April 19, 1921

REPORTS AND PAPERS


Certified copy of a report of the Committee of the Privy Council of April 12, 1921, appointing a commission to take into consideration the present methods and system of handling, marketing, etc., of grain. -Right Hon. Sir George Foster. Annual report of Dominion Experimental Farms for the fiscal year ended March 31, 1920.-Hon. Mr. Tolmie. Annual report of the Department of Health for the fiscal year ending March 31, 1920.-Hon. Mr. Calder.


RAILWAYS, CANALS AND TELEGRAPH LINES


Mr. J. E. ARMSTRONG (Lambton) presented the fourth report of the Select Standing Committee on Railways, Canals and Telegraph Lines.


COMMITTEE ON PUBLIC ACCOUNTS


On motion of Mr. H. B. Morphy (North Perth) the fourth volume of the report of the Auditor General for the year ended March 31, 1920, was referred to the Select Standing Committee on Public Accounts.


REPRESENTATION OF MAISON-NEUVE AND GASPE

UNION

John Wesley Edwards

Unionist

Mr. J. W. EDWARDS (Frontenac) :

Mr. Speaker, it was my intention on a question of privilege to bring before this House a resolution in regard to the hon. member for Maisonneuve and Gaspe (Mr. Lemieux) holding two seats. The hon. member is not in his seat; therefore, I give notice now that I will bring this matter up to-morrow.

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INLAND REVENUE ACT AMENDMENT


Mr. JOSEPH ARCHAMBAULT (Cham-bly Vercheres) moved for leave to introduce Bill No. 79 to amend the Inland Revenue Act. He said: The purpose of this Bill is to do away with what I consider to be an ever-increasing evil. The Inland Revenue Act now provides that all forfeitures and penalties imposed on persons licensed or unlicensed under the Inland Revenue Act may be divided between and paid to any officer of the Inland Revenue and any person having given information or otherwise aided in effecting a condemnation of the goods or thing seized or the recovery of the penalty. I contend that this law is absolutely immoral because it opens the door to grave abuses. The officers are not so anxious to have the law observed as they are to make seizures of valuable goods in order that they may divide the proceeds of the sale of the goods seized, and the penalties. These officers have extraordinary powers. The Act provides that they may make forcible entry into buildings and premises at all times, break up floors, partitions, doors, etc., and also seize all horses, vehicles and other appliances used for the purpose of removing goods seizable under the Act, and all such vehicles, horses, and other appliances, apparatus and materials are forfeited and sold and the proceeds divided among the officers and the informers. I do not intend to cite many cases with regard to this matter; I will do that on the second reading. But the object of my Bill is to do away with this kind of thing by repealing subsections (a) and (b) of section 138 of the Inland Revenue Act, Motion agreed to, and Bill read the first time.


GRAND TRUNK RAILWAY ARBITRATION


On the order: "Introduction of Bills":


UNION

Arthur Meighen (Prime Minister; Secretary of State for External Affairs)

Unionist

Right Hon. ARTHUR MEIGHEN (Prime Minister) :

Yesterday there was handed in, in my name, notice of motion for leave to introduce a Bill intituled, "An Act respecting the Grand Trunk Arbitration." I observed at the- opening of the House that it was not on to-day's Order Paper-I do not know why. But I would ask the assent of the House to its introduction now, as the matter of time is important.

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UNION

Edgar Nelson Rhodes (Speaker of the House of Commons)

Unionist

Mr. SPEAKER:

The notice appears in the Votes and Proceeedings. The Prime Minister askes the unanimous consent of the House for leave to introduce the Bill at this stage. Is it the pleasure of the House that the hon. gentleman should have such leave? Carried.

Mr. MEIGHEN moved for leave to introduce Bill No. 80, respecting the Grand Trunk arbitration. He said: On the 9th of the present month the Arbitration Proceedings established under the Agreement made between the Grand Trunk Railway Company and the Government, dated March 8, 1920, ceased and the power of the arbitrators lapsed. The agreement in question provided that the hearings should be completed and the findings given within nine months from the appointment of the arbitrators or in such further time as might be approved by the Governor in Council. For reasons which I have already given briefly to Parliament and which appear more fully in the correspondence filed on April 6, the Government refused to assent, except on certain stipulated conditions, to

any extension of time. The purpose of the Bill which I now beg leave to introduce is to enable the Government and the company to continue the arbitration on conditions which the Bill itself specifically provides. Should this legislation meet with the approval of Parliament and should the company decide to avail itself of the offer embodied therein it will be enabled to have the Board of Arbitration reconstituted upon arranging definitely and effectively for immediate transfer of possession and control to the Government of the property purchased, the proceedings thereafter to follow the intent of the original agreement.

The decision of the Government not to extend the time of arbitration except upon terms of immediate possession and control, which terms are fairly translated into the present measure, has apparently been met on the part of certain shareholders and others in England with some resentment. There seems to have been an effort made to spread the impression that this country, through its Government, is dealing harshly with investors in this, one of the first -[DOT]of our big Canadian enterprises. I am convinced, and I think the House is convinced, that no such spirit has animated or controlled the negotiations or legislation or ' the conduct of the Dominion generally in relation to the Grand Trunk and that any impression that may have spread to the contrary is due to a failure to realize the facts. I therefore propose to review briefly' the history of our relations with the Grand Trunk and with various Grand) Trunk ventures in Canada. I need go back only to the years of 1903-04 because from that period dates the commencement of the policy which has borne for this country through several years past such bitter fruit and has brought to the Grand Trunk itself something very close to disaster. I have been convinced for some time and am now convinced that the inability on the part of many Grand Trunk shareholders and of some people in the Old Land to appreciate the fairness with which this country has dealt with them arises from a failure to grasp the fact, or rather a determination not to grasp the fact, that their present position is due to the unsoundness of enterprises into which they themselves deliberately entered.

By the terms of 1903-04 contracts, which contracts contain the whole of the agreement and mutual obligations entered into by the Grand Trunk and by Canada, the Dominion undertook certain defined responsibilities. The Grand Trunk undertook

certain other defined responsibilities. I say first of all the Dominion has carried through faithfully and scrupulously every responsibility into which it entered. The Dominion has done more, and vastly more. In addition to the construction of the Transcontinental Railway from Moncton to Winnipeg, which cost about $170,000,000 exclusive of interest, in addition to the guarantee of the bonds on the Prairie and Mountain Sections as the agreement provided and to the payment of interest without recourse on the Transcontinental and on the Mountain Sections of the Grand Trunk Pacific as the agreement provided, in addition to the payment of all guarantees and of every other obligation which the country covenanted to discharge, it has sought by every means in its power to make -possible the success of the enterprise and has from time to time rendered assistance on an enormous scale in the hope that the other parties to the contract could ultimately make the venture pay. I mention the following -as assistance rendered by the Dominion beyond all contract obligations:

1. In 1909 a loan of $10,000,000 was made the Grand Trunk Pacific on Grand Trunk guarantee.

2. In 1913 a loan of $15,000,000 was made the Grand Trunk Pacific on Grand Trunk guarantee.

3. In 1914 the bonds of the Grand Trunk Pacific were guaranteed by the Government for purposes of completion of the system without recourse to the Grand Trunk up to $16,000,000. This was distinctly a Grand Trunk obligation under contract. Subsequently, in 1916, 1917, 1918, cash loans were authorized by Parliament and were advanced to the Grand Trunk Pacific to the amounts of Seven million and Eighty-one Thousand odd, Five Million and Thirty-eight Thousand odd and Seven million Four Hundred and Seventy-one Thousand odd respectively.

The Grand Trunk Pacific Railway had agreed to operate the Transcontinental. It failed indeed, was utterly unable to do so and the Government has been compelled to operate this line at many millions annual loss on operating account alone. Early in 1919 on six days' notice the Grand Trunk Pacific informed us that they would cease to operate the railway. The Government has been compelled since to provide for operation of this road under receivership and has had to advance to the Receiver some $26,607,000 for the purposes of operation and fixed charges. For the Grand Trunk itself the Government has since the

summer of 1919 advanced various sums in order to keep the system intact and enable it to continue, which sums aggregate in all approximately $47,000,000. Ihe great part of this has been advanced since the execution of the agreement for the acquisition of the Grand Trunk Railway. It is a fact that the total amounts advanced by way of assistance to the Grand Trunk and the Grand Trunk Pacific Companies, inclusive of interest unpaid, amounts in the case $77,297,000 of which all but $15,000,000 is due, and in the case of the Grand Trunk Pacific to $62,400,000 of which the entire amount is due. The Government has as well guaranteed obligations of the Grand Trunk to the extent of $25,000,000. It is very difficult to argue in the fact of this recital that the Government of Canada has at any time dealt harshly with Grand Trunk shareholders or Grand Trunk enterprises.

Had the Grand Trunk been in a position in 1918, 1919 to continue the operation of its system and discharge its obligations without the necessity of its continuous demands for further assistance it is doubtful indeed whether negotiations for the acquirement of the system would have been entertained or consummated. There were strong reasons from the standpoint of Canada why the integrity of the system should be maintained. Those reasons still exist. There were strong reasons as well for believing that the system, which is essentially an Eastern Canadian System, could be best operated as part of what had become the Canadian National System, which is essentially a Western Canadian System. Those reasons also still exist. But aside from both these considerations there is the irremovable fact that the Grand Trunk was admittedly incapable of continuing operations and of taking care of its liabilities without heavy demands upon the Dominion Treasury added to and indeed probably exceeding in their burden those that the Dominion had for so many years sustained. That this latter consideration was a primary factor in determining the course of Parliament there can be no doubt whatever. The Grand Trunk should not forget this element of the case.

It must be remembered that by the terms of the agreement of March 8, 1920, there . was no binding obligation upon the Government to finance Grand Trunk operations. The Government assisted in such financing and Parliament authorized assistance in order that the Grand Trunk might continue to operate and render the essential service

that it does render as a transportation system and be held together as a transportation unit. The importance of maintaining the integrity of the Grand Trunk system and preventing its disintegration and dissipation into parts and pieces appeals to every one who carefully studies the question and, indeed, can scarcely be overstated.

The Government has been called on since the agreement was executed to finance for the Grand Trunk in very large amounts. This was primarily a Grand Trunk obligation. While this was being done, we were convinced that the arbitration proceedings were advancing very slowly indeed. The Grand Trunk has been aware since the fall of 1919 that such proceedings were pending and at least from the early spring of 1920 was undoubtedly preparing their case. They pressed for a physical examination of the system by arbitrators and counsel. This caused delay of questionable necessity. The Government, on the other hand, was not able to obtain access to the necessary evidence until late spring of 1920. Notwithstanding this, when the Arbitration Board met on November 1, the Government had completed physical examination of properties and made comprehensive analysis of Grand Trunk accounts and financial status and was ready to proceed. The Grand Trunk was not. Again, when the board met on February 1, the financial statements -of the Grand Trunk had not yet been produced. Meantime, in the month of December, 1920, the Government,-feeling that the arbitration was not proceeding with sufficient expedition, notified the Grand Trunk, through Mr. Kelley, of its dissatisfaction and urged the utmost expedition in the conduct of the arbitration. Again, on January 13, a meeting was called at my instance, of the Grand Trunk officers and counsel and of the government officials and counsel. At that meeting a thorough discussion was had as to the cause of the delay and the steps for more rapid prosecution of the work. Thereupon, the Grand Trunk was definitely informed that the Government was not satisfied with the progress being made by the Grand Trunk in the conduct of the arbitration, especially in face of the heavy demands on the Government for finance and were advised that they must not rely upon any extension of the time of the arbitration. On February 7, as the correspondence discloses, the Grand Trunk was informed of the Government's position as regards extension and requested to consent to legislation providing for Government possession, upon the termination of the orig-

inal arbitration period of April 9. This condition was, therefore, at that time, clearly made known to the Grand Trunk. They had, therefore, ample time to secure the consideration of the shareholders on the question of possession, but instead of even attempting to do so, they distinctly refused to meet the Government's request. Again, on March 19, in sufficient time for a meeting of shareholders to be held, the company was advised by cable that the Government could not extend the period of the arbitration, except upon terms of immediate transfer of management and control of the railway. On March 22, Sir Alfred Smithers cabled, refusing assent. Further correspondence ensued and it was not until April 1 that Sir Alfred Smithers intimated that there was any possibility of the company acceding to the condition required by the Government. This intimation was immediately followed by the objections of the Grand Trunk authorities that they had not authority to transfer possession without consent of shareholders. It is, therefore, idle to maintain that the Government requested from the directors something they were not capable of performing, because they were given abundance of time to secure the judgment of the shareholders upon the proposal, if they had set about to do so. It is the opinion of the Government that there is no further need whatever of the Grand Trunk remaining in possession and further that it is wholly unreasonable that ' they should insist on doing so, while the financing of the property is virtually placed on the shoulders of this country. They have had abundance of time to secure their evidence and, no doubt,'have secured it. If the Grand Trunk as a government property is to be operated to advantage, it must be operated in full unison and concert with the Canadian National railways. They should no longer be operated in any degree as distinct systems, but as bne system. This advantage the Dominion is entitled to now, and, in the judgment of the Government, the Grand Trunk authorities are entirely without justification in seeking to withhold it.

By the present measure, the Government asks Parliament to support the stand taken by the Administration. We believe the shareholders should not be finally denied the the reconstitution of the Arbitration Board until an opportunity is given to meet the conditions required. By the present measure Parliament will give them this opportunity in clear and definite language and

will give sufficient time to enable them to meet and decide. It seems to me clearly a case, not for further negotiation with the company, but for a square and final statement of what must be done, with reasonable opportunity to accept or reject. That is the purport of the Bill which I now submit for the judgment of Parliament.

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Motion agreed to, and Bill read the first time.


ALLEGED IMPERFECT RETURN


On the Orders of the Day:


UNION

Donald Sutherland

Unionist

Mr. DONALD SUTHERLAND (South Oxford):

Mr. Speaker, I desire to direct your attention and that of the Government to a return which was brought down and tabled on the 11th instant in response to an order of the House passed on April 8. The return is obviously incomplete in that copies of several papers relating to the matter have been withheld and are not included in the return. There appears to be an intention to evade the order of the House. The return also includes a memorandum of gratuitous comments which were not asked for, and which are not in accordance with the facts. I might read the order of the House, but possibly that is not necessary. With your permission, Mr. Speaker, I will refer to the inaccuracies in the return.

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UNION

Edgar Nelson Rhodes (Speaker of the House of Commons)

Unionist

Mr. SPEAKER:

I think the hon.

gentleman is quite in order in directing the attention of the minister to any incompleteness in a return, but he would not be in order at this stage in going into the details of any inaccuracies. He will have ample opportunity to do that on a motion for Supply, or in Committee of Supply itself.

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UNION

Donald Sutherland

Unionist

Mr. SUTHERLAND:

I might say that the return to which I refer is known as Sessional Paper No. 131. There are at least five glaring inaccuracies in the return. I would have very briefly touched on them so as to afford an opportunity to have them corrected, but if that is not permissible, I shall not attempt to do so.

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April 19, 1921