June 6, 1919

UNION
UNION

Edgar Nelson Rhodes (Speaker of the House of Commons)

Unionist

Mr. SPEAKER:

It is understood that the minister has spoken.

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UNION

Alfred Ernest Fripp

Unionist

Mr. FRIPP:

I will withdraw that statement, Mr. Speaker. I do not purpose to make a speech, but I purpose to offer one or two observations. I am informed not only by merchants who have had dealings with the War Purchasing Commission, but also by purchasing agents of uie different departments, that the operation of this War Purchasing Commission has not been a success.

For example, I am informed that they ask for tenders for certain commodities, returnable on a certain day, but that they do not order the goods until three or four months afterwards. That is to say, no time is stated within which the goods must be delivered if the tender is accepted. The result is that it is impossible for intending tenderers to give the better price, because they do not know the date of delivery, and for that reason the War Purchasing Commission has been paying much larger prices for goods than would be paid if the

purchasing was done upon a more businesslike basis. In fact, I am told that the business of the War Purchasing Commission has been managed by one or two clerks, and that business men who have dealings with them find the commission very unsatisfactory as to prices, date of delivery, and general quantities required. On the other hand, I am informed by purchasing agents of the departments-perhaps more or less in confidence-that they were able to purchase more advantageously for the Government when they purchased solely for their own departments; that they got better delivery and better prices, and that the goods were superior. I am also informed that local purchasing is practically cut out; that the War Purchasing Commission have been buying largely in the United States and that they refuse to recognize local agents for the supplying of goods manufactured in the United States. The result is that a large number of mercantile agents have been unable to do business with this commission. I bring these matters to the attention of the House because 3D think that before we embark upon a scheme which means a large expenditure of public money in the payment of large salaries to members of this commission and its staff, we should investigate the matter more carefully and see whether the system is any improvement over the one that was in vogue prior to the creation of the War Purchasing Commission.

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UNION

John Harold

Unionist

Mr. JOHN HAROLD (Brant):

Mr. Speaker, before the Bill goes into Committee I should like to make a few observations dealing with the principles of this measure. You will agree that this is one of the most important subjects from the business standpoint that has been brought before the House this session. I think we should concern ourselves more about the soundness of the principles which underlie this Bill than about the question whether some of the details in connection with the manner in which we have been purchasing recently are an improvement on the methods of the pa*t.

We are departing, by this Bill, from the procedure that has been adopted by the War Purchasing Commission, in that a new organization is being set up. We are combining in one department the experts and others who have been looking after the purchasing in the different departments, in order that these specialists may devote their attention and abilities to work which will benefit all departments. Let me illustrate.

During the fiscal year ended March 31,'1919, provisions were purchased in fifteen departments, dry goods in sixteen, hardware in eighteen, mechanical goods in eighteen, drugs, chemicals and scientific articles in sixteen. This Bill proposes that men shall be engaged as specialists in these different branches of purchasing. One man, for instance, will be an expert on groceries and provisions. It will be his duty to

4 p.m. study the markets, to know the goods, to find out when it will be most favourable for those who are able to tender to supply the goods to the Government. He will select articles as standards that are most generally used, in order to permit a larger number to submit tenders fbr the supplying of those goods.

Another thing we should consider is that the goods themselves must be carefully inspected; tests and analyses of certain articles will be necessary. This commission can better employ these experts and get much better general results in that respect. I know of an instance where a manufacturer was asked to tender for a certain article. He tendered at a wholesale price to the War Purchasing Department, but they purchased the goods from a jobber at a higher price. Now, the Purchasing Department were led to believe that the goods they were purchasing represented better value than those which the manufacturer in question offered to supply; but it turned out that the goods were the same as those bid on by the manufacturer. I do not blame the War Purchasing Commission for that, but under the new system that difficulty would be overcome.

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UNION
UNION

John Harold

Unionist

Mr. HAROLD:

If a man deceived the department, it would be known to all departments, whereas if he was dealing separately with different departments it might be known only to one. Under this system the standard of the goods will be set down, samples will have to be submitted, and if the commission does its duty-and I believe it will; if it does not, it is for the House to see that it does-they will see that if goods bid on are claimed to be superior, those goods must be proved to be superior. I think, therefore., that the arguments advanced with regard to certain defects in the purchasing system will really tend to strengthen this Bill in the estimation of the House.

The people are looking to the Government to set an example of efficiency and justice

in the conduct of the business of the country. We are undertaking responsibilities in a business way which we never thought would be necessary. We have undertaken the operation of great railroad systems, and if this Government does not adopt a sound, honest, and efficient policy with regard to such business as the purchasing for the different departments, the country will not have confidence in its ability even to direct, through its officials, the National Railway System

I have had some experience in connection with the organization of just such a department as this. A large business which was organized some twenty years ago and which controls a number of amalgamated factories, saw the advisability of uniting the purchasing branches of the various departments in a central head office. Accordingly, they adopted that system, continued it ever since, and have found it most successful. The point brought out by the President of the Council (Hon. Mr. Rowell) with regard to the desirability of buying in quantities was one of the advantages which commended itself to the firm.

Moreover, the requirements of the different departments are varied, and considerable loss will result to the country unless there is some method of transferring goods from one department to another in the case of there being a surplus stock on hand. It is the duty of this commission to know the stocks of goods in the various departments, and to see that goods are transferred from one department to another if it is to the advantage of the country that that should be done.

This is an opportune time for this ques-* tion to come before the House. Yesterday the Budget was presented by our able Finance Minister (Sir Thomas White) in a masterly way. He advised us to produce and to save; and in adopting, the day following the Budget, a system of purchasing which, in my opinion, will save this country millions of dollars, is establishing a very good object lesson.

I had the privilege a short time ago of calling at the offices of the War Purchasing Commission where I had an interview with Mr. W. P. Gundy and I wish to endorse the words uttered by the President of the Privy Council (Mr. Kowell) with regard to the services of the late Mr. Gundy to Canada and also with regard to the services of the other gentlemen who gave their time untiringly to the work of this commission.

I was tela that when the commission first asked for prices on typewriters, they received from all the companies the same price based upon the price for a quantity of ten. The commission protested against this and said that as the Government was a very large purchaser it v/as entitled to a further discount, and the commission were given a further discount of ten per cent which represents a very substantial saving. I was also informed that in their purchases of Kraft paper which are very large, they were able to buy it at ten per cent less than any one else.

With regard to boots, since the establishment of the War Purchasing Commission in May, 1915, over two and a quarter million pairs of boots have been purchased. When tenders were called in 1918, the boot manufacturers blamed the tanners of leather because prices had advanced so much, and they in turn, blamed trade conditions. By co-operation with the War Trade Board, a fair price for leather was arranged with the tanners; a fair price for boots was then arranged with the makers, and I give the House these figures as an instance of the work of the War Purchasing Commission in this large item which is much more important than some of the smaller ones to which they could not give the same attention. The United States' boots cost $6.45 per pair as against our price of $5.40 for Canadian pattern, and a3 regards British War Office pattern, the United States' price ranged from $7.15 to $9.05 per pair according to size as against our price of $6 for all sizes. That demonstrates that the War Purchasing Commission have done a most useful service to Canada during the past few years.

Purchases amounting to $200,000,000 were made or supervised by this commission, and the work they did must have taxed their time both night and day. From May 4, 1915, to May 31,1918, the commission held 672 sessions, and they passed upon items which were entered on minutes, the minutes of those meetings numbering 22,610. From April 1, 1918, to the third week cf February, 1919, they held 277 sessions, and they passed 15,000 minutes. The increase during the past year was due to the fact that there was placed upon the commission the additional labour of supervising purchases of all other departments of Government.

They were entrusted with making adjust-' ments on $8,000,000 worth of salmon that the Government took over, and they were successful in arranging a satisfactory price

between the canners and the British Food Minister. They were also entrusted with adjusting the cancellations of $8,000,000 worth of orders after the armistice, and they were successful in adjusting these cancellations on a compensation of less than ten per cent. They also had in hand the sale of surplus stores of the Department of Militia and Defence and the Department of the Naval Service. These articles which were left over after the armistice were disposed of by the commission, I believe, in a fair and a reasonable way. The commission also had charge of arranging the rates for the transportation of troops by rail. The first-class rate was arranged at one and one-half cents per mile where there were over 350 troops in the same train or being transported at the same time, and when there were less than 350, the rate was two cents per mile. The commission also arranged for the transportation of officers and men from overseas; the rate for officers averaging $61, and for men $.35.

If any hon. member has any doubt as to the desire of the commission to carry out, in a businesslike, just and fair way, the policy of calling for tenders, he should visit the offices of the War Purchasing Commission and make personal investigations. I had an opportunity of looking over their files in which their tenders were recorded, the books and files showing clearly what each company bid, which tender was accepted and the reason for such acceptance. I have here, without any names, some facts that will demonstrate how this policy was carried out.

For example, this is a purchase of 200 sanitary flat-top desks of a certain adopted pattern. Twenty-four firms were asked to tender; eighteen replied, of whom fourteen quoted, the tenders ranging from $9,900 to $6,300, and the lowest tender was accepted.

This is a purchase of medical supplies. Sixteen firms quoted, the total of the highest tenders was $1,969.50, and the accepted tenders totalled $1,281.

This is a purchase of surgical supplies. Fourteen firms quoted, the total of the highest tender being $2,098.30, and the accepted tenders totalled $765.80.

Of another purchase of medical supplies seventeen tenders were received, the highest bids totalling $4,069.68, and the accepted tenders totalled $2,916.88.

On a purchase of drugs, seventeen tenders were received, the highest bids totalling $7,598.85, and the accepted tenders totalled $5,014.21.

On another purchase of medical supplies, the highest tenders totalled $940.80, and the accepted tenders totalled $611.94.

On a further purchase of medical supplies, the highest tenders totalled $4,046.54, and the accepted tenders totalled $2,701.44.

Those figures should demonstrate to the House the necessity for having this business handled by men who are experts in the different lines, and also of having this business open to the free tender of any *Canadian citizen who thinks he is in a position to bid for the business. I do not see how it is going to be possible for the country to get a proper system of purchasing except by adopting the policy laid down in this Bill. Probably some modifications will have to be- made to the Bill, but I believe the general principles of it are absolutely sound and will commend themselves to the good judgment of the members of the House as well as to the general public. It will give the people of Canada a square deal, and they are certainly entitled to a square deal from the public servants in charge of the country's business.

This is the first occasion on which I have had the honour of addressing you, Sir, and Ufeel it a great privilege to be able to say a few words of congratulation on the Government's action in this respect. I believe this measure will help to demonstrate to the people of Canada that this Government desires to do the right thing in its administration.

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UNION

John Hampden Burnham

Unionist

Mr. J. H. BURNHAM (West Peterborough) :

I should like to draw the attention of the minister to a little incident which will serve as an illustration of something that has happened very frequently, and may happen much more frequently, very much to the detriment of the member for a constituency. Under the old system it used to be known that tenders for coal were required. Now this Bill does not apply to the wthole system of tendering. Consequently, there is just as much room for inefficiency and for doing evil that there was before. There is no way under Heaven by which business can be properly done if you cannot rely on the honesty of the people doing it. Let me give an instance. Instructions were sent to a janitor to find out how much coal was required, and what the price, would be. He did so, but instead of asking several people what their tenders would be, he asked only one man, and he sent that man's tender to Ottawa. It was accepted, and then the people rose up on their hind * legs and said " What sort of a member of Parliament are you to allow such work

as this to go on?" I said " I, did not do it." " Oh, yes, they said, that won't go here. You are the member for this constituency and must watch the Government in everything. You must look into this matter." So having ascertained the facts, I communicated with the Minister of Public Works, and in due time he communicated with the officer he had employed at Peterborough, one of his own officers, and found I had stated the matter correctly. I said to the Minister of Public Works " What are you going to do about it? This man is perfectly honest. I do not think he intended to do anything wrong, but the efficiency of your system is now on trial. What are you going to do?" He replied " I will have to fine him five dollars." So the Minister of Public Works fined his own agent in Peterborough for inefficiency in a transaction under this brand-new system which the member had nothing to do with, but which he will' have to watch very carefully.

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UNI L

Michael Clark

Unionist (Liberal)

Mr. MICHAEL CLARK (Red Deer):

If I may be permitted to do so, I should like to offer my congratulations to my hon. friend for Brant (Mr. Harold) upon the easy fluency which characterized what he informed us was his maiden speech 'to this House. I do that more sincerely because I regret to add that his speech did not succeed in removing some distrust which 1 have of this legislation. Indeed, some of the facts to which he referred rather increased than allayed that distrust. He made some references and gave us copious figures regarding certain purchases which we made in war time that would have been a good justification of this legislation in war time, but I understand that the object of the Bill is to perpetuate in times of peace the machinery which was found necessary during the war.

In my opinion, one of the most fundamental principles which the Government need to observe, if they are going to be a successful Government now, is to make as rapid a transition in their thought from war time to peace time as is consistent with the situation. There are a good many things we had to do in war time which I think we shall be glad to discontinue, and be compelled to discontinue, in times of peace.

My hon. friend for Brant referred to the great success this commission had had in purchasing salmon, but I do not apprehend that the Government of Canada are going to be perpetually in the fish-dealing 'business. They had to purchase the salmon,

I presume, to feed the men at the front, and the same remarks apply to a great many of the other figures which my hon. friend gave. That was all right for a Government in war time, but I have, I repeat, very grave distrust of continuing that system in time of peace. The creation of this commission seems to be the shifting of governmental responsibility. We have been a country in Canada for some time now, and the various departments of the Government have had their experts making purchases for their departments., Their duties would be to study the needs of their own particular department, and if they were connected with the department and studied its needs it would appear to me on the surface, at any rate, that they would be better qualified for purchasing ifor that department than a commission would which had surveillance of all the departments of the Government. Furthermore, I think the creation of this commission will be associated with an increase in expense. I do not know what the minister's view would be on that point, but if he would assure me that it would lessen the expense he would remove one of my objections, and no doubt score a point in favour of this legislation.

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UNION

Newton Wesley Rowell (Minister presiding over the Department of Health; President of the Privy Council)

Unionist

Mr. ROWELL:

If you consolidate the purchasing that is now carried on by ten or fifteen different departments into one, I believe it will very greatly reduce the expense.

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UNION
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Mr MICHAEL CLARK:

It could only decrease the expense if it reduced the number of public servants in the various departments, and I venture to say that short as the minister's ministerial experience has been, it has brought home to him the very great difficulty of reducing the public service. His belief-because it is only a matter of faith with him; he has told me he believes it would reduce the expense- partakes of the nature of a prophecy, and as I have said before, the only thing you can do with a prophet is to disbelieve him, especially when he prophesies something that is contrary to one's own experience. I have very grave doubts that it would not increase the expense. It certainly increases the machinery of government, and if my hon. friend can increase the machinery of government and reduce the expense he will certainly be something of a miracle worker, because our universal experience is that with an increase in the machinery there inevitably follows an increase in the

expense of government. These are the reasons why -1 do not accept the belief of my hon. friend on the subject. I have very grave doubts about this being a departure for the better, and I shall be glad if those doubts can be removed.

It is no pleasure for me to oppose any legislation introduced by the ministry, and I would be very glad if the doubts that I entertain could be removed. But they exist jn my mind and I would not be doing my duty if I did not express them.

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UNION

Samuel Hughes

Unionist

Sir SAM HUGHES:

I had considerable experience in war purchasing both under a responsible minister and under an irresponsible War Purchasing Commission. The great objection to this commission business is that there is no one responsible. The commissioners are responsible to no minister directly. The War Purchasing Commission has been run by two or three clerks, engineered by the commission and fortunes have been built up for the favourites of the commissioners, contracts have gone almost invariably in the right direction, and I have no hesitation in saying that if the facts were made known as to the way in which the War Purchasing Commission conducted its business they would startle the people of Canada. They would be astonished at the tremendously high prices that have been paid. This whole system of Government has been running away from responsibility. I went into the war to overthrow autocracy and bring about responsible government in so far as we possibly could in Germany, in other countries and above all in Canada. This is a departure from responsible government, and it places in the hands of a commission the spending of $40,000,000 a year. If you will give me the management of that business, under the terms of this Bill, I will undertake to put any party in power at the next general election. If you have a purchasing agent for the department, the minister is responsible, he feels his responsibility, and he takes pains to see that the work is done in an efficient manner. I had to do with that business and I do not think there are anything like the irregularities going on that the general public claim there are in reference to these matters. I found that contractors were anxious to do the best they could, although there was an odd one here and there that had to be watched. I found the officers in almost all the departments toe keenest men alive. I have seen instances where contractors who had succeeded in bluffing the War Purchasing Commission tried to put the same bluff over

the purchasing agent of the department and failed, with the result that the department was able to purchase cheaper than the War Purchasing 'Commission did. When an analysis was made it was found that the prices paid by the War Purchasing Commission were for almost all commodities, higher, I know instances where local men were asked to give a quotation and their quotations were fifty per cent under the price that the War Purchasing Commission was furnishing to the department. I know of the manipulations that went on by the War Purchasing Commission to see that contracts were landed in the right centre. There will be under this system no direct responsibility and we must have responsibility when we are dealing with the administration of such- large sums as this. I agree with the objection which has been pointed' out by my hon. frien/d from Red Deer (Mr. Clark) on the question of responsibility. The minister of the department for which the purchases are made is not responsible and no one will care except the young purchasing agents who will make their millions out of it if they are permitted to go on long enough. One of the presidents of a large American railway corporation said: I would rather be president of the Inter-State Commerce Commission than president of the United States at $750,000 a year. The gentleman who will get the management of this commission will consider himself one of the most successful operators in the Dominion of Canada. The whole thing is an attempt to get this Government away from its responsibility to the House, to the members and to the people and that is one of the things that I want to fight against. Let the members be responsible to the people who elect them and let the people hold the members responsible. I am not afraid of that responsibility in my county, I never have been afraid and I never had a bit of trouble with any one in connection with this matter. Let the members, for once in the history of Canada, hold the ministers responsible.

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UNION

Edward Walter Nesbitt

Unionist

Mr. E. W. NESBITT (Oxford North):

I am sorry I was not in the House when the minister who has charge of the Bill (Mr. Rowell) gave his explanation of the measure. I have been reading the Bill and I cannot understand the necessity for three commissioners to purchase the supplies for the departments of this Government. I will guarantee to supply them with a man who, if he is furnished with a good, clever stenographer and one or two inspectors, will purchase all the supplies that the Government will require in a year and who, even then will not be any busier than the purchaser for any large institution in this country. Referring to clause 5, I find that the Governor in Council may appoint an officer to be called the director of the Purchasing Commission for Canada. What is he going to do? Is he going to direct the commission how to purchase? As I understand it, the deputy minister, or some other head of a department, may put in a request for supplies and the commission will purchase them. I suppose this director will direct them how to purchase the supplies.

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UNION
UNION

Edward Walter Nesbitt

Unionist

Mr. NESBITT:

And where. I do not know what else it can mean. I believe that under the present system there is a waste in purchasing for the Government departments, This will mean not merely three commissioners; a whole department will be built up with forty or fifty clerks, stenographers and so on. It will run into a department and a very expensive one. We want to economize. That is what we were told to do yesterday, and by the looks of the financial statement, it is necessary not only as a people but as a Government. I see no economy in this Bill as introduced. I am sorry I did not hear the minister's explanation for it. There may be a reason for it. I understand there is a great deal of waste in the purchasing of supplies by the different departments. This new department will require, I suppose, a lot of typewriters. There are.plenty of typewriters in the different departments that are not in use, but this new department will not have any old typewriters; they will insist on having new typewriters, new furniture, new stationery, almost everything new, and they will not under any possibility gather up equipment that might have been used by commissions and departments that have been abolished. There is no necessity for waste in purchasing if it is properly conducted. Why we want three commissioners to do the purchasing when one man could easily do it, is more than I can comprehend; besides which there is to be another man who is to be called the Director of the Commission. I see no sense in the Bill at all.

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Mr. G@

B. NICHOLSON (Algoma): With the details of this Bill I shall not presume to deal at this stage, but dealing with the principle underlying the Bill, if I understand it correctly, it means the employment by the Government of a competent pur-

chasing agent or agents. I do not see how any one having any business experience can disagree. Any ordinary business man, or small firm that is purchasing goods up to $100,000, without going into the millions, will find it to their advantage to pay a salary to a man who understands how to purchase, who knows where to get the right kind of goods, as has been pointed out by the hon. member for Brandon (Mr. Whid-den), and who knows what the goods are when he sees them. How does any large corporation, such as a departmental store, for example, do its purchasing? Does it leave it to the head of each department or employ an expert thoroughly conversant with the whole question of buying?

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UNION

Alfred Ernest Fripp

Unionist

Mr. FRIPP:

Is the hon. member aware that there is an expert purchasing agent in every department?

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UNION

George Brecken Nicholson

Unionist

Mr. G. B. NICHOLSON:

There may be a purchasing agent in every department, but whether he is expert or not I do not know. If there is a purchasing agent in every department, the hon. member's question seems to imply that he would prefer to have a purchasing agent in every government department. But this Bill would eliminate separate purchasing agencies and concentrate the business under one department. We can amend the details of the Bill, but at the present moment we are dealing with principles. Take the Canadian Pacific Railway Company, whose system is divided into departments from coast to coast. There is not a department, from the Atlantic to the Pacific, that can buy a single dollar's worth of material without going through the purchasing department, because the men at the heads of the various departments are not purchasers and do not understand that business. They are managers and devote their attention to the conduct of the business of their particular departments. But they leave to experts the question of purchases and allow them to buy the goods they require. It has been objected that by employing a purchasing agency the Government is getting rid of its responsibility. If the Government concentrates the whole purchasing for the Dominion in one agency, is that evading responsibility to any greater degree than if it distributes the responsibility throughout a multitude of agencies? From the information that we have now, each head of a department purchases the supplies for that particular department in his own way. If this work is all concentrated in one purchasing department for which the

Government is directly responsible, does the Government thereby lessen its responsibility to the country? In my judgment it would only narrow the business down to a point where it would be controllable. As things stand now, it is uncontrollable and unwieldly. My hon. friend from Red Deer, with whom I always try to agree, has laid down the principle that you cannot effect economy unless you reduce the number of employees. If there is one man in each department to-day charged with purchasing for that department, and if he is capable of doing the work with which he is charged, lie cannot be of very much use for anything else. Therefore, taking that phase of the argument alone, if you bring all thesj men under one head and employ one purchasing agent nr agency, you will have eliminated a certain number of employees. 1 presume, without, having any figures before me. that this Government purchases millions of dollars' worth of goods every year and, I have no doubt, will continue to purchase equally large amounts annually from all sources. Is it not conceivable that by reducing the cost at which these goods are purchased and improving the character and quality of the goods and obtaining the best materials that can be put into each particular article, just as any ordinary business man would do, a saving could be effected? A large departmental store could not carry on business for six months if it permitted the heads of the various selling departments to act as purchasers at the same time. No large organization producing goods in this country could successfully operate on such a basis. A lumber firm could not carry on business ii the man who had charge of the work in the woods had to purchase the goods required in connection with the conduct of the business. In principle, I think the Government is starting out along the right lines. I have not read the details of the Bill. They may not be right, and the idea of a purchasing commission may be wrong. If, as the hon. member for North 'Oxford (Mr. Nesbitt) says, it is going to involve the employment of a commission and then a director, that would seem to me to be a case of overlapping, and if it is going to mean the employment of a large establishment, that again is entirely unnecessary. But with the principle of concentrating the whole business of purchasing the country's goods and placing it under the head of an expert or a small group of experts, I am entirely in accord, and contend that it will bear

analysis by any business man who wants to study it and ascertain what he would do il he were in the same position as the Government. I venture to say that if hon. members who have spoken were carrying on business for themselves, they would not even attempt to operate on any other basis than that outlined in the chief principle of this Bill, namely, the employing of experts to do work that necessarily calls for expert knowledge and a thorough acquaintance with a particular subject. Those who purchase supplies should thoroughly understand purchasing.

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UNION
UNION

George Brecken Nicholson

Unionist

Mr. G. B. NICHOLSON:

Perhaps so, but I am a little doubtful as to whether we always did. If we had time to go through all the ramifications of all the departments we would find that a whole lot of things had been purchased in supplies of various kinds that would not measure up to the standard. I think that if this proposal were submitted to any group of business men who are accustomed to purchasing any considerable quantity of goods they would say it is the only possible system by which efficiency can be attained. To have purchases distributed broadcast, and to have experts in engineering-for instance, in the Public Works Department-start out to buy dry goods, boots and shoes, or woollen goods, about which they know nothing, is the height of absurdity and could not possibly be carried on in any private business, because a private business is done on a basis that would not permit the waste necessarily involved in such a system.

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June 6, 1919