February 13, 1939

LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

Yes. At the request of

the Minister of National Defence. The suggestion that there was no disclosure is unwarranted because it is untrue, and in all the calumny of the personal attack that has been made upon the Minister of National Defence, the most contemptible is that he failed to disclose the facts which are so fully reported to the government in this report.

As desired by you-

That is, the Minister of National Defence.

-a report on the Bren light machine gun question is respectfully submitted:

As far back as the summer of 1936 the Department of National Defence came to the conclusion that it would be necessary to arm the forces with the Bren gun and that 7.000 of these guns would be required. A few model or specimen Bren guns were ordered and it early became clear that Canada could not look to the manufacturing establishment of the government of the United Kingdom as a certain or timely source of supply reasonably safe from possible enemy action. The two model guns which we now have were not made in England but in Czechoslovakia where they were invented; the Enfield plant near London cannot satisfy the United Kingdom government's requirements before several years. You will not want me to go too deeply into the difficulties

Bren Gun-Mr. McGeer

which have been encountered in this connection by Great Britain, but the fact that the United Kingdom is not only willing but anxious to order 5,000 Bren guns from a Canadian manufacturer is of the utmost significance. Direct advice to this effect, with corroboration from our Royal Canadian Ordnance Corps officer stationed at Canada House, London, has been received, also similar advice to the effect that the treasury in London has approved the war office proposal.

In view of the present situation, as mentioned in the next preceding paragraph, which, although anticipated here long ago, materialized slowly and after long and unexpected delays, it was deemed advisable, even in 1936, to consider the possible necessity of having our requirements manufactured in Canada. The probable difficulties of the position of the United Kingdom were surmised here from the beginning. Because of known variations in cost factors (labour, for instance), heavy outlays for machinery, et cetera, that would be required if the guns were to be manufactured in Canada, it was known that Canadian production costs would be much more than the English production cost, if only 7,000 guns were to be made in Canada it was believed that the cost would be prohibitive under normal conditions. Such has turned out to be the case, to the extent that the placing of the 5,000 order in Canada will save something more than $1,000,000 in cash to Canadian taxpayers. It is impossible to translate into dollars the other advantages to Canada whether financial, or, very important, the extending of our means of defence. Perhaps to mention one other advantage will suffice, i.e., that we will get the guns more quickly than would otherwise be possible; there will remain in Canada the plant and acquired skill in the production of this weapon.

When the matter was first considered, it was not then believed that there would be long delay in receiving favourable or at least definite advice regarding the placing of an order by the government of the United Kingdom, the advisability of having the guns produced in a dominion arsenal, by private industry following invitation to tender or by a selected manufacturer who would produce the guns under the close financial and technical supervision of the Department of National Defence, on a cost-plus basis, was carefully considered. The latter method was chosen as the one which would bring quickest results, would be the most economical, would most easily permit of termination of activity, and would be one which would commend itself to the w'ar office.

It is the practice in England to select the contractor when, as in the case of the Bren gun and many other articles required for defence purposes, to have the contractor proceed on a cost-plus basis. This, when it is not possible to say what a fair and reasonable firm price is. This procedure permits sound planning against an emergency or war. In the case now under discussion, the president of Messrs. John Inglis Company Limited. Toronto, Ontario. James E. Hahn (Major, D.S.O., M.C., Canadian expeditionary force) called at the war office in October or November, 1936, and undoubtedly created a most favourable impression there and with the technical officers of the Enfield plant, with the result that of a number of Canadians who have displayed an interest in armaments. Major Hahn is one of

the few who has proven satisfactory to the war office if an offer of a contract is to be taken as the indication. The prospective contractors were equally acceptable to the department and their continued interest in the matter, despite delays vexatious to all concerned, was reassuring.

It may be added that Major Hahn has visited England several times and has acquired a great deal of extremely valuable information concerning the manufacture of the Bren gun. The departmental proposal was brought before the interdepartmental committee on the control of profits on government armament contracts and there given minute attention which has resulted in a draft agreement which would limit the financial returns to the company to an extent greater than the agreement which has been found acceptable by both the war office and the treasury people of the government of the United Kingdom.

Mr. MANION; Whose statement is that?

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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

I will tell the hon. gentleman when I have finished reading it.

The Department of National Defence has spared no effort to acquaint the members of the interdepartmental committee with all possible facts and information concerning the proposed agreement. The members of the committee, including a subcommittee, individually and collectively, have been extremely painstaking and cautious in their approach to the subject. Some members insisted that a cost-plus contract be submitted to tender by selected Canadian firms.

Mr. MACKENZIE (Vancouver); There you are. There is "concealment"!

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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

It being the expressed wish of a majority of the members, this was referred to the war office officials with the result that they nearly dropped the matter. It had been arranged through proper channels that the Department of National Defence ordnance office in London, as an observer, attend the discussions on this particular point. All reports were painfully to the effect that if such action -were taken it would mean the immediate and complete loss of interest on the part of the war office. Whatever the reasons for delay in arriving at a decision up to a short while ago, London evidently cannot or will not place an order in Canada unless it can do so immediately. All concerned in the department here, including myself, quite understand and agree with war office officials; the members of the interdepartmental committee who desired that the point be referred to London accepted the war office decision when the committee again took up the details of the proposed agreement.

What I want to draw to your attention, Mr. Speaker, is that the hon. member for St. Lawrence-St. George demanded that the Prime Minister call for the resignation of the Minister of National Defence because he had not acquainted the government with these very facts, facts that went before the government in this report and were filed there before the government acted. Surely the time has

Bren Gun-Mr. McGeer

come when in the face of a report of this kind members who charge a minister of the crown with deception by not informing the government of the facts have little regard for the right of the Minister of National Defence at a time like this to be free from having suspicions cast upon him that are not warranted by the facts.

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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

What has the hon. member been reading from? Surely we have a right to know.

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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

I wish to compliment the leader of the opposition on putting upon the political records of Canada one of the finest Irish bulls that ever went into print. Speaking to the Minister of National Defence about the editorial from Vancouver, which did not come from Vancouver, " Why," he says, " Mr. Speaker, I did not quote the editorial; I merely read it verbatim."

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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

I did not say that at all. I wish to correct that statement. I did not say that I quoted it verbatim. I did not pretend to quote it verbatim. I took some of the words and used them, adopting them as my own. I never made the statement attributed to me.

Mr. McGEEIl: Collectors of Irish bulls will find that in Hansard.

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LIB

Donald Elmer Black

Liberal

Mrs. BLACK:

On a question of privilege, Mr. Speaker, I myself sent that editorial to the leader of the official opposition. That editorial was printed in the Vancouver News-Herald.

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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

We have passed the editorial stage. We are now at the stage of the bull in the china-shop. I took a great deal of time to tell the house that I was reading from the report made by the interdepartmental committee to the minister and presented to the government, upon which they acted when they passed the order in council authorizing the execution of the contract, filed by the minister before the Davis commission as exhibit 244.

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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

Why does it always say "myself"? In that report, again and again, says "myself." Is it the deputy minister?

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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

That is the reason why this kind of material should go to a committee where it can be analyzed properly. I do not blame the hon. member for not wanting it to go to a committee, but it is going there.

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CCF

Thomas Clement (Tommy) Douglas

Co-operative Commonwealth Federation (C.C.F.)

Mr. DOUGLAS (Weybum):

May I ask a question-

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?

Some hon. MEMBERS:

Order. Sit down.

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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

To continue:

The last meeting of the committee was held on March 17, 1938, when all remaining clauses of the proposal were passed. Major Hahn was called into the discussion during the latter part of the deliberations.

The principal features of the proposed contract, as passed by the interdepartmental committee, and recommended to you by me, are: The contractor to manufacture in Canada 7,000 Bren light machine guns and parts, as ordered by national defence according to available funds.

Contractor to have ten-year non-exclusive licence. (This is effectively controllable by national defence through war office, and is subject to cancellation for cause, including increase of company's capitalization without consent of department.) Licence renewable by mutual agreement.

The essential feature of that report is to be found in the fact that the demand of a majority of the committee at one stage for tenders was properly placed before the government, and the government were advised that this committee, after full consideration of all the facts, had decided to accept the war office recommendation for the selection of the Inglis company under the direction of Major Hahn. Again, I say: Whether the minister was correctly advised or not may be one issue; but whether or not the minister and the government had a right to act upon that kind of report made by a responsible officer, who the other side declares is honourable and worthy of every respect, can no longer be an issue.

Upon what is a minister to act if he cannot act upon the written reports of the chairman of the interdepartmental committee, the deputy minister of national defence? Will any hon. gentlemen on that side say that this report is untrue; because to do so is to change completely their acceptance of the capability, honesty and integrity of the deputy minister of national defence? Well, if it is true, what was wrong with the minister and the government in acting upon it?

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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

Because they took the

responsibility, not the deputy minister.

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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

Then we shall come to

one or two other incidental facts. This is the finding of the commissioner upon the interdepartmental committee's dealing with the question of tenders. Let me quote from that finding of commissioner Davis at page 40:

Mr. Elliott said that the chairman (the deputy minister of national defence) pointed out that

his department had followed the practice of the British government where competition is not always obtainable, and they unhesitatingly go into non-competitive contracts in order to secure their requirements. In this particular case the British government had picked the firm to manufacture its guns.

Bren Gun-Mr. McGeer

By the Commissioner:

Q. Just a minute; the British government had done what?

A. Picked the firm.

Q. In this case?

A. Yes.

Q. In this case the British government had done that?

A. Yes, that in this case the British government had picked the firm to manufacture guns, and that they had made the best possible deal with that particular firm.

That is the finding of the commissioner at page 40. Is that finding correct? We can go to this imaginary picture language and 'say that the commissioner did not mean to quote that to be believed; that he meant something else. Let us turn to pages 46 to 47 where he refers to the first cablegram from the British war office. I quote:

It was on November 9, 1937 (exhibit 182) that the war office had informed the department by cable that the British government was then "ready to negotiate" for the purchase of 5,000 Bren guns to be manufactured by the John Inglis Company subject to some substantial reduction in cost.

That is the finding of the commissioner. Then he quotes Sir Harold Brown's cablegram to the department in detail.

Mr. STEWART; May I ask the hon. member a question? Will he read the finding of the commissioner at the foot of page 47?

As appears from the communications quoted above, the war office as late as February 3, 1938 (exhibit 190) was still adhering to its desire to deal with the Canadian government and not with a Canadian manufacturer direct.

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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

I am reading the sections that are pertinent to the matter I have under consideration.

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CON
LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

The commissioner has definitely found that the war office, rightly or wrongly, under pressure from this government or anyone else, did decide to select the John Inglis Company.

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CON
LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

What is the accusation, that this government in Canada is running the war office in England?

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February 13, 1939