Canada. Royal Commission on Shell Contracts : The Commission to Inquire Into and Investigate Into and Report upon Certain Contracts Made by the Committee Known as The Shell Committee, and Upon Such Other Matters Relating to the Acts or Proceedings of the Said Shell Committee as May be Referred to the Said Committee by Order in Council From Time to Time was established under Order in Council P.C. 775, 3 April 1916, under Part I of the Inquiries Act (R.S.C., 1906, c.104) and on the recommendation of the Prime Minister. The Commission was mandated to inquire into: (a) the following contracts made by the Shell Committee: a contract dated 19 June 1915, between the International Arms and Fuse Company and the Shell Committee; a contract dated 19 June 1915, between the American Ammunition Company, Incorporated and the Shell Committee. In each of these contracts the Shell Committee agreed to purchase from the companies a quantity of fuses; a contract constituted by an order dated on or about the 16 July 1915, given by the Shell Committee to the Edwards Valve Company of Chicago, in which the Shell Committee agreed to purchase a quantity of cartridge cases; and an alleged contract between the Shell Committee and the Providence Chemical Company of St. Louis in which the Shell Committee agreed to purchase a quantity of picric acid; (b) the acts and proceedings of the Shell Committee, and of the Minister of Militia and Defence in connection with the negotiations, profits or prospective profits arising from contracts, or any commission or reward for procuring the contracts or any commission or reward for procuring the contracts; and (c) other matters relating to the acts or proceedings of the Shell Committee as may be referred to the commissioners by order in council from time to time and to report the result of any inquiries. The Commissioners were William Ralph Meredith, Chairman, and Lyman Poore Duff. The Secretary was J.A. Ritchie.
The Shell Committee was formed in September 1914 by the Minister of Militia and Defence, Sam Hughes, and continued in operation until November 1915, when it was replaced by the Imperial Munitions Board. The Shell Committee acted as a purchasing agency in Canada for the British War Office, arranging contracts with manufacturers for the production of munitions. Beginning in January 1916, attacks against contracts entered into by the Shell Committee, particularly contracts for the manufacture of fuses ordered from the United States, were made in the House of Commons. On 28 March, G.W. Kyte, a Member of Parliament for Richmond, Nova Scotia, reiterated and enlarged upon earlier charges made by F.B. Carvell and William Pugsley.
One contract, dated 19 June 1915, between the Shell Committee and the International Arms and Fuse Company of New York, was for the manufacture of 2,500,000 number 80 time and percussion fuses at a cost of 1,252,000. Kyte showed that the amount advanced on this contract was 10 per cent. Within four months another five per cent was advanced, making a total advance of ,687,500. Kyte pointed out that the minimum capitalization of this company was only 000.
By another contract, of 19 June 1915, the American Ammunition Company of New York undertook to supply the Shell Committee with 1,666,666 number 100 graze fuses. At the same time, this company undertook a further obligation with the Shell Committee to deliver 833,334 number 80 time and percussion fuses. Kyte proved that the amount advanced upon contract to the Company was ,041,600 and about four months later it got a further advance of five per cent, making a total advance of ,565,400. He pointed out that the minimum capitalization of the company was only 000. Kyte then demonstrated that 10 days before this contract was entered into, and the day before the American Ammunition Company was incorporated, B.F. Yoakum of New York, E.B. Caldwell, President of American Ammunition, and E.W. Bassick, of Bridgeport, Connecticut, entered into an agreement entitling them to receive as commission ,000,000 for negotiating the contract. Kyte charged that in September 1915 a further agreement was reached between J. Wesley Allison, the agent for the Shell Committee, E. Lignanti and B.F. Yoakum, both of New York, by which Yoakum was to divide his portion of the commission of 75,000 with Allison and Lignanti. Allison, a friend of the Minister of Militia and Defense, Sam Hughes, was especially condemned for taking a commission on a contract which he had arranged for the Shell Committee. Kyte specified several other contracts in which these men were to divide commissions, although they were not all related to the Shell Committee.
Up to that time Prime Minister Borden had resisted demands to appoint an inquiry because the Shell Committee was technically a purchasing agency of the British Government. Now, under severe pressure in the House of Commons, and within his own caucus, Borden gave in and on 30 March he announced the appointment of a royal commission to investigate the charges made in Kyte's speech. (See Royal Commission on Shell Contracts Report, Ottawa, King's Printer, 1916, pp. 4-6 and Canadian Annual Review, 1916, pp. 269-278.)
Hearings of the Commission were held in Ottawa from 19 April to 9 June 1916. RG33-61 General Inventory
