April 7, 1949

CCF

George Hugh Castleden

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

Mr. Castleden:

What is the security of this company behind the mortgage that the government now has?

Topic:   DEPARTMENT OF TRADE AND COMMERCE
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

A first mortgage on the company's real property. What it is worth I cannot say.

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CCF

George Hugh Castleden

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

Mr. Castleden:

Has the minister any

approximate figure?

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LIB
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

It

seems strange that the minister and I have to delve into these legal matters. Apparently the government finds itself in the position where this business transaction has to be carried out. It is not a matter whether they have power or not, they just do it. The minister seems to think that by passing an order in council they can cure any difficulty in their position. I propose to read the enabling sections of the act because I believe that if hon. members will listen to it they will find out that this transaction does not appear to come anywhere near to being covered. I am reading from section 4 of the Canadian Commercial Corporation Act:

The corporation is established for the following purposes:-

(a) to assist in the development of trade between Canada and other nations, and

(b) to assist persons in Canada

(i) to obtain goods and commodities from outside Canada; and

(ii) to dispose of goods and commodities that are available for export from Canada.

I do not think anyone will suggest that what I have read covers what has been done. Section 5 under "powers" makes the situation still clearer. It reads:

(1) The corporation may do such things as it deems expedient for, or conducive to, the attainment of the purposes set forth in section four of this act; and, for greater certainty, but not so as to restrict the generality of the foregoing, the corporation may carry on the business of:-

(a) importing goods or commodities into Canada, and

(b) exporting goods or commodities from Canada, either as principal or as agent, in such manner and to such extent as it deems advisable to achieve the said purposes.

In the following year the powers of the corporation were broadened. By chapter 51 of 1947 they were given quite a broad additional power, which reads as follows:

17. The corporation may, as directed by the minister, exercise and perform on behalf of the minister, the power, duty and function vested in the minister to buy or otherwise acquire and manufacture or otherwise produce munitions of war or supplies for, and to construct or carry out projects required by, the Department of National Defence.

In other words, this section gives them certain powers to act as agent of the Department of National Defence. Previously they had certain powers with regard to assisting in the import of goods into, and the export of goods from, Canada. Does the minister suggest that what has been done comes within any of these sections? If not, where is the power? Surely the minister is not going to leave us with the suggestion that merely because the government thinks it wise to do something, they proceed to do it regardless of whether this parliament has given them

Supply-Trade and Commerce power or not. That is the position in which he has left us at the moment.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

I should be very glad to enter into a legal argument. I think that if this corporation has the power to deal with the building of ships, which it certainly has, because it has done just that, and to deal with ships for the account of foreign purchasers, it has the power to intervene in a contract of that kind. However, I took the opinion of the assistant deputy minister of justice who was acting in his capacity as-

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

Let us

see the opinion.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Well, I do not know that I have to do that. He is a director of the Canadian Commercial Corporation, and he gave it as his opinion that the transaction was within the powers of the corporation. My own departmental solicitor, who is an officer of the Department of Justice, gave the opinion that the transaction was in order from the legal point of view. I relied on those two opinions. If my hon. friend has another opinion I shall consider the fact that he has not practised law very much either.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

I am

not setting myself up as a lawyer. It does not need a lawyer. It needs only a little common sense to read these things and to see that prima facie they do not cover what has to be done. The minister has become a lot surer about these legal opinions in the last half hour.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Yes, I just obtained that advice from my deputy.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

When we first began the discussion I could not make out whether he had any opinion or not. I still think we are entitled to know. Whatever the minister may think about me, there are on this side some hon. members who are quite competent lawyers and I think we are entitled to see the opinion, if one is in writing. If not, maybe we should hear the views of the deputy minister of justice. We would respect his opinion, if that is his opinion. But as it is at present, we are just being treated as we have sometimes been treated before, as people who really need not be answered. The government goes ahead, and it becomes so accustomed to using these powers that it simply does so.

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CCF

Thomas John Bentley

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

Mr. Bentley:

May I ask the minister a question. I am not going to dispute the legality or otherwise of it. The minister may have given this answer in his statement, which was quite lengthy, and I may have missed it. If so, I should like him to give it again a little more simply and precisely.

Supply-Trade and Commerce Apparently the government came to the rescue of a concern that was in financial difficulties. According to the dominion bureau of statistics, commercial failures have been fairly extensive in the last few years. It is obvious that the government has no intention of coming to the rescue of other commercial enterprises which show indications of failure. What was the peculiar circumstance that brought the government to the rescue in this case, and in what other cases would the government likely come to the rescue of prospective commercial failures?

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

I point out to my hon. friend that the government came to the rescue of itself. The government had guaranteed a $12 million loan to pay for these ships. They did not rescue one shipyard, because after the ships were launched the St. Lawrence Metal and Marine went into receivership. It is in receivership now. The George T. Davie Company turned over to the government all of its physical assets. I do not know that it could have done any more, and its future is pretty well in the hands of the government. It was not to rescue anyone except itself that the government entered into this situation. But if it had not entered in, the ships would not have been delivered. The guarantee of the Chinese government, without ships, would not have been very valuable; and the chances of realizing very much from the sale of the ships which were built to Chinese specifications for a particular trade on the Yangtze river would not have been sufficient to recoup the government to any great extent. I would like to make it clear, though, that the government was helping itself, and no one else.

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CCF

Thomas John Bentley

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

Mr. Bentley:

I can understand anyone doing anything to help himself. That is common sense. Then, may I ask if the guarantee of the Chinese government is still good, because the government at that time seemed to be more stable than the government of today.

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

All I wish to say is that the government of China paid its obligations at the beginning of this year in full, and cfn time. I have considerable confidence that the government of China will continue to do that. It is only an opinion, but I think there is a good deal of evidence to support it.

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PC

Arthur Leroy Smith

Progressive Conservative

Mr. Smith (Calgary West):

The minister has told us that the deputy minister of justice is of the opinion, or that he has the opinion of the deputy minister, that this action is within the purview of the statute.

I suggest that the Minister of Justice will not agree with that, and I doubt very much if the deputy minister of justice ever gave such an opinion. Therefore I would like to see the opinion. I have the greatest respect in the world for Mr. Varcoe's opinion, but I do not

think he ever gave any opinion, as expressed to the committee now by the minister as having come from the deputy minister of justice. The mere fact that he is a director is not important; he is a director of many things, and does not even attend meetings, because he has too many things to do.

I should like to know who it was that, as a lawyer, gave the opinion that this expenditure was within the power of the government under the statute creating the corporation.

Topic:   DEPARTMENT OF TRADE AND COMMERCE
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

I do not know that I can say anything more than I have already said. There was the departmental solicitor of the Department of Trade and Commerce, Mr. Anger, who was an officer of the Department of Justice; and there was the representative of the Department of Justice on the board of the Canadian Commercial Corporation who, I believe, is Mr. Varcoe, the deputy minister himself.

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PC

William Alexander McMaster

Progressive Conservative

Mr. McMasier:

Should not this have been charged up to the Export Credits Corporation in the first instance?

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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

No, it was a private banking transaction. The loans were actually made by three Canadian chartered banks.

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PC

William Alexander McMaster

Progressive Conservative

Mr. McMasier:

Are there many other

accounts guaranteed by this corporation which are likely to arrive at the same condition?

Topic:   DEPARTMENT OF TRADE AND COMMERCE
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April 7, 1949