September 12, 1939


Amendment agreed to. Section as amended agreed to. Section 3 agreed to. On section 4-Deputy Minister.


CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

Why are the appointments to be made by the minister instead of by the civil service commission?

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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LIB

Charles Gavan Power (Minister of Pensions and National Health)

Liberal

Mr. POWER:

The reason is that this is

a new department which is being set up. It is all very well, in cases where a department is already in existence and where there are a certain number of men who know the workings of that department, to bring in new men through the civil service commission. But when a department or a board of any kind is being set up, it is extremely difficult to get the calibre of people required through the civil service commission by means of the ordinary eligible lists.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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CON

Charles Hazlitt Cahan

Conservative (1867-1942)

Mr. CAHAN:

This department will cease

to exist at the end of three years. It is not regarded as continuing after that time.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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LIB

Charles Gavan Power (Minister of Pensions and National Health)

Liberal

Mr. POWER:

I thank my hon. friend for

giving me a better reason than the one I mentioned.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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Section agreed to. Sections 5 to 11 inclusive agreed to. On section 12-Power to require production of documents and keeping of records.


CCF

Thomas Clement (Tommy) Douglas

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

Mr. DOUGLAS (Weyburn):

Would the

Prime Minister be good enough to answer now the question I asked a few minutes ago?

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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LIB

Clarence Decatur Howe (Minister of Transport)

Liberal

Mr. HOWE:

Perhaps I may be allowed to answer the question on behalf of the Prime Minister. The provisions of the defence purchasing board will not be carried into a board set up under the WTar Measures Act. As

Department oj Munitions and Supply

stated by the Prime Minister, the defence purchasing board was a board to function in times of peace, and one requirement was that all materials should be purchased by public tender. It is perfectly reasonable and satisfactory to do that in time of peace, but it may be impossible to do it in time of war on certain occasions, and to make it mandatory that tenders shall be called, as in the defence purchasing board act, would not be practicable. Let me give an illustration. A few days ago an order came to the defence purchasing board for the purchase of a net for submarines at one of our harbours. A net for submarines was needed immediately. It was not something that we could get by tender. That is obvious. It is not a commodity sold on the ordinary market. It was necessary to make arrangements to have it constructed at once. It is obvious, therefore, that if a new board functioning in time of war were restricted to tenders, the obtaining of that veiy necessary equipment would have been impossible at the time at which it was required.

There is another factor to be considered. In time of war many materials come from outside the country. Prices in other countries are beyond our control; they may fluctuate widely. At such times it is often not possible to protect the price for a period such as is required in calling for tenders. A price may be quoted for two or three days, but with rapidly fluctuating prices no firm is likely to quote a price good for two or three weeks, and such additional time as is necessary to review tenders and to award the contract after the tenders have been analysed. Under the former act, there was a provision that profits should be limited to 5 per cent of the capital utilized for the period in which the article was produced. I have had a good deal of experience, extending over a good many years, in buying materials, and I give it as my opinion that it is impossible to lay down a uniform standard for profits with respect to a wide variety of purchases. If you could tell me the range of products, I would give from my experience what I believe to be the minimum profit which is reasonable; but unless you could tell me the range, I would not attempt to say what would be a reasonable profit for a wide variety of commodities. It depends a great deal upon the size of the plant, the amount of machinery required, the length oT" time ltr takes to produce it; and these factors are not capable of measurement by any yardstick.

The provision of 5 per cent was put in the last act after a good deal of consideration as a minimum return for the service

rendered, but it was one which men of considerable experience believed to be unworkable. I can say to my hon. friend that from that day to this the defence purchasing board has done its very best to place contracts on that basis and has used every pressure that could be brought to bear in the form of patriotism and so on, but to date it has not succeeded in placing a single contract on that basis. To carry that provision into another bill would be out of the question at this time. That part of the act we can consider as having proven to be unworkable.

The best guarantee which this government can have that profits on war material will be kept to a minimum is to place, on the board responsible for purchases, men of skill in purchasing, men of experience, men who know values, and men of absolute integrity. When the board was set up under the last act, the chairman was chosen as a man who perhaps had the widest experience in purchasing in this dominion, a man who in the ordinary course of his business had for many years been purchasing materials to the extent of around $100,000,000 a year. A man of that type, if unrestricted by the sort of provisions placed in the last act, could have saved for this government every cent it was possible to save, and at the same time he could have obtained the material which he was required to secure. I believe that the greatest safeguard this country can have, particularly at the present time, is to have adequate machinery of control such as the set-up under the present bill, and to have the measure administered by men of experience and wisdom in the particular service, men of absolute integrity.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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Section agreed to. Sections 13 and 14 agreed to. On section 15-Power to require protection of essential undertakings in time of war.


CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

In line 20 on page 9 of the bill I find these words:

. . . the appropriate proportion of the expenditure of a capital nature. . . .

Would wages be included as an expenditure of a capital nature?

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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LIB

Charles Gavan Power (Minister of Pensions and National Health)

Liberal

Mr. POWER:

I did not quite follow my hon. friend, but I think I have an idea of what he wants to know. Subsection 2 states:

Where the person carrying on an undertaking proves to the satisfaction of the minister that directions given under this section in respect of that undertaking have been complied with within the period specified therein, or such further period as the minister may allow, there shall be paid to that person by the minister a grant equal to the appropriate proportion of

ISO COMMONS

Department of Munitions and Supply

the expenditure of a capital nature which appears to the minister to have been reasonably incurred in complying with the directions.

If the minister were to tell a person that he must build an extension to his plant, let us say, or put in some new machinery, then an appropriate proportion of that expenditure would have to be paid by the government.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

But would that include wages?

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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LIB

Charles Gavan Power (Minister of Pensions and National Health)

Liberal

Mr. POWER:

The labour cost of installation might be included, but I doubt whether any other labour cost would come in.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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CON

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

The other labour cost is included in the goods supplied.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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LIB

Charles Gavan Power (Minister of Pensions and National Health)

Liberal

Mr. POWER:

Yes.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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Section agreed to. Sections 16 to 18 inclusive agreed to. On section 19-Offences and penalties.


CCF

Charles Grant MacNeil

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

Mr. MacNEIL:

May I ask if the rights of organized labour are fully protected under this bill?

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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LIB

Norman McLeod Rogers (Minister of Labour)

Liberal

Mr. ROGERS:

The point raised by my hon. friend is one which would naturally be raised in connection with a bill of this kind by one interested in organized labour. This point was not overlooked in the drafting of this bill. On the other hand, it was not found possible to put in any appropriate words the rights and obligations of labour in relation to the activities which might be carried on under this ministry of supply. It seems to me that one cannot go beyond this statement, that in connection with this very large reserve of power in regard to the mobilization of industry in this country, it would be natural for the minister concerned to work on a basis of consultation both with industry and with organized labour. I have every reason to

believe that if the cooperation of labour were sought on fair and reasonable terms, cooperation would be given in generous measure. I doubt very much if it would be possible or, indeed, advisable to put into this bill any special clause dealing with the position of organized labour. I think we can depend upon the relationship ' to be worked out satisfactorily on a basis of effective consultation.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

With reference to this section, which is the punitive portion of the bill, perhaps I can allay some of the fears that were expressed by the leader of the opposition in regard to the drastic nature of the bill, by pointing out that under section 11 provision is made for remuneration after arbitration. If anjmne concerned feels that he has been ad-

versely dealt with, that section is open to him. Under this section provision is made for the only method I can see of enforcing the measure, namely proceeding by summary conviction against anyone who does not comply with what are said to be drastic provisions. So we find that we have what is a basic protection against anything that might be regarded as too arbitrary in this country. Anyone proceeded against for failure to comply with the directions of the minister would have all the protection of the court in the proceedings on summary conviction and also all the protection of the appellate court on an appeal from any such summary conviction, if he felt himself to be aggrieved. I think with those safeguards we may consider that this measure well protects the subject in war-time.

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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CCF

Charles Grant MacNeil

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

Mr. MacNEIL:

I can appreciate the difficulties outlined by the Minister of Transport, and I do not wish to detain the committee at any great length, but I think some further assurance should be given in regard to the limitation of profits. It is well remembered- and I have before me some of the evidence- that a similar committee was set up during the last war, and subsequently some unsavoury evidence was brought to light showing that some of the members of the original shell committee were personally interested in firms handling large contracts for the government. One member of the board was interested in a firm which secured contracts to the value of $15,000,000. Can we have some assurance that the members of this supply board will not have any direct personal interest in any of the firms likely to secure war contracts from the government?

Another point that arose during the last war was that middlemen were allowed to operate. Anyone who has read the Memoirs of Sir Robert Borden or even the booklet issued by the Liberal party in 1917, which in condensed form points a finger at all these difficulties, will see what might arise in this connection. Actually reputable firms such as Bauer and Black, another firm making Webb standard equipment, were refused the right to do business direct with the government. That is my second point. Can we be sure that middlemen will not be allowed to take a rake-off? There was one case in which three men actually agreed to share a rake-off of a million dollars on a contract for shell fuses.

The third point on which I think we should have some assurance is in regard to the elimination of a patronage list. Before the public accounts committee of 1915-16, and before the Davidson and the Duff-Meredith commis-

Salaries Act-Amendment

sions as well, I believe the director of contracts swore that he was compelled to do business with a specified list of firms, which eventually grew to something like eight thousand. Again, if you read the evidence produced at that time, you will find that one great source of the difficulties with regard to purchasing and the scandals which subsequently arose was the patronage in placing contracts.

I bring up these three points at this time for the consideration of the government, and while the minister may not be able to give any definite assurance at the moment, could we have some general assurance with regard tc these matters?

Topic:   MUNITIONS AND SUPPLY
Subtopic:   ESTABLISHMENT OF DEPARTMENT TO MOBILIZE AND CONTROL RESOURCES, MUNITIONS AND ESSENTIAL SUPPLIES
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September 12, 1939