March 15, 1933 (17th Parliament, 4th Session)


Charles A. Stewart


Mr. STEWART (Edmonton):

I am not speaking of the rates in effect in 1912; I am speaking of those which have been in effect for the past ten years and comparing them with the rates which have been in effect in the United States. We should not forget this fact when we are critical of expenditures made for whatever- purpose upon these lines.
I listened with a great deal of interest to the speech of the Minister of Railways (Mr. Manion). I agree with him in his plea that we should view this question dispassionately and, as far as humanly possible, not from a political standpoint. Personally, I propose to view it in that way. At times I resented some of the criticisms made of the administration of this railroad while it was under the control of the government of which I was a member, but I think it can be said that most hon. members of the house have tried to be fair in their criticism of this great national institution.
No one will deny, and the minister does not deny, that the situation with respect to our railways, both national and privately owned, is extremely critical. But we must not forget that the same thing can be said, with scarcely a single exception, of every other business in this country. We all know of industries which were thought to be stable and beyond question as to their financial standing but which now find themselves in difficulties. We must admit also that mistakes have been made in the management of our railroads, but we must remember that this management was human the same as the management of other institutions, not only in our country but in every other country of the world. These are days when our faith in our country and its commercial institutions is rather severely shaken.

Perhaps I may be pardoned for interjecting a little politics at this point. While the present government perhaps cannot be held responsible for the major difficulties of to-day, it can be held responsible for a considerable portion of the difficulties facing this institution which we are now discussing as well as other institutions in the country. The fact that barriers have been placed in the way of trade has contributed in no small degree to the difficulties of the Canadian National and the Canadian Pacific railways. I cannot conceive of any individual engaged in the transportation business who would be in favour of trade restrictions to such an extent that they practically force the cessation of operations. I made a computation some time ago and found that we have spent something in the neighbourhood of over five billions of dollars upon our transportation system. By this I mean the steamships, [DOT] the necessary port facilities and everything needed for the transporting of goods in and out of the country. Nearly one-half of that huge amount has been expended with a view to the carrying on of international trade. When we erect barriers against that trade, is it any wonder we find ourselves in our present position? Is it any wonder we are seriously alarmed about our financial situation and particularly about the situation facing our transportation system?
I have no complaint to make as to some of the suggestions made by the minister, but I have a great many complaints in respect to the provisions of this bill. I agree with what many of my colleagues have said, that there is evidence in this bill from start to finish of the unloading upon or the delegating of responsibility to a board over which this government, this house or this parliament will have little or no control. I am entirely in favour of a reduction in the board of directors, b.ut I am sorry that the minister has interjected trustees in their place. I would be entirely in favour of a board of three directors, and I must disagree with many of my hon. friends on this side when they say that there should be sectional representation upon the board. If complaint could be made of any one thing it would be that in the past we attempted to give sectional representation and representation to labour and other crafts. All of this was unnecessary and in my belief led to some of the difficulties which were experienced in the administration. I am entirely in favour of a board of three directors. I refuse to call them trustees, and I shall have some opinions to offer later on with respect to this matter.

C.N.R.-C.P.R. Bill-Mr. Stewart (Edmonton)
I should like to state what I consider to be a few of the salien't facts with respect to this situation, and in doing so I shall not go back beyond 1920. Let me refer to the evidence given by Mr. Hungerford before the commission, because it meets entirely with my approval and because he says, but in a much better way, what I would wish to say. I shall not cite the statement which he made as to conditions prior to 1921, but this is what he says about the situation in that year as it affects the Canadian National Railways.
The situation which confronted the new management of the consolidated properties was an extremely difficult one and it had a great multitude of problems to solve. The Grand Trunk Pacific and The Canadian Northern were not entirely completed nor equipped for operation and the earlier constructed lines of the latter company were in a very poor physical condition; while the Grand Trunk and intercolonial were badly run down as a result of war pressure and financial limitations. All of these groups were very short of rolling stock and what was owned was generally in a poor condition of repair. _
On practically all of the lines the condition with respect to ties, rails, ballast, bridges, buildings, and other features of like character was most unsatisfactory; terminal facilities required enlargement and rearrangement to permit of satisfactory and economical operation; the coordination of the various groups so as to operate as a single system involved the construction of numerous connecting lines and rearrangement of facilities. Altogether, the physical condition was such as to preclude giving even reasonably satisfactory service.
Beyond all this, the management was faced with the following combination of conditions: -
(a) Property bankrupt by a very wide margin, i.e., capitalized far beyond its earning power.
(b) Lowest average traffic density of any large system in North America.
(c) Very low freight rates as compared with other countries.
And I am confident Mr. Hungerford was comparing it on that occasion with United States lines.
(d) Necessity of spending large amounts of money to keep certain lines in condition to
operate at all.
(e) The necessity of spending large amounts to place the property in reasonable and economical working condition.
(f) The insistent demand of the public for the construction of branch lines, grade separations. stations and hotels, and for a higher standard of service generally.
That was the condition of these lines in 1921. It was well said by both the hon. member for North Bruce (Mr. Malcolm) and the hon. member for Shelburne-Yarmouth (Mr. Ralston) who, speaking of this question, went more into detail with respect to these matters, that fair value-and I shall perhaps except one or two items-was obtained for the expenditure of the money that went into
the lines. In 1930, when our government went out of office, we felt that the lines were in such a position that in at least one or two years they would be taking care of the interest charges due to the public. I well remember, and I beard with a good deal of satisfaction, the statement of Sir Henry Thornton on that occasion and indeed the observation of the present Minister of Railways after he took office, that so successful was this institution that within a period of three years it would be in a position to pay its way. I know that difficulties arose and I repeat that while the government of the day were not responsible for all of them, they must be prepared to assume a fair share of responsibility for some of the difficulties in which the railroads now find themselves. Hon. gentlemen opposite, rightly or wrongly, felt they were going to improve not only the railways but commerce generally by the policies which they said they would put into effect if returned to office. In that regard they kept their word; they did put their policies into effect, with disastrous results. I sincerely trust that when the budget is brought down next week they will remove some of these obstacles to trade and give some assistance in rehabilitating the railways.
Speaking of 1930, one must not forget the added burden that was thrown upon the management of our railways by the employees who were kept on and who were really not required in the service. All credit is due to the government for keeping them on, but this caused an addition to the burden of railway administration. It is true that these men had to be employed somewhere and the government did their part in providing employment or retaining them in employment when their services were really not required, but to that extent they made the position of the railways just that much more difficult.
I want to deal now for a moment or two with what Mr. Hungerford suggested and which in my opinion should be the main features of the bill. I am leaving out his evidence and simply stating what I believe was sane and reasonable advice to the commission in assisting them to bring in a report that would be satisfactory and would lead to some solution of the difficulty. Let me at this point say that I do not wish to confuse any evidence that might be given by Mr. Hungerford with my own deductions with respect to some of the difficulties under which the railways are operating. This is his suggestion :
Having regard to all the circumstances I believe the best ultimate results will follow the adoption of the following policies:-
C.N.R.-C.P.R. Bill-Mr. Stewart (Edmonton)
(1) Maintain present status and organization of the two railways.
(2) Cooperation between the two companies as far as feasible subject to the condition that in any case, neither company shall suffer loss, and that one or the other, or both, shall secure substantial advantage.
(3) Continue the present policy of effecting every practicable economy in operation.
(4) Take all reasonable measures to combat highway competition.
(5) Restrict capital expenditures to:
(a) Items necessary for safety of operation.
(b) Items ordered by competent authority or obligation assumed by agreement.
(c) Items which will undoubtedly earn a full return on investment.
In view of past experience and future prospects as I see them, I believe that these measures will best meet the circumstances, particularly as there are certain encouraging features in the Canadian National Railways situation as follows:-
And I think this is absolutely true.
(1) During the period under review, operating expenses have been increased much above normal by rehabilitation work and this may now be regarded as fairly complete.
The minister took considerable credit for the reduction in operating expenses effected during the last year or so.

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