Mr. ROGERS:

I move:

That in the new section 24 after the words "marketing service" there be added the words "of the department of agriculture."

Mr. GARDINER:

The explanation is the same as in the case of the other bill.

Mr. BENNETT:

Would the minister explain just what is involved in this? It is only $17,000,000, and the loss is far greater than that already.

Mr. ILSLEY:

That is to provide for capital expenditures amounting to $17,574,233, made up as follows:

(a) Retirement of maturing capital obligations, miscellaneous matured or unmatured notes and other obligations, secured or unsecured, and payment of sinking fund not exceeding $9,019,233; and

(b) Additions and betterments, including coordinations and acquisition of real or personal property not exceeding $8,555,000, estimated as follows:

General additions and betterments, $12,321,392.

Less equipment retirements, $7,921,392.

That leaves a balance of $4,400,000 as the sum that is required for general additions and betterments,. The general additions and betterments for the year 1938 that will be paid for out of capital will be $4,400,000.

In addition, there are new equipment purchases, amounting to $3,455,000. This sum is only one-quarter of the new equipment purchases that will be made during the year 1938, but the railway company itself has power under legislation passed some years ago to purchase or issue notes for raising money for the payment of three-quarters of the sum required for new equipment purchases. This house has to vote the other quarter, which amounts to $3,455,000.

The remaining item is $700,000 for the acquisition of securities. Those are the securities of three companies, the shares of which are owned by the Canadian National Railway and other companies. The three companies are the Toronto Terminals Railway Company, the Northern Alberta Railway Company, the Chicago and Western Indiana Railroad Company.

The method used in supplying new equipment or in making capital expenditures on the properties of these companies is that securities are issued of which the Canadian National Railways purchases part. Their contribution, in other words, to the capital expenditures of these three railway systems for 1938 will be $700,000.

Mr. BENNETT:

They are jointly owned.

Mr. ILSLEY:

They are jointly owned. That makes a total of $8,555,000 for general additions and betterments, new equipment pur-

Special War Revenue Act

chases and acquisition of these particular securities. That, added to the 89,019.233 that I mentioned first, which is for retirement of obligations maturing this calendar year, makes 817,574.233, the amount covered by this resolution.

Mr. BENNETT:

Normally part of these retirements should be made out of operating income, but under present conditions that cannot be done. I think that is the fair way to put it.

Mr. ILSLEY:

The whole general additions and betterments amount to 812,321.392. and part of those should be and are being met out of operating income. That is the amount provided for by what are called the equipment retirements, $7,921,392.

Mr. BENNETT:

I was speaking of the first item, the nine millions which normally had been met, in part at least, by income.

Mr. ILSLEY:

Well, I do not know about that.

Mr. BENNETT:

If the minister will look at it I think he will see that it is so.

Mr. ILSLEY:

Possibly that is the case. I have a list here of the obligations that mature. It is quite a long list. I think it is normal and usual to meet it in this way. I have given the manner in which the $17,574,233 is made up. The bill it is proposed to introduce is simply to enable the railway company to issue its securities for this amount, to authorize the government to guarantee the payment of these securities, and to authorize the government to make temporary loans pending issue of the securities.

Resolution reported, read the second time and concurred in. Mr. Usley thereupon moved for leave to introduce Bill No. 174, to authorize the provision of moneys to meet certain expenditures made and indebtedness incurred by the Canadian National Railways system during the calendar year 1938, and to authorize the guarantee by his majesty of certain securities to be issued by the Canadian National Railway Company.

Motion agreed to and bill read the first time.