I do not see how there can be any doubt as to the position of the bonds now issued. They are the subject matter of a special contract between the Manitoba government and the Canadian Northern Railway. The papers were before us last session, and most of us will remember that a mortgage was executed by the company, whereby the bonds then issued, up to the amount of $10,000 per mile, were made the first lien on the road. No authority which may subsequently be granted by parliament to issue additional bonds could possibly change the position of those previously issued. The bonds now authorized will have to follow and be a second security. We have not, are not giving them any priority, nor are we putting them on an equal footing. Therefore, whoever holds the existing mortgage, holds the property in security for the bonds issued prior to
this arrangement. The Manitoba government no doubt have been made thoroughly acquainted with the character of this proposed legislation, and if there were anything in it which might infringe on their rights, they would have quickly called our attention to it.
In reply to the hon. member for Alberta (Mr. Oliver) I may say that it was the understanding of the Railway Committee, when that committee agreed to report the Bill, that I should take the third and fourth clauses into my consideration. I had called the attention of the committee to the very large capitalization powers, and said that these two clauses might well receive further consideration, and that if the committee were content, I would look into the matter and suggest any change, and in the meantime they could report the Bill. My hon. friend is therefore right in asking me for some explanation why I have advised that the bonding power should be retained at the amount first stated. It is all very well for my hon. friend to talk about the cost of the construction, but taking the least costly of the railways mentioned in the present Bill, I had inquiries made by the best of my engineering staff, and they told me that to build this road and to bridge it- and there will have to be two very expensive bridges across the Saskatchewan river- and pay the cost of the rails and their transport and properly and adequately equip the road, would take in the neighbourhood of $15,000 to $20,000 per mile. When my hon. friend speaks of $8,000 or $10,000 per mile, he is entirely astray in his calculations. Take the matter of equipment alone. If the country through which this road is to run is as fertile as represented, it will soon be filled up with producing settlers, and to carry their crops which will have to be carried by that railway will require large quantities of freight cars and locomotives. It is not a trifling matter to equip a railway with sufficient freight facilities to carry a traffic such as has been produced along the line of the Canadian Pacific Railway, and as will no doubt be produced along this line. And when you count the cost of the locomotives, freight cars and other equipment, I do not think that $5,000 or $6,000 per mile would be an unreasonable sum to expend in that way. Then when you come to realize on your bonds, what do you find ? I do not care how strong a company may be, or what may be its prospects, these bonds cannot be sold except at a considerable discount. Even bonds that bear the guarantee of the Manitoba government, when brought to the English market, have to be sold at a very substantial discount. I am not at liberty to say, but have been credibly informed what the extent of that discount is. If you undertakae to sell the bonds of a company with the brightest prospects in the world, in the English or any other market, not guaranteed by any government, and you have to submit to a
still larger discount. I do not believe that $25,000 of bonds will more that suffice to furnish the money necessary to construct and equip a road of this character, as it ought to be. Having that opinion, I did not think I should ask the committee to make any reduction of the bonding powers.
I would suggest that the following words be added to the last line of the fourth clause : * Should not at any time exceed
$25,000 per mile on the government line of railway authorized to be constructed under this Act.' That will exclude the application to lines chartered under previous legislation and not chartered under this.
Subtopic: CANADIAN NORTHERN RAILWAY.