because they have not the $45,000,000 at the present time to do the work with that the "Canadian Northern railway cannot get the $58,000,000. To earn the $58,000,000 the Canadian Northern railway must spend the $45,000,000 which they are asking from Parliament to-day. Even if the $100,000,000 comprises this $21,000,000, and I maintain that it does not, the argument advanced yesterday that there is still
$7,000,000 to be provided for, holds good. The argument of my right hon. friend the leader of the Opposition that they will have to come back and ask for more money, still remains. The Solicitor General says we are getting 40 per cent of the common stock, and that we are leaving $60,000,000 to Messrs. Mackenzie and Mann to pay them for their eighteen years of work for the development of the railway system. When the leader of the Opposition said yesterday that Canada should get more than $40,000,000 of the common stock, and that Canada should have a controlling interest in this road, I do not think it was in his mind that we should get more than $40,000,000 worth in money, because we all know that the common stock is now worth absolutely notning. We know that the common stock may never be worth anything, but we claim on this side of the House that Canada should have a controlling interest in this road, so that we may have something to say when it comes to letting the contracts for the balance of the construction of the road. We want to have a word to say in the management of the road in order that the contracts shall not be given by Mackenzie and Mann and the Canadian Northern Railway 'Company to Mackenzie and Mann, acting as the Mackenzie and Mann Construction Company, Limited, without tender and without competition. We claim that this road has been carried on as a feeder for the Mackenzie and Mann interests long enough, and that the time has come when the Canadian Northern railway should be administered, as other up-to-date railway companies are, in the interest of its shareholders and of the country generally, rather than in the interest of the promoters alone. Canada is becoming a shareholder in this road, and is advancing $45,000,000 in cold cash, or its equivalent. Canada backs the note of the company to the extent of $45,000,000. We claim that we should be able to protect our interests by having a say in the management and in the awarding of contracts; in order to see that these contracts shall be given to the lowest tenderer. It is not so much the proprietorship of the road that we are interested in as the right to have a word to say in the administration, in order to protect the interests of the people and to protect the guarantee which we have given.
I would like to call the attention of the Solicitor General to another part of this contract. In the definitions I find that:
the table, had not even consulted the maps - and were discussing the matter without knowing where the road was going to. We consulted the books and documents and one thing we do know is that the road is going into bankruptcy, and that $45,000,000 will not save it; more will have to be given if it is to be saved. The Canadian Northern Tailway is going into bankruptcy and that is where this country will go if the party now in power remains there much longer, because when it comes to handing out money to assist corporations it is always ready to a,ct, and the Minister of Finance is always ready to borrow.
The Prime Minister, when he submitted these resolutions to Parliament, laid great stress upon the fact that he was able to read tc the House an editorial taken from the Journal of Commerce, published in Montreal, edited by the former Minister of Finance of Canada, Hon. Mr. Fielding. If the Prime Minister can get any great consolation out of that editorial he is welcome to it. The former Minister of Finance. Mr. Fielding, admits in that editorial that it would be a disastrous thing for Canada if the Canadian Northern railway went into liquidation. He admits that the loan necessary to avoid that must be guaranteed by Canada. He does not discuss this agreement or say that these resolutions are good resolutions or the best that could have been made. He merely says that the money or credit must be given. That is what the Prime Ministers of the different provinces say in the letters and telegrams they have sent to the Prime Minister of Canada. We all agree that the Canadian Northern railway must have assistance. The money has all gone from the moneybag labelled ' Canadian Northern Railway' into the moneybag labelled ' Mackenzie and Mann and these Canadian Northern Railway moneybags must be refilled. But what we do not agree upon is the manner in which that loan is to be guaranteed. It is because we consider the guarantees insufficient, it is because we consider that we should have a controlling interest in this road, it is because we consider that we should receive all the securities that Mackenzie and Mann can give, that we do not favour this agreement. If Messrs. Mackenzie and Mann have confidence in their enterprise, if they really consider that with the money advanced by Canada at this time they can make a success of this undertaking and make millions out of it besides, they should at least give us security upon all they possess, and not
merely a mortgage upon the stock of companies that are worth nothing. If this were done it might be wise for the Dominion of Canada to give a guarantee or loan. Now, talking about editorials in newspapers, I have an editorial here that I would like to read to the Prime Minister. It is taken from the Montreal Gazette-and nobody will tax that with being a Liberal paper-of date February 27, 1914:
The Government of Canada is being asked to loan the Canadian Northern railway a sum of money, said to be $20,000,000 or $25,000,000.
They made a mistake; it is $45,000,000. At that time the amount was not known and people did not think they would dare ask for so much.
The grounds are peculiar. The company voluntarily undertook to construct a great system of railway lines, some of them in close competition for a limited traffic with other roads. It has been liberally treated by Parliament and legislatures of the provinces traversed by its tracks. The cost of the construction to December 31 last was given the other day as $303,319,000. Included in this amount is $20,000,000 of cash subventions from the treasuries of Canada, of the provinces and the municipalities, besides the proceeds of $24,000,000 of land grants bonds issued and on the security of land given to certain of the component lines of the system. Even with the free way the legislative provinces of Canada have of voting away public money and resources, this was not illiberal. Then, in order that the company or its subsidiaries should be the better able to borrow money, the guarantee of the Government of Canada, as to principal and interest, was given to some $62,000,000 of bonds. It is after this that the demand is made for a direct loan, which, if it is made to the company, can only be made after the Government itself borrows the money. The proposition is not businesslike. The Government of Canada is not an institution financing private corporations. What it has done in the connection, because of the folly of Parliament, has cost it much already and will cost it more, has compelled it to borrow heavily, swollen the annual interest charge on the public debt and made it impracticable to reduce the customs taxes. The reasons advanced in support of the request are not strong. One is that if the loan is not made some other company may get control of the Canadian Northern property. This is not a thing to be afraid of. Parliament in the Railway Act has done all it could to ensure that there shall be no competition in rates between railway points and railways.
The Railway Commission fixes rates, which may neither be exceeded nor cut. It does not matter, so far as cost of service is concerned, whether the railways of the country are owned by ten or a hundred companies. Another statement is that unless the loan sought is made, provinces which have guaranteed bonds of the company and its associated organizations may be embarrassed. Some of them would certainly be embarrassed if they were called upon to meet the obligations they have assumed. They have backed railway notes with a recklessness that has made the process useless. This, however,
is not the business of the Parliament of Canada, whose duty it is to consider first and only the credit and financial strength of Canada and the interests of the federal taxpayers. These will not be helped by continuing the bad practice of making the national treasury responsible for the debts of companies or individuals in any line of activity.
That is the opinion of the Montreal Gazette, a good Conservative newspaper; an opinion expressed, by the way, just about the time when the hon. Finance Minister said that no further loan would be given. Whether or not the Gazette still has the same impression 1 do not know, but I do know that the Montreal Gazette is a reputable newspaper. I consider it to be one of the best Conservative newspapers published in Canada and I read its editorials with much interest. I find that it strives as much as possible to be consistent, at least with itself, and for that reason, I presume, it cannot approve the arrangements made at the present time by this Government for a guarantee of $45,000,000 worth of bonds for the Canadian Northern Tailway.
I do not propose to take up the time of the House any longer; I merely wish to say that I am at one with the leader of the Opposition in this matter. I believe that the Canadian Northern railway should be assisted, not so much for the company itself as for the credit of Canada and for the necessity of building a third transcontinental railway. As other speakers have said before me, the question of whether the third transcontinental railway should be built to-day or to-morrow is a question which cannot be discussed at the present time; that question has already been decided in the affirmative. I have confidence in the future of my country and I really believe that in a very few years Canada will be in a position to furnish traffic for this third transcontinental railroad. I cannot say, however, that I approve the resolutions as they stand at the present time upon the Order Paper of this House and I hope that they will be amended in such a way as to provide that more security will be given to the people of Canada. I hope that an amalgamation of the different companies will be brought about. Amalgamation should not be a difficult task, although I quite realize that it could not be brought about without notice to and protection of the shareholders in the different companies. But I do think that all these constituent and subsidiary companies should be incorporated into one large company known as the Canadian Northern Railway of Can-235
ada, instead of retaining their own identity and being known as the Canadian Northern system, a definition which says much but means very little.
I think I have shown to you, Mr. Speaker, and to other hon. gentlemen of this House that the right hon. leader of the Opposition yesterday really found the weak points in this agreement, that he very ably pointed them out and that the hon. Solicitor General was unable to refute the objections which were urged. I regret that the Solicitor General, having devoted two or three months of his time to the drawing of these resolutions, should not have taken the trouble and the time yesterday to explain them to the House in all their details. I admit that they are complicated; I admit that for members of Parliament who are not accustomed to high finance they are difficult to understand and that we may make mistakes in interpreting them, but I do say that they certainly should be understood by the hon. gentleman who drafted them, and that he should have explained them fully to the House instead of attempting merely to refute the objections which were levelled against them. The hon. Solicitor General promised us at one time in this House this year, when a certain resolution was moved by an hon. member on this side of the House concerning the reduction of the duty on agricultural implements, that that was not the proper time to make such a motion; that the matter would be considered in the Budget speech, and that when the Budget speech was delivered he would rise in his place and explain his position. When the Budget speech came before the House he did not r;se in his place and did not explain his position. Further, he was so busily engaged in drawing up these resolutions that he was not even in his place when the vote was taken. After neglecting his other duties for the purpose of preparing these resolutions, he certainly could have done more, in making his speech yesterday, than to accuse the right hon. leader of the Opposition with not knowing what he was talking about. Although he proceeded to show the members of this House and the people of Canada that the right hon. leader of the Opposition was absolutely right, and that Ins objections could not be successfully refuted.
Mr. H. B. AMES (St. Antoine, Montreal). Mr. Speaker, after the full and careful explanations of these resolutions that were
given yesterday to the House by the Prime Minister (Eight Hon. E. L. Borden) and by the Solicitor General (Mr. Meighen) very little can be added at this stage of the discussion. But some of us who are endeavouring to give careful and conscientious consideration to the problem now before us and who have tried to
bring into somewhat stronger light the main features of the arrangement which is being made, are desirous
of stripping the question, to some extent, of its technicalities and of throwing upon the screen a few of the salient features connected with this arrangement and the steps that have led up to it.
I think it is generally admitted that no prime minister and no government in Canada has for many years been called upon to face a more difficult situation than that which this Government has had to meet in connection with this question.
It would not have been at all unnatural for the right hon. the Prime Minister and his colleagues to have declared themselves not responsible for the situation that has arisen and, having reference to the fact that this organization, the Canadian Northern railway with all its subsidiary companies, was born about 1896 an>d has grown to full maturity under a regime for which the present Government is not responsible, to have said: We did not create this position, we do not propose to become responsible for this affair; we will allow matters to take their natural course. But that position, while it might be defended from a political point of view, did not appeal to the statesmanlike mind of the Prime Minister. He felt that in inheriting the power of carrying on this Government he inherited also the responsibilities of government and that he had to face all situations that might arise, whether they were situations easy of solution or difficult to deal with. This is one of those questions that he has had to face and make the best of conditions for which he was primarily not in any way responsible. And so we should consider this question without political recriminations, without personalities, with the elimination even of the personal factors in connection with the people with whom we have to deal.
The fact is perfectly apparent that a third transcontinental railway has nearly reached completion, that in order to complete that railroad obligations to the extent of $300,000,000 have been incurred, that the rail-
[Mr. Ames. 1
road cannot be completed without additional assistance, that if it be not completed it cannot pay, that if it does not pay the obligations alreafdy incurred will be repudiated and the credit of Canada, will, in consequence, suffer; that, therefore, the only chance that the expenditure already has of being made good is that the system be completed and that the railroad, as a going concern, be permitted to earn what is necessary to meet the charges upon its obligations.
There is given in the blue book of information placed in the hands of members of Parliament a statement by Mr. Hanna, the third vice-presMent of the Canadian Northern railway, which may by some be regarded as an optimistic statement. Mr. Hanna states that by 1918 the fixed charges on the system would be about $16,000,000, and he proceeds to show that by that time he would consider that the earnings would be ample to meet not only the fixed charges but to create a surplus of some extent. Whether we altogether agree with his prognostications I do not know. They do not, however, seem unreasonable. At all events, it can be urged that the line then in operation will have upon it an obligation which will not be more than one-half of that which the Grand Trunk Pacific have assumed in undertaking to operate the National Transcontinental railway. If the Grand Trunk Eailway Company can expect to succeed, it is not unreasonable to imaging, that a railway with one-half the obligations to carry can also succeed. However, we have to admit the fact that this company in its time of extremity can turn to no other source than the 'Canadian Government. It has no other friend in the world, and however we may feel towards- it, the responsibility rests on us of determining whether we shall or shall not be the only friend that that company can possibly have.
We cannot escape the fact that the Government of 'Canada and the provincial governments and the municipalities to some extent have frequently recognized this undertaking. They have declared that the primary intention of the promoters, the building of a transcontinental railroad from the Atlantic to the Pacific, was timely and was a laudable intention. They have frequently committed themselves to that contention. They have done so by granting frequent and generous aid. It is not perhaps inopportune to review what we -have done, very briefly. The
Dominion has given to this undertaking in cash $21,378,534; the provinces have given in cash $3,877,000 by way of subsidies. These companies have been able to earn lands amounting to 4,100,000 acres which were originally in the possession of the Dominion Government. They have entitled themselves to select 2,000,000 acres of land in the province of Ontario, now belonging to that province, and some 500,000 acres of land in the province of Quebec, now the property of that province. In addition their obligations have been guaranteed by the Dominion to. the extent of $58,000,000, and by the provinces to the extent of nearly $77,000,000; and the public, taking cognizance of the fact that the Dominion and the provinces have both recognized this institution, and that the people of Canada, in Parliament and Legislature, have declared that it was a laudable undertaking, the general investing public of the world, of Europe and of America, have put their savings also into this undertaking to the extent of some $175,000,000 or $178,000,000 without government guarantee. Canada's investment in this undertaking is large. Our endorsement of this undertaking that may become an obligation is still larger, and the moral obligation which rests upon us of having encouraged other investors is larger still. Therefore, on these three heads, it seems to me that we cannot allow this undertaking to go by default.
There are three alternatives that have been urged in reference to the situation which confronts us, each of which has its advocates and each naturally has its objectors. The first alternative is what we may call laisser faire, allowing matters to take their course, with the inevitable understanding that collapse will follow. That has been declared to be unthinkable. It is admitted on both sides of the House that it is unthinkable. It therefore is of no advantage that we should dilate upon the disaster that might result from a condition of affairs which none of us have any intention of allowing to come to pass.
The second alternative is that of immediate Government possession. I have found it a little difficult to understand what is the policy of the right hon. leader of the Opposition in this respect. But as nearly as I can judge, his contention is that we should take a majority of the stock at present owned by Messrs. Mackenzie and Mann and hold a majority of the stock in the new Canadian Northern amalgamation. That is 235i
equivalent to our assuming a controlling interest, which is practically the same as our taking immediate possession. The other method of taking immediate possession, if I understand aright, is that proposed by the hon. member for Kingston (Mr. Nickle), whose method would be the taking over of the physical assets of the whole system. Just how that would be done was not fully explained by the hon. member. So that the second alternative, and if I am right it is what the leader of the Opposition favours, is that the Government should at this time assume control or possession of the entire undertaking.
The third method is that proposed by this' Government, namely to grant what may be called an extension of time, one final and 'last opportunity to the promoters of this grea t enterprise to make good, with the understanding that this is the last time that the pitcher goes to the well, that if it ever comes back again it will most assuredly be broken. I do not think that we in this House should indulge ourselves to any considerable extent in considering the personality of the two men whose names are primarily connected with this great undertaking. I am quite free to admit-and I think this feeling is shared on both sides of the House-that there are many members of Parliament who have just cause to feel that they have not always been fairly dealt with in respect to the demands that have been made by Messrs. Mackenzie and Mann upon the Parliament of Canada. Those of us who remember the legislation of last session, when we were given to understand that the aid then granted would bring ft bout the completion of the road and that nothing further would be demanded, while we feel that those who made those representations in this House were sincere in believing that the evidence laid before them was in accordance with the facts, yet we cannot help feeling that to some extent they were deceived, and purposely deceived, and that this House acted on a supposition which further events have shown to be unfounded. Therefore, we cannot altogether get away from a feeling of annoyance at the way in which we have been treated, In the matter of the stock that came into the possession of the people of Canada one year ago, it was repeatedly stated in this House that the Canadian people were henceforth the owners of one-tenth of the capital stock of the company. If I remember rightly, the Minister of Finance in four separate paragraphs of his speech made that statement, and I have no doubt whatever that
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
Mr. Speaker, before the House rose at one o'clock, I had been dealing briefly with the various alternatives open to this Government in meeting the difficult situation, and I had endeavoured to show that of the several alternatives there was none which seemed to be so free from objection as a method somewhat similar to, if not identical with, the one that is covered by the resolutions which have been introduced by the Prime Minister. I shall now take a few moments of the time of the House in dealing rapidly with some of the prominent features of this agreement with the view of pointing out wherein, in my judgment, that agreement is commendable and should receive the support of the House and of the country. When the Government approached this problem they found that they had to deal with a very tangled web of allied companies. The proposition would have been comparatively simple if they had been dealing with one completed railway system. But they found a score and a half of different companies each having a separate entity and organization. The first task that presented itself was that of unification, not the task of amalgamation which would require extensive legislation and much time. Under present circumstances all that was necessary was to form a unification and to bring these various component parts of this system together so that they could be controlled from one centre. My hon. friend the Solicitor General showed last night what were the advantages of this method and the many obstacles that were in the way of such an amalgamation as had been hinted at by the Opposition. It is proposed to bring these twenty-nine undertakings into one system so that they can be centrally controlled.
These undertakings, if united, contain all the essentials to the successful operation of a railway system. They include a main line of railway from the Atlantic to the Pacific, the necessary terminals in all of the chief centres of traffic, a number of branch lines and feeders, telegraph systems, express companies, even steamship lines, and care
has been exercised in bringing into the unification every essential feature which might be necessary were the Government, or another company, to be called upon to operate it as a completed Canadian transcontinental railway system. Henceforth there is to be a central control-not a central control as heretofore by Mackenzie and Mann, Limited-but the Canadian Northern Railway 'Company are to hold all, or a majority, of the stock of every one of these subsidiary companies that go to make up this general unification. In order that these provisions may be observed these stocks are to be in the hands, not of the Canadian Northern Railway Company itself, but of trustees who will see that the agreement is carried out in its fullest particulars. Moreover, further issues of stock are prohibited, so that we know just where we stand in our enumeration of the stocks involved.
With this new unification the Government has made a bargain. Some people think that it is a hard bargain. There are people who believe that the Government has exacted really more than it should have taken out of the companies and the people who compose this unification. Hitherto it has been customary for the Government of Canada to present the railways with large assistance considering that the only return necessary was that the roads, when completed, would be successfully operated and would indirectly be a benefit to the people of Canada. But, for the first time, the Government has sincerely insisted that a bargain should be made in which there is a large quid pro quo in return for aid rendered. [DOT]
This undertaking is about three-quarters completed and it has been represented to the Government that it will require an expenditure of another $100,000,000 to bring the system up to a full operative basis. That $100,000,000 can be made up in this way: There are $58,000,000 worth of securities which are already legislatively possible but which can only be realized as the work, of construction continues. The other $42,000,000 of aid, the promoters are expecting to realize by the sale of new securities guaranteed by this Government and it is claimed that with $42,000,000 they can easily realize the $58,000,000 and therefore, the whole $100,000,000 will be available ifor the completion of this system. The Government gives-or I might rather say-lends its
credit to this enterprise to the extent of guaranteeing an additional $45,000,000 worth
of bonds. These securities are to be issued for twenty years at four per cent and the Government becomes, in the last resort, responsible for the principle and interest. That is the main assistance that the Government gives.
But the Government gives further assistance than that which must be taken into consideration when we are examining this bargain. The Government says: For the
first three years of the operation of this system it will be very difficult, if not impossible, for the company to pay interest on these bonds; consequently the Government undertakes to advance-that is to lend-the interest of six semi-annual payments, amounting, it is estimated, to $5,400,000 and this loan shall be repayable in 1934 when the guarantee securities fall due, and this loan shall be covered by the same security. So that the Government is giving an additional guarantee to the extent of $45,000,000 and practically a cash loan of $5,400,000. This makes the total assistance that the Dominion Government has given to these allied enterprises:
Cash $ 21,400,000
Loaned in cash 5,400,000
or a total of about one-third of the entire $400,000,000 which at the time of completion shall have been invested in this road. The Government has taken a large interest and is entitled in return to very marked consideration.
What does the Government get in return? I propose to classify the benefits which are to accrue to the Government under several different heads. In the firs<-place, the Government is to get forty per cent of the common stock of the reorganized Canadian Northern Railway system. That forty per cent of stock, or that $40,000,000 worth of stock if it remains at par, is to be the absolute property of the Government for all time.
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
apparent discrepancy as to the cash and other aids alleged to have been given to the Canadian Northern between the member for Kingston and the Solicitor General. Has the hon. gentleman had an opportunity of investigating the difference and can he give any reply?
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
I have not had an opportunity of investigating the difference, and I am giving what is set forth in the official papers laid before the House.
To resume, let me state that this $40,000,-
f Mr. Ames ]
000 par value of stock of the reorganized Canadian Northern Railway system is to be the absolute property of the Government for all time. The Government is already a partner to the extent of $7,000,000 worth of stock, or one-eleventh of the present stock of the Canadian Northern. The Government is now to become a partner to the extent of two-fifths of the entire capitalization of the undertaking. I take it that the Government is not so particularly anxious that this should become a revenue bearing stock as it is interested in the fact that the stock should be controlled by the Government in order that, in that way, it may to a large extent be able to guide the future policy of this gTeat organization. It is well known how this matter is to be arranged. The Canadian Northern at the present time have a capital of $77,000,000 of which we own $7,000,000. They are authorized to increase that capital to $100,000,000, and all the stock of all the constituent or subsidiary companies will become the absolute property of the Canadian Northern Railway Company, and no further stock will be permitted to be issued by any of these subordinate companies. In order to secure the carrying out of that arrangement, these stocks will be placed in the hands of a trustee who will act for all the parties to this agreement. Therefore to control the Canadian Northern in the future will be to control the entire system, including all these subsidiary. companies; and if two-fifths of the control of the entire system rests in the hands of the Government, two-fifths of the control of all the component parts of the system will be with this .Parliament and those whom we appoint for that purpose.
There are further conditions to be imposed upon the Canadian Northern and the subsidiary companies. The Government, in making this arrangement, have thought of other people besides themselves; they have thought of those people w'ho have made short term loans for this undertaking and of those who have in good faith sold goods or rendered services on construction account. All these people will be protected by this agreement. As far as the temporary loans are concerned, all represented probably by short term notes, I understand that they represent $20,703,865, and to secure the payment of that amount securities valued at $24,324,000 have been lodged under the trust deed of 1903. This agreement proposes to say that these securities shall be regarded
as pledged for that loan; that they will not and cannot be interfered with in aDy other way or for any other purpose than for the satisfaction of these temporary loans. Therefore, it gives to the persons who have loaned that money the feeling that they need not worry; that while there may be delay, they will eventually be paid, and they are thus relieved from the necessity of pressing for immediate attention.
As to current indebtedness-that is to say the floating liabilities for work on construction, for supplies given and for services Tendered, scattered throughout Canada from one end to the other, many of them owed to Canadians, some for large amounts, some for small amounts, some which would ruin the man to whom they were owed if they were not paid-the Government undertake to make a prior condition to this guarantee that Messrs. Mackenzie and Mann, Limited, shall reduce those claims from $10,500,000 to about the normal amount, namely, $3,000,000. In other words, in one year Mackenzie and Mann must reduce those claims by $7,500,000 or arrange for that indebtedness in such a way as may be satisfactory to the persons who have supplied the goods or performed the services. This is protecting, of course, our own people, and will undoubtedly Ibe received throughout Canada with great satisfaction by many who have passed anxious days and nights while this subject has been under consideration.
There are certain other conditions which by this bargain are imposed upon the Canadian Northern; and it is well that we should see all that the Government of the day has seen fit to exact, shall I say, before bringing this bargain before the House. In order to secure oversight and accurate information, and in order to make it certain that hereafter we shall know down to the last detail how this company is getting along and how all the constituent parts are thriving, we are to have first of all a director who will sit, not only on the board of the Canadian Northern, but on all the other boards that are kept alive in connection with this system. He can attend every meeting; he can demand that a meeting be called if it is not called at the regular time, and he is protected in many ways in performing the duties for which he is appointed. He is on guard and will be on guard to see that the Government interests are in all ways protected, and to notify the Government in case any of the stipulations covered in this agreement are not lived up to by the Canadian
Northern Railway Company or any of its secondary or constituent parts.
There is also to be brought down yearly a consolidated balance sheet, which will show the financial condition of the entire system. If that is in any way unintelligible or does not contain a statement which the Government is prepared to accept, there cannot be the slightest difficulty in the Government having an outside independent auditor appointed, such a firm for example as Price, Waterhouse and Company, to go thoroughly through that statement and find out whether it represents accurately in every particular the position of the company. We have the further right that the books shall always be open to inspection, and that any person appointed by this Government shall have full right to in- [DOT] spect all the details. Therefore the Government will always have accurate information; and with such precautions, even if the company were to try to hide some things, I contend that it would be impossible for them so to do, because this Government will always be completely and accurately informed as to all that is going on.
We may subsequently require again to deal with this great question in some form or another; and I contend that, if from this time forward every detail of these transactions is open to inspection and can be filed on record and can be known and understood by the Government of the day, when we have again to deal with these people, we shall be in a position far better than we are in to-day adequately to meet the situation.
There are further conditions that are imposed on the Canadian Northern that carry with them indirect benefits to the Canadian people and to the Canadian Government railway system. First of all it is stipulated that Canadian routes and Canadian ports will always have preference. I would point out that this railway company has no American terminus, and this agreement does not encourage private and independent routing of freight. The companies agree in these arrangements that they will follow Canadian routes and that they will utilize Canadian ports. Further, they agree to enter into an arrangement whereby the export traffic, viz., goods, that may originate in the Northwest intended for export via Montreal, Halifax or St. John, shall be carried to those ports, and the rates shall not exceed those which the American railroads are at that time prepared to give. So we are assured that we shall have in Canada as fr'nd rates as are given on the
continent on such goods as we may desire to export. Then again there is interchange of traffic which may be possible with the Intercolonial railway which involves, of course, apportionment of rates. And finally it is stipulated that they shall consent to give to the Intercolonial railway, that is to the Government railway system, running rights over the whole Canadian Northern Railway system. Now, as I look at that-and the point has not yet been dealt with to any great extent-it seems to me that that is a consideration which carries with it very great benefits. For example, under that .arrangement Intercolonial railway trains might be expected to travel to Winnipeg and Canadian Northern railway trains.to arrive at Halifax; and if it should happen at any time that none of the three great companies gave satisfactory railway rates across the central portion of Canada, nothing need hinder the Intercolonial railway from taking advantage of these running rights into the heart of the northwest and instituting their own rates for the relief of those citizens of Canada who may be affected by the situation. So, there are further considerations which certainly bring indirect benefits to the people of Canada and to the Canadian Government railway system.
Now, there are some conditions which have been imposed upon Messrs. Mackenzie and Mann, which, it seems to me, might have been left entirely out of the agreement haJd not the Government felt that they were anxious to make that agreement so good that there would be no chance of it being rejected by Parliament and the country. Messrs. Mackenzie and Mann have been connected with the system ever since 1606. During that time they have acted in the double capacity of contractors and financial agents. As contractors they would naturally be entitled to contractors' profits, and as financial agents to commissions for the loans and financial dealings that they put through. It is stipulated by the Mackenzie ankl Mann Company, Limited, and by Messrs. Mackenzie and Mann, individually and collectively, that all claims of this character shall he considered as satisfied up to the time that this agreement is signed, and that they will not be presented hereafter. There is, therefore, no undisclosed liability in this connection, and we feel that we have all the cards on the table before us. Hereafter doubtless they may still perform services for which they will expect
[Mr. Ames. 1
remuneration, but in that case these services will be performed with the knowledge and consent of the directors of the new company, which directorate will contain a representative of the Canadian Government, and unless these agreements are in advance accepted by the representative of the Canadian Government, it is not probable that they will be permitted to hold. So that in this case also the Government were freed from liability of having claims made upon them-should the road prove eventually successful-that it -would probably require a very large sum of money to satisfy.
Now, without in any way impugning the good intentions of the contracting parties, it is customary in an arrangement like this to exact large security that shall be placed in impartial third hands, and shall be forfeitable in case either of the contracting parties should fail to fulfil the terms of the agreement. In this case securities to a considerable amount are to be placed in the hands of impartial trustees. I do not intend at this time to go to any great extent into an examination of those securities. That was done very thoroughly last nigiht, and will be further done wnen we reach committee. It is hardly necessary to do more than enumerate: First, there is the physical mortgage on the entire Canadian Northern road, an undertaking having 5,300 miles of railway, an undertaking which, at the present time, I understand, is able to meet the fixed charges that are upon it, and which we have every reason to believe will become, if it has not already become, a profitable undertaking. In the second place
there are the eighteen lots of stock enumerated in schedule 2, part 1, which at present are owned by Messrs. Mackenzie and Mann Company, Limited, free from all prior claims save the mandatory charges. These, with four exceptions, are all the stock either issued or that can be issued. They become what might be called the second line of defence, the second item in the list of securities. Then, we have the equity, which is alleged to be considerable, in a list of bonds and stocks which are held under the trust deed of 1903 which, with that trust satisfied, it is expected would realize a certain sum of money available for the satisfaction of our guarantee. And finally we have the Broekville and Westport railway on which we shall hereafter have the first claim.
There is also security which Messrs.
Mackenzie and Mann Company, Limited, have been asked to put up which does not really directly belong to this railway system, and the putting up of which they would have been justified in refusing to consider had they not been anxious to meet this Government. I refer to their equity, their beneficial interest, in their townsite properties. We understood from what the Solicitor General told us last night that the townsite properties together with the prairie lands were covered by certain securities which, if satisfied, would practically leave the townsite property free of all indebtedness. And the $10,000,090 of capital stock, and $10,000,000 of debenture stock which Messrs. Mackenzie and Mann Company, Limited, have as their share in this town-site property are placed in escrow for us and come into the list of securities which are given as pledges for the purposes of this undertaking.
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
No, those I refer to are town-sites throughout the Northwest. Now, securities have a dual value in an arrangement of this kind. They have their instrinsic value, the value that may be there to satisfy any financial loss which may be involved through foreclosure. But they have also the value that they are to the pledger who may be presumed at least to be very anxious to resume possession of what he has pledged. If my hon. friend from Algoma, for example owned a property worth $10,000 and I loaned him $10,000 on that property, he would naturally feel that, having already obtained the full value he would not need to pa'y the interest and need not care whether the mortgage were foreclosed or not. But if, on the other hand, I had loaned $6,000 and he felt that the property was worth $10,000, he would pay the interest promptly and would be anxious that the mortgage should not be foreclosed as he would look forward to the day when he might step back into his possession of the whole $10,000. It is the same in the matter of driving the bargain that we are making here; if you take from the party with whom you are dealing so large a share of what there is in it that he feels he has practically already received full value he has no incentive to endeavour to recover his possession. One of the features of this arrangement that I think should commend themselves to the House is that Messrs. Mackenzie and Mann individually
and collectively will have a very great incentive which will call forth their very best endeavour to bring this great enterprise through, because if it is a success there is , still enough left in it for them to amply repay them for all they may have done.
If you took from them practically everything, they would be, just as other human beings naturally would be, far less liable to put forth their every endeavour to get back into the position that they were in in the first place. So I think that when we come to consider the value of the securities, we may take into consideration both their instrinsic value and their value as an incentive to those who are putting them up fo redeem them and to put themselves hack into their former position.
There is another feature of this matter which, I think, is well worthy of consideration. What is to happen in case of default? We have hitherto been dealing with the situation in case of success; the Government has very carefully looked ahead in regard to what might happen in case of failure. Ordinarily it is a very slow process to foreclose a railroad and for the bondholders gradually to take possession of the physical assets thereof. The Government in this case, however, has supplied a method of quick procedure whereby the axe drops instantly and whereby there can he no coming back for further assistance. It is definitely stipulated in this undertaking what shall constitute any event of default; it is so clearly defined that there can be no possible misunderstanding. Should the Canadian. Northern railway fail to pay interest on the securities which are to be issued in connection with the guarantee which we are now authorizing, or should they fail to carry out any of the conditions contained in the trust deed as accompanying that guarantee, they would commit an event of default. Should the Canadian Northern on any of the previously guaranteed securities or hereafter guaranteed securities fail to pay the interest, they would * commit an event of default. If any part of the system goes into the hands of a receiver; if any branch of the whole tree shows signs of decay, that is an event of default and in any of these events the Government can drop the axe without delay. I have heard this agreement described somewhat as a case where the culprit has confessed judgment and has been let out on suspended
sentence. Some elements of the agreement certainly can be compared with such a case. 'The trial is over. The applicants for aid admit that without our help they cannot complete the road. We have undertaken to give them a last chance, and it will never be necessary for them again to come here, nor will it be necessary for this Parliament to listen to another discussion such as is taking place this session. They have been tried; I may almost say Urey have been found guilty and let out on suspended sentence. If there is an event of default; if they fail to perform the obligations that by this new trust deed are placed upon them, the axe drops and that is all there is to it. There is a summary method, therefore, by which the Government steps in and takes possession of the whole enterprise. The Government can replace the directors by Order in Council; the new board of directors will have all the rights that would be given by a board of directors elected by the shareholders, and they can deal with the physical property as they see fit. Then, the Government can declare the mortgage foreclosed and can enter into the benefit of the equities, subject, of course, to the consent of Parlial-ment. If the Government, in such an event, enters into control, it may become the owner of the system by assuming the responsibilities and powers as provided by this proposed legislation. The Government could then arrange the whole financial system involved so as to protect all concerned. The Government can operate; the Government can lease, or the Government can create a new railway company to manage the road and enter into ownership, if so desired.
It has been advocated in this House that the Government should immediately take possession of this system. The right hon. leader of the Opposition practically recommended that when he said that we should demand and receive a majority of the stock. If you have a majority of the stock you have control of the system, and to control the system means to assume the majority of the responsibility and practically let the other fellows out, if they care to go out. That is one way of doing it. The other way is that explained by the hon. member for Kingston, who proposes that we should immediately allow the road to go to smash and then step in and take over the physical assets and become absolute owners of the system. I endeavoured to point rnt. before luncheon
that there were many difficulties in the way, but if we now give, by this new arrangement, what practically amounts to four or five years' extension of time; if we permit Messrs. Mackenzie and Mann to make one more effort to put .this thing into shape and bring it through; if, with the information which will hereafter be always at our disposal, we can see that they are not succeeding, this Government will then have ample time to consider the matter and provide ways and means whereby we can, in due course, take possession of the road if we so have to do.
To conclude, I will simply summarize in a word what I have been endeavouring to demonstrate. This is a bad situation, at. the best, but it is a situation in respect of which a government in which we have fconfidenee has no intention of lying down or shirking responsibilities. This arrangement wil1 be either a success or a failure. It gives to the promoters of the road one more chance; it still leaves them with a considerable status and if they regain their original position the people of Canada will benefit to the extent of being the owners of $40,000,000 worth of stock, which wall be then of value. If, however, the promoters cannot succeed, this legislation provides a simple and effective method of foreclosure and a short cut whereby the people of Canada can take, without expense, possession of the physical assets of the road. The Canadian Government would then be the owners of a transcontinental system which has been built at lower cost than any other; a system which ought to be able to pay if any of them can be made to pay. If it is to be sold or to be leased or to be operated we will in the next few years have time to consult the people and ascertain what their wishes may be in regard t the matter. I feel, Mr. Speaker, that the Government, having had to face an extremely awkward situation, has acted with courage, with foresight and with skill and has made the best possible arrangement that under the circumstances could be made, and therefore, deserves the support of this House.
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
Speaker, I confess that I rise with some diffidence to address this House at this time. I am not unconscious of the fact that in rising to address the House on a measure which has been submitted by a Government that I have supported, I am inviting not only criticism, but something worse; and yet I cannot by any system of reason-
ing that I can adopt bring my mind to support the proposals that are now submitted for our consideration. I am, however, a firm believer in party government. I have always believed that under democracy as it now exists the interests of the people can best be safeguarded by party government; I have not changed that view, nor have I any apologies to offer for my party affiliations. I am proud of the fact that during my manhood, since I have been able to think for myself, I have served one party. I have expended some time, some energy and what little ability Providence gave me, on behalf of that party. In doing that, I believed that I was best serving the State of which I am a unit, and I cannot better express the views which I held and which I now hold than to quote to thia House the sentiments from Macaulay with which I closed the annual address that I gave to my constituents last fall. Lord Macaulay, in his farewell address to his constituents at Edinburgh, used these words:
I acknowledge great errors and deficiencies but I have nothing to acknowledge inconsistent with rectitude of intention and independence of spirit. My conscience bears me this testimony : that I have honestly desired the happiness and prosperity and greatness of my country; that my course, right or wrong, was never determined by any selfish or sordid motive, and in troubled times and many vicissitudes of fortune, in power and out of power, through popularity and unpopularity, I have been faithful to one set of opinions and one set of friends. I see no reason to doubt that those friends were well chosen or that those opinions, were, in the main, correct. I
I still hold that the friends with whom I have been associated were well chosen and that the opinions which I have held were, in the main, correct; but I venture to say that in this new democracy in this Canada of ours there must be room, in the party to which I belong, for independent spirit and independent thought, and that I must be permitted to exercise the intelligence that Providence gave me, in arriving at a conclusion as to whether or not this measure commends itself to my judgment; and if it does not commend itself to my judgment, as it does not, I purpose to give to this House and to this country some reasons for the faith that is in me. That being so, let us frankly for a moment contemplate the transportation system in Canada. There is no problem so serious, there is no problem that offers so many (difficulties, there is no problem that so vitally affects the well-being and interests of the people of Canada, as does the transportation problem; and in the solution of that problem the measure which this House is now asked to consider must bear always an ever increasing importance, for what we do here to-day with this measure must have a vast and vital effect and influence upon the well-being not only of this generation but of generations of men and women yet unborn who in time to come are to occupy the great fertile plains of Canada. That being so, what is the position that confronts us? I am not concerned about the argument of how much better we are doing than some one else did. The argument that I am holier than thou is getting rather played out, if I may use a common expression.
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
I sdid not say that to gain any sympathy from my hon. friends opposite. If they read history aright they will be so ashamed of their record with respect to transportation matters that they will offer apologies to the generations yet unborn. What was the condition with which this country was confronted? A vast territory, one of the vastest unoccupied and fertile countries that the world knew, was being joined and united into a great dominion. By contract we undertook to provide for transportation between the two seaboards. We undertook that the far off seaboard of the Pacific should be united with the seaboard of the Atlantic, and in the strength of that undertaking the people of Canada, numbering but a few millions, commenced a task of a magnitude such as the same number of people never undertook before and in less than fifty-five months they carried it forward to a successful conclusion. But they did not carry it through to a successful conclusion without facing great difficulties and overcoming enormous obstacles. For, only thirty years ago last month, that great enterprise now known as the Canadian Pacific railway was faced with destruction, and the right hon. gentleman who leads the Opposition is, I think, the one survivor of this House who will remember the circumstances under which as-sistence was sought by and given to that undertaking. After the Canadian Pacific railway was constructed the people of the West began to demand additional transportation facilities. They cried out against the monopoly that had been created alike by statute and by agreement. They said that adequate transportation facilities had not been given to them and that the pro-
visions in the contract made with the Canadian Pacific railway were such as to preclude new lines of transportation being opened with the United States, and therefore they were deprived of the rights which they claimed as citizens to transport their products to the markets of the world at the cheapest possible rates. It became necessary for a readjustment of the contract to take place. A readiustment took place. Then it was that the Dominion Government looked towards that other means of transportation, the Hudson bay railway, and I thought it was after all a commentary upon the slow way in which human movements are accomplished when I heard the hon. member for Kingston (Mr. Nickle) reading the offers that had been placed upon the statute-book, month after month and year after year, in order that we might have a Hudson Bay railway thirty-five or forty years .ago. There is no Hudson Bay railway yet. Despite the offers, and the genius and the vision of the men of thirty years ago, the road is still not an accomplished fact. These land grants were offered but there were no takers; and then it was, as has been said, that certain pioneer contractors, James Ross, one of the greatest minds in that direction this country has produced; H. S. Holt, now president of the Royal Bank; Mackenzie and Mann, then contractors of ambition and energy, and with some wealth behind them, because they had large means for those days as contractors, conceived the possibility of being able to make some money oat of these enterprises. They were then not empire-builders or merchant princes; they were ordinary contractors seeking to make money out of the building of railways. They conceived the possibility of making money, and took up these charters. These roads xan largely from nowhere to nowhere, and when it is said in this House that the land grants that attached to these roads were land grants that were available to these men as contractors, on the very threshold I controvert that argument. Why? Because those grants were given to a road to Hudson bay, and the lands that were to be given were lands that had no value as fertile prairie lands, but lands which lay along the railway, not valuable in any large sense. But when, in 1907, in the month of May, after the Canadian Northern railway had been formed, certain Orders in Council were passed, then this country said: Because this company has shown some sighs of becoming a national trans-
portation system, a transportation system in the larger sense, we will allocate and allot to it certain fertile lands in the valley of the Saskatchewan, and in the Goose lake country. Hundreds of thousands of acres of land were thus made available by that Order in Council to the Canadian Northern Railway Company, not to Mackenzie and Mann, not to the men who owned the road, but to this system as such, as an assistance to enable it to prosecute the construction of the road for the benefit of the people of Canada, and especially of western Canada. That is the reason that the Hudson Bay railroad was not prosecuted with the subsidies or aids proposed to be given to it. That is the reason the Canadian Northern emerged from the position it then occupied, of a short road running from nowhere to nowhere, offering no adequate facilities, into a road stretching out, branching out, reaching out, extending, if you will, ultimately to Edmonton. This road at that time had not become a national undertaking. It was, however, a road offering some transportation facilities to the people. It had not offered great facilities, as my friend from Kingston said yesterday -and in order to shorten my address I desire to adopt in its entirety the statement made by him yesterday, for which I accept absolutely as much responsibility as he^-I accept full responsibility for the accuracy of his statement because you will find that every word and figure he used in reference to the history of aids given and subsidies granted and guarantees of securities are absolutely borne out by the statutes of this country. Every line has been checked and rechecked and I accept with him full responsibility for their accuracy. He pointed out that it was because the little province of Manitoba was demanding more transportation facilities that we now have the Canadian Northern system. He referred to the part taken in that enterprise by my hon. friend the Minister of Public Works (Mr. Rogers). I would say in all seriousness, to the people of this country and the members of this House, that I think we little realize just how large a debt we owe to that hon. gentleman in regard to transportation matters in the West.
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
applaud perhaps do not know the facts. I know something of the facts. I think no man knows them all because they are locked in the hearts of many men; but there are one or two solicitors, one or two lawyers,
one or two great counsel in St. Paul to-day who will tell you that, almost repudiated by the Government to which he belonged and by those who held high place and office, the Minister of Public Works assumed the responsibility of signing a contract by which Manitoba acquired the branch lines of the Northern Pacific railway in that province, and after Manitoba acquired the ownership of the lines he had to look for and found somebody to operate them.
It is true the Canadian Pacific offered the province of Manitoba $1,000,000 on their bargain and a reduction in freight rates. It is also true that the contract then made for a reduction in the rate on wheat to the head of the Great Lakes secured to the people of western Canada a reduction in freight rates that has since amounted to not less than fifteen or twenty million dollars. I point that out, Mr. Speaker, because it seems to me right that it should be pointed out, and that honour should be paid where honour is due. Such was the beginning of the career of two men, if not three, that challenges its parallel in the history of the world. I appeal to every man in this House and say that if he will take the time to read the history of the operations of Mackenzie and Mann from that time till now, he will find nothing but a long trail of parliamentary corruption, of lobbying, of degradation of parliamentary institutions, of the lowering of the morale of public life, and the degrading of those standards by which public life should be truly measured. Both sides of the House have been to blame. Look to the statute books for the aid that has been given to this company. Just a few days before a general election, one party proposes and the other acquiesces. They are bound to ask a few questions in order that the contribution to party funds may be large enough. Let us look the business squarely in the face. The time has come when we must take stock of the conditions, and now faced as we are with conditions such as we never met before, we must decide whether we will continue to add to the predatory wealth of promoters or whether we shall strike a blow for the people of this country. That is the condition that confronts us at the present time, and it is to that question I propose to direct my remarks. No man occupying a high position has ever had greater problems and difficulties confronting him than the present Prime Minister. My right hon. friend the leader of the Opposition had no such problems to solve when he came into power. This Government inherited difficulties sufficient to stagger any government. We realize, Mr. Speaker, the difficulties this country is confronted with, and they are not entirely undue to the party opposite and the men I have mentioned. My hon. friend who has just taken his seat (Mr. Ames) says we are not concerned about the men. In all the history of transportation there has never been an enterprise before where two men, or three, have endeavoured to control a transcontinental system. When the Canadian Pacific Bailway Company was launched, its stock was placed on the markets of the world. When other enterprises were launched the stock was placed upon the markets of the world. But these men conceived an ambition greater than any man in this country had hitherto conceived, greater even than that of Huntington and his associates in the case of the Central Southern Pacific. These two men conceived the ambition of having the people of Canada build a transcontinental system which they would control and own. That is the position, and that is what we must face. When the Northern Pacific line fell into their hands, they extended it on to Edmonton with a line to Port Arthur. They then had a complete system that extended from Edmonton to Port Arthur comprising now with many branches nearly 5,000 miles of track. I regard J. J. Hill as a man of some genius in transportation matters; yet in his wildest dreams he never conceived the idea of carrying the Great Northern down to New York. Gould conceived the possibility of carrying his rails across the continent but was unable to do it. Huntington conceived the idea of carrying the rails of the Southern Pacific from the Atlantic to the Pacific coast, and joined the Gulf of Mexico with the Pacific coast. He accomplished that with the aid of governments, and of those who invested in the securities of the road. But Mackenzie and Mann conceived the ambition of uniting the Atlantic and the Pacific oceans at the expense of the people of Canada, while they owned the road. That is the position; we cannot get away from it.
The Prime Minister said that the Canadian Northern railway in 1903, by reason of the threatened construction of the Grand Trunk Pacific and the National Transcontinental railway, was confronted with the difficulty of getting traffic. That was the moment the people of this country should have decided that there was not room for three transcontinental railways. There are always two reasons why men do not vigorously oppose certain things. Men are
human. I have been in politics long enough to know that the mainsprings of human action are not always in accord with the highest moral ethics or the teaching of the Sunday school. After the Government of the right hon. leader of the Opposition had committed itself to the construction of the Transcontinental from ocean to ocean, the Canadian Northern enterprise was threatened with extinction. The genius of a man, who is now no more, foresaw that there was not room in Canada for three transcontinentals. My right hon. friend the leader of the Opposition believes that there is room in Canada for three transcontinentals at the present time. I am not a pessimist; I am an optimist, hut I take issue with him at once on that point. The history of transportation is simple; there is a limit to the producing and consuming power of the people. It all, therefore, depends on the population of the country and I say that not in history, in the most fertile territory where traffic is produced by the hundreds of thousands of tons to the mile has it been possible for 10,000,000 people to support three transcontinental railways. Do you realize, Mr. Speaker, that we have over 30,000 miles of railway under operation in this country. That is exceeded only by the United States, and by the Empires of Bussia and Germany, and by British India. Canada, with less than 10,000,000 of people, has at the present time, or will have at the end of this year, more miles of railway under operation than any country in the world except those I have mentioned. Is it possible for a single moment to conceive that this country can support three transcontinental railways under those conditions where the earnings, to make possible the payment of the fixed charges on the roads to pay the interest upon the outstanding securities, must reach the enormous sum mentioned by Mr. Phippen in his argument before the Bailway Commission and quoted to this House last night. The mandatory charges that must be paid by the Canadian Pacific railway are relatively small because they have converted bonds and debentures into ordin-4 p.m. ary stock, so that four per cent consolidated perpetual debenture stock and ordinary stock have taken the place of bonds, and the bonded indebtedness is becoming smaller and the mandatory charges are therefore becoming less. The Canadian Northern has fixed charges amounting to over $12,000,000, but I shall deal with that later. The National [Mr. R. B. Bennett.1
Transcontinental Bailway system, when completed from Prince Bupert to the Atlantic will have fixed charges that I will not venture to mention for I do not know nor do I think does any one else. But, Sir, it is not possible for 10,000,000 people to produce and consume sufficient traffic to pay those fixed charges unless a miracle happens, unless the country changes entirely, and the population is suddenly increased. Ten million people cannot do it. That is the condition confronting this country. The late Government, doubtless inspired by splendid motives, desired to build a line from Prince Bupert to the St. Lawrence wholly in Canadian territory. They have built a line the cost of which has become so enormous as to stagger one's imagination, and the fixed charges on which will be so large that I cannot conceive the possibility of the road ever earning them. What is the position to-day? A partially completed Grand Trunk Pacific, and a partially completed Canadian Northern railway. Then you have the Canadian Pacific railway being extended, rebuilt and made stronger day by day, so strong in fact that what is the greatest asset of the country, in my judgment, is also its greatest menace as far as transportation is concerned.
The late Government gave the Canadian Northern a guarantee to enable it to build _ from the head of the lakes down to the St. Lawrence. In some countries that may be called statesmanship; but if I were to undertake to characterize it I would be obliged to describe it in harsher terms. I have no doubt that the men who granted that guarantee believed that it was essential that this road should be built. But all it meant was that the boundless ambition of two promoters obtained control and overturned the sanity of the Government.
That is the situation which this Government had to meet. They did not create it, but we must face it. Difficulties belong to governments and they must be grappled with by the men who hold power. On that statement of facts, what must be done? Last year and the year before we were induced to grant extensive aid-I am sorry . to say it-to this Canadian Northern system. I voted for it on a statement of facts that, I am bound to say, I did not believe.
I voted for it on a certain statement of facts which was presented to me as being true, which I did not believe to be true,
but fortunately, or unfortunately, I voted for it. I was negligent as far as that is concerned. I failed in my duty as a member of this House last year. My duty last year was to point out what I am going to point out this afternoon. I failed in my duty then, but I am not going to fail again. I did point out then-although I did not do it in this House-that it would take $100,000,000 to finish that system. That statement was laughed at. I knew that these men would be back here. Some people describe them as empire builders, wizards of finance, merchant princes, etc., but if I were asked to describe them I would describe them as Mackenzie and Mann, mendicants. Ever since I have been in this Parliament all they have done has been to get down on their knees and beg. That is a beautiful sight, is it not? Is that uplifting, is that elevating, is that calculated to advance the interests of democracy? Is that the kind of thing that should be going on in these legislative halls? Yet that is what has been taking place since I have been here. I have in my hand an article written by a Washington correspondent in 1896, and this is what he says:
The most pitiable and at the same time the most disgusting spectacle that now offends the national capital is the Huntington lobby. The list of paid lobbyists and attorneys now number twenty-eight, and their brazen attempt to influence Congress to pass the Pacific Railroad refunding bill have become the disgrace of the session.
It only means that there is a change of time and a change of place-1912, 1913, 1914! We have listened to the voice of the tempter. We granted aid to these men at last, and we are confronted with a difficulty the most serious that has ever confronted the people of Canada. This is the greatest problem of domestic politics that we have ever had to consider.
Before we consider what this country should do, I ask the hon. members of this House to go with me on an imaginary trip from Montreal to Vancouver via the Canadian Northern railway-system, they call it, but I would call it a lack of system. You commence at Montreal at the terminal, in the tunnel. Mr. Speaker, have you read the advertisements in the newspapers regarding the exploitation of the townsite there? My friend the ex-Postmaster General (Mr. Lemieux) asked yesterday: Who got the money out of it?
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
whether my hon. friend means by that that he benefited, but 1 do not think he [DOT]did. I cannot conceive that he did. I think it might perhaps equally well be said ' hear, hear ' and ' there, there,' because I suppose many benefited who bought lands and sold them. Who owns these terminals?-the Canadian Northern Railway Company of Canada-no; the Canadian Northern Quebec?-no; the Canadian Northern Ontario?-no. In the railway committee we had a Bill for consideration providing that the Canadian Northern, the Canadian Northern Quebec and the Canadian Northern Ontario should lease these terminals. On what basis? On the basis of paying the interest on the capitalization in bonds of the terminal company and the providing of a sinking fund. When that sinking fund has paid the bonds, of course the capital stock would have some value. I do not know at the present time, because that Bill has been held up, what the exact condition is, but this I do know, that there is a terminal company bonded to death about which there has been a real estate exploitation which made millions, not for the terminal company or the railway company but for many-I do not know whom-and this country is now asked to come to the relief indirectly of this terminal company. That is what it means.
The hon. Solicitor General (Mr. Meighen) said last night that it was generally regarded as good railway practice that the terminals should belong to one company and the railway to another. I would not like to join issue upon any statement that he might make except that I might point out to him that the greatest terminals that have been built in America in recent years -those of the Chicago and North Western railway in Chicago and those of the Pennsylvania railway in New York city-are examples to the contrary. Who owns the Pennsylvania terminals? The genius of Cas-sett, who was then president of that great railway system whose earnings at times amount to one million dollars a day, did not think it good business to create a terminal company to control the New York terminals and as a result those terminals are owned by the Pennsylvania Railway Company. The Chicago and North Western system terminals in Chicago, which challenge your admiration by reason of their beauty and the facilities that they provide for the public, belong to the North Western system. The New York Cen-
tral Railway terminals belong to the New York Central and Hudson River railway, the Canadian Pacific Railway terminals at Windsor street, Montreal, belong to the Canadian Pacific Railway Company and the Bonaventure station, the poor terminals of the Grand Trunk, belong to the Grand Trunk Railway Company and are used jointly by the Intercolonial railway. When we were getting another great terminal in the city of Montreal provision should have been made for the joint use of that terminal by the Government railway, the Canadian Northern railway and also the Grand Trunk railway, because, if you can get union terminals for traffic, you reduce the fixed or rental charges against the railway and you thereby render it possible to reduce the carrying charges to the people. We advocate joint terminals and union stations because in these days of high values of city real estate and enormous cost of construction the only way in which charges can be lessened is by having a large number of railways running into one terminal. I, therefore, join issue when it is stated that it is sound railway finance to have separate companies to own and operate the rai'way and the terminals. It is sound finance for the promoters. It affords one more opportunity-
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.
If so, so much the worse because it affords an opportunity for an exploitation to the extent of a few million dollars for the benefit of the promoters. I am glad to see that the Solicitor General has become the advocate of these two men. Before I finish he will regret that he has become their apologist. The Canadian Northern may own the stock of this terminal company but, why could it not own the terminal in the first instance without creating another company? Why, these companies within companies; why these interlocking companies?
Subtopic: CANADIAN NORTHERN RAILWAY AGREEMENT.