November 4, 1949

TEMISCOUATA RAILWAY

PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA

LIB

Lionel Chevrier (Minister of Transport)

Liberal

Hon. Lionel Chevrier (Minister of Transport) moved

that the house go into committee to consider the following resolution:

That it is expedient to bring in a measure to provide for the purchase by the government of Canada of the Temiscouata railway and that the Minister of Finance may, out of unappropriated moneys in the consolidated revenue fund of Canada, pay any amounts, not exceeding in the aggregate four hundred and eighty thousand dollars, that are payable under the terms of an agreement dated the 14th day of October, 1949, between His Majesty the King in the right of Canada and the Temiscouata Railway Company at such times and in such manner as are set out in the agreement.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

Is the minister going to make a statement?

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

I wonder if I might have the permission of the house to make my statement in committee of the whole.

Motion agreed to and the house went into committee, Mr. Dion in the chair.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

Pounds or dollars?

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

At the time that the pound was $4.80. I make that point now because at the time of purchase the bonds were valued at $2,362,000.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

Is that dollars or pounds?

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

That is dollars. No dividends have been paid on the capital Stock since issue, and no interest on the bonds since 1930. Prior to 1930 only partial interest was paid on the bonds. The operating results of the railway have not been good, particularly in the years 1943 ito 1948. I have a table which perhaps I might summarize fairly quickly. For instance, in 1943 operating revenues amounted to $319,000 and operating expenses to $304,000, but because of other expenses the net corporate income of the Temiscouata Railway Company was only $208. In 1944 the net income was $315. In 1945 there was a deficit of $272. In 1946 there was a net income of $9,821, and in 1947 a net income of $1,161. In 1948 there was a deficit of $156.

The traffic handled over the railway was small. I refer to the years 1943 to 1948. The total tonnage varied from 180,943 in 1943 to 192,081 in 1948. The greatest tonnage carried was in 1946, when it amounted to 202,223 tons. The forest products which originated on the line accounted for over eighty per cent of the freight traffic I have just mentioned. The number of passengers carried varied from 37,245 in 1943 to only 11,670 in 1948. The present train service consists of a mixed passenger and freight train on Monday, Tuesday, Thursday and Saturday between Riviere du Loup and Edmundston, and freight service only between Edmundston and Connors.

It has been evident for quite some time, at least two years if not more, that the Temiscouata railway could not continue to operate under present conditions. It has been able to operate only through assistance given by the Canadian National Railways and the Canadian Pacific Railway Company, and also because of the willingness of the employees of that railway to accept subnormal wages.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

How many employees are there?

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

I am coming to that. The average number of employees in 1948 was 144, with a total pay roll of $258,702. If the wage rate of the Canadian National had been in effect, the pay roll would have been $399,490, an increase of $140,000, or 54 per cent.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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PC

Arthur Leroy Smith

Progressive Conservative

Mr. Smith (Calgary West):

Is it a standard gauge railway?

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

Temiscouata Railway

ac prices arrived at by negotiation with the interests holding the proprietarial rights, and they were incorporated in the Canadian government railways. Under the authority of chapter 16, 5 George V, acts of 1915, the government acquired some nine railway lines from private companies, totalling 407 miles, at an average cost per mile of $9,191. Under the authority of chapter 22, 6-7 George Y, acts of 1916, the government acquired two additional lines of railway totalling 97 miles, at an average cost of $37,048 per mile.

Then there is the position in reference to competition. Highway competition is quite keen in that area. Several highways parallel the Temiscouata railway and bus and truck services are operated in competition with it, which have contributed in no small measure to the falling off of both passenger and freight traffic.

After giving this matter careful consideration the government requested the Canadian National Railways to purchase the Temiscouata railway at a price not to exceed $500,000. The owners, represented by the bondholders' committee in London, England, held a meeting and accepted the offer made by the Canadian National on behalf of the government, and called a special general meeting of the shareholders for that purpose. Meanwhile an agreement was drafted between the government and the Temiscouata, both of which were ratified at the special general meeting. That is the agreement referred to in the resolution, dated October 14, 1949; and parliament is now being asked to sanction it.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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PC

Alfred Johnson Brooks

Progressive Conservative

Mr. Brooks:

What rolling stock is being taken over?

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

There is a lengthy list of locomotives, box cars, equipment and the like. I would have to get it for my hon. friend. I would be only making an estimate if I attempted to give the value now.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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PC

Alfred Johnson Brooks

Progressive Conservative

Mr. Brooks:

It was the value more than the quantity I wanted to get, in order to compare it with the cost of the railway.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

Dealing with the value, perhaps I can say that twenty-five per cent of the bonded indebtedness amounted to $950,000. As I stated, the Canadian National was authorized to make an offer not exceeding $500,000. They were able to purchase it for $480,000. The house will be interested in knowing that current assets, less the current liabilities, amount to $137,000. Furthermore, the Canadian National Railways indicated to us that, as scrap, the railway was worth about $240,000; so that, with the $137,000 cash to which I have referred, the agreement is an excellent one, I should think. This is

particularly true when it is compared to the amount per mile which was paid for the other railways I mentioned.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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PC

Alfred Johnson Brooks

Progressive Conservative

Mr. Brooks:

Is there any intention of scrapping any part of the railway? There is a rumor to that effect.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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LIB

Lionel Chevrier (Minister of Transport)

Liberal

Mr. Chevrier:

Not the slightest; it is intended to operate it.

Topic:   TEMISCOUATA RAILWAY
Subtopic:   PROVISION FOR PURCHASE BY GOVERNMENT OF CANADA
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November 4, 1949