If the Minister of Customs were present, I would refer him to the Minister of Justice for an answer to everything he urged this afternoon. Now, the Minister of Justice has introduced a matter which I proposed to introduce later, namely, the placing of the bonds guaranteed by the Grand Trunk upon equality with those guaranteed by the govern-
ment. That is a very good thing for the Grand Trunk and for the holders of the bonds guaranteed by the Grand Trunk ; but the very' fact that the government have put those bonds in that position is the best possible argument against introducing these other stipulations in the contract. When you have these bonds, there ought be no reason for postponing entry and foreclosure until five years' default has taken place. Why should there be any stipulation in the contract absolutely abolishing any foreclosure at all? The hon. gentleman refers by illustration to the mortgage given by the Canadian Northern for similar bonds guaranteed by the government. Well, ought the Canadian Northern be in any better position if it had created another company called the Canadian Northern Pacific Railway Company, obtained a government guarantee for the bonds of that company, and guaranteed one-fourth of the bonds itself. That is all the Grand Trunk has done. Why should the Grand Trunk be in any better position because, as was frankly stated at a meeting of its shareholders, it has created another corporation called the Grand Trunk Pacific for the purpose of carrying this enterprise out. The Minister of Justice says that that alters the situation, but it ought not to alter the situation. After all, the main feature of this is that the government undertake to guarantee bonds representing three-quarters of the cost of the road and the government did practically the same thing as far as the prairie section of the Canadian Northern is concerned.
In the one case the trustee acting for the government has the right to enter upon default in payment of one coupon representing interest for six months. In this case the Grand Trunk Railway Company can do what my hon. friend from Hamilton has said, and it can do more. It can designedly permit the first nine coupons to be defaulted, and to be paid by the government, and it can let these stand for the remaining period of fifty years ; and unless it has money to burn, to use a common expression, it will do that. Why is the government called upon to put the country in that position ? If six months' default is sufficient in the case of the Canadian Northern Railway mortgage, why is it not sufficient in the case of this mortgage ? The Minister of Justice suggests that to permit this default to continue makes the position of the government better, because it gives the company a better opportunity of carrying on its railway. Exactly the same considerations would apply in the case of the Canadian Northern or any other company whose bonds are guaranteed. You would put them in a better position the more you gave away to them. That is very plain ; but is it necessary for the country to give so much away simply fm the purpose of putting the company in Mr. R. L. BORDEN.
a better position ? As my hon. friend from Hamilton suggests, the four and a half years is in addition to the ten years. In the first place, you have the eight years during which the road is being constructed ; after that, so far as the mountain section is concerned, you have seven years during which the government assumes the interest ; after that you have the three years during which the interest cannot be enforced, but may be capitalized under certain conditions ; and after that you have the four and a half years during which the Grand Trunk Pacific may make default in payment of interest, and for the payment of that interest the government has no remedy whatever during the entire period of fifty years providing the remaining interest is paid as it becomes due.
I admit that the mortgage may be so drawn as to give the government a right of action. It may enter up a judgment, but when it does, what can it do afterwards ? Can it take any effective proceedings ? It may issue an execution only to find every available asset of the Grand Trunk Pacific covered by some prior charge. Tt may sell subject to this prior charge ; but will that be an effective remedy ? Will the Minister of Justice say that you can get title under that ? It seems to me you could not. because you would have to face the prior charges of the bonds guaranteed by the government and those guaranteed by the Grand Trunk Railway Company. Therefore, after all. it is a mere visionary remedy, and will not result, so far as we can see. in any actual payment under the judgment. These are remarkable provisions, and I do not see why the government should be driven to make conditions of this kind when they were not considered necessary in a similar case last year. Why is it that the usual default should not give the government any remedy under this contract ? Why is it that what you call a mortgage is legislated out of being a mortgage and is constituted a mere charge under which the government can enter into possession and may be placed in a very unfortunate position by being called upon at some time to render an account of the receipts and profits of this road .' I must confess that the explanation of the Minister of Justice seems to me insufficient and inadequate. I cannot conceive of any possible ground which could have induced the government to enter into a contract of this kind. Section 7 of schedule agreed to.
On section 8 of schedule,
8. Should possession be taken as aforesaid, the right of the government to such possession shall terminate if and when the application of the proportion herein provided of the said
surplus tolls and revenues shall have paid off all arrears of such Interest.