February 1, 1912

CON

Joseph Elijah Armstrong

Conservative (1867-1942)

Mr. AEMSTEONG.

Last evening the Postmaster General told the House that he was compelled to be away on Monday next.

I interviewed him . and he told me that he was anxious to have as extended a debate as possible on my resolution and that he would arrange with me foT some other day when it could be taken up and disposed of.

Topic:   BUSINESS OF THE HOUSE.
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CON

Haughton Lennox

Conservative (1867-1942)

Mr. LENNOX.

The Postmaster General expressed a very strong desire to be present when the debate was resumed, and said that he would like to have it not on Monday next but at some other time.

Topic:   BUSINESS OF THE HOUSE.
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CON

Robert Laird Borden (Prime Minister; President of the Privy Council)

Conservative (1867-1942)

Mr. BOEDEN.

That would not really affect this motion because this is designed

to take Monday next as a government day.

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LIB

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER.

I have no objection to the motion being adopted, but I would point out that if the motion of my hon. friend (Mr. xirmstrong) is not taken up next Monday it cannot be taken up this session, unless by a special leave of the government.

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CON

Robert Laird Borden (Prime Minister; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN.

That is quite correct,

Topic:   BUSINESS OF THE HOUSE.
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LIB

Edward Mortimer Macdonald

Liberal

Mr. MACDONALD.

There are quite a number of motions not yet disposed of, some of -which would not involve much discussion. On Wednesday, the last day available, hon members were not aware that Monday would be taken by the government so soon. I think the usual course of giving one day before these motions are cut off altogether would be the fair thing.

Topic:   BUSINESS OF THE HOUSE.
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CON

Robert Laird Borden (Prime Minister; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN.

I have no desire to deny a reasonable opportunity of disposing of these motions and so -1 would move to amend my motion with the permission of the House to read as follows:

That on and after Monday the 12th of February, to the close of the session, government orders will have precedence on Mon-davs immediately after notices of motion for the production of papers.

Topic:   BUSINESS OF THE HOUSE.
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Motion agreed to.


THE WRIT FOR SOUTH RENFREW.


On the orders of the day being called.


LIB

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER.

Has the writ yet been issued for South Renfrew?

Topic:   THE WRIT FOR SOUTH RENFREW.
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CON

Robert Laird Borden (Prime Minister; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN.

It was issued yesterday. The nomination day is the 15th of February and the polling day therefore will be the 22nd of February.

Topic:   THE WRIT FOR SOUTH RENFREW.
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INQUIRIES FOR RETURNS.

LIB

William Pugsley

Liberal

Mr. PUGSLEY.

Would the right hon. the leader of the government (Mr. Borden) kindly see that returns which I moved for a considerable time ago, and to which I have referred once or twice already are brought down? One relates to the Harvey and Salisbury railway, which should take very little iime to prepare and the other relates to the appointment of commissioners under the Boundary Waters' treaty.

Topic:   INQUIRIES FOR RETURNS.
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CON

Robert Laird Borden (Prime Minister; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN.

I was under the impression that the last- mentioned return lead been brought down. It may be that- it is in my office and that through my own inadvertence it has not been presented to the House.

The other relates to the Department- of Railways and Canals, and I shall bring it to the attention of the minister of that department.

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GRAND TRUNK PACIFIC RAILWAY.


Mr. WHITE moved that the House go into Committee to consider the following proposed resolution: Resolved, that it is expedient to authorize the payment out of 'the consolidated Revenue Fund of such sums as may be sufficient to discharge the obligations of His Majesty the King, acting in respect of the Dominion of Canada, under the provisions of paragraph 5 of the schedule to chapter 24 *of the statutes of 1904, in accordance with the interpretation ,of these provisions by the judgment of the Lords of the Judicial Committee of the Privy Council, on the appeal of the Grand Trunk Pacific Railway Company v. The King, from the Supreme Court of Canada, delivered November 2nd 1911. He said: Mr. Speaker, in connection with this resolution I have furnished to each member of the House a copy of the judgment of the Supreme Court and of the Judicial Committee of the Privy Council. I have also furnished to the right hon. the leader of the opposition (Sir Wilfrid Laurier) the papers for which he asked yesterday. In view of this it _ is probable that the House is acquainted with the subject matter of this resolution, but, on account of the very large sum involved by way of obligation under the judgment, a brief explanation may not be out of order. Under a contract dated the 29th day of July, 1903, between the government of Canada and the Grand Trunk Pacific Railway Company, provision was made for the construction of the National Transcontinental line of railway from Moncton to the Pacific ocean. That railway was to consist of two divisions, the eastern division and the western division. The eastern division was to extend from Moncton to the city of Winnipeg, and the western division from the city, of Winnipeg to the Pacific coast. The government of Canada was to construct the eastern division and the Grand Trunk Pacific Railway Company was to construct the western division. The eastern division was to be owned by the government and to be leased to the Grand. Trunk Pacific Railway Company under the terms and provisions of the agreement. The western division was to be owned by the Grand Trunk Pacific Railway Company, and the entire line was to be maintained, equipped and operated by the Grand Trunk Pacific Railway Company. The 28th and 30th paragraphs of the contract of July 29, 1903, to which I have referred, were as follows: 28. For tile purpose of aiding the company in the construction of the western division, the government shall guarantee payment of the principal and interest of an issue of bonds to he made by the company



2.380 for a principal amount equal to seventy-five per centum of the coat of construction of the said division, as defined and ascertained in accordance with the provisions of paragraph eighteen hereof, but such principal amount shall not in any case exceed thirteen thousand dollars per mile of the mileage of the prairie section, nor thirty thousand dollars per mile of the mileage of the mountain section, although seventy-five per centum of such construction may have exceeded the said respective sums per mile. 30. The said bonds shall bear interest at the rate of three per centum per annum, payable half yearly, and shall have attached thereto coupons representing the instalments of interest thereon, and shall be in such form as the government shall determine. The Grand Trunk Railway Company of Canada were to guarantee the bonds of the Grand Trunk Pacific Railway Company for an amount sufficient to raise the balance of the money required for the construction of the line. At the time this agreement was entered into, the 3 per cent stock of the Dominion of Canada stood at about par. Shortly afterwards there was a fall in that stock in common with other high class low interest-bearing securities, and as a result it was seen that the 3 per cent Grand Trunk Pacific Railway Company's bonds guaranteed by the Dominion of Canada would not nearly realize par. In order to meet that situation a supplementary agreement was entered into in the following year. Among other things it removed the limit as to the $30,000 a mile upon the mountain section, but allowed the ,$13,000 per mile as a maximum of bonds to be issued by the Grand Trunk Pacific Railway Company cn the prairie section to stand. And then comes the important section to which I direct your attention upon which litigation subsequently arose and these judgments were rendered. 5. Notwithstanding anything the said contract contained the government may and shall, preserving always the proportions in the said contract provided as between the ' Prairie ' and ' Mountain ' sections of the western division implement for the purposes and subject otherwise to the provisions of the said contract its guarantee of the bonds of the said company to he issued for the cost of construction of the said western division in such manner as may be agreed upon so as to make the proceeds, of the said bonds so to he guaranteed a sum equal to seventy-five per centum of the cost of construction of the western division ascertained as provided in the said contract, hut not exceeding in respect of the Prairie section thirteen thousand dollars per mile. In 1905 a trust mortgage was executed over the entire western division, securing the bond issue of £14,000,000 to be guaranteed by the Dominion of Canada. Differences of opinion arose between the government and the Grand Trunk Pacific Mr. WHITE (Leeds). Railway Company as to the construction of the clause I have just read. On the part of the government it was contended that implementing the guarantee meant that the Grand Trunk Pacific Railway Company should issue its bonds guaranteed by the government to an amount which would realize by sale A total amount equal to $13,000 per mile on the prairie section and par for the amount of bonds required on the mountain section. The Grand Trunk Railway Company, on the other hand, contended that the true meaning of implementing the guarantee was that the government of Canada should pay the difference between the net selling price of the three per cent bonds of the Grand Trunk Pacific Railway Company, issued from time to time, and par; in other words that the government should be directly liable to thq Grand Trunk Pacific Railway Company, for an amount sufficient to implement or make up the difference between the net selling price and par, and that there was no obligation on the Grand Trunk Pacific Railway Company to issrne its bonds further than to the amount of $13,000 a mile, no matter what they realized. The government, as I have said, contended that their liability on this was secondary or as guarantor. So there was a clear issue between the government, and the Grand Trunk Pacific Railway Company, the difference being that tlhe government contended that it would have merely to guarantee bonds of the Grand Trunk Pacific Railway Company sufficient to make up the difference between the net selling price of the bonds and par, and the Grand Trunk Pacific Railway Company on the other band contended, that the government must be directly liable and responsible to the Grand Trunk Pacific Railway Company for an amount sufficient to make up the difference in cash. A case was submitted to the Supreme Court of Canada, and that Court held in favour of the contention of the government, nameily that its liability was to guarantee bonds issued by the Grand Trunk Pacific Railway Company to an amount sufficient for the purpose of implementing. An 'appeal was taken to the Judicial Committee of the Privy Council, and the Judicial Committee reversed the decision of the Supreme Court of Canada so that in the result the contention of the Grand Trunk Pacific Railway Company prevailed, and the Dominion of Canada, under the terms of that judgment, have become responsible to the Grand Trunk Pacific Railway Company for a very large sum. I shall read the last portion of the head note of the judgment of the Privy Council. Held, that the liability of the government under this agreement was not a secondary liability as guarantors only, the primary liability falling oil tlie company, but that the government were liable to make the bonds of the first issue up to tlieir nominal value without recourse over against the company. That is substantially the history of the transaction, and the effect of the judgment. As to the amount involved, which, as I have said, is very large, I have had a memorandum prepared, showing the position to date, and the estimated total lia-ability under the terms of this judgment. The memorandum is as follows: Memorandum respecting Privy Council decision, Grand Trunk Pacific Railway Company v. The King. Sales of Grand Trunk Pacific Railway Company's three per cents guaranteed by the government which have already taken place- In 1905 £ 3,200,000 were sold at 92J and produced $14,559,674 08 In 1909 £ 2,000,000 were sold at 80 and produced 7,773,495 15 In 1910 £2,000.000 were sold at about £80 13s. 9d., and produced. 7 856,119 67 The amounts here stated as being produced from the respective sales include interim interest accretions in London before tlie transfer of the funds to this country, and to that extent the net proceeds as above stated are too great. The sum to lie paid the Grand Trunk Pacific Railway Company by the government under the Privy Council judgment, in respect of these sales, will therefore be approximately $4,900,000. On the basis of the estimated cost of construction of the mountain section made by the government chief engineer, there will yet have to be sold of these three per cent bonds approximately £5,515,220. Assuming that when a sale of these bonds has to he made they bring the same price as the last lot, sold, viz.: £80 13s. 9d. for each hundred pounds, there will he required to he paid in cash by the government in respect of such sale, to make the proceeds of the sale equal to par, the sum of $5,183,617.40. On these estimates this will make a total cash contribution by the government of approximately $10,080,000, dn order to make the proceeds of the government guaranteed bonds equal to par. That is substantially the position as I understand it, and I, therefore, beg to move that the House go into Committee of the Whole to consider the resolution standing in my name. Motion agreed to, and House went into committee on the resolution. Resolution reported, read the second time and agreed to. Mr. WHITE (Leeds), moved for leave to introduce Bill (No. 95) respecting the National Transcontinental railway. Motion agreed to, and Bill read the first time.


THE GRAIN ACT.


House in committee on Bill (No. 32) respecting grain-Mr. Foster (North Toronto). On section 80-re-inspection,


February 1, 1912