May 17, 1916

CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

The point of my argument is that there was -a very large sum, some $5,000,000, invested in the Quebec and Saguenay railway, and if it is desirable that the Government should complete that road, as we submit it is, it is absolutely necessary that we should acquire the Quebec, Montmorency and Charlevoix railway in order to have a continuous line. These are the considerations that have appealed to me in connection with this transaction. So far as the Quebec, Montmorency and Charlevoix line is concerned, there are $2,500,000 of bonds issued some years ago, and bearing 5 per cent. The Government takes over that

line and assumes t'be obligation of the bonds. So far as the Quebec and Saguenay line is concerned, the Government is acquiring that railway on a basis of actual cost, not to exceed some $4,000,000, which, as a matter of fact, is much less than the actual construction cost. That is the situation, and it all comes back to the question whether "it is in the public interest-in the interest of that large section of the province of Quebec which lies to the north of the St. Lawrence, that the Government should come to the aid of this road, acquire it, and complete it in order that the district may be served; or whether, on the contrary, the road bed of the Quebec and Saguenay line should he allowed to deteriorate from year to year at a loss of hundreds of thousands of dollars annually, and, ultimately, of all the capital invested.

It seems to me that that is the question. My right hon. friend the leader of the Opposition dealt with it very fairly. He had no objection to our acquiring the line. He knows the district down there, and my hon. friend from Rouville (Mr. Lemieux) also knows the district. I doubt very much if either of those hon. gentlemen would stand up and say that it is not in the public interest that the road should be acquired in order that that district may have railway facilities. If you look at it from the standpoint of a railway promoter desirous of making a large amount of money out of the enterprise, that is one thing; but if you look at it from the standpoint of the people down there, who belong to one of the oldest settled districts in Canada, who are, I suppose, among the worthiest people in Canada, and who are debarred from getting to the city of Quebec for so many months in the year, I think these are considerations which would appeal to any public man. Take the National Transcontinental railway, built at a cost of $150,000,000, or $160,000,000, or $170,000,000. No one would stand up in this House and say that that would give a return on the investment. A return of four per cent on that investment would be some $6,000,000 or $7,000,000 per year. No one will say that the Government is obtaining a return upon that railway. Private enterprise would not build a road of that kind, and yet it was built-I am not passing upon the merits-it was built, and hon. gentlemen opposite will defend the building of that road. They will not say that it is immediately profitable. They will say it was built for the purposes that

have been so often mentioned in this House.

I do not want to make any speciah argument on this question. It is a matter involving the expenditure of a large sum of money, and the considerations which have influenced me favourably are that it is in the public interest of that northern district, lying along the St. Lawrence, to have railway communication with the city of Quebec. We are acquiring these railways for the Dominion of Canada. We are not making loans; we are not giving guarantees; we are not subsidizing. We are buying these roads, and when they are bought they will belong to the Dominion of Canada. The price is to be fixed by the Exchequer Court, and it is not to exceed a certain amount, which is much less, in the case of the Quebec and Saguenay railway, than the amount that has been spent upon it. These are the considerations which have had weight with me in this transaction.

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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

In the past four years

we have heard in this House, week after week, month after month, session after session, hon. gentlemen on the treasury benches complaining of what the Grand Trunk Pacific railway cost, and of all the hon. members who complained none was louder or stronger than my hon. friend the Minister of Finance.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

What is that?

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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

I say that of all the

members on the Government benches who have fulminated week after week, and month after month, in this House against the cost of the Grand Trunk Pacific railway from Moncton to Winnipeg, none was louder than my hon. friend the Minister of Finance. .

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

I think there

were some.

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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

None was louder

in pointing out that the cost had been excessive, and that there was no justification for the cost of the Grand Trunk Pacific. Let me tell my hon. friend the Minister of Finance one or two things. Leaving out the question of interest, the cost of the Grand Trunk Pacific railway from Moncton to Winnipeg, the best built railway on the continent of America, was less than $85,000 per mile. With a grade of 4-10 of one per cent one way, and 6-10 of one per cent the other way, with heavy rails, telegraph lines, station houses, everything complete, and in

first-class shape, it cost less than $85,000 per mile. Now my hon. friend the Minister of Finance comes forward and. from his place in this House justifies the purchase of a right of way. It is only a right of way, on which 87 per cent of the grading has been done, and a great deal of that has been washed out. He defends the purchase of that road at a cost of $98,000 per mile.

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CON

John Dowsley Reid (Minister of Customs)

Conservative (1867-1942)

Mr. REID:

That statement is not in

accordance with the factsi and the hon. member should not make it.

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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

The Acting Minister of Railways may say that that Statement is not correct, but, taking the figures given by my hon. friend from Charlevoix, $4,500,000 worth of bonds was issued on that road and $1,500,000 in addition. If you figure that out you will find that the Government is taking over a road which cost, it is claimed, $98,000 per mile, and it is not taking it at its full value.

They are tying up the judge of the Exchequer Court hand and foot so that he cannot take the value of the road, but he must take the cost as shown by the present owners who are selling to the Government, subject to the fact that it is not to be more than $2,500,000 bonds, plus $4,465,000, less all subsidies paid; whereas you have a completed road, the finest on the continent, at a cost of $85,000 a mile, and the Government now, to help out political friends, are willing that < the Canadian people should pay $98,000 a mile for a right of way only, not a tie, not a bit of telegraph wife, not a telegraph post, not a station house, not a rail, not a bridge, not anything. I heard the statement made by some hon. gentleman in the House yesterday that this was just a lumber road in the first place. Now they put it over on the country, and they propose to put it in such a shape that the judge of the Exchequer Court has to take the cost of the road as shown by the owners. The owners claim that they have put into the road the proceeds of the sale of $5,600,000 worth of bonds and $1,500,000 of Canadian money, but they have nothing to offer for all that, not even a rust streak, but some grading. Hon. gentlemen opposite come forward and load on to the people of Canada, not a completed road, but a road which, when completed, will cost $10,000,000. The Minister of Finance, in spite of all the difficulties that he has pointed out during this session in the way of financing the debt of Canada in the future, now deliberately adds $500,000 to

the fixed charges of Canada. I hope, after this transaction, we will never hear another word from hon. gentlemen opposite about the cost of the Grand Trunk Pacific. That cost may have been excessive, that cost may have been too heavy, but we certainly got a first-class road completed for $85,000 a mile, and here we have an expenditure of $98,000 per mile when even the grading has not been done.

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LIB

William Stewart Loggie

Liberal

Mr. LOGGIE:

I would like to make a few remarks about this matter. If I understand it correctly, the Government propose to take over 136 miles of railway at a cost of about $50,000 a mile, a part of which is completed and a part not completed. What I object to strongly is the departure of principle as to the acquisition of branch railways. If you are going to adopt a principle with regard to the taking over of branch railways, you ought to apply the same principle to the taking over of branch railways along the line of the Intercolonial. I want to recall to the committee how a branch line was taken over some few years ago. They did not set about to value the railway on the basis of what it cost and then deduct from that cost the subsidies paid and depreciation, but they put valuators on the railway and they purchased 125 miles between Fredericton and Loggieville at a rate of $6,000 per mile, equipped. The railway was purchased from the Gibson Manufacturing Company at the viery low price of $6,000 per mile. A railway 125 miles in length was acquired for an outlay of $750,000, including equipment, cars and everything in connection with the operation of the road. If the principle that now applies had applied to the purchase of the Canada Eastern at that time I venture to say that it would have cost twice as much as it did. If you are going to adopt a principle regarding the purchase of branch lines, then I want you to apply it to the branch lines you purchase in the future. There are branch lines along the Intercolonial that it is most urgent in the public interest the Government should take over. The districts that they traverse are not properly served, and the mercantile interests are retarded because there are not proper railway facilities. If you are starting out now on a new principle of taking over branch railways, valuating them at the cost price, less depreciation and bonuses paid, you should apply the same principle in the purchase of other branch lines. I oannojt say

that I am against the taking over of this road in the public interest. I believe that there is a good deal in what t'he minister has said that if the company is not strong enough to complete the undertaking, then strong men must come in and rescue it in the public interest. But, the same principle ought to apply to other branch lines.

Mr. LElvilEUX: I must say a word in connection with the vote I am about to give. If I were seeking for popularity, it would be quite easy to give a vote this evening, because I would vote for the interests of Charlevoix county and the city of Quebec. But there are other considerations, and I think the Minister of Finance (Sir Thomas White) has not given the same attention to this question that he gives to other business. He seems to forget that this country is loaded with a colossal debt, and that we will have to find money for the interest charges. He forgets that the people of the country, individually and collectively, in municipalities, cities and towns, have to bleed themselves white in order to do their share towards helping the great cause we have at heart. I quite believe my hon. friend the Minister of Finance when he say-s that the uncompleted section of the Quebec and Saguenay should be aided. I think that the promoters of the line should be aided materially and substantially to enable them to complete it. The people have been waiting for years for connection with the city and district of Quebec, and now material assistance should be given toward the completion of the line. But, Mr. Chairman, what my hon. friend has not explained to the committee, and what he will not be able to explain, is the fact that instead of aiding the only road which requires assistance, he is a party to a scheme which involves the Government in the taking over of three railways. The members of the committee this evening are not aware that the Minister of Finance, and the Acting Minister of Railways and Canals, are not, with this amount of money, buying one continuous railway system. That ought to throw some light on this scheme. Does my hon. friend believe, in his heart of hearts, that at the present moment he is asking Parliament to devote a sum of money to the acquisition of a continuous railway system?

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

The Lotbiniere and Megantic is on the other side of the river.

Mr. LEMIEUX': The Lotbiniere and

Megantic has no connection whatever with this. It starts from Lyster in the county of Megantic and runs to St. Jean des Chaillons in the county of Lotbiniere. It is a little bit of railway that looks after the lumbering needs of the district.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

How much has been paid for that?

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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

The Government is

paying $330,000. Now' this railway is paying its own way; the people are not clamouring for 'the Government to acquire the road. Are there any petitions from the people of this district asking the Government to take over this road? I make bold to say there is not one such petition on the files of the Department of Railways and Canals. Why then should the Government saddle the people of this Dominion with this [DOT] unnecessary obligation? The other railway starts from Quebec and runs to St. Joachim in the county of Montmorency. This is a tramway, and it is also paying its way. Nobody has ever clamoured for the Government to take over this road. The other railway which the Government intends to take over is the Quebec and Saguenay, which runs from St. Joachim to Murray Bay. And I quite agree that that section of the country should be generously aided by the Government. But why is the Government taking over three roads at a cost of $6,000,000 when only one of them needs assistance? With substantial assistance from the Government the Saguenay road could be completed and its trains run right into the city of Quebec, if running rights were secured over the Quebec, Montmorency and Charlevoix railway. This item should be reduced by at least $2,000,000; the balance of the vote would allow the Quebec and Saguenay road to be completed and fully equipped. I ask the Minister of Finance what reason in the world is there, at this present juncture, when the people all over the country are being bled white in taxes for the war and contributions to the Red Cross, the Blue Cross, the French, and Servian and Belgian Relief Funds, why the people of this country should be saddled with this $6,000,000, when the only one of these three roads which is not completed is the Quebec and Saguenay, and when that could be completed for $2,000,000?

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CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

Under the conditions to which my hon. friend has alluded,

why did he ask us last evening to pay out, in addition to this $6,000,000, a couple of million dollars to the gentlemen who had invested in this road in the first instance?

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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

That is a different proposition entirely. My argument was this, and as the Finance Minister was not here last night I may as well repeat it. The hon. member for Charlevoix stated last night that the Quebec and Saguenay had sold its bonds partly on the French market and partly on the Canadian market, and that $1,000,000 was absorbed by a group of financiers in Montreal and Quebec, and $4,600,000 by investors in France.

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CON

Joseph David Rodolphe Forget

Conservative (1867-1942)

Sir RODOLPHE FORGET:

The $4,600,-

000 of bonds produced only $3,800,000. The Canadian money has no mortgage whatever; it comes after the French bonds.

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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

French investors subscribed the greater proportion. Now the road has failed.

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CON
LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

The French investors

were lured into investing in this enterprise by prospectuses which were circulated broadcast in France, and which contained the name of an ex-colleague of my hon. friend the Minister of Finance. The French investors were told that the road would extend not merely as far as Murray Bay, or even St. Catherines Bay, but as far as Cape St. Charles on the Labrador coast. The road was represented as being nearly half a transcontinental railway. It was further represented that there would be a surplus of over $300,000 the first year. The prospectus stated that the present Canadian Government was granting the road a mail subsidy of $50,000 per anum-which . was untrue. Afterwards, I admit, the promoters modified the prospectus and stated that the mail (subsidy would not be $50,000. Later on, too, the Hon. Mr. Pelletier, who was then Postmaster General, withdrew his name from the company. But before he resigned the company had obtained the millions + hat have been referred to by my hon. friend the Postmaster General tonight. French investors put bheir good money into this road in good faith, and I say that their claims should be considered if the claims of these other people are to be considered. If, as the Acting Minister of Railways says, the bondholders of the Quebec, Montmorency and Charlevoix are to get a hundred cents on the dollar for

their bonds, why should net the French bondholders be given the same treatment?

Is it because they are on the other side of the ocean?

Surely the fact that they are our allies is no reason why we should treat them as enemies. I am told: But the French bondholders have sold their bonds. Yes, but, as I explained to the House yesterday, they sold their bonds because of the failure of a company to carry out the rosy scheme which was represented to the bond holders as being actual and possible. '

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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

And also they were told that they would lose everything if they did not sell their bonds at the price offered them. So much was this felt by them that a vigilance committee was appointed which received the offers which were made. My hon. friend from Charlevoix (Sir Rodolphe Forget) asked by whom the offers were made to sell the bonds? They were made by the Canadian group. I do not give the names of that group; I do not know them, but I suspect who they are. My hon. friend from Charlevoix knows more who they are, because he belongs to the financial world in Montreal, and I do not. The French bondholders had to sell their bonds at forty cents, thirty cents, twenty-five cents, on the dollar. If you give the Canadians one hundred cents on the dollar for these bonds, the French bondholders should be given that value.

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May 17, 1916