May 30, 1921

UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID:

We own the stock of the Grand Trunk Railway Company, and for the money we advance to that system for further improvements or on capital account we take security on the system itself.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

But if we own the stock we own the company.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L
L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

As I understand it, in these companies there is debenture stock guaranteed by immovable property that the company happens to own, and there is common stock. In most of these railway companies the common stock is not worth anything, so we take over not the common stock but the debentures. Now, can we lend an additional $89,000,000 to these companies? What guarantee have we for its reimbursement?

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID:

Well, if $50,000,000 is put into the company, of course it increases its value to that extent. For the money advanced the Government must take security on the railroad.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

But the minister is not answering my question. What is our security for the $89,000,000, and how is it made up?

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID:

The security will be by way of mortgage on the road. Of course, it will rank after the other securities that are ahead of it.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

How can a man be at the same time the owner of a property and the mortgagee creditor? That is a legal question that I would like the minister to answer.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID :

I would not attempt to answer legal questions; the hon. member himself, being a prominent lawyer, should understand that without asking me. But if he owned all the shares of any private company, is there any reason why he could not lend that company money and take security by way of mortgage on the property of the company?

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

Any one who did that would he securing himself out of his own property.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID:

Well, if the property is increased in value to the extent of the advance-

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

That is his profit.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID:

No, it is money

advanced for the purpose of extension of lines or to pay liabilities against the company.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

What is the period of that loan? When are we to be reimbursed?

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID:

It will be on demand.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

That is very vague. Does the minister mean that a month from now or a year from now the Government may ask the company to reimburse the amount loaned?

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID:

It will be a demand mortgage or loan. If it is in the interest of the Government or of the country to demand it in a month or in a year, or whatever time it may be, they will call in the loan.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

What rank will this

mortgage hold? Will it be a first or second or third mortgage?

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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UNI L

John Flaws Reid

Unionist (Liberal)

Hon. Mr. REID:

All the securities that are against the road up to date-and they have been given to the House-of course rank first. This will be the last.

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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L LIB

Lucien Cannon

Laurier Liberal

Mr. CANNON:

Therefore, as regards

priority, we are going to be the very last, and seeing that these companies were taken over by the Government because they could not meet their liabilities, our mortgages are worth nothing. What is the use of saying that this is a loan?

Topic:   SUPPLY-BERRY AND CURRANT BOXES
Subtopic:   REVISED EDITION. COMMONS
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May 30, 1921