June 25, 1924

HON. MR. MURDOCK AND HOME BANK


Mr. JOSEPH ARCHAMBAULT (Chambly and Vercheres) moved: That the second report of the Select Standing Committee on Privileges and Elections be concurred in. He said: Mr. Speaker, in making a motion of this kind it is customary that the chairman should give 'his views to the House regarding the proceedings and the report of -the committee. I shall do so briefly and impartially. The charge made by the hon., member for West Hastings (Mr. Porter) is as follows: The Honourable James Muirdock, Minister of Labour, did withdraw from the Home Bank at its Ottawa branch on the 15th day of August, 1923, two days before such bank's failure, thousands of dollars on deposit therein to his credit, using certain information he had received, as such minister, of the likely immediate failure of said bank, and had received advantage and profit to 'himself to the extent of such withdrawals, contrary to his .obligations as such minister in derogation of his office and the honour, dignity and traditions of parliament. I wish to state at the o-utset, Mr. Speaker, that I have nothing but praise for the hon. members of the committee, who throughout the proceedings of the inquiry have conducted themselves in the true spirit of the high traditions of parliament. I say this without any reservation whatsoever. The members of the committee bad to inquire into the action of one of their fellow-members, and it is to their credit that, following in -the footsteps of the hon. member for West Hastings when he made his speech in the House, they have avoided personalities and partisan feelings, and used throughout the whole proceedings a most temperate and sober tone. Mr. Murdock and Home Bank Tlhe committee had several meetings and summoned a number of witnesses. The report which I now beg the House to concur lin reads as follows: The evidence taken by the committee shows that Hon. James Murdock on the 15tih of August, 1923, drew out of the Home Bank of Canada at its Ottawa Branch, the sum of $4,050, but there is no evidence to show that before so drawing out said 6um he had received information as a cabinet minister of the probable failure of said bank. The evidence also shows that the only information Mr. Murdock had of the probable failure of said bank was received as a private citizen, from Hon. G. N. Gordon, in a friendly interview on tlhe 9th of August, 1923. The committee finds that Hon. Jas. Murdock did nothing in connection with tlhe withdrawal of such money from the Home Bank contrary to his obligation as a minister of the Crown, or in derogation of his office and the honour, dignity and traditions of parliament, and that the charge submitted to this committee for investigation, so far as it affects the honour of Mr. Murdock, is not. only not proved but entirely disproved. Every bon. member will realize that in order to substantiate his charge, the hon. member for West Hastings had to prove three things: Firet, the withdrawal of the money under the circumstances mentioned in the charge; second, that in doing so the Minister of Labour used information that he had received as a minister, of the likely failure of the bank; and third, that by using such information he has received advantage and profit to himself to the extent of such withdrawals, contrary to his obligation as a minister, and in derogation of his office and the honour, dignity and traditions of parliament. May I be allowed to point out that in order to maintain the charge, not only one, but all of those three things had to be proved. May I also point out that the first two questions are questions of fact, and the third question is more a question of appreciation in the light of precedent, in the light of jurisprudence, more a doctrine or proposition than a positive fact. Before considering the evidence on the facts, and the soundness of the third proposition in the light of the law, I wish to state that I endeavoured to conduct this inquiry in a judicial way. I based my reason for doing so first on section 2 of the Canada Evidence Act which reads as follows: This Part shall apply to all criminal proceedings, and to all civil proceedings and other matters whatsoever respecting which the Parliament of Canada has jurisdiction in this behalf. This seems to be clear. I followed the rules of evidence contained in this act. Secondly, I followed also the jurisprudence. I assumed that the members of the committee were the jury. The hon. member for East Toronto (Mr. Ryckman), and the hon. member for 229 York-Sunbury (Mr. Hanson), speaking before the vote was taken in committee, contended that the rules of evidence at a judicial trial should not apply; that it was not for the member for West Hastings (Mr. Porter) to prove his charge but it was for the Minister of Labour to prove his innocence. The hon. member for East Toronto drew my attention to the Marconi debate in the British House of Commons in 1913 where no such rules were observed. But I wish to draw the attention of the House to this point,-the hon. member for East Toronto overlooked the fact that we were proceeding with an inquiry where all the witnesses were sworn, while in the Marconi case in the British House of Commons in 1913 it was not an inquiry. In that case there was no inquiry whatsoever; there was no charge made and referred to a committee; it was an ordinary parliamentary debate where no witnesses were heard, where members simply spoke and gave their opinion. The proposition here is quite a different one. I may say that I was gratified to hear the hon. member for Leeds (Mr. Stewart), although he voted against the report, express the opinion on this matter which he did. That opinion is to be found on page 154 of the report of the proceedings of the committee. The hon. member for Leeds, as there reported, said this: I assume, Mr. Chairman, that this committee is here as a court of justice, that we have all thepowers, all the privileges, all the rights, all theresponsibilities, and all the duties of a court, and if that be so, then the rules of evidence must apply and we must discharge our duties as a court and notin any other capacity or from any other motives than those which would characterize and must characterize judges and jurors in determining a question which is brought before them. This doctrine is sound; it has been fob, lowed in every inquiry of this kind since confederation. It was followed in the Mc-Greevy inquiry in 1891; it was followed in the Lanctot inquiry in 1911; it was also followed in the Yukon inquiry presided over by the hon. member for South Wellington (Mr. Guthrie). I repeat, it is sound doctrine. The suggestion that the ordinary rules of evidence should not apply, that they should be put aside, that the inquiry should be conducted in a haphazard and go-as-you-please manner is a most astounding proposition. Before I leave the subject I will quote the opinion of a man who has occupied one of the highest positions in this country, whose eminent character, fine legal mind and wide knowledge are undisputed. I refer to Sir Allen Aylesworth, ex-Minister of Justice. Speaking on the Lanctot case, as reported at page 7,900 of Hansard, 1911, he said:



Mr. Murdock and Home Bank Every' one knows that it is the privilege of the person accused either to remain silent or to say: Not guilty, prove your case. Nothing is to be inferred against a man because he may choose to take that course. I am therefore satisfied that the course which I followed was the proper one. Let us now examine the first allegation: Hon. Mr. Murdock, two days before the failure of the Home Bank, withdrew the sum of 14,050 of his money. As I said before, and according to all rules of evidence, the hon. minister was not obliged to appear as a witness. But he did appear, and admitted that on 15th August, last at about one o'clock, two days before the failure of the Home Bank, he withdrew from the bank the sum of $4,050, his parliamentary indemnity, which he had deposited in the Royal Bank, and that later on, on 1st October, he used that money to pay a mortgage on his property. The mortgage itself, with evidence of the payment mentioned, was produced at the inquiry by Mr. Cuthbertson, the holder. The first allegation, therefore, was proven, but minus the frills and insinuations of the partisan press. Mr. Murdock did not withdraw his money after banking hours as stated in the liquidator's letter to him-and in the speech of the hon. member for West Hastings, a very material incident in the case as stated by the members for West Hastings, and York-Sunbury. Both these hon. members expressed their opinion as to this fact and the evidence on the point is to be found at page 13 of the committee's proceedings, where Mr. Clarkson, the liquidator, was being examined by Mr. Porter. I will cite it: Q. Did you get any information of that character *from the officials of the Home Bank in Ottawa?-A. Not until after that letter was written-after settlement was made. Q. Then what knowledge had you when you wrote this letter that the money had been withdrawn after banking hours?-A. I say, "the statement was made to me" that was so. The statement wras made to me by some officer of the bank that it was after office hours.


LIB

George Newcombe Gordon (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The Chairman:

Mr. Porter, I do not want to

limit you, but this is hearsay evidence. There is only one fact to be proven before this committee if you want to make your case, and that is that the money was withdrawn. Whether the money was withdrawn before hours or after hours makes no difference-

Mr. Porter: I would think it would make a very

material difference.

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LIB

George Newcombe Gordon (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The Chairman:

It makes no difference because the

reference is to the effect that money was withdrawn before the failure of the bank on the 15th day of August, 1923. That is the only thing we have to look for.

Mr. Porter: The time of withdrawal would be a very material consideration for the committee to consider.

Mr. Hanson: I think it would be very vital. It

shows the intent.

TMr. Archambault.]

The Witness: Mr. Porter, the manager of the bank

informed me yesterday that the withdrawal was not made after banking hours; it was made in banking hours, and the previous statements made to me were incorrect to that extent.

The evidence also shows, that without any obligation whatsoever in my opinion the Minister of Labour sent back to the liquidator every cent he had withdrawn. The evidence as to this is to be found at page 15 of the report. Let me quote it:

By Mr. Porter:

Q. Then the account, Mr. Clarkson, shows a balance at that time due from the Hon. Mr. Murdock of how much?-A. On May 16th it shows a balance of $3,000, excluding interest. Then we gave him a credit for $1,035.23, being 25 per cent of $4,140.94. That left a balance of $1,964.78. The interest on that was $150.30, which left him owing $2,115.08.

Q. Has the balance been returned to you as liquidator?-A. Yes sir, with that letter which you have in your hand.

Mr. Porter: I file a letter dated May 26, 1924.

Document filed as Exhibit No. 6.

Mr. Porter: This letter reads:

" May 26, 1924.

Dear Mr. Clarkson:

Acknowledging your letter of May 16, and your memo of May 20, re the amount which you compute is still due to you as liquidator in connection with my withdrawals from the Home Bank on August 15, 1923. I send you herewith cheque for $2,115.08."

Therefore, Mr. Speaker, the depositors of the Home Bank have not lost one farthing, and the people of Canada have not lost one cent, through the action of the Minister of Labour.

Now let us look at the second fact. Was it proven that the hon. Minister of Labour withdrew his money from the bank using certain information that he had received at a meeting of council of the immediate failure of the bank? Every hon. gentleman must admit that if the second fact is not proven the case must fail. I submit, Mr. Speaker, that there is not one tittle of evidence given in the inquiry to show that the Minister of Labour had received any information as a minister of the near failure of the bank before he withdrew his money-nothing to show that he received any information as such minister. You can search the whole evidence and you will not find one witness who proved this fact. The directors of the bank came to Ottawa on the 14th August. They had an interview that evening with the Prime Minister (Mr. Mackenzie King), Mr. Graham, Mr. Robb and Mr. Saunders. They had not seen the Minister of Labour, and no information as to the state of the bank was given to him by any of his colleagues or by Mr. Saunders. The Minister of Labour only learned of that meeting much later. On page 85 of the Report of Proceed-

Mr. Murdock and Home Bank

ings evidence will be found to substantiate that fact, as follows:

By Mr. Porter:

Q. Just one more question, Mr. Chairman. I think that is all I want to ask for the moment. Mr. Murdock, I want to ask you one further question: Were

you aware of the fact that the directors of the Home Bank met certain members of the cabinet at the Premier's house?-A. Not until after it came out generally.

Therefore, Mr. Speaker, the hon. Minister of Labour did not have that information, or was not aware of the meeting of the Home Bank directors on the night of the 14th, before he withdrew his money from the Home Bank.

Mr. SHAW. May I ask a question for information?

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LIB
LAB

Joseph Tweed Shaw

Labour

Mr. SHAW:

Is the expression "Not until after it came out generally" interpreted subsequently by the minister (Mr. Murdock).

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LIB

Joseph Archambault

Liberal

Mr. ARCHAMBAULT:

Yes. I surmise it

would mean, "Not until it was known generally by the public".

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LAB
LIB

Joseph Archambault

Liberal

Mr. ARCHAMBAULT:

That would certainly be after the next day. The Minister of Labour withdrew his money on the 15th, and that meeting was on the evening of the 14th. It is evident that he could not and did not know that that meeting had taken place until after he had withdrawn his money.

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LAB

William Irvine

Labour

Mr. IRVINE:

Before the hon. member

leaves that point, I would like to ask a question, just for information. I understood the hon. member to say there was no evidence that the action of the Minister of Labour was affected by any information received at the cabinet council meeting. I want to know if it is not a fact that the only source of that information would be some member of the cabinet council, and they were not permitted by their oath of office to give that information. Is that not so?

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LIB

Joseph Archambault

Liberal

Mr. ARCHAMBAULT:

I am coming to

that point. After the meeting, or during the meeting, of the Home Bank directors at the house of the Prime Minister, the Prime Minister decided that under the circumstances no assistance could be given to the Home Bank, and it was suggested that the Acting Minister of Finance should go to Montreal the next day, to interview the Bankers' Association, in order to get some assistance if possible. The matter was finally settled there. True there was a meeting of the cabinet next morning, at which the hon. Minister of Labour was present, but no evidence was given to show 229J

that t'he matter of the Home Bank was discussed at the said meeting. I ruled, according to all precedents and according to jurisprudence, that nothing could be asked of the minister of what transpired at that meeting. I submit, Mr. Speaker, that I was bound to make that ruling. The members of the Privy Council are bound by the oath of office to keep all matters which engage their attention at the meetings of the cabinet strictly private and confidential. I do not need to refer to all the authorities in this matter. May I. however, first ask the attention of hon. members to the oath of office which says:

-you will keep close and secret all such matters as shall be treated, debated and resolved on in Privy Council, without publishing or disclosing the same or any part thereof, by word, writing, or any otherwise to any person out of the same council, but to such only as be of the council, and yet if any matter so propounded, treated and debated in any such Privy Council, shpll touch any particular person, sworn of the same council upon any such matter as shall in any wise concern his loyalty and fidelity to the King's Majesty, you will in no wise open the same to him, but keep it secret, as you would from any person, until the King's Majesty's pleasure be known in that behalf.

I desire also to direct the attention of hon. members to the work of Alpheus Todd on Parliamentary Government in England, second edition, volume 2, page 240, where I find the following:

The deliberations of the cabinet upon all matters which engage their attention are strictly private and confidential; being kept secret even from other members of the administration, who have no seat in the cabinet, and who therefore are not directly responsible for the conduct of the government. Upon their first introduction into the Privy Council ministers are invariably sworn to secrecy.

At page 84 of the same work Mr. Todd says:

The obligation of keeping the King's counsel inviolably secret is one that rests upon all cabinet ministers and other responsible advisers of the Crown by virtue of the oath which they take when they are made members of the Privy Council.

A judgment was rendered recently on the same matter by Mr. Justice McKeown who presided at the Home Bank inquiry, and I will refer to that judgment later on. The exclusion of such evidence may be unfortunate; but there are other circumstances when certain evidence cannot be accepted from witnesses, and other circumstances where certain evidence is not legal. Counsel, solicitors, attorneys cannot be compelled to disclose communications made to them in professional confidence by their clients; nor can doctors; nor can priests nor ministers of religion be compelled to disclose secrets confined or confessed to them under the regulations of their respective churches and religious persuasions. Hon. members who voted against the report

Mr. Murdoch and Home Bank

in committee admitted that. The hon. member for York-Sunbury (Mr. Hanson), as reported on page 149, states:

It will be said that my learned colleague (Mr. Porter) did not prove affirmatively that the matter was discussed in cabinet council that' morning. Unfortunately the absolute privilege given by the cabinet ministers' oaths closes the transactions in cabinet council and precludes us from even asking the question as to who was there.

In face of that jurisprudence, in face of that ruling by Mr. Justice McKeown, I was bound to prevent anything that had transpired at the cabinet meeting from being disclosed at the inquiry.

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LAB

Joseph Tweed Shaw

Labour

Mr. SHAW:

The hon. member lias compared the relationship between a minister of the Crown and the Crown with the relationship existing between a solicitor and his client. My hon. friend will realize that the relationship between solicitor and client is a qualified privilege only. I should like to know, as a matter of information, if the relationship between a minister of the Crown and the Crown is a matter of absolute privilege or a matter of qualified privilege.

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LIB

Joseph Archambault

Liberal

Mr. ARCHAMBAULT:

Mmisters of the

Crown may not divulge anything that transpires in council even by mutual consent. I would refer my hon. friend again to Todd at page 84:

As has been already observed, this secrecy is not a mere personal privilege or protection, either to the Sovereign or to the minister, that may be waived by mutual consent.

Now, not only has the prosecution not proved that the Minister of Labour used information that he received as a minister to withdraw his money, but the evidence shows conclusively that the withdrawal was made because of some other information. The Minister of Labour, although under no obligation to do so, as any member with any legal knowledge will admit, volunteered to make a statement. His evidence is to be found at pages 75, 76 and 77 of the inquiry. I will crave the indulgence of hon members for a few moments because this evidence is very important. At page 75 this is the statement of the Minister of Labour:

Bv the Chairman:

Q. Do you wish to make a statement to the committee, Mr. Murdock?-A. All right, I will do that. Mr. Chairman and gentlemen, I attended two meetings of the cabinet council on August 15, 1923. One meeting commenced at 10.30 a.m. and lasted until about 12.40 p.m., and the next meeting from 3 p.m. until 4 p.m. I withdrew from the Home Bank of Canada, Ottawa branch, around one p.m. on August 15th, the $4,050, which have been referred to. Neither at the time I made that withdrawal nor since did I for one moment think that I had in any way been untrue to my obligation as a cabinet minister or a member of parliament. How-

[Mr. ArchambaultJ

ever, having noticed certain newspaper reports in, I think, February or March, when the liquidator of the bank wrote me the letter of May 7th, which is in evidence, I decided as per my letter of reply dated May 14, and proceeded to return the money as promptly as it could be arranged. I think, Mr. Chairman, that covers the statement necessary. I might say of course, that I am precluded by my oath as a cabinet minister from intimating in any way whether any questions in relation to the Home Bank of Canada were or were not discussed at either of the cabinet meetings on August 15, which I have said I attended.

By Mr. German:

Q. Had you not prior to August 15th, had any information of ithe financial standing of the Home Bank, or as to its solvency or insolvency?-A. Yes, I had some days prior to that received what looked to me to be very conclusive information that it was not a safe place to leave my sessional indemnity.

Q. This was your sessional indemnity?-A. Yes. I drew it as a lump sum on July 3rd, deposited iit in the Home Bank, and changed its location on August 15 th.

Q. Did you receive that information in your official capacity as a minister of the Crown?

Mr. Porter: That is a matter for the committee.

Then there is a long discussion. Further on:

By the Chairman:

Q. Have you any objection to stating, Mr. Murdock, under what circumstances you received that information?-A. I have no objection to stating anything that will be of assistance to the committee.

Q. Just answer my question.-A. I received that information from a member of parliament some few days before, or, to be exact, on the 9th of August.

By Mr. Porter:

Q. Would you tell us who the member was?-A. The Deputy Speaker.

Q. The Hon. G. N. Gordon?-A. Yes.

By the Chairman:

Q. What information did you receive?-A. Mr. Chairman, my memory would be faulty to indicate just exactly what I received but I did receive that from hearing Mr. Gordon recite various facts in connection with the Home Bank, its then present condition and references to some of those who were connected with the Home Bank, and this gave me to understand that it was not by any means a safe institution. Further than that I do not think I should say definitely-

By Mr. Porter:

Q. And after getting information from Mr. Gordon did you get any further information?-A. No.

Q. You say "No"?-A. "No".

Q. Of any kind or description-or anywhere?-A. Not that would form my opinion in regard to the matter.

Q. It may not have formed your opinion, but did you get any other information?-A. No one else had discussed that matter with me at all.

Q. Had you any better knowledge on the 15th as to the condition of the bank than you had on the 9th? -A. I would say not.

Q. Why did you get in such a hurry on the 15th?- A. Well, I do not. know whether it was a question so much of getting in a hurry-

Q. It seems to be-

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LIB

George Newcombe Gordon (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The Chairman:

Let the witness finish his answer.

The Witness: I proceeded to do on the 15th what I intended to do, and no doubt would have done, excepting that I neglected it for several days.

This evidence is corroborated by the Deputy Speaker whose evidence is to be found at page 109 of the evidence.

Mr. Murdock and Home Bank

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Will the hon. member

tell the House now whether he considers the evidence he has just quoted as intended to be a denial that the information was received at a meeting of council?

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LIB
CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Then how does the hon. member explain the statement of the Minister of Labour (Mr. Murdock), which he quoted just before, that his oath forbade him to say what was discussed at the meeting of council?

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LIB

Joseph Archambault

Liberal

Mr. ARCHAMBAULT:

I do not think

that it would have been proper to ask the Minister of Labour to make any such disclosure, but in answering a question put directly to him, whether he had more information on the 15th than on the 9th, he could do nothing but tell the truth, and he answered that he received no further information on the later date.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Does the hon. member

take the view that the answer constituted a breach of the minister's oath of office?

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June 25, 1924