March 10, 1939

CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

I do not know anything

about this record, and I cannot discuss it, but would the minister give us a little more detail in regard to the selected lists on both sides? I assume my hon. friend has had selected lists.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

Yes. I said forty per cent.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

Would he explain to the house, as a matter of information, how the selected lists were chosen, both by the late government and by the present one?

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

Yes. I think the general procedure is this. You are building in Calgary, let us say. There are before the department a number of potential contractors, say seven or nine. You invite them to tender. The contract is not advertised in the press; it is a closed list, limited to those selected by the department.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

I understood that, but what I meant was this: Has the minister the lists or the numbers of people called in with respect to these selected lists?

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

I believe I can get them. I have not them at the moment. I suppose they would be available in the department in all oases, as regards both the previous administration and the present one.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

I was just asking for information.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

I shall be very glad to get that information.

I come now to a brief discussion of the measure which would be consequent upon the adoption of this resolution by the house.

The bill itself has three definite features. The first is the creation of a defence purchasing board, with four members. The second principle is the provision for financing defence purchases of a capital nature on a ten year three per cent amortization basis. The third feature deals with the element of profit control.

I think it is fair for me to say that public opinion to-day is unanimous that excess profits on arms and munitions contracts must be curbed.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

May I ask the hon. gentleman a question? Who makes the greatest profit out of war, those who finance it or those who produce the materials?

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

According to the information that is mine as a result of the experiences of the last war, the greatest profits were made, not on these engines of destruction which we call munitions, but in respect of essential food and other supplies for those who were trying at that time to fight the battles of Canada overseas.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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SC

John Charles Landeryou

Social Credit

Mr. LANDERYOU:

How would that compare with the profits of those-

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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?

Some hon. MEMBERS:

Order.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Walter Edward Foster (Speaker of the Senate)

Liberal

Mr. SPEAKER:

The house is not in committee.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

When

my hon. friend interrupted me I was going on to observe that the commonest way of expressing this desire was to say we did not want anyone to profit out of war or preparation for war, but I must say that there has been a great paucity of practical suggestions as to how to attain this most desirable objective. My hon. friends of the Cooperative Commonwealth Federation have a very simple solution. They would nationalize all industry, and then there would be no profit at all in the manufacture within Canada of shells or bread or butter or any other commodity.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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?

An hon. MEMBER:

Nonsense.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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CCF

Thomas Clement (Tommy) Douglas

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

Mr. DOUGLAS (Weyburn):

That is a subject on which the minister is not an authority.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

But I

believe the majority of people in Canada, as in Great Britain and the United States, believe yet in a competitive society and are not prepared for the drastic step my hon. friends would recommend.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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CCF

Angus MacInnis

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

Mr. MacINNIS:

They are fast moving

that way.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Thomas Reid

Liberal

Mr. REID:

Not the farmers.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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LIB

Ian Alistair Mackenzie (Minister of National Defence)

Liberal

Mr. MACKENZIE (Vancouver):

Short of the complete nationalization of all industry there is no way to eliminate all profits on our defence requirements, to use a phrase which was attributed by the press, improperly I believe, to my hon. friend with reference to his Toronto speech. If we manufacture shells and guns in state arsenals we shall still build the plants and buy the machinery and raw materials under the competitive system and the element of profit will still remain. Although it may be one degree removed, it will be just as real and just as objectionable.

Defence Purchasing Board

There are other objections to the state arsenal plan for all direct requirements. It would involve, as has already been explained very thoroughly, large capital outlays on plant and equipment which would be required for only a short time, and unless your continuous supply is guaranteed, then would lie idle, throwing men out of work. Any such program has been rejected as uneconomic by some of the ablest observers. I have already reviewed the steps taken by Right Hon. David Lloyd George in the last war, when he said to a delegation of labour, "Let the manufacturers make their profits, I will take it away from them by taxation. Leave that to me." May I draw your attention to the fact that that measure was adopted under actual War conditions?

A great deal of thought has been given since then to the question of profits control in every democratic country in the world, and certainly much thought has been given to it by the present government. Perhaps I may be pardoned if I refer now to what I said in this house in 1937, I think in response to a question asked me by the hon. member for Winnipeg North (Mr. Heaps):

Now I wish to deal with the question of profits.... This question divides itself into three categories.

The first is the supply of defence equipment in peace time;

The second is the export of munitions or supplies beyond the country, and,

The third is the supply of munitions and equipment in war time.

With reference to the first of these categories having to do with the supply of defence equipment in peace time, government policies were formulated some time ago... .

They are designed to safeguard the public interest as far as possible by competition, where competition is possible. Where this cannot be done; where competition is not possible, they are designed to establish rigid principles of reasonable remuneration to make unfair profits impossible and to provide for a thorough system of inspection and audit.

So, sir, we have been through the British royal commission report. We have had the majority and minority reports of the senate committee of the United States. We have had our own Skelton committee report. We have worked in cooperation with the interdepartmental committee of eminent civil servants, and we have even had debates in this house. In Great Britain this is what the royal commission said:

It is our opinion that measures ought to be taken to restrict the profits of armament firms in peace time to a scale of reasonable remuneration. . . .

We do not propose to undertake the task of formulating specific methods for the restriction of profits in peace time. No doubt that is fraught with technical difficulty.

There is no concrete suggestion there. They go on to say: .

Nor do we believe that a measure of taxation such as the excess profits tax which was enforced during the last war will prove satisfactory to meet the essential object in view.

That does something to increase the "technical difficulty" referred to, but nothing to help us solve it.

Topic:   NATIONAL DEFENCE
Subtopic:   CREATION OF DEFENCE PURCHASING BOARD TO ENTER INTO CONTRACTS FOR MUNITIONS, EQUIPMENT, MATERIALS AND SUPPLIES
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March 10, 1939