September 29, 1903

L-C

Matthew Kendal Richardson

Liberal-Conservative

Mr. M. K. RICHARDSON (South Grey).

There is abundant evidence that there is a very important element of doubt as to the legal construction which may be put upon this section. While that element of doubt exists, it must have a very damaging effect on the manufacturing and other industries of this country. If the government have it in their power, as I believe they have by accepting this amendment, to eliminate' that element of doubt, thus giving a degree of stability to the industries of Canada which would tell immediately and for years to come on the advancement of the country in various directions, why cannot they accept it ? It is evident that this provision has been imported into the contract entirely in the interest of the Grand Trunk people, that it has been put there at the instance and by the action of their own solicitors.

It is clear, from the evidence produced in this debate, that while this element of doubt exists, it will have a depressive effect upon all the industries of Canada, not only in manufacturing, but in mining and agricultural industries. We have in section 37 of the contract a provision that:

The company shall purchase all material and supplies required for the construction of the western division and the equipment of the whole of the said line of railway from Canadian producers

But the conditions following that are such as to nullify it almost entirely. It just means this, that Canadian manufacturers and producers shall have the great privilege of competing on equal terms with the manufacturers and producers of any other country in the world, nothing more or less :

-when the same are produced in Canada, and when such material and supplies can be purchased in desired quantities and of equal quality suitable for the purpose required and for prices and upon terms equally advantageous with those procurable elsewhere.

And only on these conditions will it apply. The conditions are so onerous as to nullify the very pretense which the section makes of protection to manufacturers and all Canadian producers. It would appear to me to be almost imperative on the part of the government to accept any amendment which would eliminate this element of doubt in this section, which must have a very injurious effect on Canadian industries, Canadian wealth, and Canadian advancement. I do not intend to occupy any time on this matter. I simply desire to point out that Canadian manufacturers and producers should not merely be put upon an equal basis with those of other countries. If we are to get nothing else out of this railway project, which involves such an enormous outlay of public, money and such an enormous increase in the debt of the country, we ought at least to have this much out of it, to give Canadian industries that stability which is so much needed and which would warrant the investment of capital in this country in many directions. The government profess at times to have an interest in protecting our home industries ; and here is a great opportunity for them. If this railroad project is to be of any use to this country at all, here is the way and the only way which I can see at present by which we can get any good out of it, and that little modicum we ought to have at least.

House divided on amendment

Osier. YEAS :

Messieurs

Alcorn, Lancaster,

Ball, LaRividre,

Barker, Lefurgey,

Bell, Lennox,

Blain, McGowan,

Borden (Halifax), Boyd,

Broder,

Bruce,

Cargill,

Clancy,

Cochrane,

Culbert,

Fowler,

Gourley,

Hackett,

Hale,

Halliday,

Henderson,

Hughes (Victoria),

McIntosh,

Morin,

Osier,

Reid (Grenville), Richardson,

Roche (Marquette), Rosamond,

Sherritt,

Simmons,

Sproule,

Thomson (Grey), Tolton,

Wilmot,

Wilson-39.

NAYS :

Messieurs

Angers,

Archambault,

Beith,

Reland,

Belcourt,

Bernier,

Bickerdike,

Bord'en (Sir Frederick), Bourassa,

Brown,

Bruneau,

Campbell,

Champagne,

Copp,

Costigan,

Davis,

Delisle,

Demers (Levis), Demers (St. John), Dugas,

Emmerson,

Erb,

Ethier,

Fielding,

Fisher,

Fortier,

Fraser,

Gallery,

Gauvreau,

Geoffrion,

Gibson,

Gould,

Harty,

Harwood,

Heyd, [DOT]

Kendall,

Laurier (Sir Wilfrid), Lavergne,

LeBlane,

Logan,

Loy,

Macdonald,

Mackie,

MacLaren

(Huntingdon),

Macpherson,

McCarthy,

McCool,

McCreary,

McEwen,

McGugan,

Melsaac,

McLennan,

Madore,

Marcil (Bagot), Marcil (Bonaventure) Meigs,

Mignault, "

Morrison,

Muloclc (Sir William), Murray,

Paterson,

PrSfontaine, [DOT]

Proulx,

Puttee,

Ross (Ontario),

Ross (Rimouski), Schell,

Scott,

Stephens,

Stewart,

Talbot,

Tobin,

Tolmie,

Turgeon-78.

Holmes,

Hughes (King's, P.E.I.), Talbot, Johnston

(Cape Breton),

Johnston (Lambton), Amendment negatived.

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CON

George Oscar Alcorn

Conservative (1867-1942)

Mr. G. O. ALCORN (Prince Edward, Ont.).

The amendment I am about to propose, Mr. Speaker, refers to clause 7 of the Bill, which authorizes the Grand Trunk Railway to acquire, hold, guarantee pledge and dispose of stock, bonds and debentures or other securities of the Grand Trunk Pacific Railway, subject to the provisions of the agreement between the government and the Grand Trunk Pacific Railway, and upon such terms as are specified iu a resolution to that effect passed by the directors of the said company and sanctioned by a majority of the shareholders. The clauses of the agreement which relate to this subject are clauses 2(1 and 27. They are as follows :

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L-C

Matthew Kendal Richardson

Liberal-Conservative

Mr. RICHARDSON.

The capital stock of the company shall be forty-five million dollars, of which not more than twenty million dollars shall be preferred and not less than twenty-five million dollars-common stock.

The company undertakes that the Grand Trunk Railway Company of Canada shall acquire and take the said common stock to the amount of twenty-five million dollars, except shares held by directors, not exceeding one thousand shares, and shall hold the same during the term of the said lease, and so long as any of the bonds guaranteed by the government under the terms of this agreement shall remain outstanding unpaid.

Hou. gentlemen will be familiar with the contention raised by this side of the House with reference to the number in which the stock should be acquired and held by the Grand Trunk Railway. We on this side have contended, as set forth in an amendment proposed by the hon. the leader of the opposition, that the Grand Trunk Railway should be compelled to subscribe for this, stock iu the ordinary way and incur all the-liabilities incident to such subscription. In other words, that they should pay for that stock in cash at par, either in one payment,, or in instalments as called upon, in the ordinary way. My hon. friend the .Minister of Justice, in reply to the hon. the leader of the opposition, objected to the term ' subscribe ' for and argued that the Grand Trunk Railway should be at liberty to acquire that stock by any means; and that all that was necessary was that they should be compelled to hold it during the time specified in the agreement. In my opinion, the proposition of my hon. friend the leader of the opposition, is one of vast importance to the project and to the people of this country, namely, that a fund should be expressly provided in this agreement, out of which the liability of the Grand Trunk Pacific Railway for its 25 per cent share of the cost of construction of the western division might be met. In the agreement there is no clause providing for any fund out of which that 25 per cent of the cost of construction may be paid. Surely there can be no reasonable objection to a provision of that kind, and I am at a loss to understand why the government, if it is guided by any ordinary business ideas in this matter, should object to it. The amendment which I beg to move, is as follows :

That section 7 be amended by striking out all the words after the word 'three ' in line 12 down to and including the word ' company ' in line 44 and by inserting instead thereof the words : ' subscribe and pay in cash at par for common stock and for preferred stock of the Grand Trunk Pacific Raiway Company, and may acquire, hold, guarantee, pledge, and dispose of preferred stock, bonds, debentures, o- other securities of the said Grand Trunk Pacific Railway Company.' .

As I have said, it is in my opinion of the utmost importance that these words ' subscribe and pay for in cash ' should, as suggested by my hon. friend the leader of

the opposition lie embodied in this clause, and the Grand Trunk Railway should not be allowed, as it will be if this amendment be not adopted, to acquire the common stock by any other means. It is evident that if the Grand Trunk Railway should hold the total [DOT]$25,000,000 of common stock of the Grand Trunk Pacific Railway, less $100,000 the entire control will be exclusively in the hands of that company. It will have absolute control. It may appoint every director on the board. All the employees and agents of the Grand Trunk Pacific Railway will be subject to its control and may be appointed and dismissed by it at will, and me object of my amendment is, in the case of such an event, to compel the establishment of the fund I have spoken of, out of which the Grand Trunk Pacific Railway-may be in a position to construct its share of the western division.

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?

The PRIME MINISTER.

I shall not surprise my hon. friend if I tell him that I cannot accept his amendment and I am sure he will not expect me to go over the arguments which have already "been made at length against it.

The House divided on the amendment of Mr. Alcorn.

YEAS :

Messieurs

Alcorn,

Ball,

Barker,

Bell,

Blain,

Borden (Halifax), Boyd,

Broder,

Bruce,

Cargill,

Clancy,

Fowler,

Gourley,

Hackett,

Halliday,

Henderson,

Hughes (Victoria), Kaulbach,

Lancaster,

LaRivifere,

Lefurgey,

McGowan,

McIntosh,

Morin,

Puttee,

Reid (Grenville), Richardson,

Roche (Marquette),

Rosamond,

Simmons,

Sproule,

Thomson (Grey), Tolton,

WiJmot.

Wilson-35.

NAYS :

Messieurs

Angers,

Archambault,

Beith,

Beland,

Belcourt,

Bernier,

Bickerdike,

Bourassa,

Brown,

Bruneau,

Campbell,

Champagne,

Copp,

Costigan,

Davis,

Delisle,

Demers (Levis), Demers (St. John), Dugas,

Emmerson,

Erb,

Kendall,

Laurier (Sir Wilfrid), Lavergne,

LeBlanc,

Logan,

Loy,

Macdonald,

Mackie,

MacLaren (Huntingdon), Macpherson, McCarthy, . McCool,

McCreary,

McGugan,

Mclsaac,

McLennan,

Madore,

Marcil (Bagot),

Marcil (Bonaventure), Meigs,

Ethier,

Fielding,

Fisher,

Fortier,

Fraser,

Gallery,

Gauvreau,

Geoffrion,

Gibson,

Gould,

Harty,

Harwood,

Heyd,

Holmes,

Hughes (King's, P.E.I.), Johnston

(Cape Breton), Johnston (Lambton),

Amendment negativ

Mignault,

Morrison,

Mulock (Sir William), Murray,

Paterson,

Prdfontaine,

Proulx,

Ross (Ontario),

Ross (Rimouski), Schell,

Scott,

Stephens,

Stewart,

Talbot,

Tobin,

Tolmie.

Turgeon-75.

ed. '

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CON

William James Roche

Conservative (1867-1942)

Mr. WM. J. ROCHE (Marquette).

I have an amendment which I desire to propose at this stage; and, inasmuch as the principle of this amendment was discussed in Committee of the Whole I do not intend to deal with it at great length on this occasion. I may say that in connection with this amendment the Minister of Justice (Hon. Mr. Fitzpatrick) took the ground that it would limit the powers of the Railway Committee in regard to the control of rates. To show that there was no force in that, it is only necessary to read the amendment. The object is not to limit the control of rates but simply to provide that the rates on this road shall not be any higher than those charged, or at any time to be charged, on the Canadian Northern Railway system. Nothing can be more important in connection with a new road than the rates to be charged to the people who have to ship their produce over that road. We have heard many objections offered in the past to the rates charged on the Canadian Pacific Railway. _ It has been, declared that the agriculturists in the west were merely farming on shares with the Canadian Pacific Railway. And still the very men who made those assertions admit that the Canadian Pacific Railway was neither better nor worse than other corporations, and that other corporations placed in similar circumstances would do what it has done. On that reasoning, if this Grand Trunk Pacific Company comes to deal with the farmers who have no competing line-and it is provided that this line shall not be built within less than thirty miles of the Canadian Pacific Railway or the Canadian Northern-the farmer along this route will be placed in exactly the same position as were the farmers of Manitoba and the North-west in relation to the Canadian Pacific Railway, and will have to pav the rates demanded for the shipments of their products to the head of the lakes by this road. It is important that a safeguard should be provided to protect the farmers from exorbitant rates. The Minister of Justice, when he took the position that this amendment would limit the power of the railway commissioners to control rates, was

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CON

George William Fowler

Conservative (1867-1942)

Mr. G. W. FOWLER (King's, N.B.).

I desire to move an amendment to section 7, which is so very defective that it is necessary, in order to perfect it, to move a number of amendments. The amendment which I propose is somewhat akin to an amend-Proved by the hon. member for Prince Edward, Ontario, except that it goes further and is a sort of complement to that amendment. It relates to the common stock of tile Grand Trunk Pacific Railway Company 39S4

which is to be acquired by the Grand Trunk Railway. The objection to the Bill in this particular is that under section 7 of the Bill and section 11 of the charter it is possible for the Grand Trunk Railway Company to acquire the common stock of. the Grand Trunk Pacific Company without paying therefor any money or giving therefor any consideration which would be at all commensurate with the value of $24,900,000 of common stock. This we believe to be entirely wrong ; we believe that this common stock should be paid for in cash or in the equivalent of cash m order that the Grand Trunk Pacific Company will be able to complete their railroad and its equipment without having to float as large an amount of bonds as they would otherwise have to float; that is without adding so greatly to the indebtedness of the company as they would be obliged to do if they did not receive par value for this common stock. It has been pointed out in this House that this objection existed, and I do not desire to take up much time in discussing the matter now, because I suppose that the government have hardened their hearts in respect to this matter and do not propose now to amend any portion of this contract or this Bill. At the same time I do propose to point out what has been urged already that by allowing the Grand Trunk Railway to acquire this common stock we impose a very much greater additional burden on the people who use this road in the additional freight rates that will be required. Under the Bill as it stands there is no way of fixing the value of the privileges which may be taken in exchange for this common stock. It has been pointed out even by lion, gentlemen opposite that the guaranteeing of the bonds by the Grand Trunk will be a sufficient consideration for this $25,000,000 of stock. Then there is the additional feature that the possession of this $25,000,000 of common stock gives the Grand Trunk the absolute control of the Grand Trunk Pacific so that the Grand Trunk Railway will control all the officials of the Grand Trunk Pacific and will be .able to violate all the conditions supposed to be imposed on the Grand Trunk Pacific Railway by the contract as to the carrying of freight over Canadian soil to Canadian ports without renderin'-themselves liable to any penalty. The Grand Trunk Railway, controlling all the officials can easily induce these officials to persuade shippers to route their freight over the Grand Trunk to Portland and it will be absolutely impossible to trace such an action or to prevent it, and so I say that by allowing the Grand Trunk Railway to acquire this common stock in this way the government is putting this power in'the hands of the Grand Trunk, which will enable them to violate with absolute impunity the agreements of the contract which has been entered into by the Grand Trunk Pacific Railway Company. Now, Sir. I trust that the

government, even at this late day, will permit this amendment to pass, that they will accept this amendment, because if they do that they will have given an earnest of theii desire to make this railway which they propose to build with such an enormous amount of the people's money, a truty Oanadlan hue, which will carry Canadian freight all the wav from the west to Canadian ports, and build up this Canada of ours into a nation.

I therefore beg to move :

That all the words alter the word 'that' to the end of the question be left out and the: following be substituted therefor The Bill be referred back to a Committee of the Whole House with power to add the following as a sub-clause to section 7.

'Notwithstanding anything in this Act or in the said agreement contained, His Majesty the King, acting in respect of the government of Canada, shall not he hound or obliged to perform, carry out or fulfil any of the covenan s, undertakings, conditions or stipulations m the said agreement contained on behalf ot riis Majesty the King, acting as aforesaid, unless and until the Grand Trunk Railway Company [DOT] of Canada shall have subscribed for the common stock of the Grand Trunk Railway-Company payable in cash at par to the amount of not less than $24,900,000.

I regret that there are not more members from the west in the House, because I think they would all certainly vote for this motion.

Amendment (Mr. Fowler) negatived on the same division.

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CON
CON

George William Fowler

Conservative (1867-1942)

Mr. FOWLER.

within its powers, directly or indirectly permit, advise or encourage the transportation or traffic by routes or at rates other than tnos? in the said agreement, provided that each of the said companies shall in all respects and in good faith use its utmost endeavours to fulfil the conditions upon which public aid is granted and accepted, namely, the development of trade through Canadian channels and through Canadian ocean ports.

I will only speak briefly on this amend- , meat, as the subject was so thoroughly thrashed out in committee, hut I will state that the object is to provide a security ou the part of the Grand Trunk Railway Company that the terms and conditions which have already been agreed to by the Grand Trunk Pacific Railway Company shall indeed and in truth be carried out. I presume that we cau predicate the duty of the House to be, that, the government having entered into a contract with the Grand Trunk Pacific, which is subject to the ratification of the House, to endeavour to the best of our ability in order to safeguard the interests of the people, to throw every protection they possibly can around these interests so that the real and true intent of the contract may be in fact carried out. When we look at the contract it requires but a moment s consideration to see that it is a contract simply between the government and the Grand Trunk Pacific Railway Company, a contract in which there are a ceitain number of covenants and stipulations made by the Grand Trunk Pacific Railway Company, but we must not forget, that, although there are many covenants and stipulations on the part of the Grand Trunk Pacific Railway Company, in order to estimate the value of the covenant there are two conditions which must not be overlooked. In the first place, as to the extent of the covenant we want to see what is really undertaken by the party covenanting, and in the second place, we want to see whether the financial standing of the party giving the covenant is sufficient to secure the carrying out of the obligation. I do not intend to discuss the question of the covenants, because that has been practically, settled by the various divisions which have so far taken place here, but it is quite in order to call attention to the fact that even assuming that these covenants made by the Grand Trunk Pacific Railway Company are expressed to an extent which is satisfactory to the people, practically we have no financial obligation on the part of the Grand Trunk Railway Company which can give us any remedy at all in so far as they are concerned. When we consider that we are making a contract with a company whose whole line when completed will be mortgaged for every single dollar that it costs to build the line, I think no further comment is necessary to show of how little value the covenant of the Grand Trunk Pacific Railway Company really is. m fact, the government of the country is in this

position : If the government claims that

the covenant of the Grand Trunk Pacific Railway Company is really a valid financial obligation, and one upon which the people can rely then the Grand Trunk Railway Company is not assuming any risk whatever in guaranteeing 25 per cent of the obligation necessary to construct this road. If we look at the position of the Grand Trunk Railway Company we find that that company, by the Act being enforced to accept practically the whole of the stock, we have the Grand Trunk Railway Company controlling the Grand Trunk Pacific Railway Company without any obligation whatsoever. It seems to me that if we could throw on the canvas a picture of the interest that the government and the Grand Trunk Pacific Railway Company and the Grand Trunk Railway Company really have in this particular contract, and if the picture could be drawn according to mathematical scale, showing the true interests of all these parties, it would be found that the interest of the Grand Trunk Railway Company looms up very large indeed, while, on the other hand, if we could have thrown on the canvas a picture of the obligations asssumed by the Grand Trunk Pacific Railway Company and the Grand Trunk Railway Company, it would be found that the obligation assumed by the Grand Trunk Railway Companay is in reality very trifling. If the government should1 vote down this amendment, it must be on the ground that the covenant of the Grand Trunk Pacific Railway Company is a good covenant, but if so, it is perfectly evident that the Grand Trunk Railway Company is assuming no liability whatever practically in guaranteeing the amount of the bonds it undertakes to guarantee. Therefore, as to this subclause (a), I think we are justified in assuming, that, as the Grand Trunk Pacific Railway Company, which after all is as clay in the hands of the potter as between itself and the Grand Trunk Railway Company, the Grand Trunk Railway Company should covenant that it, itself, will see that the child of its creation shall carry out the contract which has been entered Into. Another feature of the contract is as to the carrying of trade through Canadian channels and through Canadian ports. I will not occupy the time of the House in reading clauses 42 and 43 of the contract, which provides that the Grand Trunk Pacific Railway Company shall see that freight is routed through Canadian channels and through Canadian ports. Subclause (b) of the amendment which I moved provides that the Grand Trunk Railway Company shall do in fact itself what the Grand Trunk Pacific Railway Company is bound by the contract already made with the government to do. It also provides that the Grand Trunk Railway Company, itself, shall not in any roundabout w^y defeat the true intent of the agreement by itself doing what the Grand Trunk Pacific Railway

Company would be liable under its covenant for doing. Therefore, without occupying the time of the House further, I submit this amendment which is in effect to secure to the people of Canada the covenant of the Grand Trunk Railway Company that in these two respects the Grand Trunk Pacific Railway Company shall carry out the contracts, covenants and agreements which it has made with the people of this country. While under ordinary circumstances it might not seem reasonable or fair to exact such a covenant from a third party, the Grand Trunk Railway Company, I submit, that as under the terms of this particular contract it is provided that the Grand Trunk Rail-1 way shall hold the stock and shall in effect be the Grand Trunk Pacific Railway Company in every sense, except liability, the amendment is not unreasonable.

Amendment (Mr. Northrop) negatived on the same division.

On motion of Mr. Lancaster, the debate was adjourned.

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ADJOURNMENT-COASTING PRIVILEGES.

?

The PRIME MINISTER.

I beg to move the adjournment of the House. In reference to a certain point, as to which my hon. friend from Leeds (Mr. Taylor) and myself do not agree, let me quote the following from an Act of the congress of United States, of February, 1898.

Be it enacted by the Senate and House of Representatives of the United States of America in congress assembled, that no merchandise shall be transported by water under a penalty of forfeiture thereof from one port of the United States to another port of the United States, either directly or via a foreign port, or for any part of the voyage, in any other vessel than a vessel of the United States.

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CON

George Taylor (Chief Opposition Whip; Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. TAYLOR.

That is quite correct with regard to coasting, but carrying from an American port to a Canadian port is a different story.

Mr. (SPROULE. What business will be taken up to-morroiw ?

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?

The PRIME MINISTER.

We will continue this Bill and after that we will take up some other Bills and then go into supply.

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Motion agreed to, and House adjourned at 11.25 p.m.



Wednesday, September 30, 1903.


September 29, 1903