May 4, 1922

LIB

George Perry Graham (Minister of Militia and Defence; Minister of the Naval Service)

Liberal

Mr. GRAHAM:

I see that hon. members cannot imagine anything being discussed in Parliament except from a party standpoint. Well, Mr, Speaker, I submit to you that while the leader of the Opposition (Mr. Meighen) who has had an experience of many years, and who admittedly has read the information gathered by the Board of Railway Commissioners for over twenty years, has not yet been able to make up his own mind,-

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

I did not say I had read it all.

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LIB

George Perry Graham (Minister of Militia and Defence; Minister of the Naval Service)

Liberal

Mr. GRAHAM:

Then, I stand corrected. My right hon. friend says he has not read it. I understood from his argument that the information on which the old government had acted carried down to the year 1920-21. I had the impression that it was information received from the Board of Railway Commissioners, as gathered during the past twenty years, upon which the late government had acted. Well, it is rather worse to make a decision without having adequate information than it is to arrive at a conclusion after being seized of that information. However, that is just by the way. I want to point out to my right hon. friend that there is a difference between this Government and the late government, and I am glad of the fact. Under the War Measures Act the late government took advantage of its powers, to do everything itself. This Government proposes to let Parliament have something to say in regard to matters in which the whole people are interested.

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LIB

Ernest Lapointe (Minister of Marine and Fisheries)

Liberal

Mr. LAPOINTE:

That is the whole thing.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

It was in 1919 that the question was dealt with.

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LIB

George Perry Graham (Minister of Militia and Defence; Minister of the Naval Service)

Liberal

Mr. GRAHAM:

The Order in Council was passed in 1918, and my hon. friends submitted the matter to Parliament in 1919. But I will not waste the time of the House dealing with these questions; I desire to discuss the matter seriously.

The railway situation in Canada is one that requires not the political but the most serious business attention of every member of the House. We have had differences of opinion, and I could take up the time of

this House for hours discussing these differences ; but I take the ground that the people of this country are not so much interested row in what either party has done in the past, as in what Parliament at the present time is going to do. We cannot live in the past if we are to make progress. Conditions in this country have changed; the war has altered the viewpoint of many people on many things. We find ourselves to-day confronted with a condition, and not a theory; and it needs practical suggestions and not a rehash of old political arguments if we are to solve the problems before us. If hon. gentlemen, who perhaps have not carefully read the agreement of 1897, will permit me, I shall place on Hansard the gist of that agreement so far as freight rates are concerned. I will not read the whole of it. The Crowsnest pass agreement, makes this concession with regard to freight rates:

(d) That a reduction shall be made In the general rates and tolls of the Company as now charged, or as contained in its present freight tariff, whichever rates are now the lowest, for carloads or otherwise, upon the classes of merchandise hereinafter mentioned, westbound, from and including Fort William and all points east of Fort William on the Company's railway to all points west of Fort William on the Company's main line, or on any line of railway throughout Canada owned or leased by or operated on account of the company, whether the shipment is by all rail line or by lake and rail, such reduction to be to the extent of the following percentages respectively, namely:-

Upon all green and fresh fruits, 33% per cent;

Coal oil, 20 per cent;

Cordage and binder twine, 10 per cent;

Agricultural implements of all kinds, set up or in parts, 10 per cent;

Iron, including bar, band, Canada plates, galvanized, sheet, pipe, pipe-fittings, nails, spikes and horse shoes, 10 per cent;

All kinds of wire, 10 per cent;

Window glass, 10 per cent;

Paper for building and roofing purposes, 10 per cent;

Roofing felt, box and packing, 10 per cent;

Paints of all kinds and oils, 10 per cent;

Live stock, 10 per cent;

Wooden ware, 10 per cent;

Household furniture, 10 per cent;

And that no higher rates than such reduced rates or tolls Shall be hereafter charged by the company upon any such merchandise carried by the company between the points aforesaid; such reductions to take effect on or before the first of January, one thousand eight hundred and ninety-eight;

(e) That there shall be a reduction in the company's present rates and tolls on grain and flour from all points on its main line, branches, or connections, west of Fort William to Fort William and Port Arthur and all points east, of *three cents per one hundred pounds, to take effect in the following manner:-One and one-half cent per one hundred pounds on or before the first day of September, one thousand eight hundred and ninety-eight, and an additional one and one-half cent per one hundred pounds on

Crowsnest Agreement

or before the first day of September, one thousand eight hundred and ninety-nine ; and that no higher rates than such reduced rates or tolls shall be charged after the dates mentioned on such merchandise from the points aforesaid.

It is no wonder that it was a serious step for any government to relieve the railway from those rates, but as a matter of fact conditions were such at that time that I would not criticize the then government for doing almost anything in reason in order to carry out our part in that great war effort. But now the time has come when, according to the order in council, Parliament is called upon to decide a policy.

Let me point out to my right hon. friend that his remarks about the powers of the Board of Railway Commissioners have no bearing whatever on the reference of this question to a committee. The Board of Railway Commissioners as a matter of fact-and I had a good deal to do with the powers given to that board-are in just the position my right hon. friend stated. But he was rather endeavouring to mystify hon. members in dilating on its duties and powers. No one suggests for a moment that this Parliament should deprive the Board of Railway Commissioners of any of its statutory powers. But this question to he decided now is not a question of rates per se as my legal friends would say, it is a question of policy on the part of this Parliament.

Notwithstanding the powers of the Board of Railway Commissioners, my right hon. friend says that that Board cannot exercise these powers until it knows fully under what conditions they are to be exercised. If the Crowsnest pass agreement is to be reverted to, then the Board of Railway Commissioners will have no power to go behind that agreement; they will be confined to the rates named therein so far as that agreement is concerned. But if Parliament in its wisdom decides to defer for a further period the restoration of this agreement, them the Board of Railway Commissioners could give their decision as to what these rates ought to be.

This is not a new question; it was up many times during the period I had the ' honour to be at the head of the Railway Department. At its inception the Board of Railway Commissioners was clothed with certain powers, which were enlarged from time to time, until to-day the jurisdiction of the Board is far wider than that of any similar commission in the world; but, of course, as I said before, the statute embodying the Crowsnest pass agreement

is outside the scope of the board's jurisdiction.

At one period after this agreement was made the question of rates came up. It was argued on many sides that at that time, conditions having changed, and the Board of Railway Commissioners having been appointed to deal with rates, some arrangement ought to be made by which the agreement would be abrogated. The government of that day, believing that a contract made under the circumstances was binding, could not see how the agreement could be displaced.

We are not discussing the powers of the Board of Railway Commissioners, we are discussing what should be the policy of Parliament with reference to the Crowsnest pass agreement, and to my mind a decision cannot be properly arrived at until we are seized of all the facts. I leave it to the fairness of both sides of the House to say whether I am not right in stating that at the present moment we are not in the position we were in when that agreement was made; we are not even in the position we occupied five years ago. We are here representing people who have a dual capacity, they being both taxpayers and part owners of a great national system of railways, and therefore interested in what is to become of those railways. In years gone by they had no such interest except to a very limited extent, that is, in the Intercolonial railway and the Prince Edward Island railway, comprising less than two thousand miles altogether; whereas our National Railway system to day is twenty-two thousand miles in extent. These same people also have interests as consumers and producers. The management of our National Railway system-the railway system of the people-tell us that if we revert to the Crowsnest pass agreement it will very materially injure their property. We are here representing them as directors of the people's property on the one hand; on the other hand, the producers and consumers say: We are being very materially hurt now by the existing transportation conditions. The railway companies come to us and make representations privately that they believe that they can convince a committee of the House that conditons are such as to warrant some amelioration of the position the railways would be in- their railways and our railways-if this agreement was allowed to come into force again.

Now, this House, as a House, Mr. Speaker, has no power or method of hear-

Croivsnest Agreement

ing every side of this story except through a committee. We cannot sit here and listen to arguments by the railway companies and by our own railways; but a committee of the House could hear those arguments and then report to Parliament what the situation is, when the Government would be able to give a decision. My right hon. friend is altogether mistaken in thinking there is any idea on the part of the Government of evading responsibility. But a government that believes in fairness is of the opinion that this matter should not be decided until all parties are heard. That is British fair play, and that is what the committee is suggested for.

To recapitulate, Mr. Speaker, here is the situation so far as the Government is concerned. Unless some legislation takes place the statute embodying the Crowsnest pass agreement will come into force again on July 6; such legislation will not be passed unless good cause is shown; and the opportunity for presenting that cause can only be had through a committee. That is the only fair way, in fact it is the only way by which we can arrive at a just decision. The Government, I repeat, has no desire to escape its responsibilities, but it does believe in fairness to our own railways as well as to others, and it believes also that the only way in which the various views of the parties interested can be presented to this House is through a committee. Then, upon receiving the report of that committee, Parliament and the Government will decide what course ought to be taken.

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PRO

Thomas Alexander Crerar

Progressive

Hon. T. A. CRERAR (Marquette):

Mr. Speaker, the purpose of the motion under discussion is not expressed nearly so clearly in the motion itself as in the words that have fallen from my hon. friend, the Minister of Railways and Canals (Mr. Kennedy) this afternoon, and later from my hon. friend, the Minister of Militia and Defence (Mr. Graham).

Reduced to its essential meaning, the motion resolves itself into nothing more and nothing less than this, that a committee of this House shall be selected to consider whether or not the Crowsnest pass agreement, respecting railway freight rates in this country and which has been under suspension for almost four years, shall be allowed once more to come into effect, be suspended for a further period, or be indefinitely set aside. That is the purpose of the resolution, and it is from that angle that I propose to discuss it.

I listened with a great deal of interest,

as I always do, to the speech made by my right hon. friend (Mr. Meighen) who leads the hon. members to my right. He gave a very interesting historical review of railway conditions in this country during the past twenty-five years. He chided the Government-possibly with some little reason-upon not having a policy on this question, but he sat down without giving any intimation whatever to this House or to the country where he himself stands with regard to this important matter. My right hon. friend is an adept at side-stepping in political debates, and he certainly outshone himself this afternoon, because no one by any stretch of the imagination, could tell from his remarks what his position is on this question.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

If the Government will say, and if my hon. friend will say, that my stating what ought to be done is necessary to enable them to decide, I do not think I would object to saying so.

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PRO

Thomas Alexander Crerar

Progressive

Mr. CRERAR:

Railway Act, then passing through Parliament, suspending the operation of that agreement for a further period of thre

If this motion carries, we admit at once that the question of the Crowsnest pass agreement is open to debate, and as far as I am concerned, Mr. Speaker, I do not wish to place myself in that position. The agreement was made in 1897 for what purpose? The railway company secured a valuable cash subsidy from the Parliament of Canada, and these rates were fixed, and for what purpose? They were fixed not only to benefit western Canada; they were fixed as much to benefit eastern Canada. The railways wanted financial assistance and the government gave it. To assist the factories of eastern Canada, to assist the development of business in this Dominion, these rates were fixed in return, so that commodities might more easily pass from eastern Canada to the great prairies of the West, which were then opening up in

all their vast extent. The arrangement, I submit, was beneficial to western Canada, and it was necessary also for the prosperity of eastern Canada. We have had in Canada for the last forty years a system of protection so far as our fiscal policy is concerned. The net result of that policy of protection has been to drive business east and west to a greater extent than would otherwise have been the case, and if you are going to compel the farmers of western Canada, the labouring people, the business men, the merchants, the professional men and every one else in western Canada, to buy their goods from eastern Canada, the matter of transportation costs from the East to the West must be taken into consideration. Consequently, if it were essential that we should have as low freight rates as possible at that time, I say it is just as essential that we should have them now.

As far a3 the commodities of western Canada are concerned, it is equally essential that these reductions take place. I speak from personal knowledge, Mr. Speaker, when I make this statement: as a result of the increase in freights on lumber, for instance, that took place in 1918, lumber mills, not one or two, but many along the line of the Grand Trunk Pacific railway in northern British Columbia closed their doors and they have not operated since, and the one reason for that is that the increase in freight costs on lumber made it impossible for the lumber manufacturers to sell their products in the markets they had hitherto served. The same is true in respect to the shipment of fish from the Pacific coast to the prairie. In the prairie regions we are dependent for our deep sea fish mainly on the Pacific ocean. Consequently, the very fact of the increase in freight rates affects also the shipment of that commodity.

I will give the House an even more pressing case than those I have mentioned, and that is the effect that these increased freight charges have had on the shipment of grain from the prairies. The provincial treasurer of Saskatchewan, speaking on this question in the Saskatchewan legislature a few months ago, when that legislature unanimously passed a resolution asking that the Crowsnest pass agreement come back into effect, made the statement that he knew of cases, not isolated ones, but hundreds of cases, where farmers had not threshed their grain because the price they would get for it when it reached the market at

Crowsnest Agreement

Fort William or Port Arthur would not be sufficient to pay the freight charges after threshing costs had been paid. I have heard, I believe reliably of cases, not isolated ones by any means, where railway agents are insisting on farmers prepaying their freight on grain going to Fort William because they are not going to take any chances of the grain not realizing sufficient when it reaches Fort William to pay the transportation costs. I draw the attention of the House to that fact and I say that this country cannot prosper under those conditions.

What effect has that on eastern Canada?-you ask me. The best market that the factories of eastern Canada have today are the prairie provinces of this Dominion, as every member of this House knows. The great industry of western Canada is the industry of agriculture. That is a truism which needs no argument. If on the one hand these main producers of wealth in western Canada are to be handicapped by the excessive costs of getting their products to market, and if, on the other hand, the merchants, the manufacturers, and business generally is to be handicapped by the high cost of freight going to western Canada, Ihow can we expect the country to prosper? How under those conditions can you expect your factories to open, how can you expect to relieve unemployment in: eastern Canada, how can you expect to bring about a general revival of business in this country? It cannot be done. I say that on that ground also, it is of the first importance that the rates on freight particularly should come down in this country.

There is another argument; my ihon. friend the Minister of Railways made allusion to it to-day. It is to my mind an argument that carries a very great deal of force. You can raise freight rates in this country to a point where you will absolutely destroy business. It is true, also, that you can bring them down to a point where you will destroy the profit of the transportation companies, thereby bringing about inefficiency in transportation. Somewhere between these two points must be found the medium, the basis upon which rates will be fixed. It is absolutely essential, if business is to be revived in this country that freight rates come down. I submit, sir, that when we maintain freight rates at the existing levels of today we are killing the goose that lays the golden egg as far as furnishing business to the railways is concerned, and it is a

short-sighted policy that should not receive the approval of this House.

It has been argued-I have not heard the argument here but I have seen it presented outside, and I wish to make an allusion to it-that if a reduction in freight rates takes place it will have a serious effect on the earnings of our Canadian railways -that it will have a serious effect on the Canadian Pacific Railway, and that it will have a very serious effect on the National Railways. I wish to examine that argument very briefly. When the question of freight rates was before the Railway Commission a few years ago-and indeed, I believe throughout the whole history of the last few years in the consideration given to this matter by the Railway Commission -the needs of the National Railways were never taken as the basis upon which the rates would1 be fixed. The basis upon which the Railway Commission fixed rates was the needs of the Canadian Pacific Railway. It was recognized that it would be impossible for the Railway Commission t

Now, it is argued in some quarters that it is necessary to keep the Canadian Pacific Railway prosperous in order that the credit of Canada may be maintained; that it is necessary that the Canadian Pacific Railway be furnished with rate fixtures to enable it to earn sufficient surplus to pay the dividends on its stock. I submit, Mr. Speaker, that that argument is not a sound argument. The credit of Canada, the national financial position of Canada, is not fixed by the balance sheet of the Canadian Pacific Railway; nor is it fixed by the balance sheet of any other corporation. Upon what does national credit rest? It rests on the general prosperity of the country, and it rests equally on the security the country gives in the way of law and order - the security it gives to foreign capital when it invests here, the security that is absolutely essential if prosperity is to be maintained. These are the factors which establish the national credit and not the balance sheets of the Canadian Pacific Railway, or the balance sheets of any other business concern in this country. We have sometimes made a very great mistake in our attitude

Crowsnest Agreement

of mind toward that question. I have nothing against the Canadian Pacific Railway Company; I want to see it prosper. It has prospered splendidly in Canada, and there is no Canadian but is proud of the record the Canadian Pacific Railway has made; but if we are to argue that the Canadian Pacific Railway must be maintained in the position where it can earn the dividends on its investment irrespective of everything else, then I say we are not on a sound basis in the consideration of the matter.

Let me point out another consideration: If we assume for the moment that the Canadian Pacific Railway Company would be unable to pay its dividends for the year, would that be a very serious matter from the point of view of the national interest?

There is scarcely a single railway

5 p.m. in the United States that has not, at some period or other in its career, gone through the hands of a receiver. Has that affected the national credit of the United States? Why, until within comparatively recent years the United States was a great borrower of foreign capital-borrowing in Great Britain, borrowing in Prance, in Holland, in the countries of Europe that were prepared to lend capital for development purposes in North America; and the experience of the United States railways in this respect had no effect whatever in fixing the national credit of the republic. Another fact too that should not be overlooked is that Canada has done very well by the Canadian Pacific Railway. I do not think it is improper, or unfair, in any sense to bring that argument up at the present time.

Quoting again from the Drayton-Acworth report we find, according to that report, that the total assistance given by the public of Canada to the Canadian Pacific Railway reached the handsome total of $228,000,000 since that road was brought into existence. But the Canadian Pacific Railway also enjoyed other advantages in the carrying on of its work in Canada. Under the agreement by which it was chartered by the Canadian Parliament it was given exemption from taxation not only on its works, that is on its railway works, but also on the immense land grants it received from the federal government by way of assistance at the time the project was undertaken. At that time I think it was generally understood by Parliament, at any rate it was the general opinion of, the country, that the Canadian Pacific Railway Company

[Mr. Crerar.l

was given exemptions from taxation on its lands for a period of twenty years. But it was later held by the courts that that period did not begin from the date the land grants were given but from the time the lands .were selected. What is the result? The Canadian Pacific Railway Company hold their millions of acres of land in (western Canada and have not even yet in many cases, paid any taxes on those lands.

That was the result of the agreement entered into by the Parliament of Canada with the Canadian Pacific Railway Company, but that agreement imposed serious hardships. In many districts in western Canada it was almost impossible to form school districts because the lands of the Canadian Pacific Railway were exempt from taxation, and the burden was so great on the other ratepayers of the district that they were almost unable to carry on their educational work.

Now that agreement, Mr. Speaker, was made with the company when the railway was undertaken, and the people and the Parliament of Canada have scrupulously lived up to every letter of it from that day to this. I submit that now we are getting back again to normal conditions, when the prices of natural products in Canada have gone down in many cases to below the pre-war figures, it is not too much to ask the Canadian Pacific Railway Company to live up to the agreement it made with the Canadian people when this Crowsnest pass railway was built and when, in return for $4,000,000 cash subsidy, it agreed that the rates on commodities,-on a large list of commodities,-would never go beyond a certain point. I submit, Sir,' it is not too much to ask the Canadian Pacific Railway Company now to respect the letter of the agreement that was made at that time just as scrupulously, as fully and as faithfully as the Canadian Parliament and the Canadian people have observed the agreement they made with the Canadian Pacific Railway Company when that great enterprise was undertaken.

There is another fact to be remembered. The Canadian Pacific Railway Company is not in a difficult position financially. I read, with a great deal of pride as a good Canadian, the balance sheet of the Canadian Pacific Railway Company a few days ago -pride in this sense, that we had a great transportation company that was in such a sound position financially. But I have studied the balance sheet of the company

Crowsnest Agreement

and I find that it has reserves not in the tens of thousands, not in the hundreds of thousands, not in the millions, but in the hundreds of millions of dollars. I have no fault to find particularly with that but why, Mr. Speaker, are reserves created by any business concern, why are reserves created by a transportation company just the same as an industrial concern? The reserves are created as a provision against a rainy day when the earning power may go down a little. Then these reserves can be drawn upon to make good the deficiency. I submit that should the Crowsnest pass agreement go back into effect, even should it have the effect temporarily-it would not be for more than a year or so at the very outside-of preventing the company from making the earnings that it has made in the past, that its dividends to its shareholders could very well be cared for out of the handsome reserves which have been created during the course of a long period of time.

We now come to a consideration of National Railway matters. I said a moment ago that the needs of the National Railways were never taken into consideration by the commission when rates were being fixed; and it is of course absurd for any person, either here or outside, to consider the proposition to having railway rates fixed on a basis that will enable the National Railways to pay. That cannot be done. I shall have something to say upon that, I hope, when the estimates of the Minister of Railways come up again. This is not the time, nor the place, nor the occasion to discuss that question. I merely submit that rates cannot be fixed on the basis of enabling the Canadian National lines to pay, and, consequently that factor may be omitted from our consideration of the case. The Canadian National lines are largely colonization lines, they pass through new territory, and I should like to say, just in passing, that I have an abundant faith in the future of our Canadian National railways. As I have said before, as I say now and, as I shall take occasion to say again whenever an opportunity arises, they are a good potential asset for this country and they will eventually prove a great asset. I have a good deal of sympathy with the Minister of Railways in the position in which he finds himself in connection with the National railways. I think, judging from the statement that was submitted to the House the other day, he is tackling the proposition energetically, and 90i

I hope we shall soon get on common ground as regards all political parties, when we shall treat this national undertaking as a business proposition and free it absolutely, continuously and forever from any consideration of party politics in its administration.

Allusion has been made to the difficulties that will face this committee if it undertakes this work. I can see no prospect that such a committee, undertaking the programme that was laid down by the Minister of Railways this afternoon, and that was supported by the Minister of Militia, can reach any intelligent conclusion in this matter in the time at its disposal. We know all the factors that enter into freight rates, all the circumstances surrounding the question; and simply to say: " We can appoint a committee of this House that will hear evidence on this matter and bring in a decision that will enable us to reach an intelligent conclusion upon it," is altogether beyond the possibilities of the case. When we survey conditions in Canada to-day, we know they are difficult, if, indeed, not desperate. Every one, I am sure, is glad to note that there are signs of revival. To bring about a revival of prosperity in this country, a revival of business, to start the wheels of industry going again, to give encouragement to the people on the farms to produce their stuff, to give employment to labour, one of the first and necessary steps is to bring down transportation costs in, this country, and for that reason I am>

opposed to any further suspension of the-Crowsnest pass agreement in this case. It is stated that dire results will follow if this scale of rates again comes into effect. I cannot see that such will be the case; but even if it should prove, by actual experience, an undue handicap upon our railways, why could this Parliament not, a year or two years hence, again consider the matter? Let us get back to the old scale of rates; let us see what effect that will have on business conditions in this country; and then, if it proves unduly burdensome to our railways, it is always open to this Parliament to give further consideration to it. But, in the meantime, this agreement should not be further suspended. This Parliament should allow that legislation to lapse; we should come back under the scale of that agreement; and if we do that, we shall be taking perhaps the longest step we can in the immediate future towards restoring sound business conditions in this country.

Crowsnest Agreement

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LAB

James Shaver Woodsworth

Labour

Mr. J. S. WOODSWORTH (Centre Winnipeg) :

Mr. Speaker, I should like, in a word, to endorse the position taken by the hon. member for Marquette (Mr. Crerar).

I feel that the industrial sections of the West will agree with the position taken by the agriculturists. The right hon. the leader of the Opposition (Mr. Meighen) says that it is necessary that freight rates should be reduced in order to ensure the continuance of Confederation. May I suggest that it is necessary that freight rates should be reduced in order that the economic life of the West may be maintained at all? The West occupies somewhat a different position economically from that of the East. The West has been built up entirely on a basis of the railways. Had we not the great transportation systems to the western plains, those plains would still be uninhabited and uninhabitable. The extent to which people can carry on in the West is absolutely dependent upon their transportation facilities, and only those who have lived in the West can quite appreciate the position in which the West has been placed during the last few years because of high freight rates. We are there as producers, we are there as consumers; and we have to pay both as producers and as consumers. That is true not merely of our agriculture, but of our fishing, our lumbering, our mining and other primary interests, we cannot begin to get these things started so long as freight rates remain as they are to-day. I take it that the railroads were built primarily to serve the people. Immense sums were ^granted in order that the Canadian Pacific railway should be built to serve the people; but to-day we find that the people cannot afford to use the railways. There are cases where goods are perishing in the fields because the producers cannot afford to ship them to the towns.

I think the hon. member for Marquette has already called attention to the fact that, in the middle West, we cannot get lumber from the west coast simply because of prohibitively high freight rates. It, therefore, becomes absolutely essential that these freight rates should be reduced. I do not know that a great deal of consideration need be given to the exact position of the Canadian Pacific in this regard. We all recognise that that railway has enjoyed a period of great success in the past. We recognise that subsidiary companies have been built up. Why should that railway not take its share, with other industries

[Mr. Crerar. 1

or with other concerns, at a time when there is more or less depression?

The suggestion to appoint a committee evidently looks to a discussion of the whole question. Supposing that this committee brings in a recommendation that the Crowsnest pass agreement should be still further suspended, where would we be then? I would just like to say that, in my best judgment, the West, at least, simply would not tolerate such a recommendation as that. We could rfbt do so with the tens of thousands of unemployed throughout the West to-day, and with conditions stagnant as they are to-day. We simply must have some relief, and it seems to me that this question ought not to be referred to some committee to talk over for weeks; but rather that since the question is one of principle, the discussion should go on i* this House and the principle should be decided here.

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LIB

Alexander Kenneth Maclean

Liberal

Hon. A. K. MACLEAN (Halifax) :

Mr. Speaker, at the risk of repeating a good deal of what has been said this afternoon, I desire to say a few words upon the resolution now before the House for consideration. I agree with the hon. member who leads the Progressive party (Mr. Crerar) that the essential and vital question involved in this resolution relates to the Crowsnest pass agreement, which came into effect in 1897. I admit that that is a very important question. It is an important question to hon. gentlemen who sit directly opposite me and who represent constituencies in the prairie provinces. I wish to remind them, however, that it is not entirely a western question; it is as much an eastern question. And, more than that, I say that by a concurrence of events of r ecent years, and by reason of the economic and financial conditions of the country, it is a national problem and must be viewed in that light; if it is not so considered, we cannot reach a fair and sound conclusion. I admit that potentially a very great principle is involved in this matter, and a very difficult question is before hon. gentlemen of this House to determine. And we must settle it. The Minister of Railways (Mr. Kennedy) deemed it prudent on his part to submit these matters to a committee, and the issue before us this afternoon is whether or not that request, in all the circumstances, is a fair one, a reasonable one, a practical one, and one which should be conceded by the House. The leader of the Opposition (Mr. Meighen) did not, I think, give a very fair rendition of the resolution now before us. It may be quite true that

Crowsnest Agreement

the introductory section of the resolution is expressed in too general terms. The important part of the resolution, however, is the enacting clause, which contains the submission which the minister asks us to put before the committee. Let me read it:

That, in the circumstances, it is advisable to afford opportunity to all interested parties to submit their views upon the subject matter of the inquiry to the said committee with particular regard to the effect of the rates established by the Crowsnest pass agreement upon Canadian National railways and other lines, as well as upon agricultural development and Canadian industry generally;

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Subtopic:   PROPOSED INQUIRY INTO EFFECT UPON RAILWAY RATES
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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

My hon. friend referred to the previous part of the resolution as being merely introductory. May I call his attention to the fact that it is not? The previous part of the resolution is an enacting clause. It says that, notwithstanding, and so forth, it is advisable that a Select Special Committee should be appointed to make inquiry into the question of railway transportation costs.

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LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax) :

And still I adhere to my statement that the language used in the first section is very general. It refers to conferences between the Government and the heads of the railways; it refers to the Crowsnest pass agreement; but it is in the second part of the resolution that we find the enacting clause. Now, having read that clause, I would point out that this resolution does not call for an investigation into railway rates generally. That would be an impossible task to impose on a committee or, indeed, upon Parliament; for few hon. gentlemen in this House, if any, are competent to express an opinion upon the structure of railway rates. We have not had the experience or the training to enable us to do so, and with the exception perhaps of the last Minister of Finance (Sir Henry Drayton), hardly any hon. gentleman in this House would venture to give an opinion upon railway rates in detail.

In essence this resolution asks that a committee inquire into the effect of the Crowsnest agreement upon the Canadian National Railways. Thus the matter becomes a national problem. It is not sectional; it affects the whole of the country; it affects every citizen of Canada. And if it increases taxation the question is one upon which all interests must be heard. The leader of the Opposition objects to the creation of a parliamentary committee. He states that the Government should itself initiate a policy and present it to Parliament for consideration. Let me point out that this is a political question. It is not altogether a railway rate question though, that, of course, is involved. The Crowsnest pass agreement is one that was validated by Parliament; it was made effective by an act of Parliament. It was considered by the Parliament of Canada, and if the suspension is to be continued, or if we are to go back to the agreement, surely Parliament has a right to express an opinion upon the subject. In that case, it has a right to secure such evidence and facts as it deems necessary, from any source, and for that purpose a select committee is considered essential.

I would refer to the remarks made by the member for Marquette (Mr. Crerar). He was disposed, I thought, to consider this question largely from the standpoint of the conditions that prevailed in Canada when the agreement was entered into. He disregarded new factors that have come into the situation. He disregarded the fact that a few years ago we passed through a great war which has seriously affected many things we considered long ago settled, and affected, particularly, the economic interests not only of Canada but, as well, of the whole world. That fact must not be disregarded. Another factor has entered the situation. Since 1897, the people of Canada, through their Government, have become the owners of a vast railway system, and this ownership was not among the conditions that existed when the agreement was made. Let me say here that I am not taking a stand one way or the other in respect of the rate agreement referred to as the Crowsnest pass agreement. I confess frankly that I have never had an opportunity of studying it carefully. Living as 1 do in eastern Canada, there was no very great reason why I should take as much interest in the matter as would hon. gentlemen who live in the West. I am merely indicating the importance of the issue that is before us in the resolution now under consideration. The average member of Parliament is not, and cannot be, informed as to the facts; and I go further and say that it is quite probable that the country as a whole is not well informed of those facts. Before we undertake to make a decision in this matter, surely it is not an unfair request to ask, at least, that a committee be appointed to secure such facts as) are relevant to the issue and as will assist the House in coming to a determination thereon.

Before I refer to some other matters I might consider one or two further re-

Crowsnest Agreement

marks made by the leader of the Progressive party.

There was a time, possibly, when the Crowsnest pass rate agreement, as I have already stated, was purely a western question-when it affected largely the Canadian Pacific Railway and the people living in the territories served by that railway. It is a bigger question to-day. It does not affect the Canadian Pacific Railway and western interests solely; other railways and other interests are involved. My hon. friend (Mr. Crerar) said that if the revival of this rate agreement caused the Canadian Pacific Railway to pass its dividend, that perhaps would not be against the national interest. Well, of course if that occurred it would be bad for the shareholders. But I fear wider interests are involved. What would it indicate if that railway were unable to earn the dividend upon its stock held by the investing public? Would it not mean that there had been a recession in railway business, which in turn would indicate that there was a decline of activity in the commerce of the country? And if that condition affected the Canadian Pacific Railway disastrously, would it not of necessity affect adversely all other interests in the country? Therefore, I say it is a bigger question than the interests of the Canadian Pacific Railway alone.

But I admit for the moment that I am not interested as to whether or not the Crowsnest pass agreement, if again put into effect, would cause such a diminution in the earnings of the Canadian Pacific Railway that the company would have to pass its dividends. We need not be concerned at the moment about that phase of the question. A railway never of itself originates or creates traffic. All commodities that are exchanged are produced by some section of our people, and a business transaction represents a sale and purchase on the part of two people; the sale and purchase must be an accomplished fact and must occur before transportation service is requisitioned at all. In other words, a railway only functions after individuals have consummated business and commercial transactions.

I am sure no Canadian is pleased with the fact that the Canadian National Railways during the past year operated at a deficit of considerably over fifty million dollars-a deficit which must be made up by taxation. And to what is it due? It is due, of course, to the fact that the coun-trv is not normal in its commercial and

industrial processes. Therefore we have this tremendous deficit, which is a severe burden upon the people. I am confident that everyone is interested in having these deficits ended and the railways brought to such a condition that they can at least pay their operating expenses. And the cases are similar. If our railways are prosperous to the extent even of paying only their operating expenses, it means that the country is prosperous to that degree at least; and I wish to protest against the view which I understood my hon. friend from Marquette to impress upon this House, that it was not an important question, viewed from the national standpoint, whether or not our railways earned operating expenses or paid dividends.

Now, Mr. Speaker, what is involved in this resolution? The history of the Crowsnest pass agreement has already been given to the House by the Minister of Militia (Mr. Graham). That agreement was first entered into in 1897, and under it the Canadian Pacific Railway Company undertook the construction of certain railway mileage in British Columbia, primarily for the purpose of developing mining in a certain region of that province; that was the reason given to Parliament at the time. The Canadian Pacific Railway, or other interests, asked the government of the day to pay a subsidy of $11,000 per mile, and they received something like $3,000,000 for the construction of that road and the carrying out of the contract. As a consideration for that assistance, the railway company on their part undertook to fix maximum rates on fifteen commodities, these commodities moving from east of Port Arthur to western points; they also agreed upon maximum rates for wheat and other grain moving from the West to the East as far as Port Arthur. This agreement, I have no doubt, was designed to meet particularly the conditions then prevailing in the West. The agreement continued in force, without variation, until August, 1918, when under the War Measures Act the 25 per cent rate increase was granted and superseded those fixed maximum rates. In 1919, as has already been stated by several hon. members, clause 325 of the Railway Act was passed with a view of legislatively suspending the operation of the agreement. That suspension comes to an end next July, unless this Parliament further continues it.

Now, in order that the Government might be in a position to determine whether the suspension should be continued, or whether

Crowsnest Agreement

the agreement should be allowed to go into effect again with some variations, the Minister of Railways (Mr. Kennedy) has asked the House for leave to submit to a committee the whole question, with the purpose I assume

I can imagine no other purpose-of obtaining all the facts relating to this particular matter. I think the issue is important enough to warrant the establishment of this committee for that purpose, and I intend to support the resolution on that ground.

What facts do we need to be seized of? It is stated that if this agreement is allowed to go into effect again next July the Canadian Pacific Railway will operate at a deficit. I do not know whether that is true or not. That has been stated to me by some persons who are not railway experts and know very little of the actual situation, and I would not like to be guided to my conclusions by such statements. Are there many hon. members who really feel they are sufficiently conversant with all the facts involved, to be in a position to pass judgment upon the issue at once? I can hardly understand any hon. gentleman taking that position, unless he has been intimately associated in his life work with the structure of railway rates and operation. If, however, there is such an hon. member he might well be willing to pass judgment upon the whole issue without hearing any further evidence. I say we should be informed, so far as information can be obtained with any degree of exactness, what will be the effect upon, say, the Canadian Pacific Railway if the Crowsnest pass agreement is revived? That is a big factor in the issue, and speaking for myself at least, I should like to have it authoritatively from some person. I do not know how we can get that except through the avenue of a committee. If it comes directly from the railway, its reliability will be at once Challenged; if it comes from the Railway Board, the allegation may be made that some members of the board are prejudiced1 in the matter and that the information given cannot be relied upon. As I have said, this issue has changed very considerably in the last two years. It has changed since section 325 of the act was put into legislative form. It did not require very much courage to pass that section at that time. Nobody objected to it. The condition of western interests then was very different from what it is to-d'ay. The great wheat production of that section of Canada was being officially bought and sold and the cuestion of railway rates was not a Very important one, because they were not then, I think, borne by the producer of wheat. At any rate, the sentiment of the country was such that at that time it did not require much courage on the part of the government or of Parliament to suspend the Crowsnest pass agreement, or to enact section 325 of the Railway Act.

We have become recently the owners of a great system of railways, and it is proposed that the country continue that ownership-a tremendous experiment, indeed, which we all hope will result in success. A few years ago in the West the Canadian Northern, the Grand Trunk Pacific and the Canadian Pacific were competing for western traffic,.. With a situation like that prevailing to-day, competition might very well regulate the rates. But that is not the situation to-day. These railways, so far as they have come under Government ownership, have been consolidated-or practically consolidated-I may say for the purposes of my argument, even though I be not literally correct. The Canadian National Railways are operating at a very large annual deficit, to say nothing of failure to pay the interest on the moneys which they owe to the public. Any deficit incurred by reason of the operations of the Canadian National railways must be paid by the people of this country; the people of the west and1 the people of the east must pay their proportion as well as the people of Central Canad!a. If we have annual large railway deficits made up by taxation from the pockets of the people, we cannot hope for a revival in business or industry.

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PRO

Henry Elvins Spencer

Progressive

Mr. SPENCER:

My hon. friend says

that the deficits come out of the pockets of the people. Where do the railway rates come from?

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LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax) :

The railway rates ultimately come from the consumer, the man who buys the thing that is produced and transported. The more money that is taken from the people to make up railway deficits, the less money they will have to buy the commodities which the country produces. Whatever way you look at this question, you find it is one which affects all the people of Canada, all sections and all interests. If the Crowsnest pass agreement be again put into operation and the result is an addition of from $10,000,000 to $20,000,000 to the deficits of the Canadian National Railway system then that is a verv serious national problem to

Croivsnest Agreement

consider. It is bigger than a western question; it is national, not sectional. We must sit down and review the whole situation as Canadians, regardless of sectional interests.

I have heard it said-not perhaps by very competent people, I admit,-that if the Crowsnest pass agreement comes again into effect the deficits of the Canadian National Railway system will be increased by the amounts I have mentioned. Personally I should like to know whether or not that statement is well founded. My view of the whole issue would be changed if I were satisfied upon that point, and the people whom I represent would, I am sure, be inclined to view it in a different light. But who is going to inform me; who is going to inform hon. gentlemen around me and Parliament as a whole whether or not that statement is well founded? It would be better to have the facts reach Parliament through the avenue of a committee than through the Minister of Railways, for the Canadian National Railway system is still operated by directors who are supposed to be absolutely independent. What objection can there be to having such matters as these made clear to Parliament and to the country? How else can we obtain the facts? What objection can there be to the constitution of a committee to make these things clear prior to our venturing upon the determination of such an important issue?

The leader of the Opposition states that the Government should declare its policy in this respect, announce it to Parliament, and, whatever it be, seek to make it effective by legislation. Well, that is one way of dealing with the question. Sometimes that can be done; sometimes it is not wise or prudent to do that. It was either the leader of the Opposition or the leader of the Progressive party who admitted this afternoon that the facts relating to this issue were intricate and involved. After all, Parliament has responsibilities in respect to this matter: Parliament made

this agreement in 1897. Parliament alone can vary it or substitute another for it, and Parliament should not shrink from its obligations in the matter. Indeed, it cannot escape them; it must deliberate upon this issue and in due course exercise its judgment. But, as I have already said more than once, I am not quite clear how Parliament can place itself in that position without having more knowledge of the facts than I think most hon. members

have regarding it. Ultimately, I admit, the Government must state its policy upon this question. It cannot escape it. But the Government says it should state its policy after this committee has reported. There is nothing unreasonable about that position,. It is in harmony with past practice. It is not out of harmony with sound constitutional parliamentary practice. I fail to see any objection whatever to the request of the Minister of Railways (Mr. Kennedy) for the creation of this committee.

This committee is not asked in specific terms to report or to make a finding as to whether or not clause 325 should be further suspended. It is not in specific terms asked to make that finding. I do not know whether the Minister of Railways intended that it should. It is simply asked to make inquiry as to what effect the Crowsnest pass agreement shall have upon the Canadian National railways and other lines, as well as upon agricultural development and Canadian industry generally. It would appear from a careful reading of the resolution that the minister deliberately had in mind the acquisition of facts relevant to this issue through the avenue of a committee and by it to be placed before this House. I do not think it would take the committee a great number of days to have placed before it the facts and the evidence contemplated by this resolution.

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PRO

Robert Forke

Progressive

Mr. FORKK:

Have you ever taken into consideration the fact that the people who are opposing the abrogation of the Crowsnest pass agreement realize that they cannot go on producing and paying the present freight rates? They know their side of the question absolutely. They do not need any investigation or to hear anything that may be said from the other side; it would make no difference to them. They cannot carry on business under these conditions.

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LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax) :

I am not disposed to argue with my hon. friend the effect of the present railway rates upon producers in any section of Canada. I think we are all agreed there should be a reduction of freight rates on the primary commodities. The people in my section of the country feel the effect of the present high freight rates upon primary commodities just as other people do. Many of them tell me they have been unable to carry on their business during the past year or two by reason of these rates. That problem exists in every section of the

Croiosnest Agreement

country. I hope that there is coming soon a reduction in rates upon heavy primary commodities in this country, upon the product of wheat, for instance, which is of so much interest to my hon. friends directly opposite me. The continuance of clause 325 would not, I hope, mean that we are not going to have a reduction in railway rates. As I said a moment ago, the people of all Canada are all very much interested in a reduction in railway rates. The only reason why railway rates have not been reduced on the Canadian National Railway system, I presume, is because the roads have been operating under a very heavy deficit. If this deficit is going to be increased, how can we look forward to the future with very much hope of a reduction in railway rates? Does not my hon. friend see that this is an important question? We cannot have heavy railway deficits and low freight rates, or something will suffer in this country.

It has been suggested that it would not necessarily affect the nation if the Canadian Pacific railway's operations this present year turned out disastrously and they had a deficit instead of the usual surplus. I am not a shareholder in the Canadian Pacific, and I am not personally much interested in it any more than is any other hon. member of this House, except in wishing that all the big institutions in our country should be fairly prosperous; for if they are not, it reacts upon us all. A deficit in the operations of the Canadian Pacific in Canada would, I think, be an unfortunate thing for all of us. One cannot foresee just what its effect might be. It perhaps might not be so bad as some people think, but I do venture the opinion that if such a thing occurred we would face a condition of affairs full of possible danger to our economic welfare.

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PRO

John Morrison

Progressive

Mr. MORRISON:

If the railways had been unable to pay any dividends during the last two years, do you think it would have had the disastrous effect on Canadians generally that the present situation has had, where the masses, no matter in what industry they were engaged, have lost money?

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LIB

Alexander Kenneth Maclean

Liberal

Mr. MACLEAN (Halifax) :

Let me say to my hon. friend that whenever any organized commercial activity fails, it immediately affects everybody. My hon. friend would not say that the recent failure of many commercial institutions in this country has not had a bad effect, in the first place, on the community in which the

business was carried on, and secondly, on all other sections of the country.

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PRO

John Morrison

Progressive

Mr. MORRISON:

You are evading the question. I asked you a straight question, and you have not answered it.

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Subtopic:   PROPOSED INQUIRY INTO EFFECT UPON RAILWAY RATES
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May 4, 1922