I beg to lay on the Table of the House the report of the Royal

Commission on Chinese and Japanese Immigration, second part.

Mr. McCREARY.

Mr. Chairman, before this clause passes, as we have now the Minister of Railways and Canals (Hon. Mr. Blair) in his seat, and as that gentleman was not present during the consideration of private Bills on Friday night, I would like to state one or two objections I have to this Bill. In the first place, I object to the Bill on general principles. The Bill authorizes the construction of 5,000 or

6,000 miles of railway, and this power, to be given in any one charter, is altogether too great. I object also to the Bill because it authorizes the construction of certain branch lines, but the descriptions of these lines are so indefinite that we do not know where the roads are going to run. But, my most serious objection to the Bill is the fact that by its terms it entirely controls the only two available passes through the Rocky Mountains. These are the Pine River and the Yellow Head passes. There was an engineer who went through the Pine River Pass about twenty-five years ago, and a gentleman named Mr. Hunter also went through about twenty years ago. Neither one of these gentlemen reported on the feasibility of this pass for a railway. There is no information on that point as far as I can learn. I submit, Mr. Chairman, that the hon. Minister of Railways and Canals should take steps to see, if any other transcontinental road should endeavour to get through the mountains as there are no other passes available, that they should have running powers over the line in one of these two passes. I notice that the Board of Trade held a meeting in Winnipeg a few days ago to discuss a resolution sent to it by the Halifax Board of Trade dealing with the Intercolonial Railway. I may say that the Winnipeg Board of Trade represents practically all the large and influential corporations loaning moneys on the prairies. That board took the ground that a commission should be appointed to look into the question as to whether the Intercolonial Railway could be made a factor in the transportation of that country, and if it could that it might be feasible on the part of the government to extend that system to the Pacific coast to serve as a feeder for the road. That proposition was very

Sir WILFRID LAURIER.

fully discussed by several gentlemen who are deeply interested in that country, and the partner of the hon. member for West Toronto (Mr. Osier), Mr. Nanton, seconded the resolution. I am not going to say whether this is feasible or not, but, if it is feasible and if it should transpire that it should be necessary in the future for the government to extend the road to the Pacific coast, they should adopt the policy of reserving these passes with that end in view. But, there is another factor in connection with this charter to which I wish to draw attention. As you are aware, Mr. Chairman, a bargain was entered into between the Manitoba government and the Northern Pacific Railway, which bargain was passed also by this government. That arrangement was something like this : The Manitoba government leased from the Northern . Pacific Railway Company for a period of years the company's lines in the province of Manitoba, having a mileage of 350 miles for which they were to pay an annual rental of $210,000. The Manitoba government released those lines to the Canadian Northern Railway Company, and a bargain was made that on certain bonds issued by the Canadian Northern line the government were to guarantee interest to the extent of $20,000 a mile on 300 miles, and on certain other bonds covering 1,000 miles of road, the Manitoba government were to guarantee interest at the rate of $10,000 per mile. That is 1,300 miles in all on which interest is guaranteed. Out of the receipts of the railway company they were to pay, first, the running expenses of the road, secondly, the $210,000 rental to the Northern Pacific, and thirdly, they were to pay interest on these bonds, amounting to about $14,000,000, but in default the Manitoba government had to pay any arrears of interest accrued. Should there be a surplus at the end of two years that might be applied to a reduction of freight rates. This was the consideration for which the Manitoba government became the endorser of the bonds of the company so that the farmers of the western part of Manitoba should get a material reduction in freight rates. The reduction was to be 2 cents a bushel on wheat on the first year's operation. If the road proved a paying concern, there was to be a further reduction in the rates. This Bill goes on to say that they should have power to bond the road for $25,000 per mile, not only on any lines to be constructed, but also on the lines now constructed, and the question arises: Is that $15,000 extra per mile to

be in addition to the 1,300 miles for which the Manitoba government are responsible as endorser ? If it is, it seems that in addition to guaranteeing the interest on what is provided for in the agreement now that government will have to become responsible for the interest on $15,000 per mile extra and there will be no opportunity of gaining any further reduction in freight rates.

Hon. Mr. HAGGART.

What is the bonding power on the 1,300 miles that have been already constructed ?

Mr. McCREARY.

I am sorry that I cannot give the hon. gentleman the information he asks me for.

Hon. Mr. HAGGART.

If they bond it for $25,000 per mile and it is completed it would not affect the matter.

Mr. McCREARY.

I suppose not. But the Manitoba government assumed respons-bility for $10,000 a mile on a portion and $20,000 on another portion. I may not be correct in my contention, but I want to have It shown that I am not correct. I want to see that the Manitoba government will not have to guarantee interest on $25,000 per mile instead of $10,000. I want to see that the farmers of Manitoba who are supposed to get the benefit of that road will not have to pay interest on that extra bonding per mile. It is the duty of the Minister of Railways to clear up the point. He was thoroughly cognisant of the matter when it came before the Railway Committee and I have no doubt he will be able to explain.

The hon. member from Selkirk (Mr. McCreary) has invited my attention to some provisions of this Bill, and he particularly mentions the fact that it is proposed to construct an enormous mileage which he thinks we are not justified in empowering the company to construct. The hon. gentleman said that if this Bill passes the company will have authority to occupy not only the Yellow Head Pass but also the Pine River Pass under existing legislation. It will be remembered by members of the Railway Committee that two or three times I called the attention of the committee to the extended character of this proposed undertaking, and I mentioned that the company were asking to occupy a very great deal of territory. As far as my observations then impressed themselves on the committee the result was that considerable lengths of mileage which were embraced in the original Bill were stricken off, and it appeared to be the sense of the committee that the balance of the Bill should stand. I did not carry the controversy further ; I do not propose to continue the controversy now. I called explicit attention to the very point which the hon. gentleman (Mr. McCreary) has dwelt upon, and the committee after listening to the arguments on both sides concluded that it was not improper legislation. Considerable respect is due to the decision of the committee with respect to all of these Bills, and unless the circumstances are of an extraordinary character, or unless something has been done under a misapprehension of the facts I think it is better to consider the decision of the committee as approaching finality. What my hon. friend (Mr. McCreary) has said with regard to the necessity of providing that running powers shall be secured to any 841

railway that may desire to use any of these passes, is covered by existing legislation completely. We would have added it to this Bill if it were necessary, but it is not necessary. The hon. gentleman seems to be under the impression that we have no information in the department as to the character of this Pine River Pass from a railway point of view. The hon. gentleman is not fully informed with respect to that, because my deputy tells me that the records of the department show that a very careful survey was made of the Pine River Pass, with the result that the opinion of the engineer, Sir Sanford Fleming was, that there was only room for one track through it. While that is the case, some one must build the track. It is quite immaterial it appears to me by what company the track is built, because there is ample power in the government under existing legislation to secure to any companies who desire to use the same pass, all the rights which they will need for such a purpose.

With reference to the effect of this legislation upon the contract entered into by the Manitoba government with the Canada Northen Railway ; that point occurred to my mind before this question was disposed of in the committee, and I made such inquiries that I felt were necessary. I did not see how it would be possible for this legislation to enlarge or to restrict in any degree the contract as it affects the existing bonds which were already issued ; and upon inquiry I was very well satisfied that my opinion in that regard was well founded. I think I can safely assure the hon. gentleman that he need have no anxiety on that account.

Mr. FRANK OLIVER (Alberta).

I would like to say that while I would be only too glad to accept the assurances of the Minister of Railways on the subject of the responsibility likely to be laid upon the province of Manitoba by this legislation it is not altogether clear to my mind that the province Is not placed at a disadvantage by it. J must admit my lack of legal training, and therefore that I am at a disadvantage in discussing this question. But it is an important question. We are going to do something that we cannot undo, and it is well that we should proceed with the fullest information, even to those of us who are not thoroughly versed in legal questions. The Manitoba government lies under its present responsibility in respect of the Canadian Northern Railway because of legislation by this parliament. That responsibility is limited to a certain amount. This parliament by legislation now in hand permits the adding of a certain load of responsibility, not on the province but on the company. This brings up the question as to whether the company, by reason of this legislation would not be at liberty to provide for the discharge of the interest upon the additional bonds before giving that advantage to the people of Manitoba which they

expect because of the responsibility they have assumed. That is to say, that the company being only allowed to provide for a bonded liability of $10,000 a mile ; this legislation will permit them to provide for a bonded liability of $25,000 per mile. It is an arguable question it seems to me, whether they will not be able to hold that legislation up as a defence for paying interest on that additional $15,000 per mile before discharging their obligations to the people of Manitoba in regard to the reduction of rates. The fact of giving them the privilege to place these additional bonds upon the road may be used by them as a protection against the terms of their present agreement with the province of Manitoba. I may be wrong in that and I may be right ; but I would make this suggestion : That the

lines in the province of Manitoba, or the lines covered by the agreement with the province of Manitoba, be exempted from the provisions of this section. Then there will be no question about it. Then the province will be perfectly safe. We would know certainly that we had done no harm anyway, and I can see no objection to that provision being made.

Further I would like to say, that the idea that a railway company pays the interest on its own bonds is now exploded. The company does not pay anything. It is the people who use the road that pay the interest. They pay it through the rates which it costs them to have their traffic carried. If the company is permitted by parliament to bond its line through the prairies of the Saskatchewan valley at the rate of $25,000 per mile, the future population of that valley must pay that interest, if the interest is to be paid. The government in exercising Its authority as to control of rates must take into consideration the fact that it authorized the issue of these bonds to the amount of $25,000 per mile, and thereby became a party to the charging of rates sufficient to earn interest on that amount of bonds., I claim that it is the duty of parliament to restrict the issue of bonds on a railroad to the necessities of the case. It is necessary to do that if parliament is to exercise effective control of the rates to be afterwards charged on that road by means of a railway commission or by any other means. If the bonding power of $10,000 per mile is sufficient to construct the line of the Canadian Northern through the prairie sections of the province of Manitoba. $10,000 a mile should be sufficient to enable them to construct through the prairie regions of the Saskatchewan-if not absolutely then aproximately. The fact that they were willing to make a bargain with the province of Manitoba to build a line through the prairie sections of that province on a bonding privilege of $10,000 per mile is absolute proof that the bonding power of $25,000 per mile applied to prairie construction through the Saskatchewan valley is needlessly large, and as a matter of fact lays Mr. OLIVER.

a burden of future taxation upon the future population of that country, for which, they, nor we, nor any one else outside the men composing the company, receive any value whatever. I would ask the Minister of Railways and the House to protect beyond question the province of Manitoba against any additional obligation, and further to protect the future interests of the western country by restricting the bonding powers of this railway to the necessities of the case. The experience of this country in the past proves that such safeguard is necessary, in order that the country may get the proper benefit from the expenditure made in aid of railway construction.

Hon. Mr. HAGGART.

I was in the Railway Committee when this clause was passed, but I have just had the explanation of the Minister of Railways that it does not interfere with the bonds already issued. If that be so, there can be no objection to it. But taking the wording of the clause, * The company may from time to time issue and secure by mortgage, bonds, debentures, or other securities for the purpose of the acquisition by purchase, &c., there is nothing to show that the bonds so authorized to be issued will not rank; pari passu with those already issued.

Those already issued are secured by a first mortgage under the agreement with the province of Manitoba.

Hon. Mr. HAGGART.

I do not remember at present how these bonds stand, but I was simply pointing out what appeared to be the effect of this clause. Even if the bonds already issued be secured by a first mortgage, the House should still be careful to see that by this Act we are not in any way taking from their precedence. That could be guarded against by providing an additional clause, which would give these bonds already issued priority beyond doubt over those authorized to be issued.

I do not see how there can be any doubt as to the position of the bonds now issued. They are the subject matter of a special contract between the Manitoba government and the Canadian Northern Railway. The papers were before us last session, and most of us will remember that a mortgage was executed by the company, whereby the bonds then issued, up to the amount of $10,000 per mile, were made the first lien on the road. No authority which may subsequently be granted by parliament to issue additional bonds could possibly change the position of those previously issued. The bonds now authorized will have to follow and be a second security. We have not, are not giving them any priority, nor are we putting them on an equal footing. Therefore, whoever holds the existing mortgage, holds the property in security for the bonds issued prior to

this arrangement. The Manitoba government no doubt have been made thoroughly acquainted with the character of this proposed legislation, and if there were anything in it which might infringe on their rights, they would have quickly called our attention to it.

In reply to the hon. member for Alberta (Mr. Oliver) I may say that it was the understanding of the Railway Committee, when that committee agreed to report the Bill, that I should take the third and fourth clauses into my consideration. I had called the attention of the committee to the very large capitalization powers, and said that these two clauses might well receive further consideration, and that if the committee were content, I would look into the matter and suggest any change, and in the meantime they could report the Bill. My hon. friend is therefore right in asking me for some explanation why I have advised that the bonding power should be retained at the amount first stated. It is all very well for my hon. friend to talk about the cost of the construction, but taking the least costly of the railways mentioned in the present Bill, I had inquiries made by the best of my engineering staff, and they told me that to build this road and to bridge it- and there will have to be two very expensive bridges across the Saskatchewan river- and pay the cost of the rails and their transport and properly and adequately equip the road, would take in the neighbourhood of $15,000 to $20,000 per mile. When my hon. friend speaks of $8,000 or $10,000 per mile, he is entirely astray in his calculations. Take the matter of equipment alone. If the country through which this road is to run is as fertile as represented, it will soon be filled up with producing settlers, and to carry their crops which will have to be carried by that railway will require large quantities of freight cars and locomotives. It is not a trifling matter to equip a railway with sufficient freight facilities to carry a traffic such as has been produced along the line of the Canadian Pacific Railway, and as will no doubt be produced along this line. And when you count the cost of the locomotives, freight cars and other equipment, I do not think that $5,000 or $6,000 per mile would be an unreasonable sum to expend in that way. Then when you come to realize on your bonds, what do you find ? I do not care how strong a company may be, or what may be its prospects, these bonds cannot be sold except at a considerable discount. Even bonds that bear the guarantee of the Manitoba government, when brought to the English market, have to be sold at a very substantial discount. I am not at liberty to say, but have been credibly informed what the extent of that discount is. If you undertakae to sell the bonds of a company with the brightest prospects in the world, in the English or any other market, not guaranteed by any government, and you have to submit to a

still larger discount. I do not believe that $25,000 of bonds will more that suffice to furnish the money necessary to construct and equip a road of this character, as it ought to be. Having that opinion, I did not think I should ask the committee to make any reduction of the bonding powers.

I would suggest that the following words be added to the last line of the fourth clause : * Should not at any time exceed

$25,000 per mile on the government line of railway authorized to be constructed under this Act.' That will exclude the application to lines chartered under previous legislation and not chartered under this.

Mr. HUGHES (Victoria).

I would call attention to the fact that there is a section of the road from Winnipeg to the Northwest not authorized to be constructed under this Act, but under a former Act, which, possibly, is re-enacted by this Bill. I refer to the forty miles running north-west from Winnipeg.