Mr. Carroll:

Did they take up arms in the last war?

Mr. Viau:

With respect to the taking up of arms either by the Hutterites, the Mennon-ites or any Anglo-Saxon religious group who claimed certain exemptions during the last war-and there were a good number of them in the last war-the Hutterities did claim certain exemptions.

Mr. Carroll:

Do they all take the same grounds?

Mr. Viau:

No. There were a certain number of Hutterites who joined the armed forces in the province of Manitoba in the last war.

Mr. Weir:

I hope the committee will not think that this is developing into a little argument between two members from the same province in connection with this bill, because I assure you there is no argument about it. But what I should like to ask here is the amount of property that is set aside as church property for the purposes of the church alone.

I am given to understand that in Manitoba it is a half section of land, three hundred acres belonging to the church and twenty acres as a cemetery. If that provision is made generally to church organizations who are prepared to go out and do missionary work and carry on other activities in connection with their religion, as generally promoted throughout the country and elsewhere, may I point out there is no desire and not even any thought on the part of these people of going beyond their own farmyards, so to speak. I realize, let me say immediately, that this comes within the scope of provincial jurisdiction having to do with property and r.Mr. Weir.]

civil rights. But if we have granted to other religious organizations a half section of land, if I am properly informed, as part of the church property in itself, then there might be good grounds for suggesting to our provincial legislature that with these people being more curtailed in- their activities, steps might be taken to reduce the amount of land they could have as part of their church property.

Mr. Viau:

I appreciate the remarks made by the hon. member for Portage-Neepawa. When he refers to the Hutterites as citizens, perhaps I agree with him in that respect, but in respect to the church property which is now being held by any religious group in the province of Manitoba, that property is subject to municipal and provincial laws. That is also true with respect to the number of acres which can be held by a church for a church establishment within the province of Manitoba. That is subject to the close scrutiny of the municipality where the church is established. If an amendment is to be placed before the municipality, or if the city bylaws are changed, it is subject to revision by the provincial legislature, and as such if the amount of land which could be held by one church is in excess of the amount held by other religious groups in the province of Manitoba, then our provincial representatives could express their criticism of the excess land held by the Hutterites in the province of Manitoba.

Mr. Howard C. Green (Vancouver-Quadra):

Mr. Speaker, this bill is described as an act respecting British Columbia Telephone Company. It provides for amendments to the act which set up that company quite a few years ago. The main amendments will be, in the first place, to increase the capital from $25 million to $75 million; in the second place, to make certain changes in the provisions covering preference shares; and finally, to give the company the power to pay a commission on the sale of its shares.

I am opposing the bill in its present form for several reasons. I believe that the people of British Columbia are not getting a fair deal in so far as telephone rates are concerned; that the telephone users in our province are not adequately protected now, and that their position will be worse if the bill passes in its present form. Parliament has a responsibility to protect the people of British Columbia, and I ask for the most careful consideration of the bill by my fellow members.

It is significant that the Vancouver city council passed a resolution unanimously, asking the members from that city to oppose this measure on two grounds: In the first

place, because the council believe that an excessive increase in capital is being sought, and second, they believe that under the company's present act there is no protection against unreasonable charges which are levied against the British Columbia Telephone Company by its parent and affiliated companies. In other words, the Vancouver city council believe that the British Columbia Telephone Company is being milked by its parent company in Montreal, and by the parent company of the Montreal company, which is an American corporation, with headquarters in Kansas City. All the time the

British Columbia Telephone Company people cf British Columbia have to feed the cow by way of paying the full rates.

I use the words "the people of British Columbia" not the words "the people of Vancouver" advisedly, because this company and its affiliates own over 90 per cent of the telephones used in that province, and of course they have a monopoly in all of those areas. I believe that all of the communities in our province endorse the stand taken on this bill by the council of the city of Vancouver. Last year there was a hearing before the board of transport commissioners of an application by the company for an increase in telephone rates. At that hearing the city of Vancouver was represented by counsel; also the cities of Victoria and New Westminster, the municipality of Burnaby and the Union of British Columbia Municipalities, and the provincial government. All of these bodies appeared opposing the application of the telephone company for an increase in rates.

The city council now ask that the increase of capital be kept to a reasonable amount. This bill seeks an increase from $25 million to $75 million, which means that the capital would be trebled. But that is not the whole picture. In 1947, just four years ago, the company obtained an amendment in the House of Commons which increased the capital from $11 million to $25 million. So that if the increase now sought becomes law it will mean that within four years there has been almost a sevenfold increase, from $11 million to $75 million.

I submit, Mr. Speaker, that in this bill the company is asking too much. At the rate hearing last year it said that it had large expenditures to make on capital account. There is no doubt that there will have to be a great deal of money spent in the years that lie ahead. I understand the evidence was that it would require about $10 million a year, by way of new capital expenditures, until the year 1952 which would mean a period of three years, and that there would be further expenditures in later years. The sponsor of the bill, upon introducing it in the house, said the company would require $10 million a year for ten years. I rather think that was an exaggeration. The annual reports for the years 1949 and 1950 show that the company has spent something like $8 million in each of those years. I would point out to hon. members that because of shortages of materials there will probably be a good deal of difficulty in these years lying ahead to get the necessary supplies. I doubt very much whether it will be necessary or, in fact, possible, to spend as much as $10 million a year.

British Columbia Telephone Company

However, let us look at the picture showing the money to be spent on capital account. In the treasury now there remains $5 million. In other words only $20 million of the $25 million has been issued. If this increase of $50 million is granted there will then be $55 million available to issue as shares. But the ratio of share capital to the bonded indebtedness in financing by this company is approximately 40 to 60. In other words where they raised $40 through the issue of shares, they raise $60 by issuing bonds and other securities of a similar nature. So that if they have $55 million in share capital available to issue, they would have $82,500,000 to be raised by way of bonded indebtedness. This makes a total of $137,500,000 which would be available for capital expenditures, if the bill is accepted in its present form.

Even at their own figure of spending $10

million a year, the increase they are now asking would be good for from fourteen to twenty years. I would point out that in addition there is approximately $17 million in a depreciation reserve, which would also be available for capital expenditures. I say that fourteen to twenty years is too long a time for the company to go, without being required to come back to parliament.

And it is so important that parliament should have some check on companies of this kind. There is no check by the provincial government. The company is incorporated under a dominion act, and is not subject to regulation by the provincial utilities body. The only groups which have any power of regulation are right here in parliament, and also in the board of transport commissioners. So I say there is great value to the people of British Columbia in the requirement that the company must come before parliament at fairly frequent intervals.

Always the situation is that the people pay the shot. In the long run, any increased expenditures have to be paid by the telephone users; and those users are entitled to all the protection they can be given by parliament. The present bill asks for too much at one time. It means that there will be much less control by parliament-in fact there will be no control for from fourteen to twenty years. It means there will be no control by the cities and municipalities of British Columbia. And those corporate bodies are always at a great disadvantage in trying to fight a utility company such as the British Columbia Telephone Company.

I know very well that there is need for a pretty close check on the company, because when in 1947 they applied for the increase from $11 million to $25 million I thought I

had worked out a pretty good method of making sure that there would not be an application for an increase in rates in the immediate future. When the bill was before the house for second reading I asked for an undertaking from the then hon. member for New Westminster, who was sponsoring the bill. Hansard of that time, where the undertaking is recorded, reports my words as follows:

I understand that the hon member has been authorized to give assurance to the effect that the company has no present intention of applying for an increase of rates and will not make any such application unless compelled to do so by extensive changes in conditions.

Mr. Reid answered, "That is my definite understanding". In so stating he was acting in perfectly good faith for he had been authorized by the company to give that undertaking. Then I went on to say:

That assurance is clearly worded and contains a statement to the effect that an application will not be made unless the company is compelled to do so and then only by reason of extensive changes in conditions. If the hon. member for New Westminster is prepared to give that assurance on behalf of the British Columbia Telephone Company I for one shall have no objection to the bill passing.

Mr. Reid:

I am authorized to do so, and it is my

definite understanding.

That was in May of 1947. In June of 1949 the company launched its application for' an increase in rates. When the representative of the city of Vancouver pleaded before the board of transport commissioners that it should take into consideration conditions only since 1947, and attempted to read this undertaking, he was met by a vigorous protest from counsel appearing for the British Columbia Telephone Company-a distinguished senator; mind you, he was acting for the company, and representing them most efficiently. I have here a quotation from what he said to the board of transport commissioners: "I didn't know my learned friend was appearing on behalf of parliament." The company took the position that what was said in parliament had nothing to do with the situation, and that it was not any of the board's business. The deputy chief commissioner of the board, who was presiding, took the same position, and simply brushed aside the representations made by the city, and the undertaking which had been given in the House of Commons. Therefore I repeat that I for one think there should be some fairly definite curb on this company in that they should be required to come back here at frequent intervals so that the people of British Columbia will at least receive that amount of protection.

The Vancouver city council also asked protection against unreasonable charges by affiliates, all of which charges have to be paid

by the telephone users. In order to explain that I must give hon. members the picture of the family tree of this company. It was founded by west coast pioneers and they deserve great credit for establishing this company. Some of the descendants of those pioneers are still with the company. In fact the president, Mr. Gordon Farrell, is a son of one of the key men of the early days of the company. I believe that it is well run, efficiently managed and has a very efficient staff.

For many years it was controlled in British Columbia with local men having all of the direction of the company and no decisions being made outside of the province. However, in the 1920's control was acquired by a Delaware corporation known as the Associated Telephone and Telegraph Company with headquarters in Kansas City. It holds control of the British Columbia Telephone Company through Anglo-Canadian Telephone Company of Montreal which owns

60,000 of the 80,000 common shares. For a long time, in fact until last year, Anglo-Canadian Telephone Company owned all of the issued common shares. Last year, however, 20,000 common shares were sold to the public and although the par value of the shares is $100 they brought $139. Dividends of eight per cent have been paid on the common stock for many years. Only the common shareholders vote. Preferred shareholders have no vote in the affairs of'the company. Therefore Anglo-Canadian Telephone Company and through it Associated Telephone and Telegraph Company have been able to control the company although they only hold a small portion of the issued shares, there being a large amount out by way of preference shares.

Anglo-Canadian Telephone Company also controls other telephone companies in British Columbia. It controls Chilliwack Telephones Limited, Mission Telephone Company Limited, both of which are in the riding of the hon. member for Fraser Valley (Mr. Cruickshank), Kootenay Telephone Company Limited and Northwest Telephone Company. These are smaller telephone companies operating in different parts of the province. In addition to controlling these local companies Anglo-Canadian also controls a company known as Canadian (B.C.) Telephones and Supplies Limited, and another one known as Dominion Directory Company Limited. These are companies operating in the province, and in effect operating in conjunction with British Columbia Telephone Company. They are affiliated companies, and I propose to deal with them at some length.

In the hearing before the board of transport commissioners last year it was disclosed that Dominion Directory Company Limited, 80709-102

3, 1951 1597

British Columbia Telephone Company which is owned by Anglo-Canadian Telephone Company, has a contract with the British Columbia Telephone Company whereby on all advertising contracts for the directory the directory company receives 35 per cent commission. It does not do the printing of the telephone directory. I understand that subsidiary companies of the Bell Telephone Company print their directory, but in British Columbia there is this contract with the directory company. The profits of the directory company go directly to Anglo-Canadian Telephone Company. In other words, British Columbia Telephone Company is being milked in that way, and the telephone users of our province are expected to pay the shot. The board of transport commissioners were not interested in that arrangement. They said it was purely a question of management.

Then the supply company to which I referred a few moments ago, namely, Canadian (B.C.) Telephones and Supplies Limited, purchases all supplies for the British Columbia Telephone Company, instals exchange equipment, and executes repairs. For that it is paid at a set rate. For example, on purchases it gets a commission of five per cent. Incidentally purchases by the telephone company in some cases at least are from other affiliated companies. I believe, for example, that Phillips Electrical Works Limited of Brockville is an affiliate, and much of the equipment is purchased from that company. The profits of the supply company also go back to Anglo-Canadian Telephone Company . in Montreal.

Then there is a licensing contract directly between Anglo-Canadian Telephone Company and the British Columbia Telephone Company under which one per cent of all operating revenue of the company in British Columbia goes to Anglo-Canadian in Montreal. I must take a little time, Mr. Speaker, to explain that contract, so I move the adjournment of the debate.

On motion of Mr. Green the debate was adjourned.

Mr. Speaker:

It being nine o'clock the

house will resume the business that was interrupted at six o'clock.

Mr. Gauthier (Sudbury):

Mr. Chairman, I am not going to speak on wheat. While the bill is under consideration I think that the government should be made aware of the serious responsibilities involved in the return of certain people to Canada after leaving this country a short time ago. I should like to cite a few articles before asking the minister a question at the conclusion of my remarks. In this evening's edition of the Ottawa Journal an article appears headed, "Says Yugoslavians returned to Canada to work for Stalin". This story comes from Sudbury, the riding I represent in this house, and goes on to say:

Peter Borovich, leader of the Yugoslav colony here, protested today the return to Canada of men he said are avowed communists.

Borovich declared that Sam Lazich, whom he described as the former Sudbury leader of the communist party, is returning from Yugoslavia after going there four years ago. He said the federal government is "criminally soft and stupid ... to readmit people of the very same kind as those who are killing Canadians in Korea."

Borovich claimed the return of the Yugoslavs is being financed by the communist party and by communist-dominated national groups. The Canadian government "is rescuing Lazich from Tito so he can work for Stalin in Canada."

"The Yugoslavs who left Canada were the most rabid communists in the country," Borovich said. ". . . they were no good to this country and never will be".

I know the man who made that statement. Mr. Borovich is a hotelkeeper in my city; we have been in the same business there for many years. I do not know if Sam Lazich is the man I think he is, but if so he was an outstanding communist in my district. I want to tell hon. members that the first communist candidate ever to get nomination papers in this country got them in my district, which was then Nipissing, in 1930. We have many communists in our part of the country, but not all the people there are communists; and I would not want to make that statement without qualifying it further by saying that not all foreign-born people in this country are communists. There must be at least

40,000 of these people in my riding, and I know them well. This statement by Peter Borovich, who is a responsible citizen, is very strong. Knowing Pete as I do, being a hotelkeeper and probably with a couple of beers under his belt, he would make the statement as strong as possible. But I always found that Borovich used his best judgment when he had a couple of beers.

At this point I would like to read to the house what was said by the present Prime Minister, then Secretary of State for External Affairs, when these people left Canada to go to Yugoslavia. I hope the lawyers will listen,

because this is a legal position. I am glad I am not a lawyer; perhaps I would be in jail if I were.