May 20, 1914

CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

No, the point is as to whether or not any portion of this money is to be used to extend these lines. As far as that feature is concerned, we were asked to give certain assistance for the purpose of completing the Canadian Northern system. We understood that so far as these provincial lines are concerned, adequate provision would be made under the provincial guarantees. At all events, we asked the company to give us a statement of what requirements were necessary ' for the completion of the system as submitted to us. That statement, as made to us, involved the provision of about $42,000,000 more than seemed to be available at the present time, and so we have brought down these resolutions. What effect will that have upon the development of the branch lines in the provinces of Alberta and Saskatchewan? At least it will have this effect, that if the Canadian Northern Railway system as a system were allowed to collapse and no aid at all were forthcoming at the present juncture, the construction of any lines which have been undertaken as branch lines of that system would, it seems to me, be very greatly delayed. Therefore, so far as that is concerned, we believe that by coming to the aid of the system at the present time and by the endeavour, which we believe will be successful, to place the whole system on a sound financial basis, we shall give a very practical assurance of the extension at an earlier day than otherwise would be possible of the lines to which the hon. gentleman alludes. I am not aware that any application has been made to us for aid out of this sum now proposed to be raised to extend thet particular lines to which he alludes, because, as I understood, the provincial Governments were prepared to implement their guarantees to a further extent for the development of these branch lines. The main line, I think, has been regarded by both the late Administration and the present Administration as a read which should be assisted with federal aid, with the exception of the line through the province of British Columbia, which was initiated by arrangement made with the Government of the province of British Columbia. So far as that was concerned, recognizing, as we did that the system had acquired the status of a transcontinental line and as the development of branch lines throughout the territories would probably he expedited and assisted by putting the main line on the 2581

basis of a transcontinental system, we did assist the line in the province of British Columbia. I do not know whether I have covered all the points which the hon. gentleman brought to my attention, but if there is anything further he wishes me to refer to, I shall be glad to do so.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB

Frank Oliver

Liberal

Mr. OLIVER:

The other point that I would like the Prime Minister to elaborate a little more is as to the possible effect of the measurable amalgamation that has taken place upon the raising money upon these provincial lines after a general mortgage has been placed.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

I do not know whether I can add very much of value to what I have already said on that point. Let us take one of these lines-my hon. friend mentioned several. Will he recall the name of one?

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB
CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

Let us take the Canadian Northern Western line. It has been partially built and remains to be completed for a certain distance, I think my hon. friend said about a hundred miles, through the moneys derived from securities guaranteed by the provincial government. Let us assume that the proceeds of the securities so guaranteed would be sufficient for the completion of these one hundred miles of railway. Let us suppose further that no portion of the aid now proposed is devoted to the completion or any betterments. The physical assets of that line, then, would remain free from this mortgage and would not be affected by it. But as it is included in the list ot roads whose stock is to be transferred to the Canadian Northern railway, then the stock, instead of being vested in Mackenzie and Mann, will .be vested in the Canadian Northern railway and will be subject to the mortgage. That really means that the Canadian Northern railway would own the stock and would control, in the future as in the past, the management and operation of the road. But in case of default and of the vesting of the mortgaged premises either in the Government or in some corporation appointed for the purpose, the management would be changed. I think it will be apparent to my hon. friend-it is apparent to me-that if such a thing were brought about the road would still continue to be part of the great transcontinental system, that is a branch line directly connected with the transcontinental system, a feeder of that system, and, so far as one can foresee, the position of the people of the

province of Alberta whose interests are more *directly concerned in this road would not be in any way prejudiced; because if default were brought about and it were necessary to reorganize the system or if it should pass to the people of Canada for operation as a state-owned railway, or for *operation under lease granted by the Government of Canada to some corporation constituted for the purpose, the branch railway would at least maintain as advantageous a status as that which it has to-day. If my hon. friend has any suggestions to make, I shall be only too glad to receive them.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB

Frank Oliver

Liberal

Mr. OLIVER:

Unfortunately I am not a *corporation lawyer, and I am rather at a loss in attempting to argue this question. My theory is that, in the first place, the fact that the stock is not available for the purposes of the company will prejudice the financial position of the company in the case of more money being desired to be raised. In the second place, the possibility of change of ownership in case of default would prejudice the possibility of raising money upon the security of the road. If in this legislation the Government specifically provided that in case of default and the taking over of the road by the Government, they would assume the responsibility of the obligations in that regard, then the position would be good. But so long as that question is left in uncertainty, we are legislating here in the face of a possible change of ownership without providing any guarantee as to what shall take place when that change of ownership occurs. My theory, therefoire, is that there is to that extent a prejudice against the road being able to raise further money that may be required in order to carry it forward to completion. My suggestion is that this condition could be remedied by the legislation specifically providing what shall be done if default should occur.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

I do not think that these roads are in any different position from any other portion of the system in that respect. The railway is the modern highway of the world; persons who undertake to build a railway have a certain obligation to operate it, and it would be appropriate to enforce that operation through effective means, by legislation or otherwise, if the persons entrusted with the duty of operating the line did not operate it. If such an obligation rests upon a corporation organized for the purpose of operating a railway, I am sure that my hon. friend will realize that it rests in still greater fMr. Borden.]

measure upon a government, whether of the Dominion or of a province, which by reason of its guarantee and foreclosure of the mortgage securing the bonds so guaranteed, has to take over a road. My hon. friend says that possible change of ownership may prejudice this road. Well, there would be a possibility of change of ownership under the bonds guaranteed by the provincial government, and there would be a possibility of change of ownership of the same character with respect to every road that is enumerated in the list set out in the resolution.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB

Frank Oliver

Liberal

Mr. OLIVER:

The provincial government is furnishing the money to build these roads, but the ownership of the roads is going to rest in the Canadian Northern Railway Company, or ultimately in the Dominion Government. That is not as good for the province which has provided the money to build the road as if the ownership rested in the Canadian Northern with a reversion to the provincial government. The provincial government, if it had a reversionary interest in the ownership of the road, might he in a position to dispose of the property to some other system, but it is debarred from doing this under these resolutions, where the ownership of the stock, and, therefore, the ultimate ownership of the road, rests in the Canadian Northern, or, in case of default, in the Dominion Government. I submit that the interests of the province are prejudiced to that extent.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

I can hardly agree with my hon. friend that they are prejudiced to any extent whatever by the fact that the road might ultimately come into the ownership of the people of Canada and become part of a great transcontinental system. I cannot see, with all deference to my hon. friend, that that would prejudice the interests of Alberta. So far as stock is concerned, the road itself is still in the same ownership as before. The only difference is that formerly Mackenzie and Mann, Limited, owned the stock, and now the Canadian Northern railway own the stock. The road is there as an entity, and the corporation which owns it is there as an entity, the same as before. The mere fact that the stock will pass out of the ownership of Mackenzie and Mann into the ownership of the Canadian Northern railway cannot, according to my humble comprehension, and with all due deference to my hon. friend, in the slightest degree

40S3

affect the possibility of raising money for the extension or betterment of the road. I cannot see that there is any possible reason why there should be any such prejudice as my hon. friend suggests.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB

Frank Oliver

Liberal

Mr. OLIVER:

The province pays, and the Dominion owns and controls; that cannot be as sound a position for the province as if the province, doing the paying, also controlled, and, under certain circumstances, might own. It looks to me like a ease in which the province is, in the slang of the day, left holding the bag, while the Canadian Northern and the Dominion obtain whatever benefit there is from the transaction.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

I think that if the position of the road is affected at all, it is affected for the better, because it can only be taken over by the Government in case of default in the way that I have mentioned, as part of a great transcontinental system. Why that should be regarded as prejudicing it. I cannot understand. Of course, the Government taking it over in that way would have to assume all obligations in connection with it.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB

Frank Oliver

Liberal

Mr. OLIVER:

That is the suggestion I made, but it is not made a part of the resolution.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

But it is the practical effect of it, because the Government can only take it over subject to existing obligations, and that is specifically provided in the resolutions. The only persons who are being eliminated in the cases suggested are Mackenzie and Mann. The province is not being eliminated; the province can not be eliminated, because its rights are secured by an outstanding mortgage which protects it. If the Government of Canada ever takes over that road or any of these roads, it must take them over subject to all the existing outstanding obligations upon them.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB

Frank Oliver

Liberal

Mr. OLIVER:

I quite understand that,

but the Dominion Government does not need to take them over unless it wants to. The Solicitor General in his explanation the other night said that we could cut off any branch lines that we did not wish to take over. That would leave the provinces at a loss with what under other circumstances would be a profitable enterprise. When the Dominion Government is taking the responsibility of putting these roads under the Dominion Railway Act, and is taking the control and ownership of the stock, the circumstances call for the Government s putting in actual legislation what the right hon. gentleman has said would follow in the natural course of events; that is, that the Dominion Government in case of default will take over the branch lines and become responsible for them. If they put that on the face of the document the road is in a position to go to the money markets, and to get further money if it is required, but without that assurance on the face of the document, without a specific clause in the Bill, they could not as readily get further and necessary aid from the money markets.

Mr. BORDEN: My hon. friendstarts, I think, from a premise

that is not strictly accurate. We are not taking over the control of the road; we are leaving the control and management of the road practically where it is at the present time until default comes. If default comes we must take over these roads undoubtedly, as one transcontinental system. But in the meantime the purpose of this arrangement is to get the stock of all these companies under one management, and to bring about an amalgamation so far as it is practicable at the present time. However, I am ready to consider my hon. friend's suggestion.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB

Frank Oliver

Liberal

Mr. OLIVER:

What I object to is that

the Government in case of default takes control, and yet does not take upon itself the specific obligation of operation and control of the road.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

It takes a good deal more than control; it takes ownership.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB
CON

Robert Laird Borden (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Conservative (1867-1942)

Mr. BORDEN:

You might say that of

any road in the system, but as a matter of fact all these roads form one transcontinental system and will have to be operated as such. It would be utterly impossible for this line from Montreal to the Pacific to be operated without branch lines, and even if a branch were not imme-

11 p.m. diately profitable I think any person having the slightest knowledge of railway and business affairs in this country would say that any government would be very foolish indeed to let go a branch line for that reason. All the great railways in this country construct or acquire branch lines-perhaps not so rapidly as they are sometimes desired-which are not immediately profitable, but are indirectly profitable even at first, perhaps, and in the end exceedingly profitable with the growth and development of the country. I

think my hon. friend need not have any cause for alarm in that regard. However, I will take his suggestion into consideration.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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LIB

Frank Oliver

Liberal

Mr. OLIVER:

I am only bringing it up now that it may be considered when the Bill comes down.

Progress reported.

On motion of Mr. Borden, the House adjourned at 11 p.m.

Friday, May 22, 1914,

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
Permalink

May 20, 1914