May 5, 1904

LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

I trust that hon. gentleman will understand that if we do not reply fully to the very interesting speeches made this afternoon, it is not because any discourtesy was intended, but simply because a good many of the arguments have already been heard and answered to the best of our ability, and because at other stages of the Bill we will have to discuss these questions over* again. Therefore, I would prefer to postpone what

I have to say until another stage of the proceedings.

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CON

John Graham Haggart

Conservative (1867-1942)

Mr. HAGGART.

My attention has just been directed to the speech of the hon. member for Brantford (Mr. Heyd) in reply to me the other evening. I made the statement that there was no object in getting a lower grade than four-tenths, because the power required to draw a train over a four-tenths grade was the same as is required to start an engine on a level road. I gave the House my authority on the subject, yet the hon. gentleman went to the library to discover an opinion which would contradict the statement I made. He said :

I heard to-night, with what confidence and with what assurance the late Minister of Railways made the statement, that a railway of four-tenths grade is equal in capacity to a practically level road. When the ex-Minister of Railways makes a statement like that, with so much confidence, one is almost afraid to dispute the accuracy of this assertion. But I have under my hand the Canadian Pacific Railway standards with respect to the grades of railways, and also the standards of Mr. Wellington, and these statements are diametrically opposed to the statements made by the exMinister of Railways.

Every statement that he makes with that degree of assurance and confidence must be just as carefully scrutinized as the statement he made to-night with respect to the gradients of the railways. He stated that a four-tenths grade railway was equal to a level road. What does Mr. Wellington say in his tender ? He says that an engine with an 18-inch by 24-inch cylinder is capable on the level of drawing 2,183 tons, while on a four-tenths grade it is capable of drawing 1,058 tons.

No one disputes the correctness! of that opinion, but what I stated was that there is no object in having a lower grade than four-tenths, because it is found in practice that to start an engine on the level required as much power as to take it over a four-tenths grade, and I gave as my authority the ' Scientific American.' I thought I made myself particularly plain.

Section 9 of the schedule agreed to.

On section 10 of the schedule.

10. Paragraph twenty-one of the said contract is amended by adding thereto the following clause :-

' 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 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.'

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LIB
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

The original contract provided that at the expiration of the fifty years, if the government did not take over and operate the eastern extension from Winnipeg to Moncton, the Grand Trunk Pacific would have a lease of that extension. The intention here is to modify that section so as to provide that in the event of the government taking over the eastern section and operating it as a government road, the company shall be entitled to have such running rights and haulage powers as may be necessary to enable it to effectually operate the western section from Winnipeg to the coast.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

In order to understand exactly what this clause means, we should refer in the first place to clauses 21 and 24 of the original agreement. By clause 20 of the original agreement it is provided that the eastern division shall be leased to the Grand Trunk Pacific. By clause 21 of the original agreement, which is now amended, it is provided as follows :-

If, upon the termination of the said lease, the government shall determine not to undertake the operation of the said eastern division, the company, provided the terms offered by it are as favourable to the government as those offered by any other railway company equally competent to perform and fulfil the obligations required by the government to be assumed by the lessees thereof, shall have the right to an extension or renewal of the said lease for a further period of fifty years, upon such terms as may be agreed upon. Notices of the intention of the parties shall be given as may in such lease be provided.

In clause 24 of the original agreement It is provided that the lease shall reserve to the government in respect of Its ownership of the Intercolonial, running powers and haulage rights upon the eastern division, upon certain terms mentioned. The same clause also provides that power shall be reserved to the government to grant running powers and haulage rights sufficient to enable any railway company desiring to use the eastern division to do so upon certain terms, and also that there should be secured to the government, in respect of its ownership as aforesaid, running rights over the western division, and to any railway company desiring to use the same, running rights and haulage powers over the same division. So, we have four powers contemplated by that clause ;-running powers for the government over the eastern division ; running powers to any other railway company, in the discretion of the government, over the eastern division ; running powers to the government over the western division ; and running powers to any other railway company, in the discretion of the government, over the western division Now, the clause which we are at present discussing, contemplates the event of the government determining to undertake the operation of the said eastern division, in

which case, of course, the lease will not be renewed and will come to a termination. The clause amended provides for the renewal by t|ie government of the lease to the Grand Trunk Pacific Railway Company. This supplementary or amending clause makes provision in case the government does not renew that lease. The provision made is this-that the company shall, in such case, he entitled for a further period of fifty years to such running powers and haulage rights as may 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.. 1 wish to point out to the government that, although they have made a provision by which the Grand Trunk Pacific Railway Company shall be entitled for a further period of fifty years to haulage rights over the eastern division, we do not find any correspond, ing provision by which the government or any other railway company shall during Ibe same period of fifty years, have running powers or haulage rights over the western division. It seems to me there is a very serious commission in that regard. Under the terms of the lease, during the first period of fifty years and during any renewal period, these rights would be secured to the government ; but, in the event of the government bringing the lease to an end at the termination of fifty years, the company will retain running rights over the eastern division, while the government, or any railway company named by the government, will not have corresponding rights over the western division, except as they may be secured under the general provisions of the Railway Act. I would like to ask the Minister of Justice if this is correct, and if so, why some provision such as I suggest does not appear in the amended agreement ?

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LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

I understand my hon. friend (Mr. It. L. Borden) to take the position that, with respect to the western division during the term of the lease, that is for 'fifty years, we have running rights over that division for the Intercolonial, or any other government owned road-

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

Or any other road.

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LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

Any government-owned road so far as the government is concerned ?

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CON
LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

The operation of the western division by the Grand Trunk necessitates connection with eastern Canada, and, for that purpose, they are to have all the running rights they require over the government road after the fifty years, to enable them to communicate with eastern Canada. With respect to the western division, that will come under the operation of

the General Railway Act. Under the General Railway Act, running rights will be secured to any company over the western division, as it would over any other road.

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?

Mr. I@

Under what provision of the Railway Act is that ?

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LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

I will try and find it, but, while I am going over the Act we might take up some other section.

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CON

Haughton Lennox

Conservative (1867-1942)

Mr. BENNOX.

There is another point involved in this section which I would like to discuss. But it also would require the attention of the Minister of Justice, so. perhaps, I had better postpone what I have to say until the clause is taken up again.

On section 11 of the schedule.

11. Iu 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 ease 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. -

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CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

The Minister of Justice Is busy, but probably the Postmaster General (Sir William Mulock) will answer the question I have to ask with regard to this section. -

There is a provision here that, if a government grant has been made towards the construction of a branch line and the government afterwards take over that branch line, the amount of the grant shall be deducted from the purchase price, but without interest. Now, that may be perfectly fair, I am not prepared at this moment and without further explanation, to say that it is not fair. But I would like to hear from some of the ministers as to the principle on which that provision is there inserted. It may be quite open to debate whether it is a fair way of looking at it or not. No doubt, some principle is well known to the administration, or was laid before them at the time and duly considered, to show that the deduction of the amount of the subsidy should be made without charging interest.

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LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

It is really a question of bargain. It seems, at first sight, perfectly fair that, if the company is obliged to build branch lines and secures the aid of the government, should those branch

tile full benefit of fifty years of tlie money we have paid out in the way of subsidies to branches1. It seems to me it is a pretty one-sided bargain. It is a one-sided bargain if you take this clause by itself, but it is very much worse if you take it in connection with all that has gone before. In the clauses preceding this, we have given up almost everything that we possessed under the agreement as we had it last session. We then had what we thought was a pretty bad bargain but every important principle upon which the government asked the support of the people for their Bill of last year has, down to this point, been practically surrendered. The limit of $30,000 a mile on the mountain section has been giveii up and instead of having to guarantee $15,000,000 as a total we will probably have to guarantee nearly $25,000,000. The $5,000,000 deposit which the company was to make has not to remain in the hands of the government as long as under the original agreement. Whereas under the old agreement it was to remain in the hands of the government until the western section was completed and the whole line equipped, now that deposit will pass out of our hands before the western section is completed or the railway is equipped throughout. The $20,000,000 of rolling stock which was to be put on the road, and which the Minister of Finance said would be a security for this country is cut down

lines be taken over the amount of the subsidy should be deducted. And it seems not over generous to allow the interest in favour of the company. There is no other ex-p;anation that I am aware of.

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CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

It may or may not be fair ; I am not prepared at this moment to say. But I think that persons who are railway experts-and 1 presume that every man of the administration must be a raii-way expert by this time, and there has been considerable evidence of that fact from time to time since we have been investigating this matter-ought to be able to point out to the committee plainly, why the interest should not be charged.

However, passing that matter by for the moment, and referring to the main question involved in this section, I think there >s good ground for questioning the wisdom of the government in agreeing to the terms here contained. I notice that the right lion, gentleman (Sir Wilfrid Laurier) who leads the House, says that all the sections after the ninth section involve alterations to the contract of trivial nature and really hardly worthy of serious consideration. That may be some indication of the way in which this matter was treated when these negotiations were pending between the government and the railway company. Confining the discussion for the present to the lith section, I am inclined to think the privilege granted to the railway company lure has not been duly considered with reference to the interest of Canada. Section 11 provides that:

If at the expiration of the said lease, it shall determine to undertake the operation of the said eastern division, the government shall 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).

. 4 hat is by arbitration. Tliis is an exceedingly one-sided bargain. If there were provisions that tlie government would have the light to take them over at a fair valuation, then there might be some reasonable ground to believe that tlie subsequent provision that only the subsidy without interest should be deducted would be a fair provision. But when we find, putting it in a brief, concise form, that what it means is that we cannot take over a branch line if we want to unless the railway company says so, that we can only get it if the railway company does not want it and that we must take it if the railway company does not want it, then I think the provision goes too far. We cannot get these branches if the railway company desires to retain them, but let us desire as much as we will to avoid taking them, we must take them if the railway says so, and we must take them after simply deducting the grant that has been made. Thus the railway company can have I

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LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

to $15,000,000 and is surrounded by terms that make it less than $15,000,000 in fact. The early construction of the railway has been abandoned. The people of the west were promised immediate relief from the alleged congestion. That has been completely abandoned as a theory of the government to-day. The control of rates upon which the Minister of Finance was so eloquent last year and upon which he attempted to ridicule the opposition last year is abandoned. Last year the hon. minister told us that it was perfectly idle to talk of speculation; ' every dollar of the $25,000,000 stock must remain in the control of the Grand Trunk Company ; not one dollar of it could be sold.' That too, has been abandoned, and every dollar of that stock may he sold ; not one share of it need be retained in the hands of the Grand Trunk Company and all that need be retained by the company is the bare right to vote. They are to control the policy of the Grand Trunk Pacific. Control it for what ? Control it against the interests of this country, because it is distinctly against the interest of Canada that the policy of the Grand Trunk Pacific should be controlled by the Grand Trunk Railway. Thus. I say that taking the whole amended contract down to the 11th section, every important provision on which the government relied last session, as an argument in favour of the measure, has been changed and all beneficial provisions have been removed. It is too much to ask this country now, under the 11th section,

to commit itself to an agreement that it shall take the branch lines from the Grand Trunk Kailway if the Grand Trunk Railway does not want them and shall not have the right to take them if the Grand Trunk Railway desires to retain them, so that if the Grand Trunk Railway say : ' We do not want them, they are no use to us,' then the government must take them, whether they are of any use to the government or not.

.. AIl'llLAVELL- Au examination will show , e !S P/ragraph materially increases the liability of the country in connection with the building ot this road, and this is being done in such a way as to allow practically no regulation of the railway by the people ot Canada who assumes the liability. Provision is made in this paragraph for taking o\ei such branch lines as the company mav choose not to retain, but no provision is made for regulating the number of lines they shall build, or for having it known before hand how many lines the government mav be required to take over under this section". While this is not a matter on which the [DOT]Grand Trunk Pacific or any other road is apt to experiment very largely, still the fact remains that they can experiment if thev want to, and if it is found that the line in one section does not pay as well as another line they can go on with the second line with perfect faith that they can compel the government to take over the first experimental line as soon as their lease has expired. I submit that some provision should be made in this Act either by this section or by a clause in the Act itself, whereby the consent of the government must be obtained before any of these branch lines are built in order that it may be known when a branch line is built whether it is one of those that will come under this paragraph at the end of the time. While, as I said, the company is not apt to experiment too largely, still under this clause it can make experiments, and in making them add very greatly to the liability of the country at the end of the term of fifty years. I submit that something should be done to limit that liability and to make it considerably more definite than this paragraph makes it.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

Are we going to dispose of section 11 before we go back to section 10 ?

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LIB

Charles Fitzpatrick (Minister of Justice and Attorney General of Canada)

Liberal

Mr. FITZPATRICK.

If you please. I would like to look into the Railway Act. My present impression of the Railway Act is that it is not applicable to a government owned railway, but that it is only applicable to railways which are the property of private corporations. If that is correct then my statement was incorrect a moment ago, that is to say that we should find relief under the terms of the Railway Act independently altogether of the agreement.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

I have not been able to find in the Railway Act any provision S4

which confers upon the board power to give one railway running rights over another railway compulsorily and against its consent.

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May 5, 1904