass buying has not developed and in the last five years induced some evils and trade abuses, on the contrary I propose to show that it has, and perhaps we need legislation to remedy those evils. But to blame mass buying or mass merchandising for some of the shocking conditions of the working people or the pitiable plight of the primary producer is putting the cart before the horse.

Beyond these general observations I must agree with certain statements made by the former Minister of Trade and Commerce. Undoubtedly the concentration of industry has been responsible more than anything else for some of the conditions disclosed by the investigation, and for the exploitation, using the word in its economic sense, of weak and unorganized groups, both producers and workers. Let me illustrate the point with one or two examples. Take the tobacco industry. In that industry one company controls seventy per cent of the business of Canada. The hon. member referred to the meat packing industry in which two companies control eighty-five per cent of the business in Canada. In the fruit and vegetable canning industry two companies control, or endeavour to control almost eighty per cent of the business. And so on down the line, even in industries which have not been investigated by the commission, pulp and paper, cement, rubber, rubber footwear, electrical appliances and many others. There has been this concentration of industry in which one or two companies control the production and sometimes the distribution of perhaps seventy to eighty per cent of the commodities, or by acting in unison with other companies or by some arrangement manage to get control of

particular commodities. The result of this concentration in industry has been the creation of mergers and monopolies having great power, which power they have used to the detriment of both the primary producer and the working people.

Let me go a step further and endeavour in a few words to show how these huge corporations through their corporate powers succeeded not only in causing great wrong to society by taking millions of dollars from the innocent investing public, but built up huge financial structures with a rigid overhead, which, when the depression came and business fell away they were unable to maintain except by taking it out of the primary producer and the working people. I have no quarrel with the investment dealer and the promoter, I believe they occupy a legitimate place in the economic scheme, but the unscrupulous promoter, and the incapable o-r dishonest investment dealer have created the situation through which in the last ten to twenty years the public has lost millions of dollars. This concentration in industry and misuse of corporate powers has resulted in the establishment either of monopolies or monopolistic competition. There is no use blaming anything else. If we succeed in removing these monopolies from our national economy we shall have solved a great many of the problems that are facing us.

Let us glance for a moment at the other side of the picture. I am not going to discuss the condition of our primary producers, 1 leave that for members of the commission who- can speak with greater authority, but I should like to say a- few words concerning the shocking conditions of labour that were shown to prevail. For a young country endowed with great natural resources it came to me as a distinct shock to learn of some of the labour conditions that exist; low wages, long hours, deliberate flagrant violation of the present inadequate minimum wage laws and factory inspection laws and generally speaking a grinding and oppressive condition in industry which is a disgrace to a civilized country. We have a labour chapter written in this report of which I, as a Canadian, am not proud. We have got to realize what has been so amply demonstrated, particularly by my distinguished leader, that industry has two arms. There is the capitalist investor and the labour investor. The capitalist investor invests money with which to buy plant, machinery and equipment, materials and the like. The labour investor, on the other hand, invests his health, his energy and sometimes his very life. In the last twenty-

Trade Commission-Mr. Factor

corporations have lost money and have gone through difficult days, we cannot compare their position with that of the man who must work for two or three dollars a week. I am not talking about the unemployed; I am dealing more particularly with the underemployed and those in employment receiving inadequate wages. How can we compare the position of these corporations with those of the small retail man and small merchants who in the last five years have been struggling to make ends meet and to keep body and soul together?

I appeal to every hon. member, irrespective of political affiliation or partisanship, to try at least to help solve some of these problems. We cannot legislate morality in business; I realize that. No law put on the statute books will in any way bring about an adequate remedy for all these business evils, but at least it will be a step in the right direction. It would act as a brake and would help to remove some of the evils and abuses. I believe the men in control of our industrial and commercial structures now realize the problem. Only a few days ago I read a speech delivered by the president of the Ford Motor Company in which he stated that human life is more important than a balance sheet. Even the president of the Imperial Tobacco Company spoke along similar lines. We must come to a realization of the fact that we must give the small business men, the working people and our primary producers a decent chance to enjoy life.

May I conclude by citing something which President Roosevelt said a few days ago to a correspondent who asked him to restate his position on the new deal, following the decision rendered by the supreme court. Here are his words, and I commend them to the attention of the house:

The social objective, I should say, remains what it was, which is to do what any honest government of any country would do; to try to increase the security and the happiness of a larger number of people in all occupations of life and in all parts of the country; to give them more of the good things in life; to give them a greater distribution not only of wealth in the narrow terms but of wealth in the wider terms; to give them places to go in summer-recreation; to give them assurance that they are not going to starve in their old age.

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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LIB

James Lorimer Ilsley

Liberal

Mr. J. L. ILSLEY (Hants-Kings):

Mr. Speaker, following the hon. member for Toronto West Centre (Mr. Factor) I should like to say a few words on the bill before the house. My line of approach will be roughly to present the point of view of the three members of the price spreads commission who prepared the memorandum of reservations appended to the majority report.

As I stated last night in my observations concerning certain criminal code amendments, the majority report provided for the setting up of three commissions. One of these was the trade and industry commission, another a board of live stock commissioners and the third a fisheries control board. In connection with the two last named boards we disagreed with the majority, believing that they would be either ineffective and superfluous or positively injurious. We did agree with the majority, however, about the setting up of a federal trade and industry commission. We offered our support, believing that there were functions, a half a dozen in number, which such a commission could discharge.

Speaking on the second reading of the bill this afternoon the Minister of Trade and Commerce (Mr. Hanson) enumerated five of those functions, and in a sort of way provision is made for those functions in the bill now before the house. The sixth has been dropped, the reason given being that there is a constitutional difficulty. About that point I may have something to say later. These six functions, subject to what I have to say about price and production agreements, we considered of importance to the Canadian people. First, and to my mind the most important, was the necessity for the better enforcement of t'he Combines Investigation Act. As hon. members are no doubt aware, this act was placed on the statute books in 1923. Of course there had been anti-combine or anti-trust legislation dating from the year 1889, at which time a section of the criminal code, now numbered section 498, was enacted. The original section through the years has to some extent been amended, but section 498 of the code contains substantially the provisions of the original section. After some experience it was found that it was almost impossible to obtain convictions under section 498, unless before launching a prosecution there was set up an investigating body to obtain evidence and to report as to whether or not there was a combine in a particular industry. So in 1910 the first Combines Investigation Act was passed. It remained on the statute books till 1919 when it was repealed. Its place was taken by the Combines and Fair Prices Act of 1919 and the Board of Commerce Act, twin acts placed on the statute books that year. That legislation was declared unconstitutional by the privy council in 1921, and in 1923 the present Combines Investigation Act was passed. It has been called by a good many competent observers the best anti-trust legislation in the world. Under that act there have been hundreds of investigations; there have been many reports declaring that a combine existed

Trade Commission-Mr. Ilsley

in particular industries; there have been prosecutions following the reports, and in every case except one, as I said yesterday, the verdict of the court has been in accordance with the finding of the registrar under the combines act. There is no doubt about this fact, that the existence of a combines investigation act is a fact that is in the minds of everybody engaged in trade or industry in the Dominion of Canada, and to my mind, and in this I understand that all my colleagues on the price spreads commission agree, the Combines Investigation Act is good legislation. No one in this parliament advocates its repeal, although some business men in the country do. It is one of the main measures of protection which the consumers of this country have against monopolistic exploitation. It is therefore very important, Mr. Speaker, that proper machinery be furnished for the enforcement of the act.

With regard to the machinery which exists at present, we were of the opinion, and I am still of the opinion, that it could be improved upon. We think that instead of having a registrar serving under a minister, a branch as it were of a department, the Combines Investigation Act would be more effectively administered and enforced if it were placed in the hands of an independent commission. The registrar is an admirable official, none better in the government, but the conditions under which he has to function hamper him to a great extent.

We have had something to say in this house about publicity. The minister has not made public the reports during the last three or four years. Because there was some little dispute about the facts in connection with publicity I took steps to ascertain what the practice has been in other years. I find in the Labour Gazette of May, 1935, on the first page, a list of the publications of the Department of Labour, and among them are the [DOT]eports published by the commissioners and .he registrar under the Combines Investigation Act. I will leave out the reports of the commissioners, but the reports of the registrar published are five in number: the first was published on June 9, 1925; the second on March 25, 1926; the third on September 6, 1928; the fourth on February 5, 1931, and the fifth on March 4, 1933. That last one was the report of the registrar on the alleged combine of tobacco manufacturers and buyers of raw leaf tobacco in Ontario, which the minister at first refused to produce and did produce only under pressure of the house and because of the circumstances that a by-election was pending in one of the counties in Ontario.

The matter of publicity is therefore important. and we put in our report a very definite recommendation that the reports of the registrar under the Combines Investigation Act should automatically be made public. I think that that provision should be contained in this act instead of section 28, which provides for publicity at the option of the commission. Publicity certainly should be the rule, if and when the opportunity has been given to the persons investigated to be present at the investigation either in person or by counsel.

My first criticism of the bill before the house is that if the enforcement of the Combines Investigation Act, instead of being entrusted to an independent separate commission, is entrusted to the tariff board, I am afraid it is not going to be as well enforced as it has been up to the present time, and I say that very sincerely. The members of the trade and industry commission are to be the members of the present tariff board, and the present registrar under the Combines Investigation Act apparently is left entirely out of the picture. I do not know what will become of the registrar. Certainly I would say that he should be a commissioner. He has had more experience than the others. The others have no experience whatever, and that is one great defect in this legislation. Provision is made for any one of the members of the tariff board to conduct investigations under the Combines Investigation Act. but the one person in this country who has had experience in the conduct of these investigations is the present registrar, who has, within the limitations imposed upon him by circumstances, discharged his duty with great efficiency and distinction. That is my first criticism of the legislation which is before the house.

The second function that we thought this trade commission could effectively discharge for the benefit of the people of this country was that of a bureau of commodity standards. The Financial Post says that a bureau of commodity standards is to be set up as a separate board. Not at all; it was to function as a branch or committee under the supervision of the trade and industry commission. What does that mean? In 1924 we set up a national research council, and it has been examining different commodities to see whether or not they were adulterated, or whether or not they met the requirement of purchasers; but the national research council is primarily a scientific body, and its research is scientific. It is occupied with the scientific rather than with the commercial side, and

Trade Commission-Mr. Ilsley

we considered that it would be very much better for the consumers and for persons in business if they could have a body of men with some commercial contacts, rather than a body with scientific contacts, to establish commodity standards. The evidence was that ' in Great Britain they have established five or six hundred of what they call British standards, and sellers of goods and makers of goods whose products come up to these standards have the privilege of putting upon them the words, or the initials therefor, British Standards, which gives the purchaser some guarantee as to the quality. I am pleased to note that this bill makes provision for Canadian standards, and I think quite a lot can be done along that line. There is a great deal of fraud being practised on purchasers in this country. The most startling evidence given to the commission was on 'that point. Evidence was given that substances were being sold as paint which were hardly paint at all-they would wash off with the rain; lubricating oils were sold which did not meet the requirements of the purchaser in any sense; gasolines were being sold with very widely varying degrees of efficiency, and the grades had no relation to the price at which the gasoline was sold; silk was sold as pure silk which was largely artificial silk and weighting material; putt}'- was being sold with mineral oil in it instead of linseed oil, which caused it to crack and come out shortly after it was put in; anti-freeze and cleaning preparations and soaps were being sold at prices entirely out of line with what was in these articles. It was considered by the commission that much progress could be made in the way of giving the consumer the properties of the article which he was buying; for that reason we brought in a recommendation that a bureau of commodity standards be set up, and so far as I can see that is fairly well provided for in this bill. I have not critically examined the provisions of the bill in this regard, but the principle of the bill, I would say, in that respect is entirely right.

The third function of the board was to act as a securities control board. On that point let me read a brief passage from page 44 of the report:

The machinery outlined above, however, can only come into action after the securities have been issued. It should, therefore, be supplemented by and combined with some machinery which would review the situation before the securities were issued. This leads logically to the formation of an investment or securities board, functioning as a section of the federal trade and industry commission, recommended later in this report. It should cooperate closely with that department of the government responsible for incorporations but should' not, we feel,

be an administrative division of such department. The functions of such a board should be to review the proposed capital structure of all companies incorporated under the dominion act and desiring to issue bonds or stock to the public. In other words the board would pass pn all issues of bonds or stock after thorough investigation. In performing this duty, the board would necessarily give careful consideration to the proper relation that bonds or stock to be issued bear to the company's assets.

We an this side of the house have insisted far some ye-ars that some such board should be established. My right hon. leader stated in 1933:

The Liberal party believes the financial mismanagement of industry is largely responsible for many conditions obtaining to-day.

To prevent exploitation of the public through the sale of watered stocks and worthless securities. it believes an investment control board should be established, with supervision of issues of securities by companies incorporated under federal charters.

These being our convictions we naturally concurred in the recommendations of the price spreads commission, but when I come to consider the bill I find that this federal trade and industry commission is not to function except upon the request of the Secretary of State. Without going further into tihe matter I would say that that provision is entirely inadequate to meet what we had in mind when we made that recommendation and to meet wihat we on this side of the house have had in mind for some years.

The fourth function ,of the commission is the prevention of unfair trade practices. Unfair trade practices can be divided roughly into two classes, those which are ethically unfair and those which are economically unfair. There can be no argument as to the provision of adequate machinery to control ethically unfair trade practices such as short weighing, deceptive packaging, misleading and false advertising, and that sort of thing. I think every hon. member will agree that adequate machinery should be supplied, I believe by the dominion rather than by the provinces, to curtail and prevent ethically unfair trade practices, of which there is a surprisingly large number. There are more of these in existence than I thought possible before I heard the evidence presented to the commission. I am sure that all hon. members will agree to the providing of effective measures foir the curtailment of these practices. It may be that the director of prosecutions may be able to attain this end but we may have to find out mo-re as to how that official is to function and what checks there are to be upon his functioning.

It is very difficult to define what are economically unfair trade practices. The hon.

Trade Commission-Mr. Ilsley

member for East Kootenay (Mr. Stevens) made it very clear to the house this afternoon that theire is great difficulty in defining this type of unfair trade practices. If we needed a further illustration I think it was furnished by the debate last evening which demonstrated the great difficulty of providing proper amendments to tihe criminal code. Attempts have been made in other quarters to curtail what are known as economically unfair trade practices. Since 1924 the federal trade commission of the United States has attempted to deal with these matters and I think we should make some attempt to act within our powers as a parliament to curtail and prevent unfair trade practices. We had a long discussion on this whole matter last evening and I have not the time this afternoon to take it up further.

The fifth function which we recommended for a federal trade commission is what I might call the regulation of monopolies, and I should like to say a word about this. The hon. member for Toronto West Centre (Mr. Factor) has shown the trend towards monopoly and the serious concentration of business in fewer and fewer hands, in the hands of huge corporations. I am thoroughly in accord with all that the hon. member said. No one could listen to the evidence given before the commission, no one could read the reports which were presented to the commission, no one could read the report of the commission itself without realizing that that is true to a tremendous extent in the Dominion of Canada. The packing industry has been mentioned two or three times. In the United States the largest packing company controls only twenty-seven or twenty-eight per cent of the business while in Canada one company controls fifty-nine or sixty per cent of the business. There is a tremendous concentration of control in the tobacco industry, the Imperial Tobacco Company controlling seventy or eighty per cent of the business while two of the largest companies control eighty-five per cent. As the hon. member for Toronto West Centre has said, such monopolies eliminate competition and both primary producers and consumers are undoubtedly put in positions of great disadvantage. Competition is the regulating factor, as the Prime Minister (Mr. Bennett) has said, and when the growth of these monopolies causes the disappearance of competition I am convinced that something must be substituted, that there must be some way provided by which the public can meet these great concentrations of industry on their own ground' and1 get fcr the people

with whom they are dealing some of the advantages which otherwise would be provided by free competition.

Some attempt should be made to bring about that position. We thought that a body should be set up which would have the power to recommend to parliament after careful investigation that certain industries had attained the dimensions of monopolies and should be declared monopolies and' that extraordinary measures should be taken with reference to those industries. They would not exactly be made public utilities, but regulations could be applied similar to those applied to the public utilities. We differed with the majority of the commission on two points. In the first place, our colleagues were of the opinion that the governor in council should have the power to declare these monopolies on the recommendation of the federal trade and industry commission. We disagreed with that because we claimed that the situation could! not possibly be an emergent one. We contended that matters could remain in statu quo for some time. It might be a great advantage to a particular industry to be declared a monopoly because if it once got into the position of a public utility its profits might be more or less guaranteed. Many industries might desire to be classified as monopolies rather than to remain in the competitive field and come under the provisions of the Combines Investigation Act. We thought it a serious thing to allow the status of an industry to be altered by governmental action; we contended that it should be submitted to parliament rather than to the government, that it should be the subject of legislative rather than executive action. That was the first point upon which we differed from our colleagues.

The second point upon which we differed was this: They were of the opinion that

there might be times when even though competition existed1 to some extent in an industry, even though it could be restored to an industry, nevertheless that industry should be declared a monopoly; but we considered that competition was by all means the most efficient regulating factor and if there was any chance of restoring competition, it should be restored. Those are the two points upon which we differed from our colleagues in connection with monopolies. I would call attention to the fact that this bill contains no provision for the handling of these monopolies. To that extent it is a disappointment to us and it is obviously a disappointment to the hen. member for East Kootenay.

Trade Commission-Mr. Ilsley

This subject is too important to be dealt with in the dying hours of a moribund parliament. I contend it should be left to be dealt with !by a parliament fresh from the people. In my opinion this will have to be dealt with in the near future because it will never do to leave the consuming public open to the power of these embattled monopolies which are gathering up more and more of the business of the country along certain lines. Those are my submissions with regard to the regulation of monopolies.

The sixth function as recommended by the majority report was the authorization of price and production agreements in certain competitive industries. With that recommendation we on this side of the house flatly and decisively disagree. We believe it is thoroughly illogical to confer upon the commission, as its primary function, the prevention of combines and then, further down on the list, to confer on it the power to sanction combines. That is thoroughly illogical and contradictory. I admit that in times of distress and depression you will find highly competitive industries where there seem to be cutthroat competition, waste and chaos. But our contention is that competition is the best protection the public has; and if you authorize price and production agreements between those engaged in any industry, limiting production and fixing prices charged the general public, you will get stagnation in industry, exploitation of the public and monopoly-the very thing which is admitted to be one of the greatest evils we have to contend with. We are most emphatic about that. We believe in the principles of the Combines Investigation Act and do not believe in its nullification by conferring on the trade and industry commission or on the government, on the advice of that commission, the power to sanction combines, monopolistic combinations, when one of the primary functions of the commission should be to prevent combines. I would point out that these attempts have not succeeded where they have been tried. Take the codes in the United States under the NBA. The attempt was made there. I am not familiar with the codes but broadly speaking that was the object-to sanction combines within various industries, allowing them to fix the prices they would charge the public. As everyone knows, prices went up faster than wages and a great many of the codes broke down for that very reason. That is a very large subject and I have not the time nor am I prepared to go into it fully at the

present time. I do not believe in that provision of the Natural Products Marketing Act which enables the manufacturers of secondary products to enter into these price and production agreements, such as the jam agreement entered into not long ago. I do not believe in that principle at all. There is the dominion marketing board, with power to sanction certain combines, and it would be a very foolish thing to set up a second body to sanction combines under similar circumstances. There would be overlapping jurisdiction which would be farcical. I am therefore thoroughly opposed, as those on this side of the house are, to that section of the act which authorizes the sanctioning of these price and production agreements, section 14. and I want to make that clear on this second reading.

Those are the six functions which the majority had in mind for the commission, and it will be seen from what I have said that we regard the bill as in some respects a disappointment and a failure, though in some other respects we approve of it. Speaking for myself, I think the two great weaknesses are these. In the first place it weakens rather than strengthens the administration of the Combines Investigation Act; and the second great weakness of the bill is that it authorizes the formation of price and production agreements in competitive industries, depriving the public of the benefits of competition and sanctioning what is declared against earlier in the bill.

At six o'clock the house took recess.

After Recess

The house resumed at eight o'clock. BANK ACT AMENDMENT

Topic:   TRADE AND INDUSTRY COMMISSION
Subtopic:   ADMINISTRATIVE, ADVISORY AND INVESTIGATORY FUNCTIONS-PROVISION FOR A DIRECTOR OF PUBLIC PROSECUTIONS
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PROPOSED REPEAL OF SECTION 138, UNAUTHORIZED ISSUE OF NOTES OR SUBSTITUTES FOR MONEY


Mr. G. G. COOTE (Macleod) moved the second reading of Bill No. 69, to amend the Bank Act. He said: Mr. Speaker, money is a creation of government, and in Canada under our constitution the federal parliament is given control of the issue of all money. Parliament in its wisdom has given this right to the Bank of Canada and to the chartered banks. So far as the public is concerned we can get money for the transaction of our business only through the chartered banks. Under Bank Act-Mr. Coote section 138 of the Bank Act the banking system is given the exclusive right to issue money. That section reads: (1) Every person, except a bank to which this act applies, who issues or reissues, makes, draw's or endorses any bill, bond, note, cheque or other instrument, intended to circulate as money, or to be used as a substitute for money, for any amount v-hatsoever, shall incur a penalty of four hundred dollars. (2) If any such instrument is made for the payment of a less sum than tw'enty dollars, and is payable either in form or in fact to the bearer thereof, or at sight, on or demand, or at less than thirty daj's thereafter, or is overdue, or is in any way calculated or designed for circulation, or as a substitute for money, the intention to pass the same as money shall be presumed unless such instrument is


June 10, 1935