March 15, 1933

CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

You could not subscribe to all that has been said on that side because it was too contradictory.

Mr. 'STEWART (Edmonton): Possibly,

but I am not going to enter into that. As I said, I am opposed to this board being designated a board of trustees, which is an indication that the property is in bankruptcy, and I maintain, rightly or wrongly, that that state of affairs cannot possibly exist. Secondly, while I would give the board the freest hand with respect to the operation of the road, I do think that they should be restrained from making any disposal of the property, or closing any lines, or doing anything else except with the consent of the governor in council.

There are one or two other objections which I have to register against the bill. I have said that I do not object to the term proposed, which is seven years, although personally I think five years would be better, but the process that is provided in the bill by which a director or trustee, as he is designated, can be removed only upon address by the House of Commons and the Senate seems to me a most cumbersome process. I do not think it is right. If parliament has control over the expenditures of money, and if the Senate

3042 COMMONS

C.N.R.-C.P.R. Bill-Mr. Stewart (Edmonton)

has no right to interfere, why interject the Senate into the measure now before us? I am for direct responsibility, and I put that responsibility upon the Minister of Railways and upon the government. They are responsible to the people of Canada, and any evasion of their responsibility will but serve to lead us into future trouble. Under section 12 we have control over capital expenditures, and whether we like it or not we are forced willy-nilly annually to vote deficits. The minister has no control whatever.

Right here let me interject that I believe the elimination of the Minister of Railways from control under this bill is a great mistake. I believe the national railways are big enough and important enough to the people and government of Canada to merit the supervision of the Minister of Railways, a man who will have at least some control and be responsible to parliament for matters in connection with administration. If there is to be a semblance at all of public ownership in operation, the minister must have some say. And the provision for the removal of the trustees in the manner indicated in the bill I entirely disapprove and it is my intention to oppose it. Moreover, I believe we would have a much greater control over the trustees or directors if they were appointed and paid by order in council.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

They have always been

paid by the railways.

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LIB

Charles A. Stewart

Liberal

Mr. STEWART (Edmonton):

Quite so.

I admit at once that that is true. Then, I take exception to the fact that the measure before us makes a bit of a czar out of the chairman. I believe on all occasions a majority vote should prevail; but in the present measure the chairman is given powers almost equivalent to those of a czar; he has practically unlimited control. Under the provisions of the bill about all the trustees are asked to do is to report annually to parliament, and present a budget. If there are deficits we wall be forced to vote them, the only alternative being the privilege of refusing to vote them. That is the position in which we will find ourselves if the provisions in the bill are accepted.

I now turn to the arbitral board. At once I agree that if there is to be cooperation, if savings are to be effected in the two great railway systems, some method will have to be provided of assisting them. Undoubtedly, at times, they will disagree. As I understand the provisions of the bill, either one railway or the other will make application for a hearing. But, as the chairman of the Board of Railway Commissioners is to exercise most control in

[Mr. C. A. Stewart. 1

the arbitral board to be set up, and as in Canada we have had dealing with railway matters a trained body of men who, I believe, know their work fairly well and are thoroughly familiar with most aspects of railway operation, I can see no reason why those men should be forgotten upon this occasion and another board set up and given power, if necessity arises, to supersede an order of the Board of Railway Commissioners. The chairman of the arbitral board will have that privilege, under the provisions of the bill. I can see no reason for such a provision. If armed with sufficient power, I do not see why the Board of Railway Commissioners could not perform all the duties delegated to the arbitral board to be set up under this measure. For these reasons I am opposed to the measure.

Personally I believe there are many commendable features in the bill; many of its provisions represent steps in the right direction. I do, however, and shall in committee, oppose most vigorously and to the utmost of my power the provisions of the bill to which I have referred, and which do not, in my view, appear to be in the interests either of the Canadian people or of the railways themselves. Despite all that has been said in and out of this House of Commons, the national railways have given as good an account of themselves as has the system operated under private control. I do not believe it is even contemplated by any hon. member, but I say it would be the height of folly at this time, to turn over the national railways to private control or to an amalgamation with the Canadian Pacific Railway. Any government which would attempt to take such a course would meet a speedy end when it appealed to the public. The public believe that the national railways have been of immense value to Canada and, if properly managed, I believe will continue to be a valuable asset.

I do not share the gloomy views expressed by some hon. members to the effect that this and other institutions are not going to continue to function. I believe the national railways will in the future continue to serve as faithfully as they have in the past. I say, further, that I question very much whether the rates prevailing for passenger and freight traffic would have remained in effect had it not been for the nationally owned system. There would have been a tremendous urge for an increase in rates. Further, had the national railways and the Canadian Pacific enjoyed increased rates during the last ten or twelve years they would not find themselves in their present unfortunate position. I repeat that low rates, coupled with the trade policies put into

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

operation in 1930, have had very far-reaching effects upon the financial position of our railways. Unless these policies are changed, unless they are revised, unless there is a revival of trade, we will face a difficult situation in the future.

Many things of a domestic nature may be done to relieve the situation. Hon. members have mentioned the competition of trucks and other vehicles which has had a detrimental effect upon the railways. However, this type of evolution will continue; Canada cannot get along without her railways. At the present time I do not know of one branch line in western Canada which could be scrapped. It is all very well for a commission to sit down and say, "We will tear up the ties and rails upon this particular line." They must remember, however, that towns have been established along those tracks, communities have been growing up which the railways will have to serve. May I predict that if hon. gentlemen opposite will change their policy, if they will adopt a more moderate policy with respect to trade, if they will get off the backs of industry and the railways of Canada, there will be a change which will be immediately perceptible and we will not be worried as we are to-day about our railways.

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LIB

Joseph-Arthur Denis

Liberal

Mr. ARTHUR DENIS (St. Denis) (Translation) :

I shall only add a few words to this debate on a bill which aims at improving the management of our railways. The discussion seems to clearly prove that this measure submitted to the house by the government, far from improving the situation, conceals a set purpose whidh the government fears to reveal and prepares the way to the merger of the Canadian National with the Canadian Pacific. The government intends to carry on its work by destroying our national economy. Not satisfied of having ruined our trade through its high tariff policy, it has decided by this disastrous and deceitful measure to confide the management of our national railway system to a committee of three trustees invested with exclusive powers, bearing no responsibility and whose chairman would rule as a master. He would become the dictator of our railways-a dictator fashioned in the school of the leader of the government.

The rights of parliament, the responsibility of the people's representatives and the interests of the country would thus be sacrificed.

A superman is sought to manage our railways. Where shall we find him? No doubt, in the ranks of the Conservative party, he will, however, be clothed with the mantle of political independence, although he may have been a defeated candidate at the last election.

He will probably be a lawyer in order to interpret the act as he pleases. As you may imagine he will be a superman like Bennett, who, when speaking in the house, gave a false meaning to the words and acts of our great leader, Sir Wilfrid Laurier who, in his grave, still makes the present leader of the government dhiver with fear, who is small when compared with Sir Wilfrid Laurier, but appears taller when beheld from bended knees, as his followers opposite do. I wondered, after perusing this report, whether the Duff commission threw new light on the management of our railways. Its members were certainly men of high standing, the chairman, a legal light in his day, now a judge, however, with no knowledge of railway matters, the other members were as highly qualified. No wonder that the report limited itself to writing the history of our railways and copying balance sheets, financial statements, etc., of our two Canadian railways. This commission has taught us nothing, excess mileage, too much competition between the two roads, not enough cooperation and economy. It appears that since the government has assumed power-I take the word of the Minister of Railways (Mr. Manion)-thrift has been, to a certain extent, practised by the management of the national railways; why then make a change? The only aim the government has in view, by making this change, is to appoint a superman to carry out the high orders of the administration and sacrifice our national railways and interests in _ order to benefit the Canadian Pacific which should bear its share of responsibility in the present plight of our railways.

There is not a word in the Duff commission of what should have really been recommended: reduction in salaries, suppression of useless positions and private cars for those who occupy these positions; reasonable railway rates, so as to improve business and not divert it to road transport, such as motortrucks and autobus. At first, our railways imposed on the people and neglected to give an efficient service; to-day, conditions have changed. The government wishes, at the country's expense, to give us a better service, but our trade is threatened, owing to the policy adopted by the Conservative party and we have no freight to transport. However, we must not entirely bla/me our railways. Closely linked with our national economy, they are not only necessary but indispensable. We must foster their activities so that they may play their part in the economic life of this country.

We have two railway systems, one controlled by the state, the other managed by a

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

private concern. In this present crisis, sir, notwithstanding the critical situation in which are our two railways, it is the duty of the government to keep our National Railways separate. The government decided, so as to implement the Duff commission's recommendations, to bring down in the house a measure by which it hopes to improve the management of our railways. By this bill the government substitutes to the board of directors, composed of seventeen members, a board composed of three trustees, and decree that the chairman is to have, no doubt, with the co-operation of the other two trustees, absolute control of the railway management. What can be the result of such a reduction in the number of the board of directors and whence does the necessity arise? I, for one, sir, agree with the government when it restricts the number of directors. The past and present directors have been charged with unfairness-political interference, private interests and negligence-in the discharge of the duties assigned to them in connection with the management of our railways. These charges are, to some extent, substantiated. We must have in the management of our railways men who are above suspicion, possessing, to a high degree, public spirit-

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CON

Joseph-François Laflèche

Conservative (1867-1942)

Mr. LAELECHE (Translation):

103 degrees?

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LIB

Joseph-Arthur Denis

Liberal

Mr. DENIS (Translation):

And having no other aim than the general welfare of the country.

The discussion on this bill should, to my mind, bear on the general welfare rather than on local interests. We must help our railways to give the best results. One class of people or a section of the country must not be favoured to the detriment of the other. It is service we require and not favouritism. The management of our railways must be made to understand that their part is to serve the public in the interest of the country, as a whole.

Unfortunately, I fear that in the appointment of these trustees, the government will show partiality towards their friends, and I am convinced that they will blunder as they did in the appointment of the radio commissioners. These appointments should go to men outside of party politics; however, we are quite aware that when the government appointed Mr. Maher as commissioner, it was appointing the defeated candidate in the constituency of our good friend the hon. member for Charlevoix-Saguenay (Mr. Casgrain).

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LIB

Joseph Philippe Baby Casgrain

Liberal

Mr. CASGRAIN (Translation):

Hear, hear! Thanks!

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LIB

Joseph-Arthur Denis

Liberal

Mr. DENIS (Translation):

We trust, that in the present case, the government will not make the same mistake. I could mention other cases, such, for instance as the appointment of the tariff commissioners: I refer to the appointment of an ex-member Mr. Campbell, who always sided, with the government. Perhaps he also helped in the campaign funds, which are supposed to be furnished by the leader of the government. This appointment was certainly not an impartial one, but was intended to safeguard the government's interests.

As I pointed out a moment ago, the only improvement which can be derived from this bill will come from the decrease in the number of the directors of our railways. On the other hand, the powers granted to these trustees are too broad, and exclusive; these powers entirely supersede the responsibility of the hon. Minister of Railways and Canals. I think the hon. minister must retain this responsibility and keep under his immediate authority this commission in order to be able to give a full account of it to the house and thereby be approved or censored.

It is time, sir, that governments, and more so this government should not divest themselves of the responsibilities inherent to selfgovernment. The time has come to vindicate the rights of governments and parliament, the people demand it and wish to judge, finally, of the acts of their legislators, with full knowledge of the facts. That is why, sir, I disapprove of granting such wide powers to this board of trustees, because, in so doing, the hon. Minister of Railways divests himself of his responsibility and duties in favour of a so-called superman who, with his associates, will assume all responsibilities.

Part II of the bill refers to the cooperation which should exist between our two railways. It should have existed long ago. If there are people responsible for such conditions, they are here in the house. All governments, past and present, must shoulder their share of this responsibility. Railways applied to us for branch lines and built them with the approval of the majority of this house. To-day, by this bill, the cooperation of our two railways is sought. But why not also include the co-operation of the government. I think that such co-operation would be necessary for the success of the present management. On the other hand, can the government in all fairness force the Canadian Pacific Railway, a private concern, to co-operate with the management of the Canadian National, fully knowing that this cooperation is not in the interest of its share-

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

holders? Such co-operation should be left to the discretion of the Canadian Pacific Railway itself, and not forced upon it. I am quite certain that the latter, both in the interest and development of this country, would deem it a duty to co-operate as experience has taught us that unrestricted competition brings disastrous results.

I think, sir, with reference to Part III, which deals with the arbitral tribunal, that the government could dispense with this board by granting broader powers to the railway commission, of which the Minister of Railways might form part.

I shall now close my remarks by stating that I, for one, do not agree with the spirit of this measure, and I shall strenuously oppose it, because it does not, in any way, improve the present act with reference to the management of our national railways.

This seems to be the first important bill submitted to the house this session, however, when examined from all angles, one finds that the situation remains unchanged. This reminds me of the various measures which have been enacted to relieve unemployment. At the special session of 1930, when the present crisis started, we had in this country about MO,000 unemployed. In haste, parliament was summoned and $20,000,000 were voted to relieve these unfortunate people. In 1983, when there are in this country over 1,300,000 unemployed, the government still requests $20,000,000. That is called solving the unemployment problem. $20,000,000 when we had only MO,000 unemployed, and again $20,000,000 to relieve 1,300,000 unemployed! That is the government's rational way of dealing with the problem; it is the interest taken by this government to solve our national questions! I wonder why this administration, finding itself helpless to fulfil its duty and pledges of 1930, still clings to power, although they know that they cannot face the situation.

Some hon. MEMBERS (Translation): Hear, hear!

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LIB

Joseph-Arthur Denis

Liberal

Mr. DENIS (Translation):

All the measures enacted by this house, since 1930, are tainted with this spirit, and as I think it will react unfavourably on the welfare of this country, I shall vote against the second reading of the bill.

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LIB

Joseph Jean

Liberal

Mr. JOSEPH JEAN (Maisonneuve) (Translation) :

Mr. Speaker, until the right hon. Prime Minister (Mr. Bennett) spoke on this debate, I held entirely different views on the nature and purport of this bill. I was under the impression, as the hon. Minister of Railways (Mr. Manion) had sought to convey 53719-193i

when he introduced this measure, that it was merely a question of making the management of our railways more efficient and economic, or rather, the management of what we thought were our railways. As a policy, we could but laud such endeavours on the part of our government and we would have co-operated, because I think it would have been our duty to facilitate the enactment of all government measures which would improve the situation, help the administration to solve the deficits of our railways, while, on the other hand, maintaining the credit of the Canadian Pacific Railway as suggested by the royal commission's report.

No doubt, we would have reserved the right to discuss certain details, as, for instance, the appointment of the management and trustees, their term of office, qualifications, number, etc. However, as a policy, I repeat it, if the bill had been such as represented to us at the outset, we would probably have approved of it.

However, the right hon. Prime Minister thought proper to give certain details which entirely gave a new aspect to the whole question relating to our railways, and which have, therefore, greatly altered my views.

The speech delivered, on Thursday last by the right hon. Prime Minister, has given rise to a great uneasiness among the public and has considerably added to the anxiety of the hour. We gather from his remarks that the railway problem that we are, at present, facing is most serious, that Canada's whole credit is involved in the solution of this problem and, according to his own words, confided to Hansard, page 2861:

Our effort must be to save not the road alone but, as I said, because of the guarantees that have been given, the credit of the guarantors themselves.

And, in this instance, the guarantors are the Canadian government.

On the other hand, the government in introducing this bill and by the explanations given of its provisions, recognizes implicitly, as stated just now by the hon. member for St. Denis (Mr. Denis), its absolute powerlessness to solve the problem and its total incompetency.

The problem of our railways is a serious one, that is certain. It matters very little, for the moment, who is responsible for this situation. All our railways were built just as much by our federal and provincial governments and their guarantors as by private enterprise, at a time when optimism reigned and the people of Canada had an unshakable faith in the future of the country.

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

The railways, in most cases, preceded the development of the country and gave it its first impulse. Without our railways Canada would never have attained the position which it occupies among the leading trade nations of the world. Unfortunately, uncontrollable events happened; war and the present economic depression have spoiled our plans and created new difficulties.

It is certain that, at -the start, our railways could not possibly be paying enterprises, however, with the expansion of the country following in the wake of its development which was destined to instil new economic life into the country as a whole, our railways were to meet by degree the cost of operations and reimburse, at least partly, the capital invested in its construction.

This continuous progress of our railways with the development of the country greatly benefited the Canadian Pacific, and its effects had already begun to be felt by our national railways. It is only necessary to compare the balance sheets of the two systems to be convinced of this fact. From 1923 to 1931, when the country was well administered by the Prime Minister of that period, now the leader of the opposition, and when it had reached a high degree of prosperity, the Canadian Pacific Railway distributed to its shareholders the 'handsome amount of $312,879,978 in dividends, while the Canadian National, during that period, was turning the operating deficits of its earlier days, into a surplus of $281,211,847.

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CON

Joseph-François Laflèche

Conservative (1867-1942)

Mr. LAFLECHE (Translation):

Never, it has never had any surplus in its whole career.

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LIB

Joseph Jean

Liberal

Mr. JEAN (Translation):

The hon. member has but to consult the report of the Duff commission, at page 15, and in reading it carefully, he will discover that the figures I have just given are correct.

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CON

Joseph-François Laflèche

Conservative (1867-1942)

Mr. LAFLECHE (Translation):

Are they

absolutely correct?

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LIB

Joseph-Arthur Denis

Liberal

Mr. DENIS (Translation):

If you contend that they are not, it is because you cannot read.

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LIB

Joseph Jean

Liberal

Mr. JEAN (Translation):

Now that this

trend towards progress has stopped, for the moment, the government instead of being inspired by the perseverance and hopes of its predecessors, preaches defeatism, spreads dis-pondency and endeavours to elude its responsibilities.

The question of the hour is one of faith in the future of our country.

Are we to take for granted that Canada has ceased to develop and forsaken all hopes which it had for its future, or are we to

.

believe, once the economic crisis has passed, our country will take its flight towards the progress and realization of its legitimate ambition?

In the first instance, we can do no better than be guided by the leader of the government and declare our railways bankrupt as they are no longer of any use1-

Some hon. MEMBERS (Translation): Shame! shame!

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LIB

Joseph Jean

Liberal

Mr. JEAN (Translation):

-and will no further be needed for the future development of our country; curtail their services; decrease their output; abandon those lines which do not pay their way and retain only those strictly requisite for the needs of the public. I contend, sir, that this is where the present measure will lead us. That is what we clearly gather from the remarks made by the right hon. Prime Minister, the other day, when he stated in the house, that our railways are no more the property of those who built them or of those who purchased them, but have passed into the hands of the bondholders and must be put in the hands of receivers pending the winding up of their business or reorganization, as the creditors may decide.

By the way, I wonder, sir, whether this statement made by the right hon. Prime Minister, that our railways are now the property of bondholders, has any connection with the law-suit brought against the government of Canada, the Canadian National and the Grand Trunk, last year, by a group of English bondholders who wished either to be reimbursed or take possession of the company's railway system. If such be the case, the statement of the right hon. Prime Minister and the appointment of receivers or rather, to use his own words, of trustees with the powers of a receiver as provided by the act, would indicate his determination to liquidate our national railways and, thereby, threaten the future of Canada.

If, on the contrary, we still have faith in the future expansion of Canada, and I think that every Canadian citizen has a right to hope that our country, with its natural resources, undeveloped regions and its high-minded population, may yet forge ahead. Therefore, if we still have faith in the development of the country, the bill submitted to us does not meet our present requirements. It is not any receivership, even temporary, which will help our railways to weather the crisis, but, rather, a controlled and efficient management, a well planned and economic operation of our present railway systems.

Aou cannot suppress part of our railways without threatening the life of this country.

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

What we require in Canada, to-day, is not so much a policy of economy and retrenchment which will lead us to bankruptcy, but a policy of putting to good use the assets we possess. The Canadian railways are an asset to the country, but this asset can only produce inasmuch as the country develops in conjunction with the railways, and with equal strides.

Some hon. MEMBERS (Translation): Hear, hear!

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LIB

Joseph Jean

Liberal

Mr. JEAN (Translation):

By the bill submitted to our consideration, if we are to put faith in the explanations given to us, there is no mention of facing and providing for the future of our railways or country, but simply of delaying the disaster, that is why, sir, I cannot support this measure.

If it is a fact that the credit of the whole country is threatened by reason of the guarantees given to the railways, and that its fate is closely linked with the future of our railways, we can foresee, at present, where the present administration will lead us. The way this problem is handled shows on the part of the government a delusive incompetency. For a government which was to bring complete relief and settle all questions on its assuming power, it is rather sad to note the means to which it resorts. To refer vital questions such as this one to a commission of so called experts, of whom two only had some experience in railway matters, however, strangers to this country, and to accept blindly the conclusions of this commission; I state, sir, any one could have done as much. This, again, clearly shows that the government in office is powerless to cope with the situation and their implicit acknowledgment of this fact is bound to depress our people. I shall not enter into the details of this measure. All those who preceded me in this debate, at least, on this side of the house, have clearly pointed out its defects. However, may I, in closing my remarks, state that this measure does not fulfil public expectations.

The public is, to say the least, as interested in the future of our railways as are the British, United States, or other bondholders, whose bonds are guaranteed by the government. This measure is introduced simply to safeguard the interests of the bondholders according to the statement made by the Prime Minister himself.

The railway employees, who also contribute largely to the good management of our railways, should at least, in my opinion, have a representative in the new proposed management.

The Canadian Pacific Railway, which has managed its own lines heretofore, should not,

in my opinion, be forced to cooperate to its own detriment. If unrestricted competition, has sometimes created abuses, enforced cooperation may lead to the ruin of both railways.

These are some of the things which bring out the defects of the bill and force us to vote against it. Let the government bring down a truly constructive measure based upon the maintenance of the integral identity of our railway systems as well as their services, although keeping in mind the relations which exists between the development of the country and that of the railways, we shall be but too pleased to support such a measure. However, the bill before the house does not fulfil these conditions, therefore, for my part, I deem it a duty to oppose its second reading.

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LIB

John Power Howden

Liberal

Mr. J. P. HOWDEN (St. Boniface):

I do not really rise to make a speech. At this late stage of the debate the ground has been well covered and there is not much satisfaction or interest in reiterating the remarks of others, but I have had an insistent prompting during the last day or two that the part of the country which I represent will expect me to go on record in connection with this vitally important matter. I have risen therefore to state my position with reference to this bill.

We are told that we have a railway problem in Canada to-day. As a matter of fact we have had a railway problem in this country, with the exception of the short period from 1922 to about 1930, ever since I can remember, and that is quite a long time. It is certain, however, that the railway problem that has presented itself to the Canadian people in the last three or four years has. assumed rather serious proportions. The late? management of the Canadian National Railways is very largely blamed for the condition of that road to-day. There can be no gainsaying the fact that in tihe fulness of prosperity and success which this country enjoyed between 1922 and 1930 the management of the Canadian National Railways probably provided for that system with a lavish hand. They found these railways in poor condition, seriously handicapped. The late Sir Henry Thornton was asked to combine the railways into a national road to compete with perhaps the best railway on the American continent, namely, the Canadian Pacific Railway; and if in doing so he found some success and sought to outdo his opponent, who in turn sought not to be outdone, and if in this way the Canadian railways indulged in unnecessary expenditures and extravagance, it is not to be wondered at, and

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

there should not be a great deal of blame attached thereto.

I am quite prepared to admit that the railway problem in Canada to-day was caused to some extent by the vying of these two railways, in a period of prosperity and advancement, to outdo each other and that the late management of the Canadian National Railways is not entirely blameless. But I would suggest also that to a great extent the railway problem in this country has been caused latterly by a lack of haulage, a lack of business; and so far as that lack of business is concerned the government we have in this country at the present time is not blameless, for to a considerable extent the policies initiated by that government were responsible therefor.

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CON

John Thomas Hackett

Conservative (1867-1942)

Mr. HACKETT:

What about Great Britain and the United States?

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LIB

March 15, 1933