June 28, 1904

RAILWAY ACT, 1903-AMENDMENT.


Bill (No. 132) to amend the Railway Act, 1903 (Mr. Fitzpatrick), was read the second time, and House went into committee thereon. On section 1, 1. In order so the ascertainment of the true net earnings of the eastern division of the Grand Trunk Pacific Railway for the purposes of the scheduled agreements referred to in the Act of the present session intituled ' An Act to amend the National Transcontinental Railway Act,' the Board of Railway Commissioners of Canada shall, upon the request of the Minister of Railways and Canals, inquire into, hear and determine any question as to the apportionment of any through rate or rates between the Grand Trunk Pacific Railway Company and any other transportation company, whether such company is or is not a railway company, or, if a railway company, whether it is or is not as such subject to the legislative jurisdiction of the parliament of Canada, for the purpose of determining whether such apportionment is Just and reasonable, having due regard to the interests of the government of Canada as owner of the said eastern division and of the Intercolonial Railway, and to the provisions of the National Transcontinental Railway Act, and of the said Act of the present session, and of the said scheduled agreements.-which Acts and agreements are hereby declared to he part of the special Act of or respecting the Grand Trunk Pacific Railway Company within the meaning of paragraph (w.) of section 2 of the Railway Act, 1903 ; and in any such case the fact that the Grand Trunk Pacific Railway Company has agreed to such apportionment shall he material evidence only and not conclusive ; and such net earnings shall then be ascertained upon the basis of the receipt by the Grand Trunk Pacific Railway Company of such share of such through rate or rates as,



in the .opinion of the said board, that company should have received under a just and reasonable apportionment.


LIB

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

Liberal

Hon. OHAS. FITZPATRICK (Minister of Justice).

This clause was introduced for the purpose of giving effect to an undertaking that was entered into by the govern rneut when the National Transcontinental Railway Act was under consideration. It was suggested that it would be possible for the Grand Trunk Railway and the Grand Trunk Pacific to enter into an arrangement by which the Grand Trunk Railway might divert all the traffic of the Grand Trunk Pacific down by way of North Bay, and that it would be impossible for the Railway Commissioners to exercise any control over it. It was argued at the time that under the different sections of the Railway Act (263, 266, 267 and 309) the Railway Commissioners would have the power to control such an arrangement. It was thought that these sections did not go quite far enough and were not quite clear enough, and in that view this amendment is introduced for the purpose of carrying out the undertaking that the Railway Commissioners would be given absolute power and control to investigate any traffic arrangement that might be made between the two companies.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

I call the attention of the Minister of Justice to the limit he has placed upon the first section. It says it is only for the purpose of ascertaining the net earnings of the eastern division.

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LIB

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

Liberal

Mr. FITZPATRICK.

The apportionment.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

Yes, so far as it affects the net earnings of the eastern division. The government of Canada as guarantor of the bonds of the western division are equally interested, because if an undue proportion of the through rate is applied upon the Grand Trunk Railway proper, to the depletion of the earnings of the Grand Trunk Pacific, it may result that there will be default in the payment of the interest upon the bonds of the Grand Trunk Pacific. It seems to me, therefore, that at the very inception of the clause there has been an oversight, and that the country is equally interested in the proper apportionment of the through rates, whether it affects the rental of the eastern division or the earnings that will be available to pay the bonds on the western division.

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LIB

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

Liberal

Mr. FITZPATRICK.

The question raised during the discussion was with respect to the apportionment of rates between the Grand Trunk Pacific and the Grand Trunk Railway, in so far as this apportionment of rates may result in a diversion of the traffic. My intention is to do what is necessary to give the Railway Commission absolute control over the through-traffic arrangements made . between these two companies, and I am quite prepared to accept any amendment that will tend in that direction. If my hon.

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LIB

William Mulock (Minister of Labour; Postmaster General)

Liberal

Sir WILLIAM MULOCK.

friend would suggest any amendment that he would think effective I would be glad to consider it between this and next Tuesday, when the Bill will be discussed again under an arrangement with my hon. friend from East York (Mr. Maclean).

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

The country are just as much interested in the proper apportionment of * the rates so long as they remain guarantors of the -bonds, as they are in regard to the rent of the eastern division. I will be very glad to do what the hon. gentleman says.

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LIB

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

Liberal

Mr. FITZPATRICK.

I would move that to that section be added the following amendment :

Provided, however, that either party shall have the right without leave, to appeal to the Supreme Court of Canada from any order or decision of the Board of Railway Commissioners under this section.

It may be prudent to reserve to the government the right to appeal to the Supreme Court, for it is a matter of so great importance that we should have it settled there. We can leave the clause in abeyance. *

On section 2,-majority of directors of subsidized company to be British subjects.

Mr, CASGRAIN. I desire to call the attention of the Minister of Justice to section 10 of the Act incorporating the Grand Trunk Pacific Railway Company7, which reads as follows :

The directors may annually appoint from among themselves an executive committee composed of at least three directors, for such purposes and with such duties as the directors by by-law determine ; and the president shall he ex-officio a member of such committee.1

It seems to me evident that the amendment which my hon. friend is now proposing to the General Railway Act should have been proposed to the law which ratified the contract, and the subsequent amendments, with respect to the National Transcontinental Railway. Suppose the majority of this executive committee should not be British subjects, it seems to. me that the amendment my hon. friend proposes would be nugatory so far as the Grand Trunk Pacific is concerned ; because the board of directors, although a majority7 of them may be British subjects, may appoint on this executive committee a majority who are not British subjects. They may even appoint the whole committee from gentlemen who are not British subjects. This safeguard is all the more important in regard to the National Transcontinental Railway, because, as was indicated before, the company may divert its traffic from Canadian ports to American ports, and the whole policy of the company may be in the hands of an executive committee of directors. Therefore it seems to me that some provision should be made in the Act, specifying that when an execu-

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five committee of the board of directors is appointed, the majority of the members of that executive committee should also be British subjects.

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LIB

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

Liberal

Mr. FITZPATRICK.

This provision is general in its effect and it was intended to make it applicable to all railway companies in Canada. The only company in Canada to which such legislation is now applicable is the Canadian Pacific Railway. There is no reason why it should be applicable to the Grand Trunk Pacific alone. I think it is proper that it should be applicable to all railway companies in Canada which receive government aid. It seems to me that the executive committee must of necessity be subject to the control of the board of directors. I do not know whether there is anything in the Act which takes them out of the jurisdiction of the board of directors : but unless there is something exceptional, an executive committee would of necessity be under the control of the directors and could do nothing without the sanction of the board.

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CON

Samuel Barker

Conservative (1867-1942)

Mr. BARKER.

The executive committee might accomplish many things before the board could have an opportunity of revising their proceedings. If there is any object in having a majority of the board'British subjects surely there must be a like object in. providing that those who actually execute their own resolutions should also be, at least a majority of them, British subjects. I cannot see why there should be

a board of twelve might have seven British subjects and five the subjects of some foreign nation. It seems to me that we have already had an indication of that in the case of the Grand Trunk Pacific. The statement has been made that some of the best offices have gone already to United States people : and during the recent investigation, some of these have been compelled to go back and Canadians have taken their places, so that we may say that the thin edge of the wedge has been introduced. While we lie so close to the United States, it might be in the interest of Canada to have some American directors on the board ; but I do not think it is in the interest of Canada to have such a large proportion of citizens of some other country.

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LIB

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

Liberal

Mr. FITZPATRICK.

I would not be prepared at first sight to agree to the suggestion made by my bon. friend. In Canada the majority of our railroads require foreign financial aid. In the United States and other foreign countries those who invest their money in our enterprises are anxious to have some sort of representation on the board of management, and I think while we ought to keep in our own hands the absolute control of the policy of the company, and its general management, it is equally fair that those who invest their money should have some representation on the board. For that reason, I would not be disposed to go so far as my hon. friend suggests.

any desire to have a majority of the, board British subjects if the men on the spot who have actual control and put their plans into effect should not also be British subjects [DOT] a board in England or elsewhere could not always reverse their decisions if they desired. I do not see why these men, having such power of action, should not be themselves restricted in the same way as the board of directors are.

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LIB

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

Liberal

Mr. FITZPATRICK.

In any event, the question arises whether or not this is a proper amendment to the General Railway Act. The other matter will require to have an amendment to the special Act respecting the Grand Trunk Pacific.

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IND

William Findlay Maclean

Independent Conservative

Mr. MACLEAN.

Would it not meet the ease to make the clause read : ' A majority of the directors or any permanent executive committee of the directors ? ' I think we ought to have that provision in the Act, because we are trying to keep the control of this road in the hands of British subjects, and an executive; committee composed of three members, not British subjects, might be the actual controlling influence on the board. '

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CON

Richard Blain

Conservative (1867-1942)

Mr. BLAIN.

Why should not the Minister of Justice go further and provide that all the directors of a railway company which receives aid from the public treasury of Canada should be British subjects ? While we may keep the control under British law,

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CON

Charles Eusèbe Casgrain

Conservative (1867-1942)

Mr. CASGRAIN.

There may be a great deal in what my hon. friend spys ; but I do not think there is much in his remark about the majority of the executive committee being British subjects.

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LIB

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

Liberal

Mr. FITZPATRICK.

My difficulty with respect to that suggestion now is that I should not like to adopt it offhand, without ascertaining how far it would affect other corporations, for instance the Canadian Pacific Railway. I see the fairness of the re marks made by the hon. member for Montmorency and my hon. friend from Hamilton, and the desirability of meeting their wishes ; but I do not like to agree to it without seeing what would be the effect of the legislation.

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CON

Charles Eusèbe Casgrain

Conservative (1867-1942)

Mr. CASGRAIN.

I was going to suggest that after the words ' majority of directors ' we should add the words ' and of any exeen-tive committee of any company.' The directors of this company may be composed of gentlemen residing in the United States and also in England, and of course the executive committee will, to a great extent, control the policy of the company, because by section 10 of the Act incorporating the Grand Trunk Pacific, it is provided that the board of directors may vest the executive committee with such duties as the directors may by by-law determine. Suppose the directors, composed of a majority of British subjects, invested the executive committee

with powers involving to a great extent the policy of the company, then it seems to me that the executive committee would have the right to carry out that policy, I quite understand that this policy will be subject to review by the board of directors, but in a great many instances this board would only meet very seldom and a great many things might happen between the meetings of the board by which the policy of the executive committee would be carried out notwithstanding the wishes of the board of directors.

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June 28, 1904