May 26, 1904

LIB

Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LAURIER.

I made a statement some time ago of the voters' lists which had been received and printed, and I do not know that the attention of my hon. friend has been called to that statement. I shall in, quire again how far the work has been proceeded with and let him know.

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Subtopic:   INQUIRIES FOR RETURNS.
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CON

Uriah Wilson

Conservative (1867-1942)

Mr. WILSON.

Is it the intention to finish those of last year which were not printed ?

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LIB

Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LAURIER.

The statement is that the voters' lists are printed as fast as they come.

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John William Bell

Mr. A. G. BELL.

What progress is being made with the return moved for on the 19tli of April, showdug the passes issued on the Intercolonial ?

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GRAND TRUNK PACIFIC RAILWAY.


House resumed adjourned debate on the proposed motion of Sir Wilfrid Laurier for the third reading of the Bill (No. 72) to amend the National Transcontinental Railway Act.


CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN (Halifax).

The contracts which, in their amended form, Mr. Speaker, have been submitted to parliament for ratification during the present session, are of a somewhat complicated and extraor dinary nature ; and although we have occupied a good many days in discussing their provisions, I think it necessary at this stage to go over some of the ground perhaps already traversed and to submit certain considerations to the House and the country. I have said that this contract,

as embodied in the amended agreement, is of a somewhat complicated nature, and I think I am not far from the mark in believing that not many members even of the cabinet, understand it thoroughly, while very few of their followers pretend to have studied it at all. The Minister of Railways (Mr. Emmer-son) may thoroughly understand it, but up to the present he has not given us any light on the subject, and we are entirely in the darrk as to the construction he puts upon its various clauses. We have been told by lion, gentlemen who have supported this ministry, one of whom is supporting it at present in this House, that all these matters are decided in caucus and that all discussion in the House is absolutely idle and unnecessary. That was in effect the language of the late Mr. Jamieson, who at one time represented in this House the city of Winnipeg, and it is the language used only very recently by the hon. member for the city and county of St. John (Mr. Tucker), who told the people of St. John, in so many words, that all these/matters are decided in caucus and that discussion in the House is absolutely futile and unnecessary. Well, Mr. Speaker, I do not so regard the institutions under which we are carrying on the government of the country ; , and therefore, notwithstanding that these agreements have been discussed at some length, I desire to add a few words.

I have remarked that not many members of the cabinet thoroughly appreciate this agreement, and even those of them who during the past four or five weeks have undertaken to discuss the subject have not always shown themselves thoroughly familiar with its provisions. The right hon. gentleman who leads the government told us even this year-and his remarks will be found on pages 2512 and 2513 of ' Hansard '-that the Grand Trunk Pacific is liable to pay three per cent oh lease of the eastern division. As a matter of fact, it is not liable to pay one cent.

The Minister of the Interior told us that the additional stipulations contained in the amending agreement do not impose one dollar of additional liability on the country, and his remarks in that regard were endorsed by the hon. member for Annapolis (Mr. Wade). Yet it has been demonstrated beyond a doubt that these amending provisions impose a very large additional burden of taxation upon the ratepayers of this country.

We also heard from the Minister of the Interior that the Grand Trunk Railway is! bound, under the terms of this agreement, to provide working capital and necessary betterments. As a matter of fact, the Grand Trunk Railway is under no legal obligation, under this agreement or otherwise, to provide any of the working capital for necessary betterments.

Having said so much to show that even by those members of the government who have 1124

given particular attention to the measure, its provisions are not always thoroughly understood and appreciated, let me come to analyse the proposition and see whether or not it is designed to carry out the object laid down by the First Minister when he introduced the measure last year. He proposed to establish a national transcontinental railway from ocean to ocean on Canadian soil, and to do that for a certain reason,-that reason being the danger, of which he appeared then to be convinced, but of which we have not heard him say much since-the danger of the abrogation by the United States of the bonding privilege. How does the government propose to attain the object which the right hon. gentleman has in view? Let us consider for a moment what the proposal really embodies.

It is intended to accomplish this result by the following means. In the first place, we are to build the difficult portion of the line, about 1,900 miles from Winnipeg to Moncton, at a cost of not less than $76,000,000. Then we are to give this portion free to the Grand Trunk Pacific for ten years, without interest or rental. We are then to lease it for forty years additional to the Grand Trunk Pacific at a rental of three per cent, which will probably be less than the interest the government will have to pay on the cost of construction. And although we have asked the government to amend this-provision so as to provide that the country shall receive in the shape of rental at least as much as it pays in interest, that amendment has been voted down.

They next propose to grant running powers to the Grand Trunk Pacific for fifty years additional over the eastern division, or in the alternative to give a lease for fifty years additional after the period of the first fifty years shall have expired. In other words, the Grand Trunk Pacific is to have a lease or control by running powers for at least one century over the eastern division.

In the next place, the government permits the company to control all terminals on the eastern division, so that the government must eventually concede any terms which the Grand Trunk Pacific may dictate at the expiration of the lease. Then they permit the Grand Trunk Pacific to build branch lines from the eastern division to important strategic points and to retain such of these lines as are profitable and force the government to buy such as shall be found unprofitable.

Following this, it has been agreed apparently-if we may judge by the language of Sir Charles Rivers-Wilson and Mr. Hays at the meeting of the Grand Trunk Railway shareholders-to subsidize lines from the eastern division to Port Arthur and North Bay, although the Prime Minister has admitted that the freight which goes to North Bay must necessarily go thence to Portland.

In the next place, the government refuse to impose on the Grand Trunk Railway stipulations which would prevent that company from carrying western freight to Portland. That subject has been brought to the attention of the government over and over again. First by one and then by another amendment, we have asked the government to impose on the Grand Trunk Railway those stipulations which they regard as of so much importance when imposed upon the Grand Trunk Pacific, and in every case, for one excuse or another, our amendments and requests to that effect have been voted down and refused.

Then the government has refused to take such powers as would enable it to prevent the Grand Trunk Railway from unfairly apportioning the rates as between its system and the system of the Grand Trunk Pacific.

In the next place, it has so framed this contract that the Grand Trunk Railway Company can acquire, hold and utilize terminals so as to place the government absolutely at its mercy on the conclusion of the lease.

In the next place, the government has left it open for the Grand Trunk Railway Company to carry Canadian through traffic either via North Bay, or via lake ports, or via Chicago to its terminals in the United States. That is beyond doubt. It cannot be controverted. We have the declarations or I should say we have the admissions o? the ministers of the Crown to that effect.

In the next place, the government has permitted the Grand Trunk Company to expedite the surveys of this line from North Bay to Winnipeg, with a view to the early construction of that line, so that channels of trade reaching to and connecting with the United States terminals of the Grand Trunk railways will be established to the detriment of the eastern division and to the detriment of the country, and especially to the detriment of the maritime ports of Canada. The right hon.. gentleman (Sir Wilfrid Laurier) has sometimes at least, been very frank as to the effect of this contract. For example, at page 1630 of ' Hansard,' quoting us of the opposition, he represents us as saying :

We cannot support your scheme ; but while we cannot support your scheme we ask you to support our scheme tor bringing the traffic from Winnipeg to North Bay

And then he interjects :

*-and surely then it will go to Portland.

Further on, he says :

For my part I have read his speech

He is there referring to myself.

-I have read his speech carefully, and I must say-it may be my fault and I shall be glad to be illuminated-if he will explain how, having brought the freight from the west to North Bay, he can send it on to St. John and Halifax, over the Grand Trunk, I will be glad to hear him.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

Well, I promised my right hon. friend some answer with regard to that, and I will answer him now. That freight which comes from west of the great lakes to North Bay can be carried to the national port? of Canada on the St. Lawrence or in Nova Scotia or New Brunswick if you extend the Intercolonial westward to North Bay. In that way you secure, and in that way alone, I believe, can you secure the carriage of western traffic to the national ports of Canada on the St. Lawrence and in the maritime provinces. But, if the right hon. gentleman thinks that traffic carried to North Bay will assuredly go to Portland, how is it in the first place that he is authorizing the Grand Trunk Pacific to build a branch line to North Bay ; and how is it, in the second place, that he has allowed to stand without contradiction for two months the statement of the president of the Grand Trunk Railway Company that that line is to be subsidized by this government as well as by the provincial government of Ontario ? If that line is so to affect the traffic of this country to the detriment of our national ports, why is it the policy of the government not only to permit the building of that line, but to encourage and aid the building of it by the granting of a very ample subsidy?

I am corroborated to a very great extent by certain utterances in the past-not in the very recent past-by my hon. friend the hon. member for Hants (Mr. Russell). For, although the hon. gentleman's voice has not been raised in this House very strongly in favour of government ownership during the present session, yet the time was, and not so many years ago. when that hon. gentleman thought that the salvation of our national ports in the maritime provinces was to be found in the extension of the Intercolonial to Georgian Bay. An! let me say that a great many of these gentlemen who in days gone by-and not so very long gone by-were agitating government ownership, and almost staking their political lives upon their belief in that policy, are now strangely silent in this House, and their only answer when that policy is advanced by hon. gentlemen on this side of the House is to suggest, forsooth, that those who advocate that policy are not sincere. Well, if anything is to be said about sincerity, one would think that the reproach would rather lie at the door of those, who, in days gone by. when this was not so much an issue in this country, were loud in their professions of faith, but who now find the shackles and fetters of party discipline altogether too strong for the expression of what I cannot but think is still their sincere faith. None of these gentlemen, and especially none of those who have been elected as so-called independents, should make any suggestion as to lack of sincerity. These gentlemen had better square themselves with their past

professions before attempting to read a lecture on the virtue of sincerity to hon. gentlemen on this side of the House.

But I must come hack to my hon. friend from Hants (Mr. Russell) who has made a very considerable study of railway subjects, I believe. Let me refresh that hon. gentleman's memory as to what his policy and his faith were in days gone by. The hon. gentleman may have forgotten a letter which he wrote to the editor of the Toronto ' Globe ' and which was published in that newspaper on January 11th, 1899. I attach importance to his remarks because at that time he represented the constituency of Halifax and was speaking from a maritime standpoint, and especially from the standpoint of the port of Halifax. I quote a portion of his letter only :

I hope that if any possibility is presented of accomplishing such an object, the government will not lose the opportunity.

The object, as will be seen by the context, was the project of .extending the Intercolonial to Georgian Bay. He continues :-

The extension to Montreal was simply the logical sequence of the purchase of the section between Ldvis and Rividre du Loup and the extension to the waterways of the great lakes would be a still further and equally logical sequence of the steps already taken

I believe that my hon. friend (Mr. Russell) during the present session has manifested a very great disbelief in the policy of government ownership. He has suggested that any person who expresses a belief in the possible advantages of government ownership cannot really be sincere. He thinks that those of us on this side of the House who have to some extent advocated that policy have done so altogether without sufficient study of the question. Yet, he possesses so high an opinion of his own ability that he fully believes that five years ago he was in a position to advocate this policy, and that we. after five years have intervened, and after we have been studying the question in that intervening period, are not in a position to pronounce on a question on which he was fully able to give an opinion five years ago. Thus, he does not seem to be unduly modest. But let us proceed further with his remarks.

It is a worthy aspiration for us to cherish that the mighty and ever swelling stream of Canadian commerce should not continue to flow for evermore for the enrichment of alien cities.

My hon. friend was full, then, of good strong Canadianistn. He had sympathy with the maritime ports, a sympathy which seems strangely to have deserted him in these latter days. He continues :-

The day must come if we are not to prove recreant to the ideals with which we entered upon our national undertaking, when the Intercolonial Railway will be the wTiole year

round carrying the produce of our western fields through the gateway of a Canadian port for shipment to the millions of Europe

Mr. Blair explained a few days ago to the Halifax Board of Trade how improbable it was that either the Grand Trunk Railway or the Canadian Pacific would hand over to the Intercolonial at Montreal any considerable portion, if any portion whatever, of the traffic originating on those lines. The grain carried as far as Montreal by the Canadian Pacific when not shipped at that port will continue to be carried over the Canadian Pacific until it reaches its ocean terminus at St. John, and the traffic originating on the Grand Trunk will under like circumstances continue to be carried over the Grand Trunk until it reaches its ocean terminus at Portland. The Intercolonial must as to this class of business for ever continue to play second fiddle to these great company lines until it can establish a connection that will plant it right in the heart of the great distributing centres and emporiums of tho west.

Not until then will it ever be in a position to compete on even terms with its rivals for the grain-carrying business of the Dominion.

And now I commend to my hon. friend from Hants (Mr. Russell) and to these gentlemen on the other side of the House who have ridiculed the purchase by this country of the Canada Atlantic Railway, the passage which immediately follows. It is this :

If anybody can suggest a better move in this direction than the acquisition if necessary of the Parry, Sound road, he should have the floor

My hon. friend (Mr. Russell) apparently could not find any one else to take the floor and so he took the floor himself and proceeded to demonstrate that what he had pronounced perfect wisdom a few years ago is now the most absolute folly. But he continued as follows :

.... Give us a through line to the grain distributing centres of the west, and the country will no longer be beholden to a company road running through a foreign territory, nor pay tribute to the seaports of a foreign country. We shall have for the first time in our history all the year round an all-Canadian route for the transportation of the harvests of the Dominion to the markets of the world.

My right hon. friend (Sir Wilfrid Laurier) has. however, developed a theory on this subject, which is worthy of attention and to which I propose to give attention for a few moments. He said speaking in this House during the present session, as reported at pages 2510 and 2511 of ' Hansard [DOT] '

We cannot undo the past altogether ; Portland has been made the winter terminus of the Grand Trunk Railway Company. I do not expect that they are going to abandon what they have. I expect, on the contrary, that Portland will serve the Grand Trunk as a winter port for the trade that they now have. But I expect that the trade of the future which is to be gathered by the Grand Trunk in the west will be brought down to some Canadian har-

bour on the Atlantic shore. At all events that is our policy.

Now it may be the policy of the right hon. gentleman and it may be his sincere desire blit will he or any hon. gentleman on the other side of the House point out to me how it is that you are to have the traffic at present gathered up by the Grand Trunk Railway Company carried to Portland and how, at the same time you are to have the new traffic which they will gather in the west carried to our Atlantic ports ? That is a proposition which I for one am absolutely unable to understand. Let me point out that not one syllable or suggestion of that kind is to be found in the language of the magnates of the Grand Trunk Company at their meeting. Sir Rivers-Wilson and Mr. Hays distinctly point to the conveying of traffic across the Great Lakes and to the Grand Trunk handling that traffic and carrying it and routing it in exactly the same way as they handle and carry and route their traffic at the present time. There is not a syllable or suggestion of any abandonment of their former policy. The traffic which they get from the west at the present time is carried to Portland. They bring it across the great lakes and their railway takes it at certain ports on the east side of the lakes and they carry it to Portland as their winter terminus. How are you to distinguish what they gather up in the west at the present from what they will gather in the future, and how are you for one moment to believe that any portion of that additional traffic which they will gather up in the west shall be taken to any other terminus than that to which is carried all the traffic they now control? The suggestion seems to me to be absurd and laughable. There cannot be any question about it. They carry to Portland the trade that now comes to them from the west, and they will carry to Portland in the future the trade which they gather in the west by means of the Grand Trunk Pacific. I challenge my hon. friend to point to any reason that should lead us to believe that western traffic which as Mr. Hays says will come across the lakes or to North Bay will be carried to the maritime ports of Canada.

Indeed, the traffic carried by the Grand Trunk Railway at the present time is not delivered to the Intercolonial under an agreement of which we have heard a great deal in days gone by, and thus it is not carried to the maritime ports of Canada.

There cannot be much doubt about where it is profitable for the Grand Trunk to carry this traffic. We have some interesting admissions on that point by three members of the government and I think that all who know railway corporations can certainly agree in this very reasonable proposition that railway corporations will carry freight to the point which will afford them the Mr. R. L. BORDEN.

most revenue. They will use that route which is the most profitable to them and will influence the shipment of grain or any other commodity' along that route which will be of most importance to them from a revenue paying standpoint. There cannot be any doubt about that; it is admitted and conceded by all of us. Now I had a little discussion on this point with my hon. friends the Minister of Justice and the Minister of Finance last year. My hon. friend the Minister of Justice was very frank about it. He said in debate last year :

Our great competitor in the English market is the United States, and for six months in the year, yes, for seven months in the year, we are depending upon our chief competitor for an outlet to that market for our Canadian products.

The Minister of Justice so absolutely overlooked our maritime province ports that he declared we had no winter port in Canada and that the traffic must therefore go to Portland. I must remind him once more that we have some of the best harbours in the world in the maritime provinces and that these harbours are open all the year round and are ready to do business all the year round if the policy of this government will enable them to acquire that business. He went on :

Is that wise or is it prudent ? How can you get out from Montreal in winter except by way of Portland or Boston or New York ?

I point out once more that you can get out by Halifax, St. John, Sydney or half a dozen other ports. He continued :

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The MINISTER OF JUSTICE.

Halifax competing with Portland ? It is double the distance practically.

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CON

William Rees Brock

Conservative (1867-1942)

Mr. BROCK.

What is the use of talking ?

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The MINISTER OF JUSTICE.

What is the use of talking ? Can we shut our eyes to geography ? Can we shut our eyes to facts ? How much of the trade of Montreal has gone to1 Halifax ? How much grain has gone from Montreal to Halifax or to St. John ? How much of our food products have gone that way? Invariably they have gone to Portland or to Boston or to New York. As Portland is to the Grand Trunk Railway so Boston is going to be to the Canadian Pacific Railway.

That is the view the Minister of Justice took. He directly declares that the maritime ports must be ignored and disregarded. As to present traffic conditions I do not think that so far as St. John is concerned he is accurate, because the Canadian Pacific Railway has done a larger business with St. John this year and made larger shipments from St. John than at any time in the past. I believe that the bulk of their ocean traffic has gone there. The Minister of Finance discusses the matter in the same way :

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The MINISTER OF FINANCE.

They might 'carry it to Portland if they were perfectly

free ; but under the present contract they are obliged to give the same rate to St. John or Halifax as to Portland.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

They will give the same rate, but it will be to their interest to carry it to Portland.

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The MINISTER OF FINANCE.

Undoubtedly they would make more money by carrying it to Portland, but we do not intend to permit them to carry it there.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

Where is the restriction to prevent them ?

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The MINISTER OF FINANCE.

By the fact that the Canadian rate is not greater than the American rate, and we will trust to the patriotism of the Canadian shipper that when the rate to a Canadian port is not greater 'than to an American port, he will ship by the Canadian port.

Now, I have cited that for the purpose of showing that ministers of the Crown are not altogether in agreement with each other. The hon. Minister of Finance relies in the ultimate result upon the patriotism of the Canadian shipper.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

At an equal rate.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

these concessions obtain from the government either relief from the payment of this rental or a new agreement in regard to the terms upon which it shall continue to operate that railway.

Let us now look for a moment at the contract proposed by the government in so far as it affects the western division. Comparisons have been made by those who, 1 suppose, have no better argument, between the proposal which is now submitted to the country and the agreement which was made with the Canadian Pacific Railway Company some twenty-three years ago. We are told of the land grant, we are told of the cash subsidy, but I do not recollect that any of those hon. gentlemen on the other side of the House who have discussed the subject ever remember that their own political friends, the administration of the late Hon. Alexander Mackenzie, made a better offer to any one who would be willing to build the Canadian Pacific Railway than the offer which eventually was accepted. Let us remember that as a starting point and let us remember that the conditions in the Northwest Territories of Canada were absolutely different at that time from what they are at the present day. There was not any one of these hon. gentlemen who now so loudly talk about the resources and the development of the Northwest who had one iota of faith in the future of that country. The Minister of Trade and Commerce had no faith in it. He had now, he says, great faith in it. The right hon. leader of the government (Sir Wilfrid Laurier) did not then, in so far as I am aware, exhibit any faith in the future of that country. These hon. gentlemen we found decrying the country, and now, when the country has been developed and advanced by the very policy that they denounced, they' ventured to make a comparison between the terms which we then conceded to the Canadian Pacific Railway Company and the terms which are now offered to the Grand Trunk Railway Company. Do not these hon. gentlemen who make that argument agree with the view of the hon. Minister of the Interior and the hon. Minister of Agriculture (Mr. Fisher) who have pointed out in glowing terms during the past session that the proposition now offered to the Grand Trunk Railway Company is perhaps the best railway proposition that was ever offered in the world. Do they not remember that the Northwest has been developed, that its value has been ascertained, that the splendour of that great asset is now realized by the people of this country, aye, and by the people of other countries and that it is under absolutely different conditions that we are now making a bargain with this company that proposes to construct a railway in the Northwest Territories of Canada. Let us remember that the Canadian Pacific Railway company Mr. R. L. BORDEN.

which they derided in days gone by, that railway which they said would not pay for the grease used upon its axle wheels, that company which they said proposed to construct a line through a country only fit to be the home of the bear and other wild animals now yields annual profits in the shape of net earnings to its shareholders of fifteen millions and over. Conditions are so absolutely different they make an absurd comparison when they compare this proposal and that which was offered to the Canadian Pacific Railway twenty-three years ago.

What does the government propose to do for the Grand Trunk Railway Company? In the first place let us always and constantly bear in mind that there has been an exhibition of shrewdness and skill in the framing of this scheme on the part of the Grand Trunk Railway Company which has never been surpassed before. The Grand Trunk Railway Company did not go into this scheme itself under its own name. It took good care to organize, as its president has stated, a subsidiary company ; and the advantage of that is this, that the subsidiary company, in which no capital at all will be invested, will make all the contracts and incur all the responsibilities, which it can very easily and very lightly evade, while the Grand Trunk Railway Company without committing itself in any way to the obligations of the' contract will obtain all the advantages and all the profits, by means of controlling the Grand Trunk Pacific Company, and by means of the possession of its common stock, which it will receive at a nominal value, and which it will dispose of no doubt at a very considerable profit. Therefore the Grand Trunk Railway Company, under this scheme, occupies the enviable position of having all the advantages and all the profits, and incurring none of the responsibilities! or disadvantages.

Well, beginning at that standpoint-and it is a very excellent one for the Grand Trunk Railway Company-let us see what the government propose to do. In the first place, they propose to guarantee three-fourths of the'cost of 1,000 miles of the prairie section. In the next place, they propose to guarantee three-fourths of the cost, no matter what it may be, of the mountain section. In the next place, they propose to pay interest for seven years on the bonds which the government guarantee in respect of the mountain section. In the next place, they propose to permit the interest for three additional years on bonds guaranteed in respect of the moun tain section to be capitalized and added to principal. Then, on these sums, which must be advanced by the government during a period of seven years, the government exact no interest from the Company at all ; but during a period of from forty to fifty years that interest runs on until

eventually the bonds are paid. Further than that, the government agree to implement the bond issue on the whole western division in case the bonds shall be sold below par; and in that way, under the amended agreement, they materially increase the country's liabilities.

But that is not all, although one would suppose that in all conscience it was enough. The government agree further to pay four and a half years interest on the bonds guaranteed by the government over the whole western division, and to make that advance without interest for a period of about forty-five years. So that, summing all these up together, you see that the Grand Trunk Railway Company has certainly a very good proposition in respect of the western division. This payment by the government of four and a half years' interest is permitted because that will logically and naturally follow from the terms of the agreement. There is no foreclosure ; and entry into possession by the government cannot take place until the Grand Trunk Pacific Railway Company is in default for five years ; and one can easily see that the Grand Trunk Pacific Railway Company will allow its interest to be in default for four and a half years, and after that will see that it is not further in default. Thus the government will have made an advance of four and a half years' interest, upon which it will receive no return whatever until the fifty years period has expired.

What next ? Formerly we had the security of mortgage. Now we have no mortgage. We have simply what was formerly a mortgage reduced to the security of an ordinary charge. We formerly had a first mortgage, while the Grand Trunk Railway Company had a second mortgage. Now the Grand Trunk Railway Company is placed on an absolute equality with the country, because when the government enters into possession and the interest on bonds must be paid out of the earnings of the road, the Grand Trunk Railway Company's bonds will participate proportionately with the bonds secured by the mortgage of the country. It must be borne in mind that I am putting this aspect of the question perhaps not quite fairly to the country, because, as a matter of fact, the Grand Trunk Railway Company's bonds would be in a better position than those guaranteed by the country, for this reason ; that there is no restriction on foreclosure proceedings by the Grand Trunk Railway Company, and the Grand Trunk Railway Company, by the control which it exercises over the Grand Trunk Pacific Railway Company, can always see that the earnings of the Grand Trunk Pacific Railway Company are applied in payment of interest on the bonds guaranteed by the Grand Trunk Railway Company, and not for interest on the bonds guaranteed by this country. So that, as a matter of fact, although ostensibly the bonds are placed on an

equal footing, nevertheless in reality and in the practical working out of the matter, the Grand Trunk Railway Company will be in a better position than the government of this country with respect to the payment of interest.

The government has given up its right of foreclosure. In place of foreclosure, and title consequent on foreclosure, which could be secured formerly, it has simply a right of entry. That, instead of being an advantage, is a" liability, because it will be only exercised in case of default. That default will only take place in times of stringency ; and when those times of stringency come, the government entering into possession will be bound to see that the road is maintained and in operation. So that the right of foreclosure having been abandoned, the government has no effective remedy until after fifty years from the date of the bond issue. It obtains no running rights over the western division after the expiration of fifty years, although it concedes to the company such running rights over the eastern division. It assumes more than three-fourths of all the obligations necessary to build the road from Winnipeg to the coast, but secures absolutely no compensating advan-ages. It permits the Grand Trunk to obtain for very moderate support $25,000,000 of the common stock of the Pacific Company, while the government, for three times, ay. ten times that support, obtains not one dollar of stock or other compensating advantages. Indeed, the terms of this Bill and this contract would permit the Grand Trunk Railway Company to obtain the whole $45,000,000 of common stock, although as a matter of fact only $25,000,000^ are to be forced on the Grand Trunk Railway Company in return for what it calls its support, that support consisting of the deposit of $5,000,000, which the president of the Grand Trunk Railway Company said will not cost his company one cent, and the guarantee of one-fourth of the bonds on the western division, which are secured by the mortgage of the road, and which are placed on an absolute equality with the bonds of the government. Then, last but not least, the government in return for all this secures no greater control of rates than that which is created by the general law of the land. So that, as I said before, there are absolutely no>

compensating advantages which can be called at all adequate in view of the enormous aid which this country is giving towards the construction of this railway.

Now, Mr. Speaker, it is an interesting question why this government, having last year made a bargain which the Minister of Trade and Commerce (Sir Richard Cartwright) declared to be fair not only to the people of this country but to the Grand Trunk Railway Company, after that -contract was thoroughly understood by the gentlemen representing that company, and after it was announced to the

people of this country months after parliament had prorogued that that contract would be carried out-it is an interesting question, I say, why these concessions have been made. One thing is absolutely certain, and that is that the government did not make them voluntarily. They have told us that themselves. I have their language under my hand ; but I will not weary the House with it. The Minister of Finance, the Minister of Customs, the Minister of the Interior, have each declared that the government would have preferred the terms of the contract as it was approved last year, but that they could not adhere to the terms of that contract. They could not adhere to that contract because the Grand Trunk Railway Company would not permit them to do so.

The government take a somewhat supplicatory attitude with regard to this modified contract. They say : Do not blame us ; we did not want to make these concessions ; we preferred the contract as it was ; it was a fair contract, but the Grand Trunk Company has compelled us to make these concessions, and therefore .we are obliged to make them. Well, it is somewhat peculiar to have a contract, which was fan- to the corporation, amended by further enormous concessions to that same corporation, and to be told in the free parliament of a free people that these concessions were forced upon the government by this corporation. It is a strange condition of affairs, but it is a condition of affairs which is declared by no less than three responsible ministers of the Crown; and we are obliged to take their word for it. Therefore we must assume that there is some influence, which has apparently not been disclosed to the people of this country, and which compels the government to yield everything that the Grand Trunk Railway Company demands.

Mr. Speaker, I have run over thus briefly the provisions of this contract. I want now to say a word or two about the amendments which we have offered, and to make an observation or two on the reasons why we offered them and on the arguments which have been evoked from the government in voting them down.

I myself moved during the present session a resolution setting out our preference for a policy of government construction in place of the policy which the government is now advancing. My hon. friend from West Toronto moved another amendment demanding that the people of this country should be consulted before this enormous liability should be entered into upon terms so onerous to the country. That amendment was voted down-it is true, by a small majority-a majority of only 19, but still a majority sufficient for the purpose of carrying through this measure.

Our other principal amendments may be briefly enumerated. First, we moved an Mr. R. L. BORDEN.

amendment to oblige the Grand Trunk Railway Company to pay par for the common stock which it acquires in the Pacific Company. We moved that so as to prevent the rates payable by the people of this country in the future from being affected by watered stock, as they have been affected in the past, not only in this country, but in the United States.- I have been reading some works on the history of rates and the management of railways in the United States. I have not time to-day to go fully into that subject ; but there is not the slightest doubt that in the United States the amount of stock held by bona fide holders has influenced rates, and has been taken into consideration by those who have the control of rates in that country. We do not want any watered stock, and therefore we asked the government to oblige the Grand Trunk Railway Company to pay par for any common stock which it might acquire in the Pacific Company ; but the government called up its obedient majority, and voted down that amendment.

In the next place, we moved an amendment declaring that the Grand Trunk Railway Company, as it controls the Pacific Company, and as it will control it, ought to agree to carry out all the engagements of that company. Again our amendment wras voted down, although there seemed to be good reasons to support it Inasmuch as the Grand Trunk Railway Company obtain all the advantages under this contract, it ought surely to accept the engagements which the Grand Trunk Pacific Company is nominally assuming.

In the third place, we moved a resolution providing that the rates for carriage between Canadian inland points should not be greater than the rates charged between the same points by any route not wholly Canadian. We demanded this ins order that traffic might not be diverted to United States lines south of Winnipeg owned or controlled by the Grand Trunk; and again our amendment was disregarded by the government and again voted down.

We asked that rates upon this line should not exceed the lowest rates between corresponding points by the Canadian Northern Railway, a fairly reasonable proposition ; because, apart from that, we have not any control of rates except that afforded by the general law of the land ; and the arrangement which the Canadian Northern Railway had entered into with the government of Manitoba seemed to afford some guarantee at least that the rates on that line would be fairly low.

In the next place, we moved a resolution that the Grand Trunk Railway Company itself should not in any matter within its power, directly or indirectly, permit, advise or encourage transportation of traffic by routes or at rates other than those in the said agreement provided ; and again the government called up its obedient majority,

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and that most important amendment was voted down. That amendment should not have been voted down if the government had at heart the interests of the national ports of Canada. The danger is not from the Grand Trunk Pacific Railway Company, because it has no terminals in the United States. The danger is from the Grand Trunk Railway Company, which has its enormous interests in Portland and Chicago. But when we asked that that company should be bound by the stipulations contained in this contract against the diversion of the traffic, every hon. gentleman on the other side of the House, even those who shouted most loudly for the interests of our Canadian portsj, stood up manfully and voted down our proposal.

We moved an amendment that the government should have power to enforce a fair apportionment of rates between the Grand Trunk system and the Grand Trunk Pacific system, a most important amendment ; but the government called on their supporters to vote that down also.

We moved that the rental of the eastern division should be secured upon the property of the Grand Trunk Pacific. That also was rejected.

We moved that the Grand Trunk Pacific Railway Company should pay a fair rental for any temporary lease of the line from Winnipeg to North Bay. The government did not approve of that amendment and rejected it.

We asked by an amendment that the government should supervise any agreement between the two companies respecting the issue of stock by the Grand Trunk Pacific Company, and thus prevent the creation of watered stock. The government has made a most ignominous surrender with regard to that. Last year over and over again ministers of the Crown declared that the rates payable by the people of this country might be affected by the issue of stock. This year they have permitted the Grand Trunk Railway Company to do that which it was forbidden to do last year. Watered stock is now to be permitted under this contract, and our amendment asking that it should not be permitted was voted down by that same obedient majority which was relied on with regard to the other amendments.

We asked that the government should receive shares of the common stock of the Grand Trunk Pacific Company in proportion to the support given by the government to the enterprise-that the people of this country, who are giving three or four times the support to this enterprise that the Grand Trunk Railway Company is giving, should be considered in the apportionment of stock, that the interests of the country, as well as the interests of the corporation, should be considered. Once more the government called up their majority so worthy to be relied on, and voted this down.

We asked further that alien labour should not be employed in the construction of this railway except where the Department of Labour found it to be necessary. A newfound zeal for the interests of labour was then displayed by the government, and we are promised general legislation to that end. In the meantime, however, we have asked that a special stipulation should be inserted in this contract in order that the Grand Trunk Railway Company should receive notice that in the surveys and in the construction of this road preference must be given to British labour, and in order that those how controlling the surveys and the construction of the road should clearly understand that other things being equal the preference must be given to our own . citizens.

In the next place, we moved that the stock of the Grand Trunk Pacific should not be placed upon the market unless issued payable at par. Surely that was reasonable. Surely it is not the policy of this government that stock issued at five, ten or fifteen cents on the dollar should go subsequently into the hands of bona fide holders at par, and stand in the fixing of rates as if it had been sold in the first instance at par. Surely the policy of the government is not a watered-stock policy ; yet that is the policy contained in this contract. In fact, so far as this stpck is concerned, it may be said that it is not even a good quality of water, and the simile has been used that it is only froth. A watered-stock contract is, however, what the government is submitting to us, a watered-stock policy is what they are advocating. If that be not the case, why did they vote down our amendment that the stock of the Grand Trunk Pacific should only be placed on the market if payable at par V Is there any reason why the people of this country should be saddled down with rates raised to an undue point because the stock does not represent capital invested, but merely the profits of the promoters ?

In the next place, we asked that a provision be inserted to the effect that if the Grand Trunk Railway or the Grand Trunk Pacific should divert traffic to foreign ports, any complaint thereon should be investigated by the Railway Commission, and be reported to parliament for action. If the government was sincere in saying that it desires to prevent diversion of traffic to foreign ports, it would have accepted this amendment, which is of the utmost possible importance to our national ports.

Then we moved a resolution that the prairie section should be completed within four years from the passing of the Act. That was voted down. Although time could not wait last year, the government was very anxious to have it wait this year.

We then moved an amendment that if the Grand Trunk Pacific should exercise its right to force on the government any unprofitable branches at the end of fifty years,

the government might take all or any of the remaining branches. In this way we desired to prevent this country being placed in the position of having to take and operate unprofitable branches without having the option of controlling the situation by taking also all the branches this company might find profitable. We further moved that the government should have haulage rights and running powers over the western division for the same period granted to the company over the eastern division. Both these amendments were rejected.

Then we proposed that the government should be empowered to expropriate the railway from ocean to ocean, upon paying fair compensation, and, in addition, we moved a further amendment empowering the government to do so in case these companies should not carry out the true intent of the agreement, or should combine, or conspire, to divert traffic to foreign ports. Some observations were made with regard to these amendments last night, and I desire to say that, with regard to this as well as any other company, I take the same position as I did last year. When last year I was advocating the empowering of this government to take over, if necessary, a certain portion of the Canadian Pacific Railway, I used this language :

In this connection it should be added that if, in the public interest, the whole or any portion of any great line of transportation can be more advantageously operated by the country than by a private corporation, then the same justification exists for exercising the right of eminent domain, upon payment of due compensation, as that which permits the government of a great railway corporation to expropriate the business, or property, or undertaking of a farmer, of a merchant or manufacturer.

My night hon. friend smiles, I do not know for what reason he would make any distinction between the two. The principle has been justified in the United States, In Great Britain and in this country, on the ground that it is in the public interest and in the interest of the -whole country, and I say I know of no reason why it should not be exercised in the case I have mentioned with all due regard of course to private interests, because in such cases you must not only be fair, but you must be generous to the person whose property is taken against his will. But so far as the principle itself is concerned, I say that it supports action in the one case as well as in the other.

I took that position last year with regard to the Canadian Pacific Railway, and I am prepared to take it with regard to the Grand Trunk Pacific. I make no distinction between the two, and I say that if the interests of this country should demand in the future that the government shall take over this undertaking and shall itself own the line which is to be constructed, to a very great extent, by means of the aid furnished by the public, this country should have no hesitation in doing so. And a provision of that kind should be inserted in the Bill, in order that the Grand Trunk Railway, the Mr. R. L. BORDEN.

Grand Trunk Pacific Railway and all others interested, may have due notice that this country is prepared to act upon those lines.

Perhaps we have not sufficiently realized in Canada that railways are, as was pointed out by my hon. friend from Compton (Mr. Pope) the other evening, the great national highways of the present day. Except 1,551 miles of government railway in Canada, all our railways have been constructed and are owned by so-called private corporations, which, however, were created to exercise a public function, and in that connection I may quote to the House the words of the late President Garfield on this subject in the United States Congress :

Since the dawn of history the great thoroughfares have belonged to the people, have been known as the King's highways, or the public highways, and have been open to the free use of all on payment of a small uniform tax or toll to keep them in repair. But now the most perfect and by far the most important roads known to mankind are owned and managed as private property by a comparatively small number of private citizens. Yet, in all its uses the railroad is the most public of all our roads.

And to the same effect is the language used by the Interstate Commerce Commission on two occasions. First, in 1892, as follows :

The railroad is justly regarded as a public facility which every person may enjoy at pleasure, a common right to which all are admitted and from which none can be excluded The railroad exists by virtue of authority proceeding from the state and thus differs in its essential nature from every form of private enterprise. The carrier is invested with extraordinary powers which are delegated by the sovereign and thereby performs a governmental function. ... So far from being a private possession, it differs from every species of property and is in no sense a commodity. Its office is peculiar, for it is essentially public.

Again, in 1898 :

While railway transportation in this country is carried on by private capital, it is essentially. a government function. . . . The railway is, from its very nature In respect to the greater part of its business, a virtual monopoly. The essential feature of a government function or of a monopoly is that it excludes the idea of competition.

According to the last report of the Department of Railways and Canals, there are in Canada 19,077 miles of railway. From this are to be deducted 1,551 miles of government road, leaving 17,526 miles of railway, all of which were probably aided by the government. That aid, Dominion, provincial

and municipal, is as follows :

Cash, Dominion $167,007,344

" provincial

39,884,584" municipal

12,661,527" loan G.T.R., 1855-57 .. 15,142,633" other loans unpaid .. 821,625Total $226,517,713

So that we have in Canada to-day railways aided to the extent of $226,511,113. Besides this there are provincial loans and municipal subscriptions of stock, bringing the grand total up to $231,520,480, or $13,552 per mile for every mile of railway constructed in Canada. Besides this, there have been gifts to these companies of land aggregating at least 60,000,000 acres, or 3,500 acres per mile-lands which when given were worthless, perhaps, but some of which are now very valuable.

In bringing these facts to the attention of the country, 1 am not criticising bargains made in the past, but I am pointing out the enormous aid that these railway corporations have received, and I am suggesting that it is now time for us to pause and consider whether or not in the future we shall carry out the same policy, or whether we shall at least see to it that, in return for any aid afforded to railway construction, the country shall have some interest in the ownership of the roads and some share in the profits resulting from their operation. What returns have we at the present time from these enormous subsidies of money and land ? We have no interest in the roads which have been largely constructed from our own assets and no share in the evergrowing profits arising from the operation of these roads. These profits are, and must be, appropriated for the benefit of the shareholders. We cannot undo the past, as my right hon. friend has said. We cannot interfere with vested rights, and I am not suggesting that we should interfere with vested rights. But let me point out that in considering what is to be done in the future, we have the right to take into account what profits have been made by these companies so largely aided by the state in the past. During the year ending 30th June, 1903, the profits of Canadian railways were no less than $28,583,000. These are the roads that were aided by the country to the extent of nearly $14,000 a mile.

Consider also the amount of bonds and stock issued by the various companies. This is of importance, when we remember that the government are permitting in this very contract the watering of stock to an enormous extent. The issues of Canadian railways are as follows :-

Bonds $424,100,762

Preferred stock .. .. 136,846,825

Ordinary stock 346,923,487

Total $907,871,074

It is beyond doubt that the bonds did not realize full value. It is beyond doubt that the stock, to a very considerable extent was not paid for in full. But these securities are expected now to make returns to those who are bona fide holders. And when a question of rates comes before the Railway Commission, the holders of these securities

will be insistent that rates shall be so fixed that they may receive a fair return on stock for which they may have paid one hundred cents on the dollar although that stock in the first place may not have contributed ten cents on the dollar to the construction of the railways.

I do not minimize what these railways have done. I admit that they have done a great deal to open up and develop Canada. But we have to pause and consider whether a different policy in the past might not have brought about equally satisfactory results with greater advantages to the country. Suppose that we had undertaken, in the first place to build the Canadian Pacific Railway or some other great railway which yields an ample return; suppose that we make a very large discount for the alleged disadvantages of government ownership, should we not have had a fairly good paying property to-day, and might we not have had at least the same advantages that we now have in the opening up and devefopment of the country ? Could not even the splendid results which have attended railway enterprise in Canada have been gained with less cost to the country and with greater advantage to the country in the shape of a return of some revenue for the enormous public aid that has been given for the construction of these railways.

In North America, state ownership of railways has not made much progress. Perhaps, therefore, we may be overlooking the fact pointed out the other day by my hon. friend from Compton (Mr. Pope) that, outride of Great Britain, Canada and the United States, the total railway mileage of the world is distributed as follows ;-owned by private corporations, 87,834 miles; owned by the governments of various states no less than 146,813 miles. Of fifty-two countries that have been considered in a very able argument presented to the Senate of the United States, forty-two have public railways, while but twenty-nine have private railways ; twenty-one have public railways only, while but nine rely upon private railways only. Let us look very briefly at the experience of one or two countries in this respect. And I am not now making an argument in favour of state ownership, but rather reminding the House that, perhaps, we in Canada have not very much considered this question, and have not looked, as much as wo might have done, to the experience of other countries.

In Belgium, the state owns 2,513 miles of railway, out of a total of 2,845 miles. The operation of these railways resulted in a profit in the year 1900 of more than $11,000,000. Freight and passenger rates have been reduced more tha 40 per cent. A report on the administration of railways in Belgium made to the Royal Commission of Great Britain, states the result thus-and I am quoting from page 464 of Mr. Jeans' work on railway problems.

of government ownership in so far as the Intercolonial is concerned. On the contrary I think there is a stronger sentiment than ever in the minds of the people of Canada in favour of retaining and operating the Intercolonial Railway as a government railway of Canada. By the extension of that railway westward it could do a profitable.business. Its lines in the province of Nova Scotia and southern New Brunswick are profitable and paying although operated at a low freight rate. This line from Montreal westward would be even more profitable. These two profitable portions would ensure fair average results upon the whole system.

Let me point out to my right hon. friend that, if the press is to be believed, a very strong protest has been made by gentlemen in the west, some of whom, I believe, have been supporters of his own party in the past, against putting to one side any idea of government ownership in connection with the proposed transcontinental railway. I do not know whether this document, which I have observed in the ' Citizen ' of this morning, is authentic, but it contains some very cogent language from which I shall quote a few words :

The remedy lies in railways under public ownership and operated by a non-partisan commission. The Intercolonial should be freed from the spoils system, placed under such a general manager as Sir Thos. Shaughnessy, Mr. Hays, Mr. Whyte or other efficient railway administrators, and extended to the Rocky mountains and the Pacific ocean.

Topic:   QUESTIONS.
Subtopic:   GRAND TRUNK PACIFIC RAILWAY.
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?

Some hon. MEMBERS

Hear, hear.

Topic:   QUESTIONS.
Subtopic:   GRAND TRUNK PACIFIC RAILWAY.
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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

I am glad I have the support of some of my friends on the other side of the House.

Topic:   QUESTIONS.
Subtopic:   GRAND TRUNK PACIFIC RAILWAY.
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May 26, 1904