August 28, 1917

LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

I have only twenty

minutes.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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CON

George Green Foster

Conservative (1867-1942)

Sir GEORGE FOSTER:

I wish to remind my hon. friend that if he goes on in this way his twenty minutes will be up and he will not have approached the question at all.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

My hon. friend asked me if I would permit a question, and under the belief that he was going to ask one I sat down, but as he evidently has not car-

Tied out his intention I will proceed. The reasons why I do not approve of Sir William Meredith are these: We have here a stupendous task for some man-some man who is more or less versed and well informed on the question with which he is going to deal. Sir William Meredith is not versed or well informed on the highly technical matters with which he will be called upon to deal. If Sir William Meredith had been engaged for many years in the study of these questions, ae the Minister of Finance or the comptroller of the Railway Department, Mr. Graham Bell, have been it would be a different thing. But ;Sir William Meredith is no longer young; he has reached an age when it is impossible for him to grasp new things of the magnitude of this railway problem, and do justice to it. We can be sure that the Canadian Northern will have to look after their interests men who are in the prime of life, whose minds are alert and well-versed in these matters. Any of us who have seen contests in the courts knows that it will be impossible for Bir William Meredith to do justice to the people's interests in that tribunal, and I should be failing in the discharge of my duty if I did not say that I believe that a man of the age of Sir William Meredith, who is now not far from four score, will not be equal to the great task before him.

I plead even at this date with the Minister of Finance to choose some other man; for he can find some other man who would be more equal, mentally, and by information, training, and learning, to this task. The Minister of Trade and Commerce turns it into a joke, but when it comes to a question of spending $60,000,000 of the people's money, even the smile on the face of the Minister of Finance at this moment will not make me say other than that this is a matter too grave to be dismissed with a smile from the Minister of Finance or an ironical remark from the Minister of Trade and Commerce.

We have Sir Henry Drayton, a man who has studied railway matters closely, and who in his capacity as solicitor for a great corporation in the city of Toronto has no doubt become very well versed in these matters. He is in the very prime of life, and a friend of hon. gentlemen opposite; he would be incomparably .superior to Sir William Meredith as an arbitrator. It is a remarkable thing that in all these commissions the Government never think of appointing anybody but friends of their own, and that is another thing I have against [Mr. Knowles.l

Sir William Meredith. It is well known that he is a Tory of the Tories he is the right hand man-the man Friday, so to speak-of the Ontario Government. It is a well known fact that for years they have taken counsel with him in all the great measures they have brought down, and that he helps draft their -legislation. That is the belief in the public mind, and instead of doing anything to aggravate the suspicions of the people, the Government Should endeavour to inspire them with confidence. That in itself is>

an unanswerable argument why a man should be appointed who is considered to be entirely dissociated from politics and from all political activity, and people have not that belief about Sir William Meredith. Whether it is true or not I cannot say, but the fact remains that Sir William Meredith is still believed to be very closely associated with the Conservative party. The Government seem to think that they must always appoint friends of their own to these commissions. But that is a source of weakness to the Government. If the Minister of Finance wishes to appoint a judge to this position, why does he not endeavour to restore public confidence by appointing a judge who is not the appointee of the Conservative party? What did the Liberals in Manitoba do in connection with the investigation into the Agricultural College and other buildings? They appointed a man fresh from the Bar. Mr. Justice Galt, the appointee of the late Minister of Public Works. If the Government want a judge they could have appointed Mr. Justice Cassels.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

Hear, hear.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

Mr. Justice Cassels has had long experience in these matters. Although an appointee of the Liberal party, while at the Bar he was a supporter of the Conservative party. He is in every way far better qualified for this position than Sir William Meredith.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

William Pugsley

Liberal

Mr. PUGSLEY:

The Government would not appoint him after the Quebec and Saguenay case.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

It makes the public mind more suspicions than ever, and that is the point I am urging for the sake of the Government itself. It ought to allay public suspicion, and restore public confidence by reconsidering the suggestion that Sir William Meredith should be an arbitrator. The matters which have been dealt with in this debate are so long and so deep

and so big that I cannot discuss them in the ten minutes I have left. There is, however, one point about which I wish to speak, and that is if there is compensation to be paid, and I 'have not for a moment said that compensation should not be paid -I have quarrelled only with the system of dealing with compensation-if there is to be compensation paid we should have further knowledge of the particulars. I might say a great deal with regard to the details, but time does not permit. I do contend, however, that we should have more knowledge of the pledgees of this stock. I think it was the hon. member for Calgary (Mr. R. B. Bennett) who stated that we should have nothing to do with the pledgees. I do not entirely agrqe with that in any sense. We should have more knowledge of these pledgees. The companies of Mackenzie and Mann are so interlocked that it is quite possible that many of the shares of this company were pledged to the bank, together with the shares of some of their subsidiary companies. There is a lumber company known as, I think, the Big River Lumber Company, which is owned by Mackenzie and Mann. Three years ago it had over $1,000,000 credit in the Bank of Commerce. I do not know why the bank would lend a million dollars to that not very well-known lumber company. We should know what that stock is pledged for, and whether it is interlocked with some other stock as collateral, or pledged absolutely and entirely as an isolated pledge identified and ear-marked by itself as collateral or security. When the arbitrators come to ascertain what is the value of this stock, that question will be immediately presented to them. The .minister will understand, with regard to the lumber companies, for example,-I forget their names, but there are many of them in British Columbia-that when the arbitrators come to ascertain the value of this $60,000,000 stock, the argument will no doubt be made to them along the line that the stock (has an especial value to Mackenzie and Mann, because it gave them control of the railway, and the control of the railway helped the subsidiary lumber companies, and the other companies they owned. I hope the minister catches my point. I do not think he is paying very much attention.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

I am listening to my hon. friend.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

My hon. friend then is like Caesar; he can do several things at

the same time. I was going to say there is every possibility that Mackenzie and Mann will go before the board of arbitration and say " this stock we are possessed of has an especial and enhanced value to us, because it gives us control of the Canadian Northern Railway Company, and the control of that company makes our lumber companies and our saw-mills very, very valuable," and they will want compensation because of the loss caused to them by the taking away of that stock. The minister will agree that it is a well-known principle of arbitration law that the board of arbitration must ascertain the compensation to be paid to the c'aimant on the basis of the loss to him, but the minister should safeguard it here that it should be absolutely the market value-the earning value-that there should be eliminated from this any special value they might claim because of the fact that the control of the railway would operate for the benefit of the other subsidiary companies or industries of which they were the owners. That should be made clear to the arbitrators, so as to get rid of the evil results of these underlying securities or interests. _ I have only one word more to say to the minister, and I hope he will listen with an open mind. He is a young man yet, and I wish he would reform his methods with regard to making railways pay. I will tell the minister how to make railways pay.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

I will listen now.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

William Erskine Knowles

Liberal

Mr. KNOWLES:

I may be wrong, but I will give it for what it is. worth. My idea with regard to a railway is that it has something to sell, that is, transportation. The way to make a railway pay is to get a lot of things for it to transport. Railways are not an end in themselves, they are a means to an end. When you build a railway, you have not reached your goal. Your goal is to carry goods. If a man builds a boot factory, his goal is not only to make boots, but to get the boots sold. The way to make your railway pay is to have your transportation in demand, so that people will buy it. How will you do that in Canada, when you are prohibiting it, and strangling it, as you strangled it in 1911 by discouraging the production of wheat in our western country? The way in which you could make these three railways pay, would be to make an agricultural proposition in Canada for the production of wheat in those great zones of prairie land, and produce wheat in such quantities that the railways would have lots

to handle. Yet the Government seem to think it is their duty to adopt and enforce a policy that will prohibit the purchase of transportation, that will prohibit men from raising wheat and grain of all kinds, the carrying on of which would be the source of life to the transportation companies. If the minister will not only listen to this but heed it and put it into practice, he will do a great deal to redeem himself with regard to this proposal. If you could take things as you found them in 1911 and look back at the multiplication table, and see the way in which the wheat production rune you will see that for the ten or fifteen years prior to that under the Laurier policy it had been multiplied by ten. If the minister could have kept that ratio up, instead of choking it off, we would have had plenty during these five or six years to keep those railways as busy as they could be, and make them as rich as they could be. The way to make a success of our transportation problems in Canada is to build the country u]5 so that the railway companies will have so much business that they will be kept busy, and the people of the country will be made rich at .the same time. I am tired of this Toronto legislation, and this privileged legislation-[DOT] and I do not care whether Clifford Sifton is at the back of it or not. It does not need Clifford Sifton to queer it. It is already queered. The people of Canada believe this matter is being run too much for the interests of the privileged, classes, and if the minister would develop the Dominion along industrial. lines, especially developing the agricultural interests of the country, he would help hie railways, and would help the whole of Canada. He would help his friends the manufacturers and the large companies, just as well as he would help the farmers.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

John Gillanders Turriff

Liberal

Mr. J. G. TURRIFF (Assiniboia):

The railway condition we are up against now is no doubt the result of a good many years of great prosperity and development in the West. The fact, however, remains that we are up against a very serious proposition, which has to be dealt with, and to be dealt with in the near future. . Under ordinary conditions, and in. ordinary times, I should have favoured, and favoured as strongly as I could, that this road should have gone into the hands of a receiver, and be dealt with on that basis, letting the water out of the 6tock, if there is any water in it, and letting every creditor take his chances in the railway business and in that railway com-

pany as the rest of us would have to take in any business .transaction into which we went which does not turn out successfully. But we are not under such conditions now, and I do not think such a course would be feasible. We have a tremendous debt facing us at the present time, which is being increased at the rate of almost one million dollars a day. We do not know when it is going to stop. We do not know what the amount of our debt will be when we get through with this war. If by allowing this railroad company to go into the hands of a receiver the result was that we had to pay a higher rate of interest on account of the black eye to Canadian credit and Canadian, finance it may be the most expensive way we could possibly deal with the present railway question. On these grounds I am not at the present time in favour of this railway being allowed to go into the hands of a receiver.

There are some features of this Bill that I do not like but at the same time I am free to confess that if any one asks me to propose something better I do not know how to do it. I da not mean that I am in a position to know how to do it as well' as many other hon. gentlemen in thisHousewho have given more time and attention to the question and understand these matters a great deal better than I do. But, as far as I can make out, in a general way, it seems * to me that the proposition is a fairly reasonable one.

There are two things that I want to bring before the committee that cannot be done in connection with this railway system. One is that this company must not, by any manner of means, be allowed to. get into the hands of the Canadian Pacific. There is no doubt that the Canadian Pacific is a well managed business institution and that it is doing good work. I am not here to make any criticism of the Canadian Pacific railway. But those in charge of the Canadian Pacific railway have enough on their hands at the present time. The main point I want to make in this connection is that the Government will have on their hands the Intercolonial, the Transcontinental and the Grand Trunk Pacific, and it would be a calamity to Canada, in my judgment, if by any possibility the .Canadian Northern, or any single branch line of that system should be eliminated instead of a part of the Government main line from the Atlantic to the Pacific, or that these branches should be put in the position of being feeders to the Canadian Pacific railway main line rather

than to the two main lines that the country is going to have on its hands. The people of Canada would not permit the Canadian Northern to become a part of the Canadian Pacific Railway system. There is another thing that the Canadian people will not stand for in my judgment. The Canadian people will not stand for any more millions being poured into the coffers of the Canadian Northern as long as it is in the hands of Mackenzie and Mann.

I am glad to know that in this House there is very little difference on the question of principle. As far as I have been able to discover in this debate, it is generally accepted on both sides of the House that the Government has to take over this road and it is simply a question of terms. There is one point that I want to bring to the attention of the Government and that is that in the interest of the people the Government has to be mighty careful that nothing is allowed to be done which under any circumstances would allow the old Grand Trunk Railway Company of Canada, either by purchase, lease, or traffic arrangement to come under the control of the Canadian Pacific Railway Company. I believe that we are going to be forced into the position of taking over all the railways of the country except the Canadian Pacific Railway, and if we have to take that position it is absolutely essential for the West that we shall have the Canadian Northern branch lines to gather freight in the West and that we shall have the Grand Trunk lines to gather freight in the East. If you have that you have something to work upon, you have a chance to put these roads in such a position that they will eventually become paying propositions. If, on the other hand, through any carelessness in dealing with this matter, the old Grand Trunk Railway Company should be allowed to get into the hands of the Canadian Pacific Railway, you would have all the gathering power of the Canadian Pacific Railway at this end and in the West, plus the gathering power of the Grand Trunk in the East, contributing to make one main line pay handsomely, while the other two main lines from the Atlantic to the Pacific would be starved.

Another thing has to be considered-it was pointed out by an hon. member yesterday-and it is that the railway companies are asking for an increase of freight rates. It was stated yesterday that they want an increase of 10 per cent, whereas, my

memory is that they have asked for an increase of 15 per cent. If an increase of 15 per cent in the freight rates is necessary to make the Canadian Northern and the Grand Trunk pay, it is certainly not necessary to grant such an increase to the Canadian Pacific Railway. But, if it is done for one it has to be done for the other. You cannot give an increase of freight rates to the Canadian Northern and the Grand Trunk without allowing the Canadian Pacific Railway to take advantage of these increased rates. The result would be that we would probably be handing over $18,000,000 or $20,000,000 a year to the Canadian Pacific Railway. Under the circumstances there is no necessity for doing that. Therefore, if this proposition will cost the country something it will not cost it any more than it would if we gave them an increase in freight rates. The biggest objection that has been developed in connection with the debate so far is as to the amount that -might possibly be paid to Mackenzie and Mann. Personally, I do not think there is a great deal coming to Mackenzie and Mann. 'I am also of the opinion that, if there is not much coming to them, under a fair arbitration, there will not be much given to them.

One arbitrator, whose duty it will be to see that not more than a fair value shall be given to Mackenzie and Mann, will be specially appointed by this Government; another will be selected by the railway company, and -a third by the first two. These men will surely -approach their duties with honest intention and open minds. If it is found that nothing or only a small amount is due to the Canadian Northern Railway Company, it is absurd to talk about $50,000,000 or $60,000,000 being paid out. I have a good deal of faith in the honesty of arbitrators when they come to deal with a question of this kind. I have hope that if nothing is due, nothing will be paid. According to the Drayton-Aeworth report, the commissioners are not against arbitration. I quote from page LXII of the report:

And if in recent years the Canadian Northern shareholders were carried away by a wave of unreasoning optimism, at least it may be said for them that almost the whole population of Canada shared their expectations. We think that, on the whole, the equity of the case would be met if the Canadian Northern shareholders were permitted to retain a moderate portion of the $60,000,000 of shares which they now hold.

On page LXXXVII they say:

We recommend that the question be considered whether Canadian Northern shareholders

shall be perm'tted to retain a moderate proportion of the $60,000,000 shares which they now-hold ; that the precise proportion, it any, and the relation of that proportion to their share of any future profits of the Dominion Railway Company be fixed by arbitration.

Messrs. Drayton and Acworth, then, favour arbitration. The only difference that I see between their proposal and that of the Government is this: the commissioners favour arbitration in respect of what proportion of the $60,000,000 of stock Mackenzie and Mann should hold and what they should get in the way of future profits of the road. The Government proposes arbitration in respect of the equity of Mackenzie and Mann in the railway company and how much should be paid for the $60,000,000 of stock. I repeat that I have faith in the honesty of arbitrators appointed in cases of this kind; I feel that they will do justice to the country. If it can be clearly shown that Mackenzie and Mann have equity in the road and should be paid something for it, I do not know that anybody would be very much opposed to their receiving an amount in- respect of that equity. Personally, I think it would be money well spent if a few million dollars would get rid of Mackenzie and Mann for good; if it would separate them from Canadian railways and Canadian matters generally. They have been no credit to Canada, except that they have built a big road upon the credit of other people.

The Government is adopting the principle of Government ownership of railways. Once they take over this road, the Government cannot stand still. We shall be taking over the operation of 9,000 miles of railroad in addition to the 1,400 miles of the Intercolonial, to say nothing of the Transcontinental. That means that we have to go further. Without saying anything about the method that the Government is adopting, I believe that the taking over of this road by the Government meets with the approval of the people generally. It is better to take this step than to continue to pour millions of dollars into the Mackenzie and Mann sieve. I have never favoured Government ownership of railways, but I see now that we have to take action; we have to adopt the principle of Government ownership. It is the best way out. The people whom I represent would rather have the road taken over and operated by the Government than allow it to go into receivership or Continue to pour millions into it without undertaking Government ownership or control.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

Pius Michaud

Liberal

Mr. MICHAUD:

I object most emphatically to the measure introduced by the

Government in respect to the Canadian Northern Railway. New Brunswick is under no obligation to the Canadian Northern, or to the Government, in connection with this transaction. The people of that province have kept away from this railway corporation, but I am sorry to say that they will have to assume part of the obligation involved in paying a certain amount of money to this company. I have received a resolution passed by the town of Edmundston, in my county, protesting against the purchase of this railroad. I desire to put it on record so that my electors will know that I have taken their request into consideration. The resolution reads:

Whereas the Canadian Northern Railway has been almost entirely built and financed by public money, in the shape of bonuses, grants and loans, including the loans made by the Dominion Government;

And whereas the Dominion Government are now proposing to take over the road, and to assume the liabilities thereof, amounting to some $350,000,000, and to pay Messrs. Mackenzie and Mann for the capital stock still held by them ;

And whereas the Dominion Government has already loaned this company $45,000,000, taking as collateral security the assignment of 45 per cent of this stock, although the stock represents no capital investment and will have no value until the railway shall have become a financial success, which it is not.

Resolved that we, the undersigned, most emphatically protest against the purchase of a bankrupt railway at the price of a solvent concern or any payment being made for the common stock of the company; and insist that if the Government, which is now a creditor to the extent of many millions of dollars, finds it necessary to make further advances in order to protect its claims against the company, it shall safeguard the interest of the general public, whose agents, it is, by taking over the assets of the company without further payment to the promoters, who, as is well known, have already made enormous profits out of the promoting and building of the road with public money and have amply recouped themselves for any investment of their own capital and time.

The resolution is certified by Thomas Guerette, town clerk. *

It was alleged yesterday by the member for Vancouver (Mr. Stevens) that members of the Opposition were influenced in some way in their attitude towards this measure. The people of New Brunswick have no influence behind them; they are not interested in this company directly or indirectly, but they will be called upon in the near future, when this measure goes through, to become responsible for a part of the $40,000,000 or the $60,000,000 that will be paid to Mackenzie and Mann. Some provinces are anxious that the Government shall take over this railroad. No doubt those provinces are

under obligation to Mackenzie and Mann; capitalists in those provinces have bought the debentures or bonds of the company. But at this moment, when everybody is taxed very highly to meet the expenses of the war, we are called upon to pay Mackenzie and Mann, two railway men tin Canada, an enormous sum. In New Brunswick we have lately been called upon to tax our people to the extent of half a million dollars, and the people are called upon to-day to pay still further taxes to finance this proposition. The labour men, who work for small wages, were taxed under the municipal laws to raise this half million dollars. The people of the province of New Brunswick insist that this Bill should not be passed, because we do not want to assume other liabilities. In New Brunswick to-day we are under heavier expenses than any other province of Canada in proportion to our population, and if we are called upon to pay out more money to complete the purchase of this railway I do not know what will become of us. I have heard it alleged that some members in this House are personally interested in this measure, and that others are indirectly interested. If that is the case, I am very sorry to hear it. It reminds me of the fact that in England lately the rich people have met, and I believe have decided to make what they call an economy pudding. There are too many members of this House' who have met together and have prepared the economy pudding. I am sorry to hear that, because the people of the country have lost faith in the administration of affairs by this Government.

I am against Government ownership of these railways. I have had experience of it in my own. province for the last six years. I have seen railways operated by the Government, namely the Transcontinental in New Brunswick and the Intercolonial railway. It is really a shame to see the way the Transcontinental, especially, has been administered by this Government. I say that no government in my opinion can operate a railway to advantage. When the Transcontinental was built it was a first-class road, but the Government .could not operate it with advantage and profit. There is to-day, lying alongside the Transcontinental from Moncton to L^vis, enough freight for export to fill 250 cars a day for a period of three months. The freight is lying alongside the line, and there is no organization to export it. Before the Government took hold of the International

318}

Railway, we had a "Daily express and good accommodation"; we knew the time the train would leave one station and arrive at the next, but to-day we have very little satisfaction in the administration of this Government railway. I am glad to say, however, for the benefit of the Minister of Railways, that, within the last month or two, an express has been, established on the Interprovincial railway, running three times a week. I say that the public will not endorse the application of closure to such a measure as the one before the House. They do not think we are bound to pass a measure through without giving an opportunity to the members of the Opposition to discuss it thoroughly and intelligently. Many members of this House have protested that 20 minutes is too short a time in which to express their views on such a great measure. In conclusion, I wish to say that Mackenzie and Mann have obtained enough money from this country. The Government should have .taken hold ol this railway, not by means of the measure before the House, but under the .authority of the .statute of 1914, which reads 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 he 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.

Under this authority I beg to submit that the Government does not owe one cent to the Canadian Northern. The people of the country cannot afford to pay any more money to this company, and if we have authority to take hold of it, we should do so at once, and stop making payments to them.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

Onésiphore Turgeon

Liberal

Mr. TURGEON:

I do not very often

occupy the time of the House, except when I think I should express my opinion in the interests of my constituency, and I believe that I could not justify myself before my electors if I did not state my views on. this particular question. Coming from a constituency in the Maritime Provinces which is traversed by the Intercolonial, it has been my duty, on more than one occasion, to express my opinion on the operation of

force, would have given us cruisers and destroyers to help the Empire at this hour. It was a sore day, the 11th day of September 1911.

As I say, our financial potsition is such that we cannot properly equip the roads we have to-day. At the beginning of this session I asked the Minister of Railways if it was his intention to take over the Caraquet and Gulf Shore Railway, as branch lines for the Intercolonial, and he answered that owing to the war it was very difficult to get the money, and he would have to postpone consideration of that question till some later date. I accepted his statement in good faith. If the reason he gave at that time was good, it is good to-day. He could have taken over this railway for a few hundred thousand dollars, and many other branch lines could also have been acquired at a total cost of less than a million dollars, which would have been of great advantage to the Intercolonial railway. But if financial conditions are such that one million dollars cannot be spared for the taking over of branch lines for the Intercolonial, how can the Government expect the .people of this country to support them in taking over the Canadian Northern involving this great expenditure, especially when we have not yet properly equipped the Transcontinental.

According to the Dr ay ton-Ac worth report we should have to spend $40,000,000 on the Canadian Northern for equipment, and $30,000,000 for additions and betterments in the next five years. Then there are also the fixed charges, and the amount we shall have to pay for the stock. The Minister of Finance said that the taking over of this road was the beginning of a policy of the nationalization of railways in this country. While I am in favour of the nationalization of railways, I say that Canada is not in a .position to take over this road, which will be a drain on the country for many years to come. In the last resort I would rather the Canadian Pacific took over the Canadian Northern Railway than the Government, or that we gave .a few million dollars to keep the Canadian Northern going for another six months or a year. This Parliament is a dying Parliament. In forty odd days it will have no life, and in three or four months .a new Parliament will have come from the people with a mandate to deal with the railway question. My time is up.

Topic:   CANADIAN RAILWAY SITUATION.
Subtopic:   CONSIDERATION OF CANADIAN NORTHERN RAILWAY BILL RESUMED IN COMMITTEE-RULE 1TB APPLIED.
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LIB

Daniel Duncan McKenzie

Liberal

Mr. D. D. McKENZIE (North Cape Breton):

The question which we have to

consider is so large that one approaching it with a time limit of twenty minutes finds himself somewhat in the position of the boy in the old adage who proposed to storm Gibraltar with a pistol. Time seems to be precious to the present Government, and I do not blame them for feeling at this stage of their existence that time is getting to bs of the essence of the contract. We are told that there are certain species of spirits and devils that can only be handled and dealt with by prayer .and fasting, and I suppose the Government realize that if they are to save their political souls, all worldly affairs should be put on one side as quickly as possible, and prayer and fasting he the order of the day for the few remaining days at their disposal. That is the only excuse which I think I could plead on behalf of hon. gentlemen opposite, for tying the people's representatives in this Parliament down to a time limit of twenty minutes. We have been pressing them hard for the last six months or so, to put the millionaires of this country within some certain limits. We were trying to get them to cut down certain, lords and dukes in this country who are paying their way into titles of that character, according to the lore we get from the Imperial Parliament. We were asking that they be put upon a certain limit; but they had the cash, they had the pull, they had the power and the. privilege, and they have been permitted to go on; some of them making $5,000,000 of profits out of the poor people of this country within a comparatively short period. While the power of closure was in the hands of the Government, and in the hands of the Minister of Finance, to put a closure on the profiteers of this country, they took mighty good care not to exercise it, because it would interfere with business and profits, and emoluments, and privileges, which they hoped to enjoy under the wing of these characters at a later stage of the game. When it comes down to the representatives of the poor people of this country, men*who like myself are here untrammelled and uhr [DOT] chained, free to speak for the poor people of this country, the Minister of Finance does not turn a hair in putting the closure on me quickly, confining my whole privilege to twenty minutes or less i.n dealing with such a great subject as. this. The question of time has a peculiar turn in the hands of the Government. When it is a question of five years of Government, why it is but as yesterday in their eyes. It is like a vapour which appears for a little while and

then passes away. In their eyes it is as a snowdrop in the river, a moment white and then melts forever. But it is another thing altogether when it comes to deal with time in respect to their friends who are paying the penalty in jail for their rascalities. That is a different thing entirely. Then a day becomes as a thousand years, and the Minister of Justice goes around with tickets-of-leave and a year of Jubilee in hispockets, by which the doors of the jail are opened and those culprits are let loose upon an, innocent people. When they find the country may be against the proposal they bring down, and the wrath oi the people is about to break forth upon their heads, and when they know that proper and free voice of Parliamert in putting the facts before the peopleis adding to their danger and cutting short the time within which thestorm will break upon their heads, they resort to this alternative of cutting our time down to a miserable twenty minutes. Why, Sir, on the question of time, the only act of constructive statesmanship that stands to the credit of the Minister of Trade and Commerce for his six years of office is an effort to interfere with time and daylight. So, they are experts on the question of time. The hon. Minister of Trade and Commerce, finding time heavy upon his hands, and finding that the conditions arose under which he and his Government must go and give an account of himself to the people, he tried to strike on a scheme that might add a little to their time, and he started to put back the clock. The clock would yield, of course, but he found that the roosters of this country, who were in the habit of crowing at four o'clock in the morning, refused positively to crow at three. The hon. gentleman who has been accustomed to globe-trotting during the last few years, and knowing the crowing time of the rooster in India, the rooster in England, the rooster in California, the rooster in the New England states, and in New Zealand and in Australia, knew they were crowing at very different times, and he thought it would be well to introduce an Act that would bring about an amalgamation of the crowing of roosters the world over. In this, however, he failed. He found that he had to give it up, for the rooster put down his legs at an angle of forty-five degrees and said: "This far

shalt thou go, and no further." The Minister of Trade and Commerce has found after all his efforts that he had to come hack to the Minister of Finance and say: "I have failed in commanding the other

crowing birds, you are the only bird that crows at will, and you will have to go to it." This was done, and the Minister of Finance crows on every occasion. He crows with his hat on, and he crows with his hat off. The Minister of Finance also crowed over the Secretary of State-and let me congratulate the Secretary of State, now that I have for the first time mentioned his name in that capacity. This is a union government we are having now; a union in the sense of concentrating half a dozen offices in the one man, as they evidently cannot get anybody to step aboard the ship in her present precarious condition. When the Minister of Finance was crowing in praise of the Secretary of State, then and now the Solicitor General, there was no stint in his crowing; and let me give him at least one consolation, that whatever else may be questioned about him he is the boss bully of the crowers of the whole aggregation and federation of the universal combination of the financial roosters. He is the financial crower of the roost. [DOT] He crows when he has money; he crows when he has no money; he crows when he pays low interest; he crows when he pays high interest; he crows when he is going to get the Canadian Northern on the bargain of 1914, and says that it is absolutely and completely good, and that nothing can be comparable with it in the heavens above, in the earth beneath, or in the waters under the earth. You would think nothing could be more lusty than such crowing, tout he comes down in three years, at another time, when there is another bargain made, and the crowing of 1914 is put absolutely in the shade by the crowing in regard to the new bargain. So you do not know when to put any confidence, or trust, or finality, in the crowing of the Minister of Finance. He crows for reciprocity, and he crows against it. He crows for free wheat, and he crows for no free wheat. In all those cases we have at least one consolation to offer to the Minister of Trade and Commerce that while he might not be able to control the fantastic notions of time as carried in the breasts of ordinary birds, he has one bird on a string that answers his every pull, and crows for the Government at every hour of the day and at every hour of the night. So much for the question of time.

We have no evidence before us to-day, and we never had any evidence that Mackenzie and Mann wanted this transaction at all. My right hon. friend! who' leads the Opposition asked that a committee toe appointed before whom Mackenzie and

Mann or their representatives -might appear and be questioned -about the transaction, giving us, as one man to another, the condition in which the road stood or in which it stands to-day, so that we might know whether or not it was necessary for the people of this country to burden themselves with the enormous debt they are asked to assume. The Prime Minister said he would take the matter into consideration. This was in the early stages of the Bill. Nothing -can be more satisfactory in negotiating a bargain of this kind than to have the parties face to face. Reports are good enough, but reports are prepared for a purpose. Reports are prepared and are put on the table of the House supporting the bargain and putting it in the best light it can possibly be put. There is not a man in this House who is doing business for himself who would be satisfied with information of that kind. For instance, if he were buying a house, or buying land, or buying a railway, he would ask the seller to come before him and lay all his cards on the table face up, and state clearly and definitely what was the nature of the transaction into which he asked the purchaser to enter. That would have been the proper course; that is what the people would have expected. 1 appeal to hon. gentlemen opposite along business lines, and I ask them if they are prepared to go back to their people and say: We have been asked to buy a railway which involves you in a debt, an undertaking on account of principal money, of something like $650,000,000 and a yearly expenditure of something like $30,000,000 or $40,000,00 to keep the enterprise going. If they tell their people that story, and if their people are intelligent, as I presume they are, they will ask them: Have you inquired into this matter; what sort of a bargain have you made; are you getting value for the money that you are spending; is the transaction one in the interest of the Canadian people? And these hon. gentlemen will have to say in reply: We know nothing about it except what we have learned from the reports which have been laid on the Table. But nine-tenths of the hon. gentlemen who are voting for this Bill and supporting the Government have never read a line of these reports, or, if they have, they have not read enough to give them any conception of what kind of a bargain this is.

I submit that we have not the knowledge of this business that we should have before entering upon such a huge undertaking. I submit that this Parliament at this stage

should not be entering upon this transaction. We were elected in 1911 to serve the people for five years and to look after the affairs of Canada. In 1911 such a question as the public ownership of railways was not before the people. There was not a word about it. I have no mandate to talk here upon any question, or to support legislation, or to impose new responsibilities on the people, with regard to matters that were never discussed when I was elected to this House. Up to the end of our five years' term there had been nothing said about the question of the public ownership of railways. Our terms were up and under ordinary conditions we should have gone back to the people for a new lease of power to ascertain what their will was. The plea upon which an extension of time was given to the Government is well known to the people. It was given for the purpose of looking after war conditions and nothing else except the ordinary routine business of the country. I submit, Sir, that we are here now by virtue -of our own vote, by our own authority, and that we have no business to start out upon new and unbeaten paths and strike out upon a policy that never was submitted to the people. When this question came before the Government the business answer to the parties interested woulc^have been: We are here by virtue of our own votes, we are here simply for .a year helping along war conditions, and it is not our right to start out upon a new condition of things which was never submitted to, and never approved of, by the country. Instead of that, we are launched upon this new idea, this new experiment.

Hon. members from the province of Ontario have always said that the Intercolonial was- a failure, that it was a millstone around the neck of the country, that it was a drain on the federal treasury, and I am sure that I can gather from their speeches that they would all be willing to get rid of that railway proposition. If that has been the experience of hon. members in this House with respect to the Intercolonial-I do not agree with their position at all-why then, without consulting the people, and with the meagre information we have before us, are we launched forth upon a project which means the taking not merely a line of the length of the Intercolonial but of nearly nine times the size and fifty times the obligation upon the treasury of this country which the acquisition of this road implies? That is a reason why we should not be launched upon this new idea and policy until we have had an

opportunity of consulting the people about it.

While the government ownership of railways may be all right in itself, I am not at all in favour of it. I believe that the success of any enterprise is more assured in the hands of private individuals than in the hands of the Government. We have the example of the Canadian Pacific Railway itself. It is not a government-owned railway. I cannot talk from experience very much about this railway but a number of speakers in this House have claimed that it is the greatest success among enterprises of its kind to be found anywhere in the world. If that road has been such a great success and such a great agency in the development of this country under private ownership, if it is getting along and paying back everything that it has a right to pay back to the Government, and if it is paying its way splendidly as it goes along under private ownership, what is the matter with another road alongside of it and passing through much the same territory, if kept within proper limits, operated under private conditions and by proper management, making the same success as this great undertaking? The experience in this country is that you do not find enterprising and far-sighted railway men conducting railways under public ownership. Apparently the reason is that personal advancement, as a result of ingenuity and enterprise, is not so rapid or assured on a government-owned railway as it is on a railway which is privately owned. Anybody who has managed a railway will agree with me that if a railway is looking for a first-class live manager it will go to a privately owned road where personality and individuality in the management are encouraged. One of the great drawbacks in connection with the governmentrowned railway is that men who are hired by the Government simply become a part of the machinery and move along at the slow pace that that machinery demands. Be that as it may, I want to point out that if we were going to take this road over we should have done it under the conditions and arrangements that were made in 1914. Then we had the assurance of the Prime Minister, the Minister of Finance and the Solicitor General that everything was in readiness to take the road over if default should be made. I want to impress upon these gentlemen who have put their words on record and given us that assurance that the people expect them to carry out their promise. They were acting

for the people of this country and they have no right to change the conditions of the agreement of 1914 without consulting the people.

The Secretary of State, who was then in charge of this measure, said that everything that the Canadian Northern owned had '[DOT]been put in the hotchpotch, absolutely under the control of the Government. There it stood; out of that it could not go; if default occurred, we had the whole thing. We hold hon. gentlemen to that bargain; if they make a worse one, they are not keeping faith with the country.

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Some hon. MEMBERS:

Time.

Mr. MeKENZIE: I am sorry that my time is up, for I have done nothing more than touch upon this great question.

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LIB

Hugh Guthrie

Liberal

Mr. GUTHRIE:

I rise to give the conclusions which I have reached in regard to this important measure. I agree with the last portion of the remarks of my hon. friend (Mr. McKenzie) who has just spoken I so voted on the amendment offered upon the second reading of this Bill by the member for SouEh Renfrew (Mr. Graham). I thought that the legislation of 1914, particularly section 24, was binding upon me as a representative of a constituency in this Dominion. When the statute of 1914 was placed before the House it was made in very express terms, so express as to take away what might be the' ordinary rights of mortgagors before the courts of law and equity of the land. That section provided that in the event of default the Government of Canada might take over the road, foreclosing absolutely all rights of the proprietors of the road, and of other - persons if any, notwithstanding any statutory enactment or any rule of law or equity to the contrary. In view of that enactment, I felt it was my duty to vote for the amendment proposed to the motion for the second reading of the Bill. But this House saw fit in its wisdom to defeat that amendment, and I have now to decide, according to the best judgment that I can exercise on the matter, what disposition should in my opinion be made of the Canadian Northern railway, having regard only to the interests of the people.

I believe that the people, had they had an opportunity of expressing their opinion upon the question, would in very large majority support the proposal for government ownership of the Canadian Northern railway at the present time. I know that that is the feeling of {he people in that part

of Ontario from which I come. The people believe and I believe that the time has come when the Canadian Northern railway-should be taken over by the Government, whether in pursuance of a definite policy of government ownership, or merely on account of the financial assistance that we have hitherto given that road. It is true that there are other ways of dealing with the Canadian Northern railway. There is the method of putting the road into the hands of a receiver, who would attempt reorganization of its affairs. I would not hope for any good results from such a proceeding. The first difficulty that the receiver would meet would be the question of additional capital. The infusion of new capital is necessary before reorganization of the road can be attempted, and if the figures submitted to the House are correct -and I believe they are-any new capital taken in would come from one source only -the Government of Canada. I believe that tile Government has already a sufficient investment in the securities of the Canadian Northern Railway Company. I do not, therefore, favour receivership. Then there is the method of proceeding under the winding-up clauses of the Railway Act. That does not commend itself to my judgment either. True, it is a logical way of proceeding; in ordinary circumstances it would be the proper way of winding up such an enterprise. But the ramifications of the Canadian Northern Railway and the amount of capital involved are such that this method would he too slow, too tedious. Moreover, when the road should be offered for sale under the Exchequer Court judgment, only one corporation in Canada would be in a position to buy it. For these reasons, I do not favour proceeding under the winding-up clauses of the Railway Act. There i6 no other alternative than that proposed by the Government.

'The Government's proposal is not as good as the proposal embodied in the amendment of the member for South Renfrew, but, believing as I do that the Government's proposal means the nationalization of that road, its acquirement and operation by the people, I feel bound to support the Government in this measure-having regard to the fact that the proposal which I myself would have preferred has been voted down by a substantial majority.

I have no fear for the result of an arbitration; I believe that questions are, perhaps, more fairly arbitrated than they are judicially decided. I am con-

fident that the arbitrators will arrive at a conclusion fair and adequate as between the py-ties. If the proprietors of the Canadian Northern Railway still have a real financial interest in this road, I do not believe that any man would seek to deprive them of it. If they have no financial interest in the road-and the Drayton-Acworth report says that they have none-then the arbitrators will so find. I cannot conceive that uny injury will be done to the people through submitting to arbitration the question of what interest the proprietors still have in the road. This legislation eventually will vest the road in the people of Canada; it will be part of a Government-owned system. The people whom I represent feel strongly on the question of Government ownership of railways. While I believe that we might well have depended upon our statute of 1894, and the covenant of the proprietors of this road, I am quite satisfied, in view of the fact that that proposal has been rejected by a majority of the House, that the present proposal should become law.

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LIB

Louis Audet Lapointe

Liberal

Mr. L. A. LAPOINTE (St. James, Montreal):

I feel constrained before the Bill passes to say a few words in explanation of my attitude towards it. The district which I represent should, it seems to me, express its opinion upon this measure through me as its representative. I first desire to take exception to some statements made by the Minister of Finance (Sir Thomas White), who on one occasion said when discussing the measure:

* The fundamental issue of the transaction which is now before the House is that the Government of Canada is acquiring a great railway system. It is the beginning of public ownership of Canadian railways-I do not say of all Canadian railways; hut it is a great step forward.

I take exception at once to this proposition of the Minister of Finance, because I believe that the nationalization of one railway at a time, and another railway at another time, is wrong, although I would be inclined to the opinion that it would be a good thing, and in the interest of the country at large to nationalize all the railways at the same time. If you begin by the nationalization of one railway or another, it means the competition of public money against private enterprise, so that the money of the people will be spent in operating a railway to compete with anotheT railway which is run by private investment. This idea is condemned, even in a country, like Australia, where everything has been nationalized. They took one great

railway man from Montreal, Sir Thomas Tait, to effect the nationalization of the Australian railways, and he has made a great success of the nationalization of the railways in that country. My first objection, therefore, is that I think it is a mistake to attempt to nationalize only one railway. My second objection is to a statement of the Finance Minister when he says:

The question of purchasing the $60,000,000 stock owned by the majority shareholders is really a secondary and subsidiary question.

A secondary question, a mere bagatelle, a small affair, and the minister does not seem to care. He proceeds .to say:

We must acquire the $60,000,000 par value of the Canadian Northern stock, in order to get control of the system.

I differ from the Minister of Finance. He knows perfectly well that it is not necessary, under the circumstances, to buy $60,000,000 stock of the company in order to get control. He has been connected with many companies where there must have been disagreements among shareholders, and in which somehow or other one party of shareholders got control of the majority of the stock. I think the Finance Minister is wrong in arranging to buy $60,000,000 of stock of the company. Immediately before the words "$60,000,000" in the Bill we find the words "par value" in brackets, par value would mean $100 a share, and this might be taken as a suggestion to the arbitrator that that figure might be fixed at par value. I differ with the hon. minister because I believe that no practical man would make such an arrangement as is set out in this Bill. I would advise the minister, in the circumstances, to expropriate from Mackenzie and Mann, who have in round figures $58,000,000, the amount of such stock which would be sufficient to give the Government control of the railway. The Minister of Finance holds, in trust for His Majesty, $40,000,000 stock in the railway. That represents 400,000 shares. A practical man would say that, as [DOT] the Government has already 400,000 shares, they would simply acquire sufficient additional stock to give them control of the road. Why should the Bill not read in this way:

His Majesty will acquire 100,000 shares and one share more.

One hundred thousand shares would mean $10,000,000, and one additional share, $100, would give the Government control. The hon. minister understands that calculation very well, because he knows that one share additional will carry control. The hon. minister proceeds with this Bill and pays

no attention to the argument of my hon. friend from Calgary (Mr. R. B. Bennett) about the pledgees. Hon. members heard the great opposition that he made to the word " pledgee." What does that mean? Did the hon. member for Calgary know that Mackenzie and Mann held $58,000,000 of the stock, and that the Government required $51,000,000 to get control; that, besides, there was $2,000,000 held in hand for certain officers or employees, that there was $1,600,000 deposited in the province of British Columbia, and $4,014,000 held by Mackenzie and Mann, Limited, pending uncompleted financial arrangements for distribution? What does this $4,014,000 mean? It would not harm Mackenzie and Mann if the Government had said: "We will take this $4,014,000 of stock." It would have left only $7,000,000 to be expropriated. I do not concede there is any value to that stock. But we have never heard that Mackenzie and Mann put any money in that enterprise. The stock came to them in the ordinary way as promoters, I suppose. They first allotted to themselves $10,000 worth of shares each; $10,000 to Mr. D. B. Hanna, and $10,000 to Mr. E. R. Wood. Mr. R. J. Mackenzie has $10,000 worth of stock and Mr. Z. A. Lash, whose name has often been mentioned here, has only $2,000 worth, and several others have also $2,000 each.

You will not, by expropriating 100,001 shares, put these men into bankruptcy. They will hold the balance of their shares just the same, hut we may punish Mac-zenzie and Mann who are both guilty in this affair. We shall take away from them in round figures $10,000,000 worth of stock, and they will not lose one cent by the transaction.

I call attention to these remarkable words of the Minister of Finance in one of his

speeches:

This transaction, although it is a large one, is a comparatively simple transaction.

In the first place he said that it was a large one. Yesterday he said that it was a secondary affair, a mere bagatelle. Yes, a very simple transaction to put on to the shoulders ef the taxpayers of this country a burden of millions of dollars when he had this opportunity, as he himself explained in the same speech:

The Dominion Government is already

and this fact, I am afraid, is lost sight of in this House-the owner of $40,000,000 stock of the Canadian Northern Railway Company; that is to say, we are a minority stockholder in that company. There are $60,000,000 par value of shares still outstanding. Instead of con-

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Some hon. MEMBERS:

Time.

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LIB

Louis Audet Lapointe

Liberal

Mr. L. A. LAPOINTE:

Wait. I am not through with you hon. gentlemen who call out "time" and "gag." Although you may gag me to-day, there is one thing we are sure of, you will, as a moribund Government, have your turn.

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August 28, 1917