September 21, 1903

CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

Three amendments to this section have been proposed. I suppose thait, strictly speaking, only one amendment can be proposed at a time, therefore there is only one motion before the committee, but notice was given of the others. Two amendments, I think, were proposed by myself and one by the hon. member for West Toronto. My recollection is that these amendments stood at the request of the government, and I was in hopes that I might have had some intimation from the government as to what disposition they would propose to make of them. 1'orhaps it would be best to take them in order.

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The MINISTER OF JUSTICE.

If the chairman would permit me, I would suggest that we take the second amendment first, that is the amendment with respect to the subsidiary 'agreement to be entered into by the Grand Trunk Railway, which is intended to provide that the government

shall not become responsible foi^ the first guarantee of bonds until the Grand Trunk Railway has become responsible for the second guarantee of bonds. Perhaps we might take that up and dispose of it.

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LIB

Peter Macdonald (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The DEPUTY SPEAKER.

The amendment reads :

That section 7 be amended by adding thereto the following subsections :[DOT]-

Notwithstanding anything in this Act, or in the said agreement contained, ' His Majesty the King, acting as aforesaid, shall not be bound or obliged to perform, carry out or fulfil any of the covenants, conditions or stipulations in the said agreement contained on behalf of the Dominion of Canada unless and until the Grand Trunk Railway Company of Canada shall have entered into an agreement with His Majesty, the King, acting as aforesaid, by which the said Grand Trunk Railway Company shall covenant and agree as follows :-

(a.) That the Grand Trunk Railway Company of Canada shall guarantee the bonds of the Grand Trunk Pacific Railway Company for the balance required for the complete construction of the western division of the said agreement as provided in clause 34 of the said agreement.

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The MINISTER OF JUSTICE.

The first two paragraphs of this amendment are merely intended, as I understand, to give effect to the agreement as it has been at all times understood and interpreted by the government. We have never at any time expected, nor was it even in contemplation, between the parties to the agreement, that the government should endorse or become liable for the first issue of bonds until the Grand Trunk Railway Company of Canada had undertaken to guarantee the second issue. Therefore, with regard to the first and second paragraphs, we are prepared to accept this amendment, as it is in accord with the intentions of the parties. With regard to the third section, it is impossible for us to accept the amendment.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

I desire to say a word with regard to clause (a). If the minister will turn to page 11623 of the unrevised ' Hansard,' he will see there the resolution as I gave notice of it. I would suggest that possibly the wording of clause (a), which my hon. friend (Mr. Fitzpatrick) is disposed to accept might be improved if it were made to read :

That ithe Grand Trunk Railway Company of Canada shall guarantee thie 'bonds of the Grand Trunk Pacific Railway Company for such an amount as shall produce and provide a sum of money equal to the balance required for the complete construction of the western division as provided in clause 34 of the said agreement.

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The MINISTER OF JUSTICE.

Is my hon. friend (Mi-. Borden, Halifax) adopting the terms of the contract ?

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

No, I am not. The hon. gentleman will see exactly what the difference is between what I first proposed and the amendment which I now suggest. The amendment I now suggest

takes into consideration the possibility of the bond* guaranteed by the Grand Trunk Railway Company selling below par ; and, therefore, instead of saying that they should guarantee the bonds for the balance, I say that they shall guarantee the bonds to an amount sufficient to produce a sum of money equal to the balance required to complete construction of the western division.

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The MINISTER OF JUSTICE.

As I understand, subclause (a), as my hon, friend first introduced it, adopts the words of section 34 of the contract ?

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

Yes.

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The MINISTER OF JUSTICE.

The hon. gentleman now wishes to depart from that and make an amendment which would have the effect of altering to some extent the terms of the agreement ?

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

Of course, it alters the terms of the agreement in any case, even as at first proposed, because it provides that the Grand Trunk shall enter into a contract to do a particular thing. To that extent, and to that extent only, does it alter the terms of the agreement in clause 34. It provides that the bonds to be guaranteed shall be of sufficient amount to provide a sum of money equal to the balance required for the construction of the western division. That is all.

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The MINISTER OF JUSTICE.

The contract provides that the Grand Trunk Railway Company shall guarantee bonds of the Grand Trunk Pacific Railway Company for the balance required for the construction of the western division. That would be secured, I think, under the amendment the hon. gentleman first proposed. But, at first sight, I would not be disposed to depart from the terms of the agreement.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

I should think that the words used in the amendment to the amendment really express what the government intended. I could hardly imagine that the government was simply asking the Grand Trunk Company to guarantee a sum of money equal to the balance that was required, without considering the probability of the bonds not producing the money. The government must surely have considered what position the country would be landed in, if after it had guaranteed three-quarters of the cost, and the Grand Trunk Railway Company had given their guarantee for the remaining quarter, the proceeds of the bonds so guaranteed should uot be sufficient to complete the railway. The result would be, as the Minister of Justice must see, that the work would come to a standstill unless the government or somebody else provided more money. In drawing the agreement, the government could never have intended that. It must have been the intention of the government that, after they had guaranteed bonds equal in amount to three-quarters of the cost, the Grand Trunk Railway Company Mr. BORDEN (Halifax).

should assist the Grand Trunk Pacific to provide all the money required to complete the road. That, I take it, is, beyond question, what the government intended ; and if they did not clearly express that in the agreement, then, by this clause, we should express what they really did intend. I submit to the hon. minister that this requires very careful consideration.

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The MINISTER OF JUSTICE.

The clear intention of the parties to the agreement- and we say that that intention is abundantly manifest in every line of the contract-is that the company should first get from the government the guarantee of bonds to the amount of 75 per cent of the cost of construction, and whatever is required over and above that must be guaranteed by the Grand Trunk Railway Company. That is expressed in terms :

Inasmuch as the bonds to be guaranteed by the government only make provision for a part of the cost of construction of the western division. the company hereby agrees that the Grand Trunk Railway Company of Canada shall guarantee bonds of the company for itbe balance required for the constructing of the said western division.

The intention of the parties is clear,- all that is required for the construction of the western division, above the proportion guaranteed by the government, is to be provided under bonds guaranteed by the Grand Trunk. I do not see how it is improved by this proposed amendment.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

It was probably the intention of the parties to provide as the hon. minister lias said ; but it is very important for us to consider whether the agreement as drawn expresses that. Let me put the case to the hon. minister. Suppose the cost of the western division to be one hundred millions. The government would not be called upon to guarantee more than seventy-five millions.

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The MINISTER OF JUSTICE.

That would be the outside possible limit.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

Now, then, the Grand Trunk will be called upon to guarantee bonds to provide the remaining $25,000,000. The hon. gentleman says they must guarantee bonds that will produce $25,000,000. Let us seo what the wording is :

The Grand Trunk Railway Company of Canada shall! guarantee bonds of the company for the balance required for the construction of the said western division, exclusive of the said $20,000,000 required for first equipment.

In the case I put, the balance required for the construction of the western division is $25,000,000 ; therefore, this language clearly says that the Grand Trunk in that case shall guarantee bonds for $25,000,000, although It might require bonds for $30,000,-to produce the $25,000,000 cash.

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The MINISTER OF JUSTICE.

The language does not imply any such construction, in my opinion.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

The hon. gentleman thinks so, but is the meaning plain ? Assume that $25,000,000 is required to complete the road, then the Grand Trunk shall guarantee the bonds of the company for the balance required for construction. ' Guarantee bonds for the balance,' that is, for the amount of the balance, not bonds which, when sold upon the market, will produce that balance. That is the point of the amendment here, and I think, with all due respect to the Minister of Justice, that it will be a serious thing if it is not expressed in the clearest possible language. You will probably find that the Grand Trunk will look upon it in a very different light. There can be no question I take it, that the second mortgage bonds guaranteed by the Grand Trunk will not sell at par. I do not care what rate of interest you may give, what reasonable rate of interest you put upon those bonds, 4 per cent, or any reasonable rate, I do not believe they will sell at par upon the market. Very well, then it is perfectly clear that whatever may be the actual balance in money required to complete the road, you will have to issue more bonds to realize that balance. Does the Minister of Justice say the contract is clearly expressed in this respect ?

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The MINISTER OF JUSTICE.

I think so.

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September 21, 1903