Mr. J. R. MacNICOL (Davenport):
I see it, after listening to the very able speech delivered by the Prime Minister (Mr. Mackenzie King), the object of this bill is to relieve the government of any responsibility for initiating legislation in connection with the export of power. Just why the government is afraid to take responsibility I do not know.
What is the proposal that is before the house at the present time? The government proposes to turn over to a private member, in relation to a matter so important as this, the right to initiate legislation. Both the Prime Minister and the Minister of Justice (Mr. Lapointe) have characterized it as legislation of very great importance, and in my opinion it is altogether too important to be
turned over to any private member or to any private bill. Behind a private bill there is always the motive of profit, whereas international amity should be the purpose of the government in a situation of this kind.
I agree with what the leader of the opposition (Mr. Bennett) said. If the government really desires to give parliament the power to pass upon the exportation of electricity, all it has to do is to accept his suggestion and amend the statute so as to provide that before any measure to export power becomes effective it shall have the approval of this house.
It is not my intention to deal with the bill at any great length, but I wish to deal particularly with one aspect of it, namely, the question of the revocability of licences. In the course of the debate so far, three cities have been mentioned, Massena, Niagara Falls, and Chicago, and I will try to show, from our experience in connection with the development of electricity through water diverted at each of these centres, that it is next to impossible to revoke a licence for the exportation of power.
Let us take, first, Massena. During the last year of the great war, in 1918, the aluminium interests at Massena, New York, a branch or subsidiary of the Mellon interests in the United States, were the greatest exporters of that metal to the allies. In 1918, wishing to divert more water from the St. Lawrence, they applied, through the International Joint Commission, I believe, for the right to erect a weir in the south channel of the St. Lawrence river, above the head of the Long Sault. Of course, the government of the day objected. It was a violation of one of our international treaties, the Ashburton treaty, which stipulated that no obstruction should be placed in any international navigable channel between Canada and the United States. But when it was represented to the government of the day that the aluminium company were supplying a very large proportion of that metal used by Great Britain as well as by Great Britain's allies in the prosecution of the war, the government consented to the erection of a weir in the St. Lawrence river on the condition that it should be removed "five years hence," that is to say, in 1923.
What happened? The weir was erected and the aluminium company diverted from the St. Lawrence 25,000 cubic feet of water per second through a power canal over to Massena, situated on the Grass river in New York state, and there from a head of approximately 25 feet they were able to develop from 80,000 to 90,000 horsepower. What was
Electric Power Export
done in 1923? Indeed the company did not wait until 1923, because, before that date, they asked for an extension of the lease, notwithstanding that the war had then been over for practically five years. In 1928 they went after something very much more important, namely, permission to raise the weir another six feet. That is far different from carrying out the agreement to remove the weir at the end of the five years. To-day that company is diverting 25,000 cubic feet per second. It is developing from 80,000 to
90,000 horsepower from 25,000 cubic feet of water, 12,500 of which belongs to Canada.
I should like the Prime Minister when he speaks again to tell us whether that agreement can be revoked. I do not believe it can, because the interests are too strong, not only in connection with the electricity but in the realm of oil. The same interests are behind both, and they have shown great strength. Hon. members may be familiar with what took place in Colombia, South America, when the Anglo-Persian Oil Company, and the Gulf Oil Company-the latter belonging, I am told, to the Mellon interests-were trying to obtain oil leases in that country. The effort resulted finally in the overthrow of the government. The incoming president, Doctor Herrera, tried to obtain a loan, just as the outgoing president had done; and what did he do? He went to Washington and was there given a banquet; and the gentleman who sat beside him was none other than the Secretary of the United States treasury, the late Andrew Mellon, then head of the Mellon interests, who controlled, I am told, the Gulf Oil Company, and the aluminium company on the Grass river at Massena, New York. Well, what was the upshot? Instead of cancelling the lease for oil for the Gulf Oil interests in Colombia, which it was alleged had been obtained illegally, as a result of the president's visit to Washington Colombia extended the lease and obtained its loan of 84.000,000. That is one instance of how revocation did not take place, of oil in that case, of electricity and water in the case of Massena. The second instance is Niagara Falls. Most hon. members are familiar with the situation there. It would seem that Divine Providence, in laying out the course of the Niagara river, knowing that this great territory of Canada has a cold climate and for heating would require a lot of white coal for a large part of the year, and that in Ontario teeming millions of people would in due course be settled, determined that ninety-four per cent of the flow of water in that river should pass over the Horseshoe falls on our side of the line.
In due course it was realized that there were great potential power resources at
Niagara Falls, and in 1909 the two countries blade a treaty to prevent the robbery of the water that flows over the falls. Later came the International Joint Commission, and it was arranged that for the preservation of the beauty of the falls not more than 56,000 cubic feet per second of water should be taken for power purposes, and of that 56,000 cubic feet it was stipulated that 36,000 should belong to Canada and 20,000 to the United States. That was not nearly as generous to Canada as would appear on the face of it; for what was the situation at that time? The Niagara-Hudson interests, which control all or practically all the power in t'he whole of western New York state, had a plant on the Canadian side of Niagara Falls, either in operation or about to operate, known as the Canadian Niagara Power Company plant. They were diverting 10,000 cubic feet per second, and all of the power that they generated with our
10.000 cubic feet of water was exported to the United States, barring a small quantity on which I am told the Ontario Hydro has a call if required.
In determining how much water Canada should have out of the 56,000 second feet this
10.000 second feet diverted by the Niagara-Hudson company or the Canadian Niagara Power Company was charged to Canada, which left us with only 26,000 second feet. Again the Ontario Hydro, or at that time the Ontario Power Company, had a long-term agreement with United States power consuming interests by which these interests were supplied with 60,000 horsepower, requiring the diversion of 3,600 second feet from the Niagara river. In other words at the time the allocation was made of 36,000 feet to Canada and 20,000 to the United States, the United States were already obtaining from Canada 13,600 second feet; so we were left with 22,400 second feet. That was the situation at Niagara Falls. It is a situation which cannot be revoked. The hydro longterm agreement for the exportation of their
60.000 horsepower does not expire until 1950, and I do not know how long the term is of the Canadian Niagara Power Company plant which diverts 10,000 second feet of water. So that at Niagara as well as at Massena we are getting the short end of the stick.
Our power resources are gone from us, whether we would use them or not. Who' does not know what happened during the great war, when the power shortage in Ontario was very acute? At that time I was associated with a large plant which used a great deal of hydro power, and I know that there was great difficulty in obtaining power to run
Electric Power Export
that plant. Why did we not revoke the licence to export the power generated from the 13,600 second feet taken from us? I am not saying we did not agree to do it, but we cannot revoke the agreement.
What is the situation at Chicago, the third instance to which I wish to refer? At Chicago, in spite of anything the premier of Ontario says, Canada does lose a lot of water. I made a speech recently in London, Ontario, in which I discussed the Chicago situation, and later the premier of Ontario said that I must be wrong, because water does not run uphill, and he is reported in the press as saying that on account of lake Michigan being several hundred feet higher than lake Huron therefore no Canadian water can run out at Chicago. But of course the premier of Ontario is not always right; in fact is often wrong, and on this occasion he was very far wrong. As a matter of fact those two great lakes are on the same level, to all intents and purposes one lake, joined by a channel twenty miles wide, the straits of Mackinac. So that the water pouring into those two great lakes pours into one common reservoir. The watershed on the Canadian side from which water flows into those two great lakes is larger than the watershed from which water flows into them from the United States. And of the water diverted at Chicago half is Canadian water.
Now what is the situation there? For the twenty years from 1915 to 1935, the diversion at Chicago for domestic purposes, for power purposes and shipping, has approximated 10,000 cubic feet a second. Thirty-six miles west of Chicago at the town of Lockport, where the Chicago drainage canal drops into theDes Plaines river, Chicago develops 36.000horsepower of electrical energy, half of which is developed from Canadian water because half of the water diverted belongs to us.Prior to 1900 water was diverted at Chicago in small quantities. In those old days they used to pump it over the height of land ten miles west of Chicago, a height of about twelve feet. They pumped the water and
sewage over and poured it into the Des Plaines river. But since 1900 it flows by gravity through a canal twenty-four feet deep and two hundred feet wide, and they can take almost any quantity they want. Up until 1935 they were diverting approximately
10,000 cubic feet per second, and to-day while they are not taking that much they are still diverting about 7,000 cubic feet per second. I am aware that by 1939 they have to reduce the amount taken to 4,000 second feet, but if the bill now before the United States congress passes-and they will move heaven and earth to see that it does-instead of 1,500
second feet plus about 2,000 feet for domestic purposes, the 1,500 will be changed to 5,000.
Canada has protested for years against the diversion of water at Chicago, but can we revoke it? No, we cannot. It has had a disastrous effect on lake levels, apart from the question of power. But the fact is they are developing power with it, and on the rest of the river, the Illinois river, between Chicago and the Mississippi, down which our water flows along with the United States water, there are six other power sites. Some of them develop a small quantity of power, but the whole six, when in full operation, will develop another 70,000, or, plus the one at Lockport, approximately 100,000 horsepower. A large proportion of the water used in the plants down the river will be water diverted from lake Michigan.
If the government of Canada cannot revoke the situation at Chicago and cannot do anything towards revoking the situation at Niagara Falls-and it cannot do anything to change conditions at Massena-what can it do if in a short time it enters into an agreement to export to the United States another hundred or more thousand horsepower? It cannot do anything. I do not believe the government can revoke any contract to export it may enter into with any other government or any organization of producers.
There are the three pictures. May I at this point recapitulate: at Massena 80,000 to 90,000 horsepower has been developed, one-half of which is developed from Canadian waters. If that water were diverted on our side of the line we would have at that point about
40,000 or 45,000 horsepower. At Niagara Falls we receive only that power for ourselves which is diverted from 22,400 second feet; our share of that water should be 36,000 second feet. This is the condition, in face of the fact that 94 per cent of the water at Niagara Falls flows over the Horseshoe Falls on the Canadian side. Canada is getting the wrong end of the stick, if I may use that expression, in connection with each of the three great power developments which have come about from diversions of water one-half of which is from our side of the line.
In the white paper presented to parliament a short time ago I find at page 104 item No. 54, respecting an order in council. In this order in council there are very important statements which bear out my statement to the effect that once power is exported and used in the development of industries on the other side of the line, it is impossible to cut it off without international difficulty.
Electric Power Export
I have known many large industries in the United States which have used Canadian power, and have gained that information from my association in a business way with some of those great industries. I do not see how it is possible to cut off power from large industries which may be using it. For instance, how can you cut off power from the Lackawanna Steel Company, if they are using it? It is one of the largest steel plants in the United States. If they are not using it, then I know that other companies are using power developed from water diverted from the Canadian side of the line. That power cannot be cut off, because they have long term contracts, and those contracts must continue in operation.
Let us now give some attention to item No. 54 in the white paper. We are told that it is a certified copy of a report of the committee of the privy council, approved by His Royal Highness the Governor General on the 25th August, 1914. The text is as follows:
The committee of the privy council have had before them a report, dated 16th June, 1914, from the right honourable the Secretary of State for External Affairs, calling attention to a recent opinion of the public service commission of the state of New York in the matter of the application of the Canadian-Ameriean Power Corporation for permission to import an additional 46,000 horse power of electrical energy from Canada into the United States.
Then, omitting the remainder of the letter, we will read from the middle of page 105, where we find the American opinion with respect to the importation of power.
Without going into details, it seems sufficient to say that the prohibition of exportation from Canada of this present electric power which now comes into this country would paralyse business and industry of many kinds and would deprive numerous localities of electricity for light. American-produced Niagara power is so far from supplying the vital needs of the sections of the state above described that the immediate results of such prohibition would plainly amount to a great public calamity.
How are we going to revoke power, the prohibition of which would cause a great public calamity? I am surprised to find that the government wants to place in the hands of a private member, no matter how brilliant he may be, the introduction of a bill which might bring about a great public calamity, and embroil this country in troubles with the country to the south of us. I am sure the Prime Minister would be one of the last to condone any such action because, I am pleased to say, it would appear that on every occasion he tries to keep this country on an even keel internationally, and out of any possible trouble. I continue the quotation:
The form of securing a licence yearly from the dominion government is required by the dominion law, but such licence lias been granted yearly to the other great producing electrical corporations of Canada, and no reason appears for apprehension that any discrimination would be made against the Electrical Development Company or the Toronto Power Company, lessee. We have nothing before us but the suggestion that the Dominion of Canada may at some future time forbid this exportation. This commission must assume that international relations affecting so important a subject as the means of continuing great industries which have grown up in reliance upon the use of this imported power, and as well the interests of the Canadian producing companies themselves, have become fixed
As I said, they certainly are fixed at Massena; they certainly are fixed at Niagara Falls; they certainly are fixed at Chicago- -and subject only to such changes as will fully protect the great commercial and industrial interests and rights now served by this power brought from Canada. The time has long since passed when governments proceed ruthlessly from pure national rashness or anger to destroy the settled accepted commercial relations and formally vested rights of persons and corporations.
That is just as true to-day as it was when it was written.
In conclusion I will say that if the Minister of Justice, as he intimated on March 10 might be possible, can persuade the Prime Minister to adopt the suggestion of the leader of the opposition, there will not be much need to find fault with the bill.
Subtopic: TRANSFER TO PARLIAMENT OF CONTROL OF EXPORT EXCEPT IN INTERNATIONAL EMERGENCY