April 5, 1904


it could have this property sold, could buy it in, I suppose, and operate the line itself. But what is the provision we have here V No action can be taken by the government unless the company is five years in default to the government in respect of the bonds which the government shall have guaranteed. But the company may be in default for four years and six months, and may so remain during the entire period for which the bonds were issued, and apparently, under the terms of this supplemental agreement, the government can not take any action at all. Therefore, it is open to the company to allow the government to provide interest for four years and six months on the bonds guaranteed ; then the company can made the subsequent payments, leaving the government during the remaining years for which the bonds are to run without any remedy at all, and without receiving any interest upon the amount which it had advanced. If I am wrong in believing that to be the effect of the contract my hon. friend the Minister of Justice will be able to correct me when he comes to consider the ' question in committee. But if the company becomes in default for more than five years, what is the position of the government ? Last year, great emphasis was laid on the fact that the government could foreclose. But that remedy is gone ; the government cannot foreclose. It can require that a receiver be appointed. But during the continuation of the receivership, capital will be required for the maintenance of the road and for improvements. Who will be called upon to provide this capital ? The government, of course. A road operated by a receiver or manager appointed under such circumstances is usually not so efficiently run as by a strong and financially capable corporation. Great emphasis was placed last year upon the fact that the government had a first mortgage. It is not a first mortgage now, because, if any surplus arises during the period of the receivership, that is not to be appropriated to the , bonds guaranteed by the government, but 75 per cent only is to be appropriated to the bonds guaranteed by the government and 25 per cent to the bonds guaranteed by the Grand Trunk Railway Company. The government is placed in exactly the same position, it seems to me, as the Grand Trunk Railway Company in respect of the bonds guaranteed by it. The government does not get really a mortgage at all. For, you cannot foreclose it. It is simply an instrument creating a charge under which the government cannot foreclose, but can enter into possession and operate the road, using the surplus earnings of the road for the purpose of defraying interest upon the bonds guaranteed by the government and the interest upon the bonds guaranteed by the company, in the proportion of 75 per cent for the one and 25 per cent for the other. Now, what is Mr. R. L. BORDEN. the reason for this change ? Is it not trfl ' as was stated by the Minister of Finan and the Minister of Justice last year tfl the conditions of the original agree®® . were thoroughly understood and assent ^ to by the Grand Trunk Railway Company ^ Why should the country occupy a differ® position from that which was absolutes agreed to last year ? For what purpose P this change been made ? What PreS®L,. has been brought to bear upon the £° ,„gt ment to do away with that which, j year, was thought to be of importance on which, in their official statements^ * " "''Vr to me that this provision opens up a i'a curious possibility. And it is this : st During a time of prosperity the intei upon the bonds guaranteed by the g<>v w ment may be paid by the Grand eo the House and the country the govern®®1, placed a great deal of reliance. It se. Pacific Railway Company, and that mn? „, iod of oommornlfll on during a period of commercial exp®11® during a period when the country ifl perous. The company may even during period remain in default for four years six months. But when a time of dePr® yj,jit comes, when it may not be convenient g(j that railway should continue to be op®, pj-by the Grand Trunk Pacific Railway yage pany, the government will be obliged tor[,pen hold of it if further default is made. ypfor five, ten or fifteen years, this d ment will be allowed to keep tljatoUefs in its possession, to advance any ® apc® necessary for its operation and mainte pgji during a period of depression ; but the time of expansion again comes. wbeU back interest has been paid up, then ajiA ernment will have to give up the roam,h $ 'cbJ ciuuj^ui, Will 11U. V C lAJ JjlVW Up - V\iC** the Grand Trunk Pacific Company, the only another name in that regard t VS Grand Trunk Company, will take , tiljp®" and earn all the profits that can be o ' ^ 0t out of the road during the further P®p ® commercial expansion. It does not b® ^ gti' me that there is any justification t° jfl w pulatiou of that kind which was u°L)tiU'tlCi contract as originally framed, a c r which had obtained the assent and BVg fo of the gentlemen who are now nsn these modifications. A ;t d°e„ and gof deals with a matter that was discussed in this House last year I come now to paragraph u, au^e S' y seem to me that in this paragraph ,apU ernment has excelled itself. I>ar"Z {Pa% very oSsi bility of speculation by the Gfra® Railway Company in a very of stock of this company which adni ^ jja* to be handed over to the Grand 1 iaiderflS,j3 way Company without any c0'of except what is called their supP° _ scheme. Let me read the clause . , ,.j,p 27tb Notwithstanding anything in U,B, t],e u ' - tained, 1 (ter ' { n0t' doll*rfre8 graph of the said contract con Trunk Railway Company shall acquisition of the twenty-five mil11 g9 s' , m/Ml tionc^* ' common stock therein men i, . be Droy directors, not exceeding one thousand), of s11ei',ente<1 from making any such disposition ^ailw common stock as the said Grand Trunk that nf may deem expedient, provided however Shan 1 i ?aid Grand Trunk Railway Company ®araer U£ins the delay mentioned in the said Said Lap," continue to hold a majority of the Grand u- hy such title as shall enable the said J>oljev r/unk Railway Company to control the y °t the company. Very6 [DOT] words of that paragraph are Lter S1fnlfi®ant, and 1 will deal with them then i



With members of the government took ^ .°n' Mr. Speaker, every hon. gentlet'oa th this Mouse will remember the posi-Witt, , a*- members of the government tool; tQei,to16gar<^ to this stock last year. Amendllousio Were moved from this side of the Qranl More than once, requiring that the stoeh > t Un'1 Company should pay for that on t^('*t Par, and arguments wen were advanced iVoui'J °ck should pass, as we apprehended it Ti'hnl. Pas,s> into the hands of the Grand aiinalv ttailway Company for a mere no-that Ponsi,leration, or for no consideration, C}ra11(} ^ 1; being afterwards held by the Used f Al'unk Railway Company would be e.\-act(l|1r the purpose of increasing the rates the the people of this country for stockl lP®se of paying dividends on that attitn'lo N°w there is no doubt as to the the government then took, *h the was repeated over and over again [fiend strongest possible terms by my hon. h*h. Minister of Finance, and by my °hce, ;Ulea<i the Minister of Justice at least [[lent. ' x by other members of the goveritdei Wer oi<i t do arePMi°ns, then not know whether the official tlie solemn declarations, which [he Unn, ' friend as having been relegated to [ few b, scraps. But let me read to him ;[l°re B^L_them, and if there ever was a [hat whi ^[[ordinary change of front than ['My lf). 011 is presented by the document J°n, i ' e(t before parliament for ratifica-\r °th*,. °Ut* bke some hon. gentleman on -i. hop fs'.(ie °f the House to point it out. aMvei. 't„r,eP[t the Minister of Finance, in oi the tv objections made from this side *Ji0 of tlUs®> used this language ; at page ue Hansard ' : ct°«r,stocv! Pr°yiiled that practically the combo, 25.00() non1 tais company, to the full extent ^ C UU, Shall Lev Vvwivl , -U„ tbo, 6vcn V,,. ' shaH be held, not by promoters, han rs Indii.iv o!<3 Grand Trunk Railway pro-C'vay Com^ 'L but by the Grand Trunk 2C theyrPoath®re ia a chance



.uoo, an only hold 1,000 shares against I want to for promoters b'ari[Lthe stock isi now to be put upon the th rhet, is _____________ ___________ hw r®Hson 11,°iV- to *>e speculated with, and kjpbs ana ,, , cb was put forward as a W ahCe lsmr 4?ent reaRon by the Minister of quo /6" absolutely disappears. But 11 a Utttr. ag!|in from that hon. gentle-Ue further on : (Hansard, 1903, p. 8570.) . If the Grand Trunk Railway acquired that stock at a comparatively small sum and afterwards floated it on the market at a higher sum, that would be a proceeding which might be open to objection. Well we know from the declarations made at the Grand Trunk meeting, we know from the comment upon those declarations made in financial papers of the highest class in London, that the Grand Trunk Railway Company expects to receive that stock, the whole of the $25,000,000 of that stock, for the support which they are giving to this enterprise. I will deal with the amount of that support later on. But the Minister of Finance continued as follows : (Hansard, 1903, p. 8570.) But the Grand Trunk Company must not only take this stock, but hold it for all time ; they cannot put a dollar of it on the market. It is absolutely impossible to buy a share of that stock ; it must be held by the Grand Trunk Railway Company itself and no person can buy or sell a share. Where then comes in the chance of speculation ? That was my hon. friend's standard argument. Yet in face of that declaration by this government, we have a clause which puts more than $12,000,000 of that stock in the market for speculation. But we do not know for what reason the government is permitting this, because my right hon. friend this afternoon absolutely threw no light whatever upon that question. But that is not all. The Minister of Finance, if I may quote him again, and if I ihay be permitted to regard his official declarations in this House as not scrap, went on further ; (Hansard, 1903, p. 11230.) I maintain that we are not at all concerned as to what these two companies do in reference to that. If it were stock that was to be placed in the market and sold I could at once recognize that we would have a great deal of interest in it. That interest, Mr. Speaker, seems to have been absolutely lost when this supplementary agreement was entered into by this government. My hon. friend continued : If this stock were to be put in the market, taken over by the Grand Trunk Railway Company at 5 cents on the dollar, and in later years it passed into the hands'of other people at 100 cents on the dollar, If the question of freight rates comes to be adjusted at any time and it becomes a question whether we are to have such freight rates as will earn a fair dividend on the 100 cents that the present holder paid, or on (he 25 cents that originally went into the treasury there certainly is much to be said in favour of the man who purchased tho stock and who says : I paid 100 cents on the dollar for it. That is to snv, when this Grand Trunk Company takes' $12.000 000 of this stock which it receives for the support it gives to this enterprise, and puts that in o t hands of bona fide purchasers, those men



will be entitled, according to the admission of the Minister of Finance, to come by and by and say : We have paid 100 cents on the dollar, and we want you so to fix the rates upon these western lines that we shall receive fair and just dividends upon the money. But Sir, that is not all. Let me quote further from my hon. friend the Minister of Finance, because of all the Ministers of the Crown he was the most pronounced and the most emphatic on this subject. He said : (Hansard, 1903, p. 11231.) The strength of this enterprise is to he found In the fact that the Grand Trunk Railway Company are not only behind it but they are in it and of it. If the Grand Trunk Railway Company take over this new stock of 25 cents cn the dollar, they cannot sell it to anybody at 26 cents on the dollar the next day, and they cannot sell it later on for 100 cents on the dollar. It must stay in the treasury of the Grand Trunk Railway Company. But, in order that there may be no doubt about the position of the government in this regard, my hon. friend the Finance Minister was even more emphatic than that later on. Although he was assisted on one occasion by the hon. Minister of Justice, he apparently took charge of this matter on behalf of the government, because he put forward forcibly and cogently, as he always does, the best argument that could be made in support of the position which the government assumed at that time. He continued as follows : (Hansard, 1903, p. 11851.) The stock will not be allowed to go into the market and pass into the hands of other persons, and possibly at a later stage, be treated, in the fixing of freight rates, as capital at a fictitious value. The stock will not be allowed to go into the market, he said. Well, under this provision, as I understand it, stock to the extent of $12,000,000 is to be allowed to go into the market, is to be allowed at a later stage to be treated, in the fixing of freight rates, as capital at a fictitious value. I would like to know the reasons, if there are any, which have induced the government to make this tremendous concession, fraught with so much importance to the people of this country with reference to freight rates. My hon. friend the Minister of Finance continued as follows : We think it important, for several reasons, that the Grand Trunk should take and hold that stock and not dispose of it Therefore, we insist that they shall acquire, take and hold that stock. When and why did they stop so insisting ? That was the position of the government at that time. They were insisting. If they were so insisting at that time, why did they afterwards assent to this provision of an exactly contrary import ? We are treated to-day to an entirely different position of affairs, to a new contract, a new stipulation, Mr. R. L. BORDEN. which permits every one of the evils agad' which my hon. friend the Minister of ** ance last year said that the country was { solutely and entirely safeguarded. But,1 ' is not all. I do not wish to weary the with these quotations, but I think it is ot r portance to have these declarations might call them pledges which were m® to the country by so important a member the government as my hon. friend the M ister of Finance placed at some length fore parliament and the people for the Pe pose of eliciting an answer; if answer tm^ be, as to why it is that in respect to this m important matter so extraordinary a efia of attitude is presented by the governingi ( My hon. friend the Minister of Finance n farther. He said : (Hansard, 1903, p. 1185.) We claim that we do get from the old o Trunk Company two things of importan which I have referred one that they shoul® eS and hold the stock and thus identify tbems ^ closely with the undertaking, and the s tj,e that they should become the guarantors ® bonds to the extent of one quarter or P jjdirf more of the balance required for the bu* ;Bg!3 of the western division. In these two we have obligations on the part of the . if Trunk which we think are of value ; a o1" additional obligations on the part of 1 th® Grand Trunk Company are asked, as gsf amendment of my hon. friend, all we w® is that they are not in the contract, a have no right to demand them. ,, rlly Apparently the Grand Trunk B'l1 Uic maiiu j-iu,..- , {1)9® Company had the right to demand 0t this position taken by the £°ve ^011$! so strongly and so firmly through the



of my hon. friend the Minister of 1 , should be absolutely departed from, speculation in the stock which is pnt>" to be so fraught with evil to tn glg1) lie should be permitted for some $3 which has not been fully disclosed House. But let me give one or twe be quotations from my hon. friend, heck pjjtSi lias placed the evil, which he now so strongly and forcibly before the c 0tn that I cannot do better than let the jj it-have the full benefit of the opinion !! e$ was not slow to announce at that ti said : delict The Grand Trunk Company would be lg0 ed to have that clause stricken ou > toCK they might be allowed to take UjWi ey ple" and float it in the money market if tn ed, no doubt. ^ tl)6 My hon. friend thoroughly reaH?,ued ^ situation at that time, and he com follOWS : atV nl°rrii tifying to the promoters of this ent® ^ That, I have no doubt, would be ferpr*36 Tying to the promoters of this on Well, the promoters of this enterp1 every reason to be gratified n0''r' fi'if ( they have exactly that which my n ' w'1' e said they should not have, aD" j us. Kq means they got it he has not inform oglJa* has not been quite so eloquent a® Plainingthese matters, certainly not nearly eluent as he was in regard to this rail-'y last year. Let me continue the quota-1011 which I (Han am reading : ansard, 1903, p. 11875.) the r> kave Put that limitation in, not to please Suit Trunk Company but a.s an additional g0j antee to the people that the stock is not at he placed in the market and floated L a fictitious value. Trunk* did not put it in to please the Grand tool- -4.Railway Company, but evidently they Wav n out please the Grand Trunk Railfihv i °mpany> and tlley t00k Jt out wltll0Ut so fnis.tiflcati°n whatever, if the arguments ecuu°r1'Cibly Presented to the House and the ate f* Iast year by the Finance Minister °t any value whatever. He continued ' t° gjay'. hnhesitatingly, that it would be better other 6 lt; to the Grand Trunk, even without any dealt c°n|Htion, than it would be to have it tfiarlcet 1 to be used stock speculators in the thatlcl n°w the company is presented with joy !se- Does the country hail with be dent aUse wllicl1 permits that stock to ih the11 ou* to use6 by stock speculators friend ®a,rket ? Is that what my right hon. hiodero? ls an exceedingly reasonable and guag ate Provision in the light of the lanin cl}s„„ e? by bis most important colleague year [DOT]> this subject in the House last littu'yelb it would seem to me that a find th °le exPb;ulation is due to the House yet heirriCountry than anything we have tep, from the right hon. Prime Minisjittle nnUt, fbat is not all. I have one other t«ter of °r?tion from my hon. friend the Min-the jj I mance, with which I will trouble t° to0 R 1 am not inflicting his views the om,?5eat an extent on the House and c°untry. He sald : „ BhtS we' 1903' p- H221.) "o conrrt? Protecting the people against any j°topanv "'"on, because we are refusing the It . stock*16 power to put a dollar's worth of ls hot r,°n *"be market and sell It to any one. J?*rket lt egotiable, it cannot get in the stock a? ihhocenfuuot be the subject of speculation; (W say * Tl third party will be able to come dn * r for tvPaili ln sood faith 100 cents on the tkVi?end on v v,Stock an|f am entitled to get a nat the 1 Paid. We have stipulated must no0ck cannot be put on the market. Unk Ran main In' " ' ' -



Mr, gWai,way durin; ??ns of efi!ve,r' i® It conceivable that deelara-SW should be made by the important n of tllis country in regard to so bR blade in+nlatter as this, that they should ofr' 1903 ,,,,, month of September or Octo-]., r'l-diru;',,,'!'1'! that in the following month {,,, execute o*'j government would deliberat-hav8 evo,.,-11' enter into a contract stultitbe6 quoted ?neT0f lts words which 1 ten rlght >7 Is it conceivable that. DayUtry wPrIme Minister of this lfHhent ,3), 'lure to come down to without some better explanation than he has given to-night in regard to this most extraordinary change ? What is the meaning of it all ? Here is language of the most pronounced character, here are evils pointed out by my hon. friend the Minister of Finance, here, in these quotations, he declaims upon the dangers of stock speculation. He says here that not one dollar of this shall be placed upon the stock market for the purpose of speculation ; he says that the Grand Trunk would be very glad to strike out the restriction, but the government will take good care that it shall be kept in-and yet, within four months after that, this stapulation is taken out, and more than $12,000,000 worth of this stock is handed over to be speculated in. But my hon. friend the Minister of Finance was not th'e only member of the government who took that position. My hon. friend the Minister of Justice (Mr. Fitzpatrick) took the same ground, and here is his argument : (Hansard, 1903, pp. 11219-11220.) My hon. friend's fear is that this stock, issued at a low figure, and falling into the hands of the public, will afterwards be taken into account, and the question of freight rates will be considered. My hon. friend has overlooked the fact that the $25,000,000 of common stock, under the contract, is to pass into the hands of the Grand Trunk Company and will not be dealt with on the same principle as it would be if it had passed into the hands of the general public. That company will have to take this stock and hold it, which would not be the case with the general public. Let me say, that if the Minister of Justice overlooked something on that occasion, the government would seem to have overlooked something on this occasion, viz.: That all the evils that have been portrayed by these gentlemen1 are now before the country, that the country is face to face with them, and that the country will have to encounter them if parliament sees fit to ratify this contract which contains a stipulation wholly inconsistent with the declarations of the government last session, as to what is in the public interest. But that is not all. There was a gentleman) with us last session who is not with us now ; I refer to Mr. Blair, the Chairman of the Railway Commission. The judgment, the ability, and the integrity of Mr. Blair have been certified to by the government in every possible way. They have been certified to, not only by his appointment to the chairmanship of the Railway Commission, but by the declaration of the Prime Minister in this House during the present session. Let me quote what I believe to be the words of Mr. Blair, and which, if my information is correct, were communicated by him to his colleagues ; let me quote his views on the subject; and if I am mistaken in any wav as to the authenticity of this memor andum from which I am quoting,Jet me say that the words which I attribute to Mi.



Blair and which I believe were used by Mr. Blair in discussing this matter with his colleagues, are words which carry great weight of themselves whether they are uttered by Mr. Blair or by any one else. Mr. Blair said : Any new transcontinental lines should be built under conditions which would make every dollar of bonds and every share of stock available in cash as near the face value as possible. If bonds may be disposed of by companies at a large discount, and stock distributed gratuitously, or on terms which produce little or no cash at all for construction and equipment purposes-which has been forbidden by law-the business such railways may do will for dividend purposes be always unduly burdened and will be a grave handicap for all time to the development of the interior. With capital shares and bonds ultimately coming into the hands of innocent buyers at prices increasing with the growth of the railway traffic, it will be. impossible for either a Railway Commission or the government itself to reduce tolls below a dividend-paying basis. That is the opinion of an expert who is certified as such, by the Prime Minister of Canada ; certified as the best man in Canada for filling the position of railway commissioner-. That is. the deliberate opinion of this gentleman, and it is absolutely at variance with the position which the government takes in asking that parliament shall amend this contract by inserting the stipulation now proposed. Mr. Blair continues : An appeal from the holders of the company's bonds and shares, to fix tolls sufficiently high to ensure a moderate dividend, cannot easily be resisted, and as a consequence the country, through its business and traffic, is in effect as much charged, though Indirectly, with the weight of these obligations as if the amount was covered by an issue of government bonds. Moreover, the system is not sound. Why should a few people be allowed to make themselves millionaires in such a way ? No OEe nowadays puts his money into the capital shares of a railway company at the Inception of the undertaking. It has been done hitherto, it is not done now, and why not ? Because with the government assistance supplementing the sale of bonds the railroad can be built. And yet capital shares are issued by the million and appear later, when the enterprise becomes a success, in the hands of the purchasers who clamor for dividends upon them. This is the way in which the question will present itself to the very man whom the government have put at the head of that railway commission which has to regulate these rates. He says : They are not easily to be resisted ; issue that stock for nothing and place it in the hands of promoters who can put it upon the stock market, and afterwards it will come up in the hands of men who have paid one hundred cents on the dollar for it, and their demands for dividends, as Mr. Blair says, are not easily to be resisted. He continues :


CON

COSfMOlSTS


of the Grand Trunk Pacific Company at the end of 50 years. Paragraph 10 is as follows : Paragraph twenty-one of the said contract is amended by adding thereto the following cld(US6 * * * Provided, further, that, in the event of the government determining to undertake the operation of the said eastern division, the^ company shall be entitled for a further period of fifty years to such running powers and haulage rights as may [DOT] be necessary to continuity of operation between the said western division and other portions of the company's system and the Grand Trunk Railway system upon such terms as may from time to time be agreed upon, or as may from time to time, in case of failure so to agree, be determined in the manner provided by paragraph 24 (2) hereof, which is hereby made applicable to cases arising under this paragraph. Paragraph 11 of the agreement declares that: - In case, during the currency of the lease of the eastern division, the company shall have constructed a branch line or lines running from a point or points in the said eastern division, the government shall, if at the expiration of the said lease, it shall determine to undertake the operation of the said eastern division, take over such branch line or lines as the company may elect not to retain, at such value as may be agreed upon, or as may, in case of failure so to agree, be determined in the manner provided by paragraph 24 (2) of the said contract, which is hereby made applicable to cases arising under this paragraph. If any such branch line or lines shall have received any grant or grants under the provisions of any Act of the parliament of Canada, the amount of such grant or grants without interest, shall be deducted from such value and the difference only shall be payable by the government upon the taking over of such branch line or lines. The company will build branches and during 50 years it will find out which of these branches are profitable and which unprofitable. At the end of 40 years it can simply say to the government: This branch and that ' branch and the other branch we have found to be unprofitable. We have made a mistake In building them, they have been of no use to us as feeders of our line, we elect not to retain them, and you must therefore take them .over and pay for them. But all the valuable branches, those which control the trade of the country, without which the eastern division may be of very small value indeed-all these the Grand Trunk Pacific will retain. And by the erection of terminals at important junction points, thei Grand Trunk Railway may also control the situation In another way ; so that at the end of the period of forty years, the government will find itself absolutely at the mercy of the Grand Trunk Pacific and be forced to accept such terms as may be dictated by the company. Needless to say, the original agreement, as amended by this subsequent agreement, puts Mr R. h. BORDEN. hilt out of sight not only for fifty ypa1®' 0i possibly for a century, any possibility q. extending the government system ot '0f ways throughout the length and bread g;J. this continent. That possibility is P°1 e0t> tirely in the background. This govern^ ^ I say, has no mandate at present to ^e into any such agreement as will pm- q,js possibility of government ownership m js country absolutely out of sight. There „ _____„ ___ _ . fftV' a feeling growing among the people m ^e\-our of government ownership. Tb®* sti! ing may or may not develop, but I that it is not wise or prudent for * ernment, and the government has u? tjjiS date to impose such a condition untry to nilie' at do, in* contract as will prevent the co some future time, if it desires so from extending the system of govei railways across the continent. reg^i Let me now say a few words with jagt to the general subject. Our propos-year was to extend the Intercoloiua way to Georgian Bay. That is a P d V> by which I for one am still PreI)i qjiP^' stand. My right lion, friend said- *oUlice0 on one occasion, that Mr. Blair de pN' our proposal as a mad scheme. But_ _„{!. posal to extend the ixu r-:Ln;ui-. - ' - .-olll'w .1 Intercolonial to ^ eJ#, Bay is one which has always co® ^ jflJ itself to Mr. Blair, and as to which gtr0® expressed himself publicly in v®Vln,j language. When my right hon. In„lftjr Prime Minister suggests that Mr. ^ ft tflK nounced the scheme we proposed ar®* , one, I do not think he will find any e(j for that statement in any language Mr. Blair. Mr. Blair certainly 0pl? XVII. JJ1RU [DOT] 1VAI. U1X1X1 LCf uaiuij - - J. .Jj the scheme of the government, n mad, but as an unjustifiable 1 waste of public money, but he n gard use of any such language with use aioi1 the scheme we proposed. If he eve eXte>l3|)t-> such language with regard to tne gay, * of the Intercolonial to Georgian would have expressed himself ah arefi> ;. contradiction to what he said ih „moi prepared memorandum. In that dum Mr. Blair said this : [DOT] tpe u°if The observations thus far made by tj,at 1 tpi signed amply justify the conclusm tggt 01 quite misleading to look for a ta quite unoicaunife ~ principle of government ownersn * tv perience of the Intercolonial, or tcauSe s principle as inherently defective a rr perience principle oo iuuo*vu«,v choWiJ1B,rfnVe'> comparison of net results the s go tween the corporation railways ai tlJ0 > teo* ment railway is unfavourable There is no good reason which or which in the opinion of the of 0 tually exists, why the S°veJrn?[L prlj, ** l cannot apply and work out t e$bei government ownership as S!IC itisft &eV is being worked out in other r. cies and in foreign lands. of**,f aiv ftorThat is the language, not P is $ nary individual, but of a man ' ,,]e tb!l ed by the government more cM other in Canada to deal with



Placed ua<\,w1'0' for that reason, has been i'nfiUv-,, ,. is government at the head of the ^ Commission. Further on Mr. Blair and would place that road on a very good and paying basis. Mr. Blair then continued as follows : Til ^tercoinn8! i°ne certain means of putting the and that *?13; upon an interest paying basis, ^ c is by the extension of its line. tlie S** stl'ike you, Sir, as characterizing It strime w^icIi I proposed as a mad one. S(-'hem<TeS rather as commending that Th as wise and prudent. 3 hirthi^n*'rea* extension has done much ; but ^everim-e extension will do more. While tho Part oj tl?t railway has captured the larger l3estihed t tr.afl5c originating in Montreal and Points, u if1' inIau|I eastern and even export 6<1 to tak "as no eenuections west and is allow-railways h °nly w^at traffic the two corporation ^'oter ov,-° tlot care to retain themselves. All feach ths lpnients from the west ordinarily i e CananiSeaports of St. John or Portland via lvely, ana , Pacific an(i Grand Trunk respect-pja although the Intercolonial is fairly ~°V it m t0 carry height to Halifax and St, Portion ofuat itiways remain excluded from that eal, So j the business arising west of Mont-j ® as Present conditions continue. |ht<l nJ.? an elaboration of what Mr. Blair t said- 1 tvh0 hastUSte.r s o°t only yeceiyed his highest approbation, , °tt|h)isi; by appointment to the Railway , ehd's b?' but also by my right hon. Ses**ion. yrogium of him during the present The ^*air continued as follows : r!lat a pnrfsighed has long held the opinion tj athed b on the Georgian Bay should be tralha<i with%ln„te/colo,nial- and ,thus a connects .P°rt nrT tae Caaadian Northern by water Ca„ x Greeks fn ant* Practicable for from four thf* lan No>.f^nser than caaal navigation. The 'Va^Sc>Vernm(1„* rn. woul<i gladly co-operate with the c°nnecti 01 ra'lway, as it has no other rail-"'o\,i?0vernin2,ntnor any interest antagonistic to dire . he in , 1 SJ'!te"- Duluth and Chicago tre^f fhroue-h0ucb with the Intercolonial, and to J °r Lgvio rates could be arranged to Monst- John e ,ring the summer season, and Ann n° Halifax during the winter, bj- n1. the and I commend it to the as the statement of a man the EV Ration it gave the House this at ®tain f-absoIute feasibility of carry- " GeOrsrinn Ttoyy TTelifnY government has demonstrated, than ®«rl; h a ... I Which ihe Georgian Bay to Halifax that- Profit-a profit far better tyur Very , me Intercolonial earth) ve.ltlf,. 'ar«e Portion of its freight, 0 say . e to say. But Mr. Blair went ^ «y ^ * ?°iiig*ei1t scalp1,1!1 ll?n °f storage elevators on a o!4 6Ver^ard' until10,ld ?rail1 in iuantities not Ver r.er'incre;ia,„i aav£gation closed, a large , n. [DOT] <ncrpoo) """gallon oi, to'ltn<liah term trafflc would find its way KL?? Would6' bllt coi, way In In-at such fairly paying o^MaCof^P® out tlie deficit on' the which we hear so much, The advantage of such extension to the Intercolonial can hardly be over-estimated. If the Canada Atlantic system were acquired a traffic-producing section of the country, with a growing local business already created, would be found on the western portion of *he line ; while St. John, Halifax and Sydney at the other end would equalize the existing conditions and carry the intermediate section, a section which, it is only fair to say, has within the last few years shown signs of considerable progress and before the lapse of many years may be expected to be self-sustaining. Let me state that argument in my own words, as I understand it. Mr. Blair says we have in Nova Scotia and New Brunswick a splendid paying portion of the Intercolonial, but that portion has been handicapped by the fact that the line from Moncton north to the province of Quebec has not been a paying portion. He says the Intercolonial is cut off from western connections. Acquire the Canada Atlantic, or expropriate it, and you will have these results. In the first place, you wil have in the east of Canada a splendid paying portion of the Intercolonial. In the second place you will have in the west the Canada Atlantic system, or some other system possibly constructed by the government itself, and that will be a paying road running, as it will be, through a country where there is no water competition. And further than that, you have tho possibility of an enormous through-traffic, by the Canada Atlantic, if acquired by tbe government, over the Intercolonial to Halifax and St. John. And, putting all these things together, he says there can be no doubt of the wisdom of acquiring that railway and thus completing the extension of the Intercolonial which was begun when it was extended from 1,4vis to Montreal. That is the view which I am commending to the government because it is the view of a man upon whose judgment they cannot pass any reflection. If Mr. Blair does not understand something about transportation in this country,! surely he would not have been put in the position he now occupies. If he had not made a study of railway problems, he would not have received this mark of the government's confidence. But my right hon. friend was so impressed with his ability, that putting to one side the strong speech Mr. Blair bad levelled at his project, putting aside even the reflections which Mr. Blah-had cast upon the government, but looking only at the public interest he said : Here is the man of all men In Canada to deal with these questions. I give my right hon. friend this gentleman's opinion as to what ought to be done. Does this seem like calling the acquisition of the Canada Atlantic a mad scheme ? On the contrary, he says it win prove the salvation of the Intercolonial Kan-



way? And why has not the government adopted this course ? The only reason that has ever been given to the House by my right lion, friend, I think, was that celebrated vision of his when he stood at Depot Harbour, and, looking out upon the wild waste of waters, came to the conclusion that the government could not engage agents to canvas for freight and could not have anything to do with steamships. These considerations do not seem to have impressed themselves upon Mr. Blair, who, of all other men in the country, according to the opinion of the government, has most closely studied and best understands the problems which attend the question of transportation. Mr. Blair continued : If the Canada Atlantic system were taken over by the Intercolonial, the tolls now in force on that line could be maintained. No complaints have been made with respect to these tolls. That they are moderate and acceptable to the people who use the railway is shown by the entire absence of agitation, public or otherwise, against them. That these rates are also profitable is shown by the net results for the year 1902, which amounted to $618,000, or 4 per cent on $15,000,000 after paying all operating expenses for the year and making large outlay upon betterments. Then, Sir, summing up the whole situation, Mr. Blair's view is this : From the purely Canadian, national point of view, the Intercolonial would then have advantages over any other railway in Canada. Its traffic would find an outlet during the summer months at Montreal and Quebec, and during the winter at Halifax, and St. John, and there is good reason to believe that it would give -.he two Atlantic seaports (the Canadian Pacific also serving at St. John) all the business they could conveniently handle for some time lo come ; and moreover, from the point of view of its paying prospects, the outlook is in the highest degree encouraging. At present there are 400 miles of good paying railway at the eastern end of the Interco'onial Railway. Extension to the Georgian Bay, by way of the Crnada Atlantic Railway, would give 300 or 400 miles of profitable railway at the western end, and, as has already been pointed out, these two ends together would be able to carry financially the less productive and intervening section and afford a substantial surplus towards paying interest on the capital outlay. Let me commend this view of the situation to my right hon. friend, and let me ask him whether, in view of these strong and forcible words of this man whose judgment he so much) commends, there is not- reason for drawing back from what the government are doing at the present time-reasons for seeking some better solution of the transportation problem than is afforded by this measure ? The government need not be afraid of drawing back. They have already receded from their position on a dozen or more different points, even from the most solemn declarations have been made by Ministers of 'the Crown. It would be impossible for them to depart further Mr. R. L. BORDEN. from their professions than they havei ready done. And, though they have culed the idea of extending the Intercowa^ to the Georgian Bay it is not tod la];etijj9 them to draw back. Let me commend -t to my right hon. friend in the same seoJ) which prompted him to believe that W gg this side would regard this agreement eminently reasonable and satisfa® There is time for repentance, even ^ this government, and the extension ,(j the Intercolonial to Georgian Bay "0 {e-be a bringing forth of fruit meet f°J ^ pentance, at which I am sure, the co 0t would! greatly rejoice. The develop®? gt the Intercolonial Railway, the operati the government system upon a larger. ' ,t than at present, would probably bring ' a better management of that railway) would tend to produce better J 0li;y than we have hitherto had-not ted for the reasons to which I have aov ^ and which have been put forcibly by .gyg-Blair, but for the reason that if f^1 ^efc® :em became a very great system, the ;j ight of public opinion beating uP°b jtflbj llgni oi pumic opiinuu ueauui, "v- } all parts of the country would neC®LtaD® better and more economical manage® * ^ one less subject to political influenc ^ has prevailed In the past. revanea m me past. As I session, I would like to see the Inte ^ jiti-absolutely free, if possible, from pawjed 10 cal interference. And, if it were ext p1', Georgian Bay I believe not only \Ve,.' vince of Ontario, but the great west would receive very great hepen [DOT] should thus have better control c°^t than we could obtain by any rail' , mission or any similar tribunal, fl efficient. Every reason that has 0f v> vanced by the able men at the ae* oSl)i** Grand Trunk Railway Company t0 ia that railway int< - - to be applicable These gentlemen of the Grana -'-'"Weir it as imperatively necessary that ,g should reach the Northwest. Mr- , plainly points out that if they do to the Northwest they may not u> - * able to pay dividends on stock w* returning something to the sn e Well, if It is a good thing f?r tlie >Tfa < Trunk Railway to extend into rea « t<> west, why is it not, for the sai good thing for the Intercolonial , " " * 0{ is it not, for the ®a, UflijW"0jjS for the Intercolonial * ^9, xtend to Georgian Bay 7 r..apO **;. oi [DOT]hlcli make it desirable for the gli®1 ,ltit o go into the Northwest to iSjible. raffle make it not only a<' jj It lecessary for the Intercolonia. p tr j9j) >ose to secure a part of the w ge° o have its line extended to j,t r .j ow, I suggested last session tb w d® possible for the govern® 0f rfll0# >ine means by which the rjoi- gpe )w running north of Lake * ,e tfffi 3 utilized for the purposes or n ipd !ay. Now777 is eastern. I pointed out that that road titoefe of handling, I believe, five or ten 7 rm,ri eJraffic it handles at present; and sHbleeft e suSgestion-which I said was rv„j u to first obtaining expert advice and expert , n0om? to aeific, opinion-that the government could an arrangement with the Canadian (J}.a-T"' the Canadian Northern and the atilizpri l'unIi i*y which that road might be a . the purpose of the three rail-^nntrv^t a dollar of expense to the What t ^ome unfair representations of been o ProP°sed have been made. It has c°UntrvSfeSted tllat 1 desired to put this benefl.v to an enormous expense for the it w , the Canadian Pacific Railway, and ll°Use h®en hinted, if not asserted, in this lariiarn Jat standing as a public man in instanf?eilt' made that suggestion at the Sir, j ? °t the Canadian Pacific Railway. ^°ssible eflle rePudiate, in the strongest Ua tnent Ia.?guage which the usages of par-that. Wl11 Permit, any such suggestion as h°r ^Canadian Pacific Railway did not, ?"eh si,„any ,one on their behalf, make any its or <wes*.ion- Whatever may be the mer-;key are ne,rits of the proposal I then made, lhese rail 10lly my own- 1 suggested that 8heh a 'way companies pay to the country ^Quirij.^tdul as would meet the cost of gj g 'he control of that road, and that listens, also Pay for the operation and the fir-i-oV, 6 °f it upon a wheelage basis. If n?s'on Jent °f *he Minister of Finance last tliat , as worth anything, the utilization v°Uld i10(.aea for three roads instead of one ®ht. rj,,. Cost the people of this country one 7'Ve)1 the Policy would immediately have h(l the rand Trunk access to the west , <ls3t. x *. anadlan Northern access to the a.ve been satve that while the government f,d'lwavs 1sleeping as to this matter, other l^hi an taken it up, and I quote [DOT] here L rtlcle in the hi is Tore News ' of Toronto, r, the Tv, a report to the same effect vahaclia phto ' Globe.' I observe that the a 3hern i>ri„e!1/lc Railway and tlie Canadian I'nf 'Hfir way are now entering into e'Te(j rp.augement to that which I have It lg he ' News ' item is as follows : that the Canadian Pacific tfon/Th an i,r?iIan Northern authorities have °ronte Uerstandlng respecting the line have to Sudbury. The Canadian Pa-Nortv,runnins rights over it, and the <?*6nt over*? wil1 secure a haulage ar-nadian the Lake Superior section of Sw8 a fiir ' Paciflc- The latter road thus [DOT]v 6q this . 6 for passengers and freight W°W, x i y an(l fho west. Thtv'011 °f tho% !?een sPeahlng of the ex-ti0l; ahd w htercolonial to the Georgian lin1uehtireiv say before I leave that ques-hii, h;'l ^ while I understand liow *«8g .foils l];i,.!!Rfn of navigation Is after y®ar I 7 Points* been harvested, neverthe-' * beii- O out to the government last Ve that by a system of icebreakers the period during which grain -can he shipped from Fort William and Port Arthur might be considerably extended. That subject does not seem to have been investigated by the government, at least I have heard no official utterance upon it. If it would be possible to accomplish that, and those who are familiar with these waters say it would be possible to accomplish it, then we have still another argument in favour of the extension of the Intercolonial to the Georgian Bay; because of course the longer you make that season of navigation the greater opportunities you create for traffic to pass from! Thunder Bay over Lake Superior to the shores of the Georgian Bay and. to be transmitted by the Intercolonial to Halifax and St. John. Now, Mr. Speaker, I do not say that the Intercolonial ought to stop at the shores of the Georgian Bay. I believe that its extension should only be limited by the western confines of the Dominion. There is no good reason why it should not be extended to the city of Winnipeg, or why the people of that city should not have communication by means of the Intercolonial with Ontario, Quebec and the maritime provinces. I submit that by that means the Intercolonial would reach into the Northwest, and not only secure a considerable portion of the traffic which passes from the west to the east, but also a considerable portion of the traffic which passes from the east to the west of Canada in agricultural implements, merchandise and commodities of a hundred different kinds which must he sent from the east of Canada into the west for many years to come. I still advocate the extension of the Intercolonial to Winnipeg. It would be wise also, if necessary in order to overcome congestion, to aid in double tracking or otherwise improving the line between Fort William and Port Arthur and Winnipeg. I say, as I said last year, that in doing that we should only give! reasonable public aid in return for the most absolute and thorough control of rates upon those lines, so that we might give to the people of the west every possible facility and the cheapest and most economical means of transportation that could be devised in this country. But, Sir, I am prepared to go even further, and I say that rather than enter into the present contract, I believe it would be infinitely wiser and more in the interest of this country that the government should itself immediately construct a line from Winnipeg to the coast. What is the position at present ? Let us examine it for a moment. We are committing this country to obligations to the extent of $150,000,000. If we consider the probability that the bonds must be sold at 00 cents we are committing this country to obligations to the extent of $170,P00,000; and the (Grand D'U'1'' Railway Company, the other partner to the contract, is committing Itself to obligations



to the extent of only $14,500,000, or a little less than $15,000,000. What is the result of the contract at present 7 The result is that 1,500 miles of railway built in the west of Canada as part of an enterprise to which the government contributes $150,000,000 or $170,000,000, and to which the Grand Trunk Company * contributes only $14,500,000, is to become the absolute property of the Grand Trunk Pacific. If we are going to expend $150,000,000 or $170,000,000 for the construction of this line and hand over 1,000 miles of the most profitable portion of it to the Grand Trunk Pacific Company what is the objection to our incurring the other $14,500,000 of obligations and owning that whole stretch of road ? We are to build 1,875 miles from Moncton to Winnipeg, a portion of the line which is declared by the Grand Trunk to be infinitely less profitable than that portion which lies further west. We pay for the whole of that, we build the whole of that, we hand it over to the Grand Trunk for ten years for nothing, and we hand it over to them for forty years for a very small rental, a rental which, according to the opinion of Mr. Blair, will involye us during 40 years in a loss of $18,500,000. We build in the west 1,500 miles of railway, and we guarantee bonds to the extent of $13,000 a mile on 1,000 miles of that, and bonds to the extent of $37,500 on the remaining 500 miles ; we make provision that if the bonds are sold at a discount we shall increase our liability. After building 1,500 miles of railway in that splendid country, a country and a railway, with enormous possibilities, possibilities transcending those of the Canadian Pacific Railway which earned $15,000,000 of profits last year-I am quoting the opinion of the Minister of the Interior as to that-after building that railway we hand it over to a corporation without any control of rates, without any assurance of cheaper transportation, without any assurance even of the transport of our traffic over Canadian lines and to Canadian seaports. Is there any good business in accepting that position ? Is there any sound statesmanship in taking that position ? If we are to incur obligations to the extent of $150,000,000, why should we not go the whole figure and incur the other $14,500,000 of obligation and own that line in the west, which may at some future time bring a revenue to the people of this country of $15,000,000 a year, as the Minister of the Interior has pointed out. If we are to incur all the obligations of this contract, why should we not take some part of the profit of this contract 7 Why should we own only the eastern division of this railway ? Why stop at that ? Why is there to be no participation by the government in the profits of the 1.000 miles of splendidly paying property in the west 7 What are the obligations of the Grand Trunk Pacific ? Bet us take them as stated at the recent meeting of their shareholders.


CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

that: $20,000,OCX) will be required. Well, I want to bring to the attention of the government, the method which the Grand Trunk 'Railway, propose 'to adopt with regard to that. Last year when my hon. friend from Hamilton (Mr. Barker) urged that the security taken upon the rolling stock would r.ot amount to very much because the rolling stock could be acquired by means of a lease, the Minister of Justice and the members of the government disputed that argument very earnestly. Let us see how the Grand Trunk directors regard it. Sir Rivers-Wilson says :

As regards the five millions ior rolling stock, it is not five millions-it is estimated at three millions. With that the Grand Trunk has nothing to do. That rolling stock will be provided by the Grand Trunk Pacific Company, and, as the general manager will tell you, they have laid their plans for providing that rolling stock by a trust fund. Therefore, you may wipe it out and call it four milions.

The ' Financial Times ' of London, commenting on what took place at the meeting said :

The roiling stock it appears is to be provided for by a separate trust.

Therefore the twenty million dollars of supposed preference stock is not to be used, according to the views of the Grand Trunk directors, for the purpose of providing rolling stock, but it is to be kept in the treasury, or placed in the stock market, we do not know which. It may be reserved for an opportune occasion, and then placed upon the stock market for speculative purposes. The government is surely as well able to provide the rolling stock for the equipment of a profitable line in the Northwest of Canada, as is either one or other of these corporations. Under the modus oper-andi of these gentlemen they will provide this rolling stock by means of a trust and the rental for the rolling stock will be paid out of earnings. They propose to deal with it in that manner, so that the obligation to provide this rolling stock will not impose one dollar of capitalization upon this company. It will be provided for out of earnings, it will be leased, a trust will he created which will provide the rolling stock and lease it to the Grand Trunk Pacific and then the rental will be paid out of earnings. The advantage of that operation to the company will be that the capital stock of the Grand Trunk Pacific can be reserved for some other purpose, can pass to promoters, can be used for speculative purposes, and the rolling stock will be provided for out of the earnings. The disadvantage to the country will be, that this supposed security which we were to have upon this rolling stock will probably not he worth five cents; and there will he further fictitious capitalization. That will be the advantage to the Grand Trunk Railway Company on the one hand, and the disadvantage to the country on the other hand.

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CON
LIB

Clifford Sifton (Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Hon. CLIFFORD SIFTON (Minister' . the Interior).

I hoped to be able to r, some remarks this evening. Mr. Spei but as we have reached ihe hour 0 ^e

o'clock, I beg to move that the clet>a adjourned.

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Motion agreed to. * .. rtotfe On motion of Sir1 Wilfrid Lanrier, adjourned at 10 pm.



Wednesday, April 6,


April 5, 1904