May 27, 1914

CON

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

Conservative (1867-1942)

Mr. BORDEN:

The section deals not only with the acquisition of shares hut with the acquisition of securities as well. Altogether apart from the aid that is now being afforded, it might be possible at some time in the future, and before the companies are all amalgamated into one, that the Canadian Northern railway would have to make advances to one of the subsidiary companies for the purpose of enabling the line to be put in better condition or for the purpose of enabling it to extend its system-. In that case this section provides that either by the transfer of shares, or by the transfer of securities to be issued by the subsidiary companies, the Canadian Northern Railway Company can deal with the situation and can make the advances necessary for the purpose. That is one object that strikes me at the moment. It is

impossible to foresee all contingencies. I dare say there may be other contingencies which might suggest themselves if one were thoroughly conversant with the operations of railway companies.

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

Adam Carr Bell

Mr. CAR YELL:

That is just the very

point that we have been arguing all morning and a part of last evening. What the right hon. gentleman has said is the very opposite of the argument presented by the Solicitor General who is contending that it makes no difference what the capitalization of the subsidiary or allied companies may be because all their stock, whether it be $68,000,000, or $81,000,000, or whether it be another $400,000,000, becomes merged into, and becomes the property of, the Canadian Northern Railway Company, the capital stock of which is reduced down to $100,000,000. My right hon. friend now says that the Canadian Northern railway may have to advance money to one of the subsidiary companies and that therefore they ought to have a right to take stock as security. What reason can there be for that if the Canadian Northern owns the whole thing and if the Canadian Northern stock is limited to $100,000,000 as the Solicitor General says it is? The Solicitor General says that under no contingency is it possible that the stock on which they can demand dividends can exceed $100,000,000.

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 Canadian Northern,

for the purpose of making these advances, would probably, itself, have to issue securities which would be placed on the market. They could be issued by the Canadian Northern very much more advantageously than they could be placed on the market by one of tnese companies. Therefore, it may be a good financial arrangement for the Canadian Northern to issue its own securities for the purpose of making provision for one of the subsidiary companies and it may take the stock or securities of the subsidiary company to compensate' it.

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

Frank Broadstreet Carvell

Liberal

Mr. CARVELL:

Why take stock if it owns the stock now?

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 may not take stock; it m&y take securities. In any case the Canadian Northern is capitalized at a fixed amount and if it was to take shares it would take these shares subject to the consideration already referred to.

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

William John Macdonald

Conservative (1867-1942)

Mr. MACDONALD:

Such shares would

have no commercial value.

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:

Except as giving the

Canadian Northern a very much increased

interest. They would not necessarily take shares; they might take securities.

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

Frank Broadstreet Carvell

Liberal

Mr. CARVELL:

If the Solicitor General be correct in his argument that under this Bill every equity which these companies possess, including all their stock certificates and everything, goes to the Canadian Northern Railway Company, how can the Canadian Northern Railway Company take any further security by way of stock, or bonds, or anything of that kind?

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 must confess I do not see why they cannot.

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

Frank Broadstreet Carvell

Liberal

Mr. CARVELL:

What is the good of it, because the Canadian Northern owns it now? It just makes one believe that my right hon. friend the leader of the Opposition has opened up something which has not been explained away. What had the gentleman who drafted this clause in his mind? If it was the Solicitor General he ought to be able to tell us. If it was not the Solicitor General I think he should get into communication with the gentleman who drafted this clause and ascertain what his real intention was. The more the right hon. the Prime Minister attempts to explain 'it the more difficult he makes it for the Solicitor General.

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

I have explained what the meaning of the clause is. I have said I cannot tell what the intention of the company is; I do not pretend to he able to tell that. I do not pretend to be a railway expert and to know all the contingencies that may arise, but I do know that under that clause they cannot do anything prejudicial to the public interest. If hon. gentlemen can suggest anything that may be done prejudicial to the public interest, and suggest a remedy for it, we will be glad to consider it.

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

Frank Broadstreet Carvell

Liberal

Mr. CARVELL:

If there is any object in issuing additional shares of this stock it may be prejudicial to the public interest because if the line ever becomes a paying investment there may be a demand that these shares shall receive dividends. If my hon. friend is serious in saying that these shares never can demand dividends, but that the only dividend demanding shares will be the $100,000,000 of stock owned by the parent company, then I would suggest the amending of this section by striking out the word * shares.' The right to issue other securities, like bonds or debenture stock, might not be very serious but if he would eliminate the word ' shares ' he would get rid of the suspicion

we have notwithstanding the oft-repeated assertion of the learned Solicitor General that there may he some real object in the mind of the Canadian Northern people in keeping the shares of these subsidiary companies in their own hands.

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

If by merely eliminating the -word ' shares ' we could get rid of the suspicion in the minds of hon. gentlemen opposite, I would be inclined to do it; but I do not think it is so important as that, and I am not very hopeful that we could eradicate from the minds of hon. gentlemen opposite at least the allegation of suspicion.

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

Frank Broadstreet Carvell

Liberal

Mr. CARVELL:

Make toe attempt and see how you will succeed.

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

I cannot see what harm can result if it is convenient for the Canadian Northern on one part of the system to take shares on another part; nor can I see what harm can be done if it is shown to the satisfaction of the Governor in Council that it would be in the interests of the Canadian Northern system to, say, amalgamate one portion of the road with another and give stock. Everything is under the control of the Governor in Council just the same as everything is under the control of the Railway Act. The capital is $100,000,000 and it cannot be increased. If a new road should be acquired the arrangement is under the control of the Governor in Council and the Railway Commission. There is no change from the Railway Act in this respect at all. Has the hon. gentleman lost faith-in the Railway Commission?

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

William John Macdonald

Conservative (1867-1942)

Mr. MACDONALD:

There might be a

possible explanation in connection with this section. If one will examine the first schedule he will find that the statement is made with respect to the Canadian Northern Manitoba Company, The Mount Royal Terminal Company and some others, that the security is to be the total issue. Has any issue of stock been made by these companies?

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

No, not by either of

them.

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

William John Macdonald

Conservative (1867-1942)

Mr. MACDONALD:

How much is it to be

made?

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

Arthur Meighen (Solicitor General of Canada)

Conservative (1867-1942)

Mr. MEIGHEN:

I do not know and I

cannot see what imaginable difference it makes. It is to belong to the Canadian Northern system out and out whatever it is. If it is $50,000,01)0 it belongs; if it is $200 it belongs.

272 '

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

Frank Broadstreet Carvell

Liberal

Mr. CARVELL:

Assuming that the Canadian Northern system purchases the Quebec and Saguenay that road will have a capitalization of $5,000,000 and they will buy the stock. I take it for granted that that would increase the stock of the Canadian Northern by $5,000,000 so that the stock of the Canadian Northern would be be $105,000,000 if the stock were purchased by the Canadian Northern itself. If purchased by one of the original companies it would go in as part of the original transaction, but if the Canadian Northern purchased, am I right in assuming that the stock would be increased by five million dollars, and if so would the Government get two-fifths, or would it all go to the Canadian Northern?

Topic:   QUESTIONS.
Subtopic:   CANADIAN NORTHERN RAILWAY AGREEMENT.
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May 27, 1914