August 28, 1917

CON

Joseph Hormisdas Rainville (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Conservative (1867-1942)

The CHAIRMAN:

Order. The hon. member should address his remarks to the Chairman and not to hon. members.

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

Louis Audet Lapointe

Liberal

Mr. L. A. LAPOINTE:

When I am addressing the Chairman of the Committee, I am at the same time practically addressing the Government. You, Sir, will call me to time in a few minutes. Remember, Sir, that you will soon have the "gag" yourself. On the 7th of October next the Government will have the gag; they will have to go to the country as they should have done long ago. The audacity oi a government to propose such measures on the eve of an election is-well, I leave it to you, Sir, to say. The people will speak at the proper time and will say exactly what they think of such an important transaction being undertaken in the last moments of a moribund Government and a moribund Parliament. I cannot speak to any elector of any constituency in Montreal who does not put this question to me: When is the election coming on? Are this Government going to dare to do anything before they come before the people? Yes, the Government are ready to do anything, because they believe that after themselves there will be the deluge.

At six d'clock the committee took recess.

After Recess.

The committee resumed at eight o'clock.

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

Ernest Lapointe

Liberal

Mr. LAPOINTE (Kamouraska) (translation) :

Mr. Chairman, my most serious objection against the Bill now before us is similar to the one which I, raised against the Conscription Bill passed in the course of this session.

Parliament, as it is now constituted, has certainly no authority to adopt a measure of such an extreme importance. We are now sitting, not in virtue of a mandate from our electors, but by reason of our own act, ratified, it is true, by the Imperial Parliament, but unsanctioned by the popular will. Those who are sitting with me on this side of the House know that, last year, I was far from favourable to the proposal of extending the life of the present Parliament. However, as it appeared to be the desire of the majority of the people in the other provinces of this country that there should be no elections during the war; as such a representation was*made to us, we did not want to be alone to oppose what then seemed to be the will of the people or, at least, what was represented to us as being the popular will. As my colleagues,

I voted in favour of that extension, but upon one condition: It was then stated to us and we were promised by the Government, by the Prime Minister himself, that, in this Parliament the life of which was thus prolonged, no contentions measure (would be submitted to the House; that we should only take up measures having some connection with the war and of such a nature that they could command the aid and obtain the support of all the members of this House. We have assented to that extension by reason of that promise on the part of the right lion. Prime Minister and in pursuance of a well defined agreement. The present Parliament does certainly not represent the majority of the country. It is not a representative House. There are at least twenty-five vacant seats. Several members are drawing from the Government salaries for military or other functions; twenty seats and over should be, in pursuance of the redistribution Act, passed a few years ago, now occupied by representatives of the people, but they are not, and I think I might well quote these words applied by a French writer to the French chamber of deputies at a certain epoch of its history: "The nation is reflected in this House as in a broken mirror." Under such conditions, is it fair, is it reasonable, is it constitutional, is it even decent to come to the House of Parliament and ask them to adopt a measure whose effect will be to increase our national debt by an amount of $653,246,949.39, according to statistics compiled by my hon. friend from Pietou (Mr. Macdonald), which were laid before the House yesterday, an increase which will carry this country's total indebtedness to the fabulous total of $2,248,538,000.41.

I contend that this House has neither the mandate nor the authority to pass such a measure.

Now, this action on the part of the Government- becomes even more arbitrary when it is accompanied by the rigorous application of the rules of this House which are actually imposed upon us. It is assuredly tyrannical-I believe the word is still within the limits of moderation-to employ the gag in order to have such a measure passed by a Parliament such as we constitute just n-ow.

What did the Prime Minister say on August 7, 1917, when the resolution preceding this Bill was introduced into this House?

The leader of the Opposition asked that a committee be formed in order to consider the very proposal now before us. And the Prime Minister said:

What I suggest to my right hon. friend is to study and perhaps to adopt the proposed resolution in Committee of the Whole. Then, we could examine his idea before the second reading. It is desirable, of course, that all the necessary information in connection with the matter should be supplied, but the debate which will take place on the proposed resolution may also take place in committee, after the second reading. There is no reason why it should not be done in either case.

Mr. Chairman, it was upon that promise from the Prime Minister that the House assented to the adoption of the resolution in the committee, and, when we did come to that stage in the Parliamentary proceedings, where the Prime Minister said we would have all the required latitude to discuss this Bill, scarcely had three or four members, on this side of the House, criticized the proposal, when the Government imposed the closure o,n us and prevented any further speech on our part.

When, for the first time in Canadian parliamentary history, this Government had the regulations of this House so revised as to have the right to impose closure and restrain the freedom of speech of which we had always been so proud, in the course of the observations I then made upon such a proposition, in 1913, I spoke as follows:

The resolution which we are asked to pass will put in the hands of some ministers a dangerous weapon. That weapon will be still more dangerous when such ministers owe their position to lobby wire-pulling, to services of a suspicious character ,to a deep knowledge of intrigue.

. (Mr. Chairman, (I did (not .believe, or rather, I foresaw even then what might happen after such a tyrannic resolution as the Government forced this House to adopt, and what we are having here to-night is the result of the attitude then taken by the Canadian Parliament. 'There is an attempt made, Mr. Chairman, to prevent the discussion, on its own merits, of the Government's proposition, 'by putting up the theory of the nationalization of public utilities and railways. As far as I am concerned, I am not an out and out supporter of State ownership, probably because I have known too much about the Intercolonial administration. I represent a county tributary to the Intercolonial and I have always lived along the Intercolonial, I am conscious of all the drawbacks inherent to that system. Many object to a railway being administered by the Government service. In theory, it may be possible that, under certain conditions, such -a system would prove advantageous, but why discuss to-day that phase of the question, when the members on this side of the House have not attacked the principle of State ownership, but have rather assailed this

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

George Perry Graham

Liberal

Mr. GRAHAM:

Before this Bill is finally rammed through committee I want to say two or three words. I expressed my views fairly explicitly, I think, on the second reading of the Bill, but I consider this an opportune time to emphasize very briefly what I have perhaps -said before. We have heard a good deal about the nationalization of railways. The Government has harped on that string pretty strongly at times, but I am not sure that, if the acid test were applied, my hon. friend the Minister of Finance would prove to be a public ownership man himself. I should not like to crowd him too closely for fear he might fall from grace and express his real view-s on this question. The

nationalization of railways and of all public utilities is a policy that has made rapid advancement, and possibly Ontario is as far advanced in that line as any of the provinces, but I submit that the question of the nationalization of the Canadian Northern Railway plays but a very small part in the considerations which led up to the taking over of this system. The railway situation in Canada is one that demands attention. It has been pointed out by several hon. gentlemen that there are two or three ways in which relief can be afforded or a remedy applied. Speaking for myself, I am not averse to the taking over of this system under certain conditions. If the Canadian Northern were paying its way at the present time, I would urge the postponement of consideration of taking over the system at least till the war was over, and we had some idea what our future responsibilities would be. I am inclined to think, although we have no proof that Mackenzie and Mann themselves have asked for this legislation, that the Government would either have had to give them a grant or make some other disposition of the system.

As outlined in -what I had the privilege of stating in this House some days ago, I am rather against the idea of a receivership. I know that a great many of the ablest financial men in Canada take a different view-at least I have been very sharply criticised in correspondence for taking the position I did in regard to a receivership. Still, as the governments, both federal and provincial, have guaranteed many of the securities of the road I cannot get away from the idea that it would not be a good thing for Canada just now to allow a system whose securities we have guaranteed to get the name of having gone into the hands of a receiver.

Now we come to what has been done. I have no hesitation at all in saying that I oppose this measure, and am prepared to oppose it at every stage unless the Government will take some other method of transferring the Canadian Northern system to the people of Canada. It has been argued very strongly by some hon. gentlemen that it would be unfair to take the property of any man without giving him an opportunity at least to state his claim. That in itself sounds fair, but in this case the company has contracted itself out of any claim, and has done so knowingly. It did not make that contract without a price, and the price was the guaranteeing of bonds, by the Government to the amount of $45,000,000. This

question seems to- have got so far into the political arena that hon. members of this House who ordinarily view affairs from a business standpoint decline to consider this question as a business man- would. If such an agreement had been made between any two men in this House it would have been carried out without any question of hardship arising; the contract would have been carried out as a matter of course. The argument has been made, and has been dilated upon, that the legislation of 1914 did not contemplate the taking of the equity of redemption without compensation. For the life of me I cannot see how any person can consistently argue that; for every utterance by members of the Government that has been quoted in this House from Hansard points in exactly the opposite direction. Over and over again the fact was impressed upon us in thi9 House that if the legislation of 1914 were allowed to go through, this country, through the Government, could without process of law take possession of the Canadian Northern system should default take place. The Government had that contingency in its mind, because in the Act of 1914 it provided the whole machinery by which the road could be kept running after it had -been taken over on default.

If hon. gentlemen will read section 22 they will instantly see that it provides for the operation of the line. So, clearly, there was no question in the minds of the Government as to what would happen if default took place. If the Government's present contention were correct, it would not have provided that machinery, but would have waited * until to-day to do so. Let me read what section 22 says:

Upon the happening- of any event of default and at any time or times while the same shall continue, it shall be lawful for the Governor in Council after such notice to the Canadian Northern as the Governor in Council may direct, to declare to he vacant the offices of the directors of the Canadian Northern and of any of the constituent or subsidiary companies which may he subject to the legislative authority of the Parliament of Canada, and to appoint a board or boards of directors in lieu thereof respectively (any former director being eligible for appointment).

2. The power of appointment herein conferred upon the Governor in Council shall he a continuous power and shall be exercisable from time to time and so often as any event of default may exist and be continuing.

I want to call the attention of the committee to the fact that the Government not only provided for the taking over of the road, but provided in detail in the statute all the machinery for taking it over auto-

matically. Nothing can be clearer. It was distinctly understood by the Government and by every member of this Parliament that the Canadian Northern contracted itself out of any equity of redemption in the stock.

But let us look at the marginal note on section 24. The legal officers of this government surely understand what they are doing, and in a marginal note they interpret the section. Let me Tead the interpretation placed by the (Government of Canada, through the officers of the Justice Department, I presume, on section 24. The marginal note is: "Equity of redemption foreclosed on default and vested in His Majesty." As a layman I need not argue any more. I submit the interpretation put upon section 24 by the Government officers themselves is full justification for the statement that in the passage of this Act of 1914 the Government never dreamed of giving any person anything for the equity of redemption in this stock. Let me go a little further. There is in this Act the word "pledgees." It may seem insignificant, but the hon. member for Calgary (Mr. R. B. Bennett) put his finger on the spot the other night. I submit, Sir, that if there were no pledgees of this stock there would be no legislation of this kind this session, but that the statute of 1914 would be carried out as it was to be carried out, and the property of this company would be the property of the people of the Dominion of Canada through the foreclosure provided under section 24 without process of law. The common stock of the Canadi m Northern Railway system has been pledged for certain loans, and the enactment we are now discussing is, in my humble judgment, to provide that the security which at the present moment has no value and is held by those pledgees shall be made valuable through this legislation. I submit further-and perhaps I may take issue with some of my friends on this- that the arbitration clause in this Bill is not for the benefit of Mackenzie and Mann, but for the benefit primarily of the pledgees to whom Mackenzie and Mann have pledged this stock. Without this legislation that stock would probably have no value for many years to come. The Drayton-Aeworth report provides for Mackenzie and Mann as individuals by suggesting that a certain amount of the common stock of the Canadian Northern Railway system may be given to them. This would be common stock to be issued by

the company formed under the recommendation of the commission, but it would be common stock of the Canadian Northern. They suggested that to recompense Mackenzie and Mann as individuals for the work they have performed, a certain amount of this stock might be given them, and while this stock was not at present valuable it was their hope and their belief that in the years to come it would be of some value, and it might serve as a recompense to Mackenzie and Mann as individuals. That, however, would not have suited the occasion, and the pledgees would not have an actually valuable security, consequently, Mackenzie and Mann are an excuse, but the pledgees are the real men behind the guns. I am talking very plainly, because I believe what I say to be the truth. If the Government had desired to give Mackenzie and Mann something as the holders of this stock, they should have done it directly, in a moderate way, or made a suggestion to that effect, and allowed them something for the great work they have performed in the building of this road. But that would not have protected the pledgees, and the common stock those pledgees hold now as collateral for a big loan would have been worthless, and it would be the bankers, not Mackenzie and Mann, who would have to lose. I submit again, this legislation is for the protection of the pledgees rather than for the protection of Mackenzie and Mann as individuals. I believe that under the legislation we are now passing the pledgees will be entitled to have a say in the appointment of the arbitrators. Consequently, the men with whom we are dealing for five-sixth of this stock are not Mackenzie and Mann, but are the pledgees of Mackenzie and Mann, and they will have more to say about this arbitration than will the principals in it. I do not know how much this arbitration may award; it may be a large amount, but my hon. friend from Calgary asked the Government the other night if it would not be wise to make a provision in the Bill by which the Government might refuse to accept the award of those arbitrators if it were considered extravagant. If my memory serves me- and I think it does-some member of the Government intimated that this would not be an unwise provision, but so far I do not see anything to show that the Government is going to put it into effect, as I believe it should do. This arbitration may bring in an award of $40,000,000 or $50,000,000. There is nothing in the directions given to the arbitrators to prevent them from coming

to such a conclusion. I asked the Minister of Finance about a certain report that had been made by the directors. That report *will undoubtedly come before the arbitrators in some way, and if it is of the nature I believe it to be, it might possibly influence the result of the arbitration to a very marked degree. I shall not discuss the personnel of the board. I have been told that Chief Justice Meredith is to be a member of it and that Mr. Lash is to be a member. I do not know whether that is correct or not. I will say, however, that I am entirely against this proposal as it is put forward. I believe the time was opportune and ripe for taking over the Canadian Northern under the contract we made with them and they made with us, which was set forth in the statutes. That is the only way the road should be taken over. As I said before, I am very firmly of opinion that if there had been no one but Mackenzie and Mann in question-if there had been no pledgees *-this property would become ours in virtue of section 24, which provides for foreclosure without process of law. My objection is just as strong to the method of taking over the road as it was in the first place, and it will continue to be so until this Bill passes out of the House of Commons. I shall have to sit down very shortly, but before I do so I wish to point out that the Hudson Bay railway now beinj^ constructed by the Government will form an integral part of the Canadian Northern Railway system. These two systems will connect at Le Pas Mission by a bridge constructed over the Saskatchewan river, and the Government taking over this system may be in a position to save monty in the construction of shops on the Hudson Bay railway; in other words, it may make some difference, if those two systems are connected, if the shops were located to serve both systems. At the present time the Hudson Bay railway is a separate entity, and would probably have those shops and all the machinery and overhead expense by itself, part of which might be saved if it were operated in connection with the Canadian Northern railway. I have no more to say, and I would not be allowed to say it if I had.

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

James Joseph Hughes

Liberal

Mr. J. J. HUGHES (Kings, P.E.I.):

Mr. Chairman, I desire to say a few words on the proposition now before the committee from the point of view of the ordinary citizen and taxpayer-the man, after all, who is going to pay the shot. There are certain

facts and circumstances in connection with this matter which enable one to form a fairly correct conclusion in regard to it. One of these facts is that Messrs. Mackenzie and Mann, who built this great line of railway, have not put one dollar of their own money into the enterprise. They have built it with money obtained from the people in the form of land grants, guarantees given by the provincial governments and the proceeds of bonds sold in the markets of the world, a large part of th'ese bonds being guaranteed by the Government of Canada. They employed the money raised in these various ways in the building of this road. In the construction of the road Mackenzie and Mann, beingthemselves the contractors and having no competition, made -very large fortunes. They are very wealthy men apart altogether from this railway system. They are said to be multi-millionaiies, and to have vast sums invested in various enterprises in Canada, the Argentine Republic, Brazil and Mexico. They have money invested in coal mines in Nova 'Scotia, timber limits in British Columbia, and street railways in various parts of the country. No matter what may happen to the Canadian Northern system, they are wealthy men. No matter what becomes of the common stock, they are rich and the people of Canada who have provided all this money owe these gentlemen nothing. Since this Government came into power the Canadian Northern Railway company has received from the public in one way and another some $76,000,000. I think it was in the session of 1912 that Parliament gave them a grant of $16,000,000, in round figures. Last year they received another gift of $15,000,000, and in the session of 1914 there was a guarantee of bonds to the amount of $45,000,000. That guarantee has been considerably discussed and it is known to every man in this House that at the time that legislation was passed the power was taken by the Government, in the event of default by the owners of the road, to take the road over without any responsibility therefor, or any legal proceedings. My horn friend from South Renfrew (Mr. Graham) stated, on his knowledge and on his responsibility as an ex-minister of the Crown and a member of this House, that proceedings would have been taken in the way provided for by the legislation of 1914 to obtain possession of this road if it were not that influential men in this country, who are near to and have close connections with this Govern-

ment, and who are the pledgees of this common stock, would not stand to benefit largely unless the common stock were given a value.

In June, 1916, the Government appointed a commission to ascertain what this railway system and the common stock were worth. Mackenzie and Mann had issued $100,000,000 of common stock against this railway, $40,000,000 of which the Government holds and $60,000,00 of which is held by Mackenzie and Mann, but is now pledged largely to the Canadian Bank of Commerce. This common stock never cost Mackenzie and Mann or any other person one cent. The commission appointed by this Government to inquire into the value of this road and of this common stock reported that the stock was worth nothing. That was the report of Sir Henry Drayton, the chairman of the Railway Board, and Mr. Acworth, an English gentleman of large railway experience and financial knowledge, the best man that the Government could find for this work. Not only did these gentlemen report that this stock was worth nothing, but they also reported that the known outstanding liabilities of the railway, which the Government are assuming, amount to some $68,000,000 over and above the total value of the railway. That report not being satisfactory to the Government, and probably not being satisfactory to the pledgees of this stock, the Government is proceeding to appoint a commission to give this stock a value. Whatever value is given to it the people will be just that much out of pocket. It is said that the Canadian Bank of Commerce is the holder of $51,000,000 of this stock, and, that being so, the Canadian Bank of Commerce is very materially interested in the value that may be placed upon the stock. It holds it as collateral for advances made to Mackenzie and Mann. Whether the money so Taised by Mackenzie and Mann has gone into the construction of this road or not the members of this committee, so far as I know, have no knowledge, and neither the Government nor the Minister of Finance has given that information.

There are large financial concerns in the city of Toronto that are very closely related to each other and closely related to this Government. The Canadian Northern, the National Trust Company and the Canadian Bank of Commerce have interlocking directorates and are all closely associated. The representatives of these interests are the men who will have the appointment of one of the arbitrators. I have said these in-

319i

terests are closely associated with this Government. I have been informed, for in-etance, that the Canadian Bank of Commerce has gone very far in its efforts to assist the Conservative party and to assist this Government, and has used its influence as a banking institution for this purpose.

I am prepared to believe the information that I have received in this respect. As a matter of fact, I know that the Canadian Bank of Commerce, at least in some instances, has undertaken to say who shall and who shall not be members of this House. They have, in some instances at least, used their influence as a banking institution to hold over citizens of this country engaged in commercial enterprises the threat that if they exercised their political rights as free citizens they would incur the displeasure of that institution and would be seriously injured in their commercial operations. In the session that was held here in August, 1914, just after the outbreak of war, the bankers of Canada obtained very large concessions from the Government on account of the probability of adverse financial conditions coming upon the country. The understanding was- I think it was expressed by the Minister of Finance at that time-that the banks should do their duty in endeavouring to carry on the financial business of the country as it had been conducted during the few preceding years. The Bank of Commerce took advantage of the fact that it was the only bank in certain parts of the country, and of the further fact that shortly after the outbreak of war the Canadian banks came to an arrangement among themselves that they would take on no new accounts and they would endeavour to give to their customers so far as reasonably possible the accommodation that they had previously received. The Bank of Commerce, knowing that they had a monopoly of business in some places and that the business of their customers would not, under the circumstances, be taken over by any other banking institution, made the threat, and exercised the power and the intimidation to which I have referred.

The legislation now proposed is largely to benefit the pledgees of this stock and to give it a value, notwithstanding the fact that a commission appointed by the Government, consisting of experienced men from Canada, Great Britain, and the United States, decided that that stock had no value. Now the Government propose to appoint a commission of arbitrators with a view to giving

the stock a value-at the instance, no doubt, of the pledgees, the largest of whom is the Canadian Bank of Commerce, an institution that is using its influence and its enormous financial power in the way that I have indicated. Is there not ample reason for the ordinary member in this House being suspicious of this legislation? We are coming to a condition in this country that will not be far removed from that in which the British people found themselves some centuries ago, when wealthy men and large corporations could nominate and cause to be elected men of their own choice to represent the people in Parliament. If legislation of this kind goes through Parliament; if the financial corporations and interests have it in their power to exercise in this way the enormous advantages which they possess, representative government and the independence of Parliament will not be worth very much in 'Canada. Under these circumstances it is no wonder that the people are alarmed. Every phase of this legislation is open to suspicion. In order to shut off ordinary discussion of this measure ; in order to force this legislation through Parliament, the 'Government have taken the drastic step of applying the closure. This is a time when the people have great reason to be very careful of what is done in this House and in this Parliament. When, after some months, we know what we have to pay for this stock-which a commission of experts declares to he worth nothing- we shall know better than we can know now the influences that are behind this Government, urging them to force legislation of this kind through Parliament, not for the benefit of the whole people, but for the benefit of certain interests in this country.

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

Some hon. MEMBERS:

Time.

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LIB

James Joseph Hughes

Liberal

Mr. J. J. HUGHES:

I -am subject to the Chair.

Topic:   CANADIAN RAILWAY SITUATION.
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CON

Joseph Hormisdas Rainville (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Conservative (1867-1942)

The CHAIRMAN:

The hon. member has two minutes more.

Topic:   CANADIAN RAILWAY SITUATION.
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LIB

James Joseph Hughes

Liberal

Mr. J. J. HUGHES:

The taking over of this road by the Government under the legislation of 1914 might be all right, but the passing of this legislation and the taking over of the road under the circumstances that I have pointed out is a very serious matter indeed.

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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

I have already spoken on one or two occasions, although not at great length, on this question, but I desire

to make a few more remarks to the committee. First, as to the weapon used in this discussion, namely, closure, I have only this to say, that in ordinary times, in fact at all times, the closure or gag is nothing but a bludgeon to prevent people from expressing their free and untrammelled opinions, but, under present conditions, with a Government represented as it is on the ministerial benches, I am rather pleased to see that they have -adopted this procedure which shows their intention to prevent the country from being informed by gentlemen on this side of the House. We know that closure was introduced in England when the Irish Parliamentary Party were obstructing the proceedings of the House of Commons. At that time the Irish party did not complain of the introduction of closure, because, as Mr. Parnell rightly said, "We will make the world listen to our grievances." I stated the other day that the press of this country had been ominously silent, that it looked as if the press had been bought, body and soul, in order to keep the lid on this transaction; and, after the lobby which has been carried on in this Parliament since the beginning of the session, I understand why the Government is anxious to enforce closure, in order to prevent revelations being made. I am glad that the Government has adopted this weapon in order to sandbag its political opponents at the present juncture, thus the country will be made to listen, and to inquire why this extraordinary procedure has been adopted, when there has been no obstruction within the walls of this House. I listened the other day to the remarks of my hon. friend from Red Deer (Mr. Michael Clark). He said: I am surprised that we are here, after eight months of a session; we should not be debating in -this House, but should be pitching sheaves in the western prairie. He added that he did not understand why all this delay and all this discussion. Let me say, in all sincerity and frankness to my hon. friend, that if there -has been delay the responsibility lies with the Government. The measure before the House, the most important piece of legislation which has been, introduced in Parliament since the Grand Trunk Pacific Bill was passed, has been placed before us in the dying hours of a dying Parliament, and the Government must flDear the responsibility, and not the members of this House who protest strenuously and sincerely against this transaction. I am surprised that a Liberal like my hon. friend from Red Deer-

Topic:   CANADIAN RAILWAY SITUATION.
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LIB

Charles Arthur Gauvreau

Liberal

Mr. GAUVREAU:

He is no more a

Liberal.

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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

-should complain that there is discussion over this transaction. Does he not know that hundreds of millions of dollars are involved in this transaction, and that the Minister of Finance has done us the injustice of not bringing with him, and laying on the table of the House, one bit of correspondence exchanged between the vendors and the purchasers? Who, in the country, will believe that there have not been written documents in the negotiations which took place between the Government and the Canadian Northern Railway company? Do hon. gentlemen believe that the sacred cause of war, of which my hon. friend the member for Red Deer is apt to speak every now and then, is well served by this Government catering to the desires and wants of Messrs. Mackenzie and Mann?

I say that at all times sentiment is, at best, a sorry substitute for sound finance, and the " win-the-war " cry raised in this connection will not impress people because it is only a sham to cover an act of piracy. My hon. friend from Pictou (Mr. Macdonald) asked the other day: But with whom are you

dealing? I thought it was a very naive question-with whom is this Government dealing at the present juncture? They are dealing with a coterie of knights, most of them millionaires, but willing-anxious, indeed-to add to their millions, some of them banded together to deliberately loot and plunder the Canadian treasury. In the days of real chivalry-and it was in the olden days-it was said that the knights were contributing their blood and the common people their money and their prayers. We have reversed the position nowadays, the people are contributing their blood to the cause of war, but the plumed knights are getting the plums and the booty, and some of them are good enough to give us their prayers. The press has been silenced, and the Minister of Finance was rather short in his remarks to this House when he introduced his resolution. He thought, as a matter of course, so deeply has he been dealing in millions and rnillions since the beginning of the war, that this Parliament was not entitled to know much about this scheme. But more than that, he has even refused an invitation which he received from his home city, Toronto, to discuss publicly at Massey Hall the question now at issue. I have seen in this House men of as high

a stature, politically speaking, as my hon. friend the Minister of Finance. Sir Charles Tupper played a part in the history of Canadian confederation. He was largely responsible for the Canadian Pacific contract, and when the terms of that contract were discussed before the House of Commons in the '80's he accepted the challenge of those two great political giants, Sir Richard Cartwright and Edward Blake, and did not think it beneath his dignity to leave Parliament and meet them in Montreal, Toronto and the large centres in Canada, and discuss with his opponents the contract made with the Canadian Pacific railway. And yet the Canadian Pacific had hardly more importance, financially speaking, than the present proposition. More than $600,000,000 is added to the public debt, and yet my hon. friend who is responsible for that measure refuses to discuss in public in his own city the whys and wherefores of this legislation. He received the following letter from Toronto:

August 17, 1917.

Sir Thomas White,

Minister of Finance,

Ottawa, Ont.

Honourable Sir:-

I have been instructed by Ward 4 Liberal Association, of which I am secretary, to invite you to address a public meeting in Massey Hall on the question of the purchase of the Canadian Northern Railway.

Great alarm has been expressed by the citizens of Toronto as to the proposals of the Government with reference to this purchase, and the interest of the Canadian Banlt of Commerce therein is a matter of much speculation.

If you will kindly advise me what day next week would be suitable, we shall arrange for the meeting.

Yours truly,

(Sgd.) John Callahan.

What was the answer of the Minister of Finance?

Ottawa, August 20, 1917.

Dear Sir:-

I have yours of the 17th instant in which you kindly invite me to address a public meeting on the question of the acquisition of the Canadian Northern Railway system. It does not appear to me that any discussion is necessary as the question is being fully debated in Parliament. I am not aware that there is any public apprehension such as you mention with reference to the purchase, which means that the entire system will be acquired for the people of Canada and will constitute a most important forward step in the direction of public ownership. For your information, I enclose herewith an extract from Hansard showing the remarks of your leader, Sir Wilfrid Laurier, upon the subject in 1914, in which he suggested arbitration as a mode of acquiring the

common stock of the company. Thanking you for your courtesy.

Yours faithfully,

W. T. White.

He adds to that letter a postscript enclosing the amendment moved by the leader of the Opposition in 1914 and seconded by my hon. friend from St. John (Mr. Pugs-ley). But what a flimsy pretext! As it has already been answered during this debate, I will not weary the committee by giving further reasons why it should not have been invoked by a serious gentleman like the Minister of Finance. The minister has refused to face his own city of Toronto because, as he says, it is not in the public interest to discuss that issue. He has ignored the people of Toronto just as he has ignored the financial people of Montreal. The people of Montreal have been taken to task by the Solicitor General (Mr. Meighen). Oh, he says, some Montreal financial men have awakened; a protest has been signed, but it is only Montreal-and, he couples the name of Montreal with the question of conscription in order to becloud the issue. Let me say to my hon friend that not only is Montreal protesting against thi9 piece of legislation, but Toronto is also protesting against it. The great Liberal conven-t'on held at Winnipeg has a opted a resolution against this measure; the Single Tax Association of Ontario and the Constitutional Club of Toronto have passed resolutions against it. Let me quote the last paragraph of a resolution adopted by the Constitutional Club of Toronto:

And whereas, the audacious and resolute efforts now being made by the Government of Canada to commit Parliament to the purchase of Canadian Northern Railway stock resolves itself into an attempt by predatory private interests to loot the treasury of the Dominion, therefore, he it resolved, that the people, in view of the foregoing considerations, demand the impeachment of all members of Government and of public services such as the Imperial Munitions Board, who at present or in the past, have either personally or in the capacity of directors of incorporated' companies, been connected with any of the financial institutions involved In the affairs of the Canadian Northern Railway.

P. F. Cronin, President.

M. Lacey, Secretary.

The Solicitor General the other day made light of the protest circulated in Montreal by the most influential association in that city. There is in Montreal a lawyer of renown, the son of Sir Alexander Campbell who once was Postmaster General in the administration of Sir John A. Macdonald

some time after Confederation. He is the first commercial lawyer of the province of Quebec. He has represented the largest interests before the Privy Council.

He has had a long and successful career at the Bar. He has, on many occasions refused from both political parties the highest position on the Bench. I therefore do not hesitate to invoke his opinion as against that of the Solicitor General- not that I minimize the ability of the Solicitor General, but every one in this country knows that Mr. C. S. Campbell, K.C., is at the head of his profession. This is what he says:

The Canadian Northern Railway has never earned interest on its debts. Great expenditure is needed to put it in efficient shape. Its bonds have always sold at less than face value. Its stock has been declared worthless by two experts named because of special ability to form an opinion.

This stock it is now proposed to purchase at a price to be fixed by arbitrators, one named by the sellers and one by the friendly buyers. And buyers and sellers have had undisclosed verbal negotiations. No one can doubt the result.

Canada is paying 8 per cent, for money. The two-year 6 per cent, notes netted 96.11.

Money at 8 per cent, cannot be poured with impunity into a system running behind every day.

The whole proceeds of the new income tax for years to come will not suffice, and this tax we want for war and not to relieve present holders of doubtful securities.

Sir, this letter is signed by one of the friends of the Conservative party, by an honest Tory, who says that this country may be deeply involved; that the income tax, which will weigh so heavily on the taxpayers of this country will be, so to speak, engulfed in order to meet the liabilities of the Canadian Northern Railway. I ties of the Canadian Northern railway. I tive party to heed that statement made by one of their friends.

As a representative of the province of Quebec, I have one word to say, not from a sectional point of view, but from a business point of view, about the condition which this transaction is going to create as regards the credit of my province. I am proud to say-and I know the Minister of Finance will not deny my statement-that the credit of Quebec is excellent; that the finances of that province have been well administered. As he can see from, this morning's Montreal Gazette, of all the provinces of the Dominion, Quebec has a substantial surplus to show this year. He knows that the bonds of the province of Quebec are quoted at par in the markets of the world, and that is higher than the price

at which the bonds of the Dominion of Canada are quoted. I am proud to say that on behalf of my province which has of late been so much vilified, by so many people. Quebec, I am prouder still to say, has always refused to be encircled by the tentacles of the Canadian Northern railway. Quebec has always refused to guarantee the bonds of the Canadian Northern railway, and she has never given subsidies to its doubtful enterprises, and now Quebec must be punished, forsooth, because she has refused to impair her credit by dealings in questionable policies.

Just one word more, and I am through for the present. Sir Lomer Gouin, the distinguished premier of my province, and Mr. Rourassa, in an admirable article in his newspaper. Le Devoir, only a few days ago, have raised their voices against the raid which is being made on the treasury of the province of Quebec as a result of that transaction. Let me read what Sir Lomer Gouin said the other day:

The province of Quebec has not guaranteed the bonds of a railway company, but other provinces have guaranteed them to. the extent of $20,000,000 and $30,000,000 and even $100,000,,000. Now that the railways are built, some of which are bankrupt, or on the eve of becoming bankrupt, the Government of this country which has no longer the confidence of the people is about to run us into debt to the extent of $700,000,-000, of which about $100,000,000 will fall upon the province of Quebec.

I regret that I have spoken longer than I should, but may I conclude by quoting the pious message which, in my judgment only adds insult to injury in the present circumstances, which Sir Byron Edmund Walker has just issued for the benefit of this country. I receive the Monthly Commercial Letter issued by the Canadian Bank of Commerce, and I notice in the last issue the following words:

Public attention is still taken up with the problem of giving effect to the general and earnest desire to apply the moral and physical resources of the nation to the prosecution of the war in a fuller and more effective manner. Compulsory service-

Mark the gradation.

Compulsory service, a new tax upon incomes, and the proposed acquisition of the entire capital stock of the Canadian Northern Railway are among the important measures advocated by the Government.

On the next page he preaches economy and thrift. Sir, I am quite willing to tighten my belt for the (soldiers at the front, but not for the looters and plunderers.

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?

Some hon. MEMBERS:

Time.

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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

I am through. My hon. friend says-

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CON

Joseph Hormisdas Rainville (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Conservative (1867-1942)

The CHAIRMAN:

Order.

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?

Some hon. MEMBERS:

Order. Sit down.

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LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

In the name of Canada, of my province, and of my electors, I protest against this iniquitous legislation, and let me add in conclusion that when I see Sir Clifford Sifton directing from the Chateau Laurier with Sir Wm. Mackenzie the affairs of the Government, I say the time has come to cry: "Stop thief! Stop thief!''

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LIB

William Manley German

Liberal

Mr. GERMAN:

I wish I could give my twenty minutes to my hon. friend from Rou-ville (Mr. Lemieux) because he can do greater justice to this question than I feel I can do. I have a few more words to say on this measure before the official guillotine is applied-and I might say that in my opinion the operation of that guillotine will have more far-reaching effects than simply stopping discussion of this Bill in the House to-night; I believe its effect will be as disastrous to the Government as it is to the discussion of this Bill in Parliament. I regret very much that the Government has seen fit at this early stage of the discussion of so important a Bill, to apply the closure rules. I think that before that was done the Minister of Finance should have explained to the House what he meant when he said: I believe I can give the committee good reasons why the legislation of 1914 should not be put into effect. It will be remembered that the Prime Minister, the Minister of Finance, and the Solicitor General prided themselves all through 1914 on the legislation of that year providing security for the $45,000,000 guarantee of bonds. They prided themselves on the easy, expeditious, and effective manner in which in case of default, the Government could take over these properties under section 24 of the Act. In regard to the security and the manner in which it could be realized, they pledged themselves in their speeches when the Act of 1914 was under consideration, that if default was made proceedings would be taken under section 24 to realize on the assets of the Canadian Northern railway. I challenge the Minister of Finance to-night before the debate closes to explain to the people of Canada and to this Parliament why proceedings are not being taken under that section, and what he meant when he said: I believe I can give the committee good reasons why the legislation of 1914 should not be put into effect. The

Minister of Finance has made several speeches on this Bill, and has often reiterated that statement, but that is as far as he gets, and unless he explains what he means by the words I have just quoted we must come to the conclusion that there are no reasons why section 24 should not be put into force, and that there are ulterior reasons for taking over the road in the manner provided for by this legislation.

There is another question in connection with this Bill which I have not heard discussed in this committee or in the House, and it is this, and it seems to me that it requires explanation. Section 1 of this Bill provides that:

His Majesty may acquire the six hundred thousand shares of capital stock of the Canadian Northern Railway Company (par value sixty million dollars), not now held by the Minister of Finance in trust for His Majesty, on such terms and conditions satisfactory to the Governor in Council as may he set out in an agreement to he made between His Majesty and the owners or pledgees.

I ask the Minister of Finance to explain what that agreement is to be. What is the agreement for, and what is it to contain? If the Government takes over the shares of this company the Government will own the company in toto. The company has nothing in regard to which they can make an agreement. I would like the Minister of Finance to tell us, if he will, what that agreement is about. He must enlighten this House. We are giving the Government what might be called a blank cheque. We are giving them authority to make an agreement with the Canadian Northern Railway company, and with the pledgees of the stock of that company, and there is not a man in the whole Dominion of Canada-outside of the Government, and possibly Mackenzie and Mann, and the pledgees-who at this moment knows, or apparently will know, what that agreement is to be about. I say, Sir, that the Government has no right at this time to force through the House an Act of Parliament which gives the Governor in Council the right to make an agreement with the railway, unless Parliament knows what the terms of that agreement are. What is the agreement to be for? Is it in connection with the stock? Why i-s the agreement with the owners? The Government is to take the stock, the owners will have nothing to do with it. Is it to be with the pledgees? The right of the pledgees can be no higher than the rights of Mackenzie and Mann. If this stock is pledged, as I believe it is, to the Canadian Bank of Commerce, it has been pledged since the Act

of 1914. If it was pledged since that Act was- passed the pledgees took it with full knowledge of what that Act contained, and the rights of the Government to take that stock in the event of default. In law the rights of the pledgees are no higher, and cannot be any higher, than the rights of the owners. If the Government could take the stock from the owners without compensation, as the Act provides, they could take it from the pledgees without compensation in exactly the sa_me manner. The Minister of Finance does not appear to be particularly interested in what is taking place, knowing that he has an official axe which will chop off discussion at two o'clock, and that this Bill will then go out of committee. But I may tell the minister that he will have an audience to reckon With after this Parliament is dead, and gone, and to this audience he will have to pay attention, and he will have to give an accounting, and make an explanation. I may also tell him that before this Bill becomes law we must have an explanation as to what that agreement is to contain. They say that upon the making of the agreement at least five-sixths of the stock is to be handed over. Can it be an agreement for the operation of the railroad. Surely there is no necessity for an agreement of that nature before the handing over of the stock. The Government takes the stock, and if the Canadian Northern Railway company as at present constituted see fit to retain their directorship and go on and manage the road, they will do so. That agreement can be made between the 'Government and the Canadian Northern railway after the stock is taken over, and it would not be necessary to put in an Act of Parliament such as this is, any conditions regarding an agreement for the operation of the road, because this Act contains nothing in regard to the operation of the road. We must have an explanation as to what that agreement is to be. We are absolutely in the dark on that point. With that provision in the Bill, the Government can make an agreement with Mackenzie and Mann and with the Canadian Northern that the stock they hold is to be taken at a price to be fixed by arbitration, but that stock will he held by the Government and returned to Mackenzie and Mann if in the future Mackenzie and Mann can make financial arrangements to relieve the Government from responsibility. The Minister of Finance shakes his head, but I say, Mr. Chairman, that is so as a matter of law. This Parliament is giving the Gov-

emor in Council authority to make an agreement 'in. connection with this property, with the owners and pledgees. It is a blanket agreement.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

For what? For

the purchase of the shares.

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LIB

William Manley German

Liberal

Mr. GERMAN:

That is what we do not

know.

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August 28, 1917