August 15, 1917

CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

Hear, hear.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
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LIB

George Perry Graham

Liberal

Mr. GRAHAM:

I move the following

amendment, seconded by Mr. Nesbitt:

That all the words of the question after the word "that" be struck out and the following substituted therefor:

"Whereas in the year 1914 this Parliament was induced to guarantee the securities of the Canadian Northern Railway Company for $45,000,000 on the representation that with that amount the said railway could be completed and operated without further aid from Parliament. which arrangement is contained in Chapter 20 of 4-5 George V.

And whereas by section 24 of the said Act it is enacted as follows:

"If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may

prescribe, at any time while any event of default shall exist and be continuing, by order declare the equity of redemption of the Canadian Northern and of all other persons whomsoever in the mortgaged premises to be foreclosed. and thereupon the equity of redemption of the Canadian Northern (and of such other persons) in the mortgaged premises and every part thereof shall be and become absolutely barred and foreclosed, and the same shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment or any rule of law or equity to the contrary notwithstanding."

And whereas the Minister of Finance in introducing this measure stated that the company is unable to pay its underlying interest charges and continue the proper operation of the road;

And whereas the report of the Commissioners appointed by the present Government to investigate and report upon the condition of the Canadian Northern Railway states that there is no value either actual or potential attaching to the capital stock of the Canadian Northern Railway Company: It is therefore resolved

that in the opinion of this House Parliament should proceed to take over the said railway for the benefit of the people of Canada under the said provision of the said Act and that the capital stock of the said Canadian Northern Railway Company should be considered in the said foreclosure order as possessing no value and that nothing should be paid therefor.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
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?

Right Hon. S@

Mr. Speaker, my hon. friend from South Renfrew (Mr. Graham) has a habit of crediting every one in the world except himself with lack of courage and he was not free from that habit to-day, because he said that if the Government had courage they would come down to Parliament and state an amount which they regarded as the fair value of the $60,000,000 common stock of the Canadian Northern Railway Company and propose to Parliament that such amount should be paid. I ask hon. gentlemen opposite to imagine what a shout would have gone up from the hon. member for South Renfrew if we had done anything of the kind. He knows perfectly well the 'attitude he would have taken with regard to such a proposal coming from the Government. He knows perfectly well, in speaking of courage, that no hon. gentleman in this House has had more courage in the proposal of inconsistent policies with regard to the Canadian Northern Railway than he has had. I shall come to that in a moment, after making a few observations respecting his criticism of the proposals of the Government, and respecting the proposal which he himself has put forward.

In the first place, he finds fault with our proposals because the Canadian

Northern Railway, he says, do not want this legislation, and they do not want any aid at all. Almost in the same breath with which he announced that conclusion, he informed the House and the country that the Canadian Northern Railway Comnany is actualy or potentially in default. Which statement shall we take-* the statement at the commencement of my hon. friend's observations, or the statement at the conclusion) Is he able to say now on which ground he stands? I do not think my hon. friend has yet reached a conclusion as to that.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
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LIB

George Perry Graham

Liberal

Mr. GRAHAM:

Oh yes, he has, and he stated it distinctly.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

He stated distinctly the two inconsistent nronositions I have just mentioned. I am simply asking which of these two inconsistent propositions he will eventually stand for.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
LIB

George Perry Graham

Liberal

Mr. GRAHAM:

I have made my statement.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

More than that, he has made two statements, and more than that, he has made two inconsistent statements, and I have asked him which of these two he intends to stand for.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
LIB

George Perry Graham

Liberal

Mr. GRAHAM:

My right hon. friend must have been nervous, or he did not hear me for some reason or another. I first stated the Canadian Northern attitude and quoted their statement as presented by the Government, to show their view point. Then I expressly stated that I agreed with the attitude of the Minister of Finance who said in his speech, that the company were in default.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

The attitude of the Canadian Northern in regard to the matter does not support my hon. friend's position at all, and he knows that perfectly well. The attitude of the Canadian Northern is precisely that which the Minister of Finance has described, namely, that they have ^ a great railway system built up in Canada but which is not yet completed, which has not yet had a fair opportunity to demonstrate what its earnings may be. In order to carry that boad on to completion, and, more particularly, for the purpose of operating it, for providing betterments, and rolling stock, and everything else that is necessary, and besides all that, meeting fixed charges, it is necessary for the company to have a certain capital which they are unable to procure without the aid of the Government. The Government came to the aid of this

road in 1914, and again in 1916. It also came to the aid of the Grand Trunk Pacific (an enterprise for which it was not responsible) in 1914, and again in 1916. So far as the Canadian Northern Railway is concerned, t'he Government has reached the conclusion that if, in order to prevent receivership or liquidation, further aid is necessary, that aid ought to be given to a road, the whole of whose capital stock is vested in the people of Canada, so that the people of this country may receive any benefit and advantage which would be derived from the aid thus given. That is a very plain statement of the Government's proposal on this occasion. It is perfectly obvious the Canadian Northern Railway cannot carry on and must face receivership or liquidation unless something is done. Some hon. gentlemen opposite have said that we should come to the aid of the road in 1917 as we did in 1916 and in 1914. We have reached the conclusion that further aid to the road ought not to be provided by this country unless the entire ownership of the road is vested in the people of Canada through the acquisition of the balance of the stock.

My hon. friend (Mr. Graham) went further and said not only that the Canadian Northern did not want aid, but that the aid had been asked for by financiers behind the road. I take absolute exception to that remark, for which there is no foundation whatever.

My hon. friend said further that the holders of securities would find this transaction a very profitable thing as far as they were concerned. Will my hon. friend inform me whether they will find it more profitable than they would have found it under the proposals which he supported in 1914, looking to the acquisition of the capital stock of the Canadian Northern Railway Company by this country at a valuation ns high as $30,000,000? I think that proposal would have delighted the holders of these securities much more than the very modest proposals that the Government of the day is now putting forward. I would also point this out. In any event, the amount which must come out of the road, if it does not go into liquidation or into the hands of a receiver, is the amount of the securities with the added interest from year to year. In either the one case or the other, that is all that the holders of the securities can get, and therefore I am unable to appreciate my hon. friend's argument in the sense in which he placed it before the House

He stated further that the Minister of Finance has repudiated the Drayton-Acworth report. According to my understanding of what the Minister of Finance said, he did nothing of the kind. He pointed out that in Professor Swain's report, certain elements of value which would have to he taken into account by arbitrators determining either the value of the road or the value of the capital stock, had been inadvertently overlooked by Sir Henry Drayton and Mr. Acworth. , _

I do not propose to accept the valuation of the Canadian Northern Railway Company as to the lands. I do not propose in this House to build up any argument which could be used by the Canadian Northern Railway Company before the arbitrators. But it is perfectly proper to point out, when it is set up 'by hon. gentlemen on the other side of the Ho-use, that there is absolutely no value in this stock or in the road, that these items were inadvertently omitted, and that the company itself puts forward certain claims in respect of other items which it alleges have been omitted, and as to which they are at least entitled to a hearing. The Drayton-Acworth Commission was not appointed for the purpose of determining the value of the Canadian Northern Railway system, nor for the purpose of determining the value of the stock of that road. Would any hon. gentleman in this House say that the interests of this country would be advanced 'by any action in this Parliament that would take away from any man or any group of men in this or any other country, his property against his will without giving him a reasonable hearing for the purpose of determining its value? We cannot do that, and I shall come in a moment to the statute of 1914 and shall demonstrate very clearly, if not to my hon. friend, to any reasonable man in this House, that the proposal which we are placing before Parliament is based on precisely the same principle that Parliament would have been obliged to follow under the legislation of 1914.

My hon. friend (Mr. Graham) read certain statements which have been tabled by the Minister of Finance, and he spoke of the needs of the company as to rolling stock and other requirements. He agreed that something must be done at this stage, and he agreed also, if I understood him correctly, that no more annual applications for aid should be entertained. Then he came down to the legislation of 1914, upou which he bases his chief argument. He endeavoured in the first place to distort the

statements of the Minister of Finance into a declaration that default has actually occurred. The statements of the Minister of Finance bear no such construction, and if my hon. friend examines them carefully I am sure he will agree with that. His principal allusion was to sections 21 and 24 of the Act of 1914. Let us look once more * at section 24, and ascertain whether or not the necessary procedure under that section would be different from that which we are now proposing to Parliament. Section 24 is as follows:

If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe, at any time while any event of default shall exist and be continuing, by order declare the equity of redemption of the Canadian Northern and of all other persons whomsoever in the mortgaged premises to be foreclosed, and thereupon the equity of redemption of the Canadian Northern (and of such other persons) in the mortgaged premises and every part thereof shall be and become absolutely barred and foreclosed, and the same /shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment or any rule of law or equity to the contrary notwithstanding.

In the first place, I invite the attention of the House to this: sections 22 and 23 provide that in certain events, the Governor in Council may declare to be vacant the offices of the directors of the Canadian Northern and of any of the constituent or subsidiary companies and that the Governor in Council may thereupon appoint directors to the offices so vacated and proceed to assume the management of the Canadian Northern railway system. Then comes section 24, which provides that if any such default has taken place, the Governor in Council, upon such terms and conditions as Parliament may prescribe, shall declare the mortgaged premises to be foreclosed. The effect of that would be to take out of the ownership of the Canadian Northern, Railway Company the physical properties now vested in that company and to transfer them to the Crown in the right of the people of Canada. The Canadian Northern Railway Company would cease to own the physical properties that were vested in it. The Canadian Northern Railway Company would cease to be the holder of the stock of the subsidiary and constituent companies; and the physical properties to which I have referred, as well as the stock in the constituent and subsidiary companies, would be vested in the Crown, in the right of the people of Canada. The road then being vested in the Crown, its operations would have to

be provided for. We should either have to bring it under the administration of a department of the Government, under a minister of the Crown, or provide some machinery by which the operation of the road could be carried on on behalf of the people. But the member for South Renfrew seems to take it for granted that all this can be done by Order in Council. It cannot be done by Order in Council until the authority of the Parliament of Canada shall have first been obtained. Let me emphasize the language of section 24 in that regard:

If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe, etc.

What would be the duty of a government in this or in any other country if it came to Parliament with a proposal that certain property subject to a mortgage should be foreclosed, and that the title to that property should be vested absolutely in the mortgagee? Would it be a proper course for the Government to invite Parliament to confiscate that property without regard to the claims of the owners that the equity of redemption had some value? Even if the Government or Parliament were absolutely convinced that the property had no value, would it be according to the ordinary dictates of justice as administered in this country at all times in the past

and as it will, I hope, be administered in the future-that the right of hearing as to the value of the property should be denied to the persons in whom that property was vested? I venture to say that neither this Government nor any Government that could be formed on the other side of the House would come to Parliament and say: Although this claim as to value is put forward, we shall disregard it; we shall pass a resolution of this Parliament vesting in the Crown without compensation the equity of redemption which is now held by the persons who own this property subject to the mortgage. What, therefore, would be the proposal that a government, having reasonable regard to these considerations, should make to Parliament? It would ask Parliament to establish and define some tribunal before which the persons in whom the equity of redemption was vested should have reasonable opportunity of putting forward their claim, if any, and of supporting it by such evidence as might be available. That, it seems to me, would be'the result if we proceeded under the statute of 1914, and that

is precisely the .method which we are adopting in .presenting to the House the proposals that are now under consideration. The only distinction, therefore, between the procedure under the Act of 1914 and the procedure proposed by the Government at this time is simply this: in the one

case we acquire absolutely the ownership of the road by foreclosing the mortgage and vesting the title to the physical properties in the Government; in the other case we vest the ownership in the Government by the absolute acquisition of all the stock, maintaining the corporation as an entity and using the corporate machinery for the purpose of operating the road in order that it may not be brought under the direct administration of the Government itself. That is the difference between the one proposal and the other. I will Tepeat that in order that I may make my remarks perfectly clear to the House and to the country. In the one case, we should acquire, by arbitration or by reference to some sinlilar tribunal, the equity o.f redemption in these properties, and having acquired that equity of redemption we should either have to administer those properties under the direction of the Government itself, or provide some machinery by which they could be administered without the direct intervention of the Government. In the other case, we do not take away from the company the ownership of the physical properties; we leave them in the company as they are at present, but we proceed to acquire the entire balance of the

capital stock so that the road, to all intents and purposes, is vested and will remain vested in the ownership of the people of this country. To my mind, the advantage of that is obvious. By acquiring the stock without taking the property out of the ownership of the company we still use the corporate machinery, the staff of employees, all the organization that has been built up during fifteen or twenty years; we utilize all that; we operate the road by means of that; we avoid the evils and dangers which would attend the administration and operation of this road under a department of the Government. That is the difference between what is possible under the legislation of 1914, and under the legislation of to-day. The only distinction of any importance is one that I am prepared to maintain and support as obviously in the interests of this country; that is, in the operation of this road and in the administration of its affairs we shall use the corporate machinery; we shall not bring the road directly under the administration of a Government department.

Having regard to what I have said and the explanation I have made, what remains of the amendment of my hon. friend? I have shown, that, so far as principle is concerned, we have acted absolutely in accord with the statute of 1914, but we have modified it in this respect, that, under this proposal, we can use the powers of the corporation, the organization which it has built up and the machinery at its disposal, and we could not have done that if we had pursued in every respect the method embodied in the legislation of 1914. Therefore, when my hon. friend, with something of a flourish at the commencement of his speech, said that he had a method that would avoid any inquiry, any arbitration, and any delay, he was speaking without his book, unless he is prepared to say that he will support legislation which will deny to any .man or any group of men in this country the right to Come forward and support by evidence, if they can, the reasonable value of property taken from them. I do not think it would be in the interest of this country, which for many years to come must be a great borrowing country, if its resources 'are to be developed, that the Parliament of Canada should adopt any such method as that. It would be exceedingly unfortunate that it should go abroad to the United States of America, to Great Britain, or to any of the other great lending countries of the world, that the people of Canada are represented in Parliament by men who are disposed, on occasion, for one purpose or another, to deny to those whose property is taken against their will, the right and the opportunity to make good their Claim as to its value 'before an impartial and properly constatuted tribunal.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
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LIB

William Pugsley

Liberal

Mr. PUGSLEY:

What did the Government mean by asking Parliament to enact by section 24 that the Government may by Order in Council bar and foreclose the equity of redemption without 'any condition?

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

Richard Bedford Bennett

Conservative (1867-1942)

Mr. R. B. BENNETT:

It says: if authorized by Parliament.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

In the first place, the Government did not ask Parliament to do anything of the kind, and in the second place the Government meant precisely what the statute sets forth. The section reads:

If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe.

44.?2

I will repeat my statement, for the information of my hon. friend, if he did not understand me before: No Government of whatever political party would, as I believe, ask Parliament to confiscate any man's property without giving him the right to put forward and support his claim as to its value. In the Expropriation Act of this country, it is provided that when any man's property is taken, he shall have the right to make good his claim in the court.

5 p.m. Suppose we expropriated property of my hon. friend from St. John (Mr. Pugsley), and suppose the Government had reached the firm conclusion that that property was really of no value; that it was not being used by the hon. member for St. John; would he consider that he was being fairly treated or justly dealt with if the Government of this country, in pursuance of a power obtained from Parliament, should take his property away from him and at the same time deny him the right to make good his claim as to its value?

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

Yes, if we had so agreed.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

In this case there has been no such agreement, because the section of the statute reads:

If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe.

My hon. friend realizes, I am sure, that if some such procedure as that to which I have alluded had not been in the mind? of members of Parliament, they would not have alluded to terms and conditions as a condition precedent before this property should be foreclosed. Does my hon. friend place importance upon the words "if any"?

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

Yes.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

My hon. friend places importance upon the words "if any," and he apparently construes them as if the section had read:

If authorized by the Parliament of Canada, the Governor in Council may, without any term or condition whatever, . . . declare the property to be foreclosed.

If my hon. friend is prepared to say that the language which appears in the statute is the equivalent of that which I have just-described as his interpretation of it, then I cannot agree with him at all.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
LIB

William Pugsley

Liberal

Mr. PUGSLEY:

What effect does -the

Prime Minister give to the words "if any "?

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

Precisely the

meaning which they have, namely, that if it were perfectly apparent and admitted by

the owners of the property that the equity of redemption had no value whatever, then Parliament need not establish any tribunal. That is the meaning of the words " if any ". If that were perfectly apparent, and admitted by the owners of the property, it would be an idle thing for Parliament to fix any terms and conditions. Does the hon. gentleman deduce from that the argument that, when the owners of the properties claim vehemently and persistently that their equity of redemption has a value, we should by reason of the words " if any " deprive them of the right to appeal to any properly constituted tribunal in this country? If my hon. friend is prepared to take that view, then all I have to say-

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
LIB

George Perry Graham

Liberal

Mr. GRAHAM:

Will the Prime Minister allow me to suggest

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink
CON

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

Conservative (1867-1942)

Sir ROBERT BORDEN:

Will my hon.

friend allow me to finish my sentence? Then, all I have to say is that, if my hon. friend from St. John has reached that -conclusion, he has reached a very advanced stage in his political development. There may be circumstances in which Parliament need not prescribe any terms or conditions, because the matter would be so obvious. But I ask any reasonable man in this House or in this country whether we are to deduce from the words "if any" the conclusion that persons, who claim, with some show of reason, that their equity of redemption has a certain value, shall be debarred from putting that claim forward and supporting it by any evidence that may be available for that purpose.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   MOTION FOR SECOND READING OF CANADIAN NORTHERN RAILWAY BILL.
Permalink

August 15, 1917