Mr. ADAMSON:

It still seems to me that we are asked to pass this bill with a scanty amount of information. In 1948, $45 million falls due and presumably will have to be refinanced. Although the parliamentary assistant has not said so, apparently $131 million in United States funds becomes callable in 1949. In other words, it becomes possible to call the bonds to the extent of $131 million. We are asked to pass this bill now authorizing the government to raise $200 million, the bulk of which will not be needed or it will not be possible to use it until 1949. The government may say, we are prepared or we desire to borrow in the money markets of the world in order to meet these obligations when they do fall due; or they may say, we wish to have this bill passed so that we may do this. The parliamentary assistant has not said that. But we have three possibilities: We can deplete our fast vanishing supply of hard currency in setting up a reserve for this $131 million; we can do it on the open market in New York and buy United States currency with Canadian dollars at a discount, or we can borrow United States dollars in order to refund this $131 million. If we take the latter course we presumably are expecting to get a lower rate of interest than this $131 million of capital is now costing us. Therefore I suggest that the parliamentary assistant should tell us what rate of interest we are paying on the $131 million and whether he expects to borrow in the New York market to refund these bonds. Does he expect to deplete our rapidly vanishing hard currency reserves, or does he propose to go out into the open market and purchase United States funds?

Mr. MAYHEW:

I cannot tell the hon. member what they will do; I could not tell him myself what I would do until the time came when these maturities were due and what the situation would be at that time. But we should be in a position where it can be handled to the best advantage. I did not say that there were $131 million. That was picked up; but I shall give the figures if required.

Mr. ADAMSON:

Let us have the figures.

Mr. MAYHEW:

These figures are quite lengthy, but I shall be glad to put the table on Hansard, so that hon. members can see

Canadian National Railways

them in the morning. I think they will find I have already given the information which is in here. It may be convenient for hon. members to have them on Hansard.

Mr. ADAMSON:

What is our net debt in hard currency?

Mr. MAYHEW:

I do not know what the hon. member means by "net debt in hard currency".

Mr. ADAMSON:

What is our net debt? How many of these bonds are payable either directly or by holders' option in New York or in United States funds?

Mr. MAYHEW:

I gave that.

Mr. HARKNESS:

S131 million.

Mr. MAYHEW:

It totals S132 million and some odd: 88,629,000 payable in New York and 8123,088,500 payable in Canada, London or New York. The two of these together total 8132,717,500. If I have the consent of the committee I shall put the tables on Hansard.

The DEPUTY CHAIRMAN:

Has the hon. member the consent of the committee?

Agreed.

Mr. MAYHEW:

The tables are as follows:

Mr. SMITH (Calgary West):

May I make a remark that may clear up something? I have given the bill a little study and it seems to me that we have been talking at crosspurposes. I think what the bill says is this. It really authorizes the treasury to lend money on notes to the Canadian National Railways. That is what section 7 says. In the earlier sections, provision is made for assigning substituted securities for the securities which are paid in by the $200 million or such portion of the $200 million as may be decided on, so that tonight all we are asked to do is to authorize the borrowings on notes. "Notes" is the word

used in section 7. In other words, the government gets a note from the Canadian National Railways for such portion of the $200 million as the railway wants to borrow from the government.

Mr. ILSLEY:

No.

Mr. SMITH (Calgary West):

I think that is exactly what it says.

Mr. ILSLEY:

Why would the government be guaranteeing, then?

Mr. SMITH (Calgary West):

I am coming to that. Against that borrowing we then have

Canadian National Railways

securities issued by the railway which the government guarantees and, according to section 4, these securities may be mostly in kind or issued probably at any time the government chooses. I hope the parliamentary assistant to the minister will agree that I have now perhaps-I hope finally-found out just what the gist of the bill is. Therefore all that we are really doing tonight is authorizing a loan from the treasury up to the S200 million to the Canadian National Railways on notes. Then we also authorize the treasury to guarantee new securities in substitution for those which are brought in and cremated as is provided in the act. So far as I am concerned I have some confusion in mind. I thought the securities were to be sold immediately or something of that sort in order to take up this $200 million. That is not so. The $200 million is a loan on a note as it is used. Then the government guarantees the securities issued by the railway company to take up the reclaimed outstanding bonds, or whatever they are. Having regard to our exchange situation- and this may be an amateurish suggestion- would it not be worth while considering the issue of new securities payable in New York in United States dollars at a discount, and thus, for the present at least, avoid paying bonuses-of ten per cent, as it is at the present time-in New York to get the United States dollars to pay off our present securities? That may not be a good suggestion, but it is one which has occurred to me.