The CHAIRMAN:

If the hon. member wishes the title of the Bill to be changed in any way, he would be in order in moving accordingly, but in committee the discussion must be strictly relevant to the clause immediately under consideration, and he is certainly not in order in referring to the total liabilities of the undertaking on clause 1, which is merely the Short Title of the Bill.

Section 1 agreed to.

On section 2-Government empowered to enter into agreement with Grand Trunk Railway Company for acquisition of entire capital stock of company except 4 per cent guaranteed stock.

Mr. CAHILL:

I would ask the Government now to state what are the total liabilities to be assumed by the country.

Mr. J. D. REID:

Mr. H. A. MACKIE:

Does that include the arrears of dividends upon the preferred stock?

Mr. J. D. REID:

No, we pay no arrears on any of the stock. Whatever award is made as to what interest, if any, we shall pay will be effective from the date that the award is made. The arbitrators, then, will, value this $63,841,201.23 of stock, and on, that valuation we will pay four per cent interest in perpetuity, with this exception: we have the right to purchase it after thirty' years.

Mr. McKENZIE:

In reckoning the liabilities, why does the minister take out the $60,000,000 of guaranteed stock? Are we not assuming that liability?

Mr. J. D. REID:

I have stated that upon the $173,558,544.62, which is the funded debt, we pay interest in perpetuity. The interest on the guaranteed stock of $60,000,000 we pay also in perpetuity, except that we have the right to take it over at the end of thirty years.

Mr. J. H. SINCLAIR:

Have we not the right to take over the debentures? Are they not redeemable?

Mr. J. D. REID:

If my memory serves me correctly, these bonds are in perpetuity, and we have not the right to take them up. The rate of interest is very low.

Mr. McKENZIE:

Bonds are not usually in perpetuity.

Mr. J. D. REID:

They are in this case.

Mr. J. H. SINCLAIR:

Some of these debenture stocks are at five per cent and some at four.

Mr. J. D. REID:

It is only the guaranteed stock, as I understand it and the stocks that the award is made on that we have the right to take up at the end of thirty years.

Mr. J. H. SINCLAIR:

I do not understand the intimation of the minister that there will be no.arbitration of the value of

the debenture stock, because we are assuming that liability. The Minister says that we have the option of wiping out the guaranteed stock after thirty years; I understand him to say also that in the case of the debenture stock we have not that right; we must continue to pay interest at five per cent, or whatever the rate is, in perpetuity.

Mr. J. D. REID:

That is as I understand it at present. We are allowing the debenture stock, which is in perpetuity, to remain; we are not taking that right at the present time. In that I am subject to correction, and if I am wrong, I will correct my statement later.

Mr. J. H. SINCLAIR:

I would like to be clear on that point. I understood the minister to say a minute ago that there was to be no arbitration on the $60,000,000; that we have assumed that and the arbitrators will have nothing to do with it. The minister now says-

Mr. J. D. REID:

Mr. BURNHAM:

Is this transaction subject to the rate of exchange?

Mr. J. D. REID:

Thirty years from now there may not be any question about the rate of exchange. In any case, the matter of exchange does not come into it at all.

Then we come to the common stock, $116,583,124.44, upon which no dividend has ever been paid. That also will be valued by the arbitrators, and upon the valuation arrived at, if any, we shall pay interest at four per cent in perpetuity unless we decide after thirty years to purchase it outright.

Mr. McKENZIE:

In calculating the possible cost to the country of this white elephant which we shall have upon our hands, has the Government made any general estimate of what valuation will be placed upon these stocks by the Board of Arbitration?