March 10, 1938

CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That was predicated on the St. Lawrence waterway.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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LIB

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

Liberal

Mr. MACKENZIE KING:

Yes; as my right hon. friend has said, it was predicated on the St. Lawrence waterway development. It was in that connection the government found it necessary to make it clear to the United States that we would not for one moment consider the export of power to the extent that would be involved in a proposal of that kind. In other words, public opinion in Canada would not entertain the thought of large quantities of power being exported to the United States, to the extent that it would develop communities on the other side of the St. Lawrence river which would be dependent upon Canadian power. In its report, the committee appointed to advise the government made it very clear that they felt any export of power to that degree would not be in accord with the views of the Canadian people, and should not be contemplated. It was made clear, once and for all, in discussions in connection with the St. Lawrence

waterway development, that we would not consider the possibility of large-scale exportation of power from Canada to the United States.

I shall not refer to the brief observations of the hon. member for Leeds in reintroducing his bill. I shall, however, read to the house what I said in the debate on the St. Lawrence waterway. My observations are to be found in Hansard of February 25, 1929, page 415:

Our government has repeatedly made clear its policy with respect to the exportation of power from Canada to the United States. We have given it as our opinion that power should not be exported. That opinion was endorsed by the national advisory committee with respect to the power which might be generated in connection with the development of the St. Lawrence. Accordingly, in writing the United States with respect to any possible basis of negotiation, our position in this regard was made very clear. The exact statement made by our government will be found in the correspondence which passed between the United States and Canada, all of which was tabled in this house on April 17, of last year. In that correspondence will be found a communication dated January 31, 1928, which contains these words:

" Reference was made in your note to the early development of hydro electric power as a factor which must have equal application to and influence upon the Dominion of Canada. The opportunity of developing great quantities of power incidental to navigation is. it is agreed, a special advantage possessed by the St. Lawrence project, and an important consideration in determining its advisability. In this aspect of the project, however, there are again special features in the Canadian situation which it is desirable to make clear. Public opinion in Canada is opposed to the export of hydro-electric power, and is insistent that such power as may be rendered available on the St. Lawrence, whether from the wholly Canadian section, or from the Canadian half of the international section, shall be utilized within the dominion to stimulate Canadian industry and develop the natural resources. With this view the national advisory committee expresses itself as in complete accord."

That finishes the quotation from the note: I now return to my observations:

When the United States government replied to our communication it was made perfectly clear that from the point of view of the United States.^ Canada was entirely within her rights in taking such a position, and that no question would be raised on the part of the United States with respect thereto.

And later on:

i What I wish to make clear at the moment is that, with respect to any projected St. Lawrence development, this parliament may take it as definitely settled and understood between the United States and Canada that power generated on the St. Lawrence and belonging to Canada will not be exported to the United States but will be used for the development of our industries and our natural resources.

Electric Power Export

Hon. members will find, at page 112 of the white paper I tabled a few days ago, the report of the Canadian National Advisory Committee. The opinion of the committee is found in section 9 at page 116:

In consideration of the economic aspect, we have given some thought to the question of possible export of power. As to that we would say that we are in complete accord with the feeling throughout Canada that export of power should not be permitted.

Then, at page 119 is the expression of opinion of Mr. Beaudry Leman and Adelard Turgeon, two members of the committee who, while in agreement with the other members of the committee, made additional observations, a part of which reads as follows:

It would seem wholly desirable that power developed in the national sections and Canada's share of power developed in the international section be not exported, permanently or temporarily. The energy so produced should be retained permanently in Canada as being a very important factor in its development. Should large amounts of power be temporarily exported there would be strong possibilities of causes of friction developing with the United States when this power would be required for use in Canada.

In view of the large amounts of power which would ultimately become available _ for use in the provinces of Quebec and Ontario, it would appear desirable that the governments of the provinces of Quebec and Ontario agree with the broad lines of the -policy adopted by the government of Canada. It would seem important that the cooperation of the provincial governments concerned be obtained in respect of the features of this project wherein power development is the predominating object. The collaboration of the government of Canada and of the provincial governments concerned towards the realization of this project would be a potent factor in insuring its success.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

What is the date of that?

Topic:   ELECTRIC POWER
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LIB

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

Liberal

Mr. MACKENZIE KING:

It is dated Montreal, January 18, 1927. Based on that advice of the advisory board, a communication of some length was sent by the Canadian government, through its minister at Washington, to the Secretary of State of the United States. This communication was dated January 31, 1928, and made clear to the government of the United States how the government of Canada viewed the question of any possibility of large exports of power from the Canadian St. Lawrence waterway developments. In 1928 I tabled the correspondence relating to the St. Lawrence waterway project as a white paper. The report of the Canadian National Advisory Committee appears in that white paper as well as the correspondence between the governments of Canada and the United States. I intend to read a

part of the dispatch of January 31, 1928, which will be found at page 9 of the white paper, of 1928:

Reference was made in your note to the early development of hydro-electric power as a factor which must have equal application to and influence upon the Dominion of Canada. The opportunity of developing great quantities of power incidental to navigation is, it is agreed, a special advantage possessed by the St. Lawrence project, and an important consideration in determining its advisability. In this aspect of the project, however, there are again special features in the Canadian situation which it is desirable to make clear. Public opinion in Canada is opposed to the export of hydro-electric power, and is insistent that such power as may be rendered available on the St. Lawrence, whether from the wholly Canadian section, or from the Canadian half of the international section, shall be utilized within the dominion to stimulate Canadian industry and develop the national resources. With this in view the national advisory committee expresses itself as in complete accord. The committee further indicates^ that, in view of the relatively limited capacity of the Canadian market to absorb the vast blocks of power contemplated by the St. Lawrence proposals, it follows that it is most important, in any arrangement which may be considered, that the development of power on the Canadian side should not exceed the capacity of the Canadian market to absorb it.

I wish to make clear again the circumstances in which these communications were sent to the United States government. They arose out of the development of the St. Lawrence waterway project and the proposal that, if the government of Canada would consent to the export of large quantities of power, it might be possible to have the canalization of the St. Lawrence made at the expense of the United States rather than at the expense of Canada. This brings the matter up to. the end of 1929. The statements which I have given were made prior to the passing of the order in council which approved the plans of the Beauharnois Power Company. The statements were made in order to make the position of the government clear with respect to this larger proposal before any formal approval was given to the power development plans. As I indicated in the outline I gave a few moments ago, there has been no further major discussion in this house on this question since 1929.

In the years 1930 to 1935, my right hon. friend opposite was in office. During that period one significant measure was passed by the legislature of Quebec, which reversed the policy of that province of opposition to export of power from Quebec. I have already quoted the important sections of the statute of 1926. On April 4, 1933, that act was amended to permit the export of a limited

Electric Power Export

amount of power under certain conditions. I shall refer to these conditions before I conclude, but at the moment I think the house will be interested to know the position taken in 1933 by the present premier of Quebec with respect to the proposal that the act should be amended to permit the export of power from Quebec to the United States. The Quebec legislature does not happen to have a Hansard in which discussions are recorded, as is the case in this house, and I have therefore to fall back on the press report. I imagine the following report is correct, at least no exception has been taken to it so far as I know. The Montreal Gazette of April 5, 1933, reports a speech made by Mr. M. L. Duplessis, the leader of the opposition in the Quebec legislative assembly, during the debate on the bill to permit the export of power, as follows:

Mr. Duplessis said that the premier (Mr Taschereau) had declared at the time of the export prohibition legislation that once the power went to the United States it would be impossible to recall it, and to seek to do so would be a cause of war, so it was apparent that the government would not have control of the power to be exported. It meant a permanent alienation of 250,000 horse-power developed in Quebec. Already there was export of power from Cedars Rapids, and the Southern Canada Power Company also exported power to the United States. Evidently, the law had already been breached.

The second excuse was that the provincial government needs more revenue. But, demanded Mr. Duplessis hotly, was this a sufficient reason for alienation of natural resources? The conduct of the government was most regrettable, most condemnable. It meant that the United States would be aided in building up its industries, and Canadian workmen suffer from lack of employment.

"I cannot understand how the government, speaking through the voice of the distinguished minister of lands and forests, can tell the province that because it needs money it is necessary to part with our precious capital," said the opposition leader. "These resources were handed over to us as trustees, so as to insure the survival of our people, to maintain our national life, and not because we could get some revenue. We need money, but that is paying very dear for the few dollars. The minister asks for legislation to enable the government to give part of the soul of Quebec to the Americans for an annual revenue which does not represent more than a small share of the actual value of the power. The government says that things have changed, but the conditions of to-day are those made by the government, which has permitted over-capitalization, forced pulp and paper manufacturers to build new mills, permitted Sunday labour in those mills, and thereby added to the causes of the trouble. The government in 1926, following the policies preached by the opposition, adopted a policy of leasing our natural resources, and now the government asks for a return to the disastrous policy of alienation."

As to argument that the province has almost unlimited resources, Mr. Duplessis suggested that this surplus of electricity be used to electrify the countryside, supply light at cheap rates. For while 1,000 rural municipalities get electricity, he was ready to engage that the whole 1,000 complained of the rates charged. The country could be made more attractive with electricity, farming could be made to pay, and thereby a great problem would be solved, and there was also the matter of heating by electricity to be considered. Charity commenced at home, said Mr. Duplessis, and when all the things he had mentioned had been done, it would be time to consider if we had a surplus which could not be disposed of in Canada, and then the attitude to be adopted could be decided. There was talk of the need of preserving the savings of the people, but the greatest saving for the people would be to safeguard the natural resources for their benefit. What should be done was to commence rectifying the errors the government had committed in the past as much as possible, for there must be respect for rights legitimately acquired.

The present legislation meant that the richest and most accessible water powers would go to the benefit of the United States. Mr. Duplessis said the legislation was of a permanent nature, and it was to deal with a temporary condition of depression, and had it not been the premier who this session had repeatedly declared against legislation of a permanent nature to deal with temporary difficulties. The opposition was against the legislation with all its powers, and would not support a policy that was ruinous, backward and disastrous. It was asked that the lieutenant-governor in council be given the powers needed, but there had been abuses in the past, and he for one had no confidence in the lieutenant-governor in council, nor in the ability to make terms for the sale of our natural resources to the Americans. "We are of the opinion that the legislation presented is inopportune and prejudicial to the public interested," concluded Mr. Duplessis.

That, I think, is all that I need quote for the period from 1930 to 1935, except the following, which I imagine my right hon. friend the leader of the opposition will wish to have placed on record. Speaking on May 17, 1933, the then Prime Minister (Mr. Bennett) said, as reported in Hansard, at page 5131:

With respect to the export of power from Canada to the United States, those who are interested will find that in 1925 the legislature of Quebec passed a statute, the preamble of which is as concise and powerful an indictment of any policy that will permit the export of power as it is possible to conceive can be put into words. No stronger indictment as to the evil consequences that will flow from permitting the export of power to the United States can be found than will be found in that statute. But the province of Quebec has not the jurisdiction over the export of any commodity from this dominion. That rests within the jurisdiction of the dominion, and this parliament passed a statute which provides for licences being given before power or gas is exported from our country.

Electric Power Export

Elsewhere in the course of the discussion my right hon. friend mentioned, I believe, that no further licences had been granted by his administration and that they had no intention of permitting further exports.

In 1934, 1935 and 1936 there were no discussions in this house. I come now to the year 1937. Last year there was a short discussion ; it took place on an item in the estimates, "Electricity and Fluid Exportation Act, administration of, $750." At that time the late Right Hon. Sir George Perley questioned the Minister of Trade and Commerce (Mr. Euler), who was then submitting his estimates, with respect to the policy of the government on the export of power. The discussion is reported, at page 2932 of Hansard of April 7, 1937, as follows:

Sir George Perley: I understand it is the policy of the government not to issue any further licences for export

Mr. Euler: We do not grant licences to export power, except with the consent of the province concerned. We have given only this one.

Sir George Perley: I understand that. This one seems quite all right, because it involves only an exchange of power; we get back what we export. But if at the present time an application is made to the government for a licence to export a large quantity of power, what would the procedure be? What is the government's policy in that respect?

Mr. Euler: I do not know that I am in a position to say, except that I suppose each case would be judged on its merits. As a general principle, and speaking for myself rather than for the government-in fact, that is the only way I can speak-I would say it is not the policy of the government to export to another country power which might be needed in this country. However, no applications have been received, and I believe there are none before the department. About all I can say to my right hon. friend would be that we will cross that bridge when we come to it.

Later, Sir George Perley having said, with reference to some other point, "The minister does not seem to have taken that view of it,"-

Mr. Euler: ... I cannot definitely say at

this time, if the right hon. gentleman wishes me to make a direct statement, that this government is taking the absolute position that in no case whatsoever will it issue a licence to export power. I cannot say that. But I will say, as I said before, that I do not anticipate any substantial exportation of power, and certainly none which in my opinion of the government would in any way prejudice Canada's position in the future with regard to power requirements. I can give my right hon. friend no further assurance than that. I do not know of any absolute assertion by any government that as a matter of definite and conclusive fact they will not at any time export any power.

Sir George Perley: I think the minister is right in that.

Mr. Euler: I think we should consider each case on its merits.

That concludes all I wish to say with regard to the discussions which have taken place in this parliament and what appears on the record as to the views of different administrations with regard to the export of power. I have made these quotations in extenso for the reason that they bear immediately upon the question which the government had to consider last year. From what I have pointed out, I think it is clear that, after the bill of the hon. member for Leeds had passed this house unanimously, the government- all governments from that time on-assumed that further licences were not to be granted without, at least, securing the approval of parliament. The fact that the bill referred to passed its first and second readings in 1928 and all three readings in 1929 without a division, settled, I believe, in the minds of the administrations that followed-that of my right hon. friend during his time, and the present administration since we have come into office-the view, which we believed the House of Commons would take with respect to any applications, namely that, while we should not close the door wholly to any export of power, we should provide that no further licences should be granted without the approval of parliament and that, in seeking to secure such approval, each application should be considered on its merits.

Much of the discussion that took place in previous years related to developments for purposes of navigation; but out of all the discussion we reached the point where this House of Commons was agreed upon a policy of permitting future export of power only with the approval of parliament. That was the position when, in April of last year, the government received an application from the Montreal Light, Heat and Power Company for the right to export 40,000 horse power to the United States, to the Aluminum Company of America at Massena, New York. The application will be found at page 65 of the white paper I tabled the other day. It was made on April 17. Some of my colleagues and myself were preparing at that time to leave for the coronation and the imperial conference, and when the application was brought to the cabinet we felt that we could not possibly give it adequate consideration in the little time that remained before we left. Accordingly we advised the parties who made the application that it would have to stand

Electric Power Export

over until after the return to this country of those members of the cabinet who were going abroad.

In the application, very strong arguments were presented as to why it should be granted immediately. For example, the application set forth that it would mean a reduction in the rates to consumers of electricity in the city of Montreal, whereas, not to grant the application at once was to deny consumers in that city a reduction in rates which they otherwise would have. That presented, of course, an important consideration. While the imperial conference was in session the company renewed its application to the cabinet, stressing that the matter was of such importance that it desired to have the licence granted before the return of the ministers who were abroad. It was pointed out that unless this application were immediately granted, the company might lose altogether the chance of making an important contract which it had under negotiation. However, the members of the government in Ottawa, m the absence of their colleagues abroad, declined to grant the application and took the view that the matter must be held over until the return of the absent members when there would be a full cabinet to consider the whole question.

When we returned, this question was one of the first taken up by my colleagues and myself. The president of the Montreal Light, Heat and Power Company wrote me a letter in regard to the application and asked for an immediate answer to the representations that had been made. The answer I made was to the effect that, in view of the importance of the subject, and the extent' to which it had been discussed in parliament in the past, the government felt that the matter would have to be discussed in parliament in the first instance.

It was in August that the president of the company communicated with me. In November another application was received, this time from Mr. Powell, the president of Aluminium Limited of Montreal. Mr. Powell called upon me personally, accompanied by his counsel, Mr. Geoffrion, and presented the representations of his company with respect to the necessity for granting their application. It was pointed out that important contracts which had international significance were being held up because of a shortage of power experienced by a concern in the United States with which the Canadian company was allied, and that unless the application were granted forthwith these contracts might be prejudiced. It was claimed that all that was being requested was the right to export surplus power

going to waste in Canada. It was urged that to deny to the company the right to export surplus power to help them to meet an important demand on the other side was to take an indefensible position. It was also advanced that the proceeds which the company would obtain from exportation of power would result in additional employment at a time when employment was needed, and that it would also have its effect on consumers' rates.

These were strong representations. The government took again the same position that I have described with reference to the previous application, namely, that, however willing we might be to grant the application, we did not feel that, in the light of previous discussions in this house and the view that it had unanimously taken with respect to the bill requiring the approval of parliament in the first instance before any export should be granted, we could do other than bring the matter here to parliament before consenting to such exportation

I have brought the matter up to the second of November. Up to that time neither my colleagues nor myself had had any knowledge whatever that any other application was likely to be forthcoming. I am making this clear because I wish the house to understand exactly how it has come about that this bill has been brought in at the present time. It has not been brought in because the government of Ontario made an application. Representations in respect of the Ontario government's application were not made until late in the month of November.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

It is significant that in the meantime the Cedars Rapids had withdrawn their application.

Topic:   ELECTRIC POWER
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LIB

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

Liberal

Mr. MACKENZIE KING:

That point will come out later.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

It is in the white paper.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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LIB

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

Liberal

Mr. MACKENZIE KING:

But it does not bear upon what I have in mind at the moment. What I wish to bring out is that it was November 29 before representations were made by the premier of Ontario to my colleagues and myself with respect to granting a licence to the Ontario Hydro-Electric Commission to export 120,000 horse power. The position of the government had been taken, not in reference to any application from the province of Ontario, but with respect to two applications from the province of Quebec. That, I wish hon. members to see clearly, and to understand. The decision of the administration to deal at this session with the export of hydro-electric power, in a manner which would lead to a discussion of the whole subject on the floor of parliament,

Electric Power Export

grew out of the two applications made by Quebec companies, one in April and the other early in November, 1937. And the decision was reached and made of record in the replies that were sent to those companies before any member of the administration had any knowledge or thought of the possibility of any application coming from the province of Ontario. I notice that the hon. member for Dufferin-Simcoe (Mr. Rowe), speaking the other night in Petrolia, sought to present an entirely different view. I marvel very much at what he said in the light of the knowledge he must have possessed of the facts. Here is what he said, as reported in the Toronto Star of March 8, 1938:

Petrolia, March 8-"Premier Hepburn frightened King so badly over the export of power from this province that now the Prime Minister of this dominion has turned right-about-face and has submitted the matter of power export to parliament." Hon. Earl Rowe, Ontario Conservative leader, made this statement here last night.

And the statement is in quotation marks.

Now may I say to my hon. friend that it was not Mr. King who was frightened by Mr. Hepburn, but it was my hon. friend himself who had the life frightened out of him. What is the present position? After he fought a provincial campaign with Mr. Hepburn and was badly defeated he took to cover very quickly, and is under cover at the present time in this house. He ought to be in the Ontario house fighting his battles with the premier of Ontario there. Evidently he is too frightened for anything like that; he has come back into the fold here and is carefully protecting himself in the shelter of this house while he makes attacks of this sort outside, which are wholly unwarranted and unjustifiable. I say to my hon. friend that as far as the application from Ontario is concerned, that application had nothing whatever to do with the decision of the government to refer the question of the export of power to parliament at this session. That decision was made, as I have indicated, before any word whatever had come to the government from the province of Ontario, nor was there the slightest thought in the mind of any of us that an application would be received from that source.

I have another reason for having placed on the record these statements this afternoon. It is to make perfectly clear to hon. members, and to the members of the Ontario legislature and to the people of Ontario, why the present administration could not possibly have given any other answer than the answer it gave to the premier of Ontario when he made the application to us to give to the

Hydro-Electric Power Commission of Ontario the right to export 120,000 horsepower. We were already on record in writing to these two Quebec companies that they would have to wait until parliament met and the whole question was discussed here, before we could consider their request, and that we would only grant their request if we had reason to believe our doing so would be favourably viewed by this parliament. We expressly stated that we wished to be guided by the views of parliament, recognizing that in the course of years there may be reasons for modifying policies, but equally that, if those policies are to be modified, it must be in the light of reasons sufficient for that purpose.

I now refer the house to the application of Montreal Light, Heat and Power Consolidated, which will be found at page 57 of the white paper tabled the other day. The reply sent to that application appears on page 65 of the white paper. I wish to read that reply because it is what governs the situation. This letter was sent by myself in reply to a communication from J. S. Norris, president of Montreal Light, Heat and Power Consolidated. The president's letter is dated Montreal, August 10, 1937. I shall not read the entire letter but shall read two paragraphs:

The proposition is a matter of business in that it affords an excellent opportunity of disposing, temporarily, of some surplus power and bringing into the Dominion of Canada a substantial amount of money which would otherwise be lost.

The granting of the export licence requested will bring to the federal government approximately $75,000 per annum, by reason of the export tax, to the Quebec government a very substantial increase in revenue, and to the electricity customers in the Montreal area the amount indicated.

. . . we bespeak your good offices toward

early and favourable consideration of the matter by your government; in other words we are fearful of losing the opportunity of this sale and consequently would appreciate an early decision.

The reply I made to that communication was as follows:

Ottawa, August 14, 1937.

J. S. Norris, Esq.,

President,

Montreal Light, Heat and Power

Consolidated,

Montreal, Que.

Dear Mr. Norris:

I wish to acknowledge your letter of August the 10th, just received, with reference to the application of the Cedars Rapids Manufacturing and Power Company, a subsidiary of the Montreal Light, Heat and Power Company, for a

Electric Power Export

licence to export 40,000 horse power to the United States, for sole use by the Aluminum Company of America, at Massena, New York.

The representations of your letter have received the most careful consideration of my colleagues and myself. I regret, however, that the government is not in a position to grant the licence, at the present time. In view of the broad question of policy involved, and the fact that the export of power to the United States has been debated at length in parliament on several occasions, the government is of the opinion that an opportunity should be afforded at the approaching session for a discussion on the subject, before any final action is taken with respect to the application of the Cedars Rapids Manufacturing and Power Company.

Yours sincerely,

W. L. Mackenzie King.

The interview with Mr. Powell, president of Aluminium Limited of Montreal, was held in my office, on November 2. In the absence of the under Secretary of State for External Affairs, the acting under secretary, Mr. Read, was present. I later asked Mr. Read to communicate to the company the views of the government as they were given after we had an opportunity of considering this second application. The following is the communication which was sent by Mr. Read to the president of Aluminium, Limited, Montreal:

Ottawa, 12th November, 1937.

Dear Mr. Powell:

May I refer to your interview last week with regard to the question of the application of the Cedar Rapids Manufacturing and Power Company, a subsidiary of the Montreal Light, Heat and Power Company, for a licence to export 40,000 horsepower to the United States for the sole use of the Aluminum Company of America at Massena, New York. During that interview you and Mr. Geoffrion discussed the relationship between the question of granting the export licence and the position of your company, Aluminium Limited, and its subsidiaries, especially with regard to the use of waste power developed on the Saguenay and the problem of the export markets.

The representations with regard to this matter have received the most careful consideration by the Prime Minister and his colleagues. It is a matter of regret, however, that the government is not in a position to grant the licence at the present time. In view of the broad questions of policy involved and of the fact that export of power to the United States has been debated at length in parliament on several occasions, the government is of the opinion that an opportunity should be afforded at the approaching session for a discussion on this subject before any final action is taken with regard to the application for the export licence in question.

Accordingly I have been instructed to communicate this conclusion to you for your information.

Yours sincerely,

J. E. Read,

Acting Under Secretary of State for External Affairs

R. E. Powell, Esq.,

President,

Aluminium Limited,

Montreal, P.Q.

That communication, as I have said, is dated November 12. It was not until November 26 that the premier of Ontario asked to have an opportunity of meeting my colleagues and myself to discuss the question of granting to the Ontario Hydro-Electric Power Commission a licence for the export of 120,000 horsepower. Perhaps I should pause for a moment to make clear how the matter was brought to our attention in the first instance. My colleague the Postmaster General (Mr. Elliott) was in Toronto over the week end of November 21. While he was there, he had an interview with the premier of Ontario, in the course of which the premier handed him a communication which had been sent to him by the chairman of the Ontario Hydro-Electric Power Commission giving certain facts and making certain statements with respect to the power situation in Ontario. This communication was given by the premier to the Postmaster General to bring down to me to be considered by the government as an application, or at least as the basis for an application to the dominion government for an export licence. The communication appears in the white paper at page 67. It was not until January 21 of the present year that an application was made in due form. It appears at page 72 of the white paper.

When the first communication I have referred to was received by me, I sent it to my colleague the Minister of Trade and Commerce, who informed the premier of Ontario of the two previous applications which the government had received and of the action we had taken with respect to them. The minister indicated that it would not be possible to have the matter given consideration at that time. On November 26 I received a telephone communication from the premier of Ontario asking if he might be permitted to present the application to the cabinet in person. I arranged for a special meeting with my colleagues. I had planned to leave Ottawa during the previous week for an absence of a few days, but deferred my departure in order to make possible the meeting, and I asked my colleagues to have their plans so arranged as to permit them to be present also. On November 29 Mr. Hepburn met with my colleagues and myself in my office and made what I think might be considered as an application on behalf of the Ontario Hydro-Electric Power Commission to export 120,000 horse power.

I need not go into what was said at the interview; that is beside the point. All I think it is important to communicate to this house is that the premier of Ontario pressed very hard for an assurance from the government that we would grant the application.

Electric Power Export

In the presence of my colleagues, I read to the premier of Ontario the reply which I had made to Mr. Norris and the reply which Mr. Read had made to Mr. Powell with respect to their applications. I quoted several of the declarations of policy, which I have placed on Hansard this afternoon. I directed the premier's attention to the fact that he himself was in the house on the day in 1929 that the bill of the hon. .member for Leeds was unanimously put through all its stages, and the house had decided there should be no further export until parliament had been given an opportunity of approving it. I pointed out wherein this had been the policy of all administrations from. 1929 on. I intimated that in the circumstances it was impossible for the government then and there to accede to the request that had been made and that consideration of the application would have to be held over until after the assembling of parliament.

We were told that the matter was extremely urgent; that the answer must be given that day; for the reason that if it were not given that day the speech from the throne, which was already prepared and was to be delivered on the following day, would have to be changed. I intimated, in speaking with the premier of Ontario, that being a responsible ministry we held the view that as the executive we were the servants, not the masters, of parliament, and that inasmuch as parliament had repeatedly shown a special interest in this matter, and as we had stated in writing our intention to bring the matter before parliament at this session, we could take and would take no action until after an opportunity had been afforded for a full discussion on the export of power in parliament. Naturally the premier of Ontario was much disappointed at that reply. I think I have indicated all that is essential in regard to what took place, and why at that time it was not possible to meet the wishes of the premier of Ontario.

Perhaps I should conclude what I have to say by briefly summing up the reasons pro and con with respect to the granting of an application for the export of power. I hope I have made it clear that so far as the administration is concerned, we have been actuated not by personal motives in any shape or form but solely by a desire to further the public interest and to be true to what we believe to be the relation of an executive to the parliament to which it is responsible. I would now say that in our opinion not only should members of this house feel free to express their views with respect to what is wisest in the matter of granting permission

for the exportation of power, but they should consider the question most carefully and should not fail to express their views in the clearest manner possible. The views which have been already expressed in this house in previous years show there can be no doubt that the question is one of the most important that at any time is likely to present itself for the consideration of parliament. It is perfectly clear that policies have tended more and more in the direction of safeguarding our electrical energy in this country; it is, however, equally clear that as time has passed it has become apparent that there may be cases where it may be wholly justifiable to grant permission for the further export of power. I would go a step further and say that there may be cases where it would be an injustice not to grant such permission, provided that the case on its merits establishes the wisdom of so doing.

With respect to the particular applications I have mentioned, the only one which has come before us since the last session of parliament, that of the company at Cedars Rapids, as the right hon. the leader of the opposition has already remarked, has been withdrawn. I am not so sure as to the application of the Montreal Light, Heat and Power Company, but as one is a subsidiary of the other I believe the cancellation of one application would involve the cancellation of the other.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

It is the same organization.

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LIB

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

Liberal

Mr. MACKENZIE KING:

This means

that at the present time the government has before it for consideration only one application, namely that which comes from the government of Ontario. I hope I need not say that the attitude the government will take towards the matter is precisely the same as if the application had come from any other province of the dominion. May I point out further that in considering this matter I believe we should seek to free ourselves of any feelings of prejudice which may have been aroused as a result of discussions which have taken place. In the present measure, we are not deciding what is to be done in connection with the Ontario application, more than to state that the application can be granted only after a private bill has been introduced, has passed this house and the senate, and been given assent. To-day we are deciding what steps should be taken in the event of applications from Nova Scotia, New Brunswick, Prince Edward Island, Quebec, Ontario, Manitoba, Saskatchewan, Alberta or British Columbia. If possible at this stage, I should like to divest this measure at all events of any special relationship to

Electric Power Export

the province of Ontario. That question can be debated when, in the event of this measure passing, we have the private bill before us.

The house must now consider the broad question of whether or not some cases may arise or have not already arisen where parliament would be justified in granting licences for the export of power. What, then, are the arguments pro and con? Possibly I could sum them up briefly.

The argument most frequently urged against the export of power is that we are parting with our natural resources; that we should not deplete our natural resources. It is stated that the natural resources are the greatest assets of a country, and that in allowing the export of power we are losing the value of a great asset. I believe the answer to the assertion is that power differs from other natural resources in that unless it is used at the time it is created it wastes and is lost forever. Nothing but surplus power, it is said, is to be thought of in connection with exportation. Once power is created, unless it is used immediately it is gone for all time.

This consideration does not apply to other resources. Exportations from our mines and our forests are exportations of national assets which may be limited in quantity. Electrical power is not so limited; the supply is not lessened by permitting export of surplus quantity. When we export power we are not parting with national capital. We do not export the rivers or the falls which create the power. They remain, and continue to function. The same is not true of copper, gold or any other natural resource which may be exported. The true parallel is found in the annual crop. In the exportation of surplus power we have something similar to the exportation of a perishable crop, because if it is not exported it is wasted for all time. It would be as reasonable, it is contended, to prohibit the export of wheat, or cattle or paper to the United States or for the United States to prohibit the export of its coal or oil to Canada.

I believe the difference must be apparent, and it is a fundamental one to keep in mind in connection with any application for the export of surplus power.

The next argument is that we ought to keep power in Canada for the purpose of building up our own industries. It is stated that we should keep it for our own industrial and commercial development and, particularly, that it should be kept in the country for use in shops, factories, and for domestic use in homes for purposes of lighting, heating and motive power. There is too the argument that electrical power should be used more extensively on our farms to relieve

much of the work now being done by manual labour. Especially as other fuel becomes more scarce and expensive is there the greater need to keep electrical energy in our own country. The contention is that if at this time we export power to any great extent, as time runs on it would not be available, and it would be more difficult for domestic industry to secure, at the low cost which would otherwise prevail, the power which should be available. Also it is contended we should, by retaining our power, seek to attract industries and capital to Canada.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

What is the Prime

Ministers idea with respect to the possibility of withdrawing the right to export power, after it has been exported?

Mr- MACKENZIE KING: I shall deal with that point later. I am now trying to present both sides of the case as fairly as possible, because undoubtedly there would be no justification for asking parliament to permit the export of power only by private act unless there were cases where such private acts of parliament would be wholly justified. For that reason I am presenting the argument in this form, to make clear to the house what is to be said for and against the export of power. I do this so that the entire situation may be clear to hon. members.

The opposite side of the same shield is that, with our own power, we should not through export, help to build up competitive industry on the other side of the boundary line. It is alleged that as we send power out of the country we are helping to create industries in another country. As the hon. member for St. Lawrence-St. George (Mr. Cahan) argued on one occasion, we were sending power to build up factories in the United States and to give employment to United States labour, while our own people were unemployed.

It must be remembered that in the development of power, capital is necessary for the erection of plants in which the power can be generated. Capital must be found for transmission and installation of electrical energy before its use can become general. From where is that capital to come? It has been argued-and I believe it can be argued successfully-that some of the enterprises which have already been established in Canada for the purpose of developing power have been established with the assistance of United States capital, and that the capital would not have come to Canada had it not been for the fact that some of the power was to be exported to

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Electric Power Export

the United States. In other words, those who favour export contend that to establish a power development requires extensive capital, and that capital can best be secured by permitting the export of a limited amount of the surplus power, until the necessary further capital is found in the country itself to provide for additional transmission, installation and the like. It is the demand for power that brings forth the capital needed for its development. If that demand is not effective it is of little avail. If capital cannot be found at home, it is contended that by exporting surplus power developed at home employment is thereby given our own labour and additional income secured wherewith to expand and extend facilities at home.

In connection with the building up of industries elsewhere, it is important to note that apart altogether from available power, there are many other factors which must be taken into account. Power is a decisive factor in deciding the location of industry in only relatively few cases. Most industries depend upon other available materials, the accessibility to markets and in some cases the geographical location. Power is vital to certain industries, but in others it is not the most important factor. It is probably more important in the paper and aluminium industries than in most others. It has further to be kept in mind that steam power can be produced from coal and that under present day developments it is possible to have it produced at a much lower cost than could have been done heretofore. It is alleged that what will happen in the event of surplus power not being exported is simply that coal will be used to develop power from steam as a substitute. It is claimed that exported power brings revenue to the country that exports. That is one of the answers given to the statement that the export of power means that our own people are going to suffer as a consequence.

The export of power, it is claimed, increases the cost to consumers at home by limiting the quantity available at any moment, and by deferring the time when the surplus power may be used for domestic purposes. The contrary argument is that the extra sale of power enables companies to reduce costs to consumers. It was asserted in all the applications that were before the government last fall that in the event of the export of surplus power being permitted, the companies would be in a position to reduce rates to consumers. What was promised in that connection will be found at pages 57, 65 and 75, 76 and 77 of the white paper. There will also be found the

[Mr. Mackenzie King.l

answer of the companies mentioned to the assertion that the export of power may mean that the day is being postponed when consumers in our own country will get lower rates.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

Did they suggest to what time the reduction would continue?

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LIB

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

Liberal

Mr. MACKENZIE KING:

Every grant of permission for export should be made subject to clearly defined terms and conditions; in the granting of permission parliament would fix a definite time limit and a definite amount of power related to the quantity that is available and required in Canada. It would doubtless require that there must be reasonable belief that the surplus power to be exported would not and could not be used at home at the time of the export.

Topic:   ELECTRIC POWER
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Within a reasonable time.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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LIB

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

Liberal

Mr. MACKENZIE KING:

Within a

reasonable time. I am simply outlining the argument; I am not saying that it is substantial or otherwise. I think it is right that we should see that there are two sides to this question.

The strongest argument against the export of power is between that referred to by the hon. member for Davenport (Mr. MacNicol), namely, that once power is exported it is difficult to retrieve; that it creates vested interests in other lands, and that international complications are almost certain to result once an effort is made to stop the export of power that has been exported for a certain length of time. As I mentioned in the earlier part of my remarks, in 1914 the governor in council found it necessary to deal with that phase of the question. The Public Service Commission of the state of New York had made representations to the effect that power which was -being imported from Canadian sources could not be cut off summarily. They had given it as their opinion that the government of Canada would not be justified in stopping this export once it had been permitted for a considerable period of time. The government of Sir Robert Borden felt it necessary to take official notice of that statement and reply to it. This was done by the enactment of an order in council in which it was made quite clear that the government of Canada could not be expected to refrain from stopping the export of power at any time that it might deem it necessary to do so, and that it must be understood in the United States that any power which was being exported from Canada was being exported only by yearly licence. This yearly licence, it was asserted,

Electric Power Export

was being required that exports from Canada might be considered not as creating a permanent vested right which companies operating in the United States could hold and claim, but simply a right extending from year to year.

Topic:   ELECTRIC POWER
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That the licence meant what it said.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

Has there been any instance where power has been cut off? What about the large company the Prime Minister has referred to, the Niagara Hudson Company?

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LIB

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

Liberal

Mr. MACKENZIE KING:

I cannot go into details at the moment; I am just trying to give broad aspects requiring consideration. What I want to make clear is that that question did come up in 1914. I am not sure, as I have no personal knowledge, that during the war the question was not considered by the government of the day.

Topic:   ELECTRIC POWER
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is right.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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LIB

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

Liberal

Mr. MACKENZIE KING:

I believe there was a desire on the part of some Canadian interests to take back some of the power which was being exported to the United States. The power, I have been given to understand, was being used by industries manufacturing essential war supplies, and as the United States was friendly to Great Britain at the time, and subsequently an ally, pressure, I understand was brought to bear on the Canadian government by the government of Great Britain as well as that of the United States to allow the export of power to be continued.

_ Mr. BENNETT: Certain changes were made in the Massena dam.

Topic:   ELECTRIC POWER
Subtopic:   TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY
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March 10, 1938