wholly or partly laden with liquor for the United States, or allegedly bound for a foreign port, but admittedly sailing to "rum rows," and that false landing certificates have been produced to obtain cancellation of bonds given for foreign export of cargoes so cleared.
The Committee further finds that a strong presumption is raised that some proportion of the liquor so shipped and cleared finds its way back into Canada for consumption. The Committee, therefore, recommend that excise and sales tax be levied on all Canadian made intoxicating liquors released from bond, no matter where they are carried and consumed, and that duty and sales tax be levied on all alcoholic liquors entering Canada, whether in bond or otherwise, irrespective of their ultimate destination.
Doubts have been cast upon the sufficiency of existing legislation to prohibit or authorize regulations prohibiting the illegal export of intoxicating liquors to the United States. To the extent to which such legislation may be insufficient the Committee recommends that it be amended. The Committee further recommends that, as soon as possible, regulations be made to prohibit clearances being granted to vessels carrying liquor as cargo, sailing from a Canadian Port to a United States Port, such regulations to make an exception in favour of liquor being imported into the United States in accordance with the laws of that Country.
11. Subsection 4 of Section 171 of the "Excise Act" provides that "no spirits subject to excise which have not been warehoused for at least two years shall be entered for consumption". By reason of special circumstances arising out of the War, Parliament on the 1st day of July, 1920, Chapter 52, 10-11 George Fifth, Section 4, amended the section by adding thereto a . proviso empowering the Governor General to suspend the operations of the said subsection during such period or periods as he may deem necessary. From sessional paper No. 84, 1926, it appears that by Order in Council the following distilleries have been permitted to enter for consumption the spirits manufactured during the period of nine months or less from the date of distillation:
Gooderham & Worts, P.C. 641, April 17t.h, 1924.
Distillery Corporation Limited, P.C. 1646, September 14th, 1925.
Manitoba Refinery Company (Ltd), P.C. 1903, October 20th, 1925.
Consolidated Distilleries of Manitoba, P.C. 29, January 7th, 1926.
In the oipinion of the committee such unmatured spirits are unfit for human consumption and their release is injurious to the public health. The committee therefore recommends that Section 4 of Chapter 52, 10-11 George Fifth, be repealed at the present session of parliament and that the orders in council issued thereunder be, thereupon forthwith, cancelled. The committee further recommends that the technical regulations now governing the denaturing of alcohol be revised by competent experts so as to render all classes of denatured alcohol non-potable, and that where the Regulations under Section 171 of the Excise Act provide for the warehousing of potable liquors they shall provide for the maturing of such liquor in wood for a period of at least two years.
' 12.* The committee recommends that the following firms and companies should be proceeded against in the proper forum to recover the sums, if any, now owing by them to the Crown:
John Gaunt Company.
Dominion Distillery Products and Associated enterprises.
B. B. Glove Co.
Jas. A. Gilmore Co.
Globe Suspender Co.
Perfecto Garment Co.
Peerless Overall Co.
R. & G. Manufacturing Co.
Reliable Garment Co.
Stanstead Manufacturing Co.
W. M. Pike & Sons.
Standard Manufacturing Co.
Telford Bros. Garment Co.
Telford & Chapman.
Jenkins Overall Co. Ltd.
Snag Proof Limited.
Rock Island Overall Co.
Alco Dress Co. ,
O. B. Earle Co.
Royal Cloak Co.
Miracle Dress Co.
Hollinger & Packer.
Klover Dress Co.
Poyaner Group of Companies.
With reference to the distilleries, the committee has not had time to investigate them all. The committee recommends that a thorough audit and examination be made of the records and accounts of all the distilleries in respect of all matters relating to a loss of customs, excise and sales tax revenue.
13. The committee finds that the following officers have been delinquent in their duties and recommends that their sendees be dispensed with:
1. R. P. Clerk, Inspector of the port of Montreal.
2. A. E. Giroux, Superintendent of Customs and Excise, Montreal.
3. W Duval, Preventive Officer at Montreal.
4. John Landv, Customs Officer, Montreal.
5. Collector E. Brownlee, of Beebe, Quebec.
6. Marvin A. Sawyer, Customs Officer at Rock Island, and that in the interest of the public service arrangements should be made for the retirement of the following persons:
1. R. R. Farrow, Deputy Minister.
2. W. S. Weldon, Collector of Customs at Montreal.
3. Henry McLaughlin, Surveyor of Customs at the port of Montreal.
14. The committee recommends that the conduct of the officers at the port of Windsor, Ontario, and other important ports, should be further investigated and that the services of such of them as are found guilty of evasion of duty should be dispensed with.
15. The committee recommends that the evidence of J. A. E. Bisaillon given before this committee with reference to his bank account for the amount of S69.000 be transmitted to the Attorney-General for Quebec, for the purpose of comparison with the evidence given by him on the same point at preliminary inquiry at Quebec, P.Q., in the case of Rex vs Symons et al, and for such action by the said Attorney-General as the evidence may warrant; and further that the evidence in connection with the Morris Delage Motor Car case be transmitted to the said Attorney-General for such further action as the said evidence may warrant.
16. The committee recommends that for reasons of sound economy and increased efficiency there should be a reduction made in the number of ports of entry into Canada.
In support of this recommendation the committee would call attention to the following facts:
The United States has 270 customs ports of entry. The United Kingdom of Great Britain and Ireland has 80 ports of entry. On the other hand, Canada has a total of 681 places at which customs revenue is collected.
17. For the prevention of smuggling and of other frauds a strong preventive force under a capable administrator is necessary, and the committee, therefore, recommends:
1. That the Preventive Service be re-organized under a Chief, possessed with the highest qualifications for such office, clothed with wide powers of initiative, direction and control.
2. That such Chief Preventive Officer be authorized to select his staff in consultation with the Civil Service Commission.
3. That the Chief Preventive Officer be authorized to organize within the Preventive Service a secret service force, with special training in criminal investigation work, which force shall be under the general executive direction of the Chief of the Preventive Service.
4. That Preventive Officers and persons authorized to act as Customs and Excise Officers be given power to arrest without a warrant persons found committing any act declared by the Customs and Excise Acts to be an indictable offence.
5. That in connection with Preventive Service work the R.C.M.P. services be used for Patrol Work on the border, and while so engaged they be given full powers as Customs Officers. Pending the reorganization of the Preventive Service the R.C.M.P. should be immediately detailed for Patrol Service on all important points on the Border.
18. The evidence adduced before the Committee disclosed two outstanding facts, namely-
First, the methods of appraisal are exceedingly careless and fail to safeguard the interests of the importer or the revenues of the Country from being defrauded by undervaluation, and
Secondly, persons appointed as appraisers are in many instances untrained in the branch to which they are appointed.
The Committee recommend that the appraisal branch be re-organized and that all appraisers be chosen because of their competency to estimate the values of the class of goods they are appointed to appraise.
19. The Committee recommends that in future 'the provisions of Sections 213 and 213a of the Customs Act, which provide for the removal of buildings within a hundred yards of the boundary which are made use of in smuggling operations, be strictly enforced.
The situation created by the location of Derby Line, Vermont, and Rock Island, Quebec, as brought to the attention of the Committee is of a grave nature, and they recommend that a bond be established in each factory in which bond goods imported from the United States shall be placed until released for manufacturing purposes, and that an officer be appointed to look after such bond at the owner's expense.
20. The Committee recommends that Schedule "C" Prohibited Goods, of the Customs Act, be amended to include merchandise which is marked in contravention of the Gold and Silver Marking Act. That Act provides for prohibition of the importation of articles improperly marked, but Customs Officers ordinarily are not acquainted with the provisions of the Act, and for this reason the Committee recommends the inclusion of the prohibition in schedule "C" of the Customs Act.
21. Where articles containing precious metals are seized and forfeited the Committee recommends that they be not sold in the open market, as at present, but should be melted down and disposed of as bullion.
22. The Committee recommends that the regulations governing the distribution of the proceeds of fines and forfeitures be revised and that more liberal treatment be accorded informers and seizing officers. The moieties granted seizing officers in respect of seizures made
by them should not however, be distributed to such officers as each seizure is made. Such moieties should be paid into a special fund and periodically distributed to all the members of the Customs and Preventive Services.
23. The Committee recommends that in cases of commercial smuggling or under-valuation, where the offenders are known, they should at once be arrested and brought to trial with the utmost promptness. The Committee further recommends that the Department of Justice be requested to select at once capable and experienced Counsel in important centres, and retain them to act for the Department of Customs and Excise in all future cases.
24. The real solution of the difficulties at such points as Windsor, Niagara Falls, where traffic is heavy, and where a thorough examination of vessels and vehicles cannot be carried out, will be found in the discovery in advance by investigators of the secret sendee of the persons who make a practice of smuggling at these points, and their arrest when passing the Customs barrier. The Committee recommends that at bridges, ferries and main highways, where traffic enters Canada, in addition to the regular Customs supervision, vessels and vehicles should 'be searched at frequent, irregular and uncertain times. The uncertainty as to what vehicles will be examined, and as to when such examinations will be made, should operate as a strong deterrent of smuggling.
Your Committee recommend that such of the account books and other books and papers belonging to the firms mentioned in Clause Twelve of this Report, as may be necessary for use in any action that may be taken against the said firms, be retained by the House in order that they may be available if required.
Your Committee submit herewith for the information of the House, their Minutes of Proceedings and the Evidence taken by them.