May 13, 1914

LIB
CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

I do not know; I hope there is no danger there. But if, in the

progress of events, any such a thing should happen, we have the power to let the mouldering branch drop off. If we permitted amalgamation and such an event took place, the liabilities of the line in question would be loaded upon the Canadian Northern itself. What would the right hon. gentleman do in such a case? Suppose that he found that a certain line, a part of the system, is not a paying line; that it is a liability and a drag on the system, pulling it back rather than helping it forward; what would he do to get rid of it? He could not sell it; it is loaded down with $350,000,000, the debt of the whole system. He could not sell it unless he were to take a jaunt through Europe and circularize several thousand bond * holders to get a partial discharge. There would be no. way of getting rid of it; he would be tied to it, no matter whether it [DOT] were valuable or detrimental. So there is one objection to amalgamation. But there are others. It has been found, not only by the Canadian Northern system, but by practically every system, that very many of the accessories which are essential to the success of a railway system are handled to much better advantage in individual companies. I venture to say that not a railway system in the world has amalgamated within it as part of one company all the assets of as many individual companies .as come into this system under the present arrangement. Would the right hon. gentleman advise that the land companies amalgamate and convey their lands to the Canadian Northern? Here the Railway Act itself would come in, because only for certain purposes can a railway own land. There would be objection to any such amalgamation. Would he advise that the telegraph company, express company and the Montreal Tunnel and Terminal Company convey their assets to the Canadian Northern Railway Company? What was the idea oif the forming of the Mount Royal Tunnel and Terminal Company? It was because the markets of England demanded that the money to be raised for the purpose of these terminals should be raised by this method? It is a notorious fact that if you can simplify into one unit certain of the accessories of a railway and base your securities on .specific, well-defined and easily-understood contracts which that company possesses, you can sell the bonds of the company to better advantage. For reasons such as these tne Mount Royal Tunnel and Terminal Company

was formed, and those advantages you sweep away and rid yourself of if you insist on amalgamation. The same is true right through the system. Indeed, there are objections and legal objections to amalgamation which at the present time could not in honour be gotten over. The right hon. gentleman knows, because he himself, .a few days ago, asked that there be laid on the table a list of companies in which Mackenzie and Mann, Limited, did not own all of the stock. That list was laid on the table, some four companies in all, the Quebec and Lake St. John, the Duluth and Winnipeg Company, the Canadian Northern Quebec and another railway whose name at the present time I do not recall. We know that the majority of the stock of these four companies is owned by Mackenzie and Mann or the Canadian Northern railway, but there are portions of the stock, in the main of very small portions but very considerable in the case of the Duluth and Lake Superior and rather considerable in the case of the Canadian Northern Railway Quebec, which are outlying in the hands 'of the public. Will the right hon. gentleman tell me how he would effect an amalgamation in the case of these companies, portions of whose stock are outlying in the hands of the public? He knows that the Railway Act provides for the protection of minority stockholders and he knows that we could not, without doing injustice and depriving the minority stockholders of their rights, insist on having their stock in this case.

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LIB

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER:

Hear, hear.

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

That is quite correct,

so that his whole scheme of amalgamation-

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LIB

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER:

All the stock of this company is conveyed to Mackenzie and Mann in this agreement.

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

Oh, no, how could we

make an agreement with Mackenzie and Mann to compel the public to convey stock to them? All the stock of Mackenzie and Mann is conveyed to the trustees for the protection of the Government.

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LIB

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER:

The stock of

other parties, too, according to' your agreement.

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

If the right hon. gentleman can show me that I will agree to an amendment. Will he just read it, where we provide that all the stock, even if it is owned outside, must be conveyed to the trustees? That would be confiscation pure and simple,

and it does not exist in the resolution. The stock that is to he conveyed is set out in each case in the schedule with the amount opposite the name of the company. That is the stock that is being conveyed, that is the stock that is owned by Mackenzie, Mann and Company, Limited, where they own stock at all. In the case of the Duluth and Winnipeg, the majority is owned by the Canadian Northern railway itself. Where the other is to be conveyed it is the stock owned by Mackenzie, Mann and Company, Limited, because we have no power, without the most arrogant act of confiscation, to demand that others convey their stock to the Canadian Northern railway. As a matter of fact, in the case of the Quebec and Lake St. John, the others cannot be found. That is the reason why Mackenzie and Mann Company have not got the stock. They have_ been trying to chase them up all over the world but cannot find them. I would ask how, under sections 361 and 362 of the Bailway Act, you are ever going to amalgamate with these outlying stocks. The provisions of the Eailway Act relating to amalgamation are for the protection of the minority stockholders, and we would have no right, in justice, to repeal them, even if we chose to do so. We have power to repeal them, of course, but it would be unjust to do so. They provide for an application of two-thirds of the stockholders to the Eailway Board. The Eailway Board must then publish in the Gazette notice that they will, at the expiration of a month, apply to the Governor in Council for leave to amalgamate, and within that time the stockholders have a right to appear and be heard, and there is no telling what length of time may elapse before it would be possible for the Governor in Council to hear the application. After they are heard they have to be protected. I would ask how you are going to protect them so long as there are outstanding stockholders at all? As the stock outlying in the hands of the public comes in and becomes the property of these men and gets into the system, then amalgamation is quite possible, and it is the purpose and aim of all the allied concerns and of the Canadian Northern railway to effect an amalgamation as soon as it can be effected. So much for the question of amalgamation and so much for the advantage of retaining the identities of the original company. I would ask, as a last word, that I be allowed to impioss on the

right hon. gentleman that while we have, under this arrangement, retained all the advantages of the individual identities of the company, we have not incurred one single obstacle, we have not injected into the agreement one single weakness or impaired our security one jot, by failing to amalgamate the road. The right hon. gentleman complains that the security is illusory because he says it is subject to $312,000,000. He says: You could not take over the road even if there should be failure, because you would have to pay $312,000,000. Of course we would, or assume it. What would the right hon. gentleman say if he found the Canadian Northern railway on their knees and really believed that they were in extremis and had to have the money? What would he himself take for security because he had promised to lend the money? He could not get the Toad except subject to the indebted-9 p.m. ness, he would have to take the very security which to-day he tells us is an illusory security and no good at all. After he took it he would have the hon. member for Carleton or some of his supporters get up behind him and say: You have got all kinds of security; nothing better than default could happen for the country. For this was something like the language used by the hon. member for South Eenfrew in 1911, when he said that it would be a great advantage to this country if the Canadian Northern Eailway Ontario defaulted and we were obliged to take over this connecting link, without terminals and without any of the accessories of a railway. The right hon. gentleman has a further objection, and this time he is more than usually vigorous in pressing the objection. Why, he said, we are giving $45,000,000 now of our credit. We are loading this country with an indirect liability of $45,000,000 for the Canadian Northern railway, and for the life of me I cannot have the heart to vote for it unless we get a majority of the stock. That is his second last objection. I know that the political necessities in this case were very great. This is a concession which the right hon. gentleman has made to the editor of the Toronto Globe. In the main he was much more moderate, much more sensible, has a more far-seeing eye to the advantage of his party, but he made this little concession that he would follow the dictates of that gentleman to the extent of insisting on a majority of the stock. Here is one of the features of his policy which was impossible for us to predict. I would.

be the last to believe that the right hon. gentleman would say that he would be satisfied with this agreement if it called for sixty instead of forty million dollars of this stock. The right hon. gentleman has made railway bargains himself in days gone by. He made a railway bargain in 1903 and he did not take very much stock at that time. Why, he said, we (this Government) have paid out twenty million dollars in subsidies to this company since this Government came into power. I do not think we have. I figure the subsidies that this Government has undertaken total some $15,000,000, but anyway the difference is not very great. The total subsidies which the Canadian Northern railway and allied companies have received come to about $25,000,000. That is the aggregate of they subsidies. Their bonds have been guaranteed to a very considerable extent besides, I think to the extent of About $131,000,000; and in addition they have raised about $176,000,000 without any credit or assistance at all. That, in a nutshell, is the financial history of the Canadian Northern railway, $25,000,000 odd of subsidies. Does the right hon. gentlemen remember the subsidy that has been paid by this country, under the compulsion of his legislation, to the Grand Trunk Pacific? We will use the word subsidy for that is the word the hon. member for South Renfrew (Mr. Graham) insisted on in the Transcontinental debate. He said the seven years' interest is subsidy, and nothing but subsidy; so we will call it subsidy to-night. What is that" seven years' interest which he pays as subsidy to the Grand Trunk Pacific? One hundred and eighty-one million dollars is the cost of the Transcontinental from Moncton to Winnipeg. On $181,000,000, the company have to pay interest after the seven years elapse; we have to pay it in the meantime and it costs this country four per cent. Now, I ask my hon. friend what is seven years' interest on $181,000,000 at four per cent? About $50,000,000 on that item alone. That is the subsidy the* the leader of the Opposition bound this country to pay to the Grand Trunk Pacific; but he bound the people of this country to pay a lot more than that. He bound them to pay interest for seven years on the mountain section, without recourse-no getting it back at any time-and that liability is between $11,000,000 and $12,000,000, and I think I have stated it too small. Add that to the $50,000,000 and you have $61,000,000 or $62,000,000 of subsidy to the Grand Trunk Pacific to get them to build

a line between Winnipeg and the coast. But more than that, he put an implementing clause in his Bill; he did not get any stock or proprietorship as compensation, but he succeeded in getting an implement ing clause, and as a result of that consideration the country is stuck for $13,000,000 more, $4,900,000 of which we have paid already, and to save paying the rest directly we are buying the bonds ourselves, which cost us, of course, far more than we can sell them for. If we followed the course of letting the bonds be sold and paying the difference-as we are bound to do under the implementing clause-we are out $13,000,000 more. Add that to the $61,000,000 or $62,000,000, and you have $74,000,000 or $75,000,000 of subsidy to the Grand Trunk Pacific. But, unfortunately, we cannot stop there. We have undertaken to give the Grand Trunk Pacific the use of the National Transcontinental railway for 50 years for three per cent, and we have to pay, now, four per cent on our money. We are out. one per cent on that. It may be that, in that time, the rate will come down. Suppose that we assume that three and one-half per cent would be a fair amount. Capitalize that, and it runs the subsidy to the Grand Trunk Pacific up to about $100,000,000. That is the subsidy that hon. gentlemen opposite saw fit to pay in additional to their guarantees to the Grand Trunk Pacific. Why? To secure the building of a line between Winnipeg and the Pacific coast, about 1,750 miles long, the right hon. gentleman has compelled this country to pay $100,000,000 in subsidy to the Grand Trunk Pacific, or, on that basis, about $60,000 a mile. Then, in addition to that, we ibuild the eastern end of the Transcontinental outright, ourselves. We are out m the meantime in capital expenditure, for which, of course, we have the road, about $181,000,000 besides, as the cost of the Transcontinental from Moncton to Winnipeg. Spreading the subsidy over the whole road we have paid in subsidy to the Grand Trunk Pacific about $30,000 a mile for every mile of the road between the Atlantic and the Pacific. In addition to that we are building ourselves over half of the road, and we guarantee to the extent of three-quarters of the amount for all the rest of it. That is the bargain that the right hon. gentleman made for the Transcontinental. One would have thought that he would have insisted then upon some compensation to the country. One would have thought that he would not have been satisfied with being the

very juniorest of junior partners of the Grand Trunk Pacific. He is a partner in that transaction, all right; the country is a partner-a very silent partner, it is true. It is a silent partner except on pay day, but the country is never a partner on receipt day. He took care that all the money went the way of the company, and that all the risk went the way of the country. That was his bargain with them, and not one dollar of stock did the country get. No possible chance-no matter how profitable the road may be-of ever bringing back to the treasury any part of the moneys we pa-id in subsidy, or of ever getting compensation for the immense indirect liability under which the country lies. And the same right hon. gentleman says that for the |.fe of him he cannot see his way to consent to let the Opposition vote for a Bill which only takes $40,000,000 worth of the proprietorship of the Canadian Northern as compensation for a $45,000,000 guarantee. I am glad he recognized that there should be compensation for guarantee: this is his first conversion to that doctrine-that is as far as the country is concerned. He recognized the validity of the doctrine in 1903, so far as individual companies are concerned. The Grand Trunk Railway Company guaranteed the Grand Trunk Pacific, and for its guarantee it got the whole stock of the Grand Trunk Pacific. The country guaranteed three-quarters of the cost of building the whole road, and for its guarantee and for its hundred million dollars of subsidy it never got one dollar. And now the right hon. gentleman says that we are not justified at all in letting Mackenzie, Mann and Company away with a paltry $40,000,000 of stock as compensation for our guarantee. We have a two-fifths proprietorship in the Canadian Northern absolutely, -come what may. If it succeeds, as there is every anticipation it will, then the value of that stock enters the treasury of this country as compensation; and there is every reason to believe that before any great length of time there will be a par value for that stock, and that the Government of the present Prime Minister will have restored to the treasury of this country the $40,000,000 which his (Sir Wilfrid Laurier's) Government squandered on the National Transcontinental railway.

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LIB

Michael Clark

Liberal

Mr. MICHAEL CLARK:

Will my hon. friend allow me a question ? Which railroad has the most wooden trestles in it ?

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

I am obliged to the hon. member for Red Deer for mentioning that

point. The Canadian Northern railway is building its railway along sensible lines, and according to business methods. It has used both wooden trestles in the construction and later on steel trestles when they could be put in more cheaply. As a result we are going to have a transcontinental railway that will cost on the outside about $40,000 a mile from coast to coast, instead of $100,000 a mile; and as a result we are going to have a real competing factor in the railway world, instead of a factor the only influence of which in the way of competition is to shove up the rates. But did I say $40,000 a mile for the Canadian Northern as against $100,000 for the Transcontinental ? That does not do half justice to the Canadian Northern. In the Canadian Northern as an aggregate system what do we include ? We include the railway from coast to coast and all its branches; we include the terminals in every city to which it comes; we include the lands, 4,002,000 acres and the proceeds thereof; we include the telegraph and telephones; we include the express companies and the transfer companies; we include the steamship companies operating two steamships across on the Atlantic, and we include a quarter of a million dollars' insurance for another steamship that was burned. We have all these collateral accessories which go to make a railway, and even then the total aggregate capitalization bond issue is only about forty thousand dolllars a mile.

On the other hand, what is the situation as regards the National Transcontinental railway? It has cost this country in outlay $180,000,000 for about 1,800 miles of road, and when you have got your $100,000 a mile capitalization you have not a steamship company in it, you have not a terminal in it-yes, you have a terminal in it-

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LIB

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER:

No, you have not.

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

Then I was doing overjustice to the right hon. gentleman. But I do know that you have not any express company in it; I do know you have not any transfer company in it; I do know you have not any steamship company in it; I do know you have not any telegraph company in it; you have not any 400,000,000 acres of land; you have no townsites; you have nothing in it except your bare road between Winnipeg and Moncton. Such is a comparison between the railway arrangement of the present Government and that of the late Government led by the Right Hon. Sir Wilfrid Laurier.

Then the right hon. gentleman has another distinctive feature in his railway policy. Under the present Bill we have a summary method of taking over the road, a summary method which in effect gives us as security the other sixty per cent of stock. We know we have the ordinary right which any mortgagee has, and the right which any guarantor of a mortgage has, the right by subrogation of getting into the shoes of the lender and in the event of default exercising the rights of a mortgagee and taking possession of the road as a receiver; we know we have that right, but we have the additional summary remedy of proceeding by mere Act of Parliament to take over the road as the property of the people of this country and eliminate once and for all, all other parties interested in that railway. And we have not only so arranged it that the interests of the Canadian Northern and all other persons whatsoever in the Canadian Northern system shall be eliminated, and that in the event of default all shall be the property of the Canadian people, but furthermore, the ten million dollars of stock in the townsite and the ten million dollars 'bonds are put into hotchpotch, although they are the property of Mackenzie and Mann, and although Mackenzie and Mann alone made investment in them, and in the event of our foreclosing and taking over the enterprise we ourselves get the whole benefit of the town-site. That summary method is given us. It is true Parliament has to act. The Government did rot think it wise to in any way tie the hands of Parliament in days to come. We provide though that Parliament in days to come, should there be default, shall have in its own hands the power to put in directors of the road, and we clothe the directors so appointed with full power to sell that road to any corporation established by the Parliament of this country for the purpose of taking over the road. Or, if we choose, we can ourselves, by Act of Parliament, legislate that that road is the property of the people of this country and that the interests of all persons whatsoever outside of the people of Canada are eliminated. The idea of that is that we are at this time making the interested parties and all stockholders parties to this contract, and we say to them: We now and here bind you that should the day of default come you shall not appeal to the Parliament of Canada on the ground of your road being confiscated in any way whatever, but you here and now leave the Parliament of this country free from any such question and untrammelled 233

in every way to deal with the property of the Canadian Northern as it may be advised in the interests of the people of this country. That is the summary procedure outlined here for taking over the road.

How does that differ from the procedure followed by the late Government? Had they any such method? No. They had the ordinary method of subrogation it is true; those ordinary methods come in the common law and they were embodied in their Bill. They have the right to go into possession of the Grand Trunk Pacific as receivers, and when they do so they act as receivers, and if the road pays the Grand Trunk Pacific can come back again and take the road and make the money. But if the road fails it fails, and the people of this country stand the loss and all the results therefrom. That was the method employed by the late Government for taking over roads in respect of which it issued its guarantee bonds. And in 1911 when the present hon. member for South Renfrew (Mr. Graham) introduced his resolution to guarantee the $35,000,000 issue of the Canadian Northern Ontario railway, no summary provisions whatever were embodied in that resolution, and the only rights which this country had were the rights of subrogation. Their only way of getting into the shoes of the bond-holders and exercising these rights was by the appointment of a receiver. As a consequence if that road paid, then the stockholders could come in and demand their money back, the bond-holders being satisfied, but if it failed, on the head of this country was the failure, and all the consequent loss.

During the last few weeks we have been told several times that we were very stingy with our information and very slow in producing it. I do not believe that any legislation has ever been proposed in this House which has been accompanied by data so ample as this Government has supplied in the present instance. There has been no concealment. The right hon. gentleman asked for the names of all contractors, and for the names of all parties that the Canadian Northern owed. If there was throughout the length .and breadth of Canada a man to whom they owed one dollar and fifty cents he wanted to know who that man was; he wanted to know the name of each individual who was a creditor fin this $21,262,000. It was not believed that such information would result in any good whatever, but that on the contrary there would be insuperable objection to dis-

365)4

closing such particulars as that. But what was the procedure in 1911 when the hon. gentleman from South Renfrew (Mr. Graham) was Minister of Railways, and when he asked for a guarantee for the Canadian Northern railway? He came to this House without any data at all; he had made no exploration of the road; he did not know what it would cost; he had the guarantee of the Canadian Northern but he did not know how the 'Canadian, Northern stood. He was asked in' this House what the cost of the Canadian Northern was and his answer was he did not know; he was asked what the 'bond isue of the Canadian Northern was and his answer was he did not know. He had no data on the subject; he had never sent his engineers over the line; he did not know what the road would cost; he had very little idea of it at all; and he had no data or papers to lay on the table of the House. And as a matter of fact he was unable to tell the House where the road was going. He pointed out a few far-distant parts through which it was going to go, but the route of the road as ordinarily laid down he was unable to give to the House.

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LIB

George Perry Graham

Liberal

Mr. GRAHAM:

Under these conditions did my horn, friend or any of his friends vote against this guarantee?

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CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

On this side of the

House the particulars were called for an'd the data should have been supplied by the then Minister of Railways. Protests were made against the guarantee. Inquiries were made of the Government as to the grounds for it. One protest after another was entered. As far as I can recall, the House was not divided; but there was no excuse whatever for the hon. member for South Renfrew (Mr. Graham), then Minister of Railways, not arming himself and informing the country to the extent it should have been informed before it incurred that liability. We have on the table a whole book of idata which I venture to say not one hon. gentleman opposite has read in full yet; and when $35,000,000 were guaranteed here three years ago, the table of this House was as bare as the board of Lazarus. Then my right hon. friend comes to the traffic clause, and he conceives that he has found the much heralded joker which the Liberal press of this country has been declaring would yet be discovered in the Government proposals in regard to the Canadian Nv'bern. He

fMr. Meighen ",

says the traffic clause is so perilous a thing that it utterly removes the Canadian Northern Pacific from the jurisdiction of the Board of Railway Commissioners as to rates. The Canadian Northern Pacific is at the present time a provincial company; it had its bonds guaranteed by the province of British Columbia, and it entered into an arrangement with the Government of British Columbia by which that Government should control its rates, and it would not apply for or agree to a control of rates by the Government of Canada through the Board of Railway Commissioners. That is all correct; tout the law is the law and the law of this country, as contained in section 6 of the Railway Act-I think I have the section right-is that the moment the assets of the railway company are declared to be for the advantage of Canada, the jurisdiction of the province ceases and the jurisdiction of the Dominion commences. Consequently the effect of this clause is undoubtedly, clearly and emphatically, to establish the jurisdiction of the Railway Commission over the Canadian Northern Pacific as over every other railway line embraced in this system. Oh, well, says my right hon. friend, you have nullified the effect of your absolute clause by this traffic clause contained in the agreement. Now, what is the traffic clause contained in the agreement? Here it is:

The Canadian Northern and the Constituent and subsidiary companies severally agree with the Government as follows:-

(b) That they and each and every of them will from time to time enter into agreements with the Government for the mutual interchange of traffic between the Canadian Northern and the constituent companies or any of them, with the Government railways, and the terms and conditions of every such agreement shall be such as the parties thereto may agree upon or in default of agreement, as may be settled by the Board of Railway Commissioners for Canada (hereinafter called the " Railway Board"), and the Railway Board shall have power from time to time upon the application of the Governor in Council or of any party to any such agreement to vary, modify or rescind the same provided always that every agreement respecting the interchange of traffic shall be subject to any agreements now existing with any other company or companies.

That is to say, that the Canadian Northern itself, owning the stock of all the other companies, or any one of the others, as the Canadian Northern Pacific, will, if called upon at any time, enter into an agreement for the mutual interchange of traffic with a Government railway. The terms they are to agree upon mutually. If they cannot agree, the Board of Railway

Commissioners is empowered to fix the terms, but no terms can be fixed affecting this traffic arrangement between the individual company and the Government railway that nullifies any agreement already entered into. In the first place, if this clause is never acted upon, there is no repeal of the general clause establishing jurisdiction, is there? If we never call upon the Canadian Northern Pacific to make a traffic arrangement with a Government railway, then the clause is never acted upon, and consequently there is no repeal, even if there were a repeal, if it were acted upon. I pause for any objection, if there is any objection to the reasoning so far. There is no objection, and consequently that is quite clear. Then, who in the world can conceive of the Government, owning the Intercolonial railway, calling upon the Canadian Northern Pacific 2,000 miles away, to enter into a traffic arrangement? The -Canadian Northern Pacific is confined to the province of British Columbia, and how in the world can it make a traffic arrangement with the Intercolonial railway that never gets west of the province of Quebec? Consequently the point raised by my right hon. friend, to say the most of it, is a purely academic one. There is no conceivable possibility of a traffic arrangement between any constituent company in British Company and any Government railway, is there?

I go farther. Not only wiill the clause never be acted upon, so far as anyone can see, with regard to the Canadian Northern Pacific; but if it were acted upon, it would not have the effect for one minute of impairing in the slightest degree the control of the Railway Commission as to rates. Let us say that the Government owns a railway that runs to British Columbia, and it says to the Canadian Northern Pacific in British Columbia: We want to make a traffic arrangement with you for the interchange of traffic? What is a traffic arrangement? It is an arrangement for the interchange of traffic and for the apportionment of rates. Well, suppose we have a line running to British Columbia, and the Canadian Northern Pacific railway is asked to make an arrangement with us for the interchange of traffic and the apportionment of rates between us. If we cannot agree, the Railway Commission decides how the traffic is to be interchanged and how the rates are to be apportioned. Now, how in the world can that ever interfere in any way whatever with any agreement 2334

between the Canadian Northern Pacific and the British Columbia Government as to control of rates? It does not matter what the rates are. All the traffic [DOT] arrangement does is to apportion the rates, whatever they may be, and to agree upon an arrangement by which traffic shall -be interchanged. The rates are fixed by the Railway Commission. The apportionment of them is fixed by the traffic arrangement.

Furthermore, the agreement that the right hon. gentleman has referred to between the Canadian Northern Pacific and the British Columbia Government is not a traffic arrangement at all. Therefore, for a third reason it can not possibly interfere with the jurisdiction of the Railway Commission, because the meaning of that clause would be, and it was intended to be and is, that, while if there is any traffic arrangement such as that we have, as a Government, "with another road, that traffic arrangement Shall not he violated by any terms the Railway Commission shall make. As a matter of fact we have a traffic arrangement. I am informed that the Canadian Northern has no traffic arrangement with any company, but the Government of this country has a traffic arrangement with the Grand Trunk, made by the right hon. gentleman himself, for the interchange -of traffic at the city of Montreal. As a consequence, we were bound to protect the country by saying that we could not be called upon to make a traffic arrangement with the Canadian Northern that would be a violation of our obligations under our traffic arrangement with the Grand Trunk. That is the effect of clause (b), of which the right hon. gentleman is so much afraid.

I recapitulate as follows the reasons why there is nothing in the objection of my right hon. friend. First, there is no conceivable possibility of the clause being acted upon with regard to the Canadian Northern Pacific at all, because we have no line that connects that can make a traffic arrangement with it. Second, if there were a traffic arrangement between any two companies, it could be made apportioning the rates between them without in any way violating any arrangement with any Government as to the rates themselves. Third, the agreement made by the Canadian Northern Pacific with the Government of British Columbia is not a traffic arrangement at all.

I think I have passed in review, perhaps not fully, but as fully as the time at my

disposal will permit, all tlie objections raised by the right hon. leader of the Opposition to the resolutions of the Government.

I do not feel that I should be justified in delaying the House longer with a more detailed examination of the various provisions of the Bill. That can be better attended to in committee. While we believe this Bill to be complete, while we 'believe that it safeguards the public interest in every way, yet it is laid before the House not as an invulnerable document, not as an infallible document beyond all possibility of improvement, but as the proposal of the Government to which we invite criticism from hon. gentlemen opposite as well as from hon. gentlemen on this side of the House. And if the Bill can be improved in the public interest, it is open for improvement, and we will welcome any suggestions along that line. But, Sir, we lay the Bill on the table of the House and before this Parliament as the solution proposed by us of a very vast and very difficult problem, a problem freighted with difficulties on every side; and we say, in laying it before this Parliament, that we believe it at once preserves the public interest and does justice to all the fair claims of private capital; for only by concurrent regard for the rights ol private enterprise and the promotion of the public welfare can the ultimate ends of government be properly subserved.

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CON

William Folger Nickle

Conservative (1867-1942)

Mr. W. F. NICKLE (Kingston):

If my

intention in rising had been to reply to the hon. the Solicitor General (Mr. Meighen), his eloquent, able and comprehensive speech might, at the last moment, have deterred me. But, Sir, I have not risen with that intention. I have a conscious sense of embarrassment in rising to-night to express to this House and to the country the reason for my differing with iny party on this measure. It is not a pleasant thing to differ from men who have been one's confreres for a length of time, and it is an accentuated unpleasantness where the position one takes is seized upon by the representatives of the opposite party and his conclusions and his motives distorted.

When I accepted the nomination for the city of Kingston I reserved to myself the right to exercise my judgment and express my views on such subjects as were not fundamental to the Conservative party, and it is in the exercise of that right that I rise to my feet this evening. Sir, I do not be-

lieve that there is a man in this House tonight who is more loyal to the principles of the Conservative party as he understands them than am I. But I am not willing to admit that it is necessary to the solidarity of party government that the crack of the party whip should be so loud and its sting so sharp that individual responsibility shouild be absolutely abrogated.

I have, as I say, some difficulty in approaching this subject. My good friend the Solicitor General has frankly admitted that the Government places this Bill on the table not wedded to its terms, that they are prepared to have it discussed and to accept amendments if in their opinion they are such as should be adopted.

It is a strange thing what >an important part railway legislation has played in the history of this country. In the fifties we had the Grand Trunk Railway Company; in the sixties we had the Intercolonial railway; in the seventies and early eighties we had the Canadian Pacific railway; at the end of the century we had the minor Ontario railways and the proposed railway in the Yukon; and from 1900 we have had the National Transcontinental and the Canadian Northern railway. In my judgment there is much of truth in what the Solicitor General has said in his criticism of the construction of the National Transcontinental railway and as to the effect of that road a.$ a competing road for the lessening of rates. If I understand the principle which underlay the construction of that road it is that Mr. Hays thought that the increased cost of railway operation through the increase of wages and prices of material, necessitated the construction of a road which would permit of long trains being economically drawn. But when the cost of the Transcontinental was so augmented, through irregularities and extravagance that the interest charges became excessive, then, I say, the National Transcontinental ceased to be a factor in competitive railway rates in this country. If I understand correctly the attitude of Messrs. Mackenzie and Mann, or the Canadian Northern Railway Company, they approached the problem from an altogether different point of view. Their road was constructed more .after the manner of a colonization road. The original cost of construction was reduced to a minimum with the idea of improving the road iut of earnings or improving it indirectly as money might be available. And it follows necessarily,

where grades are high and curves are sharp, that the cost of operation must be high although the expenditure for construction is small and the interest charges comparatively low. I do not know that any opinion of mine as to what would have been the wise thing for the Liberal party to have done in 1903 will carry the slightest weight or be deemed worthy of attention. But I submit for the consideration of this House 'and the country at large, that from the point of view of economy-and I want to emphasize that word, ' economy '-it would have been better for the Government of that day to have made some arrangement with the then existing transcontinental road the Canadian Pacific railway, around the head of lake Superior, than have put Canada to the expense of building another road there. But there is another consideration besides that of economy. I do not know the motives that actuated the present leader of the Opposition (Sir Wilfrid Laurier). It may be that he was inspired with the idea that Canada through the West should be something more than a line, that it should have breadth as well as length, and that he felt that from a national and political point of view it was well that Canada should be broadened around the head of lake Superior, and therefore favoured the construction of the second transcontinental railway. However, Sir, when We come to the question of 1911, it has always puzzled me why the then Minister of Railways and Canals promoted the construction of a third transcontinental road by guarantee of $35,000 per mile of some 1,000 miles of road. Surely it would have been the wiser plan to have incorporated the National Transcontinental and the Canadian Northern Railway system into one road. It would have been more ^economical land certainly it would have served equally well the national and political outlook. But that plan was not adopted, and I suppose that but little is to be gained by looking into the past rather than into the future. But before I leave the past, I would like to direct the attention of this House and of the country at large, and more particularly of my constituents, to the fact that when last year application was made to the Government for further'assistance to the Canadian Northern Railway Company, I was outspoken within my own party in stating my objections to any aid being granted without a full and ample inquiry.

I told those then in authority that in my judgment the amount required would never

complete the Canadian Northern Railway system. I was, however, confronted with the statement then made by an official of the Canadian Northern railway that if that money were granted that railway system would be enabled to carry its work to completion. I was told that to stop that work would be a national calamity; that the Canadian Northern railway was so closely allied with the financial interests of this country that if the work were stopped, financial chaos would result and Canada would suffer a setback from which she could not recover for half a century. Possibly I was wrong in yielding to that argument without full examination, but, as you will remember, Sir, the Bill was brought down to the House in the dying hours of the session and there was little opportunity for inquiry and investigation. This year, however, when the matter came first to the attention of the House, through an insidious and persistent lobby that was carried on by the Canadian Northern interests, it seemed to me that the time had come for a thorough examination and inquiry into the development and organization and relation to the Government of the Canadian Northern Railway system. After giving that matter the most careful consideration that I have been able to give it, permit me, Sir, to-say that I am of the opinion to-night that I held a year ago; that it was a mistake in 1913 to have assisted the Canadian Northern railway, and that the bargain that the Government suggests to-day is a bad bargain for the Dominion of Canada.

I want to look back a little into the history of the Canadian Northern railway. I should like this country to understand just how this undertaking has been organized and managed. I do not know whether members of this House know the history of this company, but I do know that it took me many weary hours to worm out from the statutes of this country the financial wanderings of this road, and the intricacies of its amalgamation and absorbing corporations. I want this House to come back with me to the year 1880, when certain gentlemen presented a petition to this House asking for an incorporation for the Nelson Valley Railway and Transportation Company. The prayer of the petition had the favourable ear of the House and by 43 Victoria, chapter 57, authority was granted to that railway to undertake certain operations, and by 43 Victoria, chapter 59, similar powers were granted to the Winnipeg and Hudson's Bay Railway and Steamship Company. The Nelson Valley Company had power to build a rail-

land, and by an arrangement entered into with the Manitoba Government-and my right hon. friend the leader of the Government this afternoon when directing attention to the fact that these charters of the Winnipeg company and the Manitoba company were for years peddled around without a purchaser failed to direct the attention of the House to the radical change that took place when Messrs. Mackenzie and Mann bought this charter. Up to the time they got their grant of $8,000 per mile from the Manitoba Government, all these companies had was the land grant and the transport subsidy, with an assurance that certainly merited recognition from the point of view of railway financing, they had the courage to make application to the Manitoba Government for a guarantee of $8,000 per mile to build a road that they had admitted could be built for $11,700 per mile. Just figure this out for a moment. These wizards of finance, so-called, had bonds guaranteed at the rate of $8,000 per mile. They had lands that were worth $9,600 per mile, if the land is valued at $1.50 an acre, and I leave it to you and members of the House who are older in parliamentary affairs than I am, to say whether in the '90V lands in the Swan river and Danphin district were not worth at least $1.50 per acre. They had more than that, they had a transport subsidy, which, capitalized, was worth $4,000 per mile. In other words, they had $21,600 of Government subvention to build a road that their own contract showed could be built for $11,700 per mile. That is the beginning of the road.

I want to state to the House where the Canadian Northern Railway Company came into existence. The Act permitting the amalgamation of the Manitoba Railway and Canal Company and the Winnipeg Northern Company, the two companies to which I have been referring, was passed in 1899, 6263 Victoria, chapter 57. You will remember that the authorized capital, not the subscribed capital of the Winnipeg and Northern Company, and that was the final name of the Winnipeg company, was $15,000,000. The authorized capital of the Lake Manitoba Railway and Canal Company was $800,000. And what did the wizards of finance do when they bought up these two charters? They amalgamated the two companies under the name of the Canadian Northern Company and by section 3 of their agreement they fixed the stock at $16,000,000, all paid up and fully subscribed.

And that $16,000,000 of watered stock is

[Mr. Nickle.3

the initial foundation on which the Government builds their claim that they are dealing fairly with the country when they take forty millions of watered stock as security for a bond guarantee of $45,000,-

000. How did they provide for the distribution? Section 6 says:

Each shareholder in the Winnipeg Company shall be entitled to receive, and there shall he issued to him by the amalgamated company, one share in the capital stock of the amalgamated company, issued as fully paid up and free from calls and other liability, for every, one hundred dollars, paid up upon the shares held by him in the capital of the Winnipeg Company.

The agreement further provides:

Each shareholder in the Lake Manitoba Company shall be entitled to receive, and there shall be issued to him by the amalgamated company two shares in the capital stock of the amalgamated company, issued as fully paid up and free from calls and other liability, for every one hundred dollars of fully paid-up stock held by him in the capital of the Lake Manitoba Company.

The original capital of $15,800,000 was increased by $200,000, a paltry sum perhaps, to roll the whole amount into round numbers. They went on further with their amalgamation. By chapter 52 of 1 Edward VII, 1901, certain agreements of amalgamation between the Canadian Northern Railway Company and the Manitoba and Southeastern Railway Company, and the Canadian Northern railway and the Ontario and Rainy River railway were ratified. The agreement is dated 28th of April, 1900. Schedule ' A ' says:

3. The name of the amalgamated company shall be 'The Canadian Northern Railway Company.'

4. The amount of the capital stock of the amalgamated company shall be sixteen million, seven hundred and fifty thousand dollars.

$750,000 of water was poured into the amalgamated company. How was it divided? In the same way: $100 worth of fully paid-up capital stock for every $100 of stock subscribed for, whether paid or not. Let us go further. By schedule B of the same Act a further agreement was ratified. That agreement provided that the amount of the capital stock of the then amalgamated companies should be $24,750,000 being the capital of the two companies. One share of the new stock was issued for each share of the old stock held by the respective shareholders in each company.

And now, Sir, a change comes over the scene; the hand of the hon. Minister of Public Works appears. He was then Min-

ister of Public Works in Manitoba. The Northern Pacific and Manitoba Railway Company ran a line of railway from the United States up into Winnipeg. The railway was not doing well and was dn the hands of a receiver. With that shrewdness that has characterized the Minister of Public Works from that day to this, he grasped an opportunity that few men at that time appreciated. He went to the United States and, made an arrangement, the full story of which I am not at liberty to tell, but it would be interesting if he would take the House into his confidence.

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?

Some hon. MEMBERS:

Hear, hear.

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CON

William Folger Nickle

Conservative (1867-1942)

Mr. NICKLE:

It is not often that gentlemen opposite applaud the Minister of Public Works, but I am sure they will be generous when I tell them that the bargain he entered into with the Northern Pacific and Manitoba Railway Company was highly advantageous to the province of Manitoba and a credit to the Minister of Public Works.

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CON
CON

William Folger Nickle

Conservative (1867-1942)

Mr. NICKLE:

The province of Manitoba secured the road, and almost at once turned it over to the then Canadian Northern Railway Company stipulating that the Canadian Northern Railway Company must guarantee not to take the traffic through American territory and thence to the seaboard by other American lines but that they must connect up with the Canadian Northern railway to Port Arthur. I want to say that if there is one thing that has characterized our railway policy more than another it is this: we have done things in Canada because our conditions compelled us to do so, but while we did things we also dreamt things, and one of the things we dreamt was that Canada must be united from the Atlantic to the Pacific, and when the Minister of Public Works made that bargain that diverted the grain trade of Manitoba from the United States to Port Arthur and the Great Lakes, he did a great work for Canada. Later on the Canadian Northern railway branched out. Certain subsidiary companies were incorporated to conduct railway operations in British Columbia, Alberta, Saskatchewan, Ontario and Quebec under the name of the Canadian Northern Pacific, Alberta, Saskatchewan, and so on. I have mentioned the fact that they made application to this House in 1911 for a grant of

$35,000,000 and that they got it. We know what was done in 1912, and also last year. So much for the early history of the company.

I now wish to draw the attention of the country to the aid this railway company has had, and while one does not want to say unpleasant things it is hardly fair to the people of Canada to issue such a misleading statement as the Canadian Northern railway people have issued to the people of this country through the recent blue book laid on the table of the House. Any one who reads it with care, and that understands the financial situation, will see how craftily words have been used; the distinction that is made between aid received and aid granted, to these companies since their incorporation, and amalgamation under the name of the Canadian Northern Railway Company, and the careful method by which the subsidies- and aids are eliminated when the aid was given prior to amalgamations. * I say that the statement issued by the Canadian Northern railway most inadequately portrays to this country what assistance has been given to the company, and I am going to read to this House a statement showing the assistance Canada has given the Canadian Northern Railway Company system. Take land grants for instance. Let us see what the Dominion Government has done. As I explained earlier in the evening, they made a grant to the Winnipeg Great Northern of 2,624,128 acres. I have asked the Government how about that extra 256,000 acres they asked for a few week ago. Does the Government intend to grant that in respect of 40 miles of railroad constructed out of Winnipeg-a railroad that was never completed, the wires of which were used to fence the fields of settlers, the ties of which rotted, and whose rails lay a streak of rust along the way? The member for Selkirk (Mr. Bradbury) tells us that when the road was built thirty years ago the land could not be sold. To-day it is worth from $15 to $20 an acre. Is the Government going to yield to Mackenzie and Mann, and grant 256,000 acres of this domain in the year 1914 which was not asked for in 1900, when the land was worth only $1.50 an acre? Why was the request made lately? Why has it hung fire so long? We will take another case. The Canadian Northern Railway Company received, as the Lake Manitoba Railway and Canal Company, 798,400 acres of land. The Manitoba and Southeastern Railway Company, now a part of the Canadian Northern railway, received 680,320 acres. In other

words, the Canadian Northern through these three subsidiary incorporated companies has received 4,102,848 acres of land.

Now, let us see what that land is worth. I desire to be fair, and perhaps it is hard to be fair sometimes; but I would like to direct the attention of the House to the value of the lands .as shown by the company. I would first direct attention to the eighth annual report of the Canadian Northern Railway Company, at page 8 where, over the signature of Sir William Mackenzie, he admits that up to that date there had been sold $12,964,627.76 of that land, and that in addition the railway company had to dispose of 1,161,017 acres.

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LIB

May 13, 1914