The government would
take a lien on the equipment itself. The usual procedure is for the Canadian Pacific Railway or the Canadian National Railways to pay a certain proportion, frequently twenty-five per cent, of the cost of the equipment. Equipment trust notes are then sold on a fifteen year basis to cover the other seventy-five per cent, and the notes are paid off gradually over that period. Instead of following that method, it may be decided that the government will purchase the equipment and take back a lien which would be paid on the same basis as the equipment trust notes; instead of its being paid to the holders of the notes, it would be paid to the government.
Subtopic: WORKS, 'UNDERTAKINGS AND GUARANTEE OP RAILWAY EQUIPMENT SECURITIES TO CREATE EMPLOYMENT