My hon. friend from St. Antoine (Mr. Ames) reminds me that when Mr. Davis got his control, and when
he was allowed to wait for a year without doing a single stroke of work on it, he started to hawk it about and to endeavour to sell it like any other commercial commodity.
He had a good thing from the commission and he knew it. He had good prices. He started to hawk the contract around. He said to one man: I will give you the contract if you will give me 20 per cent. He offered it to another man if he would give him 15 per cent. At last he gave it to Mr. O'Brien for 10 per cent. I will read Mr. O'Brien's evidence at page 529 of the report:
Q. When you took these contracts Nos. 16 and 17 east of lake Nipigon, oft the hands of Davis & Company, did you go over the work?- A. We sent a man over it.
Q. And you looked over it?-A. Yes.
Q. And you made a bargain with Davis to take it off his hands?-A. Yes.
Q. Were you substituted for him in the contract or are you sub-contractors under him?- A. I think if my memory serves me right, that we just stepped into Mr. Davis' place.
Q. And his security remained?-A. Yes.
Q. Did you put up any security?-A. Not in that case, we are paying our share of the amount.
Q. What do you mean by saying you are paying your share of the amount?-A. We would have to pay that money anyway.
Q. Do you mean to say that you pay the interest on the deposit?-A. Half of it.
Q. And you also pay Mr. Davis 10 per cent on the gross?-A. Yes.
Q. How much more did you pay him?-A. That is enough, I suppose.
Q. I think so, but I was just wondering how generous you might be?-A. It is conceded that I am generous. '
Q. On that work which you took from Mr. Davis, do you think you will have a fair profit? -A. Yes, I think we will make a fair profit.
Q. You took the contract after sending a man over the work?-R. Yes, sir.
Q. Did you negotiate this bargain with the Davises?-A. Well, I concluded it in Montreal.
Q. When you negotiated with the Davises, did they want any more than 10 per cent?-A. Yes.
Q. What did they ask you?-A. 15 per cent,
Q. Did they also ask you to pay interest on the deposit?-A. Well, you see it was like this: Mr. Davis' deposit was up. His deposit is there yet. I said to them, the first thing to do was to leave that undisturbed, the commission is paying 3 per cent for this deposit, and the money will cost us more. Of course we could not get it for 3 per cent so I suggested myself paying the other 3 per cent, which made 6 per cent and it cost Mr. Davis nothing. My suggestion was accepted and that is the way it stands.
Q. So that you and the Government are paying the interest on the deposit?-A. Quite true.
Q. And Davis gets clean and clear 10 per cent on the gross cost of the work?-A. Yes.
Q. How did you bring him down to 10 per cent and give away half a million dollars difference between the 10 per cent and the 15 per
jvIARCH 25, 1914
cent?-A. We would not give him more than that and besides there were others who were negotiating as well as us and they were not offering as much, so that I think we went a little better to get the work,
Q. As compared with the prices on the adjoining contracts, how do the prices on contracts 16 and 17 compare?-A. I think they compare favourably with the prices on the adjoining works.
Q. That is to say they are higher?-A. That is what I mean.
Q. You could afford to pay Davis 10 per cent on the gross cost and still make as well out of it as you did on the adjoining works?- A. That is my recollection of the figures.
Q. That is the way you viewed it?-A. Yes.
Yet my hon. friends wonder why the Transcontinental railway has cost so much. When they can let the contract in such a manner, on such terms and allow the contractor to hold the contract over for a yeaT until the prices come down to such an extent that he can make $740,000 without doing a single turn and then hand it over to Mr. M. J. O'Brien who can still make a reasonably fair profit on the work, is it any wonder why the Transcontinental cost so much? As I said before, the Grand Trunk Pacific, backed by the Grand Trunk, came in and took $17,000,000 worth of the contract. What for? Are they behind the commission too?
Have they the favoured entrance? Are they, with the Grand Trunk, the firm that can put up the money? They have never built a line of railway; they have never owned a shovel or a wheelbarrow. They did not build a foot of the Grand Trunk Pacific although they took $16,000,000 or $17,000,000 worth of the contract. They simply came in as the favoured contractor who could put up a depoisit; they signed their name and handed the contract over to the man who did the work and took a rake-off of $850,000. Yet my hon. friends opposite ask why the Transcontinental railway has cost so much. It was partly due to their unbusinesslike way in calling for tenders.
Let me give you another instance of why this railway ha3 cost so much. I do not intend to give many of these instances because they become tiresome, but I will just give one or two instances to show what I mean. Contract No. 11 was called for in the usual way. There were several tenders on the contract. The lowest was that of the Grand Trunk Pacific at $1,691,000. The next lowest tenderers were Macdonell and O'Brien at $260,000 higher. Remember that. The Grand Trunk Pacific did not do any work. They never intended to do any work, 1301
and they immediately began to look for somebody to whom they could hand over the contract. They sold the contract to whom? To the man who had bid $260,000 higher on a contract of $1,691,000. Macdonell and O'Brien said: We will throw
off the $260,000; we will come down to your figure of $1,691,000 and will give you 5 percent as well. They gave the Grand Trunk Pacific $105,000 to step out and then according to their own evidence, they made a profit of $500,000. Is it any wonder that the National Transcontinental railway has cost $100,000 a mile, when this is the manner in which the contracts have been let?