October 23, 1919

UNION

Francis Henry Keefer (Parliamentary Under Secretary of State for External Affairs)

Unionist

Mr. KEEFER:

Why should he not be consulted?

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

Daniel Duncan McKenzie

Laurier Liberal

Mr. McKENZIE:

He is a partner to Mackenzie & Mann.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

Samuel William Jacobs

Laurier Liberal

Mr. JACOBS:

There is no reason in the world why he should not be consulted. There is no reason in the wide world why Sir William Mackenzie and Sir Donald Mann should not be consulted.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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UNION

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

Unionist

Mr. J. D. REID:

I simply want to say to the hon. member that Mr. Lash was consulted as a legal adviser because he was considered to be one of the best railway lawyers in Canada, and because he is consulting lawyer for the Canadian National railways.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

Samuel William Jacobs

Laurier Liberal

Mr. JACOBS:

Another startling statement was made by^the minister. Of course, he was delivering a stump speech in the *House, and we will overlook some of the remarks which he made in the heat of the moment when he was working up his friends to a state of enthusiasm at the wonderful speech he was making attacking our new leader (Mr. King). He made the extraordinary statement a few minutes ago that he would dismiss any agent who goes outside of his own territory to route freight over United States railways. This is what he said yesterday when a question was put to him by the hon. member for Guysbor-ough:

Mr. J. H. Sinclair: The policy of the Grand

Trunk, as I understand it, has always been to make Portland, Me., the Atlantic terminus for their traffic. What is the view of the Minister of Railways with regard to that? Does he intend to continue that policy?

Mr. J. D. Reid: So far as I am concerned,

as I stated a few minutes ago, when we took over the Grand Trunk Railway system we would have one great national system of railways, and we must get the very best men available to manage this system' and they must of course adopt whatever policy they think is best to ensure successful operation.

To-night he tells us that any man who adopts a policy of that kind, looking to the United States, will be forthwith dismissed from his employ. Last year when the question of. the Canadian Northern was up, we were told that that railway was to be taken completely out of politics; that it was going to be placed in the hands of Mr. D. B. Hanna and a directorate, and that the Canadian National railway was taken out of politics and neither the minister nor any other person connected with the Government had the remotest intention of interfering with this company and the

management of the line. Yet, now the minister stands up and' bluntly and coolly tells us that he is going to dismiss any person who will route freight over United States lines, and his friends on his side cheer him to the echo.

Another extraordinary statement made here to-night by the Minister of Railways is this, that the poor old Grand Trunk railway was fooled by the former Liberal Government into believing that the cost of this railway would be $13,000,000, and it subsequently cost $200,000,000. Did you ever hear of such a thing as that-astute railway men, builders of a great line of railways across the continent, were fooled by Sir Wilfrid Laurier-and his friends into believing that this railway would cost $13,000,000 when it subsequently cost $200,000,000, and that for that reason we ought to show consideration to the Grand Trunk railway! These are only a few choice morsels that I culled while the minister was going along at the rate of sixty miles an hour.

The minister told us that this agreement embodies the report of the Drayton-Acworth Commission, overlooking the fact that for the last three or four weeks every man in this House has been carefully studying that report. He knows as well as, if not better than, any one else in this House that the Drayton-Acworth report was in no way followed. The Minister of the Interior (Mr. Meighen) told us a few days ago, when introducing the Bill, that they wanted the Grand Trunk to come to terms on the basis of the Drayton-Acworth report, but they refused to do so, and consequently the Government were compelled to go very ibuch further than they expected and the result was that this bargain was entered into which was in no way what that report suggests.

There is another astonishing thing in connection with the Government, and it is this: The former Minister of Public Works, Hon. Mr. Carvell, has been an antagonist of public ownership of railways for many years. In fact, during the whole of his political life, Mr. Carvell, in season and out of season, in this House and out of it, on every public Occasion,'in his public utterances has declared himself as being against public ownership of railways. He left this House and the Government a few days ago, and what has become of him? He has been made chairman of the Board of Railway Commissioners, the board which holds in the hollow of its hand the whole of the railway problem of this country.

And yet this Government tell us that they are in favour of public ownership when they appoint the greatest antagnoist of public ownership to the most important railway position in this country.

It will be interesting also to find out the views of the Minister of Marine and Fisheries and of the Naval Service (Mr. Ballan-tyne) with regard to this question of public ownership. He has not hesitated to declare on many public occasions whathisviews are. I do not know whether he has done that in the House, but his views are well known. Has he been consulted on this matter? No person knows. What has happened to the hon. member for St. Antoine (Sir Herbert Ames) who, instead of being at Geneva, should be in his seat to-day to protect the interest of the city of Montreal and of the Board of Trade of which he has been for many years the idol? Where is the Minister of Justice (Mr. Doherty) who represents St. Anne's division in the etiy of Montreal and who is also one of the darlings of the Board of Trade of that city? Where are these people? An echo answers "where"? Therefore, it falls on us, the second: line of defence, to take up the cudgels for the Montreal district, for the city of Montreal, which has within its confines over ten per cent of the entire population of this Dominion and which, perhaps, contributes in income tax 35 or 40 per cent of the entire amount received by the treasury of this country from that source. It is necessary for us to say a word or two for those organizations that have been passing resolutions but have received such scant courtesy at the hands of the Government.

I should like to say a word or two with regard to the bargain which has been entered into by the Government and the Grand Trunk Railway Company. The Bill before the House commits the country to a liability equal to one-quarter of the national debt. I wonder whether hon. gentlemen in this House really stop to think of the magnitude of the proposition which is before us. One-quarter of the national debt is involved in this proposition, and yet it is being rushed through, and why? I will tell you why, Mr. Speaker. The President of the Council (Mr. Rowell) told us the other day why it is being rushed through. I have not his exact words before me, but he stated that he was afraid of an organized opposition to defeat the Bill. We take the ground that a matter of this magnitude ought to be discussed throughout the length and breadth of the land, on the hustings and in every public place. The President

of the Council takes the ground that it is not in the interest of Canada to allow the opposition to this measure to be organized, and that is one of the chief reasons, he says, why this Bill is being forced, through the House to-day.

I wish briefly to pass over the contract which is about to be put through by the Government. This is what it proposes to do: The Government guarantees the $60.000,000 of what is called the "guaranteed" stock, which immediately upon the Government's imprimatur being placed on it becomes worth, as the hon. member for Shelburne and Queen's (Mr. Fielding) pointed out the other day, 80 or 90 cents on the dollar. In addition to that we take over the bonded indebtedness deben-. tures amounting to about $153,000,000. Finally, we take over about $185,000,000 of common stock which is to be valued by a board of arbitrators appointed in the manner indicated in the Bill. Now what we have reason to fear is that the arbitration board may put upon this stock a value altogether beyond what it is worth, and we say that the Government should .make some provision in the Bill providing for the manner in which the stock shall be valued. The arbitrators may be asked by this company to value the stock on the basis, for instance, of the cost of duplication of the road at present prices, that is, the cost of equipment, rolling stock, and so on, or they may be asked to take into consideration the potential possibilities of the road after the country is better developed than it is now. If the arbitrators are going to do that, we have very good reason to be apprehensive as to the amount we shall be called on to pay. We know what happened in connection with the Canadian Northern, when $60,000,000 of stock belonging to Mackenzie and Mann or their transferees was valued by the arbitration board at nearly $11,000,000 and that amount of the money of this country was paid over to these gentlemen. Now I put to the Government this question: If stock which never cost the owners one single penny, representing merely so much water, is valued by an arbitration board at $11,000,000, how- much will the people of this country have to pay for stock which actually cost $185,000,000? That is a question which I put to the Government. We ought to see to. it that safeguards are inserted in the agreement whereby the arbitrators will pass upon the value of the stock from the standpoint of the condition of the road to-day as a going concern, and not

taking into consideration the cost of duplication or the potentialities of the road when it becomes further developed. There is no such provision in the agreement, and the stock goes before the arbitrators to be valued in the same way as the Canadian Northern stock was dealt with.

I do not want to say very much on the question of public ownership, not that I am afraid to express my views, but it seems to me that the question does not enter into this discussion. We'have this railway. -It has, been decided to take it over, but it ought not to be taken over on the terms which were made by the company and the Minister of the Interior (Mr. Meighen). We say first that the $60,000,000 of what is called " guaranteed " stock should have been submitted to arbitration for valuation in the same way as the first, second, and third preference and common stock. Why was this stock not submitted to arbitration in that way? As I understand it, the Dray tom Aeworth commission recommended that this stock should also be valued, and there is no reason in the world why it should not be valued in the same way as the other stocks. We are in a position to deal with this company as we like. We are the creditor and they the insolvent debtor, and who ever heard of an insolvent debtor dictating to his creditors the terms on which he will surrender his property? The property belongs to the Dominion of Canada. The Grand Trunk have defaulted on their bonds in respect of the Grand Trunk Pacific, and consequently it is for us to take over the read and make our own terms with the company. But we find the Minister of Railways (Mr. Reid) in a charitable and indulgent mood when the pockets of the people are concerned, and not his own private pocket. He spoke of the old Grand Trunk, using the word " old " as a term of endearment and affection, I suppose. Dear old Grand Trunk ! Good old Grand Trunk ! The people put their money into this company in good faith, the minister says, and we should see they get everything they can out of it. If that 'be so, why not pay the Grand Trunk every dollar that was paid in by the various stockholders? Why not pay them this $700,000,000 or $800,000,000? Why stop at $250,000,000, if they are the dear old Grand Trunk, and it is necessary that the credit of this company should be kept up in England? The fact is the Grand Trunk went into this deal originally in the same way as other people do. They expected to do well out of it, but it turned out not so good as they expected. Is that

any reason why the money of the taxpayers of this country, not the private money of my good friend the Minister of (Railways -for he is too astute a gentleman to part with his money unless he gets value for it-but the money which belongs to every man, woman and child in this country, should be turned over to these foreign investors? None whatever, unless as a matter. of charity. I say that charity begins at home, and we must be just to our taxpayers before we are generous to strangers, and the sooner the Government learns that the better it will be for them.

The reason which it seems to me impels the Government in embarking on this grand coup is to provide themselves with something to go to the country at the next election. Their platform is pretty well broken; it is somewhat wobbly, and needs new planks. The President of the Council rather let the cat out of the "bag the other day when he assured us that west of Ottawa there was not even a fraction of the people who were against public ownership. He wants to give the people what they want. I think he wants to provide for my good friend the Minister of Immigration and Colonization (Mr. Calder) so that he may be able to go home. At present that lion, gentleman finds it somewhat difficult to land safely in the West, but if he comes home bringing the bacon-I ask pardon of my Christian friends-he wall be perhaps more welcome than if he came empty-handed.

Now, Sir, this talk about government ownership which has been thrown across the floor of the House for the last week or ten days is something upon which I do not intend to dwell. I just put it to my good friends on the other side, if they think the Canadian Pacific railway would have been the success it is if it had been managed by the Minister of Railways, who would immediately dismiss an employee if he routed freight on a United States railway. How long do you think the Canadian Pacific railway would last under such conditions?

I have in my mind's eye a picture of Lord Shaughnessy, as president of the Canadian Pacific railway, standing on the carpet in front of the desk of my good, amiable and unassuming friend the Minister of the Interior (Mr. Meighen). I also have visions of Mr. Beatty calling to see the present Minister of Railways and learning from the vast storehouse of knowledge which this minister possesses, something about the running of the railway. The thing has only to be mentioned for us to see the absurdity

of it. And yet these gentlemen will insist upon declaring that government ownership is the best thing for the country.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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UNION

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

Unionist

Mr. J. D. REID:

Does my hon. friend take the position that in acquiring the railway it is really government ownership, or does_ he take the position of the leader of the Opposition that it is not government ownership?

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

Samuel William Jacobs

Laurier Liberal

Mr. JACOBS:

I take exactly the position of the leader of the Opposition, and for this reason: If I buy a house for $25,000 and it has a mortgage of $50,000 on it, I do not own that house until I pay the $50,000,.because when the mortgage comes due the creditor can foreclose. Now, Mr. Speaker, there seems to be a great deal of vacillation on the part of members of the Government with regard to this question of public ownership. I have not heard the Minister of Militia and Defence (Mr. Mewburn) in his seat loudly proclaiming the virtues of government ownership. I have not heard the Overseas Minister of Militia (Sir Edward Kemp) in his seat declaring himself in favour of government ownership. I should fancy that a man of his experience would be able to enlighten the House to a very material degree upon this question. But nothing of the kind has transpired. The people who are anxious for government ownership are those who 'Want it as a means of being returned again to power at the next election, and who feel that they can carry the West on this question and nothing else. Some criticism was made in this House this evening by the hon. member for St. James (Mr. Lapointe) on the conduct of the Government in reference to the treatment of the Montreal Board of Trade. I think it was the Minister oi. Trade and Commerce (Sir Geo.rge Foster), who is acting at present as Prime Minister, who received the Board of Trade delegation and told them that the Government had taken a stand and was not going to retreat from it. If hon. members will remember, I asked the acting leader of the Government whether he had received a letter from the Montreal Board of Trade protesting against the acquisition of the Grand Trunk. He replied that he had received a letter of that kind, and when I asked him what answer was made, he fell back on a famous line in " The Raven He said that the letter had been acknowledged, "Only this and nothing more". Well, Mr. Speaker, I make hold to say that when the hon. gentleman's friends present themselves to the members of the Board of Trade seeking the sinews of war which are always necessary in times of great

stress the reply of the members of the Board of Trade may be another passage from " The Raven ": " Quoth the raven, never more ".

May I as a parting word commend to my friends on the opposite side a remark or two made by the present Minister of Finance in the famous Drayton-Aoworth report and give them that thought to take home with them and slumber on. I would refer to page xliv of the sessional papers Nos. 20C-20G, Vol. LII, No. 12, 1917, under the heading, " Government Operation Discussed and Rejected":

We are instructed to consider the acquisition of the Canadian railways by the State, and the possibility of their operation in connection with the Intercolonial. We do not recommend this course. In our judgment it is not in the interests of Canada that the operation of its railways should be in the hands of the Government. We know no country in the world, where a democratic state own and operates its railways, in which politics have not injuriously affected the management of the railways and the railways have not had an injurious influence on politics.

Of course, I wish to say in parenthesis, other countries probably did not have at the head of their railway departments a gentleman of the astuteness and railway ability of our present Minister of Railways. No doubt that is why they failed. To continue :

We do not think government ownership of the Canadian railways would tend to reduction of rates, tout rather in the contrary direction.

My hon. friends from the West will note that.

For the carriage of one ton of freight one mile the Canadian shipper pays at present on the average three-fourths of one cent. On the railways of New South Wales, the oldest and most important Australian state, where the railways have been in government hands from the outset, the Shipper pays well over two cents. But we see no cause to enlarge here on such general considerations. There are several reasons peculiar to Canadian conditions why state ownership and operation should be avoided.

I am sorry the Minister of Finance did not tell us what were these reasons " peculiar to Canadian conditions." They might be interesting. On page xlix I read, under the heading " Possibility of Forming a Commercial Company Discussed ":

Assuming, then, that the Canadian Northern, Grand Trunk, and Grand Trunk Pacific must be united into one system, and that this system must remain entirely separate from the Canadian Pacific railway, we have considered the possibility of forming a new company on a commercial basis, to which the operation of

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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UNI L

Frederick Forsyth Pardee

Unionist (Liberal)

Mr. F. F. PARDEE (West Lambton):

Mr. Speaker, I intend to detain the House for a very few moments, but there are some things which it seems to me ought to be brought to the attention of the country before this debate closes.

Let me say at the beginning that this is not the time to declare for public ownership or otherwise. As the Minister of Railways has very properly said, it is not a question of whether or not we want public ownership but whether we have got to have it in this particular ease. The fact, Sir, is that as regards public ownership on this particular question the Government are at the end of their tether and they say they must take over the road willy-nilly. That is the trend of their argument. Therefore, the question is not whether we are in favour of public ownership as a concrete proposition or not, but whether this House deems that in its judgment this is a fit and proper

bargain to make in taking over the Grand Trunk railway. Before I go further there is one thing 1 would like to point out; The hon. member for Algoma (Mr. G. B. Nicholson), if I understood his remarks aright, and the Minister of Railways also, led the House to believe that the railway muddle is wholly due to the policy pursued by the Liberal party in 1903.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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?

Some hon. MEMBERS:

Hear, hear.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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UNI L

Frederick Forsyth Pardee

Unionist (Liberal)

Mr. PARDEE:

"Hear, hear," the hon.

gentleman says. In 1903, declares the Minister of Railways, the Grand Trunk Railway Company wanted to get into the West and in order to meet that want the Liberal party presented railway legislation which they deemed to be in the best interests of the country, and the Grand Trunk Pacific adventure was entered into. Let me point this out: that if the Grand Trunk Pacific arrangement was bad-which I am not admitting in any way whatever-if the construction of the Grand Trunk Pacific was improperly undertaken, the Conservative party at that time under its leader, Sir Robert Borden, also advocated in the strongest possible terms the construction of another road, as an alternative to the Grand Trunk Pacific, to meet exactly the same end. So that, whatever may be said with respect to the Grand Trunk Pacific railway, there is this to be offered in extenuation of any- fault there may have been in the arrangement entered into, that the Conservative party at that time also considered another transcontinental railway to be necessary.

So far as this bargain is concerned, I am not arguing against public ownership in any way whatever, I express no opposition to public ownership; but I say that to my mind there are three fatal objections to the proposed arrangement. In the first place the Minister of the Interior declared that it was the largest transaction that had ever been brought before the Dominion. That is so, without a shadow of a doubt, and therefore I maintain this is not the proper time to bring down such legislation as this. This session was called for a specific purpose. That specific purpose has been fulfilled; and today I assert, and I believe the people will Back up the assertion, that the only reason for bringing down this Grand Trunk legislation now, was to afford some reasonable and fair excuse to extend the session beyond the period of thirty-one days. Sir, there is another fatal objection to the proposition and it is this; The other day when introducing the resolution upon which this legis-

OCTOBER 23, i919

lation is founded, the Minister of Railways was asked the question, " In what condition is the road?" to which he replied: " I am informed it is in very fair condition."

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

Daniel Duncan McKenzie

Laurier Liberal

Mr. McKENZIE:

" First-class condition," he said.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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UNI L

Frederick Forsyth Pardee

Unionist (Liberal)

Mr. PARDEE:

I want to ask hon. gentlemen, suppose they were buying even a horse or an automobile unsight unseen and the only recommendation they had was that it was in very fair condition, would they dare to buy either one without a valuation and without a thorough looking over? Where is the valuation in this case? The ex-Minister of Finance the other day told us that we must recollect that we are buying this road on a marginal liability. Well, if we are buying it on marginal liability have we not got the right to ask the fullest particulars be brought down to show the people what margin they are getting for the money they are putting out? Why, Sir, there is one item alone of $43,000,000 of bills receivable. Up to this day I have not seen in Hansard, nor have I heard, one single particular of what that $43,000,000 consists of. Is it a good or is it a bad item? If you are assuming a marginal liability have you not got the right to know the value of your assets? The $43,000,000 in question may not be worth a dollar. If such is the case that fact should be taken into consideration by the arbitrators in fixing the value of the stock that the people of Canada have got to pay for. We have absolutely no valuation, absolutely no particulars in, with respect to what we are buying. If ever the accredited representatives of the people entered into a bargain that they knew absolutely nothing of, they are doing so today in the purchase of the Grand Trunk railway. Moreover, Sir, I

make this assertion, and I say it is positively correct. The Minister of the Interior declares, "We must be generous to the English shareholders." Well, We are ta-day entering into an arrangement to pay the English shareholders the interest on stock that we are guaranteeing-stock that those shareholders are not getting a dollar on and. that we are making good for them. In view of these facts. I say that the bargain entered into is not a well-considered one and that it is utterly lacking in those particulars that are necessary in order to deal with it intelligently. Therefore, I say that the only right and proper thing to do, so far as this bargain is concerned-and without at this time going into the question of any further particulars-is to have the fullest valuation made of the assets, of the

leases, of the bills receivable, of money owing, of all the liabilities of the Grand Trunk Railway Company. Information as to every one of these items should be submitted to the House, and until such time as that information is in. our possession we have absolutely no right to commit this country to the huge amounts that we are committing it to in the purchase of this road. The Minister of Railways to-night, with his usual acumen, went into many facts and many figures that were far from germane to the subject under discussion. He beclouded the issue in every way that he possibly could. He brought a mass of what he supposed to be facts and figures bearing upon this matter; but kept very carefully away from the absolute meat in the nut, namely, what the people of Canada are getting for the moneys the Government propose to expend on this railway.

I repeat again, Sir, that until such time as these particulars have been brought down, until such time as hon. members and the people are fully informed as to the exact amount of liability they are assuming, and as to the exact amount of advantage that may accrue to them from the assumption of that liability, this House has no right to pass this measure, but it ought to be deferred for further consideration by the House and by the country.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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IND

George William Andrews

Independent

Mr. G. W. ANDREWS (Winnipeg Centre):

Mr. Speaker, before recording my vote on this important subject, I desire to say that unless the leader of the Government can in some way postpone this debate until after the report of the Special Committee on Soldiers' Civil Re-establishment is brought before this House, I shall have to vote in favour of the amendment. My reasons for this decision, Mr. Speaker, are not because I am opposed to public ownership. The Germans made an unqualified success of state operation of railroads, and what German men can do Canadian men can do better. But, rather, my reasons are to be found on page 943 of the proceedings of the Soldiers' Civil Re-establishment Committee, No. 15, of Friday, October 10, 1919. My hon. friend the Minister of Immigration (Mr. Calder) and Chairman of that Committee, in winding up the proceedings of taking evidence, made the following statement:

I am sure that every member of the committee appreciates the spirit of Mr. Waistell's remarks to-night. We have recognized throughout the entire investigation that on the part of those associated with Mr. MacNeil there has been a desire at all times to co-operate with and assist the committee in every way possible. We have a very difficult problem to solve, one of the most

difficult, I dare say, that Parliament has had before it for many years.

These are the weighty words of the Chairman of that Committee, Mr. Speaker. Further down on the same page he .said:

1 can assure you' that personally I have learned a great deal, and in saying that I am sure I speak for every member of the committee.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

Georges Henri Boivin (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Laurier Liberal

Mr. DEPUTY SPEAKER:

Order. The hon. member is not in order. Until a committee makes its final report to the House, it is irregular to refer to its proceedings in the course of a debate.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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IND

George William Andrews

Independent

Mr. ANDREWS:

I submit to your ruling Mr. Speaker. I hope you will pardon my ignorance. The words I have quoted will be found in due course in the report when it is submitted, although this portion of the evidence came into my hands in the usual way and I thought every member had 'a'copy. The words were uttered at a public meeting at which the press were present. However, Sir, I have gathered from my observations during this debate that no matter what happens the taking over of the Grand Trunk will cost this country a good deal of money. My hon. friend from Brantford (Mr. Cockshutt) who, in my humble opinion gave the clearest statement that I have heard on the entire subject, this afternoon stated that it would cost $18,500,000 a year. Now, the successful re-establishment of our soldiers will involve a considerable amount of money, Mr. Speaker, and $18,500,000 will re-establish quite a number. If you will advance that money to them in loans I think they will pay you 5 per cent for it, and be glad to. Arad I want to say this before taking my seat, that I sincerely hope this country will be able to successfully re-establish the Grand Trunk and the other railroad systems of this country, and I also hope that they will be able to re-establish the soldiers; but if it ever comes to a showdown between the Grand Trunk that failed and the soldiers that won, I am going to put my money on the men that won the fight.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

William Daum Euler

Laurier Liberal

Mr. W. D. EULER (North Waterloo):

Before I enter upon the subject under discussion, Mr. Speaker, I would like very briefly to convey to the leader of the Opposition (Mr. King), who has taken his seat this afternoon, my most cordial congratulations. I say that with particular pleasure because, as may not be known, the hon. gentleman is a native of the city which I have the honour to represent in this House, and I view his promotion with all

[Mr. Andrews.!

the greater pleasure on that account.

Now, Sir, I enteT upon this discussion with a certain reluctance, largely because of the fact that I do not entirely agree with some of the views and conclusions that have been drawn by hon. members on this side of the House. It has been stated that the question of the nationalization of the Grand Trunk railway is not a matter of public ownership at all. I cannot view it in 'that light. And I would like to say at the outset, for myself at least, that I am entirely and absolutely a believer in the principle Of public ownership-in the principle of public ownership in general and in the principle of nationalization of railways in particular. I come from a city where that (principle is pretty much an article of faith with every one. In that city the ownership of public utilities has been a great success; there has been no failure whatever in connection with it. While it may be a far cry from the successful public operation of the smaller utilities in a city such as the one I come from to the operation of a national utility, it is, after all, some encouragement for me to believe that the same principle would be successful in the larger national field.

It has been argued that the matter of taking over the Grand Trunk is not in itself a matter of public ownership. Technically that may be correct. But I would like to point out this, and I think it has been lost sight of very largely in the discussion, that the object of public ownership is not the making of profits; it is the service that may be rendered to the public. Ownership in itself is not the consideration. It is important only because of the fact that it gives control of operation, and by that means the power to give service. I think under the Bill which has been presented there can be no real doubt that the Government will have absolute control of the operation of the Grand Trunk. I believe, Sir, that many hon. members have no conception of the growth of public feeling in favour of public ownership of the great public services and the great natural resources of this country. I believe that the people are tired of continually paying out millions to private corporations for the operation of public utilities and more especially of railways.

The people of Canada have, I believe, paid fully one billion dollars in one way or another to the railways, of this country; they have paid enough money to the railways to build the roads, and yet we do not own them to-day.

I believe further that the people of this country will go a great deal further in the direction of public ownership than we have gone up to this time; I believe that they will go beyond the nationalization of the railways. I am not going to enlarge on that now, but I hope that will be the case.

It would be impossible to exaggerate the gravity of the financial condition in which this country now finds itself, but I would not like to admit that the acquisition of the Grand Trunk' Railway system under proper conditions, on a fair basis and on fair terms would necessarily aggravate the seriousness of that position.

Now, we have two groups, as I take it, that are opposed to the nationalization of railways, or to the nationalization of the Grand Trunk, the matter which is before us to-night. One group consists of those on both sides of the House, who do not believe in the principle at all; they believe for various reasons that private ownership of railways is preferable to public ownership. The other group consists of those who do favour the principle, and perhaps this group may be subdivided into three classes, The first class embraces those who theoretically believe in public ownership but have not the courage of their convictions when it comes to applying the principle on the larger national scale. Then there are others who claim that the time is inopportune for the acquiring of the Grand Trunk; and I will deal with that very briefly in a moment. Then we have the third group, consisting of those who think that the present project is a very bad and a very poor bargain for the people. I should like for a moment to examine these objections.

Some who are opposed to the entire principle of nationalization and believe in private ownership are of that mind because their private interests are concerned-interests which are not'consistent with those of the public. The larger number fear that in the case of the nationalization of the Grand Trunk there will be political manipulation ; that the road will be used for political advantage and that there will be consequent inefficiency of management resulting in large financial loss.

I admit at once that unless the Government, if it takes over the Grand Trunk, creates an absolutely efficient board of management the project will be a sad financial failure. If it*is decided to take over the road I would get the very best railway men in the world; I would not care where they came from, and I would pay the price. I

do not see why men who understand the railway business, men who are the best in their own particular line, cannot give the same kind of service to the country that they can give to a private corporation, provided they are not interfered with by those who are higher in authority.

I admit that it takes a good deal of faith to believe that the policy of interference for political purposes will not continue. But if you obtain the right kind of men-men with backbone, men with a sense of responsibility and with a fair amount of patriotism-they will not allow themselves to be interfered with in the performance of what to them must be not only a work for remuneration, but a matter of public and patriotic duty.

During the last session, when the incorporation of the Canadian National Railway Company took place, I voted against that Bill because I felt at that time that the Government was not acting in the interests of the country when it retained in the management of that road the men who had already made a failure of the Canadian Northern, I believe that to-day. I have no particular criticism to make against the gentleman who was then very freely criticized, the president of the road. When a man does not make a success of one undertaking I think it is fair to assume that he will not make a success of another undertaking which is much larger. If I believed that when the Grand Trunk is incorporated into the Canadian National Railway system the National railways would remain under the control of the present management, that would be sufficient justification fur opposing the acquisition of the Grand Trunk, because you would be starting out with practically no chance of success. I was very glad to read in Hansard, therefore, the following remark made by the Minister of Railways a few days ago:

There is another matter that I wish to mention in connection with this great railway undertaking. When these two railway systems are operated as one system it will be absolutely necessary for the Government to select a management and a staff of the best men that can be found, no matter where they come from, to operate this whole new complete system, and those who are decided upon must assume this responsibility.

I gather from that-and I would like to be corrected by the Minister of Railways if I am wrong-that it is his intention to appoint a new board to manage the enlarged national system.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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UNION

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

Unionist

Mr. J. D. REID:

The hon. member is

absolutely right. I made that remark the

other day, and if I can use any other words to make the expression stronger, I wish to be understood as doing so. I repeat that so far as I am concerned this road will be operated by the best railway men that we can get, no matter where they come from. The intimation or insinuation of an hon. gentleman opposite-I think it was the member for North Cape Breton and Victoria (Mr. McKenzie)-that the management of these railways would be turned over to the present management was absolutely wrong. The whole board will be reorganized and a set of railway men will operate the system entirely independent of myself or any other man.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

William Daum Euler

Laurier Liberal

Mr. EULER:

I understand, then, that it is the intention to reorganize the whole - board?

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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UNION

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

Unionist

Mr. J. D. REID:

Certainly.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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L LIB

William Daum Euler

Laurier Liberal

Mr. EULER:

I am very glad to have that assurance from the minister. Just a word or two with regard to the danger of financial loss under government ownership. The real reason, I think, why some railways in Canada have been losing money is that there has been no co-ordination of our railway services. If the Grand Trunk is taken over we shall have the Canadian Northern and the Grand Trunk, each one weak where the other is strong. I know that that point has been mentioned in the Drayton-Acworth report, but I think it should be dwelt upon in view of the argument that public ownership of railways will necessarily result in a heavy financial loss. In the West the Canadian Northern is well supplied with branch lines, but it is weak in Eastern Canada and especially in Western Ontario, of which I have more intimate knowledge. On the other hand, the Grand Trunk has insufficient branch lines in the West but it has lines running into practically every town, village and hamlet in Ontario.

These two roads can be organized to form a complete system, I see no reason why they should not be at least fairly successful at the outset, and develop ultimately into a well-paying proposition. While I am on that point, I should like to mention another feature which is of much importance to the people of the province from which I come, the province of Ontario, and especially to its western portion. In that section of the country public ownership has made great progress. We have made a success of it on a smaller scale in most of the towns and cities. We are now entering upon the building of what is known as radial lines of railway, publicly-owned, In order to do that,

unless the Grand Trunk is nationalized, it will be necessary to duplicate many lines which are already in existence. If the Grand Trunk is nationalized, the people of Ontario would like to see the branch lines which are already there, which are not operated as they, should be (many of them with only one or two trains a day) placed under the control, of those who would electrify these roads, save a great deal of duplication, and render a tremendous service to the people of Ontario.

Duplication, of which I have already spoken, is another cause of losses. There is only one remedy that I can see for that, and that is the placing of all these roads, including the Canadian Pacific, under one . national control, and 'then relentlessly cutting out duplication wherever it may exist, saving the unnecessary overhead expenditure and maintenance of parallel lines and all the rest of it. Then I believe the national roads would have a fair chance of financial success.

During last session and again during this session I was disappointed and surprised to hear the ex-Minister of Finance (Sir Thomas White) make the remarkable statement that it was well to take over-I am perhaps not using his exact words, but this was his meaning-the Canadian Northern, which was. a losing proposition, to take over the Grand Trunk now, which is perhaps, to some extent, in financial difficulties, but to leave the Canadian Pacific alone, 'because it is a paying institution and is a prosperous and well-managed road. The only conclusion to draw from that is this, that it is the business or the duty of this country to take over the lame ducks and to leave the prosperous and paying institution in the hands of private interests. I am personally sufficiently a believer in nationalization of railways to say that if it be at all possible, I would also include the Canadian Pacific railway in the national system.

Others say that the time is not opportune for taking over the Grand Trunk. That may be true. I for one cannot see that there is any immediate likelihood, perhaps not for a generation, of .Canada's being in any very much better position to take over the-road than it is at the present time. We are loaded down with a tremendous debt. There is no reason for believing that we can get rid of these obligations for a very long time to come. -In the meantime, I presume, it will foe with this road as it has been with others, namely, that if they lose, we pay; if they win, they keep

the profits to themselves. If we are obliged to pay anyway, we may as well own and control the road.

Another alternative that has been mentioned is to allow the Grand Trunk to go into liquidation, and then if we wish to nationalize it, to buy it in at bargain figures. Perhaps that argument is sound. When private interests fail to make a success of their business, the Government or the people of Canada cannot be expected to come to their assistance, and possibly the same rule should govern in the case of the Grand Trunk and the Grand Trunk Pacific. But I believe, after all, if a fair and just bargain can be made for the purchase of the Grand Trunk, it will be preferable to take it over in that way rather than to allow it to drift into bankruptcy, with all the inconveniences that come from interference with a great public service such as is provided by a great railway system.

I come to the last point and I shall be very brief. I wish to refer to the claim that we are making a very poor bargain on the basis which is proposed in the Bill before the House. I do not know whether this is going to be a good bargain or not, and I question -whether any hon. member on the other side or on this side of this House is able to express a really reasoned opinion whether we are going to make a good bargain or not, because there is so much uncertainty connected with the terms presented to us now. I am entirely in favour of the acquisition of the Grand Trunk and the incorporation of it with the national railways if that can be done on the proper terms, and anything I may say is not to be considered as in any way a retreat from that position. I am in favour of nationalization of the Grand Trunk.

I will, however, say this, that after looking over the blue-books and the financial statements that have been placed before the House, it appears to me that there is a good deal of ground for the amendment that has been moved by the leader of the Opposition, that we have not had, and we cannot have sufficient time, merely, by debating the question in this House, to come to a really reasoned conclusion as to what we are actually doing in connection with the acquisition of the Grand Trunk railway. I know that the Minister of the Interior has said in this House in regard to that criticism that the Government is willing to stay here and debate this question as long as may be necessary; but I say in all seriousness that I do not believe that it is possible to arrive at a correct estimate of

the situation merely by making speeches on one side and then on the other side of the House. A question of the magnitude of this kind involving hundreds of millions of dollars ought to be discussed not only .by the newspapers, but the people ought to be given an opportunity to think it over, to talk to their representatives in Parliament, and thus permit us finally to arrive at some sort of reasoned conclusion with regard to the matter. For that reason, I am inclined to favour the amendment. We should thus have two or three months thoroughly to investigate and to digest the information. Then, next session, in January or February, we could deal with it intelligently.

I would, just for a few moments, refer to the terms themselves as I gather them from the Bill and from the balance sheet as submitted by the Grand Trunk railway. We are taking over the assets and the liabilities of the road. Those assets consist of property and equipment of a value of $434,990,999. There are other sundry items amounting to some $25,799,381, and outstanding ac-courits in one item amounting to $43,838,831 as to the details of which, as the hon. member for Lambton (Mr. Pardee) said, we have absolutely no knowledge whatever. That makes a total, if we take it at its face value, of $504,029,211. The liabilities consist of the funded debt of $216,207,138 upon which we guarantee to pay perpetually 4 per cent per annum, further bonds of some $18,184,738, an advance by the Canadian Government of $15,142,633, equipment notes and loan of $5,344,207, and notes payable of $35,548,235. Then there are current liabilities amounting to $22,801,474, reserves amounting to $3,455,344 and advances to controlled companies $7,286,995. We are, therefore, agreeing to assume a responsibility as regards liabilities of $323,970,767. I am taking that from the statement in the blue-book. Upon $290,426,958 of that, there are fixed charges that this Government undertakes to pay.

Deducting $323,000,000 of liabilities from $504,000,000 of assets there remains a nominal balance to be arbitrated upon of $180,000,000, covered by three preference stocks totalling $63,000,000, and common stock of $116,000,000. Where my misgivings come in, so far as the bargain is concerned, is in connection with the arbitration on this $180,000,000 of stock. I am not so particularly concerned over the ability of the Grand Trunk to take care of the fixed charges, so far as the present guaranteed and debenture stocks are concerned. From the past history of the Grand Trunk, ac-

cording to their statements, I am inclined to think they would be able to take care of those fixed charges. According to the rates of interest given, they would amount to something like $12,500,000 per annum.

I understand the hon. member for Brantford (Mr. Cockshutt) has fixed it at something like $18,000,000. Of course, to the $12,500,000 must be added any possible amounts that the country may have to pay because of certain guarantees which the Grand Trunk has made in respect to other companies. I am quite willing to accept the figures of my hon. friend from Brantford, $18,000,000, although they are somewhat higher than I had thought. I repeat it is possible, and I believe that under proper management it is probable, that the Grand Trunk will be able to take care of those charges.

The great objection I have to the proposal as it stands is this: I am afraid to entrust to any three men, no matter how competent they may be, the determination of the value of the $180,000,000 of preferred and common stock which is to be referred to arbitration, and to bind this country without further reference to Parliament. I think the responsibility in the end must devolve on the Parliament of Canada to say what amount shall be paid. While I am going to vote for the amendment, which would give us more time to study and discuss the matter, I do not for one moment intend to vote for anything that would tend to sidetrack nationalization of the Grand Trunk on proper terms. I say that if the arbitration award did not become effective until after it had been approved by the Parliament of Canada, I should vote for the main motion. I do not suppose the Government will vary its Bill on account of anything a member of the Opposition may say, but I wish to reaffirm this: In a project of this magnitude, which involves the people of Canada in a possible expenditure of at least $180,000,000, for which I believe there is very little value to-day, and a total investment of half a billion dollars, I believe that Parliament should pass upon the award of these three arbitrators before it becomes effective.

There are two things that should be considered, and which may even affect the ability of the Grand Trunk, after it is acquired, to pay the fixed charges of which I have spoken, and they are these: We are affected by the Grand Trunk Pacific entanglements. I do not know exactly what that liability involves, tout it is going to be very great, and it ought to be taken

into consideration when the value of the $180,000,000 of stock is toeing considered. We have further the statement in the Drayton-Acworth report that some portion of the dividends which have been paid in past years, amounting to something like $21,000,000, should not have been paid, but should have been spent on the road, and thus have been a charge on the revenues.

I apologize for having spoken at this length, but I desired to make my position plain. I am for the nationalization of the Grand Trunk. I believe it would toe in the interests of the people if we could give it the fullest possible thought and discussion. I have not yet heard any reason advanced why the interests of the country would suffer if discussion was allowed in the interval between now and the next session, when the whole matter could toe debated in the light of the knowledge we may ourselves elicit and that may be obtained through discussion in the press and elsewhere. Finally, I urge that the award be not effective until the Parliament of Canada has passed upon it.

In conclusion, I do not intend, nor do I desire, to give any vote that will place me in the position of opposing nationalization of the Grand Trunk or any other railway on proper terms.

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   BILL, PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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October 23, 1919