February 23, 1926

LIB
CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

As to the chronology of the matter, in some way this became noised abroad and a question was asked in March of last year. In reply to that question tin Minister of Railways said that the Canadian National Railways had suggested to capitalists that if they would build this road it might be leased. We know nothing further of it than that. The capitalists did not appear. Certain capitalists, so-called, representing bond-holders, have taken the place of directors, so we are told, on the Rouyn Railway Company board; but as construction men, railroad men, they do not exist. They are used only for convenience as representing the money that has gone into the railway and these people representing the bondholders or trustees for the bondholders are no more capitalists constructing the road than any other purchasers of bonds issued by the Dominion government in respect of construction. That was in March and things were then pretty well under way. Hon. members may draw their own inferences from the state of fact which is disclosed by the chronology of the matter. There is the reply made by the minister. On April 3, 1925, shortly after the minister had spoken, the Rouyn Railway Company was incorporated by the legislature of the province of Quebec. There must have been a great deal of discussion before thalt; the matter must have been pretty well completed and ready for crystallization if it was not already crystallized. This House was then in session, it sat luntil June 27, and on April 3 the railway company had got its incorporation. The minister had considered the proposal to build the road and everything was in train to bring the matter before the House for discussion if there was such a great hurry about it. There was sufficient time to have it taken up in the House if the government deemed it so urgent. On June 9 it was reported to the Canadian National Railways that negotiations had taken place with the Quebec government as to its grant of free lands and money guarantee and as to the guarantee with other parties of $20,000 per month. So that the whole thing was ready for consummation and it could have been brought before the House if it had been the intention to deal with it in the normal, legal way, and to have it incorporated in a bill which could be subjected to discussion. Other branch lines

The Address-Mr. Geary

were discussed during last session and this one could have been discussed also. But that was not done; the thing was allowed to drag through the summer until the election came on. The election had been in the air and on September 5 the Prime Minister was talking about railways on a 'high plane while aft the same time he knew that he was on the eve of putting through this order in council. And will hon. members recall how busy the government wag at that time. Although the MSnidter of Customs (Mr. Boivin) had been appointed some weeks before that, he did not find it possible even to enter his Office, and as a matter of fact he did not do so until the first of November. Yet there was time to put this through. On September 14 there began a series of meetings and' there was a great rush. The Rouyn Railway held1 its famous little meeting at which it was said! that such and such might be the case. "Here is a form of lease", they were told, "and if you approve an arrangement can be entered into". And so on. On the 21st the Canadian National Railways met and accepted the proposition and on September 26 the cabinet met and presumably discussed this important matter in its different phases andl passed the necessary order in council. That was the time, between September 14 and September 26, when this government was so immersed in political business and election affairs that if could not attend to the ordinary business of the country. So busy were they that the Minister of Customs was unable to enter his office. Still there was *time to hold these various meet-5 p.m. ings, to call the Privy Council together, and to issue a solemn order in council providing that this railway, so much desired by someone, should be put through, dfenying in this way the right of parliament to discuss the matter on its merits. The general election was little more than a month in the future. Is it not reasonable to suppose that that fact entered largely into consideration?

It is a matter which perhaps it is difficult to bring clearly to the attention of the House. I have endeavoured to assure my hon. friends opposite that I am finding no fault with the acquisition of railways in the four provinces contemplated by the act of 1915; nor am I here finding fault, although there may be room for discussion, with the building of the Rouyn railway. I might or I might not agree with it; I am not given an opportunity to consider the matter. I am simply directing the attention of the House fo this one point, that this government which, in season and out of season, has been so indignant over the

procedure of the Conservative party on former occasions in issuing certain orders in council, has now had uncovered one of its deeds wherein, to the extent of $5,000,000, it has allowed public money to be spent without giving parliament an opportunity to discuss the advisability of that expenditure; and this, not because there was any hurry, but solely and for reasons best known to itself, with a view to depriving this House of its proper opportunity for discussion. The rights and privileges of the House of Commons were flouted in that transaction as they have never been flouted before. I submit this to the judgment of the House with a good deal of confidence; I submit it to my friends to the left, who are interested in branch lines and who can see for themselves how these things can be done by this government when it suits their convenience. The thing isi not only wrong in itself; it indicates what this government will do and must do in the circumstances in which it finds itself. It has existed for four years by barter and compromise and is determined to go through any number of weeks and months by means of subterfuge and barter and compromise once again. The government in justice to itself, to redeem by one grand act all the faults of which it has been guilty, should resign. That would be the one redeeming feature of its career. It has not the confidence of the House; it has not the confidence of its supporters. And surely it has no moral Strength or character, for it is prepared to go to any length to retain the place it now occupies.

One looks across at the scattered remnants of the contingent from Saskatchewan and pictures those gentlemen, like the song of the nine little niggers, one disappearing every day. I can see those hon. gentlemen coming to their seats each one looking at his desk-mate and wondering, are you the next? This government has decided to use the fine province oif Saskatchewan as a borrow-pit from which it can draw material to shore up up its tottering structure. It is reduced to all sorts of expedients. In the course to which it is condemned it cannot function nor govern. I repeat, it has not the confidence of the House and hon. members by their votes should declare that it has lost also the confidence of the people and should resign from office.

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. G. B. NICHOLSON (East Algoma):

In rising to say a few words in this debate it is not my purpose to enter into any discussion of the questions generally before the House but to confine myself almost exclusively to the subject which has just been

The Address-Mr. Nicholson

considered by my hon. friend from South Toronto (Mr. Geary), the matter of the Rouyn railway. And at the outset may I say that I have no intention of discussing the advisability or otherwise of building that railway from O'Brien on the Transcontinental to the township of Rouyn. I do not intend to deal with the question whether there should be a railway from that part of the country or whether railway connections should be secured in some other way, because I look on that aspect of the subject as one that is particularly of interest to the province of Quebec, and I have no right and no desire to suggest what they shall do in the matter of providing railway facilities through their own province. The aspect of the subject with which I wish to deal is the relationship of the government of Canada and of the Canadian National Railways to this whole proposition.

My hon. friend from South Toronto, referring to the opinion which the government secured as to whether this railway should 'be built or not, told us that the Minister of Finance had made the statement in the House the other evening that they had obtained the views of counsel on this matter. In looking through the papers that have been made available I have not been able to find any such opinion. The opinion of counsel may have been asked as to the merits of the question and as to whether the construction of this railway by the Canadian National Railways would be a good thing or not. But I have some doubt on that point. Until I see the documents themselves I will not conclude that the general counsel for the Canadian National Railways gave his opinion in that regard. My view is that the documents in connection with the case, set forth in Hansard, were submitted to him and that he, good lawyer as he is, going into the matter carefully, gave to the government his opinion that perhaps by this circuitous method they might be able to d'o something that otherwise they could not do and keep within the law. That is about as far as the general counsel for the system would go or could be expected to go in the matter-simply to deal with the legal aspects.

But coming to the position of the government in relation to the case, let us for a moment observe what the Minister of Finance (Mr. Robb) said in his effort to explain and defend the attitude of the government.

Han. members will recall that away back in 1922, 1923 and 1924, there were reports of great mineral development in the northern part of Quebec. In 1923 and 1924 particularly, reports came to us of rich finds in that .part of the country, and representations were made, not only to the Canadian National Railways, but to other railways, that they should extend a line * 14011-80J

into that district. In 1924, Mr. Timmins of the Hol-linger Mines approached the President of the Canadian National Railways urging him to build a line into that section of the country. A survey was made of it and the railway directors and the president were not satisfied that the building of a road in there would be a profitable venture.

That was after the matter had been before the government and the country during 1922, 1923 and 1924, and again in 1925. Then we find him saying a little further on:

Shortly afterwards another discovery was made of the Noranda mines and again they were approached to build a road. Representations were such that engineers were sent there to make a very careful survey of the possiblities of that section of country. It was diiscovered that there were very rich mineral deposits and there was a rush not only of miners, but of railways to get into that district. It is well known that an Ontario railway that has been made very profitable to the province at large by going into the mining country was anxious to build a line.

Now, at this point may I just ask why the government of Canada should have been interested in that at all. It was not a matter for this government, it was not a matter for this parliament. It was a matter between the Canadian National Railways and the government of Quebec. Those who followed the press reports during the discussion of the question will recall that the Premier of Quebec declared the readiness of his government to do what was their right and arrange railway communication for themselves.

But passing from that altogether, let us assume, if we may, that it would have been wise for the Canadian National Railways to have had a branch line into Rouyn district. First, let me say that it was for the parliament of Canada to determine that, having all the facts before it. I am not going into the legal aspects at all, more than to say that before a branch line is built by the Canadian National Railways or for them, creating an obligation on the Canadian people, parliament is the one and only body to decide what shall be done in the premises. But taking the whole scheme as we now have it, and, let me say again, assuming that there was justification for building that railway, let us see what method is followed in providing the means, and so try if we can to get at what the government may term its justification for the course it took. I am going to ask the House to bear with me while I read a few of the extracts that have already been put on Hansard. I do so for the purpose of connecting

what I wish to say in regard to this. The first is:

Extract from minutes of meeting of the Board of Directors of Rouyn Mine3 Railway Company, duly held in the city of Montreal, on Monday, the fourteen day of September, 1925.

The Address-Mr. Nicholson

There is just one thing wrong with that. The title should be 'The Campaign Funds Company of 1025," not the Rouyn Mines Railway Company; because, Sir, as is disclosed here, and as has been tacitly admitted by the only minister who has so far ventured to offer any reasons whatever for the action of the government, it never was the intention that this company should build or own the railway; the intention was that it should be a branch line of the Canadian National Railways. Then why incorporate this dummy company at all? Simply because in September there was evidently a conviction that a railway must be built at once, and funds must be provided at once, notwithstanding the fact, as the minister has already said, that the whole question had been before the government, before the country and before parliament since 1922. Let me continue this extract from the minutes:

The meeting was informed that arrangements can, it is expected, be made for the lease to His Majesty the King in the right of the Dominion of Canada, herein called the government, of the line of railway intended to be constructed by the company,

And so on. Then 1 find in the draft lease submitted at that meeting the following recital:

Whereas the lessor was incorporated by an Act of the Legislative Assembly of the Province of Quebec, being chapter 110 of the acts passed in the year 1925, with power to construct and operate the line of railway hereinafter mentioned, and to make the issue of bonds.

And so on. Then follows this recital:

And whereas the Minister of Railways and Canals (hereinafter called the minister) is of the opinion that the said line of railway is a line of railway which can more conveniently and usefully be operated as a part of the Government Railways system and one which may be deemed necessary or desirable for the more efficient operation of the said system.

Let me ask, Mr. Speaker, if it was the opinion of the Minister of Railways and Canals that the railway could be more efficiently operated as a branch of the Canadian National Railways, why did he not come to parliament last session, submit all the facts and ask for authority to build the railway in the manner in which any branch line of the Canadian National Railways should be built? Then follows this recital:

And whereas the lessor pursuant to section 8 of the Act incorporating the lessor proposes to create an issue of not exceeding $5,000,000 of thirty year 4J per cent first mortgage bonds.

My hon. friend the member for Pontiac (Mr. Cahill) addressed a question to the hon. member for South Toronto (Mr. Geary) as to whether this railway was going to cost more built under the present method than if it had been built by the Canadian National

Railways in the regular way. Well, I propose to show that the whole purpose of the plan set out in these amazing documents was to provide a means to mulct the country of 15,000,000 to do something that in the end is worth only $2,250,000 and no more. Here is the initial step in the course that the government intended to follow in the name of the Canadian National Railways. Let me read the recital again:

And whereas the lessor pursuant to section 8 of the act incorporating the lessor proposes to create an issue of not exceeding $5,000,000 of thirty year 4i per cent first mortgage bonds.

What for? What did they want this $5,000,000 of bonds for? Well, in the very next phrase of the same paragraph of the agreement itself, it is set out that they are going to build a railway that they themselves estimate will cost $3,500,000. Yet they are going to issue $5,000,000 of thirty year 4i per cent bonds which the people of Canada are going to guarantee, and, mark you, we guarantee to pay not only a rental for that railway, interest and sinking fund, all expenses in connection with the flotation of the bonds, the creation of the trust, and so forth, but as well we must absolutely retire t'he bonds in thirty years. Now what is that other $1,500,000 for? What was this dummy company going to do with it? It is set out clearly: We are going to guarantee $5,000,000 of bonds to construct a line that the Rouyn Railway Company says is going to cost only $3,500,000. Let us see what the Minister of Finance has to say in this regard. Let me say in all fairness to him that in speaking on this question he frankly stated on the floor of the House that he had1 never even read the lease, and did not know what it contained; he knew practically nothing about it. I am sorry the minister is not in his seat, but I am sure that every man in the House will agree with me when I say that we absolutely accept what the Minister of Finance said, for we have the utmost confidence in his personal integrity, but where the Minister of Finance and every other member of the government is responsible is that they allowed an agreement of this character to receive the approval of the government by way of order in council without apparently knowing what the document contained.

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

I did

not follow clearly just where the hon. gentleman gets that estimate of $3,500,000.

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

That is the statement of the so-called Rouyn Mines Railway Company.

The Address-Mr. Nicholson

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

Is it embodied in the document?

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

Yes, and here is just

another evidence, Mr. Speaker, that we have on the floor of the House this afternoon another member of the government responsible for passing this order in council when he did not know what the agreement contained.

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

I do

not want to interrupt the hon. gentleman, for I do not believe in interruptions, but my hon. friend well knows that many documents pass the government of Canadh the full details of which are not in the minds of the ministers who have to take the responsibility. I am not wishing to shirk one iota of responsibility; I asked my question simply with a view to information, as the hon. member had mentioned the point.

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

I will give my hon.

friend the information. Here it is:

And whereas the lessor pursuant to section 8 of the act incorporating the lessor proposes to create an issue of not exceeding $5,000,000 of thirty year per cent first mortgage bonds (hereinafter called the said bonds) of which it is expected that approximately $3,500,000 will be required to provide for the cost of construction of the said line of railway-

That is the declaration of this so-called company, that they are going to build a railway which they say is likely to cost $3,500,000, and yet they are going to ask the government to provide $5,000,000 with which to do it. The Minister of Finance said that in his judgment the road would cost $2,655,000. I say to the House, assuming the Rouyn railway is a proper line that Should be a branch of the Canadian National railway for them to build and operate, the very outside figure the line should cost, if constructed under proper conditions, would be $50,000 a mile, or $2,225,000 in all, because in the construction of that branch line, what is necessary, viewing fhe matter from the standpoint of practical railway operation? Nothing more or less than the roadbed, with tracks for 45 miles of railway, and a turn-around terminal in the township of Rouyn. The Canadian National have their terminal at O'Brien and all the equipment and everything else that is necessary to operate this road, and all that is required is the roadbed itself of an ordinarily constructed branch line railway capable of taking care of light power and the ordinary freight traffic that will pass over the road. That is the whole story, and when you put the construction cost at $50,000 a mile, or a total of $2,225,000, you have gone the extreme limit.

I pass on. Without labouring the question or boring the House with any more extracts

from the lease, if you will look now at page 1184 of Hansard-

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

Does my hon. friend not intend to deal with the provisions against excess cost of construction?

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CON

Arthur Meighen (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MEIGHEN:

There is no such provision by the government.

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

By the company. If my hon. friend does not propose to deal with that, I ask him if it is not a fact that the engineers of the Canadian National railways will inspect and pass upon every mile of the construction cost.

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

I have no knowledge what the facts are as to-[DOT]

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

I am asking my hon. friend if it is not a fact that such a provision is contained in the document from which he is reading.

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

What the engineer of the Canadian National railway does has no bearing on this at all. The rental for this railway is not based on what the railway is going to cost. If there was a provision in this contract by which this dummy company would build a railway under the supervision of the Canadian National railway engineers, and the Canadian National railway or the Canadian government would pay an annual rental that would retire the bonds necessary to build the railway, that would be an entirely different thing. But it is not a question of what the railway is going to cost at all.

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

Will my hon. friend, instead of arguing around the question, deny that there is a provision that the construction of the line by the company shall be supervised as to cost by the engineers of the Canadian National railway?

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

Let me say again, there is.

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

That is all I wanted to get.

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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

There is a provision that the trustee for the bondholders shall have inspections made to see that the funds provided by the trustee for the bondholders shall be properly expended, but there is nothing in this agreement, until it gets to $5,000,000, that protects the Canadian National railways. It is simply a case of the Canadian government giving a blank cheque for $5,000,000 to a dummy company to build a branch line for the Canadian National railway which the dummy company says is going to cost $3,500,000, which the Finance minister

The Address-Mr. Nicholson

says should not cost more than $2,655,000, and which I say any practical railway man will tell you will not cost, if properly constructed, more than $2,225,000. There is the point. The rental is not based on the cost of the railway at all. The rental is based purely on this-I will read the paragraph for my hon. friend and then he will know for himself.

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LIB

Charles A. Stewart (Minister of Immigration and Colonization; Minister of Mines; Minister of the Interior; Superintendent-General of Indian Affairs)

Liberal

Mr. STEWART (West Edmonton):

Reading a paragraph without giving the context and sequence may give a wrong impression.

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February 23, 1926