March 23, 1938

LIB

Thomas Reid

Liberal

Mr. REID:

They will not transport much lumber by air. I am afraid this shipping company and the lumber interests are going to find themselves in difficulties if they have to come to a board sitting in Ottawa and ask that this shipping line be allowed to transport lumber to Montreal or Quebec. Probably they will be asked by the board: "Why do you want to go into this business now? There are two railways serving the 51952-103J

Pacific coast; we urge you to go back and use them." If this business of transport is to be carried out according to the proposed legislation, and British Columbia is to be faced with conditions such as those outlined in the bill, it will be to her disadvantage. We have no competitive lines such as are found in the eastern provinces.

On the last page of the bill these words are used:

Nothing in this part contained shall affect any right or obligation, granted or imposed by the Maritime Freight Rates Act.

I wonder why they left out the Crowsnest Pass rates?-because they are specifically mentioned in the present Railway Act, with the Maritime Freight Rates Act. The reason for this omission will perhaps be stated in committee; at the moment I simply draw the minister's attention to the fact.

I should like to deal now with some of the arguments put before the house by the minister on the introduction of the bill. I realize the minister's anxiety to obtain revenue, but I suggest that he is going about it in the wrong way. My own view is, using an expression which may not be strictly parliamentary, that he is going to hog-tie all present and future transportation systems, and is going to bolster up a railway system which, in my view, refuses to be modernized.

I shall take one or two minutes to point out to the minister where the great losses occur on our railways, and the danger in the fact that freight traffic is being called upon to bear a heavy burden. I know the statement has been made that Canada has the lowest freight rate structure in the world. Well, that is a wide statement. Perhaps if one had time to go into it he could show that there are certain goods carried in Canada which are charged a very excessive rate indeed.

In connection with losses may I say, first of all, that in 1922 there were 165,655 employees who received salaries of $233,290,040, or an average of $1,408. That amount has been decreasing, until in 1936 we find there were only 132,781 employees receiving a total salary of $182,638,365, or an average of $1,375 per employee. I mention those figures because I am going to endeavour to show to the House of Commons that there is something more seriously wrong with our railways than is usually pointed out by many speakers both in and out of this chamber. In 1922 more than 44,000,000 passengers were carried, with an average receipt per passenger of 2-82 cents per mile. The average receipts in the year per passenger amounted to $1.79.

Transport Commission

That figure has steadily decreased until we find that last year only 20,497,000 passengers were carried, with the average passenger receipt decreasing to $1.58. The freight traffic has not dropped to the same extent. In 1922 over 87,000,000 tons of freight were hauled. The receipts per ton averaged $2.01 and the receipts per ton mile averaged, $1,039. In 1935- I have not the figures for 1936-the freight hauled had decreased to 69,141,100 tons whereas the receipts per ton had increased to $3.06 and the receipts per ton mile had decreased only to $0,972. I am endeavouring to show that whereas there has been a considerable decrease in the case of the number of passengers carried and the revenue derived therefrom, the decrease in revenue from freight has not been nearly as great. While the freight tonnnage has decreased, at the present time it is paying more per ton than it did in 1922 or in the other years I have mentioned.

The total operating expenses of both railways in 1920 was $478,000,000, whereas in 1935 they had dropped to $261,000,000. In the meantime a number of economies had been brought about in operation. For instance three trains in 1928 equalled four in 1920. The total car capacity has been increased although the number of freight cars had dropped from something like 224,000 in 1920 to 217,000 in 1935. Fuel and upkeep costs are less and there has been a decrease in general expenses. The number of freight cars per freight train is greater and the number of employees and the compensation paid is less. Yet we have before us a bill which to my mind will load a little more on that part of the business which is already overburdened, the freight end. In spite of the fact that passenger traffic has dropped in Canada from 51,000,000 in 1919 to just over 20,000,000 last year, freight traffic has increased, as well as the receipts per ton mile.

In my opinion the minister is going about this matter in the wrong way if he expects to increase the receipts of our railways. I should like to refer briefly to what has taken place in the old country; both the leader of the opposition (Mr. Bennett) and the minister referred to that when they were speaking on the bill. We must bear in mind that this bill is not patterned after anything that now exists in the old eountry. As was pointed out by the leader of the opposition, it is an experiment; therefore we should be very careful about the provisions of the bill. In the old country there has been inaugurated a new system of goods rates and passenger fares which abolishes preferential and exceptional charges. It has been stipulated that wherever possible the

[Mr. Heid.3

scales of rates and tariffs shall be applied impartially over the whole system. According to this record, the passenger receipts last year in Great Britain per ton mile averaged $3.88 as compared with $1.58 for Canada.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

They increased the first class rates.

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LIB

Thomas Reid

Liberal

Mr. REID:

There are three rates in certain parts of the old country, but if you go into that you will find that the third class is the one that pays.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is right.

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LIB

Thomas Reid

Liberal

Mr. REID:

The railways in the old country have not just been sitting down or trying to put the motor trucks and passenger cars out of business; they have gone out and made an effort to meet modern competition. Let me give one instance of how they take care of the farmer in Great Britain. The other day a north country farmer wanted to move into the south. He just put on his hat and coat and caught a train and the railway company did the rest. They went on to his farm and crated up his pigs, poultry, implements and other possessions and installed them all on the new farm. Such policies have resulted in greater economies and more profits to the railway companies. We must bear in mind that wages in the old country are 150 per cent higher to-day than they were during the war years.

I should like to deal now as briefly as possible with some of the arguments advanced by the minister. He stated that this bill will not increase rates. That may be so, but at the same time it will not permit a decrease in rates which I claim is all-important to the development of traffic and trade. The minister stated that this bill will keep down wasteful competition, but I should like to ask him, where is the wasteful competition so far as British Columbia is concerned? There are only two railways operating from the coast and every time we have come to the board of railway commissioners for redress we have been told that we could expect no relief because they did not feel like reversing judgments which had been handed down twenty or twenty-five years ago.

The minister stated that the railways are placed under a burden because of the fact that the motor trucks are not under the same regulations. I am glad to see that for the time being motor transport is not to be covered by this bill. The minister referred a number of times to motor transport, and it may be that he proposes to take two bites of

Transport Commission

the cherry, so to speak. He may come back another time and ask that the motor transport provisions in the bill of last year be included in this one.

The minister referred to the regulations under which the railroads had to operate. I should like to point out that the board of railway commissioners was set up to protect the public, not the railroads. When this board was set up it was felt that the railroads held a monopoly and this action was taken to prevent the further exploitation of the public. But a new principle is being introduced by this bill. This legislation is being introduced not to protect the public but to protect the railroads alone. I maintain that that principle can be found through the entire bill. It is new to this country and is something that should be watched very carefully. Because of this I felt it incumbent uopn me to speak before the bill reached the committee stage.

When this legislation was discussed last year in the senate it was argued that the agreed charges provision was to take care of unprotected competition. I ask hon. members to read this clause carefully. My reading of it leads me to the conclusion that it is intended to control protected, unprotected and every other kind of competition, with the exception for the time being of motor trucks. However, that may come along a little later. One of the most startling statements by the minister is to be found on page 1554 of Hansard, where he is reported as saying:

On the other hand, individual carriers who fear that rate regulation will result in the establishment of unreasonably low rates, as a result of the board of transport forcing carriers to adopt the lowest rate published by an improvident competitor, can be assured that the bill provides ample remedies against such a condition.

That to me is telling the country that the rate structure is not going to be lowered much but that an endeavour is to be made to maintain it in the face of falling revenues and because of the fact that what this country needs more than anything else is increased traffic and trade.

I am going to give the house one pertinent illustration bearing on the competition of motor trucks with railways. There is a fish contract for the hauling of five tons of fish each week from Vancouver to Calgary. The rates quoted, I believe, by the railway to the people shipping the fish is six cents a pound by express and three and a quarter cents by freight, although, mark you, it costs no more to haul the fish by express, because it goes

over the same track and perhaps by the same train as the freight. Two men who have a splendid line of motor trucks got in touch with the shipper. They took a trip into Alberta through the United States, and found out what taxes they would have to pay. It was ascertained that the taxes would amount to $600 per truck per year; and I mention that because it has been too glibly said in this house that the motor trucks are getting off too light. If they put this truck line into operation between Vancouver and Calgary it would cost them in taxes, about $600 per truck per annum. After going into the matter very carefully they came to the firm and said, "We will haul that fish for you at two and a quarter cents per pound and land it in Calgary two hours ahead of the train. That line would have been in operation right now, but when the men went to the customs department they were told: We cannot allow you to put the railroads out of business, and we are not going to allow you to take fish out of Vancouver, over United States highways and bring it into Calgary in bond. So that project was stopped. I mention it, Mr. Speaker, because the people of this country want lower freight rates, not higher freight rates, and the great loss on railway passenger traffic is being loaded on to the freight traffic. Instead of the railways modernizing their equipment and meeting this competition, they are saying to the minister: give us a bill that will regulate and keep out the motor truck or any other form of transport which is likely to compete with us.

It is all very well for the minister to give the house his opinion, as all ministers before him have done, or would do if placed in a similar position. But before closing I want to read from an order in council, and I ask any hon. member, if he were faced with interpreting it, whether he would not interpret it differently from what the board of railway commissioners has done.

There was an order in council passed by the government in 1925 directing the board of railway commissioners to investigate fully the freight rate structure of this country. I am going to read one clause of that order in council, which gives the board very wide, almost unlimited, powers. Here it is:

The committee therefore advise that the board be directed to make a thorough investigation of the rate structure of railways and railway companies subject to the jurisdiction of parliament, with a view to the establishment of a fair and reasonable rate structure, which will, under substantially similar circumstances and conditions, be equal in its application to all

Transport Commission

persons and localities, so as to permit of the freest possible interchange of commodities between the various provinces and territories of the dominion and the expansion of its trade, both foreign and domestic, having due regard to the needs of its agricultural and other basic industries.

Then it goes on to particularize. What could be wider in language than that? What could give the board greater scope? But was that ever done? Did the board ever interpret that order in the wide sense that parliament thought they would, or at least as the ordinary layman would expect? I mention it to warn the members of this house to be very careful in their consideration of this bill, which touches for the first time a new phase of transportation, and see to it that every clause is carefully scanned and that the widest powers are given to protect not only shippers but the great consuming public. Believing, Mr. Speaker, that this bill touches the province of British Columbia to a very considerable extent in that it will interfere with the shipment of lumber and other goods through the Panama canal, I felt it incumbent upon me to assure the minister and the house that I am going to watch it very carefully, and I trust that many of the matters I have touched upon will be investigated before the bill is passed.

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CON

Frederick Cronyn Betts

Conservative (1867-1942)

Mr. P. C. BETTS (London):

Mr. Speaker, I should like to criticize the sections of the bill contained in part V which deal with agreed charges. I take exception to them on the ground that, reading this bill and the English legislation along similar lines, it seems to me that in drafting this bill the English legislation has been followed too closely, perhaps almost slavishly, and due regard has not been had to the very marked differences, geographical and economic, between the transportation problems of this country and those of the old land.

I would submit, further, that we would be far better advised to defer the introduction of this agreed charge principle until we have had more of an opportunity of seeing how it works out in Great Britain. I would therefore urge the minister, and the committee to which this bill will be referred, to delete the agreed charge sections of the bill.

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SC

Otto Buchanan Elliott

Social Credit

Mr. O. B. ELLIOTT (Kindersley):

canals therefore approximates $70,000,000, which is slightly more than the deficit of the Canadian National Railways.

Taking it from another angle, Mr. S. W. Fairweather, Canadian National Railways economic expert, speaking at Toronto on December 6, 1937, stated that in percentages of national income Canada's total land transportation bill is approximately as follows:

Per cent

Steam railways 9

Motor vehicles and highways.. .. 20Street and electric railways.... 1Airlines

1

He goes on to say that if an attempt were made to perform with the motor vehicle the services now rendered by the railways we would spend forty per cent of our national income.

We are subsidizing export shipments of wheat by low freight rates, while at the same time wheat for consumption in British Columbia is charged almost double the export rate. Competitive rates by freight and express to meet motor competition as well as passenger rates, are much below the published rates of the railways, which would indicate that by an increase in passenger and freight traffic a general revision of tariffs could be accomplished. I know from personal experience that in a certain city in the west the railways attempted to reduce their rates in order to meet highway traffic competition, but on every occasion the motor trucks reduced their rates below those of the railways, which in turn compelled them to carry freight and express at much below cost. If the principle is right that highway traffic, canals and ocean shipping can be subsidized effectively. it appears to me that a proper system of railway freight tariffs applying on bulk shipments of heavy commodities having to be transported great distances would have a beneficial effect on Canadian business and industry generally.

We all recognize that transportation is essential to our national life in peace, and perhaps particularly in war, and it is essential that the problem be solved to the advantage of all the communities in the dominion. It is my belief that a system of transportation rates under which the delivered cost of all necessaries of life would be uniform at every point in Canada reached by the transportation system is desirable. I venture to say that, as a result, in the course of a few years Canadian business and municipalities, as well as the railways, would be the most prosperous in the world. For example, putting the Canadian National Railways to work hauling coal to tidewater, to western Ontario,

Saskatchewan and Manitoba points, at a rate not exceeding $2 a ton, so that shippers could deliver a good quality of coal at perhaps $5 a ton from our Alberta and Saskatchewan fields, would go far to solve the railway problem at the present time. It would pqt many thousands of men into permanent employment and do away with the necessity of a debate such as we had here on Monday regarding large numbers of men being laid off by the railways.

In cities like Winnipeg, Regina, Moose Jaw, Vancouver, or Prince Rupert, if fuel costs were cut in half it would immediately offset the burden of taxation. Take for instance an industry requiring four tons of coal a day. At $10 a ton, which they have to pay at the present, time, the industry is unable to operate, but at $5 a ton it could flourish, keeping men in employment, giving the community the satisfaction of added business, and the railways perhaps sufficient profit. This I think would warrant the railways adopting such a policy and earning dividends, instead of bemoaning their troubles and unloading their deficit on the government.

Lumber, coal, grain, fruit, etc., are geared to give the railways real money on an equalized rate basis. At the present time, when the prairie people are so urgently in need of building material, transportation costs on lumber from British Columbia to the prairie provinces are equivalent to if not greater than the price of the lumber. Houses are most urgently needed throughout the prairies, and elsewhere in the dominion so far as that is concerned. Owing to the curtailment of their earning power, people have not been able to make good the depletion of their resources. I understand that Winnipeg during the last two years has had about 5,300 marriages, with no increase in housing accommodation.

The purpose of the bill, as I see it, is to assist transportation agencies in meeting their financial obligations, as well as to prevent discrimination between different types of transportation. I foresee the possibility in the near future of amendments to this bill to make it include the whole of our transportation system. I hope this will be possible, but I see no reason for delaying action at this time towards the solution of our railway problem until we can coordinate all kinds of transportation. I suggest a policy of bringing the necessities of life and of industry to every community in Canada reached by rail or water, on a uniform cost basis fairly approximating world values. With such a policy I am convinced that Canada would soon be the richest country per capita in the world. By making Canada prosperous we would soon

Trans-port Commission

overcome the handicap of our small per capita population in regard to railway mileage. I was interested in checking up the population per mile. I find that in 1901 we had a population of 5,337,000 with 18.100 miles of railway, or 300 people per mile. In 1916, with 7,500,000 people, the railway mileage had increased to 40,584, or 185 people per mile. In 1932 with 41,024 miles of railway we had 224 people per mile, and in 1937, with 42,000 miles of railway, that had increased to 261 people per mile.

It might be interesting also to note how the population is distributed according to provinces, as follows:

Railroad Per

Population mileage CapitaP.E.I 92,000 286-05 322Nova Scotia . . . . 537,000 1,397-21 384New Brunswick. . 435,000 1,871-22 232Quebec 3,090,000 4,777-45 648Ontario 3,090,000 10,746-06 343Manitoba 711,000 4.S59-57 146Saskatchewan. . . 931,000 8,023-52 108Alberta 772,000 5,686-44 136British Columbia. 750,000 3,907-37 192Yukon Territory.. 4,000 57-72 693Total 11,028,000 42,212-61 261

Saskatchewan, as will be noted, has the smallest population per mile of railway, but much of this mileage was constructed to connect with the sources of raw material, such as coal in Alberta and fish and lumber in British Columbia, and latterly great quantities of oil and salt in Alberta, in addition to agricultural products. For years the railways struggled against high tariff walls in the United States, but even worse than those high tariffs was the policy of keeping in effect a destructive system of freight rates which neutralized the existence of favourable grades for freight handling on the Canadian National. One instance is that portion of the Canadian National which reaches the Pacific ocean at Prince Rupert, which is three days less steaming distance to oriental ports than any other north Pacific point. The million dollars tied up in the Prince Rupert branch of the Canadian National is kept dormant because the rate on coal from the mountain coal fields, for example has been fixed and kept at an amount higher than the value of the coal at tidewater.

We have other coal resources which are not being exploited. I refer to the Groundhog anthracite coal fields, which of course would require a connection with the Peace river district and an outlet on the western coast. The Groundhog coal fields contain the largest compact body of anthracite so far discovered in

the world, sufficiently close to Pacific ports to permit the coal to be delivered to any port on the coast at a very low freight rate. It is estimated that it can be delivered to any trading port in the world at less than $8 per ton. This in my estimation is a national prize that is worth taking, but after reviewing the coal situation in various parts of the world I believe it should be handled as a public utility, which eventually would develop into a great national asset.

In conclusion I should like to direct a question to the Minister of Transport (Mr. Howe) with regard to tolls on our canal system. I should like to know if in any way this bill will inaugurate a system of canal tolls.

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CON

Howard Charles Green

Conservative (1867-1942)

Mr. H. C. GREEN (Vancouver South):

Mr. Speaker, the question how we in this national parliament can help to improve the transportation industry in Canada is most difficult and involved; perhaps even more involved and more difficult is the question of freight rates. I realize that this bill is to be sent to the railway committee, where there will be an opportunity to have it considered in detail; but before it reaches that stage I should like to point out one or two things to the minister and, if he sees fit, I would ask him to clear them up in his remarks when he closes the debate.

The other night the minister said that the object of this bill was the stabilization of the transport industry in Canada, which we all agree is a very worthy object indeed. I think the first four parts of the bill undoubtedly will help to accomplish that end. They are provisions dealing with the appointment of the board, with transportation by water, with transportation by air, and with traffic tolls ~nd rates. The key to these four parts, however, is contained in section 24 of the bill, which I will read to the house:

24. (1) All tolls shall always under substantially similar circumstances and conditions, in respect of all traffic of the same description, and carried in like manner over the same route, be charged equally to all persons and at the same rate, whether by weight, mileage or otherwise.

(2) No reduction or advance in any such tolls shall be made either directly or indirectly, in favour of or against any particular passenger or shipper.

(3) No toll shall be charged which unjustly discriminates between different localities.

The minister will agree that this section is almost word for word with section 314 of the Railway Act. It appears to have been copied from the Railway Act.

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LIB

Clarence Decatur Howe (Minister of Transport)

Liberal

Mr. HOWE:

Yes; it is the same.

Transport Commission

Topic:   AUTHORITY TO CONTROL TRANSPORT OF PASSENGERS AND GOODS BY RAILWAYS, SHIPS AND AIRCRAFT
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CON

Howard Charles Green

Conservative (1867-1942)

Mr. GREEN:

So far the principle of the bill seems to me to be correct; but in part V we have a new principle, a second principle, which I doubt very much will help to stabilize the transport industry. It overrides the section I have just read. I would refer the minister to the first few lines of section 35, which is the first section dealing with agreed charges. It says:

Notwithstanding anything in the Railway Act, or in this act-

That, of course, would cover section 24.

-or in any other statute, a carrier may make such charge or charges for the transport of the goods of any shipper or for the transport of any part of his goods as may be agreed between the carrier and that shipper-

That is an entirely new principle.

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LIB

Clarence Decatur Howe (Minister of Transport)

Liberal

Mr. HOWE:

Mr. Speaker, I think it is hardly fair to read that clause without reading the whole section. My hon. friend stopped just where the limitation comes in with regard to what he read. I think he should read the rest of it.

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CON

Howard Charles Green

Conservative (1867-1942)

Mr. GREEN:

I have no intention whatever of being unfair, and if the minister wishes I shall be glad to read the balance of the subsection :

Provided that any such agreed charge shall require the approval of the board, and the board shall not approve such charge if, in its opinion, the object to be secured by the making of the agreement can, having regard to all the circumstances, adequately be secured by means of a special or competitive tariff of tolls under the railway act or this act.

I submit this proviso does not help very much.

It may be wise to have a provision for agreed charges in order to meet traffic which is competing with the railways, but which is uncontrolled-in other words, traffic which does not come under the act such as competition provided by motor trucks which, we all admit, is serious. I will not deal with the question as to whether or not provision should be made to enable the railways to deal harshly with motor truck competition; arguments have been brought forward in favour of a provision for that purpose. But I do suggest to the minister that a way of meeting uncontrolled traffic was all the railways were asking last year when they appeared before the standing committee of the senate on railways, telegraphs and harbours with respect to Bill B of the senate. I would refer to page 332 of the proceedings before that committee and particularly to an answer given by Mr. E. P. Flintoft, K.C., who was representing the Railway Association of Canada. He said this:

There is this situation which is not covered by the act. There is all this local traffic, intraprovincial traffic that is being carried by the trucks, which this bill will not affect, and in respect of which they can make all the agreements they like. We say all the carriers should be in the same position, and that we should have the opportunity of making agreed charges if we find it necessary to do so in order to meet that traffic which is uncontrolled by this act.

The present measure seeks to go farther than that. It enables the railways to challenge and perhaps to wipe out competing traffic, traffic which is competing fairly and which, like the railways, is actually controlled by this measure.

An example is transport by water. It is with that one point that the people on the Pacific coast are so very much concerned. As the minister is well aware, there is water transport from eastern Canada through the Panama canal to British Columbia. Of course, there is transhipment in certain cases; but we know that goods are moved by water from Ontario, Montreal and Quebec, and in the winter from Halifax or St. John, through the Panama canal to British Columbia.

That canal was completed during the great war, but it took several years for the people of Canada and even for our business men to realize what great advantages had accrued to them by reason of its completion. However, because of that canal we now have established in Canada a great many comparatively short rail hauls from each coast to the interior. For example, goods brought by water to Vancouver are carried by rail to Calgary, Edmonton and other points in Alberta, being shipped cheaper by water through the canal to Vancouver and thence to points in Alberta than they can be shipped from eastern Canadian points to Alberta by rail. There is the possibility that under this bill that advantage might be destroyed.

As all hon. members are aware, water transport is cheaper than rail transport and, as I have said, we can get some goods from eastern Canada cheaper by water than by rail. While we cannot get all goods cheaper, the very fact that there is water transportation means that there is competition for the railways, and that railway rates to the coast have been cut to meet these water rates. I believe that in some cases goods can be shipped cheaper to the Pacific coast from eastern Canada than they can be shipped to Calgary and Edmonton, and the reason is that there is water competition through the Panama canal. That is of great benefit not only to the people in my province but to manufacturers and shippers in Ontario, Quebec and

Transport Commission

the maritime provinces and it is of great benefit to the people in Alberta because they can obtain goods cheaper in that way than by having them hauled all rail across Canada.

Yet under part V of the bill, by making agreed charges with the companies at present shipping goods by water, the railways can cut into this water transport business, and perhaps will be able to wipe it out altogether. If the water competition is wiped out, the result will almost certainly be an increase in freight rates to the coast which, I submit, is absolutely unfair, particularly in view of the fact that this same water transport is actually regulated by the bill. The bill gives the new board of transport commissioners the power to regulate water transport. It was believed, incidentally, that coast to coast water transport would not come under control; but not only traffic from British Columbia to Ontario and Quebec is covered by this bill but also traffic from Halifax and Saint John and other maritime points to Quebec and Ontario. I submit that it is not fair that the railways should, under the bill, be in a position to attack and perhaps to destroy fair competition by water, which is also regulated under the bill.

Mention has been made of the effect the measure would have on small dealers. The argument is that the large dealers, such as departmental and chain stores, will be able to make special arrangements with the railways, whereby they will have their goods transported more cheaply than will the small dealers. That will affect British Columbia more than any other province in Canada, because the cost of hauling goods to the coast is a greater item in prices than it is in any other part of Canada. I do not see how the measure can help being detrimental to the small dealer. It is true that there are protective clauses. I have no doubt those clauses have been carefully drawn, because I know the minister is most conscientious in all things, but I suggest that those protective clauses may sound better than they will work. A small dealer is not in a position to come from British Columbia to Ottawa, or from Calgary or Edmonton to Ottawa to appear before the transport board. He is not in a position to hire expensive counsel to represent him. The net result will be that the big man will receive the benefits and the little man will be just out of luck. That is not fair. The protective clauses are too cumbersome. I believe the result will be discrimination, and just the reverse of the stabilization of the industry which the minister is so anxious to achieve.

Then, I should like him to explain to us why such commodities as iron bars, rails, flour and grain products, newsprint, wood pulp, lumber and lumber products, naphtha, fuel oil in drums, sugar in bags and articles of that type, are not defined as " goods in bulk " and thereby taken out from regulation under the-

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LIB

Clarence Decatur Howe (Minister of Transport)

Liberal

Mr. HOWE:

What do you leave in? Name two or three articles you leave in.

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CON

Howard Charles Green

Conservative (1867-1942)

Mr. GREEN:

I should like to know why some of these are not included. This bill has the appearance of forcing the carriage of package freight by rail rather than by water on the great lakes.

In conclusion, there is one other point I should like to mention. For years we have been pressing for the completion of the trans-Canada highway, but the remarks of the minister when introducing this bill the other day would lead me to fear that there is not much possibility of the present government completing the road. I do not know whether my conclusion is just, but that is the way it looks to me. I suggest to the minister that the completion of this highway would not hurt the railways. It would provide a means for Canadians to travel through their own country; at the present time thousands and perhaps hundreds of thousands of Canadians are forced to travel through the United States; in addition it would mean a greatly increased revenue from the tourist industry, and I believe it would actually be one way of helping to solve our transportation problems.

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LIB

Clarence Decatur Howe (Minister of Transport)

Liberal

Hon. C. D. HOWE (Minister of Transport):

Mr. Speaker, I think it can fairly be said that there is general agreement as to the principle of this bill, although this is tinged with some scepticism. However, that is not surprising as this is a difficult bill. None the less I consider it an extremely important piece of legislation; Ever since I accepted my present office, a substantial number of citizens has been asking me why I did not do something courageous about the railway problem. I have heard the word "courage" almost every day. I believe the introduction of this bill requires a little courage as it introduces a new principle, particularly part Y. I urge that we all take a courageous view of this matter.

The provisions of this bill will be applied by the board of railway commissioners, about which we know something and in which we have great confidence. It is true the name of the board will be changed, but that will be the only change. It will be still a board set up by the people of Canada for the protection of the people of Canada.

Transport Commission

There is no doubt that the provisions of this bill will have to be applied with a great deal of caution, but I think we can trust the board to proceed cautiously in its work. After a great deal of study I am convinced that this is the procedure which will give the most help to our transportation system and cause the least disturbance to business generally. I think it is the only practical thing we can do at this particular time. I regret that a year has been lost since this legislation was first introduced, as some progress might have been made in that time in working out the principles of the bill.

As I followed the discussion it appeared to me that there is not much question as to the desirability of regulating the rates of inland shipping and the aviation industry. I know our aviation industry in particular has felt the need of regulation. I think I can say that both these industries are acquiescing in the move now being made. They realize that it will be in their interests to have a board set up before which they can appear to justify the rates they are charging. The hon. member for Comox-Albemi (Mr. Neill) has objected to our not including rate regulation for the Pacific coast, but I say to him frankly that the reason that is not included is a desire to keep this bill down to the bare essentials.

I had a rather gruelling experience last year in piloting a similar bill through a committee., and I have introduced this bill on the assumption that it should be kept within strict limits if it is to complete its passage through parliament. I admit at once that the contentions of the hon. member are fairly well justified, particularly in their application to the Pacific coast where the steamships of our two railway companies carry a large proportion of the freight and are subject to the regulations of the railway board. I think I have assumed my full share of responsibility in bringing down the bill in its present form, and if the hon. member will take the responsibility for the suggestions he has made and can convince the committee, when the bill is before it, that they should be added to the bill, I shall give him my best support in having an amendment adopted.

Let me deal now with the matter of agreed charges, which will be the difficult part of this legislation. I am convinced that the fears and alarms in connection with agreed charges can be largely dispelled by a full discussion. The first study of these agreed charges creates a worse impression than the facts warrant. We have in this country at the present time an intolerable situation, in that our railway tariffs are the barometer for

what other forms of transportation may charge. We have built up over the years a rate structure which I think we all believe is absolutely essential to the well-being of Canada. The basis of that rate structure is that low priced commodities shall be carried at a low rate, and that the natural products of our country, particularly those of our prairies, shall be carried the great distances to our seaboard at export rates which are undoubtedly the lowest on this continent. I believe Canada has the lowest ton mile rates of any country in the world.

To permit our railways to carry these commodities long distances at exceedingly low rates, it was necessary that the structure provide that the rates on commodities of a greater value and moving shorter distances should be proportionately higher. The rate structure having been built on that basis, the result is that the railroads have been exceedingly vulnerable to competition from motor trucks. These motor trucks are interested only in high-grade commodities, and serious inroads have been made in the tonnage of these commodities carried by the railroads. The railroads have attempted to meet that competition by a general reduction in commodity rates, that is, by applying competitive tariffs.

Topic:   AUTHORITY TO CONTROL TRANSPORT OF PASSENGERS AND GOODS BY RAILWAYS, SHIPS AND AIRCRAFT
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

And reducing express

charges.

Topic:   AUTHORITY TO CONTROL TRANSPORT OF PASSENGERS AND GOODS BY RAILWAYS, SHIPS AND AIRCRAFT
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LIB

Clarence Decatur Howe (Minister of Transport)

Liberal

Mr. HOWE:

And by reducing express

charges and speeding up trains. The speeding up of trains is a proper competitive move, in that it provides perhaps a better service than can be given by the trucks. But in the matter of rates the railway is, in the long run, helpless. For instance, a large manufacturer or dealer in an important railway commodity can go to the railway and say: "I have been offered a certain rate for moving my business by truck; I prefer to move by railway, but you must meet that truck rate." The traffic officers give the matter some study and find that it is in the interest of the railway to retain that business, and so say to the shipper: "We will meet the rate; we will cut our tariff to hold your business." That means that they cut their tariff from coast to coast. But that does not hold the business at all. It may hold it for a while; but after a few months the trucker may come back and say: "I have worked out my schedules so that I can now cut that rate again, and I will take your business." The railway having gone as far at it could go, cannot cut its rate again and so must say to the shipper: "Very well; we throw up our hands; move your business by truck."

Transport Commission

I claim, Mr. Speaker, and we all know, that the railways are capable of moving a ton-mile of freight at a cheaper rate than any other mode of transportation except the bulk carriers, and it seems to me that having that fundamental advantage the railways should be placed in a competitive position where they can reap the benefit of that fundamental advantage. It seems to me hardly fair to make the railways forever the regulator of rates on highway traffic. We have a good many cases before the railway board for tearing up branch lines on which all the traffic has been lost to the trucks. Of course, when we attempt to take up such a branch line, we have serious objections from shippers all along the line, even though they are not users of the railway. The basis of their objection is not that they need the railway themselves for moving their goods; but they say: "We need that railway to regulate truck rates; do not leave us at the mercy of the truckers." Surely it is not reasonable to ask that the railways be maintained merely to set a rate under which trucks must operate to take competitive business.

Great Britain had this trouble perhaps to a greater extent than Canada, because their distances are shorter and a larger proportion of railway business there is vulnerable to truck competition than would be the case in Canada. In the old country the principle of agreed charges has been adopted and applied, and I am told that after a thorough trial the British people are well satisfied with agreed charges as a means of straightening out their transportation difficulties. My deputy minister spent some months in England within the last year studying this question. He made a thorough report on the subject, and I was convinced by his report that our earlier information was correct and that agreed charges are working out to the benefit of the public as well as of the transportation industry itself. I urge that every member give some study to the question of agreed charges and not form his opinion from one or two cases only, which may be brought before him.

It must be borne in mind that the essence of an agreed charge is a lack of discrimination. It must be obvious that it is not detrimental to the small shipper as against the large shipper, because if an agreed charge is given to a large shipper the railways must be prepared to grant the same agreed charge to any shipper, large or small, who is willing to . comply with the same terms as the shipper for whom the agreed charge is made. That is the essence of the agreement, and the first duty of the board of transport commissioners will . be to see, before an agreed charge is decided upon, that there is no discrimination.

Topic:   AUTHORITY TO CONTROL TRANSPORT OF PASSENGERS AND GOODS BY RAILWAYS, SHIPS AND AIRCRAFT
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CON

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

If there was an agreed charge for the movement of an average of, say one hundred thousand tons a year by a large shipper, do I understand the minister's statement to mean that the same agreed charge would be applicable to some smaller firm that was moving only one thousand tons in the same year?

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LIB

Clarence Decatur Howe (Minister of Transport)

Liberal

Mr. HOWE:

Exactly. The charge must be the same to all persons who are willing to abide by the same conditions. In other words, the agreement is a public document, and anyone who is willing to write the same agreement must get the same treatment.

Topic:   AUTHORITY TO CONTROL TRANSPORT OF PASSENGERS AND GOODS BY RAILWAYS, SHIPS AND AIRCRAFT
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CON

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

The same except as to quantity.

' Mr. HOWE: The same except as to

quantity. The conditions of the movement must be the same; the bill provides for that.

The hon. member for Vancouver South (Mr. Green) mentioned shipments by the Panama canal. The United States for many years has found it necessary to regulate all coastwise shipments via the Panama canal. That comes in direct competition with the railways, and when regulation was applied to shipping, the coastwise shipping through the Panama canal was the first item to which regulation was applied.

Topic:   AUTHORITY TO CONTROL TRANSPORT OF PASSENGERS AND GOODS BY RAILWAYS, SHIPS AND AIRCRAFT
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March 23, 1938