June 10, 1935


(a) a cheque on some chartered bank paid by the maker directly to his immediate creditor; or (b) a promissory note, bill of exchange, bond or other undertaking for the payment of money made or delivered by the maker thereof to his immediate creditor; and (c) not designed to circulate as money or as a substitute for money. The bill which I have introduced asks that section 138 should be deleted. The first objection that I raise to the section is that it is almost impossible for any ordinary person to understand it. The second objection, and I think this is a valid one, is that if certain forms are used the intention to pass them as money, which is a contravention of the act, is to be presumed. That is, any person who is charged under certain clauses of this act with an offence is presumed to be guilty, and the onus is upon him of proving that he is not guilty. It seems to me that proof of violation of the act should rest with the prosecuting authority. I think this is a very bad feature to introduce into the law. However, my chief reason for introducing the bill is the financial situation of many of our cities and municipalities and also of some provinces. There are many cities in Canada -I do not wish to name them-that have been capitalizing their relief costs for perhaps the last two or three years, and many of them have been borrowing to pay their interest charges. In many cases they have not been keeping up their sinking fund. This debt creating process, it seems to me, must stop some time. Then many municipalities cannot borrow money from the banks to carry on their necessary public services. If not prevented by this section I believe there are many municipalities which oould not only carry on necessary public services but might also collect a lot of taxes which are at present going unpaid, and at the same time effect some public improvements. This section has been invoked in one or two cases at least to stop municipalities from doing this very thing. Last year when we endeavoured to have section 138 struck out of the act the minister said that there must be some protection for the currency of the country. Of course I would agree with that, but even so I do not see why we should impose a penalty of S400 for the issue of a substitute for money as distinct from w'hat might be termed money itself. If we had an adequate money system in Canada operating at the present time-it may have operated adequately at certain times, but it seems to me it has not done so in the last few years-I would not be introducing the bill. But if the people of a community who have goods and services to exchange with each other have no money and can get none from the banking system, I do not see why we should by law prevent them from providing and using a substitute for money if they can do so. A good many cities in the United States have made experiments with municipal scrip, and the story of the efforts of these towns has been published in book form by Professor Irving Fisher. In that book he also tells the story of the town of Worgl in Austria where I think half the people were unemployed, and the mayor persuaded the town authorities to issue what was known- as stamped scrip. A stamp in value equal to two per cent of the face value of the scrip itself had to be placed on the scrip once a week. These stamps had to be bought with legal money, so in fifty weeks enough money was secured from the sale of these stamps to retire the scrip in full. In that town they succeeded in putting practically all the unemployed back to work; they built a new town hall and many other improvements, and made a great success of the use of this stamped scrip. That success I believe might be duplicated in some of the cities of Canada. I have talked with some town authorities who said they would like very much to issue a small amount of scrip but they were afraid they would !be found guilty of an infraction of section 138 of the Bank Act, and they could not run the risk of being fined $400 for the carrying out of such an experiment. It seems to me that the term money as used in this act or as used in the British North America Act, that is currency and coinage and paper money, is undoubtedly within the jurisdiction of this parliament. But such money is only a small percentage of the money which we actually use to-day. In the general acceptance of the term the bulk of our money is in the form of bank deposits and is passed from one person to another by cheque. That naturally raises the question Bank Act-Mr. Bennett



whether cheques are substitutes for money. When we discussed this matter in the banking committee last year I noted it was the opinion of a good many members of the committee that cheques were not money. If they are not money they must be a substitute for money, and it seems to me that according to the strict interpretation of section 138 many people who are passing cheques around are guilty of an infraction of that section. It is true that if the cheque is for less than $20 there would appear to be an exception; in that case it is not considered to be a substitute for money. But if it is for a larger amount it is so considered, and if the cheque passes through the hands of a third or fourth person, under the terms of this section the party who issues it would be liable to a fine of $400. It may be presumed that it. is his intention to pass it as money, and then it would be necessary for him to prove that it was not his intention so to do. In conclusion., Mr. Speaker, I should like to repeat that it is this section of the Bank Act which gives the banks a monopoly of all money and credit. I think the introduction of this bill will give all those opposed to the granting of this monopoly to the chartered banks an opportunity to register their objection. I hope the bill will receive at least the careful consideration of the house.


CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Right Hon. R. B. BENNETT (Prime Minister) :

Mr. Speaker, in the absence of the

Minister of Finance (Mr. Rhodes) I desire only to point out first of all that this matter was carefully considered) by the banking and commerce committee last year, and the subject matter of the present discussion was then much debated. The conclusion of the oommittee was that the section should) be incorporated in the Bank Act as it now is.

I cannot say that the practice of bringing to the attention of the house in a succeed^-ing session a measure that was carefully considered less than a year ago and on which a conclusion was reached, has very great merit, nor do I think the hon. gentleman who has just taken his seat (Mr. Ooote) has quite made himself familiar with .the provisions of the new Bank Act and the Bank of Canada Act. The old1 fashioned appeal that was formerly made, that we must vote against the banks that have a monopoly of .the issue of bills, no longer has substance, because we have provided that ultimately the Bank of Canada will be the only issuing bank in the country. Therefore the last argument [Mr. Coote.l

made by my hon. friend was one that might have found1 force and place some years ago but which perhaps cannot be taken too seriously now.

I wonder what would happen in the country if this bill were to be enacted. I wond'er just what would be money. I sent the page out for Palgrave's Dictionary of Political Economy and turned up the word "money" because I recalled that there was a time when oxen were the standard of money; that in other cases iron bars were used as money, and that at other times various substances and commodities passed as money. But according to Palgrave we are thus able to give a full and final definition of money:

-namely, that it is that which serves (1) as the common medium of exchange: (a)

dispensing with the double coincidence of *wants and' of possessions involved in barter; (b) furnishing a price-current of all the commodities in the market. (2) As the

standard of deferred payments. To put it in another form, money is that which passes freely from hand to hand, in full payment for goods, in final discharge of indebtedness, being accepted equally without reference to the character or credit of the person tendering it. and without the intention on the part of the person receiving it himself, to consume or enjoy, or otherwise use it than by passing it on, sooner or later in exchange.

I wonder what sort of money we would have in Canada if this bill were to pass. There would1 be scrip at Calgary, scrip at St. Paul, scrip at Red Deer, scrip at Winnipeg and at Regina, and the very essential idea of the word "money" would have perished and vanished. I do not think this bouse desires to have it seriously argued that the enactment of legislation such as this would turn our whole monetary system, such as it is, into a farce; I am sure the hon. gentleman has no such object as that in mind.

For the moment I need say nothing further on that phase of the matter. The hon. member for Macleod (Mr. Coote) does object to the provisions of the act that state that the possession of certain things constitutes a presumption against the person who is in possession of or who tenders certain things as money. There is nothing new in the law in that regard. For example, if a man is walking down the sidewalk and a barrel of flour falls on his head there is presumption- of negligence, and he need not prove it. That is res ipsa loquitur; the thing speaks for itself. In criminal or quasi-criminal cases there are certain things that in themselves constitute a presumption which it is essential that the person who is

Trade Commission-Mr. Kennedy (Winnipeg)

affected should discharge by evidence indicating that the presumption was not warranted. All that is said in this case is that if any such instrument is made for the payment of a less sum than S20, and is payable either in form or in fact to the bearer thereof, or at sight, or on demand, or at less than thirty days 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. It is not that the man is presumed to be guilty but that the intention is presumed, and there is a vast difference between a presumption of guilt and a presumption of intention. It is so difficult to prove intentions, however honourable they may be. It is so difficult to prove them even when they are dishonourable, and when the law says there shall be a presumption of intention that is an entirely different thing from asserting that there is a presumption of guilt. All this section says is that certain facts shall constitute a presumption of intention, and that only.

I do not desire to do more than indicate the views of the government with respect to the matter, in the absence of the Minister of Finance. In order that the matter may be presented from his viewpoint, since I understand that he has some views with respect to it, I think I might content myself with merely moving the adjournment of the debate and permitting the matter to end there for the moment.

Topic:   PROPOSED REPEAL OF SECTION 138, UNAUTHORIZED ISSUE OF NOTES OR SUBSTITUTES FOR MONEY
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IND

Alan Webster Neill

Independent

Mr. A. W. NEILL (Comox-Alberni):

Might I ask the Prime Minister a question?

Topic:   PROPOSED REPEAL OF SECTION 138, UNAUTHORIZED ISSUE OF NOTES OR SUBSTITUTES FOR MONEY
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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

Certainly.

Topic:   PROPOSED REPEAL OF SECTION 138, UNAUTHORIZED ISSUE OF NOTES OR SUBSTITUTES FOR MONEY
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IND

Alan Webster Neill

Independent

Mr. NEILL:

If this bill should pass would it be possible for every private individual to mint or print his own money?

Topic:   PROPOSED REPEAL OF SECTION 138, UNAUTHORIZED ISSUE OF NOTES OR SUBSTITUTES FOR MONEY
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CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Mr. BENNETT:

You see, it is very dangerous for a man who is a lawyer to express an opinion these days, but if I might be permitted to do so I would think it would be somewhat doubtful with respect to the individual. There would be no doubt about it with regard to the aggregation of individuals that might constitute a certain form of corporation, shall we say, whether it be municipal or otherwise. I am inclined to think that if he could get anybody to take it as money, if the printing were nicely done, he might be able for the moment to induce people to accept it as such.

Motion agreed to and debate adjourned.

Topic:   PROPOSED REPEAL OF SECTION 138, UNAUTHORIZED ISSUE OF NOTES OR SUBSTITUTES FOR MONEY
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TRADE AND INDUSTRY COMMISSION


The house resumed consideration of the motion of Mr. Hanson (York-Sunbury) for the second reading of Bill No. 86. to establish a dominion trade and industry commission.


CON

William Walker Kennedy

Conservative (1867-1942)

Mr. W. W. KENNEDY (Winnipeg South Centre):

Mr. Speaker, in discussing Bill No. 86, the purpose of which is to set up a dominion trade and industry commission, 1 hope not to detain the house at length but to confine my remarks to one phase of the principle of the bill, reserving until it has reached the committee stage a discussion of the details.

I should like first, however, to make a few observations of a somewhat personal nature. When speaking last night I made certain references to the official attitude of the opposition towards the implementation of the price spreads commission recommendations, and the hon. member for Hants-Kings (Mr. Ilsley) took exception in these words:

But I do not think the hon. member should have imputed the motives he did to those who express sincere objections to some of the recommendations of the price spreads commission.

I should like to state frankly that when I made my reference to the official attitude of the opposition I was referring to the attitude as reflected by the official financial critical critic of that body, namely the hon. member for Shelburne-Yarmouth (Mr. Ralston). So far as the hon. member for Hants-Kings is concerned-and I might speak more freely if he were not in his seat-I would say that I had not that hon. member in mind. I have known him in this house for some years and during that time have formed the highest admiration of his fairness in dealing with all matters, and of his sincerity as well. In addition I had the pleasure of sitting with him as one of a special committee dealing with price spreads and mass buying, and later for a period of six months as a fellow member of the royal commission. I can say that throughout that time his attitude was the very fairest and most helpful. Time and again when futile arguments arose he displayed the rare ability of putting into precise language amendments disposing of the difficulties. I may add that the relations between all members of the committee and the royal commission throughout the whole time were of the most friendly nature and all cooperated in the greatest possible measure. In fact, whatever merit has been accorded the

3532 COMMONS

Trade Commission-Mr. Kennedy (Winnipeg)

report which as chairman I had the privilege of signing, is fully and freely shared by me with all the members of the commission.

I believe it would' be in order for m to say a word or two concerning the other persons who assisted in the preparation of the report. I refer particularly to the secretariat and the economic advisers. Mr. L. B. Pearson of the Department of External affairs acted as secretary, and Messrs. J. M. Boyer and R. A. Cameron as assistant secretaries. If I may ibe permitted to single out Mr. Pearson I would say that he was no ordinary secretary. I believe all members of the commission will join with me in paying the highest possible tribute to the assistance given to the commission and all members of it by Mr. Pearson. We were further assisted by economic advisers in the persons of Doctor W. J. Couper, Professor A. C. Curtis of Queens University, Doctor A. Rive of the Department of External Affairs, Mr. C. S. A. Ritchie of the same department, and other gentlemen whose names do not occur to me at. the moment but who rendered notable service. Apart from them I was tremendously impressed by the calibre of the civil servants who assisted us, those who occupying positions of trust in various departments were consulted from time to time to assist us in matters being studied by the commission. One and* all rendered most valuable service. I could not conclude these observations without acknowledging the great courtesies extended to the committee and the commission by Doctor Beauchesne, Clerk of the House of Commons, and Major Gregg, Sergeant-at-Arms, in making comfortable quarters available for our use.

Topic:   TRADE AND INDUSTRY COMMISSION
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LIB
UFA

Donald MacBeth Kennedy

United Farmers of Alberta

Mr. KENNEDY (Winnipeg):

I think perhaps the hon. member would agree with me that without any words of mine they have been suitably rewarded. However, now that the subject has been opened I would add that the commission did appreciate the services rendered by counsel.

Topic:   TRADE AND INDUSTRY COMMISSION
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LIB

William Duff

Liberal

Mr. DUFF:

Did you sign their accounts?

Mr. KENNEDY (Winnipeg) We paid their accounts. I may be reprimanded for this, but I should like to make a personal reference to the Prime Minister (Mr. Bennett). As we were sitting as a royal commission it is probably unnecessary for me to intimate that neither the Prime Minister nor any cabinet members interfered in any way, shape or form with our investigations. My only instructions when handed the order in

council by the Prime Minister on October 29 last were words to this effect: "Kennedy, remember, this is a 'royal1 commission, and remember all the term connotes-British justice. It is to be an investigation into the facts. Go as deep as you like, and1 go as wide as you like, but see that the great and small, rich and poor receive even handed justice." And to the best of my ability and with the wholehearted cooperation of the members of the commission we endeavoured to carry out the traditions of a royal commission.

Now I shall direct some observations to the bill. It would seem that the hon. member for Shellburne-Yannouith (Mr. Ralston) is amused. Well, I hope the hon. member will1 follow me in the phase I am about to discuss, and I trust that I may convince him. I refer to the non-inclusion in. the bill now before the house of regulatory and administrative1 powers of the commission, the power not only to determine what are unfair practices but1 the power to issue orders to cease and desist from such practices. To me it is a matter of considerable satisfaction that in the desire to carry out the recommendations of the commission in that regard, as was indicated this afternoon by the Minister of Trade and Comerce (Mr. Hanson), the government in the original draft did include those clauses to which reference was made this afternoon by the hon. member for East Kootenay (Mr. Stevens), namely the powers to which I have referred. As the Minister of Trade and Commerce has told us, they were dropped only after receiving advice from eminent counsel that such procedure was invalid. For that reason they were dropped from the bill.

I am not going .to labour the law, but speaking on the principle of the bill I do wish to refer to that phase of the matter, placing it on record and possibly indulging the fond hope that if what I submit to-night is not the law, to-morrow it may possibly be the law. The Minister of Trade and Commerce and the legal advisers to the government based their claim of absolute invalidity of the powers referred to upon the privy council case commonly known as the Board of Commerce case. I shall1 not discuss the case in detail but shall draw to the attention of the house only two matters in connection with it. The case is reported in Law Times Reports, new series, volume 126, year 1922, at page 290.

We have spent a lot of time this last day or two discussing the question whether a matter is obviously invalid or whether there is merely a question of doubt as to its

Trade Commissionr-Mr. Kennedy (Winnipeg)

validity. Resting the argument of invalidity, as it is rested, upon the Board of Commerce case I draw this t.o the attention of the house, that that case was on appeal from the Supreme Court of Canada, and that six judges of our own supreme court were not so settled in their minds that the powers referred to were invalid. I merely cite the facts as reported :

As the six judges who sat in the supreme court were equally divided in opinion no judgment was rendered. The Chief Justice and Justices Anglin and Migneault considered that the question raised should he answered in the affirmative, 'while Justices Iddington, Duff and Brodeur thought that the first question should be answered in the negative and that therefore the second question did not arise.

Then as to the subject matter of the decision I would draw the attention of the house t.o this fact, that tha.t decision had to do with price fixing, and I submit that that is of some importance in view of the bill we are considering. That judgment I say had to do with price fixing, but in the report of the royal commission on price spreads we have not recommended price fixing; in fact, we found and so declared, that we believe it unsound, and we studiously avoided recommending any such thing.

Referring to the case report, the order in question was to the effect that certain retail dealers in clothing in the city of Ottawa were prohibited from charging as profits on sales more than a certain percentage of cost which was described as being a fair profit. I bring that to the attention of the house. That case was decided in 1921.

Now that very case has been distinguished in the later case to which I referred yesterday and which I shall again cite, the case of the Proprietary Articles Trade Association et al, appellants, and Attorney General for Canada et al, respondents, which was heard by the privy council in 1931 on appeal from the Supreme Court of Canada (Law Reports Appeal Cases, 1931, page 310). Just let me refer briefly to the judgment of Lord Atkin who delivered judgment on behalf of the committee. He states at page 316:

In determining judicially the distribution of legislative powers between the dominion and the provinces made by the two famous sections, 91 and 92 of the British North America Act, two principles have to be observed: first, the accepted canon of construction as to the general effect of the sections must be maintained. This is that the general powers of legislation for the peace, order and good government of Canada are committed to the dominion parliament, though they are subject to the exclusive powers of legislation committed to the provincial legislatures and enumerated in section 92, but-

I particularly draw 'the attention of the house to this qualification:

-but the provincial powers are themselves qualified in respect of subjects enumerated in section 91 as particular instances of general powers assigned to the dominion. Any matter coming within any of those particular classes of subjects is not to be deemed as coming within the class of matters assigned to the provincial legislatures. This almost reproduces the express words of the sections, and this rule is well settled.

The second principle to which I wish later to refer briefly is this:

The second principle to be observed judicially was expressed by the board in 1881, "It will be a wise course ... to decide each case which arises as best they can, without entering more largely upon an interpretation of the statute than is necessary for the decision of the particular question in hand."

I submit that that second principle is of importance because with the passing of time conditions change, and matters that were at one time purely local in their nature become interprovineial, national, and sometimes even international in their nature. So the privy council, I submit, has wisely established the principle that each case shall be decided on its own merits and in the light of the conditions at the time the case comes before them for adjudication.

Then at the bottom of page 326, and I submit that this is a rather important expression of opinion, Lord Atkin says, and here he distinguishes the Board of Commerce case:

The view that Their Lordships have expressed makes it unnecessary to discuss the further ground upon which the legislation has been supported by reference to the power to legislate under section 91, head 2, for "the regulation of trade and commerce."

Again:

Their Lordships merely propose to disassociate themselves from the construction suggested in argument of a passage in the judgment of the Board of Commerce case under which it was contended that the power to "regulate trade and commerce" could be invoked only in furtherance of a general power which parliament possesses independently of it. No such restriction is properly to be inferred from that judgment. The words of the statute must receive their proper construction where they stand as giving an independent authority to parliament over ^ the particular subject matter . . . they desire to guard themselves from being supposed to lay down that the present legislation should not be supported on that ground.

Again:

If then the legislation in question is authorized under one or other of the head's specifically enumerated in section 91 it is not to the purpose to say that it affects property and civil rights in the provinces. Most of the specific subjects in section 91 do affect property and

3534 COMMONS

Trade Commission-Mr. Kennedy (Winnipeg)

civil rights, but so far as the legislation of parliament in pith and substance is operating within the enumerated powers, there is constitutional authority to interfere with property and civil rights.

My position is this, that if this parliament legislates in respect of matters of trade and commerce and such legislation impinges upon property and civil rights, the mere fact of that impingement is not a bar to the validity of the proposed legislation. What is the principle? The principle is this, that inasmuch as the right to legislate in respect of "trade and commerce" is given in section 91, subsection 2, of the British North America Act to the federal parliament, it has the right to legislate in respect of all matters of trade and commerce where such matters affect the general public interest under the general head of peace, order and good government; and if also it impinges on property and civil rights-and let me point out in passing that there is not a single power given under section 91 to the federal parliament which may not conveivablv in one way or another in the course of legislation impinge upon property and civil rights-[DOT] the fact of such impingement is not a barrier to legislation. It is not a denial of validity. The test is this: whether it is a matter of regulating in respect of trade and commerce, in respect of a matter that is not purely local and that does not merely affect contracts between individuals or localities; if it be a matter that affects the general public interest either for the general good, or to the detriment thereof, then the will of the federal parliament must prevail and the rights of the province must stand aside. I submit that that is the psoition.

Why is it that the federal governments have not more vigorously in times past sought to occupy the field of legislation for which I am now contending? I submit that one reason, and one very obvious reason, is this, that it has been hesitant to break neiw ground and to occupy it and to assert its rights federally by reason of political expediency. I am not referring to any particular administration but to the administrations through the past years. So often when the federal government has sought to legislate in respect of matters that in one phase or another affect individuals in the provinces, the cry of "provincial rights" has been raised. Hon. members know full well the potency of such a cry. Any government hesitates to proceed aggressively with legislation when the question of "provincial rights" is raised, and unless it be clear beyond peradventure that they have the right, the tendency has been not to assume an aggressive attitude. But I

say that when the matter concerns the general wellbeing of the people of this country, political expediency should not stand in the way; the government should be courageous enough to occupy the ground which I submit they are entitled to occupy.

Further, even though it be argued, as it has been, that the federal government has not legislative jurisdiction to deal with what are found to be "unfair" trade practices, it may well be that some of these practices will be federal in their nature. Many of the unfair practices to which the price spreads commission's report refers are matters which affect not merely local dealings but interprovincial and sometimes ini ernational trade. I submit that power to deal effectively therewith should be included in the bill before the house. Assuming that the eminent legal opinions given are correct and that there are other unfair practices which fall within the exclusive jurisdiction of the provinces, the federal government could be enabled to deal therewith through enabling legislation by the provinces. I earnestly suggest to the government that they include in this bill a provision to empower the commission to do those things to which I have referred, to deal with unfair trade practices in an effective way and to issue orders to cease and desist, with the proviso that where any such unfair practice is one which is deemed to fall within the exclusive jurisdiction of the provinces the federal government invite enabling legislation by the provinces. I suggest that such an amendment would fulfil the wishes of the members of the price spreads commission and I ask the government to take it seriously into consideration.

If it be that this parliament has no jurisdiction, as it has been argued, to legislate in respect of matters which were unanimously recognized by the commissioners as being unfair, as being bad, as being against the public interest and as being of a nature which ought to be prohibited; if hon. members recognize such practices to be of a category which should be prohibited; if it be that we have not the power to prohibit such practices in an effective way by legislation, there at once arises the question of the necessary amendments to the British North America Act.

I am fully aware that this suggestion at once raises the problem of the rights of minorities. So far as I am concerned I want to make it very plain that I would be the last one to challenge the rights of minorities as guaranteed to them by the pact of confederation. But in the matter of legislating for

Trade Commission-Mr. Kennedy (Peace River)

trade and commerce and in connection with business dealings between citizens of Canada there cannot be any question of minority rights. I submit that we are then face to face with the question of necessary amendments to the British North America Act.

This act has not been handed down to us as were the commandments to Moses. The British North America Act is a very human document, and being human, it is subject to the frailties of humanity. It was built by men who in their day constructed a document to the best of their knowledge and ability which would govern the affairs of the citizens of Canada, having regard to the rights of the individual provinces, having regard to the division of matters among provincial jurisdictions upon the basis of local interests, and giving to the federal government by section 91 control over those matters which were of general interest.

That document was prepared to serve conditions as they existed in 1867-this is 1935; times have changed. What was provincial, yes, even what was parochial in 1867 may well now be interprovincial, national or even international. The proper measure of distance is not in miles, it is the time taken to go from one point to another. What is distance in 1935 as compared to 1867? In point of time, in 1867 the distance between Montreal and Toronto was as great as the distance to-day between Montreal and Vancouver. Matters of business and trade and commerce which were distinctly local in 1867 are no longer local. In 1867 an industry in Montreal could not conceivably compete with an industry in Vancouver or Winnipeg, but to-day industries in every part of Canada compete directly with industries in the other parts. So when you come to deal with unfair competitive trade practices you are dealing with something which touches the whole of Canada and which is not confined to any particular province.

The British North America Act is not like the ark of the covenant upon which no man could lay a hand. It is not like the laws of the Medes and Persians which legend said could not be altered but which in fact have wholly passed away. The British North America Act has been amended, not once, but more than twenty times. Shall we not amend it again in the public interest? Let us remember that the written constitution of Canada should be the " servant " and not the " master " of the people. Let us remember that that constitution is " man-made " and being manmade it can be man-altered. Let us remember that not bricks and mortar, not tall buildings, but its citizens are the ramparts of the nation;

it is in the interests of our citizens that we should legislate.

I commend to the house the words of John Bright: " The nation in every land dwells in the cottage, and unless the light of your constitution can shine there, unless the beneficence of your legislation is there reflected, believe me, gentlemen, you have yet to learn the principles of statesmanship."

Topic:   TRADE AND INDUSTRY COMMISSION
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UFA

Donald MacBeth Kennedy

United Farmers of Alberta

Mr. D. M. KENNEDY (Peace River):

Mr. Speaker, after the discussion which we had this afternoon on this bill I do not feel I can add very much to what has been said, but there are a few things I should like to bring to the attention of the house. I shall try to be as brief as possible.

In the first place I want to say that I was impressed with the need of some such organization during the investigation by both the parliamentary committee and the royal commission. It is quite easy to set out the difficulties which such an organization will encounter; it is quite easy to argue that it will not be effective in certain ways; it is quite easy to argue that it will meet with difficulties which it will not be able to deal with as effectively as we should wish. But that is true of every organization. The railway board of this country has a very difficult task. We hear it said quite often that the railway rate situation in Canada and in the United States as well is a crazy patchwork which no one can understand, and yet I venture to say that railway rates as fixed in the United States, and railway rates as fixed in this dominion through the railway board, are much more satisfactory and much fairer than they would be without the railway commission here or the interstate commerce commission in the Lhiited States. And so we must approach the whole problem from the standpoint of whether we can expect by setting up a .commission of this kind to improve conditions as they exist at the present time.

Some have pointed to the additional cost of establishing a commission of this kind. But costs are always justified where you provide greater efficiency; the well paid manager is better than the poorly paid manager if he is an efficient man. That is true always, and if there are in the social system abuses which the dominion trade and industry commission can correct, and I believe there are, then the cost is a small matter.

There is no question about the fact that there is a certain amount of regulation of business now. Those who cry against inter-

3536 COMMONS

Trade Commission-Mr. Kennedy (Peace River)

ference with business are actually crying out in favour of the interference that now prevails. I think it was very well established in the evidence that some organizations in this country were able to buy commodities from manufacturers and others at prices that would put the manufacturers out of business unless they got higher prices from someone else. H. G. Wells, in his book, Work, Wealth and Happiness of Mankind, points out that at one time the Standard Oil Company in the United States was able to do that very thing in connection with the railways. Whether it is done deliberately or not, the result is a differential between the price at which the mass buyer gets his commodities and the price at which his competitor obtains his. And so the question arises whether or not the spread is fair. I think it is quite evident, and it was generally agreed by the commission, that the spread was unfair; and the question then came up whether or not we ought to have a deliberate attempt to have regulation through the government. If the mass buyer is in a position to exact unfair discounts, so that the manufacturer or the other party who is selling to him must charge other retailers a higher price relatively, then I think we have something that justifies the government in stepping in. If the regulation is there now, if there is a partial regulation, if it is onesided, I cannot see how we can avoid the responsibility of trying to establish effective and fair regulation in the interests of all classes of the community. Therefore I favour the establishment of a commission for that reason. That is one reason at least.

I wish to refer to the powers that are supposed to be provided in the bill for the federal trade and industry commission, and in this connection I would point to some of the arguments in the minority report as signed by three members of the commission. It is stated in this report that desirable regulation is that of the law of supply and demand. At page 276 there appears the following:

Secondly, in parts of the main report there is a disposition to regard prices as being easily controllable by regulative measures of one sort or another,^ such as marketing schemes, regulation of business practices of large corporations, and control of corporate profits. We have been impressed time and again by the evidence presented before the commission that such regulative measures have, and can have, only a very slight effect relatively upon the principle of supply and demand. Our point may be illustrated by a brief reference to the tobacco and live stock industries.

Then there is a paragraph dealing with the tobacco industry. Briefly, it points nut that because of the rise in the price of tobacco in

the United States we had a demand for tobacco in Canada, and that this was really what raised the price. I submit however that while there is an element of truth in that statement, there was in the United States a deliberate attempt to deal with production and to raise price levels just as we had in the dominion. I have here a pamphlet entitled Agricultural Adjustment, a .report of the administration of the Agricultural Adjustment Act, M.ay, 1933 to February 1934, issued by the United States Department of Agriculture. At page 74 I find the following:

Reduction of Production

Of the estimated tobacco acreage planted in these districts in 1933, about 12,400 acres-or around 15 per cent-were taken out of production under the terms of the contracts signed by growers. Those who participated in the program took out of production, on the average, about one-third of the tobacco which they planted in 1933. Figures showing the extent of the sign-up and the amount of acreage taken out of production are shown in table Tl.

The plan for adjusting production was announced during the 1933 planting season and many growers, in anticipation of signing contracts, refrained from planting the full intended tobacco acreage. Growers of these types reported on March 1, 1933, intentions to plant 91,200 acres. The acreage harvested in 1933 was about 67.400 acres. This represents a reduction of 23,900 acres, or 26 per cent, from the acreage growers intended to plant in 1933.

The reduction from 1932 was 50,900 acres, or 43 per cent.

Topic:   TRADE AND INDUSTRY COMMISSION
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LIB
UFA

Donald MacBeth Kennedy

United Farmers of Alberta

Mr. KENNEDY (Peace River):

This is

a report covering the tobacco industry, and this refers to one type of tobacco, cigar tobacco. Now as to flue cured1 tobacco:

In July, 1933, the administration began to formulate plans for a program with respect to flue-cured tobacco.. In its development, all the available facts with respect to production, consumption, and world carry-over were taken into consideration. It early became evident that any plan to increase the price of flue-cured' tobacco must be based upon a control of production, because the production of this commodity in excess of consumption was responsible, in a large measure, for the low-rice paid to the growers. Surplus stocks had egun to accumulate as early as 1929, and by

1932 they were the largest on record. In 1931 the flue-cured crop totalled 665,000,000 pounds, and sold for an average of 8J cents per pound. In 1932 the crop totalled 374.000,000 pounds and sold for an average of 11 -6 cents per pound. On July 1 the 1933 crop was estimated at 591,000.000 pounds, -which was about equal to the estimated annual world consumption of this tobacco. But as the 1933 crop grew toward maturity it became increasingly evident that it would be a large crop, well above the annual consumption. (The December estimate of the

1933 production was 708,000,000 pounds).

Trade Commission-Mr. Kennedy (Peace River)

The result was that an attempt was made to reduce acreage.

A tentative contract was drawn up and offered to the growers, under the terms of which they would agree to reduce their production in 1934 and 1935, as required by the Secretary of Agriculture, by an amount not exceeding thirty per cent of the average of the years 1931, 1932 and 1933. Through the cooperation of farmers, warehousemen, state and county officials, business men and professional men the campaign was rushed to a successful conclusion, and within a week more than ninety per cent of all flue-cured tobacco growers had signed the tentative contract.

Armed with these agreements on the part of farmers to control production, negotiations were immediately begun by the administration with the buying interests to obtain an increase in the prices to be paid for the 1933 crop. It was believed that with a knowledge that the 1934 and 1935 crops would be reduced below the level of consumption, thus liquidating the surplus produced in 1933, the buyers would be willing to enter into an agreement to make a material advance in their prices.

A few sections follow dealing with the agreement, and then it continues:

Following the inauguration of the adjustment program prices materially advanced on the flue-cured' tobacco markets. During the month of November the daily average prices for a number of individual markets frequently exceeded twenty cents per pound. As a result of this price advance it is expected that flue-cured tobacco growers will receive for their 1933 crop on the market about $39,000,000 more than they otherwise would have received. The estimated total value of the 1933 crop is $115,000,000 compared with $44,000,000 for the 1932 crop and $56,000,000 for the 1931 crop.

This tremendous increase in total income from flue-cured tobacco has given a great stimulus to business in the flue-cured area and has brought about renewed hope, enthusiasm and optimism on the part of tobacco growers. Many old debts and mortgages are being paid off. trade in every line has been stimulated, and the flow of commerce in many channels has been increased. All this has worked toward the attainment of the objectives of the Agricultural Adjustment Act by tending to give flue-cured tobacco a purchasing power equivalent to its purchasing power during the base period from August, 1919, to July, 1929.

My point is simply this, that the attempts in Canada to reduce acreage and to market the crop through an organization had an effect similar to the effect -of the same policies in the United States-deliberate interference, if you like, with supply in an attempt to give the producers, who otherwise -could not get a reasonable living out of it something like a fair standard of living. I think we must admit that while the effort in the United States had some effect in Canada, if the policy is fair in -one country and resulted in the raising of prices to a reasonable level, it is proper that we should apply it in another

country and that we should expect the same results. I have dealt before with live stock, and I d'o not think there is any need to a-rgue that. The same policy was followed to some extent in the United States with regard to cattle. It is described in this volume, but I do not think I need read it. My point is that it cannot be argued that the law of supply and demand, as we have used that term, is the only rule that will affect prices, in view of the experiments in the United States -and Canada with regard to primary commodities.

It is said that there are great dangers if we give this federal trade commission power to ratify agreements, when the commission is unanimously of the opinion tha-t wasteful or demoralizing competition exists in a specific industry. Human beings have, of course, a tremendous range of adaptability, but we have no right to expect people to deliver commodities to the markets of the world indefinitely if the price is much below the cost of production. I think every effort made by the Dominion of Canada to raise prices to the primary producer, even if it cost the treasury some money, has been justified, because I do n-ot think this country has any right to expect its primary producers to sell commodities at the ruinous levels at which they stood through 1932. It is in the national interest -as well as a matter of simple justice that some attempt should be made to raise prices. If that is not so, then I submit that minimum wage laws cannot be justified, but I do not think it requires arguing to-day that minimum wage laws are justified; that is generally agreed. If it is fair that farmers and labour should have consideration of that kind why should not the same rule apply to industry? Why should we be afraid to give a commission power, if they find that an industry is selling its product at ruinous levels, to make a recommendation to the governor in council to stabilize prices as suggested in this bill? I will admit that there are dangers. I will admit that there are problems. But I do not know any reason why an industry that has had to pay -its work people less than a living wage simply because the prices of the products were at ruinous levels should not have the right to present its case for assistance towards stabilization. Of course stabilization could be at too high a level, which might be unreasonable and unfair to the public. But I do not think that danger is very great. I would be willing to take the chance, because the hardships that some industries and agriculture and the labouring people of this country have been through in

3538 COMMONS

Trade Commission-Mr. Kennedy (Peace River)

the last four years require definite and specific remedy, and we ought to be willing to take some chance in an attempt to work out something -better.

The argument has been advanced that every attempt to increase prices makes it all the more difficult for the consumer to buy. Well, that just d'ependis on what prices are increased. I believe that when prices are ruinously low to the producer it is just as much a problem a-s when they are ruinously high to the consumer, and1 this commission and every other government agency, so far as it has deliberative power, must aim at prices that* as far as it is possible to ascertain, are fair as between -the producers and the consumers. After all there is no such individual as a consumer or a producer; people are both producers and consumers, and if we can reach prices that are fair as between the two then in my judgment we will reach the best possible solution.

It has been suggested here that every other attempt at regulation should be cast aside and that our chief aim should be a lowering of tariffs to promote foreign competition. As between the various retail merchants of this country, mass buyers and small individual stores, I do not see that the lowering or increasing of the tariff would have a great deal of effect. If it did have an effect probably it would1 fav-our the people who have -been in the most favourable position during these last few years, the mass buyers.

There is just one other thing I should like to say, having listened to the arguments of various witnesses who appeared before the price spreads committee and the commission. If their representations were fair, as I think they were in most cases; if they understood what they were talking about, and1 certainly a great many of the witnesses impressed me as knowing what they were talking about, the problems of trade and industry in Canada appear to me to be such that I do not believe it is too much to ask that another organization be set up in order to deal with them. I do not think the tariff board can take care of the duties they have at the present time and deal effectively with the problems that were presented to the price spreads and mass buying commission, and I believe -the government ought to consider the advisability of establishing a commission separate from the tariff board.

Topic:   TRADE AND INDUSTRY COMMISSION
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LIB

Edward James Young

Liberal

Mr. E. J. YOUNG (Weyburn):

Mr. Speaker, if I understood the argument of the hon. gentleman who has just taken his seat (Mr. Kennedy, Peace River) it was to this effect, that because the United States govern-

ment, by taking vast sums of money out of the treasury of that country and paying it to the farmers for not growing tobacco, were able to create an artificial scarcity of tobacco in that country and thereby raise the price, it follows that the Canadian marketing act, which we passed in this house a year or more ago, was responsible for the increased price of flue cured tobacco in Ontario last fall.

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UFA

Donald MacBeth Kennedy

United Farmers of Alberta

Mr. KENNEDY (Peace River):

I should

like to say that I did not say that at all.

Topic:   TRADE AND INDUSTRY COMMISSION
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LIB

Edward James Young

Liberal

Mr. YOUNG:

My hon. friend says he did

not say that. I hope he repudiates the idea.

Topic:   TRADE AND INDUSTRY COMMISSION
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UFA

June 10, 1935