November 4, 1919 (13th Parliament, 3rd Session)


Louis Joseph Gauthier

Laurier Liberal

Mr. LOUIS JOSEPH GAUTHIER (St. Hyaeinthe-Rouville):

Mr. Speaker, I have not taken much part in this discussion; I did not want to look as if I was desirous of embarrassing the Government by putting questions that they would not like to answer. But it has been my intention before this Bill is disposed of, to register my formal protest against the acquisition of the Grand Trunk Railway system under the present circumstances.

It is true that the question having been debated for quite a while it is very hard for any hon. member to offer new considerations. But I wish to express my personal views; I wish to take a stand for which I intend to be responsible before the people of the country.
It has been said that it is the duty of the Opposition to oppose. I say that it is the duty of the Government to enforce their decision with their majority, and I have no complaint to offer because the Government sees fit to press the passage of this Bill. They will be responsible for it; all that we on this side have to do is to offer fair criticism in order that the public may know that there is an Opposition in this House and that it is ready and willing to do its duty.
I submit, Sir, that the acquisition of the Grand Trunk by the Government is going to impose upon the Government a duty in connection with railway operation which will be more onerous to the Government than it was to the Grand Trunk Railway Company. That is the first point I wish to make.
It 'has been stated by the Drayton-Acworth Commission that $21,000,000 -had been paid to the shareholders by way of dividends which amount should have been invested for the maintenance and the equipment of the road. Since the submission oi that report it has been affirmed by experts that this amount of $21,000,000 has been increased to $51,000,000. I contend that if the Government- acquire the Grand Trunk Railway system they will be compelled to invest in that road $51,000,000 which ought to have been invested in it for maintenance and equipment, but which was divided among the shareholders. This puits a very onerous burden upon this country when the road is taken over by the Government.
But there is another point. On the amount of $180,000,000 which is to be submitted to arbitration the Grand Trunk Railway Company never paid a cent by way of dividends. It is stated that the stock representing this amount is valueless.
I am not a professor of the English language, but I would not be disposed to agree with this expression. This stock may be worthless as a dividend producing proposition; but it is not valueless, because the shareholders have invested $20,000,000 in this amount of $180,000,000. If the Government offers for arbitration this amount of $180,000,000 on which the Grand Trunk Railway system have never paid a cent of dividend, what will be the result? In this

country we have had experience in regard to arbitration in connection with a railway. There was in Canada a railway system known as the Canadian Northern, and when we decided to purchase 60,000 shares of that system, shares in, which not a cent had been invested, the people of this country were compelled to pay for that stock a price exceeding $10,000,000. This is the point I wish to make to the House and to the country. If in purchasing the shares of the Canadian Northern, in which shares not a cent has ever been invested, we have been compelled to pay more than $10,000,000, what will be the decision of the arbitrators when they put a value on $180,000,000 of stock in which $20,000,000 have been invested? It is a fair conjecture to say that we shall be compelled to pay twenty times the amount that we have paid for the Canadian Northern stock, and why not? The Grand Trunk Railway system is a system in operation; it is a going concern; $20,000,000 have been invested in that stock which has been worthless as a dividend producing proposition; but the value has been placed in that stock, and I am afraid that when the arbitration is over, we shall be compelled to pay to the new or to the old shareholders a sum equivalent to at least twenty times the amount that we have paid to the new or to the old shareholders of the Canadian Northern Railway system. For these two reasons I claim that the acquisition of the Grand Trunk by the Government of this country will impose upon the Government a burden more onerous to them than it has been to the Grand Trunk Railway system and its directors.
What has been the result of nationliza-tion in this country in connection with our railways? We own actually about 14,500 miles of railway, and the deficit for this year is nearly $18,000,000. If you add to these 14,500 miles of railway that we own, another 7,000 miles, you are going to face a deficit of at least one-third more than the deficit for the current year. So that you will have to pay first of all $51,000,000 to replace the amount that has not been invested by the Grand Trunk; then you are going to pay interest on the common stock which has never paid a cent of dividend, and you are going to load this country w'ith an annual deficit on our railways of at least $25,000,000 a year. This is no extravagant statement. In the United States, with its dense population, with manufactures in every city and town, with the immense increase that was made in
freight and passenger rates on the railways in that country-and it was claimed that last year the United States railways under government operation showed an increase of $865,000,000 in rates alone-what was the result? The result was a deficit of $850,000,000. With this immense country of Canada, thinly populated, with cities and towns situated far apart from one another, with the difficulties of operating our railroads during the winter season, is it possible to expect that we are going to make a success in operating these 22,000 miles of government-owned railways in this country when the American Government made a failure of their own railway administration during the time of the war when it was necessary to commandeer the railways in order to help the Americans to win the war, to transport as fast as possible soldiers, munitions and merchandise? Even after increasing the rates, the American Government have had to face a deficit, and they intend to give the railways back to their former owners. Yet this Government have decided to try again a policy that has proved a failure in the United States. .
Many things have been said in regard to the Grand Trunk Railway system, and I wish to put my views and suggestions on Hansard. I hold no brief for anybody; I speak on my own responsibility, and I intend to do my duty as I think I should do it. In 1903, the Grand Trunk Railway system entered into an agreement with the Government of this country. The Canadian people were to build 1,450 miles of railway from Winnipeg to Moncton, thus opening up new areas for colonization, and this occurred at a time when two new provinces had been given their provincial rights. The old provinces were asking for better terms, and the Government of the day decided that, instead of giving them better terms in the-way of subsidies, they would open up the undeveloped parts of the old provinces in order that with their own finances, they might be able to colonize and develop the old provinces. The Transcontinental was-built, but it was understood that after a certain period of time the Grand Trunk Railway system would lease it at a certain rental. The Grand Trunk Pacific and the Grand Trunk Pacific branches started building the parts of the road that they were compelled to build. In 1911, there was a change of Government, and a commission was appointed, and the result was that the Transcontinental was degraded. We have paid for that commission more than $60,000 to depreciate property belonging to the peo-

pie of this country, and we have rewarded the two commissioners. What has been the result? The degrading of the Transcontinental was done without Consulting the Grand Trunk who were to pay the rental of the railway after it had been completed. The Grand Trunk made out a case so strong that the Government of the day decided that the lease that was to exist between the Grand Trunk and the Government of Canada should be cancelled, and the Government took over the Transcontinental. By the degrading of the Transcontinental the Government have prevented the Grand Trunk from making connections with the Grand Trunk Pacific, and the Grand Trunk being unable to meet their obligations, the Government have appointed the Minister of Railways as receiver for the Grand Trunk Pacific.
The Grand Trunk Pacific may foe looked at from a different angle, but the fact remains that this was an undertaking entered into in the interests of the country by the Government and a private company. If the Transcontinental has been degraded it is the fault of the Government and not of the Grand Trunk, because the company was no party to the degrading of the road. Without the connecting link of the Transcontinental between the West and the old Grand Trunk system it was impossible for the Grand Trunk Pacific to operate successfully. By degrading the Transcontinental the Government cut the system in two. Is it fair for the Government, after altering the conditions of the contract they entered into with a private company, after changing the conditions of operation, to say to the company: You. must sell your road to the Government, and must accept our terms. The bargain for the Grand Trunk Pacific was entered into by the company in good faith, and was carried out as well as they could. It is not their fault that the Transcontinental was degraded. You cannot charge the company with the war, which has altered economic conditions generally. The Government claims that the only remedy is to buy outright the stock of the Grand Trunk Railway system. Just consider our financial position, Mr. Speaker. We have deficits every year and have to call on the people to subscribe loans. We are floating a Victory Loan now, and expect to get at least 1500,000,000. That loan has not yet been subscribed, but already officials of the Government are stating publicly that after it is subscribed there will have to be another appeal to the people for subscriptions.
[Mr. Gauthier.!
Under such conditions is it fair to say to the people of this country: We are not going to cut down our expenditures or curtail our extravagance, but shall go on as before, and further, we are going to ask you not only to make up our annual deficits, but to buy a road which is unable to make both ends meet; -you must put up the money. Not only is the bargain unfair to the Grand Trunk system and onerous for the Government, but it is unfair, and this is my third" point, to the people of this country.
I want hon. gentlemen to remember when I speak of the Canadian Pacific that I hold no brief for that company, but there is this argument to offer. We are proud of the Canadian Pacific Railway Company. It is a wonderful railway organization, the greatest in the world. Does any one suppose that the Canadian Pacific railway, when the Canadian Government is its competitor, will foe able to maintain its system in that state of efficiency of which we are so proud to-day? Although the National Railway system is operated by an independent board we all know who is responsible for its administration. I am not here to discuss that board, but I say it is impossible for a government-owned system to be administered as a private-owned system would be. We shall have to secure traffic, and the government-owned system will encroach on the rates, will give greater facilities, and break through the traffic regulations of this country, and who will suffer by that? The Canadian Pacific, because to meet the competition of the government-owned system they will have to do what the government-owned system does. The result will be that the dividends of the Canadian Pacific will be cut down, and the efficiency of the road impaired, and who will suffer from that? The people of Canada. If the Government were really anxious to make an experiment in the nationalization of railways I would look with more favour on a project to acquire the Canadian Pacific. If the Government are really in favour of public ownership, let them take over all the railways in Canada so that there will be no unjust competition. Just have one system. I do not know that it would be a paying business, hut you would have to risk that. If the Government want to experiment in the nationalization of railways let them buy roads which are on a paying basis, and not simply roads that are bankrupt or about to fail. Why in the name of

everything that is holy should the Government pick up only the railways that are unable to meet their obligations, and leave alone the railways that are operating successfully? I cannot understand that. It may be that the money-makers who would like to buy the shares of the Canadian Pacific would have to buy them in the open market and would have to pay a much bigger price than for Canadian Northern or Grand Trunk stock, because the Canadian Pacific is a paying road. To take over the Canadian Pacific would be a more sound policy for the Government to pursue, but it is the Grand Trunk system that is going to he acquired.
I cannot help smiling when I hear or read in Hansard the arguments made from the Government benches that the Grand Trunk is required as a feeder or connecting link for the national system. Now a connecting link cannot pay better in the hands of the Government than in the hands of a private corporation. If it has proved a failure in the hands of private owners I wonder what will be its fate in the hands of a commission appointed by this Government, when it is acquired under our presept peculiar financial circumstances, and in view of the burdens which the Government of the country will have to shoulder. In conclusion, Mr. Speaker, let me say that I have expressed my views on this subject not with any hope of influencing a single vote, hut rather to convince hon. members opposite if it be at all possible to do so, that there are more sides than one to a question and that every subject can be debated with perfect equanimity of mind and a sound and unbiased conscience.

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