February 5, 1923

LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

Consequently my hon. friend's argument applies to us just 4 p.m. as much as to him, and I am not blaming him, as I said before, for going so slowly for two years. There are many difficulties in the way. But I do blame him for saying to the House that in two

months we could clear up all those difficulties and amalgamate the Grand Trunk, and I make the further assertion that, in two months we did take the first step towards amalgamation and appointed a Canadian National board, and on January 30, the Grand Trunk became a part of the Canadian National system.

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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON:

Was there not a Canadian National board then? Were not Mr. Barnhill, Mr. E. R. Wood and Mr. E. T. Riley on that board?

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LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

There was never any

Canadian National board until October 4 1922.

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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON:

That was when you promulgated the appointment?

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LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

There was not any before that. By order in council the systems were called the Canadian National system prior to that, but the board was the Canadian Northern Railway board.

I want now to give the dates, so that we will have them in proper sequence. When the late government took control of the Grand Trunk they appointed a separate board for the Grand Trunk, not an amalgamated board, with Sir Joseph Flavelle as chairman. It became the duty of the present government when we wished to bring abou the amalgamation, first, to retire the directorate of the Grand Trunk and the Canadian Northern, for these were the only directors in existence, to make way for whoever we might propose as the new Canadian National board The new Canadian National board when named was only a board, it had no railway to run except as an operator, and there was not one single mile of railway otherwise under that board; consequently it was necessary to appoint that same board as the board of directors for the Grand Trunk, the board of directors for the Canadian Northern and practically the board for all the subsidiary companies of the Canadian Northern. This continued until the Grand Trunk board was brought in a few days ago by order in council under the act of 1919 and the Canadian Government Railways were brought in. At the present time the Canadian National is operating the Canadian Northern and its lines until such times as they can be brought in, but it is in control, and practically the owner oi the Grand Trunk and the Canadian Government Railways, the latter for operation only. I will give the dates now, so that wr will have them in sequence:

The formal transfer of control of the Grand Trunk was effected at the initial meeting of

The Address-Mr. Graham

the new board in Toronto on October 10. By order in council dated January 19, 1923, preference and common stock of the Grand Trunk Railway of Canada was declared the property of the government of Canada in accordance with the judgment of the Judicial Committee of the Privy Council.

I might say that was under the act passed in 1919, and that was the process by which the stock of the Grand Trunk became the pioperty of the people of Canada. Under the agreement to which my hon. friend has referred the government of Canada guaranteed 4 per cent on what is known as Grand Trunk guaranteed stock. I think the amount is something like $8,000,000 anually in round figures on the preference and common stock-

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Two and a half millions on the guaranteed stock I think.

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LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

Perhaps my figures are

wrong.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Two and a half millions is right.

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LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

The agreement under which the government became responsible for interest charges on the debentures and guaranteed stock ($8,984,034.58 annually) left the value if any, of the preference and common stock to be decided by arbitration.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Certainly, if you include the debentures, but you said only the guaranteed stock.

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LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

I should have included

the debentures.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

There is a big difference.

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LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

It was a slip of the tongue. In addition to this $8,000,000 I mentioned there was the preference and common stock the value of which was left to arbitration. The arbitrators declared that of no value but that is the voting stock. That is the only stock, I think, that has any voting power. They had to transfer it to the government of Canada. One can readily understand it having no value as declared by the arbitrators, the identical certificates could not be obtained, but the act provided that a transfer could be made in the books of the company, which was done, and the Grand Trunk stock passed into the possession of the Finance Minister, in trust for the people of Canada. Before the shareholders of the Grand Trunk could agree to the amalgamation with the Canadian National a meeting was necessary. The Minister of Finance of Canada being the only shareholder of the Grand Trunk with any voting power, he alone had the exercise

of that power. But he gave a proxy to Mr. Cope, Controller of the Railway department, who, acting for the shareholders of the Grand Trunk, in Ottawa a few days ago, agreed to the amalgamation of the Grand Trunk with the Canadian National system. This having been done, an agreement of amalgamation was necessary. This agreement was drawn up and acquiesced in by the two boards. Further, it had to be approved by order in Council, and that has been done; so that to-day the Grand Trunk and the Canadian Government Railways are part of the Canadian National system; and the Canadian Northern will shortly also form a part of that system, as soon as the legal technicalities can be disposed of. I have tried to give in sequence the steps that wrere taken to bring about this amalgamation. As I remarked before, we are entering upon an experiment which calls for the best that is in us all if we are to succeed. I believe that government ownership in Canada, even starting under the handicap of a deficit such as this great system has to face, can in time be made a success. If it is, we shall have given a lesson to the entire world in the matter of transportation.

My right hon. friend (Mr. Meighen) referred, I think, to the fact that certain rolling stock has been purchased without a vote of parliament. Well, as we know, that is not an uncommon practice in this parliament. But rolling stock cannot be ordered to-day and be ready for use to-morrow. The wants of next year-at least, that has been my experience ever since my first connection with railways-have invariably been anticipated, and rolling stock required a year ahead must be ordered now if it is to be available. I think I could produce some orders in council, passed under the late government and, as well, some passed by the government of which I was formerly a member, in connection with matters analogous to this. Now, the necessity must exist for rolling stock before such a procedure can be justified. Did that necessity exist in this case? My right hon. friend stated that it did not, because, under the old board, my good friend Mr. Hanna, who was at its head, was able to move crops and fill the requirements of the commercial interests of Canada without ordering rolling stock in advance. My right hon. friend is entirely mistaken. The greatest trouble I have known to exist through the lack of rolling stock, particularly in eastern Canada, to meet the needs of the lumbermen of Quebec and New Brunswick, and to keep up with the pulpwood business and all the other trade east of here, prevailed before the new board was formed

The Address-Mr. Graham

at all. Mr. Hanna and myself were communicating day by day on the question as to how the demand should be met, because there was such a shortage of rolling stock. The United States is also short of rolling stock. There was a balance of 20,000 cars of the Canadian National Railways in the United States, and consequently we were very short of rolling stock. To show how a shortage in cars can come about, I might mention a recent incident. A few days ago, at the urgent request of some coal interests, the Canadian Pacific Railway sent over, into the United States, fifty cars with the express understanding that they were all to come back loaded with coal for the Canadian people. Only fifteen came back; thirty-five were diverted. Early last autumn the people of eastern and western Canada were very much in need of additional rolling stock, but there was none bought last year. Now, we cannot hone to carry on the business of this country and have our National Railway system compete with other lines and, what is of greater importance, transport the commodities which the people produce or require, unless we are able and ready to provide the necessary rolling stock and motive power that are required for these movements. We hope to finance the purchasing of this rolling stock as far as possible without appealing to parliament for assistance. I am not speaking positively, but for the most part we expect to finance the purchase of necessary rolling stock through the sale of equipment bonds.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

Guaranteed by the government?

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LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

They will not have to be guaranteed by the government; that is my information. The company will purchase it, just as any other incorporated company would do, and the government will not be called upon to finance these purchases. The transactions will be carried on as in the case of the Canadian Pacific Railway or any other incorporated company. For the most part, the Canadian National Railway Company will provide its own securities for the purchase of stock.

I have endeavoured in sequence to put on the records of the House the method by which this amalgamation was brought about, and I have outlined the difficulties that have attended it. The sky is not cloudless, either in regard to the railways or any other business. There are difficulties that have to be overcome, and an attempt will be made to meet them. I believe that the board is entering upon this work with an earnest desire

to make the railways a success, and it is my conviction that with the help of the Canadian people this can be done. Now, Montreal has been selected as headquarters of the Canadian National system.

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

That is where the pull was.

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LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

Transportation is based on pull of freight and passengers.

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CON
LIB

George Perry Graham (Minister of National Defence)

Liberal

Mr. GRAHAM:

I may point out that under the act of 1919 only the government has the right to name the headquarters. That duty is reserved to the government; all else comes within the purview of the board, such, for example, as divisions of districts and all that sort of thing. The board was asked to advise the government in regard to the question of headquarters, but that advice need not necessarily have been taken. I am not trying to crawl under the coat of the board at all. Personally, it would have been a great pleasure for me, as an Ontario man, to see the headquarters established in Ontario. But I have always advised that the headquarters should be in Montreal, and this from purely business reasons. What the people of Ontario, and the people of all Canada besides, need is efficient transportation at reasonable rates, and the fact that the expert who has been engaged to advise on such matters recommended Montreal as headquarters is, to my mind, evidence that that city should have been chosen. More than that-and I am not speaking in any way derogatorily of the Canadian Pacific Railway-when you have to compete in business with another you want to be as near your competitor as you possibly can. The Canadian Pacific Railway headquarters are in Montreal, and there, I think, is where the Canadian National Railway system should have its headquarters. Some of my friends say that the Canadian National headquarters have been taken from Toronto. Toronto never had the Canadian National headquarters any more than Montreal had. There were certain railways which were christened the "Canadian National" by order in council, but there was no Canadian National company until October 4th. Toronto was headquarters of the Canadian Northern, and not the Canadian National; and Montreal was the headquarters of the Grand Trunk and not of the Canadian National Railways. I fully concur with the chairman of the board, that the headquarters of the Canadian National system ought to be in the

The Address-Mr. Hoey

same place as the headquarters of the Canadian Pacific Railway. Further than that, at the present time Montreal, during the summer months, is the great distributing centre, inward and outward; and where trade originates oceanward, either in or out, is where the headquarters of the Canadian National system should be, if that system is to get its share of that traffic. Many reasons perhaps could be adduced why some other place should have been selected as the headquarters of the system, but from purely a business standpoint I believe Montreal is the right place.

As to the divisional headquarters, that is a matter for the board to decide. Let me point out that the president will be glad to have any views or opinions from members of this House; indeed, he is anxious to listen to such views or opinions because the people whom we represent own this railway system, and their representatives have a right to advise, but not to order.

Now, as to this Canadian National railway system being removed from politics. In the smaller sense of politics, the operation of the system ought not to be interfered with by any outsider; that is a matter that only those in charge are in a position to judge and decide. But in the higher sense of politics, the management of the affairs of the nation, such a property as I have attempted to describe to you this afternoon, a property owned by the people who sent you here, may be expected to engage your attention, and our shareholders-the people-will naturally require their views to be presented to this House as would the views of the shareholders of any incorporated company be brought before a general meeting of shareholders. We hold the proxies for the shareholders, and it is the inherent right of parliament to discuss the affairs of the Canadian National railway system. The government is in a way a committee of this House which has by statute been given authority to name for you a board of directors. It is therefore the privilege of this House at any time, if the shareholders believe that the gentlemen to whom they have confided this duty have not properly discharged it, to put other gentlemen in their place-but they will not do so for a while.

I want to make it clear, Mr. Speaker, that in the smaller things, the operation of the line, the men whom we have hired for the purpose must not be interfered with; but in the larger things we do not forget that the people whom we represent-every man, woman and child in the Dominion-are shareholders of this great national transportation

system. Its success is their success, and if we allow it to become a failure, it will be a failure for the entire people. I believe that it will not be a failure, and I trust that as the months go by and the machinery gets working more smoothly as all these different entities are consolidated into one, that success will be achieved. And I ask parliament and the people of Canada to be patient, to give the board of directors and its president an opportunity to put the system on a sound basis, and a year from now begin to judge by actual results-not by promises, but rather by accomplishment.

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PRO

Robert Alexander Hoey

Progressive

Mr. R. A. HOEY (Springfield):

Mr. Speaker, we have listened to a very informative address, an address dealing with a subject of the most vital importance to the Canadian people, but a subject to which I have no desire to refer at the moment.

I cannot persuade myself, Mr. Speaker, nor can I be easily persuaded, that the Address of His Excellency the Governor General, which is ostensibly the programme of the government for this session, and which forms the basis of our discussion at this time, will on the whole awaken hope or kindle inspiration in the hearts of the Canadian people. It is defective in that it fails, seemingly, to come to close grips with the economic conditions confronting us. It must suggest to many hon. members, at any rate it suggests irresistibly to me, a lack of faith on the part of the government itself-that is, a lack of faith to deal successfully and effectively with the tasks confronting it; a lack of faith that is no doubt due to lack of unity within the government ranks. Without faith we cannot have those deep-seated, deep-rooted convictions upon which a true and adequate legislative programme must be based, and without conviction there cannot be that enthusiasm generated, the warmth and glow of which is so essential to national progress.

The programme, to me, is sectional, not so much because of what is stated, but rather because of what is carefully and guardedly omitted-notably all reference to a revision of the customs tariff. Evidently that policy last year of attrition is now to be displaced by a spiritual state of contrition on the part of the government itself. The programme is to me an eerie programme, and I am convinced that, had the government which adopted that attitude of austere aloofness to the Near Eastern crisis abroad-and with some measure of justification I am convinced-adopted the same attitude of austere aloofness to the near-eastern interests at

The Address-Mr. Hoey

home, a different programme would have been submitted at this session. The programme, I am convinced, was framed during the absence of the hon. Minister of Marine and Fisheries (Mr. Lapointe), at a time when the hon. Minister of the Interior (Mr. Stewart) was sleeplessly engaged in his celebrated immigration policy, and prior to the departure of the hon. Minister of Justice (Sir Lomer Gouin) to take part in that little family misunderstanding in the province of Quebec.

That the people of Canada to-day are vitally and-shall I say?-intelligently interested in social and economic conditions, none will deny. The producers of Canada in general, and the western agriculturalists in particular, are interested in a rapid deflation of the price of foodstuffs which has not been accompanied by any corresponding reduction in the price of manufactured commodities. I have no desire to weary the House with lengthy quotations or to irritate hon. members with statistics, but in order that the House may grasp what that deflation means, let me quote just one short paragraph:

The farmer who on November 1st, 1919, went to pay a one hundred dollar obligation, required 38 bushels of 1 Northern wheat. On November 1st, 1922, he would require 95 bushels to pay $100.00. If he paid it with oats he required 117 bushels 2 C. W. in 1919 and 218 bushels in 1922, 67 bushels of barley in 1919 and 190 bushels in 1922. If he was a mixed farmer he could meet his one hundred dollar obligation by selling a 952 lb. best butcher steer, four years ago. This last November his steer would have to weigh 1,818 lbs. If he sold hogs, 654 lbs. of selects would pay the bill in 1919, but it would take 1,025 lbs. to do the trick in 1922. In other words, one dollar's worth of the various farm products on Nov. 1st, 1922 were worth four years previous as followswheat, $2.50; oats, $1.94; barley, $2,85; cattle, 1.90 and hogs, $1.56.

The western agriculturists, then, are vitally interested not only in the deflation of the value of farm products, but in a problem that is closely associated with that deflation, namely, the problem of the cost of production. Let me say here that if we ever turn seriously to consider the payment of our national debt-and I am not persuaded that we shall do so during the life of the present administration-we shall be forced to the conclusion that the national debt can be paid only by the disposal of our .surplus farm products in the markets of the world-there is no. other way, so far as I can determine. And when we reach that conclusion we shall realize that we can profitably dispose of our surplus farm products in the markets of the world only when agriculture is detached and divorced from every handicap now associated with that industry.

The right hon. leader of the Opposition (Mr. Meighen) discovered a relationship between sixty-five- and seventy-five-cent wheat on the western plains and the impoverished if not chaotic conditions prevailing in Europe. But in what was an admirable address, no words fell from his lips that would lead me to believe that he grasped the real relationship. Hon. members will recall the three major struggles in which Great Britain was engaged during the nineteenth century-that struggle in the second decade of the century; the Crimea, just about the middle of the century; and later the war in South Africa. After the earlier struggle there were bread riots in Great Britain; the conditions were indescribable. After the second, in the middle of the century, squalor, poverty and penury were in evidence everywhere; men paraded the streets crying aloud for bread. After the South African war the conditions were not quite so acute, owing to Britain's free trade policy. It was conditions such as these that led Norman Angell, the author, to prophesy that if modern nations engaged in war on any large, any colossal, scale in the early years of the twentieth century, such a struggle would be followed by the complete collapse of modern civilization itself. Well, we engaged in the struggle; we have reached the post-war period, and there are no bread riots in Europe. There were one or two features that these prophets-shall I call them prophets of despair?-overlooked. The first

thing that they overlooked was the efficiency and responsiveness of the agricultural machine, particularly on the American continent. They overlooked also the combination of circumstances-they had of necessity to overlook those circumstances, being unable to visualize them-that has forced the producer on the American continent onto a treadmill, a treadmill the revolutions of which he is forced to

make prompted by the instinct of selfpreservation. And when we discern that relationship we discern the only redeeming feature in the public life of the country in this post-war crisis. I see the Canadian agriculturist a depressed and discouraged but nevertheless heroic figure, toiling, toiling, toiling, that the world may be fed and that civilization itself may be saved. The Canadian agriculturist to-day is feeding Europe at a price considerably less than cost.

So much for the redeeming feature; what about the tragedy? Well, when the people who receive our foodstuffs say, in substance, though perhaps not in so many words, "The

The Address-Mr. Hoey

cheap foodstuffs that we are obtaining at a price less than cost, coupled with our industrial efficiency enable us to produce manufactured commodities at a price considerably less than the price prevailing in your country for similar articles"-when they say that to us, what do we say? We put up both hands, and we say, "No; these goods can only be admitted at a price that will guarantee a dividend to the home manufacturer." You cannot with impunity treat natural laws with contempt; the nation that seeks to thwart these fundamental laws will be ground ultimately by their very force. That is the vital relationship existing to-day between the agricultural conditions in this country and the state of Europe. When men prate of Canada's selfishness and aloofness, they are simply overlooking the fundamental facts of the case.

Physical conditions will not permit me, Mr. Speaker, to speak at length, but I do want to make one or two suggestions. I want to suggest to the government, first of all, that in my humble judgment the time has arrived for the appointment of a Canadian ambassador to the United States. I am convinced that that appointment is inseparably bound up with the problem of wider markets. I am convinced that if the right man were secured,-and he ought to be secured; a man of tact, good judgment, and familiar, to some extent at least, with conditions on the North American continent at this time, a man who could become responsible for negotiations and take the initiative in starting negotiations that could be followed up by the administration here-I believe that if such a man were secured and ultimately appointed he could make a contribution of the first magnitude to the cause of a better understanding between the two nations at this time. Furthermore, it is my opinion that our foreign policy is going to be more and more bound up with the foreign policy of the United States, whether we desire it or not. For Canada to embark on an European struggle at this time with the United States remaining neutral, would mean, in view of our present financial obligations, bankruptcy to this young nation. If some people contend that no other nation of the British Commonwealth has ever taken this step, I reply that no other nation in the British Commonwealth is inseparably associated with the United States in the sense that this Canadian nation is.

The second practical suggestion I should like to make is one to the government, and it is that they should seriously consider at the earliest possible moment, or as soon as

circumstances will permit, the advisability of calling a conference of representatives of the provinces who will meet with the federal representatives and clearly define, if they can, the respective sources to which each body may go in search of the revenue that is necessary to meet its needs. Nothing could be more irritating than to receive a notice from the Dominion government that your income tax is overdue, or at least due, and then to receive a similar notice from a provincial government. I think this is a conference the holding of which is long overdue.

Before I take my seat I should like to refer to the address delivered during this debate by the right hon. leader of the Conservative party (Mr. Meighen). I was surprised, I was amazed, at its toleration. We had from him at least a speech worthy of his mind. But there was one pronouncement in his address that seems to have remained with me in a peculiar sense. Referring to the hon. leader of the Progressive party (Mr. Forke), he said that he was a man who was not only truly Canadian, but also truly British. I could not help but think as the right hon. gentleman concluded his remarks that he himself was rapidly becoming Canadianized. But what of his immediate followers? I trust the Canadianization of my right hon. friend will not lead to the fossilization of his immediate followers. Why this ominous silence? The country did not expect much from them we know, but surely the country expects something. Well might an angel exclaim "Why seek ye the living amongst the dead?"

Believing, Mr. Speaker, that there is an aspect of our economic conditions that has not been emphasized in this debate, believing also that that aspect of our economic conditions is of the most vital importance to the Canadian people in this crisis, I beg to move, seconded by the hon. member for Victoria and Carleton (Mr. Caldwell):

That in view of the increased burden of taxation and of the hardship which many of the people suffer from this burden, and the unrest and dissatisfaction arising therefrom, and in view of the desirability of adopting measures to reduce the cost of production, and effect such relief to consumers and producers as may be within the power of parliament, the House is of the opinion that substantial reductions of the burdens of customs taxation should be made with a view to the accomplishing of two purposes of the highest im-[DOT] portance.

(1) Diminishing the very high cost of production, which presses so severely on the primary producers of the country at this time;

(2) Reducing the cost of living to the great masses of the common people, many of whom are being forced out of the country by the prevailing economic conditions.

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February 5, 1923