MATTHEWS, James Ewen

Personal Data

Brandon (Manitoba)
Birth Date
August 17, 1869
Deceased Date
November 24, 1950
insurance agent, journalist, teacher

Parliamentary Career

November 14, 1938 - January 25, 1940
  Brandon (Manitoba)
March 26, 1940 - April 16, 1945
  Brandon (Manitoba)
June 11, 1945 - April 30, 1949
  Brandon (Manitoba)
June 27, 1949 - June 13, 1953
  Brandon (Manitoba)

Most Recent Speeches (Page 8 of 17)

August 6, 1946

Mr. MATTHEWS (Brandon):

In regard to the question of sending parcels overseas. I was told only yesterday by a thoroughly reliable source that an 11-pound parcel sent to Greece from Canada requires the payment of $3.10, but if it is sent from the United States the charge is only half that much, or $1.55. An air mail letter from Canada to Greece costs sixty cents; from the'United States it costs from twenty to thirty cents. We have all heard of the dire shortage of food in Greece, where the need is perhaps as great as or greater than in any other part of the world, and I believe that some steps might very well be taken to make it easier and cheaper for the sons of Greece in this country to send food to their starving relatives at home. If my information be correct, as I believe it is, I suggest that the department, which I have alw-ays found ready to act on what they believed to be reasonable suggestions, might look into this matter and see if it cannot be corrected.

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July 31, 1946

Mr. MATTHEWS (Kooteney East):

I am not yet clear as to what is to be done in this particular case in regard to which I am appealing to-day. Can it be reopened by the pension commission?

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July 25, 1946

Mr. MATTHEWS (Brandon):

There is

one observation which I dhould like to make in a spirit of fairness, and it might as well be made under this heading as any other. Several months ago I received, as other members probably receivedi, a great many complaints as to the demeanour of local inspectors checking up on farm returns. I received a few letters that incensed me a good deal, so much so that I prepared a questionnaire and sent out fifty-ifive copies to various persons, not all in my constituency, inquiring as to rVhat grounds there were for these complaints. Most of them replied, and I wish to report in a word or two the gist of the replies. About half of them praised the attitude of the assessors; about a quarter of them said they had no complaints at all to make; only one man complained, and he complained bitterly. I knew that man; in fact I had known him for years. I knew also the inspector who made the inspection. They

are both very fine men and I regretted that there was any feeling between two men of that. type. I believe they came together at a time when they were both considerably irritated about other matters and there was a bit of explosion. Apart from that individual case, I had not one complaint of the attitude of these assessors. Had there, been many, I would have expressed myself fairly critically on the floor of the house, and I would have had a right to. But since there is only one, I thought, as I said in the beginning, that as a matter of fairness I should report to the Minister of National Revenue and to the committee the calibre of the men so far as I have been able to learn who were in my constituency and near it, and I have much pleasure in. doing so at this time.

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July 18, 1946

Mr. MATTHEWS (Brandon):

I was paired with the hon. member for Norfolk (Mr. Barrett). Had I voted I would have voted against the amendment to the amendment.

Subtopic:   THE BUDGET
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July 2, 1946

Mr. MATTHEWS (Brandon):

Mr. Speaker, prior to the house rising at six o'clock I was citing some questions which I had placed on the order paper last March and the answers given to them. My reason for having asked those questions, bearing directly as they did upon Canadian Industries Limited, was due to a situation which is set forth and explained by Merchants Consolidated Limited, an old and reputable wholesale firm in the city of Winnipeg of which some four hundred retail merchants in western Canada are members. As hon. members know, I am not in the habit of trespassing unduly upon the time of this house; but because of the number of people interested in this matter, and particularly because of the principle involved, I desire to take the time to place upon the record a brief, issued by Merchants Consolidated Limited so that the Canadian public may judge for themselves the strength or weakness of the situation. I do this not necessarily in the interests of Merchants Consolidated Limited but because, as I have suggested, there is a principle which should be ventilated in discussing the bill now before the house. Here then is the position of Merchants Consolidated Limited as set forth in a letter from them dated November 7, 1945. This letter tells an interesting story, and is as follows: [DOT]

To our shareholder merchants:

As instructed by the board of directors and the shareholders of Merchants Consolidated Limited, we are writing to advise you of the situation that we face in regard to our ammunition supplies.

In 1914, a number of the better type oi general store and hardware merchants of Manitoba and eastern Saskatchewan, noting the inroads being made into retail distribution by the corporate chain-mail-order houses, and

realizing that this type of distribution was detrimental to the community centres of the prairies, met together to discuss the possible establishment of their own wholesale house, with the object in view of establishing economies in the operation that -would result in a more favourable scale of prices to the consuming public and a continuation of prosperous community centres on the prairies.

Merchants Consolidated Limited was organized a few weeks later. A wholesale house was established in Winnipeg and a stock of groceries, dry goods, shoes and hardware merchandise accumulated.

Opposition to a company of this type was early in evidence, and for some years a substantial percentage of the time of the company's management and buyers was devoted to an endeavour to gain for the company recognition as legitimate wholesalers by Canadian, British and American manufacturers.

This was accomplished early in the 1920's in both the grocery and shoe divisions of the company's business, and, with one notable exception, also in the dry goods field.

Recognition, however, was not gained nearly as rapidly in the hardware branch of the company's activities, but, nevertheless, substantial progress was made.

Prior to the war, the company was forced, in order to supply a full range of hardware items to its merchants, to purchase a limited number of lines in the United States of America, although these lines were made in Canada, but were denied to the company by the Canadian manufacturers of them.

The declaration of war, and the institution of a very high rate of exchange for United States currency, and the adoption of a ten per cent war tax. raised the company's costs on these commodities. However, in spite of this, and in spite of the war needs of the United States government, the company was reasonably successful in supplying its merchants with these lines of merchandise.

A number of years ago, the company endeavoured to purchase its ammunition on the same basis as other western wholesale hardware houses from the one and only company making this type of merchandise in Canada-Canadian Industries Limited, with head office in Montreal. The company's management was unsuccessful in persuading this organization to recognize the company as legitimate wholesale buvers at that time.

In order to obtain supplies from a service standpoint, the company was forced to buy from a competitor, at. of course, substantially higher costs than those enjoyed by the company's competitors engaged in a similar line of business.

From time to time, representation was made to Canadian Industries Limited, without satisfactory results.

Shortly after the commencement of the war, it was pointed out to the company that one of the reasons that the company had failed to gain recognition as legitimate hardware wholesalers, with every Canadian manufacturer, was because of the general nature of the company's business. It was suggested that if the company segregated the hardware division from the general business, the company's few purchasing problems would be solved.

Early in 1944. the company obtained a charter for. and established Falcon Hardware Limited, a wholly-owned subsidiary of Merchants Consolidated Limited, and purchased a large building close to the company's premises, and established therein the new company.

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In the fall of 1944, after this had been accomplished, the management of the company called upon the official in charge of the explosive division of Canadian Industries Limited, at the head office of the company in Montreal, and informed him of the company's action, and once again requested recognition as legitimate wholesalers.

During the course of the discussion, the Canadian Industries Limited official pointed out that ammunition was not denied to the company, as the company had made arrangements to purchase its supplies through a competitor. Your management pointed out that the company was penalized by the amount of profit taken by the competitor on the company's business and that the company, as a legitimate wholesaler, was entitled to buy on a direct basis.

It was further pointed out by the Canadian Industries Limited official that shareholder customers of the company could purchase ammunition from the other wholesalers of the west. The management pointed out, in reply, that over 400 of the leading retail merchants of the prairies had invested substantially in a wholesale company for the privilege of purchasing their goods through that company, and they desired to enjoy this privilege in any and every line of merchandise.

A further meeting with this and other officials of the company was set for the following day, but due to the sudden passing of one of the joint general managers of our company, it was necessary for the engagement to be cancelled.

Early this spring (1945) the management once again called upon the official in charge of the explosive division of Canadian Industries Limited, and after discussing the matter for over two hours failed to obtain a satisfactory reply, and also failed to obtain a satisfactory reason for the manufacturer's attitude.

Your management pointed out to this official that there are in the city of Winnipeg five wholesale hardware houses, including Falcon Hardware Limited, that the other four are on the direct list for ammunition and that he was at a loss to understand why the boycott against the company was persisted in.

Canadian Industries Limited were well aware of the company's purchases through the competitor, and under date of September 11, in reply to a telegram from the company, requesting that they transfer the company's allotment of ammunition to a direct charge to Falcon Hardware Limited stated-"in view of many factors involved in your proposal we would like to postpone a reply regarding 1946 policy until mid-October when we look forward to full discussion with you in Winnipeg."

Early in October, two officials of the explosive division of Canadian Industries Limited called upon the management of the company at Winnipeg and after a lengthy discussion, the company was informed that no change whatever would be made in the policy of the explosive division of Canadian Industries Limited towards Falcon Hardware Limited, although no sound reason for such action was advanced and that Canadian Industries Limited would not sell ammunition to Falcon Hardware Limited.

Canadian Industries Limited enjoy a customs tariff protection on ammunition against manufacturers in the United States of America of 274 per cent and, of course, in addition, the benefit of 104 per cent exchange. This very substantial protection makes it impossible for Falcon Hardware Limited to import into Canada ammunition at competitive prices.

On the high power shotgun shell, made by an American manufacturer in Minnesota, which is comparable in quality to the Imperial shell made by Canadian Industries Limited, the price f.o.b. Minneapolis, less trade discounts, is $31.70 per thousand. The exchange of 104 per cent amounts to $3.33, the import duty of 274 Pet cent is $9.63, the sales tax of 8 per cent is $3.57 and freight $1.10, making a laid down Winnipeg cost ot $49.33 per thousand.

It is the company's understanding that the cost of imperial shells laid down to wholesalers in Winnipeg, who are on the direct list, from Canadian Industries Limited, is $41.87 per thousand.

According to a suggested price list governing selling prices of Manitoba wholesalers to retailers, effective January 2, 1941, and still in effect, imperial 12 ga. shells are listed at $53 per thousand. This represents a mark-up of 26-53 per cent as profit to the wholesaler.

It is obvious from the above-mentioned facts that the company is being discriminated against by the explosive division of Canadian Industries Limited and for which no satisfactory explanation has been advanced. It can further be pointed out that all other divisions of Canadian Industries Limited recognize the company as regular wholesale buyers and extend to the company all terms, discounts, et cetera applying to legitimate wholesalers.

It is the considered opinion of the board of directors of the company that Canadian Industries Limited should either desist from the present discrimination and boycott, and sell its ammunition to Falcon Hardware Limited on the same basis as they sell to all other wholesalers or that the customs tariff on ammunition should be reduced immediately from 274 per cent to 74 per cent, to enable Falcon Hardware Limited and any other Canadian buyer who is being treated in a similar way, to lay ammunition into Canada at prices no higher than those charged by Canadian Industries Limited.

Further, it is the opinion of the company's board that no manufacturer in Canada, enjoying tariff protection, should be permitted now, or at any time in the future, to withhold goods from any legitimate distributor, particularly if the manufacturer enjoys a complete monopoly in his field as does Canadian Industries Limited on ammunition.

Yours very truly.

Merchants Consolidated Limited. November 7, 1945.

If that brief by Merchants Consolidated Limited, a firm that has done business in this country for thirty-two years, does not impute restraint of trade and discriminatory practices, I do not know what does. Surely Canadian Industries Limited have an explanation. Well, they have what purports to 'be an explanation, and here is what they say: I quote from the submission they made under date of January 26, 1946:

The two main objectives of our distribution policy on sporting ammunition have been

1. To obtain the widest possible retail distribution of our product through hardware and sporting goods outlets.

2. To supply the largest possible share of Canada's relatively small ammunition market, as maximum volume is necessary for low cost production and maintenance of employment in our

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factory at Brownsburg, Quebec, where 350 employees are normally engaged solely in the manufacture of sporting ammunition.

I suggest that those two objectives when you analyse them may be reduced to one simple sentence, namely this: "We want to

obtain the widest possible retail distribution of our product." Well, no one could very well condemn that ambition on the part of any firm. I suggest that in the stand I am taking to-night I am trying to assist C.I.L. in a wider distribution of their product rather than to curtail them. But if C.I.L. are really yearning for expansion as they would suggest, why do they refuse to sell, except at a higher price level, to the wholesale firm of Falcon Hardware company of Winnipeg, which in turn would be distributing to approximately 400 business firms in the western provinces who are stockholders of the Falcon, and whose thousands and thousands of customers are at present deprived by C.I.L. of advantages enjoyed by other Canadian citizens? It would look to me as though C.I.L. is missing a substantial channel for increased distribution, and I can only guess, but I think it is a fairly good guess, as to the reason.

Later in their submission, C.I.L. point out that in keeping with their policy of adequate distribution, a worthy policy I admit, they now sell to eighty wholesalers, who in turn supply 7,000 retail outlets. Well, if their professed policy of adequate distribution is to be genuinely and sincerely adhered to, does it not seem passing strange that C.I.L. in their yearning for expansion are, as I have said, unwilling to increase their wholesalers from eighty even to eighty-one, their retailers from 7,000 to 7,400 or more, and their customers by many thousands? I must say that I have never in all my life seen what seems to me to be a more glaring or a more stupid contradiction in two attitudes as expressed by any firm. I confess that I have tried, but tried in vain, to reconcile those two attitudes, but always with the one result, that is to recall those ancient words, "consistency, thou art a jewel." In theory, anxious to sell, so they say, but in practice refusing to sell except under discrimination. The Canadian public cannot accept any such clumsy explanation as that.

But then the C.I.L. bring up another point which perhaps from their angle would have been more wisely left unsaid:

The choice of distributors is, at best, a difficult one for any manufacturer, particularly when the manufacturer finds himself the sole Canadian producer in competition with numerous imported brands. Our position in this respect has not been created by any combination of interests, but presumably exists because the market is too small (normally less than 1,000,000 per annum 63260-194

divided over 200 types and loads of ammunition) to justify two plants for a product that requires a very large capital investment.

I should like to ask, is this a dog-in-the-manger attitude, or is it not? Does it mean that C.I.L. object to make any outlay for increasing their limited output but yet expect to retain what may be regarded as a monopoly in what they do produce? Are we to infer from their observation that C.I.L. have reached their maximum production? Such a condition would hardly coincide with their urge for adequate distribution. And the last paragraph of their submission seems to be only another contradiction. Here it is:

In order to reach a settlement with Merchants Consolidated Limited we are prepared to submit a proposition for selling them direct on terms which we feel would be fair and reasonable, although ammunition is still in short supply, and we are not able to take care fully of the current needs of our present distributors. We are now attempting to arrange a meeting with Merchants' Consolidated Limited to discuss our proposition . . .

This submission was made by C.I.L. on January 26, 1946. Resulting from it, another letter, dated May 5, was sent by Merchants Consolidated Limited to their members, as follows:

To our shareholder merchants:

Further to our letter to you of November 7, 1945, regarding the refusal of Canadian Industries Limited to recognize Falcon Hardware Limited as legitimate wholesale buyers of ammunition.

On January 26. we received a letter from the sales manager of the "Dominion" ammunition division of Canadian Industries Limited in which he stated that his company was now in a position to discuss the matter with us.

Later, this official wrote to state that he would call upon us either on the following Thursday or Friday. On Friday, February 8 he and his assistant called upon us and presented a letter addressed to this company under date of February 4, in which Canadian Industries Limited agreed to sell to the company on the basis of their "A" list, copy of which they attached to their letter. They stated that this list would be subject to a discount of 2J per cent on carload orders. They also set forth the quantity of ammunition they would be in a position to supply to us in the year 1946.

The prices on the "A" list are 5 per cent higher than the regular list applying to wholesale buyers. In other words we are expected to pay 5 per cent more for ammunition than our competitors.

In view of the fact that the executive committee of our board of directors was to meet on the Monday following the interview, it was decided to leave the matter in abeyance until that meeting.

A report was made to this meeting and, in view of the fact that a general meeting of shareholders of the company had been called for Wednesday, February 13. the executive committee decided that the matter should be taken up at that time with the shareholders.

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The matter was duly reported to the shareholders and, after some discussion, it was the unanimous opinion that it would be entirely too dangerous for the company to establish a precedent that in effect was that the company was prepared to pay 5 per cent more for its goods than its competitors, and the company was instructed to endeavour through every means possible, to obtain what they originally requested, viz., that the company either be placed on the regular wholesale list by Canadian Industries Limited, or that the rate of customs duty be reduced from 27J per cent to 74 per cent.

Yours very truly,

Merchants Consolidated Limited.

It will be noted from what I have quoted that Merchants Consolidated Limited did not ask for the segregation of their hardware branch under the name of Falcon Hardware Limited, or any other name. The segregation was suggested to them, as stated in their brief.

I suggest that Merchants Consolidated Limited is either a wholesale organization, or it is not. There is no halfway station. I am acquainted with many of the shareholders, and they are the type of men who know their rights, who ask no more, and whose rights they will maintain.

Merchants Consolidated Limited, as hon. members have heard, have been doing a wholesale business in western Canada for thirty-two years. Access to other manufactured products has already been accorded them-dry goods, boots and shoes, groceries, small wares, and many others. Therefore I ask, who is this C.I.L. in Canada, who is this cartel outside Canada having the audacity to set up its own standard of discrimination in this our free country? I know who the members of Merchants Consolidated are and I stand firmly in a demand for justice in their behalf.

This attitude of C.I.L. is not altogether a new thing in Canada. I have some recollection of a similar incident some years ago when another firm enjoying tariff protection declined to sell their products to a wholesale house. I believe that the matter came before the then tariff board and the manufacturers were given their choice of selling the goods as requested, or of having the tariff removed. I need scarcely add that a decision was quickly arrived at. I speak for a multitude of people in this country when I say that C.I.L. should be given the same choice, to be acted upon immediately, namely, to sell to Falcon Hardware in the same way and at the same price as they sell to other hardware firms, or to have the duty removed from similar goods imported into this country. In other words, they should be told to play the game or forfeit their protection. To my mind there is no alterna-

tive. Let it not be forgotten that the Canadian people as a whole, not any one section of them, grant protection to C.I.L. Therefore I say most emphatically that the Canadian people as a whole are entitled to share in the advantages, if any, which accrue from that protection. I would be most reluctant to make demands upon any firm struggling for its existence; but I learn, in fact I have learned to-day, that the common stock of C.I.L. is selling for from S240 to S250 for a $100 share and that a half yearly dividend of three per cent has already been declared for the first half of 1946. It would look, therefore, as if the people of Canada have been reasonably good to C.I.L. and that that firm is not by any means headed for bankruptcy.

I am less fortunate than a good many hon. members in the fact that I am not learned in the law. But I am to some extent learned along certain other lines, perhaps equally as good in their way as that of law. By long and sympathetic observation and by close and friendly contact with my fellow men I have learned something of those principles which are right and just, honourable and desirable in a community and in a nation; and I find it difficult to include in that category any tendency toward discrimination among our people, or the restraint of legitimate trade.

I therefore, with every confidence, ask urgently the Minister of Justice (Mr. St. Laurent) and the Minister of Finance (Mr. Ilsley), both able lawyers, to take such steps, either individually or jointly, by the present amendment or by added amendments, as may completely eliminate those unfair conditions to which I strenuously object, and to which I shall continue to object until t'he situation is corrected.

Mr. DAVID A. CROLL (Spadina): I too want to commend Mr. McGregor, who was the commissioner appointed under the Combines Investigation Act, for the comprehensive report which was tabled here last session. The suggestions made in the report as to control and abolishment of cartels are most useful, and I think it is well that before we get into the discussion I should give the house some of the recommendations made by the McGregor commission. A summary states that the cartels were guilty of having:

1. Limited production and impeded the most efficient use of world resources.

2. Raised or maintained certain consumer prices.

3. Restricted the import and export of certain commodities. _

4. Restricted the use to which certain commodities might be put.

5. Nullified external trade policies in certain

respects. [DOT]

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6. Restricted technological advances in certain fields.

7. Created patent pools or monopolies covering wide fields of endeavour.

8. Assisted the formation of private industrial empires which tended to supplant governments in the determination of certain national commercial policies.

I think it is fair to say that it is common knowledge that cartels exist, but how they operate is far less familiar, and what is often lost sight of is their effect upon the national economy of this country. Cartels are defined as private business arrangements to reduce or regulate competition in international trade. Their method of operation, or their usually understood method of operation, takes three farms: first, by agreements, written agreements, and if written agreements are found undesirable, there are oral agreements or, as they are termed in the trade, gentlemen's agreements, if you will; second, by membership in associations, wherein they form associations and limit the membership, as I shall indicate to the house a little later on; and, third, by centralized selling agencies, by which they demand that certain products be sold through a central agency.

Usually they divide a territory so that a member may have a sheltered territory in which he becomes a monopolist. Again, they often place restrictions upon process production, usually by patent agreements. The league of nations report in 1937 stated in part that thirty-two per cent of international trade was controlled by marketing controls; and the United States Department of Justice report in 1939 indicated that there were 179 cartels operating in that country. We in Canada have not escaped from the octopus of monopoly cartelization. As a matter of fact, we all know that every day in every way we are paying tribute to cartels in hundreds of ways.

A few glaring examples I take from the cartel report indicate that farmers are discouraged from mixing their own fertilizers by the fact that the potash and nitrogen cartels keep prices for direct sale to consumers exorbitantly high. Through cartel agreements, the price of sulphur was maintained at SIS a ton for seventeen years and then reduced to $16 a ton which became a new fixed level, and the average profits during this time to the cartel members varied from 13 to 29 per cent. The price of sulphuric acid was forced upward during good times and bad from $12 a ton to $17 a ton, although in a free market the natural tendency is for competition to send prices down. Instead of passing on to consumers the benefits to be had from newer and improved electric light bulbs, General Electric deliberately reduced the life of bulbs from 63260-1944

35 to as much as 62$ per cent, and instead of promoting the use of fluorescent lighting, which is better and cheaper than the old-fashioned bulb, General Electric and Westinghouse agreed to defer the development and marketing of the product as long as possible. A cartel agreement gave the Eddy Match company a virtual monopoly of the domestic market, foreign competition being barred by the policy of the match cartel; and through a cartel controlling plastics, du Pont of America agreed with the I. G. Farben Industries to fix the price of plastic powder for dental use at $45 a pound, although exactly the same product was sold to commercial moulders at 85 cents a pound.

That is the way cartels agree, according to the commissioner, to cripple and hamstring the economy of a country and force the public to pay through the nose for the essentials of life. The Americans have been awake to the situation, and I notice by the Globe and Mail of June 19 that:

The United States Department of Justice has started civil and anti-trust monopoly proceedings against the wealthy International Nickel Company of Canada Limited and its American subsidiary International Nickel Company Incorporated.

From the Globe and Mail of June 28 I see that they have also started proceedings against Electro Metallurgical Company of Canada Limited. But what is more important is a decision which has just been handed down by the United States supreme court dealing with the tobacco trust. I would ask hon. members to pay particular attention to it to see how well it fits into our situation. I quote from the research institute of America of June 14:

A far-reaching decision which can force revision of buying and selling practices in many industries has just been handed down by the supreme court. In a 6-0 ruling involving major tobacco companies the court has extended the revolutionary type of reasoning begun in the Alcoa case. While the earlier decision dealt with the monopoly aspects of a single firm- the new ruling applies virtually the same tests and finds an illegal monopoly where three firms exercised similar controls.

The court makes it clear that actual exclusion of competitors (from interstate or foreign commerce) is not necessary to a finding of unlawful monopoly. It is sufficient if all three of the following conditions occur:

1. Some members of an industry "combine" to get or keep the power to exclude competitors. The court pointed out that although there was no express agreement among the defenders their action indicated a clear course of dealing. This in itself seemed convincing evidence of a combination or plan to fix and maintain prices and prevent future competitors from getting into the industry.

2. The group has the "power" to exclude present or future competition from the field. The court noted that the defendants controlled over two-tliirds of the entire domestic cigarette

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field and over eighty per cent of comparable cigarettes. Following the Alcoa precedent, which uses percentage of control as an index of monopoly power, the court said that "comparative size on this great scale inevitably increased the power of these three to dominate all phases of their industry."

3. The group "intends" to use this power to maintain a monopoly. Evidence of such intention was found by the court in a wide range sf buying and selling practices of the three companies.

Both combination and intent to exclude competitors were inferred from a wide range of parallel purchasing and sales tactics engaged in by the companies-for example:

(a) Buying methods. Each of the three majors refused to make any purchases of domestic leaf tobacco unless the other companies were represented on the market. Before markets opened, they placed limitations on the prices which their buyers were permitted to pay and formulated grades so that there frequently was no competition between them. The companies determined in advance of each season what portion of the entire crop each would buy-then spread purchases evenly over the different markets throughout the season. At the time when manufacturers of low-priced cigarettes were beginning to manufacture in quantity, the majors made large purchases of the cheaper leaf needed for the low-priced cigarettes.

(b) Selling methods. The companies charged identical list prices and gave identical discounts for their cigarettes. They also raised and lowered their prices at the same time. At one point, for example, all three raised their prices on the same date in the face of declining cost and market trends. When the majors were faced with competition from cheaper brands they sold for a while at a loss. Later they insisted that retailers maintain a fixed differential between the quality and the low-priced brands.

RCA observation 1: While no one of these practices taken alone would have been evidence of monopolistic exclusion tactics, the entire pattern is one that could get a group of quasicompetitors into trouble. In this case, for example, fines totalling more than a quarter of a million dollars were imposed.

I point out the steps which our friends to the south of us are taking to deal with this important problem. I have already told the house that in his report Mr. McGregor indicated that cartels restricted production. Restricting production might be beneficial to a cartel, but surely it cannot be beneficial to the economy of this country; for I ask hon. members how restriction of production can ever be socially desirable. It is true the report says that they prevented cyclical fluctuations in prices. As was indicated this afternoon, the aluminum cartel kept prices at fixed levels in good and bad times. I ask hon. members, where is the social advantage if the price is fixed above the average of fluctuating prices which would be permitted in a free economy?

At this particular time we must pay some attention to a problem which arose during the war in order that we might examine the extent

[Mr. Croll.l

to which big firms were able to influence government regulations against the interests of smaller competitors, especially by placing men in key federal agencies. Further, we must examine the degree to which concentration of economic power has increased under war conditions and make certain that we do not permit wartime powers to be used as a cover for anti-social peacetime associations. Individually and collectively the effects of cartel agreements are a bottle-neck in economic progress. After all, what purpose is there to the united nations organization, to the Bretton Woods agreement, to the various trade agreements which we have? If the lifeline between nations, trade relations, is to a great extent under the control of international industrialists; if we are to achieve national unity in this country-and that is our purpose-then we must make sure that wealth is distributed more equally in Canada; that industry is decentralized or in turn compensation is given to the maritimes, to the prairies and to British Columbia for their lack of industries. We must also make sure that the people of the country have an equal standard of living. The only way to do that.is to clear the channels of trade, both domestic and foreign, for we no longer have an agricultural economy in Canada.

We are a great industrial country. A few hours ago an hon. member said that we were the fourth trading nation of the world. Hon. members well know that we are the third largest industrial nation of the world; and if we are left to our own initiative, unshackled and with the know'-how which we have gained during the war, the world is our oyster, particularly when it is realized that we are now reaping the benefits of our price control, of our monetary stability, of our differential in the cost of raw material. To-day we have an advantage over the United States in the markets of the world to the extent of from twenty to thirty per cent. Although we have that advantage we are now starting in to wrestle in public and we shall probably lose the advantage. In the meantime, it seems to me that there is a first-class opportunity to gain some of the markets of the world so long as we are unshackled.

To-night I wish particularly to call attention to an abuse which has crept in, namely, the Canadian Radio Patents Limited, which already has a membership of seventeen and was formed for the purpose of licensing. It is a licensing agency organized by the industry to deal with radio patents. Radios are pretty w'ell standard equipment in Canada. I am told that in Toronto 93 per cent of the homes have radios and 87 per cent in Montreal. I

Combines Investigation

have no doubt that the percentage is just as high throughout the country. To-day radio is an essential to every home, not only for educational purposes but for entertainment and cultural purposes. It is sometimes alleged that it is useful for political purposes. But here is a company having as its objective the prevention of foreign competition and the bolstering of domestic prices; which owns over six hundred radio patents, many of them basic, without which it is impossible to manufacture or sell radios; and which has a financial set-up all its own. They demand from a member $10,000, and at the same time the member must show that he is financially worthy to the extent of $100,000. Even after this has been done, they still have the right to refuse that member admission to the company, on the ground that he has curly hair or pink eyes, or for that matter, on any other ground. To-day, as a result, they are in absolute control of radio patents which are essential for the manufacture of radios in this country. The house may say that we can import radios, but when one realizes that there is a 25 per cent tariff, in addition to the sales tax, excise tax and exchange tax, it will be seen that this is hardly feasible. What is more, under our patent laws, even if a radio is brought into this country, this company have the, rights to charge a royalty on it, and as a matter of fact they have warned many people they would1 do exactly that.

We are getting far away from business as we used to understand it. I remember the time when it was said if you built a better mouse-trap the world would track a path to your door. It seems to me that the people who want to go into the radio business and take their chance ought to be permitted to do so, by paying the ordinary royalties that one pays for the use of patents, basic or otherwise.

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