May 17, 1904

LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

The object which the hon. gentleman has in view is substantially the same as we have had. The one question is whether that object is already accomplished by existing legislation ; and if not, whether the amendment proposed will cover all possible ground of objection. As respects the division of rates between the western division, which would be the property of the Grand Trunk Pacific itself, and the eastern division, which would be the property of the government, but under lease to the Grand Trunk Pacific, we have al-Mr. SPROULE.

ready made 'an arrangement for distribution.

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CON
LIB
CON
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

Section 19 of the original contract. There' is no question that, as between the western division owned by the Grand Trunk Pacific and the eastern division which they will operate, over which they will exercise the rights of lessee, there is already provision. There is also provision, I think for the equitable distribution of any through rate between the Grand Trunk Pacific and the Intercolonial. What my hon. friend draws attention to is, however, an additional item, the possible lack of legislation governing the distribution of a rate which will be in part over the Grand Trunk Pacific and in part over the old Grand Trunk. Now, we are advised that that is probably covered by existing legislation in the Railway Act.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

That was discussed last night; I do not wish to dwell too strongly upon that aspect of it. But there is another aspect of it to which the hon. gentleman has not drawn attention and which might be considered. and that is the possibility of a through rate being made as between the Grand Trunk Pacific operating that western portion of the road, for utilizing part of the eastern division, and then coming to the Grand Trunk, but using for part of the route water communication by means which might or might not be in the hands of a company with a nominally distinct organization, but controlled by the Grand Trunk. My impressions is that the amendment wThieh my hon. friend has moved would not meet that difficulty, but only the case of the connecting lines, the Grand Trunk Pacific and the Grand Trunk proper. If, therefore, there is any need of additional provision, it should be made to cover not only the mere connection of the two rail lines, but any water line which forms part of their route and over which a commercial through rate might be granted. Our advice is that that is probably covered by the Railway Act, and, for the present, we should take that view. But, if it be found on more careful examination, that there is any doubt on that point, we think the proper remedy would be, not by an amendment to this particular Bill, but by an amendment to the Railway Act which would apply to all such cases and make it clear, if it is not already clear, that the functions of the Railway Commission may extend not only to fixing a through rate but to inquiring into the manner in which that rate is divided between two railway lines. I will not press the point too much that it is covered by legislation, though we are so advised. But, if, on inquiry, it is

found that It is not so, we shall meet the difficulty by an amendment to the Railway Act which will cover not only the amendment which my hon. friend has mentioned but also the difficulty of a through rate part rail and part water. We think it better to amend the Railway Act, if it is necessary than to put it in the form of an amendment to this Bill.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

I think the Minister of Finance (Mr. Fielding) will find it exceedingly difficult to deal with the difficulty we are discussing in the General Railway Act. I think it will be an impossibility to deal with it there. You cannot leave it to a board of railway commissioners to settle the division of a through rate between common carriers. It is done by telegraph very often ; scores of such cases arise from day to day. A short time ago we had a similar case discusssed in this House. The government, in connection with the Canada Atlantic and the Grand Trunk, were carrying wheat from Depot Harbour to the ocean port. The three concerns, the Intercolonial, the Grand Trunk and the Canada Atlantic, got a through rate. The Canada Atlantic got a fair paying rate for through traffic over its portion of the line, the Grand Trunk got a higher rate than the Canada Atlantic because it had a short haul, and the government was left with actually less than the cost of hauling the traffic. That was made perfectly clear. The departments answer showed that the only reason they thought the traffic was profitable to the Intercolonial was because of the return traffic ; that is, you were carrying one way at a loss hoping to get something back that would pay. In that case, supposing the railway commissioners were to say to the Grand Trunk and the Canada Atlantic : You must accept a pro rata division, what would be the result ? The traffic would not be carried. The three could not agree to carry at a low through rate unless there was an arbitrary division. That is a matter between the freight agents. It does not concern the public in the least ; what the shipper is concerned in is what the through rate will be. When the freight agents get together they have to consider many circumstances. It may pay a railway company to carry at a loss, but they could not leave it to the discretion of a board of railway commissioners. Take the Grand Trunk hauling to Portland, for instance, there are times when it would pay the Grand Trunk to haul wheat at less than cost. It may be that they have entered into an agreement to fill a ship, and if the ship must go before its load arrives, it must go in ballast. They must put the freight aboard the ship on her sailing day. All such circumstances must be considered, but could not be left to the railway commissioners. They are dealt with as a retail merchant deals with his trade. He deals with it at his discretion, but no man not concerned in the profit and loss account could be allowed to interfere. It would be

absolutely impossible, in my opinion, to deal with the point in the General Railway Act as the minister suggests. There is another point in this matter the minister makes-that there may be a part water-haul. If there is a water-haul in which neither of the railway companies is interested, they will be willing to trust their common interest not to let the ship have more than they are absolutely obliged to allow. But, if the ship is a part of the Grand Trunk, then, what the ship gets will be part of the Grand Trunk rate. The only way you can deal with this is, if the Grand Trunk, owing to its special interest, the fact that it will control both lines, should try to divert the traffic to one portion, there should be somebody in the interest of the country to see that they deal justly. There would be no necessity for this if they were independent companies, if thb Grand Trunk did not control the Grand Trunk Pacific. The necessity arises from the fact that the government have given the Grand Trunk absolute power to control the Grand Trunk Pacific ? This is not a thing you can put in the Railway Act, because you will not have such cases arising under the Railway Act. If this thing existed between ordinary companies, the moment such an arrangement as this was made, it would be one entire company and there would be no division between sections at all. But here, the Grand Trunk, controlling the Grand Trunk Pacific and so having a motive might seek to deprive the government section of the road of some of its earnings. You must have a clause that will enable you to protect the country from anything of that kind.

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CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

I wish to draw the minister's attention to the clause, which, he says contains a provision which is ample for the purpose for which this amendement was intended-clause 19. Clause 19, if I read it correctly, has two objects in view.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I said that it is provided as respects the eastern and western divisions.

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CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

That is the only clause I can find that applies to it at all. Section 19 has two objects in view. One is to give the government the right to examine books and accounts to ascertain the cost of construction. The other is to ascertain the net earnings of the road, so that they may detei mine whether the company has completed its obligations or not. It says that :

For the purpose of enabling the government to determine the cost of construction of the said railway, or of any portion thereof, or the cost of the equipment supplied, or the net earnings of the railway, or of any part or parts thereof, pursuant to this agreement, the government shall have the right .... to inspect all the books of account, pay-sheets, contracts, correspondence and all other books, papers and documents, the inspection of which may be considered necessary for the purpose of determining such cost or net earnings. The

But there is no provision made that they shall keep an account of the earnings as between the Grand Trunk and the Grand Trunk Pacific.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I must confess that this clause has not that effect.

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CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

I can find no other clause. The question was raised last night by the Minister of Justice, who claimed that this clause provided how the division of earnings shall be made between the eastern and western division.

-the earnings from through traffic shall he apportioned between the eastern and western divisions, according to the usual practice of connecting lines of railway operated by two separate companies,

The hon. member for Hamilton (Mr. Barker) has given the usual practice over and over again, that is to divide the profits privately between them according to their own desire and arrangement, with which, I take it, the government will have no concern.

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LIB
CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROTJLE (reading) :

-any dispute as to the proper divisions of such earnings shall be determined by arbitrators to be appointed in the manner provided by paragraph forty-seven of this agreement.

But remember that refers only to the eastern aud western divisions. The amendment which I move refers to the Grand Trunk Railway, which has a line of its own over which a portion of the traffic will be carried, and as the Grand Trunk is the .party interested iu having the payment deferred, it would naturally aim at taking for itself the larger share of the earnings to be divided between the Grand Trunk and the Grand Trunk Pacific, so as to show that the Grand Trunk Pacific was not earning sufficient to justify its payment of its obligations.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I think that if at that time the company were in default that would be simply fraud, and it could be dealt with as such. With regard to the statement of the hon. member for Hamilton (Mr.. Barker) that you cannot deal with a question of this character, the division of a rate, by the Commissioners, I would call attention to the fact that we have attempted to deal with it, and our right to do so has not been challenged. Under section 44 o? the contract of last year, we stipulated :

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 equit able ratable division of all such tolls shall be made by mutual agreement, or, in case of dispute, such division shall be fixed by arbitrators Mr. SPROULE. .

appointed in the manner provided by paragraph forty-seven of this agreement, or by a board of commissioners.

We provided that in the contract of last year.

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CON
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I do not claim that we have made any provision iu this contract as respects the Grand Trunk and the Grand Trunk Pacific. I was simply replying to the point raised by the hon. member for Hamilton, that such a, thing was not practicable. We have tried it, and I have not heard any objection raised to our doing so, under our agreement of last year.

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CON

John Graham Haggart

Conservative (1867-1942)

Mr. HAGGART.

It would be easily done between the eastern and western division of the Grand Trunk by having the apportionment made on a mileage basis. It is different when a particular railway has particular claims on account of a local rate or local traffic, as the Intercolonial say they have a right to the traffic of New Brunswick and Nova Scotia. When traffic comes to be carried over two or three roads, and then goes to the Intercolonial, they insist on their local rates, as any railway would have a right to do, and the rates there are not divided on a mileage basis. Of course, each day there is a telegram sent to the manager of a road when freight is offered : What will you carry this for on your particular road ? For the purpose of covering the obligations under this Act a simple plan would be that the rate shall be allotted to each of the divisions on a simple mileage basis.

There is a provision under the Act by which the Grand Trunk may exercise the power of foreclosure when there is default to them. In the event of foreclosure and the Grand Trunk taking possession of these properties, would the Grand Trunk, becoming possessed of the property, be obligated by the contract and the obligations of the Grand Trunk Pacific Railway ? That is, if they exercised the power of foreclosure.

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LIB

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

Liberal

Mr. FITZPATRICK.

If the Grand Trunk exercised the power of foreclosure, the government of Canada would be absolutely disinterested in so far as the money consideration is concerned, because under the foreclosure we would be entitled to first claim under the sale.

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May 17, 1904