February 11, 1927

LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Ninety-two per cent "in

value".

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PRO

Archibald M. Carmichael

Progressive

Mr. CARMICHAEL:

That is a different

thing from ninety-two per cent of the individual bondholders. I can well conceive that ten or twelve bondholders may hold seventy-five per cent of the stock and that a large majority of the bondholders may be coerced into doing what the minority wish them to do, simply because that minority hold a majority of the stock. Is that the situation?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

My hon. friend is suggesting a purely hypothetical possibility; it is remotely possible. I am sure however that had there been any such coercion we should have heard about it, for the reason that this matter has been discussed in the press, particularly in investors' journals in the old land, for years past; and the scheme of arrangement itself was widely advertised months ago, each bondholder having been personally apprised of the fact that the scheme contains a provision that it shall bcome operative when assented to by three-fourths of the bondholders. That is what the bondholders were asked to consent to as part of the scheme of arrangement.

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PRO

Archibald M. Carmichael

Progressive

Mr. CARMICHAEL:

Has the minister the information as to what percentage of actual bondholders have subscribed to the agreement?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

I am afraid I have not that information.

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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON:

Was this original bond issue secured by a trust deed?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

No.

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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON:

Or a statutory mortgage?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Statutory stock, yes.

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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON:

And does this arrangement depart from the conditions of the statute in any other respect?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

No.

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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON:

Well then, I do not think the point raised by our laymen friends was very well taken. If ninety-two per cent in value of the bondholders have agreed, that is a very large proportion of any body of bondholders. Usually the proportion is very much less.

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Very much.

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CON

Richard Bedford Bennett

Conservative (1867-1942)

Mr. BENNETT:

Sometimes it is only sixty per cent.

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CON

Richard Burpee Hanson

Conservative (1867-1942)

Mr. HANSON:

Yes, and less than that.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

I should like the minister to correct me if I am wrong in the supposition that by this legislation we are deliberately depriving the holders of this debenture stock, who may not have signed the agreement, of any rights which they may have, except what we now give them in this way?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

That is correct.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

Would it not be much better to follow the usual procedure and ask the Exchequer court to make this ruling? Because I understand that one reason why we are putting this agreement through is to help the condition of Canadian credit in London. There is a feeling there that we have not treated these bondholders properly. Is it not possible that some of these bondholders would not approve of this scheme, and will have the right to say that the parliament of Canada has deliberately by legislation taken their debenture stock which calls for four per cent interest and give them two per cent? It does seem as though they might consider we are doing something very drastic to interfere with the security which they hold, and in that case they certainly could say much against Canada because this parliament is deliberately putting through this legislation.

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

The point my hon. friend raises was a point of difficulty with myself in considering the scheme, that is as between myself and officers of the company. The element of time is of very great importance in connection with this matter, because of the very near arrival of another interest date on these bonds, and the arrangement which is accepted, as I say, by ninety-two per cent of the bondholders, provides in clause 9 (b) that the scheme shall become operative when the same has been confirmed by the Exchequer court of Canada if such confirmation

216 COMMONS

Grand Trunk Pacific Ry. Co.

shall be required by the company. That is to say the bondholders themselves agreed to waive confirmation by the Exchequer court, provided the company did not require it for some purpose of its own. Well, when the matter came to me I said: Unless the percentage of consenting bondholders is much higher than seventy-five per cent I do not think it wise to introduce into the Canadian parliament a measure which would have the effect of coercing a considerable number of minority bondholders, and I simply told the company that if they desired to avoid Exchequer court proceedings they would have to get a practically universal assent. I was anxious to avoid the very thing my hon. friend points out, that is, a feeling of soreness, a feeling that people had not been treated properly; and it was not until we were assured of ninety-two per cent of assents that the arrangement now proposed was inserted in the bill. As I said before we would surely have heard of objections to it had there been any, because no matter of a financial character that I can recall has had wider public discussion in the press than this has had. The details we are now discussing have been discussed in the homes of many small investors in the old country, because this issue is very largely held by small investors, as the number of the debenture holders indicates, and it is very well understood, I am quite sure, that we would have heard before this of any substantial ground for complaint, if such had existed.

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UFA

George Gibson Coote

United Farmers of Alberta

Mr. COOTE:

I do not wish to labour the point, but it does seem to me very doubtful if many of these small investors know that in this scheme it is proposed that the parliament of Canada should deliberately take away from these people any right they may have; that is to say, we are going to compel them to accept this arrangement whether they want it or not. If these people were united in any way in a company with a majority of ninety-two per cent of them enforcing their will on the rest, that would be a different matter. But it does seem to me that parliament is doing here something that is not right in principle, and something which it is just possible we may be sorry for some day.

Will the minister be kind enough to give us a little information as to just how the Grand Trunk was taken over by the government? As far as I remember that has not been mentioned in the debate.

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February 11, 1927