May 25, 1926

FUEL SUPPLY COMMITTEE


Mr. E. A. LAPIERRE (Nipissing) moved that the first report of the committee appointed to investigate the fuel supply of Canada, which was presented to the House on Thursday last, be concurred in. Motion agreed to.


REPORT PRESENTED


Annual report of the directors of the Central Vermont Railway Company.-Mr. Dunning.


IMPORTATION OF CELERY FROM THE UNITED STATES

CON

Joseph Elijah Armstrong

Conservative (1867-1942)

Mr. J. E. ARMSTRONG (East Lambton):

Mr. Speaker, I beg leave to present a petition from the celery growers in my constituency which reads as follows:

To the honourable the Senate and the House of Commons of Canada, in parliament assembied

The petition of the undersigned celery growers of the constituency of East Lambton, Ontario, humbly showeth: That we desire to have an embargo piaced on celery coming from the United States into Canada similar to the embargo placed on this product going into the United States from Canada by the government of the United States, from October to February of each year.

Wherefore your petitioners humbly pray that your honourable House may be pleased to grant the prayer of this petition, and as in duty bound your petitioners will ever pray. May 18th 1926.

The explanatory note is very short. It reads as follows:

Thedford, Ont., May 18, 1926.

J. E. Armstrong, Esq.,

Member of House of Commons,

Ottawa, Ont.

Dear Sir:

Enclosed find two copies ol our petition for the Senate and the House of Commons.

For your information the duty on celery entering the United States is twenty-five per cent and an embargo has been on for years against the celery from

C.N.R.-Minister's Statement

Canada entering the United States on account of the com borer which to date has never bothered celery but is used as a handle to stop exportation.

We would appreciate it as a body if an embargo was on from October to February 1st each year, so as to allow the local supply to be consumed before the southern states flood the market.

This resquast is asked not as a handle to boost prices but to allow the home grown product to have the market and work off the supply before foreign goods come on.

Thanking you in advance and trusting you will be successful in our cause,

I remain,

Yours very sincerely,

Chas. Kinmerley.

I may say that the crop grown in the district in 1924 consisted of over 250 carloads.

Topic:   FUEL SUPPLY COMMITTEE
Subtopic:   IMPORTATION OF CELERY FROM THE UNITED STATES
Sub-subtopic:   PETITION FOR EMBARGO FROM LAMBTON COUNTY GROWERS
Permalink

MR. MEIGHEN'S RECOVERY CONGRATULATIONS BY PRIME MINISTER AND MR. FORKE

LIB

William Lyon Mackenzie King (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister):

May I say to my right

hon. friend the leader of the opposition that we are all pleased to see him back in the House again. We hope very sincerely that he has completely recovered from his recent indisposition.

Topic:   FUEL SUPPLY COMMITTEE
Subtopic:   MR. MEIGHEN'S RECOVERY CONGRATULATIONS BY PRIME MINISTER AND MR. FORKE
Permalink
PRO

Robert Forke

Progressive

Mr. ROBERT FORKE (Leader of Progressives) :

On behalf of hon. members in

this corner of the House, I desire to express our very great pleasure at seeing the right hon. leader of the opposition in his place once more. We hope that his health is fully restored.

Topic:   FUEL SUPPLY COMMITTEE
Subtopic:   MR. MEIGHEN'S RECOVERY CONGRATULATIONS BY PRIME MINISTER AND MR. FORKE
Permalink

IMPORTATION OF MINERS


On the Orders of the Day:


LAB

James Shaver Woodsworth

Labour

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

I should like to ask the Minister of Labour if he can give us a statement with regard to the application for workers from Europe for the mines in Nova Scotia?

Topic:   FUEL SUPPLY COMMITTEE
Subtopic:   IMPORTATION OF MINERS
Sub-subtopic:   GOVERNMENT EMPLOYMENT OFFICE ADVERTISING FOR MEN
Permalink
LIB

John Campbell Elliott (Minister of Soldiers' Civil Re-establishment; Minister presiding over the Department of Health; Minister of Labour)

Liberal

Hon. J. C. ELLIOTT (Minister of Labour):

I may say, Mr. Speaker, that the information I have received is to the effect that applications were made for workers by some of the mines in Nova Scotia. The applications were communicated to the department which asked its various agencies for information as to the extent to which these demands could be supplied. The reply received was to the effect that there were, perhaps, sufficient workers available in Canada to meet the requirements. Up to the present it has not been deemed necessary or advisable to at all comply with the request which was made for additional workers from outside Canada. That is the information on the matter so far as I have been able to obtain it.

Topic:   FUEL SUPPLY COMMITTEE
Subtopic:   IMPORTATION OF MINERS
Sub-subtopic:   GOVERNMENT EMPLOYMENT OFFICE ADVERTISING FOR MEN
Permalink
LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

May I ask whether it is the policy of the department to supply workers from Canada before allowing workers to be introduced from Europe?

Topic:   FUEL SUPPLY COMMITTEE
Subtopic:   IMPORTATION OF MINERS
Sub-subtopic:   GOVERNMENT EMPLOYMENT OFFICE ADVERTISING FOR MEN
Permalink
LIB

John Campbell Elliott (Minister of Soldiers' Civil Re-establishment; Minister presiding over the Department of Health; Minister of Labour)

Liberal

Mr. ELLIOTT:

That was exactly what

the department had in mind. It endeavoured to get an estimate of the labour available in Canada before attempting to send outside for help. That is, of course, the policy of the department.

Topic:   FUEL SUPPLY COMMITTEE
Subtopic:   IMPORTATION OF MINERS
Sub-subtopic:   GOVERNMENT EMPLOYMENT OFFICE ADVERTISING FOR MEN
Permalink

CANADIAN NATIONAL RAILWAYS


Hon. CHARLES A. DUNNING (Minister of Railways and Canals) moved that the House go into committee of Supply. He said': In attempting to present, for the consideration of parliament, what has come to be known as the railway budget, I do so with every appreciation of my own somewhat recent contact with federal railway affairs. Since taking hold, I have gone far enough into the activities of the department over which I have the honour to preside to acquire a lively appreciation also of the splendid service rendered by that veteran of public life and my own immediate predecessor, the Right Hon. George P. Graham. We on this side of the House regret his absence to-day and none more so than the one to whom has fallen the difficult task which years of experience had made so easy for the former minister. Mr. Graham had the very happy faculty of presenting National railway matters in such a way as to invite their consideration on a high plane. It is my wish that there should be no departure from that very desirable practice, and that whatever criticism there may be-and criticism there is bound to be- may be of a constructive and helpful nature, and to the advantage rather than hurt of the country's immense investment in our National railways. Following the precedent established last year the Canadian National railway report was this year made available in advance of the minister's annual statement, and has been in the hands of the members for some weeks. The report presents much detail, not only as to operating results, but of the financial ramifications of the system. It is well that such full information as to the management and operation of the National lines should be freely available to parliament. The National railways are the people's property, in the success of which the Canadian public are deeply concerned, and, as representatives of the owners, it is desirable that members of this House should take a very close interest in our railway affairs. C.N.R.-Minister's Statement Last year's operating results were so far in in advance of previous years that I feel that my first duty in relation to the report itself should be the altogether happy one of congratulating the chairman and president, the board, the responsible officers and the rank and file of the National railways on the results achieved. To have done more business at less cost is an accomplishment which has brought commendation from quarters ordinarily inclined to hold that such things were not really possible under public ownership. The figures indicate roughly that while two-thirds of this year's improvement of fifteen millions in net earnings was the result of increased business due to a good harvest and improving trade, one-third was due to decreased costs of operation. And it will be noted that Sir Henry Thornton affirms that this improvement was accompanied by no deterioration in service or unfair treatment of employees. It affords me pleasure, therefore, on behalf of the government, to acknowledge the loyal service of officers and employees, whose enthusiasm and good will made last year's achievement possible. This gathering, Mr. Speaker, in the House of Commons, is the only body which bears the relationship to our National Railways which is borne by the annual shareholders meetings of a private company to the affairs of that company, and I propose to deal with the subject this afternoon rather as if the members of this House were, as they are, representatives of the great body. of shareholders throughout the Dominion of Canada in this property. The presentation I will endeavour to make will be analytical in character rather from the point of view of a man who comes freshly into contact with the railway system and its affairs, and who settles down to study the system, and probably my point of view will be more interesting because of that. The accounts are presented in balance sheet form as designed by the Interstate Commerce Commission of the United States, and adopted by the Dominion Bureau of Statistics. The form is that used by the railroads of the United States, and by the use of such a standard form, comparison is readily made with the accounts of other railroads which have adopted this standard of accounting practice. The balance sheet of the National lines carries the signature of the chief accounting officer of the railways and, in addition, the certificate of a well-known firm of chartered accountants. It should be kept in mind that this is not the balance sheet of the Canadian National Railway Company, but is a consolidated balance sheet designed to show the aggregate assets and liabilities, under each balance sheet classification, of every company embraced within the Canadian National system, with all inter-corporate transactions eliminated. By this form of presentation there is clearly displayed the total assets under the control of the National Railways, the total liabilities to the public against such assets, and the total liabilities for capital less deficits to the government as shareholders, and for loans and advances. The Central Vermont Railway is not included in this consolidation except in respect of the control account with that company carried in the National books under investments in affiliated companies. It will be of interest to honourable members to know that there are no less than 87 separate balance sheets included in this consolidated account. Between many of these individual balance sheets are numerous inter-related transactions which require to be eliminated in any consolidation so as to present a clear picture of the relationship of the National Railways to its public creditors and to the government. I believe every hon. member has in his desk a copy of the annual report, and will be able to follow my reference to the various pages of that report. On the asset side of the balance sheet it will be seen that the accounts are separated under four headings-Investments, Current Assets, Deferred Assets, and Unadjusted Debits-and that on the liability side, a corresponding separation is made. A classification under Interstate Commerce Commission standard headings of expenditures, less retirements, during the year 1925, applicable to investment in road and equipment, is given on page 23 of the report, and similar information relating to improvements on leased railway property will be found on page 24. These statements indicate a net improvement of $17,964,827 during the year in the railways' investment in road and equipment, and of $430,628 on leased railway properties. In the next item, sinking funds which have been created in accordance with the provisions of trust deeds for the redemption of certain items of funded debt, there is a balance of $9,374,000 of which $5,064,000 represents the par of system securities acquired, but held alive in such sinking funds. This should be considered in the sense of a reduction to that extent of the total funded debt held by the public. The item, miscellaneous physical property, $53,912,609, includes hotels, lands, and so on, and in connection with the latter a footnote directs attention to the fact that the provinces



C.N.R.-Minister's Statement of Ontario and Quebec dispute the title of lands valued at $7,318,140. A detail of the investment in affiliated companies is given on page 37 of the report. In this list is a new account of $3,677,500, representing acquired bonds of the Toronto Terminal Railway Company issued in connection with the financing of the Toronto new station and viaduct scheme in connection with which legislation was enacted last session. Twenty-five millions odd of this thirty-seven millions shown as investments in affiliated companies represent the Canadian National holdings in the Central Vermont. The next group of accounts, Current Assets, shows a total of $95,500,000 as against $99,- 500,000 last year. Cash on hand in the general funds of the company which, at December 31, last, totalled $31,677,083, is up $1,669,000. Special deposits, which represent funds set aside for specific purposes, are up $4,000,000. In thig account are carried unexpended balances of proceeds of securities which are released, from time to time, on the authority of the Minister of Finance. Miscellaneous accounts receivable are down $2,500,000. Part of this decrease is due to accounting reclassification, but the decrease is also attributable to better collections, indicating better business conditions generally. The value of materials and supplies on hand at December 31, was $42,582,983, as compared with $50,459,444 at the end of the previous year. As explained by Sir Henry Thornton in his review of the year's operations, expenditures on purchasing and stores account were considerably less in 1925 than in 1924. A determined effort also was made to reduce stocks, so that at the end of the year, materials and supplies on hand amounted to almost eight millions less than at the end of 1924. Under Deferred Assets-Insurance and Other Funds-is carried the investment of the company's fire insurance and other reserve funds which I will refer to when I come to the reserves under deferred liabilities. The increase of a million in other deferred assets is occasioned by accounting reclassification. Discount on funded debt, an unadjusted debit item, represents the discount below par at the time of the sale of all securities, which discount is amortized by charges to income account in equal amounts over the life of the securities. On the other side of the balance sheet the principal account is that of long-term debt, which shows an increase during the year of $63,630,126.52. It will be noted that in this year's presentation it is made a little clearer that this account includes interest accrued on government loans, which, under present conditions, is a matter of book-keeping only and does not represent additional cash advances by the government. This interest account has been increased by $31,703,510.70 during the year, and now accumulates to more than $161,000,000. Analyzing the increase in debt of $63,000,000 during the year, we shall find the debt held by the public has increased $17,416,219.94, and the debt to the government $46,213,906.58. The increase in the debt to the public, as explained under the heading of Finance on page 6 of the report, comprises two guaranteed issues, one of $17,000,000, and the other $18,000,000, against which there were retirements amounting to $17,583,780.06. The increase in debt to the government of $46,213,906.58 is made up of three items, the first of which is the book-keeping item of interest accrued on government loans, $31,703,510.70. It will be well to keep in mind, in discussing the railway debt, that a large portion of the increase in debt as shown by the railway accounts is not additional cash advanced by the government to the road, but is this item of interest which they are compelled to set up in their books. I wish to emphasize this because frequently the impression gets abroad that the railway has used up during the year much more cash than is actually the case. For the year 1925, for instance, of the increase in debt, approximately one-half is cash and the rest is a bookkeeping transaction. The second item in the increase in government debt is an amount of $14,259,435.69 repaid to the railway. When the railway issued its four and a half per cent gold bonds in September, 1924, the proceeds not immediately required were temporarily lent to the Minister of Finance and were repaid by the minister to the railways in the early part of 1925. The third item is an amount of $250,960.19 representing certain payments made through the Department of Railways and Canals for compensation and pension payments to Canadian Government railway employees under special legislation, which are taken up in the accounts of the National Railways so as to make a complete accounting for the entire property. Full details of the outstanding debt held by the public, or by sinking funds, are to be found on pages 28 and 29 of the report. The schedule also shows to what extent the outstanding securities are guaranteed by Canada or the provinces, and indicates that, of the $931,000,000 of funded debt due the public, $674,000,000 is guaranteed and $256,000,000 is unguaranteed. Of the $674,000,000 guaranteed, $581,000,000 is guaranteed by the Dominion and $93,000,000 by the various C.N.R.-Minister's Statement provinces, as follows: Ontario, $7,859,997; Manitoba, $24,389,892; Saskatchewan, $17904,061; Alberta, $18,394,427, and British Columbia, $25,026,001. Grand Trunk debentures of 216 millions, included in the guarantees by the Dominion, are guaranteed as to interest only under the Grand Trunk Railway acquisition agreement. The provincial guarantees have, in effect, been taken over by the Dominion, since it has also acquired the properties. There never was any question of interest being paid other than by the Dominion so far as any of the Canadian Northern guarantees are concerned. In the case of the Grand Trunk Pacific, complications due to receivership created confusion at first and the provinces of Alberta and Saskatchewan were obliged to meet certain branch line interest payments. It developed that on the provinces meeting this obligation over four six-monthly interest periods, they could have taken possession of the Grand Trunk Pacific branch line properties. Former President Hanna, considering that these branches would be useful to the National system, recommended that they bs retained by the Dominion. The danger of partition of this Grand Trunk Pacific property was thus avoided, the two provinces concerned were reimbursed the interest charges they had met, and the Dominion has since provided the interest. In the debt due the government is included appropriations account of the Canadian Government Railways amounting to $453,935,303. As is well known, this item includes the direct contributions by the Dominion to the Intercolonial and branch lines, the Prince Edward Island railway in Eastern Canada, the Transcontinental railway between Moncton and Winnipeg, including the Quebec bridge, and also the construction cost of the Hudson Bay railway. It also includes the working capital advanced from year to year by the government to those railways prior to their being taken over by the Canadian National for management and operation, and it also includes the operating losses cn those railways since January 1, 1921, at which date authority was taken to pay operating expenses out of earnings. It is understood, of course, that this item of $453,935,303 is not a liability of the Canadian National Railway Company, but is brought into the consolidated balance sheet as the offset account against the assets of the Canadian Government railways as set up at their ledger value. It will be observed that the total of loans and advances on Dominion of Canada account is shown in the balance sheet as 572 millions. Hon. gentlemen may have noticed that the Minister of Finance, in his budget speech, stated that the actual cash outlay in respect of these railway corporations charged to the debt of the Dominion, was 601 millions. The apparent discrepancy of $28720,547 is accounted for by these circumstances: The ten millions advanced by the government to the railways was made after December 31 last, and appears in the budget statement, but not in the railway statement. The railway does not include in loans and advances $8,720,547.06 voted under Advances to Canadian National Railways and utilized for requirements of Canadian government railways. The amount is added by the railways to the separately-shown Appropriations account, Canadian Government Railways. The balance of the difference is the ten million dollars paid by the Dominion for Canadian Northern commoa stock. Naturally, that item has no place in the railways' loan account with the Dominion. I have here a statement showing the allocation of these 601 millions to March 31 last. It is of interest in that it shows the extent to which these government loans and ad- ' vances have gone to meet operating deficits, interest, refunding and retirements, capital expenditure and to working capital. With the permission of the House, I would like to hand the statement to Hansard, for the information of the members generally. The statement is as follows:



C.N.R.-Minister's Statement Distribution of Cash Advances to The Canadian National Railways to March 31,1926, as given in Speech of Minister of Finance, April 15, 1926 - Total Chargeable to Canadian National Railway Co. Canadian Northern Ry. Grand Trunk Ry. Grand Trunk Pacific Canadian Government Rlys.Operating deficits... Interest Refunding and Retir- $ cts. 55,269,684 39 186,872,514 20 108,334,685 22 179,352,204 66 28,528,993 66 $ cts. 5,468,300 86 1,898,433 01 2,633,266 13 $ cts. 23,810,869 22 121,144,730 33 53,721,326 10 124,376,243 94 3,187,466 56 $ cts. 1,877,047 56 29,055,222 48 52,714,926 11 16,832,947 36 18,102,038 82 $ cts. 30,595,524 56 31,204,260 53 $ cts. 1,013,756 95Capital expenditure. Working capital Total Loans Purchase of bonds... Purchase of stock.... Total given in speech of Minister of Finance 25,775,443 22 7,239,488 28 9,734,304 01558,358,082 13 33,048,000 00 10,000,000 00 10,000,000 00 326,240,636 15 118,582,182 33 94,814,716 59 33,048,000 00 8,720,547 0610,000,000 00 601,406,082 13 10,000,000 00 336,240,636 15 118,582,182 33 127,862,716 59 8,720,547 06 Of the loans from the Dominion of Canada, 485 millions odd, 127 millions went directly into betterments during the last six years. Including capital expenditure provided from moneys raised by guarantees during the same period, the total is $228,693,560. If to these be added 36 millions put into the property as the result of the railways' own financing, we have a total expenditure on investment account, during the last six years of $265,068,560. This capital expenditure, on a yearly basis, is set forth in a statement which, with the permission of the House, I will hand direct to Hansard. Expenditures on Investment Account Canadian National Railways Improvement of property by new construction betterments, property acquirements and new equipment:- Dominion Direct Riy. 1920-21 Total Dominion Loans $ 60,464,922 30 29.748,478 74 21,343.131 26 7,943,457 18 5,321,302 65 Guarantees financing $27,000,000 1921-22 $ 3,903,030 65 1922-23 1923-24 55,715,292 04 23.620,679 12 18,000,000 00 1924-25 1924-25 9,375,000 1925-26 2.633,266 13 $265,068,560 07 $127,454,558 26 $101,239,001 81 $36,375,000 The 18 million guarantee, 1924-25, was for branch lines construction and Toronto terminals, under the viaduct agreement. Turning now to some of the other items on the liability side of the balance sheet, traffic balances and accounts payable show an increase due to additional business at the close of the year. Interest matured, unpaid, shows a substantial reduction of $6,500,000, due principally to a reclassification of unpaid interest on the Grand Trunk Pacific 4 per cent debenture stock. The interest on this security is accrued by charge against income, but is not paid if not earned. Unpaid arrears are now classified as a deferred liability, and this explains the increase in the item, Other Deferred Liabilities. Under unadjusted credits, insurance and casualty reserves increased $1,408,000 of which $1,387,000 is the fire insurance reserve. The merchant marine is also insured through the railway insurance fund. The steady increase in this reserve indicates the wisdom of the policy adopted in placing insurance C.N.R.-Minister's Statement through the company's own fund instead of outside underwriters. Under present policy, all profits which the underwriters would have received, remain with the company. Profit and Loss account, being a debit balance, is shown as an impairment of the government equity in the property as represented by $265,628,338.70 of capital stock owned by the Dominion and $1,188,482,341.48 in Dominion of Canada account. Before leaving the balance sheet, I would just like to make one further observation. The Minister of Finance (Mr. Robb) in his budget speech, estimated that for the fiscal year ended March 31, 1926, there was a shortage of net earnings against the interest payable to the public of $7,400,000. When the budget speech was delivered, the actual figures for the government fiscal year were not available. Since they have been available, it is shown that the position is even better, and that the deficiency in net earnings to meet interest charges due the public was not $7,400,000, but $5,735,502-and this after allowing for such charges as amortization of discount, depreciation accruals, and retirements of the ledger value of equipment taken out of service, amounting in all to more than three million dollars. Sir Henry Thornton, on page 7 of the report, has dealt with increases and decreases in certain items of the income statement. I will simply add, for the information of parliament, a statement of the profits of separately operated companies as shown in account No. 512 of the income statement, and of losses of separately operated companies, as indicated by account No. 545. Perhaps the members will be good enough to take these as read and let them appear in Hansard. CANADIAN NATIONAL RAILWAYS Profits of Separately Operated Companies, as Shown in Account No. 512 Oshawa Railway , $ 151,777 58Thousand Island Railway 25,418 60Terminal Warehousing Company 77,767 59 Chicago, New York & Boston Refrigerator Company 194,600 26Montreal Warehousing Company 104,835 28G.T.P. Terminal Elevator Company.. .. 19,155 07 Canadian National Express (except revenues and expenses) 281,113 49Canadian National Realties 16,087 12Niagara, St, Catharines & Toronto Railway Navigation Company 83,014 77Canadian National Steamships 24,837 87Canadian National Telegraphs 176,061 14Canadian National Transfer 24,388 45



Losses of Separately Operated Companies, as Shown in Account No. 545 Rail & River Coal Company $293,206 18Duluth & Virginia Realty Company 18,605 09 Grand Trunk Pacific Development Company. 107,625 04 Prince Charles Limited 3,791 56G.T.P. Telegraph Company 13,256 38Montreal & Southern Counties Railway.. 19,344 09Canada Atlantic Transit Company 164,002 74G.T.P. Alaska Steamship Company 2,568 57Toronto Suburban Railway 228,919 83Prince Rupert Dry Dock 58,031 44Toronto Terminals Railway-Adjustment .. 150,291 29


May 25, 1926