May 9, 1928

LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

I cannot say positively as to details, but I do know that the accounts are kept in such a manner as to enable one to give the answer which I gave the other day in that regard. My hon. friend from Toronto Northwest also complained because the Canadian National did not think it well, in answer to his question relating to newspaper transportation, to give the details for which he asked. Now that raises what has always been a delicate matter with respect to an enterprise of this character, as to whether, through the medium of parliament, information should be forced into publication which no competitor of the institution, in the ordinary course of its business, does make public. My hon. friend asked for details in great variety, and the answer given-supplied by the management

is:

The question calls for information of a kind that the management of the Canadian National Railways holds not to be in the public interest to divulge in detail, as publication, while serving no useful purpose, may place the Canadian National Railways in an invidious position with respect to competitors whose advertising appropriations are not subject to publication. Even if it were advisable to bring down the information asked for in detail, it could not be given in the form of an answer to a question, as it covers advertising of all kinds

newspapers, magazines, printing of booklets, et cetera, and also not only the entire Canadian field but such portions of the United States as are served by Canadian National lines in that country.

Then follows the information in aggregate figures which I read a few moments ago. There was no objection on the part of the management to giving aggregate figures, but there was an objection to giving details in relation to different newspapers and different classes of service, and that for the reason which I have just indicated.

I would respectfully urge upon the membership of the house, with respect to the matter of free transportation, that it is not in the interests of the system nor of the country that there should be an idea abroad that free transportation is given by either of our great railway companies in contravention of the law. My object in referring to the matter is to ask hon. members' to bring to my attention, if they will be good enough to do so, or to the. attention of the Board of Railway Commissioners any case which in their opinion constitutes an infraction of the law. As I said at the outset, the law as amended in 1919 is now quite clear and specific. The Board of Railway Commissioners' conduct an audit with respect to free transportation, and I merely ask the co-

Railways and Ship-ping-Mr. Harris

operation of hon. members with a view to dispelling this rumour that the law is being broken in th-is particular.

In regard to Canadian National affairs generally, I agree with the leader of the opposition. We can more properly go into details when the house is in committee of supply than in a general discussion of this' sort, merely upon the adoption of a report.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

Joseph Henry Harris

Conservative (1867-1942)

Mr. J. H. HARRIS (Toronto-Scarborough):

I would have hesitated to intervene in this debate at this particular stage had not my hon. friend from Toronto Northwest (Mr. Church) brought my name into the discussion. But another reason I have for rising at the moment is to acquaint hon. members with the importance of some of the items which are contained in this report. It is quite true perhaps, from the point of view of the hon. member for Toronto Northwest, that we may have been in a little pipe dream when that committee was sitting. But I notice that the evidence adduced in the sittings held by that committee was of sufficient interest to induce the hon. member to read the report three or four times, and of sufficient moment for him to rise in his place to-day. on the motion, and make certain observations with regard to the matter.

Inasmuch as the session is dragging out, and in view of the fact that when the estimates do come down to the house they will probably reach hon. members at a time when they are not just ready to discuss them, I wish to point out to the house as now assembled that the statements made in the report of this committee this year reveal two or three facts' of which, while no doubt other hon. members and I know about them, I am quite certain that the general public, for whom we are trustees in this road, have no real conception so far as the bookkeeping system of the enterprise is concerned. Let me make one or two observations on this question, if I may. With regard to the rank and file of the men on the pay-roll of the Canadian National railway system, what I have observed leads me to the conclusion that during the last five years, at least, these men have been much more loyal to the company than they were previously. One can observe, from one end of the country to the other, the fact that on the whole the men on the pay-roll of the Canadian National system are, to the best of their ability, advancing the interests of the road which is paying them their weekly wages. You can notice it at every little station and in every section of the business; the men are anxious to secure for the system all the business

which it is possible to get. So that in offering a few remarks, which are not necessarily a criticism, regarding the general bookkeeping system of the road, I want it clearly and distinctly understood that I am not in any way whatever referring adversely to those employees of the Canadian National Railways who after all comprise the heart and soul of the entire system-the rank and file. So far as the management are concerned, too, they are taking a keen interest in the success of the road. But I want to point out two or three things to the house.

We have in road equipment to-day a capital investment amounting to 81,914,000,000. I speak from memory. Now that is a sum of real magnitude, and the point I wish to bring out is that year by year we are adding to that sum. The directorate are not offering, nor is the Minister of Railways (Mr. Dunning) in this house, any feasible scheme whereby that fabulous sum, approaching two billions of capitalization, can be brought down to something approximating the real value of the road in order that we may have a truer picture of the operations of the system as disclosed in the balance sheet which is given to us each year. If you refer to page 21 of the report this year you will find additions to capital account amounting to some $43,724,677.16. Very good, if we are having these additions made to capital account. But as a layman who perhaps knows nothing about railways but who has found it necessary each year, in a small business, to take into consideration a certain amount of depreciation on plant and equipment, I say that when this sum is added to the capital account of the Canadian National Railways and no provision is made for exhaustion of the different elements which go to constitute the system, the public should know of these facts. And we sitting in this House of Commons should be in a position to discuss these matters with the public and give them some idea of what this capital account, approaching two billions, really implies.

I appreciate the difficulty one would have in setting up a depreciation reserve to take care of the exhaustion of new elements from year to year, when the capital investment starts with the sum of two billions. You can realize that a mere half of one per cent would be a very large item in the operating account, to foe set aside each year for the purpose of meeting depreciation or exhaustion. Nevertheless the point is that nothing is being done at the present time-apart from those elements which are written off-so that year by year we might have reflected in the statement of the Canadian National system some

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Railways and Shipping-Mr. Harris

figure which would denote the amount of exhaustion annually of the elements in the service of the road, and which in any ordinary business would be disolosed in a statement of this kind. _

Hon. members will find it stated in the report that the accounting system which was reviewed at some length by the committee is in accordance with sound railway practice. I was rather anxious to have a more definite statement as to what railroad practices were meant, and the question was asked whether the system was in accordance with the practice of class "A" roads, which receive their authority from the Interstate Commerce Commission. If hon. members wifi refer to page 174 of the proceedings of the committee they wifi find these words:

-some railroads found it good practice to set up depreciation to take care of the exhaustion of different elements, while other railroads did not. Some of the class "A" roads did and some did not. . . . Speaking of roads in the United States, they all accrue depreciation on equipment-

In reading this report any hon. member might believe that the accounting system is in accordance with railroad practice all over this continent, yet we find that the railroad practice depends upon where the railroad is located. When the Canadian National Railways go through the United States, their accounting methods are in accordance with the requirements of the Interstate Commerce Commission, but as hon. members know by far the greater part of this railway is in Canada, and the accounting practice of that portion is in accordance with the rules of the Board of Railway Commissioners. As far as I can see, the railway commission do not lay down rules and regulations with regard to the accounting system of the Canadian National Railways commensurate with the magnitude of this organization.

When these estimates come up, I want hon. members of the house to understand exactly what they are asked to pass. The hon. member for Toronto Northwest (Mr. Church) discussed the withdrawal of the eastern lines from the report this year. I remember when legislation was passed by this house affecting a 20 per cent reduction in freight rates on eastern lines, and I remember that the loss occuring therefrom was to be a statutory payment. I felt glad to do anything I could to assist the development of the maritime provinces; if by making a 20 per cent reduction in freight rates and paying the difference out of the consolidated revenue fund we would heLp the maritime provinces I was quite content to do so. However, I must admit that I was disappointed, although perhaps it is my own fault

TMr. Harris.]

because I did not study the situation sufficiently last July, to find that this statement which most members of the house expected to cover all the operations of the Canadian National Railways for last year, does not deal with the deficit arising from the operation of the eastern lines. So while this statement is in accordance with the legislation we passed last year, I want hon. members of the house to know that the loss occasioned by the operation of the Maritime Freight Rates Act is not included in this report, so these figures do not present a complete picture of the operations of the railway.

Two or three other rather important matters came before this committee, but I think the time has come in Canada when we should expect from the directors of the Canadian National Railways and from the government who have that directorship more or 'less under itheir control, some statement of policy as to what they are going to do to put the Canadian National Railways on a business basis, so that when the members of the house and the people of Canada, who are the shareholders in this Tailway, receive the annual statement each year they will get a fair reflection of the operations of the road. As it stands now, in my humble judgment this report does not show the people of Canada all that is happening. I would like to emphasize that in just one other way. Over a period of perhaps fifty years it is quite true that this statement issued year by year will be a true reflection of what has transpired, but as a yearly statement it is of little value. This year $40 000,000 has been added to the capital account; these elements all in use on the road will be exhausted during the next twelve months, and that exhaustion represents real money in dollars and cents. Yet when the statement ia received next year the exhaustion of that $40,000,000 of additions will not he reflected in any way. I say again that in my opinion the time has come when the government and the directors !of this road should give some thought to putting the Canadian National Railways on a business basis so far as their accounts are concerned, so that when the annual statement is presented we will be able to get some idea of what is going on.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

William Garland McQuarrie

Conservative (1867-1942)

Mr. W. G. McQUARRIE (New Westminster) :

The hon. member for Toronto Northwest (Mr. Church) referred to the issuance of transportation to reporters and others connected with newspapers, and it seems to me that that matter should be investigated. The explanation given by the minister seems to reveal the fact that a pernicious practice exists, or at least that it is customary with

Raihvays and Shipping-Mr. Ralston

both railways to pay for advertising by issuing passes. That seems to me entirely wrong; at least in connection with the Canadian National Railways we should pay for advertising in the regular way, and should only issue passes to newspaper men who are entitled to have them under the provisions of the act. I have heard rumours to the effect that publicity is Obtained through issuing passes; that when matters are before the house in connection with which railway officials desire to have the gentlemen in the press gallery stop giving publicity which might hurt them, or when they desire publicity which might be of benefit to them, it is quite customary to have some high official of the railway come to Ottawa and issue passes in a rather wholesale manner to members of the press gallery. These are stories which I have heard; I do not know whether or not they are true, but I do not believe the minister should pass up this matter, as he seems inclined to do, by saying, "Oh, if any of the members hear of these things they should give me particulars of them." It seems to me that the minister or some one in his department should investigate matters of this kind.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Will my hon. friend permit a question? Is he now referring only to the Canadian National Railways, or does he include the Canadian Pacific Railway as well?

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CON

William Garland McQuarrie

Conservative (1867-1942)

Mr. McQUARRIE:

The rumours I have referred to were connected with the Canadian National Railways. So far as the press gallery is concerned, we have them writing articles from day to day, calling attention to the fact that members of parliament are receiving this and that perquisite, using free transportation, and having the privileges of the restaurant, and so on, while they themselves are doing exactly the same thing.

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Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Oh, no, Mr. Speaker, that is quite wrong. The transportation issued to the press by the railway is not free transportation; it is paid for, and that is the distinction.

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Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

An annual pass is not computed.

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Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

William Garland McQuarrie

Conservative (1867-1942)

Mr. McQUARRIE:

That is where the iniquity of the thing comes in. It seems to me that it is all wrong in principle. It is hypocritical for the pressmen to speak about the indemnities and perquisites that the representatives of parliament receive, when it is a fact that we do not get any privilege that the members of the gallery are not receiving. If they are receiving free passes on the railways, contrary to the act, then I say that there should be an investigation, and that kind of thing should be stopped.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

That is right, if it is true.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

William Garland McQuarrie

Conservative (1867-1942)

Mr. McQUARRIE:

It should be stopped. I asked the minister if particulars could be obtained of the transportation issued to newspaper reporters, and others connected with the newspapers, and he said, "Yes." When I said, "Can you give the details?" he said, "Oh, I do not think so." A general statement in regard to the issuance of transportation is not good enough; we need the details. I submit, in all seriousness, that the member for Toronto Northwest (Mr. Church) has raised an important matter, and one which should be fully investigated.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

If the hon. member will give me anything to investigate, I shall be very glad to do so. With regard to the general situation, I will assure myself that the situation is as I outlined it a little while ago.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Hon. J. L. RALSTON (Minister of National Defence):

I want to say just a word or two with regard to what has been said by the hon. member for one of the Torontos. He intimates that he is surprised to find that, under the Maritime Freight Rates Act of last year, the deficit on the eastern lines is estimated for and paid out of the funds of Canada rather than out of the funds of the Canadian National Railways. I only want to say that I am sure my hon. friend was in attendance last year, and he should not be surprised. I have before me the Maritime Freight Rates Act-

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Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

Joseph Henry Harris

Conservative (1867-1942)

Mr. HARRIS:

I rise to a point of order; is the hon. gentleman referring to the member for Toronto-Scarborough? I want to say that I was not surprised.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Mr. RALSTON:

I am glad if my hon. friend was not surprised. I thought my hon. friend at least expressed dissent from the principle which we laid down, and which I understood him to say he did not understand was laid down last year. If my hon. friend did not understand it, and dissents from it, I should think he would be surprised to find that that principle was laid down. In the Maritime Freight Rates Act the principle was laid down just as clearly as it possibly could be that the deficit on the eastern lines would be estimated for by the Department of Railways and Canals. That was a recognition by this parliament, as those from the maritime provinces claimed, of the principles of the confederation pact, whereby it was provided that the Intercolonial railway was to be built. I am a little surprised to find the gentleman on the other side of the house now taking exception to that principle.

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Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

He did not.

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Railways and Shipping-Mr. Ralston

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Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Mr. RALSTON:

He says he dissented from it.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

Joseph Henry Harris

Conservative (1867-1942)

Mr. HARRIS:

No exception was taken to the principle. The only exception was that it was not found in the consolidated accounts of the Canadian National Railways. I agreed with the principle.

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Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Mr. RALSTON:

I only want to say that I think some other hon. members in this house got the idea that the hon. member was not favourable to the principle which had been laid down in the Maritime Freight Rates Act.

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Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

He said distinctly that he desired to support it. He said that in his main speech.

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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Mr. RALSTON:

I just want to take this opportunity to make it clear so that everyone else will understand, that the principle laid down in the act was put there because of the recognition by the whole of Canada of the rights' of the maritime provinces with regard to the Intercolonial railway. Due to certain considerations of a national character, it cost a good deal of money, which resulted in some deficiency on the road. It was felt that there should be a distinct recognition of the obligation of the Dominion of Canada in that regard and therefore section 6 of the act was passed. It provides:

For accounting purposes, but without affecting the management and operation of any of the eastern lines, the revenues and expenses of the eastern lines, including the reductions herein authorized which shall be borne by the eastern lines, shall be kept separately from all other accounts respecting the construction, operation or management of the Canadian National Railways *

2. In the event of any deficit occurring in any railway fiscal year in respect of the eastern lines the amount of such deficit shall be included in a separate item in the estimates submitted to parliament for or on behalf of the Canadian National Railways at the first session of parliament following the close of such fiscal year.

Topic:   RAILWAYS AND SHIPPING
Subtopic:   MOTION FOR CONCURRENCE IN REPORT
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May 9, 1928