November 4, 1919

UNION

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

Unionist

Mr. J. D. REID:

He will be a small

value man.

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

Louis Audet Lapointe

Laurier Liberal

Mr. LAPOINTE:

Oh, no. Listen to what the article says:

The Government will appoint an arbitrator who will be told to try and meet the other man's views, and when the two agree the value of the third man's views will be nil.

And that is always the case, Mr. Speaker. Further, the article says:

Isn't this a nice way to camouflage Ibe public with the so-called arbitration? Judge Cassels might just as well stay at home. He can't stop the farce.

I have had considerable experience in matters of expropriation in the City of Montreal. When land or anything else is expropriated and a board is appointed, one commissioner is named by the city, a second by the interested parties, and when these two cannot agree on the choice of a third, the Judge of the Superior Court names the third commissioner. Past experience tells us, Mr. Speaker, that the view expressed in the Star as I have just Tead it to the House is absolutely correct. Now, if I were one of the three ministers referred to in the article from which I have quoted I would not rest passively under the imputation therein contained. The Minister of the Interior, unconscious of any suspicion in regard to himself, generally accuses us on this side of the House of being influenced by the interests of the Canadian Pacific railway. But the three ministers who are mentioned in this article have never given the House any absolute and clearly defined statement of their position on this question. All they have done has been to present us with a maze of figures and make lengthy speeches.. The President of the Canadian 109

Pacific railway has made it clear that that corporation has no interest in trying to influence the Opposition in this House in connection with this measure, and hon. members have no foundation whatever for any charge that we on this side are so influenced. Some ministers have held up the possibility of control of the Grand Trunk by the Canadian Pacific railway as a bugbear to scare members into supporting this measure. The Minister of the Interior not long ago said, as appears on page 1659 of unrevised Hansard:

But I wonder how comfortable the hen. member for Shelburne and Queen's feels to-day associated with and founding his doubts and his drifting shadow of a policy upon the resolutions of the Montreal Board of Trade and the manifest and only too evident hostility of the Canadian Pacific railway; very strange that in the city of Montreal, the home of the Canadian Pacific, a city that no doubt has benefited largely as a result of being the chief centre and fortress of that railway-very strange I say it is, that there should be found the whole head and front of the offending to the Government policy on this matter. The hon. gentlemen, it is true, tracked over the whole of this Dominion in search of encouragement and landed at Bogina.

I already have challenged the Government and the Minister of the Interior to put before this House any resolution of any body approving of the action of the Government or showing that they represent public opinion on this question. No answer has been given to that challenge. We have seen a great many resolutions in opposition to the policy of the Government, and even if it were true to say that they only came from Montreal they would deserve attention.

Coming back to the position taken by the Minister of the Interior, I wish to direct the attention of the House to the position of the head of the Canadian Pacific on this question, as expressed on a very solemn occasion in the city of Montreal. It was at the opening meeting of the Victory Loan campaign in that city. That meeting was at tended by the hon. the Minister of Finance (Sir Henry Drayton) who spoke of the Grand project, in the following terms:

The Grand Trunk Project.

As to the project itself he admitted that there was tremendous room for argument. Some considered that the Grand Trunk, the G.T.P. and the Trancontinental were all .part of the same scheme of transcontinental traffic, and that the Grand Trunk should he taken over to round it out. Others, equally patriotic, said that with these railways, and the Canadian Northern, too,

" for heaven's sake do not add the Grand Trunk to the general mess."

These were the diametrically opposite views. ''I will not deal with the merits of the ac-

Topic:   GRAND TRUNK RAILWAY SYSTEM.
Subtopic:   RILL PROVIDING FOR THE ACQUISITION OF THE SYSTEM BY THE GOVERNMENT.
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REV1SED EDITION COMMONS


quisition of the Grand Trunk," said Sir Henry. " It is a nasty thing to have to do at the present Juncture, but sometimes nasty things have to be done, but I am not so anxious for trouble that I wanted this thing brought on during the Victory Loan." (Laughter and applause.) But Sir Henry argued that railway matters, Grand Trunk or otherwise, had not the slightest thing to do with meeting Canada's obligations and keeping up Canada's credit, which was the aim of the Victory Loan. He said positively there that he would rather not have the Grand Trunk affair on his shoulders for the moment. I suppose that he was afraid of the consequences to the Victory Loan. Mr. Beatty, president of the Canadian Pacific was also present, he took up the question and I want to put before the House exactly where the Canadian Pacific stands on this question. I believe the Canadian Pacific president as fully as I believe lion, members on the other side. I quote the following: The chairman then introduced Mr. E. W. Beatty, president of the C.P.R., who was received with cheers, and gave a vigorous expression of views regarding nationalization of railways. " I have embraced, with a great deal of pleasure," said Mr. Beatty, " the opportunity of speaking on this loan, especially in view of the fact that elements have entered into it which render a frank discussion advisable, even though my own position in it may be regarded as -somewhat delicate and even invidious. " I have listened to the comprehensive statement made by the Minister of Finance as to the objects of the loan, and the reasons why it should receive the support of all Canadians who have the welfare of the country at heart, and regard the sustaining of its credit as of vital consequence. " The Minister of Finance and myself are not entire strangers. I knew him first as corporation counsel for the city of Toronto, and I admired him as an adroit counsel, and a sound lawyer. I knew him again as Chairman of the Railway Board, and I marvelled at times at his utter disregard of legal principles, (laughter.) I know him now as Minister of Finance, whose first work is the successful prosecution of this loan, but who has, I think, a very sincere appreciation of the necessity for national economy and prudence in official expenditure for the ifext few years if Canada is to reach the high place of prosperity to which it is entitled. " I have also known the minister in roles which did not secure my unqualified commendation-he was a fine lawyer, an able judge, and will he, I feel sure, a national asset as Finance Minister, but his literary efforts are not all that I could wish. Some time ago, when he was a little younger, and, therefore, more prone to make mistakes,-he wrote a book,' (laughter). He wrote the book as Chairman of the Royal Commission appointed to inquire into the railway situation in Canada, and the book was called, and will go down into histqry as " The Drayton-Acworth Report." I read all of it with a great deal of interest, and some of it with a great deal of appreciation. In it he said some very nice things about the C.P.R., and then he suggested that the Government of Canada fMr. Lapointe.] might own all the other railways and operate them under a system which he outlined. I have always wondered how a man could be so right and so wrong in the same hook." I want to come down to the presentation of the president's view on this question: " In this connection, and as one of the grounds on which Parliament is urged to support the proposals, it is said that if they are not confirmed and the roads are not acquired by the Government they will-to use the expressive phraseology of the Minister of Railways-be ' gobbled up by the C.P.R.' " I can imaginesay's Mr. Beatty- -several things worse than that (laughter and applause). It is only right that I should point out to you that there exist certain objections to this course which render the possibility of it ever taking place almost ridiculously remote. In the first pl%ce, I may be pardoned for calling your attention to the fact that there exists by statutg an absolute prohibition against any arrangement by way of amalgamation or joining of earnings between the Canadian Pacific and the Grand Trunk or any branch lines of the Grand Trunk or leased by it, or under its control. , In the second place the Grand Trunk duplicates in many respects, the existing facilities of the Canadian Pacific in eastern Canada which would render its acquisition by the Canadian Pacific railway both unnecessary and unwise. , In the third place, the Grand Trunk cannot be divorced from the Grand Trunk Pacific with its enormous liabilities-liabilities * imagine no corporation in Canada would think of assuming, even though they were able to do so. Lastly- And here comes .the denial. -the acquisition of the Grand Trunk, or any portion of it, has never been suggested to the Canadian Pacific or by the Canadian Pacific, and has never been considered or contemplated in any way or by any means direct or indirect. Those words were exactly to the point, and in view of this emphatic denial what evidence is there to sustain the allegations made by hon. gentlemen opposite with respect to the Canadian Pacific Railway Company? Does the Minister of the Interior or the Minister of Railways know that the Canadian Pacific Company ever approached the Government or that they have ever indulged in any canvassing or lobbying with respect to the Grand Trunk? Do you not imagine, Mr. Speaker, that the Minister of the Interior would not have told us if such had been the case? I think he -would. The representative bodies of business men of the city of Montreal are against this project just as strongly as Mr. Beatty of the Canadian Pacific is opposed to it. The latter gentleman says his opposition is based on the fear that the great interest of the Canadian Pacific in the city of Montreal and in the whole Dominion would be endangered by the disastrous deal which the Government is seeking to carry out. Mr. Zepherin Hebert, an important French Canadian represents* tive of the commercial interests in the city of Montreal, has also gone on record in opposition to the Government's policy. I am going to leave to the Government the responsibility for their own deeds. Coming to the amendment of the hon. gentleman (Mr. Campbell), it is possible to suspect that he is the representative of some of these shareholders. In view of the sus^ picions of 'graft in connection with this transaction which have been expressed by many of our newspapers, let me say that I will not vote for anything that savours in the least of acceptance of the Bill which is before the House. In the Montreal Star of to-day there is a despatch from Ottawa which contains a very curious statement as to rumours current in the corridors of Parliament, and I shall take a few minutes to read it to the House: Nor is the suggestion lightly treated that, from all this financial debacle, annexation'may be the possible result. The view has long been expressed here privately-that with the enormous aggregate of war obligations and the staggering load now sought to he imposed, the burden will be too heavy for Canada's people to shoulder and that the not illogical even if regrettable expedient will be absorption by a larger country, financially able to bear the overpowering strain. „ The proposition of the Government has given rise to all these queer aspects of the situation. The whole community are asking themselves: Whither are we drifting? There is no question but that financially and industrially the United States is conquering this country, and it will carry out that conquest more quickly than-hon. gentlemen opposite believe. I know the Government are not frightened at the prospect. They will placidly pursue their way administering the affairs of this country in the way that pleases them, but there will have to be an accounting some day and it will not long be deferred. If the Government only dared to put the question to the issue at the present time there is not the least doubt but that they would meet with overwhelming defeat at the hands of the people. Hon. Mr. ME1GHEN (Minister of the Interior) : I deem it my duty, although with very great reluctance, to say a few words on this amendment. I think the House would be well advised in voting down the amendment for reasons that I have alluded 109J to, more or less, briefly, on other occasions, and which I will ask the privilege of recapitulating now and perhaps amplifying to some, degree. As hon. members will see from the cablegram of the 5th March, 1918, addressed by the Prime Minister to Sir George Perley for transmission to Mr. Smithers, the Prime Minister then offered a certain fixed amount in cash as rental for the system, to be assumed subject to the debenture debt. That fixed amount, as has often been repeated, was $2,500,000 for three years, $3,000,000 for five years, and $3,600,000 thereafter by way of rental. That money was to be distributed, according to the cable, among the guaranteed shareholders, the three preference shareholders, and the common stock shareholders-that is to say, the whole five classes. That was in effect an offer to the company of a certain definite sum by way of dividend per year-as rental if you call it such-or if that were not satisfactory, of arbitration of the value of those * five stocks-the guaranteed, the three preference, and the common. Consequently it is clear that it was, first of all, the desire of the Government that all these stocks should be submitted to arbitration if arbitration were the method of solving the difficulty which would be acceptable to the company. No progress was made with that proposal. It was rejected most peremptorily-as we thought most unreasonably-and the matter was pursued by negotiations overseas. It was most earnestly hoped at the time of these overseas negotiations that we could make some real progress and get to an end of them, because the end of the negotiations and the acquirement of the system was-as we viewed it and view it to-day, and as I believe every man who understands the railway situation and wished to give a judgment on the standpoint of the Canadian people views it-of the greatest possible concern to us. The history of the operation of the Grand Trunk and the Transcontinental since, without the Grand Trunk as an adjunct to it, stretching out, as I have previously expressed it, into nothing-the history of the operation of these two roads .since shows how well advised we were in endeavouring to end all the negotiations if we possibly could. Because we did not get to the end we have lost in trying to operate these two long streaks, ending in rio traffic, $10,300,000 on one, $6,000,000 on the other, to say nothing of interest on capital in the Transcontinental. Now, we made no progress. In our endeavour to make some progress, believing that we



would succeed,'and knowing as well that we had over $2,500,000 as a minimum to start with, to be increased to $3,000,000 in three years and $3,600,000 in eight, and knowing that that $2,500,000 would itself take care of the interest on the guaranteed Mock-because it had to be there applied until that interest was fully paid, the guaranteed stock being a second charge-wo felt we might succeed by saying: We will pay interest on the guaranteed stock in any event; that is to say, in effect we will make that two and a half millions a minimum and we will repay you for the balance. We were confident that we would arrive at a bargain on that basis-but to no purpose. Our offer then also was met with a peremptory refusal, and from that day the Government felt that they would not be justified in moving in any degree. Notwithstanding apprehensions on more than one occasion-apprehensions that I do not think were! lurufounded*-that if not the whole system, some essential vital part of the system might fall into hands from which we could not take it, we adhered definitely to the proposal we made embodying the minimum of $2,500,000 as stated in the letter of 11th July, 1918. We refused to move in any degree whatever from the substance of that offer; from it we have never moved and are not moving to-day. Well then, it was not considered attractive even in that form; the Grand Trunk did not show any inclination to come to those terms until about the first of September of this year, when they recommenced the negotiations in what might be termed a hopeful form. Some hon. gentlemen persist in arguing this whole question as if, from the standpoint of bargaining, there was nothing whatever in the possession of the Grand Trunk to bargain with-nothing there of reality or of what might he called the equity of the situation. They persist in arguing that the Grand Trunk had nothing in the world to bargain with. Now, is that true? Let us not forget that we are one party to this transaction and that the other parties are more than a hundred thousand shareholders in another country than Canada. Our viewpoint, let me assure this House, is by no means their viewpoint on this question. But they had these weapons to bargain with: They may not have been as powerful as they thought they were, but it would be fatuous on the part of hon. members to come to the conclusion that they had no power or no force at all. In the first place they believed that it was possible to dispose of the whole system; many of them so believed it as, in their way of putting it, to know it. Those who might have had doubt as to that were quite confident that it was possible to dispose of portions of the system in such form as to put the Government of Canada in a very disadvantageous position, indeed. For example, one vital portion of the system is the line to Portland. That line is owned by a company incorporated over there. If the line to Portland got into such shape that it would not be embraced in the stock ownership of a Canadian company, where then was the Government of Canada? Now, that was the position in respect to that phase of the question that the Grand Trunk were in. It would, therefore, be fatuous to say, did I go no further, that they were in a perfectly helpless position and had no cards, no weapons with which to contract a bargain. Furthermore, they took this position, and I believe they took it with some assurance and in perfect good faith. It is impossible for us to think that the Grand Trunk did not know that liquidation had terrors for Canada just as well as for them. The disaster of liquidation, bad as it would be for Grand Trunk shareholders, was had for Canada. There are such things as bad bargains for both sides; very often had bargains are bad for both sides. When I condemn, for example, the whole bargain of the Grand Trunk Pacific as bad for Canada, I do not contend that it was not bad for the Grand Trunk too; the only people it was more severe on than on the- Grand Trunk were the people of Canada. Therefore, the problem of liquidation was very much like the problem of the original 'bargain ; there was much that this country had to fear if the Grand Trunk went into liquidation. I will tell you one thing it had to fear. There is, of course, loss of credit, against which we cannot shut our eyes; it is a subject that we cannot afford to treat lightly. We have heard some very weighty speeches in this House from hon. gentlemen opposite, especially from their late distinguished leader, on the real ultimate loss that it would be to this country if a great railway system went into liquidation, particularly when its bondholders were overseas. We have heard weighty speeches from hon. gentlemen opposite on that theme, speeches properly based and soundly reinforced; consequently, from that standpoint there was much that Canada would desire to avoid in the way of liquidation. But next, liquidation meant the unscrambling of the system; it could mean nothing else. Liquidation meant, for example, that the American lines held by American companies would go to American liquidators. It would hardly be presumed that we would be enabled to carry out our will in regard to companies in American territory, the stock of which is American stock. [DOT] As a consequence, liquidation meant the unscrambling of the system and the putting up to auction or the disposal otherwise over there of American concerns, vital parts, in some instances at all events, of the system. Therefore, they were not unconscious of the fact that the Government of Canada, naturally from the standpoint of the public benefit and of the identity of the Grand Trunk system as a system, were "not likely to court the day of liquidation. That was the position. There they stood and there we stood, and after negotiation, we fixed this as what we were ready to do in the hope that we would come to an agreement. But after those terms were made known to the people of Canada, and to this House; after they stood as the terms of Canada and after the policy of the Canadian Government was known for years; and after the company come to those terms and say: We bend the knee and take those terms; is it quite fair and right on the part of Canada to-day to say: We will vary the terms, and we will fix them to suit us a little better? I have argued the matter from the standpoint of bargaining. Let me suggest another consideration. Hon. members of this House have not forgotten the speech delivered on this point by the hon. member for Red Deer (Mr. Clark) some days ago. Let us view the matter from- that- standpoint for a moment, not in any spirit of sympathy, but in the ordinary spirit of justice that I hope animates hon. members and that will continue to animate them even although they feel that perhaps a little political advantage may be gained by deviating from it. If the board of arbitration grant any award at all to the shareholders of the Grand Trunk, then that justifies, in the judgment of the board of arbitration, this guarantee to pay the interest on the guaranteed stock, because there could be no award at all unless it presumes the payment of the interest; for the first money has to go there. If they award anything above the money that goes to pay the interest on the guaranteed stock, that shows that that money would have to go there even although we arbitrate all the stock. -I hope I have made that clear. Supposing they find that there is no value whatever in the three preference and the common stocks; it {night be possible that they would have found that there was no justification for paying the $2,500,000; but I ask hori. members of this House to view this matter somewhat from the standpoint of an arbiter between two interests. Do. not forget that we are one side of the bargain and that we are very likely to be influenced by the fact that we are one side of the bargain and they the other. If the Board of Arbitration find that there is no. value in those three preference and common stocks, what does that mean? It means that 100,000 people, owning $94,000,000 worth of stock, every dollar of which represents, money that has gone into the Grand Trunk Railway system in this country, a railway that has served Canada for sixty-five years, have lost forever, forfeited that $94,000,000 to the people of Canada. Now, $94,000,000 is a considerable sum. I think the Grand Trunk should be made, not in any spirit of huckstering or to the last Shylock dollar, to pay a good part of the loss in relation ito the Transcontinental and the Grand Trunk Pacific, but I do not think that if the Grand Trunk shareholders forfeit $94,000,000, it can be said that they have been let off lightly. If $94,000,000 is forfeited to the people of this country-and that amount will be forfeited if no award is given under this arbitration- then we have that $94,000,000 to be credited to the loss, in connection with the Grand Trunk Pacific. Having regard to the whole case from the standpoint of the record down to to-day; having regard to all the circumstances fully disclosed in this paper; having regard to the common equities of the situation, and not forgetting that there is to be an arbitration in Canada where the deciding factor is a Canadian judge and where the two parties are the people of Canada on the one hand and 100,000 people of another country, so far as jurisdiction is concerned, on the other-keeping in mind all those circumstances, and as well those principles that I think are sound and true, it .seems to me to be the part of reason as well as the part of common justice 'to vote down this amendment. Hon. W. 'S. FIELDING: Mr. Speaker, the historical account that the minister has given is, I am sure, deeply interesting in its place. My misfortune is that I cannot for the life of me see what bearing it has upon the amendment that has been moved by the



hon. member for Nelson (Mr. Campbell). The minister has repeatedly alluded to a sum of $2,500,000 which we have to pay, and one might almost assume from the tone of his speech that this $2,500,000 was a ^um which was to be distributed amongst the Grand Trunk people generally. It was a sort of pooling the issues and leaving them to distribute the amount. At one time in the negotiations something of the kind was suggested, but the plan was abandoned, and nothing of the kind appears in this Bill. There is no pooling of the issues; there is in this transaction no common Grand Trunk interest which is being treated alike. A distinction is made in this Bill between the various classes of the stockholders; some are being highly favoured and others are 12 m. being treated in a manner which my hon. friend would, I suppose, consider as being very harsh. There is not that common interest of the 100,000 people of whom the minister speaks; there are distinct issues and distinct classes of stockholders. What are the facts? This provision that is made for practically buying the four per cent guaranteed stock, that is, guaranteed only by the Grand Trunk company, at par, is one of the worst features of the Bill, and the amendment of the hon. member for Nelson removes some of the difficulties and makes the agreement in that respect less objectionable. I do not wish to enlarge on this, but we have to go over these things again a little. .The ground that I have repeatedly presented to the House is that this 4 per cent guaranteed stock had a market value of 45 cents on the dollar a few days ago, before the initiation of this legislation. There is no dispute about that; that is a fact; the public records show it. Of course, the moment it was announced that this legislation was to take place, the stock began to increase in value. I have before me a London financial paper of the 18th ultimo which quotes the 4 per cent stock at 60, and I have no doubt that to-day it is higher. While there is an uncertainty, as there is just now, as to the fate of this Bill, there will be a hesitancy in the stock market; but nothing is clearer to my mind at least, than that when it is settled that this measure is going through and that it will become law, that stock will have a further enhanced value. A 4 per cent stock with a guarantee of the Dominion of Canada behind it-I have to repeat myself there- would in normal times be worth par. In the . present financial condition, it would not be worth par; a first-class 4 per cent stock of a colonial Government is to-day worth 84 or 85. Therefore, when this transaction is completed, it is a reasonable contention that this 4 per cent guaranteed stock, guaranteed now by the Grand Trunk company, which guarantee means nothing, but guaranteed by the Dominion of Canada, will become worth 85. What does that mean? That means as between market value of that stock a few days before this legislation began and the market value as it will be when this deal i! consummated, there will be a difference of, say 40 points. Forty points advance on that stock means a clear gain to somebody of $24,000,000; that is to say, the Dominion of Canada is going to buy that stock for $24,000,000 more than its fair'market value. My hon. friend from London (Mr. Cronyn), who is not present, tried to draw a great distinction the other night between market value and intrinsic value. I am unable to agree with him in his contentions. Intrinsic value as a rule creates market value. Indeed, if there is a difference, especially in the stock market, you will find the market is rather more than the intrinsic value. Let me illustrate that. Suppose a railway has suffered a disaster, an accident of some sort; its property is actually damaged ; the intrinsic value of the property has materially depreciated, but the stock market knows-and they are very keen men on the stock market-that that railway has potentialities, that this condition is only temporary, that the road will be all right in time. So they discount the future and fix a market value on that stock which is more than the intrinsic value. I think it will be found in the stock market, where-ever th,ere is a difference between intrinsic and market value, that the market value will be the higher. The only illustration the hon. member gave the other night was that of the Northern Pacific. That would not occur once in a blue moon; it is not a fair illustration at all. In that case the stock had an intrinsic value of 80 and a market value of 1,000. Why? Because two or three sets of speculators were trying to get control. There is no fair analogy in that at all. That was an utterly unusual and exceptional situation. That is not our situation. We are not trying to get control of the 4 per cent stock. The market value of that stock was its intrinsic value, and the intrinsic and market value was 45 cents on the dollar. By this Bill, unless -we accept the amendment of my hon. friend, we are going to make it worth practically $24,000,- 000 more than it was. That difference may not go into the hands of the old Grand Trunk stockholders. Again and again we have been told about the sympathy for these English shareholders, and the claims of the English widow have been presented again and again. 1 am very much of opinion that the English widow who invested in Grand Trunk stocks many years ago has passed to heaven by this time, and the stocks to-day are to be found in the hands of other people, perhaps not English, and certainly not widows. I am going to assume for a moment that there is a widow somewhere in England, and I am going to ask you to consider the condition of the English widow and of the Canadian widow. The Canadian widow, perhaps a soldier's widow, goes to one of our savings banks with one hundredpounds. She does not understand Victory bonds, many people do not, and she wants to put her money where she can get it easily, so she puts it in the savings bank. She is allowed 3 per cent-an excellent, sound, business transaction. At the same time the English widow goes to the Minister of Finance and says: " I have one hundred pounds that I have been investing. What can you do for me?" " Have you the cash?" she is asked. " If so, we will give you 3 per cent in the bank." " No, I have bought Grand Trunk stocks with it," she replies, " at 50 cents on the dollar. If I had been right smart I would have bought at 45. I have two shares here now, nominally of one hundred pounds each. I paid for these two shares 100 pounds. Nominally they are called 200 pounds of stock, but I paid only 100 pounds for them." The Minister of Finance says: " That is all right, we will give you 4 per cent on your 100 pounds. We will do better than that. We will give you 4 per cent on the 100 pounds you invested, and 4 per cent on another 100 pounds you did not invest. We will call your 10ft pounds 200 pounds, and give you 4 per cent on it. In other words, we will pay you 8 per cent, and the Canadian soldier's widow only 3 per cent." That is what this transaction means if w-e are going to pay for this stock on the basis of this Bill at par, or approaching par, when its real market value is only about 45 cents on the dollar. We are going to pay a large sum of money under this Bill, which may not go into the hands of the old Grand Trunk stockholders, but into the hands of speculators who have advanced the stock from 45 to GO and perhaps 70, and will advance it further. What is wrong in asking that there be an arbitration on that stock? Why do hon. gentlemen draw a distinction in saying it is a cruel thing to have that stock arbitrated on, but all right in the case of the other stock? I see no reason at all for it. If it is wrong and cruel to have an arbitration on the guaranteed 4 per cent stock, is it not equally wrong and cruel to have arbitration on the other stocks? Why do we take these favoured 4 per cent people and give them a clean gift of $20,000,000 or $30,000,000, and then tell the other man he has to submit his stock to arbitration? It is an actual fact that one of the preference stocks is actually worth more money to-day than the 4 percent guaranteed stock. The guaranteed stock is quoted here at GO cents on the dollar and the first preference at 66. I have seen no explanation fo-r that. Why do we say to thefavoured man with the 4 per cent stock: " You do not have to submit toarbitration. We will make it dead sure for you at the expense of the Canadian people," and to the man who holds the first preference stock, " You have to take your chance under arbitration." I cannot see any reason for it at all. It seems to me that the sound policy, if there is any merit in arbitration, is that which the hon. member for Nelson (Mr. Campbell) has set forth. If there is to be an arbitration, by all means let it cover all the stocks. If the stock is worth one hundred cents on the dollar, and the stockholders think they can show it, give them a chance to do it. But to make it worth one hundred cents on the dollar without arbitration and at the expense of the Canadian people, while at the same time making the preference stocks submit to arbitration, is not justice. It is a clear advantage at the expense of the Canadian people which is being given tc one favoured class of stockholders, while the others are left to the wolves, or the arbitrators.


UNION

John Hampden Burnham

Unionist

Mr. BURNHAM:

Is it true, as my hon. friend has said, that the fact of the Government entering into this bargain means the penalizing of the people of Canada to the extent of many millions of dollars with regard to the guaranteed stock? Is it true that the stock which appears on the market at a certain sum, and for which, if nothing intervenes, its owners would get that sum, will, on account of the Dominion of Canada entering into this agreement receive from that adventitious circumstance a very large

additional value representing the difference between the market price a few days ago and par?

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UNION

Edgar Nelson Rhodes (Speaker of the House of Commons)

Unionist

Mr. SPEAKER:

The Minister of the Interior has spoken, and he has no right under the rules to speak again. If he chooses to ask the consent of the House, under the peculiar circumstances it may be granted. Otherwise, it will not be competent for him to speak again.

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UNION

Arthur Meighen (Minister of the Interior; Superintendent-General of Indian Affairs)

Unionist

Mr. MEIGHEN:

The answer is, no.

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UNION
L LIB
UNION

Arthur Meighen (Minister of the Interior; Superintendent-General of Indian Affairs)

Unionist

Mr. MEIGHEN:

The hon. member asks if it is true that the people of Canada -are paying large sums of money to the guaranteed stockholders. It absolutely is not so. The company has always paid that dividend except in the last two years, when it was earned, but was kept in reserve. Naturally the effect of the Government's proposals has been a slight appreciation. Hon, gentlemen make quotations from the market, and then add a whole lot as to what is likely to take place in the future when money gets cheap. The fact is the appreciation has been slight. We are getting in return a surrender of all voting power, a surrender which we have to have, and which we cannot get unless we give something. The fact that the preference stock increases too in value because this transaction with the Government takes place* indicates that no matter what you do there will be that *appreciation. The same took place in 1903, altogether unwarranted as results afterwards showed. It is taking place not to any great degree but to a slight degree, but that is merely a return of a little in nominal value of the stocks where they have gone down five times or three or four times the amount in recent years. We simply pay the four per cent interest on the guaranteed stock which the company have always earned but did not pay for *the last two years because they felt they should keep it in reserve.

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UNI L

William Stevens Fielding

Unionist (Liberal)

Mr. FIELDING:

My hon. friend and I will differ in our inferences and arguments, but does he deny any statement of fact I made in my recent remarks?

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UNION

Arthur Meighen (Minister of the Interior; Superintendent-General of Indian Affairs)

Unionist

Mr. MEIGHEN:

I deny the statement of prophecy. I do not say that the stock, has not gone to 60, although I have never seen that quotation myself. But that is not very much of an appreciation. It was

fMr. Burnham.] .

48 or 50 before the agreement and it went to 55, and the preference stock went up too.

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LIB

William Lyon Mackenzie King (Leader of the Official Opposition)

Liberal

Mr. MACKENZIE KING:

I did not intend to participate in the discussion of this amendment, but I should like to read to the House section 5 of the Bill as amended. It says:

The present guaranteed stock and the new guaranteed stock, or any part thereof, may be called in or redeemed by the Government, at par, at any time after five years from the date of the appointment of the said Committee of Management, on six months' notice, Iby advertisement, to the holders thereof.

In other words, if the Government were purchasing this system at the present time it would buy it at the market value. This Bill makes it impossible to purchase that same stock until after five years, and then it is only purchasable at par. The Act speaks for itself and answers conclusively the hon. gentleman's question.

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L LIB
L LIB

Peter Robert McGibbon

Laurier Liberal

Mr. PETER McGIBBON:

Do you think that people holding stock which has paid four per cent are going to throw it on the market at 45?

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L LIB

Frank S. Cahill

Laurier Liberal

Mr. CAHILL:

My hon. friend is apparently in the same position as some other hon. gentlemen opposite. They believe what the Government tell them instead of reading for themselves the evidence that is presented.

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L LIB
L LIB

Frank S. Cahill

Laurier Liberal

Mr. CAHILL:

This book will show, it the hon. member wishes to refer to it, that they did not pay four per-cent last year or the year before, and the Drayton-Acworth report says that they did not earn it for the lest ten years. Hon. members are arguing with one book in one hand and another book in the other hand, and are being bamboozled by the Government for the benefit of their friends. Now, Mr. Speaker, when hon. members talk about widows and orphans, this is the most unfair thing that can be done so far as those people are concerned. The stock that is to be arbitrated is the minority stock and has absolutely no''voice. The Government took good care to see to that on behalf of their Grand Trunk friends. They guaranteed the debenture stock or bonds, some of which were worth 66 and some 78. All of those stocks constitute the majority and can vote for the Grand Trunk as to whether they will arbitrate or not, and the widow and orphan have not a chance in the world of expressing a voice. The Government took good care of their friends first; not the widow and orphan, but the rich speculators in London, the friends of the Government who are taking advantage of this. If you will refer to the London Times, Mr. Speaker, you will see that on the 15th of October, six days after this transaction was brought into the House the guaranteed [DOT] stock had advanced $9,000,060, on the London stock exchange. The total of the first, second and third preference and common stocks had advanced no less than $14,000,000 on the stock exohange in those six days. There is absolutely no justification for it, If the Government want to deal fairly with the stockholders they ought to arbitrate the value of the stock and deduct any payment that is due to the people of Canada. That should be generous enough. I therefore will support the amendment.

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November 4, 1919