1901-04-23

Mr. FLINT moved :: That that portion of the 49th rule which limits the time for presenting private Bills be suspended in reference to the Bill respecting the city of St. John, N.B.; and also that the time for posting said Bill under rule 60, be reduced to three days, in accordance with the recommendation contained in the 13th report of the Select Standing Committee on Standing Orders.
He said : I may explain that owing to the illness of the hon. member for Westmoreland (Mr. Emmerson) the Bill did not get before the Standing Orders Committee so soon as it otherwise would. The notice and the advertisements were all right, but the illness of the hon. member himself interrupted the progress of the Bill that he had in charge.


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Motion agreed to.

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Bill (No. 126) to vest certain foreshores in the city of St. John, and for other purposes. -Mr. Tucker.

The MINISTER OF AGRICULTURE (Hon. Sydney Fisher) moved :: That an Order of the House do issue for copies of an agreement with certain steamship comPanies respecting cold storage during the year


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Motion agreed to.
24th OF MAY.
Mr. MACLEAN.: 
Mr. SPEAKER.: The hon. gentleman cannot enter into any discussion, but simply put the question.


William Findlay Maclean: I am merely showing why the question is urgent, and why the First Minister should tell the public.


The PRIME MINISTER (Rt. Hon. Sir Wilfrid Laurier).: On Monday.



SUPPLY.

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House again in Committee of Supply.
Intercolonial Railway-Steel rails and fastenings, $500,000.
['We will not accept any such under this contract.\nProgress reported.\nOn motion of the Prime Minister, House adjourned at 11.45 p.m.', 'Wednesday, April 24, 1901.']
The MINISTER OF RAILWAYS AND CANALS (Hon. A. G. Blair).: The committee. when it last had the railway estimates under consideration, had reached the first item on page 43, providing an appropriation for steel rails and fastenings. Just before the committee separated for recess on the day when I was last presenting my estimates, some statements were " made by hon. gentlemen opposite, the hon. member for East Grey (Mr. Sproule) and the hon. leader of the opposition, to which, I think, it would be well I should make a reference before going into the particulars, or what I may call the merits of the vote. The committee will recollect that when this vote was first mentioned earlier in the debate, I explained quite fully the conditions which were attached to
the arrangement that the government had entered into. Some hon. gentlemen at the time suggested that I should bring down the contract; I said at once I would do so, and my deputy, who was here, took a minute of it, and had instructions to bring it down at the next meeting of the committee. When the committee met the next afternoon, which was the last time I was able to be present before the committee, my deputy brought the contract with him, or a copy thereof, and I immediately handed it over to the hon. member for Lanark (Mr. Haggart), who desired to see it. I want the committee to note that I made my statement almost simultaneously with the assurance that I would have these papers furnished to the committee; and I felt that the gentlemen to whom I have reference would have been somewhat reluctant, at all events, in making any harsh references to what they supposed to have been misleading statements until they were assured beyond all doubt that there had been some mistake in the matter ; for if there had been a mistake you would suppose they would have been ready to assume that any member of the government would have common sense enough not to make any inaccurate statement when he was on the very eve of handing to the committee the documents and papers which would show that his statement was incorrect.
I want to refer to that statement now and I want to call the attention of the committee to the nature of the explanation I made in this regard. I said that the contract that was made with the Lake Superior Power Company was to supply rails for one year. I wished fully to apprise the committee of the facts, and I said that we had an understanding with them under which we engaged to continue the arrangement for a further term of years, the price being governed by the rate in the English market at the time when we were proposing that the arrangement should be renewed. I made that statement, Mr. Chairman, speaking from memory ; I did not refer to any papers at tlio time. I made it with the view of giving the committee all the information and without the slightest thought of withholding anything that I thought would be at all pertinent to the question, or which would be desired by the committee. I am going to ask the committee to follow me through the facts of the matter and I will leave it to the judgment of the committee as to wiie-ther the statement which I made was entirely accurate and was not absolutely full in every particular, and just such a statement as would have been proper for me to have made under the circumstances. Early in June, 1900, we had a written communication from the manager of the Lake Superior Power Company. This written communication followed upon a con-

versatlou which had taken place betweeu different members of the government and Mr. Olergne and between myself and Mr. Clergue in which the general policy of doing something to ensure, if possible, the construction of steel rails in our own country was very well considered. We were led to hope that so desirable an object could be attained if the company which Mr. Clergue represented could be encouraged to a sufficient extent to establish their plant by any action that the government would take. The committee will remember that we were somewhat sanguine about it, and we were led to incorporate in the Subsidy Bill of last year a clause which provided that if steel rails were manufactured in Canada and could be produced at a price and of a quality which would compare favourably with the price and quality of rails that were to be obtained elsewhere we would insist that the railway companies that we were proposing to subsidize should obtain their rails within the Dominion. I think that suggestion, when it was first mentioned to the House, met with general approval. There were one or two discordant voices, it is true, but that proposition met with general approval, and I would assume, that, having regard to the enormous expenditure which takes place in Canada year after year, the enormous outlay which is made by railway companies and by the governments for the purchase of steel rails outside of Canada, we would consider it a very desirable object indeed and one which we would be justified in making some sacrifices to accomplish if it were possible to accomplish it on business terms. This may not be present in the minds of hon. gentlemen, but 1 think X am speaking safely within bounds when I say that half of the iron import into Canada is in the form of steel rails and this will continue to increase and grow from year to year. We felt that we could not adopt a wiser policy, that we could not pursue a course which would be more promotive of the well-being of the Dominion, or tend to the establishment of a greater and more beneficial industry than this industry that we had in our minds. On .Tune 8th we received a written proposition from Mi-. Clergue and the subject was discussed in council and otherwise, discussed with Mi-. Clergue and discussed with various members of the government to see if we could arrive at anything like a satisfactory understanding with him upon such terms as would be just and fall- in the public interest. and which, at the same time, would lead to the establishment of this industry in Canada. These discussions continued from time to time. We had letters from him on various dates and we had verbal communications with him at various dates. In the month of August, as you will see later on when I read the document that 1 hold in my hand, we came to a very well-Mr. BLAIR.
understood agreement with him. Although the order was not distinctly formulated at that time, in August, we determined in council that we would give Mr. Clergue the encouragement we had decided upon, and upon which he was prepared to embark in this enterprise. I have in my hand a copy of an order in council which passed on the 9th of October and which I will read to the committee. Hon. gentlemen will note, when I read this order, that it has reference to a report, or a memorandum, which was placed by me before council on the 26th of September, which report, or memorandum, had reference to a conclusion that was arrived at by council in the month of August.
X will read the order as it passed council :
(Copy No. 89970.)



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Extract from a report of the Committee of the hon. the Privy Council, approved by His Excellency on the 9th October, 1900.
On a memorandum dated 26th September, 1900, from the Minister of Railways and Canals, representing that under date the 8th June, 1900, the Lake Superior Power Company submitted a proposal in connection with a project of great importance, and one affecting the interests of Canada in a direction so far undeveloped, namely, the establishment of an extensive rolling mill plant adjacent to their hydraulic power at Sault Ste. Marie.
The minister states that the company represented that as the result of their mining and drilling operations on the Canadian side of Lake Superior, they had established the existence of many millions of tons of high grade Bessemer ore; that they had constructed a railway to bring this ore from tho mines to the lake, and had brought out a fleet of large ore-carrying ships, and were in readiness to commence, immediately, the erection of a steel plant for the production of rails, plate and bridge material, on the most modern principles, and on a scale of magnitude equal to any similar manufactories. In order, however, to justify the great cost which such works would entail, the company desired to obtain the assurance, to some extent, of a market before proceeding to incur further expenditure, and they submitted a proposal that the government should give them a contract for the supply to the government i ail ways of 50,000 tons of steel rails in the year 1901, and 25,000 tons annually for four years thereafter.
The minister further states that owing to the pressure of other matters and his own absence from Canada, he has been unable to bring this proposition formally before Your Excellency in Council until now. It was, however, discussed informally by the council towards the close of August, 1900, being favourably considered, and it was understood that a recommendation wrould be made and submitted by the Minister of Railways and Canals on the basis of a contract for 25,000 tons to be supplied in 1901, at $32.60 a ton (the price then being paid by the Department of Railways and Canals under its rail contract for the current year), and for a similar quantity for the five years following.
The minister, recognizing the benefits which the creation of an industry of such extent and

importance in Canada would necessarily bring directly, in the employment of labour, the expansion of mining operations and the transportation of crude materials and finished products, and indirectly, in the development of numerous other industries by which this would be served

considers that the project is one which should receive all encouragement at the hands of the government, and he recommends that authority be given for entry into an agreement with the company for the supply to the government railways of 25,000 tons (2,240 pounds to the ton) of first quality steel rails of eighty pounds to the yard, and of section prescribed by the Department of Railways and Canals, such supply to commence in the month of June, 1901, and to be completed in the month of September following; delivery to be made either at Levis or at Montreal (c.i.f), as the department may direct, and so far as practicable, in equal quantities monthly ; the price to be paid for j the said rails so delivered to be fixed, as agreed upon, at $32.60 per ton, which, as above stated, is the price now being paid by the Department of Railways and Canals.
The minister further recommends that he be authorized to contract yearly hereafter for the supply of a similar quantity of such rails during each succeeding year, for a term of five years, to be delivered either at Halifax, Port Mulgrave, Levis or St. John, as may be required by the Department of Railways and Canals, the price for the said rails to be the price for the same quality of rails in the open market in Great Britain at the time when the order therefor is given by the Department of Railways and Canals.
The committee submit the same for Your Excellency's approval.
(Sgd.) J. J. McGEE,
Clerk of the Privy Council.
Now, the committee will observe that the recommendation to council was not a recommendation to enter into a five years' contract, but it was a recommendation to enter into a contract for one year, and to be followed according to the order by subsequent contracts year by year as the years would come around. The reason that this order was presented in that way was twofold ; in the first place the government did not desire to make it. They doubted the propriety of our passing an order in council for a contract for five years ; and, moreover, the objection or difficulty was pointed out to Mr. Clergue, and Mr. Clergue, to the knowledge of the members of the council, was willing that so far as the succeeding years were concerned, the understanding should exist that the government would make these contracts year by year, and that he did not require a contract, or would not expect that a contract, would be entered into more than for the term of one year.	It was with that clear
in my mind that I made the statement to the committee, that we had only contracted explicitly for one year and had not made any permanent or fixed arrangement for the following years, further than to have an understanding with him that we would do so, and he was content to accept the order in council as being a sufficient assurance that if everything was all right he would get his contract year by year, as the time would arrive, and upon the basis and terms which were mentioned here. Well, when the matter came up the other day, I was under the impression clearly and strongly that that was the nature of the contract. I thought in my own mind that the contract had been made, and t believed that it was of that nature, and I confess that when the contract, or the draft of the proposed contract, was read here, It was a surprise to me, because it was an express and clear contract for a term of five years. But the difficulty about that contract was this ; That it had never been executed and has not been executed to this day, and never came under my observation. My deputy thought the contract was made; I supposed in the course of the numerous documents presented to me that I had executed it. I did not suppose that it would have laid over all this time, but it happened to be drawn by the law officers of the department, was sent to Mr. Clergue. and it had not been returned by Mr. Clergue at the time the question came up the other day. So that when the document was handed in the following day by the deputy minister, I think gentlemen who had it in their hands observed it was an unsigned document, and the deputy minister made a memorandum on the statement to the effect that the agreement as drawn up was drawn up in this way, and that he found it was sent to the company, but he found it had not yet been returned by the company duly executed, and he had wired that it should be done. Now, the contract as it happened had never passed under my observation. I do not know that if it had been submitted to me for signature that I would have scrutinized it closely enough to have discovered the difference between the authority which the order in council gave us and what the contract proposed to do. It might have escaped my notice or I might have carefully read it ; perhaps I would have carefully read it. At all events it did not come under my observation, and it was not read and it has not been executed, and down to this moment it has not been executed. I am quite prepared to say that Mr. Clergue will be prepared to execute the contract-I have no doubt at all upon that point-will be prepared to execute the contract when I have had an opportunity of looking into it and preparing it in accordance with the order in council which authorized me to make a contract of this limited character. I have no doubt that so far as is in Mr. Clergue's power, he will be prepared to carry out the understanding that has been arrived at and the arrangement as we have detailed it here in our order in council. It' I had a fear or a doubt I would tell the committee frankly now, that possibly Mr. Clergue may not find-though he is quite confident even to
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this moment lie would be able to do so-be may not find it practicable to get his plant into sufficient working shape in order to deliver the rails this year at the time agreed upon. I hope that he may not encounter any difficulty of that kind. He is quite sure, as he writes me, that he will have no difficulty of that kind. He says his buildings are pretty well up, and his plant is all ready to install, ibut that I apprehend will be a matter that will give our friends opposite no great pain, because they seem to be very much disposed to criticise the arrangement adversely. Now, one word and I will leave this branch of the subject. The committee will see, therefore, that the order in council which I had prepared myself, and which expressed my own intention in the matter, and which expressed the intention agreed upon by my colleagues, and which expressed the conclusion of the council after the matter bad been submitted to them ; that order contained an authority to enter into an explicit contract for one year and for one year only. It contemplates that which Mr. Clergue was well satisfied with : The understanding that we would year by year enter into a new contract with him for 25,000 tons per year at a price that should be fixed according to the terms of this order. The committee, I am sure, will recognize that when endeavouring to state the matter as fully as I did to the committee the other day, I stated it with absolute accuracy, as the order will show.
Mr. MONK.: Has the report and the order in council passed upon it been laid upon the Table of the House ?


The MINISTER OF RAILWAYS AND CANALS.: I do not know that they have.


Frederick Debartzch Monk: I remember seeing the contract.


The MINISTER OF RAILWAYS AND CANALS.: The proposed contract has been handed to ' Hansard ' and this will be handed to * Hansard ' or put upon the Table of the House if desired.


Frederick Debartzch Monk: I remember seeing the contract. The copy laid on the Table seems to have been mislaid-I am informed that the hon. gentleman for Lanark (Hon. Mr. Haggart) lias it.


The MINISTER OF RAILWAYS AND CANALS.: The hon. gentleman from Lanark had it, and I got it from him and have it here in my hands now. I will let the hon. gentleman have it. I will also forward, if he desires to look at it, a copy of the order in council. The order finally passed I think on the 9th of October. I did not happen to be present at the meeting of council at which the order finallv passed, having left Ottawa on the 7th. After the Mr. BLAIR.
order did pass, a copy of it was sent on the 12th of October by the department to Mr. Clergue. From that day until I saw it after this debate commenced, I had not seen even the proposed contract; so that any error that I may have made with regard to tlie contract having been actually executed was participated in by my deputy minister, and was the result of our impressions that as a matter of course it would have been put through, whereas in the multiplicity of matters it had not been, and has not got through yet.
Now, some criticisms have been passed upon this arrangement. It has been complained of upon various grounds. I see that the newspaper press has taken up the matter, and has endorsed the attitude of some lion, gentlemen opposite. Some of their criticisms have been based on the fact that it was an agreement for five years. Nearly all, I regret to say, for their own sakes, have based their criticisms upon the assumption that we were paying or agreeing to pay $32.(50 per ton for each of the 25,000 tons, we were getting. Of course, gentlemen here know that even the draft as it was proposed by the department, and as it was sent to Mr. Clergue, contained no such engagement. What we undertook to do was to pay the price which ruled in the market of all markets to which we could properly look for a guide as to the correct value of the rails. .Tust before the House separated the other night, my hon. friend pointed to the fact that the quotations in the United States market in November were away below the price we agreed to pay. I nin not going to find fault with the statement that the prices charged by the rail makers of the United States were lower than the price we paid at that time. I am quite willing to acknowledge that that statement was correct; I deny, however, in toto the relevancy of the statement. I deny that it has any bearing in the remotest particular upon this question. We could not have induced any company to start an enterprise for the construction of steel rails in Canada if they were liable to be met by the cut prices of the combine in the United States. Why, Sir, we know that one great complaint that has been made throughout Canada, one of the foundation planks upon which our hon. friends opposite have been for years past standing, is that the effect of United States competition, when it was not opposed by a high tariff on this side, has been to enable manufacturers there to make a slaughter market of Canada; and the combine in the United States would not hesitate to offer their surplus product of rails at any price which they felt would destroy a similar manufactory in Canada. The quantity of rails they would sell in Canada in proportion to their whole output would be so small that they would not hesitate to do that, as manufacturers were in the habit of doing in times

further consideration-for at first naturally we expect them to look critically at every thing done, and even to be hypercritical if they will-when they come to understand the transaction in all its bearings, to acknowledge that the policy we have adopted is a wise one, and the transaction one that commends itself to their approval.


Mr. BORDEN (Halifax).: I really am rather surprised that the hon. gentleman should want to know what all this clamour is about. He came down on the 9tli April and told us he had entered into a certain contract. There was no story, no statement then to the House, that the contract had not been duly executed with this company. He told us what the terms of the contract were ; and from first to last there was not a word to show that the contract was not a valid and binding one, drawn up and executed by the Crown and by this company. He was asked to lay it on the Table. The next day he came down and laid the document on the Table, and told the House that that was the contract which had been executed by the Crown and the company.


The MINISTER OF RAILWAYS AND CANALS.: I beg my hon. friend's pardon. He will not find that I made any such statement. I had no opportunity of making a statement.


Robert Laird Borden: Does the hon. gentleman deny that every one in this House was given to understand that that paper laid on the Table contained the terms of the agreement ?


The MINISTER OF RAILWAYS AND CANALS.: I thought it did myself.


Robert Laird Borden: Does he deny that it was discussed for two hours in this House from that standpoint, and that the hon. gentleman never raised a single question as to its being the exact contract entered into by the Crown and this company. Then the hon. gentleman comes down and gives us three-quarters of an hour speech-a good deal of it in a very loud tone of voice-and wants to know why the time of the House has been wasted over this thing. I must confess that the hon. gentleman hardly seems to realize the position in which he is. He came down and told us there was a contract, he was asked to lay it on the Table, and did so, and then a considerable portion of the time of the House was taken up in discussing and criticising that contract. But ten days later the hon. gentleman comes down and tells us that that is not the contract at all, and wants to know what all this clamour is about, and seems to sit down quite proud of himself too-turns around to his followers and invites their applause, which they generously bestow. I do not think that the hon. gentleman was ever under greater


Mr. BLAIR.: obligation to his followers than he has been to-day. I would like to know now whether we have really got the right contract at present. Is he quite sure that we have the exact facts ? Are we justified in going on and discussing the proposition he makes, or had we better withhold any criticism until he takes a week or ten days more to come down and enlighten us further ? I did propose to make a few remarks upon this subject, but really I feel some diffidence. I do not know whether it is worth while to discuss it further this afternoon, or whether it is not better to give the hon. gentleman a little further time in order that the House may be in a better position to adequately discuss this matter. But I suppose that he is in a position to-day to tell us exactly what the terms of the proposed contract with Mr. Clergue's company are to be. I suppose he will not deny that the House is entitled to that information, and up to the present I have not heard the hon. gentleman make it clear in what respect, if any, the contract which lie proposes to enter into with Mr. Clergue differs from that laid on the Table. If it differs from the contract laid upon the Table of the House in any important respect, I think it would be only fair for the hon. gentleman, before we discuss this matter further, to state in what respect he proposes to change the terms of that contract.


The MINISTER OF RAILWAYS AND CANALS.: I thought I had made it perfectly clear to the committee, and I am inclined to suspect that the hon. gentleman (Mr. Borden, Halifax) is the only one who is in doubt about it. Reading the order in council, the hon. gentleman must have seen what the terms and conditions of the contract were to be. The terms were that the Lake Superior Power Company were to manufacture in Canada, at their works in Sault Ste. Marie, steel rails, 80 pounds to the yard, of a standard that should be prescribed by us, and of a certain quality, and to deliver them in Montreal or Levis in the year 1901, at a price of $32.60 per ton. The hon. gentleman must have further read that later, year after year, Mr. Clergue was entitled, as a matter of fair understanding, and as it were an engagement from the government, to come to us and say that he was prepared to enter into a new arrangement for the following year-until the five-year term had expired-to furnish us with 25,000 tons of rails of standard quality, at the price current in London; that would be an arrangement which he might reasonably expect us to make with him on the strength of that order in council.


Robert Laird Borden: 
The MINISTER OF RAILWAYS AND CANALS.: That is the only contract that the order in council would authorize us to make -a contract for one year. I explained to the committee that this contract as proposed had not passed under my own observation. After the order in council had passed, the proposed contract was sent by the department to Mr. Clergue ; and 1 had not the contract under my eye until after it had been read by hon. gentlemen on the other side of the House. Perhaps hon. gentlemen opposite may imagine that it is the duty of the minister personally to inspect every document that is drawn up and to be personally familiar with every transaction that takes place in the department. If that is their expectation, I can only say that parliament must get more than one human brain of my capacity to be able to compass so large an undertaking. The proposed contract was sent, in the ordinary way, by the officers of the department to Mr. Clergue. It had never come back to me for signature, and I had never seen it ; and I have no hesitation in saying that a contract drawn for five years is not such a contract as I would have knowingly executed, and not such a contract as we propose to execute, because we had no authority under the order in council to make such a contract.


Robert Laird Borden: No one supposes that every little contract that is entered into by the Department of Railways and Canals on behalf of the Crown would necessarily be personally superintended by the minister. But. when you have a contract of this kind, purporting to involve the Crown in a liability of about $4,000,000, one would suppose that the Minister of Railways and Canals might possibly find time to glance over it. As a matter of fact, at the present time, it is very questionable whether or not Mr. Clergue cannot enforce this contract against the Crown, in view of the memorandum I see in the document laid on the Table. I see a memorandum signed by the deputy minister which says :
This agreement is drawn up on the basis of the arrangement agreed upon with Mr. Clergue on account of the company, but I find it has not yet been returned by the company duly executed, but I have wired Mr. Clergue to return the contract signed by the company.
This is dated 10th of April, 1901. So, it appears that this contract, in the terms in,
which it has been laid upon the Table, has been drawn up on the basis of an arrangement made with Mr. Clergue on account of his company, and it has not been returned by the company, duly executed, but he has been asked by telegram to return the contract signed by the company. We have not yet had the information which will be afforded by a perusal of Mr. Clergue's proposition to the government. The hon. gentleman has referred to that, and I think we are entitled to have it laid on the Table in view of that fact; find I presume the hon. gentleman has no objection to laying it on the Table ; and I should be glad if he would do so before this item passes.
Now, coming down to the merits of the arrangement which the hon. gentleman has made, I would like, in the first place, to be informed upon one point. The hon. minister has made a strong appeal to his followers in this House, on the basis of protection to Canadian industries, which appeal, I am glad to say, enlisted the sympathy of a great many of them, judging by the applause they gave him. I am happy to say that, apparently, those who had free trade views are getting rapidly cured of them when ever the exigencies of the situation seem to demand it. As touching the question of protection to Canadian manufactures, how does Mr. Clergue propose to manufacture in Canada the rails which lie is to deliver to the hon. minister this year ? I think the House is entitled to that information, because the hon. gentleman has put it forward as a strong point.


The MINISTER OF RAILWAYS AND CANALS.: I beg the hon. gentleman's pardon, but I did not catch his question.


Robert Laird Borden: The hon. gentleman was engaged in something else. I will repeat the question-I suppose it is not of much importance from the hon. gentleman's standpoint : How is Mr. Clergue to manufacture in Canada the rails which he is to deliver this year ? Has he works, or will he have works capable of furnishing 25,000 tons of rails within the time specified by the proposed contract ?


The MINISTER OF RAILWAYS AND CANALS.: I suppose that Mr. Clergue, having engaged to deliver the rails, will have the means of manufacturing them, and will produce them as other manufacturers do. I presume he will have the necessary plant for that purpose. It was, I believe, confidently anticipated by him, as it was by us, that there would be time, ample time, from the date when this understanding was arrived at, for Mr. Clergue to put up the necessary buildings and provide the necessary plant. I confess I do not see the drift of the hon. gentleman's inquiry ; for I think it must be presumed that Mr. Clergue would expect to establish a plant and get j his ore and produce his rails precisely the
3551	COMMONS	3552
same as other manufacturers produce theirs. And the rails have to he manufactured in Canada.


Robert Laird Borden: The hon. gentle man has made this so intensely clear that it is hardly worth while perhaps for anything further to be said on the subject. I put the question to the hon. gentleman for this reason : I understood he was in a hurry to make a contract for these rails last autumn because he would require them this summer. He says it is necessary to order the rails nine or ten months in advance. It being absolutely necessary that he should have these rails this summer, he was absolutely obliged to make this contract in the month of November last with Mr. Clergue. That is the position the hon. gentleman has placed before the committee. That is a plain and reasonable position. Then the hon. gentleman put forward another perfectly plain and reasonable position, namely, that he made this contract with Mr. Clergue for one year-not for five years- but for one year, for the purpose 0f encouraging Canadian industries. Now I notice in passing that this contract does not in express terms provide that these rails shall be manufactured in Canada at all. It does recite something with respect to the protection and encouragement of Canadian industries ; but when you come to the operative part of this proposed contract you do not find a single word about Mr. Clergue manufacturing these rails in Canada. Now does the hon. gentleman desire the House to understand that he believes Mr. Clergue will be able to furnish these rails between June and September, and manufacture them in Canada ? I would like an answer from the hon. gentleman on that point.


The MINISTER OF RAILWAYS AND CANALS.: I can tell the hon. gentlemau that in the month of August last when the arrangement was made with Mr. Clergue, and down until October, and since then, there has been every expectation on the part of the government, certainly there has been on my part, that Mr. Clergue would have his plant in shape to be able to produce these rails, and Mr. Clergue guarantees and assures me down to the present moment that he is going to be able to do it. Of course if he does not do it, we shall not have to pay for them, that is all. But what does the hon. gentleman mean ? You have no rail manufactory in Canada ; you want to encottrage the establishment of a rail manufactory in, Canada. There has not been a blow struck, there has not been a brick laid in a building, there has not been a pound of machinery installed without some inducement. Now you can enter into a contract under such circumstances as we did here, saying to the intended manufacturer : You produce for us in Canada a certain quantity of rails at such a time, and we will Mr. BLAIR.
take them from you. And he goes to work, and we expected he would go to work. 1 believe from what Mr. Clergue has said that he has gone to work. I believe that Mr. Clergue is competent, and that he can supply us with these rails. I am afraid-I have said already that I am a little doubtful that he has been too sanguine in his expectations ; I have said that two or three times already. I do not say that with the view of throwing any doubt at all upon Mr. Clergue's ability, but I fear that obstacles may prove to be more than he has anticipated, more than he has found it possible to overcome; but he says not. Now what does the hon. gentleman complain of ? If the rails do not materialize, if they are not produced, no harm has been done in any way. We have made a legitimate effort to have this thing accomplished.
The hon. gentleman says there is nothing in this contract about the rails being manufactured in Canada. I have already said that until that document was read over in the House it never passed under my eye. I would like our hon. friends opposite to take charge of the Department of Railways and Canals for a while, and see whether they are going to be able to read and study over every big contract that happens to be made in the department. We have a regular law department, and Justice Department, which looks over these matters, and when an order in council passes, instructions are given to have a contract based upon that order in council, drawn up, not by the minister, not by the deputy minister, but by the proper officer; and if the contract was drawn in defective form, and when it came to be executed by the minister he found it in that defective form, why, undoubtedly he would have it amended and put right. That has already happened in many eases, we cannot avoid these things by any possibility. The hon. gentleman says this contract says nothing about the rails being made in Canada. Well, that was the very basis of1 the arrangement, and no contract will be executed by me which does not contain that stipulation, unless, on inspection of the clauses, I find that they give every guarantee that these rails should be manufactured in Canada.


Mr. DYMENT.: If the leader of the opposition will allow me, I may say that I know personally that these works are very near completion. About two weeks ago I talked with Mr. Clergue and asked him directly the question with regard to this contract, as to when he expected to be able to start the delivery of these rails for the government, and he gave me every assurance that he would be delivering them in the first part of the month of August next. I consider that when we have an assurance of that kind from Mr. Clergue, we have every reason to believe that the contract will be carried out as we anticipate.


Robert Laird Borden: Does the hon. gentleman personally know whether the rolling mill has really been commenced ?


Albert Edward Dyment: The works are all up, and the plant is almost installed.


Robert Laird Borden: The rolling mill plant ?


Albert Edward Dyment: Yes, the steel rail plant.


Robert Laird Borden: I do not know personally anything about it, but the accounts we get in the press are entirely contrary to what the hon. gentleman has told us. Of course, if he tells me what he personally knows about it I shall accept his word. I would be very glad indeed if the information that he has given turns out to be correct. I may say that I have made some inquiries about this matter, and the information that I have obtained does not lead me to hope that the hon. gentleman's anticipations will be realized. I had some little difference of opinion with the Minister of Finance the other day as to when the proposed rolling mills of the Dominion Iron and Steel Company would be able to begin operations. I have taken pains to verify my information, and I find I was right about it. The Dominion Iron and Steel Company began to consider the construction of rolling mills early last autumn, and as far back as the month of December it was announced to the public that they proposed to engage in this manufacture of steel rails. I made inquiries, and find that the plans for their rolling mills have been in the hands of their architects since the first of this year, and further I find that notwithstanding that, they do not expect the rolling mills can be completed before the 31st of December, and further, they do not think they will probably be completed until two or three months after that, although I understand their manager says that the work will be completed by the 31st of December. Now I do not suppose that the gentlemen who are engaged in that enterprise are less capable of building rolling mills than Mr. Clergue and the gentlemen with whom he is associated. I know he is a very capable and energetic gentleman, and has command of large capital, apparently, and he can do this work as rapidly as any other man ; but the gentlemen who are interested in the enterprise to which I have referred have also these advantages, and I see no reason why they should not be able to complete works of that kind just as quickly as Mr. Clergue. Now, we are very glad indeed that the Minister of Railways and Canals and the right hon. gentleman have told us that we will not have to pay for these rails until we get them. That is one consolation : but the ground the hon. gentleman took, the reason for which he enlarged at some length upon the excellence of his proposal, was that rails were going to be manufactured this 112
year, and were going to be manufactured by this company in Canada. Now, it remains a doubtful question, according to his own statement, as to whether these rails can be manufactured in Canada this year. If they are not manufactured in Canada, is Mr. Clerge going to furnish them ?


The MINISTER OF RAILWAYS AND CANALS.: Certainly not.


Robert Laird Borden: Mr. Clergue is not to furnish them ?


The MINISTER OF RAILWAYS AND CANALS.: No.


Robert Laird Borden: Well, the contract which has been laid on the Table of the House merely provides that Mr. Clergue is to manufacture and deliver. Now that would leave it open, apparently, to Mr. Clerge, unless the operative words of this contract are controlled by the recital, to manufacture them anywhere he might see fit. I certainly do think that the hon. minister should be most grateful to the opposition for pointing out to him certain provisions of this contract in which he does not now seem to concur, because it is perfectly apparent that if the criticism which was made upon this document by the opposition some ten days ago had not been made, this document would have been executed by Mr. Clergue, it would have been returned to the government and the government would have been bound by it.


The MINISTER OF RAILWAYS AND CANALS.: Not much.


Robert Laird Borden: The memorandum, on the face of this document, shows exactly the position with respect to that.


The MINISTER OF RAILWAYS AND CANALS.: I presume that until I signed the contract it would not be binding.


Robert Laird Borden: But, when the chief officer of his own department says that this agreement has been drawn up on the basis of the arrangement agreed on with Mr. Clergue, and when the document was signed and executed by Mr. Clergue, the hon. gentleman and the government might have a great deal of difficulty in getting out of it if Mr. Clergue was determined to enforce it.


The MINISTER OF RAILWAYS AND CANALS.: It would not take you very long to show that we would not have a great deal of difficulty.


Robert Laird Borden: The hon. gentleman does me too much credit. I think I would have a great deal of difficulty, and I think the hon. gentleman would have a great deal of difficulty in getting out of a situation of that kind. I was rather amused



at tlie bon. gentleman's reply to ns on this side of the House when we criticised this arrangement which he proposed to make with Mr. Clergue, particularly in view of the fact that he, himself, admits, so far as I understand, that the price of rails in the United States at least, is some $5, $6, or $7 less now than the price he proposes to pay.


The MINISTER OF RAILWAYS AND CANALS.: No, I did not admit anything of the kind. I said that I would not deny or dispute the statement which was made by the hon. member for East Grey (Mr. S'proule) that rails had been offered, or were sold, in November last for $5, or S6, a ton less than the price we agreed to pay in England. I do not know that to be the fact, but I am not going to dispute it because it does not seem relevant.


Robert Laird Borden: Does the hon. gentleman mean to say that the price of rails in the United States has no relation to the price of rails in England ? I understood him to make that statement in his address to the committee. I would have supposed that when steam communication is so frequent between the United States and England, there would be some connection between the price of rails in the United States and the price in England, and when the hon. member for East Grey (Mr. Sproule) has shown that the price in the United States was so many dollars below the price which the hon. gentleman has agreed to pay, the price in England must have some relation to that price and make it so very much greater. Now, the only thing I have to say in conclusion, is that if there has been any time wasted in the debate upon the extraordinary proposition which the hon. gentleman has brought down to this House, if there has been any useless criticism made upon the hon. gentleman's proposition by reason of the fact that we were not discussing the contract which the hon. gentleman proposes to make, then, he and not the opposition is responsible for it. In respect to the vote which he asks from this House, I think that I am not demanding too much for this side of the House when I ask that the proposition made by Mr. Clergue should be laid on the Table of the House and that the hon. gentleman, should have the courtesy before this vote passes to lay on the Table of the House, a draft, if not the executed contract which he proposes to make with Mr. Clergue. We have had one contract which turns out to be not the contract at all. We are entitled to have a draft of the contract or the executed contract between the government and Mr. Clergue before we allow this item to pass. I would ask the hon. gentleman to say if I am requesting anything that is unreasonable ?


The MINISTER OF RAILWAYS AND CANALS.: I think I may say that the hon.


Robert Laird Borden: gentleman (Mr. Borden, Halifax), is asking something that is very unreasonable. I do not propose to acknowledge that the hon. gentleman is making a usual or customary suggestion at all when he asks tliat the draft should be laid on the Table of the House before we make our contract with Mr. Clergue. We have given the committee the terms of the order in council which authorizes the Department of Railways and Canals to make a contract for the manufacture of a certain quality of steel rails in Canada at a certain price for the year 1901. I propose that the contract, when it is drawn for execution by the parties, shall be in entire accord with the terms of the order in council. It will only be a contract for this year; we cannot do anything else. I have no objection at all, however, in respect to the other hon. gentleman's suggestion that we should place upon the Table of the House a copy of Mr. Clergue's proposition. I have the original proposition in my hand and I will have a copy made and laid on the Table to-morrow if the hon. gentleman desires it as I understand he does.


Mr. BARKER.: I would like to ask the hon. minister whether that important telegram from his deputy to Mi-. Clergue was sent without the minister's knowledge ?


The MINISTER OF RAILWAYS AND CANALS.: Which is that ?


Samuel Barker: The one of the 10th of April asking Mr. Clergue to return the contract executed. I would like to know whether that was sent without the minister's knowledge ?


The MINISTER OF RAILWAYS AND CANALS.: The contract, I have told the committee over and over again, which was drawn, was drawn in the usual branch of the department. It was not drawn by me. It did not happen to be submitted to me before it was sent to Mr. Clergue. The order in council was sent from council to that department in the ordinary way, and I presumed that the contract, when it was drawn, would be drawn in accordance with the order in council. Therefore, I was entirely unaware of the terms of the draft as sent to Mr. Clergue until it was read here in this House. I know that we had taken all the precautions in the recommendation which was made by council in the order which was passed to carry out the conclusions at which we had arrived, and to protect the department in every respect.


Samuel Barker: I ask the hon. gentleman to say whether the telegram, sent by his deputy on the 10th of April, the last day on which this subject was before the committee, was sent by his department without his knowledge. Would the hon. gentleman be good enough to answer ?

The MINISTER OF RAILWAYS AND [DOT]CANALS. I knew that the deputy minister was going to wire Mr. Clergue about the contract, but I do not think that I saw the telegram. No, I did not see the telegram. He certainly sent the telegram with my full permission and consent.


Samuel Barker: The hon. gentleman admits that it was sent by his authority. 1 could not imagine for a moment that the deputy minister would send so important a message, one involving a contract for Sl,-000,000, without consulting his chief. I am quite sure the deputy minister did consult his minister and that the minister, when he brought that paper down and laid it on the Table, knew that the contract was not executed. That was the object of my question.


The MINISTER OF RAILWAYS AND CANALS.: When we were coming over to the House the other day from the department, as I was leaving to come, with the understanding that my estimates would be up, I said to the deputy :	Mr. Haggart
asked you to have that contract. I would like you to bring a copy of it over with you. He mentioned to me then, which was the first information I had on the subject, that the contract had not been returned by Mr. Clergue, and of course it would then follow that I had not executed it. I said to the deputy minister :	You had better put a
memorandum on the back of this paper that you bring over to show that it has not been executed and he did that. I did not even see that. I think the first time I saw it was not until after it came over here.


Samuel Barker: I think that we have now got pretty closely the facts connected with this contract. On the 9th of April, the hon. gentleman told the committee that he had entered into a contract with Mr. Clergue for the supplying of 25,000 tons of 80-pound rails. He was then asked by the Hon. Mr. Haggart to produce the contract and he promised to do so. The next day the hon. gentleman (Hon. Mr. Blair) brought in what was supposed to be a contract. It happens not to have been a contract at all. It was a paper containing the terms of a contract, but not executed by the government, though I take it the government was in honour bound to carry out that contract, having passed it in council.


The MINISTER OF RAILWAYS AND CANALS.: If It was in accordance with the order.


Samuel Barker: It was not executed by Mr. Clergue, and there was a memorandum attached showing that the deputy minister on that date, April 10, had telegraphed Mr. Clergue to return the contract executed. Now, what was the position taken by the minister when he was before the committee the other day with the knowledge that that 1121
contract had not been executed? Did he tell the members of this House that there was no contract? Certainly not. He defended it as a contract. Again and again, in reply to member after member who questioned him upon it, he not only did not tell the House that there was no such contract in existence, but he defended the terms of tlie contract. In reply to the leader of the opposition, the Minister of Railways said :
Well, now, what are the terms of that contract?	[DOT]
This is the paper which was not a contract at all, according to the minister's present position.
What are the terms of that contract? If it is open to criticism, then let the hon. gentleman criticise it as it is his right to do. Do the terms state that we are to pay to this Lake Superior Power Company any price they may ask. Are we to pay a price higher than the market price ? No, we are not to pay a price higher than the market price.
The hon. gentleman (Hon. Mr. Blair) was not referring to the first year of the contract, because there was a fixed price as to that. He was referring to the future years ; he was referring to the contract for the four following years, and yet he did not utter a word to inform this House as to the fact known to himself, but which the House did not know, that no contract had been executed. Then this follws :


William Findlay Maclean: This is the contract.


The MINISTER OF RAILWAYS AND CANALS.: That is the contract, is it not?
May I ask the minister if that was candid in face of the fact that it was not a contract at all.


William Findlay Maclean: Yes, certainly, that is a contract to buy for five years.


The MINISTER OF RAILWAYS AND CANALS.: Well, I say that we had no explicit arrangement, because the price is entirely indefinite.
Not a word from the minister questioning the fact that he had entered into a contract for the delivery of 125,000 tons, only that the price was left indefinite, os we know it had been, and as it was intended to be. The minister goes on to say :
We have an understanding that we are to take from them rails providing they are willing and ready to sell them to us at the market price in England.
That, again, refers to the future years and not to the current year.


Mr. TAYLOR.: You are obliged to take them by your contract.


The MINISTER OF RAILWAYS AND CANALS.: We are not obliged unless they agree to give them to us at the prevailing price in England. What ivas the minister speaking of then if it was not the contract ? He was speaking of the very terms of the contract for the four years, and not for the first year. The minister then referred to locomotives, and he justified his locomotive contract on the

same terms as the rail contract. Then the minister goes on to say :
If he cannot understand the question, I am not going to undertake to do it lor him. We have agreed to take these rails for the current year for these prices.


Mr. SPROUL.: fi. And for the succeeding four years.


The MINISTER OF RAILWAYS AND CANALS.: We have not agreed for more than one year.


Thomas Simpson Sproule: Is not the contract signed?


The MINISTER OF RAILWAYS AND CANALS.: It does not fix the price at all.
*Why did not the minister tell the House then that the contract was not signed ? Every one was discussing it on the assumption that the minister had done what he said the day before he was going to do, namely, that he was going to lay on the Table of the House the contract with Mr. Clergue for 125,000 tons of rails, and the minister was discussing the question, and he saw that every gentleman on this side of the House was discussing it under the belief that there was a contract. The minister said again :
Certainly, we will take for the four years 25,000 tons yearly, but have not fixed a price. We will take the rails at the current market rate in England.
That was the position the minister assumed on the 10th of April. The hon. gentleman was not then taking the position that he had no contract.


The MINISTER OF RAILWAYS AND CANALS.: I do not say that now. I say that we had a fair square understanding with Mr. Clergue all the way through. He was willing, to treat that order in council as an understanding, hut we had not an explicit contract for more than one year. That is what I have been saying all along.


Samuel Barker: The minister talks about an understanding. Why, this is no understanding. This is a deliberate contract. The government undertook to buy 125,000 tons of rails, and Mr. Clergue undertakes to deliver them. The only question that was left open was the question of price for the four years. The hon. minister has considered this for ten days and he comes down now and he tells us that there was no contract at all. What is the position of the minister in that respect ? On the 9th of April lie was asked why the intention of the government to buy such an enormous quantity of rails involving nearly $4,000,000 was not placed before the House last session. The hon. minister then took the position that there was such a rush of business, it was so close to the end of the session, that they had not time to discuss these things, and that they therefore left it for a less busy season. Now, it appears that the minister took it up again in August, and again in September, and again in October, only four weeks before the general elections, and then when Mr. BARKER.
he had so much time upon his hands, so little to do, he enters into a contract involving $4,000,000, and after all that contract is one that a child would not enter into. The hon. gentleman recites in the order the intention to promote the manufacture of rails in this country, and yet throughout the whole contract there is not one word which compels the contractors to manufacture one rail in this country. Taking the best view of it in the interest of the minister, if the contractors had manufactured one-twentieth part of the rails in this country they would have complied with the contract, but there is not even one word in the operative part of the contract referring to the manufacture of the rails in this country at all. The Minister of Railways must have known that. I can hardly imagine that when the hon. minister was asked to bring that contract down here on the 9th of April that he did not look at it before it was brought into this House.


The MINISTER OF RAILWAYS AND CANALS.: I did not.


Samuel Barker: His deputy told him it was not executed. Is it conceivable : can any business man suppose that a minister charged with the enormous interests of this Railway Department, knowing that the subject under discussion was a contract of a most unusual character, knowing that that contract had not been executed, knowing that he was telegraphing, through his deputy, to the other party to execute it, is it conceivable that the minister under such circumstances would send that message off without seeing what the contract was about? If the hon. gentleman so acted in a private capacity he would be laughed at, and yet he thinks he can turn off the responsibility upon his deputy or upon some other officer of his department. I have always understood that a minister is responsible for his department. It is the first time I ever heard of a minister attempting to shirk responsibility in this way. The truth is that when the minister brought down that paper he knew that it was not executed. But he defended it here in the House as if it had been executed. And yet he would have us believe that he took so little interest in this subject, that knowing his deputy was telegraphing to Sault Ste. Marie to have it executed, knowing how important were the terms of that contract to this country, he, although he had the countract in his hands, neglected to read it, and came to the House and defended the terms of it, without knowing what they were, although it would not have taken him five minutes to read the paper.


The MINISTER OF RAILWAYS AND CANALS.: Let me tell the hon. gentleman one fact. Of all the hundreds of thousands of contracts'that pass through my department, I do not think there is one in a hundred that I ever see until the other party

signs it and it is submitted to me for signature. When it is so submitted, I may eall attention to some change which I think ought to be made in it, and then the contract is redrawn, and sent to be resigned. I am not going to throw any responsibility upon any one else ; I take the entire responsibility of the whole matter. The hon. gentleman misrepresented my position. At the same time, it is open to me to make an explanation to the House of what occurred- I do not care whether the hon. gentleman accepts it or not.


Samuel Barker: Are we to understand that when the hon. Minister of Railways, or any other minister, comes to the House, after an afternoon's debate criticising expenditure, and when papers have been demanded and promised, it is reasonable for the minister to bring down such a paper as this, without calling attention to the nonexecution of the contract, or to that most important message, which, as the leader of the opposition says, might commit the government by its very terms? The minister does that, and says there are hundreds of thousands of such contracts which he does not see. Why, it is monstrous. If the hon. gentleman were dealing with a contract in ordinary business involving a thousand dollars instead of millions, he would not do that. We have had three versions of this affair already ; but the fourth version, the most extraordinary, is that the hon. gentleman can excuse himself by saying that he did not read the contract.


The PRIME MINISTER.: My hon. friend from Hamilton (Mr. Barker), if he will permit me to say so, is generally fair in discussing matters that come before this House; but I do not think that on this occasion he treats the House with his usual fairness. Matters in this case are a little involved because of some misunderstanding on both sides. The broad question before the House is whether or not the government have done right in taking authority to enter into a contract with a Canadian company for the manufacture of Canadian rails. This question has been somewhat entangled with other questions. My hon. friend has rather rebuked us for not having taken authority last session to enter into a contract with the Lake Superior Power Company. But the matter was not contemplated at that time. No one in the month of July last thought it would be possible within the year 1901 to have steel rails manufactured in Canada ; but it happens that we have been so fortunate as to see this day dawning upon us. This country has been a large constructor of railways up to the present time, but our misfortune has been that up to the present time we have not been able to supply our own railways with Canadian rails, but have had to import them from abroad. I have seen enough of this discussion, and the temper of the House
on both sides and the temper of the press, to be satisfied that hon. gentlemen opposite approve of the idea and the conduct of the government in the main, though they may not perhaps approve of every detail of the transaction ; that is to say, they approve of the action of the government if it leads to the construction of steel rails in Canada henceforth, as we hope it will. Now, in the month of August last we entered into negotiations with Mr. Clergue, the manager of the Lake Superior Power Company, for the manufacture of these rails. Negotiations of that character are not concluded in a day. It took some time to complete them, and in the month of September following, the Minister of Railways brought to council a recommendation to enter into a contract which would secure the manufacture of steel rails in Canada. After a preamble, the minister's recommendation reads thus :
The undersigned has the honour to represent that under date the 8th June, 1900, the Lake Superior Power Company submitted to him a proposal in connection with a project of great importance, and one affecting the interests of Canada in a direction so far undeveloped, namely, the establishment of an extensive rolling mill plant adjacent to their hydraulic power at Sault Ste. Marie.
That the company represented that as the result of their mining and drilling operations on the Canadian side of Lake Superior, they established the existence of many millions of tons of high grade Bessemer ore; that they had constructed a railway to bring this ore from the mines to the lake, and had brought out a fieet of large cre-carrying ships, and were in readiness to commence, Immediately, the erection of a steel plant for the production of rails, plate and bridge materials on the most modern principles, and on a scale of magnitude equal to any similar manufactories. In order, however, to justify the great cost which such works would entail, the company desired to obtain the assurance, to some extent, of a market before proceeding to incur further expenditure, and they submitted a proposal that the government should give them a contract for the supply to the government railways of 50,000 tons of steel rails in the year 1901, and 25,000 tons annually for four years thereafter.
That owing to the pressure of other matters, and his cwn absence from Canada, the undersigned has been unable to bring this proposition formally before Your Excellency in Council until now. It was, however, discussed informally by the cabinet towards the close of August, 1900, being favourably considered, and it was understood that a recommendation would be made and be submitted by the Minister of Railways and Canals on the basis of a contract for 25,000 tons to be supplied in 1901 at $32.60 a ton (the price then being paid by the Department of Railways and Canals under its rail contract for the current year) and for a similar quantity for the five years following.
The undersigned, recognizing the benefits which the creation of an industry of such extent and importance in Canada would necessarily bring directly, in the employment of labour, the expansion of mining operations and the transportation of crude materials and finished products, and indirectly, in the development of

numerous other industries by which this vould be served-considers that the project is one which should receive all encouragement at the hands of the government, and he recommends that authority be given for entry into an agree*-ment with the company for the supply to the government railways of 25,000 tons (2,240 pounds to the ton) of first quality steel rails of eighty pounds to the yard, and of section prescribed by the Department of Railways and Canals, such supply to commence in the month of June, 1901, and to be completed in the month of September following; delivery to be made either at Levis or at Montreal (c-i.f), as the department may direct, and so far as practicable, in equal quantities, monthly; the price to be paid for the said rails so delivered to be fixed, as agreed upon, at $32.60 per ton, which, as above stated, is the price now Deing paid by the Department of Railways and Canals.
The undersigned further recommends that he be authorized to contract yearly hereafter, for the supply of a similar quantity of such rails during each succeeding year, for a term of five years, to be delivered either at Halifax, Port Mulgrave or St. John, as may be required by the Department of Railways and Canals, the price for the said rails to be I he price for the same quantity of rails in the open market in Great Britain at the time when the order therefor is given by the Department of Railways and Canals:
This proposition was then considered by council, and on the 9th of October the council authorized the Minister of Railways to enter into such a contract. A contract was drawn up by the legal adviser of the department, and sent to Mr. Clergue for execution. The minister then left the further details and the execution of the contract to be carried out by the officers of his department. He frankly tells us to-day that he was under a misapprehension when he brought the matter to the attention of the House, supposing that the contract had been .'executed ; for it turns out now that the contract was not executed. My hon. friend from Hamilton (Mr. Barker) is not exactly fair to the Minister of Railways when he said that the minister had been disingen-ious when he stated on the 10th of April that the contract had been executed, whereas, in point of fact, it had not. What I would observe is that the minister was under the impression at that moment that the contract had been executed, but that he subsequently discovered that it had been sent over to Mr. Clergue for his signature before the minister had been called on to sign it. Had the contract been previously brought to the minister to sign, he would have seen that it was not in accordance with the order in council. The discrepancy between the draft of contract and the order in council is this.


Samuel Barker: If the right hon. gentleman will allow me to interrupt him, my point is this-that on the 10th of April, when the minister laid that contract or paper on the Table, he knew then that it had not been executed, and yet his whole argument in this House was in defence of Sir WILFRID LATJRIER.
that contract, and he did not tell us that it had never been executed.


The PRIME MINISTER.: My hon. friend must realize that the minister, when he went to the department, found that the draft contract had been sent to Mr. Clergue. The following day, when he came to discuss the matter, he naturally assumed that the contract had been drawn exactly as authorized by the order in council. But, later he found that the contract was not in full accordance with the order in council, and the discrepancy between the two is this. The draft contract, which has been laid on the Table, is a contract for five years, whereas the order in council only authorized the minister to enter into a contract for one year, at $32.60 per ton. But, thereafter, he is authorized to enter each year into a subsequent contract, at the prices then ruling in England, during a term of four years. But the contract has to be renewed from year to year, and there can be only one contract for each year. The contract is not a binding one for five years, as is mentioned in the draft. That point is very clear. The only thing binding upon the government is the order in council and nothing else, and that order in council only authorizes the minister to enter into a contract for one year, but authorizes him to make a new contract each succeeding year during four years, and the prices are to be those ruling on the English market at each renewal.
My hon. friend said that the government would be bound in honour to carry out the contract signed and executed by Mr. Clergue. I need not say to my hon. friend that the government is bound, not only in honour, but legally, to carry out such a contract as is framed according to the order in council and no other. If in any way the contract varies from the terms of the order in council, it would not be binding on the government. But, all this quibbling is simply a little surplusage of no consequence to the issue. The question is simply whether or not the government acted wisely in the arrangement it came to with the Lake Superior Power Company last October.
What other point has been raised ? It has been said that the government entered into a contract without authority. Nothing of the kind. We had the authority, because in the Supply Bill voted last year, there is an appropriation for steel rails.
The point has also been made that we have entered into a contract for five years. If we had, the point might be well taken, that we had overstepped our authority. But, we did nothing of the kind. We made a contract for one year only, but the minister was authorized afterwards to enter into another contract each succeeding year for four years, but he could not do so unless parliament voted him the money to carry it out. So that, we have not assumed to bind parliament for five years, but simply

for one year, but we have anticipated that parliament would readily support the policy of giving our contracts for the steel rails we require to that company, which is able to supply us with steel rails manufactured in Canada, instead of the foreign rails which we have been purchasing hitherto.
Then, the question is, whether in this contract for one year, we are paying too dear for the rails. The price agreed on for that year is $32.60, and the prices to be agreed on for the coming years are to be those ruling in the English market, and to that,
I presume, there can be no objection. The only contention that can arise, therefore, at this moment is, whether the price we are ' paying this year is too high or not. What are the facts ? The facts are that at the time we made the contract the ruling price in England was $32.60, and had the delivery been made at that moment there could not have been a word said against the price. But, since then, we are told that it has gone down. Possibly it has. But you have to make your contracts in advance and agree on a price, and both purchaser and seller have to take their chances on the market fluctuations'. Instead of the price going down, it has gone up ; but, had the reverse happened, Mr. Clergue would have been the loser instead of us. Had we agreed to a fixed price of $32.60 for a term of five years, there might be some ground for criticism, but the contract is only for one year. Moreover, even if the price has gone down to $26 per ton, if I am correctly informed, the day before yesterday the price in New York rose to $28 per ton, showing the fluctuations of the market, and under the circumstances, even if we are to pay a little more this year than the actual market rate, I think the Canadian parliament and people will support us in the policy we have adopted of having our rails supplied by a Canadian company.


Robert Laird Borden: Just one observation in reply to the right hon. gentleman.
I understood him to say that there was no intention to bind parliament for more than one year by the terms of the order in council ?


The PRIME MINISTER.: I gave the terms of the order in council.


Robert Laird Borden: In the order in council this is laid down :
They submitted a proposal that the government should give them a contract for the supply to the government railways of 50,000 tons of steel rails in the year 1901 and 25,000 tons annually for four years thereafter.
Further on in the recital I find :
It was understood that a recommendation would be made and submitted by the Minister of Railways and Canals on the basis of a contract for 25,000 tons to be supplied in 1901 at $32.60 a ton (the price then being paid by the Department of Railways and Canals under its 1
rail contract for the current year) and for a similar quantity for the five years following.
What is this but a contract for 25,000 tons to be supplied in 1901, at $32.60, and a similar quantity for the five years following? The hon. gentleman does not find a proposal to bind parliament for only one year in that language. And, when he comes to the operative part of it, what does he find? After providing that there should be a contract for 25,000 tons, at $32.60 per ton for 1901, what follows?
The minister further recommends that be be authorized to contract yearly hereafter for the supply of a similar quantity of such rails during *each succeeding year for the term of five years. And the minister, under that language, irrespective of council, irrespective of parliament, can go out and make a contract for five years, binding upon the government.


The MINISTER OF FINANCE.: If he can get the appropriation.


The PRIME MINISTER.: He may contract year by year.


Robert Laird Borden: If he gets the appropriation. I am astonished to hear such language from the Minister of Finance. Does not he know that under the usage of parliament and government in England such a contract would be binding upon the government, and that any government that undertook to depart from a contract made with such authority would be different from any government existing in any British country ? If he knows anything of the history of parliamentary government in England, one instance will at once occur to his mind where a contract covering several years was made by a government just going out of power, and, thougli it was a bad contract, it was carefully observed by the government succeeding. And, so' far as this government is concerned, which, according to the hon. gentleman, is to be in power for twenty-five years, do I understand from the right hon. the Prime Minister or the Minister of Finance, that, though there is authority here to make the contract for five years, they would be prepared to repudiate it ?


The PRIME MINISTER.: No, but my hon. friend (Mr. Borden, Halifax) will see that, the Minister of Railways being authorized to contract yearly, the terms are to be revised yearly by parliament.


Robert Laird Borden: The right hon. gentleman (Sir Wilfrid Laurier) is not stating the terms of this order in council according to the language of it

The minister further recommends that he be authorized to contract yearly hereafter for the supply of a similar quantity of such rails during each succeeding year for the term of live years. He can make that contract without going back to council, and any government will i be bound to ask parliament for the appro-

priation and be bound to go out of power if parliament does not grant it. And tbe right hon. gentleman knows it as well as I know it, having the acquaintance that we all know he has with the usages of parliamentary government in this country. It is useless for the hon. gentleman to pretend that this order in council does not bind this country for five years, the terms of it having been communicated to Mr. Clergue. As long as


The MINISTER OE FINANCE.: Well, what is the matter


Robert Laird Borden: Does the hon. Minister of Finance desire to ask any question ?	*


The MINISTER OF FINANCE.: What is wrong with the transaction, even if that Ss correct ?


Robert Laird Borden: I want the transaction to be understood by the House. We heard a statement by the hon. gentleman's leader that this was not a contract binding the government for five years, and I am simply trying to make It plain that the hon. gentleman's leader does not truly apprehend the terms of the order in council when he makes that statement. That is my answer to the Minister of Finance. I think the statement of the right hon. gentleman who leads the House was not very accurate, but I think it was very much more pertinent than the suggestion of the Minister of Finance that the government could get out of the arrangement entered into under this order in council by declining to ask parliament for the necessary appropriation.


The MINISTER OF FINANCE.: The suggestion of the hon. gentleman-or, is he finished ? I do not wish to interrupt him.


Robert Laird Borden: No, I had not finished. I would like to inquire of the Minister of Railways and Canals with regard to this telegram which has been referred to by my hon. friend from Hamilton (Mr. Barker). The Minister of Railways and Canals says he sent a telegram to Mr. Clergue on the 10th of April-or, rather, he instructed his deputy to send a telegram- and we know what the instructions were from the memorandum appearing on the back of the document laid on the Table of the House.


Tiie MINISTER OF RAILWAYS AND CANALS.: The hon. gentleman can judge from that memorandum what the telegram was, but he cannot say I gave instructions, because I did not give instructions.


Robert Laird Borden: I understood the hon. gentleman to say that he instructed his deputy to send a telegram to Mr. Clergue to have the contract executed and returned. If I am in error he will kindly correct me, because I do not wish to misrepre-


Robert Laird Borden: sent him. I understood that this took place after the matter was discussed in this House. If the hon. gentleman will correct me at once if I am making any mistake, I shall be glad, because I desire to be entirely accurate. Well, if that is the case, it seems to me that the hon. gentleman's contention this afternoon that he had never seen this contract does not amount to much, because it appears, if I understand the facts rightly, that after this contract had been criticised and discussed in this House and


The MINISTER OF RAILWAYS AND CANALS.: No, no.


Robert Laird Borden: Then I am not correct in the assertion that I have just made, and to which I understood the hon. gentleman to assent, that he had sent the telegram after the discussion in this House.


The MINISTER OF RAILWAYS AND CANALS.: No.


Robert Laird Borden: After the first ^discussion ?


The MINISTER OF RAILWAYS AND CANALS.: No, the hon. gentleman misunderstands me. What occurred was this : There was a promise made by me, at the instance of the hon. member for South Lanark (Hon. Mr. ITaggart), that I would bring down the contract. I asked the deputy minister to make a note, so that we could bring the contract when we next came. When we came, the deputy minister brought over the contract with him, but when I met him, shortly before coming to the House, he informed me that the contract had not been executed by Mr. Clergue. That was just before we came over. That was before the discussion took place in the House. I said : You had better telegraph Mr. Clergue upon the subject.


Robert Laird Borden: I at once accept the hon. gentleman's statement, but I do not think it puts him in any better position ?


The MINISTER OF RAILWAYS AND CANALS.: I do not care whether it does or not. I was simply answering the hon. gentleman's question.


Robert Laird Borden: Well, I hope the hon. gentleman will not lose his temper over this discussion


The MINISTER OF RAILWAYS AND CANALS.: I am not losing my temper. But the hon. gentleman would imply that I was resenting his statement, and so would convey the impression that 1 was endeavouring to put the case in a more favourable light. What I was doing was answering the hon. gentleman's statement, which was not correct.


Robert Laird Borden: If I have stated anything to offend the hon. gentleman, I am very sorry


The MINISTER OF RAILWAYS AND CANALS.: I -would not offend the hon. gentleman for the world.
Mr. BORDEN (Halifax)-or if I have said anything to put the hon. gentleman out of humour. But perhaps he will he good enough to give me his attention for a minute or two. This subject was discussed on the 10th. He sent the telegram to Mr. Clergue the same day, asking him to execute the contract


The MINISTER OF RAILWAYS AND CANALS.: It was sent by my deputy.


Robert Laird Borden: Well, we will be entirely exact-it was sent by the hon. gentleman's deputy, by the hon. gentleman's instruction, and the hon. gentleman had nothing more to do with it. Now, the subject was pretty thoroughly discussed in this House on the 10th, but, did the hon. gentleman send any telegram to Mr. Clergue not to execute the contract, as it was not in accordance with the order in council ?


The MINISTER OF RAILWAYS AND CANALS.: When I ascertained that it was not executed, I instructed the deputy minister to notify Mr. Clergue.


Robert Laird Borden: The hon. gentleman does not quite apprehend my question. On the 10th, he telegraphed to Mr. Clergue to execute this contract. On the same day, the terms of it were discussed and criticised in this House, and the hon. gentleman must have become aware then that its terms were not in accordance with the order in council, for he tells us that now. Did the hon. gentleman, on the 10th, send a telegram to Mr. Clergue countermanding the instructions to execute the contract ?


The MINISTER OF RAILWAYS AND CANALS.: The deputy minister tells me that when the proposed contract came to be read in the House, I instructed him to wire to Mr. Clergue on the subject, and he wired- to Mr. Clergue, stating, it appears, that the minister had never seen this draft contract and he wished it immediately returned unexecuted.


Robert Laird Borden: I suppose the hon. minister will have no objection to laying the telegraphic correspondence upon the Table. I shall be glad if he will do so. Now, I think it is abundantly clear from the terms of this contract that the Minister of Railways and Canals has received from the council authority to make an agreement covering five years. The terms of the order in council would authorize an agreement at once for five years, but whether it authorizes that or not, it does authorize the minister to make a contract without going back to parliament and council.


The PRIME MINISTER.: Without going back to council.


Robert Laird Borden: But the right hon. gentleman said that so far as parliament is concerned, the minister had no authority beyond a year. So I understand the right hon. gentleman's remark with regard to the appropriation. If the minister, under the authority of an order in council, made a bargain for five years, how could parliament refuse an appropriation ? How could any government refuse to ask parliament for an appropriation ? That is the point in respect of which I think the hon. gentleman's observations to the House were not quite relevant.


The PRIME MINISTER.: My hon. friend will agree that there is a difference between making a contract for five years, or authorizing a minister to make a contract for five years, and authorizing a minister to make a contract yearly for five years. The difference in point of fact is not considerable, because parliament has power to revise the price every year. That is an advantage which the government possesses under this contract. Parliament is bound to ratify the contract or to reject it. If they ratify it, then parliament divests itself of its annual supervision over the terms of this contract. The yearly supervision of parliament is maintained over this contract, because year after year the minister makes a contract, not for five years, not for four years, not for three years, but for one year at a time, and the terms of this contract are submitted to parliament each year. My hon. friend will agree that there is a difference, if there is no difference then language has no meaning.


Robert Laird Borden: The point between us is not very great, but I think it is entirely clear. In regard to prices, the price is on the same basis always, to be determined by the current price in England. Therefore, there is no distinction so far as that is concerned. The hon. gentleman's distinction founded upon any suggestion of yearly revision by parliament is wrong. If the hon. gentleman contended that this contract should not toe made without coming to parliament yearly, I would be content. The point I made is that the minister, under this order in council, can make this contract in any year without coming to parliament, and without going to council. When he has made that contract parliament is bound to vote an appropriation, the government of which he is a member is bound to ask par-lament for that appropriation.


The PRIME MINISTER.: The minister may make a contract every year without the authorization of parliament, but he has every time to come to parliament to get the sanction of that contract.


William Findlay Maclean: The Prime Minister has told the House that the issue before the country is purely one of dollars and cents. I say that the issue is one as to the method

of doing business. This debate shows we have an incompetent minister in this respect, we have an incompetent law department, and we have a leader of the government who permits this incompetent way of doing business to go on, and this incompetent minister to be a member of his administration. The Liberals, not only in this parliament, but when in opposition, have advocated the doctrine of governmental responsibility in protecting the public interest. But they are not here for that purpose at all; as far as the public interest is concerned, they say with a well known man in New York, The public interest can go to Jericho. Now, they are supposed to be here to protect the public interest, but they have not done so. But there is an opposition here vigilant of the public interest-


The MINISTER OP RAILWAYS AND CANALS.: And capable men, competent for any position.


William Findlay Maclean: Yes, and competent for any position, and who will take care of the public interest in due time. We find the Prime Minister of this country standing up as the apostle of protection and arguing in favour of fostering new industries in Canada. But there are two ways of fostering an industry. Does he tell me that the methods that they have undertaken is a proper way of doing it ? If they were initiating this thing nearly a year ago, as we now know, why did they not announce it on the public platform last year ? Why did they not confess that they were protectionists, and intended to build up an iron industry in this country ? They were ashamed of it, they could not justify themselves before their own free trade supporters ; therefore, they covered it up, and it would have remained covered up until to-day, this contract would have been issued in this way that the minister now repudiates, were it not that there is in this House a vigilant opposition who looks after the public interest. But this is not the way to encourage an iron and steel industry. Let the government announce some general policy, just as they announced their policy in regard to bounties on iron production, and let there be competition between manufacturers. Let the government lay down a general policy which will encourage the steel rail industry in this country. But they did not want to do it in that way, they were ashamed to do it in that way. any they buried it, and kept it hid during the election, and it would have been kept hid during this present session had not this debate brought it to light. Now the government come here, one section defending themselves, taking refuge behind an order in council, the other defending themselves behind a contract supposed to have been executed, but which has not been executed.


William Findlay Maclean: They do not know where they are. One moment they are behind the order in council, another moment they are behind the contract. Then we are told the contract lias not been executed. If the contract had been signed as it was drawn up Mr. Clergue would have had the benefit of it. Under that contract every one of these rails could have been rolled in the United States or in England. That is the way this government, who call themselves protectionists, now go to work to encourage new industries in this country. They have a law department and they have a minister who does business in that way ; they are all so incompetent that when a contract is drawn there is no provision made in it for doing what they profess to desire. They drew up what they called a protectionist contract, but for some reason or other they did not wish to utilize it before the election took place, they did not wish to let the public know that they had become protectionists.


Mr. OSLER.: The last time this item was discussed, the Minister of Railways laid what we all supposed was the contract on the Table. He defended that contract from one end of it to the other as a contract in the interests of the country. He said the price was good and favourable, that it was the lowest price at which the rails could be purchased. He stated that the general opinion was that rails were not on a falling market, but on a rising market. Now, as it happens, at that time there had been a large sale of English rails, English manufacturers had not been able to overtake the demand, and consequently they were not selling further rails. In the States production had overtaken the demand, consequently the price of rails was steadily falling. In the States rails had fallen within two months from $35 to $20 a ton, at the date on which the minister made this contract, he paid $7 a ton, more than the price for Which he could have got rails. Now, as Liberal-Conservatives and as protectionists, there is no reasonable limit to which we on this side of the House would not go to establish and protect a steel industry in this country. The difference between the two parties is that the Liberal-Conservatives would have made this contract openly, and adopted it as part of their policy. The government made this contract secretly, they covered up their contract and did not want the country to know it. There is the clearly defined difference between the two parties. Now let me show you that our contention was right as to the prices, and that the minister made his contract in a falling market. The price of manufactured pig iron in Canada during July, and up to the 28th of August, delivered at the Hamilton furnace, was $23 a ton; from the 28th of August to the 20th of September, it was $20 a ton ; from the 20th September onwards to October, and to the end

of the year, it was $18 a ton ; and to-day it is about $17 a ton. So there is a difference as between $23 and $17 a ton for the raw material. The price of rails in England kept up for some time, but no English rails were sold on this continent because American rails were bought, the price being so much lower. The hon. minister makes a contract amounting to about $4,000,000, he lays it on the Table- an assumed contract-we discuss it for one whole afternoon rather warmly on both sides of the House, and he comes here now and says that he never read the contract and that probably he might have signed it without reading it if this discussion had not come up. If $4,000,000 contracts are signed as a matter of course by the hon. minister without being read or discussed, because I take it for granted that none of the hon. minister's colleagues saw this contract or knew that it was a five years' contract, but himself, I think we can form a pretty fair opinion of how the enormous expenditure of this country is being carried on. I do not think it is possible to find, in any business, a transaction of this kind. If the hon. Minister of Railways and Canals buys hundreds of thousands of tons of rails at an advance of $7 a ton on the regular price, and defends his price as a reasonable one, then, I say he is not competent for the position he tills and the country may very well be shocked and startled as to what they may expect from the finances of the Intercolonial Railway, when a full knowledge of what has been done is exposed. The prices now are lower and there was every prospect of their continuing low at the time the contract was made. The loss on that contract to-day as between the price at which it was made and the price at which steel rails can be purchased-to-day they are up $2 a ton the Prime Minister says-is $200,000. A few days ago rails were selling at $25 a ton, delivered at Montreal, rails of the same character and quality as the rails agreed to be supplied to the government. Now, if these rails are not delivered this year, is the balance of the contract still to continue in force ? Is there a contract still for 25,000 tons of steel rails a year with the Sault Ste. Marie mills, or may other steel plants that are being built in other parts of the country, notably in Nova Scotia, compete for the balance of the 100.000 tons of rails wanted on the Intercolonial Railway during the next four years, or, has Mr. Clergue obtained that contract and can he till it by subletting the contract to the Nova Scotia steel works to manufacture the rails for him there ? There is nothing in the contract that would prohibit that. Personally I hope Mr. Clergue will be able to fill the contract. I do not think anything more important in the interests of Canada could happen than the establishment of prosperous steel works in this country. I would vote for giving, ns a bonus, the difference of $7 a ton for four or five years if by doing so, we could establish steel industries in Sault Ste. Marie and other parts of the country. W'liat 1 do object to, is having a secret contract made within three or four weeks of the election, on the face of it a suspicious fact, concealed from this House and in regard to which, with the greatest difficulty information has been drawn out. The members of the government, other than the hon. Minister of Railways and Canals, were not aware of what that contract was, and I do not wonder that the hon. Minister of Railways and Canals has placed himself in a position which is so humiliating to himself, to the members of the government and to the members of this House, as he lias done to-day in the lame way in which he has tried to explain away this matter.


The MINISTER OF FINANCE.: I do not understand what the hon. gentleman (Mr. Osier) means by his reference to a secret contract. It is not the habit of the various departments of the government, when a contract is made, to blazon it through the press, or to publish it in the newspapers. Contracts are being made day after day and month after month, and when parliament meets and information is desired with respect to any of these contracts, that information is, as a matter of course, brought down, but, when the hon. gentleman speaks as he did of a secret contract, as implying something wrong in this transaction, I want to tell him that this contract has been made in precisely the same manner as a thousand other contracts are made and that the word ' secret ' does not convey any such reproach as the hon. gentleman seems to imply in his remarks.


Edmund Boyd Osler: The amount of the contract has very much to do with it. There may be thousands of contracts, but here is a contract for $4,000,000 not communicated to this House.


Samuel Barker: And for five years.


The MINISTER OF FINANCE.: Tlie magnitude of the contract does not touch the question of secrecy. Most of the contracts that are made are secret contracts. It is not usual to publish contracts in the newspapers unless there may be some special reason for it, and there is no such reason in the present transaction. I am reminded that one of my colleagues in the ministry announced in a public speech that it was proposed to aid the establishment of a steel manufacturing enterprise at Sault Ste. Marie, and therefore there was no secrecy such as the hon. gentleman seeks to imply. I have great difficulty in discovering what it is that hon. gentlemen opposite object to in this transaction, almost as much difficulty as some of them seem to have in understanding the nature of the transaction. My hon. friend the leader of

the opposition (Mr. Borden, Halifax), referred to a difference which he and I had in respect to the position of the Dominion Iron and Steel Company in relation to the manufacture of rails. There is really no substantial difference between the hon. gentleman and myself. What he suggested in a jjrevious debate, because he did not go so far as to make an emphatic statement, was, that at the time this transaction occurred the Dominion Iron and Steel Company were prepared to make steel rails. If that was not the object of the hon. gentleman's observation then he had no purpose at all in making it. I do him the justice to say that he did not make the emphatic statement but rather the suggestion.


Robert Laird Borden: I think my hon. friend (Hon. Mr. Fielding) has misunderstood what I said. I said that in the later months of 1900, the Dominion Iron and Steel Company made known to the public that they proposed to manufacture steel rails.


The MINISTER OF FINANCE.: I am coming to that. I do the hon. gentleman the justice to say that it was a passing thought and that he did not emphasize it, but, unless his purpose was to suggest that at the time we made this contract the Dominion Iron and Steel Company were in a position to be competitors of Mr. Clergue, the observation of the hon. gentleman did not seem to have any bearing on the debate. He alluded to au issue of stock that was made for the purpose of enabling the company to engage in the manufacture of rails, and I reminded him, speaking entirely from memory, that that issue of stock had only been made within a couple of weeks of the time at which he spoke, and that therefore the Dominion Iron and Steel Company could not have been in a position then, or months before, to engage in that enterprise. He said that in December a prospectus, or a document of some kind, was issued announcing that the Dominion Iron and Steel Company were going to engage in the manufacture of rails. I am prepared to accept that as correct. But, what are the facts of this transaction ? In June, Mr. Clergue approached the government with a proposition, in the month of August the matter was discussed in council informally and agreed to, it was reported on formally by the Minister of Railways and Canals in September, the order in council was signed in October, and according to my hon. friend's statement, it was not until December that the Dominion Iron and Steel Company ever whispered that they had any intention of making rails. Therefore, there is no question whatever of competition between these two companies. Now, I have a difference of opinion with my hon. friend from Halifax (Mr. Borden)-if it be not too serious a statement for me to make as applied to a member of the legal profession-I have a difference of opinion with my hon. friend (Mr. Borden) regarding Mr. FIELDING.
his interpretation of the law of contracts, and I am a layman and he is an eminent lawyer. Now," what is the position ? We have had introduced into this debate unfortunately a document which should never have been brought down to this House. I say that the bringing down of that document was a piece of carelessness. It was not a contract, it was not signed. As it turned but it did not even represent the terms upon which the minister was prepared to make the contract.


Mr. WALLACE.: Why did he tell us there was a contract made ?


The MINISTER OF FINANCE.: The hon. Minister of Railways stated at the beginning that there was an understanding for a period of five years but that there was no explicit contract, and in the end that statement proved to be correct.


Thomas Simpson Sproule: In his speech on the 9th of April he said :
We made a contract with this company.
Is that not plain enough English ?
The MINISTER OB' FINANCE. The Minister of Railways at that time no doubt was under the impression that a contract had been made. He tells you frankly now that he found that was a mistake. He had clearly in his mind the nature of the whole agreement from beginning to end. He spoke in the light of that, and his first statement was entirely a correct description of the arrangement he made with Mr. Clergue. I do not blame hon. gentlemen opposite for calling attention to the production of that document, because it was a thing that was irregular and which should not have occurred, but if we want to understand the merits of the question we will dismiss that entire ly from our minds. It is not a contract. It is a draft contract which was never executed. It is of no more value in; this discussion than any piece of waste paper. The only outstanding document which binds the government in this matter is the order in council. There is nothing else and why discuss anything else that does not exist ? The one obligation is the order in council, and what does that provide ? My hon. friend the leader of the opposition treats it as amounting to the same thing as a five years' contract. I may tell him that the difference between that order in council and a five years' contract is as the difference between a thing that is legal, and a thing that iis not legal. I can tell the hon., gentleman (Mr. Borden) that if we had made a five years' contract in the terms wbich; he implies in such a contract as that draft contract purported to be, I can tell him that would have been illegal. I tell him that it could not have been enforced by Mr. Clergue, and I can tell him that it could not have been enforced by the government of the country unless it were supplemented by a

parliamentary appropriation. I can tell the hon. gentleman tliat it was no contract at all.
Some lion. MEMBERS. Oil.


The MINISTER OF FINANCE.: My hon. friend (Mr. Borden) differs from me there. I do not like to quote law books, but I will have to do so to help my hon. friend. There is the famous case of Churchward and the Queen which determines this question and against the opinion of the leader of the opposition I will quote such an eminent authority as Chief Justice Cockburn. This was a case in which it was claimed that a contract made with the Lords of the Admiralty for a mail service continuing from year to year, to be terminated on notice, should be a binding contract. That was disputed by the authorities and the determination of the courts in England was that it was not a legal and binding contract and that it could not be enforced by either side. I hate to have to read a law book ; it is not in my line, but since I made the statement one of my colleagues handed; me the book and said I was clearly right, and here is the law to support it: I stated the fact and now I have the law to back up my statement. I read from the judgment in Churchward against the Queen, which says :
Therefore, when we come to consider whether there is to be implied from the other terms of this contract and intention on the part of the Lords and the Admiralty to bind the Crown in the event of parliament not providing the funds, let us see what the position of all parties concerned would he, if, after parliament had refused to find the funds to satisfy the exigency of this contract, the Lords of the Admiralty had taken upon themslves, nevertheless, to continue to employ the contractor. In the first place, the government would have to put itself in a state of antagonism to parliament, inasmuch as it would have set the authority of parliament at defiance. In the second place, the head of a public department would continue to employ a public contractor, without the means of paying him ; for when it is said that possibly in the future parliament may find funds, one can hardly suppose that a public minister would be warranted in assuming such a possibility, when, so far as experience had shown, parliament has refused to find the funds; and I must say, it appears to me that to employ a public contractor without the means of payment, even if he were willing to be so employed, would be a course of proceeding altogether derogatory to the dignity of the Crown and to the honour of the country. In the third place, the contract certainly could not be enforced under such circumstances, I mean enforced by the public department. Suppose that parliament refused for the coming year to find the funds wherewith to remunerate Mr. Churchward, he, under such circumstances, would be entitled to say , ' as I cannot look to you, the other contracting parties, as i am not sntitled to look to the Crown, as I can only look to parliament, and parliament refuses to find the funds to pay me, I am not bound to go on.* I take it, if the other contracting parties then endeavoured to enforce the contract, equity would relieve the contractor from the obligation
to obey it; and if an action were brought at law, I doubt very much, indeed, whether a court of law would not say that the providing of the funds by parliament was a condition precedent to the fulfilment, or necessity of fulfilling, the contract.


Frederick Debartzch Monk: In this case, if the minister will allow me, as there bad been no money voted there was no contract at all for the first year, or for any other.


The MINISTER OF FINANCE.: And there was no money voted when we made this contract.


Frederick Debartzch Monk: But you took great credit for that contract a moment ago.


The MINISTER OF FINANCE.: If hon. gentlemen opposite are right we are making a contract to bind /us for five years, but we have no funds for five years and therefore in the words of the judgment I have read, there being no funds there could he no contract.


Frederick Debartzch Monk: Then there is no contract.


The MINISTER OF FINANCE.: I am very sorry that it falls to an untutored layman to have to explain the law to my friends opposite, but I happen to have bad' occasions in times past to know that such was the law. I know very well that if we make a contract for five years it is not a legal and binding contract, and we had that fact iu mind when we were so framing the order in council that we should make a contract-


Some hon. MEMBERS: Oh.


The MINISTER OF FINANCE.: Yes ; that we should make a contract for one year, because we have the legal right to make it to the extent of one year, but as respects future years we determined that we should simply empower the minister to make the contract year after year ; not one contract, but five separate and distinct contracts made from year to year.


Edmund Boyd Osler: If there was no object in having a four year's contract, what was the use of getting in any references to it If there was no necessity or intention of binding one side or the other on a five years' contract, why should you encumber this contract with the four year's clause ?


The MINISTER OF FINANCE.: As I stated before, it is the difference between recognizing the authority of parliament, and failing to recognize the authority of parliament. I do not hesitate to say that if there should be a change of government to-morrow and if the new ministry should make up its mind that that was not a judicious contract to make, they would not be bound to continue that contract, but I say we are morally bound, believing it to be a good arrangement. If Mr. Clergue supplies these rails manufactured in Canada-because the

suggestion that they are to be supplied from any other source is preposterous-if Mr. Clergue should supply these rails manufactured in Canada, up to the standard required and in all respects carries out his side of the arrangement, X would consider that we are morally bound to continue giving him these contracts for a jjeriod of five years. Therefore, I do not discriminate so carefully as probably my legal friends would between a legal contract and a moral contract; but the difference we made was just enough difference to keep within the law ; to make a one-year contract and to give Mr. Clergue the assurance of our goodwill for the encouragement of this enterprise, that he should continue to receive these orders for a period of five years. Now, 1 would like to ask hon. gentlemen in what other way they would have proceeded 1 If it is a legitimate arrangement in aiding an enterprise of that character-I am not discussing now whether it is protectionist or not because it is the thing itself we are concerned with, and not the name-if it is a legitimate thing to encourage the creation of a great manufacturing enterprise in Canada, while agreeing to take a giveu quantity of the product of the factory, how better could we proceed about it than by saying to Mr. Clergue, we will give you a contract for one year, and we will give you the assurance of our good-will for the continuing of this contract, if all goes well, for a further period of four years, making five years in all ?


Hon. Mr. HAGGAET.: I did not hear the beginning of this controversy, but what I did hear when I first came in was certainly most astonishing to me. The last time this contract was under discussion before the House, the statement was made that it was signed by the Minister of Railways and by tbe secretary of his department. I drew the attention of the Minister of Railways, and particularly the Finance Minister, to the fact that the contract was one for five years, and I enlarged upon that fact. I enlarged upon the fact that the government had entered into a contract, contrary to the pledges again and again made by them when they were in opposition, that a contract of the magnitude of this one should have a sum of money voted for it and should receive the consent of parliament before being entered into by the government. I drew their attention to that fact again and again, in the course of my remarks before all the members of the government, who are here at this moment ; and to my astonishment 1 find, according to the statement of these hon. gentlemen to-day, that no contract has been entered into except for one year only, but that if Mr. Clergue performs tbe conditions and furnishes the rails for this year, there is a moral obligation, but no contract binding upon them, to take the rails from him from year to year.


Mr. FIELDING.: 


The MINISTER OF FINANCE.: Exactly; that is it-if we get an appropriation from parliament for it.


John Graham Haggart: When was it that the hon. gentleman arrived at that conclusion ? How is it that it did not strike them the last time this matter was discussed V But, when they find that the people of this country are likely to weigh them for making such a bargain and going back on the promises they made again and again in this House, that no such contract should he made unless the money for it was voted, and unless they receive a mandate of this House to make it, they state that no contract has been signed, but that the order in council was passed-that the authority was given to the minister to make the contract. It may be that he has signed it, and that the officers of the department have signed it, but that it has not been fully executed. What more authority is it possible to get from the government of this country to enter into a contract than an order in council on a memorandum from the head of the department ? That would be binding on the government if the contract was never signed by the Minister of Railways, for he had the authority to sign it. We are told that there is no such thing as a contract by the government for two or three years- that a contract is only binding if the money is voted by this House. This is a new doctrine. Again and again, hundreds and thousands of times, the people of this country have been bound by contracts for two, three, five or ten years. It is true that these hon. gentlemen, when they came into power, under a technicality cancelled a large number of contracts to which the Governor General's signature was attached, and which they were legally as well as morally bound to carry out. But now, after giving the Minister of Railways the full sanction of the Governor in Council to enter into a contract, and although the minister may have affixed his signature to the contract, and the secretary of the department may have done the same, they say : There is no obligation upon him, except a moral one, to carry out the contract, because tbe money has not been voted, but if Mr. Clergue performs the first part of his contract faithfully, we shall feel ourselves morally bound to carry out the rest of it. They are morally bound, at any rate, to take the 125,000 tons of rails. In other words, contrary to the professions they have made a hundred times throughout the country, they have entered into a bargain by which the people of this country are morally bound to the extent of $4,000.000, without competition, and morally bound to pay an excess over the market price of rails at the moment they bought them, of six or seven dollars a ton-flinging away about $150,000 of the money of this country on the 25.000 tons of rails which they are bound to take. It is true, they might have

telegraphed to the old country and ascertained the price at which steel rails could be got in England ; but at that moment, within a couple of weeks of an election, they entered into a contract for rails, at $32.60 a ton, when they could have bought them for cash at six or seven dollars a ton les^.


The MINISTER OP RAILWAYS AND CANALS.: Where were they to be bought at that price ?


John Graham Haggart: In the New York market, and at the same time the market was notoriously at the highest point at which it was likely to be. They purchased the 25,000 tons for future delivery. What was the necessity of that ? If Mr. Clergue does not deliver the rails in August, are you bound to take them ? The whole transaction savours of being the most disgraceful contract that ever was entered into by any government in any country in the world.


Thomas Simpson Sproule: The hon. First Minister said that the only question before the House was whether or not the government had done right or wrong in making a contract with a Canadian company for the manufacture of steel rails. I do not hold that that is the only question before the House-not by any means. If that were the only question before the House, and they had made a proper contract, there would be no complaint from this side provided the rails were needed. The hon. minister says that we had authority to make such a contract, because parliament voted the money. Well, parliament had not voted the money. It was upon the request of parliament to vote the . money that the discussion arose. It was not because parliament has voted the money, but because it had not, that we were asked to vote $500,000 for the purchase of steel rails and other plant. What I complain of is this, and I was somewhat amused at the warmth of the hon. Minister of Railways when referring to criticism from this side, especially those by the hon. member for East Grey and others. In the first place, the House was misled, or at any rate, not dealt with frankly. The impression was left on the House that a contract had been made for 25,000 tons steel rails only.


The MINISTER OF RAILWAYS AND CANALS.: Surely my hon. friend will be fair enough to say that I explained that we have made an explicit contract for one year for 25,000 tons, and had an understanding with Mr. Clergue for the four succeeding years.


Thomas Simpson Sproule: That was made subsequently.


The MINISTER OF RAILWAYS AND CANALS.: No, that was when I made my first statement in this House.


Thomas Simpson Sproule: I will read the hou. gentleman's own words :
We made a contract with this company to deliver 25,000 tons of the quality and standard which we have been placing upon the road, a rail eighty pounds in weight, and we were to pay them $32.60 per ton, the delivery to commence in the first week in August and to continue at such a rate that we would be able to lay the rails before the snow fell.


John Graham Haggart: Where were they to be delivered?
The MINISTER OF RAILWAY'S AND CANALS. They were to be delivered to us in Montreal- that is, in the preseut year. We have no permanent and explicit contract with them for the future, although in their proposal they asked us to give them a contract for a term of live years and to give thorn an order for 50,000 tons with which to commence their industry. We finally concluded to give them an order for 25,000 tons, and while we have no explicit contract with them for any term beyond the year in which we are now' entering, we have an understanding with them under which if they furnish us, as they engage to do, the rails of ihe quality and standard we require, and at the current prices in the English market, we are prepared to continue to take our rails from them.
Some bon. MEMBERS. Hear, hear.


Thomas Simpson Sproule: Not that we are prepared to take any quantity of rails at any given price, but we are merely prepared to do our dealings with them.


The MINISTER OF RAILWAYS AND CANALS.: I have always found my hon. friend pretty fair, and I would ask him whether, iu the view which I then had of the contract, and which I was entitled to have-not having read or seen the draft, or had it presented to me for execution, but having iu my mind the order in council passed on my recommendation-I could have made a franker or fuller statement?


Thomas Simpson Sproule: I can only say that the question is whether the House was led to believe there was only a contract made for
25,000	tons for one year, when it now turns out that the understanding with the company was that the contract was to be continued for five years or in other words was to be for 125,000 tons in all.


The MINISTER OF RAILWAYS AND CANALS.: I said that.


Thomas Simpson Sproule: The hon. minister said that he had an understanding that the government would take the rails from them at the market value, but if not would go elsewhere. He now tries to get out of the difficulty by saying that the contract is not in harmony with the order in council, and that the order in council does not fairly leave the impression that there was a contract for five years. What does the merno-randum submitted to council say :
In order to justify the great cost which such works would entail, the company desired to obtain the assurance, to some extent, of a market before proceeding to incur furrher expen-

diture, and they submitted a proposal that the government should give them a contract for the supply to the government railways of 50,000 tons of steel rails in the year 1901, and 25,000 tons annually for four years after.
Further on it is stated :
The minister further states that owing to the pressure of other matters and his own absence from Canada, he has been unable to bring this proposition formally before Your Excellency in Council until now. It was, however, discussed informally before the cabinet towards the close of August, 1900, being favourably considered, and it was understood that a recommendation would be made and be submitted by the Minister of Railways and Canals on the basis of a contract for 25,000 tons to be supplied in 1901 at $32.60 a ton (the price then being paid by the Department of Railways and Canals under its rail contract for the current year), and for a similar quantity for the five years following.
Does not that memorandum submitted to council leave the impression that there was a contract for 325,000 tons for five years, of -which 25,000 tons were to be supplied in 1901, and a similar quantity each following year during four years. This is evidently what was submitted to council.


The MINISTER OF RAILWAYS AND CANALS.: That is only the recital. Read the recommendation.


Thomas Simpson Sproule: It recommends :
The minister recommends that authority he given for entering 'nto an agreement with the company for the supply to the government railways of 25,000 tons (2,240 pounds to the ton) of first quality of steel rails ol eighty pounds to the yard, and of section prescribed by the Department of Railways and Canals, such supply to commence in the month of June, 1901, and to be completed in the month of September following; delivery to be male either at Levis or Montreal (c.i.f.), as the department may direct, and so far as practicable, in equal quantities monthly, the price to he paid for the said rails so delivered to be fixed, as agreed upon, at $32.60 per ton, which, as above stated, is the price now being paid by the Department of Railways and Canals.


The MINISTER OF RAILWAYS AND CANALS.: That is only for one year.
Mr. oPROULE (reading) :
The minister further recommends that he be authorized to contract yearly thereafter for the supply of a similar quantity of such rails during each succeeding year, for a term of five years, to be delivered either at. Halifax, Port Mulgrave, Ldvds or St. John, as may he required by the Department of Railways and Canals, the price for the said rails to he the price for the same quality of rails in the open market.
I leave that point, and wish to direct attention to another thing the hon. minister said. Another reason why we objected was, that the transaction was a large one to be undertaken without the consent of parliament. It is a transaction involving an expenditure of $4,000.000, and parliament was not consulted. And we have no information that the rails were urgently needed. We Mr. SPROULE.
contended that the Minister of Railways and Canals was not justified in making a contract involving $4,000,000 without consulting parliament beforehand, especially in view of the fact that he did not need the rails. And my contention was that these rails were purchased in the face of a falling market. The minister denies that. But I quote the summary giving four times a month, the market value of steel rails in New York. And he asks : Are we going to be guided by the New York market-we never looked at the New York market, but the English market. But, I would remind the hon. minister that in this explanation as to where he got his rails last year, he said :
Last year the rails were purchased by tender. They were furnished by two firms, a part by each, the Illinois Company and the Cambria Company.
Were not these American companies ? Did the hon. gentleman look to England then ? He defends himself in that case on the [DOT] ground that lie got them from the lowest tenderer. Is he disposed now to overlook the fact that the rails were at least $6.50 lower in the American market than in the English market ? And now he accepts a price $6.50 higher than the American market, and justifies it by saying that it was the standard of the English market. Can he defend that before the country ?


The MINISTER OF RAILWAYS AND CANALS.: Does the hon. gentleman (Mr. Sproule) condemn it ?


Thomas Simpson Sproule: I do condemn paying $6.50 more for rails than they can be bought for in the open market.


The MINISTER OF RAILWAYS AND CANALS.: Then the hon. gentleman does not want to see a Canadian industry established ?


Thomas Simpson Sproule: I am as anxious as is the hon. gentleman to see the Canadian industry established ; but, I am not prepared to defend the minister entering into a contract by which he loses $200,000 of the money of the people of Canada in buying rails when he did not require those rails, and could have got them cheaper in the American than in the English market-for he only sets off one against the other. I condemn this contract further, because it was made when an election was going on-right in the midst of it. I say that that is improper. How do we know what subscription the hon. gentleman got in the face of that contract ? It is very suspicious, to say the least of it, for we know that these things are sometimes done. Here is a contract entered into privately, entered into at that particular time, entered into for a purpose concerning which we are not yet informed. We have a right to condemn it for all these reasons, it is our duty to condemn it, and I believe the country will condemn it as well.
At six o'clock, committee took recess.

After Recess.
Committee resumed at eight o'clock.


Mr. PRINGLE.: I must say that I am at a great loss to understand just where we are at in reference to this contract. On the 9th of April, when discussing an item in the estimates for steel rails and fastenings, $500,000, the hon. member for South Lanark (Hon. Mr. -Haggard) brought out from the Minister of Railways and Canals that there was a contract with the company of which Mr. Clergue seems to be the head


The MINISTER OF RAILWAYS AND CANALS.: Brought out ? I stated the fact before the hon. member for Lanark had opened his mouth.


Robert Abercrombie Pringle: Then on the 9th of April the Minister of Railways and Canals stated that there was a contract with the company of which Mr. Clergue, as I understand, is the head, for the purchase of rails. The hon. -member for South Lanark asked to have the contract, tenders, &c., laid on the Table. On the 10th of April we find, when this item comes up for discussion, that there is laid upon the Table what purports to be a contract made between the government and this company. In the discussion on that contract, by the hon. member for South Lanark, after referring in general terms to the contract, and (the price to be paid for these rails :
The Minister of Railways and Canals states then that it is just what I stated it was.
In the discussion which took place in connection with that contract the Minister of Railways and Canals, when the question of date comes up, says :
Look at the agreement, I think you will see the date mentioned.


John Graham Haggart: Oh, yes; the 9th of October, 1900.
We .'find further on in the discussion that the Minister of Railways and Canals states that he is quite satisfied to have the document examined, and investigated, and turned over in every shape and form. Later on he says :
Well, now, what are the terms of that contract? If it is open to criticism, then let the hon. gentleman criticise it, as it is his right to do. Do the terms state that we are to pay to- this Lake Superior Power Company any price it may ask?
Showing that the Minister of Railways and Canals, on the 10th of April, was familiar with the contract which was then being discussed by the member for South Lanark. Then, in reply to the member for Bothwell (Mr. CHancy), the Minister of Railways and Canals refers again to the contract, and says :
Does it prove that when the contract was made, the price was higher than the market price which existed at that time?
Again, when the question is brought up as to the contract extending over a period of five years, he says :
When we come to settle up for the next year's supply of rails, if the contract which has been entered into is carried out and the rails are delivered, we have to ascertain what the market price is in England, and the market price in England is a safe guide.
I have quoted to a small extent from the speech of the Minister of Railways and Canals made on the 10th of April, to show that at that time he certainly was familiar with the terms of the contract which was laid on the Table of this House, and he was able to discuss -it with the hon. gentlemen who were speaking about this contract. We find that on the 11th of April, although the contract was spread broadcast throughout the country as being the contract that had been entered into between this government and the Lake Superior Power Company, we never found until to-day that that contract was repudiated by the Minister of Railways and Canals or by any member of the government. Now what spectacle do we find to-day ? We find that the contract is repudiated, we find the Minister of Railways and Canals saying that there is no contract existing as between the Lake Superior Power Company and the government of Canada. We find the Minister of Finance jumping to the rescue of the Minister of Railways, we find him getting into the saddle and giving a horseback opinion on a very important question of law ; we find him quoting from this case of Churchward vs. the Queen, cited in one Queen's Bench Reports, page 173. Iam not going to deal with that case, I have no doubt some other hod. gentlemen on this side will show the Minister of Finance that it would be well for him not to give horseback opinions on questions of law, nor to quote cases which are not at all applicable to the matter under discussion.
Now the Prime Minister has said that the question -is whether this government are wise to enter into a contract for the manufacture of steel rails. I humbly submit that that is not the question. The question now is, where is this contract ? Is there a contract, or is there not a contract ? We find the ministers disagreeing on that point. One says there is a contract, another says there is not a contract, that we have no contract before the House. Now I would like to ask what constitutes that contract ? Is it simply the correspondence which took place between the Lake Superior Power Company and the Minister of Railways, and the order in council that was passed in connection with -these rails ? I say if that is a contract, then the government have not been entirely fair to this House when, on the 10th of April, they laid this agreement before the House which they now say was never signed by the Lake Superior Power Company, and led -this House to believe that that was the contract in force between that company



and the government. These steel rail contracts do not seem to be handled very well by the hon. gentlemen. We had an experience in former years of steel rail contracts entered Into by these hon. gentlemen. Now 1 say that the hon. member for South Lanark was quite justified in bringing this matter to the attention of the House and of the public. He found, in going into that estimate, that suddenly, after the election writs were issued, a contract involving some $4,000,000 was entered into by this government. I was surprised that the Minister of Finance should state in this House that any minister would bring down a contract of that Importance, involving that large amount of money, without giving the contract any consideration, and try to justify his course by saying that it was brought down through carelessness. I say if that sort of carelessness is going to exist in contracts involving $4,000,000, it is time that the public were made fully aware of It.


The MINISTER OF FINANCE.: I hardly think the hon. gentleman is doing me justice. I did not say there was any carelessness with regard to the making of a contract, I said a document which was not a contract and which had no bearing on the matter, had been brought down; but I did not say that there was any carelessness in the making of any contract.


Robert Abercrombie Pringle: I understood the hon. Minister of Finance to say that this document, which was laid on the Table, which was given to this House as a contract between the Lake Superior Power Company and the government of Canada, and which w*is discussed all one afternoon by this House, as if it were a contract that was in existence, was brought down through carelessness.


The MINISTER OF FINANCE.: I say so now, because it was not a contract.


Robert Abercrombie Pringle: Then why was it brought down as purporting to be a contract ?


The MINISTER OF FINANCE.: Through the carelessness of an official.


Robert Abercrombie Pringle: Whose carelessness ?


The MINISTER OF FINANCE.: It was brought down through the carelessness of some official. The hon. Minister of Railways and Canals has stated that he had never signed a contract. If it had been an executed contract and the minister did not know it, that would have been carelessness, but a document was brought down which the minister had not signed. There is no proof of carelessness on the part of a minister there.


Robert Abercrombie Pringle: Then it was a piece of gross carelessness on some one's part. Now, we find that this contract for 125,000 tons of rails, to be supplied to the Dominion of Canada during a period of five years, was


Robert Abercrombie Pringle: laid on the Table, as the hon. Minister of Finance says, through the carelessness of somebody. I say that this is a most important contract, and while I do not wish to discuss now the merits of the contract, because I feel that we have not got the contract on the Table, so that we can properly and intelligently discuss the details of it, yet I say that we find that this company received from the Dominion of Canada $6 per ton bounty and $1 per ton bounty from the Ontario government, making a bounty of $7 per ton, or a total bounty of $S75,000 on the 125,000 tons of rails to be delivered to this government, and we find that, apart from that, they are given a price upon which there is certainly a difference of $5 or $6 per ton between the market price to-day and the price as set out in this contract. I wish to say that I think the hon. Minister of Railways and Canals .should not be so careless in the future. He should not deal with contracts involving such a large amount of money in a careless way in which it has been shown to-day he has dealt with this contract. Now, in reference to the order in council, I have not the order before me, but, if we are to take it for granted that the contract is contained in that order in council and in the correspondence which the Lake Superior Power Company sent to the hon. Minister of Railways and Canals, then, it does seem to me that the order in council does not provide for the manufacture of these rails in the Dominion of Canada. Certainly, the contract does not provide for that. I think that even the hon. Minister of Finance, as a layman assuming to deal with legal questions, would come to the conclusion, if he reads the contract which was laid on the Table, that the operative part of the contract does not compel the manufacture of these rails in the Dominion of Canada. Hon. gentlemen may say that the recital in the contract says something about the manufacture of these rails in Canada, but I would just say that where the operative part of a contract uses language which admits of no doubt, it cannot be contracted by the recital, and I say that the operative part of this contract is clear, and that there is nothing in it which compels the manufacture of these rails in Canada. I think it is due to this committee that we get a definite statement from the hon. Minister of Railways as to the terms of this contract and that the order in council and correspondence, or whatever they say constitutes this contract, be laid on the Table.


Hon. Mr. TISDALE.: There are a few points in this in regard to which it strikes me it is worth while detaining the committee a few minutes to say something on. First of all, in the eloquent words of an American congressman, I would like to see ' where we are at.' Shortly, on the 9th of April, we were told by the responsible minister that there was a contract. Then, be-

fore the discussion was through, it was discovered from him that this was in writing ; then, according to the rule, he was asked to produce it. On the 10th he produced what was said to be a contract. It seems, to-day, from the revelation that has been made, that it is more than doubtful that any executed contract has so far been shown to be in existence. Well then, these are two positions. In the third place, today, the hon. minister takes the position that he stopped the execution of this contract by Mr. Olergue after the discussion on the 10th. I am mentioning these points to show the inconsistent position of the minister in regard to this matter. What happens to-day ? The right toon. Prime Minister (Rt. Hon. Sir Wilfrid Laurier) says there is no contract; he produces the order in council and toe bases an argument upon it to show that it only authorized a contract from year to year. Then, we have the hon. Minister of Finance (Hon. Mr. Fielding), who says that it is clear there is no contract beyond the year, tout, he thinks there is a moral obligation, and yet, what do all these ministers of the Crown, the right hon. leader of the government among them, base the justification of this contract upon ? They based it upon the establishment of a steel rail manufactory in Canada. How ? By a contract encouraging it. If that is true, I would like to hear any successful manufacturer, or any reasonable man, contend for one moment that encouragement for one year would induce him to engage in the manufacture of rails. What do they want ? They want the assurance of a certain number of years. They must all agree to that. What is the logical consequence ? Either that the government have no notion of what they are about, or that they have been deceiving and misleading the gentleman who has undertaken to establish these works at the cost of a very large sum of money. That is clear. These are the two horns of the dilemma. I would like to know what position the government take upon that. I say that the intention from the contract, from the order in council, from the actions of the responsible minister, was, that they should make a bargain for 25,000 tons of rails this year with the Clergue syndicate, or the Lake iSuperor Power Company, whatever you may call them-I will call them the Clergue syndicate, because we know them by this name in the country-and they gave them to understand that they had a binding promise from the government of Canada that they were to have a contract for five years. The details of this were to be settled, how ? To be settled on the basis of the market price of rails each year in England. Are the government prepared to say that I am incorrect ?


The MINISTER OF FINANCE.: I am prepared to say that they gave Mr. Clergue, 113i
the order in council for exactly what it contains, and that he was satisfied with it.


David Tisdale: Is the hon. Minister of Finance prepared to say they gave him a copy of it ?


The MINISTER OF FINANCE.: Yes, certainly, as already stated.


The MINISTER OF RAILWAYS AND CANALS.: On the 12th of October, at Mr. Clergue's request, that was handed to him.


David Tisdale: I am very glad to get that answer. Why do you want to put it in the form of a contract at all, if the order in council is a contract ? Do you think for a moment that Mr. Clergue and the combination of capitalists who are putting millions into this enterprise would entertain the proposition at all if they did not believe in the good faith of the order in council ? Men who do not understand legal technicalities would understand that an order in council passed by the government pledges more than the ordinary legal contract, for it pledges the good faith of this country of ours. I am not discussing the merits of the agreement pro or con, but I say that if men put their money into an undertaking on the faith of a pledge given by the government of this country, then, if another government took the place of the government that made that pledge, I, for one, would insist on having its terms carried out, because the fair name and the good credit of the Dominion is at stake, and if these are not honoured, then we do not deserve to succeed as a young and respected nation. Each of the three ministers who spoke to-day disagreed from the other as to the contract, but they all agreed that the justification for it was to encourage the industry of steel rail-making in Canada. That is a thing dear to the hearts of Conservatives ; a doctrine they have promulgated in power and out of power since the adoption of the national policy, and a policy on which they are prepared to support the present government, so far as reason will allow. I do not think there will be a more surprised man in the Dominion than Mr. Clergue when he hears that the custodian of the good name of Canada, who has control of our finances, stated that there is only a moral obligation in it. There is no moral obligation on the government in one sense, but they have a financial obligation, and they have the moral obligation to maintain the good name of Canada. Although it may be politically to our advantage, I am sorry that the Minister of Railways changed his base as regards this contract, because except in one respect the contract he laid on the Table is a fair exposition of the terms of the order in council. Of course, whoever drew it up forgot to insert a clause to compel them to manufacture the rails in Canada.


The MINISTER OF RAILWAYS AND CANALS.: I do not think that the hon. gentleman (Mr. Tisdale) wants to make a misstatement. It is not right for him to say that there has been a change of base in regard to this. There has been no change of base at all. The government propose to carry out in its entirety and in all good faith the understanding contained in that order in council. We are prepared to enter into a contract with Mr. Clergue in accordance with the terms of the order in council, and Mr. Clergue will tell you that he is absolutely confident with regard to that.


David Tisdale: There certainly was a change of base, because the minister withdrew the contract he intended to have executed.


The MINISTER OF RAILWAYS AND CANALS.: It was not the contract I intended.


David Tisdale: Up to to-day we thought it was the contract. After carefully reading that supposed contract, and comparing it with the order in council, I say it is a fair exposition of the terms of the order in council, except that whoever prepared it forgot-I will not say neglected -to put in a clause compelling them to make the rails in Canada. The contract is a peculiar one. As regards the 25,000 tons of rails it is positive, but as regards the remainder, it is only provisional, and it could not be anything else. It certainly is a covenant to contract with the Clergue syndicate for other supplies of rails. Now, I wish to ask the Minister of Railways if he ever before this asked this House to vote him a large sum of money where a contract was to be made under an order in council, until he brought down the contract duly executed ? I know of no case in which that was not done. It was done with regard to the Drummond County Railway, and it is always done. I, for one, shall insist that any government, before it asks for an appropriation to carry out a contract for more than a single year, shall submit this contract to the House, and have it approved. That is only fair and proper.


The MINISTER OF RAILWAYS AND CANALS.: 
David Tisdale: I either did not make myself plain or the minister misunder-Mr. TISDALE.
stood me. I say where there is an order in council passed, upon which a contract is founded which extended beyond a single year, that contract is always brought down. For that we have the good constitutional reason that beyond the actual vote parliament is supreme, and until parliament gives its sanction it has no binding effect.


The MINISTER OF FINANCE.: Hear, hear.


David Tisdale: True, it has no binding effect, but on the other hand the good faith and credit of the country may be pledged under the order in council. We should have the contract. There is no better illustration of the necessity of that, than what has occurred here. The minister told us what the contract was and when his officer reduced it to writing it is only after two days' discussion that we find the minister was mistaken. The leader of the opposition made an extremely fair request of the Minister of Railways, when he said that before this vote passes we should at least have the agreement before us so that we can pronounce upon it. The time is getting short, I hope, before we shall prorogue, and if the executory contract is produced, I for one would be willing to treat it as an exceptional case, and vote to pass it without the signatures of the parties to it, though I think the constitutional rule should be to require the signatures to contracts before they are submitted to parliament. In conclusion, let me ask the ministry, what are they going to do about it ? They say there is no contract. The Prime Minister says there is one for a year. The Finance Minister says there is nothing after that but a moral obligation. If there is no contract after that, and if Mr. Clergue is not assured that good faith is going to be kept with him, he cannot go on. On the good faith of that agreement, as he believes it to be, he is asking capitalists to invest millions of dollars in these works which he is seeking to establish ; and if there is nothing after the first year but a moral obligation, the government are treating Mr. Clergue unfairly. That is not the way the business of Canada should be conducted. I am both surprised and grieved at the way in which the minister has managed this contract, because I did not think he allowed agreements to be completed in the way he has mentioned to-day ; and I agree with the hon. member who has last spoken, that if he does, he should change his practice. I know what the practice of the departments under the old government was, and it should be the same under this government and all governments. In the case of all important contracts, after the law officers have been consulted in regard to them, the responsible minister should see them and examine them before they are sent out to be executed by the other party. The Minister of Railways said to-day that he frequently did

not look at contracts until they came back executed, and then, if he found any change to be necessary, he sent them out again. I say that is a dangerous practice, and does not indicate good government management in the eyes of the people. As a business man, I would expect when a contract was signed, that it was settled ; and if you sent it back to me a second time, I would be suspicious. I have in my lifetime signed at least a dozen contracts coming from the different government departments, and I have never known such a case as this before. A contract is usually sent to be signed by the outside party first, so that there will be no question about the Crown being bound until the outside party is bound. All important contracts should go to the minister for his approval before they are sent out at all, and then there will be no mistake. Let me apply that principle to this case. Mr. Clergue has no doubt shown this agreement to his colleagues and to capitalists, as he had a right to do, and lie would say to them, ' There is my contract.' Are we to be told that a document involving the expenditure of $4,000,000 of public money, is to be sent out to be executed before being approved of by the minister, and, after being executed by the other party to it, is to be sent out again ? I do not wish the minister to misunderstand me. In small matters the same course is not necessary; but in important cases such as this, I think It is worth while to have the contract properly examined and properly certified, the minister becoming responsible for them before they are sent out to be signed at all.


Robert Laird Borden: With respect to the legal contention which my hon. friend the Minister of Finance put forward, I do not know that the House need concern itself very much as to that. I may say a word or two about it before I sit .down. But as the hon. Minister of Fijiance thinks that the case of Churchward vs. the Queen is on all fours with this case, I would like to point out the particular circumstances which induced parliament to refuse to grant the money in that case ; and I should imagine that the hon. gentleman would not be very much obliged to the gentleman who suggested to him that that case was in point here.


The MINISTER OF FINANCE.: Would that affect the principle, does my hon. friend think ?


Robert Laird Borden: I will deal with the legal principle later on. I am dealing now with the parliamentary principle which was laid down in the House of Commons, namely, that parliament would not vote the money because there was corruption.


The SOLICITOR GENERAL.: No no. I have the speech of Mr. Gladstone.


Robert Laird Borden: Well, I have a resolution of the committee with regard to
it, and I suppose that is as good as Mr. Gladstone's speech. My hon. friend the Solicitor General will have ample opportunity to give us Mr. Gladstone's speech, which the House will probably receive with a great deal of interest. It appeared in evidence before the committee


The SOLICITOR GENERAL.: Will my hon. friend permit me to ask him whether he has reference to what took place in 1858, 1860, or 1883, because the matter came up three successive times ?


Robert Laird Borden: I am aware that it came up three successive times ; but it wais always tire same matter. There is a very full and detailed statement of the case in Mr. Todd's book on Parliamentary Government in England, at pages 772 to 780. In that case there was a contract subsisting in 1859. It was to expire in 1863. An agreement was made to extend it until 1870, and the question arose with respect to the renewal of that agreement from 1863 to 1870. I am now quoting from Mr. Todd's work, at page 772 :
It appeared In evidence before the committee (which investigated the renewal of the contract) that on the eve of the last general election, when the extension of his contract was under consideration at the Treasury,' Mr. Churchward volunteered his support, as an influential elector for Dover, ^to Captain Carnegie, one of the Lords of the Admiralty, if he should become a candidate for that borough. lie did this on the expectation that his contract was to be renewed. The committee, however, fully exonerated all the officers, both of the Admiralty and of the Treasury, with whom the decision in regard to this contract rested, from being influenced by any corrupt or political motive in granting the same. They did, indeed, consider that the conduct of Mr. Murray, the private secretary to the First Lord of the Admiralty, was open to grave censure; but they had not sufficient evidence to show that any member of the government was cognizant of the communications between Mr. Murray, Mr. Churchward and Captain Carnegie.
While declaring themselves most fnxious for the fulfilment of all engagements entered into 'n good faith between the government and private individuals, the committee, nevertheless, submitted to the House ' whether Mr. Churchward, in having resorted to corrupt expedients affecting injuriously the character of the representation of the people in parliament, has not rendered it impossible for the House of Commons, with due regard to its honour and dignity, to vote the sums of money necessary to fulfil the agreement to extend his contract from June 20, 1863, to April 26, 1870.'
A change of ministry having taken place since the last renewal of this contract, the incoming administration in deference to the foregoing report, and to the general opinion of the House, tacitly concurring therein, refused to recognize the amended contract, which entitled Mr. Churchward to a fixed sum per annum, hut permitted him to continue to conduct his postal service under the former contract, under which he was ordinarily allowed a smaller amount, but was authorized to make extra charges for certain special services. This contract would remain in force until June, 1863,

and was free from objection of any kind, it not having been included in the censure of the committee.
Then there is a reference to certain efforts made by friends of Mr. Churchward. They brought forward on the 27th March, 18(30, a motion in parliament resolving :
That the House having considered the report and evidence presented by the committee, is of the opinion that the contract entered into on April 26th, 1839, between the Lords of the Admiralty and J. D. Churchward ought to be fulfilled.
The Chancellor of the Exchequer, Mr. Gladstone, opposed this motion, declaring that the impartial finding of the committee was entitled to respect; that independently of their report it was clear from the evidence that corrupt expedients, affecting injuriously the dignity of parliament, had been resorted to to obtain a renewal of this contract. Under these circumstances, he added, the present ministry were under no obligation to carry out the new contract, and the House were not bound to vote the money, for the executive has no constitutional authority to make a contract binding on the House of Commons.
Some lion. MEMBERS. Hear, hear.


Robert Laird Borden: Whereupon the motion was negatived on division.


The SOLICITOR GENERAL.: That is the question.


Robert Laird Borden: My hon. friend does not seem to understand the point I am making. In ordinary circumstances, the executive always feels bound, as a matter of good faith, to ask parliament to vote the moneys unless some circumstances have occurred.


The SOLICITOR GENERAL.: That is the point.


Robert Laird Borden: The Minister of Finance did not take that position this afternoon. He said distinctly that it would, be perfectly proper, for an incoming administration to repudiate this contract if it thought It was not in the public interest. I say that there is no support for any such doctrine to be found except on some such ground as that stated in the case I have quoted. The legal liability is one thing-although the case which my hon. friend the Minister of Finance referred to does not support the proposition he made-the question of legal 1 liability is one thing and that of good faith another. It is always competent for a government, if it sees fit to do so, to repudiate liability, because the Crown cannot be sued without its own consent. A fiat upon a petition of right can be refused and so the liability can be avoided. As a matter of fact about forty petitions of right have been standing before the Postmaster General during the last two years, on which he has not granted a fiat, and the petitioners have obtained no satisfaction up to the present.


Robert Laird Borden: 


The MINISTER OF RAILWAYS AND CANALS.: Could a fiat in such a case be enforced legally ?


Robert Laird Borden: I will read the hon. gentleman something about that by-and-by.


The MINISTER OF RAILWAYS AND CANALS.: Take this case then and answer my question.


Robert Laird Borden: that kind must be implied as a part of every contract, but that is a mere dictum, and we have against it the decision of sir Alexander Cockburn that if there had been no question of that kind in the way, the petitioner would have been entitled to relief.
But the broad question we are discussing here is whether this or any government of this country, in the language of the Minister of Finance, can, without any reason whatever, turn to one side this agreement with Mr. Clergue and say it is not in the interests of this country that such an agreement should be carried out. What were the facts in the case of that kind in the English House of Commons. At page 780 of Todd's Parliamentary Government is found the very case referred to, which my hon. friend the Minister of Finance mentioned-the case In which parliament virtually declared and found that a contract entered into by a preceding administration was not in the best interests of the country-the committee of the House reported its opinion that the contract had been unwisely entered into, that it had been given without sufficient regard to the interests of Canada, that a line of ocean steamers would have readily undertaken the new service on more favourable terms, and that the arrangement was altogether an impolitic and improvident one. Well, what was done with that contract ? Not only did the succeeding administration consider itself bound by it, but even when the company made default and was unable to carry out its contract, within the exact lines of the stipulations, the government did not take advantage of that, but gave the company further time to put itself in a condition to carry out its obligations ? That is a policy exactly the opposite of that which was laid by a member of the government this afternoon. I would not have thought it desirable to say anything with regard to this matter if it had not been for that very important announcement made by the Minister of Finance to-day as to the duty of this and succeeding administrations with respect to contracts of this kind.
I do not desire to occupy time further except to refer to a principle, which is distinctly laid down in England, that contracts of this kind should either be submitted in the fa'st instance to parliament or else contain a stipulation' that they should not become binding until parliament shall have pronounced on them. That is a course which the Minister of Railways did not see fit to pursue in this case. I will read the doctrine with regard to that, as held in England and laid down in this book of undoubted authority, and would respectfully ask the Minister of Railways to give heed to it; and I may say in passing that if parliament can repudiate, as the Minister of Finance says it can, an agreement to take the rails for the next four years, it can equally
repudiate any agreement to take the rails this year, because there was no appropriation by parliament to buy these rails, as X understand it. Therefore, if parliament could repudiate its agreement for the next four years, it could with equal good faith repudiate its agreement for this year.


The MINISTER OF FINANCE.: By refusing to vote the money-certainly.


Robert Laird Borden: The hon. Minister of Finance would consider that in so doing it was acting within Its right ?


The MINISTER OF FINANCE.: If parliament refuses to make the appropriation the contract fails.


Robert Laird Borden: And my hon. friend would consider that a government which would not stake its existence upon carrying out a contract of that kind would be doing Its duty ?


The MINISTER OF FINANCE.: But we are going to stake our existence upon it.


Robert Laird Borden: But this afternoon the hon. gentleman took a different position.


The MINISTER OF FINANCE.: No.


Robert Laird Borden: Then I do not understand what position he takes. I suppose he distinguishes between the duty of this administration and the duty of a succeeding administration. 'There is no such distinction to be found in any of the books, nor is there any principle upon which such a distinction could be made. The duty of the country in such matters is laid down by the authorities in England, as stated in this book, as follows :
In the interval between the execution of a contract and the application to parliament for vote in supply on account thereof, heavy expenses and liabilities are necessarily incurred by the contractors, so as to render it a matter of peculiar hardship and difficulty for the House, in the absence of any charge of fraud, misrepresentation or corrupt proceedings, to interpose and refuse to vote the moneys required to carry out a contract which has been entered into by government within the limits of its own authority.
I think that is sound common sense and sound reason. Parliament may think that a contract of that kind is not politic in the interests of the country, that it is a contract into which the government should not have entered ; but, seeing that the contractor has incurred expense on account of his faith in the honour of his country, parliament will not decline to pass the vote. At the same time, parliament should not be placed in a position of that kind. It should be allowed, in the first instance, to consider the contract before it is made. The authority I have already quoted proceeds :
Parliamentary control is thereby practically excluded in regard to an important branch of public expenditure. While it seems repugnant

to the principles of our constitution that the executive government should be free to enter into contracts binding the country for prolonged periods, and by anticipation, to the payment of vast sums, without the possibility of any effective parliamentary check beyond the disapproval after the evil had been accomplished, and when perhaps the ministers by whom the contract was made were no longer in office, nevertheless the committee were fully sensible of the difficulties attending any change of system which might result in a parliamentary canvass on behalf of competing candidates for a public contract.
Therefore, they recommend, and the English practice now is, in all such cases, that a stipulation be inserted in the contract that it should not be binding upon the country until the assent of parliament is obtained. That is a sound principle. It gives parliament the power and the right to exercise its discretion, and that is what the Minister of Railways should have done in this case. I regret to have felt called upon to trespass upon the attention of the committee so long, but I thought the subject worthy of the remarks I have made.


The MINISTER OF THE INTERIOR (Hon. Clifford Sifton).: I think it is quite clear that our hon. friends on the other side are somewhat disappointed with the turn that this debate has taken. On the last day when this question was debated, they were evidently under the impression that a contract had been made which left the government open to severe censure. Listening to the remarks of the hon. gentlemen who have debated the question, I am forced to the conclusion that instead of devoting their attacks to the real transaction upon which the government has entered, they have devoted their attacks altogether to proving that the government ought to enter into a transaction which it has not entered into, and ought to go on and do something which it has not bound itself to do. My hon. friend from South Norfolk (Mr. Tisdale) was in grave fear lest the good faith of the government and the honour of Canada might be prejudiced by the fact that the government would not go on and make a' contract for four or five years longer, whereas the whole attack hitherto has been that the government had already done that which the hon. member for South Norfolk is now afraid will not be done. The hon. leader of the opposition (Mr. Borden, Halifax) has with considerable ability-as is his wont-quoted certain authorities for the information of the committee, which authorities have gone to show that when the government has entered into a contract the government was bound by the contract. Now, he need not have cited any considerable number of authorities to prove that, because I think we will all admit It


Robert Laird Borden: Will the hon. gentleman permit me to ask him a question ? Does he hold that with the Minister of Finance that a succeeding administra-


Robert Laird Borden: tion might refuse to carry it out on the ground that it was an impolitic contract-


The MINISTER OF FINANCE.: Improvident.


Robert Laird Borden: An improvident contract 1


The MINISTER OF THE INTERIOR.: I think I shall be able to meet my hon. friend's point when I come to discuss the question of what the contract is, which hon. gentlemen on the other side sedulously avoid placing before the committee. The contention of my hon. friend the leader of the opposition is that the successors of the government would be bound by a contract which the government has made. Unquestionably that is the case. And he points out that where a contract was repealed or was not assented to by a succeeding government, it was on account of the committee finding that there was a savour of corruption in connection with the contract; and, except for that, the government would be bound. We will agree to that. We will agree that any contract the government enters into is binding upon the House, and the good faith of the country. But the hon. gentleman will recognize that the principle which he laid down just before he resumed his seat, that when a contract is to extend over a fiscal yeai% it should receive the as- * sent of parliament, is a sound principle. We are all perfectly familiar with the idea that when a contract is made involving an expenditure of money which has not been voted by parliament, and extending beyond the fiscal year, it is not a binding contract under the law unless it has received the assent of parliament. Well, now, my hon. friend cited a case or two in which he referred to the judgments of certain learned judges as indicating what was binding upon the government and what was not. And, if I understood the purpose and desire of the hon. gentleman in quoting these expressions of opinion on the part of the judges, that purpose was to show that under circumstances similar to those actions would lie against the government if flats had been granted. I do not know whether he intended to leave that impression upon the minds of the committee oj; not, but if not, there was no point in the quotation of the authority. I think the hon. gentleman would hardly stand up here and pledge his professional reputation upon the statement that an action would lie against this government under the circumstances of this transaction.
Perhaps, if our hon. friends opposite will not find fault with us, it might be well to consider what the contract is. I think it will be very clear that the hon. gentlemen have been well advised in the conduct of this debate in endeavouring to divert the attention of the committee from the actual terms of the contract to something else which does not exist in the contract. The report of the Minister of Railways and Canals


APRI L 23, 1901
[Stage Direction]
contains the substance of the order in council, the order in council being merely paraphrase of the report. The minister says :
The undersigned, recognizing the benefits which the creation of an industry of such an extent and importance in Canada would necessarily bring directly in the employment of labour, the expansion of mining operations, and the transportation of crude materials and finished products, and, indirectly, in the development of numerous other industries by which this would be served, considers that the project is one which should receive all encouragement at the hands of the government,
[Stage Direction]
I read the foregoing part and recital because it shows clearly what the minister and the government bad in their minds, and the purpose for which this order in council was passed :
-and he recommends that authority be given for entry into an agreement with the company for the supply to the government railways of 25,000 tons (2,240 pounds to the ton) of first quality steel rails of eighty pounds to the yard, and of section prescribed by the Department of Railways and Canals, such supply to commence in the month of June, 1901, and to be completed in the month of September following; delivery to be made either at Ldvis or at Montreal (c.i.f.), as the department may direct, and, so far as practicable, in equal quantities monthly, the price to be paid for the said rails so delivered to be fixed, as agreed upon, at $32.60 per ton, which, as above stated, is the price now being paid by the Department of Railways and Canals.
The minister further recommends that he be authorized to contract yearly hereafter for the supply of a similar quantity of such rails during each succeeding year for a term of five years, to be delivered either at Halifax, Port Mul-grave. Ldvis or St.. John, as may be required by the Department of Railways and Canals, the price for the said rails to be the price for the same quality of rails in the open market in Great Britain at the time when the order therefor is given by the Department of Railways and Canals.
This order in council authorizes the minister to make that contract for 25,000 tons of steel rails at $32.60 per ton for this year, and it authorizes him afterwards to enter into a distinct and separate contract each year for 25,000 tons of steel rails-at what price ? At $32.60 per ton ? No, but at the price in the open market, at what the rails may be worth. That is the contract the hon. gentleman entered into, that is the contract which the order in council authorizes, and nothing else.
Now, what is the transaction ? My hon. friend from South Norfolk (Mr. Tisdale) is disturbed, not on account of the policy of the transaction, not on account of the substance of the transaction, but he is disturbed, forsooth, not for fear that the Minister of Railways will enter into the agreement, but for fear that he won't. That is the criticism which the hon. gentleman addresses to this committee on behalf of his friends. I do not think that is the impression which the hon. gentleman's friends will endeavour to create in the country in
reference to this contract. They are endeavouring to create in the minds of the public the impression that an improvident contract has been made, and the hon. gentleman, on the other hand, is endeavouring to prove that we ought to go on and make this contract which they say is improvident. Now, this is what the Minister of Railways has recommended, and what the government has authorized him to do, first, to make a contract for the first year for 25,000 tons of rails at $32.60 ; secondly, that thereafter, in each year, he may make a separate and distinct contract. He has authority under the order in council to make that contract for 25,000 tons at the market price. Now, do we want the rails V We want 25,000 tons a year for five years for the government railway. Then, if we want 25,000 tons a year for the next five years, where in the name of common sense is the improvidence in contracting to buy them at the market price ? There is no money lost in that transaction. What is the consequence of the transaction ? One consequence of the transaction is, that instead of reserving the right to buy German rails, or English rails, or American rails, the government has said in the contract that it will authorize the Minister of Railways to buy Canadian rails. My hon. friend the Minister of Finance has said that in the negotiations in connection with this matter it was stated to these gentlemen : If you go on and establish your rolling mill, the Minister of Railways will take rails from you in order to establish this industry, paying you the market price. The people of Canada will not lose one single copper. There is no financial loss in buying the rails at what they are worth in the open market. The $200,000 of loss, which my hon. friend from East Grey (Mr. Sproule) refers to, is simply a figment of his imagination.
The only question of profit or loss that there is in this transaction is as to the price of the first 25,000 tons of rails, that is the only financial question involved ; and the simple question which this committee has to decide is whether the government has been wise in agreeing to give $32.60 per ton, the then going price on the 26th of September or thereabouts, for the purpose of securing the establishment of a steel rail manufactory in the Dominion of Canada. That is the only question. Now, our hon. friends opposite say : In giving $32.60 per ton, you are paying something like $8 per ton more than they were worth at the time you made this contract, you could have bought them at the present time for $8 per ton less than you are paying. That is to say, if we had not made that contract in September, we might have bought the same rails for something like $8 per ton cheaper, but they would not have been Canadian rails, and we would not have had the advantage of securing the establishment of this industry. But, that is not all. We did
[Stage Direction]
not even go the length of giving $8 per ton more for these rails for the purpose of giving assistance to that industry ; we bought the rails at the market price at that time. It has been pointed out elsewhere, by men connected with the trade, that all the government did was to agree to buy
25,000	tons of rails at the then going price, that although the government were aware there was a possibility of a fall in the market, they took the chances and gave $32.60 per ton in order that we might get that industry established. So, as I said, all this committee has to decide is, whether the government was wise, in so far as the financial part of the transaction is concerned, in making that contract at that time, in a market which men in business considered likely to be a falling market, and which ultimately proved to be a falling market. I do not think any member of this committee, giving the matter a reasonable consideration, will think that the government was unwise in giving that much assistance in the purchase of these rails for the purpose of establishing an industry of that kind in Canada. I doubt if any hon. gentlemen on the other side of the House, if they will abstain from travelling out of the record and will confine themselves to the actual point at issue, will say that the purchase of these rails at that price for the purpose of securing the establishment of a steel rail factory in Canada, was an uuwise or an improvident transaction.
Now, my hon. friend from Lanark (Hon. Mr. Haggart) has made some observations on this question. As a comparatively new member of this House, I always listen with a considerable degree of interest to what he says, and I very often derive considerable information from the remarks which he addresses to the House. But, I am bound to say that the hon. gentleman is not always happy when he undertakes to make an attack upon the government. I do not think he was happy when he made his attack this afternoon. I do not think the hon. gentleman himself would say that it was not a wise or a provident transaction for the government to furnish that amount of assistance for the purpose of getting a steel rail industry established in Canada. He refers to the fact that this transaction took place shortly before the election, and the obvious impression he sought to create in the minds of the committee was, that there was some connection between this transaction and the proximity of the general election. I presume that my hon. friend's experience has led him to that conclusion. But, I would not suggest that there was anything that was not quite proper in connection with his experience. I may remind my hon. friend, however, that there are certain principles in connection with the transaction of public business upon which his mind is much clearer now than when the hon.
Mr. SIFTON.: gentleman occupied the position of Minister of Railways and Canals ; for instance, the principle of letting public contracts by open tender and public competition.


John Graham Haggart: Give an instance.


The MINISTER OE THE INTERIOR.: What I want, however, to point out is that the suggestion of the hon. gentleman to the effect that this transaction occurred immediately previous to the election, is not founded on fact at all, because the gentlemen who were engaged in connection with the establishment of this magnificent plant, a plant of which I am satisfied every Canadian will be proud, had been discussing these matters with the government for. I think-I speak from memory-nearly twelve months before this contract was made, and if my hon. friends opposite are not satisfied that such is the fact, I will give them absolute proof that the establishment of a steel rail industry in Canada was in contemplation long before that contract was entered into. If my hon. friends will look at the Subsidy Act, introduced by the hon. Minister of Railways and Canals last year, if their memory requires that they should do so, and if they will look at section C, they will find this provision :
The Governor General in Council may make it a condition of the subsidies hereby granted, or of any heretofore granted by any Act of parliament as to which a contract has not yet been entered into between Her Majesty and the company for the construction of the railway, that the company shall lay its road with new steel rails made in Canada, if such rails are procurable in Canada of suitable quality upon terms as favourable as other rails can be obtained upon, of which the Minister of Railways and Canals shall be the judge.
When these gentlemen came to discuss with members of the government the question of the establishment of their rail mill, the proposition was that railway companies should be compelled to take their subsidies in steel rails furnished by a Canadian mill if the Canadian mill would supply them at the market price. Subsequently that proposition was modified and we were asked to embody in the Subsidy Act the provision that, under the conditions specified, they should lay their railways with Canadian rails. That was done, and that was the first attempt to carry out the propositions which were made to us for the purpose of assisting and encouraging the establishment of this plant. Then, afterwards, the contract which is under discussion was made. So that, there is nothing at all in the suggestion of the hon. ex-Minister of Railways and Canals that the conduct of this matter was a matter which simply arose immediately before the holding of the general election. This was a matter which had been under consideration, and which had been practically carried to a conclusion months before the submission of the report to coun-

cil of wliicli I have read an extract. Now, I do not wish to detain the committee at any length, but, it is desirable, when we are discussing these matters, to arrive at a proper conclusion upon these questions. The government has entered into a transaction which is said by bon. gentlemen opposite in a very loud tone of voice, and with a great deal of iteration to be an unbusinesslike transaction. Governments are bound to do a great deal of business, and they do that business in the way which they believe to be the most businesslike. The opposition generally seize the opportunity of saying that the transaction in question is unbusinesslike, and it is desirable under such circumstances to find out what independent business men outside of the House think of the transaction which may be under discussion. That is my reason for calling the attention of the committee to an article which will be found in the journal entitled the Canadian Hardware and Metal Merchant, published at Montreal and Toronto, and devoted especially to the hardware and metal trade. Inasmuch as this journal devotes itself particularly to a trade in the line of the transaction we are discussing, its opinion may be received with more authority. This journal goes on to point out, in words from which I will read an extract in a minute or two, that the establishment of a steel rail plant in the Dominion of Canada is an extremely desirable thing. It points out, and this is a point which the committee ought to well consider, that steel rails are upon the free list in Canada, that there is no duty upon steel rails, and that a manufacturer, starting in to manufacture steel rails, is not in the same position as the manufacturer of ordinary commodities, that upon all ordinary commodities there is an average duty of from 25 to 30 per cent, and that upon steel rails there is no duty. Why ? It has been the policy of the Dominion of Canada for many year's that steel rails should be on the free list, because of the desirability of encouraging the construction of railways in Canada, and because of the fact that we did not think our iron and steel industries had arrived at that point at which the manufacture of steel rails could be successfully carried on. In 1888 the Finance Minister of the late government, Sir Charles Tupper, discussed this question in his budget speech and he said then that he had been urged to put a duty on steel rails for the purpose of encouraging the establishment of such an industry, but he pointed out that the time had not come in the history of Canada when such an industry could be successfully established, and. if I recollect rightly, his words were that in ten years from that time the establishment of such an industry might be looked for. If you look at the amount which has been paid by the contract, even looking at it in the most unfavourable way, in excess of
what foreign rails could have been purchased for, it will not amount to more than $8 a ton, which would not be more than about the average rate of duty that is paid upon similar commodities. If there were an average rate of duty upon these rails and if the government were called upon to buy rails, then the government would, in justice to the industry, have to take account of the duty which was placed upon them, so that, looking at it in the most unfavourable way, the government have not done any more than to pay, as the price of the encouragement of the establishment of this industry, the amount of the reasonable duty that would be levied for the assistance or the protection of the manufacturer. Now, I have only to say in conclusion that I desire to call the attention of the committee to the opinion of a business journal upon this transaction. The opinion which is given in the words of the journal itself is as follows :
The action of the government in placing the order in question has caused quite a little adverse criticism. The main points of the contention are : (1) that tenders should have been called for ; (2) that the price paid was higher than that ruling, a decline having taken place a'few days before the contract was signed.
Under ordinary conditions the objections would have been well taken; but they were not ordinary. Mr. Clergue, on behalf of the company that is making such an industrial revolution at Sauit Ste. Marie, Ont., came to the government with a proposition to establish a nickel-steel rail industry:	What he wanted, of course, was
some encouragement from the government. And he got the encouragement in the shape of an order for 25,000 tons of rails at $32.85, delivered at the points named by the government. It was certainly, with the iron and steel market in the condition it was last fall, not the way any ordinary business corporation would have placed a similar order. But the government was desirous of giving some assistance to an industry which we have practically never had, but which we have for a generation been trying to get. There is not an industry in this country that has not, either directly from the Dominion treasury or through a protective tariff, received governmental assistance. And the difference in the market price of steel rails when the 25,000 tons in question are delivered and the price which the government contracted to pay will represent the measure of that assistance. If the government is to be condemned on that score, then must the whole system of protection to home industries be condemned.
This journal concludes by saying :
We have more often condemned than commended the government for its actions, but we do not see in the present instance how we can do any other than commend it.
That is the opinion of a trade journal which is most competent to deal with this question. I think the view of the committee will be, -when its attention is directed to the actual circumstances of the transaction, that the government has shown a desire to encourage the establishment of an

/
industry tliat will do a great deal to promote the prosperity of the Dominion of Canada, and that the attempt which our hon. friends on the other side of the House *are making to misrepresent and distort the facts of the case will entirely fail.


Nathaniel Clarke Wallace: I think the hon. minister (Mr. Sifton) who spoke with so much unction and satisfaction at the words of wisdom contained in that trade journal which he has been quoting, would have done well to have posted himself a little on the question of steel rails. He has repeated more than a dozen times within a quarter of an hour that steel rails are free of duty and he has quoted the trade journal to prove that. I have here a copy of the tariff at present in force and I see that iron and steel railway bars or rails of any form, &c., have a duty of 30 per cent and they are not free at all.


The MINISTER OF RAILWAYS AND CANALS.: Only for street railways.


Some hon. MEMBERS: Hear, hear.


Nathaniel Clarke Wallace: -which term for this purpose shall include all kinds of railways, street railways and tramways.
Therefore the hon. gentleman will have to revise his knowledge of the tariff in that regard. Now, Mr. Chairman, coming to the general question, it appears to me that we are entering upon a new era in this country. We are to have $4,000,000 of the money of the people of Canada exploited without the consent of the people being asked or received. The Minister of Railways on the 9th of April asked the House to pass his estimates which included an item foil $500,000 for steel rails and other things, and the minister explained the transaction in a general way. But, when we came to examine into It we found this simple looking item involved an expenditure by the government of the country of $4,000,000, and the minister expected us to pass it without his giving anything more than a very cursory explanation. Now, the minister tells us that that $4,000,000 is not to be expended at all, and that parliament is only bound to the expenditure for one year. Mr. Chairman, that is a solemn binding contract for $4,000,000 so far as the government of Canada can make a contract and it is as binding for the five years as it is for the first year. The only difference in regard to it is tljat for the first year the price is definitely and precisely fixed, and that wliife for the next four years the price is also definitely and precisely fixed, that price may be variable, as it is to be the price in the English market at the date the order for rails is given by the Minister of Railways. It stands to reason that this company is not going to undertake this industry on the faith of a contract for one year, because if they require assistance or encouragement to go into the enterprise Mr. SIFTON.
they would require it for more than one year. The government have virtually made a contract with them for five years, tvny did not the government submit that to parliament ? Have they the power of their own volition to bind this country for five years ; have they power to make that contract at all without taking the parliament of Canada into their confidence? We are told that these negotiations were in an advanced state in the month of June of last year. Parliament was sitting then, and was parliament informed of the negotiations ? Not a word was whispered outside the sacred precincts of the council chamber. The people of the country did not know. Those who were willing to go into the manufacture of steel rails did not know, and the government took every care not to let them know before the election that they had made the contract. When was the contract made ? Why, the Minister of the Interior with his usual inaccuracy stated that the arrangement was made on the 20th September, and that on that date the price of steed rails was $32.00 a ton. That is not true and he cannot prove it.


The MINISTER OF THE INTERIOR.: I read the order.


Nathaniel Clarke Wallace: The hon. gentleman read the order of the 26th of September. I am not disputing that. But the further statement he mSde and which he cannot prove was that the price of steel rails on that date was $32.00 a ton.


The MINISTER OF RAILWAYS AND CANALS.: Higher than that, for six weeks after in England.


Nathaniel Clarke Wallace: Well, Mr. Chairman, I have here the official returns of the monthly summary of the commerce and the finance of the United States, compiled by the Bureau of Statistics of the Treasury Department of the United States. This is a correct official statement. What do they say They say that on the 12tli of September the price of steel rails was $30. Mind you, be says the bargain was made on the 26th. The order in council was passed on the 9th of October. On the 5th of October the price was $26 a ton, according to this official statement.


The MINISTER OF RAILWAYS AND CANALS.: What was the price on the 26th ?


Nathaniel Clarke Wallace: $26 a ton.
The MINISTER OF RAILWAYS a'nD CANALS. In the United States ?


Nathaniel Clarke Wallace: In the United States. Where else do you go for the price ? Did you not buy your rails there ? Did you not make both your contracts last year to buy rails from the United States ? Were not the United States sending their rails to England ? Did not the Canadian Pacific I Railway buy 100.000 tons of rails from the

United States tlie year before ? All the transactions of recent years have been with the United States, and this is the official record of the price in the United States. Therefore, the Minister of the Interior misleads this House and tells the House inaccurately that the price on September 26tli, when the contract was made, was $32.60 a ton. He states what he cannot prove because it is contrary to the facts.


The MINISTER OF THE INTERIOR.: What I did was to read the report of the Minister of Railways in which it was stated the price was $32.60. That was the price they were paying at that time.


Nathaniel Clarke Wallace: No. That is what the minister himself said to the House, and he pledged his reputation to this House for a statement that was not true and that he cannot prove is true.


The MINISTER OF THE INTERIOR.: The hon. gentleman (Mr. Wallace) is making a statement that is wholly incorrect. I read the report stating it clearly word for word.
(Mr. WALLACE. There is no doubt of what the minister said for I took it down.


The MINISTER OF THE INTERIOR.: Here are the words of the document which I read to the House :
The price to he paid for the said rails so delivered to be fixed upon at $32.60 a ton, which, as above stated, is the price now being paid by the department.
That is what I read.


Nathaniel Clarke Wallace: The Minister of the Interior stated this and I took his words down and ' Hansard ' will show it. He said :
The price current at that date, on the 26th of September, or thereabouts.
That is what he said. But it was not the price at that date. The Minister of Railways and the Minister of Finance tell us, ' Oh. we are not looking at the price on a particular date ; we are not bothering about that.' Why not ? When you are making a bargain involving sucb enormous sums of the money of the people of Canada, why not apply ordinary business acumen to the business in hand ? The Minister of (Finance told us this afternoon, ' We ax-e not in the habit of blazoning contracts through the streets.' When the money of the people of Canada is being squandered, they do not consider that they are bound to give the people any knowledge of what is going on. ' We are not going to tell the people ; we are going to keep our business locked up.' What right have they to do that ? When the smallest contract is let for the erection of a public building or a lighthouse, the next day you see all about it in the papers -the price paid, and the name of the man who receives the contract. What right have they to do differently in this case ?
On the 9th of October they passed that order in council. On the 9th of October another order in council was passed dissolving the House of Commons of Canada, and another one issuing the writs for the general election. It is a curious coincidence that on the same day that parliament was dissolved they passed the order in council giving a contract of that magnitude to Mr. Clergue of the Sault syndicate. Why did they not let the people of Canada know ? What was the object of keeping that a profound secret from the 9th of October to the 9th of April, just six months to a day ? Was there anything to he ashamed of ? Was it something the people of Canada had no right to have a knowledge of ? If that was the case, then, of course, they were right; and these masters, these bosses, these autocrats, who are holding the reins of power to-day, disdained to inform the people of Canada. For six long months they never opened their mouths. Will some one give us the reason why that Important fact was kept from every man in Canada outside the council chamber ? I say it is a scandalous transaction. It is illegal to attempt to make contracts without the consent of parliament. The Minister of the Interior has had a little exjxerience in that line, and perhaps his experience would induce him to avoid asking the consent of the people or the people's representatives. He remembers tlie Yukon Railway and the secret bargain he made with regard to it, almost a day before tbe House met, subject, however, to the consent of parliament in that case. But the parliament of Canada did not consent, and that enormous scheme failed to go through.


The MINISTER OF THE INTERIOR.: The people's representatives consented.


Nathaniel Clarke Wallace: But the great balance-wheel did not consent, and the people of Canada endorsed the course of the Senate of Canada.


Some hon. MEMBERS: No, no.


Nathaniel Clarke Wallace: In that case they tried to get possession of three and three-quarter millions of the best mineral lands in the world at one-tenth of their value. But the government then learned a lesson ; and in this case they said, ' We have got a secret bargain, and we will keep it from the people of Canada.' Why did they not tell the people on the 9th of October, ' We have just concluded a bargain with the Clergue syndicate, and we ask ydur approval or your disapproval.' No ; they were afraid to let it be known-why ? The Minister of Finance quoted a case in which he said tbe bargain was upset because there was a corrupt consideration attached to it. Surely there was not a corrupt consideration in this case. Surely these men were not going to receive a portion of the moneys back again. The

$32.60 a ton was not the whole of the money the syndicate were to get. In addition to that, they are to get $7-$0 from the Dominion, and $1 from the province of Ontario-for every ton of steel rails. That is, $39.60 for an article which was worth $26 a few months ago, and which to-day I am told, is worth $24.85. They say, 'We cannot tell what the price will he in the future.' But I say you have no right in a falling market to go back to the time when steel rails were $35 or $40 a ton ; you are bound to come down to the price on the day the contract was made. They did not do that, because on that day, as the records show, the price of steel rails was just $26 per ton. Now, I say, these gentlemen -have acted illegally in making a contract without the consent of parliament. Year by year we see the powers of parliament taken away by these gentlemen, contracts given without the safeguards which the law provides, and this government snaps its fingers at the law. Here we have the most glaring instance of it. But they say, this year is the only year to consider. So far as the money payment is concerned, it is, Mr. Chairman, I must ask for a little order. Hon. gentlemen opposite look as if they were panic-stricken.


Some hon. MEMBERS: Oh, oh.


Nathaniel Clarke Wallace: I was looking at the uneasy footsteps of the Minister of Customs tramping all over tins House. I would like to know what is disturbing the spirit of his dreams to-night. I was going to say, Mr. Chairman, that our good friend from Algoma (Mr. Dyment) got up to-night and told us that he was up in Sault Ste. Marie, which is in his own constituency, and had the assurance of Mr. Clergue that they were going right along with the construction of this great plant for the manufacture of steel rails. Well, I have the Toronto Globe tonight in my hand, and it gives an entirely different story, and given by Mr. Clergue himself. He tells the correspondent of the Globe :
At present the syndicate is building a plant which will be complete and in operation by September, having a capacity of 600 tons of steel rails per day.
I would like to know where the Minister of Railways and the hon. member for Algoma got their information that these rails would be delivered in August if the shop is not built until September.


Albert Edward Dyment: What the hon. gentleman Is quoting are the words of Mr. E. D. Clergue, of Michipieoten, who is not in S^ault Ste. Marie possibly four or five times a year. I got mine from Mr. F. H. Clergue, who makes his home there.


Nathaniel Clarke Wallace: Mr. E. D. Clergue apparently knows more about it than the hon. member for Algoma, because he is one of Mr. WALLACB.
the officers of the syndicate conducting the great Sault Ste. Marie enterprise. He was in the city yesterday, and outlined the above project in an interview with the representative of the Globe. Besides, a single pound of pig iron cannot be made by the whole combination at the ' Soo.' They have to go elsewhere for their pig iron. They have not got the pig iron plant, which is the foundation of the business. First you have to make the pig iron and then manufacture it into steel rails.


The MINISTER OF FINANCE.: How will they get the benefit of the bounty if they do not get the pig iron ?


Nathaniel Clarke Wallace: Let me tell the hon. gentleman and his colleagues, because they seem to be sadly in need of information. The syndicate will buy their iron from the blast furnaces of Midland and Hamilton, to which they will send the ore from the mines at Michipieoten. Later on, Mr. Clergue says, they will build their own smelter at the ' Soo,' but at present they have not even commenced to build the smelter for the purpose of manufacturing the pig iron which Is the foundation of the steel rail Industry. The Clergue syndicate have not even commenced to build the smelter, but will have to send their ore down to the city of Hamilton and the city of Midland, and after it is made into pig iron they will bring back the pig iron to the ' Soo,' and make it into steel, and then will travel back again over the same route and deliver it in the city of Montreal. That is a highly economical way of doing business. But the point in it js this, that these men, by their own statement-and they are pretty sanguine men, we are told, perhaps a little too sanguine, according to the Minister of Railways-will mot be ready to turn out a single ton of steel rails until September. How then can they deliver rails in the month of August ?
Another point, and I think it a most important one, is this : 25,000 tons of steel rails, eighty pounds to the yard, will lay 200 miles of railway. Now 200 miles of railway multiplied by 5, will give 1,000 miles of railway that are going to be laid with steel rails within five years. Do the government railways require it ? Not a bit of it. The life of a steel rail is a good deal longer. The government do not require a
1.000	miles of steel rails to be laid within the next five years, and they will have to explain why it is that they have given an order for such a vast quantity. It will be the old story that we knew twenty-five years ago, when the Mackenzie government bought rails years before they were required, and had them piled up until they were rusting and destroyed from want of use. The same thing will occur again, because the government can have no possible use for all these rails. There is no necessity for taking the steel rails, which are to-day good and efficient and have a long
3G13

life before them, and displacing them by laying eighty-pound new rails in their stead. I would like the government to tell us why they are doing that ?
There is another point. The Minister of Railways tells us that he is not going to supervise all those contracts. He says that he has hundreds and thousands of contracts coining before him and he is not going to supervise them. The government tell us that the party of the other part always signs the contract first and then it is sent back to be signed by the government, which is all right, I presume, but before that contract is sent out is when it should have complete supervision. When you ask a contractor to sign an agreement, he ought to have the certainty that it was carefully considered and that the government intend to abide by it. But the Minister of Railways tells us that he has not signed the contract and that he supposed at first that he had signed it. It was only when it was laid on the Table that he discovered it was not signed. Thereupon the Minister of the Interior (Hon. Clifford Sifton) gets up mid says there is no contract at all. But, I presume that every member of the government was under the impression that that contract, based upon the order in council which they had pasesd upon and agreed to on that celebrated day of the 9th of October, was completed. I venture to say that before the 10th of October there was not a minister who was not under the impression that that contract was completed. But there is something more' behind this and it is a very important consideration. Does any hon. gentleman think that Mr. Clergue made a bargain on the 9th of October and had the order in council in his hand on the 12th of October, and then allowed six months to elapse without offering his signature to it ? Of course, we have to take the statement of the hon. gentleman, but if so what kind of a business government have we got ? Just imagine, here is a contract jmade six months ago, it is lying in Mr. Clergue's desk unsigned by him or the government, the government is not aware that it is not signed, the Minister of Railways is not aware that it is unsigned. He was not aware, when he placed it on the Table of the House, that it was unsigned. They say that it was a mistake to put it there. I presume it was, as they view it. But, the people of Canada want that contract there, they want the particulars, they want to know all about it, and they are entitled to know. But there is something mysterious about it all. Do hon. gentlemen opposite tell us that for six long months nothing was done, that not a word was breathed throughout the country, that nobody knew that Mr. Clergue was building large works for the manufacture of steel rails ? But now, we hear, on the 23rd of April, that they are putting up enormous works where they can manufacture GOO tons
of steel rails in a day, and later will have works that will turn out 2,000 tons per day. If you imagine that Mr. Clergue does business in that way, I think you are mistaken. And, if the government of Canada do their business in that way, I think it is time that we had a new government, and, apparently it will not be long until we get it. I repeat the question : When the government made a contract with Mr. Clergue, whether for one or five years I do not care, why did they not tell the people of Canada that a new era had dawned, that we were undertaking the great enterprise of malting steel rails for the supply of our railroads, beginning with the government railroads, and that a bargain had been made with Mr. Clergue, subject to the sanction and ratification of parliament r These things were not done, and to my mind the government is to be condemned for their secrecy, for their want of business arrangements, for their improvident bargain, and for doing what the law does not permit them to doA making the contract without the consent of parliament.


The MINISTER OP THE INTERIOR.: My hon. friend says he is very much disturbed, aud, apparently he is, by the fact that the contract was made on the 9th of October

I think that was the date he gave. But, I think, from certain references which ran through the hon. gentleman's speech, it will be evident that what has disturbed him is not what took place on the 9th of October, but what took place on the 7th of November. Now, he undertook to call attention to what he called my inaccuracy. I have no objection to being lectured about being inaccurate by any gentleman who is competent to do so, or even by one who endeavours to maintain even the most distant connection between accuracy and his own statement. But, when a gentleman who has been Controller of Customs, who has been, to all intents and purposes, Minister of Customs, and who undertakes to declare the Conservative policy with regard to tariffs, endeavours to give this committee the impression that there is a duty of 30 per cent on steel rails, I object to being lectured by him. If i were to make a statement so inaccurate as that, I would walk out of this room and hide my diminished head. The hon. gentleman is not a new member, he is not a tyro in politics, but a man who professes to be able to teach members of this House finance and tariff legislation. To support his statement he deliberately reads from an item which he knows refers to an entirely different matter :
Iron and steel railway bars or rails of any form, punched or not, n.e.s.-
Every member knows what ' n.e.s' means. I think even the hon. gentleman knows.


An hon. MEMBER.: Oh, no.


The MINISTER OF THE INTERIOR.: Yes, I think he does. It means ' not elsewhere specified.' And there is a duty of 30 per cent on these goods. What is elsewhere specified ? I turn to schedule B,
* free goods,' and I find :
Steel rails weighing not less than forty-five pounds per lineal yard.
And the rails of which we have been speaking, as my hon. friend must have heard if he listened, are 80 pounds to the yard-and they are free.


Nathaniel Clarke Wallace: I read this item as it was here, as it struck me at the moment


The MINISTER OF THE INTERIOR.: But, the hon. gentleman did not know anything about it.
Mr. WALLACE-as it struck me at the moment while the hon. gentleman was making his remarks. I turned up the item, iron and steel, &c., for railways, 30 per cent. But, I see that other rails are on the free list, and I am not persisting in an inaccuracy like the hon. gentleman (Hon. Mr. Sifton).


The MINISTER OF THE INTERIOR.: The hon. gentleman accuses me of being inaccurate, and yet, though an ex-Coutroller of Customs, did not know what was in the tariff.


Nathaniel Clarke Wallace: That does not excuse the hon. gentleman. He will have to explain his own inaccuracy.


The MINISTER OF THE INTERIOR.: The hon. gentleman says that he did not know, and the assumption on our part that he did not know is the most charitable construction we can put upon his statement, because if he did know he was deliberately misleading the House.


Mr. BELL (Pietou).: 

tect and develop home industries; hut we certainly feel that in giving a bounty of $0 a ton to the manufacturers of steel rails, they have gone quite as far as it is necessary to do. and they might have conserved the public interest better if they had limited the contract to the price at which they could have bought the rails in the United States, and still have acted equitably in this matter.
Now the Minister of the Interior, in defence of the action of the government, pleads that this contract is simply for one year and not for five years. That is a point upon which there may be room for difference of opinion ; but I am afraid, judging from the course of the government in the matter, that we cannot expect them to act much more providently the next year than they have done this year. If the government of Canada has put in that contract a condition that the price to be paid for future years shall be the price in England, what is there to justify us in expecting that they will not in succeeding years pay $6, or $7, or $8 a ton more than the market price in the country in which these rails are cheapest, as they have done this year, now that rails are $26 in the United States and they give $32.60, pleading as an excuse that the current price in England at the time when they made the contract was $32.60 a ton ? What is to prevent them, if they wish to do so, finding a similar condition of affairs in England next year ? There can only be one proper, safe or secure position for the government to take, and that would be, if they were going to purchase these rails, to purchase them in the open market, and to consider that the Clergue syndicate was amply protected and amply bonused by the fact that the department was giviug them a contract for 25,000 tons of rails extending over a period of five years during the whole of which these bounties would be paid for, although on a gradually declining scale.
Now, I think one very serious objection to this contract, and one that lias been pointed out over and over again, is the fact that in this agreement, as entered into with the Clergue syndicate for the purpose of developing the manufacture of steel rails in Canada, there is not one line, or one word, which will compel the Clergue syndicate to supply to the government rails either made in Canada, or produced from steel made in Canada. This is certainly a most amazing piece of carelessness, of criminal carelessness, I might almost call it, on the part of the hon. minister who is responsible for the drafting of the instrument. It is perfectly idle for the minister to come to this House with a transaction of such immense proportions involving such an enormous amount of money and set up the defence that some subordinate official in his department has badly drafted the agreement. These subordinate officials are Mr. BELL (Pictou).
not present in this House. They are not responsible to parliament. There is one man and one man only who is responsible to parliament and to the people of Canada, for the blunder, for the carelessness, for the amazing ignorance that is being displayed in this matter by the lion. Minister of Railways and Canals. It is idle, it is useless, it is to subvert every sound principle of parliamentary government to allow the minister to set up such a contention in defence of his conduct. If this syndicate were disposed and were not ready, as they are not ready, to produce steel rails, they can go to the market of the United States, import steel billots and roll these billets into rails in Canada. They can buy steel billets for $18 or $19 a ton, bring them into Canada and at a comparatively small cost, at a cost of some $5 or $6 a ton, they can roll these billets into steel rails. There is nothing in the contract to prevent them (tendering to the government steel rails thus manufactured, and there is nothing in the contract to enable the government to refuse to accept such rails if tendered to them-not one word in the contract that I can discover. I believe that the government has very seldom occupied a more indefensible position than the government occupies in respect to this matter. If it were its purpose to extend a helping hand to the steel rail industry of Canada, why did it proceed in secret ? Why did lion, gentlemen select as their favourites in this matter this particular syndicate which is not in a position to produce one pound of pig iron, and which has not a single steel furnace or rolling mill in operation ? Why did not they open their arms to the manufacturers of steel and iron throughout Canada in every part of this country, so that the advantage of such an immensely important institution as a great steel rail plant would be available to them ? Why was this secrecy observed ? What was the purpose of it ? It seems to me that so far as my own province of Nova Scotia is concerned, the province in which iron development is going on at a rapid rate, it has been most unfairly dealt with by the government in this matter. Why should" they proceed to the eastern end of Lake Superior to attempt to procure rails for a railway commencing at Montreal and ending at Sydney, to the entire exclusion of an industry that produces its own steel, which has the financial resources necessary to establish rolling mills, and which is located at one extremity of that road ? If these rails are to be used, why does the government go to the extreme western end of the province of Ontario ? Taking all these things into consideration, taking into consideration the manner in which they made known to the people of Kingston, without any secrecy whatever, *the fact that they were going to be in a position to turn out locomotives, taking into consideration the secrecy they exhibited in

the matter of the production of steel rails, taking into consideration the fact that the government, just on the eve of an election, entered into a contract involving $4,000,000, there is ground to warrant the suspicion that there was a rake off on a scale of the most gigantic magnitude. Now, the government would not naturally lay itself open to such a suspicion for no purpose whatever, but what else can explain the manner in which the government has proceeded to conduct this whole matter ? Why did the government proceed in secrecy from the moment that it began this negotiation in council with Mr. Olergue, through every step through which this matter has proceeded, in parliament up to this afternoon, when, now, for the first time, parliament is beginning to know the facts of the case? Why should parliament be kept in the dark? Why should these things be kept secret? It is not good government. It is not treating the people with proper respect. It is not treating the representatives of the people with proper respect. It seems to me that the government should not enter into a contract, such as has been entered into, not only for one year, but, involving the policy of the government for five years, during which that government may possibly pass out of power, and leave to their successors a contract, the responsibility of which that succeeding government might not care to take. I say again that in this matter the government is departing from the soundest principles of parliamentary, representative government for no reason whatever that I can see, unless it be for some such improper purpose as may very well be puggested. This most improper contract, involving such huge profits for the syndicate selected, without any reason that any one can discover, to be the favourite of the government, has been entered into. Unless some such improper reason as has been suggested was in existence, it is impossible for any one to discover any reason whatever that should induce the government to conduct this business in the manner in which it has been conducted. To my mind nothing much more wide of the mark than the very amazing statement made by the hon. Minister of the Interior could be conceived. It was a piece of oratory that to my mind was very much more adapted to the stump than to the floor of parliament, designed to divert the attention of parliament and of the country from the facts of the case and to accuse the opposition in this manner, not of finding fault with the government for making this contract, but of finding fault with it for not making it. Now, it may be that history is going to repeat itself. Those men who took part in the campaign of 1878 will recollect that for a much smaller steel rail business the late Hon. Alex. Mackenzie and the government of which he was the leader, received great blame, were held to account, 114}
were passed upon in judgment, and were turned down by the people. This transaction, in whicli this government is involved, is worse than the transaction in which Mr. Mackenzie involved himself. It is greater in extent, it is just as improvident, because this government has committed what is worse than a crime ; it has committed a great blunder. At a time when the market was falling steadily it agreed to purchase steel rails in quantities sufficient to relay 900 miles of Intercolonial Railway, to relay an extent of the system which does not seem to be requisite, according to the figures that the hon. Minister of Railways and Canals has laid before parliament. The government is committed to the purchase for five years of a sufficient quantity of rails to relay 900 miles of the Intercolonial Railway, showing the most utter incapacity on the part of hon. gentlemen opposite from a business point of view. It is not necessary to say that a private individual would not conduct great business affairs in the manner in which this transaction has been carried out by the hon. Minister of Railways and Canals.
It is quite true that the resources of Canada are very great and that our country can bear heavy burdens, but it is not right that we should ask our country to bear such burdens. We have money in abundance and the people of Canada are ready to spend that money in abundance for every legitimate enterprise, but there are thousands of crying wants of this country which the government did not supply and cannot supply, simply because they have not the means. Great as has been their expenditure and many as are the wants they have supplied, they know there are thousands of cases in which the country is calling to them for an outlay which would in all probability bring in a return. Great and strong as Canada is financially, there is no excuse for the administration entering on a transaction of this kind which involves such a great loss of money to the country. So far as the secrecy of the transaction, the disregard of the interests of the people and the disregard of that courtesy due to parliament are concerned, it seems to me that no speaker on the government side has set up anything like an adequate defence for the course which the government in this respect has seen fit to follow.


John Graham Haggart: I wish to ask the
minister : To what account were the steel rails which were taken up on the Intercolonial credited ? I want the minister to be correct and exact in the answer.


The MINISTER OP RAILWAYS AND CANALS.: Has the hon. gentleman any other question ?


John Graham Haggart: Yes. I would like to ask the amount of new rails which have been laid on the Intercolonial Railway of

eighty pounds weight, and how many miles the minister intends to relay with them.


The MINISTER OF RAILWAYS AND CANALS.: I will endeavour to answer the hon. gentleman. Let me say with reference to the matter of the accounts, that I have not been keeping the accounts at Moncton.


John Graham Haggart: Surely, in an important matter like that the deputy minister could tell at once.


The MINISTER OF RAILWAYS AND CANALS.: I will find out and let the hon. gentleman know accurately.


Frederick Debartzch Monk: While the minister is taking a note, I would like to ask him if it is understood we will have the proposal made by Mr. Clergue which initiated this transaction. There were telegrams also referred to by the minister.


The MINISTER OF RAILWAYS AND CANALS.: The deputy minister has a note of these things.


Frederick Debartzch Monk: In view of the nature of the difficulty which has arisen on this contract, I would like to ask the minister if he will lay on the Table the original contract sent to Mr. Clergue and which no doubt has been returned ?


The MINISTER OF RAILWAYS AND CANALS.: The hon. gentleman has seen the paper.


Frederick Debartzch Monk: As a difficulty lias arisen as to the extent and the importance of that document, I think it is fair for us to ask that the original draft be laid on the Table of the House.


The MINISTER OF RAILWAYS AND CANALS.: I have followed the hon. member from Pictou (Mr. Bell) very closely and as a struggling minister endeavouring to master as well as I can the laborious work which devolves upon me in my department, I cannot help but feel how priceless it would be if I possessed the prescience and the intellect and the capacity of the hon. gentleman.


Some hon. MEMBERS: Hear, hear.


Mr. POPE.: You never will.


The MINISTER OF RAILWAYS AND CANALS.: I never can.


Rufus Henry Pope: That's right.


The MINISTER OF RAILWAYS AND CANALS.: I abandon all pretense at foreseeing the rate at which steel rails are to be sold in the market three months, or two months, or one month, or one week hence. I abandon the pretense of knowing whether rails are going to rise or to fall, or of discharging a great many of the other duties which the hon. gentleman (Mr. Bell, Pictou) would ask me to assume. I recognize that Mr. HAGGART.
the hon. gentleman is a very competent critic and perhaps the hon. gentleman might devote himself to an endeavour to reconcile the views which he has presented with the view which some of his friends have presented, because they appear now to be totally irreconcilable. The first and the most important thing for gentlemen opposite to do is to agree amongst themselves not to make criticisms upon this transaction which are self-destructive. From a party point of view, that is not a wise policy of theirs, and yet the party point of view appears to be the only object which they hope to attain. My hon. friend (Mr. Bell, Pictou) has devoted a good deal of his attention to complaining of the secrecy of this transaction. Can he tell me in what this secrecy has consisted ? Does he complain, as his friend from East York (Mr. Maclean) did complain, that the government did not tell parliament that negotiations were going on 1 Did any one ever hear of a government telling parliament that certain proposals had been made to them, before the government had an opportunity of forming a conclusion upon these proposals ? If the secrecy consists in that, then we have been guilty of secrecy and we have done what every government that ever existed has done, and we have done what every government that ever will exist will do. If the hon. gentleman (Mr. Bell) means that we have been guilty of secrecy because no member of the government mentioned this publicly after it was entered upon, then his charge is not correct. The Postmaster General made it a boast on the public platform that the government had made an arrangement with the Lake Superior Company that they should establish a rolling mill, and that they should manufacture rails for the Intercolonial Railway. I did not hear the Postmaster General myself, but I am credibly informed that he stated it publicly on more than one occasion. However, if the Postmaster General did not state it, I stated it more than once, in the course of the speeches I made during the late campaign. After this matter was closed, I told the people that the government, deeming it was necessary that the Intercolonial Railway should be relaid with heavier rails, had availed ourselves of the necessity of doing this for the purpose of encouraging the establishment of an industry which would confer great benefits on the country if it were successful, and which would save the Canadian government and the Canadian people a large amount of money in the expenditure which they made annually for rails. I made that statement not only once, but several times, and the newspaper press reported it. I made it not far from Pictou county. I stated it in Cumberland county, and the hon. gentleman (Mr. Logan) heard me, if I am not mistaken. I stated it in my own county ; I made no secret of it. There was nothing to conceal about it. We were proud as a government

that we were able to take a step which would establish this industry. There was nothing whatever to conceal about it. It was a subject of boast, at all events so far as I was concerned, and I believe so far as other members of the government are concerned. So that, if the hon. gentleman means to say that we are open to serious criticism and censure because we did not speak of this matter publicly, we are not open to the charge, because it was spoken of publicly. The newspaper press mentioned it, and it must have come under the notice of many hon. gentlemen opposite. My hon. friend from Pictou (Mr. Bell) says it was an outrage to buy rails on a falling market. Who bought rails on a falling market ? We did not. The rails we bought were bought at a time when the price in England was as high within five shillings as it had been at 'any time for a year previous or more, and when the price was maintained for weeks afterwards. You cannot tell whether the price of rails or any other article of commerce is going to rise or fall. It is a mere matter of judgment. One man's judgment may be as good as another's. The government, I suppose, are not endowed with any greater capacity of judgment than the same number of men of equal business capacity, and we could not form any better opinion than anybody else on that question. But, we came to the conclusion, from the facts before us, that we were justified, under all the circumstances, in engaging to give this company the price we stipulated for, with the view of establishing that industry in Canada, and thereby ensuring the supply of our steel rails from Canadian sources.


Mr. CLANCY.: Will the hon. gentleman permit me to ask him a question ?


The MINISTER OF RAILWAYS AND CANALS.: Certainly.


James Clancy: I understood the hon. gentleman to say that the government did not buy steel rails on a falling market, but bought them at a period when they were within five shillings of the highest price paid in the English market ?


The MINISTER OF RAILWAYS AND CANALS.: Yes.


James Clancy: A good time to make a contract for $4,000,000 of rails, was it not ?


The MINISTER OF RAILWAYS AND CANALS.: 
Frederick Debartzch Monk: May I ask the hon. minister if the government has bought rails since this contract has been made, upon the probability, the certainty to-day, that there will be no rails from the Clergue syndicate to carry out this summer's work ?


The MINISTER OF RAILWAYS AND CANALS.: No ; and I can tell the hon. gentleman that he could not go into the market to-day and purchase rails for delivery before next year.


Frederick Debartzch Monk: May I ask the government, then, if they intend to abandon this year's
work, if the statement made several times

in this House is true, that Mr. Clergue cannot deliver any rails for this summer's work ?


The MINISTER OF RAILWAYS AND CANALS.: The statement has not been made by any. person who can speak with confidence, as I have followed the discussion, that the Lake Superior Power Company will not be able to carry out their contract with the government. There have been assertions on the other side of the House that they will not; there have been doubts expressed by myself as to whether or not Mr. Clergue will be able to realize his expectations, though I sincerely hope I may be wrong. But, if we do not get the rails from Mr. Clergue, as we hope to get
them,	we are not going to get them anywhere else. We are not going to be in such a great hurry to secure these rails that we are going to hurt this undertaking, i think the government will be justified in treating the Lake Superior Power Company in a spirit of fairness, and in encouraging them as far as we can legitimately do so without deteriment to the public interest. That is how I feel about it personally, and in that I am speaking for nobody but myself.


Rufus Henry Pope: May I ask the hon. minister,
then,	is it a fact that the government do not require the rails ?


The MINISTER OF RAILWAYS AND CANALS.: We do require them. They ought to be put down as rapidly as possible ; and I may meet that question now. The question is asked, why do you propose to take 25.000 tons of rails per year for these five years, and what is the need of laying them on the Intercolonial Railway ? The policy of the government is this. It is to put the Intercolonial Railway upon a proper business footing, and that requires it to be relaid from end to end with heavy steel rails. It is not now so laid.


Rufus Henry Pope: How heavy are the present rails ?


The MINISTER OF RAILWAYS AND CANALS.: With the exception of those put down last year, all those that were laid before we took over the Drummond County Railway, which has a seventy-pound rail, are only C.7 pounds in weight, and we are putting from 80 to 00-ton engines upon that road, and the sooner we get our line relaid with heavy rails, the better it wrill be for the Intercolonial Railway and the country. The sooner we get heavy locomotives upon our line and heavy rails, the quicker will we realize the advantages which will follow. If we have a supply of 25.000 tons per year for five or six years, we will be able to relay the main line of the Intercolonial Railway from end to end. We have been going on from time to time putting down heavy rails in the last year or Mr. MONK.
two, but we have not done the work as rapidly as we should, but when an opportunity of this kind presented itself, when the proposal was made to us by responsible parties that they were about establishing a rail making industry in Canada-a thing which has been much desired for many years past-we thought that we were carrying out a well considered policy in contracting for steel rails, and at the same time establishing a most important industry in the country, which otherwise in all probability would not be established. The hon. member for Pictou (Mr. Bell) wants to know why we picked out this one company and extended favour to it ? In the first place we did not pick them out, they came to us. I had not the faintest idea that for some years there would be the probability of such an industry as this being established in Canada. When Mr. Clergue came to us, having done as much as he had, having achieved so successful results, and having, as we believed, ample capital for the purpose, we felt that here was an opportunity which might not occur again for many a day, and that it was our duty to make satisfactory terms to encourage this company in proceeding with its undertaking. We considered their proposals carefully and adopted them to the extent we have stated to the committee. We have not, therefore, treated this matter in any secret or unusual way, but have just done what hon. gentlemen would have condemned us for not doing, if we had failed to avail ourselves of our opportunity. There is not an hon. member who has followed the discussion who is not confident that if the proposal of Mr. Clergue, embodied in our order in council, had been turned down -there is not a man in this House who does not believe that in such a case the same gentlemen who criticise and condemn us, because we are making a progressive movement would not have condemned us if we had not availed ourselves of this arrangement.


Rufus Henry Pope: in that government, and they would have pointed to the order in council and the written contract and would have said : If you are worthy representatives of Her Majesty in government, you will carry out the obligation we have entered into with Mr. Clergue for $4,000,000. That is what they would have said, and that is what the people of Canada would have understood by such an arrangement. Has the time arrived wheu a contract can be made with the government and they, at their own will, can say to the contractor : It is true that you have an order in council which we have asked the representative of His Majesty to sign, you have a contract, but it is only a moral obligation and not worth the paper it is written on. Mr. Chairman, I do not believe that either the courts of the land or the great moral sentiment of the people of Canada, if appealed to, would support or endorse the position taken by hon. gentlemen opposite on this occasion. The hon. gentleman said that steel rails to-day could not be bought for less than he is paying. It is well known that you can buy steel rails delivered in Montreal for $26 a ton. This is no fable, this is no midsummer night's dream, it is a fact-you can buy as many tons as you choose to order at that price. I do not understand the hon. gentleman's objection to going to the United States for these rails. He has gone there for cars, he has gone there for engines, why should he not go there for steel rails ? He has got from the United States everything that is necessary for the supply of the Intercolonial Railway, why should he make an exception with steel rails ? Why ? It is to adopt the grand principle of protection, to show to the native industries of Canada, to the miners of the iron ore that has Iain so long the hidden treasure of Canada, to say to the people of Canada : In us you see the copyists of the government that have gone before ; we ask for your favour because we are doing those things that the government who went before us did better than we know how to do.
Well. Sir, it is amusing, it is interesting, to see the Minister of Railways and Canals appeal to his deputy. I could not help but think of the appeals that had been made'upon more than one occasion, for the benefit of the statements made by the minister, to that deputy, a gentleman who stands in point of integrity even the equal of the minister who makes a moral contract in this country only for $4,000,000. Why, Sir, he made me think of an old gentleman in our part of the country who was never known to tell the truth. He had a wife whose name was Sophia, and whenever he made a statement that was criticised, or if any objection was taken to it, he would say : ' If you do not believe me, if you do not want to take my word, ask Sophia.' And when I heard the minister appealing to his deputy, that venerable deputy, who has passed through so many governments, and saw him bowing Mr. POPE.
his head and heard him whispering his consent, I thought of the old man who appealed to Sophia. Sir, I may be mistaken, I may not know how to appreciate a moral obligation on the part of this government, a government who have not, so far as I know, kept any single obligation that they ever promised to keep since they came into power. It is hard, Mr. Chairman-and, by the way, I see we have a new chairman. I can understand that also, I can understand that the trying circumstances in which a man is placed who holds the impartial position of a chairman, listening to the contradictory arguments of hon. gentlemen on the other side of the House, it is necessary for the restoration of health of the chairman, that he should retire and be replaced from time to time. Vigorous as this present chairman seems to be, I have no doubt that we shall have another one before this debate is over. I do not think that nature has given him strength enough to withstand the electrical inconsistencies that will shock him as they pass from the other side of the House during this debate.
Now, Sir, the minister has stated to us that there is great necessity, urgent necessity, that he should have these steel rails, so great that he had to make this contract just before they appeal to the electorate. He has also stated this afternoon that he has made this contract with rhe company, and lie does not know if it is possible for them to carry it out. Why all this haste ? Why all this urgency previous to the general election ? Now, Sir, if the hon. minister had not a reputation through Canada, if he had not made a reputation for himself in his native province before he ever came to this House, perhaps he could escape. But, knowing, as he must know, how the people of Canada view him, coupled with the Minister of Public Works-for the people look upon that pair of gentlemen as the two great pushers of the government upon certain occasions. Now, it is not for me to say if that is true. I have never been consulted by the Prime Minister or by either of those two hon. gentlemen, but public opinion says that they are the two gentlemen who provide the weapons of war, public opinion says that they distributed a million and a half dollars among the electorate of Canada during the last election on behalf of lion, gentlemen on the other side of the House. Sir, could this have been connected with steel rails ? Is it possible there is any association between that election and steel rails ? Or, was it to fulfil a moral obligation on the part of hon. gentlemen opposite with the electorate of this country ? Did they carry out that moral obligation, or is it like all their other contracts, not worth the paper that it was written upon ? Sir, I remember a moral obligation entered into in the city of Sherbrooke previous to the last general election. I discovered there the track of steel rails. I remember perfectly the offer that was


John Graham Haggart: The hon. gentleman (Hon. Mr. Blair) has not given me the information that I asked him for.


The MINISTER OF RAILWAYS AND CANALS.: I will give the hon. gentleman the statement now. The rails taken up have been put in store and have been credited to the new rails' account.


John Graham Haggart: Well, we have the statement from the hon. gentleman that they have been put in store and credited to the new rails' account. If this is so, what does the hon. gentleman want with $920,000 ?


The MINISTER OF RAILWAYS AND CANALS.: That is a statement I made to the hon. gentleman, I think, last week.


John Graham Haggart: Tlie statement that the hon. gentleman made last week was that the whole of the rails were charged to capital account.


The MINISTER OF RAILWAYS AND CANALS.: Less the old rails.


John Graham Haggart: The hon. gentleman did not say anything about less the old rails, and I will not be certain that the minister is correct at the present moment. If he credits the old rails to -the account of the new rails, why does he aslc for $920,000 ?


The MINISTER OF RAILWAYS AND CANALS.: I am not.


John Graham Haggart: The hon. gentleman asked for $420,000 last year and he asks for $500,000 this year. I asked him to give me the amount of road that he is to relay but the hon. gentleman did not seem to know. According to the last report of the chief engineer of his department, there is 1,315 miles on the Intercolonial Railway. From Montreal to Halifax there are 840 miles, from Moncton to St. John eighty-nine miles, from Truro to Sydney, 217 miles, the North Sydney branch, five miles, or 1,170 miles, with 274 miles of sidings. I suppose that the hon. gentleman has laid the whole length of the Drummond County Railway, about eighty miles, with 80-pound rails, and he has laid about thirty miles more of the road, I should judge from the statement of his chief engineer, with 80-pound rails. There is the whole of the Drummond county section laid, and there are thirty miles of another portion of the Intercolonial Railway. That leaves 1,075 miles of the Intercolonial Railway to be laid with 80-pound steel rails. The hon. gentleman very correctly stated that nearly the whole of the road, with the exception of about 118 miles, has been relaid with 67-pound rails, that the old 57-pound rails have been taken up and G7-pound rails substituted in their place. Then, for the 1,075 miles it would require 125 tons to the mile, or altogether 134,375 tons of rails, and I am adding about three tons per mile for rail fastenings and such things. The increased weight of fish-plates and bolts between the 57 and 67-pound rails would represent an increased weight of twenty-one tons per mile, and the increased weight between the 67 and 80-pound rail, including plates and bolts, is about twenty-eight tons per mile. The total increased weight, therefore, would only be, for 1,075 miles, 33,040 tons. Now, the hon. gentleman credits the old rails that he takes off the Intercolonial Railway to the account of the new rails, and is required to provide, in order to relay his whole road, for the price of 33,040 tons of rail. At the price he is paying to the syndicate, $32.60 per ton, he has. with the vote he got last year and with the vote he gets this year, got more than enough to relay the whole Intercolonial Railway with Mr. BLAIR.
an 80-pound steel rail. As for the statement that his deputy minister gives him, and the statement that he made to the committee that the old rails which were taken off the Intercolonial Railway are credited to the account of the rails which are being placed upon the road, the only amount that he requires is the difference between the price of the old and the new rails. I doubt very much if this statement is correct, and I would like the hon. minister to be accurate and give me the information to-morrow, because this item cannot go through to-night without the fullest possible information on the subject. I wish to know whether the rails taken off the road are not credited to the revenue or receipts on the Intercolonial Railway, as they have been in the past ?


The MINISTER OF RAILWAYS AND CANALS.: Never.


John Graham Haggart: They were. When I was Minister of Railways, all the rails that went on the road were charged to the ordinary revenue, and the old rails were deducted from the cost of the new. I asked the minister the other ddy what became of the old rails, and I was astonished to hear him say that they went into store account. I asked him tq be certain as to what account the new rails were charged, and after consulting his deputy, he said that every rail that went on that road, was charged to capital account.


The MINISTER OF RAILWAYS AND CANALS.: Less the old rails.


John Graham Haggart: The minister did not say that.


The MINISTER OF RAILWAYS AND CANALS.: I think so.


John Graham Haggart: Why does he ask for $500,000 this year, and why did he ask for $420,000 last year if it be correct that the cost of the old rails is deducted from the cost of the new. He should only have the difference between the cost of the old rails and the cost of the new rails. Instead of that he asks for more than the full amount necessary to purchase new rails, and I venture to say the total cost without any deduction for the old rails will be charged to capital. However, I want to be certain and I want to know how the new rails are charged. We want to-morrow the contract as originally entered into, that was sent to Mr. Clergue for the purpose of signing. This document that was laid on the Table purporting to be the contract, has a memorandum at the bottom of it which I did not notice at first. ,


The MINISTER OF RAILWAYS AND CANALS.: It was there. It was handed to the hon. gentleman just as he has it now.


John Graham Haggart: I did not notice the certificate of Mr. Schreiber on it as I first saw it.


The MINISTER OE RAILWAYS AND CANALS.: It was there.


John Graham Haggart: I may be misinformed, but at all events, it commences ' This indenture,' and purports to be signed by the Minister of Railways and the clerk of the department. He says he did not sign it, that he sent it to Mr. Clergue to sign it first, and that he even did not see the contract. It is a most extraordinary position. In the first place the minister stated to the House that he made a contract only for 25,000 tons, which he told us was at the lowest market price, and he said he 'made it in order to develop the steel industry. When we got the contract we found it was for 125,000 tons of steel rails, and the contract in no way goes past the memorandum which the minister sent for the assent of the Governor General and his colleagues. In fact it is not only for 125,000 tons, but for 150.000 tons of rails. The first 125,000 tons is to be delivered, and it enables him to enter into a contract for five successive years for 25,000 tons each year, making in all 150,000 tons. That question will be debated later, and I shall not do more now than remark on the extraordinary contentions made by the Minister of the Interior and the Minister of Finance. The Minister of the Interior denied that the government was not bound to take delivery of 125,000 tons, but the Minister of Finance made the extraordinary statement that there was only a moral obligation ; that the successors of this government would not be bound by it, but he evidently has abandoned that position since. What is the use of quibbling about the legality of it. The Minister of Railways says that he will carry out the contract. And although the Minister of Finance says that they are morally bound, though not legally bound, the Minister of the Interior, more careful than the others, admits the liability under the order in council which is signed by the Governor General, and admits that the party interested can enforce his rights as set forth in the order in council. It is absurd to state that Mr. Clergue has raised 810.000,000 for the purpose of starting an industry at Sault Ste. Marie on a mere moral obligation. He goes with the order in council to financiers who are accustomed to deal with governments, and who know that most governments in the world keep their word, not to speak of the strict legality of it. On that contract Mr. Clergue raises his money. Every member of the government, and every member of the House intends to carry out" to the best of their ability the. words which they put in the order, which they asked His Excellency to sign. The Minister of Railways boasts that he has started an industry in this country, and he challenges us to know if we would not do the same thing. He said
he announced it to the people in New Brunswick, but it is strange that an important contract involving $4,000,000 was never heard of in the public press in this country. The member for Algoma (Mr. Dyment) says that the Postmaster General made the statement in Algoma. Perhaps he did but if he did he made it in a locality where it never reached the press. No one in this country of any importance ^except the parties interested ever heard of this contract. Not one member of this House ever heard of it. That is a nice position for a political party to be in, whose platform used to be that all public contracts should contain a clause that they would be submitted to parliament. I have heard Mr. Blake again and again contend in this House that all these contracts should be put on the Table within five days of the meeting of the House. But there was not a word about this contract from the government. They were ashamed of it. I venture to say that even the colleagues of the Minister of Railways did not know the extent of this contract until it was discussed in this House the other day. I will venture to say that he led them to believe that it was only a contract for 25,000 tons of rails, and that they were amazed to find that they had entered into a contract for 125,000 tons of rails which the Intercolonial Railway does not require. But the bon. gentleman is going to make the old road hum. He is going to put it in a position which it never occupied before. When we come to discuss the railway, we shall wish to see where it is today from the back to the front. Instead of being a local road, the hon. gentleman was going to make it a great trunk line, carrying its proportion of freight along with the Grand Trunk Railway and the Canadian Pacific Railway. We shall see whether it is carrying any more through freight to-day than it was in 1896. However, perhaps I am diverging to a subject which may be discussed at a future stage ; but this may serve as a warning to the minister that there will be a discussion on that point.


The MINISTER OF RAILWAYS AND CANALS.: Do not frighten me.


John Graham Haggart: I suppose not. Nothing could frighten the hon. gentleman. There was something, however, which frightened him the other day, when his colleagues discovered the contract they had entered into. Between that and something else the hon. gentleman was not here for several days.


The MINISTER OF RAILWAYS AND CANALS.: That is not a very fair remark for the hon. member to make.


John Graham Haggart: I do not know the unfairness of the remark. I do not know that the hon. gentleman was unwell or that

he had any other reason for his little outing. But we shall have a full discussion of the matter on another occasion, and the point I want to make at the present time is that we wish to have full information in this matter-the contract, the proposals made hy Mr. Clergue, the telegram, the original contract that was sent to him, a statement of the number of 80-pound rails which are being laid, the number which have been laid out of those for which $420,000 was voted, the rails which are unlaid, and the number he proposes to lay with the $500,000. We shall then have the full information, and be in a position to discuss the matter intelligently. But the hon. minister must not expect us without this full information to pass the item; and as it is now near twelve o'clock, perhaps he had better let it stand till the next meeting, and when we get that information, we will discuss it as briefly as possible.
Mr. SPROUT,E. I want to say a few words on the secrecy of this contract. If it was for the purpose of establishing a new steel industry in the country, one would naturally suppose that if would be popular, and therefore it would be a matter of importance that it should be given to the world at the earliest possible moment. We find that this contract was entered into on the 9th of October, the same day on which parliament was dissolved and on which the order was passed for the issue of the writs, so that on that day the government was practically a defunct government. They were appealing to the country, and they might have expected that possibly they would not be returned with a majority at their back, and they would be leaving a legacy to their successors which might have turned out to be very embarrassing to them. The question arises, why was there such secrecy about this contract ? The Postmaster General was up in our country and talked on platform after platform, and I know that he used the influence of the Clergue company to assist him in the election. I know -that the moral influence of that company was at the back of the government. It was something that could not be understood at the time-the new-born zeal of the Clergue company for the present government. Now we are told that the information was given to the world somewhere back an Algoma ; but why was that not done when the Postmaster General spoke at Mea-ford and suggested that the board of trade invite Mr. Clergue down to see the place, and give him a banquet ? Why was it not done at the time he advised| the people of Meaford to bring Mr. Clergue down and get him on the platform to assist the government in the election of their candidate against myself ? Why was it not done when the Postmaster General spoke at Feversham, in the township of Osprey, or in the county of Si-mcoe ? If it was a good bargain and likely to be popular with Mr. HAGGART
the country, they would have given it to the world at once ; but the secrecy about it justifies the suspicion that the transaction was a colourable one. Up there it was currently believed that the government got a large subscription from this company. There was no doubt they did their best in a quiet way to help the government in the election. We did not understand it then, but we understand it now. What was the reason -they did not give the matter to the world, and enable us to discuss it wisely and intelligently ? Was it a proper reason -I do not think it was-why the people were kept in the dark with reference to this transaction, which took place on the very day the House was dissolved and the writs were issued for a new election, and the very day the government praotieally ceased to be a government ?


The MINISTER OF RAILWAYS AND CANALS.: I may mention that there will not be the slightest objection to bring down the information which the hon. gentleman (Hon. Mr. Haggart) desires ; and if be wishes at the same time that the matter be not further proceeded with now, I have not the slightest objection, as it is near twelve o'clock. But, let me say a word In answer to my bon. friend,who is much concerned about this question of secrecy, and the marvellous coincidence that this order in council was passed exactly on the day the order in council dissolving parliament was passed. The hon. gentleman has some little public experience, and he knows, in the first place, from the papers which have been produced and read, that this matter was practically-settled in August. He knows that on account of my absence the report of council did not come in until September, and he knows that it is an exceedingly difficult tiling to get any meeting of council at such a time as that, when my hon. friend and all his associates were passing through the country arousing the electors ; and I apprehend that members of the government were out pretty much on the same business. It was not easy to get a meeting of council. I was not present at this one myself, and I do believe that there was none for some time previously. A meeting of council was held of necessity for that purpose, and for any other business that required to be disposed of.


Mr. BLAIN.: If the Lake Superior Power Company are unable to manufacture steel rails at the ' Soo ' this year, and should purchase rails manufactured in England and the United States, will the bon. minister accept such rails ?


The MINISTER OF RAILWAYS AND CANALS.: We will not accept any such under this contract.
Progress reported.
On motion of the Prime Minister, House adjourned at 11.45 p.m.

Wednesday, April 24, 1901.