May 17, 1904

CON

John Graham Haggart

Conservative (1867-1942)

Mr. HAGGART.

The Grand Trunk has the power of foreclosure, you do not cut that away ?

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LIB

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

Liberal

Mr. FITZPATRICK.

Foreclosure! subject to our first mortgage.

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CON

John Graham Haggart

Conservative (1867-1942)

Mr. HAGGART.

Subject to your first mortgage or anything you like, subject to the payment of the first mortgage and in-

terest. Out there are other obligations and other arrangements made between the Grand Trunk Pacific and the government. Suppose the Grand Trunk assume the obligations and foreclose against the Grand Trunk Pacific Railway. Would the Grand Trunk Company, assuming that, be compelled to carry out the obligations of the Grand Trunk Pacific to the government ?

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LIB

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

Liberal

Mr. FITZPATRICK.

Would my hon. friend point out to which of the obligations he refers ?

working the railway are then the Grand Trunk Railway Company, and you have not a solitary covenant from the Grand Trunk Railway Company for the protection of all this traffic.

Amendment (Mr. Sproule) negatived.

Mr. DEPUTY SPEAKER, Shall the section be adopted 1

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LIB

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

Liberal

Mr. FITZPATRICK.

Do I understand that section 7 has not been adopted ? The section to which the last amendment was moved was section 1.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

I suppose every covenant in this agreement on the part of the Grand Trunk Pacific with 'relation to through-traffic, Canadian routes, &c. There is a good deal in the point raised by the hon. member for Lanark (Mr. Haggart), if the Grand Trunk forecloses and wipes out the existence of the Grand Trunk Pacific.

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LIB

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

Liberal

Mr. FITZPATRICK.

What then becomes of the lease of the eastern division ?

Mr BARKER, That is one of the difficulties The Grand Trunk Pacific is no longer the owner of the western division, the Grand Trunk becomes the owner, of it. Now, the only covenants we have with regard to the operation of the western division undei this agreement are the covenants of the Grand Trunk Pacific. You have refused to make the Grand Trunk responsible. If yoa had accented some of the amendments offered, the Grand Trunk would have been a covenanting party, and you would have had a hold on them. While I have not yet considered the point raised by the hon. member for Lanark (Mr. Haggart), I think the hon. gentleman might well consider it.

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LIB

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

Liberal

Mr. FITZPATRICK.

It is too abstract altogether.

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?

Mr BARKER.

I do not know. There is a peculiarity about the provisions in the supplementary contract. The government, as the guarantors of three-quarters of the bonds, have been deprived of any right of foreclosure, but the right of foreclosure has been left to the Grand Trunk. Now, suppose a default occurs. I suppose when we are taking security as mortgagees, we contemplate the possibility of default, otherwise there is not much necessity of caring at all what your mortgage is on. The very fact that there is a possibility of default is what we would like to' try to secure the country against. If there is default in the payment of interest the Grand Trunk Railway Company have the right to foreclose. They cannot foreclose the government, but they can foreclose the Grand Trunk Pacific Railway Company, and wipe them out of existence as the owners of the property. Where are you then ? You have your mortgage bonds guaranteed all right remaining against the railway, but the owners of the property

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LIB

Peter Macdonald (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. DEPUTY SPEAKER.

Yes, section 1 has been adopted, but I stated that I was going to bring up the point that you could not amend a section that has already been closed. Section 7 has not been closed.

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CON

Albert Edward Kemp

Conservative (1867-1942)

Mr. KEMP.

would be in such a condition that money could be borrowed by this government at the rate of three per cent, or perhaps at a lower rate. Therefore they stipulated that the rental to be paid for the eastern division of the road should be three percent. Since that time, as has been pointed out by the right hon. leader of the government, and as we all know, the money markets of the world have changed. Money is scarcer ; interest is higher. At any rate we are reminded of the fact that money at the present time is dearer and that perhaps it may be dearer still. Perhaps we may not again have during the next 25, or 30 or 50 years the conditions which have existed during the last 25 years and that money will not be as cheap as it has been during the last quarter of a century. What this resolution contemplates is that the Grand Trunk Pacific Railway Company shall pay as rental for the eastern division the rate of interest which the government pay for the money which they have to borrow for the purpose of constructing this road. This is one of the most reasonable propositions that could be imagined and I have been surprised in listening to the speeches of hon. members on the government side of the House to notice that when they spoke in the early part of April on the question of the money market they did not refer to the great interest which the country has in the eastern division. The Grand Trunk Railway Company are responsible, as stated by the president of the company, for 515,000,000. The responsibility of the country in this whole undertaking will probably be $150,000,000 or $170,000,000. If the money markets have changed and' if there is any possibility of the government having to pay more than three per cent for the money that is borrowed for the construction of the eastern division surely there should be some provision made that the railway should pay the extra rate. The amount of the difference may be very considerable. If the road from Winnipeg to Moncton costs $72,000,000 an addition of a quarter of one per cent, or a rate of interest of three and a quarter per cent, would result in an extra cost of $7,500,000 during the forty years in which the Grand Trunk Pacific Railway Company are to pay this rental which is provided for at three per cent. If the rate of interest should be three and a half per cent or one half of one per cent more than is provided for by the contract, then, of course, the amount will be doubled, or $15,000,000 during the forty years. Therefore, it seems to me that we are bound in this House in some way to protect the interests of the people of the country. If the Grand Trunk Pacific Railway come here and assert that on account of the changes in the money market they have to have concessions, on the other hand the interest of the country Mr. KEMP.

being far greater than that of the railway company; then, we, as representatives of the people demand that the Grand Trunk Pacific Railway Company shall pay that extra rate of interest whatever it may be. I must say, Mr. Chairman, that it seems to me that the Grand Trunk Railway Company are very anxious to go on with this contract, and I do not take very much stock in the excuse which has been put forward by certain hon. members on the government side of the House that if everything the Grand Trunk Pacific Railway Company have asked for is not granted to them they will throw up the whole thing. The president and directors of the Grand Trunk Railway Company at the stockholders meeting made it very plain that they knew that other people were anxious to build this road and they were very desirous of impressing upon the stockholders the necessity of closing the bargain which they had made there and then. They pointed out that unless this was done and done immediately other people were anxious to build this road. Therefore, under these circumstances, I think there is no risk in the government making this resolution part of the bargain ; that is to say that if the average rate of interest costs the country to borrow the money to pay for the construction of this eastern division more than three per cent, the Grand Trunk Pacific Railway Company shall be liable to pay that extra rent whatever it may be. I hope the government will, as they have done in two other cases, accept the amendment, include this provision in the bargain and make it part of the contract.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

The government have thought it best in dealing with the company as respects the lease of the eastern division of the road to fix a definite flat rate of interest. My hon. friend from East Toronto (Mr. Kemp) says that if it should turn out that we have to pay one-quarter of one per cent more than three per cent it means an increase of seven and a half millions in the forty years of the lease which is a very large sum of money.

But, he might also add, that if we had to pay a quarter per cent less than three per cent, then we would save that seven and a half millions, and there is just as much chance of our getting that money at a quarter per cent less, as there is of our having to pay a quarter per cent more than three per cent. Any argument based upon the present condition of the money market, as respects the issue of government loans,' is not a fair argument. We all know that the condition is temporary ; it has arisen out of the events of the last two or three years, and although we may not expect cheap money immediately, it is not too much to expect that long before we are called upon to issue the bonds, long before we are in a position to close up the

transaction and see how we stand, the money market will have returned to its former condition. We have borrowed money at less than three per cent. That is a matter in which we can fairly take the risk. If it turns out that we have to pay more than three per cent for the money for the eastern division, then, to the extent of the difference between that three per cent and the rate we would have to pay, it becomes an additional payment for this enterprise. We frankly acknowledge that. But my hon. friend proceeds on the assumption that we must pay a larger rate of interest, and therefore he wants to make provision for it. With equal reason he might assume that we shall have to pay not three per cent, but a shade less than three per cent, and, that so far ns the rate of interest is concerned, instead of the transaction being an unprofitable one, the balance may be materially on the other side of the account. Even already' there is a perceptible change in the money market ; not large enough to enable us to build much upon it, but at all events, money can be borrowed cheaper today than it could a few months ago. As respects the western division, we do not take it for granted that money will co3t more than three per cent, but at the request of the company, who felt somewhat alarmed, we have provided that under certain conditions which may possibly arise, we should implement the issue of bonds. Although we make that provision to meet the objection, we do not for a moment assume that we must necessarily, even in that case, pay a higher rate than three per cent. The eastern section is our own affair; the transaction is entirely under our control, and we are quite justified In assuming that we can borrow the money at three per cent. If we should have to pay anything more, which is altogether improbable, then to the extent of the difference we frankly acknowledge that it is an addition to the obligation we are assuming.

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CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

This is another example of the government making the country take all the risks, while the Grand Trunk Pacific takes none. Does the Minister of Finance think that we are contributing enough to them by giving a rebate of the interest altogether for seven years and possibly for ten years ? The liue must be built at a certain time, and the money must be borrowed. and in all probability the loan may have to be made under the ruling conditions in the money market at the time. It might be possible that we may have the advantage of making the loan at a somewhat less rate than that paid us by the Grand Trunk Pacific for rental, but that is no reason why we should take this risk. This is but another instance of the country surrendering everything to the interest

of the Grand Trunk Pacific. I am unable to recall a single instance in which the country has been relieved from any risk n this transaction. After the great sacrifices tiie country is taking, why should we leave the door open to further sacrifices ? Suppose the Minister of Finance should be obliged to borrow that money at four per cent

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

Why not suppose five per cent ?

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CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

Well, it is only a question of degree, and while I should hope the government of Canada would not be called upon to pay even four per cent, yet it is entirely possible. If we had to pay three and a quarter per cent, or three and a half per cent, then under the conditions of the contract we would be compelled to pay that interest for the company during fifty years following the renewal of the lease. That is a very serious matter, and I am amazed that the Minister of Finance should not have immediately accepted the reasonable safeguard provided bv this amendment.

Amendment (Mr. Kemp) negatived.

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CON

Thomas Earle

Conservative (1867-1942)

Mr. EARLE.

I have an amendment which I propose to move, and which I think will be accepted by the government, as it does not affect either of the contracting parties to any very great extent. The principle underlying this amendment is one of considerable interest and importance to the province which I have the honour to represent. I beg to move, seconded by Mr. Taylor :

That the Bill be amended by Inserting the following provision :-

That no contractor or sub-contractor on the said railway shall employ any Chinese labourer or workmen in the construction of the said railway. Any contravention of this section shall render the person so contravening liable to a penalty of dollars in respect of

every such person so employed for each day during which he shall be so employed.

The subject of the employment of Chinese in the construction of public works has been brought before the government many times during the past few years, and has been represented as affecting to so great an extent the white labour of the country that the government last session passed an Act practically prohibiting the admission of Chinese into Canada. As the province of British Columbia contains nearly the entire Chinese population of the Dominion, and as the mountain section of this railway' will be very accessible to the Chinese, it is of great importance .to our province that they should be debarred from sharing in the benefits of the construction of this work. Moreover, the employment of white labour only upon that portion of the road will be the means of introducing

population into our province, as many of the workmen will become settlers and remain citizens of the country. It will also be the means of retaining in the country the money that is expended on the labour employed in the construction of the road, instead of it being carried out of the country, as it would be if Chinese were employed. It is needless for me to take up the time of the committee on this matter, as it has been already fully discussed, and as the government have accepted the principle of the evil effects of employing Chinese labour as against white labour so far as to enact a law that is almost prohibitory.

I cannot see any reason why they should not accept this amendment nor imagine any objection that will be raised by the company. I have therefore pleasure in moving the amendment.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

The motion of my bon. friend is either too much or too little. The object which it has in view is one with which we all sympathize. I unhesitatingly say, assuming always that a reasonable amount of . white labour can be obtained in Canada, that we ought not to employ Chinese labour on this work ; but if the matter is dealt with, I think it should be dealt with on more general lines. It would not be a wise policy to say that this company should not employ Chinese labour, while every other company should be free to employ it. The proposal to penalize this company in particular and to allow all other companies to employ Chinese labour is one that should not receive the assent of this House. The government, in dealing with the Crow's Nest Pass Railway, dealt very effectually with tffat subject, and what has occurred since shows that some general legislation might well be enacted.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

How was it dealt with in the case of the Crow's Nest Pass Railway ?

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

There was a clause in the contract, I believe, that the company should not employ foreigners on the work, but only residents or bona fide immigrants. However, my suggestion to my hon. friend is that he should not press this amendment, because it is manifestly inadequate. I sympathize with its object, but I would go further, and I feel confident that my colleagues in the government would take the same view.

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L-C

May 17, 1904