Report of the Mining Committee:[1]
Committee of the Whole
Mr. Higgins I would like to inform you that the
report which you have in front of you is not
complete insofar as the mimeographing is concerned.
Subject to your approval, I would like to go
ahead this afternoon with the sections that are
completed.
As you will note, the report is divided into nine
sections, made up of the introduction, sections on
Buchans, Bell Island, St. Lawrence, sections
dealing with coal and copper, a section dealing
with various other minerals in the country, and a
table comprising the water-power. Insofar as the
water-power is concerned the Committee felt it
was not strictly a part of its job, but as no other
committee did it, we brought in what we could
on that subject. The other sections left are those
on Labrador and the section containing the summary....
I don't intend to comment on the contents of
the report before you, as the introduction deals
very fully with the report itself. I would like,
however, to thank the members of the Mining
Committee for their co-operation in the preparation of this report. The Committee
worked extremely hard and, as none of us, with the
exception of Mr. Jackman, had any real
knowledge of the mining industry, it took us a
little longer to get the information and digest the
facts necessary to compile this report.... I suggest
that we might deal with it in sections, taking the
introduction first.
[The Secretary read the introduction]
Mr. Higgins Are you satisfied to proceed with
the next section, which is really part of the introduction, or is there any question
on the introduction? I will be glad to answer them now.
Mr. Crosbie I would like to know about the
$25,000 that was spent in Labrador, where this
was spent and how.
Mr. Higgins It was the cost of the parties in the
field. Their expenses were paid by the Geological
Survey....
Mr. Smallwood On the first page, the third
paragraph, while mining is listed third of the
country's industries, nevertheless the wages paid
prove it to be the most highly paid industry in the
country. Does that mean the hourly wages paid
are the highest, or the average earnings per man
per hour?
Mr. Higgins The average earnings per man per
hour are the highest. Mr. Howse gave us that
information.
Mr. Jackman On page 4, paragraph 3: "It is of
great interest to note that this same mine again
possibly will be a producer of lead, this time
under the management of the company operating
the mine at Buchans." I would like to read here a
quotation from Toronto with regard to the situation in regard to the supplies of lead
in the world
today: "Today lead is receiving in world markets
the highest price in history — 15 cents per pound.
There is no reason why this should not be held
for some time to come." Apparently the situation
today as far as lead is concerned is very
precarious, and they have to go to outside
April 1947 NATIONAL CONVENTION 467
markets, and it looks to me as if the value of the
Buchans mining output will be greatly increased,
and this will no doubt add to our national income.
Mr. Higgins I may say Mr. Jackman, on that
point, I have some figures here that were given
by Mr. W. E. Ralph, Director of the Geological
Survey, and he gives an estimate of the lifetime
reserve of the various metals in the USA last year,
and for lead he says, "Based on present government reserves and the present rate of
consumption, they only have reserves for four years at the
present time." That's four years of normal use. I
understand, in fact I know, that the Buchans
Mining Co. has signed an operation agreement
with the company syndicate that has the ownership of La Manche to begin exploration
immediately, and they are actually there exploring at the
present time. There is a section on La Manche
here, and they are hoping to go into production in
the present year.
Mr. Harrington Before you pass on from this
section, on page 4 there is a list of expenditures
of the Geological Survey, I was just adding up the
figures, and it comes to about $400,000, and over
a 13 year period it comes to about $30,000 a year.
I am wondering if the Committee thought that
was a reasonable sum.
Mr. Higgins As far as I remember the Committee does say that they would like to see the
amount increased, and the Geological Survey
increased as a whole. We think it is high time that
we had our minerals thoroughly classified and
evaluated.
[The Secretary read sections of the report and Mr. Higgins answered questions on points
of detail]
Mr. Smallwood Before you pass on from
Buchans, what I am a little nervous about is that
as you read over each section there may not be an
opportunity to come back to them. I know that
theoretically there is, but practically there may
not be. This Table III, compiled by Mr. Hollett I
believe, follows page 12.
Mr. Smallwood It is a splendid idea. I would
like to make this point. This table in the first
column for each year shows the total revenue of
the Government of Newfoundland, and further
over in the table there is a column showing the
estimated amount of that total revenue that came
into the country on account of Buchans, and the
final figure shows the percentage it bears to the
total amount. If that were done on the same basis
exactly for Bell Island and for the AND Co. and
Bowaters and a considerable number of other
large companies and corporations and work out
the percentage, I have the feeling that upon this
same basis you would find that 70 or 80 % of the
revenue that the government receives each year
is paid by those eight or ten large corporations.
Now if so, it would be an entirely misleading
table if it were compiled for a large number of
companies, because, as a matter of fact, the
revenue is received mainly from the people of
Newfoundland and not from eight or ten companies or corporations.
Mr. Higgins In other words that money would
not be there except for Buchans.
Mr. Smallwood That raises the other point I
want to make. I found myself running into this
very danger when I was reading this table — a
sort of comfortable feeling that the Buchans Mining Co. was paying a good fat slice
of taxes to the
government, whereas in actual fact they are not
doing any such thing.
Mr. Smallwood No, the table does not say so,
but the general impression I got from this table in
particular was a comfortable feeling that somehow or another, with such grand enterprises
out
there, and the government getting as a result of it
over 7.5% of the revenue, almost a tenth of the
whole revenue, Buchans must contribute a lot of
money to the revenue. That is through thinking
of Buchans as an operation, but thinking of the
Buchans Mining Co. and of the Terra Nova
Properties Ltd.
[1] as companies, it is rather startling. You see here they have made $18 million
since they have been operating.
Mr. Higgins "Total net profits over the said 20
years were close to $18,672,240." By the way
these figures we ascertained from the facts we had.
468 NATIONAL CONVENTION April 1947
Mr. Smallwood I know it is a lot to do, but
essentially all they did was this: put some capital
to work, enough to hire men and to open the mine
and build the plant in which to separate the ores.
That's all they did. You can put quotations
around "all" if you like, but the point is that that
mineral was one of the things that God put in the
country when he made it, and he put it there for
us, the people of Newfoundland, not for outsiders. It is just a case of digging down
into the
earth and getting it and selling it. The day comes
when there is no more to take out, and the asset
is gone, and the net result of it all is that ten years
from now we may look back with a thrill to
recognise that we had at Buchans a wonderful
piece of wealth, that was put there when the
country was made; and a foreign company came
in, because we did not have the capital, and was
given the right to mine it, and, having been there
from 1927 to 1957, they cleaned up something in
the nature of $25-30 million and went off, and
there is no asset left. That's the hard thing about
a mine.
Mr. Smallwood Yes, with this big difference,
that the capital to develop the mine is usually in
the country, but these profits do not remain in the
country.
Mr. Higgins Take Canada, does not a great deal
of the capital coming into their mining concerns
come from the States?
Mr. Smallwood Well, it did. The point I am
trying to get at is this: the Mining Committee is
merely stating the facts, and it is not your fault or
the Convention's fault....
Mr. Smallwood But it is the old, old story of a
corporation coming into the country and being
given concessions out of which they clean up;
well, here's one company that's cleaned up $18.5
million.
Mr. Smallwood Well it's all the one mine If
they want to split up into two outfits that's their
business. They have cleaned up $18.5 million.
Have you a table showing the total taxes they
have paid to the government?
Mr. Smallwood Customs duties, I don't mind at
all, $2.25 million.
Mr. Smallwood Yes, I am coming to that. They
have paid $2.25 million in custom duties, but that
is identical with what any company does. I am
referring to the principle of it. If you start a
sawmill in White Bay you have to pay customs
duties on certain materials that you have to use in
that sawmill. They are not doing us any favour,
they are just on a par with every sawmill.
Mr. Higgins Well, it might have happened that
they could have had free entry.
Mr. Smallwood That would be that much
worse. We will take income tax. 1 take it they pay
the regular rates?
Mr. Smallwood I believe it is so. The amount
upon which they pay it may be according to
agreement, but once the amount is determined
they pay the normal amount of income tax.
Mr. Higgins You have to admit the fairness of
Buchans, they have given us a full disclosure of
all their figures.
Mr. Smallwood I understand that. They were
very decent in giving us these figures. They have
turned in $5.25 million for the movement of
concentrates. While it is perfectly true that this
money came to the Railway, therefore the government, nevertheless it is not money
for nothing
— they got good service. You can't call that
taxes.
Mr. Higgins But it is money we would not have
had otherwise.
Mr. Smallwood Oh yes, but we have been
blinded by that fact all our lives.
Mr. Higgins Pity we were not blinded a little
more in that case. As far as the Mining Committee is concerned, we realise it is a
wonderful hole
in the ground at Buchans. We feel that mining is
a gamble in every way, and they were entitled to
the profit they got.
Mr. Smallwood This does seem as if you were
defending the Buchans Mining Company.
Mr. Higgins Well I am not defending Buchans,
but the profits. I am not going to get into an
argument on it.
Mr. Smallwood Let me pass on. They get value
for what they paid in for freight and express. In
fact this was brought out in the Report on
Transportation and Communications. They got a
lot of their freight hauled by the Railway at rates
which were a lot lower than they should have
April 1947 NATIONAL CONVENTION 469
been, and since we brought that out these rates
were increased. They got good value for the
$5.25 million they paid the Railway and the $1.1
million. I don't think we have anything to thank
the company for whatever. What you have got
left is royalty. All these come to a lot of money,
it is perfectly true, but the duty is the perfectly
normal thing that any company pays, and also the
income tax, and the freights, etc., they paid the
Railway are subnormal. Well the rest is royalty,
and what is it? Less than $1 million from 1927 to
1946, $933,000, call it a million in all the years
they have been operating. $1 million out of a
profit of $18 million! Of course we are pleased
that we did get that $2.5 million for customs duty,
and that $2 million income tax, and the money
that the Railway got, the $5.25 million and $1
million for freights, a total of nearly $12 million
in those years, that's fine.
Mr. Smallwood $15.25 million, that is salaries
amounted to $2 million, and they spent on lumber
and mine timber nearly $2 million, and other
supplies within the country $3 million, and they
paid to the AND Co. $5.5 million, mostly for
labourhandling concentrates, etc. That would be
in Botwood would it?
Mr. Higgins Yes. That AND Co. handling concentrates is mostly longshore work.
Mr. Smallwood That is a total of $40 million
since they have come in, that they paid out. That's
splendid, and I am not complaining or anything
of that nature. The point I am making is that out
of a total of $40 million they have paid to the
government less than $1 million, if you exclude
income tax and custom duties. Now I would like
very much if Mr. Higgins, the convenor of this
Committee, a lawyer and a King's Counsel, and
a member of this Convention, and who is trying
to figure what the future income of the country
and the future income of the Government of
Newfoundland is likely to be, I wonder if
Mr. Higgins, with his specialised knowledge,
could tell us what chance is there of getting more
royalty or special tax out of them, since they are
taking the last bit of mineral we have in the world
in that part of the country? What can we hook out
of them? What stands in the way of hooking more
out of them? If they have made $18 million profit
I am not inclined to turn handsprings of joy, I
want to know what we can do to get more out of
them.
Mr. Higgins I don't like to give legal information in this matter, but, as you will note, there
is
a written agreement between the company and
the government, and you know the difficulty in
breaking a written agreement. You can do it, the
government can do anything it wants, but I think
it extremely unlikely; it would not be in keeping
with governmental policy for a government to
break a written agreement if the conditions are
being carried out by the other party. We realise
that the company is making a very good profit,
and we consider that the Buchans Mining Co. are
probably more entitled to it than the other party
to the agreement, and the other party to the agreement got the land.
Mr. Higgins The Terra Nova Properties Ltd.
It's been a very fine deal for the Buchans Mining
Co., but, as they told us, they themselves spent a
certain amount of money before Buchans came
into the picture at all, and they consider themselves that they should be repaid with
interest.
Mr. Smallwood You think, then, that the
government can't get any more out of them?
Mr. Higgins I would not like to give it as a
definite ruling, but that would be my opinion.
Mr. Smallwood I wonder could we get an
opinion from the Chairman?
Mr. Ashbourne I would like to have some information on Appendix E. In 1945 the duties paid
were $137,611.72, and for the nine months of
1946, I don't know if that's an estimate or the
exact figures, $51,000?
Mr. Higgins We are given to understand these
are the exact figures.
Mr. Ashbourne That's quite a drop, although I
know one period was for a year and the other for
nine months.
Mr. Higgins The whole table was supplied by
Mr. Thomas, and I am afraid I can't enlarge on it.
Mr. Hollett The impression I have is that the
Company found it practically impossible to get
the necessary parts to keep up the mine, and they
went to work and made them themselves. That
column for nine months is estimated, but we have
been assured that the column under income tax
from the Buchans Mining Company for 1946 will
go very much over $500,000.
470 NATIONAL CONVENTION April 1947
Mr. Ashbourne Thank you for that information. I am glad to see that they are paying
such a
large amount into the income tax, and I would
like to know and feel that there are a good many
other mines in Newfoundland that can produce
the wealth that Buchans has produced. Whether
or not we have these mines I do not know, but I
know that I stood on my feet 20 years ago when
this company's bill went through the House,
[1] and
I believe they were looking for 20 years free
customs duty, is that right? Were they given that?
Mr. Higgins I don't think so. They did have a
special rate, but I can't tell you what it is.
Mr. Ashbourne I understand that they did have
it for 20 years free.
Mr. Higgins I believe there were provisions in
the Crown Lands Act of 1930. There may be
special provisions for Buchans, I don't know, do
you Mr. Hollett?
Mr. Hollett The title to the Buchans mine
comes from the 1905 act, and the duty rates are
defined in that act.
Mr. Ashbourne As my memory serves me they
were looking for exemption for 20 years from
that time. The argument put up was that they did
not know exactly how much ore was there, but it
seemed to be limited. My argument is that if we
have mines in this country of good grade ore, gold
and other things, they have to be prepared to pay
a higher rate of tax than a mine of a doubtful
nature. The answer given me was that I should
not "balk" a certain company. I agree with
Mr. Smallwood that this has been a very rich
mine, and I realise that they have paid out a lot of
money, but the question is, has the country reaped
the benefit that it should from its natural resources? We have these assets, we know
that every
ton of ore taken out of the country is one ton less,
and we have to be careful, and our governments
have to be very careful when they give such
sweeping terms and leases of millions of acres of
land to any company. That's a point we want to
try and stress and impress upon any government
that takes power in this country. They are dealing
with the natural resources and assets of Newfoundland, and, whilst it is only right
that these
companies that put their capital there should have
a just return, yet the mineral that's in the earth
belongs to Newfoundland and that is where we,
as Newfoundland people, want to see that our
interests are safeguarded, and as regards granting
exemptions and certain other concessions, we
should know that they are justified when we
come to do it.
Mr. Cashin Mr. Chairman, in connection with
this nine months duty of $5l,000, I wonder if
Mr. Higgins could tell us whether they were informed as to whether or not the government
for
the past 12 months ever gave a rebate of duty on
chemicals to the Buchans Mining Co.?
Mr. Higgins I can't tell you Major Cashin, but
I have been informed that negotiations were
going on between the Buchans Mining Co. and
the government. I presume it must be something
in connection with duties, but the Committee was
not informed that I remember.
Mr. Cashin As a matter of fact the government
did give them a concession on their chemicals of
$75,000.
Mr. Smallwood Now we are getting somewhere. I think it is completely outrageous. When
I look at the burden that customs duty and taxation generally constitute to some of
our local
industries, and I don't mean local manufacturers
now but the fishermen and the seal hunters, when
I think of the burden of taxation on our own
Newfoundland industries and discover after all
this talk of mine that on top of all that that they
are allowed scot-free $75,000 customs revenue,
it is utterly scandalous.
I have just discovered this here now in "E":
"Customs Duty total $28 million." But in the
very next column: "Total paid to the Newfoundland government and to others: $40 million."
What would that be?
Mr. Hollett Add the seventh column, payments
made to the Newfoundland government, which is
the payment made to others, and you get $40
million.
Mr. Smallwood I see, yes. The total of the first
five columns. $11 million, I don't even like that
heading, it was not paid to the Newfoundland
government.
Mr. Smallwood No, $6.5 million of that was
paid to the Railway for services rendered.
Mr. Smallwood No. They are only a common
carrier. The government had to pay the deficit of
the Railway because the Buchans Mining
April 1947 NATIONAL CONVENTION 471
Co. was not paying enough to them. They had to
dig down and pay the operating deficit because
they gave Buchans and other companies lower
freight rates than they should have. That's not
paid to the government, but to the Railway, so
you have to cut that in half.
Mr. Higgins This Committee calls the Railway
the Newfoundland government.
Mr. Smallwood All right, the government lost
money. If I gave you $100 and it costs you
$110 for me to pay you that, I have not given you
any have I?
Mr. Smallwood Well, if Buchans pay the Railway $6.5 million for hauling their freight, and it
cost the Railway $7 million, then the government
had to pony up half a million dollars.
Mr. Higgins That does not say that Buchans
cost the country anything for the Railway.
Mr. Smallwood Of course it does. At the moment we are only considering Buchans. Others
are doing the same. I feel like making a motion
that "Payments made the Newfoundland government" be cut out. It is misleading.
Mr. Hollett I had something to do with the compilation of this report, and I don't want the Convention
to get the wrong impression from
Mr. Smallwood's remarks. He seems to have got
the idea that we should keep our ores in the
ground and let them stay there till the next millenium. I fail to see what value ores
are if they are
not dug out and sold I see no reason why we
should keep them mere. If we go back to the other
table we find they contributed 7.6% to the
revenue of the country. Mr. Smallwood drinks
that duties do not go into the Newfoundland
government. I wonder where they do go? They
surely went into the general revenue of the
country. Royalties certainly did, income tax —
there should be no doubt about that, and the
trouble seems to be concentrates, freights, etc. I
will tell you what Buchans get from the
AND Co. for that amount. We will forget that the
cars are loaded with ore when they leave
Buchans. They send two trains a day from
Bishop's Falls to Buchans to haul away ore. The
AND Company put two engineers and one
brakesman and one conductor on the Newfoundland government's engine. That is connected
up on the cars owned by the Buchans
Mining Co. The government finds just the engine
and three or four men to manipulate it. They go
to Buchans and load up and come back again, and
the only part of the Newfoundland Railway
which is touched by these cars is the railway
between Millenown Junction and Bishop's Falls.
In other words, during the past 19 years the
AND Co. for concentrate freight, have paid
$5,375,420, for supplying an engineer and the
men to drive it, to haul their own cars to and from
Millenown Junction and Bishop's Falls. I think
that looks a very good showing.... We merely
threw the point out to the Convention, the value
of that little hole in the ground up in Buchans,
away in the heart of the country, which would
have been of no value whatever if certain corporations did not secure certain sums
of money.
It would have been there yet, and this country
would have been deprived of a great deal of
money, over $40 million. Our men would have
been deprived of labour to the value of over $5
million; we would not have received over $4
million in royalties, income tax, etc., so I fail to
see why Mr. Smallwood gets so hot under the
collar on this question. I would like him to hold
fire until he sees the report which we shall put in
about me Bell Island and Labrador operations. I
felt pretty hot under the collar too when I saw
some of these figures, but we were definitely
informed that ore is absolutely valueless until it
is dug out, freighted from the country and sold. It
seems to me that if the proper deal had been made
in the first instance, we would either have got
more money, or the corporations concerned
would not have taken the chance. I am prepared
to state that the less taxes you can put on capital
coming into this country in the endeavour to
locate ores and send them out — I would almost
go so far as to say we should let them import all
their machinery free of duty, the better it will be
for this country.... I think the Buchans Company
have made a jolly good thing out of this. I am glad
they have, and I think the country has made a very
good job out of it too.
Mr. Smallwood I agree with so much of what
Mr. Hollett says, that it seems ungraeious to disagree in part. The issue is not whether
we should
be glad to have Buchans or not, of course we are
glad, but Mr. Hollett has summed up for me
better than I was able to do myself the whole
attitude to this whole business. He said we should
be grateful about those mining companies com
472 NATIONAL CONVENTION April 1947
ing into Newfoundland. That is precisely the
thing that we ought not to be. That's what we
have been. You have five corporations in this
country today. First, Bell Island. The story, if
that's ever written, of the taxes they have paid
and have not paid, would raise anybody's hair in
this country. Some of it has been told, and men
have almost gone to gaol over it, but they have
never been treated as in almost any other country,
except perhaps some oriental country where it is
graft from the top to the bottom. This country has
been treating these foreign corporations in the
most gingerly way, and letting them off from the
paying of taxes. Bell Island, the AND Co.,
Bowaters, Buchans and St. Lawrence — here are
five companies. They did not put any minerals,
timber or water-power in the country, but they
have been taking them out and using them up and
never paying to the government of Newfoundland a just share of the cost of running
the
country, a fair share of the government's revenue,
and when I say "just" I am thinking of the standard that's laid down in USA and Canada
for taxes
for such corporations. Compare our taxes with
the tax that they get in Canada and the United
States. A little later we will have the report on the
Labrador Mining and Development Co. I am
looking forward eagerly to what the government
has decided they should pay in taxes. I don't want
to anticipate this part of the report, but by all
accounts we are on the very trembling edge of
one of the greatest mines of the earth. Are you
going to have someone standing up 40 or 50 years
from now talking about the short-sightedness and
lack of imagination of the Government of Newfoundland in the 1940s in giving away
one of the
great resources that God gave us? We are glad of
the labour they have given and the wages they
have paid, though I am not glad of what they gave
us on the Railway, I regret we lost money on that.
If we had refused to let them use the Railway they
would have had to build a railway of their own.
Instead of telling them to build their own railway
we say, "Oh no, we will haul your concentrate for
you at a loss", and that' 5 what we have been doing
instead of letting them build their OWn railway,
or letting them pay the cost. I like Buchans, I have
gone in there on train, airplane, Speeder; everything but walk in there. I like the
company and
the people, and I am not grumbling with them for
not paying more taxes than they are supposed to
pay, but I am grumbling against the law and the
attitude Mr. Hollett just expressed. There may be
other companies come in and I would not approach them in the way he has. I would stop
it
right now, and any other companies, paper companies, water-power or anything that
uses our
natural resources, I'd make them pay for it. You
have to tax them or tax the fishermen. We tax the
fishermen so high that we can't sell the fish in
competition with other countries, and in comes a
big firm that's making $18 million, and what do
we hook off them? A little paltry $1 million. We
ought to be ashamed.
Mr. Hollett I am not ashamed of anything
whatever. I would let companies bring in all the
machinery they wanted duty free, but I would
plank on a big income tax. If you are going to put
a prohibitive tax on machinery, who is going to
come in here? You say God put the ore in the
ground, well who put the fish in the sea?
Mr. Higgins If we don't give these people fair
treatment, they won't come here at all.
Mr. Smallwood I agree with the fair treatment,
but I say we should treat ourselves fairly.
Mr. Higgins It might be as well if we left that
angle over until the whole report is in.
Mr. Penney I don't think it is fair for one
delegate to take up so much time on one subject
as the delegate from Bonavista has this afternoon.
He is surely giving the Buchans Mining Co. a
hard time of it, and he told us that God put the
mineral in the ground, and I suppose it is a natural
inference that the Devil took it out, but when we
look at it right, they give some 700 men $2,000
a year; and I think it would be a good thing,
instead of knocking these concerns, if we gave
them praise for what they have been doing, and
we could spend our time in a better way, I think,
to pray that Almighty God would give us direction to find out more holes in the ground,
with the
help of our friends Mr. Howse and
Dr. Snelgrove, to tell us where mey are so that we
could find them.
Mr. Reddy I am inclined to agree with
Mr. Smallwood and Mr. Ashboume. I don't
think the country has got enough out of these
companies. They are using our natural resources
and I think they should pay for them.
Mr. Chairman Is the committee ready for the
question? The motion is that this section do pass
April 1947 NATIONAL CONVENTION 473
as read. Motion carried.
Mr. Higgins We have one more page on the La
Manche mine. I don't know if you wish to have
that now, or if you wish to adjourn. With your
consent I was going to ask that we adjourn until
tomorrow, rather than have another session.
[The Secretary read the section on La Manche. The committee rose and reported progress,
and the Convention adjourned]
