Mr. PAUL MERCIER (St. Henri) moved:

That the third and final report of the special committee appointed to investigate tihe adminisitration of the Department of Customs and Excise be concurred in.

He said: Mr. Speaker, the special committee investigating the administration of the Department of Customs and Excise laid its report upon the table of the House last Friday. We are convinced that this House will find in that report the material necessary to reorganize certain branches of this department, and particularly the preventive service, in order to assure the collection of the duties imposed upon goods of foreign origin which enter our country. A preventive service, well organized, is the biggest help to the administration charged with the collection of customs duties, not only on account of the very considerable amounts which it brings into the public treasury, but also as a means of contributing to our national wealth by the adequate safeguarding of our trade and commerce.

When we prepared this report we were indeed aware that the Canadian customs must be regarded with reference to two separate aspects: as a means of revenue, and as an instrument of protection. This investigation has shown that many of the large countries of the world draw considerable gain from their customs dues. A large portion of the revenue of the United States, our neighbours, has no other source.

It is admitted that our participation in the last war has given our finances a bad blow. We will find in the scrupulous and strict collection of duties one of the most efficient ways of rebuilding the national wealth, and one which will enable us to pay the enormous debts willed to us by the late war.

I am convinced, Mr. Speaker, and no doubt my colleagues who have read the voluminous evidence which accompanies the report laid upon the table of this House will share this conviction, that the Department of Customs and Excise is a most difficult one to administer; the duties, including the supervision of thousands of employees, are onerous and the responsibility immense.

The minister in charge needs to be continually on the alert. He is bound according to certain critics, not to err in the performance of his duties and the exercise of the discretionary powers which are vested in him by the Customs and Excise acts. Furthermore, according to the evidence and the several public documents produced at the investigation, the minister must take into consideration that the procedure of his department is governed not only by statutes passed by this House and the Senate, but also by decisions of the cabinet, orders in council, rulings and regulations, under the authority and powers vested in the administration, and in accordance with the different laws of Canada. Regard must be paid to all these in order to properly apply the rules and regulations of the department or to extend their principles by way of interpretation.

The evidence and the examination of the different files submitted to us have demonstrated also that the minister is exposed to numerous and varied influences, and is the recipent of requests of all sorts. They come from his colleagues, from members of his own party, even from members of the opposite party, but mostly from the public in general, .^presented in this chamber by their elected members. These hon. members in accordance with the popular belief and1 under our democratic system, have not only to enact legislation, but are sometimes placed under the painful obligation of obtaining, from ministers of the crown, and, in this case, from Ministers of Customs, past and present, on behalf of offending electors, private and lenient settlements, and if possible the minimum fine provided by law. They insist even upon the reconsideration of findings, or the suspension for a certain period of the proceedings and the penalties incurred in cases already referred to the jurisdiction of the courts of this country.

I would ask my colleagues in this House, to whatever .political party they may belong, to remember, before passing final judgment on the facts disclosed by the evidence that, as members of parliament they must be fair to themselves and to their fellow citizens, and I would also counsel them not to lose sight of the fact that a minister, or a member of parliament, is a public man, and as the word clearly implies, a man who belongs to and is representative of the people of Canada.

The public man does not exercise a profession; he fulfils a mission. Is it not true, Mr. Speaker, that the public demands from him what is not expected from others? Moreover, le is continually subjected to strict and severe

4818 COMMONS

Customs Inquiry-Mr. Mercier (St. Henri)

censure. Public opinion, as he perceives it, stands for a multiplicity of opinions, says Louis Barthou of l'Academie Frangaise, and such multiplicity is sufficient to show the variety of judgments always contradictory and often irreconcilable, to which his actions expose him. He is responsible not merely for what he says or does; his abstentions or the services he renders bind him as much as his actions or words. He stands alone in the community. In the situation there is for him danger and contrast. When a physician has given his advice or a lawyer has ended his address, he has no more to do with his client and has no account to render to anybody. The public man always, has accounts to render, and, as a matter of fact, the public is his client. And if a member of the House of Commons becomes a minister of the crown, how, Mr. Speaker, can you expect him to commit no error, even of a temporary nature, if sometimes compassion, or the intention to oblige or to please a representative of the people, takes control for a moment of his heart, or of his mind? .

Before this House insists on blaming a member, a minister, because a demand has been made to him and he has granted it, let it first re-educate the people of this country. Let those amongst us, who may extol such a narrow doctrine, tell the people of Canada that in future they can no longer depend on the devotion and benevolence of their representatives and on the humanity of ministers. Let them also make use of this opportunity to inform these same people, that Canadian members of parliament, followers of a government which they themselves have Chosen, will no longer be allowed to write or telegraph to a minister in charge of a department, in order to redress alleged grievances or to submit varying claims from their electors, without incurring the risk of being called or mentioned before an investigating committee and reported to this House. If there are such hon. gentlemen, and I do not believe there are any who will be parties to the ruin of some of the best talents of this House of Commons, let them remember that those talents are necessary to the community in order efficiently to help Canada to continue its actual course into the path of prosperity.

Impressed with the ideas and sincere convictions we have tried to express, impressed with the facts that the evidence adduced during this investigation has in our judgment confirmed, we beg of you to consider and to adopt in a spirit of fairness and justice, the recommendations contained in the report

submitted to this House, in accordance with the order of reference to our committee, dated February 5, 1925.

The committee, Mr. Speaker, has done everything in its power to discover the existence of smuggling in Canada and its causes. It is hoped that the reorganization of the department in accordance with the recommendation submitted, and the amendments to the Customs and Excise acts suggested, will repress smuggling in a large measure, and will show, little by little, to every vigilant observer the real cause of this evil which we wish to banish from our Dominion.

Our manufacturers and traders will no doubt be thankful to us for the efforts we have all made in the performance of our duties on this parliamentary committee. We have, by all the legal means at our disposal, endeavoured to avoid party politics, aiming, for once at least in the parliamentary annals of this land, at bringing about immediately a new era for the traders and the dealers, who have often suffered unfair competition, an improved condition towards which they may look with confidence and faith. Have we been successful? Mr. Speaker, the debate which is to follow will tell.

Hon. H. H. STEVENS (Vancouver Centre):

Mr. Speaker, I certainly appreciate the brevity of my hon. friend's address. As I followed him closely I think one might say that he was conscious that there had been serious dereliction of duty on the part of public men, and he entered a plea, coming, I am sure, from the kindness of his heart, that the House and the public should deal leniently with those who may have been guilty of some offence. As to the goodness of his heart I am sure we all agree. On the other hand, Mr. Speaker, I think at times we have a duty to perform when it is wise not to consult so much the heart as it is to consult what is right and what is fair to the country.

On February 2, last, I addressed the House charging maladministration of the Customs and Excise department, whereupon the House appointed a special committee to hold an investigation, or rather more correctly speaking to investigate the administration of the Customs and Excise department. For over four months, that investigation has been carried on and the report now offered to the House for its consideration represents the findings and recommendations of the committee. I feel, Sir, that for the stand I then took I am now warranted in claiming absolute vindication; the charges have been amply

Customs Inquiry-Mr. Stevens

justified and a state of affairs ha3 been revealed which demands the stern attention of this House.

Before proceeding, I wish to pay tribute to Mr. R. P. Sparks and his associates whose untiring efforts during the two years preceding the opening of the investigation contributed so largely to bringing to the attention of the government these serious abuses. Canada owes much to Mr. Sparks for his devotion to the task and his great public service. He and his associates for eighteen months acted with impartiality and without political bias. It was only when it became abundantly clear that the government did not intend to act that Mr. Sparks appealed to me to secure for him a public inquiry. The task was not a simple one, and entailed much anxiety and labour. I had hoped that with the presentation of the report my work would have been finished. However, such is not the case, and I have one other duty to perform, which I cannot allow to remain undone. It is never a pleasant task to attack those with whom one is in constant contact. One's motives will no doubt be misjudged and attacked. Nevertheless, as the one responsible for the launching of this inquiry, it is my duty to finish it to the last detail.

During the opening weeks of the investigation, there were some clashes of opinion, but latterly the members of the committee worked in comparative harmony, and, as the report indicates, sought earnestly to produce to the House some constructive and remedial measures.

The chairman the hon. member for St. Henri (Mr. Paul Mercier), one of the younger members of the House, had a difficult and onerous duty to perform. He presided over each and all of the 115 sittings of the committee, and I trust that the experience he has had and the knowledge he has gained will do much to equip him for larger fieldls of service and usefulness to the state.

With the report I am in accord with one reservation, namely, the failure of the committee to report a finding on the evidence referring to the conduct of the ministry. Its neglect to do so, if not now corrected by the House, indicates a likely continuance of those practices which so largely contributed to the collapse of the department. It is but fair to the committee to say that this failure is not due to absence of evidence, but to inability to agree to a formula which would adequately meet the case. This discrepancy I propose to remedy by offering to the House an amendment to the motion for the adoption of the report.

The vital part of the report may be apportioned into two main divisions:

That which refers to "findings", and that which makes "recommendations". A brief outline under the heading of "findings" would be as follows:-

1. That the Customs and Excise department had been degenerating in efficiency for some time, and during recent years at an accelerated rate, and that the Hon. Jacques Bureau had been derelict in his duties as a minister.

That is one of the findings and the one I shall deal with first. As to the ex-minister, I have this to say. He perverted his opportunities of service to the state to the distribution of indulgences to his favourites. The vast revenues of the country collected by this department and amounting to over 1300,000,000 annually, which he ought to have jealously guarded, were left unprotected the easy prey of mendacious individuals. High officials with a long career of faithful service to the country were debauched by him and must now pass out of the picture under a cloud more or less of shame.

His conduct and the conduct of these officials influenced, debased, I might say, by him as the responsible head, were well known to the Prime Minister and his associates. Yet he was allowed to resign his seat and his position as minister and he was rewarded with a seat in the Senate while his puppets have been driven out of the service in shame.

I pause here to emphasize this point of the knowledge of the Prime Minister and his associates of the general condition of the department for many months, indeed I think I am safe in saying for a year before this investigation started. I will read certain extracts from the evidence. For instance I have under my hand a letter written by Mr. Sparks to the Right Hon. W. L. Mackenzie King, Prime Minister of Canada, under date of February 4, 1925, just a year lacking two days before I m'ade my statement in the House and more than a year before the investigation started. I will not read the whole letter, but I will read a couple of extracts:

Dear Sir:

Some months ago-

That is some months prior to the date of the letter.

-a large representative deputation waited upon you and members of your cabinet pointing out that smuggling and under-valuation for duty purposes were causing an immense loss of revenue and serious interference with the business of legitimate traders and manufacturers.

Customs Inquiry-Mr. Stevens

Then there is a long recital of certain specific instances. Thr letter concludes with this paragraph:

It is respectfully submitted thet the conditions herein set forth are sufficiently well known to the government and to its departmental officers and the requested forms of relief so necessary and reasonable as to justify the government to take immediate action by instituting the required departmental changes and submitting to parliament bills providing for necessary legislative enactment. . . . It is respectfully submitted that a parliamentary committee should be appointed immediately to inquire into the necessity of departmental and legislative changes.

On the 21st February this was followed by another letter dealing with the acquittal of the notorious Bisaillon in Quebec. This letter is addressed by Mr. Sparks, as chairman of this businessmen's organization, to the Prime Minister:

The acquittal by the Quebec courts of J. E. A. Bisaillon, the chief preventive officer at Montreal, who was charged with conspiracy, creates a new situation in reference to the prevention of smuggling. I think you should be in possession of certain information which we have in reference to this matter, as he is the key to the whole smuggling situation. . .

Might I again repeat what I think I have said to you before that, from the standpoint of loss of revenue, I think the smuggling business is second only to the loss occasioned from the operation of the Canadian National railways.

Warning the Prime Minister, urging him in conference, confirmed by letter, of the necessity of changes and remedial measures. On February 26, there is a letter stating:

After four months' investigation by a staff of trained criminal investigators, we are convinced that at least half of the smuggling now going on could be prevented within a month iby an energetic policy on behalf of the department, and further that, with necessary amendments to the act-

Which were given by this House, endorsed by this side,

-90 per cent of the smuggling could ultimately be prevented. Might I further express the opinion that smuggling is increasing at an alarming rate, rather than decreasing, as the minister states.

Thus even in February it was brought to the attention of the minister and his colleagues that these were the facts and it was pointed out that the responsible minister at the time was neglecting his duties in that respect. The letter goes on:

I took up with the Minister of Customs the question of the continuation of Mr. Bisaillon, as chief preventive officer at Montreal. I pointed out that the business community had lost confidence in Mr. Bisaillon. I had with me at that time a number of reports on this man, one of which I read to the minister.

And so forth. On March 20, 1925, there was a letter reviewing the situation at length and supplying the Prime Minister with a tabulated list of offences of this individual. The reason I mention this is because around

him at the time as chief preventive officer at Montreal, which was the pivotal point then, centred the weakness of the department. This letter addressed to the Prime Minister on March 20, 1925, reads:

In reference to the case of Bisaillon, there are certain facts, some of which are set out below which form a part of the public records and which, if they are not already known to the Minister of Customs and Excise, confirmation of them can easily be obtained. In our opinion these facts of themselves furnish sufficient evidence to warrant the immediate dismissal of Bisaillon.

Then it recites the oase of Rex vs. Lortie, the Tremblay barge case and a number of others. Then we have the following paragraph :

We would respectfully submit that the facts as above set out, together with information conveyed to you in a confidential memorandum, are sufficient of themselves to call for this man's dismissal, and, over and above all this, is the fact that this man has lost the confidence of the business community of Montreal and, as a consequence, his usefulness is at an end.

This was acknowledged by a letter dated April 16, 1925, and addressed to Mr. Sparks, from Mr. E. J. Lemaire, Olerk of the Privy Council, in the following words:

Dear Sir:

I am, iby direction of the Right Hon. the Prime Minister, to acknowledge your letter of the 20th instant with reference to Mr. J. A. E. Bisaillon, and to say that the same will receive due consideration.

I repeat what I said a moment ago that the conduct of the minister of the department, the laxity of his administration and his countenancing of evil-doers were well known to the Prime Minister and his colleagues long ago.

The second finding of the committee to which I desire to refer is in somewhat the following terms:

The committee also found that not infrequently important decisions have been made -which were repugnant to the facts, resulting in serious losses to the revenues, as well as placing a premium on dishonest practices.

The chairman of the committee (Mr. Merrier, St. Henri) who took his seat a moment ago, as I intimated, made a plea for toleration of public men who were derelict in their duty. Here we have the finding of the committee in these terms, that the minister, or officers of the department under the influence of the minister, under pressure from the minister, made findings, made decisions affecting the public revenue, affecting the treasury of this country, which were repugnant to the facts, to use the words of the report itself. Under this heading would come a discussion of " political expediency." I do not intend to enter into that this afternoon as I understand the hon. member for Kent (Mr. Doucet) and the hon. member for West

Customs Inquiry-Mr. Stevens

Hamilton (Mr. Bell) will deal at length with this phase of the question. But losses and discrepancies as disclosed by the investigation could have been effectively controlled if the existing statutes had been properly enforced by conscientious officers uninfluenced by ministerial interference. I pause to emphasize that. In other words it was not the legislation that was wrong; it was the administration that was at fault.

Another decision deduced from the evidence is that motor thefts and smuggling are intimately associated. Case after case was submitted which showed that professional auto thieves found in the Customs department a haven of refuge wherein to cover up their nefarious traffic. Of that, Sir, there can be no question. Scores of such cases were brought to light until the public grew weary of the monotony with which they were unearthed, and the question was asked, when will the end of these auto cases be reached? The purpose in bringing them forward was to try if possible to drive home to the ministry and to the members of the House on what a wholesale scale this business was being carried on. It was a thoroughly organized traffic, and the officers of the department, as well as the department itself, by its actions and by its rulings, connived at or participated in it.

In the fourth place, it was demonstrated that wholesale commercial smuggling was being practised on an extensive scale and that customs and excise duties and sales taxes were being systematically evaded. The audits, admittedly very incomplete, disclosed losses subject to possible recovery of a sum approximating $1,750,000. This is in respect of cases regarding which there is now to hand, and available to the House, such evidence as would warrant immediate action being taken for the recovery of the amount stated. 1 would point out here that the ground covered by these audits was undoubtedly but a fragment of the area which ought to be covered and which in my opinion must be covered if justice is to be done. The ex-Minister of Customs, the Minister of Marine while acting minister (Mr. Cardin), and the present minister (Mr. Boivin) have all displayed a callous indifference to the rights of the public treasury, but a touching solicitude for the liberty and well-being of defrauding offenders.

I come now to the fifth point: I refer to a practice which has reached tremendous proportions, namely, the smuggling of liquor into the United States. It was found that liquor smuggling from Canada into the United States was a serious incentive to return

smuggling of other goods into Canada, and that this Dominion has become a mere conduit through which a constant stream of liquor flows into the United

3 p.m. States. Much of this liquor pays no revenue into the treasury of either country and is admittedly unfit for human consumption. At this point I wish to refer briefly to the treaty between Canada and the United States. On February 2 last when discussing this phase of the question I gave expression to a sentiment similar to that which I shall now voice. With the laws of the United States I have nothing to do; they are not my business, nor is it my duty to criticize or to approve of them. But, Sir, when the Dominion of Canada enters into a solemn obligation with the United States, then I submit, altogether irrespective of any opinion I may hold of the laws of that country, that it is the duty of the administration of this country to see to it that the terms of that treaty as well as the spirit of it are honoured. I will not read the treaty in toto; I will quote merely the opening paragraph or a portion of it. It declares that this Dominion and the United States-

-being desirous of suppressing smuggling operations allong t/he boundary between the Dominion of Canada and the United States of America, and of assisting in 'the arrest and prosecution of persons violating the narcotic laws of either government, and of providing as to the omission of penalties and forfeitures in respect to the carriage of alcoholic liquora through Alaska into the Yukon Territory-

-have agreed to certain things. In other words, the three subjects of agreement in this treaty are first, the suppression of smuggling; secondly, the prevention of, and the prosecution of those engaged in, the narcotic traffic; and, thirdly, the carriage of liquor into the Yukon Territory. The treaty is dated June 6, 1924. There is in it a clause which I know some will contend is ineffective and renders the treaty not binding on either country in so far as the smuggling of liquor is concerned. I had better read this clause inasmuch as it will probably be advanced as an excuse for the failure of the government to observe the spirit of the agreement. Article II provides:

The high contracting parties agree that clearance from Canada or from the United States shall be denied to any vessel carrying cargo consisting of articles the importation of which into the territory of Canada or of the United States, as the case may be, is prohibited-

As properly pointed out by my hon. friend from Vancouver North (Mr. Donaghy) ir-the committee, had the article stopped there it would have been effective. But it goe! on:

-when it is evident from the tonnage, size and genera character of the vessel, or the length of the voyagt

Customs Inquiry-Mr. Stevens

and the perils or conditions of navigation attendant upon it, that the vessel will be unable to carry its cargo to the destination proposed in the application for clearance.

It is argued that in view of that qualification Canada is justified in giving clearance to vessels known to be carrying contrabrand cargoes into the United States. My submission, however, is that Canada as a country, and this parliament as well, both understood and do understand now that this treaty was intended for the suppression of the smuggling of prohibited goods from one country into the other. That is the gist of the treaty, shorn of verbiage; and I believe that this administration, and the officials under the administration, ought to be condemned without any measure of consideration for deliberately conniving at the violation of the general terms of that treaty.

I should like now to illustrate the manner in which this traffic is carried on. Vessels laden with liquor would clear for some foreign port, such as Nassau or St. Pierre-Miquelon, but before such clearance the exporter, under the Canadian regulations, would have to deposit a bond equal in value to double the duty assessable on the cargo. That bond is not to be released unless the goods so exported shall have been duly landed and entered for consumption or for warehouse at the point named in the bond. This has been one of the most prolific sources of evasion of the law. I cannot speak too strongly on this point. In my opinion the administration- and in this I include the officers of the department as well as the heads-are either too simple to hold office or else they are deliberately conniving at this traffic, which is contrabrand so far as our friendly neighbour to the south is concerned. And it is beneath the honour and dignity of this country to be engaged in, or to connive with others who are engaged in, such a pursuit. One would expect that when the government exacted such a bond it would demand that it be respected. In practice, however, it is consistently evaded. False landing certificates are tendered and accepted and the bonds are released. Not only is it a fact that liquor, instead of reaching its ultimate point of destination, is diverted to the United States, but there is a strong presumption that a substantial portion or at. least some portion of this liquor, upon which no customs or excise duty has been paid, finds its way back into Calnada. This, I think, is the conviction of every member of the committee so far as this traffic is concerned, both on the Atlantic and on the Pacific. These vessels secure from the department a clearance for Nassau or Mexico;

they leave the Canadian port and when they get outside they either produce an absolutely false landing certificate or, in the case of St Pierre-Miquelon, it may be genuine. Then the liquor is bootlegged back into Nova Scotia, Prince Edward Island or New Brunswick on the Atlantic and into British Columbia on the Pacific. All of it does not come back, because the great market is Rum Row or Liquor Lane, as they call it on the Pacific, but a portion finds its way back into Canada and pays no revenue to the country. To effectively investigate the possible losses from such cases will require a searching examination of the books and records of the firms concerned as well as some clever police work to check up the documents tendered, as to whether or not they are genuine. In other words this inquiry, while it uncovered certain facts, has not by any means succeeded in discovering the magnitude of the losses to the revenue of this country through this traffic as well as other branches of a different character.

There was another method disclosed by the evidence as followed by the notorious Cooper, 'Hushion and George gang of bootleggers, by shipment on the Bernard M. and Frank H, as well as other vessels; these, however, were the two vessels most frequently mentioned. In this case cargoes of liquor would be billed from a foreign port via the St. Lawrence and Great Lakes to Port Arthur, and thence by rail and ship to Japan. That sounds like a decent traffic, simply passing through Canada; that was the pretence, but what are the facts? The facts are that such cargoes would be passed through the Lachine canal and there given a clearance for Port Arthur, but the vessels did not reach Port Arthur. These goods were landed somewhere on lake Ontario or lake Erie east of Windsor, and not a dollar of revenue came into the public treasury from the admission of these goods. I find, Mr. Speaker, that the evidence discloses at least four vessels carrying from six thousand to ten thousand cases in this way; there were many more but we had before us definitely these four. Had these vessels been compelled to pay duty on their cargoes it would have meant from $450,000 to $720,000 in revenue to the public treasury.

What guarantee did the minister or the department have that the exchequer was properly guarded? They only had the word of a bootlegger, a man called Harbert, and absolutely nothing more. I ask this House to consider this question for a moment, and we will put it in a little different way. Let us suppose some business man, some merchant, sought to bring in a cargo of hardware,

Customs Inquiry-Mr. Stevens

or furniture, of groceries or drygoods, or any other class of goods legitimately handled, in bond for transhipment through Canada to Japan. These goods are brought down the Lachine canal and given a clearance for Port Arthur, but they do not arrive there; they are landed at some unknown point on the lakes, possibly in the province of Ontario, with no payment of duty. Would the department permit that merchant to carry on in that way? The answer is obvious. Then I ask the House why it is that those engaged in the liquor traffic should have a privilege which would not be granted or countenanced for one moment in the handling of other classes of goods. Why is it, Mr. Speaker, that the duty of the minister in the protection of the revenue of this country was satisfied with the word of the bootlegger who brought in the cargo? These are serious matters, and these are the things the House must face in connection with this inquiry.

Before going to another point I want to say that these few incidents I have mentioned are only a modicum of what one might bring forward to illustrate the magnitude of this traffic, but they do show a serious condition in connection with that class of business. I submit, Mr. Speaker, that it is high time for this unholy partnership between the government of Canada and a gang of bootleggers to be dissolved. And I have a word to say to the old established distilleries of Canada. We have here five or six old, well-established institutions which in the past, and I believe at present, claim that they carry on their business legitimately and within the law. Indeed, they pride themselves on it, but to those old-established distilleries as distinct from others of the mushroom type which have recently eome into existence I say that it is high time they ceased to sin by proxy, because that is virtually what they are doing. It is time these well-established firms recognized that they must keep genuinely and sincerely within the law and must not, by feeding their products out to law violators, enrich their coffers. I say this with all earnestness and sincerity; if they persist in dealing with such people they must expect to receive a measure of the public indignation which will be aroused.

Mr. GARDINER:

Will the hon. member

permit a question? Did the committee trace this liquor back to its source?

Mr. STEVENS:

Oh, very frequently; that

is really what I am referring to at the moment. I do not want to go into too much detail, but to answer my hon. friend, .this is the 14011-306 .

situation. There are perhaps two general classes of liquor, with one of which I will deal at some length almost immediately. There is the class known as matured, decent spirits; to .those who like liquor it is known as good liquor. Then there is another class composed of almost pure alcohol, not matured; still with the fusel oils in it, merely coloured with prune juice or something like that. That liquor is assuming tremendous proportions to-day; I believe there is more of that kind1 handled by the bootleggers to-day than of the good liquor. The matured liquor largely came from the Old Country or from old Canadian distilleries, who sold it to these people who traffic it in the way I have mentioned.

Mr. WOODSWORTH:

The hon. gentleman has referred to the old, well-established distilleries. Does not the evidence show that at least one of these old firms was guilty of giving subscriptions to the old political parties?

Mr. STEVENS:

No, the evidence does not show that. My hon. friend knows, and the House is well aware, that political parties old and new receive subscriptions from various sources, and I have no doubt that subscriptions have been received from that source. I say to my hon. friend, however, that so far as I know I have never seen or known of a dollar subscribed by that source in any campaign in which I participated. I am not denying that it was done, but I will say that there is no evidence before the committee that such subscriptions were made. The only evidence was that there were certain sums which the auditors said were unaccounted for by any other means, and my hon. friend can take what he likes from that.

Mr. MILLAR:

Might I ask what "new"

party my hon. friend referred to?

Mr. STEVENS:

There are lots of parties. I would not for a moment criticise my hon. friend's party for the sources of their campaign funds; they get them anyway. I do not know which party my hon. friend is in at present, .but I can say he is now in unholy company. The party with which he is now identified has been the recipient of plenty of such contributions.

I now turn to the question of denatured alcohol, or unmatured spirits. The committee found that unmatured spirits, unfit for human consumption, have been released under four orders in council, and as a matter of record

Customs Inquiry-Mr. Stevens

I am going to put on Hansard the details regarding these orders in council:

Gooderham and Worts, P.C. 641, April 17, 1924.

Manitoba Refinery, Limited, P.C. 1903, October 2, 1925.

Distillers Corporation, Limited, P.C. 1646, September 14, 1925.

Consolidated Distillers of Manitoba, P.C. 29, January 7, 1926.

These four orders in council were 'brought to the notice of the House by the ministei in a return which he filed in reply to an order of the House. These four orders in council synchronize with a sudden increase in the production and sale of raw alcohol, allegedly for denatured purposes, but in reality for the vilest type of bootlegging.

The evidence shows that the Dominion Distillers, better known as the Cooper-Hushion, George aggregation, sold between December 7, 1925, and January 19, 1926, no less than 82,500 proof gallons of this alcohol, denominated No. 1 F. Special alcohol, and that they secured for it from $7 to $10 per gallon.

Now that this alcohol was intended for human consumption was proven beyond all

question by the evidence at page 2416 of Leo George, in answer to a question by Mr. Bennett. I will give the question and answer:

Mr. Bennett: Do you know anything about abstraction of the denaturing substance from this alcohol after it gets to the States?

Answer: I understand that they can abstract it.

Now I want to say a word in explanation of this type of liquor. I have the act under my hand, but I do not wish to weary the House by reading from it too minutely, but the act declares that this class of liquor, No. 1 F. Special, shall be used only for hospitals and institutions for the care of the infirm, and for certain purposes of that kind. It is a rubbing alcohol, a medicinal alcohol. It is not for internal use at all, my hon. friend from Fort William (Mr. Manion) reminds me. The sale of it is very jealously guarded by the regulations. This is important because it bears vitally on what I am going to say in a few minutes, and I want to make this point clear. According to the law, according to the Excise Act, and according to the regulations the minister is empowered to make under the law, this alcohol cannot be used indiscriminately. It must be sold only to certain specific limited classes of persons such as I have mentioned, but as a matter of fact the minister exceeded his power in allowing these 82,500 gallons Of alcohol to be sold by the Dominion Distillers. It was not only contrary to

the law in Canada, but as this class of

alcohol, denatured alcohol, is not admitted to the United States at all under their law, it might have been classified as potable spirits, which it was intended to be. It was intended for, and it was sold to the United States by the Dominion Distillers as potable alcohol for beverage purposes, and it was sold only under cover of a special permit granted by the minister, in the granting of which permit, I contend, the minister exceeded his powers.

Now I want to give three illustrations regarding the export. The minister will answer me that this alcohol is exported, and that therefore he had the right to give them this special permit. I answer, in the first place, that the law gives him no such right. In the second place, I want to show that some of it at least apparently never reached the point of export or was never properly exported. I have under my hand the record of three cars. I have duplicates here of the history of these three cars. I have summarized them, and I shall not read the whole story, but briefly it is as follows.

G. T. car No. 6995, containing this denatured alcohol, was billed at Montreal on December 5, 1925, to Louis Evans, Toronto, for export to Mexico. I have the bills of lading and the freight bills under my hand, showing the facts that I am reciting. This liquor was billed for export to Mexico by a boat called the Idle Hour. I would suggest, by the way, that the name of the boat is quite in keeping with the line of business. The record shows that this shipment-and this is the significant part-reached its destination at Toronto on December 6, but the car was not unloaded there. On December 13, it was reported at Welland, still with the same load, and was finally reported "empty" at Fort Erie, although it was billed, and had the guarantee from the Dominion Distillers written upon the face of the billing, to Toronto for export by this boat.

C.N. car No. 346083, containing the same class of liquor, was billed out of Montreal on December 9,1925, to the same man, Louis Evans, Toronto, for export to Mexico, by the same boat, the Idle Hour. I pause here to draw attention to this, that this Idle Hour was supposed to have unloaded a car for Mexico on December 6, and the boat apparently got to Mexico and back and took on another load on December 9, in spite of all the difficulties of navigation of the Great Lakes and the St. Lawrence, and the distance. One would almost think it was some new type of airship, but it was not; she is a little lake boat. This was shipped on December 9, and in this case the

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car was unloaded at London, Ontario, on December 20, and according to my records this vessel was shown "empty" at London. Now London is not an export point; it is not even a lake or river point.

The next is C. N. car No. 409254, containing the same class of liquor. This was billed out of Montreal on December 13, 1925, consigned to the same man, Louis Evans, Toronto, for export to Mexico by the boat the Idle Hour. This car was not unloaded at Toronto, but arrived at Sarnia on December 18, and the contents were described as lumber when the car got to Sarnia for diversion to Port Huron.

I cite these three cases, Mr. Speaker, for the purpose of showing that in the export of this liquor by the Dominion Distillers, who were acting under a special permit from the minister, a permit, I contend, that was granted contrary to the law and in an enlargement of his powers-these three cars never reached the shipping point at all, or they passed the shipping point to which they were directed, and were unloaded at other points in Ontario. These various findings that I have cited I will leave at this point, and now I turn for a moment to the recommendations of the committee.

Many of these recommendations, Mr. Speaker, are clearly routine. I am not going to deal with them, because I think the House is in general agreement with regard to them. I do not think there is any question as to their desirability; I think they will be accepted without question. The recommendations, however, regarding further investigation and the prosecution of those already shown to have violated the law, are of paramount importance to the House. It is equally necessary that the House should be certain that those who are entrusted with this duty are untrammelled by any previous entanglements with those who are to be prosecuted. I pause, Mr. Speaker, to emphasize that point. I say to the House there are two things of paramount importance: First, that further investigation and prosecutions should be vigorously followed up; and secondly, this House ought to be certain that those to whom it entrusts this important task are untrammelled by previous entanglements with those whom they are called upon to prosecute.

Extensive and startling as the disclosures have been, it is well for the House to realize that neither the audit nor the investigation covered more than a small portion of the area that ought to be examined. I want that point to be borne in on the minds of hon. gentlemen. The way the committee proceeded it would have taken us probably two years to have covered the ground necessary 14011-306i

and then it could not have been done thoroughly. The careful examination of other sections of the Dominion will call for a sensitive appreciation of what is due to the state, as well as a fearless and impartial application of the law.

There are three major prosecutions to be undertaken. First, the Gaunt case; second, the Dominion Distillers, and third, the group of companies at Rock Island. There are others, many others, but these three cases ought to be and must be taken very seriously. Now regarding the Gaunt case, already this government, through the action of the present Minister of Marine, while acting as Minister of Customs last fall, has committeed itself to a settlement of the Gaunt case for S3,400, covering a claim which with penalties should produce $58,000. I am not saying, Mr. Speaker, that the $58,000 can be recovered. But I am within my right in saying this-that most eminent counsel, one who had given the subject most intimate study as a lawyer, advised me that he thought there was a very excellent case for prosecution. As a layman, and one who also gave the matter intimate study, I claim that as a matter of right and equity the $58,000 is due to the state and the case ought to be prosecuted. But what chance is there for success from a government whose Acting Minister of Customs and Excise now the Minister of Marine made an adjustment and settlement, which was supposed to have been final until this investigation reopened the matter, of $3,400 for this $58,000 claim?

Now, I turn to the Rock Island cases. In regard to the Rock Island companies,-and I may say there are probably about fifteen companies involved in this group-we know that the present Minister of Customs and Excise (Mr. Boivin) represents a constituency in that neighborhood, and is the intimate associate of some of the chief offenders. Now this is where some of my hon. friends will, perhaps, feel a little touchy. They may suggest, as my good friend the chairman so strongly pleaded a moment ago, that a minister should not be chided unduly for giving away to the importunities of his constituents. That is a kindly spirit, but I want to say to the House that in the face of these disclosures it is a spirit that will ruin Canada, it is a spirit that will degrade the public life of this Dominion; and I say further that it was just that buccaneering spirit of the exminister which largely contributed to the ghastly mess we have in that department at the present time. Now my hon. friend the present minister, in his speech of February

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2, describes one of these gentlemen in the following terms, I am quoting from Hansard, page 702:

Mr. Bissonette of Stanstead, a very good fellow, an intimate friend of mine, and a young gentleman whom I have met on several occasions both politically and socially-

And yet, Mr. Speaker, this same Bissonette destroyed his books and records, and ignored the summons of the committee. The auditors reported:

This company has produced no books, except for the year 1926, which books were written up from another set of books which were destroyed.

Then again the auditors report:

The amount of duty recoverable might be determined by the department to be very substantial.

They could not determine it. They could not determine the amount because the records were destroyed and the man would not come before the committee'. Is the minister to be entrusted with the prosecution of this "intimate friend", this "young gentleman", this "very good fellow" as he describes him?

Now let us turn our thoughts for a moment to the Dominion Distillers case. In regard to this case I hold very strong views not only in connection with the denatured alcohol which was shipped out of the country contrary to law, not only in connection with the large sum, the sum of $700,000 odd, which ought to be paid into the treasury, but also because in connection with the shipments that this company brought in and landed somewhere on the Great Lakes, this government excused them and allowed them to come in because a bootlegger said he had landed his goods in Buffalo, and there was never a shade of evidence to support his word. In that case [DOT]which involved over half a million dollars -this company must be prosecuted. These multi-millionaires, these unscrupulous bootleggers, who encouraged poorer men to do the dirty work of their business and then posed before the public of their respective cities as benefactors with money of which the public treasury of this country had been defrauded, must be prosecuted.

I propose now, Mr. Speaker, to examine the chances of a vigorous prosecution of this gang by my hon. friend. This- group consists of several intimately associated concerns with interlocking directorates. All of these concerns practise brazen-faced bootlegging of liquor into the United States as their chief business. That is their business and nothing else, and as the report indicates there is "a strong presumption that some portion of the liquor so shipped and cleared finds its way

back into Canada for consumption" and pays no excise or customs duty. The concerns are: Dominion Distillers Products Co. Ltd.; W. George Limited; W. J. Hushion; the George Import and Export Co. Ltd.; the St. George Import and Export Co., together with certain other entanglements in the way of steamship companies and so on. They carried on operations and then let the company go bankrupt when its usefulness was done.

Mr. WOODSWORTH:

The hon. gentleman is describing certain practices. Are these practices limited to Rock Island and the Great Lakes, or was there any evidence to show that they were prevalent in other parts of the Dominion as well?

Mr. STEVENS:

I have tried at least three times to explain, and I am most unfortunate in my expression if my hon. friend has not grasped the point, that this investigation has only touched the fringe of the ground to be Covered. I also said to my hon. friend a moment ago, if he will recall, that the practice regarding this liquor which we are talking of now was prevalent on the Atlantic, on the Pacific and on the Great Lakes. There is no question about it. It is general throughout the whole length of the country, but the investigation of four months and a half, an experience that I do not think any member of the committee wants to repeat, uncovered only certain limited areas. And regarding Rock Island, I want to say in justice to the Rock Island people I think it is perhaps there more pronounced than anywhere I know of. It exists also at Windsor and Niagara, and perhaps at other places, but at these two points I suspect the condition is not very much better.

Now then I want to proceed. Gregory George seems to be the chief executive head of this group of companies. He appeared before the committee during the early days of the investigation, and after perjuring himself left for Europe taking with him all the vital records of this group of companies. In spite of his evasion and of the loss of vital records, the auditors have uncovered ample evidence to warrant a prosecution of these people for the return to the treasury of a million dollars of revenue.

This man Cooper, who is reported to be a multimillionaire, and his wealthy associates, have made most of their wealth by defrauding the governments of Canada and the United States of revenue and by evading the laws of a friendly neighbour. I ask the question, is Ihe minister likely to prosecute these people?

Customs Inquiry-Mr. Stevens

Will he prosecute them? Can we entrust to him, in the light of the evidence of his intimacy with them, the serious task of prosecution? Who was it, Mr. Speaker, who bought from the minister,-who must now prosecute him-the alcohol seized from the barge Tremblay? None other than W. J. Hushion, the political genius of the group, he of the "missionary" spirit, who came to Ottawa as a missionary for this gang. Will the minister dare to prosecute Hushion for selling this alcohol without having paid any excise? He will not, or, if he entered action at all it would be doomed to failure before its inception. Their defence will rest in acts of the minister himself.

Allow me, Sir, to review the facts and let the House judge for itself: In the late autumn of 1924 the barge Tremblay was apprehended by officers of the Quebec Liquor Commission while in the act of landing liquor contrary to the laws of Quebec. A few hours after this action, a customs officer, Duval, a mere tool of Bisaillon, appeared on the scene and seized the vessel and the liquor in the name of the customs of Canada.

The alcohol, some 16,000 gallons originally

24.000 gallons, was then placed in the king's bond at Montreal and remained there until December 1925. During the autumn of 1925, Mr. Wilson, the chief preventive officer, wrote to a number of firms for bids for this alcohol. He received some offers which were unsatis-fadtory and continued hie efforts to make a sale in a regular and proper manner, as was his duty and he carried that duty out faithfully and well. During December 1925 the minister opened private negotiations with W. J. Hushion, ex M.P., who, according to his own evidence, was acting as a "missionary" for the notorious Cooper-George gang. During December, the minister closed1 a private sale of the alcohol to the Dominion Distillers for 36 cents a gallon. The customs law declares that all seized goods should be sold at not less than duty paid value, which in this instance would equal $10.50 per gallon, instead of 36 cents per gallon, otherwise it would be condemned to be destroyed.

That there is a large market for this alcohol within the law, is evidenced by the reports of the Quebec Liquor Commission, which showed that they handled at a price of $14.85 per gallon, 382,000 gallons in 1923, 359,000 gallons in 1924, 315,000 gallons in 1925; also it is in evidence that the department, when untrammelled by ministerial interference, had on a previous occasion sold approximately

7.000 gallons at $15.60 per gallon.

Duty paid?