March 28, 1955

?

George Gordon

Mr. Gordon:

Our new hotel in Montreal is in

the centre of the city and within 500 miles of it are nearly 53 million people; and we know from investigation there will be very intense interest in using the convention facilities of this hotel.

And again later:

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?

George Gordon

Mr. Gordon:

Our committee which considered

the suggestion for this hotel came to the conclusion there would be a high degree of occupancy.

Then a little later on, following a question regarding the name which had not yet been decided and the probable opening date, the hon. member for Peterborough (Mr. Fraser) asked the following question:

Is it to be all your development?

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?

George Gordon

Mr. Gordon:

That is the intention.

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PC

Gordon Knapman Fraser

Progressive Conservative

Mr. Fraser (Peterborough):

All the way through?

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?

George Gordon

Mr. Gordon:

Yes.

Subsequently, following a question asked by the hon. member for Greenwood (Mr. Macdonnell) about the inadequacy of convention facilities in Montreal:

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?

George Gordon

Mr. Gordon:

They are very inadequate and

that is demonstrated by the fact that we already have received a great number of inquiries from organizations which have not been able to hold their conventions in Montreal by reason of their size.

Later, on the same subject:

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?

George Gordon

Mr. Gordon:

We have received inquiries, at

this date, from 31 organizations all of which hold conventions. I think the interest being shown in the hotel long before we have begun at the site would indicate that we should not expect to have much trouble once the erection of the hotel takes place.

Just one further quotation, Mr. Speaker, regarding the plan to set up one corporation which would own and operate all the Canadian National Railway hotels:

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?

George Gordon

Mr. Gordon:

We will not organize the hotel company to be a complete operating company in all respects. Certain administrative services will be provided to the hotel company by the railway.

It seems to me that the principal service provided so far has been to sell the operation of the hotel down the river to the Hilton corporation. Certainly we have had no other factual data or indication in this house. However the quotations I have put on the record make certain facts clear. First, the new hotel was presented as something which would be operated on the same basis as the existing hotels. Second, it was indicated that on such a basis it would be a satisfactory business venture. Third, no indication was given that the operation would be conducted by an outside organization. Fourth, the presentation made to the committee indicated no need to call in an outside organization to operate the hotel, since it was indicated that it would be a satisfactory operation under existing circumstances.

It seems to me that policy has changed drastically since that point, and I think we must look to the government for an explanation of that fact. Tracing what the public might know about this project, for the benefit of the railway committee, the next development took place on November 15, 1954, when a general statement was issued by Mr. Gordon and Mr. Hilton announcing that the Queen Elizabeth would be managed by the Hilton hotel group. This was the first intimation 50433-1561

28, 1955 2459

Committee on Railways and Shipping hon. members of this house received that the hotel was not going to be operated by the Canadian National Railways itself; we read it in the newspapers. It was the last and only piece of authoritative information this house has been able to garner to date.

Under the guise of enabling the C.N.R. to operate its day to day business without interference, repeated questions in the house on this subject and repeated requests for information have met with a blank and stubborn refusal to give any more information. This point was extremely well traced by the hon. member for Prince Albert, so I shall not labour it. However, I wish to put on record the interesting fact that other organizations and the Hilton corporation itself find it unnecessary to throw what I have described as a hot air curtain around their operations, and secrete facts within themselves.

I turn to one paragraph in Business Week of April 11, 1953, referring to an hotel which is to be constructed at Havana, Cuba at a cost of approximately $10 million, in conjunction with a local labour union there. The paragraph states as follows:

The retirement fund of the union (with a bank loan to help) will finance the hotel and get two-thirds of the gross when it's operating; Hilton will lease, manage, and supply working capital in return for one-third of the take.

There is the financial information in connection with that particular operation, the division of the profits and everything else. Yet, Mr. Speaker, these gentlemen sit over there on the treasury benches and say, "We will not tell you anything about this matter because it is not in the public interest."

I realize, Mr. Speaker, that there perhaps must be some reservations in dealing with the C.N.R. in order to keep its competitive position free and on an equal basis with that of other railways in Canada, but I just cannot see that certain particular aspects of its policy and certain of its major policy decisions should be kept secret when they represent matters of urgent public interest to the people of Canada, and when there is no competitive reason for so keeping them secret. Particularly, Mr. Speaker, I see no reason why they should be kept secret when a 15-year contract is involved and millions of dollars are at stake.

We will turn over to the Hilton corporation a $20 million hotel. It is indicated that we shall be putting up an additional $5 million in furnishings. It is an immense operation. For example, it has almost three times the value of the Chateau Laurier. Yet we cannot find out anything about it. This is not an operating matter. When you take $25 million of quasi-public funds and put them into an

2460 HOUSE OF

Committee on Railways and Shipping hotel and then turn it over to a United States organization for management, that is a matter of prime public interest and prime public importance, and one upon which the house has every right to be fully informed.

Turning to this announcement, stripped of its verbiage we find that the only information we have on the subject is this. The announcement tells us that the hotel will be managed by Hilton for 15 years under a percentage division of profits after payment of all costs of operation. Ownership remains with the C.N.R. At least 95 per cent of the staff will be recruited in Canada, where possible from the C.N.R. organization. The remainder of the announcement, probably in an attempt to camouflage the absence of facts, goes at length into the fine qualities and great size of the Hilton organization, the marvellous job they will do of managing the hotel, and the advantages-largely unstated- of the agreement to the C.N.R.

The facts which would enable the house to evaluate for itself the wisdom and advantages of this arrangement and its possible implications are simply not contained in that statement. For example, the reference to a percentage division of profits after all costs of operation are met is meaningless, even to a trained accountant. I personally have examined the standard accounting practice of the American hotel association, and the figure which is referred to here could be one of four or five different figures in their financial statements. There are some who would include in the cost of operation such items as depreciation and interest. If you do that, in the amounts at the disposal of such an agreement it means a difference of hundreds of thousands of dollars every year. Yet we do not know on what basis it is, and the committee going into its session will not have that information at its disposal, although I sincerely hope it will be made available.

The only basic advantage to the C.N.R. and the people of Canada which has been clearly set out by the president of the C.N.R. as arising from this agreement is expressed in the words:

. . . the working agreement is likely to ensure a stable and high occupancy of the hotel.

These statements may well be true, but why pay for something we were going to get anyway? Just a year ago Mr. Gordon told the railways and shipping committee:

We know from investigation there will be a very intense interest in using the convention facilities of this hotel . . . Our committee which considered the suggestion for this hotel came to the conclusion there would be a high degree of occupancy . . . We already have received a great number of inquiries from organizations ... I think the interest being shown in the hotel long

before we have begun at the site would indicate that we should not expect to have much trouble once the erection of the hotel takes place.

In just a moment I think we might call it six o'clock. If these statements I have quoted were correct, as I believe they were, why do we need the Hilton corporation to solicit business which already is banging on our hotel door? Why do we need to pay a percentage of the profits of our new hotel to get business which the committee evidence showed we could get for ourselves?

Mr. Speaker, would you call it six o'clock?

At six o'clock the house took recess.

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AFTER RECESS The house resumed at eight o'clock.


PC

William McLean Hamilton

Progressive Conservative

Mr. Hamilton (Notre Dame de Grace):

Mr. Speaker, when we rose at six o'clock I was examining some of the statements contained in the press release regarding arrangements between Canadian National Railways and the Hilton corporation with respect to the Queen Elizabeth hotel, or the Hilton Queen Elizabeth hotel, in Montreal.

Continuing with that, I think we might well ask ourselves why there should be any relationship in any person's thinking between an argument concerning the advantages of the Hilton corporation as a sales representative for the new hotel, and the question of the management of the new hotel. There are hundreds upon hundreds of Canadian corporations that have appointed United States sales agents and representatives to handle the sale of their product or services south of the border, or even in other parts of the world. One of the largest hotel chains in the United States and Canada, for example, has agreements with over 3,000 different travel agents on a commission basis for the purpose of obtaining business for their chain of hotels, but these same travel agents have no more say in the management of the hotels than you or I.

The name of the Canadian National Railways and the names of its hotels are justly famous all over the world. People respect and admire hotels like the Chateau Laurier in Ottawa, the Macdonald and many of the others which the C.N.R. operate throughout the country. Surely association with the Hilton chain, great though this chain may be, is not going to do anything to increase or enhance the reputation of these Canadian National hotels. Let me add that this is particularly so in the place where this new hotel is to be erected because I think if there

is one thing ou les Canadiens frangais sont bien it is in their hospitality. French Canadians are proud of their hospitality. Down through the ages they have established an outstanding reputation for the hospitality and friendship they evidence toward the stranger. I suggest we do not need anyone to come to Montreal to show us how to attract guests to that city, or how to be hospitable.

Turning now for a moment to the question of the management of the hotel, for the agreement does turn over the management of this $25 million property lock, stock and barrel to Hilton for 15 years, the only basis I can see for it is the conviction on the part of the government that American management and control of the hotel would be superior to Canadian management and control. Quite frankly I cannot agree with this view. Perhaps, however, someone might argue that the advice and guidance of those closely associated with the operation and problems of the biggest hotels is needed. This may be so, but it should be pointed out that it is quite possible to get this advice and guidance without giving away the management rights of the operation. There are several highly reputable organizations in the United States whose particular work it is to give advice, counsel and guidance to individual hotels and to large hotel chains. They guide, counsel and advise, but they leave the management and operating control in the place where they rightfully belong, in the hands of the people who own the hotel and who have the major investment in it.

If you want a comparable situation you can turn to the position of the Sheraton hotels in Canada. This Canadian chain was purchased outright several years ago by the Sheraton corporation of America, which is next in size to the Hilton corporation. I have made inquiries, and I find that this organization use their head office personnel from the United States purely in a consultative and advisory capacity to their Canadian operations. Their units-and let us remember one of them is the Mount Royal in Montreal with a thousand rooms and another is the King Edward in Toronto, also an immense hotel- operate under complete local control, using the chain headquarters personnel for advice, suggestion and consultation to achieve the best possible operating and management results.

I see no reason why, if the need for such advice was felt, a similar arrangement could not have been worked out whereby advice, counsel and guidance would have been made available but the management control and final decision on all matters would have

Committee on Railways and Shipping remained in the hands of Canadians in a Canadian organization. It is a far cry from calling in a consultant for advice and guidance to calling him in and turning over your business to him lock, stock and barrel for a 15-year period.

While we are on the subject of the Sheraton chain, I might point out that my investigations have disclosed that they have an ironclad policy of employing only Canadian personnel from top to bottom in their organization. In their entire operations in Canada at the present time, with all their thousands of employees, there is only one single individual at the present time who has been transferred from south of the border to a Canadian position in a continuing capacity. In fact, it has worked the other way. They have been taking personnel from Canada and transferring them to the United States, because in certain cases they had a surplus of operating personnel here.

Compare this figure of one man among thousands with the proposal for the new hotel in Montreal, where the statement is made that at least 95 per cent of the operating staff will be recruited in Canada. This figure of 95 per cent sounds very reasonable at first, but it begins to look less reasonable when we realize that it means that up to 5 per cent of the staff will probably be brought into Canada from the United States, that this represents 60 to 75 people in a hotel of this size, and that this group which-I quote Mr. Hilton-"will be selected for their special skills, knowledge and other qualifications" will preempt almost every position of any importance in the new hotel, leaving for the Canadian personnel the jobs of hewers of wood and drawers of water, the subordinate positions.

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PC

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

That is Liberal government policy.

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PC

William McLean Hamilton

Progressive Conservative

Mr. Hamilton (Notre Dame de Grace):

That may be Liberal government policy but it is not one with which we on this side of the house agree, and I think the sooner they know it the better. You do not have to do it. There is absolutely no reason for it, because hotel operations in Canada have demonstrated that we have the stuff to do the job. The Royal York, the biggest hotel in the empire, uses Canadian people, and it is an extremely well- run hotel. It was only two or three months ago that a young man who had entered the service of the hotel in the capacity of secretary to the general manager was himself appointed general manager of the entire, great Royal York hotel.

There was Dave Mulligan, another Canadian who, unfortunately, died a few months

2462 HOUSE OF

Committee on Railways and Shipping ago. He was known nationally and internationally as the grand old man of the hotel business. He owned and operated some of the greatest and largest hotels in the United States, but .he started off in Canada.

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?

An hon. Member:

With the C.N.R., too.

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PC

William McLean Hamilton

Progressive Conservative

Mr. Hamilton (Notre Dame de Grace):

The

citizens of the United States are capable, ingenious and admirable in all respects, but Canadians are equally so and I think they are entitled to prove their worth in the top positions of this new hotel.

Then there is another argument put forward by the government in favour of the agreement with Hilton-and we are coming to the end of the possible arguments the government can advance. It is that advantage will be gained from association with a large hotel chain like this not only through obtaining specialized personnel but also through purchasing practices and in other ways.

Perhaps this argument would be valid if the new hotel were a separate body and had no other association. But one must remember that the hotel is part and parcel of the great Canadian National Railways complex. It does not exist by itself in a vacuum. It is associated with the Canadian National Railways. The Hilton corporation and its associated organizations have assets of around $230 million; that sounds rather impressive. The Canadian National has assets of about 10 times that amount. Hilton does $190 million worth of business in a year, but the Canadian National does about three times that amount.

In other words, you are not really bringing in a corporation which is any more powerful, which is any bigger or which has any greater facilities. As a matter of fact, it seems to me that under these circumstances there is very little Hilton can offer to the partnership that the Canadian National could not supply from its own resources. The Canadian National has lawyers, accountants, engineers, economists, a sales force and advertising men. They have all sorts and types of personnel they could use in this operation for guidance and counsel, without having to ask for it from the organization the government has selected.

I am not anti anything in this regard, Mr. Speaker, but I am pro-Canadian in these circumstances. I have a sort of fierce pride and reasoned belief in the ability of Canadians to meet the challenge of these days, to rise to that challenge and accomplish that which they must accomplish if we are to retain the leadership which is ours and which, God willing, will continue to be ours. I have no sympathy with those who feel, for whatever reason, that we should play a secondary role to any other nation or any particular people.

It seems to me that some of the arguments I have advanced here today show there could be some reasonable doubt as to the wisdom of this hotel arrangement. I think that is putting it very mildly indeed. I feel that this government is guilty of several charges in this connection. The first and greatest charge of which they are guilty is that they have not had confidence in the ability of Canadians to operate a property which Canadians, with their industry, their foresight and thrift, have managed to procure the capital to erect. They lack confidence in Canadians. Second, I think they are guilty of not giving information do this house to which this house is fully and legitimately entitled. Third, Mr. Speaker, I think the government is guilty beyond question of attempting to thrust an agreement down the throats of the members of this house and the peoplp of Canada without taking into their confidence the members of this house or the people of Canada to the extent that they might make their own decisions.

When the day comes that the gentlemen who sit on those treasury benches can make these decisions by themselves, without taking the people of this country into their confidence, it will be a sorry day for Canada. I believe that in this particular case that day has arrived. I hope the government will rectify the situation in very short order.

(Translation):

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LIB

André Gauthier

Liberal

Mr. Andre Gauthier (Lake St. John):

Mr. Speaker, I do not want to extend this debate; I would like nevertheless to take this opportunity to mention once again a matter which has long been debated but is still timely, namely the construction of the St. Felicien-Chibougamau railroad. Hon. members will recall that last December I placed on the order paper of the house the following resolution:

That in the opinion of this house, the government should consider the advisability of taking whatever steps are necessary for the early construction of the eastern section of the St. Felicien-Chibougamau-Beattyville railway, for the purpose of connecting the lake St. John industrial district with the Chibougamau mining centre.

That resolution was not the first representation I had made in favour of this project; it was but the conclusion of constant and continuous efforts for the logical and rational development of the rich mining resources of the Chibougamau district.

In fact, I was the first in the house to request the extension of the Canadian National Railway lines to encourage the development of our large natural resources, which are so abundant in the Chibougamau district as well as in the lake St. John region.

On May last, in introducing the bill which has now become law, the Hon. Mr. Chevrier stated:

It is expected that by the time the proposed line is completed from the western end into Chibougamau, if not before, projects for new industrial development in the Lake St. John-Saguenay area, which are now being considered by prospective investors, will have reached a stage which will justify the construction of this line and a decision can then be reached about any subsidy required and warranted in respect of the line. In the meantime, the Canadian National Railways will proceed to assist and encourage further developments in the lake St. John region as a means for building up potential traffic for this new line.

Now then, Mr. Speaker, this confidence in the future development of Lake St. John is shared by the whole population of my district. That is why, following the announcement of the Canadian National Railways' new policy to insist on guarantees of a sufficient volume of traffic, I stated last May 25 that the population of the Saguenay area intended to work in a constructive and intelligent way towards the achievement of this objective. Thus, since May last, I have not been chary of representations to the C.N.R. authorities, by the lumbering operators and especially to the Prime Minister (Mr. St. Laurent) and the new Minister of Transport (Mr. Marler).

Guaranteed traffic proposals have now been submitted to the Canadian National authorities, who are now considering them. It is not within my province to assess the value of the guarantees offered, but the government might hasten a decision on the part of the Canadian National authorities by offering them the appropriate subsidies.

A decision along this line, at a time when there is evidence of a drop in employment, would stimulate the Canadian economy and contribute to maintain a high level of national income.

I have every confidence in the foresight and judgment of the Prime Minister and of the Minister of Transport. By deciding to grant this subsidy, the government would at last favour the achievement of this railway project, one eagerly awaited by the whole population of my area.

(Text):

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CCF

Herbert Wilfred Herridge

Co-operative Commonwealth Federation (C.C.F.)

Mr. H. W. Herridge (Kootenay West):

Mr. Speaker, it was not my intention to speak in this debate, but one or two things have been said which move me to say a few words.

First of all, I rise to support the request of the hon. member for Winnipeg North Centre for a public inquiry into the Malton air accident. If I remember correctly, when replying to the hon. member for Winnipeg North Centre the minister asked the question, "What are you trying to prove?"

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Committee on Railways and Shipping

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LIB

George Carlyle Marler (Minister of Transport)

Liberal

Mr. Marler:

I did not ask any such question.

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CCF

Herbert Wilfred Herridge

Co-operative Commonwealth Federation (C.C.F.)

Mr. Herridge:

I understood the Minister of Trade and Commerce (Mr. Howe) asked that question. My understanding is that the hon. member for Winnipeg North Centre was not trying to prove anything; he was asking for an inquiry to ascertain the facts and to assure justice to the pilot in question, as well as to the Canadian public. I think from a reading of the evidence that a public inquiry is fully justified.

On February 25 the Minister of Trade and Commerce denied a statement by the hon. member for Winnipeg North Centre to the effect that the pilot had been on duty for a period of 16 hours in one day. If we heard the minister correctly this afternoon, by his own figures he admitted that the pilot was on duty one day for 17 hours and 29 minutes. I am not going to take the time of the house to discuss the case more fully. The hon. member for Winnipeg North Centre placed the matter on record after having made a careful study of the whole situation. I would only repeat that a careful reading of the evidence fully justifies his demand for a public inquiry into this air accident; and I trust when the committee sits it will have an opportunity to go further into the matter.

I wish to say a few words about the Queen Elizabeth hotel. I listened with great interest to the hon. member for Notre Dame de Grace who, I think, covered the subject fully. I agree with what he had to say. We in this group supported the proposal that the Canadian National Railways should build this great hotel as a public enterprise of great value for Canada, and one which would serve a very useful purpose. I believe it is true to say that public response to the building of the hotel, as well as general, tourist and commercial interest in it, indicate that it will be a profitable venture.

It is an understatement for me to say that we in this group are very disappointed to hear that the operation of the hotel is being given to an American company. We think this is a reflection on Canadian hotel personnel in Canada, and the capacity of Canadians generally to administer such affairs. I think the successful management of a number of Canadian National hotels in Canada and a large number of other excellently operated hotels is proof that we have the personnel in this country to do the job, and that there was absolutely no necessity to have an American company operate this hotel. One of the hon. members has suggested that it indicates a Canadian inferiority complex when it comes to the management of such a business.

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Committee on Railways and Shipping

Another matter that concerned me was the possibility of going to Montreal on some occasion and seeing there a large sign bearing the words "Hilton-Queen Elizabeth Hotel". That would be a ghastly business. I do hope that whatever happens so far as the management is concerned, the name of a man called Hilton is not allowed to appear on the building, on the stationery or in the advertising, but that it will be known for all time as the Queen Elizabeth hotel. I trust the committee will have opportunity to make inquiry into this unusual and, we consider, totally unnecessary arrangement which is damaging to Canadian prestige and would be a blow to Canadian pride.

That is all I am going to say on the subject. I am going to keep up my reputation for speaking briefly, stating the facts and presenting an unassailable argument.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. Knowles:

A good, solid C.C.F.'er.

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CCF

Herbert Wilfred Herridge

Co-operative Commonwealth Federation (C.C.F.)

Mr. Herridge:

I wish now to say a few words about the trans-Canada pipe line question. I do so because I was interested in the remarks of the hon. member for Hastings South (Mr. Foil well), when he urged that the government consider having this very necessary pipe line built by the Canadian National Railways. I was particularly interested to hear this proposal coming from an hon. member supporting the government. I thought it indicated that he had given serious consideration to the problem, one which is giving concern to a good many Canadians at this time.

Ever since we have talked about a trans-Canada pipe line this group has urged that such an undertaking should be publicly owned and under the management of the Canadian National Railways. This pipe line will be piping Canadian gas required by Canadian consumers. We in this group say, let Canadians build the pipe line, without paying tribute to any United States capitalist interests.

I think there are many arguments in favour of public ownership of this pipe line, and having it built under the jurisdiction of the Canadian National Railways. The railway company has a right of way across Canada, and no property problem would be- involved. There would be none of the complex difficulties in the matter of easements and other things which take so much time and often cost large sums of money. The building of the pipe line by the Canadian National Railways would mean lower construction costs because it could be serviced from the railway itself. Maintenance under public ownership through the railway company would be lower, for the same reason. If we were to undertake this great project in the near future it

could be a first step in an over-all plan for unemployment relief, as suggested earlier in debate by the hon. member for Winnipeg North Centre.

I suggest the government should float a tax-free bond issue for the building of the trans-Canada pipe line. This procedure has been popular in the United States in connection with undertaking certain large public works. Such tax-free bond issue would be subscribed to only by Canadian citizens, and would not be transferable. This procedure has been followed in the United States with a great deal of success in connection with large irrigation projects and the like. I think the hon. member for Peace River (Mr. Low) made reference to this in a committee we attended some days ago. These bonds would be of small denominations, perhaps from $100 up, and an opportunity could be given to hundreds of thousands of Canadians to subscribe to this Canadian-owned project. This would be greatly preferred to the procedure of asking United States interests to come in and build the line, and then reap the profits and have the control of this important public utility.

I am confident if the Canadian government were to undertake such a project it would capture the public imagination and would receive an excellent response from the Atlantic to the Pacific.

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March 28, 1955