March 10, 1933 (17th Parliament, 4th Session)


James Malcolm


Hon. JAMES MALCOLM (North Bruce):

Mr. Speaker, in resuming the debate on Bill No. 37, I should like to take this opportunity of complimenting the Minister of Railways and Canals (Mr. Manion) on the very fair presentation of the case which he made for the legislation being submitted. I should like also to thank the Prime Minister for the speech which he made yesterday inasmuch as it undoubtedly made clear to the minds of most of the members of the house what he considered to be the need for the legislation, based on his opinion of the situation with regard to our nationally owned railway system.
I further feel indebted to the hon. member for Hants-Kings (Mr. Ilsley) for some remarks which he made in his very admirable speech last evening when he referred to some statements that had been made by the Prime Minister with regard to the very able men who had sat on the Duff commission and to the ability of the members of the Senate who had passed on this legislation. I am thoroughly in accord with the member for Hants-Kings. I do not think that any man who sat on the Duff commission, regardless of what his ability or previous experience may have been, has any more knowledge or any more conception of the railway situation as it applies in this dominion than have most of the members of this house. The Prime Minister himself, as he said in his remarks yesterday, has carefully watched the growth of the different railway systems in Canada, and I think I can say with many other members of the house that we also, just as well as any man who sat on the Duff commission, have watched the growth of these systems and have seen the moneys that were granted by parliament spent to build up private systems, and have later seen those private systems collapse and the roads taken over under state ownership. Not only that, but I consider that hon. members of this house have a better knowledge of the requirements of the Dominion of Canada and a fuller appreciation of what our railway system means to the national life of this country than any men who could possibly be appointed to any royal commission who have not been engaged in public life for the long periods of time that some members of this house have. I therefore submit quite respectfully to the Prime Minister that this legislation having been introduced by the Minister of Railways in a most non-partisan address,
inviting on behalf of the government a discussion of the legislation, that it is our duty to present to the Minister of Railways and to the government the views that we hold with regard to the railway situation in Canada, and to suggest amendments which we, the members of this house representing the people of Canada who are the shareholders of this road, think are in the interests of Canada and the shareholders and to the advantage of future generations.
Mr. Speaker, if I might be permitted briefly to refer to the railway situation in Canada I should like to preface my remarks by saying everyone realizes that in new countries railway construction is usually in advance of requirements. In no country has this been more true than in Canada. We have only to turn the pages of Hansard for the period following the building'of the Canadian Pacific railway to find many evidences, from those of little faith at that time, that the railway could not be made a success. True, the Canadian Pacific Railway passed through many years when the earnings did not justify the faith of the original builders, but eventually that faith was justified and the Canadian Pacific railway became great and prosperous. During the years between 1896 and 1911, due to an expansive policy of immigration, Canada grew and prospered. And the men of those years had just as much faith in our dominion as had Sir John A. Macdonald and the builders of the Canadian Pacific railway.
What the Prime Minister said yesterday may be quite true; looking at events from the vantage point of 1933 it is quite justifiable to criticize what happened between 1896 and 1911. But we all admit that hindsight is much better than foresight. In fact, if our foresight was as good as our hindsight we would not have to work; we could make all our money at the race track. Between 1896 and 1911 Canada enjoyed a period of expansion, and hon. members on both sides of this House of Commons were entirely in agreement with the expansive program carried on in those years. When Sir Robert Borden took office in 1911 no man foresaw or foreshadowed in this house the disastrous events that were to occur between 1914 and 1918, or the catastrophe which in those years upset the calculations of the legislators of earlier days, and retarded the growth of Canada to an extent which no one can calculate. Therefore I say any remarks critical of previous legislators, or their plan for serving Canada with railways, are not founded upon fact. They are not fair criticisms, because the intervention of the war utterly destroyed the calculations made previous to that time.
C.N.R.-C.P.R. Bill-Mr. Malcolm
If on this continent we had not built railways for the pioneers I doubt very much if we would be a country of 10,000,000 people. If we had not built our railways in order to take our pioneers into those vast open spaces I doubt very much if Canada would be the prosperous country it is to-day. Possibly we might write off to national expansion and promotion, and the development of Canada, some of the moneys which undoubtedly we lost on railway construction. I do not feel nearly as much alarmed as did the Prime Minister in his speech yesterday concerning the financial situation in which we find ourselves to-day. Hon. gentlemen who sat in this chamber in 1922 following the close of the war, will recall that the picture at that time was not very much better than it is to-day. We were faced with a $60,000,000 operating deficit on the Canadian National Railways, when we took into account the interest we owed to the outside bondholders. We were owners of a system which the Right Hon. Mr. Meighen had tried to coordinate in 1917, and which coordination was only completed in 1923. The system was run down. Without going into detail, with which the Prime Minister dealt so ably yesterday, may I say that it was a disjointed system, and it was not in good shape. The question arose in this house whether or not the system should at that time have been sold to the Canadian Pacific Railway for the sum of one dollar, to relieve the future taxpayers of Canada. However the houses of parliament decided otherwise, and a management which had before it a tremendous task was put in control of the railway. I am going to say that I believe, in future years in the light of better perspective, men will have an entirely different view concerning what Sir Henry Thornton did for the national system during the time he was president. I shall prove my statement and my opinion by utterances from hon. gentlemen opposite during the years Sir Henry Thornton held office.
What happened between the years 1922 and 1930 concerning the operation of the national railway system? No one will deny that the system was coordinated; no one will deny that the trackage was tremendously improved; no one will deny that -new equipment was purchased, both rolling stock and other types of equipment,-all of which brought the railway to the forefront of railway systems on the North American continent. If one wants proof of that he has but to look up the references made with regard to the two Canadian systems by American railwaymen. Indeed, it is true that the state of efficiency into which
TMr. Malcolm.]
the national system and the Canadian Pacific had got themselves by 1929 was the envy of most transportation systems on this continent. What I say with regard to the management of the Canadian National Railways, to which in a moment I shall refer, was just as true with regard to the management of the Cana-[DOT] dian Pacific. During that time not only was the system coordinated, the trackage improved and new equipment purchased, but for the sake of the greatest industry in our country, namely the wheat industry, we restored the old Crowsnest pass freight rates, giving lower rates on grain. During the years from 1926 to 1932, as shown in the Duff report, we managed not only to pay operating expenses, but to contribute the sum of $210,000,000 towards the payment of interest to outside shareholders.
Let me say that in view of an accomplishment of that kind, I do not blame the Minister of Justice (Mr. Guthrie), who was then in opposition and speaking in the budget debate, for claiming that no party had any right to take credit for the successes prevalent at that time. I think the Minister of Justice was quite within his rights in stating that the success was due to the good offices of the management of the road, and Sir Henry Thornton and his officers and loyal staff should be given full credit. I do not think the Minister of Justice would want to retract the statement he made on that occasion. Therefore I do not believe anyone can say there was not reasonably efficient management of the national system during those years.
In the Duff report at pages 15 and 19 are given certain figures which I think hon. members should take into account when comparing the efficiency of the national system with that of the Canadian Pacific during the years of prosperity and ample tonnage. The figures showing mileage of the two systems indicate that that of the Canadian National railways was 23.8S0, while that of the Canadian Pacific railway was 16,886. Of the total railway mileage in Canada the national system had 58 per cent and the Canadian Pacific 42 per cent. There is a direct relationship between mileage and capital expenditures. How do they compare? The capital expenditures on the Canadian National system are given as $456,345,456, whereas those on the Canadian Pacific are only $348,776,855. Or, of the total capital expenditures on the railways from the years 1923 to 1931, inclusive, the Canadian National expenditures were 57 per cent and those of the Canadian Pacific 43 per cent. So we see how closely the capital expenditure compared with the actual mileage. On operating expenditure found at page 15 .of the Duff re-

C.N.R.-CP.R. Bill-Mr. Malcolm
port, that of the Canadian National in these years amounted to 58 per cent of the total railway operating revenue in Canada, and that of the Canadian Pacific to 42 per cent, exactly the same percentage as obtained in mileage. In otheT words these two roads ran side by side with their total mileage in capital expenditure compared with operating expenditure.
But let us come to the all important question of revenue. On page 15 of the Duff report you have the figures. The total operating revenue of the railways in Canada was divided, Canadian National 57 per cent, Canadian Pacific 43 per cent, exactly the same ratio as the capital expenditure, and only one per cent difference from the mileage. Does not that prove that during that period when tonnage was ample, when the Canadian Pacific and the Canadian National both were building up power, equipment and rolling stock, and rock ballasting their roads, they ran hand in hand on expenditure; therefore, any credit or criticism applicable to one road is also applicable to the other.
My remarks in that regard are made for a certain reason. The Minister of Railways in his speech a few days ago gave the decline in the revenue of the publicly owned system as being from 8394,000,000 to, I think, $162,000,000, if I remember rightly.

Full View