Mr. HOWE:

The entire arrangement is by agreement with the city of Vancouver. It has been approved by the transport board after hearing all parties. The principal purpose of the change in the westerly end of this section of the line was to eliminate a level crossing,

Beauharnois Power-Mr. Howe

which was done under orders of the city of Vancouver. I am sure there are no objectors to the bill.

Mr. GREEN:

This is just to complete the arrangement made between the city and the two railways?

Mr. HOWE:

That is true. Practically it completes the agreement of 1915, which required certain work to be done, the abolition of grade crossings and the improvement of streets. All that has now been done and this permits the last part of the agreement to be carried out-the removal of Canadian National railway tracks from a certain street.

Mr. STIRLING:

I understood the minister last night to say that the Great Northern was not included. The member for Vancouver South (Mr. Green)-perhaps it was a slip of the tongue-referred to the railway as the Great Northern. I asked the minister about that last night.

Mr. HOWE:

The Great Northern is not

a party to the agreement in any way unless it should be the owner of this particular railway.

Mr. STIRLING:

That is what I was

getting at.

Mr. HOWE:

My hon. friends opposite may know whether the Vancouver, Victoria and Eastern Railway and Navigation Company is owned by the Great Northern. I do not know. I think it is probable, but I asked the question of my officers, and no one could tell me.

Mr. GREEN:

The Vancouver, Victoria

and Eastern Railway is a subsidiary of the Great Northern, I understand.

Mr. HOWE:

I dare say that is true, but I cannot say positively whether it is or not.

Mr. MacINNIS:

I understand from the

explanatory notes that the original agreement of 1915 gave the right to run over the Vancouver, Victoria and Eastern Railway's tracks from New Westminster into Vancouver, right into the terminal; that this was made an agreement in perpetuity some time ago, and this bill covers that part of the railway from where the viaduct goes over the track to the terminal. That being so, I would ask if the terms of this agreement are identical with the terms of the original agreement.

Mr. HOWE:

I cannot answer that definitely, but it is my belief that they are. As the matter had been thoroughly examined by the board of transport commissioners and approved by them, and would have ended there had it not been that the agreement was for more than twenty years, I confess I did not examine into the terms of the agreement

itself. The whole purpose of coming to parliament is to extend the term of the agreement from twenty years to perpetuity.

Hon. R. B. HANSON (Leader of the Opposition) :

Before the bill is given second reading and is considered in committee I think we should have a clear statement from the minister with respect to its purposes, so that the house and the country may be clearly seized of its objects and effect. I do not wish to make any remarks on the bill until the minister has made his statement, and I invite him to do that now; then I shall have something to say.

Mr. HOWE:

The Beauharnois Light, Heat and Power company now has a lease of certain power right* from the province of Quebec in the flow of the St. Lawrence river. It was granted, by act of parliament passed in 1931, the right to divert the water of the St. Lawrence river through its power canal to the extent of 53,000 cubic second feet. The act of 1931 declared that the Beauharnois Light, Heat and Power canal and works were works for the general advantage of Canada; and by that act control of the power canal, in fact, the ownership of the canal, was vested in the federal government. The same act provided that no more water could be diverted from the St. Lawrence for power purposes except by act of parliament. Some eighteen months ago the government received an application for a further diversion of power from the St. Lawrence through the Beauharnois canal. The company pointed out that it held what is called an emphyteutic lease from the province of Quebec for an additional

30,000 cubic second feet of water, and asked the federal government to implement that lease by authorizing the diversion of an additional 30,000 cubic second feet. The circumstances were looked into carefully. It was found that at that time no particular shortage of power existed, and there seemed then to be no great public interest which required the

39S

Beauharnois Power-Mr. Howe

federal government to authorize that diversion. Since then the situation has been changed tremendously by the war. Large blocks of power are being used by such industries as the alloy steel and electric steel industries.

Mr. MacNICOL:

Aluminum.

Mr. HOWE:

Well, aluminum does not apply largely in this particular case. It has been a very important factor in taking up power generally. Also flour mills, which are large users of power, have greatly expanded their production; with the result that in a very brief time, measured in months, the power problem has changed from an easy situation to a very limited situation so far as obtaining large blocks of power is concerned. The Beauharnois company is the largest and the principal supplier of power in the Montreal area. It also sends power across the provincial boundary into Ontario, where it is retailed by the Ontario hydro-electric power commission. The government has had representations from that commission that it is urgently in need of enlarged blocks of power. It has also had a report from the Quebec electrical board to the effect that the unsold power in the Montreal area is reaching a dangerously low point.

As Minister of Munitions and Supply, it has become my duty to ensure an adequate supply of power for the manufacture of munitions of war. Plans have been made for industries within the Montreal area which cannot be put into effect unless there can be an assurance that increased blocks of power will be available when these projects are completed. If I had doubts some eighteen months ago whether it was greatly in the public interest to grant this additional diversion, as Minister of Munitions and Supply I now have not only no doubt of the necessity, but I feel I should be negligent in my duty to that department did I not press as strongly as I could to have this additional power made available without delay.

So far as I know, this Beauharnois project represents the source of additional power which could be made available most quickly. With very little improvement the power canal can handle the additional water. The power house is of sufficient size to permit additional turbines to be installed. I am not sure whether the power house is now large enough to take the entire capacity, but I do know that a considerable increase in capacity can be made without enlarging the present power house. In other words, we have the power canal, the power development itself, and a power house adequate to receive the additional generators. So that we _have at Beauharnois a source of

power located in a great industrial area, the greatest industrial area we have in this country, and capable of immediate enlargement.

I believe I have given the house the pertinent facts of the matter. Of course the lease of water power is a provincial matter. The provinces own the power rights, and the province in which this industry is situate has already taken steps to lease the water power rights needed for this purpose. The government is interested primarily in navigation; and I have looked into that question and can assure the house that no navigational interest will be prejudiced by the diversion of this water. I understand that only one boat travels, or has travelled for many years, between lake St. Erancis and lake St. Louis. That is a tourist boat, the Rapids Queen, operated by Canada Steamship Lines; and I think no public interest will suffer greatly if the operation of that boat, which has become hazardous because of the lower water conditions over the years, is made to cease entirely. I believe that the public interest as affected by power for industrial purposes, and particularly for the production of munitions, will be greatly benefited by this additional diversion, and I am satisfied that no navigational interest will suffer by the diversion.

Mr. HANSON (York-Sunbury):

It is indeed reassuring to hear the minister say that no navigational interest will suffer by the diversion of this additional water. I quite agree that under present conditions it is not likely to interfere very much with the excursions of the Rapids Queen, but for quite a while now this country has been talking about a St. Lawrence waterway, and this area will be an integral part of it; the diversion of this water will have a bearing upon that scheme if it ever goes through. I do not intend to-day to rake up old scandals or anything of that sort, but the country's mind might well be refreshed after a period of nine or ten years with regard to this whole project.

I agree that the interest of the dominion is through its control of navigation, and navigation solely. I have lately been reading the argument made in this house by the Minister of Justice when, I think it was in 1931, certain Beauharnois bills were before parliament for enactment, in regard to' which he took a different point of view; however, it is a settled opinion that if the Dominion of Canada has any interest in this project at all it is by reason only of its jurisdiction over navigation. I think that is a very sound legal position, notwithstanding the view that may have been taken in former years by eminent counsel, including my right hon.

Beauharnois Power-Mr. Hanson (Sunbury)

friend, with respect to that question. I do not think there can be any doubt that the province of Quebec, in whose territory this power site lies, owns or controls the water, at least so far as hydro-electric power purposes are concerned. But because of its jurisdiction in respect of navigation the position has been affirmed from the very beginning, and I desire now to maintain it, that the dominion parliament has complete control over the diversion of water from the St. Lawrence river. The power company must first get from the Quebec government a grant of title to the waters for power purposes and the right to divert it must come from the dominion. So we are probably on common ground with regard to that.

The Beauharnois Light, Heat and Power company, which I believe is the operating company, was incorporated by the Quebec legislature as long ago as 1902. The statute was amended in 1928 when the present development was promoted by a group in Montreal about which a good deal has been heard in days gone by; I think I can just leave it at that. The act referred to, the Quebec statute of 1928, 18 George V, chapter 113, gives the company the right to build a new canal between lake St. Francis, the upper lake on the St. Lawrence river, and lake St. Louis, the lower lake, into which the water from this canal runs.

On April 27, 1928, an order in council was passed by the government of the province of Quebec authorizing the issue of an emphyteutic lease for a period of seventy-five years to the Beauharnois company of the rights of the province of Quebec to such part of the hydraulic power as could be developed from the diversion of 40,000 cubic feet per second. The lease that was issued under and by virtue of that order in council was conditional upon the company's authorization from the federal government to divert the flow of 40,000 cubic feet per second. On December 5, 1929,-in point of time, I believe, subsequent to the dominion authorization of such diversion- the company was granted by the Quebec government the right to an additional 13,072 cubic feet per second.

On application made by the company to the governor in council some time prior to March, 1929, and following a hearing before the then minister of public works and two other federal ministers, the celebrated order in council No. 422 was passed on March 8, 1929, authorizing the construction of a canal by Beauharnois and the diversion of 40,000 cubic feet per second. I have the order in council here. It is an historic document, containing a great many provisions no doubt

intended, and properly so, to safeguard the public interest. It will be noted that the authorization was by order in council, not by parliament, on the theory, as I understand it, that under the Navigable Waters Protection Act jurisdiction was in the governor in council and an order in council was all that was necessary. Probably that is a correct statement of the position.

In June, 1929, about ten weeks after order in council No. 422 was passed, an agreement was entered into between the Beauharnois company and His Majesty the King in the right of the dominion, incorporating the terms and conditions of order in council No. 422. This agreement was approved by order in council No. 1081 of that date. I refer to the numbers and dates so that if any hon. member wants to look into the contents of these orders in council he may do so. They are all set out, I believe, in the evidence and minutes of proceedings of the Beauharnois committee of 1931, where they may be found in a convenient form.

In that same year the governor in council passed three other orders in council, Nos. 2201, 2202 and 2203, which authorized the transfer of three water-power leases previously granted to Montreal Cotton company. These leases were assigned by the Montreal company to the Beauharnois company, and under and by virtue of that transfer and assignment the Beauharnois company acquired the right to use and divert into the canal the 13,072 cubic feet per second which together with the

40,000 cubic second feet authorized in March, 1929, make up the total of 53,072 cubic second feet which they are authorized to divert at the present time. The diversion of the 13,072 cubic feet had been authorized by previous arrangement and was I think vested in the Montreal Cotton company, and no question arises with respect to that.

The question of the diversion of this water arose in the house in 1930. Nothing took place. It was raised, if I recollect aright, by the then hon. member for Acadia, who is not now in parliament. Again it was raised in 1931 because of allegations made across the country with respect to what had taken place after the passing of order in council No. 422 in 1929. I recall very well the sittings of that committee, some of the results that flowed from them and some of the controversies that took place in this house in connection with the report of the committee and the legislation that resulted from it. I do not intend to go into that to-day. The committee made a report on July 28, 1931, and as a result two statutes were passed by this parliament, which

400 COMMONS

Beauharnois Power-Mr. Hanson (Sunbury)

are chapters 19 and 20, 21-22 George V, assented to August 3, 1931. The preamble of the first statute recites:

-grave doubts have arisen as to the validity of order in council P.C. 422, dated the eighth day of March, 1929, as amended by order in council P.C. 1081, dated the twenty-second day of June, 1929, which purported to be made under the provisions of the said Navigable Waters Protection Act, and also as to the validity of an agreement based upon the terms and conditions of said amended order in council, made between the Beauharnois Light, Heat and Power Company, Limited, and His Majesty the King, which was executed on the twenty-fifth day of June, 1929-

In the enacting sections the statute goes on to annul order in council P.C. 422, dated March 8, 1929, as amended by the second order in council to which I referred, as well as the agreement. Section 2 provides:

The Beauharnois Light, Heat and Power Company, Limited, its successors or assigns, in so far as it may be within the competence of parliament, is hereby granted the right to divert from lake St. Francis up to but not exceeding 53,072 cubic second feet of water of the flow of the river St. Lawrence, to be returned to lake St. Louis-

That is to say, having rescinded the authority previously given, in the manner in which it was given, parliament then gave this company the right to divert water up to that limit. Then section 3 contained an absolute prohibition against the governor in council consenting to any further or additional diversion of water by that company from the St. Lawrence river except with the express approval of parliament. The result of that legislation was to grant the diversion the company was then expected to operate under, to put it on a sound and safe basis so they would be sure they had what they wanted up to that point. But the primary object of the legislation was to prevent any further diversion being permitted by the governor in council and to retain control in parliament, I think in the interests of navigation. As is well known, of course, this company went through the throes of a reorganization-

Mr. LAPOINTE (Quebec East):

Is there not a section which reserves the rights of the province of Quebec in the use of the water?