Minutes of a group of Canadian Constitutional Problems held at the home of P.S.Fisher on Tuesday, March 3rd, 1936, at 8:15 P.M

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TUESDAY, MARCH 3RD, 1936, AT 8.15 P.M.

Present: John Bird
A.S. Bruneau
G.S. Challies
Brooke Claxton
Monteath Douglas
P.S. Fisher
Francis Hankin
Ross Macdonald
H.E. McCrudden
F.R. Scott
T. Sheard

Speakers: F. Hankin and F.R. Scott

Subject: Agenda 11 (a) “Regulatory necessities, social legislation”.
Hankin dealth with first part of subject – “Regulatory necessities”.
The clamour for the regulation of business has in recent years attracted
much attention. The Federal and Provincial Governments have passed many
laws but the situation today is unsatisfactory as there is a multiplicity
of authority which has been partly responsible for the non-enforcement
of the existing measures of regulation. In addition some of the existng
legislation is claimed to be unconstitutional. One must seriously consider
giving to the Federal Government the necessar regulatory authority to
deal with matters of national concern. At the present time the Dominion
has a certain authority by virtue of its jurisdiction over money and banking
and weights and measures, but it has probably not adequate power to control
production and consumption.

Three classes of society require protection at the present

1. The Investor
2. The worker
3. The consumer

(1) Greater protection for investor would induce increased investment
with smaller risk and therefore lower rates of interest, and this protection
could be achieved more effectively by one central authority than by ten
provinces acting independently. The small investor no longer has any
control over the policy of large corporations as control has tended to
become centred more and more in the hands of a few persons who do not
necessarily hold a majority of the stock.

The investor’s second interest is that the products of his
company shall be sold as widely as possible. Able management alone
is not enough for there must also exist a large purchasing power for
consumers’ goods. The Federal Government can affect this by its influence
on the policy of the Central Bank and also by the powers it is attempting
to exercise in common with the provinces in the establishment of minimum
wages. Minimum wages could be determined and enforced better by a single
central authority than by several.

(2) The worker wants a decent wage, adequate leisure, health and
unemployment insurance, healthful working conditions. The best method of
achieving these advantages is by collective bargaining through trade unions,
but unfortunately the workers in many industries are not so organized.
The provinces have dealt with some of these problems like factory regulations,
workmen’s compensation and minimum wages but have ignored unemployment
insurance, obviously a problem for the Federal Government which has enacted
Legislation to establish it. The speaker pointed out that if the bargaining
power of the worker is unequal to that of the employer the Government must step
in to prevent exploitation and to keep up the power of the workers to purchase
consumers’ goods. The Federal Government is best fitted to deal with many
of these questions.

Hours of labour are directly related to the general problem
of wages and employment. The worker is concerned with his weekly, monthly or
even yearly income. If he works long hours for this, he displaces other
workers or it may be himself, and if other employment is not available,
the national consumers’ purchasing power will be reduced, and, in addition,
the worker will suffer from lack of leisure in which to enjoy his income.

Last year the Federal Government took power under Section 132 of the
British North America Act by which it has authority to do what is necessary
to perform the obligations of Canada, or any province towards foreign countries
arising under treaties, to deal with minimum wages and hours of work, but
the constitutionality of the laws then passed has been called in question. Even
though they should be upheld, the disadvantages of multiple jurisdictions would
still have to be faced as the powers of the provinces would remain, and,
therefore, it would appear to be wise, in order to secure uniformity and
effective enforcement, to have a single authority dealing with these matters.

The consumer is the investor or worker in another aspect. His
interest is to be guarded against deception or fraud in the quantity or
quality of the goods he buys, and against overcharge in price. The Federal
Government though its authority over weights and measures and criminal law,
may protect him against the former, but its power to prevent overcharge
has been limited by decisions of the Privy Council. It has been compelled to
rely mainly upon the power of competition to keep prices at a reasonable
level, but when this has disappeared or seemed likely to disappear through
the growth of monopolies, price fixing associations or cartels, it has had
to deal with them through its authority over criminal law because Privy
Council decisions have held that provincial authority over property and
civil rights prevents the Federal Government from regulating production
and distribution. It has made it a crime for monopolies or combinations
unduly to restrict competition or production or to enhance prices to the
detriment of the public. Power of this sort is inadequate to deal with a
process of integration in economic life which apparently cannot be stopped,
and which may have advantages if properly controlled, for, in the present
situation, monopolies are virtually free from control as it is difficult
to determine whether they are overcharing or not, and combinations,
even though they might be beneficial, can be formed and can operate only
with hesitancy because they can never be sure that their prices may not be
regarded as unduly high or their actions as unduly restraining trade. They
need regulation rather than a precarious existence in the continual danger of
committing a crime, but as their acts affect directly or indirectly the
national life, they should be regulated by a single central authority.

There are circumstances in which it may be in the reasonable
interests of a trade or occupation that certain practices or standards wanted
by a majoirty should be made compulsory for all. Familiar cases easily come to
mind as when small manufacturers and producers wish to combine effectively in
order to improve their position which has been rendered distressing because their
prices, and therefore the wages of their workers as well have been greatly
depressed by the buying power of monopolies, or again when bad marketing creates
a glut of natural products. Certain laws, such as the Natural Products Marketing
Act, have been passed to help them to do this, and even organized workers have
sought, and in some cases obtained, aid from government to help them to make
combination effective when they have found the wages they have agreed upon
with their employers are endangered by competition with workers not in their
unions. These problems would not, of course, arise in so pronounced a form
in a really competitive world where buyers and sellers were equally matched, but
in our world of organized capital, the state must step in to help the unorganized
and the weak as it is doing everywhere to establish and maintain minimum wages.
But, although some provinces have passed laws to deal with these matters, the
problem is a national one because no proper standards can be maintained if
there are competing jurisdictions.

There may be differences of opinion as to the way in which these
problems should be dealth with, but no one can deny that production and
distribution are daily becoming more and more national in character and
influence, and, if regulation is necessary, it must be national in origin
and scope. It must also derive from an undisputed authority, but today it
cannot do so because of the power of the provinces over property and civil
rights. This power, therefore, must be diminished in favour of the Dominion,
not of course by transferring to it full authority over property and civil
rights, but by giving to the Dominion authority over specific matters which
hitherto have been held to come within the scope of this provincial power. If
an agreement is reached that the constitution should be changed so that specific
matters of this sort may, by a majority vote in the Federal House, and after
approval of a majority of the provinces, be placed under the authority of the
Dominion, government regulation of our economic and social life may be carried on
in a manner suited to the changing conditions, and with the hope of more efficient
and equitable results than we can now expect.

The transfer of authority over the matters mentioned could be
made by adding to the enumerated powers of Section 91 of the British North America
Act the following:-

The Incorporation of Companies and the Supervision of the Sale of their Shares.
(If the Dominion should be given sole authority over companies, the authority now
possessed by the provinces under ss. 11 of s. 92 would have to be withdrawn, but, if
this could not be done, uniformity and possibly more effective regulation than at
present exists could be secured if a clause were added making a provincial act
invalid if repugnant to any Dominion Act.)

The Establishment and Enforcement of Minimum Wages and Hours.
If for any reason full authority cannot be given to the Dominion then concurrent
powers should be given the Dominion and the provinces as with agriculture, monopolies,
combinations and cartels, and generally the Regulation of Production and Distribution
when not carried on under conditions of full and free competition.

(It might be necessary to exclude from this last clause power to regulate
provincial public utilities which are already subject to more or less efficient
regulation by provincial public utlity commissions and which have little or no
effect outside the province.)

By a transfer of powers in the manner proposed, the Dominion Government
would be in a position to work out gradually and experimentally, and with
planning and study, a method of regulating the production and distribution of
goods and services within the country so that its its economic life would grow in
an orderly and equitable fashion in welcome contrast to the state of disunity
and chaos now prevailing.

Professor F.R. Scott then dealth with,

Social Legislation and the B.N.A. Act

The problem here is to consider what kinds of social legislation
can be made effective under the existing constitution, and to what degree
amendments to the B.N.A. Act may be necessary if centralized control is

The term “Social Legislation” is used to cover those kinds of
laws designed to protect the income, health, education and economic security
of the general population. More specifically, it includes such subjects as
unemployment insurance, old age pensions, mothers’ allowances, minimum wages,
health insurance, workmen’s compensation, maximum hours, factory acts, industrial
disputes, education and relief.

On every one of these subjects there are already laws on the Canadian
statute-books or under consideration by legislatures. It will, therefore, be assumed
that some legislation along these lines is desirable and necessary. The only
matter for argument is, therefore, a question as to whether the Dominion or the
Provinces should have the power to enact the Legislation.

Subjects which the Dominion should control

Some of the above mentioned subjects must obviously be of nationwide
application if they are to be effective. Such are unemployment insurance,
minimum wages and maximum hours. The argument for national control in these
matters is based on the fact that the failure to adopt such measures by any
province would enable that province to obtain a competitive advantage in
the case of manufacturing commodities which would soon make it impossible
for the other provinces to maintain their schemes. In other words, the more
backward province would attract new industries and would soon force down
the standards in the more progressive province.

This does not mean, of course, that a Dominion scheme would have
to maintain absolutely uniform standards over the entire country. Variation
could be permitted to suit Local requirements, in the same manner as the
Arcand Law in Quebec now permits variations of wage payments in the
different economic zones of the province.

It will generally be agreed that the administration of relief
and dole payments should also be a Dominion matter, partly because of the
reasons advanced for unemployment insurance, and partly also because it is
a national problem that cannot be handled economically or efficiently by
local authorities.

Two other subjects are already effectively under Dominion
control. These are old age pensions and industrial disputes. The Old
Age Pensions Act has been adopted by all the Provinces except Quebec
and New Brunswick where it is enacted but not proclaimed, and the Industrial
Disputes Investigation Act by all provinces except Prince Edward Island. As
Quebec is certainly going to adopt the former Act, there is probably no need
to disturb the existing statutes. Certainly as regards Old Age Pensions the
knowledge that if a Province stays out of the scheme its citizens continue to
pay for the support of aged persons in other provinces is sufficient to prevent
them from refusing to co-operate.

It would seem, therefore, that the B.N.A. Act would have to
be changed in order to make possible Dominion control of Unemployment
Insurance, minimum wage, maximum hours and relief, should the decision on
pending reference cases be adverse to the contention that these matters
already belong to the Federal authority.

Matters which may be left in the Provincial Jurisdiction

Amongst provincial forms of social legislation, education must
obviously be left untouched. Provincial control here is more a racial
and religious than an economic matter. At the same time it is interesting
to note that the Dominion does in fact possess some control over education
through its control of the Radio. It may be from this source used in
connection with adult education work that the development of a national
culture will be most fostered.

Workmen’s Compensation should probably also be left as a
provincial matters, although this may be open to discussion. At present a
provincial scheme is operating in all provinces except P.E.I. Theoretically,
as a considerable charge on industry, a national system with more or less
uniform rates would ultimately be desirable. But the increased benefit
resulting from Dominion control is probably not worth the political difficulty
of attaining it. The same reasoning would seem to suggest that the Factory
Acts should be left to provincial administration.

The subjects of health insurance and socialized medicine
would probably best be left within the provincial jurisdiction. At the
same time the Dominion obviously has a certain responsibility in the
development of standards, the enactment of pure food laws, the exclusion of
immigrants with infectious diseases and so on.

Mothers’ allowances are provided for at present in all
provinces except Quebec and New Brunswick, where it is enacted by not proclaimed
Logically, such payments should be under the same administration as the
old age pensions and relief schemes, but the matter is possibly of
minor importance.


The new powers given to the Dominion will all be exclusively
under Federal control if they are simply added to the enumerated powers
under Sec. 91 of the B.N.A. Act. It has been suggested that it would be
preferable to add them to the concurrent powers under Sec. 95. In such a
case the provinces are also free to legislate on the same subjects so long
as their laws do not conflict with any Dominion enactments. This provides
a greater degree of flexibility and permits the more progressive provinces
to impose higher standards.

SHEARD: We are tonight discussing the problem that is the kernel of the
whole constitutional question. All other problems can be met if there is the
will to meet them. But the social industrial problem is much more
difficult. There is a danger in giving to the Dominion clearly defined specific
powers that this procedure may lead to endless controversy on questions of
interpretation. Some general clauses resembling the peace order and good
government clause as the Fathers of Confederation originally contemplated
it might be preferable.

CLAXTON: It is difficult to find a synonym for a clause which has been
introduced by the Fathers of Confederation and misinterpreted by the Privy
Council. There would always be the risk of further misinterpretation.

MACDONALD: Could one not widen the lists of crimes to cover these industrial
and social questions?

CLAXTON: Such a procedure would be socially undesirable as it might bring
the whole of the Criminal Law into disrepute as did the Volstead Act
in the U.S.A.

SHEARD: U.S.A. has based the N.R.A. Legislation upon the power of
Congress to regulate interstate commerce. Could the same thing not be
done in Canada by amending the Dominion Power retrade and commerce.

SCOTT. Maybe this could be achieved by adding a subclause (d) to S.92
(10) allowing the Dominion to declare an industry a monopoly and thus
subject to its jurisdiction.

SHEARD: Does the Dominion not exercise a considerable control through the

HANKIN: No! the effect of the tariff has been greatly exaggerated.
International monopolies, like the C.I.L. are in large part unaffected by the
tariff. There is a similar situation in the Iron and Steel industry where there
is an agreement by the British boiler tube manufactueres not to export to Canada.

SHEARD: stated that he did not intend to suggest that there was no
necessity for greater Dominion control of monopolies, or that the tariff was
a cure all, but that the Dominion has a considerable weapon in the tariff and in
its power of taxation. With so many eventualities to consider we must seek
a minimum of amendments necessary.

FISHER: questioned the necessity of minimum wage legislation.

SCOTT: Necessity is proved by the fact that there is minimum wage legislation
is almost all the provinces. Moreover, we do not want competition between the
provinces because that will lead to a competition in the worsening of working
conditions by lowering wages and lengthening hours rather than by seeking equality
and economy in production.

SHEARD: Clothing manufacturers are moving from Ontario to Quebec because
labour legislation is not so strictly enforced in this province.

SCOTT: There is today a marked development of a household clothing
industry which cannot be controlled.

SHEARD: Any omnibus clause added to the constitution to give the Dominion
power to deal with industrial and social problems would not arouse provincial
animosity to the same extent as would an amendment giving to the
Dominion specific powers.

SCOTT AND CLAXTON: did not agree that this was desirable and pointed out
that a claim to jurisdiction over wages, hours, unemployment insurance and
possibly health insurance is not a very extreme claim.

CLAXTON: Health insurance on a national basis might run into difficulties
as the medical profession is organized provincially.

DOUGLAS: It is a mistake to attack this problem by specifically listing
matters for Dominion jurisdiction because our Canadian economy is
dynamic and constantly changing. It would, therefore, be preferable that
a broad general power be given to the Dominion.

HANKIN: A permanent method of amendment will probably be provided by the
Ottawa Committee and in such case the objection against specific listing
would be answered because specific changes could be made from time to time
without too great difficulty or delay. Undisputed power over monopolies
and combinations would have allowed the Dominion to deal with the Pulp &
Paper Industry in which provincial action has proved to be ineffective.

SHEARD: The situation in the Pulp & Paper Industry is the reverse of the
usual situation for the monopoly is among consumers not producers.

HANKIN: The main purpose of a central bank is through its control over the
internal price level to prevent profits from rising too quikly with
consequent overproduction and under consumption. This is the most important
of the Bank’s powers which it must exercise wisely and with due regard
to the effect on our foreign exchange position so as not to hinder our export

SCOTT: Why could one not expand the Trade and Commerce clause of S. 91?

McCrudden: Could we in Canada not profit from the experiment in the
United States with the interstate commerce clause, which the Supreme Court
has held does not give to Congress the broad powers required for N.R.A.

HANKIN: Why not add the word “production” to trade and commerce.

SCOTT: That arrangement might confer too broad powers upon the Dominion.
After considerable discussion the majority of those present
were converted to supporting Sheard’s omnibus clause.

SHEARD: It is difficult for this group to draft such an omnibus clause,
but at least we can list the matters that the Dominion should, in our
opinion, control:-

1. Investment – There was general agreement that the Dominion should
control this though Mr. Bruneau observed that the provinces had been quite
successful in regulating brokers.

2. Companies – General agreement that Dominion control incorporation
of companies. It was, however, suggested by P.S. Fisher that the provinces
be allowed to incorporate private and charitable companies which suggestion
met with general approval.

CLAXTON: Control of company incorporations would not cover bonds. At the
present time a company can issue as many bonds as it wises.

FISHER: If Dominion can say to a specific company that it cannot extend its
plant tremendous power is placed in the hands of a government, and if the
government can control bond issues it can, in effect, prevent a company
from expanding. Such a situation would arouse a storm of protest.

HANKIN AND SCOTT: This might be an extreme measure but even though the
government might curb corporate liberty for the national good this would be
better than another and perhaps still more severe depression.

SHEARD: The point at issue is not so much the degree of regulation as who
shall exercise the power. The provinces now have the power of controlling
investment, but do not make use of such power. The Dominion should have
this power and would have it if it were given power over the incorporation
and financing of companies. This combined with authority over Banks and
Banking would give the Dominion the power to control the expansion of
industry if necessary.

FISHER: Objected to the Federal Government having too wide powers of
controlling companies.

HANKIN: It is of primary importance that the investor be protected even
though in the national interest some large interests should suffer.

3. Minimum wages and laws of labour. All agreed that there should
be at least concurrent powers on this subject.

FISHER: doubted the efficacy of minimum wage and labour legislation
and suggested that it would be better to tax the corporations.

HANKIN: Such a tax would be no protection for the worker except that it
might provide a dole, and then we might be driven back to the condition that
England was in in the 18th century when in some districts poor law relief
supplemented and therefore drove down the wages paid by the manufacturers.

SHEARD: Suggested that another meeting should be devoted to a discussion
of this question and asked Professor Scott if he would draw up some
draft amendments.

CLAXTON: Felt that due to the lateness of the season we should push on with
the Agenda, devoting a further meeting to the discussion of “Regulatory
necessities, social legislation” if time permitted.

Professor Scott offered to provide the locale for the next meeting
which, it was tentatively decided, would take place at his house on Tuesday,
March 17th, 1936, at the usual time.

The Meeting adjourned for refreshments at 10.45. P.M.

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