April 12, 1957

PC

John George Diefenbaker (Leader of the Official Opposition)

Progressive Conservative

Mr. Diefenbaker:

That is what I was going to read, because it is the very antithesis of what you say.

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CCF

Owen Lewis Jones

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

Mr. Jones:

Mr. Chairman, I would be very pleased if I could say a few words in support of the hon. member for Dauphin who spoke yesterday on behalf of the retail merchants of Canada. I feel that he spoke on behalf of a group which has been sadly neglected in recent years, a group which is very important, not only in the community life of Canada but in the community life of most of the European countries as well. For centuries this group has made devoted efforts toward the development of the country to which it belongs. Napoleon referred to the English at one time as a nation of shopkeepers, little realizing that those same shopkeepers were capable of taking up arms and bringing him to his knees at Waterloo.

In Canada shopkeepers have been pioneers in our communities; they have laid the foundation of every town and city in Canada; it was their unstinted service and money which helped to plan the future of this country, and I well remember times of distress when the small retailers became not only merchants but philanthropists, giving credit to all who needed their services. Many merchants became bankrupt in the process because of their generosity, and we have to thank our small merchants in Canada for the help they gave to farm workers and others during the most trying period of economic difficulty.

In every town in Canada hon. members will find evidence of the pioneering spirit of this group. Often its members serve on city councils and help to build up public institutions-fire halls, arenas and other types of building. There are countless instances of good work done by the retail merchants of Canada. Unfortunately these very people are now facing difficulties which are not of their own creation, difficulties which may lead to their total extinction as merchants in Canada. As I say, through a condition which is no fault of theirs, they are at the mercy of large corporate retailers. I, in common with other hon. members, have received a letter from the

Retail Merchants Association drawing our attention to this serious situation, and I would like to quote from it:

During the last ten years a condition has been developing in Canada which is rapidly approaching the point where a few large corporations are gaining a stranglehold on the retail trade of our country. Unless there is fast legislative action to counteract this trend, small business, the mainstay of free enterprise and effective competition, may be elbowed out of existence.

We have seen similar developments already in the automobile and gasoline industries. The letter goes on to say:

The fact is that competition between the large corporate retailer and the independent retailer is unequal in our present system. The reason for this is that the large corporation has access to millions of dollars in the stock and bond market, which is quite beyond the reach of the small merchant.

The results of this inequality are clearly visible in every Canadian city today. The corporate or chain outlet has vast, new, expensive buildings, parking lots and equipment. The independent merchant is found in old buildings, and with out-of-date equipment.

I bring this matter to the attention of the house because I think that the request which the retail merchants are making is a very fair one. I am not opposed to large outlets; there is a place for them, but there is also definitely a place for the small merchant in Canada. It seems to me that we are justified in advancing loans to farmers for rehabilitation, and I believe we would be justified in extending this principle to the small merchants who are now making this request through their retailers association.

Many farmers, as we know, have been rescued from an embarrassing financial situation by the Canadian Farm Loan Act and I think the small merchant who is now in difficulty deserves access to this same financial service in order that he may rehabilitate himself. The minister already has a copy of the letter from which I have quoted. In drawing this matter to the attention of the government I urge that consideration be given immediately to enabling these independent small merchants to have a chance to survive and to carry on the excellent work they have done in the past in helping to build up the institutions we now enjoy.

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PC

John Borden Hamilton

Progressive Conservative

Mr. Hamilton (York West):

I was thinking as I listened to the debate this afternoon that at least some of the words I have used in the House of Commons in connection with the budget were coming true. At that time I said it was obviously the intention of the government to make this session the quietest on record so that nothing would detract from the effectiveness of their appeal to the people of this country, but I felt their hope in this regard would be very short lived. I think that what we have heard this afternoon

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is an indication that no matter what else the government may say, they have not been in control of the foreign affairs of this country, and there should be no surprise at this stage that such issues as are being raised today should be brought up in the House of Commons because the government has totally abdicated its authority to conduct foreign affairs on behalf of the people of this country.

I will not spend any longer in connection with that matter. More than once in the last few days we have been concerned with a very striking chain of events in connection with the activities of another of our cabinet ministers. I am thinking back to the time of the death of the late Sir James Dunn and the various phases we have gone through since that time in connection with his estate. You will recall that approximately a year ago this very important problem was raised in the House of Commons, the question of whether an executor of an estate of this kind should be entitled to hold the office of executor as well as being one of Her Majesty's ministers. Had the government taken the advice given to them at that time I think there would have been no need for the several speeches that have been made in the house dealing with the chain of events which have since taken place. As a matter of fact, in introducing my remarks a year ago, I said that I approached the job more in sorrow than in anger.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

Nuts!

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PC

John Borden Hamilton

Progressive Conservative

Mr. Hamilton (York West):

I think that at the time the minister in question undoubtedly had the opportunity to renounce his position as an executor of this estate and might have avoided the stories which we are reading in the press and hearing in the house. As a matter of fact, we have a situation now where this large corporation is being sold to at least two companies which are and have been directly dependent to a great extent on the government. It is an indication that whatever has happened in the government's dealings with them it has helped to place them in a position to acquire a controlling interest in this large company.

To get back to the issue of the ethics involved in a matter of this kind, I might refer, as was done last year, to Jennings on Cabinet Government. At page 86 Professor Jenningr quotes words of Mr. Asquith when taking part in the debates of the House of Commons at Westminster, at which time Mr. Asquith said:

The first and the most obvious is that ministers ought not to enter into any transaction whereby their private pecuniary interests might, even conceivably, come into conflict with their public duty.

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. . . Again, no minister is justified under any circumstances in using official information, information that has come to him as a minister, for his own private profit or for that of his friends. Further, no minister ought to allow or to put himself into a position to be tempted to use his official influence in support of any scheme or in furtherance of any contract in regard to which he has an undisclosed private interest. . . . Again, no minister ought to accept from persons who are in negotiation with or seeking to enter into contractual or proprietary or pecuniary relations with the state any kind of favour. ... I will add a further proposition, which I am not sure has been completely formulated, though it has no doubt been adumbrated in the course of these debates, and that is that ministers should scrupulously avoid speculative investments in securities as to which, from their special means of early or confidential information, they have or may have an advantage over other people in anticipating market changes.

Professor Jennings goes on to say:

These he stated as "rules of obligation." He added that there were certain "rules of prudence" which had never been formulated and which could hardly be put on precise or universal terms. "One of those rules is that in these matters such persons should carefully avoid all transactions which can give colour or countenance to the belief that they are doing anything which the rules of obligation forbid."

May I repeat that last sentence?

One of those rules is that in these matters such persons should carefully avoid all transactions which can give colour or countenance to the belief that they are doing anything which the rules of obligation forbid.

In the chain of events this matter came before the house again when the Prime Minister indicated that a large amount of succession duties coming from this estate was to provide the basic amount for the establishment of the Canada council. Subsequently we have been informed that this large corporation is now passing into the hands of three corporations, two of which are Canadian, one of which has probably received the greatest amount of government work in connection with its operations of any company in Canada and the other has been the recipient over the past few years of at least half a million dollars a year by way of subsidy under the Emergency Gold Mining Assistance Act.

It seems to me that many questions are being left unanswered in this connection. As I recall it, the minister stated last year that he was only going to act as a partial executor of the estate, that he was only interested in one phase, what might happen in connection with the disposition of the control of Algoma Steel. I think it was pointed out to him at that time that it was an impossibility to separate the responsibilities he had as an executor into watertight compartments and that obviously a question of ethics was involved here which might have serious repercussions in the future. I should like to refer

to Widdifleld on Executors' Accounts. At page 37, dealing with the duties of an executor, he has this to say:

The first duty of a trustee, whether an executor, an administrator or a guardian, is to acquaint himself, as soon as possible, with the nature and circumstances of the trust property; to make a complete inventory thereof; to obtain, where possible, the possession or control of the trust property to himself, and, subject to the provisions of the will, get in the trust money invested on insufficient or hazardous security.

Here is the duty of all executors and trustees. At page 129, in dealing with succession duty-

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LIB

Edward Turney Applewhaite (Deputy Chair of Committees of the Whole)

Liberal

The Deputy Chairman:

Order. I am sorry to have to interrupt the hon. gentleman but it is five o'clock and the house will proceed with the consideration of private and public bills.

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LIB

Walter Edward Harris (Minister of Finance and Receiver General; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Harris:

Mr. Chairman, I have been informed that there are a number of hon. members who would like to express their views on the three private bills, so many, in fact, that I rather doubt that any bill would carry during the one hour period. For that reason I therefore suggest that we might devote the hour to a continuation of this debate. I understand it is a fact that opposition members feel that because of their views on some of the private bills, in fact all three, they could devote the whole hour, and under these circumstances we might just as well employ that time for this debate if we are not going to make any progress in respect of the private bills.

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LIB

Edward Turney Applewhaite (Deputy Chair of Committees of the Whole)

Liberal

The Deputy Chairman:

The leader of the house will realize, I think, that the committee of supply as such would not have the right to set aside the rules by unanimous consent. Therefore, it being five o'clock I propose to move into the house with the Speaker in the chair.

Progress reported.

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PRIVATE BILLS

LIB

Edward Turney Applewhaite (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Applewhaite):

Is

it agreed by unanimous consent that all business reserved for this hour shall stand?

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?

Some hon. Members:

Agreed.

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LIB

Edward Turney Applewhaite (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Applewhaite):

business for the private bills hour having been stood by consent, the house will resume the business interrupted at five o'clock.

The house in committee of supply, Mr. Applewhaite in the chair.

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The house resumed consideration in committee of the motion of Mr. Harris: Resolved, that a sum not exceeding $1,651,674,050, being one-half of the total of the amounts of the items set forth in the main estimates for the fiscal year ending March 31, 1958. laid before the House of Commons at the present session of parliament; and in addition thereto a sum not exceeding $7,298,566.67, being one-third of the total of the amounts of items 52, 57, 116, 117, 131, 132, 156, 248, 281, 322, 324, 328, 355, 399 and 460 of the said estimates; a sum not exceeding $697,069.25, being one-quarter of the total of the amounts of items 153, 158, 252 and 397 of the said estimates; a sum not exceeding $3,640,012.17, being one-sixth of the total of the amounts of items 16, 71, 134, 217, 218, 219, 227, 361, 364, 391, 422, 428 and 432 of the said estimates; and a sum not exceeding $2,383,999.92, being one-twelfth of the total of the amounts of items 28, 69, 129, 221, 223, 224, 233, 234, 300, 321, 333, 424, 425, 430 and 503 of the said estimates; in addition thereto a sum not exceeding $9,635,679.50, being one-half of the total of the amounts of the items set forth in the supplementary estimates for the fiscal year ending March 31, 1958 laid before the House of Commons at the present session of parliament; a sum not exceeding $16,166.67, being one-third of the total of the amounts of items 626 and 654 of the said estimates; and a sum not exceeding $208,333.34, being one-sixth of the total of the amounts of items 621 and 640 of the said estimates; and in addition thereto a sum not exceeding $7,000,000, being two-sevenths of the total of the amount of item 663 set forth in the further supplementary estimates (1) for the fiscal year ending March 31, 1958 laid before the House of Commons at the present session of parliament; a sum not exceeding $30,555,555.56, being four-ninths of the total of the amounts of items 664, 665, 666, 667, 669 and 670 of the said estimates: and a sum of $1,000,000, being two-thirds of the total of the amounts of item 668 of the said estimates, be granted to Her Majesty on account of the fiscal year ending March 31st, 1958.


PC

John Borden Hamilton

Progressive Conservative

Mr. Hamilton (York West):

Mr. Chairman, I had just started to refer to page 129 of Widdifield on Executors' Accounts where, in dealing with the duty of an executor in connection with succession duty, he has this to say:

If the estate of the deceased is liable to succession duty the personal representatives must ascertain and pay this duty before the payment of legacies or distribution.

Here is a direct responsibility which the minister had assumed as an executor of an estate. I submit there is no way that he could avoid the responsibilities which are set out for an executor and trustee. One of those duties was to ascertain the amount of the succession duty which was owing in this particular case and to see that the sum was paid.

I would say as well that one of the duties would be to negotiate with the department as to the value of the shares in question. I would set off those responsibilities against the responsibilities of a minister of the crown as set out by Professor Jennings in

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the quotations which I have just given. It seems to me that there is a direct conflict of interest. Had the occasion been used by the minister a year ago to renounce the appointment under the will of the late James Dunn there would have been no reason for the questions that are required now because of the apparent sale of this company to two other companies, in which the minister quite obviously has an interest. I am not saying he has a financial interest, but an interest to see that these companies are in action and that they are prepared to carry out their work so far as the defence production of the country is concerned.

As a matter of fact the very dollars which have gone into the contracts in one instance are the same dollars which will go to provide the purchase price in order that the sale by the executors of the James Dunn estate might take place on an advantageous basis. I say this was a serious breach of ethics in connection with the responsibility that the minister has to the crown and to this estate as one of its executors. I think that the ordinary provisions which apply in connection with the disclosure of information so far as the succession duties department is concerned have now gone by the boards. As a matter of fact, I think they had partially gone by the boards when the Prime Minister, in his wisdom, decided to inform the house as to the amount of funds which were to come from this estate in order to establish the Canada Council.

At this time I think we have a right to ask some of these questions. Has any succession duty been paid by the Dunn estate? Has any extension of time been granted to the Dunn estate for the payment of duties? What method has been used to value the shares of Algoma stock held by the estate? Were any representations made to the Minister of National Revenue concerning the value of the shares of the Dunn estate, or any other aspect of the matter, by any minister of the government or by any director of any crown corporation? Did Mr. Barrington, president of Polymer, take any part in the negotiations for the sale of Algoma stock to McIntyre Porcupine mine, before or after his appointment as a director of that company?

Those are questions to which I feel the people of Canada are entitled to answers. Unless there is a full disclosure of the facts of this case there will always be a lingering doubt in the minds of the public as to whether or not there has been a conflict of interest, and whether or not it has been resolved in favour of the public of the country. This is only part of the reason for

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the concern of the press and the public in connection with this matter. Had we not reached a stage where so little attention was being paid to the truth in this house there would not be the same concern evidenced on all sides. We trace back the history of the answers we have received from the minister in the past in connection with some of the debates and we can easily see that the memory of the minister is not exactly what it used to be. I think there should be a full disclosure of all the aspects of the handling of this matter and the handling of the sale.

I think back to the pipe line debate when we were told that the pipe was all stacked outside the pipe mills in the United States. I think back to the explanation of the time for financing before the board of transport commissioners, and the two answers that we got. I think back to the time when the question was raised about options in connection with the pipe line bill. Yes, and more recently, I think back to the time when the question was raised as to the letters to the C.B.C., the personal nature of them and later the official nature. It seems to me that unless we are prepared to take the attitude that the rule book of this house might as well be thrown out of the window we are entitled to answers in connection with these specific questions raised in connection with the handling of this particular matter.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

Mr. Chairman, I have been attacked. Do I have no right of reply?

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LIB

Edward Turney Applewhaite (Deputy Chair of Committees of the Whole)

Liberal

The Deputy Chairman:

I just recognized the minister.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

I am sorry, sir. This afternoon the tone of the next election campaign is being set, a smear campaign. I have been attacked by men who so far as I know have never carried any responsibility in the world. I have been carrying fairly heavy responsibilities in this house for 22 years, and prior to that very heavy responsibilities in private practice for 20 years. So far as I know no one has successfully attacked my record in connection with either period.

I made complete disclosure of my position when this matter was raised earlier. Sir James Dunn and I had been friends for a great many years. When I found I was made an executor under his will my first inclination was to withdraw. His widow urged me not to do that. She looked upon me as a man she had known through my association with her husband and she was most anxious that I would continue. I made it clear then that I would not take any part

whatever in settling the amount of the tax. There were four other executors, one of them the solicitor for the estate. If there is any question as to whether or not that was carried out, I am sure the Minister of National Revenue will say whether I ever spoke to him or to any of his staff in that connection. I made it clear from the beginning that I had no financial interest in any asset of the estate. The principal asset was shares in the Algoma Steel Company. The Algoma Steel Company has its own president and its board of directors. I have had no part or influence in the management of Algoma, as must be obvious to those in the house who understand corporate practice. I am excluding the two members who have spoken because evidently they do not so understand.

At the time I said one of the factors that induced me to continue was that I did not want to see control of this company pass outside of Canada. I think I have been influential in preventing any trend in that direction. Offers have been made for shares that have been rejected on my suggestion that ownership of the kind contemplated would not be good for Canada. The hon member has asked certain questions. The first was, how was the value of the shares fixed? It was fixed as the quoted value of the shares on the day Sir James died, in accordance with the law. The next question was, has there ever been any argument between the estate and the taxation division as to the amount of tax? The answer is no. To the best of my knowledge after the considerable time which was needed in an estate that extended from Canada, to England and several countries to collect the necessary information, the assessment was made. It was made, I think, about a year after the death- perhaps that might not be exact. In the meantime I had nothing to do with the management of the estate in any way, shape or manner. However, in order to pay the succession duties it was necessary to liquidate a certain number of the shares of Algoma as well as other assets owned by the estate.

Now my hon. friends have read in the paper about control of Algoma passing. Sir James had control; all the shares in his estate represented control. The shares which are being sold to pay the taxes certainly do not represent control, and since they are being sold to more than one buyer-I do not know how much information I am entitled to give here about the estate but I can say that there is more than one buyer for these shares, and no buyer has control or anything like control. I think that is what any fair-minded person would hope would happen to the Algoma shares. In future no single bloc of shares will represent control, and there will

be no interference with the management of the company from that source. I have listened very carefully to the repetition, which every cabinet minister knows, about the ethics of a cabinet minister. I assure you that nothing in my relationship with the Dunn estate has violated that situation in any way, shape or manner.

I have taken no action which did not relate directly to the Dunn estate and no action which adversely affected any interest of the government whatever.

The hon. member had certain other questions. Perhaps he would ask them one by one and I would be glad to answer them. I have answered the one about how the value of the shares was fixed.

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PC

John Borden Hamilton

Progressive Conservative

Mr. Hamilton (York West):

In connection with the valuation of the shares, does the minister know whether any account was taken as to the value because of the fact that no dividends had been paid on the stock? Is it a fact that they jumped tremendously in value immediately after the death?

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

I do not know where they jumped. Rumours have been circulating. The law provides that the value of a share for tax purposes is the value at the time of death. In my opinion the valuation that was placed on the shares was the valuation required by law, not only that but probably a pretty optimistic value of them. However that valuation has never been questioned by the executors. The assessment was made by the tax department of the government and it was accepted by the executors. What is your next question?

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April 12, 1957