April 15, 1935

CON

Arthur Edward Ross

Conservative (1867-1942)

Mr. ROSS:

I was very much pleased to

hear the Minister of Railways (Mr. Manion) say that some of this money would be expended on work to be done by private companies. I was also pleased to hear the hon. member for Shelburne-Yarmouth (Mr. Ralston) suggest that single men should not be employed on these jobs, and when I take up a case with the minister to-morrow morning 1 hope now that there will be no objection from the other side. Also I am in sympathy with my hon. friend opposite who wanted some of this work given to the Canada Car Company of Montreal. I would remind him that if he and I want to get together and see that the companies in our cities get a share of this work, he had better take to task his colleague the hon. member for South Perth (Mr. Shnderson), who apparently is opposed to the policy of giving private companies any part of it. The hon. member for South Perth is a whip of the Liberal party and no doubt closely in touch with the policy of the opposition, so that what he says must surely be taken for the opposition policy. I want to quote, to my hon. friend from St. Henri (Mr. Mercier) and to others the exact words used by the hon. member for South Perth this afternoon. We do not want to hog this thing, Mr. Chairman. We simply want the work to be divided up, and I think my hon. friend from St. Henri will agree with me that we do not want everything for the private companies.

On the other hand we do not want to follow the policy of the hon. member for South Perth. I want my hon. friend from St. Henri to listen to what the hon. member for South Perth stated this afternoon. I took his statement down and it was this: " Mr. Chairman, I urge upon the minister in regard to this new equipment for the Canadian National that not one dollar of this expenditure be handed out to private companies." These are the words of one of the whips on the other side of the house, and undoubtedly he is pretty closely in touch with the policy of his party. If the hon. member for South Perth has the ear of the opposition, the hon. member for St. Henri and I will be in a bad position, because he doesn't want one dollar of this expenditure given to the private companies. I am pleased that the Minister of Railways has taken a different position and wants this work divided up.

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LIB

Frederick George Sanderson

Liberal

Mr. SANDERSON:

Will my hon. friend permit a question.

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CON

Arthur Edward Ross

Conservative (1867-1942)

Mr. ROSS:

Wasn't that the statement of the hon. gentleman this afternoon? I took it down.

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LIB

Frederick George Sanderson

Liberal

Mr. SANDERSON:

I said that this afternoon, and I have no apologies to make for it. The hon. member for Kingston City (Mr. Ross) is speaking on behalf of some private company in the city of Kingston. I was speaking on behalf of the employees of the Canadian National Railways.

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CON

Arthur Edward Ross

Conservative (1867-1942)

Mr. ROSS:

The hon. member for St. Henri and I are agreed that we want a share of this expenditure for the private companies, but my hon. friend from South Perth does not want /them to get one dollar. If that is the policy of his confreres, I cannot agree with it, and I trust my hon. friend from St. Henri will back me up and say that he does not agree with that policy.

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LIB

Paul Mercier

Liberal

Mr. MERCIER (St. Henri):

I should be much surprised if my hon. friend from Kingston City did not agree with me in wanting some of this work given to the private companies, to the Hamilton Car Company of Ontario, for instance.

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CON

Arthur Edward Ross

Conservative (1867-1942)

Mr. ROSS:

I am absolutely with you. These companies came in here to build equipment which the companies themselves could not build; and they have been without work now for four years. The men in these shops have been doing a national work and have been unemployed for years, and they should have a share of this work. That is what I am

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pleading for, and when my hon. friend from South Perth says that the private companies should not get one dollar of this expenditure, I say that that is unfair. The men who work in these shops are helping to pay the debt of this country, helping to pay the deficits and helping to maintain the roads, and they should be considered. I was pleased indeed to hear the Minister of Railways and the Minister of Public Works say that they are going to get a share of this expenditure.

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

Mr. Chairman, while I am quite interested in both halves of this duplex resolution I am naturally more concerned with the latter half since receiving this telegram addressed to myself from the mayor of Melville quite recently:

Melville, Sask., April 12. 1935.

Have wired Hon. Manion asking share of railway rolling stock repairs be allotted to Melville, and would urge you to support the request as an effort to reduce unemployment here.

Phil Walters,

Mayor.

I gathered from the Minister of Railways in the discussion here this afternoon that the rumour regarding this work being allocated to private concerns had no foundation and that the work would be given to the railways to be done in their own shops. But now that the question has been again raised by my hon. friend from Kingston City I am wondering whether I understood the minister aright, and whether this work is to be given to the railways or to private concerns or to both.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

I also received a telegram from Melville, and my hon. friend rang me up about it this morning. I tried to explain to my hon. friend this morning, and I thought I had made it clear to the committee this afternoon that the intention was that twenty per cent of this S15.000.000 should go for repairs to the two railways, to be done in their own shops. In regard to Melville itself of course I cannot speak positively. I can only say that if the railways agree to our proposition and decide to go on with this work, the railway shops throughout Canada, both Canadian National and Canadian Pacific, will receive some repair work. The twenty per cent for repairs would be in the neighbourhood of $2,500,000 or $3,000,000 between the two companies. As to work in Melville itself, that will have to be decided by the management, but I would hope, and I will suggest it to them at the time, that they will spread their repair work throughout the country as much as possible.

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

That is what I would anticipate, but I became rather alarmed when I heard the remarks of my hon. friend from Kingston City, again opening up the question of some of this work being given to private concerns.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

None of the repair work, but the manufacture of cars and engines would of course go to the private companies.

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LIB

William Richard Motherwell

Liberal

Mr. MOTHERWELL:

I am not so much concerned with that, althought I don't see why private equipment companies should get any of this work. I am more concerned, naturally, with work going to the repair shops at Melville, which have carried, less than a skeleton staff for the last four years, very much to the inconvenience and loss of the workmen, who in the meantime have become scattered around in other cities with larger concerns. The result is that privation and hardship prevail in that otherwise very enterprising town of Melville, and so I hope that the minister and the government, seeing that they are going to guarantee these equipment securities, will exercise their undoubted authority to say where the work shall be allocated. I would think that that would lie at their door, rather than with the railway company. If this were strictly a business proposition and not one deliberately designed to create employment, I would say that the big concerns could turn out cheaper work on the principle of mass production, but that is not the purpose of this legislation, as I understand it. It is deliberately and avowedly designed for the purpose of creating employment, and when you add to that the fact that the Melville shops are quite modem, having been constructed in 1929, well designed, commodious, and well equipped for the purpose for which they were constructed, I would urge upon the minister that he exercise the authority that usually goes with the guarantor and see that some of this work is allocated not only to Melville but to practically all the railway shops that are as well equipped as Melville is.

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

That is our hope.

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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

My very high regard for the minister has not in any degree been lessened this evening, nor indeed this whole afternoon. I have noticed his patience, his courtesy and especially his large fund of information. Comparisons of course are always odious, but I might be permitted to suggest that there is no more capable minister in the government at the present time-

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?

An hon. MEMBER:

Which one?

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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

The Minister of Public Works.

M.r. MANION: No Irishman ever talks

that way about another.

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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

Only those not. of my race would assume that it was at ail necessary for anybody to pay compliments to an Irishman. That is the reason I did not include the Minister of Railways and Canals; he does not need them. However my high regard for the minister makes all the more profound my regret in his having to move the resolution. So that we may have the resolution clearly before us I shall read it again:

That it is expedient to bring in a measure to create employment by public works and undertakings throughout Canada-

That principle is very clear, and I think a proper one. I do object to the method of financing, a very stupid one which adds constantly to the public debt and fixed interest charges. However, that is the method which has been selected. Then, we have the following added:

-and to authorize the government to guarantee equipment securities of the Canadian National Railways and Canadian Pacific Railway Company in the amount of $15,000,000.

Although this provision is in the same resolution, we find it .separated from the term " create employment." It is true that the whole appears in one measure and may be interpreted as a measure creating employment, but I wish I were guileless enough to believe that the purpose of this guarantee is the creation of employment.-I am not. This whole principle of guaranteeing bonds, equipment securities or other types of securities for private profit-seeking companies is entirely wrong and should never have been commenced, as it was commenced in this very House of Commons eighty-six years ago. During the session of 1849 there was introduced in the legislature of Canada a bill which in its preamble stated the principle that in a new and thinly settled country where capital was scarce the assistance of governments could safely be afforded to railway lines. I quote from the preamble:

That such assistance is best given by extending to companies constructing railways under charter the benefit of the guarantee of the government for loans.

No sooner was that principle, established than there was a crowd seeking charter privileges. The scandalous railway era developed, out of which arose the vilest type of corruption, the most appalling lobbying

system, the most wretched extension of graft both in municipalities and in governments. The history of those days is still one of the blots on Canadian historical records. To-day in this resolution we are simply pursuing the same principle. Surely there are better ways of giving employment to people, if indeed that is the purpose; surely there are better ways than that of guaranteeing equipment bonds of private companies. I tell the minister that the justification in the present instance cannot be established.

Only this afternoon the Minister of Railways quoted Mr. Hungerford as having said that the Canadian National Railways had a surplus of equipment in rolling stock for all normal purposes, .that peak loads could be handled in the customary way, and that no danger was anticipated in that regard. Why then are we being asked to guarantee loans of, in the one instance, $8,000,000 to supply equipment which in the opinion of the management is not necessary? It is not a question of saying that this or that is economically possible or that this or that may 'be economically spent. It is a question of considering two factors, first the employment of labour and second the proper expenditure of money. The present proposal contemplates neither the proper expenditure of money nor the most effective way of giving employment. I direct the attention of the minister to .the fact that when the depression struck the railways, and particularly since the general crash, the Canadian Pacific Railway, driven by the very exigencies of its shareholders, at once drastically reduced its ratio of expenditures on maintenance of way and equipment and maintenance of structures. The Canadian National Railways did not follow that .procedure but in both instances very properly maintained a sound ratio. The Canadian Pacific Railway cut its maintenance of way and structures as soon as the depression came, to such an extent that had' it been paralleled by the Canadian National Railways it would have meant a saving to the Canadian National system of $23,000,000. With respect to the maintenance of equipment, with which we are now particularly concerned, in 1929 the expenditure on both lines was almost parallel. In 1930 the Canadian Pacific Railway cut its maintenance ratio by more than two .points, but the Canadian National advanced its ratio of expenditures by two points;, making a spread of a little more than four points. In 193)1 there was a divergence of 8-82, a divergence which in 1933 rested at 6 points. So it would appear that while Canadian National earnings exceeded Canadian Pacific earnings in 1031 by $43,000,000, or 29

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per cent, the expenditures of the Canadian National for maintenance and equipment exceeded those of the Canadian Pacific by almost $28,000,000, or 110 per cent.

The fact of the matter is this, as I see it, .that in order to protect the interests of its shareholders the Canadian Pacific Railway deliberately curtailed expenditures on maintenance of way and equipment to a point which has now become dangerous. The Canadian National did not fallow that procedure, but very properly maintained its ratio of expenditures. Then the pressure commenced and was again brought .to bear upon this government to guarantee fox a private profit-seeking railway company the resources of this country, and the government, as have other governments in the past, acquiesced. But there had to be some smoke screen behind Which the transaction could 'be carried on, and in order to avoid a general public clamour the Canadian National Railways is included, although they do not need the equipment. And so we have the national railways included so that tire public may be further fooled.

This is not right. It is time a halt was called to this sort of .chicanery. I have no interest in the quarrel which has proceeded during the afternoon between .the two major parties. Since I have been in the house I have found that when the Liberals are in office the Conservatives accuse them of all sorts of wrongdoing in connection with the letting of tenders without competition, and when the Conservatives are in office the Liberals make similar accusations. It is the old story of one party accusing the other. This matter, however, is much bigger than that. It means more than the letting of a contract for a thousand dollars down in Halifax or at some other point. The matter is of .the utmost importance, and I hope the minister will justify to a greater extent than he has done this afternoon the guaranteeing of the expenditure of $15,000,000 for equipment. There is no doubt at all that the Canadian Pacific Railway needs it, and needs it badly, and will need further expenditures for the maintenance of way, but why should the public be called upon to subsidize a private profitseeking concern? Surely there are better ways than the one now proposed of spending money to give employment. I protest against it.

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LIB

Ross Wilfred Gray

Liberal

Mr. GRAY:

Before we are called upon to proceed with the bill based upon the resolution, would the minister be good enough to

table the correspondence passing between the government and the two railway companies in connection with the guarantee for equipment, and the type of equipment covered?

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CON

Robert James Manion (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. MANION:

If there is any correspondence I shall be pleased to table it, but so far as my memory goes-and I speak subject to correction-there has been no correspondence. I shall have it looked up, and if any is found I shall table it.

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LIB

Ross Wilfred Gray

Liberal

Mr. GRAY:

I ask the question because if I understood the minister correctly this afternoon1 he said that the Canadian National had1 made requests, stipulating certain conditions which appeared to them most advantageous, namely that the government supply one-third of the funds as a grant, the railways paying the remaining two-thirds. In other words, in view of the exceptionally advantageous bargain they would proceed with the work. The minister certainly left the impression with the house, as I gathered it, that this had come as a voluntary request from the management of the road. In view of the statements which have been made concerning equipment it seems to me there must have been some prior correspondence or discussion between the government and the railway companies.

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April 15, 1935