March 30, 1909 (11th Parliament, 1st Session)

L-C

James William Maddin

Liberal-Conservative

Mr. J. W. MADDIN (Cape Breton South).

The resolution before the House has for its object the handing over to the Grand Trunk Pacific Railway Company of a sum of $10,000,000 for the purpose of completing the prairie section of the transcontinental line. The object sought is, in effect, to make the government of this country bankers for the Grand Trunk Pacific Railway to the extent of this sum. It is a unique position in this country; there is only one partial parallel to it in our history, and that was when the government of this country granted assistance in a somewhat similar manner Jo the Canadian Pacific Railway in 1884. Some hon. members have suggested that hon. members on this side were opposed to the building of the Grand Trunk Pacific Railway. I submit that hon. members on this side of the House will be found as faithful to their obligations in respect of public contracts as hon. members on the government side. There is no member on this side who does not feel that the people of Canada are bound by this contract and wedded to it, and they will favour the carrying out of the contract in full. There is no member on this side who is opposed to carry to its fullest completion the building of this railway. There may be a difference in method, but there is no member on this side of the House who has offered any suggestion that will delay the completion of this road for a fraction of a day.
The hon. member for West Lambton (Mr. Pardee) in his remarks this afternoon pointed out, as a precedent for this position-and sc did the mover of this resolution-that in 1884 the Liberal-Conservative government had advanced the sum of $30,000,000 to the Canadian Pacific Railway Company. The member for West Lambton said that the resolution now before the House was 'on all fours '-to use his own words-with the resolution brought down by Sir Charles Tupper in 1884. I take issue with the hon. member when he makes that statement. There is little or no similarity in the circumstances of 1884 and those of 1909 with regard to these railway lines. Let us look at the preamble of the Act of 1881 by virtue

of which the Canadian Pacific Railway Company was incorporated:
Whereas by the terms and conditions of the admission of British Columbia into union with the Dominion of Canada, the government of the Dominion has asssumed the obligation of causing a railway to be constructed^, connecting the sea-board of British Columbia with the railway system of Canada.
Until British Columbia entered confederation, we had no outlet on the Pacific seaboard. The American boundary line came down from Alaska, running along a great part of the Pacific coast, and there was only, proportionately, a small strip of the Pacific coast on British soil. It was necessary, in order to reach British dominions beyond the Pacific that British Columbia should be induced to enter Canada. And one of the inducements offered was that a railway would be built from ocean-to ocean. As one hon. member pointed out, there was then a p jpplation of less than 20,000 white people between Lake Superior and the Rocky mountains, and less than 11,000 beyond the Rocky mountains in British Columbia. The hon. member (Mr. Pardee) asks us to have faith in our country and in the resources and wealth of our country. I may tell my hon. friend that there were found among the pioneers of this Confederation in 1881 men who, under circumstances that called for deep faith, undertook the building of a railway of greater magnitude than that which is sought to be built at the present time.
The leaders of the old Conservative party were never lacking in faith in their country and the hon. member failed utterly in his attempt to draw a parallel between the resolution of 1884 and the resolution now before us. I have spoken of the population of the Northwest in 1881 when the Canadian Pacific Railway was being built. At that time the Liberal leaders then in opposition in this House said it was folly to undertake to build a railway through that country, that it contained nothing but buffaloes and wild Indians, and that a railway through it would not pay for its axle grease. The Canadian Pacific Railway commenced the work of construction. The government built the eastern part of the road at a cost of $28,000,000 and gave it to the Canadian Pacific Railway, they gave them a grant of $25,000,000 and 25,000,000 acres of land The railway was to be finished by May 1, 1891. In 1884, Sir Charles Tupper moved a resolution in the House to grant to the Canadian Pacific Railway a loan aggregating practically $30,000,000. What were the circumstances? The promoters and stockholders of the Canadian Pacific Railway had then spent $10,000,000 of their own money. Of their $100,000,000 of capital stock they had sold $65,000,000 and had thus raised
$63,000,000, every cent of which had been spent in the work of construction. They had then used the subsidies and had sold more than three million acres of the land grant given to them by the government. They had left on their hands stock to the value of $35,000,000 and more than 21,000,000 acres of their land grant in the west. Sir Charles Tupper in moving the resolution in 1884, submitted to the House a statement prepared by the Canadian Pacific Railway setting forth the amount of money expended, the amount of railway completed, and showing resources from which this money was derived, demonstrating to the satisfaction of the House that the moneys which had been raised from the sale of the stock of the company had been used in the construction of the road. As a matter of fact they had then not less than 1,370 miles of road completed and actually running, notwithstanding that it was only three year3 from the time they had entered into the undertaking. They were not obliged under their contract to finish the railway until May 1, 1891. Before submitting that statement to parliament, Sir Charles, Tupper sent two auditors to Montreal, Mr. Colling-wood Schreiber, now chief engineer of the Grand Trunk Pacific Company and Mr. E. Miall, to make an examination of the books and vouchers of the Canadian Pacific Railway in order to satisfy themselves that the report submitted by the Canadian Pacific Railway to the Minister of Railways was a true and correct report. The minister instructed these gentlemen to make such a close and accurate examination of the accounts as a business or banking concern would require before advancing or loaning money or entering into a partnership with a reliable business firm. The books of the company and the company's auditor and his staff were placed at the disposal of these two auditors. After a careful examination they certified the statement submitted to the minister to be correct.
Then it was shown that with the depression existing at that time, the railway presumably having no great future before it, the prospects not being very bright that the railway would ever be a paying concern and that the railway had received financially a black eye in the English money markets, that cablegrams and letters had been sent to the English money markets which affected the credit of the Canadian Pacific Railway. It must be remembered that the Canadian Pacific Railway did not have freight lying at the side of the track with which to begin earning dividends when the road was completed. You will see the vast difference between it and the Grand Trunk Pacific to-day. The Prime Minister in proposing the construction of the Grand Trunk Pacific urged

that whilst Canada had a sufficient number of open harbours, it had not enough railways to carry the freight to those harbours, and so it was proposed to build this great national highway. This railway was designed to go from coast to coast. It was submitted by the Liberal party in 1903 that the Grand Trunk Pacific would follow along the coast of Lake Superior and would seek a northerly route from that point, thereby opening up a new and heretofore untouched portion of Canada. What do we find in fact? From Port Arthur to Winnipeg the Grand Trunk Pacific practically parallels the Canadian Pacific Railway. From Winnipeg to the Rocky mountains it is at no time more than 100 or 150 miles distant and for much of that distance it is only from two to four miles distant from the main line of the Canadian Pacific Railway. To the north of it lies the Canadian Northern Railway which was built through the industry and business capacity of Messrs. Mackenzie & Mann, with merely the government subsidies. To the south of it lies the Canadian Pacific Railway, and the day the Grand Trunk Pacific is completed the freight is there for it to move. In 1884, when Sir Charles Tupper's resolution was before the House, the condition confronting the Canadian Pacific Railway was that when they completed their line their first freights out into that country were to be the immigrants and farming materials for the breaking of the soil to commence to raise the first crops to be moved. No such condition obtains with regard to the Grand Trunk Pacific. Their routed freight is lying there.
When the Prime Minister spoke of having this railway reach more of our seaports did he forget that before the Grand Trunk Pacific was undertaken we had a railway running into Vancouver, and into Quebec and Montreal on the St. Lawrence, that we had the Canadian Pacific Railway and the Intercolonial Railway running into St. John, that we had the Intercolonial Railway running into Halifax and Sydney, and that with railway connection via the Intercolonial Railway between Louisburg and Halifax on the Atlantic, and Vancouver on the Pacific, we had outlets all the year round with the existing railways.
But, what is proposed to be done by the Grand Trunk Pacific Company? They wish to have the building and owning of this railway out to the Pacific coast in order to have a feeder from the west and from the prairie provinces for the eastern section of their road. They have an object in view. They have as their Atlantic seaports the towns of New London in Connecticut and Portland on the Atlantic seaboard and the object in view of this railway company is to run in between the Canadian Northern on the north and the Mr. MADDIN.
Canadian Pacific Railway on the south, grasp the freight that is routed by these two lines and which would carry it to a Canadian seaport and translate it to the American seaports of the Grand Trunk Railway Company. If that be the object of the Grand Trunk Pacific it is nothing short of treason to this country that our own seaports should be robbed of the freight from the prairie provinces. The Canadian Pacific Railway Company had exhausted their resources, they had spent $10,000,000 of their own money, they had spent the proceeds of the sale of $65,000,000 of their stock, they had spent the money derived from the sale of over 3,000,000 acres of land, and every dollar was invested in the road and they had 1,370 miles in actual running order. There was a depression in the money markets of the world. The depression was not, however, even in the minds of the people at that time, of such a character as to seriously interfere with the Canadian Pacific Railway living up to their actual original contract. There was! nothing apprehended at that time that would interfere with the Canadian Pacific Railway completing their road on the 1st May, 1891. But, rather than go into the money market with their bonds at that time they proposed to surrender to the government the stock which they held and that portion of the railway that was completed, upon which there had been expended $63,000,000 from stock as well as the government subsidies paid up to that time. This was offered as a guarantee for the repayment of the sum which was asked to be loaned. One of the strongest considerations that moved the Liberal-Conservative party in 1884 to grant $30,000,000 to the Canadian Pacific Railway was that the railway would be completed in 1886, five years earlier than the contract called for. This railway was actually completed in 1886. What do we find in regard to the Grand Trunk Pacific? They were to have had their road completed by the 1st of December, 1908. Up to the present time we find, by looking at the returns handed down the other day by the Minister of Finance, that the amount of railway completed at present is 667 miles from Winnipeg to Wainwright and it is completed and working under construction, not absolutely completed but working under construction. After over five years of operation by this Grand Trunk Pacific Railway Company they have not one single mile of that railway completed and passed by the government engineers. They are operating, it is true, 667 miles under construction, but they have not one single mile of that road completed, whereas the Canadian Pacific bad 1,370 miles of railway completed be-

sides 239 miles of branches and 160 miles north of Lake Superior, which was very heavy work, was almost completed. The result was that the road was absolutely completed in 1886. In 1884 the Canadian Pacific Railway came to the government not pretending to be in the embarrassed condition that the Grand Trunk Pacific is in. All they said was that if they could get an advance of this money they would complete the road five years sooner than they had promised to do it. Bear in mind that time was an essential element entering into the contract at that time. When the people of Canada undertook to build the Canadian Pacific Railway the American transcontinental railway companies looked upon the undertaking as a huge joke. They did not think it would be possible for the people of Canada to finance and build a railway across the continent, but as time rolled on and and they saw that the work was being carried on they began to be apprehensive that they would have an active competitor in the Canadian Pacific Railway and it was they who were principally responsible for stampeding the stock of the Canadian Pacific Railway and making it hard for them to sell the last $35,000,000 of it. The railways of the western states thought that the Canadian Pacific Railway would be an important competitor of theirs and the Union Pacific sent out agents to canvass the country and get pledges of freight from Canadian territory for the American railway lines. It was of paramount importance that this railway should be finished five years earlier than the time specified in the contract in order to get Canadian freight routed over the Canadian route and brought eastward to the Atlantic sea-board. As a security for this loan in 1884 the Canadian Pacific Railway handing over absolutely all they were owners of in the world. I quote from the remarks of Sir Charles Tupper at this time. He said:
If there is default in payment of interest or prmapal, if by the 1st of May, 1892, every dollar of interest and every dollar of prin-oipal is not refunded to the government of this advance, they (Canadian Pacific Railway Company) propose that we shall become at once the possessors of the entire property of the Canadian Pacific Railway Company.
I ask hon. members of this House to compare the conditions that obtained in 1884 with the conditions that obtain in this year-1909. As my hon. friend from East Hastings (Mr. Northrup) has pointed out this evening this government is not in a position to become bankers for the Grand Trunk Pacific. The Grand Trunk and the Grand Trunk Pacific are so wedded together financially, by contract and otherwise, that they are, for the purposes of this resolution, inseparable, and I submit that our relations in the past with the Grand Trunk Pacific have been of such a character that we cannot accept from them in good faith the representations which they have submitted to this House at the present time. As far as has been made known to this House no steps have been taken by the mover of this resolution or any one upon the government side to verify the statements submitted by the Grand Trunk Railway. These two companies are practically inseparable and the people of this country should not undertake to be their bankers on such poor security as is being offered at the present time. Since this House opened on the 20th January last it has been a common thing, when estimates were being put through, to be met by minister after minister from the different departments with the complaint that the finances of the country were in such a condition that much needed as many public works were they were unable to undertake them at the present time. In New Brunswick and Nova Scotia important railway undertakings have been laid over by the government on the pretense that the country has no money. And if we cannot afford to spend a few hundred thousand dollars on important public works, what grave reasons are there why we should place ourselves under an obligation to plunge into the money markets of the world for ten million dollars to tide
company over The financial
the Grand Trunk Pacific their financial difficulties, statistics of Canada show that there are $400,000,000 belonging to the depositors of Canada in the various banking institutions of the Dominion, and I would like the Minister of Finance to tell me if any financial concern in Canada would advance one million cents on the security offered by the Grand Trunk to the government. I think not. We have been told by gentlemen opposite that the country endorsed the policy of the government in 1904. It is true that while approving in a general way of the construction of the Transcontinental Railway the Conservative party took issue with the government as to the best means to accomplish that end, and in a sense that became the main issue before the people. But the right hon. the Prime Minister on every platform assured the people solemnly that it would not cost them one dollar more than $13,000,000 to build the transcontinental railway from ocean to ocean, and the people took him at his word and endorsed his administration. But now these same people realize to t.heir great discomforture that the road is to cost $250,000,000. So long as Canada remains a borrowing country she must live religiously up to her public contracts, but every contract we have made with the Grand Trunk Pacific from 1903 down to the present moment has been flagrantly broken by that company. It was

improvident on the part of the government to enter into the contract of 1903; it was improvident on the part of the government to have changed that contract from time to time; it is improvident on the part of the government to do what they now propose. The contract with the Grand Trunk Pacific Company was conceived in unwisdom, conducted with unparalleled extravagance and improvidence, and we are now reaping as we have sown. The government has pledged the credit of Canada to relieve the broken fortunes of the Grand Trunk Pacific Railway Company until we have now invested in this concern not less than $200,000,000.
We are meeting with the fate of the gambler who foolishly only buys stock on margin and who must buy out the stock if he is not to be ruined. Why not let Canada buy out the stock of the Grand Trunk Pacific Company without risking any more margins on it? I say, Sir, that _we _ can consistently live up to our obligations with the people of the west and the 'people of the east by saying to the Grand Trunk Pacific Railway Company: * Every contract we have made with you, you have flagrantly broken; your contractual obligations with us are at an end, give us your vouchers for the money expended by you and we will pay you every dollar you have put into the enterprise, hand us over the railway and we will build it ourselves.' Anyway, if the country is to pay nine-tenths of the cost of construction, why should not that railroad become a national asset of the people? I would go further and say, that after we have completed the railroad, if need be we could hand it back to the company to operate, always providing certain restrictions with regard to the routing of the freight in order to preserve our Canadian seaports. In view of the disclosures made in the Public Accounts Committee with regard to the item of $162,000, and as to which the vouchers were subsequently burned, the government and the people of Canada should hesitate before advancing ten million dollars more to such a company. In the estimates brought down by the Minister of Finance it is shown that a further sum of forty-eight millions will be required, ten millions of which are being asked now. Why does not the Minister of Finance muster up courage enough to ask parliament for the full sum at once? Is it pretended that the Grand Trunk Pacific Railway Company can raise the forty million dollars more which is required to complete this road; is it not common sense to suppose that if they were financially in a position to do that they would not now be knocking at the door of the government asking for this money? I regret to have to think that this is not the last ten millions that will be demanded. What guarantee have we that the Grand Trunk Pacific can finance the other forty millions estimated Mr. MADDIN.
as required to complete the mountain section? Failing to get a satisfactory answer to that question, we discharge them from any further obligations with respect to this road, and assume the obligation of finishing it, and do it promptly, for the people of Canada. Let us lease it to these people, but let us build and own it ourselves.
The hon. member for West Lambton (Mr. Pardee) said that the hon. member for North Toronto (Mr. Foster) was wont to say that a great stage had been prepared for Canada and that we were the actors upon it; and he went on to ask, shall we raise the curtain and proceed to act, or shall we halt for a paltry $10,000,000 ?_ I would say, Mr. Speaker, that he might raise the curtain and show us vouchers for the expenditure of all the moneys that have been raised by the sale of stock, or all that have been paid bv this government by way of subsidy. He might show to the satisfaction of this House that these moneys have been spent legitimately for the purchase of right of way, for railway material or railway construction, and that there are no vouchers that_ they will be ashamed to show or be obliged to go and burn.
In conclusion I have only this to urge. Hon. members on this side of the House are as anxious for the hasty completion of this road as hon. members on the government side of the House; and it is, as I conceive, the duty of this government to cut loose from the Grand Trunk Pacific Railway Company, that company having violated every contract that it has entered into up to the present time, and take possession of the road, reimburse those people for every dollar they have spent on it, with interest up to date, and complete the road ouTselves and own it as a national asset for the people of Canada in the future

Topic:   GRAND TRUNK PACIFIC LOAN.
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