GRAHAM (Minister of Railways and Canals) moved for leave to introduce Bill (No. 164) to amend the Intercolonial and Prince Edward Island Railway Employees Provident Fund. He said: The change in the management of the Intercolonial Railway necessitates a change in the description of the chairman of the Board of the Provident Fund. Hitherto he has been described as the general manager. This Bill merely defines who the

general manager is as applied to the Provident Fund Act. It will make no difference in the personnel of the chairman.

Mr. CROCKET.

I desire to call attention to an order passed by this House on February 11 for a return of all reports and accounts in connection with the survey of the St. John river between Fredericton and Woodstock. This return has not been brought down although I have called the attention of the Minister of Public Works to it on two occasions. I have received many inquiries from the counties of Car-leton and York in reference to this matter, and I am particularly anxious to have the papers brought down as soon as possible.

Mr. GEO. TAYLOR (Leeds).

The hon. the Minister of Finance said yesterday that they did not purpose making a loan for ten years, but the chances were they would make a long loan for 25 years or 30 years, or perhaps 50 years. His remarks would lead to the conclusion that he has no hope that the Grand Trunk Pacific will pay off this loan at the termination of the ten years. Now, look at the thing from a business standpoint. Would any business man make a loan at a high rate when he did not intend to use the money? If my hon. friend the Minister of Finance collects the amount of this loan from the Grand Trunk Pacific at the end of the ten years, as he intends doing, he should simply make a loan covering that period. Then, when he is repaid by the Grand Trunk Pacific, he will pay off that loan ; and if he requires more money, he would borrow at a lower rate. He says' that this loan which he intends making in order to obtain the funds for the Grand Trunk Pacific, will be at four per cent or perhaps a little more. Looking back, I find that in 1895 and 1896 my hon. friend from North Toronto (Mr. Foster) who was then Finance Minister, floated loans at about 2J per cent. Canada was then passing through a period of depression, which should have made the loan dearer, yet, n'otwithstanding the good times we have had since, my hon. friend has succeeded in lowering the credit of Canada to that extent that he has to pay four per cent for money, as compared with 21 per cent paid by his predecessor. And this money which he requires to borrow, to hand over to the Grand Trank Pacific, and which the Grand Trunk Pacific agree tc repay in ten years, he purposes borrowing on a long term. Would it not be much more businesslike to borrow the money for ten years and then when repaid by the Grand Trunk Pacific pay off that loan. By that time the interest rate will in all probability be lower; and should he require more money, he would be able to borrow it at less than four per cent. But by his present policy, he is about to bind himself to pay four per cent during 25, 30 or even 50 years. Suppose for instance, a property owner wanted to raise some more money on his property, but found it difficult to get advances from money lenders because his property was already subject to first, second and third mortgages. He however goes to a neighbour who has money to lend and who also owns property

and says to him: 'If you will go to the money market and borrow the $10,000 I require, which you can do on more favourable terms than I can, I will in return give you the security of my property for an advance of the same amount.' The transaction is put through in each case for ten years. At the end of that term, the one who borrowed in the money market will repay his loan with the money obtained by him from the second borrower; and then if he should require other money, he would borrow it at a lower rate. He might in that time be able to borrow at 2i per cent. But the government proposes to go on paying four per cent for 25, 30 or 50 years, instead of making a ten year loan at four per cent, and then if necessary reborrowing at a lower rate.

Hon. W. S. FIELDING (Minister of Finance).

I have to dissent entirely from the statements of my hon. friend, in so far as they imply that any loans have been placed by this government on terms otherwise than favourable, having regard to the conditions of the money market at the time the loans weTe issued. An argument which does not take account of these conditions is absurd. You cannot make a loan at a better rate than the conditions of the market at the time warrant. Suppose a buyer for one of the great houses is sent abroad to purchase goods. When he returns his employer says to him: 'I see that you bought goods at one and six per yard which some years ago you bought at one and three per yard. You have therefore failed in your duty to your firm.' Would not a satisfactory answer be: 'I bought the goods at the best rate I could at the time.' Well, in buying money, as in buying dry goods, you have to pay what the market demands. You are governed in both cases by the conditions of the market. Judged by that test, which is the only true one, every loan made by this government is a satisfactory one. If it be found necessary to make compai isons between the loans floated by my predecessors and those floated during my retention of the office, I am confident there will be nothing in the comparison which will in the slightest degree reflect on the policy of the present government; and in saying this, I do not wish to criticise in the slightest the actions of my predecessors. who no doubt got the best prices they could at the time and under the conditions then existing. With regard to the policy of restricting the government to the issue of a 10 year loan, to cover this advance, I do not think that would be wise. It is possible that the conditions of the market may be such as to render it desirable that we should issue a 10-year loan, and in that case I would hold myself free to do so. 1 Mr. G. TAYLOR.

hope, however, it will be otherwise. A short term loan necesarily implies, in most cases, a higher rate of interest than a long term. Whenever it becomes necessary for us to borrow, our duty is to have regard to the conditions of the money market, and issue the loan on the best terms, at the best rate, and for the best period that will meet the existing conditions. I would object just as much to a proposal to limit the loan to a 25 or 50 year period as to the proposal to limit it to a 10 year period. So much with regard to the first two points. As to the third point, although it does not add anything to the argument, it may surprise my hon. friend to know that we are pursuing the same course as that which was pursued by the late government in the case of the Canadian Pacific Railway loan. That loan was made for some five or six years. Immediately after it was agreed upon, the then Minister of Finance had to go on the money market and he placed on that market a loan-for what term? Five or six years? No. He made it for fifty years with the option of redeeming it at the end of 25 years.

Mr. LALOR.

What was the rate of that loan?

Mr. FIELDING.

I am very glad my hon. friend has put that question. They lent the money to the Canadian Pacific Railway at a fixed rate of interest, four per cent, as we propose to do to the Grand Trunk Pacific. and then went into the money market and paid more than four per cent for the money. So they pursued exactly the same policy as I am asking the House to approve. If it should happen that we will be obliged to pay a fraction more than four per cent, we shall be having the same experience as my predecessor.

Mr. LALOR.

Does the hon. minister approve of the plan pursued in the case of the Canadian Pacific Railway?

Mr. FIELDING.

I was not here at that time; but looking back, I do not hesitate to say that I am glad the government lent the Canadian Pacific Railway that money. There was a difference of opinion at the time regarding that policy. Better men than I thought it was not wise, but they have possibly since changed their views. It is easy to be wise after the event, and the men who were in parliament then had to determine the question according to the best light they had at the moment. And many of that day thought it was not a wise plan. I express no opinion except to say that in view of the great success of the Canadian Pacific Railway, there is none of us, I hope, who would not be willing to say, on looking back upon it, that we are glad the government gave them that aid. I say that, at all events, speaking for myself." So, the hon. gentlemen will see that

on every point of criticism of this loan, I can cite the precedent of the Canadian Pacific Railway loan. I do not attach much importance to that, but it is quite proper that, as a matter of illustration, 1 should refer to it. Hon. gentlemen opposite say that we are going to receive only 4 per cent and that the loan will cost us more. That was exactly the condition of the case with the Canadian Pacific Railway loan, and, as a matter of fact, in the case of that loan the rate of interest paid for the money was somewhat over 4 per cent. The hon. gentleman asks why we do not seek a short term ten year loan. Well, my predecessors did not think it was wise to do this in the case of the Canadian Pacific Railway loan. They held their hands free, they went into the market and found what the condition was, they adapted their loan to that condition, and, no doubt, they got the money at the best price at which it could be obtained. I mention this, not as an accusation against those who made the Canadian Pacific Railway loan, but as it may help to illustrate the present transaction. But I do not think that argument necessary to the case. I maintain that this loan is a fair business proposition, and that it ought to commend itself to the judgment of the House.