January 25, 1910

CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

My hon. friend is not so good a listener as he is a talker. I shall read what he said again:

234U

I am advised by competent authorities that, from the general knowledge nossessed of that country, that road can be built at a very moderate cost. From Quebec or Levis to near the point where the railway will leave the province of Quebec it can be built at a comparatively low cost.

The public want to know what the government meant by that.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

My hon. friend knows what the government meant. It meant the information given by the chief engineer of the Department of Railways and Canals, Mr. Collingwood Schreiber, C.M.G.

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CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

I thought probably some thing of that kind.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

Of course.

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CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

I have something more for my hon. friend. I hope he is not losing his temper. He is an excellent gentleman until he gets excited, and I have respect for him even more in his calmer moments than when he is excited. He was giving us a judicial statement on that occasion, and he will admit that it is hard to square them with the facts of to-day. He told us that founded upon competent information and high authority-not upon isolated consultation but on many authorities-he had ascertained that the road from Levis to Moncton would cost $25,000 per mile. The section of 1,475 miles from Quebec to Winnipeg would cost a little more, or $28,000 per mile. Taking the two sections together, the cost of the whole road from Moncton to Winnipeg he estimated at $41,300,000. To that, he told us, we must add the interest during construction, which would bring the total cost up to $54,609,675. Then he went again into an elaborate computation and made out that the total interest charge on the country would !be a little over a million dollars per year, and the actual cost ot the country all told less than $13,000,000 for the whole undertaking. Contrast those figures with the figures given by the Minister of Railways (Mr. Graham) in the session of 1908. According to-his figures, the outlay, not taking the Quebec bridge into account, computed upon the sarfie basis as the $13,000,000 were argued or -by the Prime Minister and the Minister of Finance, would he a capitalized interest hearing fund of $38,000,000. And again as the Minister of Railways told us a year and a half ago, the road, instead of costing an average of about $27,000 per mile from Moncton to Winnipeg will actually cost $63,427 a mile.

In view of these facts, and the startling declarations made by Mr. Hodgins-declarations which were not withdrawn, hut were stifled and suspended on the promise that__he would be brought immediately Mr. FIELDING.

before a committee of three experts who were then said to be at work, and give his evidence to them-in view also of the .fact that a gentleman who, out of all the engineers in -Canada, was selected as the one best fitted for the position of chief engineer, and his statement that, after he had been in charge for some years, he found the most glaring disregard of his instructions, and in view still further of the startlingly damaging disclosures made by Mr. Woods, the assistant chief engineer of the Canadian Pacific railway, is it not amazing that the right -hon. the Prime Minister should propose to ms this gold-brick in the form of the resolution we are now discussing. But the Prime Minister is not responsible. He is simply doing what he -has been commanded by__the power behind the throne. There was a time when, in my simplicity, I thought that the right hon. gentleman, as Prime Minister, ruled his party and controlled the destinies of Canada, but I have since learned that there is a stronger hand than his-the hand of the chairman of the Transcontinental. That gentleman could afford to ignore even the Minister of Railways and reject a public document affecting the interests of the people and which should have been suto-mited to that minister. Two years ago that same gentleman demanded that the Prime Minister should have an investigation for the purpose of castigating Mr. Hodgins, and the same gentleman again is file moving power in this matter a.s revealed toy the letter of the 39th of December read by the right hon. gentleman this afternoon. It is an amazing condition of things, but perhaps were it not for that communication, the Prime Minister would not have -been aware of the existence of this Lumsden letter at all. Mr. Lumsden resigned the 25th J*une last. His resignation was published in every newspaper in the country. Tt was considered everywhere a matter of great significance, yet apparently the Prime Minister knew nothing about it. He knew nothing about that resignation until this gentleman -behind the throne said to him: You must have an investigation, you must whitewash me once more. And hence we have the preamble in this resolution:

' Whereas it appears, by a return made during the present session, &c.' Is it not fortunate that there is a leader of the opposition, that there is an-opposition in this House, as otherwise the Prime Minister would probably not have known of the Lumsden letter at all.

I have been moving for returns and they come down very slowly, but we have obtained some. We have succeeded in obtaining material which in -a large degree sub-

stantiates the statements made by Mr. Woods and Mr. Lumsden, corroborated to some extent by Mr. Grant, for Mr. Grant also admits that there has been over-classification to a very considerable degree, and thus refutes the statement made by hon. gentlemen opposite a year ago that there was absolutely nothing of the kind. We have evidence that the discrepancies between the original estimates and the actual returns, as the work was done, aTe so startling, so utterly inconsistent with any hypothesis of honesty or competency, that a most thorough investigation is required land not such a misleading, narrow, hide-bound investigation as the right hon. gentleman proposes. What is required is an immediate, broad, general and thorough investigation of the business on the eastern division of the Transcontinental, which will, show the methods which have been followed in its construction and which have resulted in the enormous expenditure which has startled the country. One would suppose that before letting any work, investigations must have been made by thoroughly competent engineers in order to enable the government to judge whether the tenders were reasonable ot not and which is really the lowest tender; and one can realize that unless the estimates of the engineers are unreasonably accurate, one cannot expect a satisfactory result. It is an absolute farce, a leap in the dark, if these estimates upon which the tenders are based and accepted are not reasonably accurate. I am informed, and by competent engineers, too, that, in this matter of classification, the very most that is to be allowed for margin of error is twenty per cent. If you find that the estimates as tendered upon do not work out within a margin of twenty per cent at most, there is immediate need for investigation, for the result must come either from incompetence-or dishonesty-of the engineers who located and estimated upon the line, or from the incompetency-or dishonesty- of the men who are classitying the progress estimates from time to time as they are put in. Therefore, I hope I need not apologize for referring to some figures, for I am only giving to the House information that I should have been glad had the government given it to us long ago. Now, taking district ' F ' and the McArthur contract extending for 244 miles east from Winnipeg, we find that the estimate of quantities of the engineers who laid out the work represented a total expenditure of $13,010,398. That was the amount that the government led the country to understand the work would cost, approximately. There was a change in the location effected by Mr. Hodgins, as he testified during the Hodgins investigation, which resulted in an estimated reduced expenditure of $1,010,398.92, leaving the estimated cost of the entire contract in round numbers, $12,000,000. Now, compare that with the returns actually made and with the allowancee on which the work was paid for. In the figures I am about to give, 'S.R.' stands for solid rock, 'L.R.' for Loose rock, and 'C.E.' for common excavation:

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COMPARISON OF ESTIMATE AND RETURN.


- Estimate. Yards returned. Rate. Estimated cost. Actual cost. Difference. In- crease.S. R L. R C. E Totals .. Less-Yardage bv '6'S p c. Cost increased by c. yds. 3,696,336 733,454 11,233,247 c. yds. 6,492,923 2,029,325 2,123,151 $ cts. 1 70 0 60 0 30 $ cts. 6,283,771 20 440,072 40 3,369,974 10 $ cts. 11,037,969 10 1,217,592 00 636,945 30 8 cts. 4,753,898 10 777,522 60 2,733,028 80 p. c. 75 17615,663,037 10,645,399 5,017,638 10,093,817 70 2,798,691 70 12,892,509 40 2,798,691 70 28 15,663,037 15,663,037 12,892,509 40 This contract has a feature in common with all the other contracts that have been brought down-solid rock grows, loose rock gTows, common earth shrinks. When I was a boy going to school I used tc Tead: Stones grow; vegetables grow and live; animals grow, live and feel. We are animals; we feel. The stones handled under these contracts have grown; they have grown enormously. And the memory of the over-classification- aye, and, I believe, the dishonesty-that characterizes this work will live and grow in the knowledge and recollection of the people of Canada. Common excavation shrinks in these cases. It was only worth



thirty cents a cubic yard; it was not woTth keeping. And, though it was estimated to cost about $3,500,000, it actually cost only $636,000. But, though we saved on that about two millions and three-quarters, it was like feeding the peas to the pig in the story-we gained on the pig but we lost on the peas. And the whole thing works out disaster and loss to the people of Canada. Here we had 15,000,000 of a total estimated yardage of material to be moved. In the result only about 10,000,000 has to be moved, an error of upwards of 5,000,000 cubic yards in the total by a 'competent' engineer. And the chairman of the commission tells us with pride that they have upon the line practically the same engineers as they had at the time the line was located. It was to cost about $10,000,000 for the whole 15,000,000 cubic yards; but the actual cost is $12,890,000. That is, while we have a decrease in the quantity of about one-third, we have an increase in actual cost of $2,798,791.


CON
CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

Yes, that's the way the money goes. And yet the right hon. Prime Minister, in the interests of the public, as he says, would ask us to have an investigation as to whether Mr. Lumsden was right in losing confidence in his staff-but you must not touch the substance of the question, namely, the cause of that loss of confidence. The figures I nave given show that the average rate, according to the classification, was 64 cents a yard, but the average rate as now classified is $1.21 a yard. That is, it was to have cost 64 cents for each cubic yard removed; as a matter of fact it has cost $1.21 per cubic yard. The quantity is five millions less to remove, but it is costing us $2,750,000 more to move it. The whole work, everything of the 103 schedule items which appear in the returns brought down, covering everything, except rails and ties and things of that kind, the total expenditure on the contract was to be, as I said, $12,000,000 foT 103 items; the actual expenditure for three items alone is $12,900,000, or in round figures $900,000 more for these three items than it was to be for the 103 items entering into construction of this whole 244 miles of road. Now, the Minist:-of Finance-I am sorry he has run away-made careful estimates upon competent authority, and he found that this section of the road was to cost on an average $28,000 a mile. What does he think of it? Does he think that an investigation is necessary or not. when I tell him that these three items alone aver-Mr. LENNOX.

age, for this 244 miles, at the rate of $53,000 a mile. Well, that is the McArthur contract, and there is more of it.

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CON

George Taylor

Conservative (1867-1942)

Mr. GEO. TAYLOR.

A lot of election fund came out of that.

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CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

There is a way of manipulating figures so that the wrong man gets the contract. If you will just place the items unevenly, estimate some of them extraordinarily high and others extraordinarily low, and particularly if anybody gets behind the scene, or the screen, and ascertains how those figures are running, there is a vast temptation and there is a great chance to have dishonest tenders. Now McArthur's contract, I want to state here, Mr. Speaker, was absolutely not the lowest tender. If there had been a competent or honest estimate at the time, and competent and honest returns and classification as the work progressed. The Pacific Construction Company's tender was the next lowest, and there was only a difference of $18,000, and this seeming difference only between those two tenders. It does not take much manipulation to change those figures. Just take half a dozen items which we have on record now, and they wipe that out. Take these items: 4, 5, 6, 8, 12 and 24. Now I need not go into many particulars, but I want to say that, taking the difference in prices in favour of the Pacific Company on those six items alone, they result in this, that Mr. McArthur was not the lowest tenderer but was actually a higher tenderer than the Pacific Company. Endeavouring to shorten this as much as I can, let me give only a few of the figures. Take these items we have been dealing with. On those items, as the estimates were advertised to the public, the Pacific Company appear to be $221,000 lower than the McArthur figures. Actually worked out upon quantities as returned and allowed, the Pacific Company's figures were really $426,112 lower. So you see upon these two items alone, under: the changed conditions of things, more than enough, enormously more than enough, to give the tender to the Pacific Company. There were 2,750,000, in round numbers, more yards of solid rock than was estimated. The Pacific Company was five cents per yard better on the tender than the McArthur Company; that in itself makes $139,000. On loose rock, there was a differnce of 1,250,000 yards; that, at the rate of five cents a yard, makes $64,000. And so on these five items alone there is a difference of only $18,000 to start with, it shows that we would have been $186,000 in round numbers, better off by giving it to the Pacific Company than by giving it to the other company.

Now we come to a very interesting contract, and a very interesting section of the road, and that is from mile 0 to mile 150 west of the Quebec bridge. That contract, 'so far as I can understand, was let to McDonell & O'Brien, or Hogan & Mc-Donell. I have ascertained through Mr. Ryan, the secretary of the board, that there is no confusion as to the particular work in hand, and so we need not trouble ourselves as to which of the contractors handled it. Mr. Ryan explains to me that, by some subsequent arrangement with M. P. Davis, M. P. Davis and J. T. Davis became contractors for the first 50 miles. I am only concerned to show the extravagant, the wholly incompetent or dishonest-estimates in regard to quantities. Now as regards the difference of quantities. We have the estimates showing a little over a million cubic yards, and we have the actual returns allowing for more than 3,500,000 cubic yards. We have the estimated cost, upon the estimates of quantities, at $1,750,000, we have or alleged actual quantity, mark you, on this one item an actual expenditure of $5,512,102. We have a difference here of

$3,758,377 a startling difference which ought to arouse the Prime Minister's attention, convince him of the necessity of a further investigation and bring him to a keener

sense of his duty. We have an actual difference in this estimate of 214 per cent.

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CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

It is very much like the cost of the Quebec bridge.

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CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

Common excavation according to McDonald's tender would have cost 21 cents a yard, an excessively low price. It was estimated that there was an enormous quantity of it-6,313,682 yards-and at the rate of 21 cents a yard it cost $1,323,773. By O'Brien and Mullarkey's figures, which were four cents higher, or 25 cents a yard, it appeared to amount to $1,575,000. The result was that upon being figured out on the basis of the estimated quantities Mul-larkey was $177,849 behind.

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CON
CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

Mullarkey appeared to be higher by $177,849.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

On the estimated relative quantities?

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CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

On the estimated quantities, as put in because of this reason that although he was lower on the smaller quantity he was four cents higher on the larger quantity. If the large quantity had re-manied that would have been just. As a matter of fact it was not so at all. On the actual quantities it worked out in this way. Solid rock grew into 3,674,735 yards which at $1.50 a yard amounted to $5,512,102 and at $1.45 a yard, Mullarkey's price, it amounted to $5,328,365. There was a considerable gain there because the quantity

had increased and the five cents a yard difference counted all the time. The loose rock had again increased and with the same result, common excavation decreased and of course did not count so much against Mullarkey as did the larger quantity that was estimated before and upon which low priced material he had put in a higher price. The result was that McDonald's price was $6,880,408 while Mullarkey's price, on the actual quantities allowed and paid for was $6,695,347. There was an actual difference and there would have been a gain to the country if Mullarkey had got the contract of $185,000. But that is not all. Mullarkey appeared to be $177,000 on the wrong side of the account as I showed a moment ago. The result was that upon the actual figures it would have worked out at $363,000 less if honest estimates had obtained. Deduct from that the difference in tenders and you would still have in favour of Mullarkey and in favour of the country $110,000. If you take a half dozen other items in connection with this same matter, the particulars of which I need not go into, you will find that wherever Mullarkey was low the quantities increased-and wherever Mullarkey was high the quantities decreased strangely enough. Taking only these items at the head of the list and adding them we have another $175,000 in favour of Mullarkey's tender.

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COMPARATIVE STATEMENT BY RESULTS.


At McDonald's Prices. At Mullarkey's Prices. Solid rock.. 3,674,735 c. yds. at SI.50, $5,512,102.50 Loose rock. .1,736,564 n 0.50 868,282.00 Com. exc. .2,383,166 „ 0.21 593,525.00 Solid rock.. .3,674,735 c. yds. at $1.45, $5,328,365.75 Loose rock . .1,735,564 n 0.45 781,453.80 Com. exc.. .2,382,166 „ 0.25 596,529.00 $6,880,408.86 $6,695,?47,55 McDonald $6,880,408.86 Mullarkey 6,695,347.65 Difference in favour of Mullarkey $ 185,061.31Add apparent balance against him of 177,949.78A turnover of $ 3G3,011.09Deduct difference in tenders 252,946.68Net amount in favour of Mullarkey $ 110,064.41 Now I have dealt with the two sections of the road that have been most frequently referred to. We have been told bv hon. gentlemen opposite and far more by the Grit press of the country that the country is perfectly safe because the Grand Trunk Pacific railway will look after this. Why, the Grand Trunk Pacific are con-Mr. LENNOX. tractors in this matter. When we formed the scheme of building this road-and it was a scheme-the Grand Trunk Pacific said the most they could undertake to do was to build the prairie section, but they did not stick to that. They wanted to make something beyond that. When the country undertook to build the difficult div- ision, the division that it is said will never pay, then the Grand Trunk Pacific railway company became contractors themselves for the building of portions of this line, and have you heard of any complaint being made by Mr. Woods of over classification upon the portions of the road that these gentlemen are themselves building? I do not think so, and I venture to say, Mr. Speaker, that you will not hear of any such complaints. But, Mr. Speaker, after an investigation of this matter I declare that the same kind of over-classification and the same growth of solid rock obtains down in New Brunswick, and between New Brunswick and Quebec, where these gentlemen are contractors. The same system prevails, and in some instances in almost the same degree under those contracts that obtains in those divisions to which reference is now made. We are told that we can rely for safety upon the action of the Grand Trunk Pacific; this company with its numerous aliases which becomes increasingly dangerous by reason of these aliases. We have the Grand Trunk Pacific Railway Company in this transaction, and as the Minister of Finance told us, we have the old Grand Trunk at the back of it, and we have the Grand Trunk Pacific Branch Lines Company, and we have the Grand Trunk Pacific Construction Company, and we have the Grand Trunk Pacific Town Site and Development Company, and the Grand Trunk Pacific Telegraph Company, and the Grand Trunk Pacific Express Company, and perhaps the Grand Trunk Pacific Steamship Company. And behind them all, and if there were a thousand more of them, I am not prepared to rest the interests of the people of Canada. And why? Perhaps ks far as Mr. Woods is concerned it was all right and I have not referred to the letters of Mr. Woods, nor have I read extracts from the letters of Mr. Lumsden, because hon. gentlemen on this side of the House will deal with these questions; but I call the attention of the Prime Minister to this fact: that a strong fight was put up by the Grand Trunk Pacific; they were fighting for a broad general inquiry and they were hampered and opposed, and by whom? Why, Sir, by the man who should represent the people of Canada, by the chairman of the commission. What should have been his duty? Why should he not have said: We will have this investigation, broad, and generous, and free, and in the interests of the people of Canada. I do not care whether Mr. Woods objected or not, I want to ensure in the interest of the people whom I represent that there shall be no dishonest classification. But no, he fought like a tiger; he fought, I should say, almost like a fiend to prevent the extension of this inquiry, and to confine it within the narrowest possible limits. And the fight went on, 751 and we have the experts resign, and we have the chairman of the commission upon the mere ipse dixit of some local engineers, without one word of investigation, one word of inquiry, without asking for any explanation condemn these three experts. What have we further? We have the master hand; we have one of the great and able men who form the right hon. gentleman's cabinet, we have the master mind of the Minister of Public Works entering the arena. And it was then, and not till then, that the whole situation resolved itself into one of perfect amity and dove like greetings all round. The Grand Trunk Pacific Railway Company, and the old Grand Trunk Company, and the Grand Trunk Pacific Construction Company and the various other companies that represent this one original body, collapsed, and after fighting for a broad investigation, we have in the last pages of the return brought down we have it provided and agreed that the investigation is to be confined to the narrowest limits. Was the chairman of the Grand Trunk Pacific Commission acting in the interests of the public whose interest he had a right to protect, or was he acting in the interest of the contractors when he insisted that the investigation should be so narrowed. Do you think, Mr. Speaker, having regard to the figures I have quoted to you (and you have a mind for figures), do you think we should have this investigation upon the narrow limits the Prime Minister suggests? Let me refer for a moment to the condition of things from Moncton to Quebec, where no complaints have been made, and particularly in New Brunswick, for the purpose of showing you, Mr. Speaker, that the same infamous-I think I am right in using that word-the same dishonest, and the same unfortunate classification that prevails in sections B and F, prevails on this section of the road as well. In other words, from end to end of this line we have this amazing state of things, that the high priced class of materials grow and swell, and the low priced class of materials dwindle and shrink. And the net result is that on this road, in the province of Quebec where, the right hon. gentleman in introducing this measure, described the roses as blooming in the fertile fields, and along the fertile belt in the province of Ontario, everywhere rocks are found where no rocks were expected, and the price of material is doubled and more than doubled, throughout the whole length of the line. I realize, Mr. Speaker, that when it comes to dealing with figures I am not an expert, and that I do not handle them aptly, and my excuse for quoting figures now is that the people should know, and so far as it is in my power, they shall know, what it taking place in regard to the construction of


January 25, 1910