Mr. Speaker, I have listened attentively to the address delivered , by my hon. friend, the senior member for Halifax (Mr. Maclean) and I must at once state that I am opposed to his motion, for many reasons. Everybody admits that our railway situation is a very distressing one, but that does not justify the hon. member's proposal for the formation of a committee which, if I have understood rightly his explanation, would be vested with more power than the House which had originated it.
There is another reason why I cannot agree with my hon. friend. He states that the tendency of modern times is to give all rights and powers to governments. I do not agree with him. Rights and powers belong to Parliament, and they are not to be surrendered to the Government; and surely we are not going to give away those rights and powers to a committee which will hear evidence, send for papers, and manage the road, and will then give Parliament whatever information it may see fit. We will not be any better off. The hon. member for Halifax says that his proposed committee will be subject to criticism. In other words, it will be taking the place of the Government, because the Government is charged with responsibility for the distressing condition of our railways, and under my hon. friend's suggestion this responsibility would be shouldered by the committee. I do not think the motion - should he entertained. Why? I believe, Sir, that we would do well on this very question to take a lesson from the labour movement. What is the reason of the
struggle between capital and labour? Labour contends that in every industry there should be a closed shop so as to eliminate competition in regulating the hours of work, the schedule of wages and the kind of work to be done. Every employee is looking for the acceptance of the closed shop idea, but my hon. friend is evidently desirous that the Canadian National Railways should be operated on the open shop system. I believe that the Canadian National Railway system has troubles enough without our adding to them by furnishing to a committee of twenty-five or thirty-five men information that may subsequently be secured by its competitors. If that is done, successful competition with other railways will be made very difficult.
My hon. friend has stated that the conditions as regards railways are the same elsewhere, and he has referred to the American railways. When the United States Government decided to conscript their sons they decided also to conscript the railways of the land. They controlled them for two years; they increased the rates to the amount of $750,000,000 each year, and they had a yearly deficit of $850,000,000. In the month of September last the railways were returned to their private owners, bait the United States Government gave to the owners $500,000,000 as a bonus, because of the fact that roadbeds had been deteriorated, rolling stock had not been replaced, and motive power was no longer efficient. The United States Government decided to appropriate $600,000,000 for the purpose of enabling the railways to reimburse themselves during a certain period for the loss they would have to incur in putting their roads on as sound and efficient a basis as that on which they had been operated before. But my hon. friend was badly advised in connection with the Transportation Act passed by the United States Senate. It is what is known in railway parlance as the Eseh-Cummins law. When the roads were given back to their private owners those in the United States who still believed in public ownership were responsible for the enactment of this law, providing that the bulk of railway securities should not return to the owners more than six per cent on the investment. That is why the railways on the other side of the line are in such distress. They cannot issue bonds for absorption by the public; when they did appeal to the public to absorb their securities they had to pay as high as seven, seven and one-half and eight per cent by way of
interest. When they make further issues of bonds they have to take into consideration the fact that the bulk of their securities must not carry more than six per cent. But notwithstanding this distressing condition there are six railways in the United States which are operating on a perfectly sound basis. For instance, when the Wabash system, which traverses part of Ontario, was given back to its owners in September, everybody versed in railway matters thought that it would have to go into the hands of a receiver. But there was appointed to the management of that road a man who knew how to direct its operations properly, and to-day the Wabash system is one of the six systems in the United States which is paying its way and which is putting aside every month an amount for equipment and maintainence which is necessary to the success of the railroad.
My hon. friend has stated that there is a difference between the Canadian Pacific railway and the Canadian Northern. I admit that there is a vast difference, but there has been a vast difference, too, in the management. In the course of my remarks I am going to give the reasons for that difference. Both these railways were put on the market by promoters. The promoters of the Canadian Pacific, however, after their preliminary work had been completed, put the road in the hands of expert managers, and the result was success. But in the case of the Canadian Northern, the promoters, having secured the construction of the railway, promoted the sale to the Government, and some believe they are now promoting the re-purchase of the system by them. If you will allow me, Sir, to give you the comment of the man on the street and to put it as I have heard it, it is this: the group of promoters of the Canadian Northern bled the country to build up their railways; they bled the country to sell their railway to the Government; they are bleeding the country through its operation, and they will again bleed the country when they re-purchase the road. Public opinion will not stand for that, as I shall prove before I am through with my remarks. The Government were compelled to take over 17,500 miles af railway, and they are waiting for the conclusion of the arbitration proceedings to take over the Grand Trunk. When they are attacked with regard to their policy of public ownership they turn on the Opposition and say: You are responsible; you built the National Transcontinental; you subsidized the [Mr. Gauthier.J
Grand Trunk; you subsidized the Canadian Northern; it is your fault. But the Liberal Opposition reply: You were wrong in taking over these railways; you should have let them go into the hands of a receiver. But to my mind, Mr. Speaker, public men have no desire to lose their prestige, their reputation, their good name. They do not wish to propound policies which will result in the destruction of the parties which they lead; they are actuated by a desire to do what is right, and to do it at the proper time. Take, for instance, the Liberal party. In 1904 there had been two or three adjustments of Federal subsidies to the provinces and the older provinces were still endeavouring to secure better terms. The authorities in Ottawa thought that the demands were reasonable but that if they were met, the Federal Government would be exposed to a series of raids on the public treasury. About the same time the new management of the Grand Trunk, under the guidance of the late Mr. Hays, decided to ask for subsidies in order that they might tap the prairie provinces and secure an outlet to the Pacific ocean. The Government of the day decided that they would link, together the appeal of the older provinces to secure better terms and the appeal of the Grand Trunk to get subsidies. Was that a wrong policy? Was the Government of the day composed of wilful wrong-doers? Not at all. This was at a time when two new provinces had been opened up on the prairies; it was at a time when an abundance of wealth was coming to this country, when an immense prosperity was flooding the country, and the men at the helm of the ship of state then decided that, at the same time as they were according better terms to the older provinces and as they were giving a favourable answer to the Grand Trunk, they would also answer the calls of the western population of Canada. What was the claim of the western population of Canada at that time? They said that the Canadian Pacific railway with its rolling stock was unable to take care of the needs of the western country; that the western country could not get service at proper rates. They were asking better service, competing lines, and the Government of the day decided to grant to the Grand Trunk subsidies to build the Grand Trunk Pacific, but on the understanding that the Grand Trunk would at the same time operate the National Transcontinental which was to be built with the
money of the people of this country. If you want to judge the action of the Liberal Government of 1904, you must go back to 1904. You cannot judge the decision and the action of that Government by the motives that you can impute to them in 1921. To do so would be unfair; it would be an injustice and you would be resorting to a policy of recriminations which would create a sentiment and feeling of unrest in the country. We are not here to say: "You are another." "I told you so." "Why did you not listen to me?" We are here to face problems as they come before us, without recrimination. If we want public men to be respected in the land, our first duty is to respect one another.
What was the argument of the Government in respect of their policy of public ownership? On account of the war, the railways were unable to meet their obligations, and the Government decided it was better to take over the railways and not to allow the companies to go into the hands of the receivers, because, otherwise, the credit of Canada would be hurt for all time to come in the money markets of the world. This is a sound reason; this is a reasonable argument; but there is more than that. The 'majority of the chamber were in favour of public ownership; they wanted to have this experiment, and
9 p.m. majorities rule in this House.
I have stated before, and I have no hesitation in stating again to-night, that I am opposed to public ownership, because I believe it kills individual incentive to better one's condition. As soon as you have public ownership, you are falling into routine, and you can have no proper management unless you are lucky enough to find somebody who will be sufficiently strong to do his duty to the utmost, and such conditions are very hard to find these days.
Anyway the situation as I see it is this. The railways were built by parliaments of former days; they were taken hold of by the late government. Now we are face to face with this situation. Are we going to say: "Well, we will try to becloud the issue?" You cannot becloud the issue. Last year the railways had a deficit of $48,000,000; this year they have a deficit of $70,000,000, and next year the deficit will run up to $100,000,000. You cannot becloud the issue; you must face it like business men and try to secure the real remedy for the evil. What else could you do? You cannot sell those railways. Nobody will buy them.
You cannot give them away for nothing. Nobody will take them. You cannot even give them away by paying somebody to take them. Everybody will be afraid of the expenditure. Are you going to sacrifice the money of the country? Are you going to let the railway deteriorate? Are you going to allow the rolling-stock to become obsolete as our locomotives are becoming obsolete? Are you going to let the motive-power, the rolling-stock, the road-bed, go to pieces? If that be the case, the deficits will be higher every year and you will never be able to dispose of the railways. You have the railways; manage them properly; keep them in the best of condition. If you are able to make a success of the business, all right; but if you can only make both ends meet, keep your railways in a state of efficiency, and when times are better, you will be able to dispose of them, regulating those railways by the Railway Commission, so that the people of this country will not have to pay rates which are prohibitive as the rates which we are paying now are. That is, to my mind, the only solution. We have, I admit, to face a tremendous problem; but are we going to say, after having gone on record for public ownership, that public ownership in the railway question is a hopeless task for Canada? You cannot do this unless you have given a fair trial to the experiment of public ownership of railways.
Who is responsible for the actual deficit because after all, if we had a surplus, I suppose the opponents of public ownership would not say much; I suppose we would not be looking for remedies if we had a surplus. We have a deficit. Who is responsible for that deficit? In railway management you have to take into consideration three factors-the management, the employees, and, in public ownership you have also to take into consideration the public. Of course, a privately-owned railway must also take the public into consideration, but under private ownership the public pays the rates and absorbs the securities issued by the railways. Under public ownership, the public pays the rates, and in our case, settles the deficits. Those are always the three factors, and they act accordingly.
Under public ownership you must have a management who can appeal to the employees. You must have a management that is founded on democracy; you must have a management that is not autocratic. Railway management under public owner-
ship must win the confidence of the employees. You cannot drive the employees by fear. The management must be respected by the employees, and when the public sees that the management is doing its best, that nothing is concealed, and that the operation of the road is successful, in its turn it also will have confidence in the management and in the employees. How can we expect the employees to have confidence in the present management of the road? They have been fighting each other since the beginning of public ownership. Actually, Sir, the Government through its management is paying every year an immense amount of money for freight which has been delivered to the Canadian National Railway system but which was never delivered again to the party to whom it was shipped. Things have gone so far, Sir, that the "Canadian Railroader," the official organ of the brotherhoods, is appealing to the employees to stop this pilfering of the freight trains. Can you blame the employees? They are doing what they see the management doing. If the management, after having had last year a deficit of $48,000,000, can come to this Parliament again this year with a deficit of $70,000,000, and still retain the confidence of the Government, what confidence do you think the employees can have in the management? More than that, if the management is permitted to manage the railway system in such a way as to compel the country to shoulder such huge expenditures and such excessive deficits, why should not the employees serve themselves while they have the opportunity? They do exactly as the ones above are doing, no more and no less. Do you believe, Mr. Speaker, that with a management of that kind we can make a success of public ownership? Mind you, I have gone on record, and I am not going to repeat myself. If I was only looking for political profit I would not say a word, but under democratic government, I believe in the majority ruling. The majority have asked for public ownership in railways. Give them public ownership, but do not kill, public ownership, and do not kill the hopes of the men who believe in public ownership. I say it is the duty of the Government to change that. If the employees have no confidence in the management, how can the people have confidence in their public-owned railway? It is a failure. From one end of the country to the other newspapers are telling their readers that it is impossible to make a success of railway management under pub-
lie ownership in this country, until now the people have lost confidence in public ownership. I believe that for the sake of the country-I have no right to ask the Government to do it for their own sake- the Government should change these conditions, and they cannot change them too soon, for not only is the Government going to suffer in the general dislocation, but the country is going to be ruined, and the country will not stand for that.
The management, I charge, is actually responsible for the situation of our railways. The road is managed by a gentleman who all his life has been affiliated with the group of promoters who promoted the Canadian Northern Railway, with its 65 subsidiary companies. Ordinarily, under railway management there is a main line, with feeders. The feeders help to swell the revenues of the main line. With the Canadian Northern, the feeders were only feeding the promoters; they never fed the main line. Conditions are the same to-day; even if they are not, people believe they are, and that is just as bad as if they were. When people look at the deficits on our national roads they will continue to believe that the feeders do not feed the main line; at any rate, they do not feed the coffers of the system.
Promoters cannot be railway managers. Promotion is an art, and railway management is a science. The promoter is looking for a quick turnover. He appeals to the schemers, the plungers, and the get-rich-quick people. But railway management is a science, and the scientific manager looks ahead for the application of principles which have been taught by experience. There is no comparison at all between the two. Promoters cannot manage. They can continue to promote, and they are actually promoting yearly deficits. But enough of that.
With the permission of the House I will speak in a single sentence my own mind on this question. Once a promoter, always a promoter. I say if the Government keep on with the present management of the Canadian National Railway system their responsibility will be very great. They are shattering the hopes of all those who believe that with competition in this country we can have better service with adequate rates. That will be impossible if the management remains in the hands of those who are actually managing our railway system. According to Mr. A. B. Johnston, the President of the Railway Association in the United States, " Transportation is a busi-
ness; it is the business of business men to put the transportation business on a business basis." I shall do my .best to discuss the situation as one who would like to be a business man, who has studied this question with all his modest ability, and who is willing, whether his ideas prevail or not, to give them to the House with the satisfaction of having done his duty.
The management of every railway ought to replace without delay the obsolete locomotives that lie around every railway system on this continent. According to the figures which I have, there are on this continent more than 20,000 obsolete locomotives which cannot be consigned to the scrap-heap for the reason that at present they cannot be replaced. To build a modern locomotive today requires from $50,000 to $55,000; that is, if the figures I have been able to procure are correct. The technical experts on the railways in the United States, finding that they were unable to secure, by the issuing of bonds, the necessary funds to replace their present motive power, have devised means by which an obsolete locomotive, which to-day can draw only one-fourth of a regular haul, will, when remodelled, do the work of an engine that has cost $50,000 to $55,000. Now, this is no experiment; it has been accomplished in one of the eastern railways in the United States. The remodelling costs something like $22,000, and it converts an out-of-date locomotive into one of the most powerful engines on the road. The railways should have in their yards and in their shops proper scientific tools and equipment. I admit that the war is responsible for the fact that the railway shops are not equipped to do this kind of work; but if the railway companies would let contracts to the companies that remodel obsolete engines, I have no doubt that these concerns would be glad to do the work at practically half what it is costing the railways to carry on with their present rolling stock. If contracts were let for remodelling the locomotives that are in use now, within a few years the Canadian railways would have highly efficient motive power. But motive power is not the only question to be considered; I think that a scientific management should also see to the reduction of grades and curves.
Now, Mr. Speaker, the question of competition is a very interesting one. Railway experts assert that the troubles in connection with the present railway situation on this continent are due chiefly to duplication of tracks; but it seems to me that our Canadian railway concerns, in face of the
unwisdom and the loss resulting from such duplication, are fostering this disease. It is a useless expenditure to have trains running practically alongside of one another, consuming fuel and paying wages to double crews. Under a scientific and proper management, many trains would be eliminated, and, with proper motive power, freight trains could be hauled with more tonnage and fewer employees. But, Sir, when the railway management have to face employees as well as Parliament, they are afraid to act, and while they are in a state of indecision, deficits are piling up every year. An important question, Mr. Speaker, is that of terminals. For the railway management as well as for the travelling public, I suggest that the same terminals should be used as far as possible by different lines, taking care, of course, not to prejudice the traffic of the owners of any terminal.
The question of letting contracts for rolling stock is to my mind one of the most important and most serious. Whenever the Canadian National Railways want rolling stock or motive power, they virtually advertise in advance through the appropriations voted in Parliament. Those who supply raw material, as well as the labourers, know that the management will be in the market; and the Canadian Pacific Railway, the only competitor our national railways have, are thereby given an advantage which they would not have in the case of a private competitor. If the Canadian Pacific Railway wanted to secure an appropriation for any purpose, they would get it at a meeting of the shareholders. But when a vote is made in Parliament for the Canadian National Railways for the purpose of securing motive power or rolling stock, their competitor-and I know this of my personal knowledge-immediately enters the market. What is their object in doing that? They are in the market to boost prices and not with any intention of letting contracts; and the prices of raw material having been boosted up, the Canadian National Railways pay more for their rolling stock than they should if they were properly managed. I was reading in one of the papers of Montreal yesterday that the Canada Car Company have no orders from the Government, although they know that the Government will soon be in the market to purchase rolling stock. Look at the National Steel Car Company. They have contracts for just three or four months in the year, and the labour men, knowing that they will have only three or four months' work, necessarily increase
their demands. The owners of dwellings also, knowing that their houses will be occupied only for three or four months, raise their rents; and the tradesmen in the vicinity, apt to be left with an immense stock on their shelves, naturally charge higher prices. So that the labour men have nothing to do but demand higher wages, because they have to pay higher rent and greater prices for the goods they buy. But there is something worse: the labouring man, working only three or four months in the year, loses a part of his efficiency and the Canadian National Railway system pays higher for its rolling stock.
May I be permitted, Sir, to place on Hansard the official figures of the rolling stock and motive power which were contracted for by the American and Canadian railways in 1920: locomotives 1,770, the cost amounting to $106,000,000. Passenger cars 997, at a cost of $23,000,000. Freight cars 73,593, the cost amounting to $221,000,000 making a grand total of $350,000,000. The Canadian National Railway system is paying for a share of this rolling stock and motive power, and I believe that it is time to have a system, a scientific system, which will do away with lots of the waste from which the national railways annually suffer; the management, to my mind, should try to secure the greatest efficiency combined with the strictest economy.
May I be permitted, Sir, to call the attention of the House to an experiment entered into by the large railway known as the Pennsylvania Railway system? When that railway was given back to its private owners there had been such a large expenditure, and such an immense amount of patronage, under public ownership, that in the first month after the resumption of private ownership the management of the road released from employment 15,000 men. There was trouble all over the line, but the management of the Pennsylvania appealed to the men. They told the men that they were looked upon as partners. The men were given committees of their own with equal representation with the management; and every month, all over the line, sub-committees are having their regular sittings. Every discussion is open, every question is settled; and when this joint committee has, by a vote of two-thirds, reached a conclusion, the matter is settled once for all over the entire Pennsylvania system. Sir, every newspaper in the United States has acclaimed this ex-
periment, saying that owing to this plan there will be no more strikes on the Pennsylvania system. I wish hon. members to keep this experiment of the Pennsylvania railroad in mind because I want to use it as an illustration in connection with the proposal which I would have submitted to the House had I not decided to speak on the motion of my hon. friend the senior member for Halifax (Mr. Maclean). But being unable to present this resolution as I had contemplated, and calling ior a vote on it, I will embody in my remarks all that the resolution contains, and this will be my contribution towards the endeavour to settle the vexing problem of our railways in Canada. I believe, Sir, that with proper handling the employees of the Canadian National Railway system might be taught that the McAdoo schedule and the Chicago agreement are unable to solve the problem as far as they are concerned. The McAdoo schedule of rates was launched on the eve of a presidential campaign in the United States. It was designed for a political purpose, but, Sir, it has created a situation which, in wages alone, has increased the pay-roll of the railways of America from $1,500,000,000 to $3,600,000,000 inside of four years. The employees using the McAdoo schedule went into convention and they adopted what is called the Chicago agreement. I shall give to the House a few instances of the effect of this agreement, and then hon. members will understand, I am sure, why the railway situation in the United States, as well as in Canada, is in a very distressing state. With the closed shop and the Chicago agreement, which are two different things, the labour element have adopted a policy which can thus be summed up: the least work done by each man means more work which will have to be done by others. Now let us see what has been the result of the Chicago agreement as recorded in the proceedings of the recent United States Railway Board which met in Chicago:
The 'Pere Marquette Railway was compelled to pay $9,364 in hack pay to four pump employees because their titles under these agreements were changed by a decision of the Director General.
A car repairer on the Virginian Railway was paid $1,000 for work he never did. He was laid off with other employees because there was no work for him to do. When he became entitled under his ''seniority rights" to be re-employed, he received back pay and overtime.
There are instances, Sir, where men, without working but because they were protected by the closed shop system and because they were influenced by the Chicago
agreement, have made raids on the treasuries of American railways. When these railways were operated by the government the patronage curse helped the employees along; but now that the railways in the United States have been handed back to their private owners the latter cannot stand for such doings; and surely, Sir, when private owners are unable to subscribe to the demands of the employees because they are excessive, the men, if they were properly talked to, ought to understand what is best in their own interests- surely they would obey and would follow the course which reason dictates? But actually, Sir, you cannot have that-it is impossible. The management is spending money and the employees want to spend just as much as the management is spending. .
Sir, if I were permitted to occupy a few more minutes of the time of the House I would say that the remedy of our railway situation is this: you must take into consideration that in running railways there is the mechanical operation, and there is the technical operation. The mechanical operation in my opinion should be attended to by the employees, and they should be given proper representation on the commission. I cannot admit, Sir, that the right hon. gentleman who leads the Government can hope to make a success of our railways when those who are supposed to have the general management have not been to Toronto for twelve, fifteen or eighteen months or even two years. They cannot be held responsible, for they have never been trained for that work. They have not got even a smattering of the science of railroading. The sole management of the road is in the hands of one man, and in this man the country has no confidence whatever. If I may give good advice to the Prime Minister, I would say to him: Do away immediately with the present commission and substitute for it a commission of mechanical and technical experts. Have three men to look after the mechanical operation of the road; secure the services of three technical experts in equipment, maintenance and operation; have two purchasing experts, and appoint as chairman an expert railway manager vested with the fullest authority. Above all, Sir, to give confidence to the public have the books of this Canadian National Railway system audited by the Auditor General of Canada. He is not an employee of the Government; he is an employee of Parliament, and he has the confidence of
the country. It may be objected that he will have to increase his staff. Well, let him increase it. Surely the auditors who are at present auditing the books must have increased their staff to look after this work, and it is just as well that it should be done under the guidance of the Auditor General. Then, Sir, in order that the idea of public ownership which was responsible for taking over this system may be maintained, the books after being audited by the Auditor General should on request of the members of this House, with the consent of the manager of the system and with the acquiescence of the Government, be brought before Parliament so that the country may see there is nothing to conceal. In that way you will restore public confidence.
Some hon. members are trying to make political capital out of this railway situation. I say it is too big and too distressing a problem to be so treated. Let us face it as business men. Let us appeal to the scientific railroad men who on the other side of the line have been able since last September to restore six of those roads from the verge of bankruptcy to a sound paying basis. "Oh," some hon. gentlemen will say, "Do not let us go outside of Canada for help." Sir, let me cite the example of the shareholders of the Grand Trunk, who were pretty nearly all Britishers living in Great Britain. They were tired of seeing the continued deficits of the Grand Trunk, and they went to Mr. Hays in southern California and hired him for five years, at an immense salary for that time, to rehabilitate the system. He came to Montreal with a full staff of technical experts and was given complete control of the road. What was the result? For the first time in the history of the Grand Trunk a dividend was paid on all its stock. It was worth while for the shareholders to engage Mr. Hays. And I say it is worth while for this country, if we are to make a success of public ownership, to take similar action, and if after doing so we are unable to make a success of it, then those who come after us will say that when Parliament decided to take over our railways it did not know its business and was unable to tackle a job which in the sequel was a hopeless task from the outset.
Topic: SUPPLY - CANADIAN NATIONAL RAILWAYS PROPOSED REFERENCE TO SPECIAL COMMITTEE OF HOUSE