March 10, 1933

LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

I have never had

that offered me before, so I acquiesce gladly.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

The figures I have before me show the gross operating revenues for the Canadian National and Canadian Pacific railways, and are as follows:

Canadian Canadian Year- National Pacific

1925 $244,971,203 $201,176,745

1926

266,187.825 217,359,6801927

268,704,294 221,420,9161928

304.591.268 251,567,0431929

290,496,979 233,339,5141930

250,368,998 196,211.6261931

200,505,162 154,963,411

C.N.R,-C.P.R. Bill-Mr. Woodsworth

Unfortunately I have not the figures for the Canadian Pacific for 1932, but I am informed they are in the same proportion.

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

I thank the minister for the information he has given. However I hope he will not take exception when I state that on one hand his figures may mean a lot and on the other they may not mean very much. I think they have to be worked out on an index basis in order to get a real comparison. I was going to point out that there are so many ways of causing the Canadian National to go back and its rival to go forward, if this trustee board so desired. I think everyone will agree to that. It altogether depends upon their attitude. I am not suggesting that they should be ardent advocates of public ownership, all I suggest is that they should be fair to it, not be prejudiced against the national road nor the Canadian Pacific. Let us see what would happen. If my suspicions-they are suspicions only, if you like, but, as indicated already, mighty well founded-if my suspicions be justified, and if the national road goes back with regard to its relative passenger service or with regard to the volume of its relative freight service, it will go back and back and back until there is nothing but a decrepit emaciated skeleton of a railway left, and then no one will want it except at a song and the people of Canada in desperation may then want someone to take it off their hands on whatever terms are obtainable. I take the ground that no man and no government, much less this government, should put itself under suspicion as they have done in this bill. I used to think in my youth that I could take any course I liked, no matter how suspicious it looked, not caring for the opinion of my friends. But I have come to the conclusion that no man, especially no public man, can afford to do that. I would say to the government that no matter how great their leader-and he is a great man in many respects, except in the one respect of properly governing Canada; he is a great orator; he has the greatest power of invective I ever heard; it is good for us that we are getting thick in the skin or he would have it all off us-but I say that even he, and I feel sure he is an honourable man, cannot afford to put himself under the suspicion that he is under in my mind and in that of thousands of others in handing over our great railway property to these two unknown boards appointed by himself, to do with it practically as they please.

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LAB

James Shaver Woodsworth

Labour

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

Mr. Speaker, my colleagues

have very well covered the ground from the labour standpoint. I agree with them that

provision for displaced employees should be the first charge on the savings resulting from the proposed change. I would further urge that this bill should go before the committee on railways and canals; it is an important bill, the details of which should have full consideration, fuller consideration than can possibly be given by the committee of the whole. It seems to me that there is no reason why we should simply take the conclusion of the Senate committee without ourselves giving ample opportunity for the very fullest discussion.

As we all know, the roads of this country were built to serve the people. I submit that the present legislation indicates that the people from now on are destined to serve the railroads. The railroads in Canada were built in the first place to make this dominion a possibility. We could not possibly have brought into one legislative unity a territory so vast as this without having good means of communication. Further than that, in the earlier days of the settlement of the west the railroads were undoubtedly built for colonization purposes. Large communities grew up alongside of these railroads, and I submit that the settlers must not be left stranded. We are asked to think of these railroads now entirely in terms of business, whereas they were constructed in the first place to serve the needs of the people, that is for the purposes other than strictly profit making.

This problem is being considered in isolation from other problems, but we cannot possibly solve the railroad problem in Canada apart from the solution of our other economic problems. It has been stated that the railroads are strangling business, are a heavy burden on the people of the country. I would point out that it might more truly be said that business-or the lack of business -is strangling the railroads. If the government would adopt policies which would lead to a larger amount of trade I think there is no doubt that to a considerable extent the railroad problem would be solved.

In this discussion, and in the report, attention is centred on the Canadian National Railways. The minister himself asserts that the Canadian National is directly our problem. May I suggest that the Canadian Pacific Railway is equally our problem; you cannot separate the one from the other. In either case it is the public that pays. May I call attention to the enormous amount that was spent by the Dominion of Canada on the Canadian Pacific railway? In a return brought down about two years ago it was indicated that the total outlay of the dominion on the

C.N.R.-C.P.R. Bill-Mr. Woodsworth

Canadian Pacific railway as far as the Department of Railways and Canals had record has been 888,822,471.70, and that in addition there is an item of $10,189,521 referred to by the bureau of statistics tabulated report for 1925 as having been paid to the Canadian Pacific Railway Company for lines relinquished. There is also the question of land grants, stated by the Dominion Bureau of Statistics to amount to 24,953,133 acres. In addition to that enormous advantages were gained by the Canadian Pacific Railway Company throughout the years in having their lands exempt from taxation, and also in the subsidies which have been given in various ways, such as mail contracts and so on, and the practical guarantee of high freight rates made possible through the. Board of Railway Commissioners. In all these ways the Canadian Pacific has received huge grants and an enormous amount of assistance from the Canadian people, and it seems most unfair that we should centre attention upon the one railroad called the Canadian National.

Take the question of extravagance. The Duff report at page 21 says that there was intense rivalry between the two systems in new territory. Again it says:

The development of this territory did not meet expectations, and the railways now find themselves with additional traffic mileage and an increased burden of capital charge.

Take the question of hotels. As at December 31, 1931, the Canadian National hotel investment was $31,828,234, whereas the Canadian Pacific hotel investment was $71,148,772, considerably over double. If there was extravagance on one road, there was also extravagance on the other, and as I have said, it is always the public that ultimately pays.

In his speech the Minister of Railways (Mr. Manion) eulogized the present board of directors, but he did not say why, if the board had done such excellent work, his bill should provide for the scrapping of the board and the setting up of an entirely new arrangement. He complimented the present management- on the decrease in operating costs, which in 1932 amounted to $44,000,000 or 112 per cent. He took the trouble to point out where these savings had been made -in the higher salaries, in travelling expenses, club dues, radio and legal services, and advertising, a saving amounting to $4,000,000. After all, that amounts to but a very small proportion of the total saving of $44,000,000. I think it is safe to say that the greater part of that sum was saved by reductions in wages.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

And reductions in traffic.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Yes, partly through a reduction in traffic. The reduction in passenger service was estimated at $8,000,000, but I submit that in reality this means largely a reduction in wages. There is a certain saving on the amount of coal used, but I think something like 67 per cent of the entire operating expenditure is taken up by wages.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

Of course that is quite

right, but they cannot pay wages if there is not enough traffic to provide work for the men.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I am just pointing out that to a large extent this reduction has been made by reducing wages, reducing staffs and putting men on part time work.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

I was only mentioning

these special economies of the higher staffs.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

In his speech yesterday the Prime Minister (Mr. Bennett) made this entirely a financial problem. I cannot agree with that. The whole of our Canadian development has conformed to the development of railways; settlement all through the west has largely followed the extension of the railway lines into new territory. The Prime Minister suggests that it is time for plain speaking, and then he enunciates his conception of the situation. I think I am being fair to the right hon. gentlemen when I put his argument into three propositions. The first is that the road belongs to the investors, and the right hon. gentleman pointed out that these investors were scattered over Canada, the United States, Great Britain, Europe and even Asia. The Prime Minister says the people do not own the road but that at best they own only the equity of redemption. If the road is indeed bankrupt I suppose that means that since we have no assets the people own the right to pay the debts. I take it that this is practically what is involved.

The Prime Minister's second proposition is that the road is bankrupt. It is not going through any bankruptcy court; the proposals in the bill suggest a very much different line than bankruptcy proceedings. Then the third proposition is that the dominion and the provinces cannot default. The Prime Minister says this is the time for plain speaking, so in this case I should like to ask why not? Bankruptcy is a process devised so that a debtor shall not remain forever a hopeless slave. The Jews had a very good way of accomplishing this; every fifty years they declared that the debtors should go free. It is against all sense of equity that people should remain forever in slavery. I submit that although developments along national lines are very recent, we are beginning to witness a somewhat simi-

C.N.R.-C.P.R. Bill-Mr. Woodsworth

lar process being worked out with regard to national and international affairs. A few months ago there was great rejoicing when an international conference declared that reparations were practically at an end. What did that mean? It involved the repudiation of international obligations. France reduced her franc from approximately twenty cents to about four cents. What did that mean but the repudiation of a great part of her national obligation? I happened to be in Europe a little over a year ago when Great Britain went off the gold standard. In good faith I had invested a certain amount in English sovereigns, but suddenly I found myself deprived of 25 per cent of my English investment. That was a repudiation by Great Britain of her obligations to the extent of 25 per cent. In more recent years we had Great Britain notifying the United States that she could not continue to pay her war debts to that country. Again that was a repudiation of a solemn national obligation. Well, I submit that once we recognize that it is possible to repudiate international obligations such as these, we may very soon come to consider whether we must indefinitely retain the idea of the sacredness of all so-called national obligations.

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?

An hon. MEMBER:

Individual also?

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I have not said anything about individual obligations; I was speaking of the repudiation of some of the so-called sacred national obligations. I agree with the hon. member for Muskoka-Ontario (Mr. McGibbon) when he says this bill offers no permanent solution. It is a temporizing measure. We have been accustomed to think of royal commissions as being entirely impartial and above political considerations in the reports they present, but I think this report bears evidence of being political in character; that is, it brought in only such solutions as might be considered politically feasible.

Having laid down his general principles that the road belongs to the investors, that it is bankrupt and that the dominion and the provinces cannot default, the Prime Minister proceeded to outline his special device for meeting the situation. The trustees, he said, are in reality in the position of receivers. Strangely enough, however, the bondholders receive all the benefits of a solvent enterprise. That is the curious combination we have offered to us.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

They are the receivers.

Mr. W'OODSWORTH: Yes, they are the receivers, if you like; they receive it all.

The Prime Minister tells us we are to have all the benefits of a receivership but at the same time the road is to be kept in operation. He tried to frighten us by suggesting what would happen to the public if the road ceased to operate, and he also suggested the dire things that might happen the employees in such a contingency, but he did not say anything about what would happen to the investors if the road ceased to operate. It is impossible to think of this road ceasing operations; hence there is no use trying to frighten the public by referring to anything of that kind. In this case, as at the time the government took over the Canadian National, if this bill passes we are entering into an agreement by means of which we are trying to save a group of investors at the expense of the general public. Under a receivership, as we would deal with private debts, the investors might get fifty cents or thirty cents on the dollar, but under this arrangement we practically guarantee the investors a hundred cents on the dollar, even though it means that this parliament must give up all real control, and in addition undertake to pay all deficits. A few weeks ago a financial friend of mine suggested rather a good scheme, which I pass on for what it is worth. Why not exchange these bonds for shares, and pay dividends on the shares when the business warrants it? I do not see why one class of people should be entirely exempt from the exigencies which affect everyone else. Sooner or later we shall have to face the scaling down of the bonded indebtedness of this road, and I cannot see why at this stage we should enter into any arrangement that would reduce the people of Canada to almost perpetual slavery, slaving to pay the bondholders of the road.

Amalgamation has been proposed and it has been rejected by those responsible for the Duff report. Further than that, the Prime Minister has I take it given his guarantee that there will be inserted in this bill a clause to the effect that nothing in the measure shall be regarded as looking to amalgamation. Whether that is done or not, I do not think makes a great deal of difference. This is moving in the direction of amalgamation, and I would not condemn it for that reason because in my opinion, taking the long view, amalgamation of our roads is sooner or later inevitable. I would urge however that if and when that amalgamation comes it must be amalgamation under government and not under private ownership and control. What I fear in this bill is that the way may be opened so that possibly by degrees there may come an amalgamation under private ownership. It

2912 COMMONS

C.N.R ,-C.P.R. Bill-Mr. Woodsworth

seems to me that when amalgamation comes it must be amalgamation not only of these two great railway systems but of all motor traffic, of all traffic by water and of all traffic by air, so that all these great systems of transportation and even of communication shall be correlated into one vast transportation organization. Sooner or later, I think, we must face some such development.

The present bill has been characterized by some as a socialist measure. There is perhaps some ground for saying that, but it is only in part socialist. It is a long step I submit towards the control of private corporations, and I do not much wonder that Mr. Beatty rather protests against a bill of this kind. Undoubtedly it is a long step in the direction of the control of private corporations. The thing I do not like about it, however, is that the kind of control proposed is not democratic. I agree with the hon. member for West Lamb-ton (Mr. Gray) and others when they say that we shall be setting up a virtual dictatorship. The appointment of this board of trustees will not be democratic; as pointed out time and again, they will be a self-perpetuating board whose removal will not be easy. Moreover, the powers of the board are very largely in the hands of one man, which means, as far as I can read the legislation, that we are setting up a virtual dictatorship.

A good deal of fault has been found with Sir Henry Thornton because he was too far removed from the control of parliament. He was probably as good a man as could have been selected, with a wide experience both in railroading and in public affairs; yet as time went on a great many hon. gentlemen in this house began to feel that he had been given too great latitude. In more recent years Sir Henry Thornton himself, with his staff, appeared before a special committee of this house to go over his estimates, and some thought that this was putting him in rather an undignified position, that he should be asked to discuss matters with parliament. But the protest came from both sides of the house in more recent years that he had altogether too free a hand, and that, I submit, has been the ground for such severe criticism of Sir Henry Thornton on the part of the present administration. Yet they are now proposing to place in the hands of one trustee power which is a great deal more autocratic than any at any time exercised by Sir Henry Thornton. I cannot see the logic of such an argument.

Since the bill is founded largely on the Duff report, we must examine the report to understand the purposes of the measures proposed. And here may I say a word with

regard to the personnel. The commission itself was suggested by the president of the Canadian Pacific Railway and endorsed by Sir Henry Thornton, and the personnel of the commission might very well have been chosen by the former gentleman himself. The bondholders were well represented. As pointed out by my colleague from North Winnipeg (Mr. Heaps), however, Labour was not represented at all. It would seem that, with the large numbers of Labour men and officials who have made such a large contribution to the building up of this road, there should have been some representation on the commission from the people who actually know railroad affairs, but there was none whatever. The bondholders, I repeat, were well represented. More than that, several gentlemen on the commission were very decidedly private ownership men. One has only to read the evidence-I have not time to go into that to-day-to note the extreme bias, shall I say, of Mr. L. F. Loree, who again and again came out urging the most drastic cuts in the wages of the men and repeatedly pointing out the benefits of private ownership under which the road would not come under the review of the parliamentary authorities. And even the vice-president, Mr. Ruel, declared very definitely his belief in the advantages of private ownership. With this evidence before us I agree with the hon. member for North Waterloo (Mr. Euler) that when the board of trustees is appointed there should be on that board men who are heartily in sympathy with the principle of public ownership, for only such men can be expected to make this great public ownership enterprise a success.

Let me comment briefly on the main considerations which the commissioners say they had in mind. First, they say, the identity of the two railway systems should be maintained. In my opinion this leaves the way open for further trouble. I think it was Lincoln who said, during the Civil wrar, that it was not possible to have a nation half slave and half free. I do not think it is possible permanently to have one half of our transportation system under private ownership and the other half under public ownership; one or the other must give way. So that this is a temporary expedient. In the second place, they say that the management of the national railways should be emancipated from political interference and community pressure. It seems to me that that is an expression of absolute despair with regard to parliamentary and democratic institutions. What is meant by the phrase "community pressure"? If it means that the people located out on the

C.N.R.-C.P.R. Bill-Mr. Woodsworth

prairies fifty, one hundred or two hundred miles from a railway have no right to press their claims for railway services, then I say this is something we ought not to permit. Many of us who have lived through the pioneering days know what it is to have our friends far removed from any railway line. They were induced to go out there and year after year, sometimes decade after decade, they waited for railway services. They sacrificed the education of their children as well as their own immediate welfare in the hope that one day the railway would come. Is it meant that there must be no community pressure of that kind, no consideration given to the needs of local communities? Let me say again that in the first place these railways were constructed to serve the people and I protest against any change in policy that makes the first consideration that of providing dividends or guaranteeing profits to the bondholders.

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CON

Henry Alfred Mullins

Conservative (1867-1942)

Mr. MULLINS:

Would the hon. member take away the savings of widows and orphans?

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

I wish the hon. gentleman would not bring up the widows and orphans to-day. I know he is thinking of some of the bonds held not by widows and orphans but by some other hon. gentleman. The widows and orphans always make a good smoke screen. I am as anxious as any hon. member in this house to protect the widows and orphans but I should like to ask the hon. member how he proposes under this bill to protect the widows and orphans of hundreds of thousands of railway employees.

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CON

Henry Alfred Mullins

Conservative (1867-1942)

Mr. MULLINS:

By making the line a success.

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

What about the

widows and orphans on the frontiers?

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

As the hon. member for Melville (Mr. Motherwell) says, what about the widows and orphans on the frontiers, and widows and orphans generally?

At six o'clock the house took recess.

After Recess

The house resumed at eight o'clock.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Before the house

took recess I had been trying to point out that we in this corner are not opposed to labour saving devices or to economies in management or even to amalgamation, but we consider that the welfare of the workers and of the community and the rights of this parliament should be safeguarded. We believe

that the care of the men displaced should be a first charge upon the savings effected, and that amalgamation, if and when it comes, should be under public ownership and should include not merely railway transportation but other transporation systems as well.

I further tried to point out that our roads were constructed in the first place to serve the people, but that under this bill, as I see it, the interests of the employees and of the public generally are to be subordinated to the interests of the bondholders. The Prime Minister explained that we should all sacrifice. Yes-all but the bondholders, who are not called upon to make any sacrifices at all. Indeed, it would seem as if the bill was primarily designed to bring about a condition under which the bondholders will receive one hundred per cent even though the road is declared by the Prime Minister to be bankrupt.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

Would my hon. friend

explain how he would go about dealing with the bondholders? I am a little puzzled at his remarks.

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March 10, 1933