[Stage Direction]
On the order for motions:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Yesterday the right hon. leader of the opposition (Mr. Bennett) asked if I would lay on the table the dispatch from Colonial Secretary Harcourt concerning the flag that is flown in Canada, to which reference had been made on the previous evening. I have the dispatch in my hand and I think it would be of interest to hon. members generally to be apprised of it. If the house will permit, I should like to read the communications. The first is:
Ebenezer, Saskatchewan, Canada, March 11, 1911.
The Secretary,
His Imperial Majesty,
King George V.
My Lord,
I am the teacher at one of the public schools in the Canadian northwest.
An order has recently been issued by the department of education that every school in the dominion shall fly the national flag, and there seems some uncertainty amongst the people in this locality as to the flag this school shall have. I hold that the Union Jack pure and simple, is the national flag of the British empire throughout the world; but find some people on this side of the Atlantic have a notion that the "red ensign" with Canadian coat of arms (the naval flag) should be used in Canada.
IMr. Howe.3
I shall be much obliged therefore if you would say which is in order.
Trusting to receive the favour of your reply. I beg, etc.,
John F. Stedman.
Colonial Secretary Harcourt wrote to the Governor General in connection with this letter as follows:
Downing Street,
12 April, 1911.
My Lord,
I have the honour to transmit to Your Excellency a copy of a letter received by the King's private secretary from Mr. J. F. Stedman respecting the national flag to be flown in Canada.
I shall be glad if Your Excellency will cause the writer to be informed that the Union Jack is the national flag of Canada as of all other parts of His Majesty's dominions.
I have the honour to be,
My Lord,
Your Lordship's most obedient, humble servant,
L. Harcourt.
Governor General,
His Excellency,
The Right Honourable,
Earl Grey, G.C.M.G., G.C.Y.O.,
&c. &c.
There are two other communications I should like to read, the first being:
Ottawa, Ontario,
2nd May, 1912.
The Secretary of State for the Colonies,
London.
Dear Sir,
Will you kindly inform me what is, according to correct usage, the proper flag for a citizen of the British empire to use in his own grounds or on his house on say 24th May or Dominion day or other occasion when flags are used.
I mean by this, is the red ensign correct on land: as it is said by some to be the exclusive flag of the merchant marine. Is the flag of Canada correct for this decorative purpose? (Red ensign with badge of Canada in the fly.) Is the Union Jack correct? May any or all of these flags be used by a private citizen, who has no official rank?
Kindly address me, care of the general office: National Transcontinental railway, Ottawa, Ontario, Canada.
Yours very truly,
George S. Hodgins.
The next communication, reads:
Downing Street,
21st May, 1912.
Sir:
I have the honour to transmit to your Royal Highness a copy of a letter from Mr. G. S. Hodgins in regard to the flag which should be used by private persons who are British subjects.

Questions
2.	I should be glad if you would be good enough to cause Mr. Hodgins to be informed that the Union flag is the national flag of Canada as of all other parts of His Majesty's dominions, and may be flown on land by all British subjects: and that the red ensign, with the arms of the dominion of Canada in the fly, is intended to be used only by Canadian merchant vessels.
I have the honour to be,
Sir,
Your Royal Highness' most obedient humble servant,
L. Harcourt.
Governor General His Royal Highness
The Duke of Connaught and of Strathearn,



K.G., K.T., K.P., G.C.B., G.C.S.I., G.C.M.G., G.C.I.E., G.C.V.O.,

[Stage Direction]
&c., &e., &c.,
Right Hon. R. B. BENNETT (Leader of the Opposition):: It will be remembered that I directed the attention of the house to the fact that the colonial secretary did not of his own motion undertake to declare officially what was the Canadian flag. It will be recalled that I made that quite clear on the pages of Hansard. My argument has been abundantly verified; for it will be observed that Mr. Harcourt was simply answering a question which had been directed to His Majesty the King by a citizen in Saskatchewan. It would hardly be correct to say that that was the first official statement as to what the flag of Canada was; for there was a circular showing that the official flag of the whole British Empire was what was called the union jack, and it was not until long after that, that there was any question of any other flag being used by any part of the king's dominions. But the point I tried to make was that under no circumstances did the colonial secretary undertake to indicate what the position was except in answer to an inquiry directed to the king by the teacher in Saskatchewan.


William Lyon Mackenzie King: Mr. Speaker, I did not intend to discuss the matter, but what my right hon. friend has just stated makes it necessary for me to point out that what he has said is not entirely correct. It is correct with respect to one of the communications I read, but not with respect to the other. The second communication was from George S. Hodgins of Ottawa, addressed to the Secretary of State for the Colonies, London, not to the secretary of His Majesty at all, asking if he could be informed as to the correct usage in respect to the flag, and the secretary of state replied to the governor general-there was no reference to His Majesty or to His Majesty's secretary-that he would be glad if the governor general would cause Mr. Hodgins to be informed that the union flag was the national flag of Canada.


Richard Bedford Bennett: And it was in answer to an inquiry. That is the point I was making.



OPIUM AND NARCOTIC DRUG ACT

[Stage Direction]
Hon. C. G. POWER (Minister of Pensions and National Health) moved for leave to introduce Bill No. 24, to amend the Opium and Narcotic Drug Act, 1929.
Motion agreed to and bill read the first time.

[Stage Direction]
(Questions answered orally are indicated by an asterisk).

Mr. BOULANGER:: What are the names, duties and salaries of employees of the Department of Agriculture of Quebec who carry out work controlled and paid for by the federal Department of Agriculture?


Mr. RINFRET (for Mr. Gardiner):: Nil.


RUSSIAN COAL IMPORTATIONS
Mr. LENNARD:: How many tons of coal were imported into Canada from Russia during the twelve months ending December 31, 1937?


Mr. EULER:: 146.656 tons (of 2,000 pounds).


CANADIAN WHEAT BOARD
Mr. FAIR:: 1.	How many bushels of wheat were held by the Canadian Wheat Board on January 1, 1937?
2.	How many bushels were purchased during the year 1937?
3.	How many bushels were held on December 31, 1937?
4.	Are the officials of the wheat board still drawing salary?
5.	What was the cost of operating the wheat board in 1937?


Mr. EULER:: 1.	54,491,000 bushels.
2.	No purchases made during 1937.
3.	6,961,000 bushels, of which 6,557,000 bushels were cash wheat converted from futures into cash wheat suitable for seed and sold to the Saskatchewan government for spring delivery. The balance of 404,000 bushels were futures.
4.	Only the chairman.
5.	As the board operates on a fiscal year ending July 31, no figures are available showing costs for the calendar year. The net cost for the fiscal year was SI 11,359.83.
I might add a word of explanation with regard to the answer to the fourth question,
Questions

which asks whether the officials of the wheat board are still drawing salary. I take this to mean the commissioners constituting the board. Of course, the regular staff of the board are still receiving salary because they are still discharging their duties.


AUDITOR GENERAL'S OFFICE
Mr. HYNDMAN:: 1.	How many new appointments were made in the Auditor General's office last year?
2.	How many promotions were made in the Auditor General's office last year?
3.	Who made the recommendations for promotions in the Auditor General's office?


Mr. DUNNING:: 1.	Fourteen.
2.	Nine.
3.	Promotions are made by the civil service commission on the basis of ratings prepared by the chiefs of branches and supervisory officers of this office.


ROYAL CANADIAN MOUNTED POLICE-LEGAL COUNSEL IN PROSECUTIONS, THREE RIVERS
Mr. GARIEPY:: 1.	Since January 1, 1936, was Mr. Fernand Choquette, K.C., of the city of Quebec, or Mr. Gerard Fauteux, K.C., of the city of Montreal, engaged by the Department of Justice in actions instituted by the said department, or by the Royal Canadian Mounted Police, in the judicial district of Three Rivers?
2.	If so, what were said actions?
3.	What sums were paid to the said Fernand Choquette or Gerard Fauteux for their services?


Mr. LAPOINTE (Quebec East):: 1.	Yes, both of them, with J. Louis Marchand, Esq., of Three Rivers, P.Q., as associate counsel, in cases instituted by the Royal Canadian Mounted Police, in the circumstances set forth in No. 2.
2.	The actions concern persons involved in an organization which covered a large area in the province of Quebec for the purpose of transporting and distributing illicit alcohol.
To date, 43 charges have been preferred under the provisions of the criminal code for conspiracy to defraud the revenue.
Investigations by the R.C.M. Police prior to the preferring of charges covered a period of almost two years and Messrs. Gerard Fauteux, K.C., and Fernand Choquette, K.C., were the original appointees as counsel for the Crown to assist in segregating the evidence and preparing charges entered at Montreal, Quebec City and Three Rivers, P.Q.
In view of the importance of these cases and the long study which the two legal counsel gave them from their inception, it was essential that their services be retained to prosecute at the three points mentioned.
The following persons who had been engaged in the transportation and distribution of illicit alcohol were charged at Three Rivers, P.Q., with " conspiracy " under the provisions of sections 444 and 575 of the criminal code, and in addition, under Section 169 of the Excise Act: Ovila Champagne, St. Stanislas, P.Q.; Adelard Champagne, St. Stanislas, P.Q.; Herve Duehesneau, Three Rivers, P.Q.; Ludger Duchesneau, Three Rivers, P.Q.; Remi Bousquet, Three Rivers, P.Q.; Raymond Thiffeault, Three Rivers, P.Q.; J. Bte. Demers, Grand Mere, P.Q.; Ovila St. Jean, Laviolette, P.Q.; Lionel Audet, La Sarre, P.Q.; Noel J. Begin, La Sarre, P.Q.; Albert Fortin, Jonquiere, P.Q.; Andre Roy, La Tuque, P.Q.
In addition Ovila Champagne was charged under section 157 of the criminal code for attempting to bribe a member of the Royal Canadian Mounted Police, who investigated these cases.
In all the aforementioned actions the following were employed as legal counsel:
(1)	Gerard Fauteux, Esq., K.C., Montreal.
(2)	Fernand Choquette, Esq., K.C., Quebec City.
(3)	J. Louis Marchand, Esqu,, as Associate Counsel, Three Rivers, P.Q.
3.	Gerard Fauteux, Esq., K.C., 11,544.74.
Fernand Choquette, Esq., K.C., 81,081.18.
J. Louis Marchand, Esq., nothing paid to date as account not yet received.


WEIGHTS AND MEASURES INSPECTION SERVICE
Mr. DOUGLAS (Weyburn):: What is the total amount that has been collected by the weights and measures service in connection with scale inspections since January 1, 1930, under the following headings: (1) fees; (2) cartage; (3) special expenses?


William Daum Euler: As the records of the weights and measures inspection service are based upon the fiscal year, figures for calendar years are not available. Further, it is impossible to segregate fees collected for scale, inspection and the following statement gives the total fees collected in connection with the inspection of all trade equipment for the fiscal years, as indicated:-

Questions
Fiscal Year	Inspection Fees	Cartage	Special Expenses	1929-1930	
$341,151	30	$54,491	75	$5,976	801930-1931	
358.402	75	49.080	90	6,135	151931-1932	
349.195	30	47,892	05	2.801	201932-1933	
332,244	80	47,134	90	3,289	301933-1934	
347,497	20	46.651	75	1.707	101934-1935	
351,414	65	46,810	90	2,214	101935-1936	
346,592	75	47,050	60	1,824	201936-1937	
342,583	15	44,481	50	2892	151937-Jan. 1938	
304.362	73	36,462	90	4,492	12


PROTECTION OF RAILWAY CROSSINGS
Mr. LANDERYOU:: 1.	How many railway crossings in Canada were protected by bell and wigwag signals in the years 1930 to 1937 inclusive, giving the number for each year?
2.	How many accidents occurred at railway crossings protected by bell and wigwag signals, giving the number of people killed or injured, in each of the years 1930 to 1937 inclusive?
3.	To what tests were the bell and wigwag signals subjected in Canada before they were finally adopted by the railway commission?
4.	Where are the bells and wigwag automatic railway crossing signals manufactured?
5.	How many were purchased by the government in each of the years 1930 to 1937 inclusive ?


Mr. HOWE:: 1. Year
1930.
1931.
1932.
1933.
1934.
1935.
1936.
1937.
Bells and Wigwags 374 430 . 437 . 445 . 461 . 507 , 585 . 616
Note: The protections shown above are those towards which a grant was made from the grade crossing funds. We have no record of such protections installed without assistance from the board's funds.
2. Year	Accident Killed	Injured1930	.. 24	13	261931	.. 15	8	171932	17	231933	.. 19	8	261934	5	201935	.. 24	10	321936	.. 20	12	261937	11	38Totals.. ..	.. 175	84	2083. Inspections were made of installations in	the United States	where	they have	been in
use and their efficiency established.
4.	In the United States.
5.	The board of railway commissioners do not purchase equipment of this nature.


GENERAL DREDGING CONTRACTORS LIMITED
Mr. PELLETIER:: 1.	Has the federal government given any guarantee or made any promise or agreement of payment to the General Dredging Company Limited ?
2.	If so, what is the amount of such guarantee, and for what purpose was it given?
3.	Has the government paid any money to the General Dredging Company Limited during 1936 and 1937? If so, what amounts have been paid, and for what purpose?
4.	Is the government renting any equipment belonging to the General Dredging Company Limited? If so, (a) did any of such equipment formerly belong to the dominion government; (b) what are the terms of rental?
5.	How much money has been paid to the General Dredging Company Limited in each of the years 1929 to 1935 inclusive?


Mr. HOWE:: Questions


$16,824,445 53 SALE OF SOREL SHIPYARD AND ST. LAWRENCE SHIP CHANNEL DREDGING FLEET
Mr. GARIEPY:: 1.	Since January 1, 1937, has the government sold, in whole or in part, the government shipyards located in the district of Sorel, or the government fleet operating on the St. Lawrence or Richelieu rivers?
2.	If so, to whom, when and for what price?
3.	Were such sales made after tenders were called?
4.	If so, what were the names of the tenderers and the amount of their respective tenders?
5.	If only part was sold, what are the details?
6.	If the said transaction was made without tenders being called, why were tenders not asked ?
7.	On whose recommendation was such transaction made?


Mr. HOWE:: 1.	Yes.
2.	(a) General Dredging Contractors Limited; (b) July 22, 1937; (c) $1,708,544.
3.	Sale was by a negotiated agreement.
4.	Answered by No. 3.
5.	Sale included the property known as the government shipyard, together with wharves, buildings and other structures, equipment, machinery, stores, etc., also the vessels comprising the St. Lawrence ship channel dredging fleet, including floating or other equipment, together with their gear, machinery and accessories, also certain surplus marine equipment connected with Montreal harbour.
6.	Having decided to go out of the dredging business because of uneconomic costs, it became necessary to dispose of the Sorel shipyard which had been operated chiefly for the repair and maintenance of the dredging fleet. Oniy one concern was in a position to take over the shipyard and plant, namely, General Dredging Contractors, Limited, who had the St. Lawrence ship channel contract, and the offer of that firm was accepted.
7.	On the recommendation of the officers of the marine branch of the department


CANADIAN PAVILION AT PARIS EXPOSITION
Mr. LECLERC:: 1.	What are the names and nationalities of salaried employees who constituted the personnel of the Canadian pavilion at the Paris exposition last year?
2.	Did the government make an exhibition of Canadian folk-lore?
3.	If so, of what did it consist?
4.	What are the names of the individuals who were in charge of this exhibit in the Canadian pavilion and outside?
5.	Were these exhibits good advertising for Canada ?
6.	Did the government receive any complaints from Canadian visitors to the exposition, and, if so, from whom, and of what nature?
7.	Is the same exhibit to be shown at the Glasgow exposition this year, and will it be in charge of the same representatives?


Mr. EULER:: 1.	Oscar Belanger, M.P., commissioner, French Canadian; J. O. Turcotte, exhibition commissioner, French Canadian; J. U. Bayard, building superintendent, French Canadian; Miss Musso, stenographer, French; J. Barada, attendant, Canadian; Miss Gendrau, in charge of information bureau, French Canadian.
2.	In the proper meaning of the word, no, but there was an exhibit of the traditional arts and handicrafts of Canada.
3.	Semi-precious stones, silver and gold, clay pottery, sculpture, book binding, wood carving, rugs, quilts and Indian work.
4.	Madame Juliette Gaultier, French Canadian.
5.	Yes.
6.	Only two complaints were received by the department from visitors, as follows:-
(1)	From W. C. Rean, Toronto, to the effect that the Canadian pavilion was closed at 7 p.m.; (2) from Thomas Dickson, the Hampton Manufacturing Company, Limited, Montreal, who claims to have visited the exhibition one. morning and found no one in charge of the building or the exhibits.
As regards the first complaint, it might be explained that out of 40 countries participating, only four kept their exhibits open during the

Questions as Orders for Returns
evening, due to the requirements under the French law of employing a double staff. As regards the second, it is inconceivable that the Canadian building would be without staff at any time.
7.	No, as this is an industrial exhibition.


CANADIAN BROADCASTING CORPORATION-EMPLOYEES
Mr. PURDY:: What are the names, positions and respective salaries of the full time employees of the Canadian Broadcasting Corporation?


Mr. HOWE:: On Monday last I thought it necessary to advise the house of the parallel between the Canadian Broadcasting Corporation and Canadian National Railways, and to say that, in the matter of each, the government must decline to divulge to the house matters having entirely to do with the internal affairs of the corporation. 1 stated at that time and I repeat that if any hon. member wishes a committee of the house to call the officers of the broadcasting corporation before it and to ask them to bring any documents that may be required, I shall be glad to recommend to the government that this be done.


LANDS VACATED BY SOLDIER SETTLERS
Mr. COLDWELL:: 1.	How many parcels of land have been vacated by soldier settlers?
2.	What was the total indebtedness against these parcels at time of vacation?
3.	How many of these parcels were resold to others, and what was their total sales value?
4.	How many of these parcels were disposed of to municipalities free of cost or as gifts?
5.	How many of these parcels were disposed of otherwise, giving particulars?


Mr. COLDWELL:: Withdrawn.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. LANDER YOU:: 1.	What are the total number of policies issued by the commissioners of the returned soldiers insurance to persons who have seen service in: (a) France; (b) other war areas in the great war?
2.	How many of these policies were cancelled by death of the insured?
3.	How many of the above policy holders have surrendered their policies for a cash surrender value?
4.	What are the total number of policies that have been issued to persons who never
saw service beyond the shores of Canada during the great war, the number of these policies cancelled by the death of the insured, and the number of policies that have been surrendered for a cash surrender value?
5. What are the total number of policies issued to disability beneficiaries, the number of these policies that have been cancelled by the death of the insured?
6. What are the total number of policies issued to persons who never saw service beyond the British Isles during the great war, giving the number of policies that have been cancelled by the death of the insured and the number of policies that have been cancelled by cash surrender value?


ELIMINATION OF RAILWAY CROSSINGS
Mr. MULLINS:: 1.	How many railway crossings were eliminated each year since 1931, inclusive?
2.	Where were they located?
3.	What was the cost of the elimination of each of these crossings?
4.	Who paid for same, and in what proportion in each case?



MOTIONS FOR PAPERS


Mr. PERLEY:: For a return showing, (a) complete details of that portion of the 1935-1936 wheat crop disposed of by the Canadian wheat board between July 31, 1936, and December 31, 1937; (b) complete details of the disposal by the Canadian wheat board of wheat acquired from the Canadian Cooperative Wheat Producers Limited, from July 31, 1936, to December 31, 1937.


William Daum Euler: I am sure that the hon. member for Qu'Appelle (Mr. Perley) will believe me when I say that there is not the slightest intention of withholding from him or from other members of the house any information which can be obtained with a reasonable degree of expenditure of time. I communicated with the chief commissioner of the wheat board with regard to the question, and I have a telegram from him stating that the securing of this information-
... involves complete details of sales of approximately 84 million bushels comprising innumerable entries. Tabulation and typing this information is vast undertaking. Our staff working under pressure and will be for next two months preparing for distributing seed and feed grain and if details as requested require be furnished shall have to employ additional staff under supervision heads of departments who are at present busy other work. Cannot estimate how quickly information could be made available. Assure you board have no deside evade responsibility this matter but imperative present full staff must be employed seed and feed work as time before seedine limited.
Motions for Papers

I read that to indicate that it is a tremendous task to secure this information, and under the circumstances I suggest to my hon. friend that he might drop the question.


Richard Bedford Bennett: No.


George Halsey Perley: I cannot see that there is too much detail involved in preparing an answer to this question. A report of the operations of the board in respect to the 1935 crop was issued by the chairman of the board on July 31, 1936. As I remember it, there were some three million and several thousand bushels remaining of the 1935 crop. As the minister has stated, the balance, making up eighty-five or eighty-six million bushels, was taken over from the old wheat board. What I should like to know, and what I think it is quite easy to procure, is the number of bushels, indicating the different grades, and the price at which it was disposed of, in order to find out what would be the balance -a report similar to that which was issued, as the minister knows, on July 31, 1936, to show the final disposition of the balance of the wheat. I do not believe that a report such as was issued on that date would entail very much difficulty. It is not a detailed statement with respect to every man or every firm that bought a bushel of wheat; it is with respect to the number of bushels, the price at which they were sold, and the amount received for the balance.


William Daum Euler: I can only take the motion in the terms in which it is expressed. If the hon. gentleman does not really desire complete details, I suggest that if he could frame a simpler motion which will not entail all the expenditure of time and money that the present motion calls for and will involve, he should do so, and withdraw the present motion and submit another one.


Richard Bedford Bennett: May I direct the attention of the minister to the fact that the statute creating the wheat board provides that this information shall be sent to the minister, and that it is not from Winnipeg that this is sought; it is the information given in the weekly reports which are sent in and signed by the auditors that should be brought down.


William Daum Euler: My right hon. friend surely does not mean to intimate that all details of the various sales of eighty-four million bushels of wheat come to the minister. They assuredly do not.


Richard Bedford Bennett: Not all the details.


William Daum Euler: That information is in the possession of the board at Winnipeg, and nowhere else, and the information must be

compiled by the board in Winnipeg. I am compelled to accept the word of the chairman who, I think, is perhaps more familiar with the work entailed than anyone else is, and I am accepting his word in that regard.


Richard Bedford Bennett: Would the minister read the telegram he sent to the chairman?


William Daum Euler: I did not send him a telegram. Just for the information of my suspicious friend-


Richard Bedford Bennett: Now, the hon. gentleman will withdraw that. There is no reason why he should be thus out of order. Strange as it may seem, he has no right under the rules to say that. I ask the simple question because the rules require that the letter sent should be read as well as the reply. You cannot take one side of it only; and I ask the minister what he asked the Winnipeg people.


William Daum Euler: For the satisfaction of my right hon. friend-and I did not anticipate he would couch his reply quite in the language or the tone in which he did-I may say that when the motion first appeared on the order paper I simply took the leaf out of the order paper, sent it to Mr. Mclvor for his comment and made no suggestion whatsoever. I say that in anticipation, perhaps, of something else that might be said.


Richard Bedford Bennett: No, I did not say "suggestion."


William Daum Euler: I did not indicate in the slightest degree to Mr. Mclvor what his answer should be. I will say that in any case. As a matter of fact, I might as well make a complete story of it.


Mr. LAPOINTE (Quebec East):: Mr. Speaker, on a question of order, standing order 51 reads:
Notices of motion for the production of papers which the member asking for the same intends to move without discussion, shall be marked by him with an asterisk and shall be placed by the clerk on the order paper above "Notices of Motions," under the heading "Notices of Motions for the Production of Papers." All such notices when called shall be forthwith disposed of; but, if on any such motion a debate be desired, it shall be transferred by the clerk to the order of notices of motions.
We have been hearing a debate for ten minutes, and I suggest that this motion, if not disposed of immediately, should be transferred to notices of motions.


Richard Bedford Bennett: The right hon. minister is right, of course.


Mr. SPEAKER:: The point that has been raised is well taken. These notices of motions for production of papers are not debatable.

Motions for Papers


William Daum Euler: At the risk of offending against the rules, I merely wish to say that my proposal to the hon. member for Qu'Appelle (Mr. Perley) was that perhaps he could frame his motion in a simpler way so that it could be accepted.


George Halsey Perley: I am agreeable to having it transferred to notices of motions.


Walter Edward Foster: Transferred to notices of motions.
On the motion of Mr. Perley:
For a return showing, (a) a detailed statement of all copies of cash broker's notes of sales made to the Canadian wheat board since January 1, 1937, to date; (b) a copy of all cash broker's notes of all sales made by the board from January 1. 1937, to date; (c) the names of brokers and clearing sheets of options, bought or sold, since January 1, 1937, to January 1, 1938.


William Daum Euler: Exactly the same objection that I raised to the previous motion applies to this.


Walter Edward Foster: Transferred to notices of motions.
On the motion of Mr. Perley:
For a detailed statement showing the number of bushels of open trades or interest of the wheat board during September 28, 29, 30 and October 1, 2, 3, 4, and 5, 1937.


William Daum Euler: With regard to this motion, the objection seems to be that, as worded, its meaning is not quite clear to the chairman of the wheat board. He does not understand what is meant by the words "or interest," and I suggest to my hon. friend that he draft the motion in such a way as to make perfectly clear what information he desires to obtain.


George Halsey Perley: I can do that right here; simply strike out those words. I just want to know what were the open trades.


William Daum Euler: That is quite satisfactory.


Louis Édouard Fernand Rinfret: According to the rules, the hon. gentleman cannot have three notices of motion under his name, so that if the first one is transferred I do not think it is in order to transfer the other two.


William Daum Euler: This one is not transferred.


Louis Édouard Fernand Rinfret: That applies to the second.
Motion as amended agreed to.
On the motion of Mr. Perley:
For (a) statement or report showing amount of durum wheat bought and sold since July 31, 1937, to date, and the price bought and sold at; (b) statement showing amount of sales of durum wheat to Italy, and amount of sales of durum wheat to United States, since January 31. 1936, to date.


George Halsey Perley: With the permission of the house I should like to amend this motion by inserting the words "by Canadian wheat board" after the word "sold" in the second line.


William Daum Euler: Again at the risk of offending, I suggest that I might answer this question orally: (a) No durum wheat has been bought or sold since July 31, 1937, by the board except for the account of the Saskatchewan government; (b) no direct sales of durum wheat were made by the board to Italy, nor did they make any direct sales of durum wheat to the United States.


George Halsey Perley: That is quite acceptable,
if the minister will agree to give us the amount of wheat sold by the trade to Italy and the United States-the exports.


William Daum Euler: I suggest that my hon. friend put a motion on the order paper.



CANADIAN BROADCASTINC CORPORATION

[Stage Direction]
On the motion of Mr. Lawson:
For a copy of all contracts made since November 1. 1937, to date, by the Canadian Broadcasting Corporation or any of its agents on its behalf, with any persons or corporations or the agents of any such persons or corporations for the use of Canadian Broadcasting Corporation stations or chains for broadcasting commercial programs containing advertising originating in the United States, and copies of all papers, letters, telegrams or other documents relating thereto.
Mr. LAWSON:: If I might be permitted to say a word, unfortunately when this motion came up on Monday I was absent from the house, and the house kindly allowed it to stand. I have read the utterances of the minister on that occasion. I regret that I cannot concur in the position taken by him, that it is not in the public interest to give this information. On looking into the matter, sir, it would appear-


Some hon. MEMBERS:: Order.


James Earl Lawson: -that it is not a point
of order for you-


Mr. DUNNING:: Order.


James Earl Lawson: Well. I raise a point of
order. It is very seldom that I offend against the rules of order in this house, and I might have been given the courtesy of being permitted to utter two more sentences. Now I will raise a point of order. I object to this motion being transferred to notices of motions; for if it is it will probably never
Motions jor Papers

come up this session and I do not propose to have the discussion sidetracked. My point of order is that I did not mark my notice of motion with an asterisk and therefore I am not within standing order 51 of the house, which I have read with considerable care. Had my motion originally been placed under notices of motions, where the Prime Minister (Mr. Mackenzie King) so graciously suggested the other day that it might go, I might have been heard in this house. I was merely pointing out to you, Mr. Speaker, that I had come to the conclusion that it was not a matter for your ruling; that the question on which the Minister of Transport (Mr. Howe) and I differ is one for the decision of the house. I desire an opportunity to debate the matter. I am not pressing to debate it now, but I insist that I have an opportunity during this session.


Clarence Decatur Howe: I must repeat what I said
on Monday. The Canadian Broadcasting Corporation as incorporated by this house is an autonomous body with its own board of directors and its own manager-


Ernest Lapointe: In order to be impartial I must point out that the rule applies to the Minister of Transport as well.


Mr. THOMPSON:: I was paired with the hon. member for Mackenzie (Mr. MacMillan). Had I voted I would have voted for the motion.


Mr. SENN:: I was paired with the hon. member for Perth (Mr. Sanderson). Had I voted I would have voted for the motion.


Mr. EDWARDS:: I was paired with the
hon. member for Middlesex West (Mr. Elliott). Had I voted I would have voted for the motion.



PACIFIC COAST INDIANS

Mr. TAYLOR (Nanaimo):: For a copy of all papers, letters, telegrams, reports, recommendations, instructions and other documents exchanged between the Minister of Mines and Resources, the Department of Indian Affairs, and any agent or official thereof, and any other persons with respect to the custom of the potlatch amongst Pacific coast Indians, especially of the Ivwawkewlth agency.
When I submitted the notice of motion I requested that it be printed without asterisks. Since then I have had a promise of the complete cooperation of the Indian department and for the moment this motion is dropped.


Walter Edward Foster: Motion dropped.



BRITISH COLUMBIA AND YUKON TERRITORY

Mrs. BLACK:: For a copy of all orders in council, letters, telegrams, correspondence and documents of any kind exchanged between the government of Canada or any member thereof and the government of British Columbia or any member thereof, with respect to the Yukon Territory, since the 1st day of April, 1937, to date.



THE CUSTOMS TARIFF


Mr. J. G. ROSS (Moose Jaw) moved:: That a special committee, the members thereof to be selected at a later date, be appointed to investigate:
(a)	The application of the Customs Tariff by the officers and clerks of the Department of National Revenue;
(b)	The collection of customs duties;
(c)	The practice now followed in applying the present law respecting drawbacks;
And that the said special committee have power to send for persons, papers and records, to examine witnesses under oath, and to report from time to time.
He said:	Mr. Speaker, speaking in this
house on February 3 I said that the people of this country were being regimented into
purchasing their supplies from certain people in the country and at prices fixed in accordance with the ideas of those people. I said that the taxing power of parliament had been turned over to privileged interests, and that prices were being artificially raised in this country in order that certain industries might be subsidized. The levying of taxation is a function of parliament. I say now that through successive changes in the Customs Act and the Customs Tariff the authority of parliament in tariff making has been delegated to a department of the government, and that through rules and regulations laid down by that department an importer of goods to-day cannot discover by reading the tariff act as passed by parliament what amount of duty will be charged upon his goods when they arrive at the border.
As a matter of fact the Minister of Finance (Mr. Dunning), as an importer of goods into this country, would be unable to-day to recognize his own handiwork. An act is brought down in this house purporting to set the rates of duty upon articles imported. By the time the rules and regulations of the department are applied the amount of money collected upon those articles is at a rate entirely different from that set by parliament when the act was passed. I am not here criticizing the Department of National Revenue; I am stating that we in this parliament have delegated to a department of the government the tariff-making powers of the House of Commons, and that the passing of a budget now simply becomes a hollow mockery. No importer of goods can gain any idea, from the act that we pass, as to how much money he will have to pay upon the goods being imported. No member of the House of Commons, no ordinary citizen, can import goods and know what he will have to pay. Even the best customs brokers in this country from time to time have to amend their entries in order to comply with the rules and regulations of the Department of National Revenue.
I say, Mr. Speaker, it is high time we in this house, and more especially the members on this side of the house, looked thoroughly into this matter, so that parliament may again perform this important function in order that the importation of goods may not be unduly restricted and discouraged, which of necessity must engender ill-will towards Canada in the countries to which we export. We on this side of the house were elected on a policy of expanding trade, and in many regards this government is entitled to great credit for having followed that policy up to date. The Minister of National Revenue (Mr. Ilsley also has credit due him for his actions
The Customs Tariff

in this regard, but there is still a great deal of barbed wire to be cleared away before we shall be able to import goods freely.
The principle of protection in Canada has been furthered in many ways. I will set them out under headings.
1.	By the raising of the ad valorem and specific duties.
2.	By the expansion of the number of items in the customs tariff.
3.	By the fixing of values for duty purposes.
4.	By the fixing of value for duty purposes in combination with the application of the anti-dumping legislation covering imports that compete with goods made or produced in Canada.
5.	By the extended application of the dumping duty.
6.	By drawbacks.
Over a period of years, Mr. Speaker, the ad valorem tariff has been raised in this country, and of late a habit has grown up of adding to that a specific tariff which in many cases amounts to more than the ad valorem rate. To some people this may seem to be a painless method, or perhaps it is done only in order to fool the people, who are the voters. In 1903 there were 645 items in the tariff, of which 447 were dutiable and the remainder free. At the present time there are over fifteen hundred items in the customs tariff, some of which are again subdivided. It is sometimes difficult to raise or lower the tariff upon an item which includes many articles. It is much easier to deal with these things if the item is split in order that it may include, perhaps, only one article. Possibly this has been done in order to mete out tariff favours to some people.
Under heading No. 3, Mr. Speaker, the simplest method of raising the tariff is through the raising of the value for duty purposes. At times it is very difficult to get parliament to raise or lower a tariff, but when parliament has passed the Customs Tariff and parliament has given the Department of National Revenue authority under the Customs Tariff and the Customs Act to value for duty purposes, it is a very simple matter to raise the value placed upon the goods to be imported, and thereby raise the rate simply because there are no members there to protest; simply because the people of Canada generally do not know what is going on.
I intend to use a hundred dollars' worth of goods as an example to show the successive changes in the Customs Act and the Customs Tariff. I am assuming that the rate of tariff has not been changed since 1867 I do not 
intend to place on Hansard all the amendments to the Customs Tariff and the Customs Act, but I ask the minister to be good enough to place these upon the order paper so that we may all know exactly what changes have been made. In 1867, under the Customs Act, the provision which is now section 35 of the Customs Act read as follows:
In all cases where any duty is imposed on any goods imported into Canada ad valorem or according to the value of such goods, such value shall be understood to be the fair market value thereof in the principal markets of the country whence the same were exported directly to Canada.
These were the qualifying words in the section dealing with value for duty purposes. That was meant to be the export price of goods in the principal markets of the country of origin. A hundred dollars' worth of goods coming in at forty per cent duty would pay $40. In 1883 the Act was amended and the qualifying section then read:
The value for duty shall be the fair market value thereof when sold for home consumption in the principal markets of the country of origin.
The home consumption value might mean an addition of ten per cent. Therefore, our one hundred dollars' worth of goods would be increased by ten per cent for the home consumption price. The duty value would then be $110 and with a tariff rate of forty per cent, this would mean the payment of $44. The result would be 44 per cent instead of the forty per cent as passed by the House of Commons.
Three changes were made to this section in 1921. The first change was that the value for duty should be determined by the wholesale price in the country of origin. The second change was that in no case should it be less than the cost of production, plus a reasonable amount for profit, and, third, that the minister was to be the sole judge of what that reasonable amount would be. We now have our hundred dollars' worth of goods with an export price of $100, plus twenty per cent for wholesale price, totalling $120. There would then be a profit of ten per cent if the minister did not happen to be a Canadian manufacturer, or probably twenty per cent if he were. The value for duty would now be $144, which at forty per cent would mean a payment of $57.60 or 57i% per cent as against the forty per cent provided for by the House of Commons.
In 1922 the section was amended to introduce exchange rates, and the value for duty was computed and levied under regulations passed by the minister. The rates set by parliament were used only as figures in the determination

The Customs Tariff
of the value. On our hundred dollars' worth of goods the minister's value might be $150. At forty per cent there would be a payment of $60, or a rate of 60 per cent. In 1937 the minister still had the right to determine the value and our example would give the same results.
Section 36 must be read in conjunction with this last section, number 35. In 1907 section 36 set the discount rate for cash that an exporter might allow to an importer. In other words, if an exporter wanted to allow an importer five per cent for cash, the customs department said that that could not be done; that two and a half per cent was the limit that could be allowed in setting the value for duty purposes. In 1930 this section really came into play. Taken along with section 35 it meant that the value for duty of imported goods in no case should be lower than the price to wholesalers or jobbers in the country of origin; that in no case was the value to be lower than the cost of production plus a reasonable advance for selling costs and profit. The minister was to be the sole judge of what that advance should be, and his figures were to be final. This meant that the authority of parliament to set rates had been delegated to the officers of the department.
In 1934 parliament delegated to the governor in council other rights and placed more authority in the hands of the minister and the department. In 1936 this section was amended and the provision that the minister was to be the sole judge was dropped. However, the value for duty was determined by the selling price for home consumption plus a reasonable advance for selling costs and profit. One hundred dollars' worth of goods would have ten per cent added to cover selling costs and twenty per cent to cover profit. This would make the final valuation $132. A rate of forty per cent would mean a payment of $52.80 or 52-8/10ths per cent instead of the forty per cent set by parliament.
This is not all. Customs officials must now be able to determine the production costs in other countries and must be able to State what are reasonable selling costs and what would be a reasonable profit. This is in order that further protection may be given to Canadian manufacturers. The other day I heard a phrase used in this house which sticks in my memory. It was "compensatory adjustments." I should like to know what is meant by "compensatory adjustments." Does it mean that the farmers, the lumbermen, the miners and the fishermen of Canada are to be given the same treatment as the manufacturers of Canada? Does it mean that these
people are to be allowed their cost of production with a reasonable advance for selling costs and profit? What a hope that would be, Mr. Speaker! Of course we know it is absurd to imagine that such a thing would be done.
There is no use in endeavouring to spread a disease of this kind in the country. It is now a cancer on the body politic; it is time we put the X-ray on it. That is the reason I ask for this committee. It may take a major operation to correct the disease, but we are fast approaching the point where it will be a question of kill or cure.
Referring now to the fixing of the value for duty purposes in combination with antidumping legislation covering imports competing with goods made in Canada, in 1922 an amendment to the Customs Act was passed which gave the minister power to set values for duty purposes and thereby imposed the anti-dumping legislation in order to protect natural products of a class or kind grown or produced in Canada. The purpose of the legislation at that time was to protect growers of fruits and vegetables in this country from undue importations while the Canadian farmers' crops were moving to market. In 1930 this section was amended to cover any goods imported and sold or on consignment under such conditions as would prejudicially or injuriously affect the interest of producers or manufacturers, the minister being given the right to fix the values, and the values so fixed to be construed as the fair market value. Here was the final blow for the importer. He had to guess what the minister and his officials had in their minds and what they would do before he was able to import goods. This amendment was certainly designed and passed to hinder and restrict the flow of trade.
In 1934 the section was amended so that it would not affect empire goods. In 1936 it was again amended, this time to give an importer the opportunity to appeal to the tariff board against the value fixed, but the uncertainties regarding valuation still persist and constitute a decidedly limiting factor in respect to the importation of goods into Canada. By the provisions of this section the minister may fix the value for duty of any goods and his valuation shall be the fair market value. Under this section, in 1937 the minister was given authority to make regional tariffs on fruits and vegetables, and under this section also there was brought down an amendment which, as I read it, certainly amazes me. It is section 43a(l) of the Customs Act:
All values for duty heretofore fixed by or on a basis or by a method prescribed by the minister or the commissioner of customs-

The Customs Tariff

Mark those words.
-or the assistant commissioner of customs, acting or purporting to act pursuant to the provisions of section forty-seven A of the Customs Act, chapter forty-eight of the revised statutes of Canada, 1906, as enacted by section three of chapter eighteen of the statutes of 1922, or of section forty-three of the Customs Act, chapter forty-two of the revised statutes of Canada, 1927, or of section forty-three-
And so on with different sections. In other words this was an admission to parliament that although parliament had delegated powers -the widest kinds of powers-to the national revenue department, when they were given those powers they did not stay within them, and the minister had to come to this house and have an amending section passed to sanction the actions of the officials of the department and clothe them with the authority of parliament. Under this section our one hundred dollars' worth of goods becomes whatever the minister, the commissioner of customs or the assistant commissioner of customs wishes to increase it to.
In conjunction with all these sections of the Customs Act there is section 6 of the Customs Tariff, which is the anti-dumping legislation. It first made its appearance in 1904. It was placed there for the purpose of protecting Canadian manufacturers against actual dumping based on the then Customs Act, which placed the value as the value for export in the country of origin. It could not at that time be placed against the free list but only against dutiable goods, and at that time, if any article carried a tariff or combination of tariffs which amounted to fifty per cent ad valorem, the dumping duty could not be applied at all. Besides, it was limited to fifteen per cent as an advance for duty purposes.
In 1907 this section was changed to apply to the free list as well as to the dutiable list. In 1930 a major revision of section 6 of the Customs Tariff took place, which altered the whole basis of tariff making in Canada. This section overrides the whole Customs Act and Customs Tariff in the addition of values and the application of the dumping duty. The increased valuation for duty purposes now becomes proof of dumping, and superduties are imposed. The imposition of an ad valorem tariff of fifty per cent, which previously had exempted the article, was thereby cancelled. The maximum advance for duty purposes of fifteen per cent became fifty per cent. If the invoice for goods to an importer were less than the fair market value of the same article when sold for home consumption in the country of origin, or less

than the fair market value as determined under sections 36 and 41, or less than the fair market value fixed under sections 37 or 43, a dumping duty was applied equal to the difference between the invoice price and the fair market value so fixed. In other words, the definition of dumping was altogether changed. Once the department said that the value should be higher, immediately and automatically the dumping duty came into play.
Now take our example, one hundred dollars' worth of goods. Parliament says the tariff rate shall be forty per cent. Value fixed, $200; duty at forty per cent, $80; dumping duty, fifty per cent of the increase, $50, a total of $130, or 130 per cent. Remember also that the import excise tax of three per cent goes on the whole amount of $230 and becomes seven per cent instead of three per cent, making it $137. Add that to the original value of $100 and you have $237 upon which the eight per cent sales tax is computed, instead of $140 as parliament intended it to be.
In 1936 this section was amended to determine what were made in Canada goods. It was established that thenceforth not less than ten per cent of Canadian consumption must be produced in Canada before goods could be classed as made in Canada goods. But, Mr. Speaker, we are still in this position, that one hundred per cent of the consumption of these goods manufactured in Canada must be charged higher prices because the duty must be raised and dumping duties applied in order to protect ten to fifteen per cent of the production which is made in Canada.
Under this protective tariff system we have a system of drawbacks on goods for reexport, and it has the effect of defeating the protection given to certain Canadian industries who produce goods needed by other Canadian manufacturers for their finished articles. The Canadian manufacturer wants protection only one way. He does not want to pay for it on anything he has to buy; he wants it to be paid only on what he has to sell. Therefore when certain goods are purchased by the manufacturer which go into the production of goods that are to be exported, instead of buying from the Canadian protected manufacturer he buys the goods from some other country and claims and receives a drawback thereon.
In addition, there are drawbacks on home consumption goods. You will find several pages of them at the back of the Customs Tariff. These are used in order that some manufacturer in Canada who is producing articles which are not protected, articles which

The Customs Tariff
are on the free list, may be able to import goods that are protected and use them in his own goods which are not protected; or it may be that there is a lower tariff on the finished article made in Canada, than there is on the partly finished article entering into its manufacture. Therefore the drawback is allowed in these cases.
But, Mr. Speaker, there is another use for the drawback: when the Minister of Finance lowers the protection on the finished article to the Canadian manufacturer, he can return to him a large part by giving him a drawback on imported goods that enter into the manufacture of home consumed goods. 'Under these circumstances under our protective system it is the greatest wheedler w'ho gets the drawback.
We should look into this matter also to determine whether all the drawbacks that are claimed and paid should be claimed and paid. I contend it is a pretty difficult thing to determine whether the conditions set before the department are really the true conditions, and what brings that to my mind is evidence that came out in regard to certain gentlemen engaged in the textile industry who came to this government and told them they were going to be swamped by the importation of certain goods, and it was found out later that no such condition obtained.
In conclusion, the purpose of my resolution is to prove to parliament and the country that parliament has delegated to departmental officials important taxing powers of parliament, and that this procedure is not in the best interests of the people of Canada.
I ask for a committee for the purpose of bringing before parliament practical men engaged in the importing business to show from their records and from their statements under oath whether or not this delegation of power has had a bad effect on the business life of the people of Canada; to what extent it has raised prices on home manufactured goods to the consumer, and to show that it has lowered the purchasing power of the consumer.
I say to the Minister of National Revenue that the Customs Act and the Customs Tariff have placed upon his shoulders a responsibility that should never have been placed upon the shoulders of any man in Canada. Parliament, through these acts, sir, has directed him to see that the interests of certain Canadian producers or manufacturers shall not be prejudicially or injuriously affected by the importation of goods. There is not one word of direction in those acts in regard to the interests of the great consuming public.
These directions defeat the aims of democracy, they take away majority rights and substitute therefor privileges for a small minority. They take from one section of Canada and give to another. They are the negation of freedom; they are the negation of liberalism; they are the means of regimentation of the people; they are the cause of a lower standard of living throughout Canada. They are the main cause of unemployment in the great basic industries of this country. They are unduly restricting and unduly complicating the import and, thereby, the export trade upon which the large percentage of our people live. They maintain prices of imported goods and eliminate healthy competition from abroad, which creates an artificial price level in Canada. They hinder, delay and discourage the flow of imported goods. They cause ill-will toward Canada in the countries where we hope to sell large quantities of our farm products and the products of our mines, forests and fisheries.
These acts are older than some of the infant industries which they are framed to protect ad infinitum.
It is time, Mr. Speaker, that this parliament looked into these matters. It is time we closely considered revamping these acts and making them conform with conditions and needs of the year 1938. Let parliament take back the powers that have been delegated to departmental officials.
As a member of parliament I protest against this way of carrying on the country's business, and I ask parliament to consider this resolution in the best interests of the people of Canada.


Mr. MALCOLM McLEAN (Melfort):: In rising to second this resolution, Mr. Speaker, I am sure it is entirely needless for me to say that there is no intention on my part- and I know there was none in the minds of those who framed and put the resolution on the order paper-to reflect in any way on the minister (Mr. Ilsley) or his officials, or on their integrity, their intelligence and sense of fair play. Particularly would that not be the case in reference to a minister who during the past few years has made for himself a record which probably has not been excelled by any other minister of the crown administering the customs department since confederation. Every member of this house knows something at least of the burdens that have been cast upon his shoulders, which, as the hon. member for Moose Jaw (Mr. Ross) has said, should never have been placed on the shoulders of any one man in Canada.
The Cm toms Tariff

So far as the officers of the department are concerned, I have less acquaintance with them, but I am just as well satisfied that they are doing everything to the best of their ability to carry out the system under which they are working.
The department that we are asked to investigate is something like Topsy in Uncle Tom's Cabin. It never was made; it just "growed." And the hide-holes and all the rest of it grew up along with it as a result of conditions about which it is needless to speak at the moment.
My opinion with regard to matters of this kind is that it should not require a special motion or resolution of the House of Commons to ensure investigation of departments from time to time. I believe that every department should be subject to investigation by the House of Commons at regular intervals in order to familiarize members with the conduct of business in the various branches of government, to familiarize the heads of departments with the intent of parliament and to familiarize the country with both. It would also enable us to get the reaction of the country to the conduct of affairs if such investigations were carried out openly by members of parliament. I submit that it should be done, and I believe that the time is coming when it will be done.
When the hon. member for Melville (Mr. Motherwell) was Minister of Agriculture he did everything he could in this house, everything that lay within his power, to bring about a thorough investigation by the House of Commons of his own department, from year to year. I remember sitting where I am now and listening to the minister, as he then was, putting through his estimates. Opposition members would call "Carried" and [ remember the then minister saying, "No, t is not carried, and it is not going to be carried until more is told of the work of this department, because this is the only occasion on which that work can be made known to the country."
I suggest that there is no reflection on any department of government in the request for an investigation from time to time for the purpose of familiarizing members of the House of Commons with the detailed operations of that department. In the past twelve years, that is to say, since I first entered this house, and in the intervening years during my absence, I have not known ten per cent of the members of the house, including myself *-and I have a fair acquaintance among the members-who were familiar with the detailed workings of the department which we are discussing at the moment. I remarked this

to one of my colleagues this morning and he said that I would be safe in cutting the percentage down to five or even less. This is an extremely important department. I do not believe there is another one that touches the people more closely or one with which they are more concerned, except, possibly, the Department of Justice. Some people may think it strange that I should rate these two departments as I do, but in my opinion the Department of Justice is, if anything, the most important of all the departments inasmuch as it so closely affects the life and liberty of the subject. I repeat, the collecting of revenues, and the opportunity to assist or to hinder industry as the case may be, make this an extremely important department.
I will not discuss the question of revenues at the moment, but if I have time later on I will touch upon it. I find, however, that there is considerable bewilderment in the country on the part of some would-be importers with regard to what they have to pay for certain goods, the classification of those goods, and charges and so on. I submit that it is time that the state of uncertainty in this connection was removed. Some years ago I had an inquiry from a would-be importer who wanted to bring in a certain article from the United States to Vancouver. I took the matter up with the department and could not possibly get a rate that would be satisfactorily definite to this man. This was many years ago but I am satisfied that the same condition has prevailed more or less in the years in between. This fact is a source of trouble to a great many people, particularly those in the primary industries. By primary industries I do not mean the farmers of any particular type but all the primary industries, because they are all affected by the customs tariff in the conduct of their business. Of course, this department touches every individual in his purchase of goods.
I am told sometimes that it is better to hide taxes, to cover them up so that the people will not be conscious of what they are paying; but in the process they grow immensely, just as some plants do when you cover them up. If you cover certain plants with the proper material and leave them under proper conditions as to temperature, air and humidity they grow very fast. These charges in connection with the tariff grow apace pretty much in the same way, and for that reason the Chancellor of the Exchequer in Great Britain was right when he said, " I could tax the shirts off the backs of the people of these islands and they would never know what was happening to them if I were allowed to do it by indirect means."

The Customs Tariff
As regards added charges such as I have mentioned, I will not go into any details but I have here a page from one of the oldest newspapers in Canada, the Montreal Daily Herald, of Thursday, November 18, 1937. I find quotations on various cars blazoned all over the page. I will quote a few to show what the tariff does to the people and how important are the operations of the Department of National Revenue. What I am about to quote will convince the house, I believe, of the importance of knowing the workings of the department. There should be no room for suspicion in the mind of anyone that any charge is being made in that department except such as is sanctioned by the parliament of Canada.
I will take one or two motor cars, not manufactured in Canada, at any rate so far as I know. For the Cadillac V-8, 60 type, touring sedan, the price quoted at the New York motor show held not long ago was $2,085, while in Canada the Montreal price was $2,450, according to this reputable newspaper. For the LaSalle V-8 coupe, two passenger, the price in New York was $1,300, and in Montreal $1,890. I do not believe that that car is made in Canada. I am taking the prices at random. Take the Hudson Six types. For the coupe, three passenger, the New York price was $909, and the Montreal price $1,255. For the custom eight touring brougham, capacity six, the New York price was $1,155, and the Montreal price $1,565. The Chrysler, a favourite Canadian make, is quoted at the New York show at $918, while the Montreal price was $1,230. These prices are for the business coupe. The coupe is $963 in New York, and $1,301 in Montreal.


An hon. MEMBER:: That is for a used car.


Malcolm McLean: If the $1,301 is for a used car it is still worse. The car will give good service, there is no dispute about quality with respect to these cars, the question is one of price. Take the Chrysler Imperial Eight types. The business coupe, capacity two, was $1,123 in New York, and $1,559 in Montreal.
It might be fair to touch on some of the more commonly sold cars, because, after all, these prices affect a good many people. Let us take the Chevrolet. The Master town sedan was quoted at Plattsburg, New York, at $732, and the Montreal price is $1,040. The coupe de luxe at Plattsburg is $775, and in Montreal $955. I find here a car described as the universal car, a new Ford. The price in Plattsburg of the standard coupe, 85 horsepower, is $688, and in Montreal, $867. The
4-door sedan de luxe, 85 horsepower, five passenger, is $836 in Plattsburg and $1,052 in Canada.
There are many others I could quote; the difference in price is pretty much the same. I will not take up time reading more prices, however. I will simply observe that the people have to face these vast differences, while in many instances the goods they import are of a kind not made in this countiy. We must all realize, I am sure, how important it is to this house to know the workings of a department of this kind; they should be thoroughly understood, both inside and out. Such a department should live in a glass house open to the public, so that the people might become familiar with its operations. There would then be no room for suspicion, and no one would fear that conditions not sanctioned by parliament existed.
There is another consideration. It is important for Canada that the maximum amount of revenue be collected by the department. Someone might tell me that the argument that the department should collect as much as possible is a strange one for me to use. I say it is important that the maximum revenue be collected. I know of only one way to bring that about, that is to allow the business to increase to its natural maximum, not to put any difficulties in the way. Everyone knows there is a maximum point, which is reached when conditions are mutually satisfactory. A lowering of price may bring more profit, but prices may be lowered too much and so a loss entailed. But there is always a point where price and cost and bulk of sales coincide to ensure the highest profit or the highest revenue. For that reason I believe this matter should be checked up very closely.
I have in my hand an official document, the report of the proceedings of a committee of the house, from which I should like to read three paragraphs. It is the report of the special committee on farm implement prices which sat last year. At page 1295 it says:
20.	That regulations of the Department of National Revenue, under the above provisions, have resulted in the inequality of treatment of importers of a like class and that the whole matter should be the subject of survey by the minister of that department.
21.	That these regulations have resulted directly and indirectly in the retention in the United States of profits arising out of the operations in Canada of certain United States companies and that these profits have been subjected to income tax in the United States instead of in Canada.
The Customs Tariff

22.	Tliat indirectly this retention of profits in the United States affected the price level of farm implements in Canada as the true profits arising out of their Canadian operations were not properly appreciated by the United States companies.
Two things have happened; prices of farm implements have been held at a higher level than they might otherwise have been, and revenue that should have been collected in Canada was collected in another country, a very undesirable condition of affairs.
I believe that a very interesting statement which I read the other day is true. It is found in a book by Albert Edward Wiggam entitled Marks of an Educated Man. The writer says:
The highest possible philanthropy and program of social welfare and moral uplift is the scientific organization of business. I think it is. We are in a business world, and when that business is badly organized everyone suffers. When business is efficiently organized everybody benefits.
I have not said that the business of this department is badly organized; but in view of what has taken place, I say it should be investigated by the house. The other day when the hon. member for Moose Jaw (Mr. Ross) was advocating in the house a regional tariff under the Department of National Revenue there was a good deal of opposition expressed in a nice way to that proposal. But we have had now for some years a regional tariff or a system of regional tariffs in Canada. I think it is the right hon. leader of the opposition (Mr. Bennett) we have to thank for that; I believe it was during his administration that regional tariffs were first adopted. Whether that is so or not, the principle has been adopted that not all tariffs are suited to conditions everywhere in this country. It is true that at the present time the regional tariff is confined largely to natural products; but there is no reason why, once the principle is conceded, it could not be extended along other lines.
Let me refer for a moment to other difficulties, other anomalies in the administration of the tariff. At page 948 of the proceedings of the committee on farm implement prices the witness, an official of the department, who was trying his best to give that committee a picture of things as they are, was asked:
Q. There has been no change since that time?
A. No.
Q. For Massey-Harris, that constitutes the position to date?	_
A. To date, the present ruling on which Massey-Harris are '-iporting.
[Mr. M. McLean. 1
Q. As compared with International Harvester Company-International Harvester Company get a twenty-five per cent discount on implements ?
A. Right.
Q. On tractors International Harvester Company get what?
A. Twenty per cent on all tractors except model WD40 on which the discount is twenty-five per cent.
Q. And on repairs International Harvester Company get what?
A. Repairs to above machines, consumers' list price less discount of thirty-five and twenty-five.
Q. What would that net? Will you figure that out, please ?
A. Fifty-one and one-quarter per cent.
Q. As compared with the net which you gave us of 42-62?
Mr. Macdonald: What you are talking about there, about the reduced price, the discount is 49-75.
That is said by one member of the committee. Another member said, "No." The witness answered, "fifty-one and one-quarter." Counsel for the committee said, "The discount is fifty-one and one-quarter."
Q. That is International Harvester Company? A. Yes.
Q. And the Massey-Harris figure, net, you gave a few minutes ago was what?
And the answer was, "42-62," as against 51| in the case of the other company. I shall read a paragraph or two more in order to indicate how that difficulty came about. Counsel for the committee asked:
Q. I must confess, Mr. Hooper, I do not follow you. If you take Massey-Harris Company in Canada, they allow their dealers a less commission than the International Harvester Company for the reason that the Massey-Harris absorb some of the local freight from the dealer to his customer. The International Harvester Company do not. They expect the dealer to take care of that unless he can pass it on to the farmer. So that their discount allowed by a company, but which is less than another company, is usually compensated by some other feature of the contract. _ Why would the department make a distinction between Massey-Harris and the International Harvester Company on a tractor or an implement or a part of either of equal quality value? Why should there be any difference at the port of entry when the Massey-Harris present, let us say for the purpose of argument, to bring it out clearly, a binder of equal quality value? Why should there be any difference in the basis on which that binder enters Canada in the percentage of fair market value of that binder in the United States?
A. The answer to that is, I think, that in 1935 the International Harvester Company became aware that that portion of the law requiring the value for duty purposes to be no less than the wholesale price had been repealed, and they requested the department to study their situation and consider whether a greater discount could not be given than the one under

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*which they were operating. That study was made, and the discount was established at twenty per cent off dealers' price and subsequently to twenty-five per cent. The Massey-Harris Company did not request any lower value for duty purposes than they had been operating on since 1917 and did not ask for any better discount than they allowed in their own sales in the United States, and we have accepted the price at which they sell to others in the United States as establishing the value for duty purposes.
Q. With the result that the department, while it changed its policy, or the basis on which it applied the existing law to the International Harvester, did not think it was their duty to pass that on to other members of the industry as a general ruling rather than a specific ruling applying to only one company?
A. No, we did not; and only now the department has lately under consideration a system whereby we would give one ruling to the entire industry. That has been the policy which has been advocated in the department, but it has not- yet been approved. It would be a departure from the procedure of years.
Q. You see what a very great weapon is placed in the hands of the administrative department of the government?
A. Oh, yes.
Q. You can see that?
A. I quite see that.
That bears out what I said, that it would be a departure from the procedure of years, that this was not framed specifically to do things it was meant to do, but, like Topsy, it " just growed."
I should like to continue with many more extracts of the same nature to prove to the hilt the contention we are making, that it is time to bring about a change in matters of this kind. I shall read just a few lines more from the proceedings before the same committee sitting the next day to that fiom which I have quoted. A request for information by correspondence was put in, and I want to say that the officials of the department had, probably rightly, refused to bring it in, but the minister saw that whatever was requested by the committee was promptly placed before it. I want to thank him now as I did then for his cooperation with the committee at every stage of the inquiry that we were conducting. But a matter of rubber tires for tractors came up, and the witness did not have the correspondence with him on the night in question. So on March 30, as reported at page 995, an explanation was given as to changes affecting rubber tires. The following letter was addressed to the chairman of the committee:
In respect to rubber tires for use on internal combustion traction engines, concerning which I gave evidence before the committee on Wednesday the 24th instant, I may state that these articles were first ruled as admissible as complete parts of the tractors on the 28th March,
1933.	A copy of this ruling is attached. This carried on until June 1936, when the ruling was changed classifying such rubber tires under tariff item 618b.
The oommittee has asked what brought about the change in the ruling. In this connection, after going over the files, and discussing the matter with the commissioner of customs and the dominion customs appraiser, I find that in the latter part of May or early in June, 1936, the commissioner of customs was interviewed with respect to this ruling by Mr. Berkenshaw, sales manager of the Goodyear Tire and Rubber Company Limited, and Mr. A. R. Caldwell, customs manager of that company. I believe the commissioner was also interviewed subsequently by either one or both of these gentlemen. The commissioner was unaware of the existing ruling and after examining the tariff files containing the ruling was of the opinion that the ruling was not correct, that the articles were more definitely covered by the provision in tariff item 618b for rubber tires, and changed the ruling in a letter to the Firestone Tire & Rubber Company of Canada Limited, dated the 10th June, 1936, file No. 181155. I am herewith submitting copies of representative departmental letters on this matter, including the letter to Firestone Tire & Rubber Company of Canada Limited and previous letters on the subject. There are, of course, other letters but they are all of a similar nature.
I want to point out that the date on which that change was made is significant. Apparently the minister was not aware of it; there is nothing said about that, though naturally he will feel obliged to take responsibility for it. Later on, in answer to questions by myself, this is the evidence that was given:
Q. I am referring now solely to farm tractors, free of duty, coming in with iron tires. Now, later on the manufacturers put on rubber tires?
A. Yes.
Q. Was there any difference made at any time at the beginning with regard to the importation of rubber tired tractors?
A. No. From the first time the question arose the department ruled that the big low-pressure tires that were adapted only for use on tractors were a complete part of the tractor.
Q. That was always free?
A. On the ones under $1,400.
Q. Yes, of course. Then, later on when they began importing tires for repair purposes, for replacement purposes, were they free at any time?
A. The same situation followed through.
Q. What made the change that caused the appeal to be made to the Tariff Board?
A. Well, the department in its wisdom decided it might not be right and they changed.
Q. First, they decided they were free?
A. Yes.
Q. And then they decided they were dutiable, and then an appeal was made to the tariff board, and the result of that appeal was respected and they were brought in free?
A. Yes.
Q. When would you say that the change was made from free to dutiable?
A. I think it was in June, 1936.
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Q. June, 1936, that they were made dutiable?
A. Yes.
Q. Will you tell me how the department made up its mind or came to that conclusion?
A. Well, the tire item is not what we call an n.o.p. item. That is items which are general items and which are not all inclusive. The abbreviation "n.o.p." means "not otherwise provided for." We have an item 618-B which reads, "tires for vehicles of all kinds" without that abbreviation "n.o.p." And after we reviewed the case we decided that maybe we were not right; that it was a specific item and that the tires were actually specifically provided for there and we accordingly changed our ruling.
Q. Would you mind answering me two questions in that respect? I should like to know who made the first ruling and who appealed against that ruling, how the appeal came to be made that led to the reconsideration of the item, and then who made the item dutiable without apparently getting a legal interpretation, or if you did get a legal interpretation from the justice department, I should like to know the history?
A. We did not get a legal interpretation.
So a ruling that had held for some years was thrown into the discard apparently because a representative of a tire and rubber company came along and convinced the department that that should be done. A little later in the same day the question as to how this came about was still being gone into. The witness was not quite sure; but a former minister of trade and commerce, the present hon. member for Kootenay East (Mr. Stevens) was a member of the committee, and he said:
I think we can get at it, a blind man almost could get at it; one of the tire companies applied for it. I don't suppose there is any doubt about it. Bring the record and let us see it. I think Mr. McLean has put his finger on a very important thing. What right has the dominion appraiser or anybody else got to change an existing practice established under a law made by parliament?
The greatest significance there lies in the fact that at the time, in June, 1936, when that change was made by the commissioner and the customs appraiser, at the request of an official of a tire and rubber company, this house was sitting. Hon. gentlemen were here, and they had authority to deal with the matter, if it was considered necessary that that should be done. The result of changes of this kind means that a bureaucracy is growing up in our country. Our people do not trust bureaucracies. They have the wisdom of centuries behind them in refusing to do so, because under bureaucracies changes can be made otherwise than in the full light of day. This is bad for the country and bad for the morale of the officials. I am satisfied that it is bad for administration and, as the

hon. member for Moose Jaw (Mr. Ross) said, it puts an intolerable load on any minister of the day.
I hold in my hand a few thoughts along that line written by one of the most prominent men of Great Britain which, however, I am not going to read at length. Lord Hewart of Bury is the author of a book entitled The New Despotism, and hon. members would find their time well spent if they looked over some of the arguments contained therein. Lord Hewart deals with an act of parliament that was passed in 1925, which gave to the minister in charge of municipal affairs-that is not his correct title, of course-power to remove, by order, any difficulty which might arise in the application of the act, together with other powers. Lord Hewart points out that the case would have to be serious before any minister would actually undertake to use such powers; nevertheless those powers were given to a minister. The learned writer of the book thought it quite extraordinary that parliament should confer that power on any minister for a period of four years. As the hon. member for Moose Jaw has shown, this power has been growing in Canada since confederation, and is not limited to any particular period. The court in Britain before which an action arising under the act was heard, made this reference in its unanimous judgment:
This I think, though I say it with some hesitation, may be regarded as indicating the high water mark of legislative provisions of this character. It is obvious that if this court had taken another view of the case presented to us to-day and had decided to quash this order as having been made ultra vires, the minister might to-morrow, under the provisions of section 67, have arrived at the same end by making an order and removing the difficulty.
Then Lord Hewart went on:
Now it will probably be admitted that matters must have gone rather far before a minister thought fit to propose, and parliament, either deliberately or by inadvertence, consented to approve a scheme that empowered a government department, on grounds of expediency, to make departmental orders modifying the provisions of the statute which conferred the power. A little inquiry will serve to show that there is now, and for some years past has been, a persistent influence at work which, whatever the motives or the intentions that support it may be thought to be, undoubtedly has the effect of placing a large and increasing field of departmental authority and activity beyond the reach of the ordinary law. Whether this influence ought to be encouraged, or whether it ought rather to be checked and limited, are questions into which, for the moment, it is not necessary to enter. But it does at least seem desirable that the influence itself should be clearly discerned, that its essential nature and tendency should be quite

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plainly exhibited, and that its various methods and manifestations should not be allowed to continue and multiply under a cloak of obscurity.
And mark this, Mr. Speaker:
The citizens of a state may indeed believe or boast that, at a given moment, they enjoy, or at any rate possess, a system of representative institutions, and that the ordinary law of the land, interpreted and administered by the regular courts, is comprehensive enough and strong enough for all its proper purposes. But their belief will stand in need of revision if, in truth and in fact, an organized and diligent minority, equipped with convenient drafts, and employing after a fashion part of the machinery of representative institutions, is steadily increasing the range and the power of departmental authority and withdrawing its operations more and more from the jurisdiction of the courts.
Later on, dealing with very much the same thing, he adds:
But other considerations apply if a mass of evidence establishes the fact that there is in existence a persistent and well contrived system, intended to produce, and in practice producing. a despotic power which at one and the same time places government departments above the sovereignty of parliament and beyond the jurisdiction of the courts. If it appears that this system springs from and depends upon a deep seated official conviction, which in turn it nourishes and strengthens by each successive manifestation of its vigour, and this, when all is said and done, is the best and most scientific way of ruling the country, the consequences, unless they are checked, must be in the highest degree formidable.
That there is in existence, and in certain quarters in the ascendant, a genuine belief that parliamentary institutions and the rule of law have been tried and found wanting, and that the time has come for the departmental despot, who shall be at once scientific and benevolent, but above all a law to himself, needs no demonstration. There is an agreeable story, not too old, of a distinguished Anglo-Indian civilian, who, returning home on leave after a prolonged absence, passed the houses of parliament on his way from Victoria to Charing Cross. "What place is that?" he asked. "That, sir," was the answer, "is parliament-the houses of parliament." "Really," he exclaimed, though his exclamation was in fact slightly different, "does that rubbish still go on?" Everybody knows the frame of mind, and everybody has met some of the teachers in that school.
But another aspect of the matter is illustrated by a well known conversation which took place, not so many years ago, between a distinguished treasury official, if the epithet is not tautologous, and the Chancellor of the Exchequer. It happened that matters had not gone quite smoothly in the House of Commons that evening. The departmental specialist was not, for once, able to say to his chief, after the rising of the house, with that air which as nearly approaches a tone of triumph as official decorum permits, "well, sir, we have got our clauses." What he did say was that he wondered whether all this palaver was really
necessary. After all, what was the good of the House of Commons? And how perfectly useless was the House of Lords! Why should the work of the expert be always at the merey of the ignorant amateur? Why should people be allowed to try to govern themselves when it was manifestly so much better for them to be governed by those who knew how to govern? "Seriously," he asked, "could not this country be governed by the civil service?" "Undoubtedly it could," replied the Chancellor of the Exchequer, "undoubtedly it could. And I am quite sure that you and your colleagues would govern the country remarkably well. But let me tell you this, my young friend: at the end of six months of it. there would not be enough lamp posts in Whitehall to go round."
I know that officials of the Canadian civil service do not look on the public business of Canada in that way, nor do they take that attitude towards the House of Commons, but there is always a possibility of bureaucratic methods developing when there is more or less of a mystery about rulings made by departments. With the multitude of rules and changes and classifications in the work of this department, it is possible that that is what might happen. It is all important for this country, from the standpoint of trade and industry and revenue, that there should be no suspicion of that kind. It is too important that the people of this country should retain their faith in democratic government wherein all the people are represented and wherein all the members of parliament take part in making the laws. For this and other reasons, I second the motion which has been proposed.


Hon. J. L. ILSLEY (Minister of National Revenue):: Mr. Speaker, I appreciate the
tone of the two speeches that have just been made in support of this resolution. On reading the resolution some time ago I thought that possibly an attack upon the administration of the department was to be made, but hon. members who have addressed the house have made it abundantly clear that they have in mind defects in the system rather than the administration of the system by the department. I am pleased that that is the case because, having had two years' experience as the head of the Department of National Revenue, and having worked with the senior and other officials of the departs ment, I have no hesitation in paying them a sincere tribute for their efficiency, for their honesty and for their integrity and bona fides. I have come in contact with many hon. members of the house in connection with departmental matters and also with many members of the business public of Canada and I think it is safe to say that the Department of National Revenue now commands and has
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commanded for years the respect of the business and industrial communities of Canada.
I should like to make a few observations with regard to the criticisms of the system that have been made by the mover of the resolution. I believe the house realizes that this is an intricate and difficult subject with which to deal. I am afraid it is also a dry subject and that being the case I do not intend to read any of the sections of the act or any of the regulations passed under the provisions of the act. I want to express in the simplest possible language-language that will be understood by laymen generally-the principles that underlie the Customs Act.
The officials and the minister of the Department of National Revenue have to do with two difficult classes of problems, that is, with valuations and classifications. The mover of the resolution referred mainly to valuations, while the seconder had something to say about classifications. Needless to say investigations must be made and decisions rendered from time to time by the senior officials and the minister in classifying goods under one or another of the items of the customs tariff and in valuing goods for duty purposes. I do not know of any system of customs administration that would get rid of the necessity of these departmental decisions.
For instance, take one matter referred to this afternoon by the seconder of the resolution. He referred to the classification of rubber tires for tractors. In this connection representations had been made to the department, and the senior officials, in the course of their respective duties, were convinced that a mistake had been made. They altered the classification, just as has been done from time to time in connection with other items. Otherwise it would be impossible for the business of the department to go on. An appeal was taken from this decision to the tariff board and the tariff board supported the decision in part and reversed it in part, and the matter was settled. The case was a fairly normal one, and I do not know of any system of customs administration in the world which would do away with the necessity of decisions of this kind being made by departmental officials.
I want to refer now to valuations. The basis of our system of valuations is a rule which has been established in this country since at least 1883, that the value for duty purposes shall be the fair market value of the goods, when sold for home consumption, in the market whence they were imported. I know that many Canadian people believe that

the ad valorem rate is reckoned upon the cost of the goods imported. They think that if goods can be bought for one dollar in another country and the rate of duty is twenty per cent, the duty will be twenty cents. That is an inaccurate way of stating the case. The basis of our valuation for duty purposes is not the invoice price, not the cost; it is the home market value. As I say, this has been the case for the last fifty-five years, and I believe the same rule applies in other countries. If this is to be continued as the basis of our customs valuations, it then follows that investigations must take place and decisions be arrived at as to what is the home market value.


Mr. HOWDEN:: What does the minister mean by "home"?


James Lorimer Ilsley: I mean the value in the country of origin, the country whence the goods were shipped at the time they were shipped to Canada. This is defined very precisely in section 35 of the act.


Mr. HEAPS:: Is that the selling price at home?


James Lorimer Ilsley: It is the fair home market value.


Abraham Albert Heaps: Would that be the selling price?


James Lorimer Ilsley: It is not necessarily the selling price, as I shall explain in a minute. In perhaps ninety-five per cent of the cases the home market value would be the invoice price, but there are some cases in which the two prices would not correspond. There are of course levels of prices in the home market, but that opens up another question into which I did not think it would be necessary to go this afternoon.


Major James William Coldwell: Does that also apply to valuations made on used cars coming into Canada?


James Lorimer Ilsley: Used cars are prohibited.


Major James William Coldwell: When they do come in.


James Lorimer Ilsley: With the hon. gentleman's permission, I will ask the house to keep in mind section 35, which contains the rule to which I refer and which is the basic, fundamental rule of customs administration. There are two or three other sections, 36 and 41 and 43, which the house might also bear in mind. Sections 36 and 41 are subsidiary to section 35 and really are designed to carry out the purposes of section 35. Section 36 provides that the value for duty shall not be less than the cost of production in the country of

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origin, plus a reasonable advance for selling cost or profit. That section is based upon the theory that the selling in the home market at less than cost of production plus reasonable advance is a temporary selling, a distress affair, a practice which if continued will put those selling the goods into bankruptcy and should not be accepted by this country as the fair home market value. That is the purpose of section 36. In the administration of that section, if the department receives a complaint that goods imported into this country are being purchased at less than the cost of production plus a reasonable advance, it is necessary for the department to make investigation as to the cost of production in the country of origin, prepare a report and then, possibly, make a ruling. So there again is the necessity of departmental or ministerial investigation and decision.


Mr. McCANN:: Who determines the cost of production in the home market?


James Lorimer Ilsley: The departmental officials. The application of it is very limited. Investigation is made upon complaint, and it is a very minor, subsidiary section.


Mr. DEACHMAN:: Where does the complaint come from?


James Lorimer Ilsley: Ordinarily the complaint
would come from Canadian competitors of the foreign suppliers.


An hon. MEMBER:: I thought so.


Alexander McKay Edwards: Why would it not?


James Lorimer Ilsley: I do not understand why they should not complain if they want to.


Robert John Deachman: The question I raised is due to this. Suppose a manufacturer is bringing in raw material for his own use, and a competitor complains; where does he get his information? How does he get the information about the importation of which he complains?	From the departmental
officials?


James Lorimer Ilsley: There are various ways in which he might realize that importations were taking place at a low price. He would know the price at which they were being resold in Canada. There are complaints, anyway.
So much for section 36. The third section I referred to was section 41. That section applies to cases where there is no established home market value, and to certain other peculiar cases, and under the circumstances outlined in the section the minister is authorized to fix a fair value. The principles upon which values are fixed have been worked out with great care by the department over
a period of years and so far as I know there is no secret as to what those principles are. As I have said, section 41 is not very important, but it is necessary because, if there is no home market value, if there is no consumption in the home market, or if goods are not sold in the home market under conditions similar to those which govern their importation into this country, somebody has to fix what is the fair value for importation.
Another section of the act, namely section 43, is based upon entirely different principles; it permits the Minister of National Revenue, under the authorization of the governor in council, to make arbitrary valuations. It is at variance with the principle underlying the Customs Act. This section was inserted a few years ago. The history of it was given this afternoon by the hon. member for Moose Jaw (Mr. Ross). During the last two years it has fallen almost into disuse except in respect of fruits and vegetables, but it is applied to those articles and is the only system that we have been able to work out to control their importation, if it is desirable to control it. I do not know of any better system. At any rate that is the main function of section 43.
When this government assumed office there were between twenty-five and thirty-five valuations of manufactured goods under section 43. With the exception of three, these have all been cancelled in so far as importations from countries entitled to the benefits of the most favoured nation and intermediate tariffs are concerned. So the main use of the section is, as I have said, in its application to fruits and vegetables. Although this is a matter of policy, with which I as an administrator am not primarily concerned, I believe that the justification of this section for application to other than fruits and vegetables is as an emergency instrument. Indeed I applied it once for a short period as an emergency section, in regard to the importation of coronation souvenirs, and there was practically no complaint from the people of Canada. That was, I thought, a legitimate application of section 43, a section which is at variance, as I have said, with the principle of section 35.
In a reform of the Customs Act such as the mover of this resolution possibly has in mind, the first question that must be answered is this: Shall we retain or shall we abandon home market value as the basis of our customs valuation? Once that principle is decided everything else can follow along naturally. Some countries apply a different principle. Great Britain has as its basis cost plus insurance plus freight, and that system has some
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advantages. There is one disadvantage, in a country situated as Canada is, in this cost basis. A home market basis is very much harder to evade than a cost basis. A cost basis on customs valuation makes rebates as between purchaser and seller very much easier, and our geographical position is such that it would be, I feel sure, a very serious problem for Canada if Canada were to abandon the home market basis and adopt the cost basis.
In the administration of the Customs Act the government and the minister should keep in mind certain broad principles. The gentlemen who have spoken are quite right in saying that the act should not be administered, the tariff should not be applied, by the department primarily as an industry protecting device. The protective feature is of course present in our tariff, but the department is the Department of National Revenue, and our primary concern is to apply the tariff that we have to apply, to administer it strictly, regardless of the effects of its application on industry in the country or outside. It is very difficult to get people to appreciate or understand that point of view. We are continually being besought to place goods in a low classification because it would help the importer, or in a high because it would help the manufacturer; or we are asked to make a low valuation to help the importer or a high valuation to help the manufacturer. But these are not the considerations which should govern the department. These are matters which should be defined in the act, and then the act Should be strictly administered, because any other administration would be an unfair one.
I have laid down in two or three speeches that I have made on the subject of the department in the last two or three years the principles which I have tried to follow and have the officers of the department follow.
The first principle is that the department should be regarded primarily as a revenuecollecting agency, rather than as an industry-protecting agency. Protection of industry will follow collaterally, of course, because that is the design of a protective tariff; but our concern is to collect the revenue which the law says we shall collect, in accordance with the tariff.
The second principle is that no unnecessary administrative barrier shall be placed by the department in the way of imports. I am free to admit that the tariff can be administered in a way that will make importation difficult, and there have been times when this has been done. Your regulations may be so strict that certain commodities cannot be imported, and

delays in appraisals and various devices might be resorted to, if we wanted to do so, which would be technically within the law but would make importations difficult. That could be done under any system. Parliament cannot help it. It has to be left to the good sense and principles of the government of the day. But I do not think it is sound administration to erect unnecessary administrative barriers in the way of imports. In other words, we should not be astute to devise regulations within the law for keeping imports out, nor should we manipulate the law or regulations to do so. That principle has been laid down and is being followed by the department at the present time.
The third principle is that importers should be able to ascertain in advance, with as much certainty as possible, what they will be obliged to pay in the way of duties upon any importation. It is not possible to do that completely at times because they must be prepared to declare, and if necessary to show, that they are importing at the fair home market value. This may seem difficult to hon. members, but it is not so in practice. Usually importers will know pretty well the prevailing price in the country of origin, and if they import at that price they are safe; there is no question of what they have to pay. The instances given by the mover of the resolution, in which he got a forty per cent tariff up to a 150 per cent tariff, are supposititious cases; they are not actual cases, and I do not think they would happen in actual practice. If by $100 worth of goods he meant goods worth $100 in the home market, a forty per cent duty would mean that an importer would pay $40 not $100, $120 or $150. So I think the difficulties of administration in that respect were unduly stressed.


Mr. YOUNG:: If the minister will permit a question, was there a recent ruling with regard to rubber footwear, and if so, under what section of the act was it made?


James Lorimer Ilsley: Rubber footwear is one of the three articles which are still subject to valuation under section 43. The value was lowered under the recent ruling because it was considered by the department that it was unduly high. That is substantially what was done in regard to rubber footwear.
Just one other matter. The impression was given, I fear, this afternoon, that the discretion of the officers of the department and of the minister is unchecked, unregulated, uncontrolled. Lord Hewart's book, The New Despotism, was cited, and the house was given to understand that we are a law unto ourselves. That statement should be qualified

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because, at every point where it has been possible to do so an appeal to a judicial tribunal has been provided. The old tribunal that heard the appeals was the board of customs, but since 1932 the tribunal which hears the appeals is the tariff board. The tariff board has a degree of permanency and a judicial cast which does not apply to the officers of the Department of National Revenue, who are crown officials collecting revenue for the crown; but the department's valuations, their made-in-Canada rulings, their classifications, their everything, in fact, except rulings under section 41, are all subject to appeal to the tariff board, and that has been provided by changes in the law or by order in council since the present government took office. So it is not correct to say that our discretion is uncontrolled or unregulated. Other countries have the same system.
As to the instances given to-day, it is only fair to say that we did not change the duty paid on rubber tires except in so far as we were right in doing so, because, as I say, an appeal has been provided to the tariff board.
Reference has been made to the home consumption drawback system. I do not know whether it is incumbent upon me to enter into a defence of that system; in fact, I do not know whether I believe in it or not myself. Under our tariff a great many articles are dutiable or not according to the use to which they are put after they are imported. The officials of the department do not like these items, and I do not like them, because they make it necessary for the department to police importers. When an importer says he is going to use a certain yarn for the manufacture of silk, and thereby gets it in free, it is necessary for the department to make a check on him to see that he uses it for that purpose and that he does not resell it. These are not regarded as desirable items from an administration standpoint. But I do not think it makes very much difference if you have items like that, once you admit the principle involved, because whether you do it by items in the customs tariff or by a system of domestic drawbacks the result is the same. As a matter of fact, the system of domestic drawbacks is safer for the crown because the crown collects the money in the first instance, and the importer is then obliged to show that he put the goods to the use which qualifies them for drawback of part of the duty before he can get that duty returned. I am sure, however, that the government will be prepared very seriously to consider a change, and perhaps a repeal, of the schedule
relating to domestic drawbacks. It might, however, entail the addition of a corresponding number of items in the customs tariff to effect the same end.
The mover of the resolution made some reference to the administration of drawbacks, and intimated that perhaps the greatest wheedlers got the most in drawbacks. I want to assure the house that the amount that an applicant for drawback gets does not in any sense depend upon his wheedling ability. The payment of drawbacks is much more severely and strictly regulated than that. Drawbacks are paid when proof is placed in the hands of the department that the goods qualify for drawback, and a large number of auditors check up on the facts that are presented to the department. After that the auditor general has access to our drawback records, and at times has questioned the payment of drawbacks by the department, whereupon the matter has been gone into anew to see that we were keeping strictly within the law. I do not believe that there is any looseness in the payment of drawbacks. The payment has to pass the treasury board and the auditor general, if he requests it, and council. It is regarded as an important matter to be paying these sums, and they are paid out in as strict a way as they would be paid out by any business institution in the country.
I come now to the specific proposal of the mover of the resolution, that is that the operations of the customs division be subject to review by a parliamentary committee. Personally I regard it as an unusual request, for this reason. Ordinarily, unless there is some charge of wrong-doing on the part of the officials of a certain department, one does not ask for a parliamentary committee to investigate that department. The hon. gentlemen who have spoken to-day have made it clear that they do not intimate or charge that anything of the sort has been done; they simply say that they would like to be given the means of finding out whether we are carrying on as we ought to do. I think that in essence the resolution before us to-day is a challenge to the system which prevails and not to the administration of that system.
In my opinion, a parliamentary committee is not the proper body to go into that question. That is a matter of principle which will have to be dealt with upon the introduction of legislation into the house. For several months now-


Alexander MacGillivray Young: That would be better done after we knew exactly what applied.

The Customs Tarifj


James Lorimer Ilsley: I will give my own views in that respect. Since May last an interdepartmental committee has been working on the revision of the Customs Act. The committee has met weekly since that time. It consists of the Chairman of the Tariff Board, Judge Sedgewick, Mr. Norman Robertson of the Department of External Affairs; Mr. Hector MacKinnon of the Department of Finance; Mr. H. D. Scully, Commissioner of Customs, and Mr. C. P. Blair, who for a great many years was assistant commissioner of customs. This committee has done a great deal of work on the Customs Act and has advanced the work to this stage, that it is about to circulate its proposals to other departments which are interested in customs administration. When they receive the comments and criticisms of these other departments they will prepare a report on the act and make that report to me, and I shall then introduce the consolidated and revised Customs Act at the next session of parliament. When that legislation is introduced these questions of principle which have been gone into to-day by hon. members will certainly have to be considered at length by the house. I do not know whether the act will be referred to a special committee or to the committee of the whole house, but that will be the time to consider changes in principle and a change in the system if such a change is thought desirable. In view of the fact that the work of revision is under way, I hope that the mover of the resolution will not press it this afternoon.
I think the house is indebted to the hon. member for plunging into the Customs Act and bringing on this discussion. Unfortunately, as the seconder of the resolution said, a great many people fight shy of such a dry subject, and any member of the house who will interest himself in the administration of the act is entitled to credit for so doing. I would suggest, if it is agreeable to the mover of the resolution, that this discussion has served its purpose for the time being; that the resolution be withdrawn, and that this matter be dealt with next year when the Customs Act is before the house.


Major James William Coldwell: First of all I should like to congratulate the hon. member for Moose Jaw (Mr. Ross) upon having introduced this resolution, and I hope that this discussion will not close now; for it has not been a discussion. We have heard mly three speakers, the mover and seconder Df the resolution and the minister, and I think it would be regrettable, in view of the fact that legislation will be ;nt'-oduced next session,

if this matter did not receive some consideration from different viewpoints in the house. I hope that the mover will not withdraw the resolution, at least until it has been further
discussed.
I have been interested in public affaire ever since I went to western Canada, nearly thirty years ago-twenty-eight to be exact-and during that time the tariff has been discussed in season and out of season. I came to the conclusion some fifteen years ago, when I was associated with the old Progressive movement, that as far as I could see the tariff had been used more or less as a debating issue or a smoke screen by the two political parties, and that there was in reality very little	difference	in their	administration oftariffs. That impression has been confirmed in the past few years. I have often been taken to task for the statement that the only	difference	I could	see	between thepolicies of the two parties with respect to the tariff was that the Conservatives always advocated a high tariff and that the Liberals when in power maintained a tariff which was high. I could not see the difference between the two. Someone suggests to me, a tariff that was not too	high. I	think	I shall leaveit as	I stated it	originally; for	I think that
is the fact.
The mover of the resolution has performed a service in bringing to the attention of the house the fact that it is not altogether the tariff or the tariff schedule that really counts, but the valuation of goods for duty purposes. The house should go into the matter of valuation for duty purposes much more thoroughly than we have gone into it this afternoon. I was on the farm implements committee last year. The hon. member for Melfort (Mr. McLean) referred to some of [DOT]the statements made there, and I recollect how difficult I found it to follow some of the arguments as to the way in which valuations were made for duty purposes.
The mover of the resolution gave certain dates as to when the power of parliament over customs duties had been restricted, if I may put it in that way, by the granting of further power to the minister or to the commissioner of customs. I noted that several of the years he mentioned, 1904, 1907, 1922, 1936, 1937, were all years when we had a Liberal administration in power, and that to a large extent the Liberal party is responsible for the method of valuation and the tariff policies that we now have. And in view of the fact that throughout all these years the tariff has been made an issue in western Canada and throughout Canada-and I say an unreal issue-I would point out to the mover and seconder of the resolution, as well

The Customs Tariff
as to other hon. members, that to-day we have in office a Liberal government with the largest majority which any government has had since confederation, and they should either carry out their declared policy in regard to this matter or drop the discussion altogether.
The other day the hon. member for Melville (Mr. Motherwell) outlined the history of the matter from the time of confederation, and, if I remember correctly, what he said was to the effect that in a large measure all we have succeeded in doing is dividing the people and creating a lot of hard feeling. That is true. I should like to see the house tackle the economic problems that confront the country. If this government do not intend to do anything in relation to the tariff, then let us tackle some other problems that need to be tackled and cease dividing our people on an issue which apparently is an unreal issue.
Let me add that regulations made by the department often undo the thing that parliament intended to do. I have in mind particularly the $100 exemption which was granted to returning tourists. Regulations have been issued by the department which have negatived that privilege to a very large extent. Last year I spoke of a case of the importation of a set of rubber tires, which could be brought in in the car but could not be brought in on the wheels of the car. This year I was crossing the boundary into Canada and the official asked me if I had anything to declare. As a matter of fact I had not. In the course of conversation with this official he told me of a new regulation which had been put into effect last summer, that if you bring a pair of shoes or an article of clothing bought abroad into the country in your baggage, it comes in free, but if you wear it when you come in it immediately becomes dutiable. Now since most people who cross the border into say the United States and stay forty-eight hours may buy shoes or shirts or some such articles and wear them, is it fair or reasonable or proper that such a person buying something for his own use should pay duty on it, whereas if he brings in something in his baggage, possibly for someone else, it may come in free of duty? I heard an hon. member on the Liberal side say, "Yes, that is fair." I say it is unfair, because it negatives the desire of this parliament to grant that exemption.


Alexander MacGillivray Young: It is stupid, too.


Major James William Coldwell: There are other regulations of a similar kind. I have a friend who was honest enough to declare a shirt that he bought in the United States. When he crossed again some time later, a few days within the four months' period, having bought a little
radio in the United States and being honest enough to say he had bought the shirt on the former occasion, this made the radio set become dutiable. Now the intention of this parliament in enacting that provision in the 1936 Canada-United States trade agreement, was that it should be given as a privilege to the people of Canada who went abroad on a visit to bring back goods to the value of $100 free of duty.


James Lorimer Ilsley: May I ask the hon. member, if he were the minister administering the act, not an outsider without responsibility, would he not feel obliged to keep within the wording of the item, rather than giving it what he calls a fair construction which might not be within the meaning of the tariff? Would he not feel that that was the proper thing to do?


Major James William Coldwell: I am not criticizing the minister; I am criticizing the system. I do not think what I have said is amiss, because if a man enters Canada wearing a pair of shoes bought on a visit to the United States, surely those shoes are for his own personal use, and that was the intention of parliament when it adopted that provision.


James Lorimer Ilsley: The item says "contained in the baggage."


Major James William Coldwell: Well, someone once said that the law is an ass. If the difference between bringing in something in baggage or wearing it on one's person makes it liable to duty then I would agree.


James Lorimer Ilsley: I do not know what our ruling is; but if the hon. member will bring the matter up in connection with the estimates, I shall look into it and tell him what the ruling is.


Major James William Coldwell: I should be glad if the minister would look into the matter. I think he will find that what I say is true.
There are some other points that I should like to discuss, but I see it is six o'clock.
At six o clock the house adjourned, without question put, pursuant to standing order.
Thursday, February 17, 1938