May 17, 1904

LIB
CON
LIB

Robert George Macpherson

Liberal

Mr. MACPHERSON.

Why did not the Conservative party use the same argument in 1882 as they are using now ?

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CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

If we compare the promises of the Liberals with their performances we will see many things to the great disadvantage of the Liberal party. Let us meet the case as it presents itself to-day-

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Some hon. MEMBERS

Oh, oh.

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CON

James Clancy

Conservative (1867-1942)

Mr. CLANCY.

We are not dealing with the past. We are dealing with the present and the future, and it is the duty of this House to pass such legislation as will prevent the recurrence of these evils. I congratulate these hon. gentlemen on their splendid inconsistency, and I confess that it tallies well with their whole conduct in this parliament. When the time comes for the hon. gentleman from Burrard to meet his constituents, I have no doubt he will have to reckon with them.

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LIB

Robert George Macpherson

Liberal

Mr. MACPHERSON.

The hon. gentleman (Mr. Clancy) need not shed any crocodile tears over what I am going to do.

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L-C

Andrew B. Ingram

Liberal-Conservative

Mr. INGRAM.

When the hon. gentleman (Mr. Macpherson) put that question to my hon friend (Mr. Clancy) I noticed a broad smile came over the face of the Prime Minister. I was in the House at the time, and perhaps I can give a satisfactory answer.

I think I remember the right hon. gentleman then saying that in the matter of treaty and trade arrangements between China and other countries, it would perhaps be well for this parliament to legislate carefully, and it was because the present Prime Minister joined with the then leader of the Conservative party in this view of the case, that we did not have any legislation on the Chinese question. I can well remember how my hon. friend sent a telegram to British Columbia, and, in order to capture the votes of the people of that province, made a solemn promise of early legislation along that line ; but sever-a! sessions passed before he had the courage to put the legislation on the statute-book, and I presume that it was put on for political reasons. I have no quarrel with the hon. gentleman for putting that legislation on the statute-book, because I have always believed that the importation of Chinese into this country should not be encouraged, because they do not take up ordinary citizenship in this country, and because the honest labouring men of the country should not be put on the same plane with that class of people. I should have thought the hon. member for Vancouver would have taken a Christian view of this amendment, and would have felt that whenever a sinner repents, even if it is at the eleventh hour, he should be encouraged in his repentance.

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An hon. MEMBER.

That is what you are doing now.

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Andrew B. Ingram

Liberal-Conservative

Mr. INGRAM.

I have never had to repent, because I have always supported the principle of the amendment. The Minister of Finance is very good in making promises. He has been making promises ever since he came to this House, especially on the tariff question. He has been holding out promises with one hand and brushing them aside with the other. He now promises general legislation on this subject, but I have very little hope of its being brought down, and I think the best course for us is simply to accept the amendment. The hon. member for Vancouver has endeavoured to show that because we on this side of the House are supporting several amendments, we are opposed to the Grand Trunk Pacific scheme. I wish to point out that gentlemen on this side of the House are as eager to have a railway built into the Northwest as hon. gentlemen opposite ; we simply differ from them as to how we should get it. We believe that a better scheme than that proposed by the government could be carried out. But the government have the majority, and we believe it is our duty to propose certain amendments with the view of improving their scheme.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

I would like to ask whether the Minister of Finance has ascertained where the stipulations are contained in regard to the Crow's Nest Pass Railway ?

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LIB
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

As that has been referred to, I suppose there will be no objection to putting it on the table of the House ?

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

We can have it brought down at the next sitting.

Amendment negatived.

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CON

Edward Guss Porter

Conservative (1867-1942)

Mr. PORTER.

Mr. Chairman, notwithstanding the many amendments which have been offered from this side of the House, and which, in my humble judgment, should have commended themselves to the favourable consideration of the government, I

venture to move, in the interest of the country, the following amendment:-

That the Bill be amended by adding thereto the following section as a subsection :-

Notwithstanding anything in this Act or in the Act hereby amended, or in the scheduled agreements contained, His Majesty the King, acting as aforesaid, shall not be bound or obliged to perform, carry out or fulfil any of the covenants, conditions or stipulations in the said scheduled agreements contained on behalf of the Dominion of Canada, unless and until the Grand Trunk Railway Company of Canada shall have entered into an agreement with His Majesty the King, acting as aforesaid, by which the said Grand Trunk Railway Company of Canada shall covenant and agree as follows That the Pacific Company, so long as the Grand Trunk Company shall control the policy of that company, shall perform, fulfil and carry out, according to the true intent and meaning thereof, all the provisions of the National Transcontinental Railway Act and all the covenants, stipulations and conditions in the scheduled agreements, which according to the terms thereof ought to be performed, fulfilled or carried out by the said Pacific Company.

I feel constrained to move this amendment for various considerations. Many of these considerations have already been debated by members on this side of. the House, and I shall not take up the time of the House in reiterating the arguments which have been already advanced, and which to my mind should have appealed to the sense of justice of hon. members on the government side. The government during this debate have persistently declared that the Grand Trunk Pacific Company are to do a great many things in connection with this contract.

It needs no argument on my part to show the importance of these things in the interest of this country. They are important, in my opinion, not only on account of the many concessions granted by this government,' but also by reason of the many onerous obligations assumed by this country in connection with this enterprise. Stress is laid by the government on the point that the Grand Trunk Eailway will control the policy of the Grand Trunk- Pacific, at least for a certain length of time or up to a certain point, but it is notorious that the Grand Trunk Railway are to be very well paid for any obligation they have entered into. By virtue of this contract, they are to receive ?25,000,000 of the common stock of the Grand Trunk Pacific. If that were all they were to get, they would even then be amply paid for any obligation they have entered into, but that is by no means all. If this Transcontinental Railway should prove a paying concern, the Grand Trunk Railway are the parties who will benefit. No one will believe that that company is associating itself with this enterprise in any other view than that of reaping a substantial benefit from it. It is certain that it Mr. PORTER.

is going to reap the benefit to the extent of 825,000,000 of the common stock, and should the railway prove a success, as the government say it will-and as we all hope it will-then the Grand Trunk Railway is going to receive, not only the 825,000,000 common stock, but the lion's share of the profits that will accrue from the operations of this railway. It seems to me, therefore, that we are asking what is eminently reasonable when we ask that a company, placed in this fortunate position, should give some adequate consideration iu return for what it will receive. Suppose this contract were being made with an individual instead of with a powerful corporation would any one dream of not requiring some guaranty from the individual that he would perform his share of the agreement ? And I do not see anything in this contract which affords any substantial reason why we should make a different rule in dealing with a corporation. On the contrary, there are many reasons why the government should insist on the Grand Trunk Railway giving a guaranty. It seems to me that in the ordinary course of common prudence the government should insist on the Grand Trunk Railway giving something iu return for the advantages it will derive from this contract. It seems to me that it should be compelled to give a guarantee that, so long as it controls the policy of the Grand Trunk Pacific, the obligations entered iuto by the latter will be carried out. The Grand Trunk Pacific is not an entity, you cannot expect any obligation it enters into to be any greater than it is itself, and it is the duty of this government to insist that the Grand Trunk Railway, which is to get all the benefits, should be given the guarantee which this amendment calls for. I hope, therefore, that notwithstanding the fact that the supporters of the governmemt have consistently voted down every amendment offered from this side, thev will not so far forget their duty as not to support the amendment which I have the honour to submit.

Amendment (Mr. Porter) negatived.

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CON

Robert Abercrombie Pringle

Conservative (1867-1942)

Mr. PRINGLE.

I regret that the Minister of Railways has seen fit to leave us at this early stage in the evening, just as we had entered upon the discussion of certain amendments to this Bill. That lion, gentleman has certainly a very peculiar idea of his responsibility as Minister of Railways and Canals, when he cannot be prevailed upon to remain and take some part in the discussion of this important measure. I desire to move the following amendment:

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

Notwithstanding anything in this Act or in the Act hereby amended o-r in the scheduled agreements contained, the Grand Trunk Company shall not during the term of the lease

mentioned in clause 20 of the original agreement, nor while any of the bonds guaranteed by. the government under the terms of the scheduled agreements remain outstanding and unpaid, transfer, convey, sell, pledge or make any disposition of any common stock of the Pacific Company except such portion thereof as shall have been subscribed for payment in cash at par.

If we refer to section 27 of the Act of 1903, providing for the construction of a national transcontinental railway and the agreement attached thereto, we find this clause !*

The company undertakes that the Grand Trunk Railway Company of Canada shall acquire and take the said common stock to the amount of twenty-five million dollars, except shares held by directors, not exceeding one thousand shares, and shall hold the same during the term of the said lease, and so long as any of the bonds guaranteed by the government under the terms of this agreement shall remain outstanding unpaid.

Then, if we turn to the Act, we find that under section 7, subsection (b) :

That it will acquire and take the common stock of the Grand Trunk Pacific Railway Company to the amount of not less than $24,900,000, as in clause 27 of the agreement provided.

Then, subsection 3 :

The Grand Trunk Railway Company of Canada shall hold the said common stock to the amount aforesaid so acquired and taken as aforesaid, during the entire term of the lease mentioned in clause 20 of the agreement, and so long as any, of the bonds guaranteed by the government under the terms of the agreement remain outstanding and unpaid ; and no pledge, transfer or conveyance of any part of the said stock during the said period shall he valid or effectual.

These clauses were discussed at some length when the Bill was before the committee, and very strong ground was taken by those who took part in that discussion on behalf of the government that this clause would stand as a protection to the people of this country and to the government. But we find that a great change has occurred since the passage of the Bill, and in the amended agreement we find that clause 9 provides :

Notwithstanding anything in the twenty-seventh paragraph of the said contract contained, the Grand Trunk Railway Company shall not, after the acquisition of the twenty-five million dollars of common stock therein mentioned (less shares held by directors, not exceeding one thousand), be prevented from making any such disposition of such common stock as the said Grand Trunk Railway Company may deem expedient, provided, however, that the said Grand Trunk Railway Company shall, during the delay mentioned in the said paragraph, continue to hold the majority of the said stock by such title as shall enable the Grand Trunk Railway Company to control the policy of the company.

104 J

The Minister of Finance (Mr. Fielding) discussed this subject at a considerable length last session, laying great stress upon clause 27 of the original agreement, and pointing out to the committee that, under that clause, the Grand Trunk Railway Company would be absolutely prevented from putting that $25,000,000 on the market so that it would reach the hands of innocent holders and subsequently be brought forward for the purpose of claiming an increase of rates so that a dividend might be paid on that stock. I would like to refer to the part of the discussion which took place at that time. The Minister of Finance said, as will be found at page 8570 of ' Hansard ' of 1903 :

We have provided that practically the common stock of this company to the full extent of $25,000,000, shall be held, not by promoters, not even by the old Grand Trunk Railway officials individually, but by the Grand Trunk Railway of Canada itself. There are 250,000 shares of common stock, of which 249,000 will he held by the Grand Trunk Railway, in its corporate capacity, and 1,000 only are available for distribution among those who may be qualified as directors. I want to know where there is a chance for promoters when they can only hold 1,000 shares against 249,000 ?

Then, later on, he said :

If the Grand Trunk Railway acquired that stock at a comparatively small sum and afterwards floated it on the market, at a higher sum, that would be a proceeding which might be open to objection

That is just the very thing we now say is open to objection under this amended clause, because we have the statement of the Grand Trunk Railway Company that they receive this $25,000,000 of stock for some slight obligations they have incurred on behalf of the Grand Trunk Pacific Railway. The president of the Grand Trunk says :

I must not forget to mention that in return for the support which we ask you to accord to the Grand Trunk Pacific Company, the Grand Trunk Company will retain a controlling interest in that company, and will become the possessors of the whole of the common stock, amounting to $25,000,000.

And further :

In return for its assistance the Grand Trunk receives the whole of the common stock of the new company amounting to 25 million dollars, which one may regard as waste paper or as an asset having enormous possibilities in the way of eventual appreciation-according to the view one happens to take of the prospects of the new line.

Now, the lion. Minister of Justice (Mr. Fitzpatrick) has stated that this $25,000,000 of common stock might be, and would be, required by the Grand Trunk Ry. Co. for the purpose of acquiring rolling stock. But we have the assurance of the president of the Grand Trunk Railway Company that it will not be required for that purpose. He states

positively that that is provided for in an entirely different way. He says :

As regards the five millions for rolling stock, it is not five millions-it is estimated at three millions. With that the Grand Trunk has nothing to do. That rolling stock will be provided by the Grand Trunk Pacific Company, and, as the general manager will tell you, they have laid their plans for providing that rolling stock by a trust fund.

So I say it is idle for the Minister of Justice to make the statement that this $25,000,000 of stock will be required for the purpose of providing the rolling stock. This $25,000,000 of stock simply goes to the Grand Trunk Railway Company, as the president says, as a consideration, practically a bonus, for their guaranteeing bonds to the amount of less than $15,000,000. Now, we have had a statement here also that this $25,000,000 of stock will never be taken into consideration when fixing the rates of the Grand Trunk Pacific Railway. I do not agree with that statement, and I think I can find a statement of the Minister of Finance that the very danger that the government desired last year to provide against was that, if this $25,000,000 of common stock got into the hands of innocent purchasers, then it would come forward when the question of freight rates was being considered. I will quote the language of the hon. minister :

If this stock were to be put upon the market and taken over by the Grand Trunk Railway Company-I will take the figures of my hon. friend the leader of the opposition for illustration-at 25 cents on the dollar, and in later years it passed into the hands of other people at 100 cents on the dollar, if the question of freight rates comes to be adjusted at any time, and it becomes a question -whether we are to have such freight rates as will earn a fair dividend on the 100 cents that the present holder paid or on the 25 cents that originally went into the treasury, there certainly is much to be said in favour of the man who purchased the stock and who says : ' I paid 100 cents on the dollar for it.'

He further says :

But the Grand Trunk Company must not only take this stock, but hold it for all time ; they cannot put a dollar of it in the market. It is absolutely impossible to buy a share of that stock; it must be held by the Grand Trunk Railway Company itself and no person can buy or sell a share. Where, then, comes in the chance of speculation ?

Now, as I have stated, the Minister of Finance took very, very strong ground on that clause. He said that it was important for several reasons that the Grand Trunk should take hold of that stock and not dispose of it.

Instead of that being merely a privilege given to the Grand Trunk Company, we think it is a privilege which carries certain responsibilities of value to the country. Therefore, we insist that they shall acquire, take and hold that stock.

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CON

Robert Abercrombie Pringle

Conservative (1867-1942)

Mr. PRINGLE.

,

Now, if they insisted so strongly last year that the Grand Trunk Company should acquire, take and hold that stock, why will they now, simply at the request of the Grand Trunk, waive the provisions which were contained in the agreement of last year ? The Minister of Finance further said :

The Grand Trunk Company would be delighted to have that clause srticken out, so that they might be allowed to take that stock up and float it in the money market if they pleased, no doubt.

The Grand Trunk must have been very pleased when they changed their terms to the government and struck that clause out for them. No doubt they were delighted just as the Minister of Finance said they would be if the clause was struck out.

Some little literature was sent out through the country during last January. The whole of the Northwest Territories were flooded with this literature under the frank of the Minister of the Interior and in that literature they quoted very copiously from the utterances of the Minister of Finance. They quoted this at page 4 of the campaign sheet :

We say we are prepared to go before the people to-day with this policy in the fullest confidence that it is a policy which has been wisely considered, that its provisions will stand investigation, that the cost to the country is not excessive, and that we firmly believe we -will be able to give to the Dominion of Canada one of the greatest achievements in Its history.

. Then he says :

Sir, we give them this contract made in good faith not with empty promoters, not with people who are irresponsible, but with men who are the most capable railway men in Canada, with men who have given every guarantee of good faith, with men who are prepared to back their urc'ertaking in a manner no company ever did before.

This is the literature sent forth in January, but on January 12 the government found that the Grand Trunk had something further to say in regard to this contract. It was finally settled and they were ready to appeal to the people when the Grand Trunk came down and said : You have to change all these clauses or we will not go on with this scheme. The elections were then called off and hon. gentlemen came down and made every change that was requested by the Grand Trunk. That is why we find that this very important clause, the clause upon which the Minister of Finance laid such great stress last session is struck out, and the Grand Trunk are now permitted to take this $25,000,000 of stock and do whatever they please with one half of it. They get that stock practically for nothing, or as Sir Rivers-Wilson says, for the slight obligation of guaranteeing a certain amount of bonds. We are told when this question

comes up : But we will not consider this $25,000,000 of common stock when fixing rates. The gentlemen who control the rates of railway corporations in this country are the Railway Commission. Who is at the head of that Railway Commission? We have at the head of the Railway Commission, Mr. Blair, the ex-Minister of Railways and Canals and that was one of the strong grounds that he. took when he presented his memorandum to the government in favour of extending the Intercolonial, and of not building and subsidizing this Grand Trunk Pacific. Now let me see what Mr. Blair says in regard to the danger of heavy capitalization and of heavy rates to meet that capitalization. He says :

An appeal from the holders of the company's bonds and shares to fix tolls sufficiently high to insure a moderate dividend, cannot easily be resisted, and as a consequence the country, through its business and traffic, is In effect as much charged, though indirectly, with the weight of these obligations as if the amount was covered by an issue of government bonds.

This is the gentleman before whom in all probability this question of rates will come, and we know his views are that the rates must be fixed according to the capital, bonds, &c. Has that been the case in this country ? I would like to refer for a moment to the revenue that is derived at the present time by our railroads on the capital shares, the bonds, the preferred shares, and in fact the total capitalization of these railroads. I find that during 1902 they rea-ized 5-72 per cent so that their rates must have been fixed so as to provide interest and to provide dividends on the capital stock to the extent of some $400,000,000 at which the railroads in this country are capitalized -and I venture to say that these railroads were built for the $404,806,000 of bonds together with the subsidies of $233,000,000 which this country has given towards the railways. So I say that there is no reason why the bon. gentlemen opposite should have changed their views on this question. They were all in favour of the contention of the Minister of Finance last year that it was in the interests of the Canadian people that this $25,000,000 of stock should remain in the hands of the Grand Trunk Company until such time as the agreement was fully complied with. Thus I say that we ought to have the support of the hon. the Minister of Finance and the other members of the government in favour of this amendment, which is an amendment in the interests of the people of this country.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

Company is to put upon the market and sell to the people of this country and elsewhere stock which it has not subscribed for payable at par. What good reason in the public interest can be advanced in favour of a proposition of that kind ? If that stock is going into the hands of bona fide purchasers, and if that stock afterwards is brought forward as a reason for keeping up rates in this country, surely it is right that it should represent dollar for dollar of its face value, and that the money represented by the stock should actually have gone into the construction of this road, or into the furnishing of its equipment, or into betterments. As the contract stands at present, that result is not accomplished. The object of the amendment made by my hon. friend who has just taken his seat is to ensure that such shall be the result, and I do not think it becomes the members of the government to sit silent in their seats, because. When a reasonable amendment, such as this, is proposed, I think some argument should be given against it, or some reason should be shown why it is not in the public interest, before the committee proceeds to vote upon it.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I am afraid that I cannot agree with my hon. friend that it is necessary to discuss any part of this contract over and over and over again without limit. I am in the judgment of the committee when I say that not one word has been said to-night in this House that has not been said repeatedly in the earlier stages of the debate. My hon. friend (Mr. R. L. Borden) has the advantage, if it be an advantage, of having my views, not only of last session, but my views of this session.

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May 17, 1904