October 16, 1919

GRAND TRUNK RAILWAY-MONTREAL BOARD OF TRADE.


On the Orders of the Day: Mr. 6. W. JACOBS (George Etienne Cartier) : Mr. Speaker, I should like to ascertain from the Government if it has received any communication from the Council of the Montreal Board of Trade suggesting that the Government defer the acquisition of the Grand Trunk railway; and, if so, what answer has been made?


UNION

John Dowsley Reid (Minister of Customs and Inland Revenue; Minister of Railways and Canals)

Unionist

Hon. J. D. REID (Minister of Railways):

Mr. Speaker, as Minister of Railways I have mot received any communication from the Montreal Board of Trade. If I had, I would have answered that the resolution is now before the House and that we intend asking the House to pass the Bill founded on it at the present session.

Topic:   QUESTIONS.
Subtopic:   GRAND TRUNK RAILWAY-MONTREAL BOARD OF TRADE.
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L LIB

Samuel William Jacobs

Laurier Liberal

Mr. JACOBS:

The question I put secondarily was whether the Government had made any answer to the council of the Montreal Board of Trade.

Right Hon. iSir GEORGE FOSTER (Acting Prime Minister): Two or three communications have been received conveying the sentiments of the Board of Trade with reference to the question under discussion, which I have acknowledged-simply that and nothing more.

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Subtopic:   GRAND TRUNK RAILWAY-MONTREAL BOARD OF TRADE.
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WERNER HORN.


On the Orders of the Day:


L LIB

Pius Michaud

Laurier Liberal

Mr. PIUS MICHAUD (Restigouche and Madawaska):

Is the Government aware

that a self-confessed German agent named Werner Horn, who boasted that he blew up the C.P.R. bridge across the St. Croix river in the province of New Brunswick in February, 1915, was brought to New York yesterday by two Canadian officers, who will take him into Canada for trial? If so, where will he be tried, and when?

Hon. CHARLES J. DOHERTY (Minister of Justice): I was not aware of the exact

stage the proceedings had reached.

Proceedings have been pending for some time for the extradition of the person referred to. Their progress was delayed by the fact that he was convicted of different offences committed in the United States and underwent sentence there. Whether the statement referred to by the hon. member is accurate or not I am not aware, but I shall make inquiries.

Topic:   QUESTIONS.
Subtopic:   WERNER HORN.
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RAILWAY MAIL SERVICE.


Mr. AIME MIVILLE DEClHENE (Mont-magny): In some parts of Quebec, Mr. Speaker, we have asked for an improvement in the Railway Mail Service, and I understand from the official reports that the matter is delayed on account of the proposal to increase the rates received by the railway companies for transporting the mails. Is the Government about to settle that increase and so improve the service required?


CON

George Green Foster

Conservative (1867-1942)

Sir GEORGE FOSTER:

The matter is

under the consideration of the Government.

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Subtopic:   RAILWAY MAIL SERVICE.
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L LIB

Joseph Bruno Aimé Miville Déchêne

Laurier Liberal

Air. DECHENE:

Alay I ask further when the matter is going to be settled?

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Subtopic:   RAILWAY MAIL SERVICE.
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CON

George Green Foster

Conservative (1867-1942)

Sir GEORGE FOSTER:

After it has been duly considered.

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Subtopic:   RAILWAY MAIL SERVICE.
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GRAND- TRUNK RAILWAY SYSTEM.


House again in Committee (from October 15) to consider resolution providing for acquisition by the Government of Canada of the Grand Trunk railway system. (For resolution see page 1059 of Unrevised Hansard.) Mr. Boivin in the Chair.


?

Hon. S@

It had been my intention to speak upon the motion for the second reading of the Sill which will be brought in after this resolution has been

adopted, because it appeared t-o me that the policy of the Government would then be brought under formal and deliberate review. But as the debate upon this resolution has taken a general character, it has occurred to me that I can say what I desire to say upon the question at the present time. At the outset 1 desire to say that the policy of the Government in acquiring the Grand Trunk Railway Company of Canada has my hearty and unqualified support. It does not appear to me that the Government could properly take any other course, if they are to have due regard to their duty respecting the existing railway situation in Canada, and the transportation needs and requirements of this country. This matter cannot be discussed without reference to the general railway situation of this country. It is not my intention to detain the House at any length by going into details of the finances of the several railroad systems of Canada. Those matters were so fully discussed during the past few years that it would seem to me that I would be trespassing unduly upon the indulgence of this House if I attempted to go into details. I think the House is sufficiently acquainted with the position of the several transcontinental railway systems of this oountry, and my observations will, therefore, be of a general character with regard to the policy which has now been disclosed by the Government in their proposed acquisition of the Grand Trunk railway system.

There are certain salient features of the railway situation to which attention may be usefully directed in arriving, at a wise conclusion as to the action which should be taken at this time with regard to the Grand Trunk Railway Company. In the first place, I think every one in this House would be disposed to agree with the general proposition that Canada lias been seriously over-built with respect to transcontinental railways. That is abundantly evident in the duplication of extensive and expensive lines which have been constructed during the past fifteen or more years. One has only to consider the situation from Winnipeg west to the Pacific coast, or for that matter, from Toronto to Montreal in which three lines parallel each other for great distances, almost within a stone's throw of each other, to reach the conclusion without doubt or hesitation that there has been most serious duplication in the construction of Canada's transcontinental railway systems. It is idle to inquire what political party, if any, is responsible for that, state

fSir Thomas White.]

of affairs. It is also idle to inquire what share of responsibility should be borne by political parties, and I have said in this House before that a share of the blame, if blame is to be imputed, rests upon both political parties in this country. This is, however, to be said for the action which was. taken. It was a period of great expansion in Canada, and, at least, a majority of the people, were practically consenting parties to the railway policy which was adopted during the past twenty years, and any one who did not seriously object to the policy which was adopted by previous governments at the time that policy was adopted, can hardly be heard now to complain as to the serious existing situation, because the situation is a serious one.

I think this committee will .agree with me that, having regard to the momentous questions which have been before Canada during the war and which now are before Canada as -a result of the war, we might better not waste discussion in seeking to impute degrees of blame for any national situation which may exist. The proper course for us as public men to consider is: What is the existing situation? Does it require remedy, and, if so, what is the appropriate remedy? That is the problem before the House and the country.

1 have said that Canada's transcontinental railway systems have been built on too extensive a scale. Let us consider what the situation was fifteen years ago, or let us say, at the beginning of the present century, nearly nineteen years ago. Canada was then served by one splendid transcontinental system, admirably managed, the Canadian Pacific railway, which was the only transcontinental system at that time Then we had the old' Grand Trunk Railway Company of Canada, one of the pioneer roads which had much to do with the development of old Canada. Its lines were principally in Central Canada with most important connections to Chicago and to points in the Eastern States. Then we had in Manitoba and in the two provinces immediately to the west the Canadian Northern railway system with its several branches. It must not be forgotten in connection with the Canadian Northern railway that it opened up immense territory which otherwise might not andl probably would not have been opened up to-day. I think myself 'that- the construction of the Canadian Northern railway through the Canadian Northwest was the means of immensely increasing the productive capacity of those three Prairie Provinces. One has

only to consider the quantity of g-rain carried by the Canadian Northern railway, to agree with the statement which I have made. That was the situation which confronted Canada fifteen or twenty years ago. My view is-and I put this forward not at all dogmatically, I hope I may never be accused of that in this House-that it would have been wise if the Canadian Northern railway with its extensive connections in the Canadian Northwest should have been joined up with . the Grand Trunk railway system in Central Canada. Then we should have had two transcontinental railway systems, the Canadian Pacific, which already existed, and which has been widely extended, and the Grand Trunk-Canadian Northern system, which then would have had the lines of the Grand Trunk in the East with their connections, as I have mentioned, ih the United States, and the Canadian Northern Railway system in Manitoba, 'Saskatchewan and Alberta. But that was not done. The Grand Trunk Pacific Railway system was gone on with under the agreement which was entered into between the Government and the Grand Trunk Railway Company in 1903. The eastern division of the National Transcontinental, that is the line between Moncton and Winnipeg, wras also gone on with. Now it is only fair to say that those proposals were before the people of Canada, and the Government which brought them forward in 1904 and 1908 was supported by public opinion. The result was the building of the National Transcontinental from Moncton to Winnipeg at a cost of $160,000,000 or $170,000,000, and -the construction of the Grand Trunk Pacific from Winnipeg through to the coast, in competition with the Canadian Northern and -the Canadian Pacific. It also resulted at a lateff date in the extension of the Canadian Northern Railway system easterly.

I submit that the seriousness of the existing railway situation in Canada is due to the fact that the Grand Trunk Pacific railway was extended through from Winnipeg to the coast, -and that the Canadian Northern was extended through Ontario -and Quebec to the east. That has resulted in an enormous additional expenditure of capital, and in great and mo-st wasteful duplication of lines, to the detriment of the entire country, because freight rates have an undoubted relation to the cost of operation of railways, which includes, of course, their fixed charges.

The serious railway -situation which I have mentioned was by far the most important problem in this country before the war broke out. The war during its course of four and more years overshadowed that issue, but it is only natural that the railway problem, which, next 'to the war, was the most serious question before Canada, should -again take its proper place in importance -before this House. The result is that we -find ourselves to-day discussing this important transaction; the acquisition by the Government of the Grand Trunk Railway .system of Canada. In 1911, it will be remembered, the Government of the day, the late Liberal Government, introduced legislation guaranteeing the bonds of the Canadian Northern Railway Company to the amount of $35,000,000, covering the line, roughly speaking, from Montreal to Port Arthur. So far as I am aware, there was -no strong opposition on the part of the Conservative -party to that guarantee, so it would a-ppear that both -political parties -consented to the giving of that -guarantee, which really determined the character of the Canadian Northern railway as a transcontinental system.

When the Conservative Government took office in 1911 we found, therefore, this situation: The Eastern division of the National Transcontinental railway, that is the section between Moncton and Winnipeg,

* partially completed, and the Canadian Northern Railway line between Montreal and Port Arthur partially completed and being financed or about to be financed from the proceeds of the bonds which, as I have stated, were to be guaranteed by the Dominion Government. The Grand Trunk Pacific was uncompleted. That was the railway situation when the Conservative Government came into power in 1911. I desire to say on behalf of imyself, and I think also on behalf of my late colleagues ' in the Government, that it was the desire-of us all to deal as fairly as possible with the railway situation. I think that was the right course and the course which was in the national interest. I know for myself that the money that was needed to complete the Grand Trunk Pacific railway was found and found not unwillingly. In 1909 the Liberal Government had given a guarantee of $10,000,000 in order to secure funds to enable the Grand Trunk Pacific to go-forward with its enterprise. In 1913, the second year after the Conservative Government came into power, we appropriated a further sum of $15,000,000, and in 1916 a further sum of $16,000,000. In 1916 we also set aside $8,000,000 in the Estimates in order that the Grand Trunk Pacific railway might

be enabled to carry on. We also placed an estimate of $7,500,000 in the Estimates of 1917 and again in 1918, The point, therefore, I am making is that sp far as the Grand Trunk Pacific is concerned the policy of the Dominion Government was that it should be completed in accordance with the original plans and specifications. Now that was done. We also finished the National Transcontinental from Moncton to Winnipeg. With regard to the Canadian Northern, we found an uncompleted situation. First an additional subsidy was granted, and afterwards there was a guarantee of $45,000,000 of bonds, and later a loan-I am speaking from memory-of $15,000,000.

With regard to the obligation of the Grand Trunk Pacific to take over the Eastern division of the National Transcontinental from Moncton to Winnipeg and pay a rental after seven years of three per cent upon the total cost, it was apparent to me, and I think the Government, that it would be quite impossible for the Grand Trunk Pacific, no matter if successful beyond the utmost expectations which could then be formed of it, to pay such a rental, because the cost for various reasons had been so much larger than was originally contemplated. The Government therefore took the position that whatever loss there might be in connection with the Eastern division of the National Transcontinental would fall upon the Government and the people of Canada.

That brings me down to 1916. We were then in the midst of the war. There were heavy demands upon the national Treasury and there had been so many applications made to the Dominion Government on behalf of the Canadian Northern and the Grand Trunk Pacific that it was determined the Government could not continue to pay out these large sums and allow these *systems to remain in private hands. That was the decision come to by the Government, and that decision, I am sure, was strongly supported by public opinion throughout this country. After a very full statement to the House we decided that a commission would be appointed to investigate the entire railway situation in Canada, and to make such recommendations as they might deem proper.

That commission, as the House knows, consisted of three very eminent gentlemen- Sir Henry Drayton, who was then chairman of the Board of Bailway Commissioners for Canada, Mr. Smith, president of the New York Central Bailway company, and Mr. Acworth, a distinguished financial and

railway authority of Great Britain. The report which they brought in is an historic document, and I believe its recommendations have on the whole met with accept-a/nce throughout the country. It is true that the report I refer to was a majority report; Mr. Smith dissented. What they recommended was precisely what it appears to me they were bound to recommend, having regard to the financial condition of these railway companies and to the necessity of keeping our railway systems in such physical and financial condition ,as would enable them to discharge their duties to the Canadian community. They recommended practically the taking over the Canadian Northern Railway, of the Grand Trunk Railway and of the 'Grand Trunk Pacific Railway. They recommended that these railways should be joined up with the Intercolonial Railwtay, that old link which bound together the Maritime Provinces and Quebec and Ontario. They further recommended that a commission should be appointed of competent men entirely free from political influence who should administer the affairs of that national railway system. The result of their recommendation if carried out would be two transcontinental railway systems in Canada. That, I submit, would have been a desirable thing if it had been accomplished, by the method which I mentioned, in 1904. They aimed at two systems.

It was not proposed that the Canadian Pacific Railway Company should be taken over, and personally I am opposed to the taking over of that company because I believe it is rendering a most admirable service to the people of this country. It is a railway of which we are all proud. Its management is of the highest character and quality, and its achievements both before and during the war have commanded the admiration not only of the people of Canada but of the wdiole world. The Dominion Government, feeling that the recommendations of the Drayton-Acworth report were sound, proceeded to carry them into effect. It could not be done at once. As a result, the Canadian Northern Railway Company was taken over and it is being operated through a Board of Directors; and there is associated in its management the Intercolonial Railway of Canada. The policy of acquiring the Canadian Northern and joining it up with the Intercolonial was the following out of the recommendations of the Drayton-Acworth report.

Now we come to a later stage. We had furnished the Grand Trunk Pacific Railway Company with some seven and a half or eight million dollars per year to enable it

to carry on its operations, and there came a time when the Government considered that public opinion in this country would not sustain it in advancing further large sums-seven millions, eight millions or ten millions, which would have been required during the past year to carry on the Grand Trunk Pacific railway, the ownership of whose stock was in the Grand Trunk Railway Company and whose securities were guaranteed in large part by the Grand Trunk Railway Company of Canada. It is within the memory of the House, (because it is comparatively recent, that the Grand Trunk Pacific Railway Company, being unable to go on, was placed in receivership by the Government of Canada. That occurred in February or March last. During the preceding summer the Grand Trunk Railway Company had made an application to the Dominion Government for assistance. It was clear that the Grand Trunk Railway Company was in a serious position by reason of its beiing involved in guarantees, to so large an extent, of the securities of the Grand Trunk Pacific Railway Company. I think the indirect liability of the Grand Trunk Railway Company to the Grand Trunk Pacific Railway Company was in the neighbourhood of $100,000,000. On the other hand-and it is very pertinent to the discussion of this question-it is to be borne in mind that the Dominion Government has direct and indirect liabilities in respect of the Grand Trunk Pacific Railway Company to an amount of some $140,000,000 or more-say $145,000,000.

Now, Mr. Chairman, the placing in receivership of the Grand Trunk Pacific railway in my judgment, made inevitable the acquisition of the Grand Trunk railway of Canada. The Grand Trunk Railway Company of Canada, in order to continue conducting its operations, would have been obliged to make good its guarantee upon the securities of the Grand Trunk Pacific Railway Company which were outstanding. Ten million dollars of these securities issued in 1909 were guaranteed by the Dominion Government. The Grand Trunk, like any other transcontinental railway system, would have been obliged to make needed extensions and improvements of a capital character in order that its system might be properly and adequately maintained. It would appear, therefore, that the Grand Trunk Railway Company, with the Grand Trunk Pacific Railway Company in receivership, must inevitably seek assistance from the Dominion Government and as I have

pointed out, in 1908, although the Grand Trunk Pacific was not then in receivership, application had been made for assistance and the question was then raised in the correspondence between the Prime Minister and Mr. Alfred Smithers as to the liability of the Grand Trunk upon the Grand Trunk Pacific's securities. It was an obvious situation, and I shall not dwell upon it because it seems perfectly clear. The Grand Trunk was so involved with the Grand Trunk Pacific that it would be exceedingly difficult for .it to continue to maintain its efficient condition and equipment and take care of its liabilities in respect of the Grand Trunk Pacific's securities.

Topic:   QUESTIONS.
Subtopic:   GRAND- TRUNK RAILWAY SYSTEM.
Sub-subtopic:   RESOLUTION RESPECTING ITS ACQUISITION 'BY THE GOVERNMENT.
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L LIB

Daniel Duncan McKenzie

Laurier Liberal

Mr. McKENZIE:

Will the hon. member pardon me? I should like him to tell the committee what was the character of the assistance asked for by the Grand Trunk on that occasion.

Topic:   QUESTIONS.
Subtopic:   GRAND- TRUNK RAILWAY SYSTEM.
Sub-subtopic:   RESOLUTION RESPECTING ITS ACQUISITION 'BY THE GOVERNMENT.
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UNION

William Thomas White

Unionist

Sir THOMAS WHITE:

I am speaking

from memory-it was, I think, in order to enable them to meet certain maturities upon their own obligations which were about to become due in London.

Topic:   QUESTIONS.
Subtopic:   GRAND- TRUNK RAILWAY SYSTEM.
Sub-subtopic:   RESOLUTION RESPECTING ITS ACQUISITION 'BY THE GOVERNMENT.
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L LIB

Daniel Duncan McKenzie

Laurier Liberal

Mr. McKENZIE:

How much money did they ask for?

Topic:   QUESTIONS.
Subtopic:   GRAND- TRUNK RAILWAY SYSTEM.
Sub-subtopic:   RESOLUTION RESPECTING ITS ACQUISITION 'BY THE GOVERNMENT.
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UNION

William Thomas White

Unionist

Sir THOMAS WHITE:

I am sorry I am unable to give the hon. gentleman that information, but I have no doubt it can be given to him by the Government. It was not a very considerable sum in terms of railway finance, but still it was a substantial amount. Now, just let me recapitulate the different steps which have brought about this situation, inevitable if the Government is to discharge its duty in regard to the serious railway condition that exists in this country and in regard to the transportation needs and requirements of Canada. The necessity for further assistance to the Canadian Northern Railway Company and the Grand Trunk Pacific Railway Company became evident.

The Dominion Government, in giving its guarantee in 1914 of the securities of the Canadian Northern Railway system to the extent of $45,000,000, insisted upon receiving $40,000,000 of the common stock of the company. They took the view that if they were to be called upon to give such a large guarantee of the securities they must obtain a substantial interest in the road. They obtained, with the amount of stock which they had received the year before, in respect of the subsidy they granted, a total sum of $40,000,000 out of the $100,000,000 of the capital stock of the company. That

gave the Dominion Government an interest in the Canadian Northern Railway system. Then, the further loans which were made to the Canadian Northern Railway and to the Grand Trunk Pacific brought about the commission to inquire into the railway situation in Canada. The result was the Dray-ton-Acworth report under which the Government has since acted, and under which, Mr. Chairman, it is acting in bringing down 'the resolution now before the House.

I desire to dwell for a moment upon certain financial aspects of this transaction and indeed relating to the taking over of any railway system. It is often put forward that the Dominion Government in taking over a railway system is increasing the public debt by the amount of the securities which have been issued and are outstanding of such railway company. Well, one can understand what is in the minds of persons putting forth that view. They say: "If you acquire a railway company which has very large obligations to be met, you increase the national debt of Canada by the amount of those obligations." I think it must be perfectly clear to the House-and I desire to dwell upon this point a little- that in taking over any railway company the liability assumed is a marginal liability. It is not a liability to the full extent of the securities outstanding of such system. Let me take a simple case. Suppose the Dominion Government were taking over the Canadian Pacific railway to-morrow, does anybody suppose that we should be in the least degree anxious about the outstanding debenture indebtedness of the Canadian Pacific Railway Company? It would be said: "True, you are taking over the stock .of the Canadian Pacific Railway Company . and there is this outstanding liability, but on the other side you have the assets of this splendid system; you have net revenues which are adequate to pay the interest upon all the outstanding securities and give you a large surplus besides." That is so obvious that I do not propose to labour it.

But that is not the case in regard to the Canadian Northern Railway system; it is not the case in regard to the Grand Trunk Pacific and it is: not the case in regard to the Grand Trunk Railway Company of Canada. But the point I am making is that the liability which the Dominion Government will assume in taking over the Grand Trunk is a marginal liability. Each year there will have to be found the amount of the deficit, if any, between the net railway returns and the amount which the Gov-1,Sir Thomas White.]

ernment is obligated to pay under the award of the arbitrators. If, for example, the Grand Trunk railway should show in any year a surplus of $3,000,000 and the award' of the arbitrators obligated the Dominion Government to pay $3,000,000 a year, of course, there need be no anxiety in regard to the liability in respect to the securities of the company because the net revenues are adequate to take care of the fixed and operating charges.

There is no man in this House who is more sensible of the serious financial position of this country at this time, immediately succeeding the greatest war in history in (which from the very beginning Canada has been a belligerent, than I am. I do not in the least degree desire to minimize the importance of this question or to put forward the view 'that it merits only light consideration. It is an exceedingly important transaction meriting the very best deliberation that this 'House can give to it. I submit that it is an urgent and immediate question and that the Government would have been derelict in its duty if it had delayed bringing down this resolution to the House.

This is not a new question; it has been to the fore ever since the Drayton-Acworth report. It has been almost immediately before Parliament ever since the Prime Minister made his offer to the Grand Trunk Railway Company in England in 1918. The correspondence is now before the House. As Finance Minister and Acting Prime Minister I announced during last session that we should acquire the Grand Trunk Railway Company of Canada. It seemed to me inevitable, just as it seems inevitable now. I see no other course, if, as I say, we are to deal with the railway situation, and it must be dealt with if we are to meet the transportation needs oif this country. A large railway system is very different from a private business. Communities depend upon the operation of the railway and its general efficiency. There is no question that in this country, largely on account of the size of the country and its peculiar physical formation, that is so concerned with the Government as the question of transportation. The Government therefore was in this position: In 1918, the Prime Minister ma.de his offer on behalf of the Government !to Mr. Alfred Smithers, President of the Grand Trunk Railway Company of Canada. That was the offer of the Dominion of Canada. The Prime Minister said: "We will take over the Grand Trunk railway system." What was then in view was a lease for 999 years. He said: "We will pay $2,500,000 for the first 'three years;

we -will pay $3,000,000 for the next five years and we will pay $3,600,000 per year thereafter." That was the offer made by the Government of Canada *through its Prime Minister. However, the Grand Trunk Railway Company did not accept that offer, and just here I desire to say that it is a little difficult for me to understand some of the criticisms which have emanated from London in respect to the attitude of the Government towards the Grand Trunk Railway Company. The offer of the Prime Minister was in the alternative. He said: "We offer you $2,500,000 a year for three years; we offer you $3,000,000 a year for five years and iwe offer you $3,600,000 a year thereafter. In the alternative we offer you arbitration." Now we hear from some of the London press that they are very glad the Government has taken a different attitude in the matter. Arbitration was open to the Grand Trunk Railway Company from the first. There has been no change in the Government's policy. Once Sir Alfred Smithers, President of 'the Grand Trunk ^Railway Company said: "I accept your offer, Mr. Prime Minister"; it became dhe bounden duty of this Government to bring the matter before this House as they have *done.

If may be unfortunate that this is at what we thought would be the close of the session, but I would submit that that is not the fault of the Government.

The Grand Trunk Railway Company had not hitherto given its consent, although negotiations had been proceeding. Once Sir Alfred Smithers, on behalf of the Grand Trunk Railway Company, gave his consent there was nothing for the Government to do, in pursuance of their public duty, but to bring the matter before this House and ask the House to endorse the policy which, it had adapted as long ago as 1918, namely, to acquire the Grand Trunk Railway of Canada. So that I do not believe any just complaint can be made for bringing in this legislation at this time. I have no doubt the Government would very much rather, having regard to many considerations which I need not mention, postpone the consideration of this matter until another session; but I would submit that they would be derelict in their duty if they did so. Further than that-and I am speaking now to myself as well as to my fellow members of this House-I believe that Parliament would be derelict in its duty if it were unwilling to sit whatever time may be necessary to consider and deal with this

matter now that the Grand Trunk Railway Company has said: We do accept the offer of the Prime Minister.

Now let me deal with one other objection that has been brought. I have not followed 'them all, but there is one objection which has been brought, and which, on the face of it, seems to be important. It is said: You have guaranteed the guaranteed stock of the Grand Trunk Railway Company of Canada. Now, if you will look-I have looked at it only hurriedly before coming in-at the letter of the Minister of the Interior written to Sir Alfred Smithers in London, you will find that the offer was $2,500,000 yearly for the first three years- $3,000,000 for the next five years, and thereafter $.3,600,000, to be disposed of, I think, as the directors of the Grand Trunk Rail- ' way Company might see fit, among the holders of the guaranteed stock, the preference stocks, and the common stock. Very good. Now, the point I make here-and it seems to me it settles the matter absolutely as far as that objection is concerned-is this: That the $2,500,000, the $3,000,000, and the $3,600,000, the amount that was offered by the Government was more than sufficient to take care of the interest upon the guaranteed stock. That being so, that stock was clearly guaranteed-if the directors of the Grand Trunk Railway Company desired to apply it in respect of that stock. They have always treated that stock like debenture stock or bonds, as though it were an obligation of the company instead of a stock in the ordinary sense-that is to say, shareholders' stock, guaranteed by the Grand Trunk Railway Company; they have always regarded that a's an outstanding liability of the company rather than as representing a participation by shareholders in the ordinary sense. Well now, if-and I just repeat this to fasten it in the minds of the House-the offer was sufficient to

4 p.m. take care of that interest upon the guaranteed stock of the Grand Trunk Railway Company of Canada, why do we bother if that company now say to us:

" We would like you to guarantee * that stock "-because the offer of the Government is a continuing offer and could have been accepted in its terms by the Grand Trunk if they desired to do so.

Now, Mr. Chairman, I have covered a good deal of ground. What I desire 'to point out is that mistakes have been made in the past in the railway policy of this country, and that as a result of those mistakes action has had to be taken from time to time by the Government, including this present

action. I should not like to leave my statement just at that. This is a difficult country to administer. We have a sparse population, .scattered over a territory as large as the United: States, as large as Europe. We have very large stretches of territory that are not productive. Our railway policy has had to be conceived and carried out under considerable difficulties. We hadi it1 from the very beginning. The Intercolonial railway had to span very considerable distances in order to carry out the scheme Of Confederation by linking np the Maritime Provinces with old Canada. No one .supposed that the Intercolonial Railway would be from the beginning a commercial success. The Government had to lose a certain amount of money on the operation of the Intercolonial railway in order that Confederation might be possible, to join up the maritime portions of Canada with Quebec and Ontario. When the Canadian Pacific railway was projected very large subsidies had to be given in land, and otherwise, in order that the Northwest Territories and British Columbia might be joined up with Ontario and Quebec. There is a great gap of a thousand miles of wilderness between Ontario and Manitoba, and there is the great barrier of the Rooky mountains between the Prairie Provinces and British Columbia. Now these had to be overcome. Not only that; .it was vital .to this country that immigration should be got in and railways cannot wait on population. The Governments of this country in the past have had to build in advance of immigration in order that the land might be accessible to the incoming immigrants. I thank we should bear these matters in mind and should rather prepare ourselves for this result, inevitable I think; that the Government, if there had only been two transcontinental railway systems instead of three, might have had to provide considerable assistance until the increase in population would come and with it the earning power which would enable these railways to carry on with profit, or at- least without serious lo.s9.. Any money that was spent by the Government of Canada in liquidating deficits in operation of the Intercolonial railway, any subsidies that were granted to the Canadian Pacific or to the Canadian Northern or Grand Trunk Pacific railway might be regarded properly by this country as sums of money which the nation had to spend, having regard to its. future welfare, in order to overcome the geographical and physical difficulties with which we have been face to face in. Canada. Now what is

the trend of my argument? It is this: That the liability upon the Canadian Northern .system, the Grand Trunk .system, and the Intercolonial system is a marginal liability. It is not correct to say that the Government- assumes all the indebtedness of all these lines; it is correct to say that the Government will have to meet whatever deficit there may he on the operation of them. Now to put the past aside, and recognizing .the futility of recriminations as to the degree of responsibility for the railway situation, is not this the position? What is the wise thing to do in this situation? We must enable these railway companies to maintain their physical position -their roadway, their plant., and equipment-if they are to minister to the needs of this country.

And just in that connection let me say this: Canada's railways played a very splendid part in this war, and on the credit side of our railway .situation-I have spoken of the other side-I think we should place this fact, that the railway systems of Canada, with their fine equipment and capable .staffs, enabled us to play a much greater part in the war than would otherwise have been possible. I think we should put that on the credit side of the account.

Now, the liability we will assume is a marginal liability. I think it may be reasonably heavy for many years to come, but considerable will depend upon freight rates, upon volume of traffic, and upon efficiency of administration. Personally-and I am always disposed to take a hopeful and optimistic view of our future, because I believe in the Canadian people and in the wonderful resources of this country-I have always been disposed to look optimistically upon the railway situation of the Dominion. The country will be able to bear whatever marginal loss there may be in the operation of these roads, which are not on a profitable basis as is the Canadian Pacific railway, until such time as they are placed on a paying basis. It may be a considerable time, I do not desire to place a false view before the House, but however long that marginal loss continues it will have to be borne by the country as a penalty for mistakes which we have made in the past, and in the general interest of the efficiency of tlie Dominion's transportation systems.

Personally, I would like to look with pride upon the establishment of a national transcontinental railway system in honourable competition with the Canadian Pacific railway, to which I have already paid my tribute. And it seems to me that if we can

keep the railways we have taken over out of politics, if we can keep their administration clean and in the hands of the most efficient administrators, we shall get that condition of affairs which will go a long way towards solving this problem. I have this to say, however, that I regard it as absolutely vital that there should be no interference of a political character. And further than that, I think there should be no influence of a quasi-political character- I mean sectional influence. Speaking with the freedom of a private member-for I have been promoted-if I were giving advice to the Government I would say: When you are considering your final commission that is to administer all the railways taken over under a national system, you must choose only the best operating men you can engage, and not bother very much whether you get a man to represent British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and each of the Maritime Provinces; because every man, no matter how honest he may be, is bound to be under the influence of his section, and he will use his influence almost unconsciously to have extensions made that should not be made, to order rolling stock that should not be ordered, and to have contracts given that should not be given in his home section. My advice therefore would be that when you get all these railways in hand you appoint officials of the highest efficiency and reputation. Their standing with the Government and the country will depend absolutely upon the efficiency with which they administer these roads, and therefore they should not be hampered in any way.

I must apologize to the House, Mr. Chairman, for taking so much of its time, but the matter is important, and my excuse, if not my justification, is that for many years I had much to do with the railway policy of the Government and was brought in contact wdth the problems which were involved in that policy, and although I say it myself, I regarded my duties with a very high sense of responsibility. I feel a continuing responsibility with regard to this matter, and I desire to say that the course which has been adopted by the Government appears to me to be the proper and inevitable course, and that in the resolution which they have placed before the House they have, as I stated at the outset, my entire and cordial sympathy and support.

Topic:   QUESTIONS.
Subtopic:   GRAND- TRUNK RAILWAY SYSTEM.
Sub-subtopic:   RESOLUTION RESPECTING ITS ACQUISITION 'BY THE GOVERNMENT.
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L LIB

Emmanuel Berchmans Devlin

Laurier Liberal

Mr. DEVLIN:

Would the ex-Minister of Finance allow me to ask him a question? It was urged in March of this year that the then Finance Minister was opposed to the

granting of any further loans to the Grand Trunk railway or to the Grand Trunk Pacific railway out of which the Grand Trunk Railway Company mignt pay the interest upon the obligations of the Grand Trunk Pacific. Am I right or am I wrong?

Topic:   QUESTIONS.
Subtopic:   GRAND- TRUNK RAILWAY SYSTEM.
Sub-subtopic:   RESOLUTION RESPECTING ITS ACQUISITION 'BY THE GOVERNMENT.
Permalink

October 16, 1919