May 15, 1914

CON

Louis-Philippe Pelletier (Postmaster General)

Conservative (1867-1942)

Mr. PELLETIER (Translation):

Mr. Speaker, following on the right hon. Prime Minister and on the right hon leader of the Opposition, I trust I may be allowed to add a few words to the encomiums and tributes of praise which have fallen from their lips in memory of the one who has just departed from our midst.

Mr. Monk loomed large in the political world and in the hearts of the people of the province of Quebec. Friends and opponents alike held him in high esteem. He was a man of high standing, a man of whom the whole province of Quebec was justly proud. Even those who differed from him could not help acknowledging that he was reflecting great honour on our race.

I was his colleague in this Government, and even after he left the Cabinet, our intercourse continued to be of the most cordial nature. His death for me, as for the whole of the province of Quebec, has been a source of deep and sincere grief. The place he occupied will not be easily filled.

One of his last deeds is very characteristic of his whole career. When he found that the ailment which terminated in his demise was an impediment to the fulfilment of his parliamentary duties, sucn as he conceived them, and that he would no longer be in a position to carry out the mandate which the electors of Jacques Cartier had entrusted to him, he was unwilling to let events follow their course, and preferred sending in at once his resignation, such was his high sense of duty.

However, subsequent to that resignation, I for one recommended postponing for some time the issuance of the writ, in the hope that this distinguished gentleman would be in a position to take once more his place in our midst as member for Jacques Cartier. God has decided otherwise, and it only remains for us to submit to His superior will.

I join with the Prime Minister and the leader of the Opposition in offering to his family the expression of my deepest sympathy.

Topic:   DEATH OF HON. F. D. MONK.
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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX (Translation):

Mr. Speaker, I may be allowed to pay my respects to my former colleague who has just died. We owe an expression of our grief to the departed statesman, and, to his family, an assurance of our heartfelt sympathy.

Frederick DeBartzch Monk has played an important part in this Parliament, and his demise is a grievous loss not only to his native province but to Canada as a whole.

A professor at Laval University, he moulded the minds of a whole generation of professional men, and his pupils, even those who did not agree with him in politics, held him in high esteem.

We, his former colleagues, are aware to what extent his knowledge of constitutional law had made of him an incomparable parliamentarian. He was listened to in this House and elsewhere; his eloquent utterances captivated his hearers.

Our regretted colleague was of distinguished lineage. Through his mother he was connected with the old Canadian noblesse. The De Bartzch family played an eminent part at the time the seignorial regime was in force.

On his father's side, he was related to a family of distinguished jurists. His father, of English extraction, had for many years past thrown in his lot with the French-Canadians, in whose midst he lived. He was one of the striking personalities of our Court of Appeal. And through his wife, whose premature death has been the occasion of such deep grief, he was connected with the Cherrier family, whose head, Come Seraphin Cherrier, was under the Union the friend and counsellor of Lafontaine, and later of Dorion.

Mr. Monk had inherited the attainments of the former and profited by intercourse with the latter. His death deprives us of one of our superior men.

The Government, no doubt, will be represented at his funeral. Those who opposed him because their views differed radically from his will also be there, for the grim reaper leaves in his wake no harsh feelings; only pleasant memories remain.

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CON

Charles Joseph Doherty (Minister of Justice and Attorney General of Canada)

Conservative (1867-1942)

Hon. C. J. DOHERTY (Minister of Justice) :

Mr. Speaker, in the death of Mr. Monk Canada suffers no ordinary loss. We all know how he gave to the service of this country the best years of his life and we all realize to what extent he brought to that service abilities that qualified him to take the foremost place in the ranks of

her public men, that place which he so easily attained and so worthily held. We all feel too, that, what is perhaps greater and more rare, he brought to that service an unselfish devotion that, I am sure, all who witnessed it admired. A man whose standards were of the very highest, and whose unfailing industry drew from the exceptional gifts with which nature had endowed him the largest measure of usefulness to his country. Canada may well mourn his loss. Born in the same year, and in the same city, we were boys together and grew up in a lifelong friendship, and great as is the loss to the country it is perhaps more the sense of personal grief in the loss of an esteemed and admired and beloved friend that has made it impossible for me not to say a word expressive of sympathy in the great grief of those who were dearest to him. That is my excuse for adding a word, at least, to what has already been said.

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CANADIAN NORTHERN RAILWAY AGREEMENT.


Consideration of the proposed motion of Mr. Borden that the House go into Committee to consider certain resolutions respecting the Canadian Northern railway, resumed from Thursday, May 14.


CON

Edmund James Bristol

Conservative (1867-1942)

Mr. EDMUND BRISTOL (Centre Toronto) :

Mr. Speaker, I desire to offer a few observations on what I regard as one of the most important matters that have come up for consideration by the Parliament of this country. I listened with a great deal of attention to the speech that was made yesterday by my hon. friend the member for Calgary (Mr. R. B. Bennett), and I do not purpose to follow him so far as the personal element in that speech is concerned. I feel it would have been of some advantage to this House if the hon. member had told us who made the report as to the condition of this railroad, which must have taken at least a couple of months to prepare and cost a considerable sum of money. It would have been interesting to know what group of men paid for this report, and furnished it to the hon. gentleman; and also interesting if, when making his anonymous attack, he had read to the House the letter that the engineer said to have been formerly in the employ of Mackenzie and Mann had given him. Anonymous attacks that come from sources not given are not, in my humble judgment, proper methods of dealing with a subject of this importance, on which we are entitled to the best possible evidence

and the fullest disclosure. I do not admit that my hon. friend from Calgary has a monopoly of the public conscience of this country, or that he alone of the members of this House is anxious and desirous to see done what is best in the interests of Canada at the present time. My hon. friend has spoken of a lobby extending over a great many years, and which he says is the most disgraceful that has ever taken place in any country. Does my hon. friend wish to imply that this Government has been lobbied in respect of this measure? Is that the charge? If so, it should be made boldly and clearly here and now. But there is not a man within the sound of my voice, or in the country, that believes that the present Government, either directly or indirectly, has been lobbied in respect of this most important matter. There is not a man in this country, in my humble judgment, that does not believe that if the Prime Minister or the Minister of Finance or any other member of the Government had been lobbied, it would have been a great deal worse in the final result for the people doing the lobbying. That is as far as we need to go into the question of parliamentary corruption. If it has not existed in this House, this House is not concerned. If it existed at an earlier stage in the hon. gentleman's career, he had the knowledge, the ability, and, apparently, the language to place the facts before the people of this country at a proper time and before a proper tribunal. I think with these observations I may dismiss that matter, and leave it to the hon. gentlemen to diiseuss at a place where it may properly be considered.

The Government of this country were confronted with this condition: they had a transcontinental railway in process of completion, not connected up. They found that the various provinces, with one exception, had guaranteed portions of the bonds of this line; that the Government of Sir Wilfrid Laurier had guaranteed bonds and had given subsidies to the extent of $58,000,000. Consequently, the road had the status not merely of a provincial railway, but of a transcontinental system endorsed by this Parliament and in a public fashion, so that investors abroad could regard it as a transcontinental system which was as much favoured by the people of this country as was the National Transcontinental railway, the child of my right hon. friend (Sir Wilfrid Laurier). That being the condition of affairs, I am going to deal just for a moment with the hon.

.

member's charge of reckless guarantees, made in his three and a half hours of discursive statements, more or less vigorous and going from San Francisco to the North Pole. The western provinces must have branch lines of railway; they have either to build them themselves by Government construction or get contractors to build them by means of Government guarantees of bonds. We have one striking example of Government construction in this country, and, in my humble opinion, the people of this country are quite satisfied to allow private enterprise to construct the railways under Government guarantees, and under proper supervision; particularly, when all the railway has to sell later on is transportation, which is controlled by the people of this country through the Railway Commission. It was for the provinces themselves to determine the best way to get branch lines to the settlers. The settlers had to have branch lines, and at once if immigration was to continue, and the farms of the West were to be occupied by those who make a living growing grain. I venture to say that the system of Government guarantees for railway construction has been more beneficial as regards the Canadian West than any system so far devised by any government or person. There are two things in favour of Government guarantees. First of all, they enable the contractor to get his money for the road at a lower rate of interest than he otherwise could get, because the endors-ation of the Government conveys to the investor abroad that it is a portion of a railroad system that the' Government believes should be built; and it has this further benefit: the road, when constructed, has lower fixed charges, because the bonds thus guaranteed carry a lower rate of interest, and the road has consequently to earn less to pay the guaranteed bond interest, and that means less charges upon the settler. It is idle, therefore, for a western man to tell us that these guarantees have been reckless. I venture to say that the hon. gentleman would not make such a statement in Alberta, because he knows the settlers of that country are very anxious indeed for branch lines; and we have also the statement of the hon. gentleman from Macleod, and of the Prime Minister of Saskatchewan, as to their necessity. That being the condition of affairs, the Government of Canada were confronted with this situation: they had a partially completed railway system that had been guaranteed by both the provinces and

the Dominion as a transcontinental line, and the question before them was: Shall we assist that line to become a transcontinental railway, or let it go into the hands of a receiver; or, as the hon. gentleman said yesterday, pool the stock, eliminate Mackenzie and Mann, and appoint some gentleman to run the road? What did the Government do first? The first thing they did was to make a thorough investigation into the affairs of the company. My hon. friend complains that it was not under.oath. Well, we have investigations made into companies affairs continuously in this country. When any question arises in regard to any of these large mergers, you employ a firm of accountants to inquire into the affairs of a company before you take it over, and I have never heard that, when any of these large corporations were formed, any inquiry was made other than an audit such as the Government has made in this case.

The people before us are not criminals, they are not people who are unknown and the Government employed the Comptroller of the Finance Department, the Comptroller of the Kailway Department, and the Comptroller of the Intercolonial railway to make that investigation. On top of their examination, you have the oath of two officers of the road who say that as far as Mackenzie and Mann are concerned they have not made one dollar out of this enterprise. I had the pleasure of 'being at a banquet in the city of Toronto on the 14th of December, 1906. It was a banquet given by the Board of Trade to the two distinguished gentlemen who control the interests of the Canadian Northern Railway Company. Sir Mortimer Clarke, then Lieutenant Governor of the province of Ontario, presided at that banquet. The most distinguished men in the province of Ontario. Senators, premiers, ex-premiers and others, were present on that occasion, and before that assembly, as long ago as 1906, Mr. Z. A. Lash made this statement:

Now, gentlemen, I will tell you another secret. During all these years neither Mr. Mackenzie nor Mr. Mann has drawn from the railway company or the Canadian Northern Railway system one single dollar in cash for themselves, whether for contractors' profits on construction or otherwise. They have given their invaluable time and services without salary; and though they have in the interests of the railway probably done more travelling than any other two men in Toronto, yet they have not drawn one dollar for travelling expenses. On the contrary, they have advanced out of their own private means and credit, millions of dollars for this railway system, and have in the earlier stages 239 ) i

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BEVISED


risked their whole fortunes and future for the benefit of the undertaking. My hon, friend has been pleased to oast some slurs upon, or to make some remarks about, Mr. Z. A. Lash. I venture to say in the presence of any lawyer in the province of Ontario, and I think of the Dominion of Canada, there is no man in the legal profession who is more highly regarded by the profession than Mr. Z. A. Lash. He has been a distinguished member of a leading firm in the province of Ontario for a generation. He has been counsel for the Bankers' Association for a great many years. He has been connected with the Law Society and he has looked after the legal affairs of the province of Ontario for a generation. His word would be taken by any man in the province of Ontario, by any business man, -any banker, and I venture to say that that statement made at that time in that fashion is a statement that every gentleman in this House will accept without question as being true. I am reminded by an hon. gentleman that he was also deputy Minister of Justice in this country. The audit which the Government made, and which they made, I am satisfied, with the greatest possible care, is only corroborative evidence of what has been well-known to those who have known what this work was, the men who were carrying it on and why they were carrying it on, and the Government have taken care in this matter that no claim shall be made and no profit other than common stock. My hon. friend stretches out his hand and says: Why, it passes the credulity of man that they could do such a thing. When you have a great undertaking to carry on, can you commence to milk it at the start as the hon. gentleman would have us believe? For one thing, the bank would never in the world allow it. I am quite satisfied that the Canadian Bank of Commerce, when they made Mackenzie and Mann put up every security, personal and otherwise, at their command for the carrying on of this enterprise, would never have allowed these gentlemen to take one dollar out of it. These men were ambitious to build a great transcontinental railway and they were willing to wait until the completion of this enormous enterprise before receiving the profi.ts which they would be so justly entitled to and which, I am sure, nobody will begrudge them when the facts are known. Therefore, I think it may be taken as a fact that, in so far as Mackenzie and Mann are concerned, they have not received one dollar


EDITION


profit out of this enterprise and that their sole profit will he that which may be derived out of the common stock, which is all they get in connection with the arrangement which is now being made by the Government. The Government having made this audit and having ascertained this state of facts, it would be reasonable for them to consider the whole situation. In considering the whole situation, it was reasonable for them to look into the matter and see who the applicants were and what right they had to come to the people of Canada for assistance. My hon. friend says that these gentlemen are the prize mendicants of this country. I did not know that it was mendicancy to ask a loan from a bank when you put up security and pay for it by common stock. It is to my mind a most ordinary business transaction. Instead of going to a banker it was very natural to go to the Government because no one is more vitally interested in the success of the road than the Government is and if it was a good financial proposition for a banker it certainly was much more so for the Government. It was much more so in the interests of the people of the country because the aid which the Government could give to this enterprise could obviously be obtained at a cheaper rate than if it were obtained from a private banker. The Government, while aiding the road were also aiding the people of the country, and it was much better that they should grant this aid than that Mackenzie and Mann should go to the bankers and allow them to distribute this common stock because if any common stock was going it was desirable that the people should get it. The Government having ascertained the position of this matter, and having met the applicants, it is only fair, it is only just to these men to show what they had put into this enterprise which entitles them to the consideration of this country. These men gained their first experience in construction work on the Canadian Pacific railway in the Canadian West. I do not think there is a man within sound of my voice who does not believe that they know more about railway construction than any other people in this country to-day. I do not think there is a man who is informed upon these matters who believe that there is any set of men in Canada to-day with the same amount of skill and ability in the construction of railways, cheaply, safely and economically as the two men who control the interests of the Canadian Northern railway. Having got their experience in the Canadian West they [Mr. Bristol.J began to build railways for themselves practically only from 1896. I want you all to bear in mind that in 1896 only 21,000 immigrants came into this country. I want you to bear in mind that that great, powerful system, the Canadian Pacific railway, would not build one branch line of railway, would not put up one dollar for branch lines. Why? Because they did not have the faith in Canada's future that these two men had. They are entitled to consideration because they had faith, in Canada and they realized that the construction of the branch lines in the Northwest was necessary in order that that country might be settled and that Canada might become one of the greatest countries of the world. How do I know that? There were, in 1896, three charters kicking around Manitoba, that had been kicking around there for these many years, and nobody would touch them, land grant or anything else. The Canadian Pacific railway would not touch them at all. Obviously it was thought that there was no necessity for them to do so because they no doubt argued that if anybody was willing to be a big enough fool to build a branch line the traffic would come to the main line and they would get the branch lines in the end at their own price. And they would have got them but for the genius of these two men, who succeeded in connecting up Port Arthur and Winnipeg. They built a line there, so that, when the Manitoba Government had an opportunity to buy the Northern Pacific, there were only two men outside of the Canadian Pacific Railway Company who were able to handle the matter and to carry grain to the Great Lakes, thus giving the West the one thing for which its people had asked for years, namely, railway competition. It is idle to say that the Manitoba Government did it. I am willing to give my hon. friend the Minister of Public Works all the credit that is so justly due to him; but it takes two men to make a bargain; and it is due to the fact that Mackenzie and Mann put their energy and capital into that railway enterprise that there was a railway from Winnipeg to Port Arthur able to deal with the Manitoba government independently of the Canadian Pacific. There was no one else who could have leased the Northern Pacific Manitoba railway, and in that way given railway competition to the Canadian West except the Canadian Northern. That is the first thing that occurred. In connection with the construction in 1896 of these roads that nobody else would have anything to do with, Mackenzie and Mann got 4,100,000 acres of land. Apparently they took 100,000 acres of that land for themselves, and turned in the other 4,000,000 acres for the benefit of the Canadian Northern railway. My hon. friend from Calgary (Mr. Bennett) says that some of these lands were later on exchanged, and that the newr grant was made to the Canadian .Northern railway and not to Mackenzie and Mann or these other companies that originally earned the land grant, as if that were of any consequence. The only reason that was so was because these earlier roads had been amalgamated with the Canadian Northern railway, and the Canadian Northern railway had absorbed the lands granted to these railways and was therefore at that time the company entitled to receive those exchange lands. There is no particular mystery in regard to the fact that other land than the particular land that they got was given to them. A portion of the land originally granted was found to be unfit for settlement; and where it was not fit for settlement, the Government were bound to give them land fit for settlement. The Canadian Pacific railway got land fit for settlement in exchange for lands originally granted which were unfit, and it was perfectly fair and proper to give the Canadian Northern railway lands fit for settlement, seeing that the grant called for that class of land. So much for that *situation. I want it to be borne in mind that 1 accept the statement of the Prime Minister, who has investigated this matter through the accountants, as to the value of that land which these gentlemen were entitled to put into their pockets; in the same way as other gentlemen in the Canadian West put into their pockets land grants in connection with the construction of railway lines in that country, as is well known to every one here. Mackenzie and Mann had precisely the same right to retain these land grants for their own use and profit but they turned the lands over to the Canadian Northern. Wheii the Prime Minister says that that land is of the value of $30,000,000, I accept his statement, and I will deal with it later on. It is of importance in regard to what the people of Canada must do, because they must deal fairly with these gentlemen, just as they must deal fairly with themselves. We are too great a people not to rise to an occasion of this kind, and deal well and fairly with those who have dealt well and fairly with us. * I will now leave these land grants for the moment and come to the question of freight rates and freight competition and the benefit the people of Canada have already derived in this regard by the work of Mackenzie and Mann. I have here Chapter 39 of the Statutes of 1901 of Manitoba; and section 8, subsections (a) and (b) read as follows: (a) Reductions amounting to more than four cents per hundred pounds on the tariff rates in force on the date of said indenture for the carriage of grain from Manitoba to a lake Superior port and, (b) Reductions amounting together to more than fifteen per cent on the tariff rates in force on the said date for the carriage of all other freight from and to points in Manitoba, and from and to points in Manitoba to and from Fort William and Port Arthur. I also call attention to section 10 of the schedule to this statute, which says: Commencing when this agreement takes effect, the company shall reduce its passenger rates in Manitoba to not exceeding three cents per passenger per mile. I may say for the information of some hon. gentlemen that the former rate was four cents, so that the reduction has been 25 per cent, an enormous reduction. I am now going to read some testimony as to the benefits the people of the West and of Canada generally have received from this undertaking, from a paper of which some of us have certainly heard. I refer to the Globe, published in Toronto.


LIB
CON

Edmund James Bristol

Conservative (1867-1942)

Mr. BRISTOL:

An article in that paper under date of March 24, 1914, says: ^

The Canadian Northern railway has a part to play, and no insignificant part, in the development of Canada. It has already been of value in providing lower passenger and freight rates over wide sections of the prairies than were obtainable under monopoly conditions.

Railway experts state that ninety per cent of these reductions originated on Canadian Northern railway lines during the past ten years. The reductions in the grain rates from railway stations in Manitoba, Saskatchewan and Alberta to lake Superior made by the Canadian Northern railway in 1903 and followed by the Canadian Pacific railway represent a saving to the farmers on the crops of 1903 to 1913, both inclusive, of $17,000,000, or four per cent on nearly $39,000,000 per year. And this is not all. There were large reductions in the rates from Port Arthur and Port William not only to stations in Manitoba, but to Saskatchewan and Alberta, and the Canadian Pacific also had to reduce its rates. There were substantial reductions in the rates on coal from Port Arthur and on lumber from various points. There was a reduction of 15 per cent in the

local rates in Manitoba and 7i per cent in Saskatchewan and Alberta. It would be difficult to compute the amount of the reductions made by the Canadian Northern railway and forced on the Canadian Pacific railway, but outside of the reductions of $17,000,000 on grain to lake Superior the saving in the rates on freight from eastern Canada and the United States, and locally between provincial and interprovincial points, would be twice, possibly even three times, the sum above-mentioned.

I am content to take it at twice, and leave it at $50,000,000. (Reading):

In over twenty years the only reductions in the grain rates to Fort William made by the Canadian Pacific were those made under the Crowsnest Pass agreement in 1898 and 1899 (three cents per 100 pounds), and the reductions forced on it by the Canadian Northern railway in 1903. The rates on grain and flour from stations on the Canadian Pacific in Saskatchewan and Alberta are higher to-day than twenty years ago.

They have since been reduced, I believe, by the Railway Commission. (Reading):

It is argued that the West would be j ust as well off with one strong road like the Canadian Pacific railway as with competing lame ducks that cannot compete because of overcapitalization or poor physical condition. The facts presented above prove this to be a specious fallacy. The Canadian Northern railway and the Grand Trunk Pacific have a great work to do in the West, and no one desires to see either of them so financially hampered as to be forced to the wall or sold out to the Canadian Pacific railway.

I asked the Department of Railways to verify those facts for me, and I will read a part of the statement. I think the statements made to the Globe are substantially accurate as to the savings in the Canadian West.

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LIB
CON

Edmund James Bristol

Conservative (1867-1942)

Mr. BRISTOL:

member listening to me does not understand it, I hope he will let me clear away his misunderstanding. To me it is so obvious that I should think even the hon. member for Calgary ought to be able to understand it.

Then there was another matter that was going to turn into a terrific scandal-the Imperial Rolling Stock Company. I have asked for information, and I find that the Imperial Rolling Stock Company was precisely as it had Ibeen described. In order to prevent the rolling stock coming under the main railway mortgage, the Rolling Stock Company intervened and bought the rolling stock, when they had credit enough for it, and sold it to the railway company with their tag upon it, so that it did not pass under the main bond mortgage. I have the information from the Government that not one dollar of profit was made out of that concern and not one dollar has ever been paid in dividends in respect of the rolling stock of the company. I almost thought, however, that the hon. gentleman was going to throw a fit when he was dealing with that rolling stock company. He picked up this- Eleventh Annual Report of the Canadian Northern and held up his hands in holy horror at this item that he found among acquired securities in Canadian Northern Prairie Lands Company $483,393.35. Let me call attention to the fact that is precisely the value of that stock on the London market at that time, about $12 per share. It was bought for $5 a share, or rather was received in exchange for land which they sold at $3 per acre. The amount simply represents land which they put in and which they took stock for. They sold some of the stock, and got the money, which went into the road, and this is simply the value of the balance of the stock exchanged for land-it is put under acquired securities-of the stock which they still hold.

My hon. friend said: Since when did a fraudulent misrepresentation form the basis of an agreement for further aid? I assume that this remark had reference to a statement made by the Prime Minister last year, in which he said:

The Canadian Northern Railway Company professes itself able, under ordinary conditions, to raise all the money that may be necessary for the completion of the line. I

I am sure that no man in this country will contend that conditions are ordinary in Canada, in Great Britain, in the United States, or in the money markets of the

world. War, fear of war, decreased railway earnings, lack of confidence, have made conditions extraordinary. Financial people have told me that financial conditions are worse than they have been for the last fifty years, and they have grown steadily worse since these gentlemen were here a year ago. I myself know a little of the law, and I do not believe that a statement of intention may constitute fraudulent misrepresentation. I am sure that legal gentlemen of the House will bear me out in saying that an untrue statement of fact may constitute fraudulent misrepresentation, but not a statement of future intention to do something. My hon. friend, however, is sometimes as mixed in his law as he is in his facts.

My hon. friend dealt with the question of $70,000,000, and $77,000,000 of stock, and the ten per cent. I will not follow him in that matter, except to say that I understand that the Government, for their own protection, preferred to make that $7,000,000 of stock paid up by Act of Parliament. Without any consultation with the Canadian Northern railway or Mr. Z. A. Lash, who was not in this country at the time, a measure so providing was put through Parliament. So that if there were $7,000,000 extra issued last year and if the per cent were eleven instead of ten, the Government of this country take the responsibility; they wanted to be sure that the stock .was fully paid up, and they asked Parliament so to provide. In my judgment, this was quite the proper thing to be done.

My hon. friend speaks of this road as a bankrupt road and, speaking of its physical condition, refers to dirt ballast and things of that kind. He did not give us his authority for the assertions which he made, though he did tell us that he went through British Columbia and that he was afraid he would fall into the Fraser river. That seems unfortunate. The proof of the pudding is always in the eating. We have had the evidence of the Railway Department of this country, not forgetting the Toronto Globe, that this system has been good enough to save the people of this country $50,000,000 since it was created; consequently it must have been good enough to carry traffic. My hon. friend really makes no distinction between a main line and a. branch line. Obviously the people do not spend large amounts of money on branch lines of railways if they can avoid it. Why? If you have a branch line on the prairies of the Canadian West that is operated three months in the year for special traffic, would

you spend money on any special ballast? Would you make the railroad anything better than was necessary for the purposes of carrying gTain? Is that not what the farmeT wants? I have seen in the South, railway tracks laid right over the cane-lands without ballast and taken up again after the sugar cane was harvested. The whole theory of this class' of transportation is to provide such facilities as will enable the train to get to the main line of railway and get there safely. This railway which is called a bankrupt and useless Tailway, carried over one-third of the grain of the Canadian West last year to Port Arthur. What else did it do? It carried 1,681,760 passengers in 1912, with only one person killed, and carried nearly two million passengers in 1913, with none killed. Is that not a magnificent record for a railroad? My hon. friend says these people do not know how to operate a railroad. They do not kill anybody; they carry the traffic; they provide competition. They show a surplus in earnings in the West even while under construction; but, in his opinion, they do not know how to operate a railroad. They must go to Sir Thomas Tait to learn how to do that. Did any one ever hear such nonesense?

Let me give you one more illustration. Do you know that this line of railroad, during the last four months of the year 1913, September, October, November and December, carried over 40,000 cars of grain at the rate of 335 ears a day? I have the figures from the Railway Department, and I am talking by the book. The .best record the Canadian Pacific railway ever made on a single track road was 250 cars a day. The Canadian Northern this year has run 335 cars a day for a period of four months: 12 trans a day, with 30 cars each, and, in respect of passenger trains, four .more on top of that. Yet the hon. gentleman has the audacity to say that these people do not know how to operate a railroad. I think the performance of this road, under the conditions which have existed, is remarkable, and something of which any one may well be proud. What are they coming to Parliament for? They are coming to Parliament for a guarantee of $45,000,000, of which some $27,000,000, as was suggested, is wanted for rolling stock, and $10,000,000 for betterments. What is that $10,000,000 for betterments -for? It is to put 80-lb. rails on the road from Winnipeg to Edmonton, where for 620 miles they now have 60-lb. rails; it is to put up a proper balast on the line and to bring it

up to the standard of the National Transcontinental line. No road can be built in a day. The National Transcontinental is the best road that has ever been built in this country, so far as construction is concerned, and the Government of this country are requiring that the new portions of this line, from Port Arthur to Montreal and from Yellow Head Pass to Vancouver, shall be built up to the standard of the National Transcontinental in respect of ballast and rails, and that it shall be in all general respects sufficient for the purposes of fast transportation.

What else have these gentlemen done? Why is this road in the future going to be of greater benefit to Canada than it has been in the past? The railway profiles show that the Canadian Northern transcontinental line through the mountain section has even a better profile than the Transcontinental railway in the ratio of -07 to 1 per cent; has a better grade than the Canadian Pacific railway, in the ratio of -07 to 2-4; has a better grade than any transcontinental railway in the United States as well, over this most difficult section; and in other respects the grades and curves of the Canadian Northern railway are superior to those of the Canadian Pacific railway as they exist to-day. What does that mean ? That means that as this road gradually settles down in two or three years and gets re-ballasted in places and filled in as a road does, because you cannot make it in a day, you must have use and weather conditions and time for structures to be filled in and brought up to standard, you will find a road which in grades and in curves will be superior to any road on this continent. What does a [DOT]7 per cent grade mean through the Rocky mountains as against a 2 4 per cent grade ? It means that a train of sixty cars can be hauled by one engine as against a train of thirty cars by two engines. What does that mean in getting traffic between Edmonton and Vancouver? It means according to experts a saving of $1,200,000 and upward on every 6,000,000 tons of freight hauled. The Canadian Northern Railway line is only 762 miles from Edmonton to Vancouver. The Transcontinental line is 952 miles from Edmonton to Prince Rupert. Consequently the Canadian Northern railway is nearer the sea. The western system of this line, over 5,000 miles, is earning its fixed charges., it has been successful, it has paid and since its inception has had surplus earnings amounting to $6,778,384.65 which have gone ird*

betterments. It is in no sense bankrupt. It is prosperous. But when my right hon. friend the leader of the Opposition, then Prime Minister, made up his mind to have another transcontinental railway, in connection with the Grand Trunk Railway system, the Canadian Northern railway either had to get from ocean to ocean or they had to lose all through traffic which at that time they were getting through the Grand Trunk system. Their existence as a railroad was at stake, and they were compelled to become a transcontinental system. My hon. friend from Calgary (Mr. Bennett) enjoyed himself very thoroughly over the Bay of Quinte road and the deficit of that poor little road. I happen to come from that part of the country; I know the road and it doee not deserve the abuse my hon. friend gave it. As a matter of fact, that road was bought because it was to form part of the system of the Canadian Northern railway between Montreal and Toronto, and the value of the thirty miles which the Canadian Northern railway acquired will be a great deal more than two or three times the deficit when it is a part of a connected-up system. The same thing applies to the Canadian Northern Quebec. My hon. friend took Poor s Manuel and showed, very properly, that a branch line railway, without -any connections, was not paying. No one would argue that such a line would pay in this country. But, as part of this transcontinental system, connecting Montreal and Quebec, it was a vital railway for the Canadian Northern railway to have, and it was. worth many times to that system the amount of the deficit of which my hon. friend speaks. That is why these branch lines have been bought, and that is why you get no statement as regards the eastern lines. Why? Because the eastern lines in Ontario -have been and are to-day under construction. But I say that it is one of the miracles of modern railway construction and operation that the Canadian [DOT]Northern railway in the Canadian West was able, through all these years, to build -and construct railways and operate them without one deficit and without costing one dollar to the people of Canada or to the Canadian West during the actual construction period of the railroad in respect of the Government guarantees. That has never been done before in any country. I think when the hon. member for Calgary is so anxious to change the personnel of the must be some other reason than the reason

gentlemen in control of this road, there that he does not believe that they are able to construct and operate railroads. The eastern system will be connected up with the western system, with the result that instead of the company having, as they now have, a branch line in the Canadian West, dependent on practically one set of crops or one kind of merchandise, they will have a well balanced -system, they will be able to take the manufactures of eastern Canada, so far as they are required, to the West, they will be able to bring the products of the West here. They will be able to bring the timber and fish and coal of British Columbia into the western prairie country, where it is so much needed. I venture to state that -the history of the success of the Canadian Pacific railway in this country, of which we are -all proud, will, in the future, attend the Canadian Northern railway, once the system is connected up and properly put in operation.

We have heard a great deal on this question of capital stock. It it is really a very simple question and not at all complicated. I think it will do no harm to go over it. The Canadian Northern Railway system proper to-day has $77,000,000 of capital stock issue, $70,000,000 controlled by Mackenzie and Mann, and $7,000,000 by the Government of Canada. Some $68,000,000 of the capital stock of *the subsidiary companies is outstanding. My hon. friend from Calgary pointed out that $45,000,000 of that $68,000,000 was held by, or in trust for, the Canadian Northern railway. That is true to this extent, that the Canadian Northern railway will be ultimately entitled to it when they comply with the trust ot pay the necessary money. But the effect of what the Government are doing in this case is that they take the $68,000,000 of outstanding stock belonging to companies other than the Canadian Northern railway and they say that those stocks shall go into the treasury of the Canadian Northern railway, and be held there for all time and in return for that there will be issued $23,000,000 of fully paid-up stock of the Canadian Northern railway. That stock does not go to Mackenzie and Mann except as Mackenzie and Mann are legally entitled to that $68,000,000 as anybody is entitled to any stock which he may buy and pay for. The Government of Canada, in the bargain they aTe making, after taking the $68,000,000 of stock and selling it to the Canadian Northern railway for $23,000,000, say to Mackenzie, Mann and

Company and the Canadian Northern railway: That $23,000,000 must be transferred, with $10,000,000 more that you now have, to the people of this country. The capital stock has been reduced, obviously, because if that $145,000,000 were left outstanding, that would be the stock on which these companies would have to earn dividends. The hon. member for Edmonton in referring to these companies said that, for instance, the Canadian Northern Ontario Railway capitalization was $10,000,000, and that they would have to earn dividends on that. My hon. friend is entirely mistaken, because that $10,000,000 of stock goes into the hands and becomes the property of the Canadian Northern Railway system, and it is only the $100,000,000 of stock, oustanding, that will ever be in the hands of the public or on which any dividends can ever be declared or paid. That is another reason why it is idle to follow my hon. friend from Calgary through his long oration on these various roads and their capitalization. It becomes quite unnecessary, because the only capitalization that the people and Parliament of Canada have to consider is the $100,000,000 capital which now constitutes the capital of the Canadian Northern railway. One hon. gentleman makes the suggestion that there was $25,000,000 more in respect of convertible stock. That is quite true for this reason, that the convertible stock is convertible into common stock, and if it is taken out of convertible stock and changed into common stock it means that the fixed obligations of the Canadian Northern Railway system are decreased by $25,000,000 and the common stock is increased by $25,000,000. No one can have objection to a change of that character. If a man went to the Canadian Northern railway with convertible stock and changed it for common stock, there could be no objection. But let it be clear that the $25,000,000 of convertible stock no longer remains a fixed charge on the Canadian Northern Railway system, but becomes common stock. We have nothing to do with that, it has been sold in England and is out of this country. But there is $100,000,000 of stock that this country has to deal with.

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CON

Herbert Brown Ames

Conservative (1867-1942)

Mr. AMES:

Do I understand that the

$25,000,000 of convertible stock, if exchanged for common stock, would carry with it voting power?

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CON

Edmund James Bristol

Conservative (1867-1942)

Mr. BRISTOL:

Obviously, I think, I

cannot understand that theTe could be more than one kind of common stock.

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CON

Herbert Brown Ames

Conservative (1867-1942)

Mir. AMES:

So that there would be $125,000,000 of common stock carrying voting. power, if it fell into the hands of the general public.

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CON
CON

Herbert Brown Ames

Conservative (1867-1942)

Mr. AMES:

Then the Government or

general public would have the controlling interest.

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CON

Edmund James Bristol

Conservative (1867-1942)

Mr. BRISTOL:

That is quite true. As

that $25,000,000 of convertible .stock has been sold abroad and the money put into that road, I think that so far as this debate is concerned we cannot deal with that matter; but there is $100,000,000 of stock which we can deal with, and it is the only stock that affects the people of this country, as it is the only stock on which dividends will be paid. I put the proposition to you in this fashion. Here is an enterprise which, when completed, will have cost about $375,000,000, including about $70,000,000 for rolling stock and about $25,000,000 for terminals the people of Canada have got the benefit of every dollar of that vast expenditure. I want just a moment to compare its cost with the cost of the main line of the Transcontinental. The main line of the Canadian Northern railway costs $106,000,000 without the terminals, which figure out at $34,000 a mile. The Transcontinental costs $305,000,000-my hon. friend from South Renfrew will correct me if I am wrong-which figures out at about $80,000 or $84,000 a mile. The importance of that comparison is this: Giving the former

Government of Canada every credit for desiring to construct a transcontinental railway in the cheapest possible fashion, the result practically is that it cost the Government about $45,000 a mile more to construct the Transcontinental than it cost Mackenzie and Mann to construct the Canadian Northern railway. Look at the proposition in this way: The people of Canada are interested in the construction of this Toad at the cheapest possible price. That is vital in order to give competition and cheaper rates. The fixed charges of the Canadian Northern railway will amount to about $12,000,000. The hon. member for Calgary made that statement, and I quite agree with him. The fixed charges of the Canadian Pacific Tailway aire about $10,000,000; but the Canadian Pacific has about $260,000,000 of common stock outstanding on -which it is paying 10 per cent dividends, and if it failed to pay these dividends fiman-

cial disaster would come on the railway and the people of this country, as no stock is more highly regarded than Canadian Pacific, and properly so. The Canadian Pacific, then, has to earn, including the $10,000,000 of fixed charges and the $26,000,000 of dividends on the common stock outstanding, $36,000,000 in order to keep its stock before the public in the proper shape. The Canadian Northern railway has only $12,000,000 of fixed charges, and only $100,000,000 of capital stock; so that when the day comes when this capital stock is earning 10 per cent it will have $22,000,000 of fixed charges, and dividends of which the Government will be getting $4,000,000 a year. The fixed charges and dividends will still be $14,000,000 less than the fixed charges and dividends of the (Canadian Pacific, because I think it is only fair in this connection to take into account the dividends on the common stock outstanding of the Canadian Pacific. What has this road to show for that expenditure? When the $375,000,000 are spent, they will have 10,000 miles of railway throughout Canada -an enormous railway system. The Canadian Pacific railway mileage is rather larger, about 14,000 miles, I think. The point I want to make is this: Here is $100,000,000 of common stock to be dealt with, and here are two gentlemen who admittedly have put into the enterprise over $30,000 in land value, quite apart from anything else, and who if they were to be dismissed and, as my hon. friend from Calgary says, sent about their business, would surely be entitled to a claim for their work as contractors in this enterprise; and is there any man in this country that believes that less than ten per cent on the cost of the enterprise would be allowed by any board of arbitrators? If you take that figure, these gentlemen would be legally entitled to $37,500,000, which anybody in this country, on an arbitration, would give them for their work in connection with this railway as contractors and $30,000,000 cash for lands. These two sums for land and contractors services. That, in my humble judgment, more than pays in cash for the $60,000,000 of stock. How idle it is to talk of the printing press, and of water, when you have to face facts of that kind that cannot be contraverted. But that is not all. What did these gentlemen do in addition? The Government of Canada says: Coming in at this last stage, we are to be entitled to $33,000,000 of your stock

for the $45,000,000 guarantee. If that is a fair price for a guarantee, what price should be paid Mackenzie, Mann and Company, Limited, for guaranteeing every ' dollar invested in this enterprise from its inception to the present day, and putting their personal guarantee behind it? My hon. friend from Calgary says that Mackenzie, Mann and Company, Limited, are worth $50,000,000. They have guaranteed this investment. What price would they get in common stock for that guarantee? Does anybody think that they can get a guarantee for ten per cent on an investment? Any hon. gentleman who has had any experience in the construction of railways knows that first of all you have to get your charter; then you have to make your surveys; then your plans have to be laid out; then you have to get a contractor to do the work/ and you go to a bank and say: Will you finance this road during

construction; we have certain subsidies, and So-and-So is the contractor? If the contractor is Mackenzie and Mann you will get along all right, because the bank knows they are able to pay for the cost of the railway to completion whether the subsidies are sufficient to complete it or not; but if he is not a substantial contractor, some one has to be found to endorse that paper before the bank will advance the money. That is the only way in which these things are done, and anybody who knows anything about financing a matter of this kind knows that you must give either money or stock to the person who guarantees that the railway will be completed, that the enterprise is all right, and that the securities can, and will, later on be marketed. That is another item that has not been considered in the $60,000,000. There is a further item: these gentlemen have created and promoted a great enterprise. You may scoff at promoters, you may use the word in any discreditable sense that you like, but, believe me, there has been no great enterprise of any size since the world began that has not had to be promoted and worked out by the enthusiast who believed in it. Every great enterprise requires faith, optimism, and imagination, and there is not a man who does not think that a person who has the genius to plan and carry out a great enterprise, who influences capital to take stock in an enterprise which is a great national benefit for any country, should be paid for his services. But where is the payment for that? I venture to say that $100,000,000

would not be regarded by any arbitrator as anything else than the cash value of the services of these gentlemen in connection with this enterprise, when we consider that the sum of $375,000,000 has been honestly and carefully expended over a period of eighteen years without one dollar of graft being taken by the contractors- or profit, if you prefer to call it so. But are they getting $100,000,000 of cash? Are they getting $30,000,000 of cash? Are they getting any cash? They are getting stock to the amount of $60,000,000 and they have to take their chance upon that with the Railway Commission to fix rates. The assistance that the Government is giving them is this. They say: we are

going to guarantee your securities to the extent of $45,000,000, we are going to give you three years to try and operate this road after completion; we know you can build railways but we are not sure whether you can operate them, we do not know whether you will make default and if you make default after three years we will take the railway away from you with every dollar you put into it and we need not give you one dollar compensation. That, in short, is the bargain which the Government have made with these people m respect to this business.

I venture to say that no firm of bankers in this country, the United States, or England, could have dealt with this matter in a more businesslike fashion, in a more statesmanlike fashion, in a more patriotic fashion, for the interests of the people of Canada than the Government have done on this occasion. My hon. friend from Calgary waves his hand and says that the people must have their rights and that the people's rights must be protected. Since when did the hon. gentleman become the only champion of the people in this country? The long training that my hon. friend had in defending the interests of the Canadian Pacific Railway Company in the West and fighting the Canadian Northern Railway Company. I am afraid, has slightly warped his judgment in connection with this matter and has prevented him from bringing to the consideration of it the same fair-minded treatment that he otherwise would have devoted to the subject. But as I state it was the Canadian Northern that he spent most of his life in fighting in the Canadian Northwest, and I fear his mind has become biased.

In dealing with this matter the Government, in my humble judgment, have considered every possible phase of the situation. They did not create the situation, out they have to deal with it. Obviously, in view of the past history of the Canadian Northern Railway Company and the cost of construction, it would have been the heigh of folly for the Government to have changed the method of construction or completion of this railway at the present time. Obviously, no two men in this country are better qualified to complete this great enterprise than they who had the honour of fathering it. The Government did wisely in not taking away from these men the natural incentive that they would have to complete this great railway system in the best possible fashion, to make it a paying system, a credit to this country and a momument to themselves, their friends, their families and the people of Canada. Under these circumstances I think it would have been most unwise if the Government had insisted on more than one director upon the board of the company or of taking any control in this way. It would have taken from these men the greatest possible incentive they could have to complete this railway and make it a success.

When you reflect, Mr. Speaker, upon the length of time that they have spent in developing this great transportation system, when you reflect that the people have already received reduced rates as the result of the introduction of a railway system which is a real competitor, when you reflect that the Canadian Northwest has been covered with branch lines which have made the settlement of that great country possible, when you reflect that, to their credit, these two men have opened up the great Saskatchewan valley and made it clear to the world that this valley is fit for settlement and that the land is of such a character that the settler can raise wheat profitably upon it, when you reflect that every government of this country has endorsed this enterprise, that every government has an undoubted interest in its success, that the people of Canada have had the full benefit of the vast expenditure and are as vitally interested in the success of this railway as even the owners of the stock. I think you will agree that when the Government of this country took forty per cent of the capital stock of the company for giving this guarantee, which if history repeats itself will cost the country not a dollar, they assuredly performed an act of statesmanship which will be remembered in the history of this country and which will redound to their credit. It

marks a new era in the dealings between governments and railways for the benefit of the people. If the railway is a success the people will be $40,000,000 richer and if it fails they will own a transcontinental line and branches 10,000 miles in extent at its cost to the builders.

At One o'clock the House took recess.

The House resumed at Three o'clock.

Hon. GEORGE P. GRAHAM (South Renfrew) : Mr. Speaker, in the light of modern history, it will not be unwelcome news to the House if I intimate in the -beginning that I am not going to follow an established precedent of speaking at -any great length- I refer to a precedent established by myself.

The question of transportation- is one to which I have given a little attention during my term of. public -life. While I am not vain enough to imagine that I have mastered this great problem, I have devoted some attention to it, and think I have discovered some of the difficulties that we encounter in the Dominion of Canada in working out the problem.

In the first place, we have a territory as large -as the United States, comparatively sparsely populated. We have undertaken, in a manner not undertaken by any other country in the world of the same population as Canada, to afford as far as possible transportation facilities, not only to our own native Canadians, but to those whom we have asked to come from other countries to join in our citizenship. The task has been one of greater magnitude than possibly we thought in the beginning. When the Canadian Pacific railway was first discussed, honest differences of opinion arose as to the best method of carrying out the desire of the fathers of Confederation to unite the West, that was to become great, with the East, which at that time had reached greater developments. That was on the one hand. On the other hand, in the far East we had the problem of giving to the Maritime provinces railway connection with older Canada. In the latter case, the Government undertook and carried out the construction of a railway which has since remained Government-owned and Government-managed. A great deal of criticism has taken place year after year, not only in this House, but in the press, as to the benefits derived by the people not only from the construction of the Intercolonial but from its management as well. I have never de-

parted from the idea, that first seized me when I entered into an investigation of the Intercolonial railway, namely, that it is a road of a great benefit to the people and should remain their property, not as a money-m-aking investment but as a part of the terms of ' give and take ' entered into between the various parts of the Dominion of Canada in order to round out Confederation, and make those who became a part of that great Confederation content and prosperous.

Into the far West was extended the Canadian Pacific railway, a work of great magnitude, and one that required, not only vision into the future, foresight as to the Canada that was to be, but financial courage ami financial sacrifice. At least at the time of its construction many there were who thought it would entail financial sacrifice. I am not one of those who feel sorry that the men who took a great risk in the construction of the Canadian Pacific railway became wealthy after some years. It is a credit to the development of Canada that such has -been the case; and it is an incentive to other men to invest capital in order that this new country of ours may be developed, because, unless capital has some security, development will cease.

Years after the Canadian Pacific railway came into operation, the Canadian Northern railway came into being, as has been described by several other speakers. As the result of the work of the Canadian Northern railway and its ramifications and the men connected with it, there is west of the Great Lakes what is, to my mind, the best gathering system in that territory. By ' gathering system ' I mean ramifications and network of branch lines that extend into the most productive parts of the plains. This work was carried out first with the assistance of the Manitoba Government, then with that of the Dominion and the provincial Governments. Finally it developed into a transcontinental system or ambitions for a transcontinental system. It has been said to me on several occasions by persons connected with the Canadian Northern railway that the National Transcontinental or Grand Trunk Pacific railway have usurped some of the territory that the Canadian Northern thinks belonged to them originally, and through which their lines were intended to operate. I do not know as to that, but I know that the Canadian Northern railway has developed into a very large system.

I may say, without being considered partial, that the Canadian Northern, on the whole, even through its proposed main line, traverses territory as rich as that traversed by either of the other two transcontinental lines, to put it mildly. I do not agree with some hon. gentlemen who have stated that the line east of Port Arthur passes through a wilderness that will not be productive. That statement applied to the Canadian Pacific railway is partially true, because that railway but fringes the great fertile territory of Ontario that, at the time of its construction, was practically unknown. It is known, however, that in the northern part of Ontario there are millions of acres' of very fertile land. The Grand Trunk Pacific railway traverses a portion of this territory and the Canadian Northern railway traverses equally as rich a portion of it. Not only are there millions of acres of very fertile land, but the mineral wealth of the neweT portions of Ontario, to my mind, is not yet known. The timber wealth is not yet exhausted. It may be that the massive pine that raised its top skyward has been reduced in quantity;, but theTe are in the newer portions of Ontario many million cords of pulp-wood and other timber of great value, which will become of greater value as the years go by. I do not at all agree, again I say, with those who insist that, from Port Arthur east, these two new transcontinental lines traverse territory that will not produce traffic. In the years that are to come, when some of the men who. are in this House look back, I believe they will be surprised at any one thinking that that portion of Ontario and Quebec would be unproductive. Already there are springing up hundreds of farms, hundreds of farmers going into that country, pulp-mills arising, other industries that will arise, which point to a great development that will not only be of great benefit to the railways concerned, but to the two provinces and to the Dominion of Canada at large.

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May 15, 1914