April 18, 1916

CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

Last summer,

when we gave the promise respecting this legislation, the only zinc being refined in Canada was by a small experimental plant at Trail which turned out about a thousand pounds or half a ton a day. They employed the electrolytic process. The war created such a demand for this zinc that the exports of zinc products from the United States increased sixty fold and the price rose as high as forty cents a pound. It was brought to our attention by the Shell Committee that the Canadian manufacturers of brass cartridge cases could not obtain pure zinc for their work, and there was great delay in consequence in their output. We called a conference of zinc producers, two companies being represented, as well as the Shell Committee and representatives of the Mines Department at Ottawa, and the whole situation was considered pretty carefully. The producers were unwilling, owing to uncertainty as to the duration of the war, to make a large investment. They were apprehensive that, if

the war should come to a sudden end, the price of zinc would drop to 5 or 6 cents a pound, and that they would lose their investment in their plant. It was to guard, them against that contingency that we promised this legislation. My hon. friend will see from the resolution that the operation of the measure is confined to the period between the conclusion of the waT and July 31, 1917. They felt that if the war lasted as long as that they would make sufficient profit in the meantime to justify them in the establishment of their refineries. As a1 result of the action taken by the Government, /the Shell Committee was enabled, on behalf of the Imperial Government, to enter into a contract with the Consolidated Mining and Smelting Company at Trail for 8,000 tons' of zinc, at 15 cents a pound, to be produced at the rate of 25 tons per day. This was a reduction of 25 cents on the then prevailing price, with an option of a further 8,000 tons at ]2j cents a pound. The object, therefore, was to ensure the zinc producer of the continuation of price for such period as would justify him in establishing his plant.

Topic:   QUESTIONS.
Subtopic:   BOUNTIES ON ZINC.
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LIB

Edward Walter Nesbitt

Liberal

Mr. NESBITT:

Then they satisfied you that they could not produce spelter at 6 cents a pound?

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Subtopic:   BOUNTIES ON ZINC.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

There is a very limited market in Canada for zinc and spelterj and with the expense of the electrolytic process it was quite clear that there was no chance whatever of their making a large investment for the purpose of going generally into zinc production unassisted by bounty legislation. In answer to my hon. friend from Assiniboia (Mr. Turriff), I may say that this legislation is of a temporary character. It arose out of a situation in which there was a real shortage of zinc in Canada. The larger question to which my hon. friend from Assiniboia and my hon. friend from Kootenay have referred is one of the most important in Canada; that is to say, the treatment in Canada of Canadian ores. It is by no means as simple a proposition as appears upon the surface, because many considerations enter into the question which are not pb-vious at first sight. One of them is touched upon by the hon. member for North Oxford. The question of tariffs also plays a certain part. It is perfectly plain, however, that since the outbreak of the war there has been a growing feeling in favour of the refining in Canada of Canadian ores, especially those products

which, may be needed in time of war. I think that not only Canada but the Empire has come to realize as never before that situations may arise in which the nation that produces within its own borders the materials necessary in war times has a decided advantage in war. It is a question that will engage more and more the attention of the public and of legislators as time goes on. We are in the midst of war; our expenditures are very heavy, and they will increase, as I have stated on more than one occasion in this House. But the whole question of our mineral production and of the finishing in Canada of our mineral products is one that will engage my most earnest attention and the attention of the Government within the next year or two. It is clear that Canada has immense mineral resources, capable of almost unlimited development; and, so far as I am concerned, I shall certainly not be wanting, and I believe the Government will not be wanting, in giving consideration to a policy which will lead to the development of those resources.

Topic:   QUESTIONS.
Subtopic:   BOUNTIES ON ZINC.
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LIB

Edward Walter Nesbitt

Liberal

Mr. NESBITT:

The community that I represent are very strongly opposed to bounties-whether wisely or unwisely I would not like to say at the moment. If my hon. friend means by "the encouragement of production from raw material in Canada" that the Government are going into the bounty business again, I think he will find very keen opposition from the farming community of the country.

Resolution reported and concurred in.

Sir THOMAS WHITE thereupon moved for leave to introduce Bill No. 94, to provide for the payment of bounties on zinc produced from zinc ores mined in Canada.

Topic:   QUESTIONS.
Subtopic:   BOUNTIES ON ZINC.
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Motion agreed to, and Bill read the first time.


SUPPLY.


The House in Committee of Supply, Mr. Rhodes in the Chair. Prince Edward Island railway, $613,100.


LIB

William Pugsley

Liberal

Mr. PUGSLEY:

The hon. member for

Kings, P.E'.I. '(Mi. Hughes) was obliged to leave by the train. He asked me to request the minister to allow this matter to stand.

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CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

We usually have an understanding that one item should be allowed to stand, and that on that item the hon.

gentleman can discuss the Prince Edward Island railway, or canals, or anything relating to the department.

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LIB
CON
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

Before we go on with the discussion of this item, perhaps the Acting Minister (Mr. Reid), would be good enough to let me know as to the correspondence concerning the operation of the Transcontinental railway by the Grand Trunk Pacific. The hon. gentleman said that he would look into the matter and bring down the correspondence.

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CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

Certain of the correspondence was brought down.

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LIB

William Pugsley

Liberal

Mr. PUGSLEY:

That only relates ,to the ..change of grades, but the Acting Minister will remember that in pfevious sessions I .called attention, as I did this session, to the fact that when the late Government was in power the president of the Grand Trunk Pacific Railway Company had offered to take over the Transcontinental by sections as completed, to put on rolling stock to the satisfaction of the Government, and operate the road to the satisfaction of the Government; the accounts were to be audited by Government officials, and, if there should be a profit upon the operation, that profit would go to the Government, and if a loss the Government would bear the loss, but it should be added to the cost of the railway upon which the company would pay interest. It is upon that subject I wish to know if there has been any correspondence. The Minister of Railways as. sured the-House that he would take up that . subject and see if the Grand Trunk Pacific Railway Company was still prepared to en-[DOT] ter into such an arrangement.

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CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

The arrangement for the taking over,of the uncompleted sections, if I understand aright, was made with a view . of taking , over the different sections before the road was completed.

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LIB
CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

Before it was completed. But before that was done, they came to a , decision to appoint Sir William Whyte as an arbitrator, and on his arbitration they took over the portion between Winnipeg and Superior Junction. That was done under - the award of Sir William Whyte. Of course,

[Mr., J. ,D. Reid.J

that is passed and gone, and the road wes completed, so far as the Government was concerned, and the Grand Trunk Pacific was asked to take over the whole road as a completed road. That was in March of 1915.

Mr. PUGSLEY. Was that by letter?

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CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

Yes, the correspondence was brought down. I have here, in addition, the final letters in which the Grand Trunk Pacific were asked and refused to take over the road. Perhaps I had better read these last two ' letters. The letter from the minister is as follows:

25th March, 1915.

Dear Mr. Chamberlain:

. As intimated to you in previous correspondence the eastern division of the National Transcontinental railway is completed within the meaning of section 20 of the agreement between His Majesty the King and the Grand Trunk Pacific Railway Company, dated 29th day of July 1903, scheduled to the National Transcontinental Railway Act, chapter 71, of 3 Edward VII, and the said division is ready for operation.

I find a reference in your correspondence to certain additional works still under construction by the Transcontinental Railway Commission, which additional works it was contemplated by the commission and by your company would ultimately be used in connection with the road as now completed. The Government, however, having been advised that the eastern division, for purposes of operation, has been reported by the chief engineer of the Transcontinental Railway Commission as completed and ready to be leased, is of the opinion that it is in the public interest that such lease be now entered into. You will readily understand that were any o.her interpretation as to date of completion to be placed upon the agreement with your company it would mean the postponement for a very considerable length of time of the taking over of this extensive line of railway by the Grand Trunk Pacific, with results that might be incompatible with the public interest. Such a postponement would be to a date very hard, if not impossible to determine, as in one sense a railway can never be said to be complete. The responsibility for such a postponement X must decline on behalf of the Government to take.

The Government has under section 15 of this agreement ascertained the cost of construction, in the manner therein provided, and in so doing have included only such expenditure as has gone into work on the eastern division as now completed and ready to be leased.

I therefore request that the lease referred to in sections 6 and 20 of the above mentioned agreement be entered into. The Government has had prepared a form of lease embodying the provisions required to be included in the same by statute and by agreements between your company and the Government. The rental reserved is based on the cost of construction ascertained as aforesaid. This lease I now hand you on behalf of the Government. You will observe attached to the form of lease is a Schedule B, which schedule should contain a description of the rolling stock marked and assigned by the company to the eastern division of the National Transcontinental railway. I trust that such

rolling stock as the statute directs has been provided and assigned accordingly, and as particulars of the same are now not in our possession, I would request that the schedule be duly filled in by you.

On behalf of the Government I beg to request that this lease be executed by your company and assuming that the schedule as so filled in will represent rolling stock fulfilling the conditions of the agreement, and provided and assigned as therein set out, I undertake that this lease will be promptly executed on behalf of the Government.

It has been and is my desire that there be nothing contained in the lease as drafted and now presented not strictly provided for by statutory requirements, and nothing omitted directed by statute to be included. This desire I believe is lived up to in the form of lease enclosed. Should, however, in your opinion the form contain any feature to which reasonable objection can be taken, or omit any necessary provision, I am prepared on behalf of the Government to confer with your company and to endeavour by every proper means to come to a common basis, and I will make every effort tc do so consistent with the requirements imposed on us by statute.

That you may have before you the method by which the cost of construction, and consequently the annual rental, is arrived at, I am enclosing you a copy of the report of our auditors thereon and of the schedules thereto annexed.

Yours very truly,

(Sgd.) F. Cochrane.

E. J. Chamberlin, Esq.,

General Manager,

Grand Trunk Pacific Railway,

Montreal, Que.

The reply to that was dated April 27, about a month later, and is:

Grand Trunk Pacific Railway,

Montreal, Canada, April 27, 1915.

Dear Sir,-I duly received your letter of 25th ultimo enclosing certain documents, including a form of lease of the eastern division of the National Transcontinental railway, which you requested should be executed by this company.

After giving your communication and enclosures careful consideration, I beg to state I cannot see my way to ask our directors for authority to execute the lease. Among the reasons which have influenced me in reaching the decision indicated are:

(1) The great increase in the cost of construction of the eastern division beyond that in contemplation by the parties at the time the agreement of July 29, 1903 was entered into.

That the cost as now computed and upon which the company is asked to pay interest by way of rental is greatly in excess of that estimated in 1903, appears to be admitted. How this largely increased cost has been occasioned has been the subject of investigation by a commission appointed by your Government on the 29th day of January, 1912. The report of that commission was submitted to Parliament last year. I do not think I need do more than call attention to it and to the official record of the debate which followed its submission. I might however, add that to my mind this large excess of cost over the estimate might have been to some extent avoided had 192

our view of the meaning and intention of clause 7 of the agreement of July 29th, 19031, been accepted. That clause, as you are aware, provided that the construction of the eastern division should be subject to the joint supervision, inspection and acceptance of the chief engineer appointed by the Government and the chief engineer of the company. In order that full and practical effect might be given to this provision, the company suggested at the outset that all contracts should contain a clause declaring that the expression " chief engineer" meant the chief engineer of the Government and the chief engineer of the company acting together, and provide that payments to contractors should only be made upon the joint certificate of both engineers. Our suggestion, was however, not adopted. Mr. Gordon Grant, chief engineer of the Transcontinental Commission would seem to appreciate the purpose of clause 7 by asking as he did in his letter of 2nd February last that Mr. H. A Woods, our engineer, should sign jointly with him a formal acceptance of the line.

The cost was further added to by the imposition of a duty upon steel rails shortly after the agreement of July 1903 was entered into.

(2) The non-completion, up to the present of the eastern division in accordance with the provisions of the agreements of July 29th, 1903 and February 18th, 1904.

The company takes the view that the eastern division is not yet completed in accordance with the agreements. The claim of the Government to the contrary rests upon Mr. Grant's statement to that effect, which, however, is not acquiesced in by Mr. Woods. Mr. Grant admits that large sums must yet be expended before the line will be completed. I refer to his letter of March 24th last to Mr. A. Bell of the Department of Railways and Canals, with which he submitted statements showing estimated expenditures for work still uncompleted amounting to several million dollars. The letter addressed to you by Messers Bell and King on the 24th ultimo also shows quite clearly that they do not regard the line as completed. In that communication they say:

" The estimated cost of the line when all the works now under way are completed, which completion is contemplated on the 31st December, 1916, will be $179,586,877.35 as set out in statement "A" hereto annexed... .The above amount may, of course, be very largely increased by reason of court decisions. "

The following paragraph ' appears in their letter to you of the 23rd ultimo:

" We beg to call your attention to a letter received from the Solicitor General, a copy of which is hereto attached, from which it appears that the ' cost of construction ' of the eastern division as completed on the 31st December, 1914, within the meaning df section 20 of the agreement scheduled to the Act of 1903 should not include expenditures made on and in respect of certain works which were still under construction. The result will be that the * cost of construction as a basis upon which to ascertain the rental to be paid by the Grand Trunk Pacific Railway Company at this date will be very considerably less than the actual cost upon completion of the said additional works now under way."

If, as appears from the foregoing, it is intended that the company shall eventually pay interest upon the cost of the works still under construction, those works must necessarily be regarded as part of the eastern division, other-

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LIB

William Pugsley

Liberal

Mr. PUGSLEY:

Then we may take it

for granted that there is no correspondence showing any inquiry on the part of the Government as to whether or not the pro' posal made by Mr. Hays to the late Government, to which I called the attention of the House, had been met. There is no correspondence dealing with an interim lease, pending the completion of the whole line?

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CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

I understand that, unless

anything of that kind was burned, there is no correspondence.

Topic:   SUPPLY.
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April 18, 1916