May 12, 1921 (13th Parliament, 5th Session)

UNION

George Brecken Nicholson

Unionist

Mr. NICHOLSON:

Steel ships. Now,
one other matter to which I wish to refer
Is the right-about-face which my hon. friend took on the subject of trusts, in an effort to make a case against the Government. The hon. gentleman said that in the city of Sydney, I think, or at all events in his own city, there was a steel and coal trust, who were squeezing the very life out of the Canadian people by the extortionate prices they were charging for their goods. In the very next breath, however, he tries to make a case against the Government because they had not forced the Canadian National Railways to pay this trust a price for its goods higher than the price at which they could buy the same goods in other places. But that is on a par with the hon. gentleman's arguments with regard to the management of the Canadian National railways. He condemns the Canadian National Railways for not adopting business management, and then he immediately turns round and censures them because they do not pay any attention the importunities of a member of Parliament to buy goods in his constituency when they can buy the like goods at a less price in other parts of the country.
The hon. gentleman bases a very plausible case on the fact that there are men in the city of Sydney who are out of employment. Well, there are men out of employment in Ottawa, in Montreal, in Toronto, in Winnipeg, in Vancouver,-men who could be put to work building locomotives and cars, laying tracks and building bridges, and doing works of this kind for the Canadian National Railways, if the Government would furnish the money to meet exorbitant rates. Would it be good business management on the part of the Canadian National Railways to embark on a policy of that kind? If the efforts of the hon. member for North Cape Breton and Victoria can influence the management of the Canadian National railways in any one case, where will it end?
My hon. friend made the statement that it matters not how hard the Government may try-I think these were his words- "we are not going to be drawn into a contest on the tariff." He says: "We will fight you on shipping, we will fight you on the railway question, we will fight you on anything else; but we had a convention in the city of Ottawa in 1919, and we drew up a platform and laid down a set of political principles which we claim to be identical with those of our friends immediately alongside of us, and you cannot draw us into a political contest on that platform; nothing doing. We are going to get away

from that platform,"-just as the hon. member for Shelburne and Queen's got away from it by moving the amendment which he proposed to the resolution to the Minister of Finance.
The hon. member found fault because the Government of Canada had granted credits to European countries to enable them to buy Canadian goods. Let me express my personal opinion on that subject. I think that if it were possible for Canada to continue granting credits to European countries to enable us to sell our goods to those countries, Canada would not be passing through the period of depression which she is experiencing at the present time. As I say, that is merely my own opinion. The hon. member said that if it had not been for these credits, and for the fact that thereby an avenue had been opened up through which Canada could export pork, beef, butter, cheese, etc., the prices of these commodities would have been depressed . down to a point that would have made it very much easier for the Canadian people to buy these things. I wonder what my hon. friends of the Progressive party think of a policy of that kind. The hon. member would make it so difficult to export the surplus products of this country that those products would be dumped on the market in such volumes that the Canadian people could buy at prices below value. Now, that is a sample of my hon. friend's political opinions.
Coming to the theme upon which-1 wish particularly to address the House for a few moments, namely, the Canadian National railways, I desire to make, first of'all, a brief statement by way of introduction. I believe I have the support of the House and of the country when I say that there is perhaps no more difficult question before the Canadian people to-day than the railway situation. I doubt whether there has ever been before this Parliament a civil question of greater difficulty or of a more complex character than the proper solution of the railway problem as it presents itself at the present moment. I am not going to go into the history of the railway question; I shall not refer to the way in which we got into this position. I do not believe we should get very far if we entered into any discussion of that kind. In my opinion, the only solution of the problem will be found in facing the situation as it is and in endeavouring if we can to find a solution for it. One of the things which, I think, are making it more difficult to solve the problem is the tendency
throughout the country to exaggerate the real situation. I do not know of any matter that has ever been so manifestly misunderstood, and in connection with which there seemed .to have been, on the part of some persons at least, so great a desire to misrepresent things and to create in the minds of the people the impression that the whole affair was absolutely insoluble- in other words, to break down the morale of the people on the whole question. Why that is I do not know, but as indicating the truth of this statement and the extent to which people go in that regard, I wish to quote some figures published in the Montreal Star of March 19, and issued by Mr. J. L. Payne, at one time statistician of the Railway Department. I have no idea what induced him to issue the statement he did. He may have issued it out of a desire to state the facts as they were before the people. But be that as it may, the statements are so exaggerated that one can only reach the conclusion that they were published with the intent of leading the public to believe the situation was something entirely foreign to what it is. Mr. Payne sets out that the total liability the peonle of Canada are carrying on ac. count of the Canadian National Railways is $2,274,125,057, made up as follows:
Intercolonial $563,000,000
Canadian Northern 624,000,000
Transcontinental 250,000,000
Grand Trunk Pacific 279,000,000
Grand Trunk Pacific branch lines. 17,000^000 Grand Trunk Railway of Canada. . 464,000,000
Canadian Northern branch lines. . 10,000,000
Quebec and Saguenay ' 8,146,189
Quebec Bridge 22,000,000
Canadian Northern System 35,000,000
In order to arrive at these figures Mr
Payne puts the original cost of the Intercolonial railway and its branches at $152,300,044 and he brought that up, on a compound interest basis, to the present figure of $563,218,701. Now, as I said a moment ago, if I can understand the figures at all, they were put forward with the object of leading the people of Canada to believe that they were carrying these obligations because of having launched on a system of publicly-owned railways. But let us look at the figures for a moment and when we do . so we find that the liability on account of government-projected lines, the Intercolonial and the Transcontinental, amounts to $813,218,701 which if taken from Mr. Payne's total leaves $1,460,906,316. Carrying this calculation a little further we find that according to the last statistical report at present available, and prepared by Mr. Payne himself, the

bonuses granted to privately-owned railways amounted to $161,398,696, to which is to be added guarantees earned of $344,672,933, and the proceeds from the sale of 44,648,123 acres of land which, put at $2.25 per acre, gives $100,345,276 making a total of $606,504,905. Applying to these the same method of calculation as Mr. Payne applied to the Intercolonial, and compounding the interest afterwards, we find that it makes a total liability on account of subsidies to privately-owned railways of $2,426,019,620. Add this to the liabilities given by Mr. Payne himself on account of the Canadian Northern, and Grand Trunk and Grand Trunk Pacific railways and the grand total is $3,332,925,936 for which, on the basis of Mr. Payne's calculation, the people of Canada would be responsible on account of their direct assistance to privately-owned railways, as against $813,218,701 on account of publicly-projected railways. But from the last figure we should take $250,000,000 on account of the National Transcontinental Railway, which arose out of a contract entered into by a privately-owned railway, the Grand Trunk. This reduces the amount to $563,218,701 on account of publicly-owned railways as against $4,082,925,936 on account of privately-owned railways. If we wish to pursue this method of financial calculation to its logical conclusion and take in the moneys we have spent on canals, river improvements, wharves, and all that kind of thing we would find we have an amount equal to all that has been spent on railways, and it would bring the total liability on account of our transportation systems up to a figure between -seven and eight billions of dollars.
Now, Mr Speaker, my only object in presenting these figures at all is to show the length to which one can go in exaggerating a situation such as this, and also, if possible, to show the desirability of finding out ourselves, if we can, what the actual position is. It may be true that worked out on a strict basis of financial calculation, or a book-keeping basis, from the time of Confederation up, our liability on account of the Intercolonial railway is what Mr. Payne has stated it to be; but the same thing applies, in an equal degree to our canal system, our river improvements and everything else of that kind that we have. [DOT]
In this connection what seems to me to be a vital point is that it is
10 p.m. not fair to the Canadian National Railways, that the situation should be so exaggerated. What we want to know is what our actual obligations are in connection with these railway systems and what they must earn annually to pay their way, confining ourselves strictly to what properly belongs to the railway, and then from that standpoint endeavour to work out a plan by which we can make railways carry their own obligations. The fact is that we have these railways, approximately 22,000 miles in extent, projected into every part of this country from the Atlantic ocean to the Pacific-railways that are absolutely necessary to the industrial life of this country and railways, in very many cases, without which we cannot possibly get along. It may be difficult but let the load be as heavy as it may be, we have to carry it. We have to operate these railways, we cannot get away from it, and the question simply narrows down to this: what does the whole thing mean in dollars and cents and is there a solution for the difficulty.
Starting from that point let us see what the annual obligations are for which we are responsible in connection with these railways. I take first the Grand Trunk, and just let me say briefly that my reason for taking the Grand Trunk is that I look upon it as an absolutely essential that the Grand Trunk shall ultimately become parr of the Canadian National Railway system no matter what scheme we may later develop for its operation. On five per cent Grand Trunk debenture stock the obligation is $1,694,409; four per cent Grand Trunk debenture stock, $4,845,104; four per cent guaranteed stock, $2,430,000; on the first, second and third preference and common stock, the value of which is being arbitrated, $2,570,000; total $11,540,320. Which for the purposes of reasonable calculation should be reduced by $1,285,000 which is equal to one-half the amount of the possible award under the arbitration, leaving a net balance of fixed charges against the Grand Trunk Railway, of $10,255,320. On the Canadian Northern-as per statement of the Minister of Railways to be found on page 1052 of Hansard-$24,155,988; Grand Trunk Pacific $9,332,776, less the amount which should properly be written off on account of over-capitalization, $7,228,600, leaving the amount properly chargeable on account of that railway at $2,104,176. I want to say a word with regard to that. It will be noted that I have mentioned an amount of $7,228,600 annually that should be written off on accoupt of ever-capitalization on the Grand Trunk Pacific Railway. My reason for doing

that is, that we should never expect the Grand Trunk Pacific Railway to earn interest on money that did not actually go into the railway, and no man who gives the question even the slightest degree of study whatever will undertake to argue that the total amount of liability charged against the Grand Trunk Pacific ever went into the legitimate construction of a railway.
Now, let us take the National Transcontinental Railway and the liability on this line means a carrying charge of $12,500,000. Prom that again we should write off $7,150,000 for identically the same reason, leaving the annual charge $5,350,000. For purposes of operation, however, the amounts set against the Grand Trunk Pacific and the National Transcontinental should be eliminated for at least a period of ten years. As a railway proposition neither one of them can be expected to earn its operating costs and fixed charges for at least a period of ten years, and if the Canadian people entered upon an enterprise of that character they have a right to carry the load without expecting the railways to earn it. That leaves the net amount properly chargeable to the operation of the railways at $35,696,309.08 on account of present obligations. To this should be added the carrying charges on the operating deficit for 1920 on the Canadian National railways, amounting to $36,842,970.17 and the deficit in fixed charges on the Grand Trunk of $6,563,091.33, making a capital charge of $43,406,061.50, which means an annual charge of $2,387,333.37.
Then comes the question of completing and equipping the lines, for which approximately the sum of $250,000,000 will be required, upon which there will be an annual charge in round figures of $13,750,000, making the total annual fixed charges on all of these 22,000 miles of railway $51,833,642.45.
This year we have deficits in operation of $36,842,970.17, made up as follows:
Canadian Northern $16,258,579 80Canadian Government.. .. 10,449,876 43Grand Trunk Pacific
10,134,513 94
In making up this statement of carrying costs it will be noted that there has been included an annual charge on the sum of $250,000,000, estimated as required to bring the lines up to standard. In putting in that figure and making that statement I do so for the reason that I am convinced that the sooner the Canadian people get to know what is the exact situation the better for them and the better for the railways them-
[Mr. Nicholson.!
selves. I will come to the details in regard to that a little later.
In the meantime the question is: Is this financial obligation of such a character as to cause us to feel that it is greater than the Canadian people can legitimately face in connection with these transportation systems? Let us get the matter clearly in our minds. We have 22,000 miles of railway, and the problem is to make these railways earn their operating costs and a capital charge of $51,833,642.45. Again the problem is, can we do it? My personal opinion is that we can. The experience of the past two years would indicate that we cannot, but the question is: Has that experience been of such a character as to convince us that these railways are destined to be a failure? Again I say my personal opinion is that not only do I believe that the railways will not be a failure, but I believe that, properly co-ordinated, properly organized and efficiently operated, thew will ultimately prove to be a very great asset to this country.
In looking for an answer to that, however, we might first ascertain what our situation is in regard to railway mileage. It has been freely stated from time to time in this House and by the press of this country that the railway mileage in Canada is entirely out of proportion to the population-to some degree that may be true-and that certain of that railway mileage should be eliminated. Just here let me say briefly that in the co-ordination and organization of our Canadian National railway lines there are duplicate lines that should be wholly eliminated, situations where two lines of railway owned by the Canadian people are running so close together that you can throw a stone from one train to the other. The point, however, is, have we reached the place where our railway mileage bears such a proportion to the business that the railways have to do that it cannot be expected that they can earn their operating costs and fixed charges and at the same time give adequate service at reasonable rates.
On the subject of railway mileage in proportion to our population, frequent reference is made to the mileage of our railways as compared to that of other countries. We must always bear this in mind, however, that with the same mileage of railway you cannot serve people scattered over a country the size of the Dominion that would serve the same number of people if they were situated on the island of Montreal. And yet if all the

people of Canada were living on the island of Montreal they would bear a relation to our railway systems that the same number of people do who live in the cities of Liverpool and Manchester. It is true that our railways may have been projected a little too soon, but comparing Canada with the United States it will be found that we require to less than double our population before our railway mileage in proportion to population will be just about equal to the railway mileage of the United States in proportion to the population of that country. I do not think that we are anticipating the future to too great an extent when we say that the time is not far distant when our population will be doubled.
But making a comparison with conditions in Canada before the lines of the National Transcontinental, the Grand Trunk Pacific and the Canadian Northern were projected, on the basis of the traffic producing possibilities of the country, it will be found that the comparison of freight tonnage available for all Canadian railways is as follows:
In 1900 total number of ton of
freight handled 35,946,183
1905 50,793,957
1910 74,482,866
1915 '. .. 87,204,833
1919 116,699,572
Or an increase just about three and a half times within the period.
The number of passengers carried in 1910 was 2,466,729,664; in 1919 that number had increased to 3,074,664,369. The gross earnings of all Canadian railways in 1910 were $173,956,217; in 1919 they had grown to $382,976,901, or nearly two and a quarter times. Speaking on this subject a short time ago the hon. member for Halifax (Mr. Maclean) told this House that we did not handle as many passengers on our railways in 1920 as we did in 1919, and on the strength of that statement he built up an argument to show that we had gone over the peak, so to speak, and that our railway business was now declining. The explanation is very simple. During 1919 our army was brought back to Canada and demobilized and the men were sent to their homes, making a tremendous increase in the number of passengers carried. From those figures it will be seen that we have more tonnage and more passengers per mile of railway than we had before the Canadian National railways were projected.
Let me give one other comparison. In 1895 the earnings of all the railways in
the territory now served by the Canadian Pacific Railway, the Canadian Northern, the Grand Trunk Pacific and the National Transcontinental were in round figures $38,000,000. The earnings of the railways in the same territory in 1920 were $297,745,297.76, an advance of almost eight times. I am pointing these things out because I feel that the situation has not been understood, and, as I stated a moment ago I think the sooner the people get to know just what the situation is the easier it will be for us to find a solution.
All this, however, does not get us away from the fact that there are deficits, and serious deficits, and for these we have to seek a remedy. In looking for an explanation one naturally turns to the report of the Board of Directors of the Canadian National Railways submitted to Parliament by the hon. Minister of Railways (Mr. Reid): I may say that I was personally very much disappointed when that statement was presented by the Minister of Railways as the report of the Board of Directors of the Canadian National Railways to the Government and to Parliament. Faced with such a serious situation in connection with this railway problem, it seemed to me that the Board of Directors should have made a complete survey of the conditions and should have stated to the Government and to Parliament in plain terms just what their opinion was as to the solution of the difficulty, if they could suggest any. If they could not suggest a solution, they should have come forward and said frankly that they looked upon the successful and economical operation of the Canadian National Railways as an impossibility. But when you scan the statement from end to end you find but two references to the deficits or to any possible solution of the difficulty, to any possible remedy for these deficits. One is the statement to be found at page 1053 of unrevised Hansard, in which the hon. minister stated that the management figured on considerable reduction in the deficits on operation owing to the curtailment of train services, reduction of maintenance forces, and other economies. He went on to say that they also expected a readjustment in the price of materials and in the wage schedules and working conditions. Again, on page 1055, the minister states that the solution of the problem is one which will require joint action by the management and employees. With the exception of the reference to the curtailment of train services, these statements

referring to prices for materials, wages paid to employees, as the result of the several McAdoo awards, etc., do not in my judgment present that comprehensive review of the whole situation which I think the Government and the House had a right to expect from the Board of Directors of the National Railways, faced as they are and we are with present conditions.
_ As to the added cost of material and the increased wages paid to employees, as I view the situation these are merely details in connection with the whole problem which will naturally and essentially work themselves out. If excessive rates are in effect, if there are inequalities in services, I am confident that the common sense of the men and of the operating officials will, if the problem is properly taken hold of, work out an adjustment which will be satisfactory to all parties. The whole record of the relations existing between railway operators and railway employees during the last thirty years is of a character to justify the conclusion on the part of any one who studies the question that railway employees will not and do not ask anything unreasonable.
Just here, Mr. Speaker, I wish to refer briefly to what I consider to be a campaign of unjust misrepresentation which is going on from one end of the country to the other with regard to the railway employees of Canada, not only on the Canadian National railways but on all railways. A systematic effort has been made in this House, through the press and by statements given out by certain railway officials to create the impression that the employees on the Canadian railways as a mass are receiving a base rate of wage out of proportion to that received by any other class of workingmen in this country, I wish to say, Sir, that such is not the fact. You will find that the base rate of remuneration paid to a railway conductor, a train despatches a machinist or a locomotive engineer on the Canadian railways is not as high as the base rate paid to bricklayers in the city of Toronto, not as high as the base rate paid to stonemasons working on the tower of this building. These men- railway conductors, locomotive engineers and train despatchers, are charged with the most responsible duties that any class of men can be charged with in this country. Let me just give you one little illustration: go to the train despatcher's office in either of the railway terminals in this city, the Canadian National or the Canadian Pacific, and what do you find? You fMr. Nicholson.]
find a man going on duty to-night at twelve o'clock and sitting down before a train sheet having to do with thirty, thirty-five, forty, perhaps fifty trains running in each direction on the section of line over which he has control. It is his business to keep these trains clear of each other, and if he makes a mistake of one single word,
* yes, in many cases of one single letter in a train order, he not only loses his position but he renders himself liable to prosecution before the courts on a charge of manslaughter. Many of these cases are happening from one end of the country to the other; yet we find the chairman of' the Board of Railway Commissioners going from coast to coast creating the false impression that these men are paid at exorbitant rates. I say again that the base rate upon which their remuneration is calculated is not as high as the base rate upon which is calculated the remuneration of bricklayers in Toronto.
Returning to the other matter referred to, namely, the curtailment of train services, an analysis of the operating results on the several parts of the Canadian National railways leads to the conclusion vthat when the Board of Directors stated that they expected to reduce the operating deficit because they did not expect to handle so many trains and because they expectec to effect certain economies in that regard they were speaking from actual experience If the whole operating statement'of the railways is taken into account and analysed it will be found that the more traffic they handled the worse off they were; that on the parts of the line where they had the heaviest traffic they sustained the heaviest deficits. If you carry that to its logical conclusion you will say at once that if you reduced the whole National Canadian Railway system to impotence, to a point where it would have no traffic at all, you would thereby reduce the annual deficits. There is something in that; I expect you would, on the basis of the statements that have been made.
In that connection I would like to refer briefly to what the operating figures really are. The Canadian Northern operating revenue for 1920 was $6,764 per mile; operating cost, $8,414, a deficit of $1,650 per mile. On the Grand Trunk Pacific the operating revenue was $5,278 per mile, the operating cost $8,993 and the operating deficit $3,715. On the Canadian Government Railways the operating revenue was $10,536 per mile, the operating cost, $13,135, and the operating deficit $2,559. In making up the returns of operating revenue

the report does not give the revenues of the Intercolonial and the Transcontinental separately, but it does give the operating deficits separately. Working it out on a mileage basis-and I would like to emphasize this point, the result is as follows: the operating deficit on the Intercolonial was $4,325 a mile, and on the Transcontinental-that part of the line running from Moncton to Winnipeg, the leanest part of the whole system-$1,386 a mile, bearing out the statement of the directors themselves that by reducing the number of trains-by doing less ^business, if lyou will-they hoped to reduce the deficit.
Let us make a further comparison. The figures given in the statistical report of the Railway Department for 1919 show that the operating revenue of the Intercolonial Railway was $16,776 a mile, the operating cost $18,842, showing a deficit on the Intercolonial for that year of $2,066. Compare this with the operating revenue and operating cost of the Canadian Pacific Railway. For the same year it will be seen that, with an operating revenue of $13,156 a mile, the Canadian Pacific had an operating cost of $9,731 a mile. Just let me repeat that. While' the Intercolonial, with an operating revenue of $16,776 a mile had an operating deficit of $2,066 a mile, the Canadian Pacific, with an operating revenue of only $13,156 a mile, had an operating surplus of $2,421 a mile.
What seems to me to be an illuminating comparison, can be drawn between the operating cost of the Canadian Pacific and the operating cost of the Grand Trunk Pacific. In 1919, the last year for which a statistical report is out, the operating cost of the Canadian Pacific was $9,731 a mile. In 1920, the operating cost of the Grand Trunk Pacific was $8,993 a mile, or a difference of only $738 a mile. When you turn to the operating revenue, you find that, with an operating cost of $9,731 a mile, the Canadian Pacific earned $12,152, as against $5,278 earned by the Grand Trunk Pacific with an operating cost of $8,993 a mile. If those reports mean anything, they mean that, as the system is operated at present, the more traffic the lines handle, the greater the deficits that we are going to have. Is the conclusion, however, that the only way to reduce the deficits on those lines is to reduce the business, an inevitable one? Is it wholly unavoidable that we must, of necessity, pay more for carrying a ton of freight a mile than we receive for carrying that ton of freight a mile? All
the figures so far presented would bear out the contention that that is the situation. But let us examine the matter just a little closer in order to see whether these figures are wholly justified. Let us take the mileage earnings for 1919 and 1920 on the Intercolonial, Grand Trunk and Canadian Pacific. In 1920, the Intercolonial had an operating revenue of $16,776, the Grand Trunk, $19,942 and the Canadian Pacific, $13,156 a mile. Hon. members will note that both the Grand Trunk and the Intercolonial had greater operating revenue per mile of their line than the Canadian Pacific had. In 1920 the operating revenue of the Intercolonial increased to $19,629, that of the Grand Trunk to $23,528 and that of the Canadian Pacific to $16,164 per mile. That shows that, in 1919, the mileage earning of the Intercolonial was 22 per cent more than that of the Canadian Pacific and that the mileage earning of the Grand Trunk was 34 per cent more than that of the Canadian Pacific. In 1920, the comparisons were 18 per cent for the Intercolonial and 31 per cent for the Grand Trunk higher than the mileage revenue of the Canadian Pacific. If the ratio of operating cost to operating revenue had been the same on the Intercolonial and Grand Trunk as it was on the Canadian Pacific, the net result would mean a profit on the Grand Trunk of $12,800,000, and a profit on the Intercolonial of $9,056,495, or a total net revenue, instead of deficits, of $21,856,495. If we take this figure of $21,856,495, the operating revenue that we might reasonably have expected from the Grand Trunk and the Intercolonial, it would reduce the fixed charges to be provided by the people of this country through Parliament to the sum of $29,977,147, provided always, of course, that the other portions of the lines had earned their operating costs. In any ease, it would reduce the operating deficit by the sum of $6,549,629.48, the amount of the deficit on the Intercolonial alone.
My point in connection with this is as follows: Is there any good reason-why the Intercolonial railway and the Grand Trunk, projected and built as they were, equipped as they are, running through a densely populated country with a traffic averaging 20 per cent greater than that which the Canadian Pacific has on the whole of its mileage, should not be able to earn their operating costs and fixed charges? I say at once that there does not seem to be any good reason why they should not earn their operating (osts and

fixed charges. Right there is where I believe we touch the vital point. Bring the operating efficiency of the Canadian National railways up to standard, and our deficits will be automatically wiped out. I do not wish to take a harsh position. Every one must recognize that the organization of a railway system such as the Canadian National railways is not a simple matter, and we - have no right to expect that these railways should earn their operating costs and fixed charges, as a whole, in the first few years of their existence. But there does not seem to me to be any good reason why two lines such as the Intercolonial and the Grand Trunk, should not earn their operating costs and fixed charges, if nothing more.
Just one other illustration. What was accomplished on the National Transcontinental from Moncton to Winnipeg last year, which is as I said before, recognized as the leanest part of the whole Canadian National system, where the operating deficit was brought down to a little more than a thousand dollars a mile, is evidence of the fact that the application of efficient operating methods on all parts of the system, should, at least, make those lines maintain their operating costs and gradually work up to the point where they could earn their fixed charges. I am aware that it is easy to make abstract statements and say what ought to be done, when it may not be so easy to say how it could be done; but there are certain general principles underlying this whole question that are applicable, and I believe a study of the whole operating figures will convince any one, at all familiar with the matter, that it is possible to bring those railways up to such a state of efficiency that they will earn their operating costs and all of their fixed charges, including interest on the capitalized deficits that may occur on parts of the line during the next five to ten years.
In a statement given to the press by the Board of Directors of the Canadian National Railways a short time ago, it was stated that this whole matter was a financial one. It is a financial one in this regard: either the railways must either earn the money with which to pay their operating costs and fixed charges, or the people of Canada will have to pay that money out of their pockets. But in the final analysis, the problem resolves itself into nothing more and less than the proper co-ordination of a great national system of railways and their efficient and economi-

cal management. The question is: Can those railways be so organized? I believe they can; but they can be organized only if, as I said at the beginning, we face the issue fairly and squarely and set our minds determinedly to find the right solution.
At the beginning of my remarks I gave a figure of $250,000,000 as the sum that would be required to put the whole Canadian National railway system into such a state of efficiency as would make it possible to operate it economically. That is a large figure. I mentioned that to a gentleman a few days ago, and he said: "If you went out and told the Canadian people that they would be expected to spend an additional $250,000,000, on the Canadian National Railways, they would say: "Scrap the
whole outfit." We are faced with one or two alternatives. Either we shall have to spend the money, or we might just as well scrap the whole outfit. You cannot run a railway any more than a business, if it is not properly equipped. Before you can operate a railway you must have
the railway itself. You cannot simply run a railway along a barbed wire fence, or on a trail that you may trace out through the bush. You must have a proper road-bed to run it on; you must have proper equipment, proper terminal facilities, round-houses and everything else that goes into a railway. After all, if we could get away from the situation we are faced with in 1921 of putting $70,000,000 into the Canadian National railways to wipe out the deficit on the roads, by spending enough money to bring the railways up to a point where they can be operated efficiently, would it be good business to do that, or would it not? Take the case of any other business you like. Give a man 1,000 acres in Western Canada; let him spend money on it, fence it, and erect buildings on it, and get it all ready for cultivation. After he has done all that, if he only has machinery and equipment enough to cultivate one-tenth of his land he would not very easily earn his operating costs and fixed charges on that
1,000 acres, but if he spends money enough to equip himself with the proper machinery there is a possibility that he will make the thing a success-and the same thing applies to the organization and operation of the Canadian National railways.
In 1918, when the subject of the Canadian National railways was before the House, I took the liberty of making a statement with regard to the then existing conditions on the group of railways comprised

in the Canadian National railways and the Grand Trunk, and I gave the estimated cost of bringing these roads up to standard. That will be found in the Hansard of that year, from pages 2041 to 2051. I have given the situation further study and I have reached the conclusion that the statement that I made at that time was as close to being correct as it possibly could be. I at least have found no reason to change the estimate that I made at that time, and in making that estimate I had the assistance of men who know something of the railways of this country. It is difficult to make an absolutely accurate estimate of the present position for the reason that very considerable sums of money have been expended both on the Canadian National and Grand Trunk railways, the details of which are not available. There are, however, certain facts manifest to any one who will study the reports at hand and the situation generally, that enable us to reach a fairly accurate conclusion. To furnish the lines at present under the management of the Canadian National railways with freight cars will take approximately $75,000,000, and for passenger cars $20,925,000. This would provide approximately 20,000 standard freight cars, 1,500 flat cars, 1,000 stock cars, 1,000 coal cars, 1,000 refrigerator cars, 2,500 miscellaneous and road cars, and 150 tank cars, and others; I need not go into the details.
For locomotives, the sum of approximately $40,000,000 would be required, and this would provide 550 modern passenger and freight locomotives of the different types required, and from 200 to 225 switch engines, making a total for rolling stock alone of $135,000,000.
In 1919 I, put the sum required to bring the Canadian National railways up to standard in road-bed, intermediate and terminal facilities, round-houses and water services at $75,000,000, the sum required for the same services in connection with the Grand Trunk Pacific at $25,000,000, and for the Transcontinental $22,000,000. Since that time very considerable and substantial improvements have been made on these lines, and the merging of the Grand Trunk with the Canadian National railways will reduce by a very considerable sum the amount necessary for terminals for the Canadian National railways. At present I believe that a close estimate of what will be required to bring the road-bed, and all the facilities that go into what you might call the road-bed itself, up to standard, will
be from $65,000,000 to $75,000,000, making the total for the Canadian Northern, Transcontinental and Grand Trunk Pacific in the close vicinity of $200,000,000 to $225,000,000.
The situation with regard to the Grand Trunk proper, both in relation to its cost and the sums required to bring it up to standard, were set forth in the statement I gave in 1918, and here again, after examining that statement closely, I have no reason to change the estimate I then gave. As with the Canadian National railways, however, there have been expended in the meantime considerable sums on capital account, and the Government itself has paid directly for a considerable number of locomotives, cars, etc. The road bed and general equipment of the Grand Trunk including terminals is admitted to be in really good condition. Some improvements are necessary, but the extent of them is not yet known. Economic operation, however, will make necessary the expenditure of a very considerable sum of money in the purchase of motive power and rolling stock. In 1919, at the time the Grand Trunk question was before the House, I put the figure for motive power alone, in order to bring it up to an economic standard, at $35,000,000; I do not wish to weary the House by going into all the details. As a matter of fact, the officers of the Grand Trunk Railway Company have themselves made the statement before the Drayton-Acworth Commission that they required $50,000,000 to bring their rolling stock and general rolling stock equipment up to the standard, they requiring 200 locomotives and 10,000 box cars. While there have no doubt been additions in the meantime, it can nevertheless be taken for granted that there is required to-day, or will be when the Grand Trunk is co-ordinated with the Canadian National Railways, a sum approximating to $50,000,000 to bring that part of the Canadian National railways to a point where it can be operated economically and efficiently.
The question is, can the country face this expenditure and face the problem of operating these railways? The answer to that is that we have the railways, and whether the task is easy or difficult, we have to operate them; we cannot get away from that. The industry of the country demands that we should' find a way to operate these roads economically, and in that connection might I say one word with regard to the statements that have been issued so many times about the operating deficits

being due to excessive wages and excessive material costs? I have no doubt that these things will work themselves out, but I think I am in the judgment of the House when I say that there are a lot of people in this country looking forward anxiously to the time when freight and passenger rates will be reduced as a result of the operating cost of the railways being lowered; but if we are to accept the statements that are being given to us from time to time, it would look as though we were going to be loaded with the present freight and passenger rates for all time. I believe that any one who studies the situation that this country is faced with will agree with me when I say that we must find some way of organizing and operating our railways so as to bring the cost of transportation down, as well as to wipe out the deficit. I have already stated my belief that our railways can be co-ordinated, can be organized, and can be operated, without these constantly recurring deficits, and operated so that they will earn their fixed charges. But the question is, how is this to be done? It is very easy to make academic statements as to what ought to be done, but it is not so easy to suggest a way by which it should be done. Now, there have been very many suggestions put before the Canadian people in one form or another as to what the solution of the railway problem is and how we should operate the lines so that they may be successful and that the Canadian people may be relieved of the present burden in connection with the railways. If the House will bear with me I will refer briefly to a few of these suggestions. The first suggestion is to turn all the lines back to private control.

Topic:   QUESTIONS
Subtopic:   REVISED EDITION. COMMONS
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