May 17, 1904

LIB

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

Liberal

Mr. FITZPATRICK.

The difference between my hon. friend and myself is that he proceeds by construing this document which is an agreement between two parties by the construction put upon it by one of the parties to the contract. I am only construing the contract by the terms contained in the contract itself.

Topic:   GRAND TRUNK PACIFIC RAILWAY BILL.
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CON

William Barton Northrup

Conservative (1867-1942)

Mr. NORTHRUP.

The hon. gentleman: will see that by the amendment brought down this year the Grand Trunk Railway Company can acquire the $25,000,000 of stock in consideration of their guarantee, whereas, last year under the original contract, according to hon. gentlemen opposite, the Grand Trunk Railway Company could not acquire this stock in consideration of their guarantee. The hon. gentleman said last year that they must pay cash for it, and so the lawyers acting for the railway company said : Whatever our ideas may be as to that if the Minister of Justice says we have to pay cash for that stock we will make it beyond peradventure and so we will put a clause into this amended agreement, which will enable the Grand Trunk Railway Company to acquire the whole of this stock in consideration of giving the guarantee. So far the predictions of hon. members on this side of the House have been verified. When we find that our predictions have been verified so far and when we find the president of the Grand Trunk Railway Company representing to his shareholders exactly what we are contending today, I think we cannot be blamed if we are disposed to adhere to the opinion which we expressed last year.

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CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

The contention of the hon. the Minister of Justice is that the proceeds of this stock will be required for certain purposes which he has already stated. I would like to ask the hon. gentleman what right the Grand Trunk Railway Company have to take the moneys that belong to the Grand Trunk Railway Company and use them for the purposes of the Grand Trunk Pacific Company ?

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DEVISED

LIB

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

Liberal

Mr. FITZPATRICK.

The Grand Trunk Railway Company would have the right to take the funds of the companv for the purposes of the Grand Trunk Pacific Rail-' way Company in connection with the purchase of stock, because it has been repeated ten times over that special authority is given them to do it.

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CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

That is not the question I asked the hon. gentleman. I asked what right they would have to expend the proceeds of the stock for the purpose of constructing terminals.

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LIB

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

Liberal

Mr. FITZPATRICK.

The proceeds of the sale of the stock go to the company owning the stock ; that is the Grand Trunk Pacific.

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?

Some hon. MEMBERS

No.

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LIB

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

Liberal

Mr. FITZPATRICK.

If the Grand Trunk Pacific have the stock and they sell it to the Grand Trunk the proceeds go to the Grand Trunk Pacific.

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CON
LIB
CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

They pay nothing for it, but they sell that stock to some person else and leceive the proceeds. The Grand Trunk get that $25,000,000 of stock for nothing beyond the mere obligations that they are undertaking. They go on the market next day as provided by the amendments that hon. gentlemen opposite are asking this House to assent to and they sell every dollar of that stock. The proceeds are placed in the treasury of the Grand Trunk Railway Company. I ask the hon. the Minister of Justice what right the Grand Trunk Railway Company have to take the money so earned and, under the circumstances I have stated, construct terminals or provide equipment for the Grand Trunk Pacific Railway Company.

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LIB

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

Liberal

Mr. FITZPATRICK.

I think my hon. friend must answer that question for himself. I never said that such a thing was possible and it never entered my head to imagine such a thing.

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CON

EDITION


Pacific Company, and perform such other services for the Pacific Company as are agreed upon, and the Grand Trunk Company may receive and take as the consideration, in whole or in part, to be given to it under the terms of any such agreement, shares of the capital stock of the Pacific Company for such amount and upon such terms and conditions as are agreed upon. When these two companies have agreed as to the number of shares that are to be given to the Grand Trunk Company in consideration of its guarantee, will not the shares so given be the property of the Grand Trunk Railway Company ; and if they be sold upon the market will not the money received from them belong to the Grand Trunk Railway, and go into the treasury of the Grand Trunk Railway Company ? If the treasurer of the Grand Trunk Railway should afterwards use that money for the purposes of the Grand Trunk Pacific it would be a misappropriation of the Grand Trunk Railway funds. It is merely arguing in a circle to say, that the stock is sold to enable the Grand Trunk Pacific to do anything that is within the functions of the Grand Trunk Pacific. The Grand Trunk Pacific loses all control over and interest in the stock the moment it gives that stock to the Grand Trunk Railway, and it becomes absolutely the property of the Grand Trunk Railway Company. Amendment (Mr. Northrup) negatived. Mr. BENNEttT. There was a good deal of discussion the other evening as to the remuneration which should be paid by the Grand Trunk Pacific Company for the use of any part of the government section, before the completed road was finally handed over by the government. It is a peculiar feature of this contract, that the power of leasing any portion of the road is conferred on the three commissioners-we are told lately that there are to be four commissioners-and that that power is not to be vested in the government itself. We have it on the authority of Sir Rivers-Wilson and of Mr. Hays, that the section of the road from Winnipeg to North Bay will be a most remunerative section, that it will pay from the very outset, that it will connect with the old Grand Trunk Railway system ; and as this 900 miles is likely td be built first, it will no doubt be at once leased to the Grand Trunk Pacific. It seems to me that the government should not be absolved from all responsibility in the! granting of a lease of this magnitude. The commissioners may be worthy men, but nevertheless it is the government which is responsible to the people, and these leases should be confirmed by Orders in Council. When we consider that under the provisions of this Bill, the commissioners are not allowed to let contracts exceeding (510,000 without the consent of the government, it is an extraordinary thing that this 900 miles Mr. BARKER. of road, costing over $27,000,000 should be handed over to the commissioners to do what ever they please with it, without the government being responsible. I therefore beg to move : That section X of the Bill be amended by adding thereto the following subsection : Provided always, that no lease shall be concluded by the commissioners under section 3 of the supplementary agreement until such lease has been sanctioned and approved by the Governor in Council ; and a copy of every such lease shall be forthwith deposited with the Secretary of State for Canada.


LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I am not sure that this amendment is not in the right direction, and I would suggest that it be allowed to stand. We would never contemplate that the commissioners would make a lease of that character except with the knowledge of the government, and before the Bill is passed, the amendment might perhaps be incorporated in its proper place, if it is not already provided for. The substance of the amendment is reasonable,-and in one form or another it should be adopted.

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CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

Mr. Chairman, I desire to move in amendment :

That the Bill he amended by adding thereto the following section as section 5 :-

5. Should the government he of opinion at any time during the continuance of any obligation of the government in respect of the western division, or during the lease of the eastern division, that the earnings upon the traffic interchanged between the Grand Trunk Pacific Railway Company system of railways and the system of railways of the Grand Trunk Railway of Canada, have not been properly apportioned between the said tw'o companies, the question of such apportionment shall be determined by arbitrators to be appointed by the government and the Grand Trunk Railway Company of Canada, in the manner provided by paragraph 47 of the agreement, or shall be determined by the Board of Railway Commissioners as mentioned in section 19 of the said agreement.

Before dealing with this amendment, I wish to say a few words with reference to some observations made by the hon. member for Annapolis (Mr. Wade). He started out by saying : We are a unanimity behind the government ; there is no diversity of opinion amongst us. Yet I have a distinct recollection of the hon. gentleman saying a few days ago : If there are

any weak-kneed members of the party, they may just as well understand first as last that this contract is going through.

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LIB
CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

I can only say that is what I understood the hon. gentleman to say, and I incline to the opinion that ' Hansard ' will bear me out. Since he denies it, I am, of course, bound to accept his statement. The hon. member went on to

say : we cannot change a single condition

of this contract or a single clause of the Bill, but we have to accept it in its entirety or reject it in its entirety. Who is saying this ? It is not the government who have made the contract. It is only a common member of parliament. What authority had he to make that statement ? Was he the party who made this binding agreement ? I find that the agreement was signed by Henry Robert Emmersou, Minister of Railways, representing Canada. We like to have principals speak, and not Subordinates. We like to have those speak who have the authority to speak. But, strange to say, the principal is not here, and it is left to his subordinates to say what is the binding nature of this contract. His deputy, the Minister of Justice, who is employed to act for him, is the only man in the House who assumes any responsibility, and who speaks authoritatively. The deputy of the Minister of Railways speaks, but the Minister of Railways himself is not present. We would like to see him here. We would like to have his interpretation of this contract. We would like to hear from him whether there can or can not be any amendment to it. If it be the fact that there can be no amendment to this contract, why are 213 or 214 members of this parliament, representing the people of Canada, wasting their time debating it clause by clause ? If we are to accept it or reject it in its entirety, why do the government not move it en bloc ? Does it not seem to be silly child's play to take up the time of this House day after day discussing the clauses of this Bill and the binding nature of the contract, when we are told by one who is supposed to know that we are wasting our time, because we have to accept the contract or reject it in its entirety ? If we cannot remedy any defects in it, we are only wasting the time of this House considering it clause by clause. This House was plied with a similar argument last year, when the original Bill was before us. We were told that not one clause of that Bill could be changed, because a solemn and binding agreement had been entered into by the government with the Grand Trunk Pacific Railway Company, that the country was bound to carry out the obligations entered into, and that we were compelled to accept it whether we liked it or not. Every amendment we proposed was voted down', and the Bill was carried through in its entirety. How long did the company stand by that agreement ? So far as we know not one month. How do we know that they will stand by the present agreement ? We do not know. Immediately after that agreement was confirmed by parliament, the other contracting party began to find excuses for withdrawing from it, and they did withdraw.

103J .

The other party withdrew from the contract, and asked to have the agreement changed. The government agreed to the changes demanded and now call upon the House to ratify this supplemental movement. But what greater obligation are we under to honour the agreement made by the government than the railway company were to honour the agreement into which their representatives entered ? We believe that this contract contains defects and we desire to remedy them. The government, however, refuse to consent to any remedy. They say that the contract must be accepted in its entirety. With regard to this amendment, I have proposed it for this reason. We find that tjie contracting parties are the government, acting on behalf of the country, as the party of the first part, and the Grand Trunk Pacific as the party of the second part. The party of the first part agrees to build the eastern division and to guarantee three-quarters of the cost of constructing the western division, and the party of the second part agrees to lease the eastern division from the government at a rental of three per cent upon the cost of its construction, and to pay besides three per cent interest upon the bonds guaranteed by the government for the construction of the western division.

But during the first seven years the party of the second part is to pay no rent on the eastern division or interest on the bonds guaranteed by the government for the construction of the western division, and during the succeeding three years, unless the earnings of the road be sufficient to pay operating expenses and three per cent interest, the party of the second part is not to be obliged to- pay any interest on the eastern division or on the guarantee of the western division, but thb amount of that interest is to be added to the principal and it will pay interest on the entire amount for the future. It will therefore be the interest of the Grand Trunk Railway, which is to have entire control of the Grand Trunk Pacific, that the earnings be not sufficient to enable the Grand Trunk Pacific to pay that three per cent interest for the first three years at least after the expiration of the seven years. How is the Grand Trunk Pacific to pay tile interest ? Out of the earnings of the road. But the earnings of the road, in the first instance, have to be divided between two or three railway corporations- between the Grand Trunk Pacific, the Intercolonial and the Grand Trunk Railway, as regards all the freight that may pass over the Intercolonial Railway, the contract stipulates that a division of the earnings between the Grand Trunk Pacific and the government will be made on fair and equitable lines. That provision is made in clause 44 :

In respect of the tolls for any traffic carried partly over any line of railway operated by the company, and partly over any of the lines of

the Intercolonial Railway, a fair and equitable ratable division of all such tolls shall he made hy mutual agreement.

Between whom ? Between the Grand Trunk Pacific and the government, I assume; but if they fail to come to an understanding as to what is a fair and equitable distribution, then such division shall be fixed by arbitration in the manner provided by paragraph 47, or by a board of commissioners which may hereafter be appointed, as mentioned in paragraph 190 of the agreement, and subject to the right of appeal as therein provided. But, when the third party comes on the scene, the Grand Trunk Railway, whose freight may be carried over a portion of this line, there is no provision made lor a fair and equitable division of the earnings between the Grand Trunk Pacific and the Grand Trunk Railway. It is true that the two companies will be obliged to divide the earnings in some way or other, but as it is the Grand Trunk Railway which will be operating the road, it will be to the interests of that company to defer any payment to the government as long as possible, and if, by taking more than a fair share of the earnings for its own railway, they will be able to defer payment of interest for three years, they will be likely to do so. We had a considerable discussion about that last night, and I understood the Minister of justice to say that there was a provision in the Railway Act which met that objection. Well, I cannot see any such provision in that Act. While the Railway Commission have the right, before assenting to any rate, to see that it must be a fair rate as between the people and the railway corporation, it has not the right to see that the division of rates is a fair one between the two railway companies. There is a provision in the event of dispute between the government and the Grand Trunk Pacific, but there is no provision in case of a dispute between the Grand Trunk Railway and Grand Trunk Pacific or the Grand Trunk Railway and the Intercolonial. There is no provision for an equitable division in these cases, and it is to provide a means of settling the dispute, similar to that which the government has provided in the case of a dispute between the Grand Trunk Pacific and the Intercolonial, that I move this amendment.

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May 17, 1904