Mr. Hansell:

Or Trans-Canada. He is Minister of Transport, and he is just as much responsible for fairness to the trucking industry as to any other branch of Canada's transportation industry.

Mr. White (Middlesex East):

Mr. Chairman, I hold in my hand a finding of the board of transportation commissioners dated August

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12, 1949 and initialled "T.D. 14157-4". It is signed by P. F. Baillargeon, secretary. This finding deals with an application of the milling and feed industries in regard to the freight rates on soybeans from southwestern Ontario to Toronto; and the application for a decrease was refused. This statement by the board points out why they have refused the decrease in freight rates. I want to review the paragraphs that are pertinent to the request dealing with the decrease in rates. I will provide the minister with a copy of this finding so that he will know what I am referring to.

Paragraph 4 reads as follows:

The premises upon which this application is made appear to be that a reduction in the present rates on soybeans would promote an increase in acreage; that large imports are now necessary from the United States; that Canada's edible oil requirements exceed domestic supply; and that diversion to truck transportation is likely to occur.

That is the first time I ever heard that the freight rate was to be based on the question whether it would increase or decrease the production of farm products. I understood that freight rates are based on the cost of haulage, on the competitive rates of other transportation systems, and the like, and not on whether they would increase or decrease the acreage of a certain product.

Paragraph 6 reads in part as follows:

The board's powers are limited to considerations of the reasonableness per se of the rates charged and the removal of unjust discrimination. Consequently, features of your complaint, other than the latter, will not be dealt with herein.

Unjust discrimination? Where are we going to draw the line? I never heard of such a thing as just discrimination.

Mr. Chevrier:

There is discrimination undel the Railway Act. This is what is meant.

Mr. White (Middlesex East):

I see. Take a carload of corn or wheat from the same station to Toronto; the rate is three cents lower than it is on soybeans loaded in the same kind of car by the same machinery. They would like to know why the rate on soybeans should be three cents higher. The board say that is not unjust discrimination. I cannot see the reason for that.

In paragraph 9 there is a statement of the dominion bureau of statistics showing that the increase in the acreage of soybeans has been considerable. Since 1942 the increase has been from 44,000 acres to 94,000 acres in 1948. By that they are intimating that the rate is not too high. They say that because there has been a great increase in acreage the rate is not too high. The actual fact was that the price of soybeans had improved to such an extent that it was more advantageous to grow soybeans than some other cash crops.

They also tried to prove that the freight is not discriminatory today because there has been an increase in acreage.

Let me read paragraph 11, which deals with it:

It is obvious from this tabulation that the acreage and total production has substantially increased. It would not appear that the railway freight rates complained of had a tendency to curtail production, nor is it clear that a reduction in such rates would tend to further increase production. The board is, therefore, unable to find any indication that unreasonable rates per se have been or are being applied.

There is nothing reasonable in a difference of three cents between corn, wheat and soybeans. Production should not be the basis of a freight rate.

Paragraph 13 reads in part:

Difference in rates is discrimination; but the prohibitions of the Railway Act in regard to discrimination are prohibitions of unjust discrimination or undue preference, and the question is whether the discrimination amounts to an unjust discrimination or undue preference.

My only comment on that is that there certainly is unjust discrimination.

In paragraph 14 they deal with the findings regarding the Ontario Paper Company, and point out the ruling there. That has absolutely no bearing whatever on freight rates so far as farm products are concerned. Paragraph 15 reads:

Evidence is required as to how rates complained of react to the detriment of the applicant.

We grew two million bushels of soybeans in 1948, and considerably more last year. If you multiply that by three cents a bushel you will get $60,000. It cost the producers of southwestern Ontario just that much money, and that is how it is reacting to the detriment of the applicant.

In paragraph 16 they deal with the water rate, and say that it is not discriminatory. Actually the water rate from Chicago is to the advantage of the Toronto elevators which bring beans from Chicago rather than from Chatham by rail. Therefore the statement in paragraph 16 is not borne out by the facts.

Paragraph 18 reads:

From Information in the board's possession it would appear that the product chiefly derived from soybeans is the oil extracted therefrom. The board is informed that oil constitutes approximately sixteen per cent of the production plus imports of beans, and that in consequence of the extraction of oil the residual meal is about 73 per cent. The board's information is that soybean flour is about three per cent of the said production plus imports of beans.

Actually, these figures do not add up. They say that oil constitutes sixteen per cent. I have been informed that it is not quite that much, but we will say it is sixteen per cent. What is all the rest? It is residue

of one kind and another. It constitutes the bulk of the bean, not the oil. Soybean meal goes into feed for livestock. It is shipped all across Canada. I want the committee to understand that the producer is paying three cents more freight on the raw product to the mill, but when the mill sends it out again to the farming areas as feed for livestock it goes out at the same rate as the by-products of wheat and corn, so that the farmer alone is the boy who is taking the loss on that particular article.

Paragraph 19 reads:

The railway tariffs applicable to Ontario grown grain and grain products show that grain products rates are accorded to shipments of soybean flour, meal and cake; therefore, these products are not placed at any rate disadvantage compared with other grain products.

In other words the millers again, are the ones who are winning, and not the farmers. We heard something about the milling combine. It would appear that they have a finger in the pie here.

Paragraph 20 continues:

On the other hand soybeans are accorded the same rates as contemporaneously apply on flaxseed.

Any hon. member who knows anything about flaxseed knows that there is no comparison in the risk of handling soybeans as compared with flaxseed. Flaxseed will go through almost any small hole. It is a difficult product to ship, but not so with soybeans. I continue:

It is noted that oil produced from soybeans is also utilized in the manufacture of paints.

What bearing that has on the setting of a freight rate for the bean is more than I can understand.

Paragraph 24 reads:

While the board views the ex-lake rates as being, in a large measure, controlled by competition, it also considers that such rates form only a portion of the total transportation movement and that "notwithstanding the spread between the ex-lake export rates from the bay ports and from Ontario points, the transportation cost to the eastern Canadian seaboard in respect of the export of western Canadian grain and the products thereof is greatly in excess of the transportation cost from Ontario points."

This actually has no bearing whatever on the freight rates, so far as soybeans are concerned, from western Ontario to Toronto. It is another red herring drawn across the trail to confuse the farmers and those Who are applying for a reduction in the freight rates.

Paragraph 25 goes on:

In view of the conclusions therein stated the board is unable to And that a fixed spread of 1 | cents on ex-lake soybeans over other ex-lake grains constitutes unjust discrimination of Ontario soybean movements.

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Actually, as I mentioned before, the net result is that the preference is given to the United States soybeans from Chicago and not to the Canadian, growers.

Paragraph 26 is very revealing. It reads:

Reference herein has been made to the board's possession of data from which certain conclusions have been drawn. It may be stated, for your information, that the source of such data is the dominion bureau of statistics, who have requested that the information furnished be privileged due to the restricted scope of manufacture of soybean products.

I cannot see why any figures supplied by the dominion bureau of statistics should be privileged. We should know about them just as we do about anything else. We are paying for the compilation of those figures. Then the paragraph goes on to say:

In view of the board's understanding that Victory Mills Limited is considered to be the leading processor of soybeans, the conclusions stated can no doubt be readily verified.

That is all the more reason why the minister and the board of transport commissioners should look into this vexatious question of discriminatory rates so far as soybeans from southwestern Ontario are concerned.

Mr. Green:

Mr. Chairman, as the committee is aware, this question of freight rates is of great importance to all the provinces of Canada, with the exception of Ontario and Quebec. While Newfoundland has not been a party to the various appeals, I imagine that when that province finds out just what its freight rates structure really means, the government of Newfoundland will also be vitally interested in this whole question of freight rates.

This afternoon I should like to ask the minister to answer one question which to my mind is at the heart of this whole problem. My question is this: How and when is the

question of discrimination to be decided?

Mr. Chevrier:

Mr. Chairman-

Mr. Green:

I do not want the answer so fast. To my mind that is the heart of the problem. The board of transport commissioners has obviously failed to deal with the disparity in the freight rates applying to different parts of Canada, because all the increases the board has granted have been on a horizontal basis. That, after all, has the effect of making the discrimination worse.

I think the situation was clearly summed up by the resolution presented in the British Columbia legislature on March 20 this year, when dealing with the decision of the government of British Columbia to join with six

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other provinces in an appeal to the dominion cabinet. One paragraph of the resolution reads as follows:

The board-

Referring to the board of transport commissioners.

-erred in authorizing a general horizontal or flat percentage increase, disregarding and accentuating existing disparities in the freight rates structure;

And the board further erred by failing to limit the authorized increase to flat maxima amounts of by other exceptions, or otherwise.

When the first decision was given, back in March of 1948, there was a great volume of protests from seven provinces in Canada. At that time the Minister of Transport was very much on the spot. He was being attacked in the House of Commons, and was dodging from one excuse to another. He was really in extreme difficulty.

Mr. Chevrier:

You know that is not so.

Mr. Green:

Well, perhaps we could say that he was very much embarrassed. If he was not, he should have been. In any event, under that pressure the government, through the Minister of Transport, announced that there was to be a general investigation of the whole freight rates question in Canada by the board of transport commissioners. I have here the minister's statement on April 7, 1948, when, on the same day, he tabled an order in council which authorized this general investigation by the board of transport commissioners. I shall read a portion of the order in council to which reference is made at page 2717 of Hansard just to show the step the government was taking at that time:

. The committee-

Referring to the privy council.

-observe that no general investigation of freight rates has been made in Canada since that conducted in 1925 by the board of railway commissioners for Canada. . . .

The committee further observe that in the said order in council it was stated that "the policy of equalization of freight rates should be recognized to the fullest possible extent as being the only means of dealing equitably with all parts of Canada and as being the method best calculated to facilitate the interchange of commodities between the various portions of the dominion as well as the encouragement of industry and agriculture and the development of export trade."

Then it goes on to say:

It is therefore advisable that the Board of Transport Commissioners for Canada be directed to make a thorough investigation of the rates structure of railways and railway companies which are under the jurisdiction of parliament, with a view-

And this is the important part.

-to the establishment of a fair and reasonable rates structure which will, under substantially similar circumstances and conditions, be equal in its application to all persons and localities so as to permit the freest possible interchange of commodities between the various provinces and territories

of Canada and the extension of Canadian trade both foreign and domestic, having due regard to the needs of agriculture and other basic industries.

Then the order in council went on to authorize the general investigation. Even that proposal was not satisfactory to the house. There were further protests, with the result that six days later, on April 13, the minister made a lengthy speech in which he pointed out that the board of transport commissioners, under the order in council I have just read, was being given the widest possible power to deal with discrimination. The minister's statement is to be found at page 2898 of Hansard for 1948, and he concluded by saying that the chairman of the board of transport commissioners had told him that there was nothing in the Railway Act which hampered them in any way in dealing with inequalities or the so-called discrimination which may exist in the country.

That was the stand taken by the government at that time. Some hon. members asked how long it would take for the board of transport commissioners to make the inquiry, and the minister answered as reported at page 2904 by saying that the chairman of the board had assured him that it would require an absolute minimum of six months in which to complete the investigation, and that it would probably be completed within the year. That would be a year from April 13, 1948.

On that same date the then leader of the opposition, Mr. Bracken, pointed out that he was afraid there would be a much longer delay, and that these increases were making the discrimination that much worse. As a matter of fact, Mr. Bracken moved an amendment to the motion then before the house.

The board of transport commissioners took action on that order in council right away and two days later, on April 15, issued a notice to the public which said that in order to carry out as expeditiously as possible the directions of the order in council the board invited provincial governments and other authorities, boards of trade, chambers of commerce and other interested parties to submit to the board any statements of fact under which it was claimed unjust discrimination or undue or unreasonable preference or advantage or unfair treatment existed against or in favour of any locality, province or region by reason of the present rate structure. In that notice the board asked that the submissions be filed not later than May 25, 1948. The notice also contained this paragraph:

The purpose of this notice is to put the board, as early as possible, in possession of any and' all complaints against the existing rate structure, and to specifically direct attention to the subject matter

*of such complaints, with a view to considering what changes, adjustments and redistribution in rate incidence may be necessary to correct the defects complained of.

That was over two years ago and it is interesting to note what happened. The story is contained in a statement made by the Minister of Transport in this house on June 2 of this year, to be found at page 3115 of Hansard as follows:

To date the plan and proposals of the railways have not been received, and the provincial governments have not made any submission with respect to the order in council.

The board of transport commissioners were of the opinion that the report and recommendations of the royal commission should be studied before completing their findings pursuant to P.C. 1487.

A royal commission had been set up in the meantime to consider the transportation problem of Canada with the exception of this question of freight rates. Throughout, during this whole time, there has been a demand for some steps to be taken to remove these discriminations. In the speech from the throne delivered on January 26, 1949, the government had this to say:

A royal commission has been appointed to inquire into and report upon all questions of economic policy within the jurisdiction of parliament arising out of the operation and maintenance of national transportation. Together with the findings of the investigation by the board of transport commissioners, the report of the royal commission should furnish parliament and the government with the basis for a sound transportation policy.

That was a year and a half ago but now we find ourselves in the position where the board of transport commissioners has not carried out its investigation and where the royal commission is not to make its report this year. Yet the government has taken no steps to correct this problem of discrimination. There was one decision made by the board for which I give it credit, that removing the mountain differential which affected British Columbia, but on the general question of discrimination there has been nothing accomplished and there will be nothing accomplished until the royal commission reports next year.

I submit that we have good reason to be doubtful as to whether the board of transport commissioners will deal with the question of discrimination on a Canada-wide basis even after the royal commission reports. If they do it will probably be more years before there is a finding by the board. I submit to the minister and to the committee that the government should act without delay and not permit this discrimination to continue indefinitely. I ask the minister to answer the question I posed in the beginning: How and when is the question of discrimination to be decided?

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The amendment now before the committee questions the capacity of the board of transport commissioners and asks that the vote for the board be reduced to $1. I do not intend to say anything about the various judgments in connection with freight rates but they certainly do not indicate great strength. However, I should like to say a word about a recent judgment of the board in connection with an application by the British Columbia Telephone Company for an increase in telephone rates in British Columbia. That application was heard by three members of the board. The chairman started out to take part in the hearing but was taken ill and did not get to the Pacific coast. The members who did sit told counsel representing the company, the province of British Columbia, the cities of Vancouver, Victoria, and New Westminster, the municipality of Burnaby, the Union of British Columbia Municipalities and various other public bodies that only a certain number of days could be spent on the application as the board had to get back east to deal with other business. From the tone used one could only assume that that business was considered far more important. The result was that a proper opportunity was not given for the consideration of this application.

The application affected most of the people in British Columbia because the British Columbia Telephone Company serves most of the settled portions of that province. The hearing was held in January of this year and on May 30 an interim judgment was handed down which granted the company 93 per cent of certain of the increases applied for. No reasons for judgment have yet been given to my knowledge and the result is that those of us who are interested cannot find out on what basis the award was made. The cities interested cannot decide whether they should appeal because they have no reasons for judgment upon which to base a decision.

That is not good enough for a board of this kind. While the board gave an interim judgment which awarded a large increase it has called upon the British Columbia Telephone Company to supply further information before rendering a final judgment. I submit that if the board of transport commissioners is to retain the respect and confidence of the Canadian people it must be a great deal more careful in the way it does business. I think it must be far more ready to look out for the interests of the little fellow, the man who has to pay these bills.

On this particular hearing there was one point which I thought was of some importance. When the British Columbia Telephone Company came to this house in 1947 asking

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for an increase in capital, we obtained from the member who sponsored the bill on the floor of this house an undertaking that they had no intention of applying for an increase in rates. At page 2718 of Hansard for May 2, 1947, I asked the then member, now Senator Reid:

I understand that the hon. member has been authorized to give assurance to the effect that the company has no present intention of applying for an increase of rates and will not make any such application unless compelled to do so by extensive changes in conditions.

Mr. Reid:

That is my definite understanding.

Mr. Green:

That assurance is clearly worded and contains a statement to the effect that an application will not be made unless the company is compelled to do so and then only by reason of extensive changes in conditions. If the hon. member for New Westminster is prepared to give that assurance on behalf of the British Columbia Telephone Company I for one shall have no objection to the bill passing.

Mr. Reid:

I am authorized to do so, and it is my definite understanding.

That was in May of 1947; hon. members will notice that there was to be no application for increased rates unless extraordinary conditions arose. I believe the telephone company officials went right back to Vancouver and started preparing an application for an increase in rates. At any rate they were not very long in applying for an increase. When counsel for the city of Vancouver tried to bring in that assurance as evidence before the board of transport commissioners the chairman ruled him out of order and would have nothing to do with it. He ruled that what had been said in the House of Commons was not evidence, that it was of no importance whatever, and went right ahead to hear the presentation by the company. In other words right there the board ruled for the company; it agreed with the submission of counsel for the company that this assurance could not be brought in as evidence, and I do not believe the board gave the people of British Columbia a fair run for their money. If we are to have a board of that type, in such a great hurry to hear the representations of these big companies and not giving the little fellow a break, I think it is time something was done about the board itself.

I suggest to the minister that he had better not be so sure as he was when he last spoke on this amendment that the board of transport commissioners is perfect. I admit that it has plenty of problems, but I am afraid it is far from perfect. Certainly some of its actions recently have shaken the confidence of the people in its wisdom. I would hope that the minister will take steps quickly to see that the board is strengthened.

Mr. Chevrier:

If I may be allowed a moment to reply to the question put to me by the hon. member, he asked how and where discrimination is to be eliminated. Discrimination can be eliminated in more than one fashion. It can be eliminated by the railways themselves; that has been done on many occasions. It can be eliminated by the board as a result of its hearings. It can be eliminated by P.C. 1487, the general investigation the government has authorized by the board. The fact that it can be eliminated is indicated by the words of the hon. gentleman, who says the mountain differential was removed following the hearing held by the board in Vancouver. Then it can also be eliminated by recommendations that may be made by the royal commission on the general question of transportation.

I do not think there should be any doubt in the mind of the committee that under P.C. 1487 the board has the right to eliminate discrimination. The difficulty has arisen because of the fact that no evidence has been submitted. It is true that the provinces were busy with the royal commission and these other two hearings, and I believe now they have given an undertaking to co-operate to the fullest extent, so I am hopeful that from now on they will make submissions. Since 1925 no evidence has been submitted before any public body or commission to establish discrimination. I do not want to go over the discussion that took place previously, but most hon. members maintained that there was discrimination. Well, as far as the board is concerned it could not consider discrimination until it had been charged with that responsibility, as it has now been, and until evidence of discrimination has been submitted. Under P.C. 1487 the board is anxious that there be public hearings so it may determine what the discrimination is, if any.

Mr. Green:

Then is this the minister's plan: first, that nothing further will be done until the royal commission reports, which he said would be next year. Then the board of transport commissioners will have a general inquiry into the whole question of discrimination, and after that is held and a decision is announced the government will have to act to make any amendments to the statute law that may be necessary. Is that the course the minister believes should be followed?

Mr. Chevrier:

No, that is not the course I suggest at the moment. What I suggest is that two years ago the board was required under P.C. 1487 to conduct a general rate investigation. During that time the board has invited any public parties interested, particularly the provinces, to submit evidence of

discrimination. The provinces have given reasons why they could not or should not do so. Meanwhile the board has not remained idle. It has commenced studies of the waybill question, and is making a complete analysis of the freight waybill in order to ascertain by that method, which I understand is a new method, whether there is discrimination and to what extent. It may well be that they will make a finding before the royal commission on transportation brings down its report. On the other hand the chairman of the board has indicated to me that a complete investigation could not be made until such time as certain questions referred to the royal commission were answered. The whole point, I would think, is that evidence should be submitted before the board by the parties alleging discrimination.

Mr. Green:

Once the board embarks upon this general inquiry, how long does the minister think it will take to complete that work? Has he asked the chairman of the board for an estimate?

Mr. Chevrier:

I would not attempt to answer that question in any way other than the way I answered it when my hon. friend referred to the matter previously. I could not attempt to answer it, because it depends upon so many contingencies. It depends upon the length of time required for the waybill study. It depends upon whether or not the provinces will make submissions to the board. It depends upon when the royal commission is likely to report. It depends upon so many contingencies that any answer I might make could not possibly be at all accurate.

Mr. Smith (Calgary West):

I should like a few moments of the time of the committee, in the hope that what I say may be regarded as a contribution to an understanding by the committee of our real problem with respect to railways. In saying that I do not wish it to be inferred that I am presuming to speak as an expert, in any broad sense of that word. Freight rates are something with which I have had some experience, particularly in the western part of Canada. I cannot help recalling that my parents came to the city of Regina before the Canadian Pacific Railway. From the time I was able to read or to listen, I remember the battles which took place between the Canadian Pacific and the various municipalities that thought they were discriminated against at that time-that is the settlers in their areas thought they were discriminated against.

Now that was a time in the history of rate making when it was one hundred per cent true to say the basis of rate making was what

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the traffic would bear. I do not think that will be disputed by anyone whose memory goes back any considerable distance. The rates vary all across Canada, not by the fixation of those rates by the board of railway commissioners, as they were first known, but in the discretion of the railway itself. I do not say that critically, because I would think that would be the way that any of us would probably conduct our business in the event that circumstances of a like kind were present in the conduct of that business. Before I am finished I am going to make a suggestion, and it is this: that until we make rates which bear some relationship to the cost of carriage, then I believe our troubles will never end. Even today there is no such relationship established in any broad way.

I well remember the debates in this House of Commons in 1921 and 1922 when the Crowsnest rates were made statutory. I believe it is well to remember that they were first made by agreement, at a time when the railways were, to use an ordinary expression, in the driver's seat, because they had no competition whatever in connection with the haulage of those goods covered by the Crowsnest pass rates. We cannot blind ourselves to the developments which have taken place since. The result has been that in central Canada a new source of competition, in the old days completely unheard of, has sprung up, and that is transportation by truck. In those old days we had only one yardstick to use in controlling freight rates, and that was transportation by water. Many of us are old enough to remember the change that took place at the time the Panama canal was opened. We then had a major change in the structure of water competition. One could ship by water from Hamilton, through the Atlantic ocean and the Panama canal to Vancouver, and that shipment enjoyed the cheaper water rate.

We are coming to a point now where the members have listened with much interest, as I always do, to the member for Macleod insisting that the Crowsnest pass rates, which are statutory rates made by this parliament, must be maintained at all costs. I am going to agree with that, with a modification, but for an entirely different reason. My reason is that they have been in force for such a length of time that those rates must now be regarded as part of the basic structure of freight rates, and should not be regarded as a stab here and a stab there to suit different occasions. I know quite well that the railways were happy to haul all the grain they could to eastern Canada at those rates. I say, therefore, that in any consideration of our

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.general rate structure they should not be regarded as a change in the structure now *debatable, but should be regarded as part of the whole rate making structure in connection with our railways.

I remember coming down here before the railway commission many years ago when we endeavoured to find the cost of hauling a ton of goods, we will say from Drumheller in Alberta to the city of Toronto. I believe our efforts on that occasion could only be described as futile, because of the inability of those of us who were not experts in rate making to present evidence to the board in contradiction or in contradistinction to that presented by the two railways. The railways, of course, have made great studies of those matters. Having regard to my amateurish theory, if you like, with respect to costs, I well remember endeavouring to find that cost by asking both railways why they did not base it on their own costs. The railways have a term known as OCS, or on company service. In other words, they haul their own coal from the Crowsnest pass to Winnipeg or they haul their own ties and other supplies, and they charge themselves, to use the initials, an OCS rate.

Upon my examining the higher officials, they frankly admitted that the OCS rate, that is what they charged themselves to do their own business, had no relationship whatever to cost, and was simply an arbitrary figure which they had fixed for the conduct of their own business. What are the changes, perhaps I should say in the economic life of the country, which most affect the rates?

I mentioned the canal. I mentioned the increase of trucking service. Let us not forget what this trucking service is doing; and we have all been approached by emissaries of the truckers in the last while, What they are doing is skimming the cream off the freight business. We shall need our railways. Certainly in bad weather we shall need them to carry all of our freight and, in other times, to carry that which goes a considerable distance.

In addition to that, we found the eastern part of the country building good highways with which those highways of ours farther west could not compete, and everything I say, Mr. Chairman, applies to the maritimes as well. We found ourselves in the position that we did not have the highways nor did we have the money to build them. The density of our population does not even compare with the density down here in the east. The truck, of course, would call at your place of business

and deliver the freight at the place of business to which it was consigned at the other place. That is the next important fact which has entered into this picture.

We shall now take a horizontal increase in freight rates. What does it mean? We have heard much about the province of Ontario and the province of Quebec not appearing before the commission. If I were running either of those provinces I would do exactly the same thing as they have done. Why? Because they know perfectly well that you can make a horizontal increase in freight rates clear across the country and it is not going to cost them a dime because the railways cannot collect that increase, in view of the truck competition and water competition through your rivers and canals which are in this part of the country. What I say is this. It is just a matter of common sense, a matter of simple arithmetic, to know that horizontal increases, in so far as they may benefit the finances of a railway, are paid for-I was going to say entirely, but perhaps that is too strong a word-in great proportion by those of us who live far from here, both in eastern and in western Canada.

I add this comment. I think it is a wrong principle that, in determining rates, there is such a complete separation between the passenger rates and the freight rates. Included in your passenger rates, of course, consideration must be given to the operation of railway hotels across Canada. Those were built, of course-and wisely built-in the first place in order to find more passenger traffic. Yet it is generally accepted today that the passenger traffic is conducted at a loss. Someone may quickly rise and say, "well, that should be stopped". That, of course, would be said by someone with no knowledge of the situation. Your transcontinental traffic is governed by two things: American competition out of Seattle, through Chicago, up into Toronto, we will say; and now, with the addition of air travel, there is another competition. He would be foolish who would simply say, "Raise passenger rates in Canada", because that indeed would be killing the goose which laid some kind of an egg, even though it be not a golden one.

I want to speak of another principle before I come to a suggested solution, and it is this. I am one of those who think that a railway company should never be called upon to operate a railway at a loss and to take the profits from its other investments into account in determining what is an adequate freight rate. I cannot help bringing that proposition down to its simplest form, to my way of thinking; because I think in simple form. Let us assume that over on Sparks

s.reet here I had a fair boot and shoe business, just to pick one out of the air. If I had, I would not have holes in both shoes I am wearing. But let us assume that I have a boot and shoe business that is doing fairly well. Then, out on Bank street or in some of those areas, let us say, I think there is an opening for, we will say, a grocery store. So I take my savings and I put them into my grocery store. Then suppose hard times come to one of my small industries. Who is there so foolish as to say that I must continue to operate my boot and shoe business, which is losing money, because my grocery business is making money? That is all there is to this argument that the railways should be compelled to put into a common pot all the money they receive from their various investments.

I now come back to what I said in opening. You meet today the request for the removal of discrimination, and certainly I agree heartily that there is need for that. But what we need is not so much a raising or a lowering of rates. In dealing with this problem, we shall'never get anywhere until we have equalization on some common basis across the Dominion of Canada. When I say "equalization" I mean this. We must get into our rate-making at least some of the principle that a longer haul does pay more money than a shorter haul. That is not true today. That principle is just good common sense, Mr. Chairman. If you buy a ticket for a passenger trip to Vancouver, you will pay a great deal more than you will for a ticket from, we will say, here to Winnipeg or vice versa. But that is not true with respect to freight.

I therefore come back to my original proposition, that until we get to some extent an introduction of the rule of costs of doing the business, we shall never be out of the bush with respect to special rates on this commodity and that commodity and with respect to discrimination here, there and elsewhere. In that regard we must all remember the terms on which our outlying provinces came into confederation. I am not saying for a moment that you can just adopt that rule. It might increase certain freight rates because of these three changes in conditions which have arisen very much within my own time, but what I am saying is that unless you start with a sound basis you will never get anywhere. From that sound basis you will have to make changes here, there and elsewhere, but now we cannot make any change without introducing so many complex questions of various kinds that we do not know where we are.

Supply-Transport

May I say one thing more about our present procedure? I think this appeal from the board to the privy council is one of the silliest procedures I have ever known.

Mr. Chevrier:

Hear, hear.

Mr. Smith (Calgary West):

I do not know how many members there are of the privy council but let us use the figure twenty. I remember an appeal in which I was involved some years ago. I think it was that twenty-fifth time the minister spoke of; but in any event my late friend, Mr. S. P. Woods, was counsel in the matter. What happened? I am not blaming the members of the privy council. You come down to the privy council with volumes of evidence. Today you will have the Prime Minister, the Minister of Transport and somebody else on the council. The following day, owing to duties that they must carry out, you will have perhaps one of these three gentlemen and three or four others. You could easily come to the place where you would never have even one minister listening to your appeal day after day throughout the whole appeal. Therefore when I use the word "silly" I can think of no better one. Perhaps "ineffective" would be better. It is a completely ineffective way of proceeding with appeals.

A word with respect to the amendment, and I am through. I am bound to say this. I am going to vote for the amendment. I realize the difficulty that the board of transport commissioners have to contend with, but in my judgment they have fallen far short of the mark. One reason may be that the difficulties are too complex. Perhaps the fact that they divide themselves up to hear cases, one section in one end of the continent, and another section in another, has something to do with it. The only thing I am going to say is this. In recent years they have proved ineffective. I hope no one will go to the members of the board and say I am suggesting that they are no good. But I am saying this. They have not fulfilled the hope held for them. For reasons perhaps better known to others than to me they have proven incompetent to discharge the duties thrust upon them by parliament and by circumstances at the present time; therefore I will vote for the amendment.