May 20, 1914

CON

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

I do not think I understood my hon. friend. This simply defines the security- .

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

William John Macdonald

Conservative (1867-1942)

Mr. MACDONALD:

The forty-five millions?

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

Yes.

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

William John Macdonald

Conservative (1867-1942)

Mr. MACDONALD:

That is all right.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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Clause agreed to. * Mortgaged Premises ' means the undertakings, properties and assets, rights, powers and franchises from time to time mortgaged or charged for the purpose of securing the payment of the guaranteed securities.


LIB

William Manley German

Liberal

Mr. GERMAN:

Does not the Solicitor

General intend to include in this mortgage the $60,000,000 of stock that Mackenzie, Mann and Company have in tha Canadian Northern railway. It seems to me important that this matter should be fully considered before the matter is disposed of.

I can see no reason why the stock of Mackenzie, Mann and Company should not be included under the mortgage as well as other things. The Solicitor General may say all the assets of the Canadian Northern railway enterprise are mortgaged and that, in case of default, these would be taken over and the stock wiped out. That may be; but that would not prevent Mackenzie, Mann and Company from dealing in these stocks meantime, selling them on the New York market or anywhere else. In this way American speculators might get control of the whole system.

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

The hon. member for

Welland made the same proposal in the course of the discussion of the motion to go into committee. But the Government did not consider that there was any object to be served in forcing under the mortgage the $60,000,000 of stock held by Mackenzie, Mann & 'Company. If the hon. mepaber will follow me, I think he will agree that there can be no possible object in this even from his own point of view. I have already argued that we have taken security on all the assets of the company, that we have fixed our mortgages on everything that the company possesses and much that they do not possess; and the hon. member has been free to admit that we have taken a mortgage on all their assets that we could get. That being the case, our mortgage, the hon. gentleman will agree, is ahead of the stock. Now, if our mortgage is illusory or insufficient, the stock would be no good, for our mortgage is ahead of the stock. If that mortgage is not illusory and insufficient, then what is the good of a mortgage on the stock? So, he will see that no purpose is to be served from that point of view. But he has a second viewpoint and contends that this mortgage should be taken if only for the purpose of preventing the parties realizing on the stock and getting the stock into the hands of the public. There is a lot that might be done in the way of tying people up hand and foot. But I do not see what object is to be served by that. This stock is already affected by the provisions of the mortgage bond, by these resolutions and the Bill to be founded upon them. The facts are being heralded all over Canada and all over the world by this debate, and any man purchasing this stock purchases it with as complete notice a3 was ever given. No right will accrue to the purchasers that does not accrue to the present holders. They cannot come to Parliament and say they have a higher status than Mackenzie and Mann. Therefore, if we adopted the hon. gentleman s suggestion we should be preventing these men from realizing on what is left of meir property without any object.

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

William Manley German

Liberal

Mr. GERMAN:

Does not the same contention apply to the stock of the subsidiarv companies?

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

Certainly not. The

other stock is the property of the Canadian Northern railway, it is not the stock in the enterprise itself. Being the property of the Canadian Northern railway, it is bonded just like the rest of their property-just like the actual rails of the Canadian Northern railway itself. Consequently, we come down on that stock.

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

William Manley German

Liberal

Mr. GERMAN:

But this $60,000,000 is an asset of Mackenzie, Mann and Company, and it seems to be the purpose of the Government to leave them free of personal liability. I say they should be brought in.

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

William F. Carroll

Liberal

Mr. CARROLL:

The fear the Solicitor

General has about taking a mortgage on this stock is that the holders of this stock would be prevented from realizing upon it. But would it not be well to keep Mackenzie, Mann and Company from handing over control to outside parties without the Government being aware? If the Government took some control of the $60,000,000 and Mackenzie, Mann and Company wanted to sell to some interest that would not be acceptable to the Dominion Government, the Government could protect itself, but if they were selling out to further the interests of the road, the Government could give a release of as much of the stock as might be necessary in order to help them out.

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

As I understand the

hon. gentleman's point it is that if we place this $60,000,000 under the mortgage it would prevent the holders from selling out and so prevent the road from coming under the control of outside parties and away from Mackenzie and Mann. If I have caught the spirit of the opposition to the resolution so faT, that is exactly what would suit these

402S

hon. gentlemen. The hon. member for South Cape Breton (Mr. Carroll) appears to have gained-or perhaps has always had -a saner and better view. At present certain restrictions do apply, as I understand the law, to the disposition of this stock to prevent, let us say, an amalgamation with the Canadian Pacific railway. I do not see why the present occasion is one for adding to these restrictions, nor do I see what object could be served by such restrictions. I do not see why the stock held by Mackenzie', Mann and Company should not be their property the same as any other property they own. They are already seriously restricted by the Bill in their disposition of this stock.

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

William F. Carroll

Liberal

Mr. CARROLL:

In what way are they

restricted?

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

Because the road by

these resolutions and the Bill to be founded upon them will be mortgaged under such drastic clauses that the stock may be very quickly and very summarily rendered valueless.

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

William F. Carroll

Liberal

Mr. CARROLL:

It still remains stock

and it is not mortgaged as stock.

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

As stock it is not mortgaged, but what is represented by the stock is mortgaged, and their title to it and power to sell is to that extent restricted.

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

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER:

As I understand it, we are advancing to this enterprise $45,000,000, and we take a mortgage upon the property of the parent and subsidiary companies. The point raised by my hon. friend from Welland (Mr. German) is, why not take a mortgage on the stock of the parent company? My hon. friend the Solicitor General says that we are amply secured by the mortgage which we have on the property of the company, and asks, what is the object of a mortgage upon the stock? The fallacy of my hon. friend's argument is this: The mortgage has value only when the property has earned a profit, and the profit will in the first place go to the owner of the mortgage, and after that to the owner of the stock. If profit is earned upon the stock of the subsidiary and parent companies, when the profits are distributed, the profits on the stock of the subsidiary companies will come to us, but if Mackenzie and Mann have sold their stock in the parent company, to whom will go the profits on that stock? We have no mortgage upon it?

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

Even if there are no profits on that stock, our present security is ample, and far more than ample.

,Sir WILFRID LAURIER: That is to say, we are diminishing by that much the assets that we could have. It is obvious that if the property earns any profit at all, that profit will, in the first place, go to the holder of the mortgage.

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:

The whole question is as to whether the security proposed to be taken by the Government in the form of a mortgage is adequate.

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

Wilfrid Laurier (Leader of the Official Opposition)

Liberal

Sir WILFRID LAURIER:

That is the point raised by my hon. friend from Welland.

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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May 20, 1914