Hon. J. A. ROBB (Acting Minister of Finance) :

I lay on the table the supplementary report on agricultural credits by Dr. H. M. Tory. I move:

That 450 copies in English and 150 copies in French be printed for distribution, and that rule 74 in relation thereto be suspended.

Right Hon. W. L. MACKENZIE KING (Prime Minister):

I beg to move the motion

of which I gave notice two or three days ago:

That, a special committee consisting of Messrs. Black (Halifax), Sir Henry Drayton, Duff, Sir Eugene Fiset, Halbert, Johnston, Kennedy (Glengarry), Leader, McKay, McMaster, McMurray, Rinfret, Sinclair (Queens), Stevens, and Stork be appointed to consider the resolution to give the government of Canada control over certain ocean rates by confirming an agreement between His Majesty and Sir William Petersen, K.C.B.E., as set out in said resolution with power to call for persons, papers and records, and to report from time to time. *

Before submitting the resolution, Mr. Speaker, may I say that my attention has been drawn to the fact that some hon. members of the House feel that the resolution as drafted is not worded in a manner which would permit the committee to inquire into any other method that offers effective control of ocean rates. The government had assumed that it would be impossible to decide on one method without considering other methods as well and therefore that the resolution was sufficiently broad as it stood. However, to remove any possible doubt as to the scope which the committee will have I should like, with the permission of the House, to add after the words "set out in said resolution", "or by any other method that offers effective control".

Mr. W. F. MACLEAN (South York):

The addition of these words by the Prime Minister gives me an opportunity to speak to the resolution now before the House. I had intended if that opportunity did not come to me in this wray that I would try and get it by moving an amendment to the proposal as has been the practice hitherto in this House; and if hon. gentlemen will bear with me I will try to show-and I will not take very long-why the scope of the committee should be widened in the direction of getting greater control of ocean rates, and having other means suggested to

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the committee than the means contained in the resolution. To bring that out I am going to take the liberty of presenting my views to the House on this occasion, and to shorten the time I propose to read, with the permission of hon. gentlemen, a few observations. I have taken some time in preparing these observations, and I hope the House will pardon me if I read them. I will be prepared at the conclusion to answer any questions that may be put to me by any hon. members. I begin to read:

At a previous stage of this debate, when the Minister of Trade and Commerce asked approval of the Petersen contract in the matter of ocean freights, I took occasion not only to dissent to that proposal but to suggest on my own responsibility what I thought was a much better plan of getting control of freight rates on the north Atlantic and a much better means of disciplining this north Atlantic combine.

My suggestion was for the Canadian government to take the necessary steps to secure the consolidation of the Canadian Pacific and all its steamship services with the Canadian National railways, which latter was in the control of the Canadian merchant marine, a consolidation which would secure enormous savings to the two railways, as well as give to the people and shippers of Canada improved transportation, not only on land but on the high seas and our other waterways.

The House heard me in silence, but two days later the hon. member for North Waterloo (Mr. Euler) rose in his place and did me the honour of saying that my plan was the most feasible scheme he had yet heard for dealing with this great problem of sea and land transportation. Some other hon. members spoke in the same strain, and on March 19, the Toronto Globe which is certainly more than friendly to the administration, had a leading article dealing with what they called my "bold proposal of the Canadian Pacific and the Canadian National railways being consolidated into one system '' and quoted still further in the editorial from the speech of the member for North Waterloo, that I have just mentioned. It said that " Mr. Euler had declared that he had it on the highest authority that if the two systems could be combined a saving of from fifty millions to seventy-five millions a year could be effected," and I believe the hon. member for North Waterloo had good authority for that view. And then the Globe went on to say that if there could not be immediate consolidation of the two systems, there was no reason why some kind of pool as between the two could not be

effected, not only for their own benefit but for the benefit of Canada, and said further:

If amalgamation is regarded as impossible at present, why should there not be co-operation? Why should not the two systems pool their advantages for , their own benefit and that of Canada? Why not cease wasteful competition and useless duplication, and spend money on constructions only where it is needed for development? The interrats of the Canadian National Railway and the Canadian Pacific Railway need not conflict. The bond of union between them is national service. They can prosper only as the country prospers and grows. A new era of prosperity for Canada might dawn if the two transcontinental systems were working heartily together for the common cause.

Sir Henry Thornton has made good. He has completely answered those who contended that a railway publicly owned and operated could not be managed as successfully as a private concern. The National Railway System can now stand comparison with its rival in every respect. Rivalry in service, so long as it is not merely for show and prestige, is healthy. Rivalry should not interfere with co-operation which might save money for both systems and for the country.

But this is not all of the approvals of my plan. While I spoke in silence in the House,

I knew that the members and country were with me both in scheme and in effect; and I continued to receive many words of approval in the lobbies and by mail and otherwise; and wdiat strengthened me most of all was a letter from a very close observer of public affairs in Canada, who said:

I should not be the least surprised if the future should vindicate your policy as to the fusion of the. Canadian National and the Canadian Pacific; I see many signs that the Canadian Pacific are getting very nervous over the competition which they are experiencing from the Canadian National: and I should think it quite possible that the time will come when they will demand that the government take them over.

And another witness appeared in this House last Thursday in favour of my proposal to consolidate the Canadian Pacific with the Canadian National, namely, the hon. member for Brandon (Mr. Forke), leader of the Progressives. In his speech on the budget, he brought up the question of the finances of the National Railways and advocated amongst other things the fixing of a fair amount as the capitalization of the Canadian National and then, passing on, he came to my suggestion of the merging of the Canadian National and the Canadian Pacific systems; and while I take it that he declared himself in favour of some kind of working arrangement as between the two roads, the thing he had in his heart was the complete merging of the two and the immense saving that would accrue from such a consolidation. Hon. gentlemen who wish to know exactly what he did say will find it in Hansard, page 1581.

And now I want to quote another newspaper that, like the Toronto Globe and the

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Winnipeg Free Press, believes in some kind of merger, and that is managed by a man veiy well known in this country and very well known in Montreal which city is supposed to be the home of the duplex system of railways; I refer to Mr. John R. Dougall who, in the Montreal Witness of the date of March 25, came out with this editorial:

Reductions of the cost of needless duplication of railway service seems to be looming up in the Commons as a live question. As the big railway batne usually conies during the sessions of the committee on National Railway estimates, much may be heard of this problem in a few weeks. Mr. Maclean, of Toronto, has won a new disciple in the person of Mr. Euler, for the cause of railway amalgamation. The latter is quite certain that sixty millions annually could be saved by this course. Other members from the west tell of train after train leaving Winnipeg with only thirty passengers aboard. In the provincial arena, Mr. Taschereau asks, " How long must the people pay the cost of running nine trains per day between Montreal and Quebec when three or four would do? " It will be remembered that Mr. Beatty, of the Canadian Pacific Railway, in a speech at Boston last fall mentioned consolidation as a possible solution of the problem. He emphatically added, however, that he did not believe the country would consider this procedure at present. He is in an excellent position to know. But if there is no general approval of either consolidation under public or private ownership there most certainly is a demand for immediate elimination of expensive and needless duplication of service. Few are so blind or so thoughtless as to fail to see that, regardless of who owns the lines, the country pays for all extravagance in the end. Canada has faith in the efficiency of the Canadian Pacific. There is now confidence that the National management is determinedly meeting a difficult situation. For these reasons there is all the more reason to expect that the heads of the systems can get together and agree on a programme of drastic curtailment of needless extravagance, which neither road could make singly without losing business to its rival, but which if effected would benefit both as well as the country in general.

And if I must quote another witness, I am going to put E. W. Beatty, president of 'the Canadian Pacific, on the stand. He spoke of economy in Canadian public affairs; and in an interview given out at Toronto be is thus reported:

If business principles prevailed, the national policy would be to render the discharge of all our obligations that are proper and possible, with due recognition of the necessity of the individual and corporate thrift.

Now these last words about "corporate thrift," if I may interpret them, ought to mean thrift on the part of the Canadian Pacific Railway, so as to fit in with the situation which confronts us, namely, the inability of this country to maintain two great transcontinental roads working in every province of Canada, in a condition of expensive, heedless and altogether unnecessary rivalry, when one system would be much better and would save the country seventy million dollars a

year. This is not the day for duplex railways.

And while I criticize Mr. Beatty, I admit his outstanding ability, and that as a railway executive he is the equal of anyone on the continent; and, furthermore, he is a graduate of my own university and won his spurs by his own abilities; and I admit he 'believes in mergers; but he wants to be the one who does the merging and the one who takes the hand of the lady; while my view of it is that the Canadian National, Which is absolutely a Canadian enterprise, should merge the Canadian Pacific, and that the Princess Eddy should gladly offer her hand to Sir Henry. And, speaking of Mr. Beatty in the personal sense, I can compliment him, if I may, by saying that his eyebrows are almost as pronounced as my own. He, too, may have "big eyes" as others have said of myself.

Mr. SPEAKER:

Order. A routine motion

is debatable, but I call the attention of the hon. member to the fact that a debate on the subject matter which the committee to be appointed will have to consider is not permissible. The committee will have .to consider the question of establishing control over certain ocean rates, and that committee will study any other methods that will establish effective control. I hope the hon. gentleman will be able to connect the actions of the Canadian National Railways and the Canadian Pacific Railway with the question at issue. I do not say that he wild not be able to do that, but he should not adopt a too circuitous method in demonstrating it to the House.

Mr. MACLEAN (York):

I certainly intend to do that, but I have to frame up a case.

Mr. SPEAKER:

May I observe that

"frame-ups" are debarred?

Mr. MACLEAN (York):

With all due respect to your correction, Sir, I stand by that. 1 will soon make the connection, but I want to come to it in such a way that the public as well as this House can appreciate it.

As for the Canadian Pacific itself, I have always been favourable to that railway, and, as a member of this House, and before I was a member of this House, I knew its chief promoters, Lord Mount Stephen, Lord Strathcona, Sir William Van Horne, Lord Shaughnessy, when they were ordinary men without title, but when they had the ability, the foresight, or shall I say the vision, to plan that great road and to make a splendid success of it, and it is with us to-day.

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But the transportation problem now before Canada and before this House is bigger than the Canadian Pacific, and all I say is that it would be to the interest of the country, and I think, the interest of the shareholders of that company, that a merger of all the services of the Canadian Pacific with the Canadian National should take place to-day before there is more raiding of a good Canadian security on the New York stock exchange. The main weakness of the Canadian Pacific is that its stock to-day is owned outside of Canada, and kicked about the New York and London stock markets whenever they like, and the control thereof might pass any day into the hands of an American railway. The Canadian National is absolutely owned by the people of Canada; it is subject to our policy and our policy as a nation only, and finally we cannot keep up a duplex system of railways, one-half of which might be held in Canada and the other half outside of Canada.

But, as I said, you will not find in Canadian papers now anything about things like these that are going on in the United States. You will hardly find one telling in its financial columns what has really been going on in the New York stock exchange more or less for a month back, and that is that the great railroads of the United States, including the Union Pacific, the Northern Pacific, the New York Central and the Canadian Pacific, have had a significant fall in prices. The Canadian Pacific has probably dropped ten points within almost the same number of days; other American roads have 'come down much lower, and apparently the end has not been reached. So, I ask this House and the country why the newspapers of Canada do not tell of things going on in New York in regard to railway shares and mergers of the railways of America and Canada.

When I am speaking of the newspapers of this country and this proposal for the merging of the two great railways into one, I am reminded of the fact that we now have in Canada what are called "chain groceries." Extending that idea, I say there are some people who think we have chain newspapers in this country and that they are pretty well "chained" at the present time. They say even that one man sitting in a big job-printing establishment in Montreal, doing the printing for both the railways and some other big interests in this country, after he is through with the job-printing propositions before him, also undertakes to operate a chain of newspapers from the Atlantic to the Pacific with a duplex line of editorials to suit the circum-

stances of the locality in which the appeal is made. Great is the duplex idea in Montreal, as to railways, as to press, and as to sports and sport clothes for .men and women. Public economies do not count these days.

Now I want to come to the question of mergers of railways and to deal with the innuendo that I am proposing something new. I want to tell the House and the country that the consolidation and merging of the railways of the United States is the most pressing question there to-day; that it is the fixed policy of the Coolidge administration, as it was the fixed policy of the McKinley administration and even of the Wilson administration, to wipe out hundreds of the smaller lines of the United States and to merge them at the most into eight regional organizations, some of them covering more than six or eight states of the union, in one consolidated system. This work has been going on for years and1 is pretty nearly completed. The duty has been imposed upon the Interstate Commerce Commission to effect these consolidations and they are at the work now every day. One of these consolidations is that of the Nickelplate with the Chesapeake and Ohio, which is now not only before the courts for decision, but also before the Interstate commission. But that is not all. As a matter of fact, the New York Central has completed its proposed regional system, so has the Pennsylvania, and in the New York World of March 26 there is a special from Washington which says:

Special dispatch to the World, Washington, March 25. Comprehensive railway legislation-the most far-reaching undertaken since the passage of the Esch-Cummins Transportation Act-will be begun at the opening of the next session of Congress, leaders on both sides of the Capitol admitted to-day.

Senator A. B. Cummins, author of the present act, already has a bill prepared calling for compulsory consolidation of the roads into a series of major Streams, while the House committee on Interstate Commerce will start hearings early in September to prepare a bill for presentation to Congress as soon as it convenes.

The tax reduction bill and farm relief legislation will be submitted at the same time, confronting the administration with its three most difficult and embarrassing problems the moment Congress assembles.

Besides compulsory consolidation, other railroad questions are the completion of valuation of the roads and a determination as to what will be done with the huge fund now building up and available to the government under the recapture clause to bolster up weaker roads with loans.

A tentative system of consolidations was worked out by the Interstate Commerce Commission, but railroads which object to being hitched up with weaker lines have made the tentative plan abortive. Whether the administration will approve any plan designed to compel the railroads to amalgamate has not been made known.

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And in its leading editorial of the same day, the New York World criticizes the Nickel-plate consolidation; its opening sentence is: Congress has approved the policy of railroad consolidation by voluntary agreement and before long a plan for the first of the great consolidations will be submitted to the Interstate Commerce Commission for its approval. It is being promoted by the Van Sweringen brothers of Cleveland. They propose to put together the old Nickel Plate, the Erie, the Pere Marquette, the Hocking Valley and the Chesapeake and Ohio.

On the general theory that consolidation of strong and weak roads is desirable there is now general agreement; there is, in fact, strong opinion in favour of making consolidation compulsory. It is all the more important, then, that the first practical test of the policy should be above serious criticism.

And the last sentence reads as follows:

The Van Sweringen merger needs looking into, not only as a matter of justice to the Chesapeake and Ohio stock holders, but also because it is important to establish sound methods at the beginning of this era of railroad consolidations. Anything like a scandal in this, the first great merger, would disgust the public with the policy of mergers and would deeply injure the railroads as a whole.

From now on mergers either voluntary or forced will be the big question in railroad America and railroad Canada.

Now, I want to come to my proposals. I have re-written this very carefully, andi it is what I desire to present to the House and the country in dealing with this merging of railways so as to reach a solution of the question of regulation of ocean freight rates. This is my proposal in a word:

Proposed consolidation of the Canadian Pacific and subsidiaries with the Canadian National, involving:

1. Such re-routing of main lines and1 branches as might be dictated by the better grades, mountain passes, bridge-crossings, tunnels, approaches to stations, etc., held by one or other of the companies;

2. The consolidation of the cartage, telegraph and express services of the systems,-perhaps taking over the parcel post, postal and money orders of the post office,-thereby cutting out all unnecessary services and buildings, rents, etc., and perhaps using local post offices at places as aids to these national services;

3. The cutting out of all unnecessary trackage, bridges, tunnels, stations, buildings, tanks, plants, etc., and thereby releasing material for any double trackage required, or other additions that the traffic thus re-routed and consolidated might call for;

4. Also cutting out all unnecessary executives and staffs, officials and offices, headquarters, and attendant expenses;

5. Also cutting out and selling any unnecessary engines and unnecessary official sleeping, dining, passenger, postal, freight and

Mr. SPEAKER:

With all due deference

to the hon. member, I fear he is not discussing the point. I have too much respect for the hon. gentleman to lecture him, but I do think he might come to the point; I am waiting in expectation that he will reach it.

Mr. MACLEAN (York):

I am sure Mr. Speaker's hopes will be realized. Further, there would be involved the general bringing about of greater efficiency, better service, lower freights and fares, increased economy, ending forever all extravagant and unprofitable rivalry.

The Canadian Pacific has been generously treated by the Canadian people and parliament in the way of legislation, charters, plans, surveys, monej'' subsidies, land grants, rights of way, exemptions of many kinds and protection by a fair and just railway commission maintained at the public expense; yet this great beneficiary and ward of the nation, notwithstanding its enterprise and devotion to the work and service called for in its franchises and contracts, has at times shown a spirit of ingratitude and at other times developed an attitude that the Canadian Pacific was more than the nation and parliament which had created it; and that it even now enjoys or thinks it enjoys a free hand to crush out or interfere with any right of the nation to engage in public ownership in the way of transportation and other services; in a word, that the created company is greater than its creator and benefactor, the nation. This public servant must not set up to be the master rather than the servant of parliament and the people; each must be fair to the other.'

The Canadian Pacific can claim to have made a success of its railways and other services and is entitled to full recognition therefor; but, on its part, this great company must