1904-05-05

Mr. ROBERT BICKERDIKE (Montreal, St. Lawrence) moved :: That the petition of P. H. Markey and others presented this day, praying to be permitted to lay before the House the petition of the Edmonton Street Railway Company for the passage of an Act to increase their borrowing powers, &c., notwithstanding the expiration of the time for presenting petitions for private Bills, be read and received forthwith and referred to the Select Standing Committee on Standing Orders.


[Stage Direction]
Motion agreed to.
Mr. R. F. SUTHERLAND (North Essex) moved:: That the petition of J. T. Schell and others presented this day, praying to be permitted to lay before the House the petition of the Lake Erie and Detroit River Railway Company, for an Act authorizing the said company to construct certain branch lines, notwithstanding the expiration of the time for presenting private Bills, be read and received forthwith and referred to the Select Standing Committee on Standing Orders.


[Stage Direction]
Motion agreed to.


Mr. TAYLOR asked :: 1.	Who is now in charge of the post office at the village of Athens, in the county of Leeds ?
2.	Has the postmaster, who has been in charge for several years, been dismissed within the last few weeks ?
3.	If so, was a charge preferred ?
4.	If so, what was the nature of the charge, and was there an investigation ?
5.	If so, has there been a report made by the inspector ?


Hon. Sir WILLIAM MULOCK (Postmaster General) :: 1.	Mrs. Janet L. McLaughlin.
2.	No ; he resigned.
In answer to questions 3, 4 and 5, the official investigation by the inspector showed that its management was unsatisfactory, and this led to the resignation of the postmaster. The new appointee is his wife, and she was appointed upon the express understanding that the late postmaster was not to be permitted to take any part in the management of the office.


TRAP NETS IN BRITISH COLUMBIA WATERS.
Mr. EARLE asked :: 1.	Have any licenses been issued permitting the use of fish-traps in British Columbia ?
2.	If any trap licenses have been issued, to whom, and how many ?


Hon. RAYMOND PREFONTAINE (Minister of Marine and Fisheries) :: 1.	No.
2.	No.


ST. ANDREWS RAPIDS.
[Stage Direction]
Mr. LaRIVIERE asked :
1.	Has the following letter been received by the hon. the Minister of Public Works ?
' Winnipeg, 30th April, 1904. The Honourable the Minister of Public Works, Ottawa, Ontario.
Sir,-I have the honour, by direction, to give you the following copy of a resolution passed at a special general meeting of this board, held yesterday, viz.:-'Resolved, that the Winnipeg Board of Trade emphatically protests against the delay in carrying out the improvements to navigation at St. Andrews rapids, and ask for the speedy completion of the same ; and would request the hon. the Minister of Public Works for full information as to the present position and future prospects of the work.'
The board will be greatly obliged for an early reply.
I have the honour to be. sir,
Your obedient servant, (Signed) CHAS. N. BELL, Secretary.'
2.	Will the request therein contained be complied with ?
3.	When is it expected the proposed work will be completed ?
Rt. Hon. Sir WILFRID LAURIER (Prime Minister) :: 1. Yes.
2 and 3. The department is at present giving the matter careful consideration.



POSTMASTER AT WILTON-DISMISSAL.

Sir WILLIAM MULOCK.: Yesterday the hon. member for Lennox (Mr. Wilson) called my attention to a return respecting the postmaster at Wilton, and the hon. gentleman stated that a number of letters were on file


Mr. WILSON.: What I said was that there were several letters, and I gave the names of some of the parties who had written to the Postmaster General. I did not say that they were on file.


William Mulock: That is immaterial to what I am about to say. The hon. gentleman gave me to understand that he was of opinion that a number of letters were on file that had not been included in the return, and that ought to have been included ; and he named a number of persons who, he said, had sent letters. I replied at once that I regretted that there was any omission of that kind, and that I would see that it was at once corrected. I assumed that my hon. friend (Mr, Wilson) spoke from actual knowledge as to what was on file, because he called at the department to see the file, and I instructed the officers to present the file to him. I find on Inquiry that all the papers that were on the public file were brought down in the return. It may be that there are communications in the department of a confidential character, but they were not and never have been on

the public file ; and, therefore, I wish to say that any remarks I made yesterday are not to be taken as an admission that any letters were or were not received from any person. But if the hon. gentleman knows any person to have sent any letters, and if they wish to remove the confidential character which may be attached to them and consent to their being produced, then the department has no objection to their production.



INQUIRY FOR RETURN.

Mr. HAUGHTON LENNOX (South Sim-coe).: I wish to ask the Minister of Railways (Mr. Emmerson) if lie has looked into the matter of the return of correspondence, &c., in reference to the Cattle-guard Commission, which was referred to the day before yesterday.


Mr. H. R. EMMERSON (Minister of Railways).: I think the order of the House is dated April, 1903. At that time, there was no report from the commission, and the papers could not be furnished. The order of the House would cover papers in the Department of Railways or in the several departments of the government up to that date. I would ask my hon. friend (Mr. Lennox) in order to make all regular, to make another motion. The papers are all ready and will be furnished with expedition.


Haughton Lennox: I understand from the minister that, if I make a motion the papers will be brought down almost immediately.


Henry Robert Emmerson: They are all ready, but cannot be regularly furnished under the order of the House as it now appears.



GRAND TRUNK PACIFIC RAILWAY.

[Stage Direction]
House in Committee on Bill (No. 72) to amend the National Transcontinental Railway Act.-Sir Wilfrid Laurier.
Mr. DEPUTY SPEAKER.: The committee will resume consideration of clause 9 of the schedule.
On clause 9 of the schedule,
9. Notwithstanding anything in the twenty-seventh paragraph of the said contract contained, the Grand Trunk Railway Company shall not, after the acquisition of the twenty-five million dollars ($25,000,000) of common stock therein mentioned (less shares held by directors, not exceeding one thousand), be prevented from making any such disposition of such common stock as the said Grand Trunk Railway may deem expedient, provided, however, that the said Grand Trunk Railway Company shall, during the delay mentioned in the said paragraph, continue to hold a majority of the said stock by such title as shall enable the said Grand Trunk Railway Company to control the policy of the company.


Mr. WM. B. NORTHRUP (East Hastings).: The clause now before the committee is, I think it will be admitted, perhaps one


William Mulock: 

HE VISED EDITION-

[Stage Direction]
My board feel that we could not ask the shareholders to affirm the agreement in its present precise form.
The government are askecl to consent to something which is described as being utterly immaterial in order to allay ' any possible apprehensions of our shareholders.' Have the people of Canada sunk so low, is the credit of Canada so fallen that we are *compelled on bended knee to give concession after concession of enormous value simply, in the words of the president of the Grand Trunk Railway Company, to allay the apprehensions of his shareholders ? Why Sir, would it not have been millions of dollars in the pockets of the people of this country if we had sent the right hon. leader of the government, the hon. Minister of Finance and also the hon. member for Annapolis over to the old country and paid their expenses that they might there meet the shareholders of the Grand Trunk Railway Company and with the rosy pictures they would draw of the glorious land through which this line is to run, of the happy hunting ground and unbounded wealth of these regions, allay the apprehensions of the Grand Trunk shareholders rather than allay them by the frightfully expensive mode that has been adopted by the government in consenting to the concessions now before the House ? It is perhaps not out of place to call attention to the fact, that, having before us the report of the directors of the Grand Trunk Railway Company, having before us the original contract signed by the leading men of the company, we are able to form a very fair idea who these people would be on the board of directors who had to be satisfied before this matter could be brought before the shareholders. It was not the president, Sir Charles Rivers-Wil-son, who signed the contract; he was satisfied. It -was not Lord Welby who signed the contract; he was satisfied. It was not John 'A. Glutton-Brock who signed the contract; he was satisfied. It was not Mr. Joseph Price, it was not Mr. Alfred W. Smithers. it was not the general manager, Mr. Charles M. Hays, it was not Mr. Frank W. Morse, the assistant vice-president, it was not Mr. John Bell, the counsel of the company, it was not Mr. Win. Wainwright, the controller, because they were all satisfied. Every man on the board of the Grand Trunk Railway Company who had a practical knowledge of finance, every man who had a practical knowledge of the operations of the Grand Trunk Railway Company was perfectly^ satisfied with the contract save one man, because, by reference to the report Of the meeting of shareholders, we find one single director only who was dissatisfied, Mr. Allen, and he continued dissatisfied and did not come in even when the amended contract was introduced and when the president of the company had expressed himself as satisfied that if Mr. Allen could
William Barton Northrup: have been there and had seen and understood the amended contract he would have assented to it. When we find that all the practical men on the board of the Grand Trunk Railway Company, having all the knowledge in October, when this Bill passed the House, that they had on the 15th December, when this letter was written for the purpose of asking the right hon. leader of the government to amend the contract, were perfectly satisfied with the concessions already given for securing the construction of this road and when one director only held out and when the president of the company expressed the opinion that they could secure his assent at any time, does it not strike the House that we are paying rather a high price for very little gain ? When it comes to the shareholders themselves, when we read the report of the meeting of the shareholders it turns out that even with the amended contract the shareholders were unwilling to jeopardize what they had. Why? Because, as Mr. Hays, the general manager pointed out, they did not know where they stood. The shareholders even with the amended contract were unwilling to carry out the contract and apparently the contract would have been repudiated then and there only for the fact that Mr. Hays pointed out: Gentlemen, this is only a case of retaining the dividends you have. Your position is that if you do not take this step you will lose the dividends you have.
The whole argument of Mr. Hays and Sir Charles Rivers-Wilson was one which we would naturally expect from these gentlemen. They were officials of the Grand Trunk Railway, addressing the shareholders of that company and discussing the amended contract from the standpoint of that company alone. They were giving reasons to show that the contract with the amendments was one in the interests of the Grand Trunk shareholders. They were not pointing to it, as a contract in the interests of Canada, but as in the interests of the company. So we find, just as we would have expected, that the statement of the president was literally true, when he said that the Grand Trunk Railway directors had been eighteen months devising a scheme and had finally succeeded in compassing one by which a road would be built from North Bay westward through Winnipeg to the coast for the express purpose-and this is the pivotal point of the whole negotiations- of securing freight for the Grand Trunk Railway. Who can doubt for a moment that the Grand Trunk Railway Company arc going into this great enterprise to secu -e freight for their own road ? Sir Charles Rivers-Wilson would be a traitor to his trust, Mr. Hays would be false to his duties, the solicitor' of the company would b * recreant to his obligations-these gentle-n en would fail in their duty if through-1 out all the negotiations they had not a

sole eye to the interests of the company they represent. We find therefore the Grand Trunk Railway people going, into this scheme for the express purpose of benefiting that railway by securing to it freight from the Northwest.
This proposed clause allows the Grand Trunk Railway to dispose of the stock they acquire. I do not wish to discuss the terms on which the Grand Trunk Railway is to acquire the stock, further than to point out that it may be acquired in return for giving the guaranty and not necessarily on the payment of cash. It is provided that the Grand Trunk Railway may, after they acquire the $25,000,000 common stock, dispose of that stock. There seems to be a general impression that under the Act pased last session there had to be $20,000,000 preferred and $25,000,000 common stock. But there is not a word in either the original or the amended contract to that eflect. We have heard speaker after speaker laying stress on the issue of $20,000,000 preferred stock as if the Act provided that there must be stock of that character. But there is not a word to that effect in the original agreement. Clause 26-which is the clause in the original agreement that deals with the issue of stock-reads as follows.
The capital stock of the company shall be $45,000,000, of which not more than $20,000,000 shall be preferred and not less than $25,000,000 common stock.
You cannot have more than $25,000,000 preferred or less than $20,000,000 common. But you may have the whole $45,000,000 common if you choose. So that, under the amendment proposed the Grand Trunk Railway might acquire every dollar of the stock in return for its guaranty. Supposing this stock be acquired by the Grand Trunk Railway, what may they do with it ? Why the task of trying to understand this contract and find what there is really in it in the interests of the country is enough to clishearten any one. We have had ministers of the Crown gravely tell us that it is necessary the Grand Trunk Railway should be allowed to sell the stock in order that they may provide the money for the equipment of the road and the purchase of the various essentials required to make it a complete and running concern. There is nothing in the agreement to warrant any such conclusion. When the Grand .Trunk give their guaranty, they will be paid for it :	and for all we know, their
pay may consist of the whole $45,000,000 of stock. There is no limit whatever imposed on the amount of stock which the Grand Trunk Pacific may give the Grand Tiunk Railway in consideration of their guaranty. But hon. gentlemen opposite say that the Grand Trunk Railway will have to sell this stock in order to build the road. Just consider, Mr. Chairman, the absurdity 834
of such a proposition. If it be true, as hon. gentlemen opposite say, that the Grand Trunk Railway must sell the stock in order to raise the money to build the road, there could be no objection to adding a clause providing that all money received by the Grand Trunk Railway from the sale of the stock shall be expended on the Grand Trunk Pacific. But we find nothing of that kind in the agreement or in the Bill. The Grand Trunk Railway is one corporation and the Grand Trunk Pacific another. While the leading officials of the Grand Trunk Railway are also the leading officials of the Grand Trunk Pacific, the corporations are wholly distinct, and the manager of the Grand Trunk Railway, when he receives the $25,000,000 of common stock in consideration of the guaranty given by his company, will receive it for the Grand Trunk Railway. It goes into the coffers of the Grand Trunk Railway and not of the Grand Trunk Pacific. Mr. Hays would be recreant to his trust if having received $25,000,000, presumably for an honest consideration-because it is not for us to say, whatever our opinion may be, that if the officials of the Grand Trunk Railway charged $25,000,000 for the guaranty, they are necessarily fakirs or dishonest, and we must assume that whatever they charge for the guaranty they believe to be a fair consideration for it-he would use that stock for other purposes than those of his own company. The Grand Trunk has paid for the stock, not by cash but by guaranty, the money becomes the property of the Grand Trunk Railway, and the Grand Trunk Pacific has nothing to do with it, and will have to go elsewhere to secure the funds required for the purposes of the road. Even apart from that, would not the Grand Trunk Railway be justified, if they got $25,000,000 of stock, in saying : We will sell this stock and utilize the money and hold it as a guaranty for the liability we may have to meet later on. Who could find fault with the Grand Trunk Railway for taking that stand ? We might find fault with the government for having put that company in that position of vantage, but we would not be justified in finding fault with the Grand Trunk Railway officials, who merely did their duty by the company, in whose interests alone they were acting, l ast year we had an illustration, which shows how little reliance may be placed even on the statement of a minister with regard to this contract. Probably my hon. friend the Minister of Justice understands it as well as any member of the House, but it is a long and complicated document, unprecedented in its character, and speaking lost year on this very point of the disposition of the stock, my hon. friend informed the House that it would be necessary for the Grand Trunk Railway to sell the stock in order to raise the money with which

to purchase the terminals of the road. I do not blame the hon. minister because thi>
.contract is a very complicated one, but. he committed himself to that statement as a reason why it would be necessary for the Grand Trunk Railway to raise the money on this stock. But, Sir, one need only read the contract to see that terminals are included in construction expenses and are to be paid for out of the proceeds of the bonds guar anteed by the government and the Grand Trunk Railway. So that, even on so important a point, we bird one of the most efficient members of the government unaware of the exact position of the Grand Trunk Railway and the opportunities at its disposal. I say unhesitatingly that once the Grand Trunk Railway disposes of the stock, every dollar of it becomes the property of that company, and, as my hon. friend the Minister of Finance told us last year, when we go to the Railway Commission to have the rates adjusted-and that is where the interests of the people come in-we will be faced by this fact: here are bona fide shareholders who bought their stock from the Grand Trunk Railway for a valuable consideration, and you cannot fix the rates simply in the interests of the people, but must also consider the interests of bona fide stockholders. While the government may say that they have control over the rates, I venture to assert that we will have no more control over the rates on the Grand Trunk Pacific than on any other railway in the country. The Railway Commission, like any court of law, must be governed by certain limitations ; and if that commission were to lay down the principle that the sole thing to be considered was the interests of the people, and that the interests of the stockholders were not to be considered at all, how much money in the future could be raised for the construction of any national enterprise in this country on railway securities ? We are necessarily bound by the moral obligation to observe good faith just as if that were a legal obligation ; and if this stock be sold by the Grand Trunk Railway, the very difficulties pointed out by the hon. Minister of Finance last year arise at once.
I am sorry the Finance Minister is not here, because I would like to hear from his own lips how at the present time he justifies a change from a state of affairs which he thought last year afforded one of the greatest securities to the government and one of the greatest reasons to justify members in supporting the Bill, namely, that the Grand Trunk Company had to hold the stock in its coffers, that it would have to pay cash for it, and that when the time came to fix rates, the rates would be fixed on that basis. Assuming that the Bill would go through, and that the arrangement had to be made with the Grand Trunk Pacific Company, then the provision of last year was a wise one ; and we.on this side of the House could say Mr. NORTHRUP.
that if the road were to be built, which we thought never should be built, we could see how the holding by the Grand Trunk Company of that stock would so far secure the interests of the people. That is the position my hon. leader took the other day, when, in referring to the speech of the Minister of Finance of last year, he praised the safeguard in the existing contract. The Minister of Finance said he was pleased to see him converted to the approval of his proposition of last year-a most illogical position. The leader of the opposition took the ground that if we are to have the contract, he would like to see certain safeguards thrown around it; but that does not imply that he is in favour of the contract itself.
Now, Sir, it seems to me that it would naturally strike a Canadian that if the Grand Trunk Company can acquire this stock up to the amount of $45,000,000, would it not be in the interest of the country that the Grand Trunk Company should be compelled to hold that stock as security for the people of this country ? Let us see where the people of Canada come in. The Grand Trunk Company guarantee 25 per cent of the bonds of the western division ; the people of Canada guarantee 75 per cent. Now. as a business proposition, when the government were sitting down to make an arrangement with the Grand Trunk Company to guarantee the bonds of the Grand Trunk Pacific Company, the government might well have said, we will guarantee 75 per cent, but we want an unlimited amount of stock as our security for that guarantee. Surely the government would have been justified in saying to the Grand Trunk Company, you are either assuming a liability that can result in loss or you are not. If you are not, you should not be allowed to have these millions of stock. If you are assuming such a liability, what about this country, which is guaranteeing 75 per cent of the bonds, while you are guaranteeing only 25 per cent ? If you lose, we lose. Under the amended contract the government might lose and the Grand Trunk Company might- not lose ; but by no possibility can the government be any better off than the Grand Trunk Company. Therefore if the Grand Trunk Company are to be allowed to receive $25,000,000 or $30,000,000 or $45.000,000 of stock-an unlimited amount at a sum fixed by Mr. Hays of the Grand Trunk by agreement with Mr. Hays of the Grand Trunk Pacific, by Sir Rivers-Wilson of the Grand Trunk with Sir Rivers-Wilson of the Grand Trunk Pacific, by Mr. Bell of the Grand Trunk with Mr. Bell of the Grand Trunk Pacific, by Dr. Jeltyll with Mr. Hyde, it matters not what consideration is paid by the dual man. If there is no limit on the amount of stock the Grand Trunk Company may receive on their guarantee, surely the people of this country should get something on their guarantee, which is three times as great. If the Grand Trunk Company, in-

261S
is to be built, every one on this side of the House as well as on the other side wants to see it a success. We will endeavour to do all we can to prevent it being built, because we believe it is not in the interest of the country ; but when once it is decided that it shall be built, we shall endeavour to make it a success. But when we
stead of disposing of this stock, were obliged to hold to it, it could be made a security for the people of this country. Let them hold it as security for both themselves and the country for all who hold the bonds. But I fail to see on what conceivable grounds it can be justified that the partner who endorses 25 per cent of the bonds is to have unlimited consideration while the partner who endorses 75 per cent is to be given no consideration.
But the hon. gentleman seems to think that the provision in the last part of clause 9 was sufficient to justify the sale of the stock by the Grand Trunk Company-a sale which will be made by the Grand Trunk directors for the benefit of the Grand Trunk Company, and the proceeds of which they must necessarily as honest men transfer to the coffers of the Grand Trunk Company. The last part of clause 9 says :
Provided, however, that the said Grand Trunk Railway Company shall, during the delay mentioned in the said paragraph, continue to hold a majority of the said stock by such title as shall enable the said Grand Trunk Railway Company to control the policy of the company.
It has been pointed out again and again by the hon. member for West Toronto (Mr. Osier), the hon. member for Hamilton (Mr. Barker), and others of practical experience in railway matters, that it is a common practice in the neighbouring republic to have stock held on such terms that the dividends shall go to one person and the voting power to another ; and it looks as if the lawyers who drafted this clause had that arrangement in their minds, because one cannot conceive of language that would better fit that state of affairs. It does not say that the Grand Trunk Company shall hold the stock. It says that it shall hold the stock by such title as shall enable it to control the policy of the Grand Trunk Pacific. If what the hon. member for West Toronto says is being done every day in the United States-that stock is sold to A, B or C, and a part of the consideration of the sale is that a proxy is to be given to the vendor to allow him to vote on that stock for 99 years or whatever the term may be-is a legal transaction, it would comply with this part of the section, and would enable the Grand Trunk Company to control the policy of the Grand Trunk Pacific. But why do we want the Grand Trunk to control the policy 1 That is one of thO mysteries which has puzzled us throughout the whole discussion of this matter. I have no doubt the premier is sincere in his desire to gain something for this country, and is perfectly satisfied that he has done so. He said the other day that the Grand Trunk Company was in and of this scheme, and he gave as a reason why the Grand Trunk was selected in preference to any other railway was that it, having a foothold in two provinces, was in a better position to handle the traffic than any other. I admit that ; but if the road
find the premier giving the Grand Trunk Company control of the line which is to run to the north, when it has a rival line to the south for carrying goods from the west to the east and from the east to the west, that is the precise reason why the Grand Trunk Company above all should not be allowed to control the policy of this new road. For tlie Grand Trunk Company are determined to carry freight as far as they can over their own line. They are in duty bound to do that. In the summer time, for seven months in the year, practically all the grain must be carried by the lakes and over the Grand Trunk system through Canada to the States. During that time there can be no question that the Grand Trunk will get all the freight that goes over that line to the head of the lakes ; none of it will go to the eastern division of the Grand Trunk Pacific. Then, in the winter time, why should the Grand Trunk Company so manage the new line as to injure its own trade ? Why not rather utilize its own line for its own benefit ? It seems to me that we are imputing one of two things to the directors of the Grand Trunk Railway Company. If we expect that they are going to decline freight for their own line-if we expect that a line which we were told the other day has $150,000,000 <*f assets, is going to sacrifice its trade to help a company whose capital stock is $1,000,000, with 10 per cent paid up, surely we must consider the directors of the Grand Trunk to be either knaves or fools, and I am sure that no man considers that they are either.
In the speech made by the president of the road he pointed but that one great advantage of this contract to the Grand Trunk Railway was that the Grand Trunk Railway and the government had become partners, and were to work together for the joint benefit of Canada and the company. That sounds well, and I can quite understand that, if I were a shareholder of the Grand Trunk, Railway, somewhat anxious about my dividends, which had not been too sure in the past, I would be very much gratified at having my president point out that my company had joined in partnership with the Dominion to work for the common benefit of both. But the possibility would suggest itself to my mind that, taking into consideration the assets of each partner, the stronger partner would be able to so swing matters that the junior would be swept out of existence. I would be Inclined to ask the president : What are the terms 1 Are you quite sure that the larger interests will not completely swamp the smaller interests !

In his letter to the Prime Minister, Sir Charles Rivers-Wilson gives the answer to this question, for he there points out the respective positions of the two partners. He says :
It has always seemed to me that the government of Canada and the .Grand Trunk Railway Company, being in point of fact partners in the enterprise-the former actuated by considerations of national policy, the latter by the necessity for securing its share in the growing prosperity of the Northwest.-the burden of financial liability should be shared between the two in as equable proportions as possible.
There is a fair proposition laid down, in the opening of the negotiations, by the president of the Grand Trunk Railway to the leader of the government. The government and the company were to become partners, and the financial liability shared between the two In as equable proportions as possible That was a fair business proposition, in reply to which, I think, the leader of the government might well have said that in deciding what was an equable division, the respective interests should be taken into account. The right hon. gentleman might have said : If we assume a greater liability, we must have a larger interest. Whoever puts in the most should have the largest share. But. taking the view of the president of the road, that each should assume an equal liability, what have we to say of this contract, which binds the Grand Trunk Railway to do nothing, except guarantee 25 per cent of the cost of construction from Winnipeg to the Pacific coast, and obliges the government to guarantee 75 per cent of that cost and build, in addition, some 1,800 miles of road from Winnipeg east ? Is that, to use the language of the president of the Grand Trunk Railway, sharing the burden of financial liability in as equable proportions as possible ? Let us see how it will work out. Suppose the road should prove a success from Moncton to the Pacific. Suppose it should pay Its way and meet all its obligations ; what will be the practical result ? In that case the road will not cost the Grand Trunk Railway one dollar. The Grand Trank Railway will have control of a transcontinental line that has never cost It a cent, it will be able to divert the traffic to its own line to the extent of millions of dollars,, and its shareholders will make money out of the road built by this country. Where does the country come in ? In any event, the country would be considerably out. We get our interest at 3 per cent, but will have to pay 34 on the bonds. There you have a loss at once. The reason given by the right hon. the First Minister for these concessions was that the condition of the money market had changed, that money could not be got as cheaply to-day as a few months ago. But if that be the case, and if the government should have, to pay 4 per cent, should not the Grand Trunk Pacific be called on to pay a larger rental during its fifty years' lease ?


William Barton Northrup: In the agreement the rental is based on the government being able to borrow at 3 per cent; but if, as the Prime Minister expects, the government will have.to pay more, surely there should be a provision in the contract binding the Grand Trunk Pacific to pay a proportionate increase in rental. If the Grand Trunk Railway are to get an increased assistance because of the change in the money market, why should not that company pay a rental on the eastern division equivalent to the interest which the government will have to meet ? U.nder the terms of this contract the government have to pay seven years' interest on the eastern section without getting any return, and on the western section the government is to get no interest during seven years on the bonds it guarantees. The government may have to pay the interest during an additional three years, the amount of which shall be capitalized, and is precluded from taking possession, by reason of non-payment of interest by the company, until the company be in default to the extent of five years' interest. We, therefore, can see what an immense amount of interest may have to be paid by the government before it can get any return. Where then is the gain to the government, compared with the immense advantages to he gained by the Grand Trunk Railway, even if the road should prove a success ? But suppose the road should turn out a failure ; suppose the expenditure in the northern part of Ontario and Quebec should he far greater than is anticipated and the revenue far less than we hope for, what will happen ? The worst that can possibly happen the Grand Trunk Railway would be a liability of $15,000,000, which cannot accrue for nearly twenty years. First ten years, then five years before the government can take possession, and these must count from the completion of the road, so that we can add seven or eight years more. Practically, it will be twenty-three or twenty-four years before the' Grand Trunk Railway could be hurt at ail. The Grand Trunk Railway cannot be hurt in the lifetime of the magnates who have entered into this contract, no matter how the thing works out. In the meantime, that company will have diverted an immense amount of western freight to its own lines. That is the point which Sir Charles Rivers-Wilson relied on. So that even in the case of failure, the Grand Trunk Railway cannot be htirt for twenty-five years, and how much can it be hurt then ? Suppose the interest should not toe paid the government on the eastern section, what would happen ? It is all very well to draw a lease with all possible provisions, there Is a vast difference between tying a man up by a contract and then recovering damages. There is not a lawyer in the country who can tie up a road like the Grand Trunk Pacific, which is Mortgaged for every dollar it cost, in such a way that you can be sure of collecting anything in case of default. Sup-

pose the Grand Trunk Pacific is operating the road from Winnipeg to Moncton, and fails to pay the interest, what can the government do ? It is all very well to say, we will compel it to pay interest, we will have this and the other security. Suppose you have $5,000,000 rolling stock as security Yand we do not admit that you will-and suppose the road has cost some $60,000,000 or $70,000,000, on which the Grand Trunk Pacific will have to pay 3 per cent, what security would that rolling stock be to you in case of default ? After that stock has been used a few years, you could not sell it at fifty cents on the dollar. It would not realize sufficient to pay one year's interest. Where would you be, supposing the company were to default on the eastern section from Winnipeg to Moncton ? This country will have spent an immense amount of money on that section, and if the calculations of the hon. member for West Toronto (Mr. Osier) be correct-which he made on his reputation as a railway man-if, in the first ten years after the railway is constructed, it will cost about as much in ballasting and renewals as it did to construct it originally, this country will be from $125,000,000 to $150,000,000 out of pocket on the eastern section. If then there should be default on the part of the Grand Trunk Pacific, in what position would the government be ? The people would insist on the road being run. The government might put in a manager, but the people would be responsible for the running of the road. So that you will be punishing the company which does not pay any rent by taking the road off its hands and running it at your own expense. If the road be a failure, the country will have nothing to fall back upon as far as the Grand Trunk Pacific is concerned. The rolling stock will not be any serious asset, and you will have a road on your hands which you must run, and the people will be loaded up with a frightful yearly deficit. When you look calmly at the situation and do not jump at the conclusion that you have the Grand Trunk Railway guarantee and the Grand Trunk Railway behind the road, for you have not, you will see that in the case of failure there is nothing the government can do except go on their knees again and beg the magnates of the Grand Trunk Railway to keep on running the road, even if they do not pay the interest, for that would be better than for the government to run it and sink deeper and deeper into debt.
When speeches are made in this House, they are made not for the members of the House alone, but for the benefit of the country. Past year, the Minister of the Interior (Mr. Sifton) made a strong speech, an admirable speech from his point of view. One of the arguments he brought forward, and one which must have impressed the country, we cannot tell how much, was the straight statement that the Grand Trunk Railway Company had been induced by the
government to enter into this contract in order that the government might secure, as they had done, the undertaking of that company to pay three per cent on the cost of the eastern division. I have under my hand the hon. gentleman's exact words, but I will not take time to read them now. And the leader of the House (Sir Wilfrid Lau-rier) spoke to the same effect. I have his speech in Hansard also under my hand, declaring that the Grand Trunk Company had guaranteed three per cent on the cost of the eastern division. And the hon. member for Saskatchewan (Mr. Davis) speaking only a day or two ago also said-and his words as recorded in Hansard I have here-that the Grand Trunk had guaranteed three percent on the eastern division. We in this House know perfectly well-it has been pointed out so often that there is not an hon. member who does not know it-that there is no covenant on the part of the Grand Trunk Company to pay three per cent or any per cent on the cost of that road. There is no obligation, no liability that the government could enforce on the Grand* Trunk to pay such a rental. The Prime Minister admitted, when asked by the leader of the opposition (Mr. R. L. Borden)-admitted by a circuitous sort of argument-that in all probability it would be to the interest of the Grand Trunk Railway to pay three iter cent, and therefore they would be likely to pay it. But that is about as strong a legal obligation as the Grand Trunk Railway Company have bound themselves to in that regard. Yet, these statements go to the people, and there is not the slightest doubt that there is many an honest reformer in this country who would ridicule the contention that the government was incurring the slightest liability in building the eastern section, because the Grand Trunk Railway Company had guaranteed three per cent on the cost. And, taking the speeches of the Minister of the Interior, the Prime Minister and such a distinguished member as the hon. member for Saskatchewan, declaring that the Grand Trunk had guaranteed this three per cent, we can hardly wonder at the friends of the government taking that position. And When we find such misunderstanding of this contract on the floor of this House, it is not to be wondered at that the people misunderstand it. But I venture to say that, when they have studied it one-tenth of the time the members of this House have studied it, they will understand it better than it appears to be understood in this House. Last year, I was amazed to hear the hon. gentleman who appeared to be put forward as the railway expert of the government, the hon. member for North Norfolk (Mr. Charlton) whose absence from the House, I am sure, we all deplore, make a statement with regard to the letting of the contracts on this eastern division. I refer hon. gentlemen for his words

to page 8796 of last year's Hansard. As showing the honesty and economy with which the eastern division was to be built, he argued that the country had a guarantee of this in the fact that there was to be a common control on the part of the government and the company. He said :
The company is interested in having the road constructed as cheaply as possible, as it has to pay three per cent interest on the cost. It has joint supervision with the government in the letting of contracts and the construction of the line.
I do n,ot doubt at all that the hon. member for North Norfolk believed that; that he honestly^ thought that the Grand Trunk Railway Company, or the Grand Trunk Pacific Railway Company, had joint supervision with the government in the letting of the contracts and the building of the line. Yet I, myself, last year, pointed out that the government had carefully avoided the supervision of contracts by the company. Where plans were to be drawn the engineers of the company could come in and see what was being done ; but when the contracts were to be let, there was not a word to justify the statement that there was to be supervision by the railway of the construction of the road. Many people would be impressed by the statement given forth by the railway expert of the government that there would be joint supervision in the letting of the contracts and that in this way the country would have a guarantee of honesty and economy in construction, while as a matter of fact there is no such provision in the contract.
The Prime Minister only the other day spoke of this change in clause 9 as one that would allow the Grand Trunk Railway Company to go into the market to raise the money necessary to carry on the enterprise. I have referred to that before. But I hope the right hon. gentleman will weigh the view I take, because it seems to me unquestionably correct-that instead of allowing the Grand Trunk by this clause, to go into the market and raise money for this enterprise, you are doing exactly the opposite thing. You are allowing the Grand Trunk to raise money-that is very true, and up to that point I am in thorough accord with the right hon. gentleman-but, having purchased the stock by giving the guarantee of the company, the sale of that stock will be raising money for the purposes of the Grand Trunk Railway Company, and as honest men, they must apply it for the purposes of that company and no other. I do not care to occupy more time in discussing that question. I have a number of references here which I had intended to give, but will not because I have given enough to illustrate the point I intend to make. The main point I bring forward is that hon. gentlemen opposite. not only those on the treasury benches, but those behind them, make statements in Mr. NORTHRUP.
connection with this contract-and I wish to be distinctly understood, but I do not say they are making them falsely or with any desire to deceive the people-statements, nevertheless, which are wholly contrary to the facts of the case, and which, if the people of this country are to have a fair opportunity of judging for themselves whether this contract is a good one in their interest or not, hon. gentlemen opposite should withdraw and apologize when their errors are pointed out. The hon. member for Annapolis (Mr. Wade) is in his seat now ; he was not in his place when I began. Speaking of these changes under this amended contract that hon. gentleman was very positive that nothing done would increase the burden on the people of this country. I wonder if he is still of the same opinion. I understand the hon. member for Annapolis to say he is still of the same opinion. Well, I begin to understand now, Mr. Chairman, how it is that the right hon. leader of the government hopes that the majority of the people of this country can be led to approve of such a contract as this. When a gentleman of the legal and railway standing of the hon. member-and I hope I say nothing offensive-makes the statement that these new concessions can in no way add to the burdens


Mr. WADE.: I did not say they could not; I said that in my opinion they will not.


William Barton Northrup: Let us see what the hon. gentleman said. I refer to page 872 of the revised ' Hansard ' :
With regard to these concessions, I wish to place myself upon record as saying that the agreement as amended will not cost the Dominion one extra dollar.
The agreement as amended provides that the country is to guarantee the bonds of the western division to the extent of 75 per cent of the cost, whatever that cost may be. I presume the hon. member for Annapolis will not dispute that.


Fletcher Bath Wade: If the hon. gentleman will read the balance of my speech, he will see how that is.


William Barton Northrup: Life is too short. I want to confine myself to fact, and decline to devote my time to the reading of the hon. gentleman's speeches. If, in view of the fact that the obligation formerly limited to $30,000 a mile has now become an unlimited obligation, the hon. member for Annapolis still says that not a dollar of additional obligation is placed on the people of this country, nothing that I can say, nothing that any one can say, nothing that the poet can write or the artist picture, would make the position of the hon. gentleman more preposterously absurd than it is made by his own statement. In conclusion let me repeat that I think this House is entitled to an explanation from the Minister

of Finance (Mr. Fielding) wlio last year so strongly argued in favour of this contract on the ground, which to him was all important, that this stock was to be held by the Grand Trunk. This year when we find that the proposition is that that stock should be disposed by the Grand Trunk we are entitled to hear from the hon. Minister of Fnance an explanation as to why he has changed his base to that extent. I think that the right hon. the leader of the government (Sir Wilfrid Laurier) may well let us know how it is that he explains that the Grand Trunk by purchasing this stock by means of a guarantee-and in this very act express power is given to the directors of the Grand Trunk and the Grand Trunk Pacific to convey any amount of stock they like in consideration of the guarantee,-will be enabled to go into the markets of the world to raise money for the Grand Trunk Pacific.


Mr. CLANCY.: I do not think I need apologize for asking a few moments from the House to protest against one of the most extraordinary railway schemes ever proposed on this continent. So far as I am able to see-and I speak entirely as a layman-the scheme is without any parallel in the whole history of railway building on the continent of America. That may seem a very extraordinary statement to make and I shall ask hon. gentlemen opposite, as I proceed for a very few minutes, to deny one statement which I make. Here is a great and wealthy railway corporation which wishes to get into the Northwest Territories for the purpose of improving its property in the east. That company, after negotiating with the government, gets the Prime Minister to consent to the creation of what is a mere legal fiction, namely the * Grand Trunk Pacific Railway Company, for the purpose of shielding and protecting the Grand Trunk, who are really the only persons concerned, from the expenditure of a single dollar, and from any but the most limited liability. I do not think any hon. gentleman will deny the truth of this statement. The next thing they got the Prime Minister to consent to is the building of 1,900 miles of unprofitable road in the east which is to be handed over to the Grand Trunk, I repeat, the Grand Trunk. By what means ? Through their straw man. or fiction, that has not a dollar in it, that cannot put a dollar in it, that has not a dollar and has no existence, except for the purpose of shielding the Grand Trunk from liability. They lease that road. The Grand Trunk who are mainly to be affected by it, are not liable for one copper of rent ; the government must look for their rent to the man of straw. The Grand Trunk go further ; through their straw man they will issue bonds to the extent required for the construction of practically the whole western division. The government of the day guarantees three-fourths of the cost of the mountain section, whatever it may be, and probably more that three-fourths of the cost of the prairie section, because it may not cost much more than $13,000 a mile. The Grand Trunk comes in and guarantees bonds of the so-called Grand Trunk Pacific, which are their own bonds, and not the bonds of the Grand Trunk Pacific because that has no existence, it is all Grand Trunk. What follows? As a compensation for guaranteeing its own bonds, in the name of the Grand Trunk Pacific, to the extent of 25 per cent, it takes $25,000,000 stock of which it may dispose of and put upon the market and upon which the people of this country must pay dividends in the form of higher freight rates. I challenge hon. gentlemen to say that I have not made a perfectly accurate statement of the case. Here is a great wealthy corporation, but its wealth does not count for one particle except to give it a respectability which enables it to hoodwink the government. Sir Rivers-Wil-son put it very plainly when telling his shareholders of the liability of the Grand Trunk Company ; he has put it beyond a doubt. Mr. A lien, a shareholder, took some exception to the bargain that was being-made and Sir Charles Rivers-Wilson in replying to him said he had entirely misconceived the facts. Referring to Mr. Allen, Sir Rivers-Wilson'said :
He boldly states that the liability upon the Grand Trunk will amount to nine millions sterling, and he divides that nine millions sterling into three millions liability in respect of guarantees, five millions in respect of rolling stock, and one million in respect of the deposit.	[DOT]
He then proceeds to deal with Mr. Allen's statement:
As regards the three millions of guarantee, that, as I stated to you, will undoubtedly be a liability, and, as I stated to you also, will swell the liability of the Grand Trunk Company.
Let me for a moment deal with that. That is a liability, but not a sole liability of the Grand Trunk Company. It is quite true that they guarantee their own bonds in the name of the Grand Trunk Pacific, but in case of default by the Grand Trunk Pacific they are secure because they then are in the position of first mortgages, if those rights can be exercised. They have only a limited liability. Sir Rivers-Wilson continues :
As regards the five millions for rolling stock, it is not five millions-it is estimated at three millions. With that the Grand Trunk has nothing to do. That rolling stock will be provided by the Grand Trunk Pacific Company, and, as the general manager will tell you, they have laid their plans for providing that rolling stock by a trust fund.
That disposes of that : then he proceeds :
Therefore, you may wipe it out and call it four millions. And as regards the one million

deposit, that deposit will not cost you one single halfpenny.
Now, Mr. Speaker, liere I repeat is a great corporation which must have mesmerized the government-I should not like to use language that would be fitting to the occasion-to such an extent that they have uttex

ly disi'egarded the mere elementary considerations of common sense and business, as to permit any l'ailway corporation, wealthy or not, to come here and put up a man of straw and to make such a bargain.
I care not how the Grand Trunk Pacific may be bound by the contract or agreement you cannot enforce the agreement, as my hon. friend from Bast Hastings (Mr. Northrup) has pointed out, unless they have the substance and the means of paying any forfeits they may be called upon to pay. There is not a dollar of security that we have not created ourselves. Our mortgage is founded on the property that we have created, upon the credit of Canada, on the money that we have put into the enterprise. Now, there is a further surrender than the one which relates to this clause. The avowed purpose of asking the Grand Trunk Railway Company to take an interest in this matter, as stated by the hon. Minister of Finance and by the right hon. leader of the government was simply this : We wish to have the security of the Grand Trunk Railway Company behind this enterprise. How are we going to get that ? We are going to compel them to take $25,000,000 of the stock to be held for what purpose ? The first pui

pose that it would be held as security for the payment of the interest on the bonds we have guaranteed. That was the strongest consideration that could be urged. The next consideration was that it would not only be held as security for the payment of the interest on these bonds but that it would be held for a further reason, namely, so that the stock should not be put upon the market, and so that it should not turn up as a ghost before the people upon which they would have to pay dividends in the shape of freight rates. Both of these conditions have been absolutely surrendered. What are we reduced to to-day ?-the humiliating position of saying that the Grand Trunk Railway Company would not consent to do what they had agreed to do and that we were obliged to surrender. The right hon. leader of the government asked : Why should we not treat this railway company .lust as other railway companies are treated? Why should we not allow them to have their stock and put it on the market or do what they thought proper ? The answer is very plain, namely, that there is no other railway company in the same position. We are the guarantors for their bonds. While we are the guarantors for their bonds and put the money of the people of Canada into the construction of this railway they draw all the benefit from it and while controlling Mr. CLANCY.
the policy of the railway they are not liable for a single dollar. What is the policy of that railway company ? The policy of the Grand Trunk is to enhance the railway which is already built in Canada with its great terminals at Chicago, Buffalo and Portland. I want to say in conclusion that this stands out as one of the most extraordinary transactions that has ever been undertaken in Canada. I defy the right hon. leader of the government in the most respectful manner to deny a single statement that I have made both as to its standing alone as the most extraordinary bargain that has ever been made with a railway company in Canada and as to the truth of the statement that this great railway corporation is making use of the Grand Trunk Pacific Company as a mere legal fiction and that the right hon. gentleman is making a bargain with a shadow while the substance is taken from the pockets of the people.


Mr. OSLER.: The government contend that this agreement that they have gone into is for the purpose of conserving to the Canadian people the trade of the west. They say that they have gone into it for that purpose and that all of these large bonuses are given with the object solely of conserving to the people of Canada and to Canadian ports the trade which is now existing and which will in future come from the northwest. We on this side of the House oppose this agreement because we believe that so far from this present scheme carrying out any such purpose it will have a directly contrary effect, that the enormous expenditure which the government are making upon this scheme, while, of course, benefiting the Grand Trunk Railway Company, will divert the trade of Canada to American ports. On this side that is how this bargain strikes us. The government, in all sincerity, say that they hold the opposite view. We claim, and I do not think the claim can be disputed, that the interest of the Grand Trunk Railway Company in this matter will be to collect all the business they can in the west, to bring it down over the line which the government are building from Winnipeg eastward, to make connection in winter time at North Bay, or wherever the junction may be, in summer time at Port Arthur by the branches built, owned and controlled by the Grand Trunk Railway Company and thus feed the Grand Trunk Railway Company's main system. That is the common sense view that any one would take in studying this transaction. That is the view which the Grand Trunk Railway Company had in mind when they first proposed to go into this scheme practically at their own expense, or at all events with a certain bonus to assist them in building theirjline. I think the scheme that the government are proposing to adopt is going to have that direct effect. We have more evidence of that than the other because we see how

thoroughly the Grand Trunk directors at their meetings and during the course of these negotiations have avoided assuming any responsibility. They have avoided any reference to the eastern part of this line, to the very part that is going to cost Canada a great deal of money. They assume that they are going into this for the benefit of their shareholders with the object of improving their old property. It strikes us on this side of the House that that is exactly what this scheme will do. We want to impose upon the Grand Trunk Railway Company, which is the only responsible party in this transaction, certain obligations which will compel them, as far as it is possible to carry out what the government say they have in view, namely, sending over Canadian lines to Canadian ports the traffic which in future may be expected to come from the west. The government, from time to time in connection with this contract, have shown themselves to be entirely in the hands of the Grand Trunk Railway Company. The Grand Trunk people say and the government assume that the shareholders of the Grand Trunk Railway Company would not and did not agree to the first proposition, the scheme which was outlined last year. Now, Sir, I say this is not a true statement of the case because the Grand Trunk directors never submitted and evidently never intended to submit to their shareholders the scheme as it came from this parliament last year.
They got from the government all the concessions they could, because they were forced into this scheme which they did not want to have anything to do with, and when certain directors of the Grand Trunk signed the agreement to carry out that arrangement, they did not afterwards show that they had any honest intention of putting it into effeet. They did not submit the first agreement to their shareholders, but after the date for putting up the deposit had passed, they opened up negotiations with the government or the government opened up negotiations with them. There never was any refusal of the Grand Trunk Railway shareholders to accept the first contract. The directors of the Grand Trunk Railway Company have the confidence of the vast majority of their shareholders, and had they submitted the first contract with their endorsation, it would have been accepted by the shareholders just as enthusiastically as was this amended contract when it was submitted to them. The Grand Trunk directors never had any intention of submitting to their shareholders the contract, which, through the dummy Grand Trunk Pacific, they signed last year. They saw that the government was so committed to some such scheme that they knew they could obtain modifications, and so they got all they asked for ; the wonder being they did not ask for more, if more was left to be obtained. It does seem a very extraordinary thing, that in regard to the western division which both the Grand Trunk people and the government say will be a paying division, the Grand Trunk should receive all that stock, although the government guarantees three-fourths of the cost. The Grand Trunk guarantee 25 per cent, and they get one hundred per cent of the stock. The clause is so worded that it is the evident intention of the Grand Trunk Company to use that stock either in giving it by way of bonus, or to make a speculative factor of it, as has been done with the common stock of the Grand Trunk Railway, for the last forty years. The Grand Trunk common stock has had a value on the market for the last thirty years out of all proportion of its real value, because it was a speculative stock, and in the same way this stock will have a value on the market. In case of default in the western section, the government have no control, because the Grand Trunk Railway Company, with its voting power on this stock, will elect the directors of the Grand Trunk Pacific and they will control the receiver who is put there to operate the road, as to three-fourths for the benefit of the government, and as to one-fourth, for the benefit of the Grand Trunk. It is admitted by railway men that no railroad can pay which is simply a back bone through any country, and the Grand Trunk owning all the branch lines, they can bring to their own line all the business which offers. The Grand Trunk will naturally do that, because as business men, once they get the control, they will operate the system in such a manner as to make it pay the best return to the Grand Trunk proper in which they have such an enormously preponderating interest, compared with which their interest in this new road is a mere bagatelle. The Prime Minister stated in introducing this amended contract, that there were practically no material changes in it, compared with the contract of last year. But the Minister of Finance admitted that the changes were material, and that the government had no alternative but to accept these changes, because the Grand Trunk Railway had forced the amended contract upon them. Here we have a very serious difference of opinion between two leading ministers of the government. The Grand. Trunk directors, at the meeting of the shareholders, studiously avoided any reference to the eastern section. Practically, the only reference made to it was by the retiring director, Mr. Allen, who spoke of a memorandum which had evidently been passed about amongst the directors, and which stated that the eastern section was probably premature. They evidently looked upon it that they had no liability with regard to this eastern section, and no liability if there should be any default in carrying out that part of the scheme. I state without hesitation, that it will be in

the interest of the Grand Trunk Railway to direct the traffic of the Northwest over their new line to Lake Superior, which may reduce the distance from Winnipeg to Duluth to something like 300 miles. That will be the route over which a great part of the freight will be sent from Winnipeg, and that line will be built by the Grand Trunk Railway or by somebody else very shortly. If, however, the Grand Trunk Railway should send freight from Port Arthur, they will send it as far as they can control it to their own roads on the eastern side of the Georgian Bay. They will send it over their own road as far as they can through Ontario, and in winter they will send all their exports by Portland. It is against the interest of the Grand Trunk Railway Company to send one bushel of grain over the northern part of this road to Quebec because they will get nothing for it, whereas if they were to send it over their own lines, they would get the freight from western' Ontario to Portland.
I do not want to enter into details, but I wish to make this statement in as strong terms as I can. I am speaking for myself and I believe I am speaking for every member on this side of the House, when I say, that we are anxious that the Grand Trunk Railway should get into the Northwest. We all approve of that; we believe that it is in the interest of Canada and in the interest of the Northwest that the Grand Trunk Railway Company should get there. But, if they come to this government for assistance to get there, then the strongest possible conditions should be imposed upon them to compel them to take the trade which they gather in the Northwest to Canadian ports. I contend that this bargain which the government proposes, has not the effect in any shape or way of conserving Canadian interests, but on the other hand, we are called upon to give the Grand Trunk Railway Company enormous subsidies without providing any adequate protection for Canadian ports. I believe that the interest of the Grand Trunk Railway Company in the future, will be the interest that it has to-day, and that its present interest will not be changed one iota by this contract. The interest of the Grand Trunk will.be to send all the freight and passengers possible over its existing lines in which it has such an enormous amount of capital invested. There is not one dollar of inducement for the Grand Trunk Railway to send its traffic over this line from North Bay to Quebec, and there is not one dollar of security taken by this government to penalize them, in case they should not do so, and in case the views which we hold on this side of the House, turn out to be correct.


Mr. KEMP.: 
Mr. FITZPATRICK.: I trust that hon. gentleman will understand that if we do not reply fully to the very interesting speeches made this afternoon, it is not because any discourtesy was intended, but simply because a good many of the arguments have already been heard and answered to the best of our ability, and because at other stages of the Bill we will have to discuss these questions over* again. Therefore, I would prefer to postpone what

I have to say until another stage of the proceedings.


Mr. HAGGART.: My attention has just been directed to the speech of the hon. member for Brantford (Mr. Heyd) in reply to me the other evening. I made the statement that there was no object in getting a lower grade than four-tenths, because the power required to draw a train over a four-tenths grade was the same as is required to start an engine on a level road. I gave the House my authority on the subject, yet the hon. gentleman went to the library to discover an opinion which would contradict the statement I made. He said :
I heard to-night, with what confidence and with what assurance the late Minister of Railways made the statement, that a railway of four-tenths grade is equal in capacity to a practically level road. When the ex-Minister of Railways makes a statement like that, with so much confidence, one is almost afraid to dispute the accuracy of this assertion. But I have under my hand the Canadian Pacific Railway standards with respect to the grades of railways, and also the standards of Mr. Wellington, and these statements are diametrically opposed to the statements made by the exMinister of Railways.
Every statement that he makes with that degree of assurance and confidence must be just as carefully scrutinized as the statement he made to-night with respect to the gradients of the railways. He stated that a four-tenths grade railway was equal to a level road. What does Mr. Wellington say in his tender ? He says that an engine with an 18-inch by 24-inch cylinder is capable on the level of drawing 2,183 tons, while on a four-tenths grade it is capable of drawing 1,058 tons.
No one disputes the correctness! of that opinion, but what I stated was that there is no object in having a lower grade than four-tenths, because it is found in practice that to start an engine on the level required as much power as to take it over a four-tenths grade, and I gave as my authority the ' Scientific American.' I thought I made myself particularly plain.
Section 9 of the schedule agreed to.
On section 10 of the schedule.
10. Paragraph twenty-one of the said contract is amended by adding thereto the following clause :-
' Provided, further, that, in the event of the government determining to undertake the operation of the said eastern division, the company shall be entitled for a further period of fifty years to such running powers and haulage rights as may be necessary to continuity of operation between the said western division and other portions of the company's system and the Grand Trunk Railway system upon such terms as may from time to time be agreed upon, or as may from time to time, in case of failure so to agree, be determined in the manner provided by paragraph 24 (2) hereof, which is hereby made applicable to cases arising under this paragraph.'


Charles Fitzpatrick: 


Charles Fitzpatrick: The original contract provided that at the expiration of the fifty years, if the government did not take over and operate the eastern extension from Winnipeg to Moncton, the Grand Trunk Pacific would have a lease of that extension. The intention here is to modify that section so as to provide that in the event of the government taking over the eastern section and operating it as a government road, the company shall be entitled to have such running rights and haulage powers as may be necessary to enable it to effectually operate the western section from Winnipeg to the coast.


Mr. R. L. BORDEN.: In order to understand exactly what this clause means, we should refer in the first place to clauses 21 and 24 of the original agreement. By clause 20 of the original agreement it is provided that the eastern division shall be leased to the Grand Trunk Pacific. By clause 21 of the original agreement, which is now amended, it is provided as follows :-
If, upon the termination of the said lease, the government shall determine not to undertake the operation of the said eastern division, the company, provided the terms offered by it are as favourable to the government as those offered by any other railway company equally competent to perform and fulfil the obligations required by the government to be assumed by the lessees thereof, shall have the right to an extension or renewal of the said lease for a further period of fifty years, upon such terms as may be agreed upon. Notices of the intention of the parties shall be given as may in such lease be provided.
In clause 24 of the original agreement It is provided that the lease shall reserve to the government in respect of Its ownership of the Intercolonial, running powers and haulage rights upon the eastern division, upon certain terms mentioned. The same clause also provides that power shall be reserved to the government to grant running powers and haulage rights sufficient to enable any railway company desiring to use the eastern division to do so upon certain terms, and also that there should be secured to the government, in respect of its ownership as aforesaid, running rights over the western division, and to any railway company desiring to use the same, running rights and haulage powers over the same division. So, we have four powers contemplated by that clause ;-running powers for the government over the eastern division ; running powers to any other railway company, in the discretion of the government, over the eastern division ; running powers to the government over the western division ; and running powers to any other railway company, in the discretion of the government, over the western division Now, the clause which we are at present discussing, contemplates the event of the government determining to undertake the operation of the said eastern division, in

which case, of course, the lease will not be renewed and will come to a termination. The clause amended provides for the renewal by t|ie government of the lease to the Grand Trunk Pacific Railway Company. This supplementary or amending clause makes provision in case the government does not renew that lease. The provision made is this-that the company shall, in such case, he entitled for a further period of fifty years to such running powers and haulage rights as may be necessary to continuity of operation between the said western division and other portions of the company's system and the Grand Trunk Railway system.. 1 wish to point out to the government that, although they have made a provision by which the Grand Trunk Pacific Railway Company shall be entitled for a further period of fifty years to haulage rights over the eastern division, we do not find any correspond, ing provision by which the government or any other railway company shall during Ibe same period of fifty years, have running powers or haulage rights over the western division. It seems to me there is a very serious commission in that regard. Under the terms of the lease, during the first period of fifty years and during any renewal period, these rights would be secured to the government ; but, in the event of the government bringing the lease to an end at the termination of fifty years, the company will retain running rights over the eastern division, while the government, or any railway company named by the government, will not have corresponding rights over the western division, except as they may be secured under the general provisions of the Railway Act. I would like to ask the Minister of Justice if this is correct, and if so, why some provision such as I suggest does not appear in the amended agreement ?


Charles Fitzpatrick: I understand my hon. friend (Mr. It. L. Borden) to take the position that, with respect to the western division during the term of the lease, that is for 'fifty years, we have running rights over that division for the Intercolonial, or any other government owned road-


Robert Laird Borden: Or any other road.


Charles Fitzpatrick: Any government-owned road so far as the government is concerned ?


Robert Laird Borden: Yes.


Charles Fitzpatrick: The operation of the western division by the Grand Trunk necessitates connection with eastern Canada, and, for that purpose, they are to have all the running rights they require over the government road after the fifty years, to enable them to communicate with eastern Canada. With respect to the western division, that will come under the operation of
the General Railway Act. Under the General Railway Act, running rights will be secured to any company over the western division, as it would over any other road.


Mr.   I@: Under what provision of the Railway Act is that ?


Charles Fitzpatrick: I will try and find it, but, while I am going over the Act we might take up some other section.


Haughton Lennox: There is another point involved in this section which I would like to discuss. But it also would require the attention of the Minister of Justice, so. perhaps, I had better postpone what I have to say until the clause is taken up again.
On section 11 of the schedule.
11. Iu case, during the currency of the lease of the eastern division, the company shall have constructed a branch line or lines running from a point or points in the said eastern division, the government shall, if at the expiration of the said lease, it shall determine to undertake the operation of the said eastern division, take over such branch line or lines as the company may elect not to retain, at such value as may be agreed upon, or as may, in ease of failure so to agree, be determined in the manner provided by paragraph 24 (2) of the said contract, which is hereby made applicable to cases arising under this paragraph. If any such branch line or lines shall have received any grant or grants under the provisions of any Act of the parliament of Canada,, the amount of such grant or grants, without interest, shall be deducted from such value and the difference only shall be payable by the government upon the taking over of such branch line or lines.	-


Haughton Lennox: The Minister of Justice Is busy, but probably the Postmaster General (Sir William Mulock) will answer the question I have to ask with regard to this section.	-
There is a provision here that, if a government grant has been made towards the construction of a branch line and the government afterwards take over that branch line, the amount of the grant shall be deducted from the purchase price, but without interest. Now, that may be perfectly fair, I am not prepared at this moment and without further explanation, to say that it is not fair. But I would like to hear from some of the ministers as to the principle on which that provision is there inserted. It may be quite open to debate whether it is a fair way of looking at it or not. No doubt, some principle is well known to the administration, or was laid before them at the time and duly considered, to show that the deduction of the amount of the subsidy should be made without charging interest.


Charles Fitzpatrick: It is really a question of bargain. It seems, at first sight, perfectly fair that, if the company is obliged to build branch lines and secures the aid of the government, should those branch

tile full benefit of fifty years of tlie money we have paid out in the way of subsidies to branches1. It seems to me it is a pretty one-sided bargain. It is a one-sided bargain if you take this clause by itself, but it is very much worse if you take it in connection with all that has gone before. In the clauses preceding this, we have given up almost everything that we possessed under the agreement as we had it last session. We then had what we thought was a pretty bad bargain but every important principle upon which the government asked the support of the people for their Bill of last year has, down to this point, been practically surrendered. The limit of $30,000 a mile on the mountain section has been giveii up and instead of having to guarantee $15,000,000 as a total we will probably have to guarantee nearly $25,000,000. The $5,000,000 deposit which the company was to make has not to remain in the hands of the government as long as under the original agreement. Whereas under the old agreement it was to remain in the hands of the government until the western section was completed and the whole line equipped, now that deposit will pass out of our hands before the western section is completed or the railway is equipped throughout. The $20,000,000 of rolling stock which was to be put on the road, and which the Minister of Finance said would be a security for this country is cut down
lines be taken over the amount of the subsidy should be deducted. And it seems not over generous to allow the interest in favour of the company. There is no other ex-p;anation that I am aware of.


Haughton Lennox: It may or may not be fair ; I am not prepared at this moment to say. But I think that persons who are railway experts-and 1 presume that every man of the administration must be a raii-way expert by this time, and there has been considerable evidence of that fact from time to time since we have been investigating this matter-ought to be able to point out to the committee plainly, why the interest should not be charged.
However, passing that matter by for the moment, and referring to the main question involved in this section, I think there >s good ground for questioning the wisdom of the government in agreeing to the terms here contained. I notice that the right lion, gentleman (Sir Wilfrid Laurier) who leads the House, says that all the sections after the ninth section involve alterations to the contract of trivial nature and really hardly worthy of serious consideration. That may be some indication of the way in which this matter was treated when these negotiations were pending between the government and the railway company. Confining the discussion for the present to the lith section, I am inclined to think the privilege granted to the railway company lure has not been duly considered with reference to the interest of Canada. Section 11 provides that:
If at the expiration of the said lease, it shall determine to undertake the operation of the said eastern division, the government shall take over such branch line or lines as the company may elect not to retain, at such value as may be agreed upon, or as may, in case of failure so to agree, be determined in the manner provided by paragraph 24 (2).
. 4 hat is by arbitration. Tliis is an exceedingly one-sided bargain. If there were provisions that tlie government would have the light to take them over at a fair valuation, then there might be some reasonable ground to believe that tlie subsequent provision that only the subsidy without interest should be deducted would be a fair provision. But when we find, putting it in a brief, concise form, that what it means is that we cannot take over a branch line if we want to unless the railway company says so, that we can only get it if the railway company does not want it and that we must take it if the railway company does not want it, then I think the provision goes too far. We cannot get these branches if the railway company desires to retain them, but let us desire as much as we will to avoid taking them, we must take them if the railway says so, and we must take them after simply deducting the grant that has been made. Thus the railway company can have I


Charles Fitzpatrick: to $15,000,000 and is surrounded by terms that make it less than $15,000,000 in fact. The early construction of the railway has been abandoned. The people of the west were promised immediate relief from the alleged congestion. That has been completely abandoned as a theory of the government to-day. The control of rates upon which the Minister of Finance was so eloquent last year and upon which he attempted to ridicule the opposition last year is abandoned. Last year the hon. minister told us that it was perfectly idle to talk of speculation; ' every dollar of the $25,000,000 stock must remain in the control of the Grand Trunk Company ; not one dollar of it could be sold.' That too, has been abandoned, and every dollar of that stock may he sold ; not one share of it need be retained in the hands of the Grand Trunk Company and all that need be retained by the company is the bare right to vote. They are to control the policy of the Grand Trunk Pacific. Control it for what ? Control it against the interests of this country, because it is distinctly against the interest of Canada that the policy of the Grand Trunk Pacific should be controlled by the Grand Trunk Railway. Thus. I say that taking the whole amended contract down to the 11th section, every important provision on which the government relied last session, as an argument in favour of the measure, has been changed and all beneficial provisions have been removed. It is too much to ask this country now, under the 11th section,

to commit itself to an agreement that it shall take the branch lines from the Grand Trunk Kailway if the Grand Trunk Railway does not want them and shall not have the right to take them if the Grand Trunk Railway desires to retain them, so that if the Grand Trunk Railway say : ' We do not want them, they are no use to us,' then the government must take them, whether they are of any use to the government or not.
.. AIl'llLAVELL- Au examination will show , e !S P/ragraph materially increases the liability of the country in connection with the building ot this road, and this is being done in such a way as to allow practically no regulation of the railway by the people ot Canada who assumes the liability. Provision is made in this paragraph for taking o\ei such branch lines as the company mav choose not to retain, but no provision is made for regulating the number of lines they shall build, or for having it known before hand how many lines the government mav be required to take over under this section". While this is not a matter on which the [DOT]Grand Trunk Pacific or any other road is apt to experiment very largely, still the fact remains that they can experiment if thev want to, and if it is found that the line in one section does not pay as well as another line they can go on with the second line with perfect faith that they can compel the government to take over the first experimental line as soon as their lease has expired. I submit that some provision should be made in this Act either by this section or by a clause in the Act itself, whereby the consent of the government must be obtained before any of these branch lines are built in order that it may be known when a branch line is built whether it is one of those that will come under this paragraph at the end of the time. While, as I said, the company is not apt to experiment too largely, still under this clause it can make experiments, and in making them add very greatly to the liability of the country at the end of the term of fifty years. I submit that something should be done to limit that liability and to make it considerably more definite than this paragraph makes it.


Robert Laird Borden: Are we going to dispose of section 11 before we go back to section 10 ?


Charles Fitzpatrick: If you please. I would like to look into the Railway Act. My present impression of the Railway Act is that it is not applicable to a government owned railway, but that it is only applicable to railways which are the property of private corporations. If that is correct then my statement was incorrect a moment ago, that is to say that we should find relief under the terms of the Railway Act independently altogether of the agreement.


Robert Laird Borden: I have not been able to find in the Railway Act any provision S4
which confers upon the board power to give one railway running rights over another railway compulsorily and against its consent.


Charles Fitzpatrick: I would have to look up the Railway Act before I could answer my hon. friend positively, but I have come to the conclusion, having regard to the application of the Act, that the government, not being controlled by the Act, would not have the power, even if that power was vested in the commissioners in respect to private companies, to take advantage of it. Therefore, we must fall back upon section 24 of the agreement.


Robert Laird Borden: I think that is quite right. If the Intercolonial Railway is not subject to the disabilities of the statute it is not entitled to the advantages of the statute.


Charles Fitzpatrick: Of course, we would have to rely on the provisions of section 24 which refers in several subclauses to certain privileges of the government with respect to its ownership of the Intercolonial Railway and reserves to it running powers over the western division.


Robert Laird Borden: But the difficulty about that is that the amendment .which is now being made is one which contemplates the termination of the lease. The provisions of a lease which had ceased to exist would not be of any assistance to us. Everything is satisfactory from the standpoint of the Grand Trunk Pacific Railway Company, because in the supplemental agreement you have this specific provision, that even although the lease does come to a termination, the Grand Trunk shall have running rights over the eastern division.. But the country must face an altered position of affairs at the close of the period mentioned. While the lease is in existence the government and any railway acting with the consent of the government have corresponding running rights over the western division. Those rights cease with the termination of the lease, when this supplementary provision comes into operation to secure running powers to the Grand Trunk Pacific over the Eastern Division with no corresponding provision to aid the government in securing running rights over the western division. That is how it strikes me and I am willing to be corrected by my hon. friend the Minister of Justice if I am wrong.


Charles Fitzpatrick: My own view is that under section 24 you provide for rights which are to accrue to the government at the expiration of the lease. In my opinion there is nothing to prevent a man who makes a lease inserting in that lease a clause which will secure to him rights after the lease has expired. I can see no principle of law which would make that impossible. I would like to consider the matter more fully.



I never like to say that I have no doubt upon any question of law but the view which I take of it is that under the lease proper provisions might be inserted which would secure to the government in respect to its ownership of the eastern division running powers over the western division which would be operative after the expiration of the lease.


Robert Laird Borden: I will not say there is no doubt when my hon. friend the Minister of Justice says.he has a doubt. But, apart from the opinion which he has expressed to the committee I would have thought, that, inasmuch as section 24 provides for a lease for a definite time, the provisions contained in that lease must relate only to the time for which the lease is in existence and that you could not, under section 24, consider those provisions in operation beyond the term provided for. That would seem to me a very fundamental principle, almost an elementary principle of the construction of clause 24. However, if my hon. friend would like to take time to consider that question we might go on with section 11 as to which I have something to say and we could hear from him later his matured opinion as to the point which I have suggested.


Haughton Lennox: May I just say before we pass from that section that if the hon. Minister of Justice will refer to section 3 of the Railway Act he will find that government railways are expressly excluded from the application of the Act. It reads as follows:
This Act shall apply to all persons, companies and railways (other than government railways) &c.
Mr. DEPUTY 'SPEAKER. We will resume consideration of section 11, of the schedule.


Robert Laird Borden: As far as section 11 is concerned it seems to give to the company an option which might be exercised in future very greatly to the disadvantage of the government. It provides that-
The government shall, it at the expiration of the said lease, it shall determine to undertake the operation of the said eastern division, take over such a branch line or lines as the company may elect not to retain.
That confers upon the company an option which is very greatly, no doubt, to the advantage of the company but which will be attended with corresponding disadvantage to the government. During the period of fifty years for which the lease is to continue the company will have ascertained which are unprofitable. It will have ascertained which of the branches are essential to the profitable working of its system, and by the word 1 system ' I mean not only the Grand Trunk Railway system but the system of the Grand Trunk Pacific Railway, and any such branches it will, of course, retain. Any lines which it finds unprofitable, any lines which it


Charles Fitzpatrick: finds are not necessary to control the situation it will hand over to the government and the government will be bound to take them. 1 would like to ask the hon. Minister of Justice whether the government should not have that option instead of the Grand Trunk Pacific Railway Company. This company is receiving very great aid from the government and if any option should be exercised it seems to me at least equally fair that the government should exercise that option. Or in ease of any difference of opinion it would be perfectly fair to the Grand Trunk PacificRailway Company that such difference as to which lines should be retained by the company and as to which lines should be taken over by the government should be determined by arbitration under the provisions of the original agreement. The proposed provision will place the government in a most unfortunate situation. What will be the position of affairs ? The government with three or four unprofitable branch lines on its hands, will proceed to operate the eastern division leaving the Grand Trunk Pacific Railway Company with the branch lines which are really profitable and serviceable to compete with the government and to take all the traffic from the west which otherwise must have been secured by the government system. I would like some fuller statement from my hon. friend as to the reasons which induced the government to consent to the giving of this option to the Grand Trunk Pacific Railway Company at the termination of the lease.


Charles Fitzpatrick: There would be a great deal of force in that criticism if this section were applicable to any branch lines except those which the company is now authorized to construct, branch lines to North Bay, to Port Arthur, and to Montreal. You will find that each one of these lines, with respect to the eastern section, may be operated successfully, and if the government does take them over they will be paying concerns. If the company were at liberty to build branch finds ad libitum, and that the unprofitable ones might be handed over to the government and the profitable ones kept by the company, then I could understand the force of the hon. gentleman's criticism. If power is given to the company in future to build any branch lines, such restrictions can be provided, as will be in the public interest.


John Graham Haggart: Suppose the Grand Trunk Pacific have the right to retain these three branch lines and the right of running to the junction at these points of the eastern extension ; what is the use of the eastern extension to the government ?


Charles Fitzpatrick: There is nothing to prevent the government from buillding any branch lines it may think necessary in the interest of the eastern extension.


John Graham Haggart: Would you build branch lines to compete with these three branch lines to which you have referred ?


Charles Fitzpatrick: If, in connection with the operation of the eastern division, the government found it necessary to extend branch lines to North Bay or Port Arthur or Montreal, and they found the Grand Trunk unwilling to give up possession of these branch lines, I can see no reason why, in the public interest, the government should not construct them. There is nothing here to prevent them doing so.


Haughton Lennox: In that case there would be two lines running through a country where there was only enough paying traffic for one line. Let me point out to the Minister of Justice, that the contract does not limit the Grand Trunk Pacific to the three branch lines to which he has referred. If that restriction were in the contract, it would be a businesslike restriction ; but the contract says : We are to take over such branch line or lines as the company may elect not to retain. Suppose for instance, that the Grand Trunk Pacific built a line through a section rich in timber, and they built it for the mere purpose of taking out that timber, and that after the timber has been exhausted there is nothing left to carry on the railway ; then it would be a very nice thing to unload such a branch line upon the government. But that is not all. The Grand Trunk Pacific do not propose to rest satisfied with the slight encouragement which they have received from the federal government, because Sir Rivers-Wilson said to his shareholders in London :
The line will pass, as you will observe, from 100 to 150 miles north of North Bay, whence a branch line will connect with the Grand Trunk system, and another branch line will be constructed from some point between Winnipeg and North Bay to a point on Lake Superior. The Grand Trunk Pacific will undoubtedly receive the usual subsidies per mile from the Dominion and Ontario government in aid of the construction of these two branches.
There are three branches contemplated for Immediate construction. I presume they will obtain a subsidy from the Quebec legislature for the branch line from Montreal, and from the Ontario legislature they have already received a subsidy of 6,400 acres of land per mile and $2,000 per mile for 200 miles to Port Arthur. No doubt they will seek another subsidy from the Ontario government for the branch to North Bay. Now the contract is very carefully guarded for the Grand Trunk Railway in that respect. It is carefully guarded in their interest because for eighteen months they have been hatching this scheme, while for the same period we have had no Minister of Railways to watch it in the interests of the people of Canada, and when we did get a Minister of Railways, it was so arranged that it is difficult to know whether we have a Min844	'
ister of Railways or not. Here is what the contract says :
If any such, branch line or lines shall have received any grant or grants under the provisions of any Act of the parliament of Canada, the amount of such grants, without interest, shall be deducted from the value.
Now, that is all right so far as it goes, but there is no possibility of deducting from the purchase price any subsidy granted by a provincial legislature. We cannot shut our eyes to the fact that what is granted by the provinces is of moment to the representatives of the people in this House, and it should be of moment to the government also.


Charles Fitzpatrick: It might, perhaps be left to the provincial legislatures to attend to their own affairs, and to attach such conditions to the subsidies they may grant to this corporation, as will enable them to have the subsidies returned, in the event of the federal government taking over the railway.
I fail to see how we, in this parliament, could effectually- deal with it.


Haughton Lennox: That argument cuts both ways ; for might not the provincial governments leave it to the Dominion parliament to take these precautions ? The Ontario legislature has granted a subsidy, but as I understand it they have made no provision for a return of that subsidy, should the Dominion government take over that branch line. I think it is the duty of this parliament to see to the matter now, and I am not prepared to say that the proper principle is for us to take chances in such an important matter.


Edmund Boyd Osler: I want to draw attention to one point in this connection, namely, that, after all, the terminals are the most important matter. If the government has to take over the eastern division, and if the Grand Trunk Company build from a point 200 miles east of Winnipeg down to Port Arthur or Fort William, there is no question that that road will do an enormous amount of business. The government cannot wisely duplicate that line, in order to have the use of the terminals at Port Arthur or Fort William ; and whoever will hold the terminals at Montreal or Toronto or Port Arthur will hold the key to the whole situation, so far as the worth of the government line is concerned.


Charles Fitzpatrick: I quite understand the value of the terminals ; but the hon. gentleman must remember that this country is growing, and while a few years ago its terminal facilities were limited, they are growing to-day, and fifty years hence no man can tell what they will be.


Edmund Boyd Osler: You leave the plum of the whole business in the hands of the Grand Trunk Company, and they can force the government to pay whatever they like for the use of the terminals. I agree that the

terminals -will be very costly ; but I think there should be some provision that if the government take over and operate the eastern division, they shall have the right to the use of the terminals at Port Arthur and the other ports.
At six o'clock, Committee took recess.
After Recess.
Committee resumed at eight o'clock.
Section 11 of schedule allowed to stand.
On section 10 of schedule,


Charles Fitzpatrick: During the recess I took occasion to look into this section and to consider it in the light of the objection made by my hon. friend the leader of the opposition. If I remember rightly, the objection he raised was that in the event of the government undertaking to operate the eastern division on the expiration of the lease for fifty years, the Grand Trunk Pacific Company would, as the owners of the western division, have running rights over the eastern division to such extent as might be necessary to carry on their business arising on the western division, and that there were no reciprocal arrangements with respect to the user of the western division by the government as owners of the eastern division. Now, I would like to draw my hon. friend's attention to section 24 of the original agreement : and in constructing that section, I would ask him to bear in mind that three separate properties are being dealt with. In sections * a ' and ' b ' it is the property called ' the eastern division ; in section ' c ' it is the western division; in section * e ' it is the Intercolonial Railway. So that what is in contemplation here is that the company, as owners of the western division and as lessees of the eastern division, shall have the right to operate these two divisions in their entirety ; but, in addition to that, they will, under section * e,' obtain the right to use the Intercolonial Railway. On the other hand, the government, as the owner of the Intercolonial Railway and of any other lines of railway in the present or the future, acquire the right of user of the eastern division and also of the western division. Now, how are these rights dealt with ? The government, as the proprietor of the eastern division, reserves to itself-that is to say, takes from the lease- the right with respect to its ownership of the Intercolonial Railway and of any other lines of railway, present and future, to have running powers over the eastern division. That is a reservation ; and my hon. friend will observe that that is the word used in sections ' a ' and ' b.' Rut when you come to deal with the western division, which is not to be leased, but is an independent property belonging to the lessees of the eastern division the word used is not ' reserves,' but that the government ' secures ' to itself certain rights Mr. OSLER.
over the western division ; and with respect to the Intercolonial Railway, it will be observed that in section 1 e ' the company ' secures ' to itself certain rights over the Intercolonial. Now, what is the effect of that ? In order to construe section ' c.' you must paraphrase it in this way : the lease shall contain the proper and usual provisions securing to the government, in respect of its ownership, present and future, of the Intercolonial Railway and any other lines of railway, running powers and haulage rights over the western division. It secures those rights in respect of its ownership of the Intercolonial and any other lines of railway, present and future. There is no limitation ; it secures them for all time. The government is not dealing with the company as lessees, but as owners of the western division. Bear in mind that the amendment is only applicable to the eastern division. It is not applicable to the Intercolonial Railway ; because, with respect to the Intercolonial Railway, the company has secured in perpetuity rights over the Intercolonial under section ' e,' ih the same way as the government has secured rights over the western division in perpetuity under section ' c '-or rather will secure rights when the covenants are made.
The position is this. The company are the owners of the western section and the government own the Intercolonial Railway. Between the two there is a section that will be in the possession of the company for fifty years under lease, but which may l'evert eventually, at the expiration of that period, to the government, and the rights of the government with respect to the western division as well as the rights of the company with respect to the Intercolonial Railway are fixed. But with respect to the intervening part, they are not fixed so far as the company is concerned, and it is in order to supplement that omission that the company ask for this amendment. The company own absolutely the western division and the government own the eastern division and the Intercolonial. With respect to the western division, the government secures rights in perpetuity over it. With respect to the Intercolonial, the company acquire rights in perpetuity over that line, and with respect to the intervening portion, the government reserve rights to the Intercolonial pending the lease, but at the expiration of the lease, if the property reverts to the Grown, the company will have over that eastern extension the same rights it would have over the Intercolonial


Mr.   R.@: Ij. BORDEN. Are we to understand that the rights which are to be secured to the Grand Trunk Pacific, under subclause ' e ' of clause 24 of the agreements are rights in perpetuity ?


Charles Fitzpatrick: Yes, over the Intercolonial.


Robert Laird Borden: Are we also to understand that any rights granted under subsection ' d ' are rights in perpetuity ?


Charles Fitzpatrick: The government are securing in the abstract rights which they may confer on any company which may desire them. There is no company mentioned.


Robert Laird Borden: But when we come to the concrete, when we have a company asking to make use of the same, it would seem to follow logically from the argument of my hon. friend that these running powers are to be granted in perpetuity.


Charles Fitzpatrick: Not necessarily.


Robert Laird Borden: With all deference to the opinion of my hon. friend, I doubt very much whether that would not be the construction.


Mr. BARKER.: Clause 10 of the supplementary agreement is not in perpetuity.


Robert Laird Borden: All these stipulations are dependent on the construction of the lease, provided for in section 20, which lease is to be for a period of fifty years, and that lease according to the provision of paragraph 24 of the original agreement, must contain proper and usual provisions. The words used are :
The said lease shall also contain proper and usual provisions.
The government reserves in respect of its ownership, present and future, of the Intercolonial, and any other line or lines ol' railway, running powers, and haulage rights over the western division, and also the right to grant running powers and haulage rights to any company desiring to use the eastern division.
Then follows of course, the word ' securing.' The reason for using the word ' securing ' is very plain. The first two paragraphs are reservations. The government is to own the eastern division, and the granting of a lease on that division is to be subject to a reservation. But when you come to deal with the western division, which is not owned by the government, you secure to the government-the word ' reserve ' would not be the proper word there-and to any railway company that may desire to make use of the same, running rowers and haulage rights. But all these are limited by the term of the lease, in which these provisions are to be contained, and the term of the lease is to be a period of fifty years. When that term comes to a conclusion, all the powers granted under the lease must necessarily fall, in the absence of an express and definite stipulation to the contrary. You cannot by merely using the word ' securing,' extend beyond the period of the lease, powers which are contained in it. I have no doubt as to this, except that which may be created by the fact
that my hon. friend argues the contrary. Then you have this amendment providing that for a period of fifty years after the termination of the lease the Grand Trunk Pacific shall have running powers and haulage rights over the eastern division. That very provision does not seem to me at all in consonance with the argument of the Minister of Justice; and if the object which he says the government had in view by section 24 and the amendment to section 21 is to be carried out, one would have expected a somewhat similar provision in respect to the powers which the government might grant to railway companies under section 24, subsection 'b,' but I see nothing of the kind. I am therefore not disposed to concur in the view which my hon. friend takes of this section. Let me point out this. Under section 24, subsection 2, of the original agreement, it is provided that if any question should arise under paragraphs, ' a,' ' c,' and ' e,' it shall be submitted to the board of railway commissioners. Is there any similar provision with regard to any question which may arise under paragraphs ' b ' and ' d ' ? I suppose, there must be some reason for omitting these two paragraphs, but at the present moment I do not recall it.


Charles Fitzpatrick: I have no persona! recollection of the object in view at the time these two paragraphs were drawn. Paragraph ' b ' reserves power to the government to grant running powers to any railway desiring to use the eastern division. Paragraph ' d ' secures to any railway company running powers over the western division. Paragraph ' e ' secures to the company running powers over the Intercolonial. These are specific cases. The others are reservation of power generally.


Robert Laird Borden: I think I see the reason now. Under ' b ' and ' d ' the terms are to be settled by the government and not by the board of railway commissioners. But does not the Minister of Justice think that after all this must be limited by the term of the lease ? Can there be an extension of these provisions beyond the term of the lease in the absence of express stipulations to the contrary ?


Charles Fitzpatrick: My answer is that the covenant there is not with the company as lessees. Take, for instance, subsection c. That is not a covenant with them as lessees at all, it is a covenant with them as owners of the western division. They covenant there with respect to a property not affected by the lease at all. They give to us running powers over the western division that does not come within the operation of the lease, and they covenant, as owners of the western division, with us as owners of the eastern division, and in respect of our ownership of that line and any

other line present and future. There Is no limitation as to the time, so that it covers our ownership of any other lines that we may acquire. It may be that at the expiration of the fifty years or thereafter, we may become owners of all the lines east of Lake Superior, and this is with respect to the government ownership of lines. What was in contemplation was with respect to government-owned roads, that they should have at all times running rights over this western division.


Robert Laird Borden: That may have been the intention but we have to take the words of the paragraph before us. The government is granting a lease to a company which will be the owner of the western division. The government reserves in the least its own right to run over the eastern division, the absolute ownership being in the government, subject to the rights conferred by the lease. The government reserves certain haulage powers and running rights. The company to whom that lease is granted happens to own a line of railway extending further west, which connects with the eastern division ; and the company, on its part, is to secure to the government running powers over that line. Well, all these are limited, it seems to me, by the terms of the lease, in the absence of express stipulation to the contrary. It would have been perfectly possible, and perfectly proper, for the government to have provided, in subsection c and subsection d that the running powers and haulage rights therein referred to should not be limited by the term of the lease. But inasmuch as the government has not made that provision, and inasmuch as section 24 itself says that the provisions with respect to these matters are to be the proper and usual provisions, it would seem to me to follow almost irresistibly-I would 'have said quite irresistibly-that the powers conferred by section e and section d are limited by the term of fifty years for which the lease is to continue. I do not quite see, notwithstanding the argument of the Minister of Justice (Mr. Fitzpatrick) how they can continue for an indefinite period. Of course, my hon. friend is forced to the contention that they must continue for ever. My opinion is that sections c, d and e do not create these powers in perpetuity but merely for the period of fifty years. And I think it will be rather new to the country that this lease is to give to the Grand Trunk Pacific Railway Company running powers and haulage rights over the Intercolonial for ever. Because I do not think that impression was derived- from the words of this contract by any hon. gentleman in this House during the discussion we had last session. For my part, I am free to confess, the idea never entered my mind until I heard it announced by my hon. friend the Minister of Justice this evening. It is a stipulation of the greatest possible importance, if the running Mr. FITZPATRICK.
powers and haulage rights over the Intercolonial are not to be confined to thd period of fifty years, but are to extend to all time in the future, and that conclusion forms a necessary part of the argument of the Minister of Justice


Charles Fitzpatrick: Does not the hon. gentleman (Mr. R. L. Borden) see that there is reason to limit the reservation to fifty years, because at the end of fifty years there is no reason for the reservation, because the property reverts to the owner? But that does not refer to the western division, for there we are dealing with an independent property. It is quite right to stipulate that the lessee shall have the right of passage over joint property. I do not see any objection to making the right of passage beyond the lease, and I do not see any objection to stipulating that the owner of the joint property, not the lessee, should have the right of passage over the property.


Robert Laird Borden: Let us take the hon. gentleman's (Mr. Fitzpatrick's) illustration. Suppose you had an ordinary lease, and reserved to the landlord the right of way over the property, and, in the same lease, a right of way was granted to the landlord over adjoining property of the lessee-I think it beyond doubt, in the absence of express stipulation to the contrary, that the right of way would expire at the termination of the lease. That is only putting it in another form and perhaps one in which we can grasp it more readily. Accepting the hon. gentleman's illustration, it seems to me that in the absence of express stipulation to the contrary-and I attach much importance to that- proper and usual provisions ' in a lease are restricted to the term of the lease. That is not only fundamental but elementary so far as the operation of the lease is concerned, unless you can point out in the lease itself some provision which, in express terms or by necessary implication, extends a particular provision beyond the period for which the lease is granted.


Samuel Barker: Is it to be supposed that if the gentleman who drew that document had had in his mind that he was going to secure to the government for all time running rights and haulage powers over some 1,500 miles of a railway he would have put these provisions in a lease expiring in fifty years ? They are entirely apart from anything connected with the lease. They would naturally be a part of a separate and distinct agreement ; and the words here would have been that the

parties shall enter into an agreement for these things in perpetuity. It is the last thing any draughtsman would have thought of, it seems to me, to put such provisions to last in perpetuity, in a lease which expires in fifty years. Can it be possible that, in a matter of such vital importance, of enormous value to the government and to the companies that are intended to be benefited, provisions to inure to their benefit for all time should be considered as coming within ' proper and usual provisions ' in a lease of fifty years. The very last thing the hon. gentleman would have done would have been so to express himself, if, when he drew the original agreement, he thought, for a moment. he was going to obtain perpetual rights over the western division. I cannot imagine that the hon. gentleman would have failed to use the words distinctly providing for perpetual user, for perpetual powers. The hon. gentleman refers to the words ' present and future '


Charles Fitzpatrick: Ownership present and future-clause A.


Samuel Barker: Not referring to ' rights ' present and future.


Charles Fitzpatrick: Ownership.


Samuel Barker: Yes, but the hon. gentleman (Mr. Fitzpatrick) uses it as if it meant rights during the fifty years and after the fifty years.


Charles Fitzpatrick: No, no.


Samuel Barker: That expression, I think, refers only to ' ownership ' now or at any time during the fifty years. That is the meaning of the words. They apply to any railway or property owned by the government now or at any time in the future during the fifty years. There is no other reasonable construction of those words. They do not extend the term of the privileges to be acquired one day beyond the fifty years. The words are consistent with the rights lapsing at the end of the fifty years and they are inconsistent with any other construction.


Charles Fitzpatrick: Would not my hon. friend (Mr. Barker) be disposed to criticise rather the use of the word ' lease ' at the beginning of .section 24. Is the document in the contemplation of the parties there, not a lease agreement rather than a lease ? The lease, as I understand it, properly so called, would be applicable exclusively in all its provisions to property which is the object of this lease. Here it is applicable to properties absolutely beyond the lease at all, and I should imagine that this would be more properly described as a lease agreement, which would contain the usual provisions of a lease and also covenants with respect to other properties.


Samuel Barker: It is like the case of two parties with adjoining warehouses. One
migth lease his warehouse to the other for '50 years and put in stipulations affecting the mutual use of each other's property during the 50 years, but if in such an agreement the words ' present ' and ' future ' property were to be construed as affecting for all time the property rights, I think it would be regarded as a very extraordinary interpretation. Here the parties are making a lease for 50 years, but further they are providing for mutual user of their two properties.


Charles Fitzpatrick: Oh, no.
Mr. BARKER, And that the lease of one party's property to the other shall contain proper and usual conditions for such a lease and providing for mutual accommodation, and the minister says that although the lease shall end, one party shall get his rights, his accommodation, in perpetuity and the other not


Charles Fitzpatrick: Are there not three properties, the western division which is the property of the company and will continue to be operated by the company, the Intercolonial section which is the property of the government and will continue to be the property of the government and be operated by the government and an intervening section, the eastern section, the property of the government and operated by the company.
Mr. BARKER, Yes.


Charles Fitzpatrick: There are three in reality, there is the lease properly so called and in addition to that there are covenants applicable to property entirely beyond the lease.


Samuel Barker: Yes, but has the hon. gentleman never seen a lease of a warehouse or premises with rights of way and easements over adjoining properties.


Charles Fitzpatrick: Yes, such arrangements are very common in our part of the country.


Samuel Barker: All proper conditions would be put in such a lease ; but all would end with the lease. I cannot imagine that if the hon. gentleman thought that certain rights or easements were to be in perpetuity, while the lease was for 50 years, he would not have used language that would put it beyond a doubt. It is one of the things I am sorry to say we have had to repeat so often, that where it was possible to use language that would put the matter beyond doubt we are left open to legal construction and the opinions of gentlemen at the bar. I think it is most unfortunate the country should be left in such a position


Charles Fitzpatrick: Perhaps my hon. friend (Mr. Barker) would say here in all serioirsness, in "view of his reputation as a lawyer in this country that he has ever seen a legal document, that a lawyer could not twist and distort.


Samuel Barker: Never yet.	[DOT]


Mr. CLARKE.: That speaks well for the profession.


Samuel Barker: I never saw one so bad as this.


Robert Laird Borden: After all there Is not so much difference between the leasing of the eastern division and the granting of these running powers and haulage rights over the western division. My hon. friend the Minister of Justice seems to make a great distinction between the two. You have the leasing to the Grand Trunk Pacific of the eastern division with a reservation to the government of running powers and haulage rights over it. You have the operation of the western division by the Grand Trunk Pacific with the granting of running powers and haulage rights to the government. The two will stand much in the same position. In the one case the Grand Trunk Pacific will own the line, that is the western division, subject to certain running powers and haulage rights in favour of the government. In the other case the Grand Trunk Pacific as lessee will be the owner for 50 years of the eastern division subject to running rights and haulage powers in favour of the government. There is not so very much distinction after all, and all of these rights would be properly contained in the same lease. The term of that lease has been expressly defined in section 20 as 50 years. The rights of the government and the company are fixed in respect of the eastern division beyond doubt for 50 years. Then with the words ' proper and usual ' at the commencement of section 24 there cannot be any doubt that the similar powers-secured to the government 'and the company in respect of the western division are also to endure for fifty years. That is to say that the government for fifty years is to have only haulage rights over the eastern division. The government for 50 years, is to have equal haulage rights over the western division and the object of both provisions is that for 50 years the government, in respect of the Intercolonial which it owns, shall have running powers and haulage rights not only over the eastern division, but also over the western division for the same period in order that during that period of 50 years the government may if it sees fit send its trains from Halifax to the Pacific coast. Now all this is limited by the term in the lease, 50 years, and these provisions never would have been put in the lease as my hon. friend from Hamilton (Mr. Barker) has well remarked, but they would have been embodied in an independent agreement If the view which my hon. friend the Minister of Justice (Mr. Fitzpatrick) put forward to-night were the view which was in the mind of the draughtsman. I am not concerned very much, of course, with the Mr. FITZPATRICK.
mind of the draughtsman. What we are concerned with is the language, but it is an important fact that all these stipulations are contained in a lease which is to be in operation for 50 years. I would put: this to the Minister of Justice : Suppose he comes to make an agreement, suppose he comes to settle the provisions of the lease to the Grand Trunk Pacific. Under the terms of section 24c you are :
Securing to the government, in respect of its ownership as aforesaid, running powers and haulage rights over the western division, or any portion thereof, upon such terms as may he agreed upon between the government and the company.
The Minister of Justice says that these terms are to be secured in perpetuity. The Grand Trunk says : No, these powers are to be secured only for a term of 50 years. What follows ? Under the provision of subsection 2 you are to go to the Board of Railway Commissioners, with the right to either party to appeal to the Supreme Court of Canada. What is the Board of Railway Commissioners to say? They would see that those stipulations are to be contained in a lease for 50 years and it seems to me they would say that in the absence of an express provision to the contrary these powers cannot be created for a term beyond the term of the lease, beyond the period of 50 years, because the first question that would strike any lawyer when he undertook to construe seetioh 24 with section 20 would be this :
Is there from the commencement to the conclusion of section 24 one single word or expression which defines the term for which these running powers and haulage rights over the western division shall be created, except the period of fifty years mentioned in section 20 ? You will not find one single word, one single provision, as to the term, except the provision as contained in section 20.
Where then are you to look for it ? My hon. friend the Minister of Justice says that because no term is mentioned, except the term of fifty years, you must there fore conclude that these rights are to continue indefinitely. Perhaps I am not doing justice to his argument. I am trying to do justice to his argument. My hon. friend puts it forward in some such way as that. You must find the term somewhere during which these powers are to continue. The only term to which you can look is the term mentioned in section 20. If you go beyond that, how is it that you arrive at the conclusion that they are to continue for ever ? Where is there a single line or stipulation from one ond of this contract to the other that shows that these powers are to continue for ever ? If you are not bound by the term of fifty years mentioned in section 20 of the contract, I would say that the only term for which they could be created would be a reasonable term, having regard to the provisions of this contract, and if you were reduced to

trying it by a measure of that kind, you would inevitably come back to the period of fifty years, because, as this lease is granted for fifty years, that would be a reasonable time having regard to all the other provisions of this contract.
There is no expression in this contract which says that these powers shall continue for ev'er. There is a provision which says that the lease shall continue for fifty years. How can my hon. friend, in face of that, argue with any semblance of reason that these powers, indefinite as to time or by this contract limited by a term of fifty years, are to continue for ever ? I certainly think that my hon. friend has not taken the correct view of this case, and I think it is very unfortunate for the country that the point has been overlooked, because, as I pointed out before recess, the result of it is that for fifty years after this lease terminates the Grand Trunk Pacific Railway Company' will have running powers and haulage rights over the eastern division, while the government will not have any corresponding rights over the western division. This may be of very great importance to the government. It may be possible that during this period of fifty years the government, by means of these running powers and haulage rights over the eastern and western divisions, may be able to build up a very important business, and continuity of operation will be of the highest possible importance to the government. The Grand Trunk Pacific realize that that will be of very great importance to them, because they have obtained from the government this amendment :
The company shall he entitled for a further period of fifty years to such running powers and haulage rights as may he necessary to continuity of operation between the said western division and other portions of the company's system and the Grand Trunk Railway system.
That may become equally important to the government. They will have that continuity of operation under the agreement for fifty years, but the company have the right for one hundred years. I have not the slightest doubt that for the government that continuity of operation will come to an end at the expiration of the fifty year term ; whereas, the Grand Trunk Pacific are amply safeguarded by another period of fifty years at least usder the provisions of the clause which we are now discussing. It may be a matter of very great importance, and I regret that it has not received more consideration at the hands of the government, because, knowing the ability and care which are exercised in these matters by my hon. friend the Minister of Justice, I feel sure that if this matter had struck him when the agreement was being drafted in the same way as he apprehends it to-night, we would have had a very different provision indeed in the supplementary
agreement from that which is now before the House for its approval.


Charles Fitzpatrick: When I spoke before I wanted to limit my statement to the use of words applicable to the ownership of the Intercolonial Railway, because it is only so long as the government remains the owner of the Intercolonial Railway that we can exercise our rights over the western division.


Robert Laird Borden: Yes, but would not those rights pass to a subsequent owner of the Intercolonial Railway ?


Charles Fitzpatrick: I would be disposed to think that that would affect the western extension, whatever changes might take place in respect to the ownership, because it would be what we call a real right. As to the other, I am not so sure about that.


Robert Laird Borden: My learned friend does not, it seems to me, quite get out of the difficulty in that way, because, coming to subsection ([d) of section 24 of the original agreement:
Securing to any railway company, desiring to make use of the same, running powers and ha'ulage rights over the said western division-

my hon. friend is driven to the same
conclusion that these rights, when they are created, are to be created in perpetuity, that they are to be created so that they will exist for ever. My hon. friend argues that without being able to put his finger on one single line of this contract which either expressly, or by necessary implication, says that these rights shall exist for ever. No period is fixed. I would say that, inasmuch as the term of the lease is fixed, you must be limited to that term and you must not say that the rights under the lease will continue for any indefinite period.


Samuel Barker: Mr. Chairman, I do not propose to further discuss the legal point, but I presume we are back now on section 10 of the schedule, and I would like to make some observations on sections 10 and 11 together so as to save time. They are not of a legal character, but I shall speak rather as to the practical results of the two clauses as bearing on the ownership by the government of the eastern division after this lease may terminate. One clause, No. 10, provides for running powers and haulage over the eastern division for the benefit of the company. The other clause, No. 11, provides for the purchase by the government of such branches as the companya at the end of the lease, may not desire to retain. Now, Mr. Chairman, I would like to try and present to you the position the country will be in at the time when the government shall be called upon to deal with this question of renewing the lease at the end of the first fifty years. The government will be the owner of the eastern division. The Grand Trunk Pacific will own the

western division absolutely' as its own property. The Grand Trunk Pacific will connect with the eastern division above North Bay, above Lake Superior, and also probably above Montreal.
By means of the Grand Trunk ownership of the western division to Winnipeg it will command the traffic coming from the west. No one will seriously say that there will be a very large amount of traffic coming from any lines except the Grand Trunk Railway, the Canadian Pacific Railway and the Canadian Northern. The Canadian Pacific Railway and the Canadian Northern will have their own continuing lines to the east, and each will feed its own system. The Grand Trunk Pacific system from Port Simpson to Winnipeg, will be controlled by the Grand Trunk Railway, and they will be able to take the freight to Chicago, if they do not choose to give it to the eastern division ; or, if they wish, make arrangements for haulage over the Canadian Pacific Railway or the Canadian Northern. In the east, the Grand Trunk Railway is at North Bay, and with its branch thence to the eastern division, and its lake route, it will command the west bound traffic of Ontario and Quebec, and it will also practically command the traffic of New Brunswick and Nova Scotia. In course of time the great manufacturing and mercantile interests will develop all along the line of the Grand Trunk Railway, and I am speaking with some knowledge of how business follows the railway when I say. that the traffic will grow stronger in the direction it starts out to-day. The Grand Trunk will command the traffic going west, at Georgian Bay ports, at North Bay, and north of Montreal. The government will own a railway that is absolutely at the mercy of those who thus control the traffic going east and west. The Grand Trunk will under this clause say to the government, we demand running powers between North Bay and Winnipeg ; and the government has to comply with their demand. I do not suppose the Minister of Justice will contend, that under this contract the Grand Trunk must take running-powers over the whole system or nothing. They are only bound to take such running powers as are necessary for the continuity of their system, and the line between Winnipeg and North Bay will complete the continuity of their system. Having the use of that section on the payment of a haulage charge, or under running powers, and having the traffic at both ends they will virtually control the road. The government will have the section between Winnipeg and North Bay without any appreciable additional traffic and they will have the section from North Bay eastward) with little more than local traffic. Approaching the end of the lease, the Grand Trunk will so prepare themselves that at the expiration of the 50 years the government will be glad to hand the line over to the Grand Trunk on Mr. BARKER.
any terms. It would be a curse to the government to have to run that line with the Grand Trunk controlling the traffic that feeds it at both ends. Nobody would take it as a gift. Why the government of the day would be on its knees to beg the Grand Trunk to take the line off its hands. That is what will result to the government of this country, owing to these very ingenious clauses which have been carefully devised by a railway man who has spent his whole life in studying the business. When the Grand Trunk Railway got these clauses in that supplemental agreement, they knew very well that they had the road practically their own. I say this seriously and without any idea of exaggerating. Again, the government say : We will buy from you all the lines you don't want. I think the Minister of Justice said that the government could protect itself by taking care that the Grand Trunk did not get power to build lines that were not likely to be of value. Why, Sir, any province along the whole eastern section can grant power to build branches and under this clause the federal government will have to buy them from the Grand Tj-unk. How can the government protect itself then ? This does not say ' Dominion railways,' but, ' any branch railway.' This government has to buy from the Grand Trunk, even a provincial railway if the Grand Trunk does not want it.


Mr. SCOTT.: At what price ?


Samuel Barker: What is the use of talking about the price of a thing you don't want ?
I am speaking of your being compelled to buy what you don't want ? Under this agreement the Grand Trunk is given power to make you buy it whether you want it or not. The hon. gentleman (Mr. Scott) has not found that out yet, although he has been weeks listening to this discussion. He asked: what price ? It is dear at any price, if you don't want it.- The Grand Trunk won't give it to you if it is worth money, but you will have to buy it if it is not worth money. The Grand Trunk knows that the government will have to buy these branches ; will probably, I think very probably, build branches for the purposes of getting out this pulp wood and bringing it down to their main line, and when the lumber is gone and there is no other traffic for these little branch lines of 50 or 100 miles it may be this government will have to step in and buy them.
You may depend upon it, the Grand Trunk will never ask the country to buy the branch to North Bay or to Thunder Bay ; I doubt if they will ever ask the country to buy the [DOT] branch to Montreal. They will not ask for running powers to the junction. They will simply run their traffic there and hand it over to the government, and when it goes farther east, they will get the fat from it

at North Bay. That is the position this places the country in. The Minister of Railways has not been looking after the country's interests in those traffic clauses. He has left them to some hon. gentleman on the treasury benches who has not had the valuable experience that he has had which enables him to understand these things. The Minister of Railways could not have agreed to them. I am afraid he has been neglecting them. But he is not here, I believe, as usual. But, seriously, this is something which I think hon. gentlemen never contemplated. They expected that the Grand Trunk would want to sell them something ; but the Grand Trunk will keep everything that commands the traffic. The enormous traffic of Ontario and Quebec which reaches this eastern division will be held on that branch at North Bay until it gets where the company can compel the government to give them haulage rights. They will do the same on the Montreal branch, if necessary. They will simply retain the ownership of the branch for that purpose ; and when the government talk about building a parallel branch line to North Bay or to Montreal, what will be the result ? Is there an hon. gentleman who has had any experience in business, who does not know perfectly well that if the Grand Trunk freight agent at Montreal or Toronto went to a merchant or a manufacturer and said, we want your traffic, and the government agent went at the same time and said to them we want your1 traffic, the Grand Trunk agent would say : We have 100 stations where we serve you to five that the government has ; you know where your interest is, if you want us to do anything for your benefit. Everybody knows that the company which commands the greatest number of stations commands the traffic ; and the Grand Trunk Railway Company, with all its ramifications throughout Ontario and Quebec-and by its control of the traffic in these provinces it will also control it in the far east-will be able to dictate to every shipper in Montreal as against the government. The Grand Trunk, hauling ten trains to one hauled by the government line, will give just ten times the accommodation to the public that the government can. The man who has to ship all over this Dominion will not dare to favour the government as against the Grand Trunk. There is not a man who does not know that of his own experience. There is not a merchant or manufacturer in Ontario or Quebec who does not know that as between two railway companies, the one which commands large districts and many stations will command the traffic as against the other which commands only a small number of stations and a limited area. The company which has the greater control commands the business. And so it will be when these fifty years come to an end, and when the government, with its barren line
to the north, as it practically will be-because it will have neither westbound nor eastbound traffic-seeks to get traffic as against the Grand Trunk, with its running powers over the regular route which the traffic will take, and which they will make it take. The Grand Trunk will control it, and they will laugh at the government and at these provisions, even if they bear the interpretation which the Minister of Justice thinks they bear.


Robert Laird Borden: I would like to ask the hon. Minister of Justice what the intention of the government is in regard to the creation of terminals at Winnipeg, Port Arthur, North Bay, Quebec and Montreal? It has been pointed out that the possession of the terminals at these various strategic points will be of the greatest possible importance to the government at the end of the fifty years' lease. Suppose the government build the eastern division from Winnipeg to Quebec, and suppose the company create the terminals with which the eastern division communicates at these points ; what will be the position of the government with regard to them at the end of fifty years' period ? My hon. friend the Minister of Justice pointed out this afternoon that it would be open to the government to build another line from the eastern division to Port Arthur, another line to North Bay, and another line to Montreal. That would not meet with the approval of my hon. friend the Postmaster General, who deprecated very strongly any action of that kind when he was criticising my proposal last year. He objected to the government building a line to compete with one for which it had already sanctioned by granting a charter. That objection would be doubly strong in a case of this kind. The Minister of Justice may say that it will be necessary for the purpose of preventing the Grand Trunk Pacific Railway Company from oppressing the government under the terms of this agreement. I would think that the better course would be to so frame the terms of the agreement that the Grand Trunk Pacific Company could not oppress the government. But, to come back to the question I asked, what is the position of affairs with regard to these terminals ? The government will be absolutely helpless with regard to the operation of the eastern division if at Winnipeg and Port Arthur and North Bay and Quebec and Montreal the Grand Trunk Pacific Company will control the terminals by means of which the traffic coming over that route is accommodated. It does not seem to be contemplated anywhere in the agreement that the government shall create great terminals at these points. Have the government considered the situation as it would develop in this way ?


Charles Fitzpatrick: I would not like to commit myself as to what policy the gov-

eminent will adopt with regard to the terminals. I think I may say, so far as the contract is concerned, that the terminals connected with the eastern extension will be constructed either by the government or by some independent company that will act in co-operation with the government. The terminals of the three branches to be constructed by the company will necessarily be controlled by the company.


Edward Frederick Clarke: Where will they be ?


Charles Fitzpatrick: One of the branches is from some point on the eastern division to Port Arthur or Fort William or some other place in that locality ; another is from some point on the eastern division to North Bay ; and the third is from some place on the eastern division to Montreal.


Albert Edward Kemp: What about Ottawa ?


Charles Fitzpatrick: There is no provision in the charter.


Albert Edward Kemp: Ottawa will have no connection with the transcontinental.


Charles Fitzpatrick: My hon. friend is too hasty, and as he is not a Hibernian, there can be no excuse offered for him. I am dealing with the charter. The company decided what the branch lines were that they wanted, and they asked authority to construct three-one to Lake Superior, one to North Bay and one to Montreal.


Robert Laird Borden: What has the Minister of Justice to say with regard to the argument of my hon. friend from Hamilton (Mr. Barker) ? My hon. friend has argued that the branch lines need not be lines constructed under authority of this parliament, but may be lines constructed under authority conferred by the Ontario legislature. That legislature might pass a general law giving to any one possessing corporate powers to operate a railway, power to construct it simply on the filing of plans and specifications in some office of the government at Toronto. Laws of that kind are in force in many states of the union. Suppose the Grand Trunk Railway, under a general provision of that kind or some special enactment, should construct a branch, then the argument which the Minister of .Justice makes use of would be of no avail. His argument was that parliament, when it gave authority to construct a branch, -would see that no injustice would be done the government in case the government should take it over. But this parliament should have no such authority with regard to a branch constructed under authority of the provincial legislature. Has my hon. friend an opinion to offer as to the soundness of the argument of my hon. friend from Hamilton ?


Charles Fitzpatrick: I would certainly not like to express myself very decidedly on that point. My attention was not dir-


Charles Fitzpatrick: ected especially to the question before, and I should like to have time to consider it more fully. My hon. friend will bear in mind that we are dealing here with a government owned road and a company which is to operate it, created by us, with authority to construct certain branch lines in connection with that road. How far you Can extend the operation of that term ' branch lines,' under these circumstances, seems to me to be open to some discussion. I would like to consider the matter further. At first sight I would not be disposed to concur absolutely in what the hon. gentleman has said.
Section 11 of the schedule agreed to.
Sections 12, 13, 11 and 15 of the schedule agreed to.
On section 3 of the schedule,
3. Pending the completion of the eastern division by the government, the company shall be entitled to lease from the commissioners, to be appointed under the said Act, and to operate such portions of the said eastern division as may from time to time be completed, but upon such terms as may be agreed upon between the company and the said commissioners, which terms are not to be more onerous than those of the lease of the whole division by the said contract provided for, save in so far as may be necessary to give full effect to the paramount right of the said commissioners next hereinafter mentioned, and subject always to the paramount right of the said commissioners to use and operate the same without any payment of tolls or other compensation for such purposes as they may deem necessary or expedient in the execution of their commission.


Charles Fitzpatrick: In connection with this, I had occasion to consider the matter more fully, and am in a position to express my own opinion on the subject. I also consulted the gentlemen who had the draughting of the Bill and got their opinion. But I thought it might be well to get the opinion of some one outside the whole transaction. No matter how7 perfect we may be, w7e are apt to take a partisan view of things, especially those with which wTe are connected. Before the Bill leaves the committee, I shall be in a position to give the view of the government as to the meaning of the expression ' more onerous terms.'


Robert Laird Borden: The hon. gentleman said before we leave the committee ?


Charles Fitzpatrick: On the Bill, of course. I suppose we should leave the committee stage perhaps to-morrow, because the clauses of the Bill will not take much time. Before that, I will be prepared to give this opinion.
Section 3 of the schedule agreed to.
On section 1 of the Bill :
1. The agreement made between His Majesty and the Grand Trunk Pacific Railway Company (hereinafter called the ' Pacific Company,')

dated the eighteenth day of February, one thousand nine hundred and four, a copy of which forms and schedule to this Act, is hereby ratified and confirmed and declared to be legally binding upon His Majesty and the Pacific Company ; and His Majesty and the Pacific Company and the Grand Trunk Railway Company of Canada (herinafter called the ' Grand Trunk Company,' and ail others concerned, are hereby authorized and empowered to do whatever is necessary in order to give full effect to the provisions of the said agreement and of this Act.


Robert Laird Borden: When we were discussing this section before, I suggested an amendment. That amendment is to insert after the words 'legally binding upon His Majesty and the Pacific Company' the words ' subject to the provisions of the National Transcontinental Railway Act and of this Act.' I move that.
. Amendment agreed to.


Peter Macdonald: I would draw the attention of the committee to the fact that there is too much noise. Hon. gentlemen taking part in the debate and seeking to put the business through are complaining bitterly, and rightly so, that there is too much conversation going on among members who do not take part in the discussion. I would appeal to the members of the committee to cease this conversation and give those hon. gentlemen who are conducting the business a fair hearing.


Robert Laird Borden: I may say to the Minister of Justice that we have an amendment to section 1 of this Bill which relates somewhat to the matter as to which he is to give an opinion later on. I will, therefore, defer presenting that amendment at present, because it might be useless to do so in view of the opinion he may offer to the House.


Charles Fitzpatrick: I would suggest- though, I am bound to say I am not sure about the regularity of the proceeding-that we should go through all the clauses of the Bill and that my hon. friend (Mr. R. L. Borden) should suggest what amendments he has to each clause, yet without adopting any of the clauses, so that before we take up the Bill for the consideration of the clauses I may have had an opportunity of considering the amendments and, perhaps, be in a position to deal with them more effectively than I can on the spur of the moment. I submit that suggestion in the hope that it will be agreeable to hon. gentlemen opposite.


Samuel Barker: I desire to state the nature of the first amendment, the amendment to section 1 of the Bill. It relates to a subject which has been very fully discussed, and, as the amendment I propose to move simply declares the meaning of the agreement to be precisely that which the Minister of Justice says it is, I suppose there will be very little objection to the amendment.
It relates to the rolling stock to be provided. The' Minister of Justice says that, under the agreements as they stand, the railway company is under obligation to acquire the rolling stock by Indefeasible title, so that the mortgage of the government will convey a title free from any prior claim or lien. We thought that the better course to pursue would be to take the Minister of Justice at his word according to his opinion, and simply embody a clause in the Act declaring that the intention is what he says it is. I am sure the hon. gentleman will not require any notes on that subject. We are simply adopting his own opinion and putting it in the Act so that there will not be any question that he is right.


Charles Fitzpatrick: For greater security.


Samuel Barker: Yes. We simply want to put in the Act that the agreement says just what the hon. gentleman says it does.


Charles Fitzpatrick: Give statutory effect to my opinion.


Samuel Barker: We do not say so in terms, but * Hansard ' will show that we are adopting the hon. gentleman's opinion. The amendment is as follows :
That section 1 of the Bill be amended by adding thereto the following as subclause (2) :-
(2.) It is hereby declared that the intent and meaning of the agreement, a copy of which forms the schedule to the National Transcontinental Railway Act, was, and as modified by the supplementary agreement, a copy of which forms a schedule to this Act, is, that the rolling stock in the twenty-second clause of the said original agreement mentioned, as the first equipment, shall be so acquired by the Pacific Company that an absolute and indefeasible interest therein- shall vest in the said company subject only to the several mortgages referred to in clause thirty-five of the agreement, and free from any prior charge, rent, or interest whatsoever, whether as working expenditure or otherwise.
That I understand to be precisely the contention of hon. gentlemen opposite. I desire to occupy very little time in reference, to this, but in order to show that apart from it being in accord with the opinion of the Minister' of Justice there is some need for the provision, I wish to refer to some sections of the statutes in addition to the clauses of the agreement that have been already referred to in the discussion as showing at least the very grave doubt as to the construction of the clause, apart from such declaration as we submit. I desire to refer the Minister of Justice to the charter of the Grand Trunk Pacific Company passed last session, chapter 122, section 13. That section is the one that authorizes the Pacific Company to execute the mortgages intended to be given to the government under section 35 of the agreement. The clause to which I am referring sets forth the different sections of the railway and the amount of bonds that

can be issued in respect of the several sections. Then it goes on :
And the company may issue such bonds, debentures or other such securities in one or more separate series, and limit the security for any series to such of the franchises, property assets, rents and revenues of the company, present or future or both as are described in the mortgage made to a trustee or trustees to secure such separate series of bonds, debentures or other securities and every such limited series of such bonds, debentures or other securities, if so issued shall, subject to the provisions contained in section 94 of the Railway Act, form a first charge upon, and be limited to the particular portion.
Therefore, we have in that sanction for the Pacific Company to execute the mortgages to provide for the special mortgages provided for in section 35 of the agreement, and declaring that such mortgages shall be a first charge upon the property, subject to the provisions contained in section 94 of the Railway Act. Now, that section 94 is section 94 of the Railway Act of 1888, the reason for that being that the present Railway Act had not* been enacted at the time that that Bill was going through the House. Section 94 of the old .Act is, however, in the same terms as section 112 of the present Act, and is in these terms :
The company may secure, such securities by a mortgage deed creating such mortgages, charges and incumbrances upon the whole of such property, assets, rents and revenues of the company, present or future, or both, as are described therein ; but such property, assets, rents and revenues shall be subject, in the first instance, to the payment of any penalty then or- thereafter imposed upon the company for non-compliance with the requirements of this Act.
That is, respecting the terms to be made to the Minister of Railways. And these are the words to which I desire to call the special attention of the Minister of Justice :
And next, to the payment of the working expenditure of the railway.
So that a mortgage given under the charter of the Pacific Company is a first mortgage ; it ranks next to the working expenses of the railway. I think that is perfectly clear ; I do not- think the hon. gentleman will dispute it. If we turn to the interpretation clause of the Railway Act, taking again the old one-and I think the words are precisely the same in the new one-the following definition is given :
' Working expenditure ' means and includes all expenses of maintenance of the railway, and of the stations, buildings, and so on, belonging thereto, and of the rolling and other stock and movable plant used in the working thereof, and all such tolls, rents or annual sums as are paid in respect of property leased to or held by the company apart from the rent of any leased line, or in respect of the hire of engines, carriages, or wagons loaned to the company.


Samuel Barker: Now, there we find what is meant by a first mortgage. It is a first mortgage on all the property of the company, subject, among other things, to rent of rolling stock. Therefore, when you find in this agreement, under clause 14, a provision for working expenditure including rents and tolls on the equipment to be provided for the eastern extension, and when, according to the language used in clause 35 of the agreement, it is subject to rents on rolling stock, I think that the hon. gentleman will see that it is essential that we should place that question beyond doubt, and put in this Act a provision that the acquisition of the rolling stock means the acquisition of a clear title to it, free from any rent or toll whatever. It is for that reason that we move this amendment, and I suppose it will be adopted and accepted by the bon. gentleman.


Charles Fitzpatrick: I do not intend to argue this point at present, but I would like to draw my bon. friend's attention to the fact that the definition of working expenditures in the Act is not applicable to this contract, because in this contract we have a special definition of working expenses.


Samuel Barker: As to the eastern division? Mr. FITZPATRICK. As to the eastern division ; and, if my hon. friend will pardon me, to the western division also.


Samuel Barker: You are right.


Charles Fitzpatrick: My hon. friend will find that section 18 applies to section 14. In section 14 of our contract there is a reference to rolling stock, but not in the same terms as in the Act. For instance, the wording of the new contract is :
In respect of the hire of rolling stock let to the company.
-as part of the equipment of the line.
I suggest that the amendment shall remain over until we finally consider section 1.


Mr. BELL.: I second that proposed amendment.


Robert Laird Borden: I think there may be some other amendments which will affect section 1.


Charles Fitzpatrick: My object is to get as much information as I can in respect to these amendments. I know I am not entitled to ask for notice of these amendments but we should have all the information possible so as to enable hon. members to discuss the matter more intelligently in the committee.


Robert Laird Borden: We have several amendments to propose. I will endeavour to look over them and see which of them affect section 1 and then I will furnish my hon. friend the Minister of Justice with them as I think it is only, fair that he should have an opportunity of considering them before being called upon to discuss them in the committee.


Peter Macdonald: They will have to be placed before the committee In the order in which the sections come.


Robert Laird Borden: When we come back to section 1 we will take them up again.
On section 2 of the Bill,
The directors of the Grand Trunk Company may carry into effect the agreement a copy of which forms the schedule to the National Transcontinental Railway Act, as amended by the said agreement, supplementary thereto, hereby ratified and confirmed (which said agreements are together hereinafter referred to as the * scheduled agreements ') so far as the said scheduled agreements relate to or affect the Grand Trunk Company ; and may, for the purpose of aiding and assisting the Pacific Company in carrying out any of the provisions of the scheduled agreements, from time to time engage the credit of the Grand Trunk Company ; and may enter into any contract of guarantee or indemnity, and may sell or pledge so much of any class or classes of stock of the said company, or of any securities held or owned by the said company, as is deemed necessary ; and may apply any moneys so realized, or such stocks or securities or the proceeds thereof, for the purpose of carrying into effect the scheduled agreements ; and any agreements heretofore made by the Grand Trunk Company for providing the deposit mentioned in the scheduled agreements, and the pledge of certain stocks and securities of the Grand Trunk Company for the purposes thereof, are hereby confirmed and declared valid.


Charles Fitzpatrick: That clause is simply an enabling clause authorizing the Grand Trunk Railway Company to do certain things, but I think we ought to amend the form in which it is drawn. I think that if hon. gentlemen will look at lines 23 to 30 they will realize that an amendment might be made which would add to the grammatical construction of the section. For instance, it says that
The directors of the Grand Trunk Company
may carry into effect the agreement....as
amended by the said agreement, supplementary thereto, hereby ratified and confirmed. ... so far as the said scheduled agreements relate to or affect the Grand Trunk Company ; and may, for the purpose of aiding and assisting the Pacific Company in carrying out any of the provisions of scheduled agreements, from time to time engage the credit of the Grand Trunk Company ; and may enter into any contract of guarantee, or indemnity, and may sell or pledge, &c.	.
I think that the word ' may ' in the 23rd, 26th, 27th and 30th lines should be omitted because the word ' may ' preceding, governs all that which comes after. _


Robert Laird Borden: I think it would be an improvement and I think it would also be an improvement if in line 1 you should insert the words ' subject to and in accordance with the provisions of the National Transcontinental Railway Act and of this Act.'


Haughton Lennox: I desire to call the attention of the hon. Minister of Justice to the use of the words ' said company ' in the 28th and 29tli lines of section 2. In section 1 my hon. friend will notice that the following words are used :
The Grand Trunk Pacific Railway Company (hereinafter called ' the Pacific Company ')
. . . . and the Grand Trunk Railway Company of Canada (hereinafter called the ' Grand Trunk Company ').
The distinction does not seem to be preserved here, because in the 28th and 29th lines, we have the words ' said company.' I think that ought to be made clear.
'Mr. FITZPATRICK. Yes, I will consider that. I have no doubt that the suggestion of my hon. friend the leader of the opposition is a proper one but I would like to consider the matter.


Samuel Barker: I wish to call the attention of the hon. Minister of Justice to the last five lines of the clause :
And any agreements heretofore made by the Grand Trunk Company for providing the deposit mentioned in the scheduled agreements, and the pledge of certain stocks and securities of the Grand Trunk Company for the purposes thereof, are hereby confirmed and declared valid.
If there are any such agreements they have not been produced. I understood that there had been no deposit of stocks. I understood that there had been some tajji of a deposit of stocks but that arrangement was virtually cancelled and I do not see what these words apply to. At all events I think we; should not be called upon to confirm agreements that we do not know anything about. It seems to me that these words may have been put into the Bill at the time that the old deposit was thought or but that seems to be abandoned. There is a purely cash transaction, or a book entry transaction in the Bank of Montreal, and if there have been any agreements affecting transactions in which the company is concerned I think we ought not to confirm them without seeing them. I therefore move that these words be struck out.


Charles Fitzpatrick: I think my hon. friend is quite right up to a certain point ; that is, that agreements affecting the country ought to be before the House for consideration before we give effect to them and bind the country, but if the agreements referred to are agreements which affect the Grand Trunk Railway Company and the Bank of Montreal, I do not see that his argument appplies. They do not affect us and in so far as the country is concerned we have the result of the agreements in a cash deposit. All that is asked for is to confirm these agreements between the bank and the company which agreements have given the deposit which we have. I do not know that

2C72
we are concerned in the domestic arrangements of the Grand Trunk Railway Com-' pany in so far as we are not affected by them. These agreements between the bank and the company do not affect our deposit because the deposit is absolute. It is only fair to the Grand Trunk Railway Company and to the Bank of Montreal that the agreements, as to the validity of which there may exist some doubt, should be ratified so as to give effect to them as between the company and the bank.


Samuel Barker: I think it is very unusual for parliament to be asked to confirm agreements that they do not see or know anything about. I have never known an instance of it. I do not think that we ought to make them public, but I think the right hon. leader of the government might show them to my hon. friend the leader of the opposition. I do not think it is right that we should confirm agreements affecting transactions in which the country is concerned and not know what they are. Hereafter, if there is something in that affecting the relationship of either of these parties to the country, we are supposed to have known these agreements when we confirmed them, and we will be taken to have approved of this, even though it may be contrary to the interests of the country.


Sir WILFRID LAURIER.: We have no other agreement than those which have been laid upon the table of the House, and of which the House is cognizant. Outside of j that we have nothing at all. We have the result that the deposit was made, but how the money was obtained and what agreements were made between the company and the bank we have no knowledge of at all.


Robert Laird Borden: Parliament should not be asked to confirm something which is not before it. If there is any agreement which requires ratification it should be laid on the table and scheduled as part of the Act. I do not think any precedent can be found for a clause of this kind.


Charles Fitzpatrick: This seems to be a clause that ought to be applied for by the Grand Trunk Railway Company itself. It might be considered as an amendment to the charter of that company. It is not absolutely out of place where it is, because after all it is necessary to give effect to the agreement entered into with us, that the company should have this power. We may consider the point taken by my hon. friend, with other suggestions which have been made, and when the matter comes up for further consideration the Prime Minister will, no doubt, be able to make a statement on the subject.


Mr. J. B. MORIN.: I desire to move the following amendment :
That section 8 of chapter 71 of 3 Edward VII., is repealed and the following substituted therefor :-


Mr. FITZPATRICK.: 8. The eastern division of the said Transcontinental Railway extending from the city of Moncton to the city of Winnipeg, shall be constructed by or for the government, during the same delays as those given for the construction of the western division, and the work of construction shall commence at Quebec to be simultaneously pursued in a north-westerly direction to Winnipeg, and in a south-easterly direction to Moncton, the said road crossing the St. Lawrenec on the Quebec bridge and running in a south-easterly direction through the counties of Ldvis and Dorchester, following the course of the Etchemin river up towards Etche-min lake, and thence easterly through the province pf Quebec towards the city of Moncton.


Peter Macdonald: We will take it as a notice of motion.


Jean-Baptiste Morin: 
Charles Fitzpatrick: There has been no location of this line at all made by the government.


Jean-Baptiste Morin: The hon. minister will remember that at the outset I stated I was speaking according to a map, showing the location of the line, which was given me by the government. If the map is wrong, it is not my fault.


Charles Fitzpatrick: I must confess it is news to me that the government have published a map of the location.


Mr. BOYD.: They have done it in Manitoba.


Charles Fitzpatrick: We are far away from Manitoba just now.


Jean-Baptiste Morin: My hon. friend can see the book if he is very anxious to look at it. Let him speak to the hon. member for Bellechasse and he will find that no one cares in that county whether the road runs on the north side of the Alleghanies or the south, but we all know it would serve the people better if built on the south side, because the south side is not opened up. There is a great deal of timber on that side, which the people cannot sell except to the Yankees, at whatever price they can get. If'the road were built there, you would have one road on the north side of the Alleghany mountains and one on the south. That would be dividing matters fairly and would serve everybody. There is one thing I do not like. Last year from the 31st of July, when the leader of the government made his motion, to the 3rd of September, when the vote was taken, I did not address the House, and this year since the 5th of April, when the resolution before the House was submitted, until to-day, I have not said a word, because I did not want to take up the time of the House. But now I want to speak plainly.



In the speech from the Throne, we are told that this is to be a colonization road. But if you build it on the north side of the mountains, how can it be a colonization road ? You will have to build it on the south side, if you want that kind of a railway. But the great evil in this whole transaction consists in the fact that the government is not the boss in it. M hy does the government give the Grand Trunk a charter and furnish the money and then let the Grand Trunk Railway do as they please?
I am only a man, but I will not let anybody else handle my money. If the Grand Trunk Railway want to build a road with their own money, I have nothing to say, but when the government is practically furnishing the money, it should not let the company lead it by the nose. I know that if the Grand Trunk Pacific or the Grand Trunk Railway had nothing to say in the matter, this road would be located where I want the government to build it. I have that much confidence in the government. I am working for the people, but the Grand Trunk Railway are working for themselves. Just look at the public accounts of this country. In 1818 the Grand Trunk Railway received $15,000,000 in cash and they owe the country in cash and interest $25,000,000, on which they have never paid a cent, either principal or interest. And after paying that company $25,000,000 of our money, we are going to give them the balance for ev.er. If you are love-sick with the company, you will go ahead, but I have more love for my people than I have for the Grand Trunk Railway.
I know that the Grand Trunk Railway will take care of themselves, for I have had experience with these companies. I have one thing to ask of the government, and it is not very hard to grant. If the government desire to locate that railway from the Quebec bridge east, all I have to say is that, if they have any faith in me, let me know, and I will show them the route they should follow. And after I have shown their engineers and surveyors that route, the government can adopt any one they please. I have guided railway survey corps through the Alleghany mountains before this for weeks and months, and I know what I am talking about. I know that it is very useful for any "body of engineers who are going through a wild country and a strange country to have a guide to guide them right, and I am one of those who can do it. Well, Mr. Chairman, I will not take up more time, but will sit down and let somebody else take a whack at it.


Charles Fitzpatrick: As I said a moment ago to my hon. friend (Sir. Morin), the government have not located this line either east or west of Quebec, in any part that I know of. I am quite sure that when the time comes to locate the line east of Quebec- that is the line which will go through the county of my hon. friend-the en-


Jean-Baptiste Morin: gineers or surveyors who will be charged with that duty will be glad to avail themselves of the local knowledge of my hon. friend and of his good sound sense in matters of this kind. I ought to say, with respect to the amendment he has suggested, that I have a clause to be added to the Bill which, I think is as complete as the amendment he has proposed and, perhaps, goes a little further. It will read about in this way :
The work of construction on the eastern division of the Transcontinental Railway shall be commenced as nearly as may be, simultaneously at Moncton, Quebec and Winnipeg, and carried on westward of Moncton and Quebec and eastward of Winnipeg in such manner that the section between Winnipeg and Quebec and the section between Quebec and Moncton shall be completed, as nearly as practicable at the same time.
I presume that that will meet the object my hon. friend has in view ; and I shall move that later on.


Robert Laird Borden: 
Robert Laird Borden: We have at least one amendment to that clause, which will be as follows :
That section 3 of the Bill be amended by adding thereto the following words :-
Every such agreement shall be subject to the approval of the Governor in Council, and a certified copy of every such agreement shall forthwith be deposited with the Secretary of State for Canada.
I-understand that the Minister of Justice (Mr. Fitzpatrick) would like a very brief statement of the reasons for each of these amendments. The reasons which influenced us in suggesting this amendment are that, as these agreements will be made between companies which are practically controlled by the same directors-or may be so-and as these agreements will relate to matters that will be of public interest to the whole country, it is only a fair and reasonable stipulation that such agreements shall be subject to the approval of the Governor in Council, and that a copy of them should be deposited with the Secretary of State, in order that they may remain on record for the use of the government and parliament of Canada. There was another amendment which has been sent across the floor of the House by my hon. friend from Hamilton (Mr. Barker) to the Minister of Justice (Mr. Fitzpatrick), relating to section 1 of the Bill. My hon. friend from Hamilton has not given the reasons in support of that, because he was not able to do so very briefly, as he tells me. But there would be no objection to stating them privately to the minister, if he desires that the reasons for the amendment be suggested, in order that he may consider the question more fully.


Charles Fitzpatrick: Before accepting that, I would like to give the matter some further consideration. But at first sight, it seems to me a fair suggestion.


Robert Laird Borden: There is another amendment which we shall move and which relates to section 1 of the Bill ; I overlooked it when we were at section 1. It is, if I remember correctly, in very much the same terms as an amendment which we moved last year. I think it has been slightly modified in the concluding portion :
move it, but at all events it conveys the idea and is based almost altogether in its wording upon an amendment of the same character which was moved last year. After the Minister of Justice has given consideration to these amendments which we have suggested this evening I would be very glad to know from him, somewhat in advance of the sitting at which they will be discussed, what action the government proposes to take in regard to them, and also in what order it is desired to have them discussed, so that we on this side may make our arrangements to carry on the discussion with as little waste of time as possible.


Charles Fitzpatrick: When I have had an opportunity to consider these amendments I shall communicate in writing with my hon. friend and arrange matters on the lines he suggests.
On section 4 of the Bill,
The Grand Trunk Company may enter into an agreement or agreements with His Majesty respecting the guarantee of the second-mortgage bonds of the Pacific Company, to be issued pursuant to the provisions of the scheduled agreements, and also respecting any other matter or thing which the directors deem necessary or expedient for the purpose of carrying into effect the scheduled agreements.
-Mr. FITZPATRICK. I would like to strike out the hyphen in line 15 between second and mortgage ; it is evidently a misprint.


Robert Laird Borden: I would suggest that it would be desirable in the case of an agreement of this character that copies of the agreement should be placed upon the table of the House at the session immediately succeeding the date of the agreement. There is no provision in the statute to that effect. I made this suggestion last year but instead of inserting an amendment in the Bill I accepted an assurance that this would be done. I am not sure that that was a wise course, because it was overlooked in consequence of not appearing in the statute. I would think that perhaps an amendment of that kind might be mad* to this section. Otherwise I do not see any objection to it.


Charles Fitzpatrick: I shall see that an amendment to that is drawn.
That all freight originating on the line of the Pacific Company's railway or upon the branch lines, not specifically routed otherwise by the shipper, shall, where destined for points in Canada, be carried entirely on Canadian territory or between Canadian inland ports, and that the rates for such carriage shall not be greater than the rates charged between the same points over any route not wholly Canadian which includes any part of the Grand Trunk Railway Company system.
It may be that this amendment is not technically in the form in which we shall
35i
On section 5 of the Bill,
The provisions of sections 3, 4, 5, 6 and 7, and of subsection 4 of section 19 of the National Transcontinental Railway Act shall apply to the scheduled agreements as if the said provisions had been expressly enacted with reference to the scheduled agreements.


Charles Fitzpatrick: The section of the National Transcontinental Act referred to here are providing as follows :
Section 3. That the railway shall be constructed wholly in Canada.

Section 4. That the western section is divided into the prairie section and the mountain section and for the establishment of the eastern limit of the Eoeky Mountains.
Section o. That the eastern division shall be built by the government.
Section 6. That the company shall construct, maintain and operate the western section and lease, maintain and operate the eastern section.
Section 7. That the eastern division shall he built under the joint supervision of the government and the company.
Section 9, subsection 4, deals with the holding of offices by the members of this House and of the Senate.


Mr. FIELDING.: There is some mistake in the numbers ; these are the sections in the agreement, not in the Bill. These are the numbers in the schedule to the Act.


Haughton Lennox: In order to correct the error it will be necessary to redraft the section.


Charles Fitzpatrick: The error is that the provisions referred to here are 3, 4, 5, 6 and 7 of the contract which is the schedule to the National Transcontinental Railway Act instead of the sections of the National Transcontinental Railway Act itself.


Robert Laird Borden: My hon. friend from Simcoe has pointed out that probably the section will require to be redrafted.
On section 6 of the Bill.
The rights conferred upon the government of Canada by section,6 of the National Transcontinental Railway Act shall he subject to the restrictions and provisions contained in the agreement hereby ratified and confirmed, as well as to the restrictions and provisions mentioned in the said section 6.


Robert Laird Borden: That is to carry out the principle of subrogation ?


Charles Fitzpatrick: Yes, it is in respect to the remedies of the government in case of default.


Robert Laird Borden: There is no objection to that, I think.
On section 7 of the Bill,
Subsections 2 and 3 of section 7 of the National Transcontinental Railway Act are hereby repealed, and in lieu thereof it is enacted as follows :-
Notwithstanding anything in the said Act or in the scheduled agreements contained, His Majesty the King, acting in respect of the Dominion of Canada, shall not be hound or obliged to perform, carry out or fulfil any of the covenants, undertakings, conditions or stipulations in the scheduled agreements contained on behalf of His Majesty, acting as aforesaid, unless and until the Grand Trunk Company covenants and agrees as follows with His Majesty, acting as aforesaid
(a.) That it will guarantee the bonds of the Pacific Company for the balance required for Mr. FITZPATRICK.
the complete construction of the western division in the scheduled agreements mentioned, as provided in clause 34 of the agreement a copy of which forms the schedule to the said Act ;
(b.) That it will acquire and take the common stock of the Pacific Company to the amount of not less than $24,900,000 as in clause 27 of the said last-mentioned agreement provided.


Charles Fitzpatrick: Subsection (b) will have to be entirely remodelled. It has evidently been drafted in contemplation of the agreement as it existed previously to the amendment, because, under the obligation the company, will have to undertake such a share of the common stock as will enable the Grand Trunk to control the policy of the Grand Trunk Pacific. We will have to amend that, of course. A new clause will be drafted in the morning and I will send it to my hon. friend the leader of the opposition.


Robert Laird Borden: There will be some discussion upon it so that we might as well reserve it until the amendment is prepared.
On section 8 of the Bill,
The terms and conditions upon which the bonds to be guaranteed by the government pursuant to the said agreements in aid of the construction of the western division of the railway referred to therein, or any portion of them, may be sold, pledged or otherwise disposed of by the Grand Trunk Pacific Railway Company, shall be subject to the approval of the Minister of Finance and Receiver General and of the Governor in Council.


Robert Laird Borden: I do not know that I shall have any objection to section 8. It is possible we may not take objection to it at all, but I would ask you not to pass it for the present.
Progress reported.
On motion of Sir Wilfrid Laurier, House adjourned at 10.50 p.m.

Fbidat, May 6, 1904.