January 19, 1916 (12th Parliament, 6th Session)


William Pugsley



October 9, 1915, as near as I can tell you. It is covered with a rubber stamp which is not very plain. While iMr. Thomas was, of course, very careful, very diplomatic, very desirous of not offending anybody, he was still very firm in his determiniationi to get nid of the old Shell Committee. I have here the report of an interview with Mr. Thomas in the Montreal Herald-and of this also I cannot give the exact date because vae record made with a rubber stamp upon the clipping is not clear. The report states <as follows :

He believes that there is more " politics " in Canada at the present time than there is in England, and that it is a had thing for Canada.
Big political interests here, at the present juncture, who are intimately connected with manufacturing concerns, are out after orders. Orders come first-the making of munitions being a secondary outcome. Mr. Thomas repeated that it was a bad thing; but added that, in so far as he was able, the British taxpayer came first, and that much as he liked to see the golden stream pouring into Canada, to the benefit of her industries and individuals, that he was guided by no other thought.
That the matter was one of very great importance will 'be apparent from the fact that up to December 16 last, the total contracts for shells and shell boxes-and I suppose the contracts include also fuses^- amounted to the enormous sum of $265,000,000, or about $80,000,000 more than the total! expenditures by the Government of Canada for ordinary purposes. It ie important .to the British Government, as 'Mr. Thomas well knew, thiat shells should be supplied (art the lowest ipos stole cost. To the people of Canada also, this is .an important matter. It appears from the .statement made by the Prime Minister on the day of the opening of this debate, that this Government is advancing a share of the cost of the munitions on the basis of the forces sent from Canada. I take it from the statement which the Minister of Finance ('Sir Thomlais White) has made thiat this is merely a temporary advance to be adjusted with the British Government when they come to determine Canada's proper proportion of the expenditure. 'If we take the forces that Canada has at the front relatively to those thiat Great Britain has latt the front, this would mean that Canada would be bearing one-thirteenth part of the expenditure for shells. If I am right in my figures, then, in addition to the vast sums which Canada is expending in other directions, she twill have to bear an expense of more than $20,000,000 for shells. If there has been paid out, as I am informed is the case, millions upon millions of dollars more for shrapnel and high explosives than these munitions could have been produced for, had business methods been pursued, Canada must bear her share of this loss. My hon. friend the Solicitor General (Mr. Meighen), to whom I am obliged to refer again for a moment, is reported to have made a speech recently in which this subject was referred to. I
speak of that hon. gentleman because he is a prominent member of the Government, and I refer to his speech because it particularly attracted my attention. That speech, if I remember correctly, was made either at Port Arthur or at Fort William. He stated that excessive amounts were being paid for munitions of war. And what was the remedy that he suggested? He suggested that Parliament should impose a war tax upon these excessive profits. In my judgment that is fio adequate remedy. While it would bring into the Canadian treasury a part of the excessive profits, the whole amount of these profits would he taken out of the Imperial and Canadian treasuries respectively in the proportion of about thirteen dollars to one. If the Solicitor General knew as a member of this Government that excessive profits were being taken, that unreasonable profits were being paid for shells and other munitions of war, it was his duty to inform his colleagues and to take the necessary steps to compel the Shell Committee-which, as I have said, was a creature of this Government, a body with whose appointment the British Government had nothing to do except in a nominal way-to cease allowing excessive profits to be made. There are some who hlame the manufacturers of Canada. I do not blame them at all. Under the Shell Committee they were not asked to tender; they were only asked if they could manufacture shells at the prices fixed. They would be more than human if they refused to take the profits which this Government, through its Shell Committee, offered them.
I think I yesterday called attention to the fact, and I desire to repeat it to-day, that the constitution of this Shell Committee was entirely contrary to the public interest, and this Government ought to have known it. This Shell Committee fixed the prices which one company, of which the Shell Committee's chairman was vicepresident, and another company of which Mr. Carnegie, another member of the committee, was manager, were to receive for shells. In other words, the Shell Committee fixed the prices in the benefits of which some of its members were to share. This was clearly not in accordance with business principles, because to that extent incentive was taken away from these .men to make the prices fair and reasonable. A portion of every extra dollar paid for shells went into the pockets of these gentlemen who were directing heads of the Shell Committee. What did General Bertram say

on that subject? This was after he had received the honour of knighthood, which, as I said yesterday, was a very good way to get rid of General Bertram, and to afford opportunity to change the constitution of the committee. He gave an interview in which he said that the other members of the committee had nothing to do with the fixing of prices or giving of orders, that he took upon himself all these things and never consulted his fellow-members regarding such matters. Did the Government know that General Bertram, the vicepresident of John Bertram & Sons, Ltd., which, besides manufacturing, is the selling agent of shell making machinery made in the United States, was carrying on the business of this Shell Committee without consulting his fellow members ?
Although this country,was supposed to have guarding its interests a committee of eight members, four of-them civilians and four of them military men, General Bertram says that really nobody but himself was looking after those important interests. Well, Sir, I am told that General Bertram has not entirely stated the facts, or the whole facts. I am told that Mr. Carnegie, whose company was receiving a large number of orders, was the only member of the committee who was acting with General Bertram; that it was these gentlemen who, in large measure, distributed these favours and, as I have said, to the amount of a vast sum of money, distributed them among themselves. Surely the House will see at once that that was entirely irregular. These gentlemen, who were directing the contracts; who were selling these munitions to the British Government, which was the partner of the Canadian Government in connection with the procuring of them, weTe both sellers and purchasers. As the vendors they fixed the prices; as the purchasers they took the prices which they themselves fixed. As I have said, my information is that millions upon millions of dollars have been taken out of the British taxpayers and out of the people of Canada by reason of the payment of these excessive prices, and by reason of the lack of ordinary business methods in connection with the appointment of the Shell Committee and its operations.
I stated in the House yesterday that there was an insistent demand from the people of Canada that an investigation should be had into these matters. There is no doubt that Mr. Thomas did investigate. There is no doubt that he came to the conclusion

that this Shell Committee, the creation of the Government through my hon. friend the Minister of Militia, should go. He took his own time to have them go, but he made up his mind that go they should, and go they did. A new committee was appointed, with Mr. Flavelle at its head. Let me now read to you, Sir, and to this House, some extracts from leading newspapers bearing upon thi-s subject. I do this because 1 think the House will agree with me that, speaking generally, the newspapers oi Canada may be relied upon to give a fail-idea of public opinion, and to express also the honest views of the editors, based upon the information which they have the opportunity of obtaining with regard to the matters of which they write. But before I proceed to.that I should like to call attention to another remark which Mr. Thomas is reported to have made. I am now quoting from his public statement in both the Montreal Star and the Montreal Gazette. After stating that the cost in Canada had been greater than in the United States oi Great Britain, Mr. Thomas is reported in these two newspapers to have further said:
In June last Canada was, frankly, rather behind in making good in point of time on the orders that had been placed-only two per cent of the orders had made good. Public sentiment would not be met by retirement of the manufacturing members of the shell committee.
Mr. Thomas must have discovered facts of very great importance to have induced him, coming to this country as a stranger, to make these observations. And his remarks are evidence, I think, that he found the conditions very serious, and that the only way in which the interests of Canada and of the Empire could be served; the only way in which the public sentiment could be-satisfied, was by completely disorganizing that Shell Committee and appointing a new committee, which should be directly under the control of the Imperial Government. Mr. Thomas made an important change in another respect. He did not approve the conduct of the Canadian Shell Committee in themselves fixing the prices and giving the contracts at those prices; he believed in and adopted the principle of competition.
Let me read, first, from the Toronto Saturday Night, a journal which has devoted a good deal of attention to this subject, and which, I believe, recently expressed some dissatisfaction with the new committee as well. There are some people who almost believe that my hon. friend the Minister of Militia shares the views of the Toronto

Saturday Night as to the new (Commission. In its issue of October 23, 19115, that journal said: [DOT]
The shell committee was no place for a gentleman directly connected with the shellmaking 'plants-corporations, he it noted, with directorates having wide ramifications.
I iam sorry that my hon. friend the Minister of Public Works is not in his place, because I am going to quote from a newspaper with whose views I think he is very thoroughly in accord. He will, perhaps, be able to impress upon his colleagues the desirability of giving attention to those views. I quote from the Winnipeg Telegram of November 1, 1915:
The greatest of Welsh humorists is D. A. Thomas. No one suspected that the hardheaded Welsh coal magnate had as strong a sense of humour as the author of Sam Slick. His farewell announcement has convulsed Ottawa with laughter. He spanked General Sir [DOT]Sam, told him he was a good, active little hoy, hut to keep his fingers out of the jampot ; gave General Bertram a fine dish of soft soap, hut warned him that business was not his forte; praised the Canadian manufacturers for their energy and enterprise, but suggested that smaller profits would show greater patriotism; and kicked out Colonel Cantley, general manager of the Nova Scotia shell game, with such a grace, that this gentleman thinks he has been promoted.
A quotation appealed in the Ottawa Citizen from the Grain Growers' Guide of November 24-I assume that it is a correct quotation. The Grain Growers' Guide says:
There certainly should be a thorough public investigation of this matter. If it is true that Canadian shell manufacturers have been robbing the British treasury of millions of dollars in these ways, they are guilty of assisting the enemy, and no punishment would he too severe for them. They belong to the plutocratic class that has always claimed for itself a monopoly of patriotic sentiment, and if they are guilty of what is charged against them their disgrace is all the deeper. Perhaps these charges are not true, and if so the manufacturers should be given an opportunity to prove their honesty. Let the public have the facts and let all concerned take the consequences.
As I have already said, I disagree with anybody who says that the manufacturers of this country are to blame. I say, if there is any blame; if there is any offence against the public, or any impropriety which'ought to be condemned, it is upon the part of the gentlemen who were created a shell committee by this Government, and who themselves fixed the prices which they were willing to pay to the manufacturers.
The Ottawa Citizen, under date of November 29, makes reference to an editorial which appeared in the Toronto Telegram. It says: 6
The. Telegram publishes the followng editorial demand for Investigation of the late shell committee by the Davidson Royal Commission :
Is Sir Charles Davidson to squander all the time and energy on his inquisition upon drug clerks, vendors of aged and spavined equines or thrifty gentlemen who short change the country in the supply of oats for war horses?
The work of the shell committee in the purchase of munitions for the British government should he lit up with all the illuminating power of Sir Charles Davidson's lanterns of truth.
The worst sort of quibble travels in the suggestion that the shell committee was spending the money of the British taxpayers, and the work of that committee is therefore none of Sir Robert Borden's business.
The shell committee was acting on behalf of Sir Robert Borden just as Sir Robert Borden was acting on behalf of the Canadian people. The shell committee was not the steward of Canada's money. The shell committee was the steward of Canada's honour. The procedure that keeps the work of the shell committee outside the zone of the Davidson inquiry is not worthy of Sir Robert Borden. That procedure is no fulfilment of Sir Robert Borden's promise to institute and prosecute a full and searching and impartial inquiry into all war expenditures.
That article appeared in a newspaper which is owned and controlled by a very prominent member of the Conservative party, who formerly sat in this House. It is one of the most influential papers in the city of Toronto, and I shall ask hon. gentlemen whether the argument which is made in favour of an investigation is not a sound bne. He calls- attention to the fact that the Prime Minister promised a full and complete investigation into the *war expenditures. But here is a matter of expenditure running far and away beyond any expenditure in connection with [DOT]ordinary war supplies. He asks why the work of the Davidson Commission should be confined to an inquiry into purchases of horses, drugs, and matters of that kind when these vast expenditures made in Canada by a commission appointed by this Government go uninvestigated. When the editor of the Toronto Telegram wrote that article he did not know what we in this House know to-day, from the statement which the Minister of Finance has made, that in the final accounting Canada is to pay her proportion of the cost of all these war munitions, including shrapnel, high explgsive shells, and all kinds of equipment. If the editor of the Toronto Telegram had known that, he would have said that in these purchases of war material Canada and Great Britain are in partnership; Canada is to pay her share of all these expenditures relatively to the number of men she will have at the front; that, when the Shell Committee was pur-

chasing shells for the British Government, it was purchasing shells lor the Canadian Government as well, and, therefore, that for every million dollars of _ excessive prices which have been paid through the unbusinesslike and improper methods adopted by this Shell Committee, Canada is paying her share. When this Government advanced'during the summer a good many millions of dollars to the British Government to enable payment to be made for these war munitions, she was giving to the British Government her own share of these expenditures, the amount of which has to be determined "When the account comes to be finally adjusted. Therefore it is absolutely clear that if this Government is going to allow Parliament to investigate any war expenditures made by Canada, this is one subject of the very greatest possible importance which demands investigation at the hands of this Parliament; and in submitting the matter to Parliament I claim that the hon. gentlemen who occupy seats behind the Treasury Benches and those of us who sit on this side of the House have a duty to perform as trustees foT the people of Canada, just as much as those who sit on the Treasury Benches; and we would not be doing our duty if we did not, by every possible, every legitimate means within our power, insist upon the fullest! the most complete investigation of these vast expenditures.
Why, what took place during the Boer war? While the then Minister of Agriculture refused to answer some questions with regard to purchases of hay in the province of Quebec, this House adopted a resolution requiring the Government to bring before the House all correspondence which had taken place with the Imperial Government in reference to the purchase of hay and other military supplies which were going to South Africa; and when there was some delay in the bringing down of the return, tne present Minister of Trade and Commerce (Sir George Foster), who was then a leading member of the Opposition, rose in his place and informed the then Minister of Agriculture that he must understand that his estimates could not be passed until those documents were laid before the House. That is the attitude which the Minister of Trade and Commerce took even in reference to the bringing down of correspondence regarding the purchase of hay. But, Sir, how different were the circumstances then from what they are to-day! At that time all that Canada was doing was to. send to the front

the Canadian boys who volunteered for service in South Africa, and all the equipment, all the supplies, alfi this hay about which inquiries were being made, were being paid for by the British Government, and Canada had nothing to do with the expenditure. How different it is to-day with regard to the shells and other war munitions for which this Government has entered into a solemn obligation with the Imperial Government to pay its proper proportion, so that Canada's proportion of this expenditure is disbursed through the Shell Committee appointed by this Government, just as is the money of the Imperial Government.
The Ottawa Citizen of November 16, 1915, says:
Britain has been charged $5.15 for machining 18-pounder shells, though they could be machined profitably at $1. By steps the British authorities succeeded in getting the price down to $2.90. Even though a responsible contractor offered to machine the shells at $1.40, the Dominion Shell Committee ordered the shellmachining at $2.90. Certain Canadian shells have been costing more than United States shells to the Motherland.
Again, on December 4, the Toronto Saturday Night says:
If Canadian manufacturers will get down to brass tacks, eliminate the stock ticker from their considerations, and if the "profiteers" will bend their energies to shell the German trenches instead of shelling the public with stock at ridiculously artificial prices, Canada as a nation will keep all its idle and semi-idle plants busy for as long as the war lasts, and will come out bettered financially.
Then, the Montreal Daily Mail, a papei which has the sympathy and enjoys the confidence of prominent members of this Administration, is quoted in" the Toronto Globe of December 24 as making the following statement:
It is with real reluctance that the Daily Mail suggests the incompleteness-of what is termed General Bertram's "valedictory." A public duty, however, cannot be evaded, and it is a public duty to remind General Bertram that his statement, utterly lacking in detail and definiteness as affecting the criticism of the work of his committee, does not allay suspicion but tends to strengthen it. Major-General Bertram has-been accused of enriching his private interests from business placed by the shell committee under his direction. He has been .accused of' showing favoritism in the distribution of shell orders, and of allowing prices to the manufacturers (including his own concerns) out of all proportion to the cost. Not one of these charges did he deal with in his valedictory, except in relation to the price of shells, and in this particular matter he witholds from the public the very information it desires.
Major-General Bertram would have been well advised to say more or say nothing. His latest statement, padded with information which is

of no material interest to the public, would appear to be a crude pretext for putting the public off the scent in regard to the operations of the late shell committee. The public is ready to be convinced that General Bertram can justify every transaction consummated under his official auspices. While it will not jump to any half-baked conclusions, it will accept definite answers to definite accusations. General Bertram. in his utter lack of frankness in defending the work of the committee, has done poor service to himself, and has very materially strengthened the demand for a public investigation of his direction of the shell committee.
That is a strong editorial, the editorial of a newspaper not only friendly but zealously friendly to this Government. Surely that is a statement which this Government, and this Parliament, cannot afford to throw lightly lasiide.
Then, the Hamilton 'Spectator-I do not know whether that paper supports the Government, or whether it opposes it.

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