The MINISTER OF JUSTICE (Hon. Charles Fitzpatrick), moved for leave to introduce Bill (No. 116) to amend the provision with respect to tolls of chapter 1 of the statutes of 1881 respecting the Canadian Pacific Railway. He said: The House is aware that in January last an Order in Council was passed authorizing the Canadian Pacific Railway to increase its capital stock by $20,000,000. The Order in Council provided that no part of this stock shall be issued at less than par and also defined the purposes to which the money to be derived from the sale of the stock shall be applied. It further provides that this increase of stock shall not in any way. be considered as affecting the question of the control of the government over the rates of the company after its earning power has increased to the extent of 10 per cent or 15 per cent on its capital. In order that the House should be fully Informed of all the facts, I would ask permission to state the legislation which was in existence previous to the passing of this Order in Council, and which would be affected by the Bill I now introduce. The statutory provisions relating to tne ordinary capital stock of the Canadian Pacific Railway Company are very few and may be stated as follows : Section 2 of the company's charter, being schedule ' A ' of 44 Vic., chap. 1 (Canada) fixes the capital stock of the company at $25,000,000 divided into shares of $100 each and provides that such shares, or any part thereof, may be granted and issued as paid up shares for value bona fide received by the company either in money, at par, or at such price and upon such conditions as the board o<f directors may fix, or as part of the consideration of any contract made by the company. This section, it will be observed, enables the directors to sell shares at a discount. Subsection 20, of section 7. of the Consolidated Railway Act of 1879, enables a railway company, subject to its provisions (and in this respect the Canadian Pacific Railway is subject to its provisions) to increase its original capital stock from time to time to any amount subject to the approval of its shareholders in the manner and form set forth in the said subsection 20. Under this subsection the capital stock of this company was raised to $100,000,000. By section 10 of 47 Vic., chap. 1 (1884) the capital stock is limited to $100,000,000, of which $05,000,000 was issued to shareholders and $35,000,000 was deposited with the Dominion government. By section 3 of 48-49 Vic., chap. 57 (1885) the $35,000,000 of stock then in the hands of the Dominion government was ordered to be cancelled and destroyed, and any further issue was prohibited without the special authority of parliament. The next and last statute in order is 55-56 Vic., chap. 53 (1892). Sections 3, 4 and 7 of this Act, which are the sections bearing upon the matter, are as follows : 3. In addition to its capital stock at the time of the passing of this Act, and to any which may be issued under the authority of the next preceding section, the company, being first authorized so to do by a vote of at least two-thirds of its shareholders, present or represented at a special general meeting duly called for the purpose, may, from time to time, issue shares of capital stock for any purpose for which the company requires new capital, in such amounts and at such times as the shareholders by resolution at any such meeting determine-such issue being first approved by the Governor in Council and notice of such meeting having been given in writing to each shareholder, delivered to him personally, or properly directed to him and deposited in the post office at least twenty days previously to such meeting, stating the time, place and object of such meeting, and the amount of the proposed increase. Section 4 reads : All shares of capital stock issued under the authority of this Act shall be subject to all the provisions of section 2 of the company's charter, as fully as if they were part of the capital stock therein named. (7) The proceeds of each issue of shares of capital stock or of consolidated debenture stock under the authority of this Act shall be applied by the company exclusively to the purpose for which the shareholders authorized such issue. In the Bill I have the honour to lay before the House, the government has taken the precaution to make it a matter of statute that the money shall be applied to the purposes for which it was said to be necessary at the time the Order in Council was applied for. Now, with respect to the tolls. At the time of the incorporation of the Canadian . Pacific Railway Company, railways were regulated by the Consolidated Railway Act of 1879, being 42 Victoria, chapter 9, which Act, in so far as its provisions are applicable to the Canadian Pacific Railway, and in so far as they are not inconsistent with, or contrary to the provisions of the company's charter, and save and except as is specifically provided in the charter, is incorporated with the Canadian Pacific Railway charter. The only provision in this statute which need be referred to is subsection 11 of section 17, which reads : (11) The parliament of Canada may, from time to time, reduce the tolls upon the railway, but not without consent of the company, so as to produce less than fifteen per cent per annum profit on the capital actual# expended in its construction; nor unless, on an examination
made by the Minister of Public Works of the amount received and expended by the company, the net income from all sources, for the year then last passed, is found to have exceeded fifteen per cent upon the capital so actually expended. The only other legislation in existence is section 20 of schedule ' A ' of the company's Act of incorporation, 44 Victoria, chapter 1, which provides : (20) The limit to the reduction of tolls by the parliament of Canada provided for by the eleventh subsection of the 17th section of ' The Consolidated Railway Act, 1879 ' respecting tolls, is hereby extended so that such reduction may be to such an extent that such tolls, when reduced, shall not produce less than ten per cent per annum' profit on the capital actually expended in the construction of the railway, instead of not less than fifteen per cent per annum profit, as provided by the said subsje-tion ; and so also that such reduction shall not be made unless the net income of the company, ascertained as described in said subsection, shall have exceeded ten per cent per annum instead of fifteen per cent per annum' as provided by said subsection. And the exercise by the Governor in Council of the power of reducing the tolls of the company, as provided by the tenth subsection of said section 17 is hereby limited to the same extent with relation to the profit of the company, and to its net revenue, as to which the power of parliament to reduce tolls is limited fcy said subsection eleven as hereby ^mended. Now. subsection 11 of section 17 of the Act of 1879 has been repealed; but I still Jiold that it must be taken as forming part of the company's charter, and must be referred to in order to understand section 20, which I have just quoted. I have gone carefully through all the legislation, and am quite satisfied that there is not now in existence any clause similar to subsection 11, and this subsection and section 20 of the charter form the only legislation which need be referred to on the subject of tolls. Subsection 11 was re-enacted by the Consolidated Railway Act of 1880, and appears there as subsection 11 of section 10, but it was not re-enacted in 1888 when the Railway Act was again consolidated. Now, the Order in Council of January 23rd of 1902, so far as it relates to the increase of capital stock, went into force as soon as it was passed, and has been acted upon by the company.
Hon. Mr. HAGGART.
What was the wording of that subsection 11?
I have given this with so much detail that, if hou. gentlemen will look at ' Hansard ' to-morrow, they will see what my brief really is. Subsection 11 was re-enacted, as I say, in 1886, but was not re-enacted in 1888. ' At the same time, in order to understand section 20 of schedule ' A ' of the company's Act, which refers to this section 11, it is necessary to read section 11 in conjunction with it. Now, tfiis legislation was necessary
Hon. Mr. FITZPATRICK.
only with respect to two points: with respect to issuing any part of this amount of capital stock at less than par-for under their charter they would have had the right to do so-and there is a restriction that the $20,000,000 shall not be issued at less than par; and then with respect to the tolls it is made a matter of special stipulation that when you come to apply section 20 for the regulation of tolls, this additional $20,000.000 shall not be taken into account. And, further, they have thought proper, at the suggestion of the Minister of the Interior, to provide that this money shall be specifically applied for the purposes for which the company say they require to have it-that Is, it shall be applied in the improvement of the property of the company.
Hon. Mr. HAGGART.
The company are a consenting party to this, I suppose?
Yes.
Hon. Mr. HAGGART.
Then, if I understand the minister clearly, this Bill leaves the company in the same position as they were in before being allowed to issue this twenty millions of stock and expend it upon the road. That is to say, the 10 per cent or the 15 per cent, as the case may be, which is provided in the Railway Act or in their charter, shall be only calculated on the $05,000,000 of stock as it is at the present moment?
That is perfectly right.
Mr. W. F. MACLEAN (East York).
This Bill is a very important one. There long have been grievances in this country in regard to tolls on the Canadian Pacific Railway. This government is on record, some years ago, when the Crow's Nest Pass legislation was introduced, as favouring a principle which was in the public interest- that if the Canadian Pacific Railway were to get any further concessions from parliament they were to give concessions to the people in return. Now, legislation is introduced giving increased stock powers to the Canadian Pacific Railway, and yet the public grievances existing under the original charter are not being dealt with. These grievances are mainly two. First, there is the regulation of the rates after 10 per cent profit is earned. There is no proposition in this Bill, so far as I can gather, to deal with that. The government told us last year that it was their intention to deal with this question by proceeding to ascertain what the actual cost of the railway was, and on what amount this 10 per cent should be allowed. Are there provisions in this Bill for that being done? Here is a government that says that the transportation problem is the great problem. But what are they doing to ascertain the actual cost of this road, and so protect the public? The profit of that road, I venture to say,
is away above this 10 per cent. Their statements show it. The time has come when the freights ought to be regulated, and a law passed that the government, in the interests of the people, should ascertain what the cost of the railway was. Another grievance against the Canadian Pacific Railway is that of the exemption from taxation of their land grant. It was a very important question last session, and we were told that legislation was to be introduced, and these lands were very shortly to come under taxation. or, at least, a test case was to be made. And I believe that test is promised to be made. But that is not the way to cure this great grievance. The principle to be adopted is that recognized by the government in* the Crow's Nest Pass case-that if a company are to get concessions, they are to make concessions. But here we see things done in the old way,-the old rule is followed, and everything the company wish is being granted, but the two substantial grievances, the exemption of the company's lands and the question of the tolls based upon the actual cost of the road, are not dealt with. I now point out to the House that the government are abandoning that principle which they claimed to be in the public interest in 1897, when the Crow's Nest Pass legislation went through, and they are not talcing advantage of the opportunity offered them to procure the settlement of these two grievances which the public are labouring under. Then, as to the raising of this 820,000,000. I corftend that a great deal of the money could be raised on the bonds of the company and a great deal of it could be paid out of the current earnings. But it is all to be raised on stock, notwithstanding the provisions of this Act and notwitslitanding that it more or less endangers the power of the public to regulate the rates under this 10 per cent clause. Had the government really been in earnest in seeking to promote the interests of transportation in the country, they would have said to the company : If you intend to
issue .$20,000,000 worth of stock, as your road is a fine road, we intend to take that stock on behalf of the people of Canada.
But we see none of these things advocated in this Bill. The public grievances are not corrected, there is no effort to correct them. There is no regulation of rates that we were promised long ago. And who were the gentlemen that howled against the rates in that awful charter of the Canadian Pacific Railway, if it was not hon. gentlemen opposite ? Now they are in power, now they have an opportunity to remove some of these grievances, especially in respect to the regulation of rates. They know the rates are wrong, and they claim, to have secured a reduction of them in connection with the Crow's Nest Pass Railway. Now was the time, not to send the question to the law courts or a special committee to ascertain the actual cost of the road, but now was the time when they should have
sat down with the directors of the company in the same way they did with the Crow's Nest Pass Company, and said : Gentlemen, we will give you your increased capital if you state to-day that you are under the 10 per cent clause. I believe they would have been prepared to say they would come under the 10 per cent clause ; and therefore the whole question of the rates on that road would have been under public regulation. And the same thing in regard to that hideous thing that exists in their charter' with regard to the land grants of the company, the patents for which are being issued now and were issued last year with enormous rapidity ; the contention is now that for 20 years hence the land grants of the company not sold should be free from taxation in the North-west Territories. Public policy should have insisted on the public being protected in these respects. But there is no promise of it in this Bill to-day, but there is an indication that even this government who made that arrangement in 1897 with the Crow's Nest Pass Railway Company, are to-day carrying out the will, and behests, and requisitions of the corporations, and doing nothing for the public.
It is not customary to debate the principle of a Bill upon the explanation which is given by the minister who introduces the Bill ; and I think hon. gentlemen who sit upon the front bench of the opposition will agree with me that it is not conducive to clearness or to a fair and reasonable understanding of important questions, that a debate should be sprung upon the merits of a very important Bill immediately the minister who gave the explanation has sat down. I think the House will agree with me, too, that if my hon. friend was interested in a real solution of this large and important question he would have devoted his attention to making inquiries of the minister who introduced the Bill, with the object of eliciting any further information that might enable him to understand the question, and then give it more mature consideration before expressing an opinion. I may say to my hon. friend that this legislation under which he says the people of the North-west Territories are suffering, was placed upon the statute-book by his own party and not by the Liberal party. The grievances of the people in that respect have been redressed to a considerable extent by the legislation which the Minister of Justice has introduced this afternoon, pnd I would willingly challenge my hon. friend to lay his finger upon any piece of legislation that was introduced prior to the advent of this government, in which, in so few words, so many important matters were dealt with, and the grievances of the people were so effectually redressed, and the rights of the people so effectually protected as they are in the Bill which my hon. friend has just asked leave to introduce.
We had upon the statute-book the clause which stated that the tolls of the Canadian Pacific Railway Company should not be reduced until the net earnings were 10 per *cent upon the capital actually expended in the construction of the railway. Now they come along and ask us for leave to extend that capital by $20,000,000. It is not suggested that the application is not a legitimate and an honest application. I think we will all agree, however our views may vary in regard to the policy of the Canadian Pacific Railway Company, that that company has now arrived at such a state of development that we need not look for any cheap huckstering or anything of that kind in connection wTith their capital. When they come forward with an application to increase their capital, we expect them to do so in a bona fide way, to get money for a bona fide purpose. There will be no question in the minds of members of this House upon that subject. They ask us to give them leave to increase their capital by $20,000,000. The first condition we make is this, that in considering the amount of capital actually expended in the construction of the railway for the purpose of applying the control which the law gives to the government in certain cases, that $20,000,000 need not be taken into consideration. So if the public get the benefit of that $20,000,000, and that sum does not add to the amount on which net earnings should be reckoned before we can apply our principle of control, can my bon. friend suggest anything in connection with our legislation for the Canadian Pacific Railway which would have placed the people in a better position in respect to the control of rates ? My hon. friend, I believe, is something of a socialist. Perhaps he would have taken the position that he did not care what the law was on that point, or what the legislation was, that he did not care what the vested rights of the stock holders and' bond holders of the Canadian Pacific Railway were, but he would simply have done as he pleased. I am bound to say, Mr. Speaker, that this government is not prepared to take that position ; but we are prepared, and I believe with the full agreement of the other side of the House-of the responsible members of the other side of the House-to give full, fair and reasonable protection to every vested right of any person who invests a dollar in the Dominion Of Canada. That does not prevent us, however, when government action is required, from taking fair and reasonable measures for the protection of the public, and I think it will be the sentiment of members on both sides of the House that we have gone in this respect as far as we honourably and legally could have gone.
Mr. MACLEAN.
Will the hon. gentleman say what this government have done to ascertain, in their five years of office, the actual cost of that railway ?
Hon. Mr. SIFTON.
Immediately before the Order in Council was passed which provided for this particular matter being dealt with in the way I have stated, another Order in Council was passed with the consent of the Canadian Pacific Railway Company, and it was required that they should give their consent to the passage of that Order in Council before this Order in Council was passed. My hon. friend will learn I think with great delight, that the first Order in Council provided that an immediate reference should be taken to the courts for the purpose of determining the amount of the capital actually expended in the construction of the road, so that we might know exactly where we are in respect to the control
Hon. Mr. HAGGAIIT.
Would the hon. gentleman (Mr. Sifton) answer this question ? Are you going to proceed with the reference to the courts ?
At once.
Mr. BORDEN (Halifax).
I just want to ask the Minister of Justice (Hon. Mr. Fitzpatrick) a question. Before doing so, I may say that the Minister of the Interior (Hon. Mr Sifton), after lecturing my hon. friend from East York (Mr. Maclean) on the impropriety of discussing this measure on its introduction, has proceeded himself, to follow his example by discussing it at very consider-
able length. I would like to ask the hon. Minister of Justice what has been done in connection with the disposal of the question affecting the tax exemption of this company in the North-west Territories V X do not, at present, recollect whether legislation was passed last session in regard to it or not. If legislation was not passed it was because it was found that there would be no need of special legislation for this purpose.
I would like to ask the hon. gentleman whether this Bill deals with the question at all, and if it does not, would he be good enough to tell us what action has been taken on that question, and whether he expects that at an early date any decision of the court in regard to it will be reached ?
This Bill does not in any way affect the question which has been mentioned by the hon. leader of the opposition (Mr. Borden, Halifax). I may say that I expected, of course, naturally, to make a statement in reference to that subject when the estimates were up, and I have prepared a statement which I intended to make then.
Mr. BORDEN (Halifax).
That is quite satisfactory.