1903-09-14

CONSOLIDATED REVENUE AND AUDIT ACT AMENDMENT.

[Stage Direction]
The MINISTER OF FINANCE (Hon. W. S. Fielding) moved for leave to introduce Bill (No. 251) to amend the Consolidated Revenue and Audit Act.
Mr. CLARKE.: Explain.


The MINISTER OF FINANCE.: As my hon. friend (Mr. Clarke) desires me to explain I will. The Bill is intended to remove some difficulties and delays which have sometimes occurred in regard to the payment of accounts against' the government. There are two methods whereby accounts may be paid. One is what I may call the letter of credit system and the other deals with the payment of accounts in a somewhat different way. Under the letter of credit system, where an appropriation has been made to a given department, a certain part of that appropriation is placed to the credit of the department in the form of a letter of credit given to one of the banks. In that case partied having claims against the department can go directly to the department and upon their claims being properly certified can receive their money at once. Perhaps by way of illustration we might take the case that was brought to our notice the other- day in connection with the indemnity of members. That is paid by the letter of credit system. The proper officers of a department receive a letter of credit under which they may pay up to the amount of that letter of credit, and then, in due season the banks are repaid for the advances so made. Now, a member, and I only take this as an illustration, will go to the clerk's office in one of the neighbouring rooms, and upon satisfying the clerk that he is entitled to his indemnity, receives a cheque which is the Sir WILFRID LATJRIER.


Mr. BORDEN (Halifax).: Is the letter of credit system confined to cases where there lias been a parliamentary appropriation V


The MINISTER OF FINANCE.: In all cases. There can be no letter of credit without an appropriation. We have had some differences of opinion with the Auditor General as to the proper interpretation of the Act. We have thought sometimes that the Auditor General gives the Act an interpretation which goes beyond the object of the law, and in view of the fact that the Auditor General feels it his duty to place this, interpretation upon the Act, we feel that we should relieve him from any possible mistake on that score, and from any undue responsibility, by introducing an amendment which will make it perfectly clear that beyond a certain point the Auditor General's responsibility ceases. We take it to be the Auditor General's duty to examine and adjust accounts. We understand it to be his duty to inquire first as to whether there is a proper appropriation. If there is, and he gives his approval to a certain account, then it is his duty to see that proper vouchers are furnished and that these vouchers correspond with the payments, which is somewhat the same duty in this regard that would be performed by the auditor of any company. If in any case the Auditor General finds anything inaccurate, or if he needs an explanation, he should at once communicate with the proper parties, calling their attention to what is wrong, and asking for an explanation. If it be found that there has not been an explanation given to his satisfaction, and if lie thinks that he is right in the matter, then he lias a further power, and that power is to set forth in writing his objections and opinions on the subject. These views are conveyed to parliament in the form of his reports. In that way parliament is fully

charged with everything in relation to the audit of accounts, and if under any circumstances the treasury board or the government fails in its duty, the party responsible before parliament must be the government. No system of audit can get us away from parliamentary responsibility. The Auditor General sometimes thinks he is bound to go further, and as he claims that he does so in virtue of the law, we think we should make it clear that the law never intended that he should carry his point as far as he does in some cases. If he has a difference with one of the departments at the present time, about an account he will claim the right to hold up the credit of that department, whether his contention is right or wrong. Assuming for the moment that his contention is right, if there is need for further explanation in regard to a given account, when he refuses to issue a letter of credit, he obstructs the business of the country and scores of people who have claims as to which there is no dispute are kept out of their money. The Auditor General claims that it is his duty to take that course. Therefore we think it well to make it clear that parliament never intended that he should reserve that power to himself, and we propose that when an application is made for a letter of credit to the Minister of Finance and the Auditor General, if, within two days the Auditor General fails to do his part the responsibility should devolve upon the treasury board and the government, and the treasury board may authorize the Minister of Finance to issue the letter of credit, and the treasury board and the government must be responsible immediately to parliament. We have no right to hold the Auditor General responsible if he has done his part, if lie has remonstrated and has set forth his objections in writing to parliament. But, in the meantime the public business should not be interfered with. The letter of credit having been issued the bank becomes entitled to repayment. At the present time the Auditor General claims that he has the right to refuse to pay anything until he is satisfied according to his own views. AVe say that when a letter of credit is issued in good faith, where a bank has advanced its money in good faith, and where there is no question as to the accuracy of the bank's claim, the bank should be repaid promptly, and therefore we propose that if the Auditor General does not promptly take steps to repay the bank, the Minister of Finance may take steps to repay the bank, irrespective of the Auditor General or the views which he may take.
In regard to the other method of paying accounts, where you do not deal by letter of credit but where the claim is sent directly to the Auditor General, sometimes delays occur. S- metimes these delays are unavoidable. Sometimes information is needed by the Auditor General. AATe think the delay there
is sometimes very much longer than it should be. We find that there is no provision made requiring the Auditor General to deal with these things promptly. We propose to relieve him from any undue responsibility, from that responsibility which we think properly belongs to the government which is subject to the criticism of parliament. So we say that if the Auditor General delays for an unreasonable time to pass an account, the department concerned may apply to the treasury board, and if the treasury board is satisfied that the delay is uureason-able, it may authorize the Minister of Finance to pay the account; always subject to this proviso, that we must be satisfied by the report of the Minister of Justice that the account comes within an appropriation which parliament has voted. There is another phase of the matter. The Audit Act never contemplated, I think, that the Auditor General should have power to hold up these accounts and credits ; but it does contemplate that the Auditor General, as re-pects a certain portion of his duties, should be subject to the overruling of the treasury board. Where under certain provisions ot the Act he takes exception to a payment, the department concerned has a right of appeal to the treasury board; but there is no fixed time within which that appeal shall be dealt with; and if the Auditor General fails to make out the necessary papers to bring the matter before the treasury board, a considerable delay may take place. AVe propose to make the treasury board the judge of what is a reasonable time ; and if. after a reasonable time, the Auditor General fails to place the papers before the treasury board, it may exercise its right independently of him, may judge of the merits of the case, and may approve or disapprove of the claim. So far as the duties of the Auditor General relate to an examination and audit of the accounts, so far as they relate to the checking of vouchers and the calling of the attention of the various departments to anything that is inaccurate, so far as they relate to the Auditor General placing his views in writing by way of protest, if necessary, before the various departments, or placing his views in writing or in print before this House-in short, so far as the duties of examination, adjustment and audit are concerned-we do not propose to take one iota of power or authority from the Auditor General ; but we simply say that when, as in the ease recently brought before this House, there is a condition producing a deadlock, there should be some authority to overcome the difficulty ; ana under cur system of parliamentary government. we know of no other authority than the government of the day to deal with these matters and to be responsible to parliament for their action. The proposal we make is to amend the Audit Act so that in these special cases, if the Auditor Gen. eral shall neglect or refuse or fail within

a reasonable time to take the course which we believe the Audit Act contemplates, the treasury board may take up the matter and deal with it irrespective of the Auditor General.


Mr.   I@: It is of course impossible to discuss this measure at the present time ; indeed, it would be unusual to do so. So far as I gather from the explanation made by the Minister of Finance, some of the matters provided for are to a considerable extent matters of detail-length of time, and so forth-while others involve considerations which are more serious. I would not regard it as desirable to relieve the Auditor General of responsibility to any considerable extent. If you abolish his duties altogether, you would relieve him entirely of responsibility, but I do not think you would advance the public interest. I would like to ask my hon. friend the Minister of Finance whether or not the proposed measure has been submitted to the Auditor General himself for the purpose of enabling him to make any suggestions which he might have with regard to it. I have no doubt that as to many of these matters he might himself be of opinion that some changes should be made in the Audit Act; but I would like to know whether he has been consulted or not, and whether there are any suggestions of tiie Auditor General which have not been acquiesced in or considered advisable by the administration.


The MINISTER OF FINANCE.: The Auditor General some time ago-I think last session-for the first time suggested some amendments to the Audit Act, which did not commend themselves in detail to the judgment of the government and the House. The matter has not been very much considered of late. As to this particular Bill, I may say to my hon. friend that it has not been submitted to the Auditor General ; but the subjects dealt with in it have been frequently discussed between the Auditor General and myself, and he is aware of the view of the government with respect to them. He has not seen a copy of the Bill; but he is aware that his conception of the duties of an auditor goes beyond what we think is the letter and certainly the spirit of the Audit Act ; and inasmuch as the Auditor feels that he is obliged by the terms of the Act to take a certain responsibility, we have thought it best to-relieve him of that responsibility- not the responsibility of audit or examination, but the responsibility of refusing a credit for the department in such a case as that which occurred recently. I only cite that as an illustration, as it happens to be one with which the House is familiar.


Mr. SAMUEL BARKER (Hamilton).: Without wishing to occupy the time of the House, I want to say a word on this matter, Hon. Mr. FIELDING.
because I think it is somewhat dangerous to go on with this measure before we know clearly what we are doing. As I understand it, one complaint the Minister of Finance makes is that when differences occur between a department and the Auditor General, the Auditor General in some instances uses the method of refusing to renew credit in order to stop the payment. It strikes me that the method proposed by the hon. Minister of Finance will go to the other extreme, and, by compelling the Auditor General to renew the credit, will enable objectionable payments to be made ; and then perhaps we in parliament, after the horse has been stolen, will be asked to criticize the payments, which may not be very large amounts, but which in the aggregate may amount to a good deal. For example, a dispute may occur between the Militia Department or the Public Works Department and the Auditor General as to whether a particular item should be paid. The Auditor General refuses his certificate, because some vouchers or some particular information which he has called for, which he thinks he has a right to call for under the statute, has not been furnished to him. The department wanting to pay the money asks him to renew the credit. He says, if I do that, you will pay this very money which is in dispute out of the credit. It seems to me that a more practical way of preserving all the benefit of the Audit Act would be to provide in the statute, or in the rules of the treasury board, or in some other manner, that the credit, if renewed, should not be used for the payment of a disputed item, and then let the credit go on in the ordinary course. I have read discussions on various items which have appeared in the Auditor General's Report ; and I could easily see that if the credits were renewed from time to time, the Auditor General could be set at defiance, payments objected to could be made out of the credits, and the whole matter might be left for discussion in parliament. I quite admit that there is always friction between an auditor's department and a spending department in every corporation or company. That is an inconvenience perhaps ; but it is after all a protection to those who provide the money. I think it is very dangerous in any way to infringe on the rights and powers of the auditor, and I hope that this matter will be carefully considered before any alteration is made in the Audit Act along the line suggested by the hon. minister. I think it would be of the utmost importance that the Auditor General should be consulted, and that we should have his report on the propositions made before we take any action upon them. The Finance Minister has referred to delays by the Auditor General, and wishes to give the treasury board the power to override him, and to order payment when he delays giving his certificate. Well, surely the remedy in such a case as

that would be, if the officer entrusted with such important duties neglects or delays to give his certificate, for the minister to report that to parliament, and let us deal with the neglecting official. Not that we should override this duties, so that you would override another Auditor General who might hereafter be appointed and who was not neglectful. I understand that, with regard to the other matter to which the Minister of Finance has alluded, namely, the difficulty in the payment of the indemnity to members, there is some cause beyond what appears on the surface. 1 understand that the Auditor- General is entitled to 'certain statements, or perhaps that certain statements from the bank and those who require the money are necessary before he can certify to the Minister of Finance that a farther credit is necessary, and I am told that these statements-I do not like to say that they were intercepted-have not gone* to the Auditor General, and he is not actually in a position to say whether the money is required or not. It seems that he is expected simply to make application to the Finance Minister for money without the material on which to base such a request. I have not had the opportunity of knowing the Auditor General's side of the question, but I have heard that the bank statements and statements from the accountant's office, necessary to enable him -to know whether a further credit is required in order to pay the indemnity of! members, have not been furnished him. At all events he has not received them ; and if he had received them, he would have been able to make application under the statute and the money would have been provided.


The PRIME MINISTER.: I quite agree with my hon. friend that it is not very convenient to proceed with the discussion of this Bill until hon. members have had the opportunity of reading it and thinking it over. But I can assure him that there is no statement needed by the Auditor General which has not been furnished him. That at any rate is the opinion of the Department "of Justice. There is no difficulty on that score except what the Auditor General sees fit to create himself, and I am not saying this offensively or with any desire to reflect on him. or the stand he has taken.


Mr. HUGHES (Victoria).: Would the hon. minister state the position which the Auditor General takes ?


The MINISTER OF FINANCE.: I do not think that that is material to the Bill, but shall be very glad to answer my hon. friend. We thought it was wise to learn wisdom by experience, and therefore decided to have a careful examination made of the methods of conducting public accouuts in order to provide against what did happen occurring possibly again, or against anything else of a like nature. With that object in view, we appointed three gentlemen to make a special examination of the system. One of these was the deputy minister of Finance, Mr. Courtney ; the second was Mr. George Burn, general manager of the Bank of Ottawa ; and the third was Mr. Kent, chartered accountant of Montreal. These gentlemen made a thorough examination into the whole system, and their report in the main was highly complimentary to the system followed in the civil service of Canada. But they did point out what they believed to be one or two defects. They advised that instead of sending the bank statements and cheques back to the department from which they came, and thence to the Auditor General, as had hitherto been the practice, they should be sent to the Finance Department for examination and checking and thence to the Auditor General. This was intended to prevent the bank statements and cheques, as in the Martineau case, going back to the same department which issued them and thus falling into the hands of the very person who was guilty of the defalcation. That recommendation will be found in the report of the Martineau investigation in the possession of the House. The government thought that while the change was not of vital importance, still, as the commissioners had advised it, we should put it into operation. But while the treasury board accepted the recommendations of the commissioners, the Auditor General differed from the commissioners as to the wisdom of the change. Whether he was right or wrong, I do not profess to say. But what I contend is that it is not the business of the Auditor General but of the treasury board, under the statute, to make the regulations, and it is for the Auditor General to observe them. And according to the opinion of the Justice Department, every statement which, by the statute, we are obliged to furnish the Auditor General, has been furnished him.


Edward Frederick Clarke: Was
he consulted by the commissioners ?


The MINISTER OF FINANCE.: I do not know that he was consulted any more that the hundreds of other civil servants whose duties were being inquired into. I presume that he was, but I have not heard any question raised on that score. The hon. member for Hamilton (Mr. Barker) has cited a case where, under a letter of credit, the Auditor General has taken exception to a certain claim, and while that matter is before the Auditor General, he says application is made for a further credit, and then the Auditor General objects to giving that credit lest the money be applied to the payment of the disputed accounts. Is that the case 1


Samuel Barker: It might be.


The MINISTER OF FINANCE.: Then my hon. friend states an Impossible case.

At the time when ihe examination takes place, the money has been paid under the letter of credit system; the audit is an audit after payment. After the money has been paid, the Auditor General may question the propriety of the payment. He may say it was not contemplated by the appropriation, but in the meantime the money has been paid, so that my hou. friend's idea that the audit takes place before money is paid and that the refusal of a letter of credit is necessary to prevent the payment, is a misconception.


Samuel Barker: I was referring rather to cases wherein the propriety of payment at all times was questioned by the Auditor General, and then the accounts were paid. It is evident that the Auditor General was afraid that a letter of credit might be used to cover such an account, although it ought not to be paid at all and had not yet been paid.


The MINISTER OF FINANCE.: Our view is that the responsibility for all these things must rest upon the government-even a bad government if we should have such. I do not know' of any other way whereby you can conduct public business and make the government responsible. The duty of the Auditor General is, in a certain degree, to act as a brake on the wheel, to check or delay by inquiry or examination, but he should not in the end obstruct the payment of any account. The government is responsible and answerable to parliament; but if the Auditor General's view is to prevail, then because of a difference between him and one of the departments regarding any particular account which is in dispute, hundreds of honest men may be kept out of their money for months.


Samuel Barker: Not at all.


The MINISTER OF FINANCE.: Yes, if the letter of credit is refused these people will be kept out of their money.


Samuel Barker: We might pass a rule providing that in such a case the letter of credit would go, but it would not be possible to use it to pay the' disputed account.


The MINISTER OF FINANCE.: That would not be practicable, and we have never had the Auditor General make such proposal. He has simply failed to make application for the letter of credit, and, under the statute, his application appears to be necessary. What we propose is that the Auditor General shall have his right of representation, criticism or protest, just as he has now, but that the people to whom money is due shall get their money within reasonable time.


Edward Frederick Clarke: Will there be a return brought down of the cases in which the treasury board deem it advisable, in the Hon. Mr. FIELDING.
public interest, to override the Auditor General ?


The MINISTER OF FINANCE.: The statute provides that within a few days from the opening of parliament, we must bring down a special return of every matter in which the Auditor General has been overridden, and we do not propose to depart one iota from that.


Edward Frederick Clarke: There appears to be considerable stringency in some of the departments, through the course taken by the Auditor General. Has any action been taken to relieve that stringency other than that which is now proposed ?


The MINISTER OF FINANCE.: I know of no other means whereby we can relieve the stringency. The Auditor General will no doubt make his representations and put on record his view before parliament, and I do not know of anything we can suggest because the government must take the responsibility for everything in relation to the public affairs of the Dominion. Right or wrong, there is no help for it.


Edward Frederick Clarke: The Finance Minister did not catch the drift of my question. In certain departments of the public service there is a stringency now, because of the Auditor General's action affecting those departments. Is any special action being taken to relieve that stringency before the passing of this Act ?


The MINISTER OF JUSTICE.: There is this Bill.


Edward Frederick Clarke: But in addition, and pending the passing of this Bill ?


The MINISTER OF FINANCE.: I can only say that the Auditor General and myself-who, I may remark, are on the best of terms ; I have the highest respect for that officer-have discussed this matter pretty fully. I have ventured to suggest that he should issue the credits in the meantime ; but he, in the exercise of what he deems, not merely his right, but his duty, declines to do so. I do not know of any other method of dealing with the matter except the introduction of this Bill-if I did, I certainly would not propose the measure.


Mr. JAMES CLANCY (Both well).: Of course, we can discuss the Bill to better advantage at a future stage. But, in the meantime, I can only say that, if I understood aright what the hon. Minister of Finance has said, this Bill involves a very-startling proposition. The very' purpose of the Audit Act is to afford a check on the government of the day. The hon. Minister of Finance now proposes to limit the responsibility of the Auditor General, who is the officer of parliament, and take the

responsibility upon the government which the Auditor General is to eheclc.


The MINISTER OF FINANCE.: We do not object to the check ; we do object to the stoppage.
I


James Clancy: 
Mr. URIAH WILSON (Lennox).: 
Samuel Hughes: There has
been a change, I presume, in the relationship existing between the Finance Department and the Auditor General's Department with regard to the issuing of these letters of credit ?


The MINISTER OF FINANCE.: No, there has been no change.


Samuel Hughes: Then, there
has been a change in the manner of conducting business to bring about the delays of which the Finance Minister told us?


The MINISTER OF FINANCE.: In the matter of statements sent in by the banks- yes.


Samuel Hughes: On whose side is the change made? Has the Finance Minister undertaken to bring about a change or has the Auditor General done so?


The MINISTER OF FINANCE.: The commissioners who made the examination after the defalcation referred to recommended a change; and we are simply carrying out the recommendations they made. '


James Clancy: Did the commissioners recommend the changes proposed in this Rill ?


The MINISTER OF FINANCE.: Certainly not; they had not this matter before them. I was answering the hon. member for Victoria (Mr. Hughes), who asked me who brought about the change, and I have said that the change is made on the recommendation of the commission.


Mr. A. C. BELL (Pictou).: It seems to me that it is a very serious matter to interfere at all with the power of the Auditor General, and I think it will be so regarded by the people of Canada. It must be recollected: that, from time to time, there



has always been a certain amount of control exercised by the Auditor General over the government of the day. Some of the members of the government, at times may find this control irksome. At the same time, the people of Canada have learned to repose great confidence in the system under which the power of audit is placed, not in the hands of an officer of the government, but in the hands of an officer of parliament. From all that I have been able to learn, the late Right Hon. Sir John Macdonald, for a long time Prime Minister of this country, was disposed to support to the utmost the position and authority of the Auditor General, even on occasions when the action of the Auditor General was somewhat annoying or embarrassing either to the government of the day or to some department. I have always understood that he insisted on maintaining the action of the Auditor General. That being the case, and this system having worked for a long period of years, and up to this moment, without interference by any legislative enactment whatever, it seems to me the government ought to present to parliament a very strong case indeed before they propose practically to supersede the Auditor General in the exercise of his authority.


The POSTMASTER GENERAL.: There is no such scheme.


Adam Carr Bell: As I understand the statement of the Finance Minister, that is the effect of this proposal.


The MINISTER OF PUBLIC WORKS.: There is no such proposition.


Adam Carr Bell: Of course, I am speaking under the disadvantage of not having the Bill before me. But, as I understand what tlhe Finance Minister has said, if, for a space of two days, the Auditor General shall, not do what he is required to do under his authority


The MINISTER OF PUBLIC WORKS.: Under the law.


Adam Carr Bell: The Auditor General's power to control expenditure in any case in which he thinks he should exercise that power is to be limited to two days.


The MINISTER OF PUBLIC WORKS.: Should he not obey the law, as other people are required to do?


Adam Carr Bell: I think there is no question that the Auditor General should obey the law. But when the government of the day undertake to limit the authority exercised: by the Auditor General for the public protection to a period of two days, they are practically superseding him.


The MINISTER OF FINANCE.: That is only as respects the issuing of the letter


Adam Carr Bell: of credit. It does not affect his audit at all.


Adam Carr Bell: It affects the manner in which he thinks it is advisable to make his audit effective and effectual. ITe has apparently, from time to time, taken tlfis same view of things and has refused the letter of credit, in order to impress his views on the government of the day. And we know, from reading the Auditor General's report, that controversies arise between the government of the day and the Auditor General, which are usually determined by the overruling of the treasury board, the government of the day, as a rule, having its own way after a period of time. Now, the government, under the proposition in this Bill, apparently are going to supersede that mode of overriding the Auditor General, which involves a good deal of delay and discussion, and are going to limit the period in which the Auditor General can assert his views, and hold back the credit of a department, to a period of two days.


The MINISTER OF FINANCE.: No, that is inot so, that only applies to the issue of a letter of credit, not with respect to the overrulings of the treasury board at all. In that case we say that if, after a reasonable time, of which the treasury board should be the judges, the Auditor General fails to bring the matter up, then the treasury board may act. The two days apply only to a letter of credit, to a case where men are waiting for their money.


Adam Carr Bell: Of course there is a distinction, but the difference between us is not material.


The MINISTER OF FINANCE.: We do not overrule the Auditor General at present under letters of credit. The question of letters of credit does not come before the trasury board under the present Act at all.


Adam Carr Bell: The point upon which the Auditor General refuses a letter of credit, the particular ground upon which he differs with the department, that comes before the treasury board ?


The MINISTER OF FINANCE.: No. not a letter of credit.


Adam Carr Bell: But the point upon which the Auditor General differs with the government, or with the department, and in consequence of which he feels justified in refusing a letter of credit, that comes before the treasury board.


The MINISTER OF FINANCE.: No. the letter of credit matter does not come before the treasury board.


Adam Carr Bell: I am aware of that. But the point in dispute, the ground upon which the

Auditor General refuses the letter of credit, comes before the treasury board ?


The MINISTER OF FINANCE.: No, it does not, the money has been actually paid. Under the letter of credit system, the Auditor General deals with the matter after payment. After payment is mad#, all that the Auditor General can do then is to place on record his view of the matter and submit it to parliament. That is not a matter for the treasury board.


Adam Carr Bell: I understand that the Auditor General issues a credit to a department, the department issues checks against it, and at the end of the month, or whatever period is arranged between the bank afid the department, the accounts and the checks are returned to that department. Then the credit having been issued, the check is handed to the representative of the bamk, for the amount that has been paid out, then a new letter of credit is issued for the future.


The MINISTER OF FINANCE.: That is right.


Adam Carr Bell: In every case in which the Auditor General audits an account, it is an account that has been paid.


The MINISTER OF FINANCE.: Under that system, yes.


Adam Carr Bell: Occasionally the Auditor General gets an account which he thinks should not be paid, or he thinks it has been paid out of an appropriation that was not intended for that purpose. These are the two grounds upon which, I fancy, difficulties would arise between the Auditor General and the department, and having been dissatisfied as to that particular matter, he proceeds to correspond with the department, and if he does not in the end get satisfaction the matter is referred to the Finance Department.


The MINISTER OF FINANCE.: No, it is not. The only case where the treasury board has the right to overrule is where there is an account pending for payment, where the Auditor General sees objections, and then the'treasury board may overrule. But that does not come under the letter of credit system at all.


James Clancy: What means is there of correcting abuses where accounts have been paid ? If the Auditor General says : On the last letter of credit there were accounts paid that should not have been paid, and I think I should be justified in withholding another letter of credit. How are those abuses corrected ?


The MINISTER OF FINANCE.: I am afraid I am imposing on the patience of the House in speaking so often-the only means of correction would be for the Auditor Gen-
350*
eral to refer to the department, and if the department does not afford a satisfactory explanation, does not adjust the matter and make a correction of an error, if there has been one, then the only thing the Auditor General can do, and I submit the only thing which he should do, or which we can permit him to do, is to set forth in writing his views on that matter and place them before parliament.


Adam Carr Bell: That is usual.
* The MINISTER OF FINANCE. It is usual, but if in the meantime, because, the Auditor General has a difference with the department about some $10 expenditure last month, if 300 men are awaiting for their money within the mouth, I think the 300 men should be paid.


Adam Carr Bell: That argumeiltum ad ho-miilem is hard to resist.


Mr. FRASER.: The argumentum ad homines.


Adam Carr Bell: My point is this : Admitting that there is, always has been and will be in the future, differences between any Auditor General who proposes to do his work with zeal and with pride in that work, and the government of the day, can there not be some explanation given or some adjustment reached that would avoid the necessity of introducing this legislation ? Now, in this particular case the Minister of Finance might perhaps tell us what is the crux of this question just now, what is that particular point upon which the Auditor General refuses to give a letter of credit, in consequence of which members of parliament are being refused payment of their indemnity ? There must be some point upon which he and the department differ. As I understand it-I have not had time to read carefully the report of the Martineau commission and the further report issued by the Auditor General-it seems to me that the whole question to-day between the Auditor General and the Finance Department is whether or not he should receive a certain statement from the banks with which the government are doing business. If that is the case, surely the government can get over that difficulty without resorting to legislation. As I understand it, the Auditor General asserts that he should receive, at the end of each balancing period, a statement showing the number and the amount of the cheques paid under a certain letter of credit. I may be in error, but that is my impression. Under the legislation as at present existing, it seems to me the treasury board could just as easily make a new regulation authorizing the supplying of a statement by the bank to the Auditor General at the end of each balancing period, as it could put in force these other changes that were recommended by the Martineau commission.

I think if they did that the deadlock for the moment would be settled, and it would not be necessary at a time like this, late in the session, to introduce this legislation. This is a matter that will attract a great deal of attention throughout the country and will provoke a great deal of criticism and possibly of ill-advised criticism by parties who have not sufficient knowledge of the matter to discuss it intelligently. It has become manifest on this occasion that even members of parliament are not well advised as to the character of the machinery that exists in the Auditor General's Department, i would suggest that the difficulty could be overcome by conceding to the Auditor General what he claims in the shape of a statement sent to him as well as to the Finance Minister, showing the number of checks issued under that letter of credit. The difficulty could surely be overcome at this time without resorting to this legislation.


The MINISTER OF FINANCE.: My hon. friend is misinformed. There is no statement that the Auditor General requires in any shape or form from the Finance Department that is not furnished to him.


Mr.   BELT@: I am quite prepared to agree with that. The Finance Minister is speaking with perfect accuracy when he says that there is no statement which the Auditor General requires which he does not receive.


The MINISTER OF FINANCE.: There is no statement which the Auditor General desires from the Finance Department that is not given to him, I do not even limit myself to what the law requires.


Adam Carr Bell: I am speaking of the statement from the banks. As I understand it, the Auditor General wants a duplicate.


The MINISTER OF FINANCE.: There is no difficulty of that nature whatever. Everything that the Finance Department gets from the bank is furnished to him. There is no question of that at all. The only question is that the Auditor General stands for the old method while the government have preferred to adopt the report of the Martin-eau commission. I do not myself think that the difference between the two is of vital importance; but since the commissioners, a body of capable and experienced men, ad-yised a change, we thought it would be well to adopt it. The Auditor General thinks that is unnecessary, and he prefers the old method. We have adopted the new one, under the advice of the commissioners, and we say that, under the statute, the treasury board is the proper judge as to whether that system should be adopted or not. We have adopted it, and we are advised that we are entirely within our rights. We do not think that the Auditior General is the proper judge of these things. That is the point of difference.


Mr. E. COCHRANE (East Northumberland).: Will the Finance Minister make this matter plain to me ? Is the letter of credit that was issued to cover the indemnity of members exhausted ? If not exhausted, where is the trouble ? That is what I cannot understand. If the letter of credit that the Auditor General issued to cover the indemnity of members is exhausted I would like to ask the hon. minister if the letter of credit covers both branches of the legislature, because, I understand, that in the Senate the cheques are being issued.


The MINISTER OF FINANCE.: It may be that )3he letter of credit issued to the Senate has not been exhatlsted. I have not had that branch of the matter brought to my attention, but the letter of credit issued to the officer of this House has been exhausted. The proper officer has made application to the Auditor General to facilitate another letter of credit and lie declined to do so. We propose by this Bill that in such cases if after two days the Auditor General does not issue a letter of credit the treasury board shall look into the matter and see whether there is any good reason why the credit should not issue and if there is not the credit shall promptly issue.


Robert Laird Borden: The hon. Minister of Finance says that the Auditor General declines to issue a further letter of credit.


The MINISTER OF FINANCE.: To apply for it.	[DOT]


Robert Laird Borden: To take the necessary steps ?


The MINISTER OF FINANCE.: Yes.


Robert Laird Borden: What reason does he give for that ?


The MINISTER OF FINANCE.: I understand from the Clerk of the House, who showed me the letter on the subject, that owing to the difference that the Auditor General had with the Finance Department as to the method of dealing with these accounts he is unable to issue a new letter of credit. I think that is the substance of the statement made by the Clerk of the House.


Robert Laird Borden: Perhaps there would be no objection to laying that letter on the Table of the House ?


The MINISTER OF FINANCE.: I would be very glad to do so.


Mr. FRANK OLIVER (Alberta).: It seems to me that this is not a question of taking away powers from the Auditor General but a question of preserving the powers of the House as representing the people of this country. It is altogether a mistaken attitude to suppose that there is any attempt


Adam Carr Bell: to shear the Auditor General of any of his proper powers. But, it is possible and it has been a conviction for a long time that the Auditor General, having been clothed with certain powers for certain purposes, has by excessive zeal abused these powers to the detriment of the public interest. It has been a very good thing for the country that the question has been brought home personally to members of the House in a most pointed manner so that they will understand fully how the Auditor General from time to time during years past has prevented the payment of honest money to honest men who have honestly earned it in the service of the government.


[Stage Direction]
Motion agreed to, and Bill read the first time.

Edward Frederick Clarke: Mr. Speaker, before the Orders of the Day are called, I would like to call the attention of the right hon. leader of the government to some correspondence which I found in my box when I returned to the city this morning. This is a matter of considerable importance, and I think it should be dealt with at the earliest possible moment. The correspondence is as follows :
The Board of Trade of the city of Toronto, Flour and Grain Section,
Secretary's Office,
Toronto, September 11, 1903. E. F. Clarke,' Esq., M.P.,
House of Commons,
Ottawa, Ont.
Re Grain Standards.
Dear Sir,-Acting under instructions I beg to hand you herewith copy of a resolution -which was unanimously passed at a meeting of this section held to-day in connection with the above matter.
Yours faithfully,
(Sgd.) F. G. MORLEY,
Secretary.
Excerpt from minutes of section, meeting held September 11, 1903.
Whereas the sale of Ontario -grain for export is being seriously interfered with, and in fact rendered almost impossible, on account of exporters being unable to forward to their customers in the United Kingdom and on the continent, standard samples representing the various grades of grain of this season's crop.
And whereas the handling -of it locally is also rendered extremely difficult on account of the Inability of country shippers to tell what the grain they are buying from farmers will grade when the new standards are fixed.
And whereas this difficulty and annoyance has been a cause of complaint to the -trade generally for the past two years.
Therefore be it resolved that in the opinion of the grain section of the board of trade of the city of Toronto, the Department of Trade and Commerce -should be severely -censured for their -neglect in not having yet arranged for the fixing of these standards.
And further that the letter of the deputy minister to the secratary of the board of trade under date of September 6th, -shows Inexcusable
ignorance of -the requirements of the trade on bis part.
(Sgd.) F. G. MORLEY,
Secretary.
If I understand anything about this question of grain inspection I understand that there was provision made in several Acts to give effect to the wishes of parliament and to promote the convenience of the business community.


Mr. SPEAKER.: Do I understand that tlie hon. gentleman (Mr. Clarke) will conclude with a motion ?


Edward Frederick Clarke: Yes, if necessary. I only wish to take up the time of the House for two or three minutes, but I will conclude with a motion to adjourn the House. Chapter 25, section 1 of 62-63 Victoria, An Act to amend the General Inspection Act, provides :
Subsection 3 of section 2 of the General Inspection Act, chapter 99 of -the Revised Statutes, is hereby repealed, -and the following is substituted -therefor :
3. The Governor in Council may appoint chief inspectors of any of the articles hereinbefore enumerated, who shall hold office during pleasure and -shall perform the duties hereinafter assigned -to them by -the Governor in Council.
Then, in chapter 25, section 2, I Edward VII., the Act is further amended as follows :
The Governor in Council may, from time to time, designate the several cities, counties, towns and other places or inspection divisions in Canada at and for which, respectively, it is expedient to appoint inspectors of the several articles hereinafter mentioned, or any of them ; and the Governor in Council may, from time to time, determine the limits of such inspection divisions and appoint at and for each of such cities, counties, towns, places o-r divisions, inspectors and deputy inspectors of any of the following articles :
Amongst the articles enumerated are wheat and other grain. I think I am not exaggerating the situation when I -say that the position must be an extreme one when such a representative and reasonable body as tlie grain section of the Toronto Board of Trade feel constrained to pass a resolution in such strong language as that which characterizes the one that I have just presented to the House. As far as I can gather there is no difficulty existing in regard to the inspection of grain in Manitoba and the procuring of the necessary samples for the grading of grain that has been purchased by country dealers. In Ontario there seems to be no machinery whereby those who desire to purchase the grain that farmers may have to sell are enabled to grade it. The situation is one of considerable tension, and I think the government ought to take action immediately to put the machinery provided by the Inspection Act in motion and have the grain standards decided upon forthwith and the necessary samples sent to the various purchasing

111S0
centres in Ontario. I would call the attention of the government to one very serious statement made by one of the English delegates who was present at the meeting of the associated Chambers of Commerce at Montreal, where he spoke very strongly as to the difficulty they found in England in purchasing grain by ordering from samples which had been sent over there. The situation in Ontario is certainly a serious one. It demands the serious attention of the government, and I would like to ask the right hon. leader of the government what action is being taken or why things have been allowed to drift into their present condition ? I beg to move that the House do now adjourn.


The PRIME MINISTER (Rt. Hon. Sir Wilfrid Laurier).: I am not aware that the attention of the government was called to the state of things which my hon. friend (Mr. Clarke) says exists at the present moment. I presume that the resolution of the board of trade of the city of Toronto has been duly communicated to the Department of Trade and Commerce, and if so we shall have a report from the deputy head on the subject. At all events, I will call the attention of the deputy head to the remarks of my hon. friend.


Mr. A. E. KEMP (East Toronto).: This matter, it seems to me, is more serious than the members of the government realize. As has been stated, a vote of censure was passed by the grain section of the board of trade of the city of Toronto upon the Department of Trade and Commerce, and they also state in this resolution that this delay in appointing commissioners for which the government is responsible, has been going oil for a number of years. Each year it is necessary to have grain standards fixed at the very earliest moment immediately before the wheat commences to move. I understand that Mr. Parmelee, the Deputy Minister of Trade and Commerce, has stated in an interview that the wheat has not yet commenced to move, that therefore it is not necessary that this board should be appointed, and that last year it was not appointed until September 26. Whether that is the case or not, I do not know. I presume it must be so, if Mr. Parmelee says so. That is no reason why the board should not be appointed until after the grain commences to move. All the wheat now being moved in the province of Ontario is being judged by last year's standards. It will be seen at once that this is unfair and unwise. I understand that the samples are to be sent to various parts of the country, as well as to Great Britain. Mr. Parmelee, I understand, states that the board will be appointed when the Minister of Trade and Commerce returns to Ottawa ; but even if the Minister of Trade and Commerce were here at the present time, there is no money. I Mr. CLARKE.
believe that between $600 and $700 is necessary to be at the disposal of the department for this purpose ; and surely the need of so small a sum of money should not prevent the government from acting. The gentlemen composing the grain section of the board of trade are very much inconvenienced, and feel that a wrong is being done to the grain dealers throughout the country, and to the province of Ontario generally, in connection with the export of wheat. I hope that the government will take some action, even in the absence of the hon. Minister of Trade and Commerce, to have this board: appointed and the necessary money appropriated for the purpose without any further delay.	[DOT]


Robert Laird Borden: Mr. Speaker. it seems to me that my right hon. friend must be under a misapprehension with regard to this matter not having been brought to the attention of the government. The resolution which has been read to the House by my hon. friend from Toronto, would seem to indicate that the matter has been a subject of correspondence between the grain section of the board of trade and the Department of Trade and Commerce for some considerable time. My right hon. friend will observe, if he examines the resolution which has been read, that a letter from the deputy minister of Trade and Commerce to that body of date of the 0th of September is referred to. The matter would seem to be of very considerable urgency, for the reason that the question of the export of grain is upon these people now ; it is a matter that has to be dealt with at once, and a delay of a few weeks, or even a few days, at this stage, might result in very serious loss to the people engaged in this trade. I would hope, therefore, that my hon. friend would lose no time in urging upon the Department of Trade and Commerce, upon such officials of that department ns are responsible, upon the acting minister of the 'department, if the min-' Ister is absent, the absolute necessity of dealing with this matter at once ; because, as I have said, it is not a matter that can be delayed, because every day's delay may mean a very great loss to the people interested in this trade.


The PRIME MINISTER.: I stated that the attention of the government had not yet been called to this matter. It may be that in so stating I stated too much ; but I had not heard of it. That may be owing to the absence of the Minister of Trade and Commerce because of his poor health. But I will take steps immediately to have the matter investigated.


Edward Cochrane: I would like to call the attention of the leader of the House to the seriousness of this question. The farmers of Ontario are now

threshing their grain, and the absence of the proper standard may militate against the farmer getting the price for his grain that he ought to get. For instance, I go to a grain buyer with a sample of my grain, and as he does not know how the sample is graded, he would not, perhaps, give me the price that I would have to get if the standard had been fixed. I do not'thimc it is any excuse to say that the Minister of Trade and Commerce is away. It is very easy for these gentlemen to flit about the country in special cars, and for us to be told, Vilien we want their attention, that they are ill. I do not think that is any excuse. The deputy minister is there, and there should be some minister to assume the responsibilities of the department, which the hon. gentleman said was a sinecure and should never have been created. I remember that not long since the Premier introduced a resolution in regard to some bonus that was to be voted, and he said he had not the information because the Minister of Trade and Commerce was not present. If that department is a sinecure, it should not overburden some of the other ministers to assume the responsibility of it, and do tlie little work that the Minister of Trade and Commerce used to tell the House and the country was done there. 1 want to tell the hon. Minister of Justice, who looks pleasant over this matter, that it is not so pleasant for a man who has three or four thousand bushels of grain to sell, and who has to take a lower price for it than he would have got if the standard had been fixed, and If the Minister of Trade and Commerce or some other minister were attending to the business which the Minister of Trade and Commerce is paid for doing.


Mr. T. O. DAVIS (Saskatchewan).: I would ask the hon. gentleman who brought up this matter if it is the duty of the inspector to fix these grades ? I understand that they are fixed by Act of parliament.


Edward Cochrane: Who is to carry out the Act ?


Samuel Barker: I am aware that this question was brought to the attention of the Department of Trade and Commerce a year ago. I saw the correspondence which took place with that department; but it appeared that the department had come to the decision to put an end to this board of inspection. The department, as one could gather from the correspondence, never observed that any action had been taken by the inspectors, and came to the conclusion that they were doing nothing. The fact was that the board of inspection had been doing their work so thoroughly that there had been no trouble in the trade, and everything had been going on smoothly and to the satisfaction of everybody. But the department, thinking as there was no
sign of any friction or trouble, that nothing was being done, determined, without consulting the trade or the inspectors, to put an end to the board. After some correspondence with Montreal, Toronto, Hamilton and other places, the department undertook to renew the appointments. That probably was the reason why last year the appointments were not made until so late as the 26th of September ; because they were only made after a great deal of pressure had been brought to bear on the department. I presume that on this occasion the delay is simply owing to the absence of the minister; but surely that is not a very good reason. As the hon. member has just said, this matter is of the utmost importance to the trade. All the grain transactions of the country are carried on upon these standards, and the matter ought to be dealt with very promptly.


Mr. W. B. NORTHRUP (East Hastings).: Although at first sight this might be thought to be a trifling matter to bring before the House, yet, when we consider the grain trade of the country to be of such importance that the government have introduced a measure based on the expectation that we are to have an enormous quantity of grain to export for many years to come, and are prepared to expend upwards of $100,000,000 to carry out that measure, surely a member of this House will be amply justified in calling attention to the fact that the jvery men, whose special business it is to deal in grain, and who are not influenced by political proclivities- in fact I understand they are strong supporters of the government-have met and passed a resolution which, if true, shows a very serious state of affairs. The gravity of the charge they make is increased by the fact that, as they state, they had already brought the matter before the Department of Trade and Commerce, and received a reply, concerning which they thus expressed themselves :
That the letter of the Deputy Minister to the secretary of the hoard of trade, under date of September the 6th, shows inexcusable ignorance ,of the requirements of the trade.
It is surely a serious matter, worthy the attention of this House, that so important a department as that of Trade and Commerce should be so administered that the leading members of the grain trade, meeting in Toronto, 'felt impelled to describe an official communication from the deputy head of that department as exhibiting inexcusable ignorance. The Toronto ' Globe ' had an interview with the deputy minister to. ascertain whether or not the statements of the grain men were well-founded, and the deputy minister, Mr. Parmelee, gave this reply :
There is no eastern Ontario grain moving for export.

How could there be ? How could there be any arrangement to move for export until a standard had been fixed ? Mr. Par-melee went on to say :
The grain that is being moved is going to the millers, to be ground in contracts tor future delivery.
No doubt It had to go to the millers when the exporters could not purchase it. But are the farmers to .be compelled to sell their grain at a reduced rate for the benefit of the millers ? It seems to me that the Ontario farmers should look to the government to provide the machinery to fix the grain standard, and thus - enable them to' sell their wheat for export. If they find that through the inaction of the government, they are compelled to trade in one market instead of having their choice of two, surely they have a right to complain, and it is our duty .to urge on the government to take immediate action to remove this gross injustice. The deputy minister then goes on to say :
Bast year the board was not appointed until the 26th of September, so that we have still a fortnight iai which to act as compared with a year ago.
That is the old argument, which apparently governs the present administration, that two wrongs make .a right. Complaints were widespread last year of the delay in fixing the standards ; but .because the unfortunate farmers managed to exist through this year in spite of the department, the department seems to think they ought to be able to get along another year. But we have this further reason given by the deputy minister :
Even if we were desirous of choosing the board now, there are no funds available.
Has the credit of the country fallen so low, has our surplus been dissipated to that extent that the present administration-this administration of all the talents, this business administration-cannot devise a means of raising the $600 or $700 required in order to give our farmers an opportunity of exporting their grain ? If our friends on the other side have not sufficient ingenuity to cope with the difficulty, if the misunderstanding between them and the Auditor General paralyzes their energy, we on this side are prepared to go to the .banks and raise the $600 or $700 necessary.


The MINISTER OF PUBLIC WORKS.: Are you sure that you could get a bank that would discount your note ?


William Barton Northrup: If the government insist on keeping us here very much longer, it is within the bounds of possibility that we may not be able.


Thomas Osborne Davis: We are willing to part with you at any time.


William Barton Northrup: 


William Barton Northrup: Perhaps, however, the real explanation is to be found in one of tlie closing clauses A>t Mr. Parmelee's explanation :
The board have to be appointed by Order in Council, .and when Sir Richard Cartwright returns to the city .the matter will .be submitted to him.
If the hon. Minister of Trade and Com-(inerce is the master oif the administration, if nothing can be done in his absence-if that is to be accepted as the law and procedure, we have nothing to say. But if that be the case, hon. gentlemen apposite should *support the motion of my hon. friend from West Toronto (Mr. Clarke). If the government are not competent to raise $700 anil appoint inspectors during the absence of the lion. Minister of Trade and Commerce, we iought not to undertake to carry on important business until his return, and hon. members opposite should support the motion to adjourn of my hon. friend from West To-1 ronto. It is rather extraordinary that in a | government which, for the last seven years, lias had more ministers absent during the session, than any previous administration, no one can be found to take charge, in the absence of Sir Richard Cartwright, of the Department of Trade and Commerce, which, '.when in opposition, they were wont to describe as being as useless as a fifth wheel to a coach. We all regret that the Minister of Trade and Commerce is compelled toy ill-liealth to be absent, and we have no desire to make the slightest reflection upon him on that account, but we would like to know why it is that he cannot be replaced. When we find that an important department, such as that of Railways, which lias become vacant, can be taken charge of by a minister who already has one of the most important departments under his care, and who is able to attend to the work of both : and When we find that the Department of the Interior, the head of which is absent, can be administered by the head of another department, surely we are entitled to some explanation why the Minister of Trade and Commerce cannot equally be replaced. Are we to conclude that his duties are so onerous and responsibilities so great that no one in the cabinet can toe found competent to fill his position ? Such an explanation is hardly compatible with the views so often expressed toy hon. gentlemen opposite of the uselessness of that department, but we are certainly entitled to some explanation.
Motion (Mr. Clarke) to adjourn negatived.



CANADIAN APPLES-MR. PRESTON'S STATEMENT.

Edward Cochrane: I would like to call the attention of the right hon. the leader of the government

to a communication I have received regarding a statement by our immigration agent, Mr. Preston, which has aroused the vigorous denial of Canadian apple exporters. I received the letter some days ago, 'but held it over expecting to find the Minister of Agriculture in "his place one of these days.
I find, however, that he is still absent. Is he also on the sick list ? Here is the letter which was addressed to me :
In the Toronto ' News,' of Saturday, the 5th of September, an Interview appears with Preston in which he makes some very serious statements in respect to the Canadian rascality that is so marked in the packing of Canadian apples. He makes a statement that he was in an auction room in London and saw two barrels of apples dumped into baskets, the centre being absolute trash and all the big ones appearing on the top. There is no .market in London where I saw apples taken from the barrels, the fruit head was simply taken from the barrel, the fruit displayed and sold on that. The fellow is evidently a notorious liar or it is one of these cases where he has got an office and has a swell head. I wish you would make some inquiries from the man having charge of his department.
Some hon.' MEMBERS. Order.


Lawrence Geoffrey Power: Do I understand the hon. gentleman to refer to some statements made in the House ?


Edward Cochrane: No, out of the House aud by an official of the government. I should think, Mr. Speaker, that hon. gentlemen opposite should not be so anxious to stifle discussion.


Lawrence Geoffrey Power: There can be no discussion. A question may be put to the government, but that is all.


Edward Cochrane: I was just reading a letter-


Lawrence Geoffrey Power: When the Orders of the Day are called, a question may be put to the government with the consent of the government, but no discussion can be allowed.


Edward Cochrane: I will make a motion that the House do adjourn.


Lawrence Geoffrey Power: That motion has already been made, and it cannot be repeated at this stage.	.


Edward Cochrane: Well. I will read the balance of it-


The POSTMASTER GENERAL.: That is out of order.


Robert Laird Borden: Under our procedure, the hon. gentleman (Mr. Cochrane) can call the attention of the government to the conduct of an official, when the Orders of the Day are called.


The PRIME MINISTER.: I do' not know what the motion is.


Robert Laird Borden: The hon. gentleman is not making any motion. He is simply reading a communication, and asking the government about it.


Edward Cochrane: If they did not interrupt me I would have stated the question. That is what I want to call attention to. This is a letter from one of the largest shippers of apples, who lives in Brighton, Ont. :
In the Toronto ' News,' of Saturday, the 5th of September, an interview appears with Preston in which he makes some very serious statements in respect to the Canadian rascality that is so marked in the packing of Canadian apples. He makes a statement that he was in an auction room in London and saw two barrels of apples dumped into baskets, the centres being absolute trash and all the big ones appearing on the top. There is no market in London where I saw apples taken from the barrels, the fruit head was simply taken from the barrel, the fruit displayed and sold cn that. The fellow is evidently a notorious liar or it is one of these cases where he has got an office and has a swqjl head. I wish you would make some inquiries from the man having charge of his department as to why he should deliberately make statements that are false, not to mention the fact that even if apples are all cuRs, the mere fact of their being thrown out into baskets would show what they were and the Englishmen would buy accordingly.
Yours,



SAM. NESBITT,

[Stage Direction]
Brighton.
That is the question that I want to submit to the government. I want to know why this man, Mr. Preston, who is an agent of the government, should go around making false statements like that-
Lawrence Geoffrey Power: Order.
Mr. COCHRANE-and not report to the department


Lawrence Geoffrey Power: If the hon. gentleman wishes to put a question he should observe the rule, which is, that a simple question should be put to the government without any comment.


Edward Cochrane: I am willing to bow to your ruling, Sir, but I cannot see how I could put a question without making a statement.


Lawrence Geoffrey Power: The hon. gentleman has said that the statements made by Mr. Preston were false, and' it is against the rules of the House to make such a comment in putting a question.



QUESTIONS.


Mr. TALBOT asked :: 1.	Has the Department of Public Works had a submarine cable laid between the Island of

Orleans and the north shore of the St. Lawrence ?
2.	What Is the object of the laying of that cable ?
3.	How much did that work cost ?
4.	Is it the Intention to give the inhabitants of the Island of Orleans use of that cable for telephonic purposes.


The MINISTER OF PUBLIC WORKS (Hon. James Sutherland) :: 1.	Yes.
2.	Improvement of communication between island and mainland.
3.	Only a nominal sum; it being done while other repairs were being carried on.
4.	Any official request to that effect will receive due consideration.


Mr. TALBOT.: I would ask the minister if he would be kind enough to bring down the papers in connection with this matter. If necessary, I shall move that they be laid on the Table.


The MINISTER OF PUBLIC WORKS.: There will be no objection to bringing down the papers in connection with the matter.


VALLEYFIELD POST OFFICE-TENDERS.
[Stage Direction]
Mr. TAYLOR-by Mr. Lancaster-asked :
1.	Have tenders been asked for the construction of a public building at Valleyileid, P.Q.?
2.	If so, how many tenders were received, and from whom ?
3.	VThat was the amount of each tender ?
4.	Whose tender was accepted ?
5.	Was the contract given to the lowest tenderer ?
6.	What was the name of the successful tenderer ?
The MINISTER OF PUBLIC WORKS (Hon. James Sutherland) :: 1.	Yes.
2.	Six tenders were received from the
following parties :	T. Belanger, Lachance
& Co.. Joseph Bourque, L. Cassette & T. Viau, Dussault & Pageau, William Stewart.
3.	$32,500, $33,900, $34,425, $37,150, $39,975, $42,721.
4.	The tender of T. Belanger.
5.	To the lowest tenderer.
(i. T. Belanger.
Another tender was received from T. Pre-fontaine, but he, having notified the department that be had made a mistake in his calculations, was allowed to withdraw.


Edward Frederick Clarke: What was the amount of his tender ?


The MINISTER OF PUBLIC WORKS.: It was quite evidently a mistake. It was something like half the estimate of the_en-gineer. I have not the figures here, but it was something like $20,000. I think. It was so evident on the face of it that it was a mistake that I did not hesitate for a moment to allow it to he withdrawn. I do not think I had any right to refuse, any way.


Onésiphore Ernest Talbot: 


MR. PAUL WIALLARD.
Mr. MONK asked :: 1.	Is Mr. Paul Wiallard in the employ of the government ?
2.	If so, what position does he hold ?
3.	How long has he held such position ?
4.	What is his salary ?
5.	What are his functions ?


The PRIME MINISTER (Rt. Hon. Sir Wilfrid Laurier) :: 1.	Yes.
2.	General agent for the promotion of emigration from France.
3.	Appointed on the 1st of September, 1903.
4.	$2,500.
5.	To promote emigration from France to Canada.



EXPORT FREIGHT RATE ON WHEAT.

Albert Edward Kemp: What is the export rate of freight per hundred pounds on wheat to Montreal from the following Ontario points, and what is the mileage in each instance :-Severn, Sfayner, Mea-ford, Barrie, Milton, Orillia, Midland. Napanee, Cannington, Beaverton, Elmvale, Brampton, Peterborough. Penetanguishene, Coillingvvood, Tara, Mount Forest, Port Elgin, Paisley, Wiar-ton, Owen Sound, Ohesley, Oakville.
The MINISTER OF FINANCE (Hon W.
S.	Fielding). I am not certain whether that information is in the possession of the government, but if it is, I shall be glad to bring it down at another date; if my hon. friend will allow the question to stand.



NEW GEOLOGICAL MUSEUM.

Mr. BIRKETT asked:: Is it the Intention of the government to proceed with the construction of the new Geological Museum, which is to be erected in the city of Ottawa, and for which a sum of money was voted by parliament in 1901, 1902, and again in 1903 ? Has the site for the museum been selected ?


The MINISTER OF PUBLIC WORKS (Hon. James Sutherland).: The matter is under consideration.
RECOGNITION (*>F MILITARY SERVICE IN 1866, 1870 AND 1885.
Mr. BOURASSA -by Mr. Lavergne- asked :
1.	Has the government received a petition from the association of Canadian veterans of the province of Quebec, asking an indemnity for the soldiers who repulsed the Fenian invasions of 1866 and 1870, and for those who suppressed the North-west rebellion in 1885 ?
2.	If so, by whom was it presented ; on what date, and have there been any other claims for indemnity on the part of other associations of veterans or of persons who went through any one of those campaigns ?
3.	If so, by whom, and on what date ?

4.	Has the government given anything by way of recognition of the services rendered by the soldiers in 1866, 1870 and 1885, and in what consists that recognition ?
5.	Did the government give anything to the soldiers who assisted the empire in South Africa, and what was the nature of that gratuity ?
6.	Is it the government's intention to reward the soldiers of 1866 and 1870 in the same manner in which i't has rewarded those of 1885 ?
7.	If so, in what manner ?
8.	If not, why not ?


The MINISTER OF MILITIA AND DEFENCE (Sir Frederick Borden) :: 1.	Yes.
2.	The petitions were presented on or about May 22nd' last by Lieut.-Col. A. R. Dufresne. They were recorded in the department on the 27th May last.
3.	Claims for grants of land have also been received from a number of individuals. Such applications were evidently intended for the government of the province of Ontario, to whom the applicants were referred.
4.	Land grants or scrip have been given for service during the North-west (1885) rebellion.
5.	No, except in the case of the first and second contingents, the members of which were paid the difference between imperial and Canadian rates of pay.
0.	7 and 8. No; it is not proposed to reopen this question, which has been settled by a former government.



SUPPLIES FOR GOVERNMENT RAILWAYS.

The MINISTER OF FINANCE.: I beg to move that the House do take into consideration to-morrow the following proposed) resolution. I may say that His Excellency the Governor General, having been made acquainted with the subject-matter of this resolution, recommends it to the consideration of the House.
Resolved, that it is expedient to enact as follows :-
1.	Advances may be made from time to time, out of the Consolidated Revenue Fund of Canada. to the Minister of Railways and Canals, to enable him to obtain, produce, manufacture, use and dispose of all -necessary materials, equipment and stores required or used in connection with the construction, renewal, maintenance and operation of the Canadian government railways, and for the establishment and conduct of railway stores.
2.	Stores accounts shall be established, as of the date 30th June, 1903, in connection with the Intercolonial Railway and the Prince Edward Island Railway. These accounts shall respectively he debited with the balance of stores then held on account of each railway, with the cost of materials, equipment and stores purchased, and of work performed, and expenses incurred in connection therewith, together with the cost of establishing, maintaining and conducting the railway stores, and shall be credited with the values of materials, equipment and
stores as issued and charged to proper appropriations or otherwise disposed of.
3.	The balances to tbe debit of the respective stores accounts so established shall not at any time exceed, for the Intercolonial Railway the sum of one million five hundred thousand dollars, and for the Prince Edward Island Railway the sum of one hundred thousand dollars.


[Stage Direction]
Motion agreed to.

[Stage Direction]
House again in Committee on Bill (No. 235) to provide for the construction of a national transcontinental	railway.-The
Prime Minister.
On section 7,
Samuel Barker: I desire to call the attention of the right hon. gentleman to the words ' the government ' in this clause. The agreement is not between the government and the other persons mentioned, but it is between the King, representing the Dominion of Canada, and tbe others. It seems to me that in a Bill of this importance there ought to be more accuracy in the expressions used.


The MINISTER OF JUSTICE.: If my hon. friend will look at the first section of the agreement he will find the words :
His Majesty -the King, acting in respect of the Dominion of Canada, by and through His Excellency the Governor General in Council, is hereinafter called 'the government.'


Robert Laird Borden: It is a question whether the interpretation contained in the first section of the contract would control an expression used in the Bill which ratifies the contract.


The MINISTER OF JUSTICE.: The contract purports to be between His Majesty the King and these gentlemen representing the company, but the King is referred to as the ' government ' throughout the contract.


Samuel Barker: Yes, but here we are at the beginning of the Bill before that interpretation clause comes in. It appears to me that the Bill itself should contain the words :
Between the King representing the Dominion of Canada.


The POSTMASTER GENERAL.: Section 7 says that the agreement is between the government and the company, and returning to the agreement you have a definition of the word 'government,' so that it has-distinct reference to the agreement.


Edward Cochrane: I would suggest to the Postmaster General that he would allow the Minister of Justice to give us the explanation. Some of us have not very much

confidence in the Postmaster General's interpretation of the law.


Tlie POSTMASTER GENERAL.: Thank you.


William Barton Northrup: Both sides are anxious, I suppose, to get the wording of the Bill as technically correct as possible. It seems to me that the words ' the government ' are entirely distinct from the words ' the Dominion of Canada.' In the first section of the contract it is provided that certain words shall be given a meaning that they would not otherwise possess, but there is nothing in the Bill itself to show that they have this meaning. Is it perfectly certain that because iii the contract it is provided that the words ' the government.' shall have a special meaning, that therefore in the operative clauses of the Bill they shall have the same meaning. We on this side of the House think that, as a matter of fact, this is a contract between the government and the railway company, but I suppose the government would prefer to have the idea go broad that it is a contract between the Dominion of Canada and the railway company.


The MINISTER OF JUSTICE.: I do not see the point of the criticism. If you look at the first section of the agreement you will find that His Majesty the King is referred to as 'the government'; and as the very same expression is used here, I cannot see that, as a matter of drafting, you could be more correct.


Samuel Barker: My point is that it does not follow that expressions which you use in the contract can be properly used in the Bill.


The MINISTER OF FINANCE.: Inasmuch as this clause refers to the contract and uses the same expression, I do not think that the criticism is necessary.


Samuel Barker: I call the attention of the right lion, gentleman to it, but I do not think it necessary to move an amendment on that point.


The PRIME MINISTER.: The moment you say that the agreement is ratified, it seems to me that you could not do better than use the very terms which are used in the agreement itself.


Robert Laird Borden: There may be some force in what the Minister of Justice has suggested, but I am bound to confess that I cannot see the force of the suggestion which the right bon. gentleman has just made. It amounts to this ; because you have a definition in the contract, that definition shall apply to the Bill, although by the terms of the contract it is to apply only to the contract itself. I hardly think that my right bon. friend, on reflection.
Mr. COCHRANE
would be inclined to persevere in his suggestion. So far as what the Minister of Justice has said is concerned, I would point out to him that, in clause 4, you have used the word ' government ' in perhaps a somewhat different context from that in which it is used in other clauses.


The MINISTER OF JUSTICE.: I think that is right, I was not here when the clause was passed. I think that what the hon. gentleman (Mr. Borden, Halifax) says will have to be considered.


Robert Laird Borden: And might I point out to the Minister of Justice that, while it is possible you may gather the meaning intended in this clause, the drafting has not been very careful in one respect. If my hon. friend will look at lines 45 and 40. he will see this expression, ' upon such terms as are specified in a resolution to that effect passed by the directors of the said company.' That would refer grammatically to the Grand Trunk Pacific Railway Company, which is the last company mentioned. But I suppose, considering the meaning of the clause, that it is intended to refer to the Grand Trunk Company.


The MINISTER OF JUSTICE.: Has my hon. friend (Mr. Borden, Halifax) considered that criticism carefully ?


Robert Laird Borden: No.


The MINISTER OF JUSTICE.: This clause provides ' the Grand Trunk Railway Company of Canada may, subject to the provisions of the agreement,' and so on ; then 1 upon such terms as are specified in a resolution to that effect passed by the directors of the said compaay.' However, if there is any doubt about it we had bed or make it clear.


Edward Frederick Clarke: The sect1 on as read by you, Mr. Chairman, differs from tne section in the Bill on my file.
The MINISTER OF FINANCE, 'j ho Bill has been reprinted.


The MINISTER OF JUSTICE.: The Bill was drafted in the Justice Department and then came to the clerk of the House, and here it has been changed so that what was section 30 in the Bill as drafted in the Justice Department, is section 7 in the Bill as reprinted.


Edward Frederick Clarke: Were two different Bills drafted ?


The MINISTER OF JUSTICE.: No, it was the same Bill. The hon. gentleman had better take the last one.


Mr. INGRAM.: What is the distinction ?


The MINISTER OF JUSTICE.: The distinction is that section 30 of the first Bill

introduced is section 7 of the Bill we are now considering. It simply alters the numbering of the sections.


Samuel Barker: I desire to move :
That section 7 be amended by striking out all the words after the word ' three ' in line 42 down to and including the word ' company in line 44, and by inserting instead thereof the words : ' subscribe and pay in cash at par, for common stock and for preferred stock of the Grand Trunk Pacific Railway Company, and may acquire, hold, guarantee, pledge and dispose of, preferred stock, bonds, debentures or other securities of the said Grand Trunk Pacific Railway Company.'
My reason for suggesting that amendment is this. The words used in the section begin ' acquire.' Now, as to the common stock, the word ' acquire ' is not the word to use, because, under the agreement, the company does not 'acquire' the stock; it is intended that they shall get it from the company originally through subscribing for it in the ordinary sense ; they are to get, under the agreement, the whole common stock of the company, with the exception of some shares to be reserved for the purpose of qualifying directors. It is not intended to be issued by the Grand Trunk Pacific Railway Company to the public and afterwards acquired by the Grand Trunk Railway Company from the public, but .it is intended that the Grand Trunk shall take it directly from the Grand Trunk Pacific Company. The Grand Trunk, must therefore, subscribe for the stock. It will not be stock of the Grand Trunk Pacific until it is subscribed for by somebody. The words I propose to use, as regards the common stock, are to the effect that authority shall be given to the Grand Trunk Company to subscribe for the stock. The right hou. leader of the government (Rt. Eton. Sir Wilfrid Laurier) will remember that we had a discussion on that point at an earlier stage of this Bill, and I then pointed out the difference that it always recognized between the subscription stock and the acquisition of stock. The acquisition of stock is the acquisition of property that is already upon the market; subscription to stock is an undertaking to be a member of the company by taking the stock. I also give the Grand Trunk Railway Company power to subscribe for preferred stock, because it is possible they might want to subi scribe for it, and I do not want to use words that will preclude them from subscribing for It if they choose. I only provide that, in subscribing for the stock, they shall pay for the same, because there has been inserted in the charter of the Grand Trunk Pacific Railway Company a provision enabling that company to issue stock without being paid for or receiving any obligation to pay for it. It is my purpose, in moving this resolution, to prevent this Grand Trunk Company from acquiring the stock of the Grand Trunk Pacific Company
without any money to represent that stock going into the treasury of the Grand Trunk Pacific Railway Company ; this is, to provide that the Grand Trunk Company must subscribe, as an ordinary individual would subscribe, under obligation to pay one hundred cents on the dollar as that money may be called up by the directors in carrying out the purposes of the company. Then, as to acquiring preferred stock on the market, or the bonds, debentures or other securities of the Grand Trunk Pacific Railway Company, I use the word ' acquire,' so that if bonds, debentures or other security or preferred stock are issued, the Grand Trunk shall have power to acquire them from the public if necessary. That is the object of distinguishing between subscribing for stock or acquiring stock. I do not wish, at the present moment, to say more upon the question whether the Grand Trunk should he enabled to obtain that common stock to the amount of nearly $25,000,000 of capital without paying for it.
I may call attention to the fact that in the discussion of the Railway Bill the government conceded the removal from that Bill of a clause enabling companies to issue stock in this manner without any obligation to pay up the calls. That was in the old Railway Act, and the subject was discussed fully in this House, and after two discussions the Minister of Railways agreed to remove from the general Railway Act a provision enabling railway companies to do that sort of thing. Although that was struck out of the general Railway Act. a clause to the same effect was put in the Grand Trunk Pacific Act; therefore a provision that was considered improper in the general Railway Act has been put in here, and not only has it been put in the Grand Trunk Pacific Act in the terms formerly used in the general Railway Act, but additional words have been used so as to grant powers that were never heard of before in this connection, for the purpose of enabling the Grand Trunk, apparently, to get this stock without paying for it. There are words used n the lltli section of the Grand Trunk Pacific charter enabling the Grand Trunk Pacific to issue its common stock, whether they can issue their preferred stock or not, without any obligation whatever on the part of the acquirer to pay for it.


The MINISTER OP JUSTICE.: Will the the hon. gentleman be good enough to point out the words which he thinks have that effect in section 11 ?


Samuel Barker: Section 11 reads :
The directors of the company elected by the shareholders may make and issue as paid up stock, shares in the company, whether subscribed for or not, and may allot and hand over in payment for plant, rolling stock, docks, elevators, wharfs, warehouses

These words I am reading



-wharfs, warehouses, vessels or materials of any kind, or as consideration for rights, powers and privileges acquired

These are all new words, and were never in the Railway Act. These words have been used for the purpose of this particular Bill, and I contend that they have been clearly added to enable the Grand Trunk Pacific to enter into agreements for what may be called rights, what may be called privileges, terminal facilities, anything of that kind, to put their own value upon these privileges, and to issue $25,000,000 of common stock in payment for it.


The MINISTER OP JUSTICE.: I think my hon. friend said there was something in the law which allowed them to do that for nothing-That is what I understood him to say.


Samuel Barker: I said practically for nothing, because these two companies are enabled by these words, put in for a special purpose in this Act, to put what value they like upon the rights, powers and privileges acquired, and to issue this $25,000,000 of stock in compensation for these rights, powers and privileges acquired. I say it is not in the interest of this country that that $25,000,000 of common stock should he added to the capital of this Grand Trunk Pacific in order that the money represented by that capital shall go into the treasury of the company, for the purposes of the company.
At one o'clock, Committee took recess.
Committee resumed at Three o'clock.


Samuel Barker: Mr. Chairman. When the Committee rose at one o'clock I was referring to clause 11 of the charter of the Grand Trunk Pacific Railway Company add I had pointed out that a similar clause to that clause 11 had existed in the general Railway Act of the Dominion and that iin the discussions upon the Railway Commission Bill the clause, then No. 59, I think it was, in Bill No. 21, was struck out because it was conceded on the part of the government that the clause was an objectionable one and ought mot to be in the Bill. We find the same clause, 59, in the general Act, inserted in the private Bill of the Grand Trunk Pacific Railway Company and not only containing all the provisions that were then in the old section of the general Railway Act but very material additions made to it. I was saying that it appeared to me that the insertion of clause 11 in this charter of the Grand Trunk Pacific Railway Company and the additions made to the old clause bore evidence that the object of inserting it was to enable the Grand Trunk Pacific Railway Company to give to the Grand Trunk Railway Company the $25,000,000 of common stock practically without any payment for it; at all events, merely for the concession of some rights, powers and privileges, and I was pointing Mr. BARKER.
out that it was impossible for any person to value these rights, powers and privileges, that the two companies set their own value upon them and make that value an excuse for the granting of the whole $25,000,000 of common stock. At present I will not say one word as to the broad question whether it is right that such a thing should be permitted at all. I only point out that in this agreement bonds are authorized sufficient in amount to construct the whole railway, that three-quarters of these bonds are to be guaranteed by the government and the remaining one-quarter by the Grand Trunk Railway Company. Therefore, the construction of the railway is provided for out of the bonds. Preferred stock amounting to $20,000,000 is authorized, and I presume- and I think it is a fair inference-that the $20,000,000 in preferred stock is to meet the expenditure necessary to provide the equipment of $15,000,000 on the western section and $5,000,000 on the eastern section. After you have built the railway and equipped it, what then is needed of the $25,000,000 of common stock ? It seems to me that a consideration of these figures and the fact of the bonds being sufficient to build the railway and the preferred stock being sufficient to equip the railway give us further indication, if any were needed, that the $25,000,000 of common stock is to be placed upon this company without one dollar in respect of it entering into the treasury of the company. The result will be, as has been pointed out more than once in this House, that the railway will have to bear the burden in the shape of dividends upon that $25,000,000 without any corresponding advantage from it. I think, that, while there may be some hon. gentlemen on the other side of the House who are prepared to go the length of saying that the stock ought to be authorized to be issued whether paid for or not, there is not a gentleman representing Manitoba or the North-west Territories who will agree to support any such proposition. We have heard a good deal on this subject and I should expect that every hon. gentleman representing the North-west Territories would stand up in favour of any proposition requiring that every dollar of the stock should be paid for in cash. Whether these hon. gentlemen will do so or not I cannot say. Why should the Grand Trunk Railway Company and the Grand Trunk Pacific Railway Company, practically the same company-the directors of the Grand Trunk Railway are the people entering into this agreement on behalf of the Grand Trunk Pacific-be enabled to sit down and enter into an arrangement by which one shall give to the other, exchanging from the right hand to the left, $25,000,000 of stock upon a mere bargain about privileges that they estimate the value of and the country have no voice in it ? Surely this is wrong. Surely there is no need for it. If the Grand Trunk Pacific Railway

Company want to make traffic arrangements with the Grand Trunk Railway Company, arrangements for terminals, arrangements for elevators, for docks, for shipping facilities, surely these are matters of mutual convenience that they can agree upon one with the other. The Grand Trunk Pacific Railway Company must'be of enormous advantage to the Grand Trunk Railway Company of Canada just as possibly the connection with the Grand Trunk Railway Company of Canada will be an advantage to the Grand Trunk Pacific Railway Company. This is a matter of mutual convenience and should be the subject of mutual [DOT] bargain, not a matter for $25,000,000 of stock to be ranked as paid up stock being handed from the one to the other. That is the point 1 make and I do not think it can be too strongly pressed upon this country. We have heard time and again denunciations of the practice of watering stock. What more barefaced watering of stock could there be than that' which is provided for by this arrangement ? There is an enormous provision for it-$25,000,000 of money on the books without a dollar in fact. Surely that has only fo be mentioned to shock the people. It is not fair when we take into account the effect ijiat the overloading of the company with stock that does not represent cash will have upon the farmers and shippers of the country. It is useless to say that it means nothing. When the question of rates comes up that stock will have to stand as stock bearing dividends and the rates that are to be authorized by the railway commissioners will have to be sufficient to enable reasonable dividends to be paid upon that stock. These commissioners will have to treat that stock on the same footing as if a hundred cents on the dollar had been paid in cash for it. They will have no authority to distinguish between one class of stock and another. On the face of the books as authorized by an Act of parliament they have so much paid up stock and whether paid in cash or paid by the writing of a signature makes no difference to them. They will have no right to distinguish and the result will be that the rates to be imposed upon the people of this country in respect to that stock will be precisely the same as if $25,000,000 in hard cash had been paid by the company upon it. I desire for that reason to impose upon those who subscribe to that $25,000,000 the obligation that applies to every man who takes $100 in any company-that he shall be subject to any calls until that $100 is paid up. So, I say that the Grand Trunk Railway Company, or any other company subscribing for this $25,000,000 of common stock, should, be liable to pay $25,000,000 when called upon to do so as required by the Railway Act. I do not propose at present to occupy further time. I shall be very glad to hear from hon. gentlemen on the other side of the House
what they have to say why that course should not be pursued.
With regard to the common stock, I say it must be subscribed for and for this reason : That it is to be issued only to the Grand Trunk Railway Company, with the exception of the qualifying shares. Being issued only to the Grand Trunk Railway Company, it must be subscribed for by that company, and the ordinary subscriber is to pay for his stock to the company. I want to know whether the Grand Trunk should be relieved from that ordinary obligation. As to the preferred stock, they are under no obligation under the agreement, to acquire, or own, or hold preferred stock. Therefore I propose in that amendment to simply give them the power to subscribe for it. But, I also propose to give them what the government proposes, namely : the power to acquire stock just as they have the power to acquire bonds and other things. That means, that preferred stock held by the public ; bonds held by the public ; debentures held by the public, may be bought by the Grand Trunk at the current price of the day. But when they come to the common stock, which cannot be upon the market, they shall not have that without paying 100 cents on the dollar for it. That is manifestly in the interests of the country. Why should they be given $25,000,000 ? Does any hon. gentleman on the opposite side of the House undertake to stand up and say that it will never be worth $25,000,000 ? Can they say that in ten years from now that stock may not be worth 100 cents on the dollar, and that the result of that agreement may not be, that we shall have made a straight present, a gift of $25,000,000 to these people ? Why should we do so ? Why should we not tell them :	You
may subscribe for the stock if it is your interest to control that company. If you want to be a controlling power in the Grand Trunk Pacific Railway Company, and for that reason want to own the majority of that stock, subscribe for it, and take your chances of there being any necessity to call up the stock. The company control the board. It is to be presumed, under these circumstances, that not one call will be made more than is necessary for the purposes of the Grand Trunk Pacific Company. If 10 per cent upon that stock will suffice for all the needs of the railway company, you may depend upon it there will never be more than 10 per cent called. If it is necessary to call it, then they will get dividends upon it. But, hon. gentlemen opposite are not satisfied with that. They are so generous to the Grand Trunk, that without their paying 1 per cent upon it, they say : You may obtain dividends upon the whole. Surely it is more reasonable to say :	We have no
objection to your obtaining a dividend upon what you pay : you will have the control yourselves to prevent an unnecessary call

being made ; if you are called upon to pay 10 per cent you will get dividends upon 10 per cent ; if the requirements of the company call for 20 per cent, you will get dividends upon 20 per cent ; but you will only get dividends, upon what you pay. That is the proposition I make, and I submit the amendment with all confidence that it ought to receive the support of gentlemen on botli sides of the House.


The MINISTER OF JUSTICE.: 1 would like to ask my hon. friend, merely by way of information, if he can tell me of a single railway charter that has ever gone through this House to which lias been applied the principle for which he contends In connection with this charter ?


Samuel Barker: I cannot, for the simple reason that I have never known a case where a company was given such privileges as this by contract with the government, and in connection with that a privileged section is put in the charter of the company enabling the contracting company to obtain $25,000,000 free.


The MINISTER OF JUSTICE.: Of course, my hon. friend does not expect us to take literally what he says, when he contends that this may be given free, and that there is provision in the charter for that. If he does, then I am somewhat amazed at the view he takes of the law.


Samuel Barker: Pardon me a moment, what I mean by free is, without the payment of a dollar of cash ; simply they could agree upon terms.


The MINISTER OF JUSTICE.: I assume that my hon. friend means that the payment of the stock must be in cash, that the equivalent of cash does not count; and that the payment in any equivalent of cash is what he calls giving the stock free. Now, the general principle of law is, that stock subscribed for must be paid for in cash. That is the general principle of our Company's Act, and it is the general principle that will prevail if the new railway Bill becomes law. If that be the general principle of law, and if provision is made for an exception to that to the effect that it is possible to give paid up stock to any person in payment for land, rolling stock, docks, elevators, wharfs, warehouses, vessels or materials of any kind, or in consideration for rights, powers and privileges acquired ; then I submit respectfully to this House that under a true construction of that statute, it would be necessary that the property given must be an equivalent to cash. I submit that that is the construction the courts would put upon it. If It is to be given in payment of the stock ; the genera] principle of the law being that it should be given in cash, then the equivalent must also be equal to cash. Irrespective of that I would like to draw the attention of the
House to this fact:	That this company
receives certain limited bonding powers ; that the bonding powers are not more than sufficient to allow the roadbed to be constructed ; that in addition to the bonding powers which they have they are authorized to issue $45,000,000, worth of stock-$20,000,000 of which must go in payment for the equipment, that they put upon the road ; because they are under the obligation to equip the road to the extent of $20,000,000. You will, therefore, have to assume that the bonds will Ire sold for the equivalent of cash, for a sum equal to their face value ; that the preferred stock will be sold for the face value of $20,000,000 in order to get the equipment, and in addition to that, then you have the $25,000,000 of common stock. My hon. friend (Mr. Barker) says that that common stock is to be given away to the Grand Trunk Company. Now, the Grand Trunk Pacific Railway Company have to provide terminal facilities. Where are they going to get the money for that '! They have to build a thousand miles of branch lines, which they must equip. Where are they going to get the money to do that ? Where are they going to get the money, not only to provide the first equipment of $20,000,000, but also to provide, as they go along, an equipment equal at any time to the most modern requirements. They have $25,000,000 to provide for all these things, and if they give this stock away to the Grand Trunk Railway, where are they going to get the money necessary to enable them to carry this enterprise out ? They have bonding powers to an extent sufficient to build the road ; they have $20,000,000 preferred stock, which if sold at par is sufficient for the first equipment of the road ; and for all the other things, they have $25,000,000 of stock, and that $25,000,000. according to the argument of my hon. friend (Mr. Barker), is to be given away to the Grand Trunk Railway. It is only necessary to state these facts to enable the country to appreciate how far it is possible for this road to be carried on under the terms of this charter if it bears the construction put upon it by my hon. friend. I say that such is not the construction that any reasonable man would apply to this clause.


William Barton Northrup: There are one or two features of the present contract that would withdraw it entirely from a fair comparison with any other contract that has ever come before this House. We are supposed to be here to-day trying to guard the interests of the people, as far as we can. The hon. member for Hamilton brings! in an amendment which calls attention to two different points of objection in this seventh clause. The first obiection he raises may perhaps be considered a technical objection'. If so, if it is properly taken, there can be no objection to changing the wording of the Act, so that there would be no possible difference


Samuel Barker: of opinion in regard to that point The hon. member for Hamilton draws a distinction between the ordinary stock and the preferred stock. The reason that distinction is drawn is owing to the express terms of the contract. If the contract did not provide that all the common stock were to be taken by the Grand Trunk Railway Company, there would be no necessity for drawing any distinction between the common stock and the preferred stock. But, as the contract provides that all the common stock practically is to be taken by the Grand Trunk Railway Company, it is quite evident that there is a distinction in the way the common stock is to be issued and the way the preferred stock is to be issued. Therefore the hon. member for Hamilton suggests that the word ' subscribed ' would be an appropriate way of describing the common stock, and the word ' acquired ' an appropriate way of describing the preferred stock, which might be acquired in the open market later on. But when we come to consider whether limitations should be imposed upon the company as to the manner in which it disposes of its stock, surely we are not going beyond the record, when we look at the circumstances, in urging that we should be particularly careful in this case. When the government's Railway Commission Bill came before the House, it contained a clause allowing companies to deal with their stock along the same line as the power given to the Grand Trunk Pacific Company in its charter. After discussion in this House, the government practically admitted that such a clause was not in the interest of the public, and that clause in the railway Bill was stricken out. Therefore, we are justified in assuming that it is prima facie in the interest of the country that such a clause should not be in an ordinary Bill. But we found the Grand Trunk Pacific charter re-introducing and extending a clause which had been stricken out of the government railway Bill ; so that we have to recognize that this company has broader powers than would prima facie be given to any other company seeking a charter from this parliament. We must also bear in mind that in the case before us we have the Grand Trunk Railway Company nominating the directors of the Grand Trunk Pacific Company ; the two companies are practically one ; and what we are trying to do is to see that the Grand Trunk Railway Company shall not have all the advantages without assuming any liability "at all. If we find that the views presented by the hon. member for Hamilton are in tlie interest of the country, we are bound to support them. But the hon. Minister of Justice says that the common stock cannot be issued unless a bona fide consideration of some kind is given for it. I wonder if that is really in accordance with the powers given to the Grand Trunk Railway Company. We must bear in mind that everv power 351
given to the Grand Trunk Pacific Company in its charter continues unfettered unless we fetter it by this bargain. If we look at clause 11 of the company's charter, we find that it has a right to issue its stock to contractors or engineers in payment of bona fide claims. A case of the same kind came before this House a few years ago. The government made a contract with Messrs Mackenzie & Mhnn to build a railway in the Yukon. The railway was not built, and Mackenzie & Mann made a claim for damages. Under this- clause, if the Grand Trunk Pacific chose to make a contract with the Grand Trunk, and subsequently found that the contract was so outrageous that it could not carry it through, and failed to complete it, the Grand Trunk could come back on the Grand Trunk Pacific and claim damages, and there would be nothing to prevent the Grand Trunk Pacific paying them damages, for breach of a contract under which nothing whatever was done.


The MINISTER OF JUSTICE.: That would not be very honest, would it ?


William Barton Northrup: I am not discussing the honesty of it, but the possibility of it under this contract. Surely, if we are to assume that everything is to be done in strict accordance with the moral law, it would not be necessary for us to have a contract at all.


The MINISTER OF PUBLIC WORKS.: Would the hon. gentleman allow me to ask him a question ? The contract provides that bona fide value should be given for the stock. Would it not be dishonest or fraudulent for the Grand Trunk Railway Company after subscribing for the stock not to pay for it, whether in cash, work or otherwise ? Would they not have to give bona fide value for it before they could legally hold the stock ?


William Barton Northrup: I think the case I have mentioned would illustrate that point. Suppose the Grand Trunk Pacific and the Grand Trunk Railway made a contract for any purpose, and the Grand Trunk Pacific chose to abrogate that contract, and the Grand Trunk claimed damages ; who would say how much damages would be allowed ?


The MINISTER OF PUBLIC WORKS.: If that were a proper claim, would it not be a legal claim ?


William Barton Northrup: If the parties were dealing with, each other at arm's length, I could quite understand the cogency of my hon. friend's remarks ; but when we find that the two companies are really one company, when we provide that the Grand Trunk Company shall hold all the common stock and therefore enjoy the advantages of ownership without the liability, we are justified in looking at this contract in a different light from a contract between peo-



pie who are dealing with one another at arm's length.


The MINISTER OF PUBLIC WORKS.: By the hon. gentleman's own argument, the Grand Trunk Company have to subscribe and pay for the stock, or take it fraudulently.


William Barton Northrup: Let me give another illustration. Under this contract the Grand Trunk Company is to guarantee a certain amount of the bonds of the Grand Trunk Pacific Company. Suppose the Grand Trunk Pacific directors say : In consideration of your guaranteeing the bonds to the extent required, we will give you all the common stock ; Who is to prevent them doing that ? Who would set the law in motion to prevent the Grand Trunk Railway Company acquiring the whole of the stock in consideration of guaranteeing the bonds ? It might be said that that is a fair equivalent, and nobody could prevent it. That may be the intention ; we cannot say ; we do not know ; but we do say that in that manner all the common stock might be made over to the Grand Trunk Railway Company without substantial consideration.


The MINISTER OF JUSTICE.: My hon. friend must not overlook the fact that the company must provide telegraph and telephone lines, terminal facilities, and build branch lines. If they dispose of the stock in the way described, where will they get the money for all these works ?


William Barton Northrup: That is a fair question. When I speak of the stock being transferred to the Grand Trunk Company, I speak of the $25,000,000 of common stock; but there is also $20,000,000 of preferred stock.


The MINISTER OF JUSTICE.: How about the $20,000,000 worth of equipment ?


William Barton Northrup: That point will come up later.


The MINISTER OF JUSTICE.: Don't get away from it like that ?


William Barton Northrup: The hon. gentleman will not forget that we on this side of the House have contended that there is no obligation at all on the Grand Trunk Pacific Company to purchase that equipment.


Samuel Barker: Will the hon. gentleman allow me to ask the minister a question ? Will he tell us how the Grand Trunk Pacific is going to build branch lines and buy rolling stock by giving away their stock to the Grand Trunk Railway Company 1


The MINISTER OF JUSTICE.: They cannot give it away. They) must get cash in exchange for it. The very face of the contract shows the untenable position which my hon. friends take.


Samuel Barker: The hon. gentleman overlooks the fact that the contract says that the Grand Trunk Railway Company Mr. NORTHRUP.
must get at once the whole $25,000,000. If they get the whole $25,000,000, at once, how is the Grand Trunk Pacific Railway going [DOT]<o use that to build the railway ?


The MINISTER OF JUSTICE.: My hon. friend supplies the obvious answer. The answer is because the Grand Trunk Railway will pay for it and give the money. My hon. friend supplies the answer to his whole argument.


William Barton Northrup: Thei'e is a very marked difference between the hon. minister and us. The Minister of Justice says that the money required to build the Grand Trunk Pacific Railway will be obtained by the purchase in cash of this stock by the Grand Trunk Railway. All we ask is to have that expressed in so many words, so that there can be no doubt. We may be too cautious or the minister may be over-confident, but by providing in this clause that the Grand Trunk Railway shall pay the money, we put that point beyond peradventure.


Robert Laird Borden: object of them ? When the Bill was going ; through the House 'the right hon. gentle-mail made the meaning plain. He was absolutely candid with the House and the country. He stated that it was right that the Grand Trunk Railway Company should acquire this stock for what might be only a nominal consideration ; that it was customary to acquire stock at the market rate, and therefore the Grand Trunk Railway Company should acquire this at the market rate. There 'being no market rate for the stock at the time when it would be acquired, that question could toe very conveniently settled toy the Grand Trunk Railway Company on the one hand and the Grand Trunk Pacific Railway Company on the other hand-the two companies, according to the language of the ex-Minister of Railways and Canals (Hon. Mr. Blair), endorsed by the Minister of Finance (Hon. Mr. Fielding), speaking on behalf of the government, the two companies toeing all the time ' the same red-headed boy.' The Minister of Justice points out as a reason for not accepting the amendment of my hon. friend from Hamilton that what is contemplated by that amendment is exactly what is contemplated by the government and by the Grand Trunk Railway Company. If that be so, might I not fairly ask the Minister of Justice what can be the possible objection to accepting the amendment ? The Minister of Justice says you must provide terminal facilities, you must provide branch lines ; and it will follow, as a matter of course, that the Grand Trunk Company will pay cash, or the equivalent of cash, for every dollar of that $25,000,000 of stock. What is the objection to adopting this amendment which will ensure that result ? It is true that it is absolutely inconsistent with the view expressed by my right hon. friend the leader of the House. But let us assume that the government has reconsidered its attitude on that point. What, then, is the objection to accepting the amendment of my hon. friend from Hamilton ? But is the argument of my hon. friend the Minister of Justice absolutely conclusive on that point ? He says that terminal facilities must be provided and branch lines must be provided; and he seems to take the view, so far as I have been able to gather any idea in that regard from his remarks, that the Grand Trunk Railway Company was to build the terminal facilities and branch lines. It jbat be so, it certaimy emphasizes the view that was expressed by the Minister of Finance, that these two companies are ' the same l-ed-headed boy,' because, according to this argument, the branch lines along the line of the Grand Trunk Pacific Railway are to be built, not by the Grand Trunk Pacific Company, but by the Grand Trunk Company ; and tile terminal facilities for the Grand Trunk Pacific Railway are to be provided, not by the Grand Trunk Pacific Company, hut by the Grand Trunk Company. Might Mr. BORDEN (Halifax).
; I suggest to the Minister of Justice that if branch 'lines are provided, a very considerable proportion of the expense will be raised by mortgages on these branch lines, My hon. friend (Hon. Mr. Fitzpatrick), toeing familiar with the contract-more familiar, I think, than some of his colleagues have shown themselves to toe-will remember that the clauses respecting the first mortgage provide expressly that branch lines, except those less than six miles in . length, are not to be covered by that mortgage. And, so far as terminal facilities are concerned, where are they to be provided ? Perhaps on the Pacific coast. But this railway is built mainly for the purpose, as announced by the right hon. leader of the House, for carrying grain from the prairies of the west to the Atlantic sea-board. But on the Atlantic sea-board the Grand Trunk Pacific Company will not need to build terminals. It will be for the government to build terminals, if these are to be provided at all, because the government owns the line east of Winnipeg. And if, unfortunately, the whole or any portion of this traffic should be diverted to Portland, we have the statement of the Minister of the Interior (Hon. Mr. Sifton) and the Minister of Finance (Hon. Mr. Fielding) that the Grand Trunk Railway Company has terminals at Portland, upon which it has expended some $20,000,000. In view of these facts, there does not seem to be a very strong argument in the suggestion that the Minister of Finance has made to the House.
But is there not strong reason after all, from the standpoint of the government itself, that there should be liability on the part of the Grand Trunk Railway Company to pay in cash, or in the equivalent of cash, the whole of this sum of $25,000,000 ? Look at the clauses of the contract. The Grand Trunk Pacific Company binds itself by many clauses in the contract to do certain things which are essential, in the opinion of the government, to the carrying out of the real purpose of this measure. I may call the attention of the House in that regard to some of these clauses. For example. let us look at dause 25 of the contract. It reads ;
The said lease shall also contain such other covenants and provisions, including proper indemnity to the government in respect to the working of the railway as may he deemed necessary by the government to secure the proper carrying out of this agreement.
That is a provision which looks to a covenant on the part of this company to be contained in the lease. And it looks to liability on the part of the company to the government in respect of its provisions. Then look at section 27 ;
The company undertakes that the Grand Trunfc Railway Company of Canada shall acquire and take the said common stock to the amount of twenty-five million dollars, except shares held by directors

And so on.- That is a stipulation on which very great stress has been laid by the min-

isters of the Crown. They have said it was a most essential and important part of this scheme that t-hei Grand Trunk Railway Company should acquire this controlling interest in the stock of the Grand Trunk Pacific Railway Company. The only way in which this important provision is secured is by means of a covenant, not from the Grand Trunk Railway Company, hut from the Grand Trunk Pacific Railway Company. Then look at clause 34. which contains a covenant on the part of the Grand Trunk Pacific Railway Company, that the Grand Trunk Railway Company shall guarantee certain bonds. It is necessary that these bonds shall be so guaranteed according to the view of the government for the raising of the money essential for the completion of the road. Then look at section 41 :
At all times during the terms of the said lease the company shall continuously and efficiently operate both divisions of the said railway, giving due and sufficient service for the accommodation of all traffic to the satisfaction of the government.
Look at sections 42 and 43, which contain covenants on the part of the Grand Trunk Pacific Company that traffic shall be carried at certain rates through Cauadiau channels, and that it shall not be diverted to United States ports. How does the government expect that these provisions are to be enforced ? What remedy is there in the contract, in case they are not complied with by this company <? Is there to be any property of the Grand Trunk Pacific Railway Company available, which will stand as a means by which the government can seek a remedy against the company in that regard ? The company's property, as is well known to all who have paid attention to the contract, is to he covered by a series of mortgages. The first mortgage is to he first charge on all the property of the company except the branch lines, and some minor items. The second mortgage is to he the first charge upon all the property covered by the mortgage already mentioned except the rolling stock constituting the equipment of the eastern division. Then there is a third mortgage constituting a second charge on that equipment. Now is it not of some importance to the government itself, in view of the fact that it may hereafter have to seek a remedy against the Grand Trunk Pacific Company in order to enforce these stipulations, that there should he some assets of this company against which it may obtain redress if the company fails to comply with these provisions ? I know it has been suggested by ministers of the Crown in dealing with this question that parliament itself shall come in and provide a remedy in case no effective remedy is found in the courts. Well, I regard that as rather a dangerous doctrine. If you embody in a contract with the Grand Trunk Pacific Company all the provisions which are presented to the minds of the party at the time, it seems rather a dangerous doctrine that you should come in
afterwards and, because something has been overlooked, or because some -remedy is not provided, you are to take the law into your own hands and vary a contract and provide terms which were not found there, and enforce a remedy which is not contained in the contract, and in that way deal with a contract made between the government and a great corporation in a way in which that contract could not he dealt with according to its terms. But apart from that, I question as to whether yon may not in future have occasion to pursue this company in the courts for the purpose of enforcing this clause, and unless you have this $25,000,000 or unless you have the liability of the Grand Trunk Company in, respect of its subscription to this $25,000,000, I would like to know in what way the Minister of Justice would seek to enforce that contract ? It seems to me that it is important from the standpoint which I last mentioned, that the government should have that remedy in its own hands, and it is a remedy much more consonant with the usage applicable to contracts than what has been suggested as a proper remedy by Ministers of the Crown. For these reasons therefore-that this is an exceptional case; that you are dealing here -with two companies in form but only one in reality, that you are giving under the terms of section 7 a power which may be exercised, I think, to the detriment of the country and the government, it seems to me that the amendment of my hon. friend from Hamilton (Mr. Barker), which is designed to bring about by legislation exactly the state of affairs which my hon. friend the Minister of Justice says is in contemplation by the government and the company-for these reasons it seems to me it is only fair and right, and only wise and prudent for the government to accept the amendment, an amendment which certainly I think cannot be complained of by any of the contracting parties to this agreement.


The MINISTER OF JUSTICE.: I think the additional words in the amendment providing for payment in cash are useless, be-1 cause if the company subscribes for stock,
' then the general law is applicable, and must ' he paid in cash.


Robert Laird Borden: But is my hon.
. friend quite sure that the general law is . applicable to the provisions which are con-* tained in section 11 ?
i The MINISTER OF JUSTICE. Exactly. i But if yon adopt this amendment, then sec- tion 11 becomes absolutely useless, because ; then they must subscribe for stock and pay E for in cash, all the fully paid-up stock pro; vided for in section 11. Now parliament . has made an exception to the general law 5 in this Act by inserting section 11 of i the charter. The amendment, ir section IX s were not there, would he absolutely use-3 less, because then the stock would have to x he subscribed for, and, being subscribed i for, the general law would be applicable,

and then the stock would have to be paid up In cash.
Mi". BORDEN (Halifax). Is my hon. friend overlooking this fact, that we did that before this contract between the government and that company was before parliament ?


The MINISTER OF JUSTICE.: I mean this, that if you eliminate section 11 from the charter then this amendment becomes useless; on the other hand, if you take this amendment theu section 11 becomes useless. Now, the intention of parliament was that this company should have the right to issue fully paid-up stock in payment for plant, rolling stock, docks, elevators, wharfs, warehouses, vessels or materials of any kind. My first argument is to this effect, that if the general law provides that paid-up stock can only be issued for cash, and then by this amendment to the charter under section 11 you provide that they shall have a right to issue paid-up stock in payment for the different considerations in this section mentioned, I say it is a natural legal inference that that stock must be issued for an equavalent in cash, otherwise the words ' in payment of ' are useless in the section.1 I trust my hon. friends follow me to that extent. That is a natural inference in law, if the general principle is that you cannot issue stock except for cash; and if to that you make an exception that instead of cash you are entitled to take in payment for paid-up stock the different things mentioned here, the equivalent must be in cash. That is the legal construction I put upon the section.


Robert Laird Borden: Is my hon. friend taking into consideration the words ' due regard being had to the then market value of the stock' '


The MINISTER OF JUSTICE.: Yes, I am taking that into consideration. I do not mean to say that if they issue stock in payment of these different things at a time when the market value is ten cents on the dollar, that they will be obliged to pay the value in cash ' Due regard being had ' governs all the preceding words. But I say at the time the stock is issued-is not at the time it is subscribed, I make a wide difference I between the acquiring and subscribed. I mean that a man who subscribes for stock has to pay in cash for it, if he does not, he is liable for the cash value of the stock at the time he subscribed, not the market value but the par value. But if you acquire the stock, the position is entirely different. When you acquire the stock you do not incur the liability of a subscriber to the stock, and if there is a liquidation or winding up process, then you cannot proceed against a man who has acquired the stock in open market, but you may against the subscriber for the unpaid calls. But I say that when you come to deal with the paid-up stock, then, having due regard to the then


Hon. Mr. FITZPATRICK.: market value, this stock must be issued and dealt with, whether you receive value proper or in consideration, it must be dealt with absolutely as if the consideration you received was cash or the equivalent of cash. Now that is a general legal proposition that I put forward, speaking, not ex-cathedra, but giving my own view of the law. Now let us deal with the other view. My hon. friend thinks this stock ought to be subscribed for and paid for in cash at par. Now let us see what the position of this company is. They have a right, under their charter, to issue bonds for the construction of this road, to procure money to construct this road. The bonding powers of the company are limited to $20,000 per mile on the prairie section, and $50,000 per mile on the .noun-tain section. I submit that there is very little doubt that these powers will not be more than sufficient to enable the company to raise the money to build the road. You must bear in mind that a first issue of bonds, even if guaranteed by the government, may sell at par and possibly may not sell at par. I think it is a matter of common knowledge that a bond issued by the government direct is a better marketable commodity than a bond issued by a company even though guaranteed by the government. Such bonds are looked upon as having a better marketable value notwithstanding the fact that in the other case there is the additional guarantee of the company issuing the bonds.


Robert Laird Borden: What is the reason of that ?


The MINISTER OF JUSTICE.: I do not know the reason of it. It seems to be a senseless condition, because you have not only the liability of the government, but the liability of the corporation as well. I am told that as a matter of fact a bond issued direct by the government has a better marketable value than a bond issued by a corporation that is endorsed by the government. The company have power to issue $20,000 per mile on the prairie section and $50,000 per mile on the mountain section. That exhausts the powers of the company in respect to the main line. In addition to that, what available assets have they ? They have $45,000,000 of capital, and what have they to do with this $45,000,000 ? They have to supplement any shortage which may occur in the construction of the road. If the bonds do not realize an amount sufficient to construct the road, then of course, they have nothing to fall back upon except this $45,000,000 of capital. Secondly, they have to equip this road in the first instance to the extent of $20,000,000. I understand that there is a difference of opinion between my hon. friends and myself in respect to the right of the company to lease the equipment. but perhaps we will have occasion to discuss that further on. In any event, according to the construction I put upon

the contract, the company have to equip the road to the extent of $20,000,000. In that connection you have to assume that the $20,000,000 of preferred stock realizes $20,000,000 of cash.


Robert Laird Borden: If it is subscribed for must it not ?


The MINISTER OF JUSTICE.: It may and it may not.


Robert Laird Borden: How can it be otherwise ?


The MINISTER OF JUSTICE.: It may and it may not.


Samuel Barker: The company do not sell a dollar of the stock. The stock is subscribed for.


The MINISTER OF JUSTICE.: Assuming for the purpose of my argument that they go on the market, and that the stock is subscribed and paid for in cash, you have your $20,000,000 exhausted in paying for the first equipment of the road. This contract provides that the equipment must be kept up to date as the road progresses, and as it continues to increase in its carrying capacity the equipment will not be sufficient. If you have to add anything to the equipment you must take it out of the common stock. Then you have to build terminals, telephone lines, telegraph lines, and buildings, and you must provide for these out of your $25,000,000 of common stock.


Adam Carr Bell: How does the lion. Minister of Justice argue that the Grand Trunk Pacific Railway Company have to supply terminals, and to build telegraph and telephone lines out of stock which is the property of the Grand Trunk Railway Company ?


The MINISTER OF JUSTICE.: The stock will become the property of the Grand Trunk Railway Company, and I am trying to argue that the Grand Trunk Railway Company must pay for this stock, because, when the Grand Trunk Pacific Railway Company dispose of it, they must get cash if they mean to do all these things. If my hon. friend will be patient and allow me to go on he will understand, I hope, eventually what I am trying to say. They have to build telegraph lines and telephone lines, and they have to provide terminals. Now, my hon. friend the leader of the opposition (Mr. Borden, Halifax) says that he does not know where these terminals are. They will have to provide terminals, for instance, on the Pacific ocean.


Robert Laird Borden: I mentioned that.


The MINISTER OF JUSTICE.: They will have to provide terminals at different points as they go on, for instance, at the different divisional points.


Mr. FOWLER.: They are not terminals.


The MINISTER OF JUSTICE.: They may not be terminals in the sense that my hon. friend: (Mr. Borden, Halifax) speaks of them, but they are terminals in the railway sense, because, I understand that amongst railway men the divisional points are called terminals. Then, they will have to provide terminals in Winnipeg. How are they going to provide these terminals ? In addition to that they have authority to build a thousand miles of branch lines. How are they going to do all that except out of their $25,000,000 of common stock ?


William Barton Northrup: I think if the hon. Minister of Justice will refer to clause 15, he will find how they will do it. Part of the cost of construction is for terminal facilities, and the government guarantee the bonds to the extent of 75 per cent, and the company guarantee them to the extent of 25 per cent. Terminal facilities are provided for in that way.


The MINISTER OF JUSTICE.: Does my hon. friend (Mr. Northrup) say that there is a provision for terminals in regard to the bond issue ?


William Barton Northrup: The hon. Minister of Justice was pointing out that the railway company would require a certain amount of money out of their stock to provide for terminal facilities. My answer to this is that this company undertake to build a railway, and if the hon. minister will look at clause 15 of the contract he will see what is meant by the expression ' cost of construction.' The cost of construction comes out of the bonds, 75 per cent of which are guaranteed by the government, and 25 per cent by the Grand Trunk Railway Company. The cost of construction shall include :
All the cost ot material, supplies, wages, services and transportation required for. or entering into, the construction of the said eastern division, and all expenditure for right-of-way and other lands required for the purposes of the railway and for terminal facilities, accommodation. works and damages and compensation for injuries to lands and for accidents and casualties.
Then, by clause 18, I find that:
The cost of construction of the western division shall include the like classes of expenditure as in the case of the construction of the eastern division.
So that the cost of construction includes the terminal facilities. When I look at clause 28, I find that:
For the purpose of aiding the company in the construction of the western division, the government shall guarantee payment of the principal and interest of an issue of bonds to be made by the company for a principal amount equal to 75 per centum of the cost of construction of the said division, as defined and ascertained in accordance with the provisions of paragraph eighteen hereof.
It is quite clear under the contract that the terminal facilities are provided for out

of borrowed money guaranteed by tbe government and by the Grand Trunk Railway Company. Therefore the hon. Minister of Justice is wide of the mark when he says that they must provide for it out of stock.


The MINISTER OF JUSTICE.: Would the hon. gentleman point out where the company get authority to issue bonds for terminal facilities ? How are they to be guaranteed ? Let us understand it.
Ml*. NORTHRUP. The question that my hon. friend asks goes to the root of how they would issue any bonds at all. The bonds that are issued are to cover the whole cost of construction.
]\lr. BORDEN (Halifax). Would my hon. friend (Mr. Northrup) allow me ? Clause 28, of the contract says :
For the purpose of aiding the company in the construction of the western division, the government shall guarantee payment of the principal and interest of an issue of bonds to be made by the company for a principal amount equal to seventy-five per centum of the cost of construction of the said division, as defined and ascertained in accordance with the provisions of paragraph eighteen hereof.


The MINISTER OF JUSTICE.: Where do the company get authority to Issue bonds for the construction of terminals ? How can the company issue bonds for that purpose that the government has to guarantee ?


Robert Laird Borden: The cost of construction is defined in paragraph 18, and then in paragraph 28 you have the provision :
The government shall guarantee payment of the principal anid interest of an issue of bonds to be madie by .the company for a principal amount equal to seventy-five per centum of the cost of construction of the said division, as defined and ascertained in accordance with the provisions of paragraph eighteen.
If you read into that, paragraph 18, which embodies paragraph 15, then you have clause 28 of the agreement, reading as follows :
For the purpose of aiding the company In the construction of the western division, the government shall guarantee payment of the principal and interest of an issue of bonds to be made by the company for a principal amount equal to seventy-five per centum of the cost of construction, which shall mean and include all the cost of materials, wages, services and transportation, and all expenditure for right of way and other lands, required for the purposes of the railway and for terminal facilities.


The MINISTER OF JUSTICE.: In addition to what I have referred, it would be necessary to equip a thousand miles of branch lines. They could not get the money for that out of the bonds, because the bonds they are authorized to issue in connection with the construction of branch lines are merely sufficient to construct the lines, whereas in addition to that you have to provide for the equipment. You can only Mr. NORTHRUP.
get the money for that out of this $25,000,000.


Samuel Barker: Does the Minister of Justice say that a telegraph line for that operation of the road would not be considered part of the construction ?


The MINISTER OF JUSTICE.: My hon. friend is perfectly aware that other telegraph and telephone lines are provided for.


Samuel Barker: That is not part of the contract.


The MINISTER OF JUSTICE.: There are all manner of things provided for by the charter, and they must get the money to do these things out of the $25,000,000.


Adam Carr Bell: Would the minister include In that the acquisition of steamship lines ?


The MINISTER OF JUSTICE.: Only partially. That would be provided for by a bond issue to the extent of the value of the steamers.


Adam Carr Bell: Where is the authority for that ?


The MINISTER OF JUSTICE.: In the charter.


Adam Carr Bell: Why should not that apply to the other works to which the minister has referred ?


The MINISTER OF JUSTICE.: Take the equipment of branch lines, and there is no other provision for that.


Edward Cochrane: Are they compelled to build branch lines under this contract ?


The MINISTER OF JUSTICE.: That depends upon what my hon. friend means. As a matter of business, I presume they would build branch lines in the North-west as feeders for the main line.


Edward Cochrane: One is a presumption and the other is a contract.


Robert Laird Borden: It does not seem to me that the Minister of Justice can hardly get away from the answer that has been made to him by my hon. friend from Hastings (Mr. Northrup). As far as the branch lines are concerned, you could pay for them


The MINISTER OF JUSTICE.: I am sure that my hon. friend wants to argue this thing out on its merits. If he looks at section 18 of the charter, not of the contract, he will find provision there with respect to the terminals, and that provision does not go very far.


Robert Laird Borden: I do not quite follow the argument of the Minister of Justice. that section 18 has much to do with this.


The MINISTER OF JUSTICE.: As respects the terminals it has.



U, 1903

Robert Laird Borden: I may see that later on, but I do not see it at present. Of course, the Minister of Justice would not make the statement unless he had some reason for it.


The MINISTER OE JUSTICE.: Section 18 makes provision for a bond issue with respect to terminals.


Robert Laird Borden: The argument of the Minister of Justice is that this $25,000,000 of stock must be paid for by the Grand Trunk Railway Company, because there is no provision outside of that for the cost of terminal facilities and branch lines. I have already pointed out, that the branch lines are not covered by the general mortgage, and that the cost of branch lines, to the extent of 75 per cent at least, would, I suppose, be paid for by independent mortgages, which would be effected upon them. My hon. friend cannot get very much consolation from his argument with regard to that. I was impressed to a certain extent by the argument of the hon. Minister of Justice until the hon. member for Hastings (Mr. Northrup) brought to the attention of the House the provisions of clauses 15 and 18, and it seems to me that these clauses take away from the Minister of Justice, absolutely, every shred of argument which he based upon the cost of terminal facilities. You have in clause 15, the distinct statement in so many words, that the cost of construction shall include terminal facilities. That is dealing with the eastern section, but then it is followed by clause 18, which says that the cost of construction of the western division shall include the like class of expenditure, and therefore without doubt the cost of construction of the western division does include the cost of terminal facilities. The next thing we have to examine is the bonding powers, and turning to clause 28 you find :
For the purpose of aiding the company in the construction of the western division, the government shall guarantee payment of the principal and interest of an Issue of bonds to be made by the company for a principal amount equal to 75 per centum of the cost of construction of the said divisions as defined and ascertained in accordance with the provision of paragraph IS.
Therefore, you have terminal facilities provided for to the extent of 75 per cent of the cost. If you turn to section 34, where the company is authorized to issue bonds to be guaranteed by the Grand Trunk Railway Company, you find the equivalent expression, and no lawyer would have any doubt as to the meaning of that.
Inasmuch as the bonds to be guaranteed by the government only make provision for a part of the cost of construction of the western division ; the company hereby agrees that the Grand Trunk Railway Company of Canada shall guarantee bonds of the company for the balance required for the construction of the said western division, exclusive of the said $20,000,000 required for first equipment.
Therefore, taking paragraphs 15, 18, 28 and 34, you have it abundantly stated, that the bond issue of the company will provide the entire cost of construction, Including the terminal facilities upon which the Minister of Justice has based his argument. At present I cannot see any answer to that. If the Minister of Justice can suggest that there is any fallacy in my reasoning with regard to this, or that I have overlooked any provision of the contract, I shall be very glad to be corrected. In view of the four clauses to which I have called attention, it does not seem to me that there can be the slightest doubt as to the accuracy of what I have stated.


George William Fowler: While the Minister of Justice has stated the law correctly, yet, wheu it comes to a question of facts," he betrayed a lack of knowledge of the contract, and that lack of knowledge was characteristic of all the ministers who have spoken upon the subject. The amendment of the hon. member for Hamilton is to provide that proper value shall be given for $25,000,000 of common stock which is to be banded by the Grand Trunk Pacific (one part of the red-headed boy) to the Grand Trunk Railway (the other complement of the red-headed boy). The hon member (Mr. Barker) has moved his amendment for the purpose of ensuring that this railway project shall not be so loaded up with improper expenditure as to unduly increase the freight rates upon that road. In this connection we might have expected to have heard something from those redoubtable champions of the people's rights from the western country-the hon. member for Western Assiniboia (Mr. Scott), the hon. member for Eastern Assiniboia (Mr. Douglas), and the hon. member for Alberta (Mr. Oliver). These three gentlemen are very strenuous in their criticism of the Canadian Pacific Railway for its excessive freight rates, which they contend are due altogether to the too large, from their point of view, capitalization of that railway. Yet here we have $25,000,000 of common stock which may be given for a nominal consideration. We have the statement of the right hon. the Premier to that effect. We have had the statement of the Minister of Justice just now that this common stock will be given for its market value at the time, and that market value may be very small; it may be only five cents on the dollar ; and yet, in fixing the freight rates, it is fair to take into consideration the total amount of the capitalization of the company. In that way the company may be permitted to charge such rates as will give them a dividend on $25,000,000 of stock, which may not have brought more than $2,500,000 in the market. That is what we want to guard against. The hon. Minister of Justice said that the amount paid for the stock should be equivalent to cash. Well, that is true ; but who is to fix the value of the thing given ? Un-

der the contract, the stock may be given for rights, privileges and powers granted by the Grand Trunk to the Grand Trunk Pacific. As has been pointed out, these words are broad enough to include the assistance which the Grand Trunk gives in floating, the bonds of the Grand Trunk Pacific ; and who is to fix the value of the credit which the Grand Trunk gives to the Grand Trunk Pacific Company ? There is the whole point; you have no two corporations, but you have oue corporation dealing with itself. That is the danger which we have to guard against. It is a danger which has never occurred in connection with any other contract of any other railway charter ; because there has been no other case in the same circumstances as this, where you are dealing with two parties who are really one party. It seems to me that is the crux of the whole thing. In the interest of the people who are to be accommodated by this road, it is absolutely necessary to guard against that possibility; and the only way we can guard against it is by providing that this stock shall not be given at its market value, but that its equivalent shall be paid in cash at che par value. The bon. Minister of Justice challenged the hon. member for East Hastings (Mr. Northrup) to show where there was any authority given to issue bonds at all. If the hon. gentleman will read clauses 29, 30 and 31 of the contract, he will see full provision there made for the issue of these bonds, their denominations, and the rate of interest they shall bear. It seems to me, as I said before, that all those gentlemen from the west who have been finding so much fault'with the excessive rates charged on the Canadian Pacific Railway, should be with us in championing the cause of the people on this occasion. Only a day or two ago the hon. member for West Assiniboia (Mr. Scott), in a letter to the Toronto ' News,' said :
A total debt of $10,-184,653 was placed upon 550 miles of road, whose total cost was only $6,283,162, leaving the settlers to pay rates to meet six per cent Interest upon an excess sum of $4,201,491 which did not go into the roads at all. The necessary freight rates under the conditions imposed simply drove settlers out of the country.
Now, history often repeats itself, and it may be so in this case if the hon. gentlemen does not rise in his place and endeavour to prevent the government doing the very thing that was done before. If it applied in the case of the railway which the hon. gentlemen was then referring to, surely it will apply to the railway projected by the Bill before the House. Therefore, I am surprised that we have not heard from the hon. member for West Assiniboia in respect to this matter.


The MINISTER OF JUSTICE.: My hon. friend's fear is that this stock, issued at a low figure, and falling into the hands of Mr. FOWLER.
the public, will afterwards be taken into account when the question of freight rates will be considered. My hon. friend has overlooked the fact that the $25,000,000 of common stock under the contract is to pass Into the hands of the Grand Trunk Company, and will not be dealt with on the same principle as it would be if it had passed into the hands of the general public. That company will have to take this stock and hold it, which would not be the case with the general public.


George William Fowler: Does the hon. minister suppose that that stock shall be held perpetually in the hands of the Grand Trunk Company without dividends ? What is the object of having the stock If it is mere waste paper ? It is only valuable for its dividend-earning powers. You might just as well have so much waste paper unless it is going to earn a dividend. What possible advantage would there be in, the Grand Trunk Railway Company taking this $25,000,000 of stock unless it were going to have some dividend-earning power ? It is immaterial whether it is in the strong-box of the Grand Trunk Company or in the hands of the individuals ; it is bound to be taken into consideration by a commission considering the question of freight rates. They would take into consideration the amount of bonds on the road, the amount of interest, the amount of the common stock, and on all that they would base their decision on the question whether the rates were undue or not. In what other way could they arrive at a decision ? The company would claim that the whole amount of the stock should be considered, particularly as the Grand Trunk Railway Company might say :	We gave par value for
this stock ; we gave it, of course, in the way of privileges and rights and powers ; but it was par value. There is no way of preventing that, even if those rights and privileges were not worth five cents on the dollar. Who is to tell what their value is except the Grand Trunk Railway Company themselves ? And, as has been pointed out, that company is really the Grand Trunk Pacific Company. Who is to establish the value but the Grand Trunk Railway itself, which Is really the Grand Trunk Pacific Railway ?


The MINISTER OF FINANCE.: On the question of freight rates, the difference between this and previous contracts for building railways in that western country is very wide and important. The difference is so important that the people in that western country, who are interested, must see it at a glance. In the Canadian Pacific Railway contract there is a condition that there can be no interference with freight rates until 10 per cent is earned on the capital stock. In this contract there is no such provision. The whole question of I freight rates, east and west, will be under

the direction of the Railway Committee of the Privy Council or the railway commission to be constituted. That is the vital distinction. In the case of the Canadian Pacific Railway, no matter what the conditions may be, this parliament cannot interfere, until such a time as 10 per cent is earned on the capital stock, with the freight rates at all, without committing a great breach of faith. But in the case of this company, there is no such provision. The only condition regulating freight rates is the general law regarding railway companies, and that is of such a vital, important difference that it must impress itself at once on the public mind.


James Clancy: That does not cover the question that my hon. friend from King's has brought up concerning the bond issue.


The MINISTER OP FINANCE.: I was just coming to that. If this stock were in the position of the ordinary stock of a railway company, if it could be placed on the market say at ten cents on the dollar, or put into the hands of first promoters at that rate, and that ten cents was alii that entered the treasury, and if, after the lapse of years, it went into the hands of innocent third parties, who paid a hundred cents on the dollar for it, these parties could come forward, when the question of adjusting the rates was brought up, and say with much force : We are entitled to a fair return on our investment of 100 cents on the dollar. There would be much force In that plea ; because, although ten cents only went into the treasury originally, the subsequent purchasers paid 100 cents, and would claim to be entitled to a dividend on the amount they paid. But we are protecting the people against any such condition, because we are refusing the company the power to put a dollar's worth of that stock on the market and sell it to any one. It is not negotiable, it cannot go on the stock market, it cannot be the subject of speculation ; no innocent third party will be able to come and say : I paid in good faith 100 cents in the dollar for that stock and am entitled to get a dividend on what I paid. We have stipulated that the stock cannot be put on the market, but must remain in the hands of the Grand Trunk Railway during the term of this lease.


James Clancy: Is the road not supposed to earn a dividend on that stock while it is in the hands of the Grand Trunk Railway ?


The MINISTER OF FINANCE.: Probably it will. We hope it will. I am glad to see that my hon. friend is taking a more hopeful view of it. We have so much faith in the enterprise that we believe that It will earn a good deal of money, and I am glad my hon. friend takes that view.


James Clancy: And would that stock not be entitled to be taken into account just as if it were held by a third person ?


The MINISTER OF FINANCE.: Exactly; but there is this difference, that if it were sold to third parties, these parties could justly claim that the price they paid should be considered when the freight rates were being regulated, and that the freight rates should be regulated so as to give them a return on what they paid, and not merely give a return on what the original holders of the stock paid for it. But in this case the stock must remain in the hands of the Grand Trunk Railway ; and when it becomes necessary to regulate freight rates, the railway commission will take into account, not the nominal value of the stock, but the amount which the Grand Trunk Railway put into the road in return for that stock. The stock will remain in the treasury during the term of this lease at whatever value the Grand Trunk Railway put into it. and the Grand Trunk Railway will be obliged to show the railway commission exactly what value they gave, and that only will be taken into consideration in adjusting the freight rates.


George William Fowler: That would be an excellent reason for adopting the amendment. I think that the difficulty is that there is no way of fixing the value given by the company.


The AIINISTER OF FINANCE.: The railway commission can fix it.


George William Fowler: When the stock is wvn-tk 10 cents, or 15 cents, or 20 cents in the dollar ?


The AIINISTER OF FINANCE.: Whenever it is necessary.


George William Fowler: If you would adopt this amendment you would fix it at once. I see that the Prime Minister laughs at that, but we would fix it at once at 100 cents in the dollar.


The PRIAIE MINISTER.: And suppose the Grand Trunk,1 Railway only put in value to the extent of 50 cents on the dollar, what then ?


George William Fowler: The difficulty is this, that the Grand Trunk Pacific Railway may put a fictitious value upon the stock they give the Grand Trunk Railway, and I have here a provision to ensure that 100 cents on the dollar will be given for it.


The PRIAIE MINISTER.: If the hon. gentleman's object is to have no fictitious value, he should oppose this amendment. By the amendment you are giving that stock a value of 100 cents on the dollar, but nobody supposes that when it is issued it will be worth anything near that. No doubt its value will increase in time, but when issued its only value will be the confidence which the enterprise inspires in the market. If we were to allow the stock to be put on the public market, the value would be fixed by what the public would

be willing to pay for it, and that would be determined by the confidence which _ the investing public might have in the project. But we are providing that the stock must remain in the hands of the Grand Trunk Railway, and we are doing this in order to protect the public. So long as this lease lasts, this capital stock must remain in the hands of the Grand Trunk Railway ; and in any adjustments of freight l'ates, they will only be entitled to .such rates as will pay a dividend on the actual money put into the enterprise in exchange for the stock. By the amendment my hon. friefid wants that matter to be determined at once at 100 cents on the dollar, but it might be much less. My hon. friend from Hamilton, who has presented his views with that logic which always characterizes bis utterances, says that the two companies are one, and that the stock is to be taken by the Grand Trunk Railway ; and he asked, How is the value to be determined between them ? Well, the value is to be determined by the needs of the Grand Trunk Pacific Railway. The Grand Trunk Pacific Railway will require money to carry on its enterprise. If it needs the whole $25,000,000, the amount of this capital stock at par, it will have to get it, and it can only get it front the Grand Trunk Railway. In such a case, the value of the stock will be its par value, because that will be the amount which the Grand Trunk Pacific Railway requires in return for its stock and which the Grand Trunk Railway will have to pay. The value of the stock will be fixed by the needs of the company, and cannot be fixed in any other way.


Adam Carr Bell: Has the Grand Trunk Pacific Railway not also the right to issue preference stock and bonds ?


The PRIME MINISTER.: Yes, but the Grand Trunk Railway has to guarantee this issue of stock and bond and carry on this enterprise, the cost of which has been estimated by hon. gentlemen opposite much higher than I think it will be. Between the bonds and the stock, I dlo not think the Grand Trunk Pacific Railway have inordinate power. But suppose they have, the Grand Trunk Pacific Railway will have to issue that stock to the Grand Trunk Railway. The Grand Trunk Company has no interest in paying more for that stock than they must. If they can get it at 5 cents on the dollar they will try to do so. Suppose that the Grand Trunk Pacific Railway only want $5,000,000, the value of that stock would be 20 cents on the dollar. And if the Grand Trunk advanced $5,000,000, as pointed out by the Minister of Finance, that will be the whole charge on the public with respect to that part of the common stock. Before the commission, in the fixing of rates, it will be shown that the Grand Trunk Company paid only $5,000,000, and it will be insisted that they should not draw Sir WILFRID LAURIER.
dividends on more than that sum. What is the policy of my hon. friend (Mr, Barker) ? He wants the enterprise to be loaded at once with $25,000,000, and the amount to go into the treasury of the Grand Trunk Pacific, so that, for all time, the settlers in the North-west will have to pay rates which will yield interest on this $25,000,000. It is hardly to be wondiered at that hon. gentlemen on this side who are interested in the people of the North-west object to such a proposal.


George William Fowler: I am surprised at the argument of the hon. Prime Minister. He assumes to say that my desire is that this $25,000,000 shall be made a charge upon the enterprise, whether necessary or not. What could be more absured than a statement of that kind ? If the Grand Trunk Pacific get from the Grand Trunk $25,000,000 for, this common stock, it would not be necessary for them to issue so large an amount of bonds as if they received less for their stock. What is proposed here would not impose a greater burden, but a much less burden upon the people who have to pay freight rates on this road.


The PRIME MINISTER.: The hon. gentleman assumes that the stock is worth 100 cents on the dollar when it is issued, yet he knows that that is absurd.


George William Fowler: It can be made worth that. If the law provides that it shall be issued at par, it must be issued at par. And, if you wish to prevent collusion between the two joints of this double-jointed company, the way to do it is to adopt the amendment proposed by the hon. member for Hamilton. As to the cost of construction, sections 28 and 34 clearly show that terminal facilities and all these things are covered by the term ' cost of construction.' That would include the branch lines as well as the western division, because, as has been pointed out, they are not obliged to build one of these branch lines, if they did, it is covered by the words ' cost of construction.' And it is provided for, as the bonds are guaranteed by the government to the extent of seventy-five per cent and the rest by the company, and that is covered by the mortgage. Then you have $20,000,000 of preference stock to cover the cost of equipment. I do not understand' why the government should object to accepting this amendment, unless from pride. They may think they have a perfect contract, and may have made up their minds that it shall not be amended. It seems to me that parliament ought to try to make this as perfect a Bill as possible. Such pride on the part of the government would not be proper pride. On other occasions they have benefited by suggestions of the members of the opposition, and have not been above accepting those suggestions. Therefore, I would urge upon the right hon. Prime Minister that he would accept the reasonable and very proper am-

eudment of the hon. member for Hamilton.


Robert Laird Borden: It seems to me that if we had a very pronounced difference of opinion before between the Minister of Justice and the Prime Minister, we have that difference emphasized now. I understood the Minister of Justice to argue that this $25,000,000 was to be paid for in cash or the equivalent of cash. But, the Prime Minister says that would be a most deplorable condition of affairs for it would load the company with a debt of $25,000,000, but that, if the Grand Trunk should acquire this stock at 20 cents on the dollar it would load the enterprise with a debt of only $5,000,000.


The MINISTER OP JUSTICE.: Does the hon. gentleman (Mr. Borden, Halifax) remember drawing my attention to the words ' due regard being had to the then market value of the stock.'


Robert Laird Borden: I do. I brought that to the hon. gentleman's attention, and may do so again before I get through. Are we to take the view of the Prime Minister or the view of the Minister of Justice ?


The PRIME MINISTER.: There is no difference.


Robert Laird Borden: When the hon. Prime Minister says there is no difference, that is the most remarkable statement that has been made this afternoon. The Minister of Justice has been convincing us-or rather, endeavouring to convince us, for I cannot say he has succeeded very well- that, from the very nature of things, the whole of this $25,000,000 must be paid by the Grand Trunk Railway Company in cash, or the equivalent in cash.


The PRIME MINISTER.: No, no.


Robert Laird Borden: If that is not the hon. gentleman's statement, I do not understand the English language.


The PRIME MINISTER.: Within the last half hour the hon. gentleman (Hon. Mr. Fitzpatrick) stated directly that it was to be paid for in cash or the equivalent of cash, so far as was covered by the market value-not beyond that.


Robert Laird Borden: The Minister of Justice called attention to the fact that it was necessary for this company to construct terminal facilities and branch lines, and said, as distinctly as the English language would enable him to say it, that this fact made it necessary for this company to pay, either in cash or the equivalent of cash, the whole $25,000,000. He said that or he said nothing, and the hon. gentleman never rises in this House without saying something. I pointed out, at the time, that this was diametrically opposed to what the right hon. gentleman (Rt. Hon. Sir Wilfrid I.aur-ler) had stated when the Grand Trunk Pacific Railway Company's charter was going
through the House. And the right hon. gentleman did not rise to make any correction. And now he has risen to say exactly what he said before, and to confuse two things which are absolutely and diametrically different ; namely, the market value of stack after it has been issued and the subscription rate of stock before it is put on the market at all. Surely, my hon. friend, on a moment's considerate n, will understand. For instance, the right hon. gentleman may to-morrow subscribe for stock on which he will pay 100 cents on the dollar, but. if he xiuts it on the market afterwards, it may not realize, at open sale, more than ten cents on the dollar. The two things are absolutely distinct and separate. The man who subscribes for stock in any joint stock corporation, in the absence of legislation to the contrary, must pay one hundred cents on the dollar for that stock, and the next day, if he attemps to sell the stock in the market, it may not be worth ten cents on the dollar. He subscribes and pays one hundred cents on the dollar because he has faith in the ultimate success of that enterprise, and he puts his money at risk by so subscribing. My hon. friend says it is a question of the Grand Trunk Company buying this stock. It is not a question of the Grand Trunk Company buying this stock, it is a question of the Grand Trunk Company subscribing for this stock, no one else is entitled to subscribe for it. In the absence of legislation to the contrary, the Grand Trunk Company must pay one hundred cents on the dollar for that stock. There is legislation to the contrary contained in clause 11 of the company's charter, and it is to meet the difficulty arising in connection with that, that my hon. friend from Hamilton has put this motion before the Committee. What possible reason is there for the Grand Trunk Railway Company, being to all intents and purposes the same thing, as the Minister of Finance has admitted, as the Grand Trunk Pacific Railway Company-what possible reason is there that the Grand Trunk Company should have the right to subscribe for what is practically its own stock at twenty-five cents or ten cents on the dollar ? My right hon friend seems to think it is all right ; he seems to think it would be a calamity if the Grand Trunk Company should be obliged to pay $25,000,000 in value for $25,000,000 in stock. The Minister of Justice has referred to the words ' market value of the stock,' which are contained in clause 11 of the Grand Trunk Pacific Railway Company's charter. It is for the very reason that these words are contained in that clause that my hon. friend from Hamilton has made his motion. Surely my right hon. friend has comprehended the argument to that extent. Here you have in clause 11 a provision by which the Grand Trunk Company can get this stock, not for cash but for something else than cash, and the value of that something else is to be

determined, not between two independent parties, but by two corporations which are to all intents and purposes, it is admitted, one corporation. There is no independent contract here, my bon. friend the Minister of Finance has stated that, my right hon. friend himself has stated that, there is no independent bargaining, which might be some safeguard to the public in ordinary cases. There is, as the Minister of Finance has said, using the apt expression which he appropriated-there is the same red-headed boy


The MINISTER OF FINANCE.: That was not my expression.


Robert Laird Borden: My hon. friend adopted it with the utmost approval.


The MINISTER OF FINANCE.: But I do not want to be credited with its origin.


Robert Laird Borden: He did not originate it, but he thought it was so good that he adopted it and used it, and I am following his example now. Here is the same red-headed boy on the one hand and on the other. This red-headed boy with one hand is fixing the value of the stock,, and with the other hand he is accepting the value of the stock so fixed. It is for that very reason that my hon. friend has brought this amendment to the attention of the House. Surely my right hon. friend will not persevere in his suggestion that it would be a calamity for this country and to these two corporations that the Grand Trunk Company should pay par value for the $25,000,000 of stock it is to receive. It imposes a burden upon the company ? I do not follow the right hon. gentleman in that suggestion at all. If the Grand Trunk Company pays par value for this stock and puts $25,000,000 into the enterprise, presumably it will be used wisely and prudently for the purposes of the company; and the people of this country, when they have to pay dividends on that in freight rates afterwards, will know that that money has gone into the purposes of the railway and that they have received some advantages in railway facilities, in terminal facilities, in something for the money upon which they are required to pay dividends. I suggest again to my hon. friend that when he takes the ground that it is a question of sale and not a question of subscription, he is not adhering to the usual condition of things, or to the terms of this contract itself. This stock is never to become the property of any other person, for a term of fifty years at least, than the Grand Trunk Company itself. My hon. friend the Minister of Finance savs that it can never be parted with by the Grand Trunk Company, and he bases an argument upon that. He is not correct in that, because after


The MINISTER OF FINANCE.: I said during the fifty years.


Robert Laird Borden: Well, my hon. friend intended that, I do not think he made Mr. BORDEN (Halifax).
it quite so plain as he thought, in the hurry of speaking. For a period of fifty years it is to be held by the Grand Trunk Company, but after that it can go into the hands of the public. This after all is not a question of sale in the market, it is a question of subscription by the Grand Trunk Company for this stock, but with this qualification which the right hon. gentleman uses for a purpose that is absolutely opposed to the real bearing. He says because you have the words ' market value ' here, that makes it a sale. That does not make it a sale, but it fixes the standard by means of which the Grand Trunk may subscribe for that stock. The Grand Trunk can pay less than the par value. That is the true significance of these words in section 11 of the clause, and that is the significance that we complain of, and it is for that reason that my hon. friend from Hamilton in submitting to the committee an amendment by which the Grand Trunk Company shall be obliged, if it acquires $25,000,000 of capital stock in this company, to pay $25,000,000 in cash for that stock so subscribed, in order that that sum of money may go into this enterprise for the purpose of affording to the people of this country the railway facilities which they are entitled to demand under an enterprise of so great moment as that which we are considering.


William Barton Northrup: I think that my leader, while doing full justice to the care which has been shown in the interest of the Grand Trunk Railway, has failed to do perfect justice to the astuteness with which the gentlemen who drew up the Bill have provided that the Grand Trunk Pacific must of necessity be squeezed by the Grand Trunk. We have heard a great deal about the market value of the stock, and no person can have listened to the discussion without feeling that the government side regard as one of the great safeguards which is relied upon, this felicitous expression, ' the market value of the stock.' I assume that the hon. gentlemen are sincere, and so for a moment I will asa. you to consider what precautions they have taken to secure that there shall not be any market value to the stock. If there was any amount of that stock that could be put on the market, then of course there Is a way of ascertaining the market value. But if you carefully provide that only $25,000,000 of stock is to be issued, and that the whole is to be taken up by one corporation, can anybody with the wildest imagination even suggest how the market value could be ascertained for such stock as that ? Now. the Premier, speaking of stocks generally, said with perfect accuracy that the value of stock is fixed by the public. We quite understand that. If stock is put on the market as all ordinary stocks are, its value depends on the confidence the public has in the enterprise, and the public displays its confidence by buying and selling that stock in the market. But how can you



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take the money value of stock that you forbid to be put on the market, that you compel one company to hand over to another company by the very terms of the enactment ? It is an abuse of language, it seems like an attempt to throw dust in the eyes of the public, whin you compel the Grand Trunk Pacific to hand over the stock to the Grand Trunk, every dollar of it, and not only to be handrj over, but actually to be held by them fci the term of fifty years. I think the Premier will hardly say that it is possible that any market value could be fixed on stock handled in that way. But the right hon. gentleman was good enough to explain how he thought the value of the stock would be fixed. He said the value of this stock would he fixed by the need of the Grand Trunk Pacific. I entirely agree with him in that. Let us see what it means. The value of this stock, $25,000,000 worth, is to be fixed by the needs of the Grand Trunk Pacific ; therefore the less the Grand Trunk Pacific could get for that stock the greater will be its need ; the more they get the better off they will be. If the Grand Trunk Pacific Railway Company have a certain amount of stock and that is of any value to them, it is to the interest of the Grand Trunk Railway Compauv that the need of the Grand Trunk Pacific Railway Company shall be as great as possible because the greater the need of the Grand Trunk Pacific Railway Company the less will be the value of the stock, so that the moment the needs of the Grand Trunk Pacific Railway Company are increased down goes the value of the stock.
The PRIME MINISTER.: Therefore, the more they will have to pay.


William Barton Northrup: No, I am going to show that the line taken by the hon. member for King's, N.B. (Mr. Fowler) is the accurate line there. If the Grand Trunk Pacific Railway Company need a certain amount of money, they have either to borrow it or to sell the stock, and if they sell the stock for $25,000,000, then they would only have to borrow $25,000,000 less than if they gave the stock to the Grand Trunk Railway Company for nothing. They only require so much money, and they can only get it from one of two sources-capital or borrowed money. The more they raise from their capital the less they will have to borrow, and the less they raise from their capital the more they will have to borrow. If the stock is handed over to the Grand Trunk Railway Company for nothing or for a nominal figure, the more they will have to borrow. What will be the position then ? The hon. Minister of Finance says that the railway commissioners will take into consideration the value of this stock in fixing freight rates. I wonder if the hon. Minister of Finance really wishes the country to understand that with all the ability, skill and experience he possesses the best he can
suggest in the interest of the tax-payer and in the interest of the Grand Trunk Pacific Railway Company is that, should they give the stock away, the commissioners will by and by keep down the rates so that the company will not be able to make any more than would pay dividends on the market value of the stock ? Surely, it would be expected, in the interest of the people who have to pay the taxes, that the hon. minister should see that this $25,000,000 is paid for at a hundred cents on the dollar, and that less money should be borrowed than if they had only obtained five or ten cents per share. Yet, he trusts to luck, despite all the ability and ingenuity that railway companies can exercise to get as much as possible out of the country, that the commissioners will be able to draw the line so finely between what the stock should be assessed at and what it has really been sold for that they can control rates in such a way as to ensure the condition that the people will not have to pay any more than is necessary to pay fair dividends on the stock. If this stock was handed over to the Grand Trunk Railway Company in consideration of giving a guarantee of $20,000,000 or $30,000,000, or whatever it may be, of the bonds, how are the commissioners to determine what the value of the stock was ? The two corporations would agree that the services rendered by the Grand Trunk Railway Company to the Grand Trunk Pacific Railway Company were worth $25,000,000, and so this stock would be offered in full settlement of those services. How could the commissioners simply allow rates to be charged sufficient to pay dividends on what had been paid for this stock when both corporations agreed that the services rendered were worth $25,000,000 ?


The MINISTER OF FINANCE.: I am afraid that at the risk of being unable to satisfy the hon. gentleman I will be obliged to repeat my argument and go a point further. Reference has been made to the public interest, but I must frankly confess that I failed to see where there is any public interest involved in this matter, save and except as touching freight rates of which I have spoken. This is a matter between the two joints of one company, if I may be allowed to put it in that way. I maintain that we are not at all concerned as to what these two companies do in reference to that. If it were stock that was to be placed on the market and sold, I could at once recognize that we would have a great deal of interest in it. If this stock were to be put upon the market and taken over by the Grand Trunk Railway Company-I will take the figures of my hon. friend the leader of the opposition for illustration-at 25 cents on the dollar, and in later years it passed into the hands of other people at 100 cents on the dollar, if the question of freight

rates comes to be adjusted at any time, and it becomes a question whether we are to have such freight rates as will earn a fair dividend on the 100 cents that the present holder paid or on the 25 cents that originally went into the treasury there certainly is much to be said in favour of the man who purchased the stock and who says : * I paid 100 cents on the dollar for it. 1 cannot help what was done five or ten years ago. I paid dollar for dollar for this stock, and I expect that the freight rates shall be adjusted accordingly.' But, we have prevented that in this case. Some of the Canadian Pacific Railway stock was put on the market at 25 cents on the dollar. To-day it is worth 100 and more. I do not know what the market quotation is to-day. If we were not subject to that 10 per cent clause, if that clause were repealed, and if we were dealing with the general operation of the Railway Act on a question of freight rates, there would be much free in the argument of the man who comes forward and says : ' I cannot help how much the stock went for originally. I paid $120 for the stock, and I am entitled to such rates as will give me a fair dividend om $120.' In that he would present a fairly debatable case. But, that condition cannot arise in this case. Now, let us take these two companies, or to use the illustration which has been used, the two sides of the same redheaded boy and I think that the strength of this enterprise is to be found in the fact that the Grand Trunk Railway Company are not only behind it, but that they are in it and of it. If the Grand Trunk Railway Company take over this new stock at 25 cents on the dollar, they cannot sell it to anybody at 26 cents on the dollar the next day, and they cannot sell it later on for 100 cents on the dollar. It must stay in the treasury of the Grand Trunk Railway Company, and if a question arises as to freight rates, the Grand Trunk Pacific Railway Company would be called upotn to show, mot what is the nominal value upon to show not what is the nominal value of the stock, not what somebody else has paid for the stock, but how much money or the equivalent of money was given by the Grand Trunk Railway Company originally for the stock. How then will the public have any earthly interest in the matter ? When that question arises it will not be trusting to luck. It will be trusting to the recognized tribunal established for the purpose of controlling railway rates, and when there is a case for consideration it will be for the Grand Trunk Railway Company to show that they paid a fair value either in money or the equivalent of money for the stock at that time, when it passed into their hands.


Samuel Barker: Surely the lion. Minister of Finance must see how utterly impossible it would be for the railway commissioners Hon. Mr. FIELDING.
five or ten years hence to form any judgment whatever as to the actual value given for the stock ? Here are two companies identically the same sitting down together as we have so often pointed out, and agreeing upon the value of certain rights and privileges and powers between one company and the other. Here we have these two companies agreeing according to this 11th section, upon the actual market value, an absolutely unknown quantity, of the stock, and saying that the stock and these privileges are equivalent to each other. Is it possible for any man in the world to point out any error in the contract made between the two parties ? The hon. gentleman knows it would be absolutely impossible, but whoever drew this contract has taken very good care that even that small protection shall be done away with. Let us see what the clause says :
The directors of the company elected by the shareholders may make and issue as paid up stock.
What does that mean ? The hon. gentleman knows that there will be $100,000 of this stock issued for the purpose of directors qualification, and beyond question 100 cents on the dollar will be paid in cash for that. Does the hon. gentleman suppose that the company can pay a different dividend on one part of this stock from what they pay on the other, when the statute under which they are created says the whole of it is paid-up stock '! Not only is it paid-up stock, but
The said issue and allotment of stock shall be binding ion thie company.
You provide here that the company shall not be permitted to depart from dealing with their stock as paid-up stock. You will have $100,000 of this stock paid in cash, and the balance of $24,900,000 is paid for by a dicker between the two companies; a dicker that no one can estimate hereafter. And yet, you say that the railway commission can determine that when they are fixing rates. The hon. gentleman must have started on that argument without reading the section.


George William Fowler: I understood the Minister of Justice to say that the terminal facilities were not covered by these bonds.


The MINISTER OF JUSTICE.: I drew the attention of the leader of the opposition to section 18 of the charter, and I said it was the section that had reference to the bonds with respect to terminals.


George William Fowler: I understood the Minister of Justice to challenge the member for Hastings to point out where there was any provision in the charter that bonds might be issued to eover the terminal facilities, and I also understood him to say that the $25,000.000 of common stock had to be taken in connection with the preference stock for the purpose of paying for these terminal facilities.


The MINISTER OF JUSTICE.: Not in connection with the preference stock; but it had to be taken into consideration in 'connection with the terminals, as in connection also with the construction of telegraph and telephone lines and other things of that character. My contention is, that the bond issue will not be sufficient for the construction of the main line, or the terminals, or the branch lines, and far from offering any challenge, I merely drew the attention of the leader of the opposition to section 18, as mv hon. tnend will see if he looks at ' Hansard.


George William Fowler: I understood the minister to draw a distinction between the railway and the terminals.


The MINISTER OF JUSTICE.: Yes.


George William Fowler: And to say that the terminals are not a part of the railway.


The MINISTER OF JUSTICE.: Of course they are a part of the railroad.


George William Fowler: Then I cannot understand what the Minister of Justice means.


The MINISTER OF JUSTICE.: There is a bond issue and a certain portion of it will be guaranteed by the government and a certain portion by the Grand Trunk Company. I contend that the boind issue will not be sufficient for the construction of the terminals, or of the branch lines or of the main line, but that it will be necessary in addition to the bond issue to have the proceeds of this common stock to build the terminals.


George William Fowler: Do I understand the minister to say that these bonds will not realize enough to build the road.


The MINISTER OF JUSTICE.: It is ray opinion that the second issue guaranteed by the Grand Trunk will not realize par.


George William Fowler: What does the hon. minister think they will realize ?


The MINISTER OF JUSTICE.: I would not care to figure that out.
Mr. CLANCY'. I understood the Minister of Finance to say that the public were ini no sense concerned, except in so far as this contract affected freight rates.


The MINISTER OF FINANCE.: I did not see where the public interest was concerned in this particular matter, except as to freight rates.


James Clancy: The supporters of the government laid great stress on the fact that the Grand Trunk in taking this $25,000,000 of common stock, added to the security that the country held for the carrying out of this work. If that be true, then the country is concerned both as to freight rates and as to the security we hold. But if the Prime Minister is right, that the Grand Trunk may acquire this stock for five cents on the
dollar, that security absolutely vanishes. If there was no guarantee of bonds I could understand that the public could not be concerned, but when we are taking this $25,000,000 of common stock as security, for which the Grand Trunk may pay only five cents on the dollar, then the country is deeply concerned. We are told that the Grand Trunk Railway Company was to take $25,000,000 of this stock and that that was to-be a security


The MINISTER OF FINANCE.: If my hon. friend means that I said, or that an'v one else said, that the Grand Trunk would put up $25,000,000 in cash in return for this common stock, he is mistaken. I said nothing of the kind.


James Clancy: Where is the security that the Grand Trunk Railway gives if they do not put up the money, when" we are guaranteeing the bonds of the Grand Trunk Pacific?


The MINISTER OF FINANCE.: My hon. friend (Mr. Clancy) is wrong. We are not guaranteeing them in the sense in which he uses the word. We are only guaranteeing a portion and they must from their various resources, of which this is one, obtain the balance to carry out this great undertaking.
I have never said that the $25,000,000 of common stock is in itself, apart from other things, a very great security. But it is worth something in connection with the other tilings which the Grand Trunk has to give as guarantee. The Grand Trunk and its associates, as promoters, have to provide a large sum for rolling stock, and other things. I did not for a moment stop to consider how much in actual cash or equivalent to cash this common stock will bring, but in any observations that I have made, I have never looked upon it as being in itself a security to the value of $25,000000 in cash.


Mr. GOURLEY.: I want to say one word with reference to what the hon. Finance Minister has said. I followed his first speech endeavouring to ascertain what position the Grand Trunk Company would occupy towards the public with reference to the $25,000,000 of stock. The hon gentleman said that if the Grand Trunk Company did not pay the full value for that stock, in the adjustment of rates afterwards, they would not be permitted to rank as creditors who had paid full value for it. I recognize the justness of that ; but the Finance Minister did not fully state this matter.
I undertake to say that the old Grand Trunk Company can get that $25,000,000 of stock, and rank as! having full value for it under the terms of this contract. If it is desirable to prevent them, language must be introduced into this contract different from what exists in it now. I understood from the Finance Minister that it was desirable that they should not be allowed to rank as creditors who had paid one hundred cents on the



dollar for the $25,000,000 of stock, unless they actually had contributed that amount to the Grand Trunk Pacific. The Grand Trunk Pacific and the old Grand Trunk are two railway coi-porations, clear and distinct in their transactions. They have the best of counsel, and when they sit down to do business, they will do it in a thorough manner that will hold water against a railway commission or anybody else. The hon. member for Hamilton has stated this matter in a way that commands my utter acquies-1 cenoe as a business man and a lawyer-that if you want the Grand Trunk Company to get no undue advantage from this $25,000,000 of stock, you must make them pay full value for it. In the 11th section of the Grand Trunk Pacific charter, there is very-ingenious language, which I have no doubt was put there by railroad lawyers, who understood this thing a great deal better than the Finance Minister or myself or perhaps anybody else in this House ; possibly better than the Minister of Justice, who has perhaps not had a wide experience in railway promotion and railway law. I undertake to say that there are railway lawyers in this country who can frame clauses which will deceive us all, of which we will never know the full import until we get before a court. In the last resort the court must construe these clauses as the language forces them. I will undertake to say that when this stock passes, the Grand Trunk and Grand Trunk Pacific can enter into an agreement that will prevent any railway commission disturbing their arrangement. Under clause 11, of the Grand Trunk Pacific charter, the company is permitted to issue common stock in return for services rendered. That is very broad language; I will only deal with these two words. The Grand Trunk Pacific Company are permitted to hand around their common stock for everything but promotion services, and especially, in the express language of the Act, they can give it for services rendered. If the Grand Trunk Pacific are going to hand over $25,000,000 of their common stock to the old Grand Trunk, what will they do ? They will have that agreement put in the form of a deed, by competent lawyers. In that deed it will be recited that the Grand Trunk have rendered services to the Grand Trunk Pacific, by helping them to sell their bonds or their stock, or perhaps by carrying freight ; and the Grand Trunk Pacific can say, for these services we agree to pay the old Grand Trunk Company $25,000,000, and wc hereby hand over, in discharge of that indebtedness, $25,000,000 of stock. Suppose that agreement takes the form of a deed, both sides are estopped from disputing it thereafter, and no court can upset it. Consequently the hon. Minister of Finance did not make his point clear and sound. The whole question is open, and the Grand Trunk Pacific could to-morrow hand over to the
old Grand Trunk Company $25,000,000 of stock for services rendered, and no railway commission could afterwards inquire into the transaction. That could be charged as an outlay, which the Grand Trunk Pacific would be entitled to have regarded as money put into the road, and no court would dispute their contention. If the hon. Minister of Finance thinks the value of the stock should be taken into account by the railway commission, in fixing freight rates, lie has this fact staring him in the face, that the $25,000,000 of stock given to the Grand Trunk Company will form a basis for the establishment of those rates. The hon. gentleman has referred to the provision in the Canadian Pacific Railway contract that the rates on that railway cannot be regulated until the company earn 10 per cent on the money invested in it. That was a very wise provision at the time, and was necessary to induce capitalists to invest in the undertaking. We are in an altogether different position to-day, and this contract may work out much more disadvantageously, because if the whole $25,000,000 of stock is made to rank against the Grand Trunk Pacific, we may find that the rates may have to be fixed to give that company far more than 10 per cent. There is this advantage in the Canadian Pacific Railway contract, that when the company earns 10 per cent we can interfere, no matter wliat case they may make out before the railway commission ; but in this case we could not interfere, even if the company made more than 10 per cent, so long as this stock could be established ns chargeable against the company. It would be a gross outrage to refuse to give a railway company an opportunity to earn a fair interest rate on the money put into it. We must look ahead to see that the railway commission are not required to face a difficulty of this kind. I undertake to say, notwithstanding everything that lias been put forward by the Minister of Finance, that if this clause is left in the Rill, the railway commission will he forced to face the claim that $25,000,000 has been paid in by the old Grand Trunk Railway Company. Will there be no doubt or difficulty on that score ? It seems to me that the provision of my hon. friend from Hamilton (Mr. Barker) that the Grand Trunk should pay $25,000,000 is the only guarantee the Canadian people can have. Then there will be no question as the money will have gone into the Grand Trunk Pacific Railway. And in such case we will not have the bonds and other charges to meet, but will have a fair deal. The $25,000,000 will be paid in and the public will get the benefit. Rut if you leave this clause as it is. you leave it to the two companies to settle between themselves the amount for which the Grand Trunk Company should rank against the Grand Trunk Pacific Railway. No court will go behind the deed of agreement be-


Seymour Eugene Gourley: tweeu the two parties. The court will hold that by this clause it is contemplated that that agreement should be binding upon all parties.


The MINISTER OF FINANCE.: 
The MINISTER OF JUSTICE.: I do not like to disturb the very interesting and able argument put forward by the hon. gentleman, but perhaps he will bear in mind that it was the Railway Committee of which the hon. gentleman was a member, that was imposed upon when this section was drawn.


Seymour Eugene Gourley: Very likely.


Seymour Eugene Gourley: Who is to settle the value of the services ?


The MINISTER OF FINANCE.: The only case in which value of the services will have to be determined will be in relation to the freight rates, and the railway commission will have authority to inquire into everything bearing on the freight rates, and any railway commission which would undertake to interpret the contract in the way my hon. friend interprets it ought to be dismissed without ceremouy.


Seymour Eugene Gourley: The railway commission would have to be governed by the same judicial principles and rules of interpretation as the Supreme Court of Canada. Suppose the railway commission were confronted by an agreement between the Grand Trunk Railway and the Grand Trunk Pacific Railway, containing a recital of the services done and fixing the value of those services at $25,000,000, could it go outside of that ? I am not very captious.


The MINISTER OF JUSTICE.: No, just a little.


Seymour Eugene Gourley: I followed the Prime Minister very attentively and I must say he gave me a great deal more light on the subject than did the Minister of Justice. I think the right hon. gentleman had better take charge of the legal part of the contract The Prime Minister takes the view that this stock will be paid for by the Grand Trunk Railway-and that it is only what the Grand Trunk Railway pays which will be charged against the company. But how do you propose to determine what value has been given by the Grand Trunk Railway ?
How are you going to control these two companies when they make a deed of sale from one to the other of that stock ? Suppose the Grand Trunk Pacific Railway 3521


The MINISTER OF JUSTICE.: And I might add that it is inconceivable that the hon. gentleman should have allowed himself to be so imposed upon.


Seymour Eugene Gourley: I ought to apologize then to the hon. minister


The MINISTER OF JUSTICE.: 1 do not want an apology but simply wish to state the facts.


Seymour Eugene Gourley: Perhaps the committee were much more innocent that the Minister of Justice would have been. If he had been on the committee, no doubt these loose words would never have got in and the Minister of Finance would never have been called on to make so inconsequential an argument. He makes better arguments as a rule. I am glad, for the sake of the Minister of Justice, that he made that explanation.


Samuel Hughes: This was never before the Railway Committee.


The MINISTER OF JUSTICE.: What ? We are talking about section 11 of the charter of the Grand Trunk Pacific. My hon. friend does not know what Bill we are discussing.


Seymour Eugene Gourley: What words could be looser', put in an Act of parliament, than these words, ' services rendered' ? I have confined myself, entirely, to the argument with reference to these words; and have not spoken of the words, in the first part of the section, almost equally extraordinary. For instance, you have the expression,
' paid-up stock.' There is a great deal of difficulty, in the country, owing to Acts of parliament, which say that certain stock shall be considered fully paid up. There has been great litigation, in our part of the country, over such expressions. People in Nova Scotia, who have got charters, hold that

they are entitled to give stock as remuneration for services, to promoters and others. Then, creditors of the company have used these people, in the courts, to make them pay up their shares, notwithstanding the words, which apparently provide, that these shares should be considered paid up. A great deal of litigation has been engendered.
1 believe that the current of the decisions has been against those who seek to hold their shares without paying for them in cash. These words with regard to issuing a paid-up stock are dangerous, if you count upon such stock not ranking before the railway commission the same as stock paid for in cash. I think the railway commission would say :	Parliament, sitting as parliament, and making laws, declared that this stock should be considered as paid up, if paid for by services rendered, no measure being given for those services. Suppose that the company asked me.for a legal opinion, and, on giving it. I made a demand for a million dollars, aind they gave me stock for that amount, I would like to know how the Minister of Finance would keep me from ranking, before the railway commission, just the same as though I had paid for that stock in cash. The company are permitted to issue that stock for services rendered, and they are the judges of the value of the services. Suppose the Minister of Finance rendered this company service-and his services would be valuable- and they handed him over $5,000,000 of stock, I would like to know what argument could be made before the railway commission to prevent him ranking the same as any other stockholder ? We must not look at this thing like children; we must not merely talk about these things without following them up to their legitimate conclusion. The hon. member for Hamilton (Mr. Barker) has hit the nail squarely on the head. He says that, if you are going to avoid difficulty, if you are going to make the Grand Trunk Railway Company pay the full value of these shares, the only way is to provide that they are to pay for them in cash.


The MINISTER OF FINANCE.: As between the two companies concerned, any agreement such as the hon. gentleman (Mr. Gourley) refers to might stand, just as between two farmers dealing with a matter in which they are concerned, an agreement might stand. But when third parties come in, as the public come in in this case, no railway commission would recognize such a bargain as a bona fide investment. I cannot believe that any railway commission would take that extraordinary view. Any bargain made between these companies surely does not biind any tribunal representing the public.


Seymour Eugene Gourley: How does the hon. gentleman get over the wording of section 11 '!


Seymour Eugene Gourley: 


George William Fowler: The Minister of Justice has stated that section 11 was passed by the Railway CommitHpe. That is qujte true. But the hon. gentleman did not tell all. This clause was strenuously objected to in the committee by the opposition members. And, when, the matter came to this House, I had the honour to move an amendment to this section along the lines of the amendment now proposed by the hon. member for Hamilton. So, the horn. Minister of Justice was not quite fair in saying that this section passed the Railway Committee in its present form; for, not only in the Railway Committee, but on the third reading in this House, it was only passed by the force of the majority, against the most strenuous objection on the part of the opposition. We are not taking a different position now from that which we took when the Grand Trunk charter was before the House.


Robert Laird Borden: The Minister of Finance practically adopted the view which the Prime Minister adopted, as I understood him, namely, that this section No. 11 was inserted in order that the Grand Trunk Railway Company might obtain the $25,000,000 of common stock for less than par value, because, as he says, otherwise you could not expect any corporation to go into an enterprise of this kind. That is not quite consistent with the argument of the Minister of Justice. Nor is it consistent with the view expressed by another Minister of the Crown who spoke on another stage of this Bill. The view of this minister is that this enterprise is of so doubtful a character that you could not expect people to put money into it and pay par value for the stock.


The MINISTER OF FINANCE.: People do mot do it in railways generally.


Robert Laird Borden: But the hon. gentleman has forgotten that a clause allowing that has been struck out of the Railway Act by the very government of which he is a member, a clause which did not go nearly so far as this one. That clause was struck out. on objection being raised on this side of the House, at the instance of the then Minister of Railways and Canals (Hon. Mr. Blair) as a clause which should not appear in our general Railway Law. That view presented by the ex-Minister of Railways and Canals speaking at that time on behalf of the government, is not at all in harmony with the view that the Minister of Finance presents to the House this afternoon. But, departing from that for a moment, does my hom. friend the Minister of Finance regard this enterprise of building a railway through the western part of Canada of so doubtful a character that it is necessary that $25,000,000 worth of stock should be handed over to the Grand Trunk Railway Company for say 25 cents, or 10 cents, on the dollar ? I should hardly have expected my non. friend the Minister of Finance to take that

position. And, let me tell him that in taking that position he expresses a view diametrically opposed to that put forward by his colleague, the Minister of the Interior (Hon. Mr. Sifton). If he will refer to the speech, the very important speech, delivered by the Minister of the Interior on the second reading of the Bill he will find expressions which would indicate that that lion, gentleman, speaking for the government, regarded this enterprise of building a railway through the west as absolutely bound to afford a splendid return on every dollar invested in it. Now the Minister of Finance, who follows in this regard the leader of the government, practically tells the House and country that that enterprise is of so doubtful a character that we must dispose of stock at 25 cents, or 10 cents, on the dollar, in order to get corporations or individuals interested in the enterprise. Let us see what the Minister of the Interior thought about it:
But this new line of the Grand Trunk Pacific will run from Winnipeg to the Mountains, pass through a belt every mile of which is fertile and productive. It is hardly conceivable that such should be the case, yet the information in the possession of the government amply justifies the statement that I have made.
That is the view of the Minister of the Interior, in direct contradiction to that which has been expressed by my right bon. friend and the Minister of Finance. But he went on further :
The Grand Trunk Pacific, on the other hand, will go

He is contrasting it with the Canadian Pacific Railway. He has pointed out that the Canadian Pacific Railway to-day is yielding a magnificent dividend on all the capital which was invested in that company, and he is showing by way of contrast, that the Grand Trunk Pacific is a very much better proposition that that of the Canadian Pacific Railway :
The Grand Trunk Pacific, on the other hand, will go from the Rocky Mountain pass to the coast through as rich a timber and agricultural country as there is in Canada-a country rich in timber, mineral and soil.
Then to emphasize his point he goes on further :
Then we must not forget that when the Canadian Pacific Railway was projected, there was no movement of settlement from the outside. There were no farmers coming to Canada in 1881 from foreign countries. Ait any rate their number was inappreciable, and the Canadian Pacific Railway suffered from that fact. That company had dozens of agents out trying to initiate movements of population into our western country but did not succeed to any considerable extent, and for years later there was practically no immigration of any serious volume into the North-west Territories or upon the lands from which the Canadian Pacific Railway had to draw its traffic. What movement of population there was came almost entirely from the eastern provinces. But what is the
position now ? We had an immigration into the Nor.th-we3t of 30,000 people last year. If it keeps on at that rate for the next ten years, think what that will mean for the Grand Trunk Pacific Railway. Think of the difference in the position of that company as compared with that of the Canadian Pacific Railway, which went travelling on for years and years before there was any appreciable influx of settlers. Let it be remembered also that when the Canadian Pacific Railway started business, it had no connections with eastern Canada and no way of getting business. What had it to do ? It had to go to Montreal and set to work at an enormous sacrifice to parallel the Grand Trunk Railway by connections all over Canada. The Grand Trunk Pacific Railway, on the contrary, w'ill start with a magnificent system of connections, ready to open business the very day the road is finished.
Now, in view of that statement on behalf of the government by the Minister of the Interior, what ground has the Prime Minister, or what ground has the Minister of Finance for suggesting as an argument to defeat the proposition of my hon. friend from Hamilton, that no corporation in this country could be induced to go into this enterprise unless they are to receive stock at very much less than its par value ? Why, in the description of this enterprise given by the Minister of the Interior in the speech to which I have referred, he says that that enterprise is calculated, so far as the western portion of it is concerned, to yield magnificent dividends, dividends of 8, 10 and 12 per cent upon every dollar put into It, and not only would yield that, but yield it from the very commencement of the enterprise. Yet the Prime Minister and the Minister of Finance seem to think, for some reason which they have not made clear, which I cannot very well understand, that there should be $25,000,000 of common stock of this railway handed over to the Grand Trunk for ' some unknown compensation, which, obviously, in view" of section 11 of the charter, is to be very much less than the par value of the stock. What is the explanation of this on the part of the government ? Why, we have had, it seems to me, a remarkable spectacle here this afternoon. My right hon. friend takes one view, the Minister of Justice takes another view, and the Minister of Finance takes one which is not quite the same as either, hut very much resembles that of the Prime Minister. What is the view of the government in regard to this ? Does the government state that the whole of this money is to he paid up in cash or its equivalent, as the Minister of Justice argues : or does the government, as the Prime Minister has stated, believe it necessary for the success of this enterprise that $25,000,000 in stock should be handed over to the Grand. Trunk ? What is the position of the government with regard to that ? Surely my right hon. friend will give his reasons, the reasons which induced him to depart so absolutely from the view which was taken by the

Minister of the Interior in the speech to which I hare alluded.


The MINISTER OF FINANCE.: I am glad to hear that my hon. friend, by reading this quotation from the Minister of Finance, finds something in the way of commendation of this great enterprise. After reading iso much about the muskegs and everything else disparaging to that country, it is a pleasure to discover, even though it comes in the way of a quotation


Mr. TAYLOR.: Six o'clock.


Mr. DEPUTY SPEAKER.: I am not at liberty to call six o'clock when an hon. gentleman is speaking.


The MINISTER OF FINANCE.: I object to the hon. member for Leeds (Mr. Taylor) interrupting me in this way ; as an old parliamentarian he knows better. I want to say that after all that we have heard in the way of discrediting this great enterprise, it is a delight to us to find that hon. gentlemen opposite are now beginning to see some merits in it. I believe it will in due time pay a fair return on the capital; but it is not inconsistent with that to say that many a great enterprise which is placed before the country and which proves a profitable and successful enterprise, does not value its stock at 100 cents on the dollar ; and even though this stock should be placed in the hands of the Grand Trunk Company at less than 100 cents, it does not follow that the enterprise will not be a great success.
Mi-. BORDEN (Halifax). I am not aware that any hon. gentleman has made any disparaging suggestions with regard to the western part of this railway. The hon. gentleman is not quite candid in making that statement. Further than that, my right hon. friend has not said one word in reply to my statement of the attitude of his own government in striking out from the General Railway Act the very words upon which he is relying now. Why did the government take that attitude from the ex-Minister of Railways and Canals only a few weeks ago, and why does it now take a precisely different attitude with regard to this company, in the exceptional circumstances which I have mentioned, where the bargain which is to be made with regard to this stock is not really between two independent parties at all, but is between two joints of the same company, as the Minister of Finance has explained a few moments ago ?
At six o'clock, Committee took recess. After Recess.
Committee resumed at eight o'clock.


Adam Carr Bell: Mr. Chairman, in reference to the amendment which has been moved and the different views expressed on the government side of the House, I would say Mr. BORDEN (Halifax).
that it would appear from the contents of the Bill incorporating the Grand Trunk Pacific Railway Company that there are ample means at the disposal of the company to carry out their enterprise or undertaking without requiring that any sum of money whatever should be derived from the common stock. In that sense it would be quite easy to understand that the views taken by the right hon. leader of the government (Rt. Hon. Sir Wilfrid Laurier) and by the hon. Minister of Finance (Hon. Mr. Fielding) are more likely correct than that which seems to be insisted upon by the hon. Minister of Justice (Hon. Mr. Fitzpatrick), who expressed the belief that probably payment for the common stock at par from the Grand Trunk Railway Company will be required in order to complete the undertaking of the Grand Trunk Pacific Railway Company. The undertaking of the Grand" Trunk Pacific Railway Company may be supposed to represent a railway 1,600 miles in length, excluding branches. They have available for the prairie section of 1,000 miles, on which the government guarantee $13,000,000. The balance of the bonds to the extent of $20,000 per mile, makes $7,000,000, or $20,000,000 in all. On the mountain section 600 miles in length, the bonds are issued carrying a government guarantee of $18,000,000, and the difference between $30,000 per mile of bonds guaranteed by the government and $50,000 per mile authorized, which at $20,000 per mile will provide $12,000,000 or $30,000,000 more. Then there is the preference stock, which amounts to $20,000,000, and which ought to realize par value. I would suppose, because it is stated in the Bill that the board will be authorized to give that such preference as they choose. We know that the preference stock of the Grand Trunk Railway Company is selling at par and above par, and we know, taking the representations of the hon. Minister of the Interior (Hon. Mr. Sifton) and taking our experience of the Canadian Pacific Railway that it should be possible for a company operating in the west through the prairie section at least for a thousand miles to earn such dividends as would send their stock above par. They are in the position, as was well pointed out by the hon. Minister of the Interior, occupied by the Canadian Pacific Railway at the time it commenced operations. They are now entering into competition with the Canadian Pacific Railway when their stock has reached within a recent period a value of 146, or 46 points above par. It is not selling at that price now, it has dropped considerably below that, but within a considerably short period of time Canadian Pacific Railway stock has sold at 146. The Grand Trunk Pacific Railway Company, in so far as that portion which constitutes the part moi-e directly interesting to the company, the part which would be in operation at the earliest moment, and the part which will be wholly in operation

long before the government have concluded the eastern extension, which will not be completed for probably ten years, having simply to operate the prairie section and the portion connecting the prairie section with the Pacific and having to operate that in connection with their enterprises in Ontario and in the United States, will be practically in the position of the Canadian Pacific Railway, and therefore it seems to me that their stock should be worth par. Then, they have the common stock, $25,000,000. If we take the whole of this it forms in the aggregate $05,000,000. Apportion that over
1.600	miles of railway and it gives an available fund of $50,375 per mile. But, deducting the common stock altogether it leaves $70,000,000 to build 1,600 miles of road, giving a capital of $43,750 per mile. If it were considered that the ordinary bonds of the company will not bring par but will bring only 75 per cent of their par value, if you deduct $5,000,000 on that account, it will give the company still, without attaching any value whatever to the common stock, a capital of $65,000,000 with which to build
1.600	miles of road, or a capital of 46,250 per mile. From that I suppose there can be fairly deducted $5,000,000 which is to be placed in the hands of the government as security to be used at some day in equipping the eastern portion of the road with $5,000,000 worth of rolling stock which is to form a separate portion of the property of the company and be assigned as security to the government. That expenditure will not be required probably for eight or ten years, and there is available for the purposes of the company, to build 1,000 miles of prairie road and 600 miles of road through the mountains, a sum which will give $46,250 a mile. That would seem to be ample, and that leaves out of account entirely the common stock of the company. This clause would permit of the Grand Trunk Pacific Company turning over to the Grand Trunk Railway Company, without any consideration whatever, the whole $25,000,000 of common stock. It is argued by the Minister of Finance that it is a matter of indifference whether this be done or not, and that it will not become interesting to the general public until the question of the power of the government to control the freight rates on the road will become a live question. To a certain extent that is perfectly true. But, at the same time, here is a vast amount of common stock which the government are deliberately placing in the power of the company to dispose of absolutely without consideration. It is perfectly clear that if that $25,000,000 were controlled by the government so as to realize cash, it would do away with the necessity of the Grand Trunk Pacific resorting to the issue of any bonds whatever outside of those which are to receive the government guarantee. This forms $7,000,000 upon the prairie section and $12,000,000
upon the mountain section. The $25,000,000 of common stock issued at par, would enable the Grand Trunk Pacific to deposit with the government of Canada, the $5,000,000, and it would leave $20,000,000 to be used in construction, and thereby it would obt viate the necessity of the Grand Trunk Pacific issuing to the public one dollar of bonds outside of those which were guaranteed by the government, and which could be sold at a high figure. It seems to me, that in financing a company that is subsidized by the government to construct a new railway, perhaps the best system in the interest of the country would be that which has been resorted to by the government when it gave its guarantee to the Canadian Northern Railway. By this means the government enables a company to complete a public work that it has expressed its faith in and endorsed by granting a charter. It enables the company to finance the project at the lowest possible figure and to capitalize it at the lowest possible figure. And in consequence, instead of compelling that company to collect from the users of the road such rates and tolls as will enable it to pay dividends upon a large issue of bonds far below par, it guarantees that every dollar of capital shall be real capital, and that the public shall not be required to find money to pay dividends upon watered stock. The Prime Minister has stated this afternoon that he thinks it very probable that this $25,000,000 of common stock may be issued at 25 per cent below par, or, even at a lower price, and in that, he is departing from the sounder financial method which has been adopted, to a certain extent with the Grand Trunk Pacific Railway and to the full extent in connection with the Canadian Northern Railway, by which the government gives a guarantee to the bonds of a company which this parliament has incorporated, and enables the company to finance in the most economical method. In permitting the issue of this $25,000,000 common stock at a mere nominal price, there is a failure to realize for the people of the west who will supply the tolls and rates to pay dividends, the advantages which would otherwise come to them from the government guarantee of bonds. If this common stock be issued at par-, it simply means that the company shall not be re quired to load up that undertaking with the issue of bonds amounting to $25,000,000, and which must necessarily be sold at perhaps some considerable price below par. If the Grand Trunk Company take that $25,000,000 at par, and in conjunction with the government take precaution that the whole of the money be wisely expended, then the government would have better security in the Grand Trunk Pacific road, and the Grand Trunk would have a better property. They would run less risk. They would stand in a better position with respect to their dividends, and in a much better condition so far as any risk of failure of the

1124S
Grand Trunk Pacific at any time in the future, to repay the interest or the principle, than if they themselves or any one else, be allowed to take up this $25,000,000 common stock at a very low price, and if the funds for the completion of the road are secured by the issuing of bonds which must necessarily sell a long way below par. It seems to me that the view taken by the Minister of Justice in this matter is exceedingly unlikely to he the correct one. On the whole the statement made by the Prime Minister and by the Minister of Fin1 ance, that this stock is going to be issued as low as 25 per cent below par, or even less, is the real truth of the matter. This-is not a good feature in the Bill, and it stands in direct contradiction to that other feature by which the government in guaranteeing the bonds of the Grand Trunk Pacific are placing that company in a position to finance to the best advantage. This feature is entirely out of harmony with the principle of sound ' financing which is involved in the government guaranteeing the bonds of this road.


The PRIME MINISTER.: My hon. friend (Mr. Bell) if not advisedly, has at all events very effectively presented a strong argument against the amendment of the hon. member for Hamilton. The basis of the argument of my hon. friend (Mr. Bell) is that the com-panv has ample resources, exclusive of the common stock, to carry on its enterprise. And yet. in face of this, the hon. gentleman would compel a company to pay 100 cents on the dollar although the company would not need the money. He would compel them to put $25,000,000 additional into the assets of the company, although they may not require it. This defeats the very purpose of his argument.


Adam Carr Bell: My right hon. friend must see that my argument is that if this common stock is issued at its face value, to that extent the non-guarantee bonds of the company can be reduced.


The PRIME MINISTER.: That brings us back to the point that this stock must be issued and paid for at the value it has, nothing more and nothing less. Suppose this stock were issued to the public, as any ordinary stock is issued, does my hon, friend imagine that the public would give one hundred cents on the dollar for it ? Does he know of any enterprise, be it ever so promising, which can sell its stock to the public at one hundred cents on the dollar ?


Adam Carr Bell: I know of some business enterprises in which new stock is issued a great deal above par.


The PRIME MINISTER.: Does my hon. friend think, if a stock of this character, instead of being forced on the Grand Trunk Railway Company, had been left to be sold Mr. BELL.
by the ordinary methods to the public, that the public would pay one hundred cents on the dollar for it ? Would my hon. friend from Hamilton have moved an amendment requiring the public to pay one hundred cents on the dollar for it ? No ; he would have said that this stock would have to be sold, like every other stock of the kind, for what the market would pay for it, according to the degree of confidence the public had in the enterprise. But this is not the case in the present instance. If we had said to the Grand Trunk Company : We will not be satisfied to have your guarantee of the bonds of the Grand Trutilc Pacific. but we must also have your backing of this enterprise, not only must we take the stock of the new company, but we must pay one hundred cents on the dollar for it; does my hon. friend believe that the Grand Trunk Company would have consented to take part in this enterprise upon ttiese terms ? He knows the Grand Trunk Company would not have accepted any such terms. But let us come to the real object which my hon. friend from Hamilton has in view. It is to prevent collusion between the two companies. He wants to prevent the Grand Trunk Company forcing upon the Grand Trunk Pacific Company things which are of fictitious value, and then offering them to the public as being worth one hundred cents on the dollar. It seems to me that if he wants to reach that object, he has taken as unwpeldy a method to reach it as it would be possible to select ; because while my hon. friend might obviate the objection he sees, he would land us into another difficulty. He would force us to load on to the Grand Trunk Company for the sum of $25,000,000 a stock which it could perhaps have got at a lower figure. The only answer which has been given to the objection of my hon. friend, and it was a very good answer, was the answer given this afternoon by the hon. Minister of Finance. There are two parties interested in this matter. One is the public, who, are interested in not being obliged to pay more tolls than are necessary. If there is collusion between the two companies ; in other words, if the Grand Trunk Railway Company are to pay more for the advantage of the Grand Trunk Pacific than they ought to pay, when the public realize that, they will have a remedy against the company. This seems to be a fair argument, and it ought to be an answer to my hon. friend. The only answer he gave to it was : You will have to be able to realize what you have in view ; the commission will not be able for a certain number of years to examine the books of the company, and ascertain what value is placed on the Grand Trunk Pacific by the Grand Trunk Railway Company. That was the only objection he had-that it was not feasible. That is a debatable point : but it seems probable that the railway commission, be-

ing clothed wih the powers which it will have, will easily devise a means of ascertaining the value of the stock bought by the Grand Trunk Company, and to what extent the tolls can be reduced accordingly.


Samuel Barker: I think the right lion, gentleman has somewhat misapprehended my remarks. My anxiety was not so much to protect the Grand Trunk Pacific Company from any imposition on the part of the Grand Trunk Company, whereby the [DOT]Grand Trunk might turn over to the Pacific property or rights or privileges which had an undue value ; but it was to prevent the Grand Trunk Pacific Company being loaded with an amount of capital, apparently paid for, and in respect of which ultimately the people of this country would have to pay rates to provide dividends. 1 tried to make that very plain. That is my object and my sole object. It is quite true, I illustrated how it might be done by means of the methods which the right bon. gentleman has mentioned. I said that it was quite possible for these two companies to meet together with practically the same board of directors representing each of them ; and that the Grand Trunk Pacific, for the purpose of making a bargain, might over-value the rights and privileges which it was according to the Pacific 'Company, and the Pacific ompany might under-value its stock ; and go, for a very inadequate consideration, $25,000,000 of the common stock of this company might be placed practically upon the shoulders of the people without any due or adequate compensation for it. That is my argument. I would like to point out to the right hon. gentleman, who I am afraid is not quite as familiar with the modes of issuing stock as perhaps he ought to be, considering the very responsible position he holds. The right hon. gentleman seems to think that there is no harm in issuing stock at ten cents on the dollar, for example. I beg to differ from him. I beg to say on the part of the public and the people who are interested in investments, that one of the most important things that can be taken care of in these matters is that no stock shall represent more than the dollars in cash paid in for that stock. One of the most fruitful causes of speculation, or gambling in stocks, have been the tricks and dodges used by many persons to get stock out on the public without that stock representing dollars and cents.


The MINISTER OF PUBLIC WORKS.: Surely that is prevented in this case.


Samuel Barker: This is the most glaring ease that I have ever seen-the most trans-pai'ent ease that I have ever known. It is the most common thing among people who have tried to float companies, perhaps beyond the true value of the properties, to "devise every possible scheme by which stocks shall be issued to the public, without the company receiving into the treasury
the par value of that stock. We all know how this is done. We see it from time to time. We hear of it every time a company fails. Company after company in the city of Toronto and elsewhere has come to grief ; and if you go to the bottom of the troubles, you will find that certain promoters, by various devices, had succeeded in getting the public to buy from them stocks which they had themselves got for nothing. It is that which I am trying to prevent. I am trying to prevent this stock being charged against the capital account of the Grand Trunk Pacific Railway, unless the company receives into its treasury the $25,000,000 or whatever the stock may represent, so that when the directors are called to account, they will be liable to account for the money they received and will show that they spent it upon the property and that the public got the benefit. I could name half a dozen of cases where hundreds and thousands of dollars have been lost by people who invested in stock companies in Toronto and elsewhere by purchasing stock that had been obtained by promoters without paying a dollar for it. Then when the public found out the true inwardness of affairs, they discovered that there was not a dollar to repay them the money they were out of pocket. I am sure that the right hon. gentleman lias not yet grasped the difference between subscribing for stocks and buying them at the market price. Subscribing for stock means paying 100 cents on the dollar, but buying at the market price may not mean paying a cent for it. That is the distinction, and when we are putting $25,000,000 capital on this company, we should see that the company receive the $25,000,000, and that the money is spent on the undertaking which we are guaranteeing. That is the position I take, and I cannot impress it too strongly on hon. gentlemen opposite. I do not believe there is an hon. gentleman opposite who does not know precisely what I mean when I say that these issues of stock are made for the very purpose of getting it into the hands of certain people without their paying anything for It, and that the country, in the present instance, and the public in the other cases, who buy the common stock on the market, are the victims. In this case the country will be the victim unless such protection is afforded as will be given by the proposed amendment.


Thomas Osborne Davis: If I understand the hon. gentleman's argument, he is trying to make out that this common stock will be a burden on the people. I want to call his attention, to the fact that the Railway Commission of this country, as the Interstate Commerce Commission in the United States, in settling the railway tolls, will not take the common stock into consideration at all. The hon. gentleman knows that in the United States at present over one-lialf the stock

of all the railways-over 100,000 miles of railway-is paying no dividend at all. If the common stock were taken into consideration by the Interstate Commerce Commission, that would not be the case, but the Interstate Commission does not take this into consideration. Ail it takes is the bonds.


Samuel Barker: Does the hou. gentleman say that the commissioners in the United States will not take into consideration the common stock of railway companies, where that stock has been paid for ? Will he assert for one moment that the stock which is paid for in hard eash is not taken into consideration by the American commissioners in dealing with the question of rates ?
Hr. DAVrS. I answer that one-half of the stock is paying no dividend.


Samuel Barker: Will the hon. gentleman say that where $100 has been paid for stock -not where it is not paid, which is the case under this Bill-but where the money is paid in, that money is not taken into consideration in the settlement of rates. The commissioners will not take into account capital stock not paid for, but this cunning 11th clause of the Grand Trunk Pacific Railway charter is so drafted as to enable this company to say that this $25,000,000 is paid up stock. The clause positively asserts that it is to be taken as paid up stock, and no commissioner could ignore it.


Thomas Osborne Davis: Does the hon. gentleman say that out of the 200,000 miles of railway in the states-or we will divide and say 100,000 miles-paying no dividend on the stock, there was no money paid for the stock ?
Amendment negatived. Yeas, 31 ; nays, 45.


Robert Laird Borden: There is another point in connection with section seven, to which I wish to draw the attention of the government, and inquire what its views are as to its effect. Very great importance has been attached by the Prime Minister, the Minister of Finance, and the Minister of Trade and Commerce to the connection which the Grand Trunk Railway has with this project. My right hon. friend has adverted to that over and over again. The Minister of Finance put that point even more strongly. At page 8569 of revised ' Hansard,' he said :
What we regal'd as a very strong feature of the project is that it is to be carried out by practically the Grand Trunk Railway of Canada.
And on the following page, page 8570 :
We have required that the Grand Trunk Railway shall not only be behind this undertaking, but in it and of it.
I may say, in passing, that my hon. friend the Minister of Finance is so emphatic with regard to that, that he used exactly the same phrase this afternoon in describing the connection between the two companies. He continued :


Thomas Osborne Davis: Every joint stock corporation is controlled by those who hold the common stock. So long as the interest on the bonds is paid, no one can take that control from them. We have provided that practically the common stock of this company to the full extent of $25,C00,0C0 shall be held, not by promoters, not even by the old Grand Trunk Railway officials individually, but by the Grand Trunk Railway of Canada itself. There are 260,000 shares of common stock, of which 249,000 will be held iby the Grand Trunk Railway, in its corporate capacity, and 1,000 only are available for distribution among those who may be qualified as directors. I want to know where there is a chance for promoters when they can only hold 1,000 shares against 249,000 ?
This idea bad impressed Itself so much on my hon. frieud the Minister of the Interior (Hon. Mr. Sifton) that he reiterated no less than four or five times that this contract was really a contract with the Grand Trunk Railway Company, although as a matter of fact that company is not a party to the contract, and is not bound by it. The same view impressed itself upon my right hon. friend the Minister of Trade and Commerce (Rt. Hon. Sir Richard Cartwright), who, at page 9631 of ' Hansard ' stated in so many words, that the Grand Trunk Railway Company was really the company -with which the government was entering into this contract. Now, I stated, on a previous occasion when I addressed the House, that the Grand Trunk Railway Company is not a party to this contract, is not bound by a single provision in it, and in no sense can we say that we are making a bargain with the Grand Trunk Railway Company. Therefore, so far as any legal operation of this contract is concerned, it is an absolute and utter fallacy to say that the Grand Trunk Railway Company is in this contract or of it. The position which the matter assumes at the present time before this House, is that, while the Grand Trunk Railway Company, by virtue of holding, if it does hold, $25,000,000 of the common stock of the Grand Trunk Pacific Company, has control of the policy of that company, nevertheless, it is not bound by any of the obligations of that company. It has been asserted over and over again in this House, that the Grand Trunk Railway Company is to hold $25,000,000 of the common stock of the Grand Trunk Pacific, and it has been argued that that is a very important feature of the proposal the government has made. I have already stated that there is no bargain about it, and cannot be, for the Grand Trunk Railway Company is not bound to take a dollar of the Grand Trunk Pacific stock ; and if this provision is of any importance at all, the only guarantee or security the government has for bringing about that condition is in the provision of section 27 of the contract. That provision is that :
The company

That is, the Grand Trunk Pacific Railway Company.

-undertakes that the Grand Trunk Railway Company of Canada shall acquire and take the said common stock to the amount of twenty-five million dollars, except shares held by directors, not exceeding one thousand shares, and shall hold the same during the term of the said lease and so long as any of the bonds guaran'eed by the government under the terms of this agreement shall remain outstanding unpaid.
I would like to ask the government in what way the Grand Trunk Railway Company is of this contract and in this contract, except by virtue of this provision ? Am I right in supposing that the government rely on that provision as bringing the Grand Trunk Railway Company in this contract and making it of this contract, in the language used by the Minister of Finance ? I would like an answer to that question before proceeding further with the few remarks I desire to make on that point.


The MINISTER OF JUSTICE.: The position I took in a previous discussion was that the Grand Trunk Railway Company was not a party to this agreement. I do not think that could be successfully contended at this time. However, the position is that the Grand Trunk Pacific Railway Company may under their charter proceed to construct this road from Winnipeg to the coast- they may proceed with that construction without the permission of the government. In that case, the Grand Trunk Pacific will be independent of any obligation to come into this contract at all. If they apply for aid, they will apply, no doubt, under section 28, which provides that the government will give its aid to the company after the road is constructed and equipped to the coast. But the government are under no obligation to give aid to the company until the whole road is constructed. It is, however, provided by section 36 that, during the progress of the work, the government may give assistance to the company to enable them to carry on the enterprise. The construction I put upon the agreement is that, if the Grand Trunk Pacific construct the road without aid from the government, the matter is at an end, so far as the Grand Trunk and the government are concerned. But if they require the aid of the government and the government is called upon to render that aid, it will be impossible for the Grand Trunk Pacific to have the aid given them that is contemplated by sections 28, 29 and 36 of the agreement, until such time as the Grand Trunk Railway Company has done two things- first, undertaken to become a party to the agreement to the extent of assuming the obligations referred to under section 27, that is, the obligation to take the common stock of the Grand Trunk Pacific to the extent of $25,000,000 ; and, second, assumed the further obligation referred to in section 34, by guaranteeing the second issue of the bonds. This obligation of the Grand Trunk Pacific to comply with the clauses of this
agreement is a condition precedent to any obligation on the part of the government to guarantee the bonds or come to their aid in any way.


Robert Laird Borden: My hon. friend (Hon. Mr. Fitzpatrick) has not made it very clear to me, though he is speaking for the government in reply to a question I put as to whether or not the government did, as they have stated over and over again, place any reliance upon or regard as important the provision that $25,000,000 of the common stock of the Grand Trunk Pacific Railway Company shall be held by the Grand Trunk Railway Company. The first alternative which my hon. friend the Minister of Justice has dealt with sweeps out of existence the argument made by my hon. friend the Minister of Finance (Hon. Mr. Fielding) and many other ministers, that the important part of this argument is that the Grand Trunk Pacific Railway Company shall be of this contract and in this contract.


The MINISTER OF FINANCE.: As respects the government's aid-yes.


Robert Laird Borden: And does the hon. gentleman (Hon. Mr. Fielding) expect for a moment that when this company can get aid to the extent of $13,000 a mile on the prairie section and $30,000 a mile on the mountain section, it will not be likely to apply for it ? I suppose they would. But the Minister of Justice is putting forward, in answer to my question, an alternative absolutely inconsistent with the position taken by the Prime Minister and the Minister of Finance, and many other ministers of the Crown with regard to this contract. Well, let us adopt the view of my hon. friend the Minister of Finance, and let us believe that it is of importance that the Grand Trunk Railway Company should acquire, in some way or other, $25,000,000 of the common stock of the company. The Minister of Justice, I may say in passing, says that aid is not to be given under one provision, until the road is completed. But, he very fairly referred to another provision, which displaces that, and gives, in the option of the government, at least, aid to this company from time to time as the work goes on; and no one can doubt that it is part of the scheme that aid shall be given as the work progresses. Now, if we assume, as I said a moment ago, that this is relied upon by the government for the purpose of making the Grand Trunk Railway Company of this contract and in this contract, what is the security we have under this agreement for that purpose ? What is the security that we have 7 What provision have we ? We look at the statute itself, the proposed Bill-do we find any provision that the government shall not be obliged to carry out its obligations unless aind until the Grand Trunk Railway Company does become possessed of this $25,-

000,000 of stock ? Do we find any provision in the contract that the Grand Trunk Railway Company shall not part with that stock during a period of fifty years, and that any transfer or conveyance of that stock during that period shall be invalid and ineffectual ? I have read over the Bill, and I have not up to the present time observed any such provision as that ? Therefore you simply come down to this, that you say to the House and to the country, it is of the utmost possible importance that the Grand Trunk Railway should be interested in this project to the extent of $25,000,000 of the common stock, to be acquired in some way or other, for some consideration, and the only security that you have that that will1 be brought about is a covenant contained in clause 27 of the contract that the Grand Trunk Company shall so acquire, a covenant which is not binding in any way upon the Grand Trunk Railway Company, because that company is not a party to this contract. Therefore, as security for this all-important feature of the contract, you have the covenant of the Grand Trunk Pacific Railway Company, a company not yet formed, which is being incorporated by a charter to be passed by the House. Well, assuming that it is all important, what are you going to do about it if the Grand Trunk does not acquire this stock, either at par or for some other consideration ? Can you force the Grand Trunk Company to do so ? Can you depart from your obligation contained in this contract ? The Minister of Justice thinks that you can depart, in other words, he would argue, if I understand him correctly, that these provisions are inter-dependent, and that if any one of these provisions is not carried out by one of the parties, then the whole thing is absolutely off. Now in section 27 the language is that of an ordinary covenant:
The company undertakes that the Grand Trunk Railway Company of Canada shall acquire and take the said common stock to the amount of $25,000,000, except shares held by directors

And so forth. Now, where do you find anything which creates the idea, which would impress upon the mind of a lawyer, that this is a condition precedent ? Does it say so in so many words ? If it does _not, where is the language which would indicate that it is a condition precedent to any fulfilment by the government of its obligations contained in that contract ? The Minister of Justice is very familiar with this contract, he has studied it, I suppose, very thoroughly, and perhaps he will be able to enlighten us with regard to that. Then assuming that it is not a condition precedent, that it does not create a precedent, what is your remedy if the Grand Trunk Railway Company does not acquire this stock ? If that all important provision of the contract is not carried out, what is your remedy ?
Mr. BORDEN (Halifax),
Your remedy is an action on the covenant of the Grand Trunk Pacific Company, an action upon a covenant against the company every dollar of whose property will be covered by mortgages to their full value. Further than that, if you brought an action upon this covenant what damages could you recover against the Grand Trunk Pacific ? The Grand Trunk Pacific makes a covenant with the Crown that it will get a third corporation, namely, the Grand Trunk Railway Company, to acquire certain stock. If that company does inot acquire the stock and the covenant is broken, what is your measure of damages ? Can you recover anything more than nominal damages against the Grand Trunk Pacific ? Speaking off-hand, I think you could not; I do mot think the Minister of Justice would be prepared to-night to state to the House any measure of substantial damages that you could recover from tbe Grand Trunk Pacific under that covenant in case it should be broken; and if you did recover damages, where would you find any assets or property of that company out of which those damages could be recovered ? Further than that, here is a provision that the Grand Trunk Company shall hold this stock during the term of said lease. That has been put before the House by the Prime Minister, by the Minister of Finance and by many other Ministers of the Crown, as a most essential feature. The whole argument of the Minister of Finance was based upon that this afternoon. He said ; You cannot have this placed upon the market, you cannot have it come into the hands of bona fide holders for value, because), (it says that the Grand Trunk is bound to hold that stock during a period of fifty years, and not to make any transfer of it during that period.
What security have we that the Grand Trunk Company shall not part with it during that period ? This contract does not bind the Grand Trunk Company. Suppose the Grand Trunk Company did transfer this stock, what would happen 1 Does the Minister of Justice suggest that the transfer would be invalid, would be ineffectual ? Well, I think if he would suggest that, he would at least agree that there was a grave doubt about it, and that we had better make it perfectly plain by some provision, either in the contract or in an Act of parliament, that neither the Grand Trunk, or the Grand Trunk Pacific, or any other body or person shall ever have a right to raise that question either in parliament or in the courts of the country. But you have not as security for that one single line or scratch of a pen in this agreement, beyond the simple covenant of the Grand Trunk Pacific that that stock shall not be transferred; you have not even that, you have merely a covenant that the Grand Trunk Company

-shall hold the same during the term ot the said lease, and so long as any of the bonds guaranteed hy the government under the terms

of this agreement shall remain outstanding unpaid.
Now, the Minister of Justice may not agree with the view I have suggested. 1 think, however, it is correct, and adopting the view of the government in this regard that it is important, I would move :
That section 7 be amended by adding thereto the following subsections :-
(21 Notwithstanding anything in this Act or in the said agreement contained, His Majesty the King acting in respect of the government of Canada shall not he bound or obliged to perform, carry out or fulfil any of the covenants. undertakings, conditions or stipulations in the said agreement contained on behalf of His Majesty the King acting as aforesaid, unless and until the Grand Trunk Railway Company of Canada shall have subscribed for the common stock of the Grand Trunk Pacific Railway Company payable in cash at par to the amount of not less than $24,900,000.
(3) The Grand Trunk Railway Company shall hold the said common stock to the amount aforesaid so subscribed for and acquired as aforesaid, during the entire term of the lease mentioned in clause 20 of the said agreement, and so long as any of the bonds guaranteed by the government under the terms of the said agreement shall remain outstanding and unpaid, and no pledge, transfer or conveyance of any part of the said stock during the said period shall be valid or effectual.
Now, if you adopt that amendment you place beyond doubt, in the first place, the necessity that the Grand Trunk shall subscribe for common stock to the amount I have mentioned; and, what I believe to be a still more important feature, you provide by Act of parliament that the Grand Trunk Company of Canada, having acquired this stock, shall hold it during the entire term of the agreement, and that any transfer or conveyance of that stock during the term mentioned shall not be valid or effectual. It is adopting for the time being the view which the government has put forward as to the necessity and as to the importance of these stipulations, and places the validity of these stipulations beyond doubt. In adopting this form for the amendment, I have necessarily been obliged to have regard to the fact that we cannot amend an agreement which has been executed; therefore I have been obliged to adopt as an amendment to the statute that which more properly in the first instance might have been a term of the agreement, but which can nevertheless be very properly inserted in the statute as a means of carrying out what the government have stated to the House they regard as a most important stipulation in that connection. In doing that I have followed to some extent the model which the government themselves have placed before us in section 40 of the agreement where they provide that :
The company shall, before being entitled to the guarantee provided by this agreement, furnish evidence, satisfactory to the government, that all claims of contractors and for materials, wages and supplies, and all just claims against
contractors and sub-contractors for materials, wages and supplies entering into and supplied for the construction of the railway have been duly paid.
That is to say, I have tried to make it necessary in this amendment that this all important stipulation in the view of the government shall be observed and carried out by these companies, or otherwise that the government on its side and on its behalf shall not be obliged to carry out or perform the stipulations which are contained on its behalf in this agreement.


The MINISTER OF JUSTICE.: In some respects the language used in the amendment suggested, conveys accurately enough the intention of the parties who entered into this agreement, and I think that all that is useful in the amendment will he found in the agreement. If my hon. friend will look at the agreement he will find that the obligation of the government is to guarantee the bonds of the company in respect to the western division after the road has been built and completed to the coast. There is no obligation on the part of the government to guarantee one dollar of the bonds of this company until such time as the road is completed to the coast and equipped botli in respect to the western and to the eastern end. Now, it is true that during the course of construction it is optional with the government to give aid to the company and to endorse its bonds but there is no obligation on the government to do so. What now is the obligation of the Grand Trunk Pacific Railway Company ? The obligation of the company is to provide that of the stock $25,000,000 shall he held by the Grand Trunk Railway Company. Another obligation of the company is that the second issue of bonds after the first issue endorsed by the government is to be endorsed by the Grand Trunk Railway Company. Now, under these circumstances, and in view of the fact that the company undertakes towards the government to secure the purchase or acquisition by the Grand Trunk Railway Company of $25,000,000 of stock and that the company undertakes towards the government to provide that the Grand Trunk Railway Company shall guarantee the second issue of bonds, how is it conceivable that the government can be forced to give its guarantee for the first issue of bonds until these conditions have been complied with ? However. I am willing to take the amendment into consideration and to have the matter held over, if there is any language necessary to make clearer the intention of the parties in that respect or to provide that tlie Grand Trunk Pacific Railway Company shall perform its obligations to secure the assistance and co-operation of the Grand Trunk Railway Company, which we consider is as essential as the construction of the road, we are willing to adopt the amendment. and for th.,t purpose I have asked the

Committee to allow the amendment to remain over so that I can have an opportunity of considering it from that standpoint and no other.


Robert Laird Borden: I think that what has been suggested by the lion. Minister of Justice is absolutely fair. I have no quarrel with it for a moment and I would be very glad to assent to it. I may say to him in this connection that I am not wedded to the exact words of my amendment, because returning only 48 hours since from the country, I have not had very much time at my disposal for the purpose of giving to the amendment the careful consideration which it deserves. I would be very glad to discuss it with my hon. friend either in the House or privately as he may see fit. Bet me, however, point out to him in this connection that section 27 to which we both have referred does not fix any time within which the Grand Trunk Railway Company shall acquire this stock. Possibly his answer to that may be that no time being specified a reasonable time would be presumed. I do not know whether that would be the case or not, but at all events, it does seem to me to be a circumstance which he ought to take into consideration in determining whether or not the government would be willing to accept some such an amendment as that which I have suggested.


William Barton Northrup: I do not wish to occupy the. attention of the Committee in view of the request of the hon. Minister of Justice, but, I think he will pardon me if he intends considering this clause for bringing a point to his attention which he has apparently overlooked. He explained that there was no obligation on the part of the government to do anything until the road was completed.


The MINISTER OF JUSTICE.: No obligation to give a guarantee.


William Barton Northrup: If that be correct, he might naturally come to a different conclusion from that which he would reach if there was an obligation on the part of the government to give a guarantee before the road was completed. If we look at clause 36 we will find, bearing in mind the distinction that there is between a legal obligation and a practical obligation, that the government has absolutely to guarantee the bonds whiie the road is being constructed. I quite admit that there is no moral obligation.


The MINISTER OF JUSTICE.: A moral obligation is something that the government is not responsible for.
Interim bonds of the company secured by first mortgage may from time to time, during, and for the purposes of the work of constructing the said western division, be issued by the company and guaranteed by the government.
I quite admit that that does not mean a legal obligation, but, when we find in this contract a provision that the company has to build 1,400 miles of railway, when we find that the company has no means of building that 1,400 miles of railway save under the credit they gain from the guarantee of the government and the guarantee of the Grand Trunk, and when we know that the government is to give a guarantee for 75 per cent of the cost, surely anyone must see that as sane, practical business men, the government in their own defence must give a guarantee as the road proceeds, for if they do not the price may be so much higher, that the ultimate guarantee they would have to give would be correspondingly greater. I hope the Minister of Justice will bear that point in mind.


The MINISTER OF JUSTICE.: What does my hon. friend consider the character of the moral obligation under which the government would be towards the company under section 36, if the company did not comply with its obligations under sections 26 and 34 ?


William Barton Northrup: I do not know why the Minister of Justice should ask me that question, because I was most careful to say over and over again that I was not referring to moral obligations. I put it as plainly as the English language would allow, that there were three obligations, namely, the legal obligation, the practical obligation, and the moral obligation, and with the last of the three I had nothing whatever to do. Inasmuch as the government is bound to guarantee 75 per cent of the western section, it is in the interest of the government to have that western section constructed as cheaply as possible, and it is self-evident that the more ready cash payment the company can make as they proceed, the more cheaply can they build. It was admitted to-day that the money with which the company is to pay contractors must come from the bonds guaranteed by the government on the one hand, and by the Grand Trunk on the other, and the sooner they can borrow the money the cheaper they can build. As they cannot issue the bonds until the road is completed, clause 36 provides that interim bonds, which may be guaranteed by the government, may be issued.


William Barton Northrup: A legal obligation is one thing, an obligation that a man can be compelled by law to undertake and a practical obligation is another thing, an obligation that any sane man would undertake in his own defence. Then, a moral obligation is still another thing. Clause 36 provides: Hon. Mr. FITZPATRICK.


The MINISTER OF JUSTICE.: Would we not be bound as a matter of self-defence to do that if the company failed ? Would we not be even justified in doing it ?


William Barton Northrup: If the government under those circumstances would be justified in doing it, then the wording of the

clause in so far as it applies to the government, is mere surplusage.


The MINISTER OF JUSTICE.: Would there be any obligation on the part of the government to comply with the conditions of section 36, if the company had not previously .complied with its obligation under the other two sections ?


William Barton Northrup: I do not see any connection between the two. The company must obtain the money to build from some source.


The MINISTER OF JUSTICE.: They are under an obligation to us to get the Grand Trunk to take $25,000,000 stock, and they are under an obligation to us to get the security of the Grand Trunk for the second issue of bonds. If the Grand Trunk Pacific should fail to perform these obligations, could we be called upon to do for them, that which is absolutely a favour under section 36. That is my point.


William Barton Northrup: It would be well to have the House understand that the Minister of Justice answers my question by laying down the proposition that the company must obtain $25,000,000 in cash from the Grand Trunk. So far so good.


The MINISTER OF JUSTICE.: You are wrong in saying that I stated that.


William Barton Northrup: Then I misunderstood the minister. I understood him to say, that is how they were to obtain the money and therefore it would not be necessary to give this guarantee.


Robert Laird Borden: The Minister of Justice will admit that question as to whether or not covenants are dependent upon each other, and as to whether one follows as a condition precedent to tlie other, are questions which depend very often upon extremely nice circumstances, and they arc questions upon which courts often differ. I understand that the Minister of Justice regards clause 27 as a condition precedent to section 36. I should hardly think that the question of ' condition precedent ' would arise there at all, because section 36 is an empowering section ; not a compelling section. It enables the government to do something which it may or may not do according to its own discretion. Therefore, with all deference to my hon. friend I cannot see that the question arises. But the question does rise undoubtedly between section 27 and other sections of the contract, as to whether you are to regard them as independent covenants, the non-fulfilment of which by either side will release the other party from the performance of the corresponding covenant. I do not see in this contract anything that would indicate to me that section 27 is a provision of that kind. There is the further point to which I have alluded. There is no time specified within which this stock must be acquired
by the Grand Trunk Company. Before we leave section 7, I have another amendment, and as it is possible that the Minister of Justice may be desirous of considering it, it will perhaps be more convenient to refer to it now.


The MINISTER OF JUSTICE.: So that I may thoroughly understand what my hon. friend (Mr. Borden) has in view by his amendment, may I ask if he suggests that the obligation which is imposed upon the company under section 29 of the contract, could be enforced against the government by the company as between subject and subject, without any compliance by the company with the provisions of sections 27 and 34.


Robert Laird Borden: I would say that inasmuch as there is no time mentioned under section 27, that it at least gives rise to a doubt that had better be removed. I say further, that the hon. gentleman has made no answer to my amendment on the point with reference to the provisions of section 27, which require this stock to be held by the Grand Trunk Pacific. So far as that is concerned, it seems to me that you simply have a covenant with the Grand Trunk Pacific and that the Grand Trunk Railway acquiring that stock and not being bound itself by any covenant, may transfer the stock to an innocent person, and that person would take that stock and would have a good title to it.


The MINISTER OF JUSTICE.: My hon. friend is not overlooking the fact that thin contract will be a statute.


Robert Laird Borden: Yes, but it is a statute that does not contain any ^prohibition, by contract with the Grand Trunk Railway with respect to the transfer of that stock, all that there is here is a covenant to which the Grand Trunk Railway Company is not a party. You undoubtedly have here a covenant with the Grand Trunk Pacific Railway another body altogether, that tin; Grand Trunk Railway shall hold this stock.


The MINISTER OF JUSTICE.: And that other company comes in and takes that stock under this statutory provision.


Robert Laird Borden: Quite so, but it is not bound itself by any covenant, nor is it a party to this contract at all.


The MINISTER OF JUSTICE.: I do not know about that.


Robert Laird Borden: Well, the Minister of Justice might have a very pretty case in the courts about it. If this provision is of the supreme importance that has been attached to it by the Prime Minister ancl other members of the cabinet, surely, it ought to be so worded that there would be no doubt about it whatever.


The MINISTER OF JUSTICE.: I agree that there should be no doubt about it.


Robert Laird Borden: 

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<3erstand my right hon. friend to dissent from that view ?
The PRIME MINISTER.: No ; I dissent from the argument.


Robert Laird Borden: As far as the argument is concerned, if my right hon. friend dissents from that, he dissents from the Minister of Trade and Commerce, who has pointed out in emphatic terms the great danger that exists; and it is for my right hon. friend to show, as I do not think he will be able to show, that it will be more in the interest of the Grand Trunk, not the Grand Trunk Pacific, to have freight brought over the eastern section than it will be to have it brought from Winnipeg to Chicago through the American connections of that railway to its terminus in Portland. That is the task which my right hon. friend has to face, and a task which I think he will find considerable difficulty in meeting. In view of the action of the government in voting down the agreement of my hon. friend from Hamilton (Mr. Barker) only a moment ago, the Grand Trunk Railway, while holding $25,000,000 of the capital stock of this company, may not have a million dollars of its own money invested in it, blit will have, through owning the capital stock, absolute and complete control of the policy of the Grand Trunk Pacific Railway. And while it will thus have the advantage of controlling the policy of the Grand Trufik Pacific Railway, it will not come under a single obligation contained in this contract executed by the Grand Trunk Pacific. That is the position my hon. friend will have to face, and I refer him again to the language of his own colleague, the Minister of Trade and Commerce, who has pointed out that very great danger, I would ask my right hon. friend to point to one line, in either this agreement or Bill, which safeguards the people from that danger. But it is not only the Minister of Trade and Commerce who has pointed out the possible danger in that connection, other members of the cabinet have also spoken of it. Let us take the language of the Minister of the Interior. On page 8625 of the revised ' Hansard ' he is reported as having said :
The Grand Trunk Railway has a line from the city of Montreal to the city of Portland. It is a magnificent line of railway, well equipped In the best modern style, and it has terminal facilities which I am credibly told have cost from $20,000,000 to $25,000,000. We are told by the Grand Trunk people that the facilities which they have for doing business1 between Montreal and Portland are not sufficient now to cope with It.
Then again on the same page, he says, referring to the argument of my hon. friend from Hamilton (Mr. Barker) :
There is another contribution which my hon. friend from' Hamilton made. He pointed out with some detail and with great accuracy that
the prairie section of the railway was easier to build than the eastern section ; and that inasmuch as the Grand Trunk Company would probably start up first to build, and would complete it as rapidly as they could, they would have that line of railway in the western portion of Canada or a considerable portion of it, hundreds of miles of it, I think he said, constructed and graded to do business before the government would have built the eastern section between Quebec and Winnipeg. My hon. friend then proceeded to show" that the result would be that the Grand Trunk Railway, long before the government line to Winnipeg was built, would be hauling out wheat from Manitoba and the North-west Territories, and bringing It down to the lakes and sending it to the markets of the w-orld. I may be excused if I do not regard that as a very alarming proposition.
Take tlie language of the Minister of Trade and Commerce and that of the Minister of the Interior, and what have you ? You have the danger pointed out most emphatically by the Minister of Trade and. Commerce, to which I referred a moment ago, and you have the Minister of the Interior accepting as beyond question the suggestion of the hon. member for Hamilton that the prairie section will be built years before the eastern section will be completed. It is true, he says, that the grain will be brought out by tlie lakes, and in admitting this, he stultified another argument which he used, when he said that the grain would be brought by all-rail. If the grain can be brought by all-rail along tile eastern section, is there any lion, gentleman who will not say that it can be brought more profitably over the Grand Trunk lines connecting with Winnipeg, as foreshadowed by the Minister of Trade and Commerce ? If it can be brought by all-rail through a wilderness, surely it can be carried more profitably through a settled country such as the lines of Grand Trunk Railway traverse in the United States, and it will be, if the prophecy of the Minister of Trade and Commerce be fulfilled. So that, if the promise of the government is correct, you will not have the trade going down by the lakes, but you will have it, for some years at least, going over the Grand Trunk Railway connections to be made between its Chicago terminal and the city of Winnipeg. This is the danger prophesied by the Minister of Trade and Commerce. Let me point out this suggestion, which will not be unworthy of consideration by the government, that if during those four or five and possibly six years before this eastern section is begun, connections are made with the Grand Trunk Railway in the United States, if the course of business gets running along that line, if you have elevators built and business interests in the United States concerned in taking the grain that way, will it not be rather difficult to divert it to the eastern section and bring it north of Lake Superior ? I woukl commend that consideration to tlie Prime Minister as a business man, in addi-



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tion to the grave reasons urged on his attention by his right lion, colleague, the Minister of Trade and Commerce. In support of the view taken by the Minister of the Interior as to the delay which will take place in the building of the eastern section after the prairie section is complete, I may advert to the language of the Minister of Justice. At page 9021 of revised 1 Hansard,' and as bearing out my view of the great interests which the Grand Trunk Railway have in the United States, and may advert to the language of the Finance Minister at page 8577. Speaking of these interests my bon. friend said :
The old Grand Trunk Railway has never been, In the best sense of the word, a national line. I find no fault with the company for that. The old Grand Trunk Railway was built before confederation, and at a time when Portland seemed to be the most convenient port for the connection between old Canada and the ocean, and the Grand Trunk Company invested large sums of money in this connection at Portland. They would naturally be inclined to utilize these terminal facilities at Portland. I do not blame them for that. But the Grand Trunk Railway has had to recognize the fact that the Canada of that day is not the Canada of the present time. I recall the fact that when the Intercolonial Railway was completed and when it was proposed that we should have a measure of independence of the United States by having steamers take our mails from Halifax instead of from Portland, there was quite an agitation before it was brought about.
You cannot blame them for tldit, and you have no contract with them by which any obligation on their part is incurred not to use their terminal facilities at Portland and their connections in the United States. Two or three of the colleagues of my right hon. friend have placed the situation before him in the words I have read. The Minister of Trade and Commerce has stated this great danger, but he found that there was something in the Bill which safeguarded us against it. I find nothing in the Bill to minimize that danger. The Minister of the Interior regards with the utmost complacency the prospect of having the prairie section completed years before the eastern section. The Minister of Trade and Commerce points out the extreme probability, in that ease, of the Grand Trunk Railway making its connections with Winnipeg and taking the grain down to Portland, yet we are to call this the National Transcontinental Railway, designed for the purpose of sending Canadian products over Canadian territory to Canadian ocean ports.
What are the probabilities with regard to that ? Is it not possible that the Grand Trunk Pacific Railway Company during the ensuing year can build four or five hundred miles of railway, perhaps seven or eight hundred miles of railway, in the prairie country ? During that time you may be making surveys for the eastern division, but certainly you will not have made any progress in the construction. The Grand Mr. BORDEN (Halifax).
Trunk Railway Company, having these hundreds of miles of railway in the fertile plains of the west, will be gathering that grain, and the question is how it will be transported to the east. Will it come to the east by the rail aind water route ? Will that be the argument of my right hon. friend ? If he adopts that argument, he stultifies the whole attitude of the government with regard to this matter, because their contention all through has been that this grain is to come out by the all-rail route, and not by the rail and water route. He cannot fall back on that contention, because the hon. member for North Norfolk who has been referred to by the Prime Minister as the greatest authority on transportation in Canada was put forward by the government for the purpose of showing that this enormous quantity of grain in the west must find its way to the sea-board by the all-rail route, in preference to the rail and water route. So, my right hon. friend is confronted, according to his own argument, with the danger, that the grain, being! collected in Winnipeg by the Grand Trunk Pacific, will be taken over by the Graftd Trunk, which is not bound by this contract, but which nevertheless controls the policy of the Grand Trunk Pacific, and will be carried over American territory to the city of Portland and shipped from that port to the mother country. Now, I do not see that my right hon. friend has answered the observations of his colleagues in that r.egard. You must remember, Mr. Chairman, that the danger has been pointed out by an old and valued colleague of the Prime Minister, who yet seems to think that we are safeguarded against that danger in some way under this agreement. Where is it safeguarded ? Is the Grand Trunk Company a party to this agreement ? Is it bound by these stipulations ? Not by one of them. And the danger that was pointed out by the Minister of Trade and Commerce, is acknowledged by the Minister of the Interior. The interest of the Grand Trunk in its terminals in Portland lias been acknowledged by three ministers of the Crown whom I have quoted to-night. I have no doubt that, if I had had time to go carefully over this . debate, I could have brought to my support the remarks of many other members on that side of the House. But the time at my disposal has not permitted me to deal with more than the remarks of three of the most important members of the cabinet who have dealt with this subject. What, then, must be done, under these circumstances ? Does the government really rely upon the stipulations in this contract on the part of the Grand Trunk Pacific Railway Company 7 I assume that it does so rely. It relies, no doubt, upon the stipulations contained in section 42 to which I have referred. ' That the aid herein provided for is granted by the government of Canada for the express purpose of encouraging the development of

Canadian trade and the transportation of goods through Canadian channels,' and that ' the company accepts the aid on these conditions.' It relies, no doubt, on the provisions of section 45. which purports to oblige the Grand Trunk Pacific to arrange for and provide for shipping facilities at Atlantic and Pacific ports. To not one of these stipulations is the Grand Trunk Railway Company itself bound; and, therefore, the Grand Trunk Railway Company is at perfect liberty to make its connections at Winnipeg and to compete at Winnipeg for the carriage by rail of this grain to the Atlantic seaboard; and the carriage of this grain by rail to the Atlantic sea-board along that line would undoubtedly bring it to the city of Portland, where as the Minister of the Interior tells us the Grand Trunk Railway Company has terminals which have cost it $20,000,000, and where, as the Minister of Finance has expressly pointed out the Grand Trunk has its chief interest. Like the Minister of Finance, I do not blame the Grand Trunk for seeking to promote its own interest. It has great interests in Portland, and it is entitled, in carrying ooi its business, to do the best it can for its shareholders, to earn all the money for its shareholders that it can; and, in pursuit of that object to take the trade to Portland. The company has a charter under which it has the right to operate railways in the United States and Canada, and it has its great interests at Portland. I am not finding fault with the Grand Trunk Railway Company. But I am pointing out that, when the government undertake to give aid of the very extensive character contemplated by this agreement and this Bill, a measure designed and intended to ensure the carriage of Canadian products over Canadian lines and to Canadian seaports, it must guard the country from the danger that has been pointed out in such forcible terms by the Minister of Trade and Commerce. And I say that I find in this contract and in this Bill no adequate provision on this point. Now, I do not say for one moment that I believe that the provisions of this agreement on the part of the Grand Trunk Pacific Railway Company would be adequate for the purpose I have mentioned, even if the Grand Trunk Railway Company itself should be bound thereby; but I say that at least it would be a step in tile right direction if you require the Grand Trunk Railway Company of Canada to be bound by the stipulations in this contract on the part of- the Grand Trunk Pacific Railway Company. And I say there is no injustice in that. For under this Bill, and in this project as it stands at present, what * do you have ? As I have said before, you have the Grand Trunk Railway Company, at a nominal cost, acquiring 825,000,000 of this stock and controlling absolutely the policy of the Grand Trunk Railway Company. Under these conditions, it is only right, and only fair, that every stipulation 353*
designed in the public interest, however inadequately, should be made to apply not only to the Grand Trunk Pacific Railway Company but to the Grand Trunk Railway Company itself. For, it is not from the Grand Trunk Pacific Railway Company that we have so much to fear, it is from the Grand Trunk Railway Company; and the danger has been pointed out by the Minister of Trade and Commerce and the Minister of Finance. The Grand Trunk Pacific Railway Company has no connection with Portland, except iu so far as it is one and the same thing as the Grand Trunk Railway Company. You have this corporation in this curious position ; It is one and the same thing is admitted by the Minister of Finance with the Grand Trunk Pacific Railway Company. And he is right in this sense that the Grand Trunk Railway Company will absolutely control the policy of the Grand Trunk Pacific Railway Company, for it will hold the majority of the stock and will elect the directors, and, of course, will elect mein who will do its bidding. We cannot blame the Grand Trunk Railway Company for doing that if the government of this country see fit to place it in their power to do it. But I say that the government of this country should not place it in the power of the Grand Trunk Railway Company to do that. The government- of this country, giving to the Grand Trunk Railway Company-for, as acknowledged by the Minister of Finance, it is one and the same thing with the Grand Trunk Pacific-giving them substantial aid for the purpose of building a railway through one of the finest countries in the world, as stated by the Minister of the Interior in the speech I have referred to, and not only giving it a charter to build a railway through that country but giving it very substantial aid as well, is bound to see to it .that the Grand Trunk Railway Company is bound by the same1 stipulations, so that we shall not have in' the future the dangers to which the Min-' ister of Trade and Commerce has called the attention of the people and of parliament.
My lion, friend the Minister of Trade and Commerce thought, for what reason I cannot conceive, that that danger was safeguarded ? My right hon. friend will tell us by and by, I suppose, how it is safeguarded. But, I say that the Grand Trunk Company can build into Winnipeg at any time, it can make its connections there, and it can compete at Winnipeg for the grain of the west brought over the Grand Trunk Pacific Company and routed only to Winnipeg-because that can be easily accomplished- and it can do that without interfering for one moment with any obligation which is imposed upon it under the terms of this contract for the very simple reason that no obligation whatever is imposed upon it by the terms of this contract. Now, as I said before, I do not know
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that these stipulations which are contained in the contracts on the part of the Grand Trunk Pacific are very adequate, I do not believe they are, I have expressed that opinion before. But such as they are, they ought at least to be applied to the Grand Trunk itself as well as to the Grand Trunk Pacific Company. Therefore I will move :
That section 7 be amended by adding thereto the following subsection :-
(2) Notwithstanding anything in this Act or in the said agreement contained, His Majesty the King, acting as aforesaid, shall not be bound or obliged to perform, carry out or fulfil any of the covenants, conditions or stipulations in said agreement contained, on behalf of the Domiinon of Canada, unless and until the Grand Trunk Railway Company of Canada shall have entered into an agreement with Hi3 Majesty the King, acting as aforesaid, by which the said Grand Trunk Railway Company shall covenant and agree as follows :-
(a.) That the Grand Trunk Railway Company of Canada shall guarantee the bonds of the Grand Trunk Pacific Railway Company for the balance required for the complete construction of the western division in the said agreement as provided in clause 34 of the said agreement.
(b.) That the Grand. Trunk Pacific Railway Company, so long as the Grand Trunk Railway Company of Canada shall hold the common stock of the said Grand Trunk Pacific Railway Company to the amount of $24,900,000, shall perform, fulfil and carry out according to the true intent and meaning thereof, all the covenants, stipulations and conditions of the said agreement which, according to the terms thereof, ought to be performed, fulfilled or carried out by the said Grand Trunk Pacific Railway Company. I
I say that I do not know that this is adequate, and it may be, I think it is probable, before this Bill has finally made its way through committee, that I may have a fur-! tlier amendment to propose along the same lines in somewhat more explicit and adequate terms than those which are contained in this amendment. But for the present, I say, that what I am asking the government to do, is this : In the first place, to provide that the government of this country shall not be bound by the stipulations contained on its behalf by this agreement, unless the Grand Trunk Company shall have agreed to guarantee the bonds of the Grand Trunk Pacific for the balance required. That is the first provision I want to make, and I want them to make that provision because it is regarded, and possibly with some reason, as important that the Grand Trunk Pacific Company should take that step, otherwise the government might find itself in this position, that having undertaken to aid the Grand Trunk Pacific, having acted under section 34, I think it is, it might find itself later on with a road partly completed, and on which the Grand Trunk decline to guarantee any bonds. Then the government would probabiy have to act in the way of a further guarantee of bonds, or in the way of further financial assistance Mr. BORDEN (Halifax).
to this company. Therefore, I say you should bind the Grand Trunk Company by an agreement that it will guarantee the bonds of the Grand Trunk Pacific necessary for the complete construction of the western division in addition to the amount which shall be raised by means of the guarantee of the government. That is the first stipulation I want them to enter into, and the next stipulation and the one which I have already read, is that as long as the Grand Trunk Company holds a controlling influence in the Grand Trank Pacific, controls its policy elects its directors, and particularly in view of the fact that it can acquire that controlling interest for a mere nominal consideration, it shall bind itself by way of guarantee-because that is the effect of this-that the Grand Trunk Pacific should on its part carry out all the covenants, stipulations and conditions of this agreement. At the present time you have merely a covenant of the Grand Trunk Pacific. I want to bring the Grand Trunk Company into and of this contract in a better sense than it is at present. My lion, friend the Minister of Finance says that it is of the utmost possible importance that the Grand Trunk Company should he and of this contract. I want to bring it in and of this contract by making it guarantee that the Grand Trunk Pacific shall perform and carry out its stipulations contained in this contract on itself. If you do that, in sense at least you have the Grand Trunk in and of this contract, controlling that company ; they can see that the Grand Trunk Pacific does perform and carry out these stipulations, and being bound by the terms of an agreement of that kind it will be in its interest to see that the Grand Trunk Pacific does perform and carry out these stipulations. But under the present conditions and with some such clause as that, you have uo such guarantee. My hon. friend the Minister of Finance in some high sounding phrases, tells us that it is of great importance that the Grand Trunk Company should he in and of this contract. It is not in and of this contract at all except that it can control this company without incurring any obligation on its part with regard to the stipulations of this contract. Make it truly and really, in some sense at least, and of this contract by providing that as long as it controls the policy of this company it shall see to it that the Grand Trunk Pacific does carry out in good faith the stipulations, conditions and covenants contained on behalf of that company in this contract. I therefore submit, Mr. Chairman with every confidence in its merits, the provisions of the this amendment for the consideration of the government, believeing that, taking the very serious statements of members on the treasury benches into consideration, the govern-raent will see that there is a real danger, and they will see that some measure of relief at least against that danger can be

afforded by bringing the Grand Trunk Railway Company really and trully in and of this contract, and make it liable in case the Grand Trunk Pacific should see fit not to observe the covenants and stipulations in this contract contained.
The PRIME MINISTER.: The answer to my hon. friend's argument is a very obvious one. My hon. friend has premised the whole of the amendment which he has just proposed to the committee upon an opinion expressed by my colleague the right hon. Minister of Trade and Commerce (Rt. Hon. Sir Richard Cartwright) in a speech which he delivered upon the second reading of this Bill. My hon. friend, however, only stated part of the argument of the right hon. Minister of Trade and Commerce ; in fact, the opinion to which my hon. friend called the attention of the committee and which had been expressed by the right hon. Minister of Trade and Commerce was simply in support of the Bill which is now before the House. My right hon. friend the Minister of Trade and Commerce gave numerous reasons in favour of this scheme being ratified by parliament, and then he stated this further reason:	The Grand Trunk Railway Company have already connections as far as Chicago. There is only a distance as the crows fly, of 700 miles between Chicago and Winnipeg. Pass this Bill and the Grand Trunk Railway Company will have no interest in building a line from Chicago to Winnipeg in order to have connection from Winnipeg by way of Chicago, because you have given them this connection by way of North Bay, Toronto and Montreal by this new line of railway. Reject this Bill and you force the Grand Trunk Railway Company to get connections by way of Chicago. That is the argument that he presented to the House, and therefore, my hon. friend failed altogether to appreciate the force of the argument that was presented by my right hon. friend on that occasion. The argument of my right hon. friend is a very obvious one. I forget if he made the argument as complete as I make it now, but he made it in a very obvious manner. The moment that this Bill, which we have now before us is passed, the Grand Trunk Railway Company have no interest in building a' line from Winnipeg to Chicago. That seems to me to be a very sound reason, and everybody will agree that my right hon. friend was right when be said that the moment this railway is built, the moment the Grand Trunk Railway Company have connection by the road which the government propose to build from North Bay to Winnipeg, the Grand Trunk Railway Company have no interest whatever in expending money for building a road to get access to the prairie country, because they have already access to the prairie country by a road which is now contemplated and which is submitted for the approval of parliament.
Then, the answer to my hon. friend is that the government did not think that there was any necessity for providing any more security against the Grand Trunk Railway Company building by way of Chicago, because the interest of the Grand Trunk Railway Company, as stated in the argument of my right hon. friend, ceases completely, falls to the ground the moment this Bill is ratified and the railway is built. If we built the railway between Winnipeg and North Bay, using the railway which is now contemplated by the government of Ontario, and which would connect with this road near Lake Abitibi, what interest would the Grand Trunk Railway have in expending a large sum of money to provide a railway which would be a very expensive railway to construct between Chicago and Winnipeg ? The interest of the Grand Trunk Railway Company Is to get traffic into their territory, and they will bring it more easily and at less cost by the project which is now before parliament than in any other way. Therefore, there is no necessity for providing against the contingency which my hon. friend has in mind. The same thing applies to the Portland division. When the road is built, as it will be built, from Winnipeg to Lake Abitibi, one has only to look at the map to see that there will be no fear of any competition from Portland, because, when a train has come to the longitude of Lake Abitibi, it will be far nearer Quebec than Portland. It will be less than 500 miles from Quebec and almost 700 miles from Portland. We think we have every precaution against the contingency which my hon. friend had in view, because the very merit of the scheme which we have now before us will be the best guarantee against American competition. I do not see the relevancy of the amendment which my hon. friend has just moved, to the idea which he has expressed in the speech which he has delivered. Do I understand my hon. friend to say that he is not quite sure of his own amendment, and that he proposes to supplement it later on ?


Robert Laird Borden: I have declared in this amendment the expediency of imposing upon the Grand Trunk Railway Company all the obligations, which, by the terms of this agreement, are imposed upon the Grand Trunk Pacific Railway Company. I have taken the safe-guards, whatever they were, which the government had included in the contract, and I have applied these safe-guards to the Grand Trunk Railway Company, and what I said was that I did not think the provisions contained in the agreement in that regard were as adequate as they might be. and that while moving this amendment. I did not want to be understood as embodying in it everything which one might think might be done to I lessen the danger that was spoken of by

the right hon. Minister of Trade and Commerce. For the present all I am doing is to take the language of the government itself in the agreement, and to say that these obligations imposed upon the Grand Trunk Pacific Railway Company shall also be obligations of the Grand Trunk Railway Company.


The MINISTER OF FINANCE.: As respects the new road


Robert Laird Borden: As respects everything under the agreement.


The MINISTER OF JUSTICE.: The western section of the road as well as the eastern section 1


Robert Laird Borden: Yes.


The MINISTER OF FINANCE.: The new construction altogether ?


Robert Laird Borden: Yes.


The PRIME MINISTER.: I understood that my hon. friend contemplated the possibility of adding to his amendment.


Robert Laird Borden: Yes, my right hon. friend is quite correct. I have only had 48 hours to deal with the matter, and I thought that possibly I might be able to suggest something later on which I myself would regard as a little more effective than that which I am proposing at the present time.


The PRIME MINISTER.: What I want to say is that as my hon. friend contemplates the possibility of improving his amendment we had better let section 7 stand in the meantime.
Section allowed to stand.
On section 8,


Robert Laird Borden: One of my hon. friends has some amendments to propose to this section. He was under the impression that the amendments that I moved would be more fully discussed, and he is therefore not quite prepared to proceed.


The PRIME MINISTER.: We will allow the section to stand.
Section allowed to stand.
On section 9,


The MINISTER OF JUSTICE.: Before you proceed with this section, I would suggest that we might advantageously substitute the words ' the operation thereof ' for its management,' so that it may read :
The construction of the said eastern division and the operation thereof until completed, &c.
The section as it stands was copied from the Bill to construct the Intercolonial Rail-Mr. BORDEN (Halifax).
way, and I am not quite sure that the words ' its management ' would suit in this case.


Samuel Barker: The suggestion made by the Minister of Justice opens up a subject of very great importance. I can quite understand that the necessity for the word ' operation ' presents itself to the mind of the minister, because for some years there will be large sections of this road completed which will have to be operated by the government. Has the government any suggestion to make as to how these sections will be operated before the time arrives when the Grand Trunk Pacific Railway will be under obligation to take a lease of the road. The Grand Trunk Pacific are not under obligation to enter into the operation of the eastern section until the whole 1900 miles are completed. It is obvious that there may be sections, several hundred miles long, completed from time to time, and the House ought to be told what the idea of the government is as to operation in the interval, which may be five or six years. The government should be able to tell us this. It is all very well to say that it shall be operated by the commissioners, but it will have to be equipped. I do not suppose for a moment that the government contemplate leaving large sections of road constructed and not operated, because if so the embankments will wash away, the ties will rot, and the road will go to pieces. You cannot operate it without rolling stock, bias the government any idea of the loss that will be sustained in working sections of that kind ? What is the government going to do under these circumstances ?


The MINISTER OF FINANCE.: All that is necessary at present is to make provision that if any section of this road is in a condition to be operated, it shall be at the option of the commissioners, who will act in conjunction with the government, to operate it themselves ; or to lease it to the Grand Trunk Company if they are ready to take it, or, by other arrangement that may be found convenient to operate the road temporarily until the time of completion. I do not know that at the present stage we are called upon to go beyond that. All these questions are important, and they will come up in due course. The theory of the whole scheme is that, we shall press forward the construction of this road with all possible speed, and all that is necessary now is to make provision that pending the completion and leasing of this road, the commissioners, or any responsible body with which they may make an arrangement, shall be empowered to operate the road.


Samuel Barker: Surely the government are not asking parliament to authorize the operation of 500 miles of railway, probably for five years, without telling us how they intend to equip that 500 miles with locomotives and rolling stock. It is going to cost a

considerable sum of money. Are we going to go it blind, and- are we to enter on this hastily and without any consideration, as the government appear to have done ? Are we to blindly vote a power of attorney to the government of the day to appoint a commission who will do just as it pleases. Here are 500 miles of railway completed through a new country, which the government think we consider to be muskegs and tilled with jackpines ; through this section of the country we w-ill have a road of 500 miles, which is not to be taken over by the lessees for several years, and which will lie idle unless parliament votes a very large sum of money for its equipment. Surely the government have considered this before submitting such a scheme to parliament. They must have intended to operate the road. They had the word ' management ' in, but the word ' oper-tion ' is much better. But even under the word ' management' they must have intended to operate it. They must have considered where they were going to get the cars and locomotives, and above all, where they were going to get the traffic. What is the government going to ? Have they any idea ?


The MINISTER OF FINANCE.: ~I do not think there is anything like going it blind in the matter. It will be precisely in the same position as any other road during the period of its construction. It will be the policy of the government to press forward the construction of this road with all speed that is consistent with efficient and economical construction, and if any portion of that road is in a condition to be operated before the time is reached at which we can lease it to the Grand Trunk Pacific, then unquestionably, if it is found in the public interest, as I have no doubt it will, that section will be operated. But parliament will meet once or twice before we have reached that stage, and I have no doubt there will be ample opportunity for dealing with these questions as they arise from time to time. There is no going it blind. We propose to build the road as quickly as possible, and. if any sections are available for operation before that moment comes to transfer it to the Grand Trunk Pacific, we must devise ways and means of operating it, either by the commissioners themselves, or, by leasing it to any other person or body corporate which can operate it.


Samuel Barker: The Minister of Finance fails to see the point I am raising. You cannot operate a road without rolling stock.


The MINISTER OF FINANCE.: I did not say you could.


Samuel Barker: Has the government thought how they are going to do it ? Have they considered the question at nil ? Are they going to buy rolling stock for 500 miles of railway ?


The MINISTER OF FINANCE.: Not this year.


Samuel Barker: But when it is completed ?


The MINISTER OF FINANCE.: It is not going to be completed for a few months.


Samuel Barker: Then you have not thought it out at all. You are going to build it, and take chances when the road is completed. Does the minister seriously ask parliament to vote for the project under these circumstances ?


The MINISTER OF FINANCE.: I do.


Samuel Barker: You do ? Then I am afraid that if the hon. gentleman were to go before a body of shareholders and tell them that is what he contemplates, they would ask him for some particulars. The hon. gentleman says it will be constructed as any other road would be by a company. But a road constructed by a company is put into operation as the sections are completed, because the company is going to continue to operate it. The hon. gentleman forgets for a moment that when this road is completed the government get out of its operation altogether, and they will have a lot of rolling stock on their hands which they will not know what to do with. The Grand Trunk Pacific will make a splendid bargain out of the government when they find them w7ith a large amount of rolling stock, and no place to put it. You will have to practically hand it over as a present to the Grand Trunk Pacific.


The MINISTER OF FINANCE.: That will depend very much upon the wisdom of the government that is in power when this arrangement is made. We have a strong and abiding faith that there will be a wise go-ernment in power then.
Mr. BARKER, So have we.


The MINISTER OF FINANCE.: We must depend upon the wisdom of the governments to guard the country against these foolish things which the hon. gentleman (Mr. Barker) suggests. In the case of a company, if I were to go before a number of shareholders and tell them what I was going to do several years hence, in regard to these details, they would probably remind me that the company would meet several times in, the meantime, and that we need not take an appropriation for rolling stock which might or might not be needed three years hence.


Robert Laird Borden: That may be a satisfactory mode of argument to the Minister of Finance, but I do not think it would be to any one else. He has not met the suggestion of my hon. friend from Hamilton at all. Has any member of the government any conceivable idea at the present time whether they propose to operate the road in sections or not ?


The MINISTER OF FINANCE.: Yes, I will answer my hon. friend at once. If

the government and the commissioners deem it advantageous to the public that any of those sections should be operated immediately after they are completed, they will be operated.


Robert Laird Borden: The policy is, then, not to consider the question immediately, but to consider it by and by ?


The MINISTER OF FINANCE.: You had better wait a year or two before you buy the rolling stock.


Robert Laird Borden: You have either to do one thing or the other. You have either to conclude that you will operate it, or to conclude that you will not operate it. If you conclude that you will operate it, you will have to buy rolling stock. In that case, what are you to do with the rolling stock; when you hand the road over to the Grand Trunk Company ? Have the government considered that ? If they do not operate the road, what will happen ? A road which is not operated deteriorates very rapidly. Are the government to have a road four or five years without operation and effective maintenance ? How are they going to maintain the road to a proper standard without having any proper return in the way of traffic ? The Minister of Finance seems to think that the time to consider these matters is by and by. Onq would naturally suppose that the time to consider them is before you make the agreement.


The MINISTER OF FINANCE.: I am obliged to dissent entirely from my hon. friend's position. I see no reason why we should ask parliament to commit itself to details which cannot arise for many months, perhaps for years. When we come to parliament for an expenditure of public money for rolling stock, these questions will be very proper ; and then I have no doubt that the wise government to which I have referred will deal with them.


Robert Laird Borden: We will do the best we can with them.


The MINISTER OF FINANCE.: The hon. gentleman is anticipating a government coming into power which would make reckless arrangements, as in the past; but I do not think that is probable.


Mr. OSLER.: It is rather amusing to listen to the Fiii a nee Minister after the solemn declaration of the Prime Minister that this scheme commits the government to an expenditure of $13,000,000. When asked about rolling stock, he said that no business man ever looked forward three years.


The MINISTER OF FINANCE.: I did not say that.


Edmund Boyd Osler: I think the Finance Minister said that parliament would meet two or three times in the meantime, and that there Hon. Mr. FIELDING.
would be time enough to provide rolling stock. Is not that right ?


The MINISTER OF FINANCE.: That is a different story.


Edmund Boyd Osler: The inference I draw is that the Finance Minister thinks it is not worth while looking forward to a possible expenditure three or four years from now. The estimate of the Prime Minister was probably arrived at on the same basis.


The POSTMASTER GENERAL.: On what basis was that $560,000,000 estimate arrived at ?


Edmund Boyd Osler: On the basis of the accumulated debt of the Intercolonial Railway.


The POSTMASTER GENERAL.: A very absurd figure.


Edmund Boyd Osler: Not as absurd a figure as many of the figures quoted by my hon. friend the Postmaster General. The increase in the cost of the Intercolonial Railway is exactly what I gave, if the statements of the government are correct. I merely carried out the figures on that basis. But' on this question of rolling stock, let me differ from the Finance Minister when he says that this is the same as a private corporation. An ordinary railway company, looking forward to operating the road for itself, would naturally buy its rolling stock as it goes along. It buys its gravel cars and various other cars for construction purposes ; and as the construction is completed, it turns its construction cars into freight cars, and so gets value for them. An enormous sum of money is expended on construction cars and engines. These engines, if bought by a railway company for its own operation, would be of great value to a new road built in a new country ; but if these cars are supplied to a road which is constructed by a government and which is to be handed'over when completed to a company, we all know as a matter of business experience that the rolling stock becomes practically valueless, because the company leasing that road and operating it will not pay any price for that stock at all. If the government are making no provision for operating this road in sections as it is built, they are overlooking a most material consideration in the cost of this road, and they are committing the country to an enormous addition to the capital cost of this road before it is handed over to the Grand Trunk Pacific. I think that the hon. member for Hamilton is right in asking that the government should give an explanation of what they propose to do with this road as they build it in sections.


Albert Edward Kemp: While we are discussing the question of the eastern section, might I inquire if the pamphlet which the Prime Minister said was being published giving information in regard to the country which

the eastern section would traverse, is yet completed and ready for distribution ?


The PRIME MINISTER.: Yes, and it will be distributed to-morrow.


Albert Edward Kemp: Will that contain information as to the practicability, from an engineering point of view, of constructing a railway with 0'4 per cent grade through the province of Quebec.


The PRIME MINISTER.: The pamphlet will be a summary of all the information which is in the library on this subject.


Albert Edward Kemp: There will be no direct information in the pamphlet from an engineering standpoint ?


The PRIME MINISTER.: I do not think so.
Amendment (Hon. Mr. Fitzpatrick) agreed to, and, section as amended, agreed to.
On section 10,
The commissioners may appoint and employ such engineers (under the chief engineer), and such surveyors and other officers, and also such servants, agents, and workmen, as in their discretion they deem necessary and proper for the execution of the powers and duties vested in them under this Act.
The MINISTER OF JUSTICE moved that section 10 be amended by adding the following words to the end thereof:-The Governor in Council may from time to time designate one of the commissioners to be chairman of the commissioners.


[Stage Direction]
Amendment agreed to, and section, as amended, agreed to.
On section 12,
Any officer or employee appointed by the commissioners who, by virtue of his office or employment, is entrusted with the custody or control of moneys, shall give security in the manner and form, so far as may be, provided by the Act respecting public officers, and in such amount as is fixed by the commissioners.
Section agreed to.
Mr. PUTTEE.: I would like to say a few words in connection with the previous section.


Peter Macdonald: The hon. gentleman had better move to reconsider section 11.
Mr. PUTTEE moved that section 11 be reconsidered.


[Stage Direction]
Motion agreed to.
Arthur W. Puttee: I wish to call the attention of the House, in connection with this Section, to the question of the labour that will be employed on the construction of this line. A great deal of this construction work is going to be through a new country with which we are at present not familiar. We have had some experience of this kind of railway construction in Canada before. In 1896, 1897 and 1898 the Crow's Nest pass road was constructed, and in that ease a
good deal of the construction work was similar to what will take place under this Bill. At that time there was a great deal of public sentiment excited, which finally culminated on the loth of January, 1898, in the appointment of a royal commission to examine into all tlie complaints then made and laid before this government. This commission reported on the 30th of April, 1898, and I have before me its report, to which I think it would be well to pay some attention. Although the public money spent on that royal commission then resulted in nothing but a report, we may get some value from that expenditure now by having our attention drawn to the evils which then existed and guarding against their recurrence. Let me just point out some of the scandals that were investigated and which are likely to occur again, if we do not take precautions against them. On page 13, of the report, I find this statement:-
Referring again to that part of the deposition of Mr. Armstrong, he says, that taking into consideration the condition of the men and their ignorance of, and the unsettled condition of the country, it makes it nearly' impossible for them to get any redress by the ordinary course of the law.
It will be remembered that probably the immediate cause of the appointment of the royal commission was the death from negligence of the two men, McDonald and Fraser. The cases were well know at the time but I am not aware that any of the responsible parties were called upon to answer for the deaths of these men. The report says :
Two men, McDonald and Fraser, were taken sick with diphtheria at Mann's camp, about a hundred miles from Macleod. They were seat in open carriage from that place with instructions to be forwarded by the ambulance from Bullhead. They were, however, brought to Crow's Nest pass, about twelve miles east of Bullhead, when they were refused the usual accommodation for patients, and on the same night were driven back to Bullhead. They- were put in an isolated house to await the ambulance. The following day they were conveyed to Sulphur Spring, where they passed the night and in the morning w-ere driven to the end of the track near Pineher Creek. They arrived at that point in the evening and two hours or so latter they died. The only medical attendance they had was that received from Doctor Meade, a private practitioner of Pineher Creek, who was sent for as soon as the end of the track was reached, but was only in time to see them die.
All through this report, it is pointed out ns being proved that men who 'were employed, and who found it necessary to resign rather than put up with the treatment they received, had to tramp all the way back to civilization. Not only that, but as they passed the different camps on the line, they were refused food, the men at work having been instructed not to furnish them with assistance of any kind. Many of these men had to tramp for two or three days from 50 to 150 miles without a bit of food, though

they passed various camps on the way. This was owing to instructions having been given to the camps not to supply any food to men who had been discharged from employment at the end of the line. As these matters are treated in the report I shall not touch on them at any length, but I would press on the government the necessity of taking precautions to see that before this undertaking is commenced, the contractors should be governed by the findings and recommendations contained in this report. One of the most serious grievances was the fees and the transportation charged against the men. This is especially' referred to. A number of the men employed, who were taken from the city of Ottawa and across the river at Hull, gave evidence on this score. The commissioners submit a table showing that, after the various fees and transportation charges were deducted from their pay, men who worked twelve months continually, and allowing $5 per month for personal expenses, would have $5.10 coming to them. If they had only worked nine months, when they arrived at Ottawa they were $22.40 cents in the debt of the company. This was actually the case in one matter referred to, where 80 employees joined together and entered a suit against one of the sub-contractors, and I believe got judgment but the case was appealed, and being unable to stay and follow up the appeal, these men had to accept from the contractor transportation back to Ottawa and $5 to buy food on the way back, which was a poor recompense for the work they put in.
I just wish to place before you some of the general grievances which the commission found had been proved and the recommendations of the commission :
First the non-compliance on the pant of the company and the contractors with the terms of the agreement, more particularly to the end of September.
That is a matter which could be arranged for with a little forethought.
2.	The lack of proper attendance to the men in several instances when reaching Maclecd.
3.	The forcing of men to sleep in the open air in some instances without blankets on the hare ground, or in cold and filthy houses, box cars or boarding cars, not being fit to keep men in for any length of time.
4.	The lack of proper washing accommodation and more particularly on the works in some of the contractors' camps, which besides not being properly attended to, because full of vermin and were filthy inside and outside, and had no or not sufficient light, ventilation or proper shelter.
5.	The keeping of men under tents until the beginning of January without stoves.
6.	The feeding of the men in some instances, and without good reason, with frozen provisions.
7.	The threatening of the men with discharge if they should make complaints or representations.
8.	The charging of mail fees against their consent.


Mr. PUTTEE.: 9.	The loss of time during which they were kept idle either after they had reached Macleod, or after they had begun work, whether due to bad weather or to causes uncontrollable by the men, or whether the employer had no work for the time being.
And the great grievanpe,-
10.	The charging of fare to Macleod and from Macleod to the works, and board, even for meals which the men did not get, and the refusal to recognize the alleged right of the men to he returned home free or at reduced rates after a certain time as represented by the agents.
These that I am reading are general grievances which, the commission say the evidence lias fairly established :
14.	The refusal of meals to sick persons and the determination of sub-officials to send them to work, notwithstanding their sickness, and in some instances discharging them.
15.	The low rate of wage which left the men in the position of being scarcely able to meet their expenses and charges from the time they left home bo the date of return, many of them never getting out of debt to the company and being compelled to walk the whole distance home, sometimes nearly 2,250 miles, and in all cases destitute and exposed to all sorts of hardships.
Tlie commission, after investigation, have stated these as facts. I happen to know them to bo so of my own knowledge. I have seen men passing through Winnipeg, even from as far west as the Rocky mount-1 a ins who had come on foot and intended to go east on foot. It was the policy of the government in the case of this construction that Canadians should be employed as far as possible. Canadians were employed, some of them coming from as far east as Halifax, most of them from Quebec and Ontario, including many from tlie city of Ottawa and the city of Hull. And, during that winter, I saw many men who had to tramp all the way from the west and intended going east from Winnipeg, undertaking to get home by tramping, after having worked for months and having left tlie company even poorer than when they entered its service. Now, some of the recommendations of this commission, it seems to me, are particularly applicable at this time; and not only should they be carefully considered. but some action should be based upon them. The commissioners say :
We also found that the payment by time cheques, bank cheques, and the giving of time records, caused the men great loss of time and money.
This, of course, is one of the great evils of railway construetibn. Time checks are given to men leaving the employment of the company, these checks being payable at the headquarters of the company and only on some particular day. The result is that the men have to take a reduction on the checks from some store or from people who make a business of cashing the checks at a discount; or these checks may be carried

by the men in their pockets and never cashed at all. I believe, that, as a matter of fact, construction companies on undertakings of this kind do make a very large percentage of profit in uncashed time checks:
Although the sleeping accommodation may be somewhat improved since the commencement of construction, yet as far as we are aware the grounds of complaint forming the subject of this inquiry still exist.
This was at the end of the winter, that is why the point is noted :
That employment agents in future be subject to government regulation, and a general system adapted to ascertain the physical condition and fitness of the men seeking employment.
That regulations be adopted- to protect employers from imposition by the men, by assuming false names, of making improper use of transportation granted them, cheating or defrauding employees whilst under employment, &c.
That general or special rules, according to the nature of the work or the distances, be fixed as to fare, food, cost of supplies, washing and sleeping accommodation, working days, rale of wages, medical attendance, hospitals, &c., and such other regulations as would protect the honest labourer against imposition and his own improvidence.
That the company, or chief employer, be responsible directly and indirectly for the reasonably prompt payment for all wages earned on the construction of the work.
' That wherever practicable there would be greater satisfaction generally if the men's wages are paid at shorter intervals than at present prevail. The terms of the contract with the men should be carefully supervised before the engagement is completed. The scale of wages on the present work should be at least from $2 to $2.50 per day for labourers and board from $4 to $5 per week.
That no liquor should be allowed to he sold on or near works of this kind.
That is an important point ; and I would suggest that this undertaking, which is to be such a large one, will be certain to involve us in dealing with these questions before the thousands of men employed on it have finished their work. It should be laid down as a rule that all wages should be paid weekly. I conceive that there is no practical objection to this proposal. Large companies do make objection, because it suits them to pay by time cheeks, and to have only one ' cashing-in day,' as they call it, each month, holding back always fourteen days' pay. But I believe it would be practical, and woidd certainly be a great benefit, to insist on weekly pay throughout this work. The commissioners reported also :
That independent government officials be appointed with certain magisterial powers permitting them to settle on the spot all difficulties and complaints arising between employers and employees and to see the proper execution of the rules and regulations in force.
That is a very important recommendation and has a bearing on the suggestion that
there should be weekly pay days. It is a custom with large contractors to object to frequent pay days because they say, it is impossible to get a considerable portion of the men to work after such pay days. If this recommendation were carried out, it would overcome that objection altogether. The recommendation is that no liquor be allowed to be sold on or near works of this kind. The next recommendation is this :
That the above suggestions apply to all public works wherever the government intervenes directly or indirectly and as far as possible to the work in question.
The commission would have this apply to all works in which the government is interested directly or indirectly. I take it that, in regard to this proposed work, or over a large portion of it, the government would he directly interested ; and on the whole line, from east to west, it might properly be said that the government is interested directly. At all events, there is no part in which it is not Indirectly interested, because on the whole line it guarantees the bonds. If the system of time-check payment is allowed there should be some new method altogether to ensure that the men receiving these checks shall be able to cash them at other than the one place specified by the company. It seems to me that it would not be out of the way to suggest that the government officers in any town should have the power, or should even have the duty imposed upon them to cash these time-checks. For instance, where there is a customs officer, it seems to me these checks could be cashed, and if necessary, the company could be charged five per cent to discourage the practice of giving time-cheeks instead of wages to the men leaving their employment. This report of that commission on the Crow's Nest Pass work was a good report. At that time, it was of no practical use, because too late in the history of the construction of that work. But it should be studied and should be availed of, and, as far as possible, followed out now, 'before the actual contracts or sub-contracts are let.
There is also one other matter that might lie referred to in this connection, and it is one concerning which there has already been some complaint.
All through this country, more especially perhaps in the west, it has become a frequent practice of construction companies to bring in American civil engineers. That has loing been a source of grievous complaint so far as the Canadian Pacific Railway is concerned, and I believe that their, officials make it a practice each season to bring over from the United States classes from the various colleges and educational institutions there, and give them work for experience, and they go back into the United States at the end of the season. At the same time our civil engineers are idle, our own engineering students who are graduated from

^universities in this country, are in nearly every case forced to seek employment in the United States. I believe it is a matter of fact that the graduating classes of this country, go over almost in a body across the line to obtain employment in their calling for which we have educated them. On the surveys that are being made at the present time west and north of Lake Superior, the complaint is already being made that the work is done almost entirely by American civil engineers. Seeing that this contract is a public one made by the government of Canada, we are bound to take the responsibility for this; at all events, it appears to me that the matter could be remedied and should be at this time.


Mr. MONK.: I was not present when my hon. friend began his argument, and X do not know if he has concluded it with an amendment. I agree with everything he has said with regard to the necessity of employing engineers of our own country. As to the pay of the workmen, I think it is a rule that should extend to all government employees who do work for which they receive a small salary. The advantage of that custom, in the city of Montreal for example, would be considerable to those who deal with the labourers employed by the government, canal men and others, because they would get paid in cash, as a rule, for everything that these men buy, they would run no risk of losing, and they could sell what the workman has to buy at a cheaper price. But when you consider the advantage it would be to the work-1 ingmen themselves, I do not see how the government can avoid adopting the suggestion of my hon. friend from Winnipeg and amending clause 11 so as to provide for weekly payments. As a rule the workingman who is paid now at longer intervals has to deal with the same man, and he lias to pay an excessive price for the necessaries of life. He has to buy on credit, whereas if be were paid weekly he would be able to purchase for cash, he would be able to purchase where he pleased and get his articles both cheaper and better. So weekly payments would be an advantage not only for the dealer but for the workingman himself, and I hope the government will adopt the suggestion made by my hon. friend from Winnipeg (Mr. Puttee). On government works where the contractor frequently keeps a store and deals with the workingmen, weekly payments would be particularly advantageous to them. That is a suggestion often made to me by working associations in Montreal, who desire to see weekly payments incorporated in the law. If it is necessary make it fifteen days-as a rule government employees are not paid every fifteen days, at least that is the case on the canals. I know that the working associations in the city of Montreal are unanimous in favour of weekly payments.


Arthur W. Puttee: and I think the government ought to adopt this suggestion and incorporate it in clause 11, otherwise we will have a renewal of those abuses which have invariably arisen on the constuction of railways in this country.
With respect to the civil engineers, I think the suggestion of my hon. friend from Winnipeg should receive the approval of the government. I do not know how they are situated in the west, but in the city of Montreal I know that the University of McGill turns out very competent engineers. In Laval University they have an affiliated polytechnic school, as my right hon. friend knows, and they are erecting a new building for that purpose. They turn out first-class engineers, who very often have to go to the United States where they are gladly received and given employment. Now, since this whole scheme is a patriotic one, why not insert in this clause 11 a provision that the commissioners shall employ only Canadian engineers on this railway ? If such a clause were put in I am sure it would have a very beneficial effect. But I am sorry to see that amendments which have been proposed of a very serious character this evening are left in abeyance, or treated as one was a moment ago by the acting Minister of Railways and Canals in a jocose manner.


The MINISTER OF FINANCE.: I was In dead earnest.


Frederick Debartzch Monk: I hope my hon. friend will be more serious in regard to this amendment. Let us put an amendment im clause 11 calling for the weekly payment of the workingmen. That will be of great advantage to them, it will protect them, and it will also protect the dealers.


The POSTMASTER GENERAL.: Protect them from what ?


Frederick Debartzch Monk: Is it the Minister of Labour who is asking that question ? Did not the Minister of Labour listen to what I said a moment ago, and what was much better said by the hon. member for Winnipeg ?


The POSTMASTER GENERAL.: Would the hon. gentleman be good enough, after he has done abusing me, to say what protection the workingmen would get from weekly payments ?
Mr, MONK. I have never, since I have brought matters of interest to the workingmen to the attention of the Minister of Labour, received the slightest assistance. Now the Minister of Labour remembers how be treated the workingmen of Cartierville.


The POSTMASTER GENERAL.: I know what a friend the hon. gentleman was, what a humbug he was in that affair.


Frederick Debartzch Monk: He remembers that he -would not protect these three workingmen who had been abused by a government contractor. Now the Minister of Labour asks me how

labouring men would be protected by weekly payments. Well, I may tell him that there are hundreds of labour organizations in the city of Montreal who have asked for weekly payments. I will tell him that the labouring man who is paid every week is not the slave of the dealer for the necessaries of life ; he has the cash in Ills hands, and he is able to go around and choose among the stores the best things for his family, he can buy them at cash price, and thereby he escapes from the thraldom of the dealer. The Minister of Labour did not know jtliat. Why, when this Bill was brought into the House, Mr. Darlington, who represents one of the labour organizations of Montreal, came to me and asked me to see that weekly payments should be made to the labouring men. The Minister of Labour, who has been two or three years in office, rises, when I speak of weekly payments, and wants to know if they are going to be of any use to the workingmen.


The POSTMASTER GENERAL.: The hon. gentleman should not put words into my mouth that I did not use. The hon. gentleman said that if the contract called for payment by the week we could protect the workingmen in respect to his wages. I asked him if he would explain what protection he alluded to. I do not say that payment by the week would not be to the benefit of the workingman. I would remind the hon. gentleman that when this government took office we found that the government was not in the habit of paying the civil service at less frequent intervals than a whole month.


Frederick Debartzch Monk: You pay them every month ?


The POSTMASTER GENERAL.: When we took office the practice of our predecessors was to pay monthly and we have modified that practice, at all events, as far as my department is concerned and I think other departments to the extent of paying fortnightly. Throughout the whole Post Office Department we have improved upon the practice we found in force when we took office and those engaged in the service are paid fortnightly. I asked my hon. friend in all humility to explain what he meant by saying that weekly payments would protect them. I thought when he said 1 protection ' that he meant that the workman might run a less risk of losing his wage, the more frequently he was paid the less financial risk he would run. If I had understood that he used the term in that sense I would have explained to him that the contract provides ample protection in so far as payment is concerned though perhaps the question of frequency is not covered. Section 40 provides that :
The company shall, before being entitled to the guarantee provided by this agreement, furnish evidence, satisfactorily to the government, that all just claims of contractors and for materials, wages and supplies, and all just
claims against contractors and sub-contractors for materials, wages and supplies entering into and supplied for the construction of the railway have been duly paid.
So flint under that clause in so far as getting his pay is concerned


George Taylor: That only applies to the western section.


The POSTMASTER GENERAL.: The company cannot get the guarantee until the wages are paid. As far as these concessions are concerned the government would he the contractor and the government will provide in the contract it makes for the construction of this section for the payment of the workingmen.


Frederick Debartzch Monk: My hon. friend asked me in what way weekly payment would protect the workingman.


The POSTMASTER GENERAL.: The hon. gentleman used the word ' protection ' and I asked him to kindly explain what he meant.


Frederick Debartzch Monk: I meant the protection which has been advocated by the hon. member for Winnipeg (Mr. Puttee) and advocated by me-protection in this sense that if the payment is more extended the workingman becomes a prey of the contractor and becomes to a certain extent his slave.


The POSTMASTER GENERAL.: There is no doubt about that.


Frederick Debartzch Monk: But my hon. friend had something else in view. He meant protection as far as the working man being secured in his wages is concerned and lie referred to section 40 of the contract, but, as a distinguished lawyer, I am quite sure that he will readily appreciate that this clause 40 of the contract applies only to the western part of the Grand Trunk Pacific scheme. Is there anything in the contracts which protects the workingman on the eastern section ?


The POSTMASTER GENERAL.: Surely the government, when it prepares its contract, will be responsible for the payment of wages and it will put in proper safeguards.


Frederick Debartzch Monk: My hon. friend knows perfectly well that the government will not be responsible for wages ?


The POSTMASTER GENERAL.: It will not ?


Frederick Debartzch Monk: It is not going to give contracts.


The POSTMASTER GENERAL.: The government will make a stipulation in regard to wages.


The MINISTER OF FINANCE.: We shall see that the wages are paid by the contractors.


Frederick Debartzch Monk: The very painful experience that I have had with the hon. Minister of Labour has led me to the conclusion that he will not protect the workingman against the contractor. That is the experience in connection with the building at Nelson where $1,200 was taken from three workingmen.


The POSTMASTER GENERAL.: That is not the ease. The case, if I remember rightly was, that the hon. gentleman had three clients who came to him with their claims. He told them that they had perfectly valid claims, that the debtors were perfectly solvent and after they put the case into the hands of my hon. friend, although there was no doubt whatever according to his advice that they would recover, for some reason he preferred not to recover these moneys for his unfortunate clients, but, he has got a grievance nominally against the government. He has assured them that there is no question as to their legal rights and .vet he will not take steps to recover these claims for his clients. I think the hon. gentleman has neglected his duty.


Frederick Debartzch Monk: I never would have imagined that the hon. Postmaster General had such a small opinion of me as to think that I would choose among my electors who have been ill-treated by him clients to make money out of. I never take a case from among my constituents. I do not know whether it is a rule adopted by my hon. friend, but it is a rule that has been followed in Jacques Cartier by lawyers since the time Mr. Laflamme was Minister of Justice in the same cabinet as that of which my right hon. friend the Prime Minister was a member. There is a tradition in Jacques Cartier that the person representing the constituency, being a lawyer, will not take a case in order to make money out of his constituents.


The POSTMASTER. GENERAL.: The hon. gentleman told us in the House that these men were his clients.


Frederick Debartzch Monk: On the contrary, I denied that I had any legal relations with these men. I brought the oase to the attention of the department as their representative. I appealed to the hon. Minister of Labour to protect them and the Department of Labour had some understanding with the Department of Public Works


The POSTMASTER GENERAL.: That is not correct.


Frederick Debartzch Monk: Although the hon. Minister of Labour, I must say, disclaimed all responsibility by saying that he had been absent at the time.


The POSTMASTER GENERAL.: I did not disclaim it at all.


Frederick Debartzch Monk: I therefore forgive him to a certain extent, although I cannot forgive Hon. Mr. FIELDING.
him now. But, in this case, there is no doubt that the contractors, Messrs, Lemoine, were paid $1,200 which belonged to these three workingmen and the only recourse they had was the recourse that I repeatedly suggested. The hon. Minister of Labour says that the recourse of law was open to them but I told him then as I tell him now that we pay $40,000 a year to maintain his Department of Labour to save the workingmen from the misfortune of falling into the hands of men who will not meet their obligations.


The POSTMASTER GENERAL.: I commiserate with them under the circumstances because it appears that these unfortunate clients appealed to him to exercise that great legal acumen of his to recover their rights and he neglected to recover their rights.


Frederick Debartzch Monk: In a certain sense I look upon all my constituents as my clients. In the county of Jacques Cartier if the member happens to be a lawyer he takes no clients from among his constituents.


The POSTMASTER GENERAL.: In this ease my hon. friend said that they were his clients.


Frederick Debartzch Monk: My hon. friend has not referred to the report.


The POSTMASTER GENERAL.: I remember quite well.


Frederick Debartzch Monk: My hon. friend is not very correct in a great many cases. However, we will leave that case aside. It is still open, the government has still contracts with Messrs. Lemoine.


The POSTMASTER GENERAL.: The hon. gentleman is still their counsel too ; it is still in his power to help them.


Frederick Debartzch Monk: After I have stated to the Minister of Labour that these gentlemen are not my clients, he has no right to contradict me.


The POSTMASTER GENERAL.: Neither do I think that the hon. gentleman has a right to misrepresent me. He knows quite well that it was not through me that these workmen were not paid.


Frederick Debartzch Monk: I know that my hon. friend tried to escape responsibility by stating that he was absent.


Tht POSTMASTER GENERAL.: I was many thousands of miles away, but I never once stated that I was absent. The hon. gentleman was good enough to state that for me, and to say that I was not personally responsible.


The PRIME MINISTER.: Might I suggest, Mr. Chairman, that we come back to the question before the committee.


Peter Macdonald: 
Frederick Debartzch Monk: I am drawing an analogy as to the conduct of the government. I am proceeding by exemplification.


Peter Macdonald: It is sufficient to use it as an illustration.


Frederick Debartzch Monk: Do you hold that I cannot give as an example the treatment meted out to three workmen by the government.


Peter Macdonald: I think you can, but I think both of you went beyond that.


Frederick Debartzch Monk: I was led into the discussion by the Minister of Dabour.


The POSTMASTER GENERAL.: Well go on with the Grand Trunk Bill now.


Frederick Debartzch Monk: I am sure the Minister of Labour will be glad when I abandon the question of the three workmen of Cartier-ville.


Albert Edward Kemp: That's a raw spot.


Frederick Debartzch Monk: Some provision ought to be made in regard to the engineers, and in this respect I appeal particularly to the Prime Minister. I do not refer especially to McGill, because the engineering course in McGill has already a very high reputation. We have in Laval university of Montreal a new polyteclmical school, and we have young men who are filling a great void which has existed in our province. My right lion, friend knows that classical studies are paid much attention to in the province of Quebec, and that technical studies have to some extent not attained prominence in the past. That Laval scientific school has been opened under able teachers, and I think we should encourage its students. A provision in this Bill enjoining the government as far as possible to give the preference to Canadian engineers would be very popular ; much more popular than the preamble of the Bill, which speaks of the work as a grand national undertaking. We should have a national enactment in the Bill to protect our workingmen, and to protect our young men who are studying engineering. The suggestion of my hon. friend (Mr. Puttee) is a most useful one.


George Taylor: Probably the hon. gentleman (Mr. Puttee) thought it was unnecessary to have a prepared amendment in this direction, as no doubt he believed that the Minister of Labour would accept his suggestion. If it is not accepted by the Minister of Labour, then the hon. gentleman (Mr. Puttee) should move to amend section II, so that Canadian surveyors, engineers, and workingmen should be employed. Not only that, but he should move to provide that these employees should be paid their wages weekly. Some years ago the manufacturers of Ontario paid their men once a month, but it was found that this was inconvenient to labouring men with large families who
had to run into debt for their supplies, and on the insistence of the workingmen, the manufacturers paid fortnightly, and latterlyi they have been paying weekly. In a project of this magnitude the government ought to make provision that all the employees should be paid their wages weekly. It is as easy for the contractors to pay weekly as monthly, and it would add to the wages of the men at least 10 per cent if this were done. In my town there are 700 or 800 men employed, and in Toronto there are thousands and thousands of workingmen, and they are all paid weekly. Why should not the government adopt that system ? The Minister of Labour says that he has changed from monthly to fortnightly payments in his department, but he should go one better and pay his employees weekly. Every civil servant should draw his wages weekly the same as every other labourer in the country. If that were done the civil servants would not have to go to brokers to discount their salary checks weeks in advance in order to get food for their families. I understand that there are brokers on Sparks street in the city here, making a large amount out of the civil servants by discounting their checks in this way. The Minister of Labour ought to see to it, that every governfinent employee should receive his pay once a week.


The POSTMASTER GENERAL.: They don't want it.


George Taylor: They don't want it ?


The POSTMASTER GENERAL.: Not all of them.


George Taylor: Leave it to the civil servants themselves and you will find out.


The POSTMASTER GENERAL.: My deputy told me that when we sent out the fortnightly checks, a good many preferred the old plan, but we adhered to the fortnightly system.


Edward Frederick Clarke: Is there much kick now about taking the checks fortnightly ?


The POSTMASTER GENERAL.: My deputy informed me that there was an objection from some of the officers of my department.


The MINISTER OP FINANCE.: The tendency to-day is to pay workmen more frequently than in the past, and I think we should respond to that sentiment. I have not myself had my attention called to the question of weekly payments, but I know that as respects a large portion of workingmen in my own province, we legislated to give them fortnightly payments. What may be a good system in the city may not be necessarily equally applicable to the rural sections. I am not sure that up amongst those muskegs and jackpines, it would be so important for a man to have

his money every Saturday night, 'as it would be in the city of Toronto. In regard to the engineering side of the question, I am sorry my hon. friend from Jacques Cartier has so little faith in the young engineers of Laval and McGill. He seems to think they will not be employed unless we force their employment by an Act of parliament. I have faith enough in these young men to believe that they will be employed on their merits, that a preference will be given to them, and that there is no need of an Act of parliament to force them on an unwilling company or contractors. You need no legislation, at any rate as respects this government, to induce the employment of Canadians in preference to others. You might push that principle too far. My hon. friend from Winnipeg, under a severe rule, might find himself excluded from representing a constituency in Canada, as he is only recently a Canadian.


Arthur W. Puttee: I object to that.


The MINISTER OF FINANCE.: I am referring to what might happen if we excluded a man who comes from another part of the empire, which we do not wish to do. However, there is no doubt that wherever Canadian engineers of standing are available, they will receive employment, and there will be no need of an Act of parliament for that purpose.


Arthur W. Puttee: I think if the minister will look a little further into this matter, he will see that there is need of some encouragement. In the railway construction which has taken place in Canada in the last few years, Canadian engineers have been discriminated against by construction companies. This matter, I believe, has already been brought to the attention of the ministers. Large numbers of young men are being brought into Canada from colleges and universities in the United States to take a part of their course on our railroads, obtaining the experience that should be given to our own students. If the minister will look at the record of one of the graduating classes in the city of Toronto last year, he will find that fourteen graduated and fourteen left for the United States the following week. There must be, then, some means of encouraging our own people. I do not believe that our Canadian people in any branch of life need absolute protection, or that other people should be barred out completely. Rut in our great corporations the principal positions are held by citizens of the United States ; and when they have plums to give out, they do as a matter of fact give to young men from the other side of the line these plums which legitimately belong to our own people.
Referring to the question of what is the benefit of a weekly wage, it makes a great difference how much a salary is how often you get it. A large salary can very easily be paid in four quarterly instal-Hon. Mrs FIELDING.
ments ; but a salary of $1 or $1.50 a day is a very different thing paid every week from what it is if it is paid once a month, with two weeks held back to give a lever to the employer, and with the statement that if you leave the service those two weeks' salary will be payable only at the head quarters of the company, which, in the case of the Crow's Nest Pass Railway, was 2,000 miles from the place where the check was issued. The great benefit of the weekly wage system in construction work of this kind would be that it would do away with the time-check system. Some of these time-checks are never paid. In the case of the Crow's Nest Pass Railway, time-checks were sent back to Winnipeg from as far as Sault Ste. Marie, which were utterly useless, but indicated the great hardship the men had suffered who had left that work and tramped away. I did not move an amendment to this section, because I could not see that any fragmentary amendment I could put together would meet the case. I did not wish to have any amendment voted down. My object was to call the attention of the responsible officers to the report of the Crow's Nest Pass commission. That report was made by three gentlemen who had given three or four months of their time and attention to an inquiry into a similar matter to that which is under discussion. They had examined two or three hundred witnesses. They had sat in the mountains, in the centre of the country, in Ottawa and in Montreal. They had heard the men who employed the labour, the employment agents, the men on the work, the men who had tramped back to the east without money, sometimes even without boots ; and after devoting their attention for three or four months to this matter, it seemed to me that their report would be far more valuable than any summary made by myself and moved as an amendment at the present time. I submit that that report should be conned over very carefully by members of the government or their officers who are competent and prepared to formulate either clauses or a schedule that would fit the case, to be included either in this Bill or in the contract.


The MINISTER OF AGRICULTURE.: The hon. member for Winnipeg in the first part of his remarks drew attention to that portion of the report in the Crow's Nest Pass Railway referring to the health of the employees. I may state that the year after that report this parliament passed an Act known as the Public Health Act, which has been administered since that time in regard to all public works and railway construction in Canada, and regulations and rules under that Act have been adopted by Order in Council. A copy of these rules and regulations was placed on the Table of- this House in 1900, and they have been faithfully and effectively carried out since that time.


Frederick Debartzch Monk: Who is the employee who lias charge of the carrying out of the Publ-lic Health Act ?


The MINISTER OF AGRICULTURE.: The inspector is Mr. Fisher.


Arthur W. Puttee: I am aware that the recommendations in regard to health have been taken note of by the quarantine officers and that a great deal of good has resulted from the regulations drawn up by the officer in charge of that Act. That strengthens my argument that the other regulations of the commission could very well be taken up, and probably the rules and regulations laid down in the Department of Agriculture could be attached to the rules and regulations applying to other matters and grievances that have not so far been given any force at all. The matters of the pay, the transportation, and the general care of the men should not be left absolutely at the mercy of the camp bosses and sub-contractors. In bringing this matter before the government, it was my hope to accomplish something, not to embarrass them at all. It seems to me that it should be a valuable suggestion at this time, that if something is not done there will be abuses, there will be agitation, and probably royal commissions, who will report as usual after the fact, when the report is simply useful for reading, and that is all.


Andrew B. Ingram: What reports has the hon. minister received since 1900 with respect to the Health Act ?


The MINISTER OF AGRICULTURE.: There is a report made every year, which is embodied in the report of the Department of Agriculture, which is laid on the Table.


Andrew B. Ingram: How does it work out


The MINISTER OF AGRICULTURE.: It works out in this way. The regulations, which were laid on the Table in the year 1000. require certain accommodation for working people on public works. They required that medical attendance shall be available and hospital accommodations where cases can be taken in and be treated. The inspector's duty is to see that the regulations are carried out. and lie makes a tour at least, once a year through every public work in the country.


Andrew B. Ingram: Only once a year ?


The MINISTER OF AGRICULTURE.: At least once a year. In addition, if anything occurs to indicate that the work is not being properly conducted, he goes and investigates.


Edward Frederick Clarke: Has he made any report about infringement of the law ?


The MINISTER OF AGRICULTURE.: He makes reports from time to time about the work to Dr. Montizambert.


Andrew B. Ingram: Who is the gentleman ?


The MINISTER OF AGRICULTURE.: Sir. C. A. Fisher.


Mr. KENDALL.: I am in thorough accord with the request of the hon. member for Winnipeg (Mr. Puttee), and I have had probably more experience in matters of this kind than most hon. members. While I think it important that a system of weekly payment should be established, or at least payments every half month, there is another matter in this connection which I think of great importance. In the construction of a railway, hundreds of miles away from the centres of population, men will have to be provided no doubt by the contractors with goods, and it is just as Important not only to see that tiie men are paid frequently but that, when they have to buy from the contractors' stores, they are dealt with fairly in the matter of quality and price. I would suggest that the Minister of Labour or the [DOT]government should undertake to arrange that the workmen on this great railway shall be paid fortnightly and shall not be swindled in quality of price when they buy from the contractors.


Andrew B. Ingram: I think that the hon. member for Winnipeg (Mr. Puttee) deserves great credit for having brought this matter to the attention of the government. Section 40, which the Postmaster General has quoted. does not go far enough to remedy the grievance of which the hon. member for Winnipeg complains. IVe all remember quite well that in the construction of the Crow's Nest Pass Railway, the men had to endure many hardships and some of them lost their lives. Advantage was taken of the men by the foremen and others personally interested on behalf of the contractor, and there is no provision at all made here against grievances of that character. There are good foremen on construction work and others again who are inclined to be arbitrary, and think they are performing their duties best when acting very arbitraily towards those employed under them. The government should provide some remedy for the workmen who have grievances of that character. Again it is well known that there are employment agencies which take advantage of the labourers who seek employment on the contraction of railways. Some provision should be made for the protection of the labourers against these employment bureaus. I am glad to notice that, according to the statement of the Minister of Agriculture, the Public Works Health Act provides for better accommodation for these labourers. In the case of the Crow's Nest Pass, that was a serious grievance, but I was very sorry to hear the hon. gentleman say that inspector only visits the works once a year. It would require more frequent inspection to see that the Act is properly carried out. I have sim-



ply drawn the attention of tlie government to some of these things that I think very important to those engaged on construction work. If they were employed on construction work in the neighbourhood of Oltawa, there would be no great hardships, but out in the wilderness the case is different. It has been said many times that the Canadian Pacific Railway are responsible for the suffering of these men at Crow's Nest Pass. I understand that Mr. Haney had that contract. He is a very respectable mau and extensive contractor. He has had very large contracts on the ' Soo ' canal in partnership with the late Mr. Hugh Ryan, and is a man from who the public would naturally expect fair treatment to the men lie employed. I have heard it frequently said that the Canadian Pacific Railway are entirely responsible for what took place at the Crow's Nest Pass, and I think it is oily fair to that company to ,say that it was not responsible, but, that it was the contractors who were really to blame. I hope that nothing of the kind will occur in connection with this new railway, but that the government will see that the men are properly treated. With respect to time checks and the cashing of these checks, that is a grievance on all new railway work. We know, that there are many stakemen who go on a railway that is being constructed and who will not work the required time. They will work a certain period and before the time comes to receive their pay, they leave the service and get their cheeks discounted by persons who make a considerable amount of money by shaving them. I would ask the lion. Minister of Agriculture how long the inspector remains when he is visiting a public work to see that the Public Works Health Act is complied with.


The MINISTER OF AGRICULTURE.: 1 think perhaps the hon. gentleman did not quite comprehend the duties of the general inspector. His duty is to go around the different public works, under the operation of the Act, and see that the rules and regulations passed by Order in Council are enforced, but one of these rules requires that there shall be a medical man on every such public work, for every 500 employees, and he must visit the work every ten days at least. The works are thus really visited at least once every ten days, although the inspector might not very often visit any particular work. The employees on all these works know that certain rules and regulations have to be carried out, and, at any time, they have it in their power to make complaint, first, to the local inspector. and then, if they choose, to the general inspector to see that the regulations are properly carried out. Speaking from memory, I think there are only two or three instances in which complaints have been made to the department of the rules not being carried out. The general inspector immediately visited the works to see that the Mr. INGRAM.
regulations were enforced. The local inspection is carried on all the time, as provided for by the rules and regulations.


Andrew B. Ingram: I presume that the hon. minister's report contains the report of the medical officer visiting the works from time to time.


The MINISTER OF AGRICULTURE.: The report is that of the general inspector, and in it reference is made to the different works visited and the way in which the regulations are carried out. The general inspector examines the local inspectors' reports, but I do not think the report contains the report of any local inspector.


Andrew B. Ingram: I desire, in one word to call attention to the injustice suffered by the men in many cases in the high prices charged for supplies of food, clothing, &c., for their use.


The MINISTER OF AGRICULTURE.: Of course, the hon. gentleman understands that the inspector of public health has nothing to do with that.


Andrew B. Ingram: Of course, I am drawing the attention of the government generally to this point, and I think steps should be taken to remedy this evil. But we shall have another opportunity of expressing our views more fully on this important aspect of the question.
Section 11 agreed to.
Section 12 agreed to.
On section 13-expropriation of lands,


Frederick Debartzch Monk: My hon. friend from Hamilton (Mr. Barker) has called my attention to the fact that there is no machinery provided for the recovery of compensation where the party is expropriated. There is a clause saving recourse of the party expropriated by the commissioners, but no machinery provided. I think it well to call the attention of the Minister of Justice to that, and he might consider the advisability of referring the parties to the Railway Act for compensation, or providing some machinery.
The MINISTER OF JUSTICES The Railway Act w'ould apply.


Frederick Debartzch Monk: Perhaps, but it is not so stated here.


Edward Frederick Clarke: Better let that clause stand.


The MINISTER OF FINANCE.: The ordinary compensation against the Crown


Frederick Debartzch Monk: But no procedure is provided.


The POSTMASTER GENERAL.: It would be under the Public Works Act.


Frederick Debartzch Monk: But that is not referred to. If the government is satisfied-


The MINISTER OF FINANCE.: The Minister of Justice will note it for further consideration.


Frederick Debartzch Monk: Is tlie Minister of Justice of opinion that the clause is sufficient ?


The MINISTER OF JUSTICE.: Provision is made in one or two sections further on for the expropriation.


[Stage Direction]
Section agreed to.
On section IT-public lands required for railway,
The MINISTER OF JUSTICE.: It has been suggested that this is not sufficient to cover lands belonging to the provincial governments. If necessary, I can make an amendment.


[Stage Direction]
Section agreed to.
Section 15 agreed to.
Progress reported.

The POSTMASTER GENERAL.: The Bill and resolution with respect to the Civil Service Act, standing in my name, I desire to change. I move, therefore, that these orders, No. 22 and No. 24, be discharged. I purpose reintroducing them with certain changes.


Frederick Debartzch Monk: Are these changes on the lines suggested by the hon. member for Ottawa (Mr. Birkett) ?


The POSTMASTER GENERAL.: That will appear when the Bill is introduced. My hon. friend (Mr. Monk) will then have better authority than my description for any conclusion he may draw.


[Stage Direction]
Motion agreed to.
On motion of the Minister of Finance, House adjourned at 11.50 p.m.
[Stage Direction]
Tuesday, September 15, 1903.