October 23, 1919 (13th Parliament, 3rd Session)


George Brecken Nicholson


Mr. G. B. NICHOLSON (Algoma, East):

May I at the outset be permitted to join with the member for Brantford (Mr. Cock-shutt) in expressing my congratulations to the hon. member for Prince (Mr. King), who has just taken his seat- in the House as leader of the Opposition? Perhaps I may be also permitted to say that I feel disposed to express my disappointment at the performance to which he has treated the House on this his first appearance since he was elected as member for Prince and leader of the Opposition. Some of us were looking forward with some degree of hope at least that upon entering the House the hon. gentleman would be able to clear up some of the mists which have apparently been hanging over the eyes and intellects of hon. members who sit around him in connection with the matter of the Grand Trunk purchase, or the taking over of the Grand Trunk system. But having listened to him intently; having taken notes of what he said and given attention to what he has

read; having examined the deductions that he made from the things which he read, I have reached the conclusion that the light which he has on the railway situation in Canada, particularly the light which he has had in regard to the proposal now before the House, is not very much brighter than the light which has been exhibited by the hon. gentleman who has been keeping his seat in this House warm for him during this session and the last.
The hon. gentleman has undertaken to show to this House-and without question with the intention of convincing the country, if he can-that t-he taking over of the Grand Trunk Railway system under the terms of the agreement outlined in the Bill now before the House will not constitute and will not consummate an act of public ownership. He bases his argument in support of that-and I must confess I was utterly amazed to hear him do ito-on the fact that the Government undertakes to continue to pay or to be responsible for the interest on the bonded indebtedness of the Grand Trunk railway. Will the hon. gentleman who, I presume, knows something about financing large institutions in this country, undertake to say that because the Canadian Pacific Railway Company agrees to pay the interest on its bonded indebtedness to the people who have purchased and own those bonds, the Canadian Pacific Railway Company or the shareholders of that company, are not the owners of the system? Would those who cheered so lustily for the statement of the hon. gentleman when hesaid that this would defer for a period ofat least thirty years the possibility of public ownership in this country say that, because a corporation pays interest on its bonds, it does not own the institution, upon which those bonds have been issued? The proposition of the hon. gentleman is 'so obviously absurd that it seems to me unnecessary to take up even a moment ofthe time of the House in arguing
against it. What this Bill purports to do and what the agreement authorized by this Bill brings into effect is nothing more or less than this: The Canadian people take possession, of the Grand Trunk Railway of Canada, subject to its bonded indebtedness and in accordance with terms that will be determined by a board of arbitration that is set up by this Bill. Just as soon as that board of arbitration has given its award, ownership of the Grand Trunk railway, as ownership is understood by any man who understands anything about the
matter, .passes absolutely to the Canadian people. The illustration given by the hon. member for Brantford (Mr. Cockshutt), in asking the hon. gentleman a question, illustrates the point exactly. The fact that a man has a mortgage on his house, that he may have a certain liability resting on the property that he owns, does not interfere in the least degree with his ownership. It is the title that passes. It is the Canadian people who will own, control and operate the Grand Trunk Railway of Canada.. They will do just exactly the same as any other owner; they will do just the same as if the Grand Trunk passed from the hands of one company to another; they will continue to carry the obligations that the Grand Trunk must always carry, and they will own the system. I almost came to the conclusion, as I heaTd the hon. gentleman leading up to his argument, that he was going to put forward as a basis for his conclusion, the theory that the only way by which the Canadian people could become owners of the Grand Trunk railway would be by utterly repudiating the bonded indebtedness. If that be the position he takes, why then, all right, we are on ground that we can discuss. If it be the feeling of the hon. gentleman that the Canadian people in taking over the Grand Trunk should repudiate the bonded indebtedness of that railway, that they should undertake to say to the bondholders of the Grand Trunk railway: We are not going to give you even the right to foreclosure under a mortgage, but we are going to- cancel the indebtedness-if that be his position, there is at least some degree of reason in it. He can be placed in the .same class as all those who believe in the confiscation of everything in the shape of real and physical property. If that be his position, the House and the country will clearly and definitely understand it. But if he proceeds to argue that when we purchase a property, when we agree to pay to the man who holds a mortgage on that property, the interest on his mortgage until such time as the mortgage is liquidated, as a result of that we do not get ownership, then he takes a position that cannot be justified and that he cannot defend before any man who understands anything about business transactions or the control of any institution of this description.
Let us see what will be assumed when we take over this railway. The Drayton-Acworth report, that we have heard a great deal about in this House and that every

member must agree went into the whole question of the physical condition and values of railways in Canada more thoroughly,
I presume, than any other commission or body that has ever investigated railways in this country or possibly on this continent, says that, the Grand Trunk railway ' cost-that is its value at the time the report was made-$127,000 per mile. The bonded indebtedness that the Government of Canada for the people of Canada -assume under the agreement constitutes an obligation against the * Grand Trunk railway of $49,000 per mile, and not one cent more. The Government says: We will pay the interest on the guaranteed stock and the bonded indebtedness, and we will leave to arbitration what, if anything, shall be paid in lieu of the first, second and third preference stock and the common stock of the Grand Trunk railway. In reality they practically wipe out one-half of the value of the Grand Trunk railway as set forth in the Drayton-Acworth1 report, leaving to arbitration what, if anything, shall bp paid for a sum of about $60,000,000 worth of first, second and third preference stocks, and in doing that they base their position on 'the Drayton-Acworth report that in itself stated that in their judgment there should be paid for the first, second and third preference stock a sum substantially approximate to $3,600,000 per annum for seven years, with a substantial increase at the end of seven' years.
I do not wish to detain the House at any length, and I am not standing here as one of those who are at all enthusiastic with regard bo public ownership of railways. On many occasions in this House I have made my position with regard to that clear, but we are dealing, not with a theory, but with an actual condition. The leader of the Opposition-I will accept the suggestion thrown out by the horn, member for Prince (Mr. Mackenzie King), and I will refer to the hon, member for Cape Breton North and Victoria (Mr. McKenzie) as the leader of the Opposition-has moved an amendment to this Bill and has spoken on it at some length. The hon member for Shelburne and Queen's (Mr, Fielding), who sits alongside of him, spoke also on this Bill at length. Now we have had the hon. member for Prince (Mr. King) speaking this afternoon at length. Has any one of the three intimated to the House or the country any alternative to the proposal made by the Government? What is the alternative that these hon. gentlemen suggest? It is simply: Wait, drift, dilly-dally with this question that has been pressing this country
for two and a half years. How has it been pressing? What is it that has brought the country into the condition in which it is? If my memory serves me correctly, the hon. gentleman was a member of the Government which brought about the condition that makes it absolutely necessary for the Government of Canada to take over this Grand Trunk railway. The hon. gentleman speaks of the people of Canada relieving the Grand Trunk of all its obligations in connection with the Grand Trunk Pacific. It has been a matter of amazement that any hon. member sitting on that side of the House who supported the Government which backed up the Transcontinental and the Grand Trunk Pacific should ever come to stand Up and utter even the words " Grand Trunk Pacific " in this House.
It is the iniquity of the Grand Trunk Pacific and the Transcontinental that has placed Canada where she is to-day in regard to this railway situation, and'which makes it absolutely necessary that we take over the Grand Trunk railway in order that by some means or other the people of Canada may be relieved of carrying a burden that can never be borne unless the National Railway system is rounded out. Will the hon. gentleman or any one else on the other side of the House tell us what he would do with the Grand Trunk Pacific and the Transcontinental without the Grand Trunk railway? Will they tell us?
The hon. gentleman speaks about traffic agreements and a gentleman's arrangement between railways, and all that sort of thing. Some of us know a little about the operation of railways, not very much, but we have given the matter some little thought, and I ask any practical railway man who has been close up to the management of a railway, what kind of a job could be made of operating the Grand Trunk Pacific and the Transcontinental under a traffic arrangement with the Grand Trunk. Where would we land? In just one of two positions: We would still further bankrupt the Grand Trunk Pacific and the Transcontinental, anid they are bankrupt now, or we would bankrupt the other road. We would be operating them in the first place at a double overhead cost of management, equipment, terminals and all that kind of thing, and in the end we would be working simply on the basis of a gentleman's agreement. Take, for example, the history of the United States railways and you will find that these " gentleman's " agreements have not been very effectual in making it possible for United States railways to operate successfully. There is only

one way in which public ownership of railways in this or any other country can be made a success, and that is by rounding out the system as it should be rounded out, spending a sufficient amount of money to develop the system as it requires to be developed, and then operate it strictly .under a business management, with a tariff for both freight and passenger traffic that will make it possible for the railways to operate without placing indirect taxation on the people of the country to support them.
Coming back to the question of what we are going to do with the roads that have been foisted on us by the Government of the hon. gentleman (Mr. Fielding) and those who supported him in this House, what are we going to do with the roads we now have if we do not take over the Grand Trunk? Will some hon. gentleman tell us how we are going to operate them? As a matter of fact, whether we take over the Grand Trunk or noit, we are up against this in connection with the Transcontinental, that some one will have to operate it for the next twenty years at a loss, but that is not the case in connection with the Grand Trunk Pacific, so far as operating expenses are concerned because it is within the hounds of possibility that it can be operated so as to make both ends meet. It is true that if we are going to deal fairly with the Canadian people as a whole, we can never look forward, and I use the word "never" advisedly, to having the Grand Trunk Pacific or the National Transcontinental earn interest on the money that has been sunk in those two roads, because there has been no equivalent value produced for the expenditure of that sum. I think the hon. member for Pontiac (Mr. Cahill) said this afternoon that it would be a fair proposal to say to the Grand Trunk: We will give you the National Transcontinental on the basis of $60,000,000, the original estimated cost. As a matter of fact, the National Transcontinental has cost about $215,000,000, and the Grand Trunk Pacific $260,000,000 or $270,000,000. Where did the money go? Not into the construction of the railway-not for one moment. It would be utterly impossible to trace where the money did go to, but any one who has investigated the matter for a single moment knows that the money did not go into the railway. Consequently, it would be unfair to competing railways or the people of Canada to expect the road to earn interest on anything more than its actual value, which is about 35 or 40 per cent of what it is supposed to have cost. .
Something has been said during this debate with regard to arbitration. The hon. member for Prince (Mr. King) was apprehensive ' that the country might get the worst of it in connection with the arbitration. Reference has also been made to the arbitration award in connection with the Canadian Northern. It is true that the arbitrators in that case found a value that the Drayton-Acworth Commission did not find. Whether they were justified in their finding or not, I am not going to argue. The position I have always taken is not to question the integrity of the judges on the bench of this country. I believe the arbitrators acted honestly. They may have been mistaken. Whether they were or not, I say that when the Canadian people got the Canadian Northern at the price they paid for it under that arbitration, even though they assumed all the obligations of the Canadian Northe. a, they got the best railway bargain that h, s ever been handed over the counter in this country. They got the cheapest rai'way that has ever been produced in this country, because the road was built by railway n. n and built honestly. The money all wei into the railway, and not into the pockeh of political friends of those who were behind the railway. Those are the facts.
There is one other point: What would happen if we did not take over the Grand Trunk railway? If the Grand Trunk Pacific, which the country has to take over because we have guaranteed the bonds to an amount greater than the value of the railway, and if the Transcontinental and the Canadian Northern are to be a successful system, one of two things is necessary. We must acquire eastern connections, either by purchase or by construction. Which are you going to do? It has been stated on the floor of this House that it would cost $100,000,000 to round out the Canadian Northern and the National Transcontinental in Eastern Canada. It will cost nearer to $200,000,000 to construct terminals and a gathering system in Eastern Canada that will make the operation of the National Transcontinental a success. When you have spent that $200,000,000, what have you got? You will have a reckless duplication of lines, which is what has bedevilled the whole railway business of this country. Would that be a wise policy to pursue, instead of acquiring lines that are already in existence? The hon. gentleman has referred to the necessity for economy. Would there be very much economy in the Canadian people undertaking to construct another set of terminals in the city of Toronto, for in-

stance, or in Ottawa, or in any of the towns throughout Ontario and Quebec, and duplicating lines already in existence throughout these provinces in order to make more difficult the profitable operation of the lines now there? Instead of doing that we should begin with eliminating some of the lines we now have, and one of the things that will be necessary before government ownership or any other kind of ownership can be a success is the elimination of certain of these non-productive competing lines that never were necessary and should never have been constructed.
In conclusion, if any hon. member in this House, or any business man outside of it, be he a railway man or not, will show me a way by which this railway burden that has been imposed on the people of Canada can be carried, other than by acquiring the Grand Trunk and rounding out the National Railway system and operating it as a public utility, I will be ready to hold up both hands for it.
If the hon. gentleman (Mr. King) can find any group of financiers in this country, either the Grand Trunk financiers or any others, who will take these burdens oft our shoulders, co-ordinate the railways, and give to the people the service they should get from them, then I would be willing to write off all the money that his friends pocketed but of the construction of the Transcontinental and the Grand Trunk Pacific and turn the whole thing over to them for nothing. That is the position I would take, and it is a perfectly logical position. But faced as we are with this tremendous burden from which we cannot escape and which was imposed upon us against the will of the people and notwithstanding the protests of those -who were best fitted to know what the railway situation was, what are we going to do to-day? I say to my hon. friends: Come forward with some alternative proposal that possesses intrinsic merit and show the Canadian people sane leadership in the endeavour to get out of the wilderness into which they were led by the hon. gentleman (Mr. King) and his friends in connection with this whole railway business.
At six o'clock the House took recess.
After Recess.

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