The Public Purse: A Study in Canadian Democracy 9781487574413

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THE PUBLIC PURSE

CANADIAN GOVERNMENT SERIES

General Editors R. MACG . DAWSON, 1946-58

J. A. CORRY, 1958-61 C.B.MACPHERSON,

1961-

l. Democratic Government and Politics. By J. A. CORRY and J.E. HoDGETTs

2. The Government of Canada. By R. MACGREGOR DAWSON; revised by NORMAN WARD 3. Constitutional Amendment in Canada. By PAUL GERIN-LAJOIE 4. The Canadian House of Commons: Representation. By NORMAN WARD

5. The Government of Prince Edward Island.

By FRANK MACKINNON

6. Canadian Municipal Government. By KENNETH GRANT CRAWFORD 7.

Pioneer Public Service: An Administrative History of the United Canadas, 1841-1867. By J.E. HoDGETTS

8. The Government of Nova Scotia. By J. MURRAY BECK 9. The Office of Lieutenant-Governor. By JOHN T. SAYWELL

10. Politics in New Brunswick. By HUGH G. THORBURN 11. The Public Purse. By NORMAN WARD

12. Procedure in the Canadian House of Commons.

By W. F. DAWSON

13. The Canadian General Election of 1957. By JOHN MEISEL 14. The Government of Manitoba. By M. S. DONNELLY

The Public Purse

A STUDY IN CANADIAN DEMOCRACY

Norman Ward

UNIVERSITY OF TORONTO PRESS

COPYRIGHT CANADA 1951 BY UNIVERSITY OF TORONTO PRESS REPRINTED 1964 IN THE UNITED STATES OF AMERICA

Reprinted in 2018 ISBN 978-1-4875-8572-3 (paper)

TO KEN ARRELL BOB DORSEY STAN GAUDIN LESLIE MACKAY AND ALL THE REST

PREFACE

THIS BOOK DEALS WITH THE STRUGGLE for responsible government in Canada to the parliamentary session of 1961 . I have never understood why so many scholars, having dealt admirably with the history of responsible government to 1848-9, have thereafter ignored most of the subject as if the story had virtually ended then. The struggle for responsible government, as I hope this book establishes, is a continuing one; in 1848-9 it entered another of a series of significant phases. Though the text contains numerous references to events of the parliamentary session of 1961, I have not attempted to include that whole session, for a very good reason: the book went to the printer before the session ended. I should like to make explicitly clear that the important final report of the Standing Committee on Public Accounts in 1961, in which the committee commended the audit approach of the new Auditor General, Mr. Henderson, is not considered herein, though the new approach itself receives some attention. The amount of help that I have received in the writing of this book, from academic and journalistic colleagues, members of Parliament, public servants, librarians and archivists, and editors, is too great for me to list all the individuals who have been involved. I am especially grateful to people who have read the entire manuscript : Watson Sellar, former Auditor General; Herbert Balls, Comptroller of the Treasury; Ian Stevenson, Assistant Auditor General ; J. E. Hodgetts, of Queen's University; Duff Spafford, of the University of Saskatchewan; and Jean Jamieson, who was the happy choice of the University of Toronto Press to edit the text. A. M. Henderson, Auditor General, Alan Macnaughton, M.P., chairman of the Public Accounts Committee, and my other associates in political science and economics at Queen's and Saskatchewan, though spared the whole manuscript, were all unflagging in their willingness to assist me, either in conversation or correspondence. To all these helpful people I offer my thanks for their advice, even if I do have to take sole responsibility for accepting all or any of it. I am grateful to Queen's University for a journeyman scholar's year as Skelton Clark Fellow in 1958-9, during which I did approximately

viii/ PREFACE half the actual writing, and planned some of the rest; and to my own University of Saskatchewan for granting me a year's leave of absence for the purpose. The University of Saskatchewan further assisted in the work by giving me several summer research grants (financed by the International Nickel Company) almost from the start of the book several years ago, and by providing typing and secretarial assistance. The Canada Council kindly supplied research grants in other summers. Publication has been made possible by a grant from the Social Science Research Council out of funds provided by the Canada Council, and by a grant from the Publications Fund of the University of Toronto Press. My wife, as ever, was helpful in all the ways in which she has always been helpful during the writing of a book. N.W. Wakaw July, 1961

CONTENTS

vii

PREFACE A NOTE ON THE DOCUMENTATION

X

1

INTRODUCTION

3

2

THE POWER OF THE PURSE BEFORE CONFEDERATION

11

3

CONFEDERATION AND RESPONSIBLE GOVERNMENT

39

4

THE SELECT STANDING COMMITTEE ON PUBLIC ACCOUNTS,

56

1867-78 5

THE PUBLIC ACCOUNTS COMMITTEE AND THE AUDITOR GENERAL,

70

1879-90

85

1891-6

6

THE SCANDAL SESSIONS,

7

THE AUDITOR GENERAL VERSUS THE LIBERAL ADMINISTRATION, 1896-1905

8

A NEW AUDITOR GENERAL AND AN OLD COMMITTEE,

9

THE CONSERVATIVES AND THE WAR,

102 1905-11

1911-21

122 143

10

THE NADIR OF THE PUBLIC ACCOUNTS COMMITTEE,

11

THE SECOND WORLD WAR,

12

THE POST-WAR PERIOD,

1946-60

201

13

THE GRANTING OF SUPPLY BEFORE THE FIRST WORLD WAR

224

14

THE GRANTING OF SUPPLY SINCE THE FIRST WORLD WAR

246

15

THE RECORD AND THE FUTURE

275

1939-45

APPENDIX: THE FINANCIAL ADMINISTRATION ACT,

AND AMENDMENTS INDEX

1921-39

161 181

1951, 285 317

A NOTE ON THE DOCUMENTATION all references to Debates, Journals, Sessional Papers, and committee reports are to the Debates and Journals of the House of Commons of Canada, the Sessional Papers of the Parliament of Canada, and the reports of the Select Standing Committee on Public Accounts, House of Commons of Canada. References to Auditor General's Report are to the Report of the Auditor General of Canada for the year in which the relevant fiscal year ended: Auditor General's Report, 1890, for example, is the report for the fiscal year 1889-90. Some of the references to the reports of the Select Standing Committee on Public Accounts for the earlier years may appear both inconsistent and confusing, because the reports were published in that way. Sometimes the committee published a report without pagination; sometimes the Journals refer to a report as published in an appendix different from its actual location; a few reports listed in the Journals are actually non-existent. Occasionally the committee published all the evidence for its reports numbered First to Eighth, say, in its Ninth Report for the year; the Ninth Report in itself had no substance, but included the entire substance of the first eight. The references are as clear as can be devised. UNLESS OTHERWISE NOTED,

THE PUBLIC PURSE

INTRODUCTION

I

PARLIAMENTARY CONTROL OF FINANCE, both in theory and as it works particularly in the United Kingdom, has been described with admirable lucidity by many well-known authorities, 1 and it is not the purpose of this introduction to do more than recapitulate the main principles, and the essentials of contemporary Canadian practice, as a preparation for the chronicle that follows. Underlying all the others are two principles, both of which have to be supported by a number of subsidiary principles and practices: (i) The executive should have no income which is not granted to it, or otherwise sanctioned, by Parliament. (ii) The executive should make no expenditures except those approved by Parliament, in ways approved by Parliament. The observance of these principles would be impossible were it not for the existence of a variety of rules, customs, devices and institutions, in all of which principle and practice are impossible to separate, for the practices have meaning only because they are based on principles. Among these various rules, etc., the essential ones are: 2

lSee e.g. Samuel H . Beer, Treasury Control (Oxford, 1956); Basil Chubb, The Control of Public Expenditure (Oxford, 1952); A. J. V. Durell, The Principles and Practice of the System of Control over Parliamentary Grants (London, 1917); Paul Einzig, The Control of the Purse (London, 1959); Sir Ivor Jennings, Parliament (3rd ed., Cambridge, 1957); and Cabinet Government (3rd ed., Cambridge, 1959); and references therein. The only comparable book on Canadian affairs is the Audit Office Guide (Ottawa: Queen's Printer, 1958), which is naturally written from a particular point of view. See also Lloyd D. Musolf, Public Ownership and Accountability: The Canadian Experience (Cambridge, Mass., 1959). 2See W. C. Clark, "Financial Administration of the Government of Canada," Canadian Journal of Economics and Political Science, IV (1938), p. 393.

4 / THE PUBLIC PURSE

1. There is a budget ( using the word in its widest sense to mean, in effect, "a financial plan" ) which brings together all the government's financial needs in such a way as to give everyone concerned a clear, unified picture of what is involved. 2. The plan is prepared annually; that is, Parliament does not grant the executive permanent rights to sper,J money, but (with a few exceptions) requires it to obtain a fresh sanction to spend money each year, and for stated purposes. Money voted for a year, but not spent, lapses. 3. The preparation of the budget is an executive function, and so is the subsequent spending of public funds which are made available to the executive. 4. Parliament has the right to debate and criticize the budget fully, both as it affects past or current executive activities, and the executive's proposals for future spending. 5. The executive is responsible not only for all financial planning, but also for any changes made in it as a result of parliamentary discussion. (This principle is one of the essential differences between Canadian parliamentary and American congressional government.) 6. The executive must account fully to Parliament for its management of public funds, both receipts and expenditures. 7. An independent auditor, responsible only to Parliament, audits the accounts, and his reports are promptly made available to Parliament. 8. Finally, Parliament itself audits the accounts of both revenues and expenditures, in almost any way it chooses; parliamentary surveillance, that is, is as loose or rigid, or as selective or comprehensive, as Parliament desires. These several principles and practices, as they are applied in Canada today, can be described in a remarkably few words, considering the enormous complexity of governmental operations. Each year the proposals for next year's expenditures begin in each department, where they are prepared, often with the assistance of officials from the Treasury Board staff, in accordance with rules and forms laid down originally by custom but more immediately in accordance with a manual provided by the Treasury Board. In each department the proposals work their way upward from lesser dignitaries to the minister, who may himself make some changes or additions to them. From the minister the proposals go to the Treasury Board, a financial subcommittee of the cabinet which has risen from modest beginnings to enjoy a more pervasive influence over the preparations of plans for spending money than any other part of the Dominion administration. When the proposals have been scrutinized by the Treasury Board ( which has a staff which is part of the Department of Finance, and is now larger than that of most departments

INTRODUCTION /

5

at Confederation), they go to the cabinet for final approval. The large document which receives the cabinet's approval is "the estimates," a sample page from which may be found elsewhere in this book. 8 The estimates, by now a detailed list of proposals to spend money, neatly divided off into several hundred separate items, or votes, are presented to Parliament nowadays as early in a session as possible. The executive alone can present estimates, and recommend the expenditure of the relevant money to Parliament, in the name of the Crown. Parliament passes each item in the estimates separately, and each item limits the executive to spending no more than the amount of money named in the vote, for the purpose described. Each vote is described or analysed in detail in a large section of the book of estimates, appropriately called "Details of Services," but the details are not binding on the executive; only the vote itself is. Parliament approves each vote in one of its most celebrated committees of the whole House of Commons, the Committee of Supply; sometimes, nowadays, after some of the estimates have been scrutinized by one of several standing committees. In its other well-known committee of the whole, the Committee of Ways and Means, the House of Commons debates and approves the government's proposals for raising the money to be spent. Parliament subsequently passes, in the ordinary way, appropriation bills which legally make available to the executive the moneys listed in the estimates. After Parliament has passed the estimates and the necessary legislation, the process of spending public money ( which is actually a continuous process, the executive, as will be explained, starting to spend each year's money before Parliament has finished voting all of it) reverts to the executive, which has naturally been responsible for the passage of all relevant business through the House of Commons. The spending function is centralized in the Department of Finance : just as there is one vast fund, the consolidated revenue fund, into which all public money goes ( with a few clearly defined exceptions mostly connected with the independent commissions and Crown corporations), all outgoing money (with similar exceptions) is effectively channelled through a single office for approval before it can legally be spent. The Comptroller of the Treasury, an official in the Department of Finance, is responsible for auditing all public expenditures before they are made, and none can legally be made without his certificate of approval; his task, in essence, is to ensure that all money is spent as Parliament said it should be, in no larger amounts and for no other purposes than Parliament has approved. The Comptroller of the Treasury is obviously in a strategic position 8See p. 2S0.

6 / THE PUBLIC PURSE

to keep the public accounts, and he does. The accounts, which are subjected to a post-audit ( that is, after expenditures have been made) by the Auditor General on behalf of Parliament, are published with the Auditor General's report and, like the estimates, are promptly tabled in Parliament by the Minister of Finance. The fiscal year runs from April 1 to March 31, and the public accounts must, by law, be presented to Parliament by December 31 or, if Parliament is not in session, within fifteen days after it begins to sit. What Parliament does with the public accounts and the Auditor General's report ( which, though separate documents, were bound together from 1943 to 1960) is not laid down by any statute, and in Canada depends entirely on custom and, at any one time, the whims of members of Parliament. Ideally, the House of Commons, through a committee on public accounts, should thoroughly scrutinize the accounts and especially the Auditor General's report, and complete the cycle of parliamentary control by commenting thereon, and receiving replies, in some way, to its comments. In one sense, it will be perceived, the process of spending public money begins and ends with the executive, which plans the expenditures, takes responsibility for piloting the plans through Parliament, and subsequently carries the plans out. In a more important sense, the process begins and ends with Parliament. Most of the steps followed by the executive would have no legal sanction if it were not for Parliament, and the last words on the spending process belong to Parliament's officer, the Auditor General, and ultimately to Parliament itself. Parliamentary control of finance assumes a close liaison between the legislative and executive branches of government, and like any chain of command is no stronger than its weakest link. As the foregoing outline suggests, the Canadian system of control (which in its operation has been so unlike the British on which it is theoretically modelled that many apparently useful comparisons are in reality irrelevant) relies on a series of documents and practices, all of which have had to be developed, starting from an initial acceptance of the principles involved, and ending pragmatically with the invention of something satisfactory to Parliament. There are several points at which the process could break down if the required devices disappeared or were suddenly modified. The preparation of the original estimates in the departments, for instance, is now systematized, and closely watched by officers of the Treasury Board; the House of Commons, for most of its history, appears to have had a profound faith in the preparation of the estimates. Yet if the Department of Finance were to become inefficient or corrupt, or merely to return to the happy-go-lucky outlook which characterized

INTRODUCTION/

7

public spending down to at least the l 920's, that part of parliamentary control which depends on the estimating process would be dangerously weakened, if not destroyed. Parliamentary control would clearly be weakened if all departments consistently over-estimated their requirements, and destroyed if the departments consistently spent more money than had been voted to them. The Comptroller of the Treasury, whose post was created in 1931, is obviously another officer with enormous responsibilities, and the necessity that the Minister of Finance be a man of both probity and ability need only be mentioned for its importance to become at once apparent. On the parliamentary side, there are two major institutions (apart from the House of Commons itself) which have dominated the history of financial control: the Committee of Supply, or committee of the whole House, in which the expenditure of money is authorized in detail; and the Committee on Public Accounts, which is Parliament's own auditing committee, and thus becomes of significance after the appropriated money has been spent. Weaknesses in either of these de,ices are patently weaknesses in parliamentary control of finance , and the same is true of the Audit Office. Parliament needs, also, three major documents which must be not only accurate, but intelligible to laymen: the estimates, the public accounts, and the Auditor General's report. All three of these have at times presented serious problems, and on occasion they are still complained about by members, though now rarely. The bulk of this book is concerned with the chronicle of the development in Canada of the various practices and institutions relevant to the Canadian version of parliamentary control of finance. The chapter on the pre-Confederation period is admittedly incomplete, and is not intended to be a definitive treatment of relevant legislative activity in all the colonies before 1867; that would make a book in itself, of unusual interest since the colonial assemblies were sometimes trying to solve problems concurrently with the British House of Commons, rather than simply following the latter's example. The post-Confederation period is divided somewhat arbitrarily into two parts of different length: the general history of the Public Accounts Committee, the Audit Office, and related developments on the executive side; and the voting of supply since I 867. To isolate out of the general history one specific process may strike some as unjustifiable, but the Committee of Supply does stand apart from the rest of the story, and when dealing with so much material, and sometimes such complex activities, any simplification that can be gained by isolating part of the material seems defensible. It may also strike some readers that to discuss the voting of supply, after

8/

THE PUBLIC PURSE

first discussing so much of what has happened after money voted in supply has been spent, is to tell the story backwards. But the Canadian House of Commons shows its attitudes to parliamentary control of finance much more in its treatment of the public accounts and the Auditor General's report than in Committee of Supply. The voting of supply has to be done every year, in a well-established, though often haphazard fashion; the scrutinizing of such documents as the Auditor General's report does not legally have to be done at all, or, when it is done, in any particular way. One can understand the Committee of Supply much better if one first reads the rest of the story. Two omissions, or partial omissions, may strike some critics as curious: there is little in this book about the Committee of Ways and Means, or the Senate. The Committee of Ways and Means, since the motion to go into it annually produces one of the great Canadian holy days, Budget Night, may seem an integral part of parliamentary control of finance. In reality it is only indirectly connected with the parliamentary control that is examined in this book, for ways and means become necessary only after finance has, so to speak, been controlled. What the House of Commons shows in the Committee of Ways and Means is not its attitudes to financial control, but its attitudes to taxation, fiscal policy and, in recent decades, general social and economic welfare; the story of these, however fascinating, is not what this book is about. The Senate's role in parliamentary control of finance, as the term is employed in this book, also receives little attention for the very good reason that it is negligible, and has been since Confederation. Although, as Dr. R. A. Mackay has shown, the Senate has not hesitated to amend or reject money bills on specific topics when it felt so inclined,4 it has generally held itself aloof from the process of appropriating and accounting for public money outlined above, beyond hinting darkly from time to time that it could take a more active part if it chose. The British North America Act, with the conventions of the l 860's, so clearly established the de facto paramountcy of the House of Commons in all legislative matters, including financial, that it has not been necessary for the House of Commons to fight in Canada the kind of struggle that was necessary between Lords and Commons in Britain. The Senate has no committee of supply, and has never received the public accounts, the Auditor General's report, or the estimates themselves; in recent years it has sometimes referred the subject-matter covered in the estimates to some of its committees, and while the committee work is often well •R. A. Mackay, The Unreformed Senate of Canada (Oxford, 1926); also Ian MacGregor, "A History of Senate Reform in Canada, 1867-1957" (unpublished M.A. thesis, Queen's University).

INTRODUCTION / 9

done, and has occasionally been an interesting reflection on the House of Commons (which was not doing similar work), it is none the less outside the main stream of parliamentary control. A chapter describing the various skirmishes between Commons and Senate over particular money bills, ( such as the Naval Bill of 1912, which the Senate rejected), would undoubtedly be interesting, but it would not alter the chronicle that fills this book. The chief reason is that although the Senate itself has asserted that ( saving the constitutional requirements that make the House of Commons the point of origin of all money bills, and then only on the recommendation of the Crown 5 ) its powers in financial matters are the same as those of the Commons,6 the Senate has not acted as if they were. In 1870, when two leading senators moved to establish a committee "to examine and report upon the Public Accounts," the motion was withdrawn after debate made it apparent that the senators considered the public accounts to be the business of the House of Commons. 7 Having early eschewed participation in the parliamentary audit, the senators equally early found themselves deprived of any extensive participation in the granting of supply to the Crown, not necessarily because of constitutional limitations, but because of the facts of parliamentary life. From 1867 the theory was adopted in Canada that legislative influence over the executive was increased if the House of Commons held over the final act of passing financial legislation until the close of each session, and this put the Senate in the invidious position of either having to pass the necessary appropriation bills hastily, or delay prorogation of Parliament while the senators discussed the legislation and the members of Parliament crossly waited in the other place. Today it is accepted as a normal practice for the Senate to be notified of an impending visit of the deputy of the Governor General for the giving of royal assent to sundry bills, including appropriation acts, and then to receive from the Commons a bill appropriating many hundreds of millions of dollars, to which the Senate is clearly expected to give all three readings within an hour or two, or else keep the Governor General's deputy waiting. "I do think we ought to have the bill here and be able to see it before we give it the third reading," a distinguished senator remarked of one appropriation bill under these circumstances in 1952. "It does seem to me a remarkable procedure to bring in one or two copies of a bill after our 5British North America Act, 1867, ss. 53, 54, and the Union Act, 1840, s. LVII. 6See Journals of the Senate of Canada, 1918, pp. 193-204. 1 Ibid., 1870, p. 90; Debates (Scrapbook Hansard), 1870, pp. 816 ti.

IO/ THE PUBLIC PURSE

sitting begins, and then give the bill first, second and third readings before we have had a chance to read it." 8 That gentle remonstrance, which could be matched by many similar complaints in the Senate, is more eloquent testimony than any number of pages of argument of the Senate's real position in regard to parliamentary control of finance. It hides one significant fact: any individual senator could at any time stop the Senate's quick passing of financial legislation, since unanimous consent is required to give all three readings to a bill on t!1e same day. In short, while the extent of the Senate's constitutional powers over financial legislation may be debatable, and the Commons and the Senate have never fought to a finish to decide what they are, the Senate has in practice conceded that parliamentary control of finance concerns the Crown and the House of Commons. Ever since Confederation the speeches which open and close each session of Parliament have, in their financial references, been addressed exclusively to the House of Commons. The Committee of Ways and Means and the Senate having been disposed of (the Senate itself, incidentally, has had vastly more to say about ways and means than supply), let it be said at once that no other relevant part of Parliament has been intentionally neglected in the pages that follow. The emphasis throughout is on Parliament, and the book is not intended to be a complete history of either the Audit Office or the Department of Finance; those two institutions are frequently cited, but only where they are concerned with parliamentary control as such. Nor is the book intended to be a technical manual explaining all the mysteries of dollar votes, virement, and the like, all of which are covered in such admirable documents as the Audit Office Guide, the reports of the Auditor General, and the Treasury Manual of Financial Authorities and Procedures; 9 where any of these technical device~ are relevant they are mentioned, but the book is written, in so far as it is possible, not only in non-technical language, but so as to avoid technicality itself. As a further possible aid to keeping the book readable, no substantive statements are made in footnotes, and recourse is made to footnotes at all only in so far as seemed compatible with academic respectability; the only logical alternative would have been to document practically every phrase and clause. Anybody who wishes merely to read the book need not look at a single footnote . ssenate of Canada, Official Report of Debates, 1952, p. 342. 9Qttawa: Comptroller of the Treasury, 1934 et seq.

THE POWER OF THE PURSE BEFORE CONFEDERATION

2

A CONSIDERABLE PART OF THE STORY of the struggle for the power of the purse in the British North American colonies has been told too often to need more than recapitulation here. 1 What follows in this chapter is not intended to be a definitive history of the period before Confederation, but an outline of the development of the relevant governmental institutions, and the attitudes taken to them by those engaged in the struggle over the public purse. The struggle was nowhere a straightforward fight between legislature and Crown, the elected representatives seeking to contain an irresponsible executive, but was frequently confused, and occasionally clarified, by its connection with other issues. Relations between colonies and the mother country, between legislatures and governors, between assemblies and legislative and executive councils, and (in Lower Canada) between French- and English-speaking citizens were all important; and disputes over such fruitful matters as parliamentary privilege and qualifications and disqualifications for legislative membership frequently gave an added fillip to them. 1 See, e.g., Adam Shortt and Arthur G. Doughty, eds., Canada and Its Provinces (23 vols., Toronto, 1914-17) , esp. vols. II, IV, V; W. P. M. Kennedy, The Constitution of Canada, 1534-1937 (Oxford, 1938) and Statutes, Treaties and Documents of the Canadian Constilution, 1713-1929 (Oxford, 1930); C. P. Lucas, ed., Lord Durham's Report on the Affairs of British North America (3 vols., Oxford, 1912); Donald G. Creighton, "The Struggle for Financial Control in Lower Canada, 1818-31," Canadian Historical Review, XII (1931), pp. 120-44; D. C. Harvey, "The Civil List and Responsible Government in Nova Scotia," Canadian Historical Review, XXVIII (1947), pp. 365-82; Helen T. Manning, ''The Civil List of Lower Canada," Canadian Historical Review, XXIV (1943 ), pp. 24-47; William G. Ormsby, 'The Civil List Question in the Province of Canada," Canadian Historical Review, XXXV (1954), pp. 93-118.

12 / THE PUBLIC PURSE

Before the granting of assemblies, of course, the question of the public purse could hardly arise. Governors governed and subjects, with varying degrees of grace, submitted, the whole having a pleasing silnplicity that disintegrated rapidly once members began to talk in assemblies. The creation of representative assemblies was the first long step towards their inevitable assumption of full control over public expenditure for, as Lord Durham subsequently wrote in his celebrated report: "It is difficult to conceive what could have been their theory of government who imagined that in any colony of England a body invested with the name and character of a representative Assembly, could be deprived of any of those powers which, in the opinion of Englishmen, are inherent in a popular legislature."2 Nova Scotia was granted an assembly in 1758, Prince Edward Island in 1773, New Brunswick in 1784, and the two Canadas in 1791. In each instance, though the timing and the details were not the same, the establishment of an assembly marked the first drawing of battle lines between the elected assembly, on the one hand, and the rest of the apparatus of government on the other. Essentially, the central problem thereafter in so far as the public purse was concerned was everywhere the same: the administration, represented by the governors, their supporting councils, and a handful of salaried officials, had a public income in addition to any that might be granted by the assembly. The executive in each colony was without responsibility for its acts, and the assembly had no voice in choosing the members of executive and legislative councils, or of the public service. In principle, therefore, the first goal usually sought by an assembly was to make the executive at least partially dependent on the assembly for its income; the second was to make it wholly so; the third, and most sophisticated, was to insist on some sort of detailed public accounting, on a systematic basis, of expenditures after they were made. The statement of these simple aims is misleading as an indication of the durability and complexity which normally characterized the attempts to achieve them. As early as 1763 James Murray, as Governor of Quebec, was given official notice of the impudence of some colonial assemblies, and instructed, in a passage that was destined to cast a long shadow, "that the Council have the like Power of framing Money Bills as the assembly." 3 It was almost a full century later, in 1861, that the 2Lucas, ed., Lord Durham's Report, Il, p. 76. Sfnstruction to Governor Murray, Dec. 7, 1763; quoted in Kennedy, Statutes, Treaties and Documents, p. 46.

BEFORE CONFEDERATION/

13

assembly of Nova Scotia, which had early won the right to vote supplies, surrendered the initiative in money bills to the executive; though the first Canadian colony to enjoy responsible government in one well-known sense, Nova Scotia was the last of the original four provinces to establish full responsible government on the British model in financial matters. None of the provinces succeeded in establishing all the elaborate accounting and auditing procedures involved in effective responsible government before 1867. . In the century before Confederation, financial control in the several colonies developed at its own pace. Since the Maritimes received the first assemblies, they also received a head start over the more western settlements, and it is not surprising that the earliest records of an assembly's asserting itself in regard to public funds are to be found in Nova Scotia. "In its early years," Professor Beck has written of the assembly there, "it sought to make the elementary point that no expenditure should be authorized by the executive which had not been previously voted by the General Assembly. The outcome was that by 1766 a halfconscious compromise had been reached whereby the Governor and Council had obliquely conceded its constitutional claims." 4 Yet the colonial executive in Nova Scotia was such that the assembly was loath to take the step which logic in due course demanded, once responsible government was achieved, and surrender the initiative in money bills to the executive. The result was that as late as 1857 a leading member of the assembly could assert without contradiction that "it is not in the power of any government to control the expenditure of the House," and in the following year the provincial Finance Minister, in presenting the estimates for 1858, observed: "This budget is altogether in the hands of the House, and can be amended or improved in any way that hon. gentlemen think most desiraole." 5 Both in Nova Scotia and New Brunswick ( where the initiative in money bills was surrendered to the executive in 1855), assembly members enjoyed for several decades the most notable opportunities for log-rolling ever made available north of the American boundary, for while the assembly had the power of the purse nobody was responsible for its exercise. Lord Durham recorded his surprise in 1839 in discovering that one sum of ten thousand pounds appropriated by the Nova Scotian legislature for local improvements "was divided into eight 4J. M. Beck, The Government of Nova Scotia (Toronto, 1957), p. 56. GDebates and Proceedings during the Second Session of the Twenty-first Parliament of the Province of Nova Scotia, 1857, p. 139; 1858, p. 153.

14 / THE PUBLIC

PURSE

hundred and thirty portions, and as many commissioners were appointed to expend it."6 A contemporary observer wrote of the New Brunswick assembly of 184 7: The Initiation of the Money Votes resting with the House, there was no estimate made by any one for the respective public services for which moneys were required. There was no individual responsibility in the matter. Members were lik.! vessels at sea without rudder or compass-subject to the fluctuations of the winds-sums were proposed by any member, and carried, for all sorts of purposes, without due consideration as to whether the Treasury contained money enough upon call to satisfy the demands. There could have been no better system in the world for running the Province into bankruptcy. T

These quotations will serve to show that vastly more was involved in legislative control of finance before 1867 than the mere assertion of legislative supremacy over the executive. The absence of centralized direction over financial matters in the Maritime Provinces, for example, naturally militated against efficient accounting and audit. In both New Brunswick and Nova Scotia the first tentative steps towards an audit assumed, as was later to be the case in the Canadas, that auditing was an executive function; Nova Scotia passed "an act for taking, examining, and stating the public accounts" as early as 1776. 8 Both assemblies in due course established committees on public accounts, that in Nova Scotia being of particular interest because it was created by statute, not House rules, and was a joint committee of the legislative council and the assembly.9 Neither committee was conspicuously successful in extracting from either irresponsible or responsible executives a satisfactory accounting for the expenditure of public funds. An observer in Fredericton wrote in 1842: "The conflicting statements of members, the chairman of the Committee of Public Accounts, and the declarations of Legislative Councillors, all show that there has been nothing certain or correct in the varnished statements which have been laid before the public. Every member has a different sum fixed upon, as the real debt of the Province; and there has been no labour spared to conceal the actual state of the country from its inhabitants." The Governor's opening speech to the New Brunswick assembly in the following year included a sharp reference: "there is one subject which it 6Lucas, ed., Lord Durham's Report, p. 93.

TG. E. Fenety, Political Notes and Observations (2 vols., Fredericton, 1867),

r. p. 203.

8Statutes of Nova Scotia, 16 Geo. III, c. 3. DRevised Statutes of Nova Scotia, I 85 I , c. 36.

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15

is incumbent on me at this time to recommend to your particular notice; I allude to the timely adoption of such a system of finance, as will be calculated to restore confidence in the integrity of the Province . . . . " Yet a full decade later, in 1853, a special committee found that an "unjustifiable liberty" had been taken by the Audit Office, in altering accounts before they were published but after they had been audited by the Public Accounts Committee, but took a lenient view of the offence because it was apparently a standard practice and had never been censured by the assembly. In the same year the Public Accounts Committee in New Brunswick objected "in the strongest terms against the Government paying out or disbursing any moneys from the Provincial Revenues without the sanction of the Assembly." 10 Similar vagaries persisted in Nova Scotia for years after responsible government had technically been won. The province's major source of income before Confederation, for example, was customs duties, and the assembly could discharge its obligations towards the raising and spending of public money only if it had adequate knowledge of what was involved. Yet in 1858, in tabling "a general statement of the Imports and Exports," the Financial Secretary (who corresponded roughly with the modern Provincial Treasurer) advised the House: "I do not mean to say that these statements contain anything like accurate information respecting the trade, commerce or shipping of the Province, nor is it possible to obtain accurate returns, unless the Controllers of Customs are sufficiently well paid to remunerate them for the labour. The trade of the Province cannot possibly be presented with anything like accuracy." He then proceeded to warn the members that "the increase in the revenue must not lead any hon. gentleman to instruct his constituents-as such a state of things very often does-to count upon an increase in the amount granted for county purposes." Joseph Howe asked if the province did not maintain departments to collect accurate information on "the very a, b, c, of our financial affairs," but his question went unanswered. 11 Since it was the custom-in Nova Scotia to refer the annual statements of the Financial Secretary to the Public Accounts Committee, one of the primary functions of the committee was less to audit them (for it is almost impossible to audit a statement which makes no claims to accuracy) than to examine them for the purpose of arriving at some inspired guess about the amount of money that members could count IOFenety, Political Notes, I, pp. 33, 47,451,461. llDebates and Proceedings during the Third Session of the Twenty-first Parliament of the Province of Nova Scotia, 1858, pp. 11-12, 162.

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on for desirable public works in their constituencies. A spokesman for the committee in 1856, in a typical statement, reported that the committee's labours "placed !he accounts in such a position that £35,000 or £40,000 could be safely granted for roads and bridges." 12 Since no central authority was responsible for proposals for public expenditure until 1855 in New Brunswick and 1861 in Nova Scotia, the inevitable tendency in both assemblies was for the members to take an optimistic view of probable revenues and spend up to the limit, covering deficits by borrowing; and even then, as has been suggested, members were by no means always unanimous as to the size of the public debt. Indeed, without minimizing the remarkable achievements of vigorous legislatures in both provinces in the winning of responsible government, and in settling with the imperial authorities the prolonged arguments over the civil list and other matters relevant to ensuring the existence of independent assemblies in full control of provincial affairs, neither Nova Scotia nor New Brunswick can be said to have established, in the years preceding Confederation, firm traditions of detailed informed control over public expenditure that could be expected to result in a rigid control over financial matters by the House of Commons elected in 1867. None the less, by 1867 the assemblies in both provinces had established a procedure for granting money, and subsequently examining accounts, which was based, though most imperfectly, on the British model. Thus the first members of Parliament who went to Ottawa from the Maritimes were stepping into a financial system with whose essentials they were already familiar, a fact whose importance can hardly be over emphasized. In any event, apart from the general system whereby colonial legislatures managed public finance, the Canadian House of Commons was to be more directly affected by the contemporary political traditions of the Province of Canada than of the Maritimes. In location, personnel, staff, and rules, the House was really a carry-over of the old colonial legislature of Canada with a few extra seats added for Ontario and new seats for the Maritime Provinces. The experiences of the Canadian government before Confederation are therefore of great significance to the understanding of what developed after, and it is perhaps fortunate that in both Upper and Lower Canada financial affairs reached a more critical stage than they ever did in the eastern colonies, and thus forced the settlement of several issues both earlier, and often in clearer terms, than in the Maritimes. By far the most important of these was the assumption by the executive of the initiative in money matters, which 12/bid., 1856, p. 125.

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in Canada was recommended by Lord Durham, and made statutory by the Act of Union of 1840. Before that date, the two Canadas had exhausted practically all the expedients open to executives and assemblies in manreuvres over control of the public purse. Until 1818, when an intensive struggle over the public purse began in both colonies in earnest, the chief events could not be considered as more than skirmishes in which each side, by devious means, tested the strength of the other. In both colonies, the chief revenues available for government after 1791 consisted of the casual and territorial revenues of the Crown, and proceeds from duties and other fees under imperial legislation, both of which were at the disposal of the Crown; and any moneys appropriated by the legislature, which were theoretically ,at least at the disposal of the legislatures. Though Upper Canada, as an inland province, was able to rely less than Lower Canada on import duties, and her population, predominantly of British stock, had views concerning the scope and mode of public expenditures which differed from those of the Lower Canadians, 13 disputes in both over the public purse turned on the same principles. Thus in 1806, in Upper Canada, a committee of the assembly complained that rights and privileges had been violated when sums of public money were spent without legislative authority. In 1810, in Lower Canada, the assembly attempted to assert its right to vote the money needed for the expenses of civil government in the province, rather than having these charges met from Crown revenues. Claims and counter-claims of this sort might have continued almost indefinitely had not fortuitous developments strengthened the hand of the assemblies in each province : the executive branch in each found that Crown revenues were increasingly inadequate to meet its expenses, and in each it had to turn to the assembly for funds . The executive's need was the assembly's opportunity and the years 1817-18 marked the beginning of a conflict over public expenditures that was partially resolved in principle in 1840, but in some relevant details not until years after that. In both provinces, though some notable battles had to be fought, the assembly ultimately emerged as the victor. The assembly of Upper Canada really spoke for both assemblies when it claimed in 1818, in historic words, "the constitutional and immemorial rights of the commons in Great Britain"-an assertion which, if it could have been substantiated, would ultimately have settled matters to the assembly's satisfaction not merely in relation to the executive, but also to the upper I3See Shortt and Doughty, eds., Canada and Its Provinces, IV, esp. pp. 421-520.

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THE PUBLIC PURSE

house in each legislature, the legislative council. 14 No single assertion of right was sufficient to untangle the complex skeins that enmeshed the executives and legislatures, however, and throughout the 1820's a brisk debate, enlivened on occasion by virtual stoppages of supply, occurred session after session. The colonies received unexpected aid in 1828 from a select committee of the British House of Commons which examined several petitions from the Canadas and, making a finding contrary to established imperial policy, reported of Lower Canada that though "the legal right of appropriating the revenues from the act of 1774 is vested in the Crown, they are prepared to say that the real interests of the province would be best promoted by placing the receipt and expenditure of the whole public revenue under the superintendence and controul of the House of Assembly." The committee further admitted to having been "strongly impressed" with the advantages of having a civil list which would leave the salaries of the leading actors on the executive side independent of annual votes of the assembly, and called the attention of the British House of Commons to the striking anomaly which permitted a colonial government to appropriate large sums of money not only without the consent of the local assembly, but without the knowledge of Parliament itself. 15 The report of the British committee of 1828, though it was destined to be quoted forcefully in Canada, was not debated in the imperial Parliament and attracted little attention there. Yet it was not unproductive. How much direct influence the committee's unambiguous findings enjoyed cannot now be assessed; but in 1831, after further squabbling between executives, legislative councils, and assemblies, the imperial authorities conceded in statutory terms one of the fundamental matters in contention: control by the assemblies of the revenues formerly accruing to the Crown, in return for which a civil list was expected to be granted. The offer was acceptable to Upper Canada, and though disputes over various parts of the civil list were to continue almost until the winning of responsible government, momentarily satisfied the Upper Canadian assembly, at least until more sophisticated aspects of the public purse became troublesome. In Lower Canada, the assembly's inflexible insistence on the recognition of a handful of basic principles by the executive, coupled with the latter's equally inflexible insistence that no principles were at stake beyond those involved in sound administration, had by 1831 produced HSee Journals of the House of Assembly of Upper Canada, March 12, 19, 21, 23, 24, 26, 27, 30, and April 1, 1818. 158,itish Parliamentary Papers, 1828, VII, p. 569.

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a situation where the concession of control over former Crown revenues was no longer an adequate solution. Indeed, as Donald Creighton has noted, "the very claim of the right to concede was regarded as an affront." 16 The early 1830's saw several consecutive sessions in which the assembly refused to vote supplies, and included the famous Ninetytwo Resolutions of 1834 which drew the line sharply (along a broad front in which control of the public purse was only one of several sources of grievance), between moderates and French-Canadian radicals, and produced another report by a select committee of the imperial House of Commons, and yet another by a royal commission. The story of the final impasse, the pitiful little civil war that ensued, and the final suspension of the constitution in 1838, is too well known to require more than mention here. For our purposes it is important to note that control of public revenue and expenditure was a major element in the disputes in Lower Canada, and that no constitutional solution could be found within the limits of the imperial legislation then in force. The same was to be true of Upper Canada. Though the absence there of conflict between citizens of two separate language groups, and of two separate social and economic backgrounds, at first gave the Upper Canadian situation a deceptive air of stability in 1831 and after, the ubiquitous William Lyon Mackenzie, working "on the comprehensive principle of being always against the government," 17 was not long in refurbishing several issues which a number of temperate people had hoped had been solved by the surrender of Crown revenues to the legislature in 1831 . Though repeatedly expelled from the legislature in the early thirties, Mackenzie by 1835 had become chairman of a select committee of the assembly on grievances, and though the committee's reports ranged wide over the broad field of government, and were not acted on by the assembly, they none the less clearly pointed the way towards those elements in the control of public money which needed elucidation and refining. In a passage which underlined statements of problems destined to remain unresolved for at least two more decades, the committee's seventh report read: The present system is altogether inefficient for ensuring the application of the revenue to the purposes for which it is intended to be applied. The House of Assembly, acting by one or more of its committees in a session, cannot examine the accounts and vouchers of the several public accountants, owing to the very complex, obscure and unsatisfactory manner in which they are 16Creighton, "Struggle for Financial Control," p. 140. 17Kennedy, Constitution of Canada, p. 144.

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THE PUBLIC PURSE

furnished; and as for the Executive Council, the law recognizes them not as auditors of the revenue, nor do they merit the public confidence as a board of audit. . . . The remedy would be a Board of Audit, the proceedings of which to be regulated by a well considered statute under a responsible government; such a Board might save the country many thousands each year, but it is difficult to believe that any efficient means of auditing the whole provincial revenue can be provided by Legislative enactment, while the Legislative Council is constituted as at present. 18 These far-sighted assertions and allegations, with their emphasis on the need for clear and up-to-date public accounts which could be readily examined by a house committee, their recognition that revenue as well as expenditure accounts required auditing, and their implication that an adequate system of public accounting would demand as a prerequisite responsible government, and as a corollary a major change in the constitution of the upper house, came, it is to be noted, from a committee of an elected assembly, and one which represented opposition points of view rather than governmental. Like the Ninety-two Resolutions in Lower Canada, they had no immediate influence beyond the creation of controversy; and in due course they were followed by an abortive rebellion which encountered defeat in the immediate sense, but whose leaders had ideas which figured :n many notable victories in matters of principle long after the last echoes of ragged rifle fire had died away. The architect of the constitutional changes which followed the rebellions of 1837 was Lord Durham, whose sympathies where the public purse was concerned lay with those who favoured an enlarging of the legislative authority, and particularly that of the elected assembly. Though the Act of Union of 1840 went beyond Durham's recommendations in one significant respect ( Durham would have retained for the Crown the revenues from public lands 19 ) the act reflects an acceptance of his ideas on most subjects related to the public purse. In the light of events in British North America prior to Durham's arrival, his report, assuming as it did that representative government implied responsible government, marked a revolutionary departure in the control of public money by colonial assemblies. The relevant terms of the Act of Union, stripped of legal verbiage and translated into the vernacular, were as follows: 1. All revenues formerly at the disposal of the two Canadas were, in United Canada, to form a single consolidated revenue fund, from which appropriations could be made as set forth in the Act of Union. 18Upper Canada House of Assembly, Seventh Report on Grievances, 1835. 19Lucas, ed., Lord Durham's Report, II, p. 327.

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2. The fund was to be charged with all the costs of its own collection, and the legislature could establish by statute how the relevant accounts could be reviewed and audited. 3. A permanent civil list was granted. 4. The hereditary revenues of the Crown were surrendered in return for the civil list. 5. Subject to a priority list of charges to be made on the consolidated revenue fund, the fund was to be appropriated by the legislature. 6. All appropriation bills, and bills imposing new taxes, were to originate in the assembly. 7. No such bill was to originate without a recommendation from the governor to the assembly. Here, together with Lord Durham's observations on the necessity for departmentalizing the various branches of the administration, were the essentials for the establishment of responsible government in financial matters on the British model, and all the institutions necessary to implement responsible government might have developed spontaneously had they not been retarded by one salient fact: the principle that the executive should have the confidence of the majority of the elected assembly had not yet been recognized. As a result, the growth of the necessary institutions was not merely not spontaneous but, because resort had to be had to various makeshift devices, actually hindered, for the makeshifts produced their own customs and practices which had to be swept aside before further progress could be made. A few examples will suffice to show the gap that existed between the system laid down on paper in 1840, and that which actually prevailed for years thereafter. The Act of Union clearly implied that the assembly was to originate all money bills; yet a decade later, in 1850, the assembly rejected several motions concerning the control of expenditure whose general purpose, as defined in one of them, was "to prohibit the expenditure of Public Monies for purposes not previously authorized by law." 20 Nine years later, in 1859, the assembly rejected another motion which sought to assert the assembly's privileges and censure the executive for large expenditures made "without any sanction of the Representatives of the People."21 The Act of Union stated unambiguously that there was to be "one consolidated revenue fund"; but in 1855, the first Auditor, John Langton, complained that "we are a mass of special 20/ournals of the Legislative Assembly of the Province of Canada, 1850, pp. 5; 30 and 244-5; 205. See also the Reports of the Select Committee on Public Income and Expenditure for the same year. 21/ournals of the Legislative Assembly of the Province of Canada, 1859, pp. 329-30.

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THE PUBLIC PURSE

funds," which of course immeasurably intensified the problems of effective financial control. 22 A royal commission in 1862, variously expressing its "utter reprobation" of the way in which the finance departments managed one of their affairs, and finding "perfectly astounding" the degree of recklessness shown in another, concluded of yet a third that: "The fault is in the system-or, rather, the want of systemwhich only a comprehensive scheme of change can remedy." 23 If the examples cited indicated aberrations from some soundly established norm of financial control, they could be dismissed as merely interesting instances of those little irregularities that always plague the best of governments. But they were nothing of the sort; they were, on the contrary, wholly typical of the confusion and lack of direction in financial matters in Canada for years after the union. Though Lord Sydenham had written cheerfully that "one of the greatest advantages of the Union will be, that it will be possible to introduce a new system of legislation, and, above all, a restriction upon the initiation of moneyvotes, "24 what in fact happened was that the members of the assembly merely exchanged targets: in place of an irresponsible governor, they were obliged after 1841 to concentrate their fire increasingly on ministers chosen from their own ranks. The battle between executive and assembly was a long one, and was not over by Confederation. As Professor Hodgetts has shown in his admirable Pioneer Public Service, responsible government means more than that the political life of the executive depends on the support of a majority of the members of the elected legislature. Behind the executive, government departments must be so organized that the ministers can exercise a control for which they can be held responsible. A system of estimating in advance the needs of government for each ensuing year is indispensable. The issuance of public money to pay for departmental activities must be under a central authority, and so must a thorough audit of expenditures. The public accounts must be intelligible to the laymen who sit in Parliament. These requirements constitute a catalogue of what was substantially accomplished between 1840 and 1867. By the same token they comprise a list of what had to be added to the statutory terms of the Act of Union before effective responsible government could become a reality. That the necessary institutions developed at all was the achievement 22John Langton to William Langton, Dec. 30, 1855, in W. A. Langton, ed., Early Days in Upper Canada (Toronto, 1926), p. 226. 23Canada (Prov.), :7irst and Second Reports of the Financial and Departmental Commission, 1863 and 1864, passim. 24G. Poulett Scrope, Memoir of the Life of the Right Hon. Charles Lord Sydenham, G.C.B. (London, 1843), p. 172.

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of a remarkably small handful of men, few of whom were responsible ministers; that the institutions developed slowly was because of the inertia displayed in financial matters by successive groups of ministers, a generous proportion of whom found ineffective financial controls entirely satisfactory. To some extent, ministers could hardly be blamed; quite apart from the usefulness of patronage, the quantity and quality of which was in inverse ratio to the quantity and quality of effective controls, there was a common tendency, in the days before direct taxation, to spend whatever revenue came in through the ebb and flow of commerce. Deficits could always be blamed on matters beyond ministerial control, or covered by borrowing, while surpluses could be viewed as the beneficent gift of a wise providence, which it would be foolhardy, if not irreverent, to refuse to spend. In addition, then as now, an appreciable proportion of each year's expenditures, like the revenues, was beyond direct control anyway, for interest on debts, and payments on large works which could not be terminated, gobbled up large sums annually; the Minister of Finance said in 1862 that more than half the year's expenditure was "in fulfilment of obligations already incurred." 25 Add to these circumstances the preoccupation of the assembly until at least 1849 with fundamental matters of principle concerning responsible government, and the consequent absence, not only of reliable records on which the government could be held to account, but also of a demand for such sophisticated documents while basic issues remained unsettled, and one has a considerable justification for the slowness with which several practices relevant to financial control grew to maturity. In earlier decades, a somewhat similar progression of achievement had been followed in England, and the House of Commons at Westminster had not by the 1840's perfected its own system of control. 26 That fact makes some of the financial accomplishments of the Canadian assembly between the union and Confederation all the more remarkable. Numerous necessary practices existed in contemporary Britain, but the imperial Exchequer and Audit Department Act, which with its amendments has been the keystone of the British system for nearly a century, was not passed until 1866. Thus in many important respects the colonial assemblies had no clear-cut pattern to follow, and perhaps can be at least partially excused for fumbling, and for permitting the executive to fumble, in an impressive variety of ways. The 25Canada (Prov.), Sessional Papers, 1863, no. 10, not paged. 26See A . J. V . Durell, Parliamentary Grants (London, 1917), chap. 1; Basil Chubb, The Control of Public Expenditure (Oxford, 1952), chap. 1; Paul Einzig, The Control of the Purse (London, 1959).

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THE PUBLIC PURSE

financial commission of 1862 noted with some surprise that the widespread abuse of the funds set aside for contingencies could be traced direct to heads of departments, who violated "checks provided by themselves." The same body found that "a very wide and important difference of opinion has existed between the heads of the two great Financial Departments of State as to their respective powers, attributes, and functions. " 27 John Langton, the first Canadian Auditor comparable to the modem Auditor General, the creation of whose office is discussed below, had discovered somewhat earlier that one of the two finance ministers in the provincial executive, the Inspector General, could spend money "without Parliament or even the Council knowing anything about it. " 28 The Minister of Finance (the office was created in 1859) himself informed the legislature in 1862 that he hoped to see Parliament given "the power of limiting the amounts expended by the heads of the several departments. At present, these expenditures may be increased indefinitely, at the will of a minister or a government; for they are provided for out of current revenues, which come into the Provincial Treasury only after deductions to which there is no recognized limit."29 Apart from spending their own revenues, the departments were for years also in the happy position of being able to float loans at the banks, "in anticipation of future revenue or subsequent appropriations. " 30 Down to 1864, indeed, the bulk of the "estimates" presented annually to the legislature by the ministry were not for a new fiscal year not yet begun, but for one just completed, so Parliament could only give a grudging sanction to expenditures already made. Many strictures on the executive control of public expenditure after 1840 applied also to the audit, which was regarded as an executive function until a decade after 1867. Theoretically, the Act of Union of 1840 brought the auditing power within reach of the assembly, at least by implication; "with a strange perversity," Mr. Herbert Balls, now Comptroller of the Treasury, has written, "no audit act was placed upon the statute books for nearly fifteen years. " 31 As a result, auditing before 1855 was chaotic where it was not ritualistic. Seven years after 1855, the financial commission already quoted, relying partly on evidence 21Second Report of the Financial and Departmental Commission, 1864, p. 11; First Report, 1863, p. 12. 28Langton, Early Days in Upper Canada, p. 238. 29First Report of the Financial and Departmental Commission, 1863, p. 12. 30J. E. Hodgetts, Pioneer Public Service (Toronto, 1955), p. 99. Slfferbert R. Balls, "John Langton and the Canadian Audit Office," Canadian Historical Review, XXI (1940), p. 150.

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taken from the Auditor himself, referred sharply to "the inadequacy of the system as a safeguard of the public interests, or as a check against malversation in the public departments or misappropriations of public moneys without the sanction of law. " 32 Most of the credit for producing order out of the financial anarchy which existed before Confederation has been given to John Langton, the first Auditor, and a few ministers who gave him support. Yet the record is clear that almost everything of significance which Langton did was foreseen by ordinary members of the assembly, and recommended by house committees. Mention has already been made of the committee on grievances in Upper Canada in 1835, which suggested that a board of audit was necessary, to audit the accounts for both revenues and expenditures. The committee of 1835 was the most outstanding of several legislative committees which plucked fretfully at various aspects of public finance before the union. After 1840, the assembly's approach to financial matters through committees became more systematic. The assembly in 1841, following a practice of the Upper Canada assembly, established a select committee of nine members to consider "so much of the Message of His Excellency, the Governor General, as relates to the Estimates for the year ending December 31, 1831, together with the documents connected therewith," and a similar committee was established in 1842. These committees, both dominated by English-speaking members, offered decided opinions on the matters referred to them, and did not confine themselves to current and past estimates but went on to calculate probable revenues and expenditures for the near future . The committee of 1842, finding itself without sufficient time to appraise the whole of financial affairs, concentrated on some specific resolutions, the most notable of which recommended grants of money to the executive for 1842, and for the opening months of 1843, "to be accounted for in detail at the opening of the ensuing session of the Legislature." 33 The assembly accepted these recommendations. Though the work of the committees of 1841 and 1842 was not followed up ( no committee was established in 1843), it is important to note that these early committees took their work seriously, and were not rubber stamps set up for the convenience of the executive. They were, in form at least, the first committees on estimates established in Canada, and once they had disappeared, they had no comparable successors for several decades. 32First Report of the Financial and Departmental Commission, 1863, p. 9. 33Journals of the Legislative Assembly of the Province of Canada, 1842, pp. 92, 108.

26 / THE PUBLIC PURSE A full-fledged committee on public accounts emerged in 184~5. Established originally as a select committee on public revenue and expenditure during 1843, the committee was soon given the public accounts for 1841 to 1843 to study, and instructed, in effect, to determine the true state of the province's income and expenses. 34 With one exception, 1848, the select committee was re-established in every parliamentary session down to 1852-3, when it was made a standing committee and entered on a new phase of its history. As long as it remained a select committee to which certain documents were referred, it had no formal title, but the custom of calling it "the committee on public accounts" was quickly established after 184~5, and the committee was soon being referred to by that name in the indices to the relevant journals of the assembly. In 1852-3 it was officially named for the first time as the Standing Committee on Public Accounts. The work of the committee down to its establishment as a standing committee was, as its own elevation in rank suggested, useful, if sporadic. Primarily the committee sought, and in due course published, vast amounts of information concerning public income and expenditure, the management of the requisite funds, and the subsequent accounting therefor. In its first y~ar, for example, after recommending the usual legislative blessing to cover all those obligations incurred by the executive during the previous fiscal year without the consent of the assembly, it expressed its surprise at the absence of records to cover certain advances from the Treasury, and recommended that in the future detailed accounts be kept. In the same year it itemized the subjects on which money has been spent "without the authority of Parliament, and for which an appropriation is required," and drew the assembly's attention to the need for investigation of "several items of a description, not, as your Committee apprehend, contemplated in the vote of Supply at the last session." In the same year, and subsequently, the committee attached lengthy statistical statements to its reports, the whole covering provincial revenues and expenditures from the union down to the latest available figures. As its files of information accumulated, the committee became increasingly critical of extravagance in the public service, particularly in departments which it named, and by 1850 was actually neglecting the public accounts themselves so markedly that its work was supplemented by a Select Committee on Public Income and Expenditure whose establishment owed much to current cries for retrenchment in all branches of the administration. The Public Accounts Committee of 1850, though it 34/bid., 1844-5, p. 134.

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found time to express its dissatisfaction with the audit of the largest spending department, the Board of Works, was overshadowed by the Select Committee on Public Income and Expenditure, partly because it carefully avoided trespassing on the areas of activity referred to the Select Committee. The latter, a vigorous body whose twenty-one members included most of the leading members of the assembly, was in any event instructed to take up the very matters which had been exercising the Public Accounts Committee: "What further regulations and checks it may be proper ... to adopt for establishing an effective control upon all charges incurred in the receipt, custody and application of the Public Money, and what measures can be adopted for reducing any part of the Public Expenditure, without detriment to the Public Service." Lord Elgin, the Governor General, had a low opinion of the Select Committee on Public Income and Expenditure. Writing to Lord Grey after the parliamentary session of 1850, Elgin reported: I send you with this [a] draft of a Report on Retrenchment which is about to be adopted by my Council. It is drawn up by Hincks and owes its existence to the following circumstances. About a year ago after we had dealt a stunning blow to the annexation movement, a vigorous effort was made to construct a platform on which the Clear Grits and Tories might stand together, and unite their forces against the Government. As the most obvious expedient an economical cry was got up-The time was propitious -A corresponding movement was in progress in England. There was much commercial distress in the Province-The Republicans thought that in advocating Retrenchment they were attacking the monarchical system and the Tories thought they were damaging the men in office. Accordingly, as might have been expected, the cry took to a certain extent in Upper Canada, and when Parliament assembled it was clear that something must be done to meet it. As the best mode of separating whatever grains of wheat there might be from the huge heap of chaff which these parties had collected together to make political capital of, the Government determined to adopt the expedient which we afterwards found you had hit upon at home, of the appointment of a Committee of the House of Assembly to enquire into the question of retrenchment generally, and I accordingly recommended the subject in my speech from the Throne. A large committee was named in order that the leaders of the Republican Party such as Papineau Holmes, etc., and the most prominent members of my late Govt Cayley Badgeley and Sherwood, with a sprinkling of ministerialists might be upon it. As soon as they met, they shewed the stuff they were made of. They resisted all attempts to induce them to institute a spending enquiry into the great branches of expenditure with which they might have dealt without any breach of faithindeed it may be said that they made no examination at all into the subject referred to them, unless it be considered that they did so by requiring certain members of the Govt and others to send in statements of their opinions in

28 / THE PUBLIC PURSE writing. They met day after day and amused themselves with putting motions for the reduction of certain salaries on the civil list, especially that of the Governor General-members bidding, against each other to see who could cut off the largest slice-the most active in the skirmish being the survivors of the Govt which in 1846 fixed the civil list at it's [sic] present amount for the Queen's life time. The only serious part of the affair was a discussion raised by a long paper of Mr. Merritt's who recommended a total change in our financial system .... 35

Despite Lord Elgin's views, coloured as they were by exigencies of the moment, and despite the innocuous report which was subsequently produced, the Select Committee of 1850 is of more than passing significance in the development of the assembly's attitude to control of public money. Historically, it is of interest that Robert Baldwin (the BaldwinLafontaine ministry, which W. P. M. Kennedy has called "the first real cabinet in Canada," was then in power) suggested to the committee, in the early months of responsible government in Canada, the utility of an officer very like the modern parliamentary assistant. 36 It is important too that in the same period, the committee, by rejecting Merritt's financial proposals, which would have put each department of government under a board or commission, put the legislature's stamp of approval on the system of departmentalization under individual ministers which was then clearly developing. (Merritt, it is worth noting, was also a champion of the American practice which permitted any legislator to propose expenditures. ) Further, successful attempts by the equivalent of the Minister of Finance, the Inspector General, to direct the committee's findings, sharply divided the committee into a "government versus opposition" dichotomy which was destined to become a characteristic of financial committees of the Canadian Parliament. On the positive side in 1850, the Select Committee on Public Income and Expenditure laid bare much material that was of subsequent use to the Public Accounts Committee. It took detailed evidence on financial matters from ministers and leading departmental officials, and in an appendix described precisely the existing departmental establishments, including the facilities for auditing public accounts. The Inspector General informed the committee that the work of auditing the accounts was "in arrears constantly," and on his initiative the committee passed a resolution in favour of a major procedural reform concerning public expenditures: public accountants, who by contemporary usage disbursed 35Arthur G. Doughty, ed., The Elgin-Grey Papers, 1846-1852 (Ottawa, 1937), pp. 762-3 . 36Journals of the Legislative Assembly of the Province of Canada, 1850, App. B.B., Proceedings of the Committee for August 2, 1850.

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substantial sums of money on their own signatures, should be required to place all public money, officially coming into their hands, in a chartered bank, to be expended only by cheques drawn by the accountants in their official capacity, and countersigned by another officer. 37 Most important of all, the Select Committee of 1850 gave new impetus to the Public Accounts Committee, which, though but an infant, had begun to show a disturbing disposition to settle down into a premature middle age. The Public Accounts Committee's awareness of being overshadowed by the Select Committee of 1850, whose work had a broad contemporary appeal and incidentally stirred up most of the departments, carried over into the session of 1851, though in that session the committee did make one important recommendation. The repairing or outfitting of public buildings, it said, should be undertaken only under contract, and the contract price should be adhered to, a recommendation whose mere existence is eloquent testimony of practices in the Board of Works. 38 At the beginning of the session of 1852-3, without division or controversy, the Committee on Public Accounts was added to the list of the assembly's standing committees, all of which had power "to examine and enquire into all such matters and things as may be referred to them by the House, and to report from time to time their observations and opinions thereon; with power to send for persons, papers, and records." 39 Though its predecessors had a somewhat erratic history, the Standing Committee on Public Accounts was heir to a lively tradition, handed down to it both from previous select committees on public accounts, and that in 1850 on Public Income and Expenditure. Previous committees had taken a firm line in making recommendations, in publishing whatever information on financial matters they were able to obtain, and in summoning ministers and civil servants of all ranks to give evidence. What the Public Accounts Committee needed, once it became a regular part of the assembly's machinery, was what a parliamentary committee always needs : an assertive member, or group of members, who would take the committee in hand to exploit its enormous potential power in the interests of the assembly, independent of the views of the ministry. After a quiet but by no means useless first year, the committee found such a member in William Lyon Mackenzie. The public accounts committees of earlier years had not been notable for continuity of membership, and the committee which chose Mackenzie 31/bid., Proceedings of the Committee for July 19 and July 29. 8 8 /bid., 1851, pp. 121-3. See also Hodgetts, Pioneer Public Service, chap. XI. 39Journals of the Legislative Assembly of the Province of Canada, 1852-3, p. 7.

30 / THE PUBLIC PURSE as its chairman in 1854 was a predominantly English-speaking group, most of whose members had had little or no previous experience on committees on accounts. Mackenzie, of course, had behind him several years of almost excessively active membership in the assembly, including his several expulsions therefrom, as well as his celebrated chairmanship of the committee on grievances in 1835. In 1854-5, in effect, he chaired another committee on grievances. The committee began calmly enough, for in 1854 fire had destroyed the recently enlarged Parliament buildings in Quebec, 40 and countless essential records had disappeared in the flames. The committee's first task was, therefore, to inquire into "the safety of the Provincial Accounts and Records, as regards danger from fire, and relative to the Audit or Inspection of Accounts by the Inspector General." 41 No great acumen was required to impel the committee to the conclusion that most public documents, and particularly those relevant to parliamentary control of finance, were most inadequately protected from fire, and a report to that effect was made promptly. It then occurred to the committee to inquire further into the ways in which public documents, and by implication public money, were protected from dangers other than fire, such as thriftless practices on the part of ministers and officials. These studies took the committee to the root of the problem of financial control by the legislature, and in due course it produced a series of the most important reports in Canada's parliamentary history. No summary of the reports can do them justice, but a few quotations will indicate their scope and point: The Post Office Department, established in April 1851, has never sent any of its accounts to the Inspector General for examination or audit. The Receiver General's principal book-keeper, has never once balanced, nor been required to balance, his books of account, from January, 1849, down to October, 1854. Last October, when a member of this Committee visited the office, the ledger [of the Crown Lands Office] was full five months in arrear. It is scarcely possible to imagine a more imperfect financial system than we are describing, especially if the danger from fire, and the relative position of the Public Offices, be taken into view. If [as was common] the Governor and Council can arrest the public treasure on its way to the Treasury, and expend what is in the Treasury by 40Hodgetts, Pioneer Public Service, p. 60. 41/ourna/s of the Legislative Assembly of the Province of Canada, 1854-5, App. J.J. (First Report from the Select Standing Committee on Public Accounts), not

paged.

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their own votes, "all aids and supplies" from the House become a mere nullity. In voting Supplies, and deciding on their application in detail, the House of Commons forms an important part of the Executive Government of the State, but the Legislative Assembly of Canada often hears, for the first time, of large expenditures, many months after the cash is paid away. Have we, under "Responsible Government," the substantial control over our own Revenue? It may be doubted.42

The committee, without difficulty, established in 1854-5 that the assembly's implicit faith hitherto that control over the raising, spending, and accounting for of public funds could be safely left to the responsible executive had been misplaced. Numerous instances of simple violations of the law and of executive decrees ; of books that had not been balanced; of large expenditures made without covering vouchers, and without legislative authority at all, were brought to light. By its probing and querying, the committee produced, as committees often do, some immediate results that were independent of its final reports. It recorded its satisfaction that books which had been left unbalanced for years were brought up to date once its deliberations started, that accounts not previously sent in for audit began to show up at the Inspector General's, and that sundry defaulters, seeing the handwriting on the wall, had begun to pay old debts which they owed to the public chest. The committee also made available numerous pungent quotations on financial control from both Canadian and British sources and, as an encore to its major opus, circularized a large number of business men and came out strongly in favour of the adoption of the dollar as the basic unit of official currency in preference to the pound, and of the two-thousand-pound ton instead of the long ton. Its recommendations for the use of American units of measurement, though irrelevant to this study, may well be of the first importance too. The committee of 1854-5 contented itself with challenging existing practices and laying down principles, and produced no draft legislation to correct the abuses which it found. The first modern piece of financial legislation in Canadian affairs nevertheless proceeded directly from its hearings. It may be true, as D'Arcy McGee subsequently wrote, that "the Audit Act, as is well known to those familiar with the history of the session of 1855, arose out of an unforeseen Parliamentary incident, and was very hastily framed and adopted." 43 It is also true that the 42Af! quotations (some slightly edited) from ibid. 43D'Arcy McGee, Report on Origins of the Public Departments, 1863, P.A.C.: R.G.1, E 7, vol. 59 (a), p. 47 or 48 (document paged twice) .

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Audit Act of 1855, despite several weaknesses, was a tremendous step forward on the path towards financial control by the legislature. Its primary goals were simple: it was to provide a more centralized audit, a comprehensive system of public accounts, and a more centralized control than had hitherto prevailed over the making of expenditures; all this, in Herbert Balls's words, was intended to be erected "on the bedrock of parliamentary supremacy." 44 The audit was entrusted to a board of three civil servants, each of whom had specified duties. The Deputy Inspector-General was to be responsible for controlling the issue from the Treasury, for keeping the public accounts, and for the audit of the expenditures connected with the administration of justice and of the current accounts of the customs and excise officers. The Commissioner of Customs was directed to check and examine the customs and excise returns, the revenues of his own department. The auditor was allotted the examination and audit of the other departments and of all institutions supported by public funds .45

The Board of Audit was to examine and revise. all accounts before passing them on for the final revision and approval of the Inspector General. All public moneys with specified exceptions (revenues from postal and customs activities, and special funds administered by the government) were to go to the Receiver General. All payments from the Treasury were to be made by cheques signed by the Receiver General and countersigned by the Inspector General, or their respective deputies; and in theory, at least, no payment could be made without prior authority from both Parliament, through some statute, and from the executive, through a warrant approving the expenditure.46 Not all the technical details of the statute of 1855 need delay us here. What is important is that the first general Audit Act provided new machinery required to facilitate parliamentary control of finance, and at the same time failed to close all the gaps which had exercised the Public Accounts Committee of 1854-5. The audit was to remain, as before, an executive function, with no provision for regular reports from the Auditor to the legislature. ( John A. Macdonald did, to be sure, toy with the idea of having the Auditor eligible to sit in the assembly so that he could speak therein.) The major departments which collected revenues were still free to spend them with little restraint, transferring only net receipts, if any, to the Treasury. As Mr. Balls has succinctly put it, the financial system of 1855 "was built on the quicksands of depart44Balls, "John Langton and the Canadian Audit Office," pp. 153-4. 45fbid., p. 153. 46Statutes of the Province of Canada, 1855, c. LXXVIII.

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mental responsibility"-a fact the significance of which William Lyon Mackenzie foresaw and tried to avert by an unsuccessful amendment moved on third reading of the relevant bill.47 Fortunately for the cause of parliamentary control, the person chosen to be the first Auditor under the new legislation, John Langton, was a man of extraordinary ability and integrity, who was prepared to go a long way towards closing the gaps left by the law. In so doing, he was also prepared to connive with members of the Public Accounts Committee, and others, to attain the ends in which they were all interested, and luckily for posterity has left behind a series of brilliant letters in which he confided to his family, in sharp detail and piquant phrases, his activities after assuming office in 1855.48 At the time of his appointment, Langton was an active politician. He had migrated to Upper Canada from Lancashire in 1833, when he was twenty-five, after a varied educational career which included tutoring in Switzerland, France, Italy, and Germany, as well as a Cambridge degree. An initial interest in politics was gradually transferred from the "home" to the Canadian scene, and by 1834 he was sufficiently au courant with affairs close to him that in a letter to his father he was able to describe William Lyon Mackenzie as a "little factious wretch . . . a little red-haired man about five feet nothing and extremely like a baboon but he is the O'Connell of Canada."49 Langton became a well-known farmer and then a business man in the Peterborough district, and an apprenticeship as warden of his county for several years was followed by his election to the assembly in 1851 . He was soon marked down for preferment, and just before the office of Auditor was created, was being considered by John A. Macdonald as a possible appointee to a vacant Indian agency; the larger opportunities of the auditorship appealed to both Macdonald and Langton, and the latter was approached even before Macdonald and his colleagues had decided a question which has nowadays a curious antiquarian air: whether or not the new Auditor should be "a political personnage, and ... subject to change on every change of government," to which Macdonald saw no objection.50 Langton's contributions at the Audit Office after 1855 have been ably analysed by himself and by Herbert Balls, and need no long exposition here. In sum, Langton interpreted his duties generously to include not merely an audit of expenditures after they were made, but ( where he 47Journals of the Legislative Assembly of the Province of Canada, 1854-S,

p. 918. 48Langton, ed., Early Days in Upper Canada. 49/bid., p. 101.

t'>O/bid., p. 215.

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could get away with it) an examination of proposed expenditures before they were made. To accomplish this he had to go beyond the law to depend on the "uncertain sufferance'' of the departments, in which he was aided to a considerable extent by an official inertia in money matters. He succeeded, despite many setbacks and erratic ministerial support, in hammering out a reasonably satisfactory system of accounting for most of the larger departments, which made at least a superficial audit possible. In all his initial achievements, on which he later built, he relied heavily on the Public Accounts Committee. That body, having done the work which resulted in the Audit Act of 1855, immediately followed up its inquiries with a further examination of how the act was working, and in 1856, as in the previous session, it was again chaired by a prominent member of the Opposition. A single letter of Langton's, written in 1856 in reference to his attempts to prevent the departments from spending money without prior legislative sanction, will serve to illustrate his liaison with the assembly, on the one hand, and the executive on the other: There is a Committee of the House on Public Accounts, the Chairman of which is a fine upright fellow, a wealthy merchant and a great friend of mine. I have told him all about it and, although a leader of the Opposition, he has agreed that I am to do my best to get the Ministry to make the reform, and if I can't do that then we will bring it out before the Committee. It is a very difficult position for me. I don't like anything that can be construed into treachery to the men in office but I can't conceal anything I know to be so grievously wrong. John Young, the aforesaid Chairman sent for me and told me that he believed both of us mairily desired, politics apart, to put the financial business on a proper footing. That he felt in entire ignorance of the nature of the business in the financial offices and did not know where to begin. He said that he would put me such general questions as would enable me to tell where was a field for research, and he did. I might to be sure have answered them truly and yet have left him in the dark, but although it looked like volunteering information, I thought it the better course to be very open. In a private conversation I told him afterwards a great deal more, upon which he agreed to leave me to work by myself first and if that failed, he will back me. It is their own fault making it a dependent office. I should have had the power of independent reporting and I always told them so, and they knew that I would not assist to conceal anything. Nevertheless, I was not easy in my mind so I told John Macdonald what I had done the other day and he acknowledged that I was right. 111 Langton failed, on his own, to persuade the ministry to make the desired reforms, and thus turned to the Public Accounts Committee as s11bid.,

pp. 247-8.

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a forum in which to publicize his views with at least an air of discretion. With the continued support of the committee, whose members were frequently distracted by ministerial crises affecting the whole assembly, Langton strove for several years not merely to become the legislature's auditor, in the fullest sense of the word, but also the protector of public expenditures; yet "expenditure without legislative sanction ... came to involve an increasingly important part" of the province's annual outlay. 52 But it would be a mistake to conclude that the work of either the committee or Langton was ineffective. Langton, as we have seen, succeeded in reducing the most troublesome public accounts to some form of order. The committee met in every session for a decade after 1855, with one exception, and continued to lay bare the weaknesses of the existing system of financial control. Its most notable season after bringing about the Audit Act of 1855 was undoubtedly that of 1856, when its two star witnesses were the Auditor, and its own chairman of the previous session, William Lyon Mackenzie, who brought the committee up to date on evidence he had not had time to make use of in 1854-5.53 Mackenzie, with his usual prescience in financial matters, deposed in 1856 that : "No remedy for the confusion visible in the public accounts can be effectual, unless the officers in charge of the Financial Departments possess the will and the power, the ability to direct, superintend and enforce reforms; very little can be done without the active co-operation of the Executive Departments." The Committee on Public Accounts, he thought, had insufficient time to do a thorough job. Executive action on paper alone was worthless, for reforms attempted on the executive side in 1848, but not enforced, had come to nought, as any new rules laid down in a statute probably would too. An energetic royal commission on financial affairs, he considered, was most desirable. The Committee on Public Accounts, without specifically recommending such a commission, nevertheless continued to produce evidence of a type which made the continued postponement of a comprehensive inquiry into financial controls increasingly difficult, and in 1862 a royal commission was appointed. The work of the financial commission, which grew directly out of, and relied heavily on, the work of the Public Accounts Committee between 1855 and 1862, has been sufficiently referred to above to indicate the tenor of its findings. One of its chief witnesses, like the committee's, was the ubiquitous Langton; and the commission, like the 112 Balls, "John Langton and the Canadian Audit Office," p. 162. 'JSJournals of the Legislative Assembly of the Province of Canada, 1856, App. 30.

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committee, refrained from proposing any draft legislation, but merely pointed out abuses. The main result of the work of the committee and the commission was a statute which made several major amendments to the Audit Act of 1855, and thus set the stage for the transfer of responsible government in public finance from the scattered colonial assemblies to the new House of Commons created in 1867. The statute of 1864 was a deceptively brief document of thirteen clauses. 54 It enlarged the Board of Audit from three to seven members, bringing in representatives of several departments and thus freeing the board of domination by the three leading civil servants concerned with finance; it transferred the chairmanship from the Deputy Inspector General to the Auditor. The final audit was also transferred to the Auditor, from the Inspector General ( or Minister of Finance, as he had become officially in 1859). The Auditor's powers were further enlarged by a provision long sought by both Langton and Mackenzie: "It shall be the duty of the Auditor to see that no warrant issues for the payment of Public Money without the direct authority of Parliament. . . .'' The Auditor's powers to report unauthorized expenditures, though not to the assembly but to the Minister of Finance, were spelled out. Unforeseen but necessary repairs to public buildings between parliamentary sessions could be covered by the device now known as Governor General's warrants, by which the executive could spend money provided all relevant information was tabled in the legislature at the opening of the next session. The Board of Audit was empowered to frame regulations concerning the method of book-keeping and allied matters in the several departments which had officers on the board; the board was also to prepare the annual volume of public accounts, for presentation to the assembly by the Minister of Finance. Finally, the estimates for each fiscal year were to be submitted to the assembly in advance, thus ending the curious practice whereby since 1841 the assembly had voted "estimates" for expenditures already made. The statute of 1864, as Professor Hodgetts has written of the new procedure for estimates, "marked a revolution in the methods of internal and external financial control.''55 With a single significant exception, the Auditor's continuing subservience to the ministry as an executive officer, the legislation of 1864 established the remaining necessary principles for the creation of effective responsible government in public expenditure. The groundwork for the virtual monopoly of financial legislation by the elected assembly had been laid by the Act of Union of 1840, which also centralized in the 54.Statutes of the Province of Canada, 1864, c. VI. MPioneer Public Service, p. 107.

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37

executive the right to initiate money bills. Subsequent developments, in addition to bringing responsible government, had centralized control over the issue of public money, subject to parliamentary authority; centralized the audit of expenditures, and the preparation of adequate annual public accounts for presentation to the assembly; and provided a system whereby the financial needs of the executive were estimated in advance of expenditure, and then voted by the legislature. The term "legislature" in this context had by 1867 come to be almost synonymous with "assembly,'' for the power of the legislative council in financial matters had dwindled steadily after 1840. By 1864 the system for ensuring parliamentary supremacy was almost complete, on paper. Creating the requisite institutional controls, to put meat on the skeleton, was not the work of a moment. It took time for the departments to learn how to estimate their proposed expenditures in advance, and it took time for the new Board of Audit to extend its control as directed in 1864. The Public Accounts Committee took a lively interest in the application of the new legislation, and in 1865 insisted on explanations of various expenditures which did not appear to be in accord with the spirit of the law passed during the previous year. 56 The new law itself was severely tested shortly thereafter, for in 1866 the ministry found itself obliged, while the legislature was not sitting, to spend large sums for the defence of the province against anticipated Fenian raids which had not been foreseen in time to ask the legislature for sufficient money to pay the necessary bills. A violation of the law was the only possible alternative to a parliamentary grant, for the legislation of 1864 provided only for such unforeseen expenditures as repairs to public buildings; the ministry spent what was required for defence and then, with commendable adherence to the principles established in 1864, sought and obtained an indemnifying bill to exonerate the ministers and public servants from the results of their violation of the law. In due course, though not before Confederation, the scope of unforeseen expenditures that could be made on Governor General's warrants was widened to include, as it still does, not merely repairs to damaged buildings, but "any expenditure not foreseen or provided for by Parliament [ which] is urgently or immediately required for the public good." 57 The construction of new institutional controls after 1864, and the testing of the new legislation by the Fenian raids expected in 1865-6, posed relatively minor problems compared with the upheaval in the financial system which accompanied Confederation. Langton and his 56Journals of the Legislative Assembly of the Province of Canada, 1865, App. 1. 57See Balls, "John Langton and the Canadian Audit Office," pp. 166-70.

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colleagues had barely begun to operate their new centralized administration over financial affairs when detailed plans for Confederation, with all they implied concerning the transfers of functions and resources between governments, and the necessary realignment of departmental organizations and accounting and auditing systems, began to take shape. The Public Accounts Committee, distracted as all members of the assembly were by Confederation proposals from 1864 on, carried out one able "follow-up" study in 1865, but in 1866 its proceedings were to a great degree perfunctory; the same could be said of some of the activities in the Department of Finance and the Audit Office immediately before Confederation. It is an ironic fact that the ambitious plans to extend the British system of responsible government over so large and diversified a community as British North America temporarily required that some of the most important developments in responsible government up to 1867 be temporarily set aside. Confederation, however, was accompanied by one supremely important circumstance concerning parliamentary control of finance. In 1841 and 1855 the major legislative enactments had not been followed by either the prompt development of all the machinery required to give life to the principles embodied in the statutes, or by any convincing show of zeal on the part of most of those in high office that life should be given; but by 1867 a small but influential group of men profoundly exercised about parliamentary control could be found in the ministry, the executive offices, and the assembly. The lone voice raised by William Lyon Mackenzie in 1835 had in the intervening years become a strong well-balanced chorus, and proposals to ensure the continuance of preConfederation gains in parliamentary control of finance were high on the legislative agend~ of the first House of Commons.

CONFEDERATION AND RESPONSIBLE GOVERNMENT

3

THE TRANSITION FROM PROVINCIAL LEGISLATURE to Parliament of Canada, so far as parliamentary control of finance was concerned, was abrupt only for those politicians and civil servants who had to come to Ottawa from the Maritimes. For the others, Parliament was to continue in familiar channels, in the building that was originally designed to house the legislature of the Province of Canada. One-third of the members of the first House of Commons had served in provincial assemblies before 1867, and the continuity in membership was vastly more marked in the first Dominion cabinet, virtually all of whose members had served both as legislative members and cabinet ministers before entering Parliament. On the administrative side, continuity was ensured by sections 129 and 130 of the British North America Act, which provided for existing provincial laws to remain in force, unless properly repealed or amended, and for the former provincial civil servants, unless otherwise assigned, "to discharge the Duties of their respective Offices under the same Liabilities, Responsibilities, and Penalties as if the Union had not been made." For all practical purposes this guaranteed that John Langton and his small staff would continue as the key personnel in public accounting and auditing. One of the first pieces of legislation introduced in the new Parliament, after the honourable members had disposed of such urgent matters as paying the bills for the early months of Confederation when no Parliament had sat, and providing the wherewithal for their own indemnities, was an act "respecting the collection and management of the revenue, the auditing of public accounts, and the liability of public accountants." 1

lStatutes of Canada, 31 Viet., c. V.

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The statute, in form, re-enacted the Canadian Audit Act of 1855 as amended in 1864, with some significant new departures. The Auditor was to continue to exercise his general control over the issue of public money, and the subsequent audit of accounts; and a Board of Audit (now enlarged from seven to nine members) of which he was chairman, was to assist him. As before, the Auditor and the board remained subject to the Minister of Finance. But the provision that "no money warrant shall issue except upon the certification of the Auditor that there is parliamentary authority for the expenditure" was subjected to two new conditions. One of these, referred to in the previous chapter, was the widening of the grounds on which the executive could spend money between parliamentary sessions, on Governor General's warrants; a power used with great doubt and hesitation by the first Canadian cabinet. 2 The other, which was to become a matter of angry controversy in the years ahead, cannot be more clearly stated than it appears in the statute; the warrants referred to are not Governor General's warrants, but the usual executive authority for any expenditure of public funds: 35: 1. If upon any application for a warrant, the Auditor has reported that there is no parliamentary authority for issuing it, then upon the written opinion of the Law Officer of the Crown, that there is such authority, citing it, the Minister of Finance may authorize the Deputy Inspector General to prepare the warrant irrespective of the Auditor's report; 3. It shall be the duty of the Auditor in all such cases to prepare a statement of all such legal opinions, reports of Council and special warrants, and of all expenditures incurred in consequence thereof, which he should deliver to the Minister of Finance to be by him presented to Parliament not later than the third day of the session thereof then next ensuing.

These provisions, it will be noted, not merely provided for an appeal against a decision of the Auditor's, but also for its overruling by a member of the cabinet, for "the Law Officer of the Crown" was for all relevant purposes the Minister of Justice whose own departmental expenditures might conceivably be those being challenged by the Auditor. Of equal significance was that the Auditor was given, for the first time, the power to report independently to Parliament all instances in which he had been overruled, as well as all occasions when Governor General's warrants were used between sessions. Other sections of the act of 1867 also provided for an appeal against the Auditor. Each member of the Board of Audit was assigned specific 2Herbert R. Balls, "John Langton and the Canadian Audit Office," Canadian Historical Review, XXI (1940), pp. 169-75.

CONFEDERATION AND RESPONSIBLE GOVERNMENT/ 41

accounts for whose initial audit he was responsible, and if a difference of opinion arose when the Auditor's final audit was made, the whole Board of Audit was to sit in judgment on the matter. In the event, this provision in the statute became a dead letter, for the members of the Board of Audit, all deputy heads, were so preoccupied at Confederation with the disestablishment and reconstruction of their several departments that the Board of Audit soon became a moribund institution. The entire burden of the audit thus fell on John Langton, who was already swamped with work. Langton was, in truth, given an impossible assignment in 1867, for his dual position as auditor and departmental official became increasingly untenable after Confederation. Since over a year elapsed between the last session of the legislature of the old Province of Canada and the first session of the Dominion Parliament, during which Langton and the other officials not unnaturally gave priority to the massive administrative and financial reorganizations that accompanied Confederation, he was from the start pulled away from his relation with the legislature in the direction of his executive duties. A sympathetic observer of Langton's work has written: For many months after the Union, the federal and provincial accounts were in a state of chronic derangement. Moneys were collected and dishursed by the Dominion on account of the provinces, and upon Langton and his subordinates fell the onerous task of making a division and adjustment of the revenues and expenditures. Also it was the Auditor's lot to carry out the accounting work involved in transferring the debts and assets of the late provinces to the books of the Dominion and the newly constituted provincial governments, in itself a problem of considerable magnitude and intricacy. The British North America Act had determined the distribution of the powers and responsibilities, the allocation of the revenues and duties, and the division of the property and debts of the provinces. Langton shouldered the major responsibility for effecting those transfers that concerned the public accounts. The classification of the assets and liabilities, their evaluation and allotment according to the terms of the financial sections of the Act; the adjustment of revenues collected for the provinces, and of expenditures made on their account; the calculation of the excess debt or debt allowance, and the interest payable thereon: such were some of the problems that arose. 3 Langton simply did not have the time to carry out all these multifarious duties and also act as auditor of financial accounts for what were largely his own activities as a public servant. Between his roles as a departmental official, and as an auditor with at least an implied 3/bid., pp. 171-2.

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responsibility to the legislature, he chose the former. In 1869, when the Treasury Board received a statutory basis, Langton became its secretary; and in 1870, when the offices of Auditor and Deputy Inspector General were combined into the office of Deputy Minister of Finance, Langton assumed the new post. Thus in the years after 1867 Langton became increasingly estranged from the House of Commons, one of whose committees was, in fact, soon to censure him. Part of the separation between Langton and the Commons arose from the former's inability, along with his other duties, to provide the necessary documents through which Parliament could exercise a systematic control of finance, for by 1867 parliamentary control had become dependent on clear annual statements of estimates for the coming year, and detailed public accounts for the past. The degree to which institutional controls had come to assume the regular appearance of these two documents can be seen from the events of the first sessions of Parliament after Confederation, when the temporary absence of the requisite papers led to a temporary breakdown of the system so painstakingly constructed in the 1850's and 1860's. The first Speech from the Throne, delivered on November 7, 1867, referred to one of the problems: Gentlemen of the House of Commons: The circumstances under which the Act of Union came into operation, rendered it impossible to obtain the assent of the Legislature to the expenditure necessary for carrying on the ordinary business of the Government. The expenditure since the first of July has therefore been incurred on the responsibility of Ministers of the Crown. The details of that expenditure will be laid before you, and submitted for your sanction. I have directed that the Estimates for the current and succeeding Financial Year shall be laid before you.

The impossibility of preparing estimates for the year 1867-8, since there was nobody with authority to prepare them and no legislature in existence to pass on them, might have been more readily comprehensible to the Commons had not the Government chosen to ask the House in December of 1867 for a single lump sum of five million dollars to cover all the expenses of civil government, not otherwise provided for, from Confederation to March 31, 1868. The absence of detail moved a small group of Grits, led by A. A. Dorion and Edward Blake, to present an amendment to the effect that "while this House will cheerfully grant the supplies required for the Public Service, it regrets that there should have

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43

been a departure from the long established and wise constitutional practice of basing the appropriations ... upon detailed Estimates . . . ; and it cannot but regard with profound disapprobation a proceeding which tends to subvert the surest safeguard of the rights and liberties of the subject, namely, the complete control over the Public Expenditure by the Representatives of the people." 4 The motion was lost 115 to 21, in the first substantive division on a matter of executive policy held in the new Parliament, and Alexander Mackenzie and many of his regular supporters joined Sir John A. Macdonald in the majority. In due course a resolution embodying the one detail in the estimates was passed. The point made by Dorion and Blake was well taken, however, and when in April of 1868 the Government asked the House for a further amount in excess of seven million for the fiscal year 1867-8, considerable detail was supplied. Since five-twelfths of the estimates for the first year of Confederation reached Parliament in a lump sum, members of the Commons had little opportunity to make an intelligent comparison between the first year and the second. The main estimates for 1868-9, tabled in the House on April 28, 1868, made no attempt to show the figures for the two years in parallel columns. Comparative columns appeared with the estimates for the third year after 1867, and the figures for 1869-70 were thus presented in a format which must have been a considerable improvement over previous years in the opinion of the average M.P.; still, in several places comparison was rendered difficult by the notation "No Details," appearing as a substitute for digits. It was not until the estimates for 1870-1 were brought down that a reasonably complete picture of the executive's total requests for supplies, shown in comparison with the previous estimates and giving the numbers of the relevant votes for each year, was available to parliamentarians. Effective scrutiny of the executive's plans for expenditure during the first three years after Confederation thus was not easy. The situation was complicated by the fact that a large proportion of all the money being spent by the Government depended on statutory commitments and did not form part of the estimates; and the public accounts, through which the members might have examined these matters, were pulled together after 1867 with even greater difficulty than were the estimates. Apart from the request for a lump sum of five million in 1867, the first main block of estimates for 1867-8, requesting $7,660,766, referred incidentally to expenditures of $9,604,253 already authorized by statute. 4/ournals, vol. I (1867-8) , p. 62.

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The chief statutory commitments depended on the British North America Act, and acts of the former colonies, now provinces, providing for services taken over by the Dominion at Confederation. The first Parliament thus began with substantial financial obligations inherited from a previous phase of political organization, in the control of which none of the ordinary devices of responsible government could be manipulated. This was one factor which militated against the early adoption by Parliament of a parsimonious attitude whose purpose was to ensure the strictest economy in all branches of government. But there were other important factors too, among them the generous terms found necessary soon after 1867 for the admission of new provinces, and a theory of Macdonald's which equated responsible government in part with adequate cabinet representation for all the major groups and regions of Canada. "Two ministers each being taken as the minimum of Maritime Province representation," he explained in 1868 when the large size of his cabinet was under fire, "it was impossible to deny at least four to Quebec, or five to Ontario . . . . " It would be, he said, "a very false economy if, for the purpose of saving a few thousand pounds or dollars annually there were any risk permitted to be run of the failure of the full and fair development of British principles and institutions." 5 The need for several cabinet posts had a secondary and lasting effect on parliamentary control of finance, for instead of a single department of finance discharging all the functions of raising, collecting, and distributing public money, which a parliamentary committee or the House of Commons as a whole might more readily have been able to keep under surveillance, the first cabinet contained four departments which shared the executive end of finance: Customs; Inland Revenue; Receiver General; and Finance itself. These four have since been reduced to two, but responsible government in Canada has not yet come to include the entrusting of sole control over all aspects of raising, collecting, and spending public money to a single department; in Britain, interestingly enough, the authority and prestige of the Treasury are commonly accepted as major elements in the authority and prestige of the Public Accounts Committee. The Public Accounts Committee of the Canadian House of Commons, established in 1867 as one of the standing committees of the House, was a direct descendant of the similar committee in the old assembly of the Province of Canada, and thus heir to lively traditions connected with probing and inquiry. Members of the committee created in 1867 (several of whom had served before Confederation), though obviously spoiling 5Debates (Scrapbook Hansard), April 3, 1868.

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for an opportunity to carry on the good work, were initially frustrated by the absence of raw material to work with, for until 1870 the public accounts, for a number of reasons, were not ready for intelligent consideration by the House. The accounts for the fiscal year ending June 30, 1867, were available early enough, but since they referred only to the affairs of the former Province of Canada, held no great interest for the new Dominion Parliament. The committee met in April of 1868 and asked for certain documents relating to secret service funds but, according to Luther Holton, M.P., did not receive them. "It was the business of the Committee to elucidate matters of this kind," Holton stated firmly, "but owing to one cause or another the Committee was practically useless. " 6 The chairman of the committee, who, unlike his predecessors before Confederation, was also a minister ( Inland Revenue), pleaded ill health as his reason for not having had the committee meet earlier, and promised to do his best to expedite its affairs. The committee made no substantive report in 1867-8. The accounts for the first full year of governmental operations after Confederation were laid before Parliament on May 10, 1869, accompanied by a report from Langton in his capacity as Auditor that revealed many of the difficulties that go with transferring principles of responsibility from one jurisdiction to another and with erecting a coherent national system of accounts where only varied provincial systems had existed before. The Auditor reported in April, 1869: During this year we have been obliged to include, not only the affairs properly belonging to the Dominion, but the clearing up of all the transactions of the late Province of Canada, and to a minor extent those of the Provinces of Nova Scotia and New Brunswick. During the earlier months of this year, before the local Governments of Ontario and Quebec were properly organized, we had also to take charge of the receipts and undertake the payments belonging to those Provinces. These accounts therefore necessarily include three totally different classes of transactions, with respect to the proper distribution of which svme difference of opinion may exist. As the rules by which we were to be guided in distinguishing these three classes were only laid down to us in January last, after much correspondence and several conferences with the governments of the Provinces, we were unable to make any commencement in the printing of the accounts as they now stand, until that date; and as every doubtful item had to be carefully considered, and in many cases the details of the expenditure by sub-accountants had to be examined, before we could decide to what class any particular item belonged, the work has necessarily been very laborious, and has involved many delays. We cannot even now hope, that the division we have made will not be open to some objections, but we have endeavoured to present the 6/bid., April 16, 1868.

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accounts in such a shape, as may enable the Committee on Public Accounts, and Parliament, to revise our distribution, and to come to a final decision as to these important questions. 7

Despite these burdens the Auditor nevertheless found time to report on three items of expenditure "for which there was no Parliamentary authority," one of which was "in excess not only of the vote, but of the intention of Parliament"; and to make a strong recommendation for better parliamentary control of payments for unforeseen expenses, which with a new government were potentially of great importance. There can be little doubt that for several months after Confederation, when Parliament's scrutiny of executive financial affairs was held largely in abeyance because of inadequate estimates and late public accounts, John Langton acted as the midwife of financial accountability not only for the Dominion but also in varying degree for the four provinces. In 1869, for the second consecutive session, the Public Accounts Committee of the House of Commons issued no reports. The committee came into its own in the session of 1870 when, with Langton in frequent attendance at its meetings, it prepared a series of reports which variously rebuked the executive departments for their delinquency in furnishing copy to the printers, thus delaying the public accounts; investigated a number of specific matters of governmental expenditure; and finally, with the help of Langton and other leading civil servants to whom the committee sent a questionnaire, considered the form in which the accounts should be presented. The committee's spirited onslaught on the accounts, a healthy revival of pre-Confederation practices in the provincial Parliament of Canada, set a pattern which lasted several years, as the next chapter shows. Though normally presided over by a minister in the years immediately following Confederation, the committee was no mere rubber stamp for the cabinet; on the contrary, at least one motion introduced in the committee during the first Parliament by a leading supporter of Macdonald was defeated, while a contrary motion presented by a Grit was passed. A notable feature of the committee's earliest years was the mutual confidence which existed between it and the Auditor. Langton's overriding authority on many financial matters was always present, and occasionally apparent; yet he deferred respectfully to the committee almost as if he were an independent officer of Parliament rather than a departmental official, frankly pointing out flaws in the accounts and in administrative activity related to them. The committee, in tum, began by giving every indica7Public Accounts of the Dominion of Canada for the Fiscal Year Ended June 30th, 1868, p. iv.

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tion of trusting Langton implicitly. The resulting situation represented probably the closest we have come in Canada to a combined Treasuryparliamentary oversight of departmental expenditure. The seriousness with which the House of Commons regarded its Committee on Public Accounts is evident from a consideration of the committee itself. It was a small body originally, starting with twenty-one members in 1867 but expanding to thirty-nine by the last session of the first Parliament. The turnover of personnel was low; of the fifty individuals appointed to it during its first five years, twelve served throughout, seven for four consecutive years, and nine for three. Both parties selected their leading members for it, and most of both front benches, including Sir John A. Macdonald and Alexander Mackenzie, took part in its proceedings at one time or another. The proceedings were sufficiently non-partisan that one Harrison, M.P., wrote to advise Macdonald in 1871 that "There are many persons who think I should ... be on the Committee on Public Accounts. Blake last session had everything pretty much his own way in that committee and it was felt that there should be some other Upper Canadian lawyers .. .. " 8 Macdonald was sufficiently partisan that Harrison joined the committee. The partisanship of the first Parliament is of course a relevant factor in the working of responsible government, and thus of parliamentary control of finance, at Confederation; for an executive supported by a stable and disciplined party, faced by an equally consistent Opposition, is demonstrably in a different position from an executive maintained by a majority whose composition changes from division to division. It is commonly asserted that party lines in the Confederation period were drawn with less clarity than they are today, and in some ways the statement is true. However, in a number of important aspects of party alignment relevant to responsible government, the situation in 1867 and after was perfectly clear. On January 10, 1871, Macdonald made one of these points in a letter to T. W. Anglin, a leading Reformer and later Speaker during Mackenzie's administration, in reply to an application from Anglin for favourable consideration in regard to patronage : "I think that in the distribution of governmental patronage we carry out the true constitutional principle. Whenever an office is vacant it belongs to the party supporting the Government, if within that party there is to be found a person competent to perform the duties. Responsible Government cannot be carried on on any other principle." 9 SR. A. Harrison to Macdonald, Feb. 11, 1871 , P.A.C., Macdonald Papers, 9P.A.C., Macdonald Letterbooks, vol. 15

vol. 343.

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Macdonald's view that vacant offices belonged to the party in power was applied throughout the House of Commons. Early in the first Parliament the management of the House as an establishment employing a large staff was taken over by an Internal Economy Commission consisting exclusively of ministers "assisting" the Speaker. 10 The first Speaker was nominated by Macdonald and seconded by George Cartier. Ministers were not merely represented on all House committees dealing with matters relevant to executive policy, but during the first Parliament usually served as committee chairmen. Thus W. P. Howland, Minister of Inland Revenue, first reported to the House from the Public Accounts Committee, and he was in due course succeeded by John Rose and Sir Francis Hincks, successive ministers of finance; members in the House directed queries and complaints about the committee to the same individuals. Hector Langevin was chairman of the short-lived Committee on Contingencies, which during 1867-8 planned and executed a reduction in both the size and the salaries of the Commons staff. Cartier was chairman of the Committee on Railways, Canals and Telegraph Lines, and Rose of the Committee on Banking and Commerce. Other important committees, though not chaired by ministers, were headed by consistent supporters of Macdonald. A notable exception was the Committee on the Printing of Parliament, whose first chairman was Alexander Mackenzie; but this was a joint committee of both houses, and parliamentary printing was then exclusively under the jurisdiction of Parliament. While the evidence that Macdonald and his colleagues dominated the internal organization of the Commons is overwhelming, it does not necessarily follow that they were maintained in all their endeavours by a stable rather than a fluctuating majority. However, an examination of division lists during the crucial first session of the new House of Commons shows that both Macdonald and Mackenzie had behind them a core of reliable supporters who lined up on opposite sides whenever their respective leaders differed. Macdonald, to be sure, would have preferred at least a temporary continuation of the Confederation coalition, and had invited leading Reformers to enter his cabinet; but the two from Upper Canada who accepted and were subsequently elected to the Commons, Howland and McDougall, were repudiated by their party in a large convention which met in June of 1867, and the convention passed with only three dissenting voices a resolution which read in part: "And 1osee J. R. Mallory, "The Financial Administration of the House of Commons," Canadian Journal of Economics and Political Science, XXIII (1957), pp. 108-13; Norman Ward, "The Formative Years of the House of Commons, 1867-91," Canadian Journal of Economics and Political Science, XVIII (1952), pp. 439 ff.

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while this convention is thoroughly satisfied that the Reform party has acted in the best interests of the country by sustaining the Government until the Confederation measure was secured, it deems it an imperative duty to declare that the temporary alliance between the Reform and Conservative parties should now cease, and that no Government will be satisfactory to the people of Upper Canada which is formed and maintained by a coalition of public men holding opposite political principles. " 11 Alexander Mackenzie played a leading role in the passage of this resolution, and with the defeat of George Brown in the general election of 1867, entered the new Parliament as the acknowledged ( though not until 1868 the formally chosen) Leadt>r of the Opposition. The first session was not two weeks old before a member complained that a proposed select committee included no representatives of the Opposition, and two were added ( one of them tilake) at his request. Mackenzie and Macdonald were on opposing sides in thirty substantive divisions during 1867-8, and an analysis of the lists reveals these significant facts: thirtyfive M.P.'s did not once oppose Macdonald in the thirty divisions; twenty-four opposed him only once; and a further thirty-two opposed from two to five times. The corresponding figures for Mackenzie's supporters are fifteen, eleven, and twenty-one. Macdonald, that is, had a clear majority of the total membership of the House who either supported him, or refrained from voting against him, in at least twenty-five of the thirty divisions. And since the actual attendance at divisions rarely approached the full membership of the Commons, his working majority was clearly a stable one, and distinguished from the members who supported his chief opponent. Further, the occasions on which usually loyal supporters voted against him must be understood in the light of the prevailing theories of what constituted a vote of want of confidence in the Government, and on this point a more tolerant view existed then than now. On May 16, 1868, for instance, Macdonald and his colleagues were defeated on three consecutive divisions over the reduction of two items of militia expenditure, but although two of the three amendments concerned were moved by Cartier, seconded by Macdonald, and supported by the cabinet, the defeats were not considered as votes of want of confidence. Again in 1870, after Cartier and Tilley had moved that the House go into committee to consider "certain proposed Resolutions on the subject of Interest," Macdonald and his colleagues, during a series of divisions

nw. Buckingham and G. W. Ross, The Hon. Alexander Mackenzie (5th ed., Toronto, 1892), p. 221.

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involving a variety of tactics and amendments, thrice found themselves in a minority, and a resulting bill was, on a Grit motion, finally given a three months' hoist on third reading, the Speaker casting the deciding vote. 12 Obviously, defence and interest rates did not loom as large in governmental policy as they do today, and one could doubtless argue that the positive state has brought with it, among other things, a reduction in the number of topics on which members of Parliament can vote freely without disturbing a ministry. If these references to partisanship in the first House of Commons seem an unwarranted digression, let it be said at once that a large part of the history of parliamentary control of finance in Canada since Confederation can be understood only in terms of partisanship. The first Parliament, indeed, was probably the least partisan in Canadian history, as a brief consideration of some of its activities will show. The conception of responsible government which prevailed at Confederation included the assignment to the legislature of a number of functions which committees of the House of Commons discharged in a manner which today would be regarded as remarkably independent, but which were possible then because the executive had not yet assumed control of virtually everything, either direct or through the slavish support of its majority in the Commons. Mention has already been made of the Committee on Contingencies, which reorganized the personnel of the Commons staff in 1867-8, and was thereafter superseded by the Internal Economy Commission; and of the Committee on Printing, of which Mackenzie was the chairman for two sessions. The Committee on Contingencies early gave way to executive influence, but that on Printing is one of several deserving of more detailed attention because they did not. 13 The Committee on Printing was created originally as one of the first of the standing committees of the Commons, and subsequently the House invited the Senate to make it a joint committee. (Alexander Mackenzie was charged by the House with carrying the invitation to the Senate.) The Joint Committee of Both Houses on the Printing of Parliament immediately undertook a comprehensive programme in which, in effect, it discharged all the necessary executive functions related to the selection and printing of parliamentary documents. It chose documents to be printed, advertised for tenders, let contracts, audited printing accounts, and, through its clerk, prepared estimates for printing costs which were submitted to the Department of Finance. During the first Journals, 1870, pp. 235, 236, 311. lSAU the committee reports referred to in the next several paragraphs can be found in ibid., and Appendices, for the relevant years. 12See

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session its members raised an objection when they discovered, during their audit of printing accounts, that "much printing is being performed without being first submitted to them"; and the House sustained the objection. The committee also recommended the creation of a distribution office for the reception and dissemination of printed documents and, having obtained it, took charge of the establishment. In 1870, exercised over the contention of a printer who enjoyed contracts with both the executive and legislative branches of the government that "under his two contracts he has a right to double charges for all printing that he may execute for the joint use of the Government and Parliament," the committee grandly recommended as follows: that all papers and documents ordered to be printed by Parliament, are subject to the terms of contract entered into between Parliament and the contractor for the Parliamentary Printing; and that the Annual Reports, from the Heads of the several Departments, are clearly comprised within the Parliamentary Printing, as documents to be submitted to Parliament; and also, that it is within the power of Parliament to order, under its Contract, such number of copies of the above as may be required for the Public Service; and, to prevent any misunderstanding, it be requested that the Heads of the several Departments do communicate to this Committee what number of Printed Copies of their several Reports, or other Parliamentary Documents they may respectively require.

Both houses concurred in these opinions, and the committee added the printing and distribution of annual departmental reports to its multifarious activities. The committee's clerk ( committee clerks often filed annual reports of their own during this period) reported in 1871 : "I have charged the Departments for the copies so furnished them, and deposited the amount received to credit of Printing Services of Parliament." The handling of public moneys by a parliamentary clerk, in his own name and virtually without administrative control, was too much for the tidy mind of Mr. Auditor Langton who, in his capacity as secretary of the Treasury Board, endeavoured to put a stop to it. The committee objected vigorously to being brought within the scope of ordinary audit activity in the executive branch, but capitulated to the extent of having most payments for printing services made through the Auditor on the certificate of the clerk. If the Joint Committee on Printing were an isolated example of a parliamentary body enjoying a lively and satisfactory existence without regular propping up by the executive, it could be dismissed as an interesting aberration. But it was by no means unique. The Standing Committee on Railways, Canals and Telegraph Lines, expanding an enterprise

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undertaken before Confederation, provided one of the great sagas of the early House of Commons. One of its first reports, presented on May 22, 1868, included this information: In the last Session of the Parliament of the late Province of Canada, the Railway Committee directed a copy of the large map of Canada, prepared in the Crown Lands Department, to be made for the House. The section embracing the Province of Ontario was delivered to the Committee early in the present Session, and they have taken steps during the Session to complete the same, by the insertion of all additional Post Offices, Railways, Turnpike roads, etc., up to the present time. That portion which covers the Province of Quebec, is also in progress, and will be ready for delivery before next Sessior.; and your Committee have given directions for the preparation of a map of the Maritime Provinces upon the same scale, and they have empowered their Chairman to take such steps as may be necessary in the premises. Your Committee would recommend that the Speaker be authorized to defray from the Contingencies from time to time all necessary expenses, connected with this undertaking.

As new areas were added to the Dominion and old ones were developed by commercial expansion and settlement, the map rapidly got out of hand and the committee's reports throughout the first Parliament portray a fascinating picture of a handful of men, aided by a clerk and one or two draughtsmen, bravely trying to stem a tide that seemed certain to engulf them. The year 1870 was a particularly bad one for the map, "in consequence of no provision having been made in the Estimates of last Session . . . for that service," and the clerk of the committee, in his own report for 1872, referred to the acquisition of the Northwest Territories and British Columbia in terms in which one can almost sense a note of complaint. "The clerk," he wrote, "finds it utterly impossible with the present appropriation, providing for but one draughtsman, to bring the Maps to completion as soon as was expected." Still, no one can deny that valiant efforts were made, for the clerk and a draughtsman even went to Halifax, "and worked laboriously for two months, taking tracings of the County Maps in the Crown Lands' Department there, but were unable during the time to complete more than ten counties"; on returning to Ottawa, the draughtsman reduced "to the uniform scale some of these tracings." Nor could anyone assert that the maps were useless, for in 1871 the Deputy Minister of Agriculture "urgently requested to be allowed the use of these tracings . . . for the use of the Census Commissioners." For some reason or other the committee's reports made significantly fewer references to the maps as the years passed, and on March 9, 1881 , the committee startlingly

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recommended "that there be prepared for the use of this Committee, special Railway Maps .... " Quite another tack was taken by the Committee on Immigration and Colonization which, finding itself baffled by the assignment in the B.N.A. Act of immigration to both the Dominion and the provinces, undertook to clarify the lines of jurisdiction. The committee circularized the Prime Minister and the provincial premiers for their views, and not only collected a large amount of useful information concerning the various facilities available for the encouragement and reception of immigrants, but also played a part in convening a series of Dominion-provincial meetings at which immigration and allied matters were discussed. Yet another contribution was made by the Joint Committee on the Library of Parliament, whose first report deserves quotation at length: Ever since the year 1852, the Committee have acted as a "Board for the encouragement of Literary Undertakings" in Canada, and have from time to time recommended that the patronage of the Legislature should be extended to various native authors whose works in their judgment merited some degree of pecuniary assistance out of the public funds. But they have arrived at the conclusion that it is for divers reasons inexpedient that they should continue any longer to act in this capacity, and that therefore it would be more advisable that they should abstain from any particular recommendations of this kind. They would nevertheless venture to express their opinion that the fostering hand of Parliament should not be wholly withdrawn from the endeavour to promote the development of Literature and Art in this Dominion, but that the Executive Government should themselves assume the responsibility of recommending to Parliament grants of money in aid of any publication appertaining to science, history, general literature or art in Canada, that they may deem to be specially deserving of public encouragement.

Notwithstanding the committee's self-denying suggestions, a variety of cultural matters continued to occupy the attention of its members. In 1871 they recommended that a supply of worth-while Canadian books be "placed in the hands of the librarian for distribution to public libraries abroad"; recommended the purchase of several paintings; and were commissioned by Parliament to effect the purchase of a statue of the Queen and busts of the Prince and Princess of Wales. The committee, after receiving a petition from interested citizens, also drew the matter of a Canadian archives to the cabinet's attention and, perhaps to prove that it was not above mundane matters, inquired into the duties and salaries of the staff of the Library of Parliament. The activities of all these legislative committees ( and there were others equally active) establish that the conception of responsible govern-

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ment prevailing at Confederation did not assume that parliamentary committees were unfit to have staffs, however small, at their disposal; or that the primary characteristic of all legislative committees should be a capacity for docile acquiescence in executive plans. On the contrary, as the foregoing examples indicate, the committees sometimes had staffs under their jurisdiction, sometimes pursued independent lines of their own, and sometimes served as partners with the executive. In addition, Parliament, and particularly the House of Commons, exerted a disciplinary control over its members and others which is no longer asserted. During the first session five M.P.'s, on motions moved by colleagues, were granted leaves of absence ranging from a week to "the remainder of the session." On May 1, 1868, the House ordered that Henri Joly, M.P., be taken into the custody of the Sergeant-at-Arms for having failed to attend in his place as required by the provisions concerning controverted elections; Joly was one of many members of whose absence from sundry proceedings notice was officially taken, and explanations were sometimes required at the Bar of the House. During the first several years after Confederation the summoning of people to the Bar of the House was indeed not uncommon. The most distinguished citizen thus called was Sir John A. Macdonald, who in 1873 was also a delinquent member of an election committee, but other visitors included an Ottawa alderman and the Attorney General of Manitoba. Virtually all these incidents concerned the legislature as such, and few appear to have occurred because of initiative taken by the executive. 14 None of the evidence of legislative activity in the Confederation period suggests that any impairment of the principles of responsible government was involved. Macdonald and those close to him, to be sure, had a conception of responsibility that could not fail to appeal to their modern successors. Their use of unpublished orders in council prompted David Mills to protest to Macdonald on September 22, 1871: It seems we have followed in the footsteps of Caligula and put it out of

the power of those who are required to obey the law to know the power of it ... when Parliament delegates this power of legislation to one department of the government it is acting in opposition to the principles of its trust . . . . It is personal government based upon the confession by Parliament that it is incompetent to meet the requirements of modern society-that as we advance we become less capable of self-government. 15

Again (in 1868), when a member urged that the names and salaries of officers and employees of the departments and Parliament be referred 14See Norman Ward, "Called to the Bar of the House of Commons," Canadian lliMacdonald Papers, vol. 343.

Bar Review (May 1957), pp. 529-46.

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to a select committee for study, Cartier interpreted the proposal in these terms: "The proposed interference in the departmental expenditure ... struck at the very root of all responsible government. For the outlay of their departments the Government were directly responsible and were not prepared to permit their duties of this nature to be transferred to any committee. " 16 A year later, when the Opposition queried the cabinet for the names of the commissioners of the Intercolonial Railway, Alpheus Todd, the parliamentary librarian who was also a distinguished constitutional authority, advised Macdonald that the commissioners were either Crown or parliamentary appointments. "But if Crown appointments, they are not, in any sense, subject to parliamentary approval, nor is it necessary to inform Parliament officially of the names of the persons appointed. By sending the names down in a message, you appear to invite an expression of opinion as to the choice, which would be an unparliamentary interference with the action of the Executive government." Within the month, Todd was writing to Macdonald again. He had learned of an "extraordinary motion" by which a member "proposes (in effect) to substitute a select committee for the Ministers of the Crown, in the preparation of the Civil Service Estimates for next session," excluding from it all ministers; and wrote agitatedly to Macdonald, citing authorities such as himself, to remind the Prime Minister that ministers must be represented on all public committees. 17 Macdonald of course agreed with Todd. Notwithstanding the clarity and firmness of these views of the executive's prerogatives, the House of Commons in the first Parliament was far from helpless. As this chapter has attempted to show, the Canadian House of Commons, carrying on from pre-Confederation practice, began its existence in an atmosphere conducive to vigorous and independent legislative life, a factor highly relevant to parliamentary control of finance. Objective parliamentary scrutiny of the executive's affairs is possible in such an atmosphere, and, as the next chapter records, the Committee on Public Accounts, whose post-Confederation beginnings have been outlined above, enjoyed a satisfactory few years once it obtained the necessary tools, the public accounts. The first Parliament is also instructive because it showed that without the tools the Public Accounts Committee was unable to do any work at all. 16Debates (Scrapbook Hansard), March 18, 1868. 17Todd to Macdonald, April 20 and May 15, 1869, Macdonald Papers, vol. 55.

THE SELECT STANDING COMMITTEE ON PUBLIC ACCOUNTS,

4

1867-78

is of peculiar significance to parliamentary control of finance during the first decade of Confederation, for as John Langton was at first distracted by the enormity of his tasks after 1867, and then increasingly weaned away from the parliamentary to the administrative side of affairs, the committee emerged as the sole guardian of the parliamentary audit, a role which it held until 1878. And it found plenty to do. The brisk impersonal efficiency that is such a necessary ( and sometimes alarming) feature of much modern administration was almost unknown in many areas of governmental activity after Confederation; the Public Accounts Committee summarized more than just the specific enterprise it was investigating when it reported in 1874 that "the system of management .. . was, to say the least of it, unbusiness-like and loose." Evidence of looseness in the public accounts themselves is commonplace throughout the committee's reports for years after 1867. In 1870 the Auditor, while expressing his gratification that "in consequence of Confederation, we have got rid of a good number of items" in the balance sheet, referred also to "many obsolete and quite useless accounts." Part of the balance sheet, he deposed before the committee, "is in many instances unmeaning, and in others delusive." Five years later the committee reported again, with startling illustrations, on "the unsatisfactory and misleading character of many of the items in the Statement of Affairs and balance sheet prefixed to the Public Accounts," and in 1877 the Minister of Finance gave as one reason for proposing substantial amendments to legislation concerning the public audit the necessity of getting "rid of the inaccuracies in the Public Accounts." The Auditor, to give THE PUBLIC ACCOUNTS COMMITTEE

PUBLIC ACCOUNTS COMMITTEE,

1867-78 / 57

him his due, had frequently tried to clear up the accounts, with singularly little co-operation from successive ministers. 1 In the years immediately following 1867, considerably more was involved in the committee's work than inadequacies in the form of the documents which constituted the basis of much of its work. The Auditor discovered in 1869 that, following a practice thought to have been stamped out before Confederation, customs collectors were still spending money from sums which they had collected; "it is evident," he commented in his report, "that, unless the rule is strongly enforced that all receipts are to be paid in to the Receiver General intact, it will be impossible for the Auditor to prevent an expenditure in excess of the Parliamentary authority." In 1877, giving evidence about a remarkable withdrawal of public funds by the Leader of the Opposition without the knowledge of the cabinet but with the connivance of himself ( a tale recounted below) the Auditor asserted: "It may be as well to inform the Committee that not only formerly, but now as well, too many verbal instructions were, and are, given, throwing too much responsibility on officers of the Departments." 2 The spending of money which Parliament had once voted, but after the lapse of the time limit within which the sum could be legally spent, was common in the 1870's; the Minister of Finance told the House of Commons in 1877 that he and his colleagues "had found that considerable amounts of unexpended balances brought forward by Order in Council had been expended, as far as could be discovered, without any Parliamentary authority." His own party, he hastened to add, had sometimes found it "necessary to use unexpended balances, but they had always asked the authority of Parliament therefor," and he graciously offered the former cabinet an act of indemnity to free its members from any untoward effects of their misdemeanours. Still more problems related to parliamentary control of finance arose from the casual manner in which contracts were let, in which political patronage was often involved. The building of railways occupied the attention of both cabinet and Parliament throughout much of the postConfederation period, and one of the reasons why the Public Accounts Committee encountered considerable difficulty in performing its duty can be found in a statement made by Sandford Fleming before the committee in 1875: "The discovery of a practicable line of railway for nearly 3,000 miles, through a country almost entirely unknown, and ISee Journals, 1870, App. 2, Eighth Report of the Select Standing Committee on Public Accounts, pp. 10 and 13; ibid., 1875, App. 2, Sixth Report, p. l; Debates, 1877, p. 1823. 2/ournals, 1877, App. 2, Third Report, Minutes of Evidence, p. 10.

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much of it without the means of access, was felt to be a problem of no ordinary magnitude. Compared with this engineering problem, the matter of accounts and the various details relating to vouchers seemed of minor importance." (Fleming's "system," the committee was interested to learn, consisted largely of picking men to do particular work, giving them sums of money to spend, and thereafter to "rely wholly on their integrity.") Engineers were not the only persons to find accounts and vouchers inconvenient, and for years the Public Accounts Committee fought a series of running battles with citizens who had in common poor memories, a capacity for losing relevant papers, and a desire to sell goods and services to the government at high prices. Not the least interesting of these was a newspaper proprietor who, following a standard procedure, published unofficial advertisements on behalf of the government and then sent bills to the appropriate ministers. "Mr. Moylan's paper received strong support from the Government," Sir John A. Macdonald testified in 1878, "and the matters he advertised I knew would be cheerfully paid for by the heads of the different Departments." Moylan's claim, surprisingly enough, dated back to 1863, and a colleague of Macdonald's in those days supported him: "according to my experience, it has been the habit in all governments to commit these little irregularities." 3 Clearly there was ample scope for a conscientious committee to make its mark, and it must be recalled that the total annual expenditures by the Dominion government then were sufficiently small that a group of citizens could examine a large portion of them every session of Par!iament. Whether the members of Parliament were unanimous in agreeing that a mark should be made is of course an unanswerable question, for the personnel for all parliamentary committees was drawn from the same parties that countenanced "these little irregularities." Nevertheless the committee, despite frequent displays of partisanship, took itself very seriously on the theory that one of its duties was to investigate and publicize every suspected case of extravagance, corruption, and inefficiency in every phase of governmental activity. In this connection it is relevant to note that in the minds of many M.P.'s the belief was held that Parliament and its committees had functions of their own regardless of the wishes or activities of the executive. Luther Holton, a Liberal member, attempting in 1877 to persuade a Liberal minister to postpone a major piece of legislation for a year, spoke for many when he gave as a reason: "There would then be this very great advantage-that it 3/bid., 1878, App. 1, First Report, Minutes of Evidence, pp. 33, 39.

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could be carefully considered before the Public Accounts Committee. It is a non-party matter." 4 Even if the importance of the committee had not often been referred to, and made apparent by the nature of its reports, the parties' views concerning it could be deduced from the members they chose to serve on it. Not only was it "not usual," as the Prime Minister observed in 1877, "to appoint an entirely new member of the House to it"; it was customary to select the parties' leading members, and to reappoint most of them for several consecutive sessions. The committee's original complement of twenty-one members reflected provincial representation in the same way as the cabinet. As the scope of the committee's activities widened with the growth of the Dominion, the committee grew also ( to eighty-one by 1878) but not solely to absorb representation from the newer provinces. Ontario tended to dominate the membership, occasionally having a clear majority on the committee and rarely falling far below half, the other provinces having proportionately fewer seats; the four original provinces always had substantial representation, but no consistent pattern for the newer provinces had been established by 1878. Since the newer provinces all had few members in the House itself, and ·the committee's oral and printed proceedings from the first were in English ( the French translation appearing, if at all, much later), English-speaking members from the three older English-speaking provinces were particularly conspicuous in the committee's investigations. This is hardly surprising in the light of the British parliamentary tradition, about which most of the leading members on both sides of the House were well informed. If they were not, Alpheus Todd, in the Parliamentary Library, and J. G. Bourinot, then a clerk assistant in the House of Commons, were on hand to advise them. The chairman of the committee ( elected by the members) was until 1871 a minister, usually the Minister of Finance, but thereafter the chairman was an ordinary member, always from the party in power. Cabinet members were prominent on the committee, which included on occasion as many as six, but there is little evidence to suggest that their presence then had as inhibiting an effect on their supporters as it would today. On the contrary, the advantages of having on the committee men who could speak with authority on behalf of the executive, in terms of "we" and "us," were often apparent. 5 Apart from ministers, party representation on the committee was roughly proportionate to that in 4Debates, 1877, p. 1824. 5For a good example, see Journals, 1871, App. 2, Third Report.

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the House. Thus until 1873 the Conservatives had a small majority over the Liberals, while after the election of 1874 the Liberals swamped their opponents in a ratio of roughly two to one. Since the tradition appears to have existed that the Opposition could appoint whichever of its members it wished to the committee, another part of the explanation for the committee's remarkable growth in size can be found here, for after 1874 every Conservative added was matched by two Liberals. Since leading members on both sides of the Commons were always on the Public Accounts Committee, it could be expected to make ample use of its powers. From the beginning, like all standing committees, it was instructed to "examine and enquire into all such matters and things as may be referred to them by the House, and to report from time to time their observations and opinions thereon; with power to send for persons, papers and records." Unless otherwise ordered its quorum was half its membership, but from 1867 to 1873 the committee's first report in every year was a recommendation, which the House invariably accepted, that the quorum be reduced to seven or nine; from 1874 the quorum, still at nine, was fixed in the resolution creating the committee which was always passed in the first few days of each session. Because of the momentous reorganization that accompanied Confederation, the committee, it will be remembered, was somewhat slow in getting under way, but after 1869 the public accounts for the previous year were always referred to it promptly. In nine of the years under consideration matters other than the public accounts were sent to the committee, sometimes at the committee's request. None of its chairmen showed a disposition to confine the members within technical limits, and one of the most significant aspects of the committee's work after 1867, which profoundly influenced its development in later decades, is that the committee was not restricted narrowly to the accounts for the previous fiscal year, but permitted to roam almost at will over an extensive range of subjects and policies. The committee's powers were supplemented by its own interpretation of them. It assumed in 1874, without consulting the House, that the disadvantages of its rapid growth in size could be circumvented by the use of subcommittees. When in 1875 a shorthand reporter was requested for one of its subcommittees, Macdonald suggested that the reporter be assigned to the whole committee, "as the House was not supposed to know anything about subcommittees. In fact it was a question whether a Committee of the House had power to appoint subcommittees, though as a matter of convenience they might do so. "6 ( His suggestion was 6Debates, 1875, p. 238.

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adopted.) The committee also assumed that its "observations and opinions" included recommendations, and although the bulk of its reports consisted only of the evidence it had collected ( often with specific findings appended), it made a few recommendations too. Despite Bourinot's pronouncement that a committee could not include in its report a minority dissent, "as such a report is as unknown to Canadian as to English practice," the Public Accounts Committee assumed the power, and a strongly worded minority report was filed in 1874. On other occasions the minority was able to get minority reports into the record by moving long amendments which, though rejected, nevertheless appeared in the committee's proceedings. Occasionally ( again despite Bourinot) several members signed a report, thus revealing divisions within the committee. 7 The committee gave a generous interpretation to its power "to send for persons, papers and records." No person was considered sacrosanct, from the Prime Minister, the Leader of the Opposition, and cabinet ministers, to a minor employee of a private firm whose appearance, in answer to the committee's summons, cost him his job. Failure to answer a summons from the committee, and refusal to answer questions, were considered sufficiently serious offences to merit an appearance at the Bar of the House of Commons, though no instance requiring such drastic action occurred before 1878. 8 No committee of the Canadian Parliament before 1876 had the power to examine witnesses under oath, and evidence taken without an oath, particularly in some of the complicated investigations into railway contracts, was, as the Public Accounts Committee formally observed in 1874, "not so satisfactory" as it might have been. After 1876, witnesses were often examined under oath by leave of the House. Whether or not the committee had power to hear counsel on behalf of witnesses remained unsettled in the period under consideration, for only one attempt was made by witnesses to employ counsel, and when the question was referred by the witnesses to the House of Commons on the advice of the committee, it was not voted on. 9 In addition to taking evidence viva voce, the committee circulated questionnaires and letters when it felt so inclined, and requested the House to refer various documents to it. The committee's most important work, however, was in its hearings, which provide us today with some of the most valuable records we have 7J. G. Bourinot, Parliamentary Procedure and Practice, T . B. Flint, ed. (3rd ed., Toronto, 1903), pp. 548-9. BNorman Ward, "Called to the Bar of the House of Commons," Canadian Bar ~eview (May 1957) , pp. 529-46. 9/ournals, 1875, App. 2, Fourth Report; and Debates, 1875, pp. 450-2, 553.

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concerning the government of Canada after 1867. The hearings varied greatly in temper. Though generally a small group of leading members tended to dominate each separate inquiry, the attendance of the other members was good, and there were hearings in which a large number of members took part. Sometimes the committee sat almost as formally as a court, its members observing stiffly, "I shall reserve my cross-examination of Mr. Fitzgerald for the present," or "I have no further questions to ask, and no other witnesses to call." Sometimes the proceedings were extremely informal, and resembled extended conversations on official matters by a group of competent discussants. In 187 5 the Prime Minister, who was a member of the committee and also appeared as a witness, was questioned not only by an M.P. who was a witness but not a member of the committee, but also by another witness, a civil servant who had an interest in the proceedings; and the chairman went out of his way to make sure that all desired questions had been asked. 10 The format of the reports presented to the House of Commons also varied greatly: the evidence was sometimes attached verbatim and sometimes in digest form or not at all, sometimes signed by witnesses and sometimes not; and different titles were attached to similar parts of reports even within a single session of Parliament. The committee had no staff beyond the usual clerk, and a i:horthand reporter who was not always supplied as a matter of course but occasionally requested on a motion by the committee. In several years, however, the Auditor, John Langton, worked so closely with the committee on specific topics that he was virtually an expert staff member. Langton was obviously anxious that the committee be kept fully informed of all relevant matters, and used the committee ( as did other public servants, notably Sandford Fleming and his railway colleagues) as a forum for airing his own views, even to the point of complaining that successive ministers under whom he had served had ignored his advice on a subject which he considered important. 11 Relations between Langton and the committee, while respectful on both sides, were not always harmonious. The M.P.'s were professionals in politics, but mostly laymen in financial affairs, and the Auditor, it will be remembered, was not only an auditor but until 1878 an administrative officer working under a minister, and engaged in the execution of governmental policy. The Minister of Finance, when in 1878 he presented his bill to establish an Auditor General who would be an indelOJournals, 1875, App. 2, Fifth Report, Evidence Taken by Sub-Committee, pp. 49-50; ibid., 1872, App. 2, Sixth Report, Evidence, p. 12, and 1874, App. 9, 11 /bid., 1870, App. 2, Eighth Report, p. 13. Third Report, p. 21.

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pendent officer of Parliament, neatly summarized the situation that had prevailed until then: Although the Department of Finance was in no respect a spending department, being intended to act as a sort of check on the others, still the Minister of Finance for the time being must necessarily be in harmony with the other members of the Government. In the absence of the Minister of Finance, his deputy was often called upon to discharge many important duties, and it seemed to him in order to have a perfect audit of accounts there should be a complete division between the offices of Auditor and Deputy Minister of Finance.12 On at least two occasions Langton differed with the Public Accounts Committee, and on one incurred its censure. In 1870, on its own initiative, the committee undertook to examine the mode of preparing the public accounts, and on a motion sponsored by a leading Liberal member reported to the Commons their "opinion that it is desirable that the principal statement of the affairs of the Dominion should be so constructed, as to show clearly the amount of ordinary revenue for the year-the receipts from extraordinary sources-the ordinary and extraordinary expenditure of the year-and the increase or diminution of the public debt, resulting from the financial movement of the year." Langton was one of several civil servants whom the committee had previously approached with a questionnaire, and though in his reply he had been highly critical of some aspects of the accounts, he had none the less written: "I do not think there is much room for improvement in the g~neral framework of the Public Accounts, though no doubt a change for the better may be made in the method of showing some of the details." When the committee, despite Langton's satisfaction with the "general framework" of the accounts, recorded their opinion as given above, it met with a direct challenge in Langton's next annual report. He wrote: Some not very important changes have been made in the form in which some of the statements are rendered, and some additional statements have been introduced, with the view of submitting all the accounts as clearly as possible; but in all essential points the accounts of this year are prepared on the same principle as those of last year .... It was suggested last session, in the Committee on Public Accounts, that in Statement 3 ordinary receipts and expenditure should be distinguished from those which may be looked upon as extra-ordinary; but in the opinion of the Board [of Audit] such a classification must be, to a great extent, arbitrary, and cannot be made a matter of account. ... ta I2Debates, 1878, p. 1624 (page numbered 6124 in error). 13Journals, 1870, App. 2, Eighth Report, p. 6; and Public Accounts of Dominion of Canada for the Fiscal Year Ended 30th June, 1870, p. 1.

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Thus the laymen were advised, in a published report, that to the expert their opinion was virtually worthless, and that he as an official, and not they as a parliamentary committee, was responsible for the form of the public accounts. A more serious difference arose in 1877, over what must be one of the most preposterous series of incidents in the history of responsible government. In 1872 the Public Accounts Committee had studied the way in which appropriations for secret service were managed, and passed the following resolution, which was reported to the House : Resolved, That inasmuch as such large sums as $75,000 have been voted for "Secret Service Money," of which there is no audit, as in the case of otl er expenditures, this Committee is of opinion, that an account of all sums hereafter spent for "Secret Service," should be kept, as in England, in a book specially prepared for the purpose, and that this book should annually be inspected by a confidential Committee, of whom two shall be Members of the Opposition of the day. 14

The resolution was ignored, and Sir John A. Macdonald went out of office in 1873 with a sum of public money at his disposal over which he had kept control by devious devices, and some of which had never been appropriated by Parliament for secret service at all. The incoming Mackenzie ministry was not informed of the existence of the fund, and the relevant public accounts showed that all the sums of which Parliament had knowledge had been actually expended, so, technically, the Auditor was freed of any further responsibility. Yet in 1877 the committee found that in 1875, "Over two years after his resignation, when another person was filling the office of Minister of Justice, and after Sir John A. Macdonald had ceased to have any legal or constitutional control over the fund, for the disbursement of which his successors were responsible, he drew therefrom the sum of $6,600." For this withdrawal ( the remainder of the fund was surrendered to the Treasury) the Auditor had reluctantly given his approval, in order to satisfy the manager of the bank where the fund lay, who had at the moment a keener appreciation of the principles of responsible government than either Langton or Macdonald. The committee, in addition to censuring Macdonald without naming him, found that the Auditor had been guilty of a breach of duty in not informing the Mackenzie cabinet about the secret service fund, and that the Treasury ought to get its $6,600 back.15 (The committee's report on this occasion was one of the few to be concurred in by the House on a formal division.) Whether under the circumstances it would 14Journals, 1872, p. 173. t5Jbid., 1877, App. 2, Third Report.

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have been possible for the Liberals to continue to have confidence in Langton is a moot point, but he was approaching seventy and retired the following year when the new office of Auditor General was created. That the opinions of the Public Accounts Committee in the two foregoing chronicles were ignored or rejected is no measure of its worth. It is true that the members were largely laymen in most of the subjects they investigated, and their quests for knowledge occasionally led them into small problems of their own creation. For example, some of the civil servants to whom the committee sent its questionnaire in 1870 were genuinely puzzled because some of the questions appeared to assume as true something that, in their opinion, was not. (The committee itself modestly observed in one report on another matter that its members, "not being professional engineers, ... hesitate greatly in venturing to differ in opinion from the Engineer-in-Chief," but did so anywayY3) Even when performing its duties competently the committee could run into trouble. C. J . Brydges, who was in the midst of contract negotiations for sections of the Intercolonial Railway, deposed in 1873 that: "If the propositions made by some members of this Committee are adopted, you will be opening the door to difficulties of the very gravest possible character, where it may be necessary to sacrifice large amount [sic] of public money." Alexander Mackenzie quite properly objected to this observation, and Brydges assured the committee that he had no wish to be disrespectful. But he concluded his evidence by observing that he could not help "adverting again to what appears to be the serious disadvantage of discussions of this sort, at a time when these contracts are in process of settlement." Mackenzie again objected, and Brydges expressed again his desire to be respectful. 17 Brydges' comment is not without relevance, partly because he put his finger on a problem implicit in much parliamentary inquiry, including many of the investigations of the Public Accounts Committee, and partly because he was himself only speculating about the possible effects of an inquiry. It is so difficult to trace all the possible influences of the committee's hearings and reports that one is tempted not to try, beyond pointing out that the documents make fascinating reading for political scientists and historians, a development which, according to the record, did not occur to any of those concerned at the time. Some of the difficulty in appraising the committee's work arises from its nature. Of the forty reports which the committee made between 1867 and 1878, six concern routine matters such as the quorum, or a 16/bid., 1879, App. 2, First Report, p. XV. 11/bid., 1873, App. 2, First Report, pp. 37-42.

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request for documents; two were not printed, on the recommendation of the Joint Committee on Printing; three more were lost somewhere in the machinery of the House of Commons or the printing press, for they do not appear in either the Journals of the House of Commons or the appendices. Of the remaining twenty-nine, eight are concerned with investigations into railway contracts and allied matters; eight with the government's management of its relations with a variety of individuals and enterprises, ranging from its dealings with the Bank of Montreal to the cost of maintaining convicts in penitentiaries; and nine with matters of specific parliamentary interest, many of them involving fundamental matters of principle, such as the form of the public accounts and discrepancies connected with public spending, Macdonald's casual flirtations with secret service funds ( described above), and payments made to members of Parliament and senators for sessional indemnities and travelling expenses. The remaining four defy classification; they comprise two surveys of problems that arose immediately after Confederation ( the meeting by the government of unforeseen expenses, and the disposition of the Upper Canada Building Fund), an inquiry into alleged overstaffing in the Queen's Printer's office, and an examination of the circumstances surrounding the superannuation of an aging employee of the Customs House. It cannot be said of many of these reports that they reflect a purely partisan desire, on the part of the Opposition, to embarrass the party in power; and even where bias is apparent, the committee still discharged a valuable function in providing a forum where both parties could variously unearth evidence of scandals and inefficiency, or deny their existence. (Alexander Mackenzie, in bringing up in 1871 what he admitted was a rumour, remarked "I do not know any place except the Committee on Public Accounts where such a rumour as I have referred to ought to be mentioned." Later, supported by his colleagues, Mackenzie conceded that the rumour was unfounded, but reiterated that he "felt bound to bring it up here." 18 ) The evidence taken in most of the hearings that accompanied the committee's inquiries provides a remarkably vivid series of pictures of many of the elements important in the governing of Canada at the time, and the committee itself believed that its main function was simply to inform. The committee, as has been pointed out, did not often make recommendations or offer opinions, even though it felt it had the right to do so; usually it accepted a motion such as the following by Luther Holton: "If there be no other evidence to be taken, I shall simply move, in accordance with our usual practice, that 18/bid., 1871, App. 2, Third Report, pp. 51-3.

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the evidence taken by the Committee be reported to the House." 111 Neither party, when in power, resisted the making of such reports. The influence of published information is impossible to assess except in general terms. One of the commissioners of the Intercolonial Railway informed the committee in 1873 that he had himself become aware of an important detail in the railway's affairs only after the committee had begun an investigation, so it is reasonable to suppose that others might have found the committee similarly useful. 20 The Canadian taxpayer might conceivably have been saved vast sums of money if the government had agreed with the committee's conviction, reported to the House by the Minister of Finance in his capacity as chairman, "that all contracts entered into with the Government, and every department of the Public Service, should be strictly adhered to." The same Minister, two months earlier, had admitted in the House in another connection that there was "no doubt whatever that very serious frauds had been committed upon the Government," and attributed this phenomenon not so much to a faulty system of accounting and auditing as to laxity on the part of some civil servants.21 Not only members of Parliament, but ministers and public servants, as noted above, used the committee as a sounding board for their views, and the committee's proceedings inevitably found their way into the press, and were quoted on the hustings and in the House of Commons. It cannot be doubted that the committee's steady sniping in the first decade after Confederation was a major factor in the comprehensive changes made in the official auditing procedures by the creation of the Auditor General in 1878. Moreover, since the committee rarely confined itself to an ex post facto analysis of the public accounts but generally strayed, almost instinctively, into the discussion of contemporary policies, it made a number of intangible contributions to the workings of the parliamentary system. Apart from its duties as a watchdog set over the executive, its hearings played a significant role in initiating members, and particularly Opposition members, into the mysteries of government. The Liberals who came into office in 1873, judging from their own previous performance in the Public Accounts Committee, would have had little excuse for not being well informed on at least how not to do a number of things, while the Conservatives who returned to power in 1878 knew what changes, if any, the Liberals had made in continuing work begun by the Conservatives. I9Jbid., 1872, App. 2, Sixth Report, Evidence, p. 12. 20/bid., 1873, App. 2, Second Report, Evidence and Minutes of the Proceedings of the Committee in Reference to Section 5, lntercolonial Railway, p. 54. 21/bid., 1870, App. 2, Ninth Report, p. 26; and Debates (Scrapbook Hansard), 1870, pp. 290-1.

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Except for the interval that always follows a change of government, when the new party in power, through its majorities on all the parliamentary committees, can investigate what its opponents did while in office, the Public Accounts Committee tended to be the Opposition's committee, the Government being on the defensive while its leading critics prosecuted case after case. For the particular uses to which the committee was put, the Opposition was probably in a stronger position than it would have been had it provided the chairman from among its own members. The committee also played a significant part in helping to ensure the independence of members of Parliament from direct executive influence through monetary considerations. In 1870 the committee reported on "great irregularities in the payment of mileage" to members travelling to and from Ottawa on official business, and urged that "the actual distance necessarily travelled shall be paid and no more." More remarkably, the committee in 1877 reported that "it appears, from the vouchers now before them, large sums of money have from time to time, been paid to T . W. Anglin, a Member of the House of Commons, for printing and stationery while a Member of that House." Anglin was the Speaker, but the findings of the Public Accounts Committee, when referred to the Committee on Privileges and Elections, led to the further conclusion that, as a contractor with the government, his election to the Commons was void. 22 The Public Accounts Committee's report on Anglin immediately preceded the report in which it censured the Leader of the Opposition and the Deputy Minister of Finance, in his capacity as Auditor, for their trifling with secret service funds. The fact that the committee should strike in successive reports at leading members from both sides of the House, as well as at the individual who was at the time probably the most important civil servant in Ottawa, is a measure of its vitality and earnestness. One might suppose, with work of this quaiity, that the committee would in a few years have put itself out of business, that each revelation of irregularity or inefficiency would be followed by stern corrective measures. But, as will be seen, the administration of affairs of state, bedevilled by political patronage and uninspired by either a sense of urgency in governmental matters or a high sense of public morality in politics, permitted no such fading away on the part of the Public Accounts Committee. Though it worked assiduously throughout the 1870's and 1880's, those decades were followed by the celebrated "scandal sessions" of the 1890's, which saw it at work as usual. 22/ournals, 1877, App. 2, Second Report, p. 26; and App. 8. See also, Debate:, 1877, pp. 1222 ff.

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The fact that its work did not stamp out corruption and inefficiency points to the committee's most serious shortcomings during its first period of activity: it did not develop the excellent habit of following up each of its reports or findings to see what executive action followed their publication; nor did it insist on rec~ving comments on its reports, or reports in reply, from the Auditor or any minister or other official. Since, as long as the Auditor was also Deputy Minister of Finance, the committee had no servant of its own to whom it could turn for advice or assistance in such matters, perhaps neither the members nor the Auditor can be held to blame. Still, the failure to establish a follow-up procedure was not merely a weakness of the committee from 1867 to 1878; it was to have more serious repercussions in the future. Even more serious was the fact that in the years immediately preceding 1878 the committee got out of the habit of working regularly with the Auditor as an adviser.

THE PUBLIC ACCOUNTS COMMITTEE AND THE AUDITOR GENERAL,

5

1879-90

PARLIAMENTARY INFLUENCE ON EXECUTIVE EXPENDITURE took a new turn in 1878, following the establishment of the office of Auditor General. In this official the House of Commons, and the Committee on Public Accounts, received a new ally who was potentially invaluable. An important new document, his annual report, which was referred regularly to the committee, opened up new vistas for any member of Parliament with an inquiring mind. The Audit Act of 1878, as several cabinet ministers later admitted freely, compelled many branches of the public service to stiffen their own internal accounting systems, for the first Auditor General, a zealous man not overly endowed with tact, was a hard man to satisfy. ("In several instances," he once wrote in explanation of the reasons why he published in detail, as part of his report, letters between himself and sundry civil servants, "the correspondence has been retained to show to others who have the disbursement of public money the readiness to make needed changes which intelligence and business capacity induce. " 1 ) The act also forced major administrative alterations within the executive departments concerned with the raising and spending of money, for the Department of the Receiver General was abolished as a separate entity and incorporated with the Department of Finance, and the reorganization involved kept the new Deputy Minister of Finance busy for most of a year. Within the relatively small circumference of government activities in the 1870's and 1880's individual personalities played a large part, and it is relevant to note that the extensive institutional changes necessitated by the legislation of 1878 were accompanied by the

1Auditor General's Report, 1890, p. 3.

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retirement (mentioned in the previous chapter) of the redoubtable John Langton as Auditor and Deputy Minister of Finance, and his replacement by John Lorn McDougall as Auditor General and J. M. Courtney as Deputy Minister. Neither of these gentlemen was less industrious nor less opinionated than Langton, and by the 1890's they were barely on speaking terms. It is not the intention of this book to trace in detail the history of the Auditor General's office, except as it pertains direct to parliamentary control of finance. However, an understanding of the bases of the Audit Act of 1878, which was largely copied from the similar British statute of 1866, is essential. The act's chief principles, for our purposes, can be quoted from the legislation itself: All public moneys, from whatever source of revenue derived, shall be paid to the credit of the account of the Receiver General. No cheque for public money shall issue except upon the certificate of the Auditor General that there is parliamentary authority for the expenditure Iwith certain specified exceptions]. The Auditor General shall call attention to every case in which cheques have been issued without his certificate, or in which it may appear to him that a grant has been exceeded. All estimates submitted to Parliament shall be for the services coming in course of payment during the financial year; and all balances of appropriation which remain unexpended at the end of the financial year, shall lapse and be written off [but any account could be kept open for an extra three months by order in council].

The act, which thus embodied both old and new principles for the Canadian Parliament, contained much more than the quoted passages, but all its clauses had one end in view: a certralized control of all public moneys coming in and going out, with a strict audit which was to be reported on to the House of Commons, whos~ members also had an annual opportunity to survey next year's estimates and last year's accounts. The Auditor General, it must be empha~ized, was given power both to pre-audit and post-audit accounts, that is, !-1e was not only an auditor, but controller of the issue of public money.2 Parliament, to its great credit, enacted the law not only without partisan controversy, but with every indication of interest and even anxiety that its provisions should be effective. The Auditor General was given large powers which were made still larger as the relevant clauses progressed through Parliament, and extended after 1878 by further decisions of the House of Commons and the Treasury Board. The original legislation 2Statutes of Canada, 41 Viet. c. 7 (1878).

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gave him tenure during good behaviour, subject to removal "on address of the Senate and House of Commons." He was given full power over the internal conduct of his own office, including the promotion, suspension, and removal of any of his officers, a right enjoyed by no other public servant in those terms. (The latter power was accidentally taken from him by the commissioners who prepared the first Revised Statutes of Canada in 1886 but restored when he drew Parliament's attention to the mistake. 3 ) His duties, in addition to those outlined above, included the examination of all the appropriation accounts kept in the several executive departments, to ensure that all payments were supported by proof of payment and were in accordance with parliamentary authority; the auditing of public accounts other than the appropriation accounts, as he might be directed by the Minister of Finance; and the making of an annual report which the Minister of Finance, in the first instance, was to present to the House of Commons. Should the minister fail to present the report within a fixed time, the Auditor General was to present it forthwith. The major limitations put on the Auditor General centred around the conditions on which a cheque for public money could be issued without his certificate. Stripped of legal verbiage, these were: 1. If the Auditor General refused to certify a cheque on the grounds that no parliamentary authority covered its issue, the Minister of Finance could nevertheless authorize his deputy to issue the cheque if the Law Officer of the Crown held that there was adequate parliamentary authority, and cited it. (The Minister of Justice, incidentally, refused to "recognize the right of the Auditor General to appeal to the Minister of Justice for legal advice"; the Auditor General sought legal advice normally outside the public service.•) 2. Any accident to a public work, or any other unforeseen expenditure "urgently and immediately required for the public good," could be covered by Governor General's warrants if Parliament were not in session. 3. If the Auditor General refused to certify a cheque on any other ground than the absence of parliamentary authority (such as an opinion that the money was not justly due), the Treasury Board, on a report by the Auditor General and the Deputy Minister of Finance, had the power to sustain or overrule him. All relevant documents relating to a case arising under any of the foregoing three points were to be reported to Parliament by the Auditor •Auditor General's Report, 1890, p. A-14. Debates, 1891, pp. 32, 36-7. •Auditor General's Report, 1882, p. 193.

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General together with a statement from him, by the third day of the next session of Parliament. To all these rights and obligations the first Auditor General, J. L. McDougall, brought a penetrating and incisive mind which vastly enhanced the powers which statute conferred upon him. At first sight, McDougall was hardly a promising appointee. By occupation a lumber merchant in Renfrew County, Ontario, McDougall had inherited a predilection for politics from his father, and sat as a Liberal in both the assembly of Ontario and the House of Commons. As was common in those days, he was twice unseated on petition and re-elected during the third Parliament, and in the year of his appointment described himself as a supporter of the Mackenzie administration which picked him for the office in 1878 while he was still a member of Parliament. On the face of it, the subsequent Conservative victory in the general election of that year put the first Auditor General in an enviable position to harry his erstwhile political opponents. McDougall's opening campaign did indeed startle many branches of the public service, chiefly because they were accustomed to being left alone. McDougall wrote in his first report : "The office, as it is now necessary that it should be, could not be built up to as great an extent as might be supposed from the materials which existed in the department of the late Auditor General. When the same person was Auditor General and Deputy Minister of Finance, the duties of the latter position were from the nature of the case first performed. Even of Mr. Langton's energy and intellect little could be spared to the work of his second office." 5 Thus starting almost from scratch, with a small staff drawn from the former Audit Branch of the Department of Finance and the defunct Department of the Receiver General ( two of the public servants transferred to his office were nearly eighty years of age), McDougall had not merely to make an audit, but first create a system by which an audit could be made. From the beginning, the Auditor General was a jealous guardian of his own prerogatives in connection with his staff, and challenged the Treasury Board's first attempt to interpret his powers in a manner which he considered at variance with the intention of Parliament.6 From the beginning too, he took a firm line in the interpretation of both his own duties and those of the departments which had to supply him with vouchers and other necessary documents. "I assume," he wrote acidly in 1889 to the Deputy Minister of Justice, who was endeavouring to postpone supplying the Auditor General with information that would in due 5/bid., 1879, p. ix.

6 /bld.,

1881, p. xviii.

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course appear in the Department's annual report anyway, "that this office was not established with the expectation that each spending Department is to put in the way of the office every obstacle that has noth [sic] been forbidden by Act of Parliament; but to afford every assistance that can be given in saving the people's money. It seems unreasonable to suppose that Parliament intended, in establishing the Audit office, to test the skill and ingenuity of the office by deliberately confining it to certain information." 7 His views on economy were strong, and he did not keep them to himself, nor feel that anybody would benefit from a too literal interpretation of the Audit Act. "Since I am the only examiner of the whole expenditure of the Dominion," he informed a restless Deputy Minister of the Interior in 1884, "it seems rational to suppose that I am not far over-stepping the bounds of my duty when indicating methods of economy suggested by the wider range of my experience." 8 Annually, once he had his work organized, the Auditor General published as part of his report "several Orders in Council relating to economy in public expenditure," to which he made copious reference in his correspondence with public servants. Inevitably a new broom sweeping on so broad a scale was bound to stir up more than the average amount of dust. Parliament itself was among the first to hear the swish of the besom, for once the two houses in a self-denying ordinance had added the auditing of the internal accounts of the Commons and Senate to the duties of the Auditor General (in 1880), their officials soon found themselves involved in a correspondence whose tone suggests that they found some of the Auditor General's inquiries impertinent, if not actual breaches of privilege. The Deputy Minister of Justice, supported by the Minister, told McDougall in 1879 that he had "no right to enquire into the legal right of the Government to do that for which they seek to expend the money which has been voted to them by Parliament," a point of more than academic interest, for the right was among the first claimed by the Auditor General. He published the Deputy Minister':; letter in his next annual report, together with a rebuttal. 9 Other leading civil servants who found the Auditor General a trial included one who regarded McDougall's conscientious inquiries as "allegations"; a second who considered that a request of McDougall's depended on "a quibble ... and in keeping with the manner in which accounts from his branch have been treated in your office"; and a third 1/bid., 1889, p. C-118. (The relevant letter is misdated 1886.) 8/bid., 1884, p. 356. 9/bid., 1879, pp. xxiii-xxvi. See also Audit Office Guide, 1958, p. 1.

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who felt obliged "to offer the strongest possible protest against the gratuitous assumption, without any inquiry whatever on your part, that these articles were obtained for my personal use." McDougall's persistence in these and scores of similar matters was buttressed by a policy which he followed with almost uniform consistency: he rarely apologized when challenged, but instead would refer his critic to some maddening statute or regulation which proved the Audit Office was technically in the right. Lest the foregoing suggest that the passage of the Audit Act of 1878 was followed by a general outbreak of internecine war between the Audit Office and the rest of the public service, it must be added at once that such was not the case. As Sir Hector Langevin remarked in 1889, when the Conservative administration whom McDougall had once opposed were taking the initiative in granting him a substantial increase in salary: "The Auditor-General has never been a popular officer, and he never will be a popular officer, because his duties make him unpopular." 10 The first Auditor General, moreover, was handicapped by the small size of his staff, whose salaries were fixed by the Civil Service Act; he complained in 1886 of the impossibility of obtaining, on those salaries, "the permanent services of such persons as are capable of properly examining the important accounts which are brought under review in this office." He was faced too with the intimidating problem of bringing under review the affairs of not merely the departments in Ottawa, whose organization ranged from the good to the haphazard, but also of a sprawling outside service, much of it working in areas where transportation was poor and communication sometimes non-existent. McDougall had little time to word his correspondence in the most conciliatory terms possible, even if he had been so inclined, and it is not surprising that his terse and forthright letters seemed needlessly barbed to more than one civil servant. Yet when the Auditor General's salary was being increased in 1888, his work received generous praise from members on both sides, including ministers whose departments were giving him the most trouble. Sir Charles Tupper, in his usual grandiloquent style, asserted on that occasion that McDougall's annual report was more complete than that "published by any other country in the world," while McDougall himself had "discharged his duties in such a way as to win the confidence and hearty approval of every member of the Government." In his work, he received loyal support on matters of fundamental importance from the Treasury Board and the Deputy Minister of Finance, both of whom in 1881, for example, upheld his opinion that 10Debates, 1888, p. 892.

76 / THE PUBLIC PURSE British practice should be followed in Canada in regard to extra emoluments for salaried officials. (Since the Audit Act was copied from a British statute, McDougall assumed from the start that he was to implement British practices wherever possible.) Of even greater importance, for our purposes, is that he turned to the House of Commons Committee on Public Accounts as an ally, within the limits of the law as he interpreted it, and put himself at the committee's disposal. "The undersigned," he concluded in his first annual report, "while exercising the necessarily novel functions of a newly-created office, has in all probability, in some instances, either exceeded or fallen short of the powers granted him by Parliament. He trusts that any points on which he should receive directions from the Public Accounts Committee will be early taken up." 11 Paradoxically, after its busy years that preceded 1878, the committee entered a period of relative decline in its first decade of collaboration with the new Auditor General. The continuance in office of a single party after 1878, as compared with the turnovers before, was of course a factor in this, for until Macdonald's death in 1891, when the Conservatives in Parliament lost control of the Public Accounts Committee, the party showed a growing disinclination to have its affairs studied by parliamentary bodies. Part of the decline, too, can be traced to the Audit Act of 1878, for it not only gave members of Parliament a number of assurances in regard to public expenditure that had not existed before, but, as Sir Richard Cartwright pointed out in 1891, the Auditor General "took off the shoulders of the Committee the care of examining into the minute details of those comparatively formal enquiries, which, in other days, used to occupy a considerable portion of the time of the Committee on Public Accounts." 12 Considering that in some ways the Public Accounts Committee was peculiarly an instrument used by the Opposition, part of the decline is no doubt due also to the complete confidence which the Liberals had in the Auditor General, for he was their choice, and working under their legislation. Yet McDougall himself drew attention to the fact that for the first several years his staff had time to make only partial audits, so that immediately after 1878 the affairs of many branches of the public service received no more careful review than before. Since the committee made no reports at all in four of the sessions between 1879 and 1890, and issued during the period a total of only nineteen substantive reports (six of which were not printed), as compared with thirty-four between Confederation and 1878, it is possible that some branches received even less. 11Auditor General's Report, 1879, p. xxvi.

•"'Debates, 1891, p. 4090.

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The number of reports made by the committee is not necessarily a valid indication of its worth, and we must look deeper for a fair appraisal of the committee during its first years with the Auditor General. In form, the committee did not change markedly except in one respect in the 1880's. It continued to attract leading members from both sides of the House, and apart from a large turnover after the election of 1882, its personnel did not change greatly from session to session. Government majorities were approximately proportionate to the majority in the House of Commons, and usually a majority of the ministers with seats in the Commons served on the committee. Representation continued to be distributed throughout the provinces, Ontario always in the ascendant. The smaller provinces, by contrast, occasionally went through a session without representation on the committee, and after the election of 1887 Quebec's share of seats dropped to ten, as compared with nearly thirty for Ontario. In 1889 the committee had eight New Brunswick members to ten from Quebec. Both political parties showed a growing disposition during the eighties to choose freshmen M.P.'s for the committee, as against their former practice of relying on experienced members. The committee's size attracted the attention of both cabinet and Commons early in the decade. From its small beginnings the committee had by 1882 grown to ninety-seven members, not far short of half the House. Its huge size, in addition to inhibiting the ordinary type of discussion that can be so valuable a part of committee work, put a heavy burden on the Opposition for, since other committees of the House were almost as large, each M.P., according to Edward Blake in 1883, had to serve on three or four. At the same time, Blake was sceptical of the benefits to be gained by a reduction in size, for he feared that it might be even harder for the ~inority to secure adequate representation with lighter committee loads, since there might not be enough leading members on the minority side to go around. Sir John A. Macdonald's interest in a smaller committee arose from both principle and practice: "It is a working committee and its numbers are too large. We have not had the same members in attendance de die in diem; and you know, Mr. Speaker, as the late Chairman of the Committee, that there was no certainty that members present one day would be present at the next sitting, or that members would keep up a continuous attention to the business before the Committee.'' Blake, speaking of the committee system generally, agreed that there was "an uncommon swelling ... shortly before a vote was taken on an important question," and implied that for some committees at least there was much to be said for preventing a member from voting if he had not heard all the evidence. As an experiment, the House

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agreed unanimously to reduce the Public Accounts Committee to fortyfive members. 13 The change was not great enough to produce noticeable differences in the proceedings of the committee, which as before used subcommittees when expedient; by 1890 the size of the committee had crept back up, at the rate of one or two a year, to fifty-seven. The work of the committee during the fourth, fifth, and sixth Parliaments was divided between examinations of matters arising from the public accounts and from the Auditor General's report. Of the thirteen of its reports that were printed, eight dealt with investigations of specific incidents involving the allegedly careless or dishonest management of public funds, and ranging from a trifling inquiry into the circumstances surrounding one civil servant's superannuation to a comprehensive survey of railway-building by contract. Several of these reports are, like the earlier ones, revealing about what appear to have been standard practices in relations between government and business during the period, and they played their part in implanting on the Public Accounts Committee the tradition that it must be at least partly a scandal-hunting body, or count itself a failure . They are all interesting to read, and one of them, in which a spirited female innkeeper spoke poorly of the "honor or manhood among the legislators of Canada [ who would] put a woman in such a position," and invited the committee to send her to prison, is excellent entertainment. 14 The five reports that do not involve specific investigations are concerned direct, rather than by implication, with fundamental matters of principle in the scrutiny by Parliament and the Auditor General of public expenditure. In 1880 the House of Commons, at the instance of the Public Accounts Committee, invited the Senate to join it in submitting to the Auditor General parliamentary accounts concerned with such matters as members' indemnities, officials' salaries, and contingencies. The Senate agreed, but put its finger on a potential loophole in the Commons' control of expenditure; the senators said of the Commons: "whilst fully recognizing their undoubted right to inquire into every branch of the public expenditure, the Sena~e is nevertheless of opinion that the critical examination of the details of such disbursements ... is, in the interest of the harmonious relations of the two Houses, best left to the House by whose order payment is made. " 15 In 1882 the committee set up a strong subcommittee which spent many sessions in a serious study of the balance sheet, summoning all the relevant public servants, 13/bid., 1883, pp. 36-8. 14Journals, 1886, App. 3, Second Report of Select Standing Committee on Public Accounts. 15/bid., 1880, pp. 158-9.

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including McDougall, to give evidence; the committee recommended (and the House concurred in) several detailed changes aimed at tidying up the form of the accounts. 16 In 1887 and 1888 two further minor expeditions with the same goal in mind were undertaken by the committee. Probably the most important single report during the period, and one of the most significant in the committee's history, was its second report in the parliamentary session of 1880. The Auditor General's first report, for the fiscal year ended June 30, 1879, contained McDougall's opinion on a variety of subjects connected with his work, and the Public Accounts Committee promptly referred the document to a subcommittee. The subcommittee, and in due course the committee, and then the whole House, upheld the Auditor General in general and in detail, spelling out the form in which the estimates should be presented and the necessary legislation passed, so as to minimize the possibilities of money being spent improperly, on the one hand, and to facilitate subsequent examination of the expenditure, on the other. The report also reviewed the provision in the Audit Act whereby any sum voted by Parliament for a specific fiscal year could, by order in council, be kept available for the first three months of the next; a provision which, as the Auditor General accurately foresaw (and the committee agreed) was potentially conducive to chaos in the public accounts, for it could mean that the fiscal year for many accounts was in fact fifteen months, while the reporting period was twelve. The committee considered that the threemonth hang-over should be reduced to one. Apart from the recommendation already cited in regard to the audit of parliamentary accounts, the committee made no recommendations on what additional accounts, if any, should be placed under the jurisdiction of the Auditor General, since the Minister of Finance had the same subject under advisement. (The most important subsequent addition to the Auditor General's duties was the annual examination of all revenue accounts, so that between the revenue and appropriation accounts he covered all money coming in and going out. As an incidental benefit, the public accounts were substantially shortened, since the Auditor General's annual report thereafter contained much information formerly given therein.) Support for the Auditor General was given also on a number of minor matters, the committee declining only to consider moving the closing date of the fiscal year from June 30 to March 31, as McDougall desired. The virtual unanimity between the Auditor General and the Public Accounts Committee, whose second report in 1880 was concurred in by 16/bid., 1882, App. I, Second Report.

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the House of Commons without a dissenting voice, is a misleading indication of the influence of either on the management of public funds by the executive. Throughout the period under review the liaison between McDougall and the committee, where the record shows any at all, was close, the Auditor General variously adding details to his report for the committee's edification, drawing up new forms and certificates at its behest, and transmitting to the Treasury Board points raised by its members. Beginning in 1884, the Auditor General on occasion added to his report citations of the actual pages in the House of Commons Debates where discussions of particular votes had occurred. The Deputy Minister of Finance, in his annual letters of transmittal covering the public accounts, showed a similar continuing interest in the work of the committee, going so far in 1886 as to advise his Minister that, "I think it would be as well for future guidance to take the sense of the Public Accounts Committee" on the way in which certain payments for railway subsidies should be shown in the accounts. But in 1890, when the Audit Office had been at work for twelve years, neither of the two major recommendations of the Auditor General's first report, which had been upheld by the Public Accounts Committee and concurred in by the House of Commons, had been implemented. In his report for the fiscal year ending in 1890, McDougall expressed the hope "that it may be possible, during the Parliamentary term in which we are about to enter, for members to systematize the estimates; to determine the amount of detail that should be given in them, and apply the principle uniformly to the Departments; and to define each subhead of appropriation so that there may be no doubt as to the one against which each item of expenditure is to be charged." This hope, expressed as a recommendation, appears in the second report of the Public Accounts Committee for 1880, partly in the same words. Also in his report for 1890, McDougall reverted again, as he had done several times throughout the decade, to the familiar theme of the provision which stretched the fiscal year to fifteen months as far as making payments were concerned, and urged again that the extra three months be reduced to one. Railway construction, he noted in a letter to the Treasury Board has "brought the most distant parts of the settled portion of the Dominion within the possibility of receiving a reply to a communication in less than a month," so that no inconvenience would result from reducing the three-month addition to the fiscal year. In its reply, the Treasury Board ignored the point. 17 Neither the Auditor General nor the Public Accounts Committee could have been surprised, for despite their clearly expressed 11A.uditor General's Report, 1890, p. S.

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opinions, not only had the relevant phrase in the Audit Act been left without change by the Consolidated Revenue and Audit Act of 1888 (which increased the Auditor General's salary and made a few minor other changes), but the Auditor General had been informed that it was to "be construed independently of the Public Accounts Committee Report" of 1880, on which he had been relying as authoritative support for his own interpretation of what the clause meant. 18 The extra three months were of more than academic interest for, as McDougall advised the Treasury Board in 1887, "the practice of carrying forward the unexpended balances of votes has become so universal that the Appropriation Accounts are too complicated to be understood by any but an expert." The members of the Public Accounts Committee were not experts, and, perhaps because the complexity of their task disheartened them, did not always respond to suggestions of either the Deputy Minister of Finance or the Auditor General about lines of activity which they might with profit pursue. Both of these officials would clearly have welcomed more and harder work from the committee, to strengthen their own hands in dealing with ministers and departments. McDougall wrote in his report for the year ending in 1885: "I would suggest that, as far as it may not interfere with some other object, the Public Accounts Committee should adopt the practice of going regularly through the report, instead of ordering information and vouchers connected with widely separated items at any time during the Session. If my suggestion were followed, I could be of more service by having the subject of the day's consideration refreshed by consultation with the examiners in this office, and by reading the vouchers ordered." Systematic review, however, was something of which the committee was even then almost incapable. The hope of finding evidence of corruption and inefficiency, too often well founded, offered temptations too great to resist. The Opposition was not strong enough through the 1880's to use the Public Accounts Committee to its fullest extent while attending to other parliamentary duties, for the 1880's were to see the Conservatives make their major onslaughts on the electoral system with the redistribution of 1882 and the Franchise Act of 1885, and prolonged night-sittings frequently exhausted the members. Neither party, nor the committee itself, had any traditions that would have led the committee members into a methodical and judicious appraisal of public affairs every session. It was in the decade of the 1880's, indeed, that the Public Accounts Committee became more, not less, partisan. In the first decade after Confederation, when party lines were not as 18/bid., 1887, p. v.

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rigidly drawn as they later became, and each party had an opportunity to form a government, the Public Accounts Committee was influenced, though certainly not dominated, by the idea that turn about was fair play. After 1878, with the continued domination of the House of Commons by one party, the continued domination of the Public Accounts Committee by the majority party became more marked. Ministerial influence in the committee had always been present, for, as has been shown, ministers were always present in quantity on the committee's list of members, and for a few years ministers had acted as chairmen. Though Sir John A. Macdonald conceded in l 880 that the committee was "a serviceable institution, inasmuch as it is a very considerable check on the Government of the day," 19 the evidence is clear that as the decade wore on the check worked increasingly in the opposite direction. A leading Liberal member in 1886, Louis Davies, who was active in the committee, made clear on the floor of the House that he had made an arrangement with the Minister of Finance concerning postponing a meeting of the committee, and having made it, sought the committee's chairman to "acquaint him with the understanding I had with the Minister." Later in the same session Sir Richard Cartwright specifically drew the attention of the Government, not the House as a whole or the chairman of the committee, to another failure of the committee to meet. In a similar incident three years later, the Minister of Customs frankly told the House: "The instructions left to the chairman were to call a meeting of the Committee as soon as the papers which had been moved for were ready . . . . I will see that it is called for Tuesday." Yet another incident in 1890, in which the Minister of Finance undertook to "see that the Committee is called to meet on the first available day," confirms the conclusion that the influence of the cabinet on the affairs of the parliamentary committee became very great during the 1880's.20 Within the committee itself, more was troubling the Opposition than the difficulty of arranging for meetings. Mention has already been made of the significantly fewer reports, one-third of which did not see the light of day; and of the fact that in four sessions there were no reports (though that does not necessarily indicate that the committee did not meet). In the committee's proceedings, in contrast to the remarkable freedom enjoyed by members before 1878, the chairman and other Government supporters revealed a growing disposition to throw technical obstacles in the path of Opposition members, to question their right to ask certain kinds of questions, or to explore matters beyond the strict limits of the 19Debates, 1880, p. 2014. 1880, pp. 1 I 44, 1514; 1889, pp. 500-1; 1890, p. 2596.

20/ bid.,

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documents referred to the committee by the House of Commons. Thus in 1886, for example, the chairman showed an unprecedentedly protective attitude to a witness, while ruling against the asking of particular questions by an Opposition member; and in 1889, in two consecutive investigations, Liberal members encountered interruptions and arguments from Government supporters interested in blocking or delaying inquiry. The points involved were of fundamental interest and importance: Is a civil servant giving evidence a witness, obliged to tell the whole truth, or is he a subordinate, acting under instructions from within his department? Does an examination of expenditure for militia clothing include an inquiry into the quality of the uniforms obtained and the opinions of the soldiers about them? The chairman's answer to the first question was advice to the witness: "You have no right to say what your superior officer told you to do; that was decided in another case yesterday." On the second question, the disagreement in principle that by 1889 had widened between the two partisan groups on the committee could hardly be more clearly expressed than by two of the protagonists: William Mulock, for the Liberals, asserted that, "We are now investigating accounts for this material, and the enquiry is to show that the money that we expended last year for militia clothing was expended without regard to sound principles, not having advertised for contracts for the supply . .. "; Dalton McCarthy, for the Conservatives, suggested that what Mulock was seeking might properly be undertaken by a special committee, but the object of the Public Accounts Committee was merely to "see that payments have been properly made upon contracts properly entered into . ... The question here is whether the money has been paid upon the contract entered into or if the material was received and paid for." The Minister of Customs, in the same inquiry, insisted with the chairman's support that "the only accounts before this committee are the accounts for the past year," a statement which, while accurate, involved a considerable departure from the committee's earlier practices. ~1 The committee thus failing to institute an annual systematic review of executive expenditure, as urged by the new Auditor General, and changing the direction of its sporadic forays into particular activities, its second decade cannot be said to have comprised a wholesome adolescence. No single incident more sharply delineates the committee's position by 1890 than the fate which befell its chairman in that year. J.C. Rykert, a respected lawyer in his late fifties who had been extremely active in 2 1Journals, 1889, App. 2B, Third Report. See also ibid., App. 2A, Second Report, and ibid., 1886, App. 5, Fourth Report.

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local, provincial, and Dominion politics throughout his adult life, was chosen by the Conservatives as chairman of the Public Accounts Committee in 1886, and served continuously until 1890. Early in the 1890 session of Parliament he was accused in the House, with much documentary evidence, of having used his influence some years before in a secretive manner to obtain a grant of timber limits in the Northwest Territories for a friend, who by arrangement bestowed substantial benefits on Rykert's wife to show his gratitude. The allegations were referred to the Standing Committee on Privileges and Elections, on which Rykert's own colleagues had a majority, and after an exhaustive examination of the evidence the committee concluded that Rykert's explanation of his conduct to the House of Commons "was untrue, and was designed to mislead the House," while the conduct itself was "discreditab1e, corrupt, and scandalous." 22 The chairman of the Public Accounts Committee, who on more than one occasion had, understandably, made it difficult for Opposition members of Parliament to carry on particular investigations, felt obliged to resign from the House of Commons. Had he not resigned, he would almost certainly have been expelled. Neither method of departure from the House of Commons could have been considered a favourable reflection on the Committee on Public Accounts. 2!'/bid., 1890, App. 4, Report of the Select Standing Committee on Privileges and Elections.

THE SCANDAL SESSIONS,

1891-6

6

THE RYKERT CASE WAS BUT A CURTAIN RAISER to the performance that followed in the seventh Parliament. The death of the beloved Sir John A. Macdonald in 1891 seemed to trip a switch controlling a vast system of illumination which shed light into many corners of Canadian politics and public service, and before the disorganized and demoralized Conservative party could bring the last parliamentary session to a close in 1896, the House of Commons, led by the Public Accounts Committee, had revealed an almost incredible series of frauds involving business men, civil servants, and politicians in the federal field. The Senate, not to be outdone, spent a happy session or two looking into similar phenomena among the Liberals in Quebec. "The state of things at Ottawa," The Times remarked laconically, "made Tammany smell sweet." Many of the frauds, which ultimately involved most of the major departments of government, were so ingenious that one is tempted to digress in order to discourse upon them at length. There were of course the more or less routine peculations concerning the raising of election funds from government contractors, and the accepting ( and indeed the seeking) of bribes by government purchasing agents; some of these, in the 1890's, took on a bizarre splendour from which the radiance has not yet disappeared. But there were also the civil servants who, prevented by the Civil Service Act from receiving more than their statutory salaries, drew pay in fictitious names; the practice in one instance was defended by a deputy minister who pointed out that no legal way existed of giving extra pay for necessary extra work such as preparing

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returns for Parliament. There were civil servants who drew pay while absent taking an academic degree or studying music; there was another who owned a small ship which he operated in the interests of his department, which unknowingly rented it from him. Still others purchased items for their homes which were charged to the government's account; or, by a simple bit of legerdemain, cashed cheques twice. (One Ottawa merchant even dignified his own dishonest dealings with a civil servant by systematizing them : the frequent entry "T.B." in his private accounts, he assured an incredulous Public Accounts Committee, referred to "Talbot Boodling.") Nepotism was openly countenanced, for faced with low salaries and inadequate pensions, civil servants could best provide for their young by getting them on the public payroll. Contractors engaged on necessary public works developed a positive genius for charging the government for extra services beyond those agreed on in their contracts, and for padding payrolls : one even contrived to levy tolls on all the subcontractors working on the same project as he, by asserting a right of way into the building for the use of which he charged a substantial fee. In one miraculous episode, over a million feet of lumber disappeared without trace from an exposed public area. In the midst of it all, the Minister of Public Works, while stoutly denying everything, found it expedient to resign his portfolio, and an M.P. was expelled from the House, shortly to find himself behind bars. That only one minister and one member were discovered in untenable positions, both in the same year, suggests that possibly the publicity given to the scandals, and their frequent use by the Opposition, exaggerated their real magnitude. The weight of evidence, however, suggests the contrary: that the relatively few investigations which revealed the scandals were symptomatic of practices far more widespread than the House of Commons had either the time or the means to study. Combined with the abundant evidence of electoral corruption during the period, and the clear intent of such legislation as the Redistribution Act of 1882 and the Franchise Act of 1885, the conclusion is unavoidable that while substantial areas of politics and administration may have been free of taint, equally substantial areas were as clearly not. Many of the goings-on, both at Ottawa and elsewhere, were common public knowledge before the House of Commons made the knowledge official. "The Civil Service disclosures were bound to come," Lady Macdonald wrote to Sir Charles Tupper in 1891 , "and in the interests of good departmental Gov't, which is after all beyond all party feelings-it is as well they come now." 1 I Nov.

3, 1891, P.A .C., Tupper Papers, no. 597.

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The parliamentary Opposition was naturally as well informed as anybody about the state of morality prevailing in the Dominion administration. As early as 1883 Sir Richard Cartwright wrote to Alexander Mackenzie to deplore the "systematic and organized corruption" that they were up against in Ontario, while the young Wilfrid Laurier was writing in the same vein from Quebec. "I doubt very much," Cartwright observed mournfully, "if we will ever return to any decent sense of honesty as regards Dominion politics for a long time. The poison has gone deep and even now our own friends privately are inclined to think that Canada cannot be governed by straightforward means in the present temper of the people. " 2 Cartwright's last phrase is significant for its simple truth: among two classes of people important in any system of representative government that has undertaken to construct vast public works-prosperous contractors who do the constructing, and underpaid citizens who provide the votes on election day-what looks like extensive corruption today was in the 1890's not only popular but, even before "public relations" had become a legitimate craft in its own right, regarded as a perfectly ordinary way of doing business. "Every business man," one business man deposed under oath in 1891, "is inclined to be just the least bit liberal to any man who gives him a good sized order, and may do something that looks to you gentlemen as serious." Another, during the same inquiry, said of a bribe he had paid: "We gave this out of the legitimate profits of our business. I simply regarded it as a sort of toll on our business.:• As for the civil servants who drew extra pay in fictitious names and otherwise helped themselves: "It was not considered wrong. It was considered right for a man to improve his time, just as men in the Civil Service use their time for literary work. " 3 The prevalence of the various corrupt practices that made such sensational reading for Canadians in the 1890's was, paradoxically, one of the difficulties encountered by the Public Accounts Committee, and particularly its Liberal members, in opening up inquiry. It is one thing to be certain, as the Liberal leaders had been for years, that sundry kinds of corruption could be found in sundry places. It is quite another to find evidence, particularly when everybody concerned had good reasons for providing none. During a fascinating investigation into the manner in which the superintendent of the Printing Bureau maintained himself in style by levying tolls of various kinds on his suppliers ( while 2 Cartwright to Mackenzie, June 28, 1883, Queen's University, Mackenzie Papers, no. 2446. BJournals, 1891, App., vol. II, Thirty-fourth Report, pp. 41, 58, and Twentyseventh Report, p. 110.

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operating an admittedly efficient plant on which he prided himself), the Queen's Printer deposed that he had tried several times to investigate the rumours he had heard, but received no co-operation from the business men. "They always denied it point blank," he said. "in fact some of them swore about it." But there were o'.her reasons that made inquiry difficult. The task was, naturally, one made to order for the Opposition. But the Liberal Opposition was not merely weak numerically in the years preceding 1891, but deeply concerned over problems of organization and leadership. The party had split internally in 1886 over an attempt to exploit the Riel case so as to win support from French Canadians in the House; it was, Alexander Mackenzie wrote, "a big blunder and a foolish experiment. . . . (some) refused to be led over such a path even to reach office." 4 Blake, the great resigner, resigned the party leadership for good in 1887; his main interests had never included the activities of the Public Accounts Committee, or the general control, as such, of the executive by Parliament. His successor was preoccupied after 1887 constructing a party. Nevertheless, the Liberals throughout the I 880's did trumpet loudly about the state of political and administrative morality in federal affairs, though they did not succeed in arousing public opinion sufficiently to assist them much at the polls. Mackenzie, tragically afflicted with a growing paralysis, may well have been right when he told a confidant in 1886: "The Government have run a long career of corruption and the country has got used to it. ... Unfortunately I am totally unable to speak, or I would try to contrast my way and their's of carrying on the Government of the country. " 5 The Government of the country, as long as Macdonald's masterly hand was at the controls, remained firmly in charge of the House of Commons and its Public Accounts Committee, and well on into the 1890's, despite the scandals, continued to display the cockiness that is the inevitable accompaniment of consecutive victories at the polls. All these political circumstances do not fully explain how it was that, with an alert Public Accounts Committee which worked within its limitations as hard as it was permitted to, and an Auditor General whose zeal at times approached fanaticism, the scandals developed to such an extent in the first place, or why the dam burst in 1891. Here we need further reasons, and most of them are still relevant to parliamentary scrutiny of finance. •Mackenzie to Mary (his daughter), May 18, 1886, Mackenzie Papers, no. 2478. 5Mackenzie to C. Black, May 18, 1886, ibid. , no. 2480.

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To begin with, there is abundant evidence of extreme carelessness ( to take the most charitable view) on the part of the responsible ministers. To give but one convincing example, the Prime Minister was informed in September of 1890, by the president of the Ottawa Conservative Association, of the rumours concerning the widespread depredations of the superintendent of the Printing Bureau, which reached deep into the printing trade of central Canada, but no investigation followed until the Public Accounts Committee went to work a full year later. Further, it is so improbable as to be incredible that in the small confines of Ottawa society neither rumours nor news of what was going on, both in Ottawa and on the major public works elsewhere, had reached ministerial ears. (Lady Macdonald, incidentally, blamed the scandals on Ottawa society itself; in the letter quoted above she added : "The fault lies with the social nonsense in Ottawa which obliges civil servants of all classes and incomes to get money anyhow-so as to keep up what they call 'a position'.") It is possible that the ministers knew of the practice of paying civil servants under fictitious names, and approved it as a way of saving public money, for one deputy minister held that it was cheaper to pay permanent officials a little extra, though admittedly unlawfully, for work taken home than to obtain more officials. Even so, that would explain only a tiny fraction of the whole that required explanation. The ministers' laxity becomes the more striking when one considers how small governmental enterprise was in 1896 : the total expenditure in that year was less than that of most single departments today : forty-two million dollars, of which slightly less than half was statutory, and the rest voted in supply. Apart from Finance, which paid out the provincial subsidies, the largest spending department was Railways and Canals (seven and a half million) and the next largest the Post Office (four million) . The average departmental staff at Ottawa could be listed by name in less than two pages of the Auditor General's report, and was so small that ministers and members could discuss the civil servants' work in the House in minute detail. Some blame, too, can be attributed to the accounting system, which in 1891, despite years of work, was still almost as loose and unbusinesslike in a few areas as it had been when the office of Auditor General was created in 1878. The Auditor General, for instance, five years after the building was occupied, was still querying the Department of Public Works concerning the final statements in connection with the Langevin Block; "has the delay," he inquired in 1894, "for its object the testing of [the Block's] durability?" A similar case could be made out against

90 / TIIE PUBLIC PURSE the method of letting contracts, and even the official contract form itself. The Auditor General suggested to the Deputy Minister of Railways and Canals a recasting of the contract form in 1896 in the light of "recent litigation and other differences" with the contractors, and at the same time pointed out that "it is only within the last few months that any attempt has been made to adhere to those provisions which more particularly guard the interests of the Government-such as ordering extras in writing, and fixing prices for them before the work begins." 6 In the House of Commons during the same year, while the Liberals were asking, among other things, how it was that works originally estimated to cost $45,000 ended up at $255,000, while others estimated at $228,000 cost $909,336, the Minister of Justice, in a singular defensive manreuvre, challenged one Opposition speaker to name "any one canal in our whole system that has ever been built within the estimate."7 From this it will be seen that parliamentary scrutiny of executive spending was still not being facilitated by the engineers in the field. Even in Ottawa, the chief engineer for the government railways conceded in 1891 that he had failed to foresee an expenditure of $302,958 over the parliamentary vote, though he had at his disposal the means for doing so. But then: "I do not interfere with the accounts. I was asked not to do so by the Finance Department some years ago. " 8 Finally, the Audit Office was not in the 1890's strong enough either to report fully on, or anticipate, all potential dangers in the public expenditures. The work of McDougall's office had expanded substantially during the l 880's, both by the reference to him of the revenue accounts, and by such legislation as the Franchise Act of 1885 which, through its insistence on annual revision of the voters' lists across the Dominion, involved the payment of large amounts of money in small sums to a large number of people. But the Audit Office was chronically understaffed, as the Auditor General frequently reminded the Commons and the public in his reports and before the Public Accounts Committee, and "there is no such thing as [regular] hours" in it. The Auditor General was limited too, as well as assisted, by his own methods, for from the first he refused all invitations from the departments "to send a man over to look at the books" but insisted on a highly centralized system in which he relied on vouchers and certificates sent to him by the departments. He dealt only with one or two senior civil servants in each department. "I thought," he averred in 1894, "that this system of fJAuditor General's Report, 1896, part R, p. 276. 1Debates, 1896, p. 6674. 8/ournals, 1891, App., vol. II, Second Report.

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certificates was perfectly sure, as long as a man was thoroughly intelligent and honest." So it was, but the parliamentary sessions of 1891 to 1896 dispelled forever any illusion he might have had that the continuing probity of politicians, civil servants, and business men dealing with the government was something that could be taken for granted. Until the 1890's at least, the sureness of his system was one of the few things about public expenditure that McDougall did take for granted. He continued to assume, in the face of stiffening opposition from the major spending departments throughout the 1890's, that he was to give the most generous interpretation possible to his own powers. It was also his view, as it had been since his appointment, that the duties of the Public Accounts Committee included supporting him fully whenever he needed support. The committee, unfortunately, found too much grist for its mill in all the scandals, and the Opposition deliberately chose to exploit the situation in the public service. "We shall continue to expose the scandals we have begun to throw light on as far as we can," Laurier wrote in the midst of the first session of the seventh Parliament, "and that done, we shall have nothing to do but close the session." 9 The Public Accounts Committee was not the sole agency used by the Opposition to explore the scandals. Some allegations went to the Committee on Privileges and Elections; others, in so altered a form that the Liberal who made them subsequently refused to testify, were referred to a royal commission; some ended up before the courts; and in a few instances investigations were actually undertaken on the initiative of the executive. But the Public Accounts Committee, partly because it was the traditional inquisition, with years of well-publicized experience behind it, was the most important instrument. Its personnel during the seventh Parliament did not show any marked variations from that of previous years. The total membership continued to rise, from fifty-six to sixty-five, and it began with the usual comfortable majority for the Government party. The majority also rose after 1891, for the revelations of that year so alarmed the Conservatives that, after the customary post-election trials for corrupt practices had deprived of their seats in the Commons half a dozen Liberals originally appointed to the committee, four of them were _replaced by Conservatives. A pre-election flurry of patronage appointments before the session of 1896 removed several Conservatives from the House and the committee, but did not materially alter the majorities in either. English-speaking members, especially Ontario Liberals, continued to DLaurier to H. Beaugrand, Aug. 17, 1891. Quoted in 0. D. Skelton, Life and Letters of Sir Wilfrid Laurier (2 vols., Toronto, 1921 ), I, pp. 434-5.

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dominate the committee, and in one session Quebec's representation ( as compared with Ontario's thirty or more) dropped to twelve, and four of those were English-speaking Canadians. Since the prosecutions were undertaken by English-speaking members, and an impressively large number of the scandals concerned inhabitants and former inhabitants of Quebec, the proceedings of the Public Accounts Committee frequently received an added fillip from the pitting of puritanical English Protestant members, aided by the reports of the Auditor General, who was originally one of them, against French and Irish Catholics. The only two members of Parliament publicly disgraced by the scandals, it is relevant to note, were named Langevin and McGreevy. One could argue with considerable force that for several decades after Confederation the Public Accounts Committee was not merely a device whereby the parliamentary Opposition sought to scourge the Government, but also an institution through which those middle-class English Canadians who had stern Victorian views about morality in public life, and the necessity for keeping all governmental expenditures to a minimum, sought to impose their views on more happy-go-lucky compatriots with other backgrounds. The fact that most of the ministers were on the committee became increasingly irksome to the Opposition during the seventh Parliament, as might be expected. The ministers were busy in multitudinous ways, and the committee could therefore meet only once, or at most twice a week. This irregularity was exceedingly awkward for members who were trying to sustain an involved case, with thousands of words of evidence; it also inconvenienced the many witnesses who were summoned from outside Ottawa. The ministers dominated their supporters, naturally enough, and made it difficult for civil servants to speak frankly about the affairs of their departments. It was, Sir Richard Cartwright asserted roundly in 1894, "contrary to the spirit of the Public Accounts Committee and the object for which it is formed, that a large number of Ministers should have seats there." To have an investigation not only participated in, but hampered by, those responsible for what was being investigated was, he implied, preposterous. Cartwright was speaking with specific reference to the ministers' obstructing the attempts of some members to have witnesses before the committee examined under oath, and since the story is representative of much concerning the committee's problems, it is worth recounting in some detail. It will be recalled that committees of the House of Commons did not have the power to examine witnesses under oath at Confederation, and a bill to give them the power when the House saw fit was

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disallowed in 1873. When the Liberals took over the government in that year they considered re-enacting the bill, and Lord Dufferin, the Governor General, argued strenuously to dissuade Alexander Mackenzie from doing so, lest the British government consider it a "strong measure." 10 After the British House of Commons had paved the way by empowering its own committees to examine under oath ( the British North America Act prevented the Canadian House of Commons from having privileges greater than those enjoyed in Britain) the Canadian House assumed the power by statute in 1876. The statute did not automatically permit the Public Accounts Committee, or any other, to administer an oath; the consent of the House was necessary. In 1891 William Mulock, one of the Liberals most active in the Public Accounts Committee, moved in the House "that it is desirable that any witness called before the Select Standing Committee on Public Accounts be examined under Oath or Affirmation touching any matters coming before them." Nobody objected, and the motion passed without debate. Two weeks later, after the Opposition had taken such happy advantage of the motion that some of the Conservatives were beginning to feel that they had been had, the chairman of the committee, N. C. Wallace, on the instructions of the committee, moved that Mulock's motion be rescinded, "as in the opinion of the committee such an order should not be asked for from the House except upon the recommendation of the Committee." The Liberals had not opposed this motion in the committee, though since the House can presumably instruct its own committees in any way it chooses, the motion was of doubtful validity. In the House, however, Laurier laid a procedural trap for it, arguing that the motion required notice; the Speaker sustained his objection. Two weeks later Wallace tried again but, since he tried to have his motion taken up out of its proper sequence, ;t change which required unanimous consent, Laurier was able to block the motion again, and it did not pass during 1891. Partly for that reason, the Public Accounts Committee enjoyed one of its most active and successful years as a general inquisitor. Wallace's motion, though it failed in 1891, was notice of Conservative intentions to obstruct the committee on procedural grounds, and in succeeding years the committee wasted considerable time examining nothing more than how, and under what circumstances, the power to administer the oath should be requested from the House. In 1892, when the session was well begun, the committee requested the power in terms almost identical to Mulock's motion of 1891, but made no use of it and IODufferin to Mackenzie, April 22, 1874, Mackenzie Papers, no. 343A.

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presented no other reports. A prolonged wrangle over the oath developed in 1894 in both the committee and the House, members marching angrily from one to the other, when Mulock, as in 1891, sought of his own initiative to have the committee given the desired power. Every conceivable point was advanced for and against Mulock's proposal, and British history was surveyed as far back as the High Court of Parliament, the Conservatives arguing variously that the House had exceeded its powers in 1891, and that the committee should make out a case for requesting the power each time it was requested, and the Liberals pointing out that this would require the Opposition to unearth in advance the very evidence they hoped to obtain with the use of the oath. After a heated but instructive debate, extending over several days, the Government unexpectedly surrendered, and took over as its own a Liberal bill which would have removed all doubts concerning the right of committees to examine on oath; the bill passed unanimously three weeks after Mulock's original motion was introduced. 11 The committee's powers were called into question in two other instances in the seventh Parliament. Louis Davies, a future Liberal cabinet minister and justice of the Supreme Court, moved in 1894 for the reference to the committee of all correspondence between the Auditor General and the departments during the past fiscal year, in order that the committee might fulfil "one of its most important duties," that of examining the differences of opinion between the Auditor General and the Treasury Board, particularly when the Auditor General was overruled. The Prime Minister, to the Liberals' great indignation, held that "it is not properly a charge upon the Committee on Public Accounts to investigate those matters in which the Auditor General is overruled by the Treasury Board," but rather the duty of the House. No motion was either passed or defeated, and the affair ended inconclusively. Since the Auditor General had been urging the committee for years to do precisely what Davies proposed, the debate was of considerable importance for the future of both the Audit Office and the committee. 12 The other episode concerning the committee's functions was a curious one, for it foun~ the two political parties in complete agreement, but neither added to, nor subtracted from, the committee's powers. Sir Richard Cartwright moved in 1891: It is the undoubted right of the Committee on Public Accounts to investigate all circumstances connected with the payment of any of the several llDebates, 1894, pp. 1635 ff., 1875 ff., 1965 ff., 2075~, 2624; Statutes, 57-58 Viet., c. 124. 12Debates, 1894, pp. 2486 ff., 2625 ff.

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sums of public moneys referred to that Committee, and that in the course of such investigation no evidence should be refused on the ground that it may disclose improper conduct or relations on the part of the Minister of the Crown or of any other party in connection with such payment. 13

Cartwright supported his motion with a statement of his own views concerning the role of the Public Accounts Committee as a grand inquisition, and expressed the view to which the Liberals adhered consistently while in Opposition when he said: "I do not at all desire to contend that the Committee of Public Accounts is bound to sit in judgment on the conduct of members or on the conduct of Ministers. . . . What I do assert is that they are bound to find the facts, without fear or favour ... ." Sir John Thompson, whose reasoned utterances throughout much of the seventh Parliament show that he was in closer agreement with the Liberals about the functions of the Public Accounts Committee than were any of his colleagues and supporters, entirely agreed with Cartwright, provided only that the committee be not used for "fishing for evidence" that might reflect on the honour of members of the House or cabinet, nor be made a sounding board for outsiders to attempt the same thing. Thompson, a former judge and a future prime minister, was probably more responsible than any other Conservative for the outburst of investigations in 1891. When Macdonald's leadership was lost to the party, the prime ministership was temporarily translated to the Senate in the person of J. J. C. Abbott, and Thompson, his ascent no doubt hastened oy the downfall of Langevin because of the scandal sessions, became the real leader of the Commons. He did not, like his colleague in the Senate, openly plead with the Liberals to help the Government clean out the Augean stables. He did something far more important: he did not obstruct, nor permit his followers to obstruct, the full inquiries undertaken by the Public Accounts Committee. Although Thompson's attitude stiffened considerably during the Parliament, perhaps because of his accession to power, he was still leading the Government in 1894 when it decided to take over the Liberal bill concerning the use of oaths. In 1891, when he was deeply disturbed over the revelations of the scandals, the Liberals had little cause to complain, and the House referred to the committee series after series of documents reaching back a decade and more which, since a committee can study only what is sent to it, enormously enlarged the scope of the committee's activities. Its work, so far as its reports to the House are a fair measure, was 13/bid., 1891,

pp. 4088-91.

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concentrated in the sessions of 1891, 1894, and 1895, which together saw fifty-one of the fifty-four reports produced by the committee in the seventh Parliament. In the other three years, if the committee met at all for other than routine purposes ( and there is some evidence that it did) it has left no trace; in 1896 it made one substantive report which was not printed. The year 1891, by contrast, produced thirty-four reports, fourteen of which were substantive, and the others routine (though extremely important) requests for documents; 1894 produced eleven reports, two of them substantive, and five concerning, one way and another, the use of the oath; 1895 produced six reports, four of them substantive. It has been customary in Canadian politics to consider 1891 alone as the year of the scandal sessions, but actually, as the foregoing suggests, the chronicle that began in 1891 extended throughout the Parliament, and the House and Senate echoed and re-echoed year after year with old and new accusations, and the fruits of old and new inquiries. The first year was merely, as a Conservative later conceded in the House,..the "year of panic and excitement." The contents of the committee's twenty-one substantive reports during the seventh Parliament have been referred to sufficiently in earlier sections of this chapter that they need not be further summarized here. The contents, however fascinating, are in any case less important than their effects, so far as parliamentary influence on executive affairs is concerned. Despite the fact that the committee's reports tended to be inconclusive, since it nearly always reported evidence only and seldom made recommendations, it is a fair statement that no parliamentary reports in our history have had greater impact on a government than those of the Public Accounts Committee in the seventh Parliament. Heads rolled in the sand, whole departments received administrative shake-ups that they had obviously needed for years, and the political party which provided the responsible ministers was totally demoralized and in due course lost the next election. Only part of this can be attributed to the committee; but Canadian political and administrative history would be very different if the Public Accounts Committee had not met during the seventh Parliament. And in all this, assuming that the British Public Accounts Committee was still the model as it was originally, it cannot be said that the Canadian committee was doing many of the things such a committee should do. As more than one member on each side of the House remarked, by the 1890's there was not in Britain anything remotely resembling the Canadian committee, nor in Canada anything resembling the British. It was nicely put by the Auditor General who, in an inspired

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indiscretion, wrote to the Leader of the Opposition in 1893. In Britain, he told Laurier: They take the last report of the Auditor General and go regularly through it discussing every point of difference between him and the departments, examine witnesses, hear all that can be said and make reports from time to time. Here if there is any point on which a temporary charge of favoritism against the gov't. can be made to hand it is taken up greedily particularly if the amount is small, but everything else in the report is ignored. If after an appeal from my view is taken to the Treasury Board, I am overruled and no notice is taken of the matter when my report comes down to the House, I am justified on general principles in supposing that Parliament, the final court of appeal, agrees with the Treasury Board and decides that my opinion is wrong. A result of the neglect of Parliament to do its duty is that the government will go on having less and less hesitancy in overruling my decisions when political pressure is exerted. If as a matter of routine the legal opinions of the dept. of Justice, on which the Treasury Board bases its overrulings of my decisions, and which I am obliged to include in my following report, were taken up seriatim by a Committee with complete knowledge of the principles which should underlie governmental expenditure and with time to hear all that could be said on both sides, I do not say that the Liberal party would receive any great addition to its numerical strength from the operation but I am sure that Canada would derive much advantage from it. To carry out my view it would be necessary for some lawyer with a turn for business to devote a large part of his time not merely during session but in the recess to studying carefully what has been the practice in Canada, what are the provisions of the various acts which authorize or control expenditure, the similar features of the American and Freni;h systems, and particularly everything English of the kind. That I may be self respecting and that the Audit Office may be self respecting, the attention of no one outside of the Departments is drawn to matters in the report which should be investigated, but it is a great pity that an investigation is not systematically made. . . . Might you not, without reference to me, allude at your convention to this matter as a subject which should engage the attention of your party. 14

This remarkable letter, with its clear implication that both the Public Accounts Committee and the Opposition were falling down on the job, was written by a lonely and exasperated man. The 1890's, which showed a parliamentary Opposition romping through scandal after scandal, a defiant Government party in the process of disintegration, and the departments of government on the defensive, were hard years in which to be Auditor General. McDougall, doing his job so thoroughly that, as the members agreed, his annual report had made the public UJune 6, 1893; P.A.C., Laurier Papers, no. 2509. I have added punctuation to McDougall's letter.

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accounts themselves almost redundant, felt with considerable justification that the most important aspects of his work were being ignored. McDougall carried into the period his fanatical devotion to detail. He paid as much attention to the Senate's sale of its waste paper as he did to the purchase of large buildings, and the government's vast canal system interested him no more than a new stove in the Public Works Department. ( On one occasion, dissatisfied with the quality of white lead being used by one department, he had a sample analysed and triumphantly confronted the department with a chemist's report; the department's reply, that for their purposes adulterated white lead was better than pure, he dismissed as obvious nonsense.) He continued his generous interpretation of his own powers, using his legal oversight of payments for civil servants' salaries as the basis for critical comments on the internal administration of departments, and insisting that he must not only certify every payment made under government contracts, but examine every contract himself. He suggested in his report how the Public Accounts Committee might-and should-assist him (his letter to Laurier in 1893, stripped of its addressee's name, appeared in altered form as part of his next annual report) and many of his published comments reflected on the ways in which the political parties, the departments, and the ministers were conducting the public's affairs. His initial reaction to the revelations of 1891 was to protect the Audit Office. As he pointed out in his report for that fiscal year, he had to rely on certified documents sent to him, and all the relevant certificates in 1891 had been properly made out; he cited the Civil Service Commission as agreeing with this finding. His second reaction, since he conceived it to be his duty to save money as well as to see that it was all legally spent, was to tighten up his already rigid system of auditing, and the departments found the Audit Office increasingly disinclined to accept vouchers and certificates at their face value. "'Taking it for granted'," McDougall wrote in a typical communication to the Public Works Department in 1893, "forms no part of the system of this office." 15 Inevitably the departments reacted, and even those whose accounts had raised little controversy began to protest when their certificates failed to satisfy McDougall's office. The major departments, of course, bore the brunt of the Auditor General's persistent sallies. The Commissioner of Inland Revenue, one of many civil servants who spent hours and days chiefly occupied in answering McDougall's letters (for his report to the House of Commons, the Auditor General insisted on having everything in writing) was provoked on one occasion to write: "I cannot accept the conclusion that in passing the Audit Act Parlia15Auditor General's Report, 1893, p. 332.

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ment intended to destroy the individuality of all other department~r reduce their deputies to the rank of ordinary clerks-and must until this question has been fully submitted to the Government and their ruling obtained, respectfully decline to have the judgment of the department daily arraigned-when that judgment is exercised within the limits assigned to the department by the Act under which it is constituted." A few years later, during an exchange in which McDougall asked, "Why don't you go a step further and claim the right to appoint the auditor?" the Commissioner of Inland Revenue observed: "The whole tendency of the practice during the past few years has been towards the disintegration of the individual departments through general regulations made in ignorance of their specific requirements." 16 Many departments, genuinely inconvenienced by the audit, protested in this vein, and by 1896 McDougall had quarrelled with most of the departmental deputies and secretaries. Some began to ignore him, and his reports included a growing number of unanswered letters to the departments from the Audit Office. In a number of instances the Auditor General obtained action only by threatening to cut off, and occasionally cutting off, the department's credit. Having failed to obtain the support he sought from either the Liberal Opposition or the Public Accounts Committee, and faced with a steady deterioration of his relations with the major departments, McDougall's devotion to duty led him into a grotesque indiscretion which might well have destroyed his office. In 1895, having failed once more to obtain from the Government an increase in his staff, he did what any ordinary citizen has the right to do: he petitioned the House of Commons. But unlike the petitions of ordinary citizens, the Auditor General's petition was not tabled and forgotten; the House took the unusual course of having it read, and ordered printed in the next day's Votes and Proceedings. Six days later, on a routine motion to go into committee of supply, the Liberals brought it up for discussion. 17 The petition is a long and curious document, in part a rational discussion of the needs of his office and the fundamental principles of parliamentary government on which it is based, in part an emotional outburst from an overworked public servant who had no ally to tum to in a cause in which he devoutly believed. It is stated frankly that he did not complain "of the treatment of this office until the last year or two" in regard to the size of his establishment, and made an unflattering 16/bld., p. 293 of section concerning Commissioner of Inland Revenue (the report for 1893 consists of separate sections for each department, identified only by separate pagination for each); and ibid., 1896, part T, p. 130. 11Debates, 189S, pp. 2132-6, 2407 ff.

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comparison between his establishment and that of several of the departments. It digressed to refute an implied criticism he had heard about his staff, and, in an ill-chosen phrase, asserted his determination "to keep the financial affairs right." It concluded with a plea for a select committee to study "the facts set forth." Whatever else the petition was, it was a vivid condemnation of one aspect of ministerial policy by a public servant, and it allied him unmistakably with the Opposition, who brought it into the House and took his side in the ensuing squabble. And squabble it was, for just as the Auditor General had taken the occasion to blow off a considerable volume of accumulated steam, the Conservative ministers, whose departments had for years been under sustained pressure from the Audit Office, did the same. The Audit Office had been criticized mildly on several occasions before, for McDougall's practice of publishing quantities of his correspondence with the departments meant that much was made public which, in the Conservative view, should have been kept private. (Fortunately for the writing of this book, the Conservative grievance on this score was well founded.) He had been criticized, too, for publishing material, including correspondence, which fell outside the fiscal year on which all accounts were based. But it had never before been said of the Auditor General's report by a Minister of Justice that it was "so framed as to make it acceptable to the Opposition" or that "an enormous part of it contains misleading and inaccurate statements." No Minister of Finance had previously described his report as "a display of items which have nothing to do with an audit." The Auditor General had not been accused of arrogating "to himself powers and responsibilities that were never contemplated by Parliament." The cabinet not unnaturally took McDougall's petition as an attempted censure, refused the select committee he asked for, and the episode, as a public affair, closed. Behind the scenes, McDougall took the Conservatives' criticisms and assertions exactly as if they were accounts come in for audit from a department with a poor record, and in his next annual report took them up and disposed of them. Those departments which had been growing restive under his heavy hand were encouraged to consider revolt, and by 1896 the Audit Office, for the first time, had been defied by two separate departments. What would have happened to the Auditor General or his office if the Conservatives had won the general election of 1896 is of course an open question. It was undoubtedly true that McDougall had interpreted his powers in a generous and even extravagant manner. He was tactless: nothing more than his petition to the House would be needed to establish that; quick to suspect wrongdoing, particularly after 1891 ; and possessor

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of a gift for writing irritating letters to civil servants that many citizens would be glad to have today. (Considering that Ottawa was a small city with a limited social circle, he must have had an interesting private life.) It is equally true that despite his faults and his view of his duties, the Government had generally not merely tolerated him but supported him until his unhappy petition virtually forced them to justify refusing his requests. Treasury Board rulings on appeals from his decisions were not always against him and even when they were ( though admittedly he was overruled on occasion on purely expedient grounds), the Treasury Board sometimes seems, from this distance, to have been in the right. A full year elapsed between McDougall's petition and the election of 1896 and, apart from the fact that the Departments of Public Works and Inland Revenue, so far as the audit was concerned, were beginning to show slight signs of becoming autonomous republics, the work of the Audit Office went ahead in its usual determined fashion. It is well that it did, and well, too, that McDougall took a broad view of his duties. The seventh Parliament established beyond reasonable doubt that neither in or out of Parliament, nor in or out of the departments, was anybody exercising an effective scrutiny of executive expenditure. The ministers, and some civil servants in high places, apparently did not try to scrutinize expenditure systematically, nor did the House of Commons or the Public Accounts Committee. The Audit Office did remarkably well, but the limitations on McDougall's office were such that he could neither foresee nor prevent the scandal sessions of 1891-6. A few leading members on both sides agreed in principle with the Auditor General that a small committee as in Britain, soberly and methodically reviewing the public accounts and the Auditor General's reports each session, was sorely needed, and the House was occasionally treated to lengthy descriptions of the British system. One or two cabinet ministers, during the angry debate that followed McDougall's petition in 1895, seemed to grasp that, in the interests of good government, the Auditor General could be held to a substantially narrower view of his functions only if the Public Accounts Committee fundamentally changed its ways and gave him more support in the tasks to which he would be limited. But scandals were too interesting, and too plentiful, and too useful at election time; during the seventh Parliament the Public Accounts Committee turned even further away from serious study of the accounts as such. From 1878 to 1891 the committee had, it is true, done a good deal of witch-hunting. But five of its thirteen substantive reports during the period dealt with matters of principle. The same cannot be said of even one of the twenty-one substantive reports published from 1891 to 1896.

THE AUDITOR GENERAL VERSUS THE LIBERAL ADMINISTRATION,

7

1896-1905

in his passage with the Conservative Government in 1895, combined with their overwhelming victory at the polls in the following year, provided grounds for optimism among those who, like John Lorn McDougall and a few members of Parliament, considered that the Public Accounts Committee should stop merely sniping at the public service and go to work on the accounts methodically. At the beginning of the Liberal regime there were signs that the committee was taking thought about itself, and was prepared to make fundamental changes in its relations with the Auditor General, on the one hand, and the departments of government on the other. The weight of the scandal-hunting tradition proved too strong, however, and the committee's mild attempts to reform itself were abortive. McDougall, at first elated and then bitterly disappointed over the committee's course, took to laying about among the departments and the accounts with so heavy a hand that he ultimately worked himself into a position from which the only honourable retreat was through resignation. No one could accuse the Liberals of undue haste in any schemes they might have had for improving parliamentary surveillance of executive spending. The eighth Parliament met for a brief session beginning late in August of 1896 for the sole purpose of granting supply to carry on the administration, since the seventh Parliament had earlier died a natural death without having voted sufficient money for the fiscal year 1896-7. The first ordinary session, which sat from March through June of 1897, was too preoccupied with major legislation aimed at implementing Liberal theories on the tariff and railway construction to leave members either the time or the energy for committee investigations. THE LIBERALS' DEFENCE OF THE AUDITOR GENERAL

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Besides, after the undoubted success of the scandal sessions, there was no point in the Liberals' using the Public Accounts Committee to keep on flogging a beaten foe, and the first Auditor General's report to cover a year of Liberal rule, in which the new Opposition might be expected to take a lively interest, was not tabled in the House until February 10, 1898. The Public Accounts Committee, though set up in the customary manner, made no reports during the first two sessions after the election of 1896, but enjoyed a brisk year in 1898, and was active in all but one of the subsequent sessions of the eighth and ninth parliaments. The Public Accounts Committee dominated by the Liberals, the first they had dominated since they created the Audit Act in 1878, followed slavishly the pattern set by the Conservatives. The party in power maintained its usual comfortable majority in the committee; the ministers whose accounts were to be investigated were prominent among the investigators; the chairman was a Government supporter of somewhat above-average parliamentary distinction, though not enough to warrant a seat on the Treasury benches; and Ontario continued to dominate the committee's membership, Quebec on occasion having no more representatives than Nova Scotia. The customary complaints about the difficulty of getting the committee to meet, and about ministerial domination when it did, continued to be heard. The large size of the major committees of the House, which gave many members heavy assignments, combined with the prolonged week-end absences of the members from central Canada, continued to complicate the meetings of the Public Accounts Committee. As under the Conservatives, the committee was large to begin with, and continued to swell in numbers, from sixty-five to seventy-five during the decade under consideration. The Liberal majority tended to grow with the committee. All the provinces had members on the committee in each session, and both major parties had by 1896 abandoned their earlier belief that only experienced members should serve. Over onethird of the M.P.'s selected in 1896 were freshmen in the House, and only a slightly smaller proportion appeared after the election of 1900; after the election of 1904, the number of new members on the committee dropped to twenty, which was nevertheless over a quarter of the membership. On the other hand, the tradition of continuity on the committee was continued, and the turnover of personnel was low. When the turnover was large, it was attributable almost entirely to electoral defeats, retirements, patronage appointments, and death, approximately in that order. Most of the committee's work from 1896 to 1905 did not differ markedly from that of the seventh Parliament. The committee made

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fifty-eight reports to the House, forty of them substantive. Thirty-seven of the substantive reports had little to do with parliamentary control of finance in any objective sense, but were frank attempts by one political party to unearth and publicize evidence that would embarrass the other. All the reports, it is true, were concerned in one way or another with the use or misuse of public money, and all of them were based on material contained in the Auditor General's reports, or, more rarely, the public accounts. It cannot be said that the committee spent time investigating matters that did not need investigation, or that it conducted its inquiries incompetently, or without being thorough. But it is one thing to probe alleged irregularities as part of a general system of ensuring that money voted by Parliament is honestly spent for lawful purposes, and quite another to make the probing a full-time occupation, to the virtual neglect of all other aspects of parliamentary scrutiny of the executive. For all its hard work and its fascinating reports, no Canadian member of Parliament could testify, as a contemporary British member did of the Public Accounts Committee on which he served for years, that, " as a check upon, not merely extravagant or unauthorized expenditure, but also upon unwise methods of management, this committee is probably more effectual than the House of Commons itself." A Canadian committee could hardly recommend with a straight face, as did a select committee of the Commons in Britain, that "even more than in the past" the Public Accounts Committee should "encourage the Comptroller and Auditor General to scrutinize and criticize improper or wasteful expenditure and to indicate where censure is in his opinion required." 1 The most that can be said of the bulk of the Canadian committee's work is that, while it did not ally the committee with the Auditor General, much less the Department of Finance, in a joint effort to keep executive expenditures under continuing scrutiny, neither did it put any positive obstacles in the Auditor General's path. On the contrary, by its very silence, it left the Auditor General free to interpret his functions in any way he liked, so that for many years he was possibly in a stronger position than he would have been if a partisan committee, dominated by ministerial supporters, had annually reviewed his report. In any event, McDougall's own zeal was partly responsible for the committee's preoccupation with irregularities. "I suppose," he wrote with his usual forthrightness in the foreword to his annual report for 1898-9, "it does indicate a want of dignified self-restraint to make a wry face because an hour cannot be spared from the days occupied in attaching blame to those who may have improperly spent hundreds, IQuoted in Journals, 1905, App. 3g, pp. 73-4. Elsewhere in the Journals this same report is referred to as App. 3h.

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when the hour would be used for the purpose of establishing regulations to prevent the waste of thousands in Canada in every year for all time." Yet his reports were so detailed, and contained so many items which, to Opposition members who had to seek re-election as often as Government members, cried out to be exploited in their party's interests, that the committee can hardly be blamed for raking them up as it did, particularly when the Auditor General was continually drawing attention to his report and urging its use. Some of the investigations required a considerable stretching of the committee's powers to justify their being undertaken (the Liberal majority in 1900, for example, dug back to 1894 to take a closer look at two subsidies to the Regina Leader), but even these examinations had their origin in the Auditor General's report. It must not be thought that the committee's reports, because they so rarely addressed themselves to passing judgment on the audit, the overruling of the Auditor General by the Treasury Board, and similar matters were exclusively exhibitions of partisan manreuvring. Most of the alleged irregularities examined were genuine irregularities, and the House of Commons and the public were entitled to have them elucidated. As always, the evidence taken was informative, and revealed many sidelights of governmental policies and practices that cabinet ministers were unlikely to think worth mentioning in the House. Moreover, the reports were sensitive reflections of the major problems being encountered by the administration as it extended its influence over steadily widening segments of Canadian society. Nine of the forty substantive reports between 1896 and 1905 dealt in one way or another with railways, and ten with communication and transportation in the Yukon. Four were concerned with newspapers and the printing trade, for in 1905 when newspapers were still the main channel of communication between the party in power and the electors, the Government of Canada, by means of advertising, job printing, and, occasionally, outright advances, was still subsidizing newspapers favourable to it; an official list of approved newspapers, with whom alone the King's Printer could ordinarily deal, was published as a confidential document by the Secretary of State. 2 Of the other seventeen reports, fuurteen dealt with a miscellaneous collection of oddities covering both the picayune and the picaresque, ranging in subject-matter from the price of government steamships to the costs of an inquiry into election frauds in Manitoba, an undertaking sponsored by the provincial Attorney General but paid for by the Dominion, the whole being facilitated by Clifford Sifton's translation, at just the right 2The Liberal list for 1904, which merely follows (with a different list of newspapers) previous Conservative regulations, is in P.A.C., Laurier Papers, no. 92477.

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time, from the provincial to the federal cabinet. The amount of detail in many of these reports is remarkable, and anyone wishing to know how the Intercolonial Railway dealt with the owners of cows killed on its tracks, how the militia tested tents, or how the government leased river frontages to people interested in dredging for gold in the Yukon, can find much food for thought in the reports of the Public Accounts Committee. Many of the reports were, as a matter of course, used in the House and in the press to belabour one party or the other. None of the reports, except in the negative sense that they left him alone, were of much use to the Auditor General as he sought to hold the government departments within the confines of the Audit Act. Occ