August 5, 1904 (9th Parliament, 4th Session)

Mr. R. A. PRINGLE.

Mr. Speaker, I feel a very great hesitation in rising at this late stage of the session to discuss this matter. However, it strikes me as a matter of the greatest possible importance and a matter which we have not now time to thoroughly discuss before the session closes. I have read with considerable interest the report of the commissioner, Judge MacTavisli, in connection with this matter. In this report the commissioner jrresents certain findings. The findings are briefly as follows :
The contract system complained of by the petitioners does in fact exist and is in general use in the cigarette and tobacco trade in Canada.
That the provisions of the contracts in question are not illegal under the common law or any statutory 'law heretofore enacted by the parliament of Canada.
That the manufacturers of cigarettes and of Canadian tobacco other than the American and Empire Tobacco Companies, are at a very great disadvantage in the distribution of their goods and in the prosecution of their business generally by reason of such contract system.
The extent, to which legislative control over the freedom of contract should be exercised, and how far the rules of trade can be interfered with by statutory enactments, without injury to the public interest, are, in the opinion of your commissioner, questions of policy for the consideration of parliament.
I assume that action is being taken on clause 3 of this report that :
The manufacturers of cigarettes and of Canadian tobacco other than the American and Empire Tobacco Companies are at a disadvantage in the distribution of their goods, and in the prosecution of their business generally by reason of such contract system.
It is proposed by this legislation to place in the hands of the lion. Minister of Inland Revenue (Mr. Brodeur) the power to cancel the license of any of these manufacturers if he considers that they are contravening the law as laid down in this resolution. I say that that is a most extraordinary- power to place in the hands of one man, practically making him the sole a-biter as to the business of these corporations. To my mind it leaves room for the grossest corruption because this will leave it- in the power of the hon. minister to say to these large manufacturers : I care
not what your contract is, I care not what
eminent counsel may say as to its coming within the law, I am the sole judge as to whether the contract is within the law or not, I say it is not within the law and therefore I cancel your license. That is a power that should not be given to any one man. I regret exceedingly that I was not present yesterday when this resolution was discussed. Let me say frankly that I am in favour of any legislation which will properly control and regulate the combines which are being formed unquestionably in this country, which have been formed in the United States of America and Which we find to-day existing in free trade England, but I am not in favour of any such legislation as that which is now before this House which will give to one man the absolute power to control these different manufacturing industries. It is unnecessary for me to say that this question of combines and trusts is a very large question. It is a question which has taken the attention of the statesmen of Great Britain, a question which has taken the attention of the statesmen of other countries. We find to-day in Great Britain the Imperial Tobacco Company, a tobacco company with a larger capitalization than any tobacco company existing, and doing business in any other country. The Imperial Tobacco Company' was composed of twenty different manufacturing firms. Its capitalization is 820,250,000. Yet, that company is not restricted in the methods by which it chooses to do its business. In order to get at this matter intelligently I think it is necessary for us to go back a little. Let us go back to 1897. In 1897 there was very little Canadian tobacco manufactured in this country. In that year free trade friends composing the present administration adopted the policy of protection and they increased the duty to ten cents a pound on foreign leaf. The Ef pire Tobacco Company engaged in the manufacture of Canadian tobacco. They invested a large amount of money, they put a great deal of energy into the business, they expended thousands of dollars in advertising and in endeavouring to educate the people to use the Canadian product. They did it against the opinion of men who have been in the tobacco trade for years. I refer to such men as Sir William Macdonald, who always condemned the manufacture of Canadian tobacco, thinking that the Canadian product was hardly worthy of being manufactured, but the Empire Tobacco Company, having confidence in the line they had laid out, having confidence that they could by educating the people get them to consume the Canadian product, invested their money and took their chance of establishing a business nurely in Canadian manufactured tobacco. That business went along fairly well. They went to -the retailers throughout Canada and by the offer of premiums and other

inducements they got the public to use Canadian tobacco. Subsequently they went to the wholesalers and they said to the wholesalers : We have established a trade
throughout this country in the Canadian product ; if you want to take up that business we will make a contract with you which we think is favourable to you. The wholesalers made that contract and we find in the report of Judge MacTavish that in 1901 there was manufactured in Canada of Canadian leaf over 3,041,687 pounds, as against 600,000 pounds in 1897. That development has been brought about entirely by the energy of and the expenditure of money by the Empire Tobacco Company. The commissioner has not found that there is any monopoly. He has found that the consumer is affected and he has not found that there is any injury to the public. He has simply found that this method of doing business may be detrimental to some of the smaller manufacturers. These manufacturers started with jusit the same conditions as the American Tobacco Company started with. They had the same rights, they worked under the same law, it was open to them to push their business just as it was open to the Empire Tobacco Company, and now that the Empire Tobacco Company have made a success of their business, now that they have increased the use of Canadian leaf to the extent, I think, this year of some 5,000,000 pounds, they are met with the opposition of some small dealers throughout the province of Quebec.
This legislation is most important. It is legislation that should not be brought down in the dying days of the session. I know it is popular to decry trusts and combines, but we are not here simply to obtain popularity by that means. We are here to consider the best possible means of controlling and regulating, if necessary, these trusts, and we are not objecting giving to this important measure that consideration to which it is entitled. If we establish this precedent, next session some other industry, which through brains, skill, energy and capital, has developed a large trade, may be legislated against. While we have to-day an lion, gentleman as Minister of Inland Revenue, in whom we all have confidence, that may not always continue. No doubt the administration of the law will be perfectly safe in his hands, but we do not know who bis successor may be and what use he may make of these powers over the manufacturers of tobacco in this country. I am sorry to take up the time at this late stage of the session, but I have not detained the House at any great length during the session, and I think that when an important matter such as this comes up it is only right that I should express my views upon it. There is nothing in the report of .Judge MacTavish which finds there is a monopoly or that the consumer Mr. PRINGLE.
is affected or that the public are affected. There is simply an insinuation that the methods of doing business by this company arc detrimental to some other manufacturers. Upon that insinuation the government aie attempting to put through this resolution, which will leave in the hands of the Minister of Inland Revenue the absolute control of this large industry. As I have said, these large combines, these large manufacturing firms, exist not only in the protected United States, but even in free trade Great Britain we find some of the largest combines in the world. We find that in the British House of Commons, during the first week in March, 1904. Mr. Austen Taylor called the attention of the government to the recent combine of the Scotch steel makers, whereby a minimum price, with heavy penalties for selling below it, was agreed upon. Mr. Balfour replied :
I am aware of the combine referred to, but the matter is not one which seems to call for any action on the part of the government.
Let us see just what our position in Canada is to-day. We have our criminal code which controls and regulates improper combines.' Let me just refer to section 520 :
520. Every one is guilty, of an indictable offence and liable to a penalty not exceeding four thousand dollars and not less than two hundred dollars or to two years' imprisonment, and if a corporation is liable to a penalty not exceeding ten thousand dollars and not less than one thousand dollars, who conspires, combines, agrees or arranges with any other person, or with any railway, steamship, steamboat or transportation company, unlawfully-
(a.) to unduly limit the facilities for transporting, producing, manufacturing, supplying, storing or dealing in any article or commodity which may be a subject of trade or commerce ; or
(b.) to restrain or injure trade or commerce in relation to any such article or commodity ; or
(c.) to unduly prevent, limit or lessen the manufacture or production of any such article or commodity, or to unreasonably enhance the price thereof ; or
Id.) to unduly prevent or lessen competition to the production, manufacture, purchase, barter, sale, transportation or supply of any such article or commodity, or in the prices of insurance upon person or property.
These are the provisions of the Criminal Code, and they seem to me to be wide en-cugh to prevent any conspiracy which would be injurious to the public by restraining or injuring trade or limiting or lessening manufacture or production. But we also have the common law in regard to the illegality of contracts in restraint of trade. What do we find in this case ? We find that a manufacturer in the province of Quebec, who felt that he was being hurt by the splendid business ability and the success of the Empire Tobacco Company, invoked

first the Criminal Code. The court held, and held properly, that the Empire Tobacco Company were not in any way infringing upon the provisions of the Criminal Code. Then he took out a writ in the civil courts and endeavoured to show that under the common law these contracts were in restraint of trade. There he failed. The court held that both the American Tobacco Company and the Empire Tobacco Company came within the law and were doing a perfectly legal business. Having failed in the courts, he with others, got this commission started, and they failed to show the commissioner that any wrong was being committed or any injustice being done to the consumer. Sir, before we pass this legislation, which is aimed directly at the American Tobacco Company and the Empire Tobacco Company, and which will place these two companies absolutely under the control of the Minister of Inland Revenue, we should give it the fullest and most careful consideration. The Empire Tobacco Company have done a great deal for Canada. I was amused on reading the evidence of Sir Wm. Macdon-. aid. with rega rd to the Canadian leaf. In his evidence he pooh-poohed the idea of manufacturing from the Canadian leaf. He said that the farmers engaged in that Canadian leaf production might far better be employed in raising wheat, that for his part he used entirely the foreign leaf. But the Empire Tobacco Company, having confidence that they could get our people to raise a good quality of tobacco, went ahead with their business, and at enormous expense they have got the farmers to-day, not only in Quebec, but in Ontario, raising tobacco which is meeting with the approval of the people, as we see by the millions of pounds that are now being manufactured. And what is this gross injustice that is complained of ? The retailer can buy and sell the tobacco of any firm. In any town in Canada you will find ail brands on tht shelves of the retailer. The American Tobacco Company do not go to the retailer at all, but they say to the wholesaler : We have expended a large amount of money in developing our business ; if you sell our goods we will allow you a certain percentage and you can handle any goods you like; but if you want to act as our sole agents in the locality we will allow you an increased commission. In the town in which I have the honour to live, there is the firm of Snets-inger and Company (the name is no doubt familiar to our Liberal friends), and yester-dap Mr. Snetsinger said to me : My firm is agent for the Empire Tobacco Company and the American Tobacco Company. I am selling W. C. Macdonald's tobacco and Tuck-ett's Tobacco and a number of others.