March 10, 1933

LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

There are various

ways in which it could be done. As I said this afternoon, we recognize that under certain conditions, when a private concern is hopelessly insolvent some relief must be given. The concern goes through a formal process by which it passes into the hands of a receiver, and the creditors have to accept a certain percentage of their claims. But it is not proposed that this road should go through any process of that kind, even although the Prime Minister suggests that the trustees occupy the position of receivers. This afternoon, I made a concrete suggestion which I said had been given to me by a financial friend of mine, that we might possibly offer shares to the bondholders.

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Subtopic:   FIRST READING
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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

But they would not accept that.

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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

They might be

forced to accept it, and in such a case it would mean that they would have been called upon or forced to sacrifice to the extent that the rest of the community has to sacrifice, just as they might enjoy prosperity when prosperity returns to the rest of the community.

Last summer I could not but think of the waste by duplication that has taken place in our transcontinental systems and also of some of the more remote consequences of this waste. I drove by car from Edmonton to Jasper over the right of way which has since been abandoned. The grade has been trans-

2914 [DOT] COMMONS

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

formed in part into a highway. The steel rails are gone, the ties are gone, some of the bridges are gone, but the interest has still to be paid on these vanished bridges and ties and rails. In the construction of those roads many a man was killed, and in some instances these men were buried in the dump and their dependents got very little recompense. The workmen are gone, but the interest has still to be paid on the dynamite that killed them in their blasting work.

It seems to me that we are recognizing the claims of only one group in the community, and at that only a particular group of the creditors, the bondholders, and so arranging matters that they shall be the beneficiaries of the entire operations of the road.

I then proceeded to the report itself, and said that a study of it would give us some idea of the considerations which the commission had in view. Paragraph (II) of clause 202 of the report reads:

The management of the national railways should be emancipated from political interference and community pressure.

It seems remarkable that nothing is said about the pressure that has been exerted in the past by promoters. Anyone who knows the history of Canadian railroads knows that there has been a great deal of that pressure upon parliament and upon governments right from the very first. There was, for instance, the old scandal in connection with the Canadian Pacific Railway in the early days, and there were the scandals-I think them such- of the lobbies in connection with the old Canadian Northern. Everywhere pressure was brought to bear by private interests. In fact it is that pressure that has landed us where we are, and yet nothing whatever is said in this report about the pressure of private interests.

We are told that we must beware of political interference. Again let me say that the railroads themselves have been very glad to come to parliament in order to secure special privileges and grants and concessions, and now we are asked by these same roads-we were told that it was Mr. Beatty who had made the suggestion for the appointment of the commission, and this proposal was endorsed by Sir Henry Thornton-to place the railroads :n such a position that they shall be free from what is termed political interference. It does seem to me that this clause in the report is a challenge to our parliament and to our so-called democratic institutions. If we are to adopt a dictatorship, let us do it with our eyes open; but we must remember the cost that it may impose upon the people of Canada.

We have been witnessing a very strange development in recent years. The management of industrial and financial affairs has passed largely into the hands of a comparatively small group of people who are not in any sense responsible to the people. It would seem as if by this bill we are deliberately sanctioning that kind of thing and placing the control and management of one of our largest public utilities in the hands of a virtual dictator. Political interference! We are to take that as it stands it would seem that before very long parliament must abdicate. Already as we go over the estimates we find that a very large proportion of the expenditure comes under what is termed uncontrollable expenditure, and now we are about to erect a board which will also be entirely uncontrollable, because I take it that no machinery is set up that will give parliament any effective control over the operations of this proposed board of trustees.

Paragraph (III) says:

Machinery should be provided for cooperation between the two systems for the elimination of duplicate services and facilities and the avoidance of extravagance.

May I say that while this sounds well, I am afraid that in practice it will not work out. As Mr. Beatty said in an address before the Canadian Club at Toronto, which has already been quoted in this house:

If we were mistaken in our appreciation of the value of competition, or did not sufficiently realize the waste and losses it involved, _ and especially involved in railway competition between the government of Canada and a private company, should we perpetuate another fallacy on the assumption that we can have competition and cooperation, that we can struggle for conflicting interests and yet not conflict? Why delude ourselves into the belief that we are super-men, indifferent to the spirit that competition and contest provoke, that we can maintain our own traffic and revenues and yet divide them, that we can act like enemies and friends at the same time, and, lastly, that we can afford to do the things we cannot afford to do and perpetuate the waste we cannot afford to perpetuate.

Clause (iv) is as follows:

The attainment of a scale of economies which will bring the burdens of the national system within reasonable dimensions and _ effectively check extravagant and costly operation.

Again this reads well; surely everyone is desirous of eliminating unnecessary expense. But we must read this in conjunction with the preceding section, which warns us against community pressure, which, in practice, may mean the needs of the local community. Then, section (v):

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

Reasonable protection for the privately-owned undertaking against arbitrary action by the publicly-owned undertaking which might unfairly prejudice the interests of the privately owned undertaking.

The whole point in the section lies in what is fair or unfair. As I said this afternoon, we here face the fundamental question whether or not it is possible for a privately owned concern to exist in the same field with a publicly owned concern. It seems to me that ultimately the privately owned concern will, by perhaps a slow process, take over the one owned by the public, or sooner or later the public concern will have to absorb the private one. I am afraid there is nothing in the provisions of this bill to safeguard the publicly owned system, and with a board and tribunal constituted as proposed it will inevitably mean that private interests will in time obtain control. With these considerations in view I cannot support the bill.

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Subtopic:   FIRST READING
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LIB

Edward James Young

Liberal

Mr. E. J. YOUNG (Weybum):

Mr. Speaker, it is difficult to understand how the passing of this bill could solve our railway problem. At page 53 of the Duff report we find listed the contributory causes of that problem; they are seven in number. Let us go over them briefly and endeavour, if we can, to see how the bill is designed to deal with them. Of the seven contributory causes the bill pretends to deal with only two, and in my opinion deals with them very ineffectively. The first contributory cause is given in the report as-

The over-development of railways beyond the immediate needs of the country.

I might say, Mr. Speaker, that the overdevelopment of our railroads, the excess mileage, is due not to the management or mismanagement of our railroads, but to state policy. From time to time it has been the policy of this country to have railroads built. If after this depression lifts we have another boom; if once more settlers should flock into the unfilled portions of Canada, the same policy will prevail. Will those settlers not demand railways? If we put the management of the national railways and that of the privately owned system beyond the reach of public influence where they cannot be persuaded to build lines they do not want to build, what will follow? The men who go in and pioneer the new parts of our country will not be deterred from demanding railway services because of any reorganization of our railway companies. New companies will be 53719-185

organized; new charters will be demanded, and the parliament of Canada will not refuse them.

The second contributory cause given in the Duff report is-

Aggressive and uncontrolled competition between two nation-wide railway enterprises, a competition the more disastrous in that one of the competitors was publicly owned and supported by the full resources of the dominion.

That is the one contributory cause for which this bill appears to have been designed; for that reason we shall pass it for the moment, and return to it later. The third case appearing in the report is-

The reactions of the world trade repression which began in 1929 and has progressively increased in its severity with each succeeding year.

In my opinion that is the chief contributory cause of our present railway problem.

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LIB
LIB

Edward James Young

Liberal

Mr. YOUNG:

I will:

The reactions of the world trade repression which began in 1929 and has progressively* increased in its severity with each succeeding year.

In my opinion, as I have said, that is the chief contributory cause. There was no railway problem when there was plenty of tonnage; there was no railway problem when traffic and goods were moving. There is less traffic to-day because business is not moving to the same extent. But certain business is moving; we ship as much wheat to-day as we did four or five years ago. We ship as much as we did in 1929, and the freight rate is just as high as it was at that time. The earnings of the railway companies from that source are just as great as and greater than they ever were. But the prices we are getting are such that we cannot bring goods back. It is not within the power of this government to increase the cash price that the people of Europe will give for our wheat. But when we sell our wheat abroad, although nominally we get paid for it in money, actually we take payment in goods, and it is within the power of this parliament to let us take more goods for our wheat than we are getting to-day. It has been and still is the policy of this government to insist that when we take payment for our wheat in goods we shall take less than the people in the outside world are willing to pay us. If, for example, the people of Great Britain are willing to give us two yards of cloth in exchange for a certain quantity of wheat, and our government steps in and says, "You must not accept two yards of cloth; we

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

will not allow you to accept more than, one yard for that quantity of wheat," it naturally follows that our railways will have the job of hauling only one yard of cloth. There will not be as great a tonnage coming back. The same applies to our lumber. We are not shipping lumber out of Canada because the price the world is offering is not sufficient to pay the wages of the men who produce it. Lumber, like wheat, is paid for in goods. Our exports are paid for by our imports, and when the government of the countiy says to the lumbermen, "We will not allow you to bring in as many goods in exchange for your lumber as the people of the world are offering you," are they not denying the railways traffic? Are they not denying the railways the job of hauling the lumber out and hauling goods back?

Some time during the next summer we expect there will be a world economic conference. The best contribution our government could make to the solution of economic problems would be to announce that they are going to the conference firmly resolved at all 'costs to break down the trade barriers which have prevented the passage of goods backwards and forwards throughout the world. And, if other nations are not willing to cooperate to that end, our government should state that Canada at least will do her share to break down the barriers that are strangling her own trade.

This bill calls for cooperation between the two railway systems. A little cooperation between the government and the two railway systems towards the creation of traffic, and an effort to get goods moving, would do more to solve the railway problem than all the legislation in this bill, a dozen times over.

Then we come to the fourth contributory cause-

Competition from other forms of transport, notably road transport.

That was dealt with this afternoon by the hon. member for North Bruce. He made the very interesting suggestion, which I would like to repeat when this bill comes before the committee, that the minister be prepared to tell us how much traffic the motor and truck business has brought to the railways and how much it has taken' from them. There is a growing feeling abroad that although motor trucks and automobiles have taken business from the railways they have added many millions of tons of traffic to the railways. It would be interesting for us to know what that figure is, but the bill does not make any provision for dealing with that contributory cause.

Then we have number 5:

Inelasticity of freight rates and railway practice generally which prevents prompt action in the meeting of falling revenues and dealing effectively with competition from other forms of transport.

Here again we have a contributory cause which is not 'being dealt with in the bill. Perhaps it cannot be. In my opinion that inelasticity, that rigidity in railway practice and freight rates, is due in large measure to the magnitude of the companies and perhaps those who believe in amalgamation will bear this in mind. I can illustrate it by an example. A friend of mine who once worked on a transcontinental railroad told me that the company had certain rules governing the conduct of its employees. My friend told me he was always in hot water with the officials. Why? Because when a situation arose he generally did the thing that he considered in the best interests of the company, the thing that he thought would move the traffic most expeditiously. In doing so he would break the rules, and the officials would say: "We cannot allow that. We know you did it in the interests of ithe company, but if we allow you to break the rules we will have to allow others to do so, and a big system Mke this cannot operate without rules." That weakness is inherent in such large bodies, and those who would combine our two railroad systems into one would do well to bear that in mind.

Then number 6:

Contractual arrangements with labour organizations which set up a rigid wage scale and inflexible labour practices generally.

There is nothing in the bill to deal with this very important contributory cause of our railroad problem. Not many days ago a delegation representing some 20,000 unemployed railway men came before the government to ask that these contractual agreements be set aside, at least for the time being. They said that in past years when times were more prosperous those agreements worked to their advantage, but to-day they are working to their disadvantage and rendering it impossible for many of them to make a living. There is another side to the question, that we have not heard. I would like to place some figures on Hansard in connection with our railroads for the years 1913 and 1931. I have taken 1913 as being the last pre-war year, and 1931 because it is the last year for which figures are available. This is what we find- and these figures apply not to the national system alone but to all railroads in Canada:

CM.R.-C.P.R. Bill-Mr. Young

1913

1981 Increase Decrease

$3,464,380,000 $1,377,800,000 34,972,899,000 4J*

16,135

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$256,702,703 $182,011,690 245,237 142,609 $215,887,868 57,811 $100,000,000 36.043J


*34 -62 10,097 $358,540,382 $101,846,679 [DOT]77 1-02 $321,025,588 $139,013,898 [DOT]55 -92 Investment in road and equipment.. Units of work done Units of work per employee Number of employees Total wages paid Labour cost per unit of work done.. Units of work done for every $1,000 invested in road and equipment.. Gross earnings Gross earnings per unit of work done. Operating expenses Operating expenses per unit of work.. * Per cent. . t Decrease. A study of these figures reveals the fact that between 1913 and 1931 we spent hundreds of millions of dollars in improving our railroads -better roadbeds, heavier steel, stronger bridges, bigger cars, more powerful engines. For what purpose? To improve the efficiency of our system. And the result was what? Higher freight rates, higher operating costs. Capital investment in these railroads for betterments could have been justified only on the ground of increased efficiency, but we find that our capital investment has resulted in decreased efficiency and higher operating costs. That is not an indictment of the publicly owned or of the privately owned system ; it is an indictment of the management of both systems. The next contributory cause of our railroad problem is: The special disabilities of the Canadian National Railways due to:



(a) Assumption, through government action, of liabilities of insolvent railway systems for reasons of national credit. In passing let me remark that it has been said that the government has advanced to the national system something like $1,000,000,000 which is added to the railway debt of the country and on which we do not receive interest. Some people are going about this country, quoting stupendous figures of the public and private debts of this country, and frightening people into the belief that they can never be paid. Take this particular item; here is $1,000,000,000 that the people of Canada borrowed first, and it was added to the national debt; then they lent it to the railway companies and it was added to the railway debt, and these people say the debt is $2,000,000,000, but $1,000,000,000 will pay it. If these people who are so busy stampeding the people would consider the duplications and triplications, yes, multiplications, involved in the figures they quote with respect to our debts, the amount would not look so stupendous. 53719-185J Then, passing over item (b) and turning to (c): Political .and community pressure on the management arising out of direct government control. Much has been said about what the railways are costing the government. I sometimes think it would ibe interesting to know what the government is costing the railroads. This political pressure to which it is said here the national is exposed is also exerted on the Canadian Pacific. We are told that in the last three years the railways have spent some $25,000,000 on relief. Why did they do this? The government persuaded them to do it. The government persuaded these railways to make improvements and extensions which they did not require and could not afford. The government said: "Do this in order to relieve the unemployment situation and we will pay the interest on the money until such time as you require these improvements." The debt of $25,000,000 is hanging over the railways in the meantime. I have no quarrel with that method of dealing with unemployment; perhaps it was the most economical method possible at the time, but when we ask the railways to shoulder $25,000,000 of a government obligation in order to relieve unemployment it is hardly fair to turn around and say the railroads are millstones about our necks.


CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

We did not ask the railways to do anything they were not going to do. They advanced their work, that is all. They did exactly what they were going to do, only they advanced it.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

It was not at the request of the government?

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

I think we proposed it, but it was part of their own work.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

I admit that the work would have been done some day, but they would not have done it at that time. They did not need it; they could not afford it but they

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

did it to help relieve the situation which was facing the people of Canada, and in doing so they assumed an obligation of $25,000,000. It is not fair for us to say they are millstones around our necks while they are carrying that load for us.

Then I am told that in the western division alone the Canadian National Railways are compelled to pay $1,000,000 a year more for coal than is necessary, just in order that they might buy Canadian coal so that employment may be given in certain Canadian mines. If that is so in the western division how much in addition is being paid jn the eastern division? I am told also that this same railway company owns a coal mine in Ohio which has been closed down so that Canadian coal can be used at this additional expense. That pressure has not been confined to the Canadian National Railways, for I understand that the Canadian Pacific was also pressed to use Canadian coal instead of coal that could be bought for less elsewhere. Is it fair to load the railways with that burden? I think it was in 1929 that Mr. Milne, who was then a member of this house, made an estimate of what the tariff policy of this country had cost the railways since confederation. Taking the total purchases of the railways during that time and the additional cost of those purchases because of the tariff, he figured that the railways had paid enough extra because of the tariff to have rebuilt and re-equipped every mile of railway in Canada.

I am sorry this bill is not going to the railway committee. I believe it would be in the public interest to have the officials of the two companies appear before that committee and tell us exactly what these insane buy in Canada policies are costing them. The other day the minister boasted that since taking office he has required the national railways to make larger purchases of Canadian made goods than they were making formerly.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

Where they could get equal quality at equal prioes; that is what I said.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

I am glad the minister does not require them to pay more for Canadian goods than they would pay elsewhere, but could not the minister trust the officials of the company to do that anyway?

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

No, because they were

specifying forty per cent of American goods, although in large part goods of equal quality could be obtained in Canada at an equal price.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

Will the minister tell me why that specification was made?

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

I should like to know myself.

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LIB

Edward James Young

Liberal

Mr. YOUNG:

Did you not ask?

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

I corrected it, which was more important than asking why it was made.

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March 10, 1933