Hon. Sir THOMAS WHITE (Minister of Finance) moved the second reading of Bill No. 125, providing for the acquisition by His Majesty of the capital stock of the Canadian Northern Railway Company.
He said: In introducing this legislation to the House, I made so complete a statement as to the reasons actuating the Government to acquire the whole of the capital stock of the Canadian. Northern Railway Company, that I deem it unnecessary to say anything further in that connection. I shall, therefore, confine my remarks upon this, the occasion of the second Teading of the Bill, to the principal features of the criticism that was offered to the resolution in committee. The criticism was mainly along three lines. First, it was suggested by certain hon. gentlemen opposite that the Dominion Government, instead of acquiring the capital stock of the Canadian Northern Railway Company, should expropriate the physical undertaking of the company and of the constituent and subsidiary companies constituting the system. Under the legislation which we are adopting, the Dominion Government, by acquiring the capital stock of the Canadian Northern Railway Company, preserves the entities of the Canadian Northern Railway Company 'and of the constituent and subsidiary companies. If we adopted the suggestion that was made that we should acquire the physical properties of the several companies in the system, we should own the assets of all those companies as the Government now owns the Intercolonial and the National Transcontinental from Moncton to Winnipeg.
In passing, I may say that such a policy would be in direct contravention of the
recommendations of the Drayton-Acworth report, and of the report of the chairman of the commission, Mr. Smith, president of the New York Central Railway Company. Apart, however, from that consideration, there is a great and manifest advantage in maintaining the corporate identity of the Canadian Northern Railway Company, and of its subsidiary and constituent companies. Particularly is this so with reference to the question of the financing of these companies. I pointed out to the House, when we were in committee upon the resolution, that the Canadian Northern Railway Company had in addition to a large funded debt a considerable short term and floating indebtedness, amounting to about $98,000,000. If the Dominion Government acquired by expropriation the physical assets of the Canadian Northern and the other railways in, the system, it would be obliged to find the -money to take care of the short date and other indebtedness I have mentioned, or if it failed to find the money to take care of that indebtedness, it would follow that the creditors of the company in respect of the short term and floating indebtedness, would be in a position to appoint a receiver, with the result that the funded indebtedness would at once become due, as to the principal owing under several trust mortgages securing it. The result would be chaos so far as the financial condition of the system is concerned.
I point out to the House that the short term and floating indebtedness is such as to be of some concern to the Government, if it had to be provided for forthwith even in ordinary times; but by reason of the fact that we have entered on the fourth year of the war, with the enormous expenditures which we have in connection therewith, it would be a most serious matter for us to take over the physical properties and assets of -this system and find the money to meet not only the floating and short-term indebtedness, but other indebtedness if it should become due Iby reason of litigation affecting these companies. We take over the system by acquiring its common stock. That will enable the companies, as companies, to continue to finance. So far as concerns the short-term obligations of the company, the Canadian Northern can, in the future, a-s it has in the past, endeavoured to extend these obligations as they mature, or make fresh issues under its corporate powers in that behalf. The result is that the Dominion Government should not be called upon to