April 30, 1929

CON

George Reginald Geary

Conservative (1867-1942)

Mr. GEARY:

I would like to support the suggestion made by my hon. friend that the statement which the minister proposes to make should be placed on Hansard so that the members of the committee may be able to acquaint themselves with the information before they go into committee. I would also ask the minister to try to arrange that the sittings of the two railway committees will not clash.

Topic:   WAYS AND MEANS
Subtopic:   CANADIAN NATIONAL RAILWAYS- BRANCH LINES QUEBEC ORIENTAL AND ATLANTIC, QUEBEC AND WESTERN RAILWAYS
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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

I certainly will. The Quebec Oriental extends from Matapedia to West Paspebiac, a distance of 100 miles, and the Atlantic, Quebec and Western extends from West Paspebiac to Gaspe, a distance of 102.5 miles. These lines traverse the north

coast of the bay of Chaleur and pass through a country whose chief activities consist of farming, fishing and lumbering. Latterly some activity has been shown in the development of lead, zinc and copper mining on the height of land of the Gaspe peninsula and about forty miles from these railroads.

The population served is 50,000 and the chief centres through which the railway passes are as follows:

Escuminac Carleton Caseapedia New Richmond New Carlisle Port Daniel

Gascons

Newport

Chandler

Perce

Douglastown

Gaspe

The tonnage handled by the Quebec Oriental last year was 175,000 tons, and by the Atlantic, Quebec and Western 140,000 tons. The principal commodities were forest products, manufactured and miscellaneous products, coal, and products of agriculture. This territory has substantial possibilities from a tourist point of view.

The purchase price is 83,500,000, which was arrived at after negotiation with the trustees, and represents the cost of reproduction new less depreciation less subsidies paid. The Gaspe railways were exploited by Alfred M. Carpenter, at one time proprietor of the Charing Cross bank which became bankrupt a great many years ago, and the property has since been operated by trustees for the bond holders. The mortgage position may be briefly outlined with respect to the Quebec Oriental railway as follows:

Matapedia section prick- lien 5 per cent bonds due January 1st, 1933, for an authorized amount of 8487,000, of which $178,242 has been issued, S60,388 being pledged with the bankers to secure an overdraft. These bonds are a first lien on the line from Matapedia to New Carlisle.

Matapedia section first mortgage 5 per cent bonds, dated July 26th, 1910, due January 1st, 1935, for an authorized amount of $974,000, all of which have been issued. These bonds are secured by a mortgage on the railway from Matapedia to New Carlisle, ranking next after the prior lien bonds.

Matapedia section second mortgage 5 per cent bonds dated June 25th, 1910, due January 1st, 1935, for an amount of $974,000, all of which have been issued. These bonds are secured by a mortgage on the same section as the two above-mentioned issues and rank after them.

With regard to the Atlantic, Quebec and Western Railway, there is an issue of first mortgage 5 per cent debenture bonds due July 1st, 1935, amounting to $2,548,675. This issue is secured by a first mortgage on the whole property of the railway. Cash (received as subsidy) was deposited with the trustee sufficient to meet the interest until June 30th, 1916. This issue is also secured by the deposit with the trustee of securities acquired by $994,893 of the proceeds of the sale of subsidy lands.

There is an issue of second mortgage 5 per cent debentures amounting to $2,050,000 issued at par in settlement of balances of construction account. This issue is a floating charge on all the property of the railway.

Briefly summarized, the capital structure of the two companies is as follows:-

Quebec Oriental

Authorized Issued

Capital stock $ 500,000 $ 120,776Prior lien bonds.. .. 487,000 178,2421st mortgage bonds.. . 974,000 974,0002nd mortgage bonds.. . 974,000 974,000$2,935,000 $2,247,018

Atlantic Quebec & Western

Capital stock $ 5,000,000 $2,000,000

1st mortgage debentures. 4,590,000 2.548,675

2nd mortgage debentures. 2,050,000 2,050,000

Total.. . . ..$11,640,000 $6,598,675Capital stock.. . . 5.500,000 2,120.776Bonds. . . . .. 9,075,000 6,724,917Total. . . . ..$14,575,000 $8,845,693

Interest on the bonds of both the Quebec Oriental and the Atlantic, Quebec and Western has been in arrears for a number of years. In the case of the Quebec Oriental, the

C.N.R.-Branch Lines

Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 173, respecting Canadian National Railways and to authorize the acquisition of the Quebec Oriental Railway and the Atlantic, Quebec and Western Railway.

Motion agreed to, bill read the first and second times, and referred to the select standing committee on railways, canals and telegraph lines.

Topic:   WAYS AND MEANS
Subtopic:   CANADIAN NATIONAL RAILWAYS- BRANCH LINES QUEBEC ORIENTAL AND ATLANTIC, QUEBEC AND WESTERN RAILWAYS
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ST. JOHN AND QUEBEC BAIL WAY


Hon. CHARLES A. DUNNING (Minister of Railways and Canals) moved that the house go into committee to consider the following proposed resolution: Resolved, that it is expedient to provide that the Canadian National Railway Company may purchase the undertakings and railways of the Saint John and Quebec Railway Company, and the interest of His Majesty in the right of the province of New Brunswick in such undertakings and railways, for a total price of $6,000,000. inclusive of certain outstanding debenture stock secured by mortgage, and the payment at maturity of certain debentures issued by the province; and that the governor in council may guarantee the principal and interest of securities to be issued for this purpose by the Canadian National Railway Company. Motion agreed to, and the house went into committee, Mr. Johnston in the chair.


CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

We are agreeable to this passing on the same general conditions.

Topic:   WAYS AND MEANS
Subtopic:   ST. JOHN AND QUEBEC BAIL WAY
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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Yes. The St. John and Quebec Railway Company was incorporated by New Brunswick statute in 1910 for the purpose of constructing a railway from the city of St. John to a junction with the National Transcontinental railway at Grand Falls, a distance of 225 miles, but there has actually been constructed only the portion of the line between Westfield Beach and Centreville, a distance of 157.8 miles. Access to the city of St. John is obtained through running rights over the Canadian Pacific railway from Westfield Beach, a distance of 15 miles.

The railway received a guarantee from the province of New Brunswick of an issue of 4 per cent first mortgage bonds, and also received a subsidy of $1,000,592 from the Dominion government.

An agreement was entered into between the company and the Dominion government whereby the railway, when completed, was to be leased to the Dominion government at a rental equivalent to 40 per cent of the gross receipts. Financial difficulties arose in connection with the construction of the line and eventually the province of New Brunswick

* M r. Dunning. ]

C.N.R.-Branch Lines

took over the property and completed the construction as far as Centreville. The railway passes through Gagetown, Oromocto, Fredericton, and Woodstock. The population of the country served is 27,000. The territory traversed by the railway is for the most part very well adapted to agriculture, the upper portion being exceptionally well adapted to potato growing and large crops are raised annually. Other sections are especially adapted to the raising of Bheep. There are distinct possibilities of mining developments about twenty miles west of Fredericton and in the vicinity of Woodstock. The valley of the St. John is very beautiful, and presents an excellent opportunity for development as a tourist resort.

The traffic handled by the railway consists of about 140,000 tons, products of agriculture, especially potatoes, predominating.

The purchase price agreed on is $6,000,000, based upon the cost of reproduction less depreciation of the property, and less the amount of the subsidy paid by the Dominion government. The arrangement does not involve any immediate cash payment on the part of the Canadian National Railways, but involves the assumption by the company of a portion of the first mortgage 4 per cent debenture stock guaranteed by the province in the hands of the public, which amounts to $2,727,977.40, and the payment to the province of the balance of the purchase price in amounts as set out in the bill for the purpose of retiring bonds issued by the province to raise moneys in connection with this railway, and the payment by the Canadian National Railways of 5 per cent interest upon the balance outstanding from time to time.

Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 174, respecting Canadian National Railways and to authorize the acquisition of the St. John and Quebec Railway.

Topic:   WAYS AND MEANS
Subtopic:   ST. JOHN AND QUEBEC BAIL WAY
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Motion agreed to, bill read the first and second times and referred to the select standing committee on railways, canals and telegraph lines.


KENT NORTHERN RAILWAY


Hon. CHARLES A. DUNNING (Minister of Railways and Canals) moved that the house go into committee to consider the following proposed resolution: Resolved, that it is expedient to provide that the Canadian National Railway Company may purchase the undertakings and railways of the Kent Northern Railway Company, in the province of New Brunswick, at a price of $60,000; and that the governor in council may guarantee the principal and interest of securities to be 78594-134 issued for this purpose by the Canadian National Railway Company, not exceeding in aggregate face value such amount as the governor in council may consider sufficient to raise the said sum. Motion agreed to, and the house went into committee, Mr. Johnston in the chair.


CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

On the same general conditions?

Topic:   WAYS AND MEANS
Subtopic:   KENT NORTHERN RAILWAY
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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Yes. The Kent Northern railway is twenty-eight miles in length, and extends from Kent Junction, New Brunswick, on the Canadian National Railway, easterly to Richibucto on the straits of Northumberland. The road is at present controlled by the Walmsley estate and administered by the National Trust Company of Toronto.

The population tributary to the Kent 'Northern railway is estimated as 8,000. The settlement is confined to the shores of Northumberland straits and of the estuary of the Richibucto river. The principal point touched is Richibucto which has a population of 1,158.

Considerable timber resources are tributary to the railway and a number of small mills are established along the line. The principal forest products consist of pulpwood, lumber and laths. The tonnage handled is 10,500 tons.

It is proposed to purchase the undertaking for the sum of $60,000. This is in accordance with the arrangement proposed under appropriation act No. 2, chapter 52, statutes of Canada 1918, which was not accepted by the owners at that time, and is about equivalent to the scrap value of the material embraced in the railway property.

Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 175, respecting Canadian National Railways and to authorize the acquisition of the Kent Northern Railway.

Topic:   WAYS AND MEANS
Subtopic:   KENT NORTHERN RAILWAY
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Motion agreed to, bill read the first and second times and referred to the select standing committee on railways, canals and telegraph lines.


INVERNESS RAILWAY


Hon. CHARLES A. DUNNING (Minister of Railways and Canals) moved that the house go into committee to consider the following proposed resolution: Resolved, that it is expedient to provide that the Canadian National Railway Company may purchase the undertakings and railways of the Inverness Railway in the province of Nova Scotia, at a price of $375,000; and that the governor in council may guarantee the principal and interest of securities to be issued for this purpose by the Canadian National, .Railway



C.N.R.-Branch Lines



Company, not exceeding in aggregate face value such amount as the governor in council may consider sufficient to raise the said sum. Motion agreed to and the house went into committee, Mr. Johnston in the chair.


CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

On the same general conditions?

Topic:   WAYS AND MEANS
Subtopic:   INVERNESS RAILWAY
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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Yes. The Inverness railway extends from a junction with the Intercolonial Railway at Inverness Junction and runs through Port Hood, Mabou and Inverness on the west shore of Cape Breton island. The length of the line is sixty miles.

The company was reorganized in 1902 under the present corporate title with an authorized capital of $7,500,000. It absorbed the Inverness and Richmond Collieries and Railway Company of Canada, Limited, the properties of the latter company consisting of coal mines at Inverness, Chimney Corner and Port Hood in Cape Breton, covering an area of 55,000 acres. On May 1, 1915, the company defaulted on payment due of the semi-annual interest on its first mortgage 5 per cent bonds. On July 6, 1915, the exchequer court of Nova Scotia appointed J. M. MoGillivray, Inverness, N.S., receiver of the property on application of the mortgage trustees (The National Trust Company). On July 23, 1919, Mr. Mc-Gillivray resigned as receiver and the Eastern Trust Company of Halifax was apointed his successor. The railway properties were operated under receivership until February 1, 1924, when they were leased to the Canadian National Railways for a term of three years at a rental of $25,000 per annum, with an option to purchase for $500,000. Since the expiration of the lease, January 31, 1927, the railway properties have been operated by the Canadian National Railways on a monthly rental basis.

The total estimated population tributary to the Inverness railway is 16,000.

The chief natural resources of the tributary area consist of coal. The coalfields of Inverness county include a series of narrow, low, carboniferous areas extending for over fifty miles along the western shore. The estimated probable coal reserves, to a depth of 4,000 feet, of the known deposits in Inverness

County, are as follows:

Metric tons

Land area... 22,000,000

Submarine area 73,000,000

Total 95,000,000

The known fields are as follows:-

Fort Hood

Mabou

Broad Cove (Inverness)

Chimney Corner

[Mr. Dunning.) -

Development has taken place in these fields at Port Hood, Mabou, and Broad Cove, all of which are adjacent to the Inverness railway. The Chimney Corner field is located some 12.6 miles beyond the present terminus of the railway.

The tonnage handled by the railway is

115,000 tons.

The purchase price is $375,000, which is about $6,250 per mile, and was a compromise made with the Eastern Trust Company who had bought the railway under foreclosure proceedings to protect advances made of $475,000.

Resolution reported, read the second time and concurred in, Mr. Dunning thereupon moved for leave to introduce Bill No. 176, respecting Canadian National Railways and to authorize the acquisition of the Inverness Railway.

Topic:   WAYS AND MEANS
Subtopic:   INVERNESS RAILWAY
Permalink

Motion agreed to, bill read the first and second times and referred to the select standing committee on railways, canals and telegraph lines. At eleven o'clock the house adjourned without question put, pursuant to standing order. Wednesday, May 1, 1929


April 30, 1929