1909-04-30

[Stage Direction]
Bill (No. 163) to incorporate the Prairie Provinces Trust Company.-Mr. Sutherland.

Hon.  G. P.@: GRAHAM (Minister of Railways and Canals) moved for leave to introduce Bill (No. 164) to amend the Intercolonial and Prince Edward Island Railway Employees Provident Fund. He said: The change in the management of the Intercolonial Railway necessitates a change in the description of the chairman of the Board of the Provident Fund. Hitherto he has been described as the general manager. This Bill merely defines who the

general manager is as applied to the Provident Fund Act. It will make no difference in the personnel of the chairman.


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

[Stage Direction]
Hon. SYDNEY FISHER (Minister of Agriculture) moved that the House will on Monday next resolve itself into Committee of the Whole to consider the following proposed resolution:
Resolved, that it is expedient in connection with the Bill now before this House, intituled : ' An Act to establish a Commission for the Conservation of Natural Resources,' to provide for:-(a) The appointment of a secretary to the said commission and such officers and clerks under him as are necessary for carrying on the work of the commission, at such salaries as, under the Civil Service Amendment Act, 1908, are appropriate to the divisions and subdivisions of the service to which such officers and clerks may be assigned; (b) the employment of such assistants as are necessary for the purpose of any special work or investigation, and for their remuneration and expenses; (c) the actual disbursements of the chairman and members of the commission incurred in travelling to, returning from, and remaining at meetings of the commission, and of the chairman in travelling or otherwise attending to the work of the commission.
He said: The subject matter of this resolution has been presented to His Excellency the Governor General and he recommends it to the favourable consideration of the House.
Motion agreed to.

[Stage Direction]
On the orders of the day being called:
Mr. CROCKET.: I desire to call attention to an order passed by this House on February 11 for a return of all reports and accounts in connection with the survey of the St. John river between Fredericton and Woodstock. This return has not been brought down although I have called the attention of the Minister of Public Works to it on two occasions. I have received many inquiries from the counties of Car-leton and York in reference to this matter, and I am particularly anxious to have the papers brought down as soon as possible.



THIRD READING.

[Stage Direction]
Bill (No. 146) to amend the Act relating to Ocean Steamship .Subsidies.-Mr. Bro-deur.
Bill (No. 149) to amend the Extradition Act.-Mr. Aylesworth.

[Stage Direction]
House again in Committee on Bill (No. 128) to authorize a loan to the Grand Trunk Pacific Railway Company.-Mr. Fielding.
On section 1,
Mr. GEO. TAYLOR (Leeds).: The hon. the Minister of Finance said yesterday that they did not purpose making a loan for ten years, but the chances were they would make a long loan for 25 years or 30 years, or perhaps 50 years. His remarks would lead to the conclusion that he has no hope that the Grand Trunk Pacific will pay off this loan at the termination of the ten years. Now, look at the thing from a business standpoint. Would any business man make a loan at a high rate when he did not intend to use the money? If my hon. friend the Minister of Finance collects the amount of this loan from the Grand Trunk Pacific at the end of the ten years, as he intends doing, he should simply make a loan covering that period. Then, when he is repaid by the Grand Trunk Pacific, he will pay off that loan ; and if he requires more money, he would borrow at a lower rate. He says' that this loan which he intends making in order to obtain the funds for the Grand Trunk Pacific, will be at four per cent or perhaps a little more. Looking back, I find that in 1895 and 1896 my hon. friend from North Toronto (Mr. Foster) who was then Finance Minister, floated loans at about 2J per cent. Canada was then passing through a period of depression, which should have made the loan dearer, yet, n'otwithstanding the good times we have had since, my hon. friend has succeeded in lowering the credit of Canada to that extent that he has to pay four per cent for money, as compared with 21 per cent paid by his predecessor. And this money which he requires to borrow, to hand over to the Grand Trank Pacific, and which the Grand Trunk Pacific agree tc repay in ten years, he purposes borrowing on a long term. Would it not be much more businesslike to borrow the money for ten years and then when repaid by the Grand Trunk Pacific pay off that loan. By that time the interest rate will in all probability be lower; and should he require more money, he would be able to borrow it at less than four per cent. But by his present policy, he is about to bind himself to pay four per cent during 25, 30 or even 50 years. Suppose for instance, a property owner wanted to raise some more money on his property, but found it difficult to get advances from money lenders because his property was already subject to first, second and third mortgages. He however goes to a neighbour who has money to lend and who also owns property

and says to him: 'If you will go to the money market and borrow the $10,000 I require, which you can do on more favourable terms than I can, I will in return give you the security of my property for an advance of the same amount.' The transaction is put through in each case for ten years. At the end of that term, the one who borrowed in the money market will repay his loan with the money obtained by him from the second borrower; and then if he should require other money, he would borrow it at a lower rate. He might in that time be able to borrow at 2i per cent. But the government proposes to go on paying four per cent for 25, 30 or 50 years, instead of making a ten year loan at four per cent, and then if necessary reborrowing at a lower rate.


Hon. W. S. FIELDING (Minister of Finance).: I have to dissent entirely from the statements of my hon. friend, in so far as they imply that any loans have been placed by this government on terms otherwise than favourable, having regard to the conditions of the money market at the time the loans weTe issued. An argument which does not take account of these conditions is absurd. You cannot make a loan at a better rate than the conditions of the market at the time warrant. Suppose a buyer for one of the great houses is sent abroad to purchase goods. When he returns his employer says to him: 'I see that you bought goods at one and six per yard which some years ago you bought at one and three per yard. You have therefore failed in your duty to your firm.' Would not a satisfactory answer be: 'I bought the goods at the best rate I could at the time.' Well, in buying money, as in buying dry goods, you have to pay what the market demands. You are governed in both cases by the conditions of the market. Judged by that test, which is the only true one, every loan made by this government is a satisfactory one. If it be found necessary to make compai isons between the loans floated by my predecessors and those floated during my retention of the office, I am confident there will be nothing in the comparison which will in the slightest degree reflect on the policy of the present government; and in saying this, I do not wish to criticise in the slightest the actions of my predecessors. who no doubt got the best prices they could at the time and under the conditions then existing. With regard to the policy of restricting the government to the issue of a 10 year loan, to cover this advance, I do not think that would be wise. It is possible that the conditions of the market may be such as to render it desirable that we should issue a 10-year loan, and in that case I would hold myself free to do so. 1 Mr. G. TAYLOR.
hope, however, it will be otherwise. A short term loan necesarily implies, in most cases, a higher rate of interest than a long term. Whenever it becomes necessary for us to borrow, our duty is to have regard to the conditions of the money market, and issue the loan on the best terms, at the best rate, and for the best period that will meet the existing conditions. I would object just as much to a proposal to limit the loan to a 25 or 50 year period as to the proposal to limit it to a 10 year period. So much with regard to the first two points. As to the third point, although it does not add anything to the argument, it may surprise my hon. friend to know that we are pursuing the same course as that which was pursued by the late government in the case of the Canadian Pacific Railway loan. That loan was made for some five or six years. Immediately after it was agreed upon, the then Minister of Finance had to go on the money market and he placed on that market a loan-for what term? Five or six years? No. He made it for fifty years with the option of redeeming it at the end of 25 years.


Mr. LALOR.: What was the rate of that loan?


William Stevens Fielding: I am very glad my hon. friend has put that question. They lent the money to the Canadian Pacific Railway at a fixed rate of interest, four per cent, as we propose to do to the Grand Trunk Pacific. and then went into the money market and paid more than four per cent for the money. So they pursued exactly the same policy as I am asking the House to approve. If it should happen that we will be obliged to pay a fraction more than four per cent, we shall be having the same experience as my predecessor.


Francis Ramsey Lalor: Does the hon. minister approve of the plan pursued in the case of the Canadian Pacific Railway?


William Stevens Fielding: I was not here at that time; but looking back, I do not hesitate to say that I am glad the government lent the Canadian Pacific Railway that money. There was a difference of opinion at the time regarding that policy. Better men than I thought it was not wise, but they have possibly since changed their views. It is easy to be wise after the event, and the men who were in parliament then had to determine the question according to the best light they had at the moment. And many of that day thought it was not a wise plan. I express no opinion except to say that in view of the great success of the Canadian Pacific Railway, there is none of us, I hope, who would not be willing to say, on looking back upon it, that we are glad the government gave them that aid. I say that, at all events, speaking for myself." So, the hon. gentlemen will see that

on every point of criticism of this loan, I can cite the precedent of the Canadian Pacific Railway loan. I do not attach much importance to that, but it is quite proper that, as a matter of illustration, 1 should refer to it. Hon. gentlemen opposite say that we are going to receive only 4 per cent and that the loan will cost us more. That was exactly the condition of the case with the Canadian Pacific Railway loan, and, as a matter of fact, in the case of that loan the rate of interest paid for the money was somewhat over 4 per cent. The hon. gentleman asks why we do not seek a short term ten year loan. Well, my predecessors did not think it was wise to do this in the case of the Canadian Pacific Railway loan. They held their hands free, they went into the market and found what the condition was, they adapted their loan to that condition, and, no doubt, they got the money at the best price at which it could be obtained. I mention this, not as an accusation against those who made the Canadian Pacific Railway loan, but as it may help to illustrate the present transaction. But I do not think that argument necessary to the case. I maintain that this loan is a fair business proposition, and that it ought to commend itself to the judgment of the House.


George Taylor: The ground of my complaint is that the Finance Minister is anticipating that, ten years from now, he will not be able to make a loan at less than four per cent, notwithstanding the progress of the country in the meantime, which he looks forward to so hopefully. He seems to think that the credit of the country will be so bad in ten years from now that he will look to the railway company to refund the money, and he will use it for the balance of the term of the loan. If we are to have the great progress and the good time that he anticipates on account of the building of this railway, we ought to be able to borrow ten millions in ten years from now at 2i per cent.


William Stevens Fielding: Then, my predecessors must have


George Taylor: Never mind your predecessors. You are doing business now.


William Stevens Fielding: I am doing business, true. But in this case, I am not comparing myself with my predecessors to their disadvantage. I am saying that, as far as I can see, they acted as reasonable business men. I am commending them. I see nothing in that transaction to-day that was not proper and businesslike. Nor have I said anything to suggest the contrary. We are pursuing the same businesslike course that they pursued. The hon. gentleman (Mr. Geo. Taylor) says that we are
anticipating that we shall not be able to borrow at less than 4 per cent in ten years. That might have been applied to the Canadian Pacific Railway loan in its time. At the expiration of ten years, when the money is repaid, it is reasonably probable the government of Canada will still require money for its public purposes, and the situation then will be that, instead of being obliged to go out and float some new loans to meet the demands of that moment, we shall have $10,000,000 in the treasury. So, I do not think there is any cause of criticism from that standpoint.


Mr. PORTER.: I have not yet heard from the Minister of Finance (Mr. Fielding) any convincing or satisfactory answer to the question submitted from this side of the House as to whether it would not be better, in fixing the terms of this loan, to provide that the borrower should pay to the government exactly what it might cost the government to make the loan. An attempt has been made to answer that, but it does not seem to me to be satisfactory or to meet the case. Now, this loan has become necessary owing to the stress of circumstances pressing upon the Grand Trunk Pacific Railway Company. In other words, the government is coming to the assistance of the railway, as one might put it, as a matter of charity, and, at the same time, while the government is professing to do this charitable act, the Finance Minister tells us that the conditions of this contract are such that, if he has to pay a little more than four per cent for the money, the government will suffer the loss. At the same time, he says that if the government is able to borrow this money at a rate a shade less than four per cent, the country will be making a profit out of this loan. It does not strike me that the circumstances warrant the position taken by the Finance Minister. Would the Finance Minister feel quite comfortable with a profit made from this poverty-stricken offspring of the government jingling in the treasury? It seems to me that, in an act of charity, the government ought to get back-if it gets back anything-just what it paid, and, considering the care the government have taken to foster this child of theirs, that it would not be fair to take a profit won through an act of charity. It seems to me that it would be quite within the power of the government, and it would not be asking anything unfair from the Grand Trunk Pacific Railway Comqany, to insist that this contract should contain a condition that the railway company shall pay to the government just what it costs the government to make this loan. We do not want to make a profit out of the railway company in this matter. But we do not want to make a loss. It is quite possible, quite within the range of our

powers, to so provide in this contract that we shall neither make a loss nor make a profit. Would not that be a reasonable, fair and proper way to protect the rights of both parties?


William Stevens Fielding: I confess that, if we should make a profit out of this transaction -I have not said we shall, I have guarded against that-I am free to confess now that I shall probably have more comfort, speaking officially, in jingling the profit of the transaction in my official pocket than my predecessor had in pocketing the loss incurred in the former transaction. And, if the Grand Trunk Pacific Railway Company, in receiving this aid, is to be described as a ' poverty-stricken ' concern, and if this is to be described as 'an act of charity,' I suppose we shall have to say that the Canadian Pacific Railway Company at the time of the loan made to it was a ' poverty-stricken ' concern, and the loan to them as ' an act of charity.' I would not apply those terms to either case. In each case, the loan is legitimate aid granted to a great enterprise. And when I show the hon. gentleman (Mr. Porter) that, in the case of the Canadian Pacific Railway it was deemed wise to fix a definite rate of interest, as we are doing, I do not ask him to accept that as a conclusive argument, but I cite it as showing that at least the men of that day and the men of this, dealing with a business transaction, thought alike and acted alike.


Edward Guss Porter: That does not seem a very convincing argument. If, in the light of subsequent events, the loan to the Canadian Pacific Railway Company is shown to be improper or wrong, or not on the best terms that could have been obtained, why should the Minister of Finance use that loan for an argument in committing that wrong a second time?


William Stevens Fielding: I say it was right.


Edward Guss Porter: But my hon. friend (Mr. Fielding) would not say that in answer to a question put a few minutes ago. He has not expressed an opinion upon that, but left that to the expression of opinion that had been given years ago. If it was wrong in that instance-and the minister will not say it was right-why will he invoke that as an argument for a repetition of the act? It is reducing the argument to this: two wrongs make a right. And he is going to commit the second wrong.


William Stevens Fielding: Except that I have not said it was wrong.


Mr. ARMSTRONG.: Has the minister made any effort to obtain money outside the London brokers? My reason for asking is, that, in looking over the finances of the United States, I find that they have a total debt of $913,000,000, of which $118,400,000 is at four per cent, $63,900,000 at three per cent, Mr PORTER.
and the balance at two per cent. I believe I am correctly informed that the bonds floated by the United States in respect of the Panama canal pay only two per cent. I cannot quite understand why they can borrow so much cheaper than we can.


William Stevens Fielding: If my hon. friend will lcok into that matter, he will find that in the case of United States bonds, there are certain exemptions and privileges which give them special value. He will find also that the banks have to have certain classes of these bonds to deposit against their note circulation. All these things create a value for certain classes of United States bonds which would not apply to the bonds of any other country. My hon. friend began by asking if I had made any efforts to borrow money outside London. We have no difficulty in borrowing money at current rates. Our loans as a rule are placed in London, because London is the cheapest money market of the world. We keep our eyes on other markets, of which we have occasionally availed ourselves to make temporary loans, and we are not unmindful of conditions in the United States. At times when there seemed to be an abundance of money in the United States, I have inquired, and I have always found that if we attempted to issue our loans in the United States the charges against them would make the expense of the transaction very considerable, and the net result would be less favourable than we were able to obtain at the same time in London. Indeed, in many cases when United States bankers and others take up foreign loans, what actually happens is that while the transaction nominally takes place in the United States, the bonds are placed in London, and they are sold and bought on the basis of the London prices. I can assure my hon. friend that though occasional conditions, according to the newspapers, might show that for certain purposes and under special circumstances money is cheap in the United States, it is safe to say that for the purposes of large loan transactions, London is to-day, as it has been for a great many years, the cheapest money market in the world.


Joseph Elijah Armstrong: I can understand why the banks of the United States should have some advantages, but I cannot see why we should be paying double the amount the United States are paying on a similar loan. When you see them paying only two per cent on $700,000,000 you cannot but feel that in some way we are paying a higher rate of interest than they are paying in proportion.


Hon. JOHN HAGGART.: What I am particularly interested in is to find out how this $10,000,000 is to be applied. I tried to get an explanation from the Finance Minister the other day, and he stated that he would carefully guard the payment of that

money and see that it was paid on progress estimates. The statement that he brings down to the House is two-fold: An estimate is to be made by the engineer of the Railway Department for the purpose of the payment of some indebtedness to the extent of $7,100,000, and to finish the prairie section, an amount equal to $10,-
500,000.	The Grand Trunk Pacific, who are borrowing the money, only ask for $9,400,000, and in that statement there is a sum for the purpose of recouping them, a payment which they allege to have made of $7,100,000. The Finance Minister says,
'I will carefully guard the payment of this sum of money to the railway company by seeing that the work is done and completed.' But the work has been done and completed long ago, the money is paid to the parties who have done the work, and there is the certificate of our own engineer saying that the work is done. Then what do they want the $7,100,000 for? It is an alleged indebtedness which, he says, the Grand Trunk Company advanced to the Grand Trunk Pacific. Well, we all know the absurdity of it, we all know that the Grand Trunk had not $5 to advance, that the corporation could not endorse even a security for that amount. Who is it we are going to pay the $7,100,000 to? It is to some loan that the Grand Trunk Pacific have made, or a sum of money equal to $7,100,000 which they must have borrowed from some bank. We ought to have full particulars, we ought to have an accurate account of the payment of that $7,100,000. We do not know, by any statement that has been made by the Finance Minister, to whom we owe this $7,100,000 or whom we are going to pay it to. We have his statement that he will take care that no part of that sum is paid out unless on progress estimates on the work. The sum is paid out, the work has been done by the contractors, there is no progress estimates to come in, there is the certificate of his I own engineer that the work is done and the money is paid out. Now surely this committee is entitled to this information. To whom is that $7,100,000 to be paid, and in what form was that advance to the Grand Trunk Pacific? Was it advanced solely on account of woTk or in the construction of the prairie section and for no other purpose? That information this committee is entitled to in detail. We are advancing a sum of $10,000,000, $7,100,000 to pay an advance of some kind. The details of that advance we have not got up to the present moment; and this committee, before voting that money, is surely entitled to a detailed account.


William Stevens Fielding: Wei are not going to vote that sum of money to the Grand Trunk Railway Company, we are not going to vote that $7,100,000 to any company.


John Graham Haggart: To whom are you going to vote it?


William Stevens Fielding: We are not going to vote that particular sum to anybody, we have nothing to do with that particular sum. What we have to do is to see that before we pay $1 of money raised by the aid of the government, we shall have a certificate of the engineer that that money has been expended on the road, and we have the work there before us. If the Grand Trunk Pacific Company, instead of borrowing money from a bank to pay its contractors, have been able to go to the coffers of the Grand Trunk Company itself, it is their own business, and we are not concerned in it at all. Whether they got the money from the treasury of the Grand Trunk or whether they got it from a bank, is of no importance to us. I presume that had they not got that money from some quarter, we would have a cry all over the land that a great many workmen were being unpaid, that merchants were being unpaid. My hon. friend speaks of the work having been certified. The work has not been certified for the purpose of any payment. We have the estimate of our engineers as to what amount will be necessary; we have statements made by the Grand Trunk Company of what amount is required to finish the road, and our engineers say that that is substantially correct.


John Graham Haggart: You say the work has not been certified by your own engineers?


William Stevens Fielding: Not as respects the payment of any money. If $7,000,000 drawn from a bank, or from another Tailway company, or from any other quarter, have gone into that work, and certificates are brought to us by our engineers that that money has gone into the work, then we are justified in responding by paying out of the funds the proper proportion of the money. My hon. friend will find that that advance to the Grand Trunk Company is practically in the same position as if one of the banks had advanced the money. We are not called upon to consider whether the company was right or not to advance it; that is none of our business. What we are concerned in is seeing that not one dollar of this money is paid except on certificates of our own engineers that it is based upon actual outlays, and that the money has gone into the work. That is provided, not upon any assertion of mine, but it is provided by the machinery in the schedule attached to this Act. I would like my hon. friend to get out of his mind this idea that we are going to pay the Grand Trunk Railway $7,000,000. If the Grand Trunk Pacific had borrowed $7,000,000 from a bank, we would not be concerned about that. We are going to pay the money, under the



terms of the contract, to the Grand Trunk Pacific upon evidence that that amount of money has gone into the work. Now that is simple and I am sure that my hon. friend on reflection, will see that it is fair and reasonable.


John Graham Haggart: You have the information already that the money has gone into the work.


William Stevens Fielding: It has not been paid yet.


John Graham Haggart: You have a statement from the Grand Trunk that they have advanced $7,100,000 and you could not pay the proceeds of the bonds for the construction of the work until you had the certificates from your own engineer. A statement has been submitted by your own engineer as to the correctness of the accounts. He submits a statement which completely confirms the statement of the company. The officer of the Department of Railways and Canals who has gone down to examine the accounts of the Grand Trunk Pacific certifies to them as being correct. Why is it that we cannot have the information showing us in what form the Grand Trunk are claiming a return of this $7,100,000? You do not go over the work again and you do not get a new certificate from your engineers. You have a certificate already that the work has been done and completed. You have paid the money for that work to a certain extent. That is as far as the $7,100,000 is concerned. It is true that you will require fresh certificates for the balance that you paid out of the $10,000,000 for the completion of the work. I believe the government are acting as trustees, that they have on hand a certain sum of money and that the balance of $10,000,000, after the $7,100,000 has been paid, is intended to complete the prairie section. But, as far as this $7,000,000 is concerned, that is a completed transaction. You have the certificate of the engineers as to the completion of the work. The amount has been paid and the accounts have been audited by the Department of Railways and Canals. Surely we are entitled to a statement as to who holds that indebtedness and in what form the payment of that $7,100,000 was made.


William Stevens Fielding: I am sorry that I have not succeeded in satisfying my hon. friend.
I maintain very respectfully, in view of his larger knowledge and experience, that we are not concerned about that $7,100,000 at all. An hon. gentleman opposite asked the question what amount the Grand Trunk Company have, in one form ot another, put into this enterprise and we have the information brought down that they have put in $7,000,000. If they have put $7,000,000 in they stand in the same position as the Bank of Montreal would stand if it had loaned the Grand Trunk Pacific Company


William Stevens Fielding: $7,000,000. What concern would we have
in that?


John Graham Haggart: I will tell my hon. friend what concern you have in that. Suppose it were part of the expenses of lobbying here and of the amount that was entered in an account which was considered by the Public Accounts Committee and the papers in regard to which were lost. Suppose one of these items was included in that account or something similar to it, have we not the right to see the account? When you come here and ask for $10,000,000 of which $7,100,000 has been paid out, have we not the right to know in what form this money has been paid out?


William Stevens Fielding: I quite admit that my hon. friend ought to have a better knowledge than I have as to the expenses of lobbying and things of that kind, but I still insist that we are not asking to pay $7,000,000 to the Grand Trunk, and it is not open to us to enter into an inquiry as to how they used the money or as to what they did with the $7,000,000. They stand exactly in the position of a bank which had loaned the Grand Trunk Pacific Company for the purpose of its undertaking that .much money. We would have nothing to do with that. That would be a matter between the company and the bank. In this instance it is a matter between one company and another. Whether the Grand Trunk borrowed it, or loaned their credit are interesting questions in themselves, but they do not touch this loan. We are concerned in seeing what becomes of this money which we propose to lend to the company, and we have provided by this Bill that not one dollar of this money can be paid to the Grand Trunk Pacific until we receive the certificates from the engineer that the money has gone into the work and is represented by work to be seen.


Mr. SPROULE.: We, on behalf of the
country, promised to give aid in the shape of a guarantee or other assistance. The balance was to be provided by the guarantee of the Grand Trunk Railway. The Grand Trunk had to stand at their back and raise the balance of the money. We have lived up to our portion of the agreement. The Grand Trunk Pacific Railway now come here and ask for an additional loan to help to build the road. But they say that $7,000,000 out of the $10,000,000 is required to pay back to the Grand Trunk Company because they advanced that amount. It was their duty to advance it.


William Stevens Fielding: No.


Thomas Simpson Sproule: It was their duty to provide the security that would raise it.


William Stevens Fielding: No.


Thomas Simpson Sproule: Yes, it was the understanding that they would advance that

money or that they would be at the back of the Grand Trunk Pacific and assist them to carry through the undertaking. They advanced a sum of money and now they turn around and ask us to advance more in order that this $7,000,000 may be paid back to them. I think we should say to them: 'It is true that you have advanced $7,000,000 to build this road, but that is what you ought to do, and if you have done that we are under no obligation to raise money to pay that amount back to you. We want you to carry out your part of the bargain.' They are doing no more than carrying out their paTt of the bargain and we are doing all we could be expected to do.


William Stevens Fielding: The error in my hon. friend's statement is that he says that the Grand Trunk were bound to advance this money.


Thomas Simpson Sproule: JSTo, I did not put it that way, but I said that it was understood that they were to be at the back of the Grand Trunk Pacific and to provide the money by putting up the security or otherwise.


William Stevens Fielding: No, my hon. friend's statement was that they were bound to advance the money and that they had a right to do it.


Thomas Simpson Sproule: I did not say to advance the money; I said to be at their back and to furnish the security to aid in raising the money.


William Stevens Fielding: We must distinguish between these two things. The Grand Trunk never contemplated that out of its earnings it would take $7,000,000 and put it into this road. The Grand Trunk never .agreed to advance a dollar to this company. The Grand Trunk agreed to do exactly what it is proposing to do now ; that it would guarantee certain bonds of the western division. It has agreed to do that and it is not shirking that responsibility. It is willing and ready to do that and this legislation requires the company to do it, but, for financial reasons we think it best that the company should not float its guarantee in the present condition of the money market. If the Grand Trunk was bound to advance this $7,000,000 to the Grand Trunk Pacific, and did not do so, and now asked us to do it, there would be something in what the hon. gentleman says, but that is not the situation at all. What the Grand Trunk agreed to do it is still doing by way of a guarantee of those bonds.


Mr. R. L. BORDEN.: We could not assent for a moment to the statement just made by my hon. friend the Minister of Finance. He says that the Grand Trunk were to guarantee the bonds, not for the balance but for some certain amount.


William Stevens Fielding: I did not say that. I was trying to show the distinction between 1664
a pledge to advance money and a pledge to guarantee bonds. I was not dealing with the question of the bonds.


Robert Laird Borden: My hon. friend from East Grey (Mr. Sproule) simply stated to the Finance Minister that the Grand Trunk were bound to guarantee the bonds necessary to raise the balance required for the completion of the western division.


William Stevens Fielding: Yes.


Robert Laird Borden: I understood the Minister of Finance to take direct issue with my hon. friend upon that statement.


William Stevens Fielding: No, I did not.


Robert Laird Borden: Well, I was very unfortunate in my understanding of what the hon. gentleman said. There is no doubt whatever as to what the contract was:
Inasmuch as the bonds to ibe guaranteed by the government only make provision for a I art of tbo cost of construction of the western division, the company hereby agrees that the Grand Trunk Railway Company af Canada shall guarantee bonds of the company for the balance required for the construction of said western division, exclusive of the said $20 000,000 required for first equipment, which the company is required to provide under paragraph 22 of this agreement.
The Grand Trunk Railway Company was to guarantee the bonds of the Grand Trunk Pacific for the balance required for the construction of the western division; that is the balance remaining after the provision made by the government on its guarantee of bonds, and there is no doubt my hon. friend (Mr. Sproule) was strictly correct in the point he made.


William Stevens Fielding: The Grand Trunk Railway did agree to do that.


Robert Laird Borden: The Grand Trunk Railway Company entered into an agreement with the Grand Trunk Pacific to carry out that condition of the contract, so that my hon. friend (Mr. Sproule) is correct.


William Stevens Fielding: I understood the hon. gentleman (Mr. Sproule) to argue that the Grand Trunk Railway was bound to advance the money, that they have advanced it, and now they are trying to get it back. My hon. friend, however, has made it clear now that such was not his argument.


Robert Laird Borden: They are required to give that guarantee and the government is becoming banker.
Mr. FIELDING Yes.


Robert Laird Borden: And they are getting back their $7,000,000?


William Stevens Fielding: That has no relation to it.


Mr. E. L. BORDEN.: 
William Stevens Fielding: I think the difference is accounted for by the equipment bonds which represent a very considerable sum.


Robert Laird Borden: I may be very ignorant as to what is correct procedure in these matters, but, to use the guarantee of the Grand Trunk Railway for providing equipment five years in advance of the time it will be required, and then to put that forward as an excuse for aid from the government seems a remarkably unbusinesslike proposition. Every one who has eyes in his head knows that some of this equipment has been continuously* in use on the Grand Trunk Railway system during the past two or three years, and yet we have it gravely put forward by Mr. Hays as a reason why the government should come to the assistance of the Grand Trunk Pacific Railway Company, that a guarantee has been given to equipment which has been used not on the Grand Trunk Pacific but on the Grand Trunk Railway system.


William Stevens Fielding: There is a distinct provision with respect to the equipment bonds, and I do not see what relation that could have to the merits of the present case. I should think it would not be wise for the Grand Trunk Pacific to wait until the road was completed to look around for equipment. If all goes well a good part of that equipment will be needed for the operation of the road next season, and although I have no information on the point I take it for granted that if any car constructed Mr. FIELDING.
for the Grand Trunk Pacific and not immediately used was loaned to the Grand Trunk Railway Company or any other, they would give in return the usual business consideration to the Grand Trunk Pacific for it.


Robert Laird Borden: Unless the Grand Trunk Pacific Company saw they could come to some such source as this for assistance I do not think they would engage in any such unbusinesslike methods. It was perfectly proper that they should provide their equipment in good time, but it does not seem reasonable that they should provide it two or three years in advance and use it on a railway system for which it was not designed at all. There was no expectation in the minds of the members of parliament who discussed the contracts of 1903 and 1904 that the guarantee stipulated for would be utilized for the purpose of providing equipment for the Grand Trunk Railway system in the meantime. Certainly nobody ever expected that it would be used as an argument for further assistance from the government, especially as the very company which has been enjoying the benefit of that equipment in the meantime was described in 1903 as being in and of the undertaking and forming the whole thing in connection with it.


William Stevens Fielding: The only relation between the two things is that the Grand Trunk Company in stating the amount of obligation it had itself incurred in this enterprise very naturally stated that it guaranteed these bonds. I would rather prefer to discover that the Grand Trunk Pacific had the rolling stock in good time than to discover that when they needed it there was not sufficient to handle the business. I do not see why we need worry ourselves very much as to whether they got the equipment in 1908 or 1910 in view of the fact that they are spending their own money and not ours on that part of the enterprise.


Robert Laird Borden: If that is so it was absolutely irrelevant for Mr. Hays to introduce the statement into his letter.


William Stevens Fielding: It was perfectly legitimate to state the extent to which the Grand Trunk Railway Company was pledging its credit to help this enterprise, and more especially as it has been stated in various quarters that the government was doing everything in the matter and that the Grand Trunk Railway Company was doing nothing.


Robert Laird Borden: Where was this equipment obtained?


William Stevens Fielding: I cannot say I am sure, but I know that a good deal of it was obtained in the province of Nova Scotia

because I have seen the cars bearing the well known name of Rhodes, Curry and Company.


Mr. W. F. MACLEAN.: It was not supplied in the province of Ontario?


William Stevens Fielding: That must have been because the man in Nova Scotia was willing to build it more cheaply. However, I am only speaking from recollection and I will be glad to get the information.


Robert Laird Borden: I think there was some company formed for the purpose of supplying the equipment.


William Stevens Fielding: I could not say, I am not aware of that.


George Taylor: Did not the Grand Trunk Pacific secure a great number of old cars from the Grand Trunk and have the name changed?


William Stevens Fielding: I could not say, but as not one dollar of government money has gone into that I do not think we need worry much over it.


Thomas Simpson Sproule: I understood there was a provision in the Act whereby a separate company could be organized to provide that equipment and the security would be in the form of a chattel mortgage on the equipment which would be repaid by the [DOT] earnings from the road when in operation. That was put forward as a distinct and important provision in the Bill, which would enable them_ to provide this equipment for the road without drawing on their credit to any great extent. If part of this guarantee by the Grand Trunk was for this purpose what becomes of the company that was to be organized to provide the equipment? How do we know how much has gone into equipment or where the equipment was purchased or the amount of equipment?


William Stevens Fielding: I do not think there was any such rolling stock company.


Thomas Simpson Sproule: There certainly was such a provision in the Act. I remember Mr. Osier saying it was a common and useful practice on railways.


William Stevens Fielding: Undoubtedly such a system is employed on some railways but it was not in this case.


Mr MIDDLEBRO.: Does the minister know how much of the $7,000,000 which the Grand Trunk Pacific borrowed from the Grand Trunk Railway has been paid out for actual expenditure on the road bed.


William Stevens Fielding: We are dealing entirely with construction and can only recognize payments for construction.


Mr. MIDDLEBRO.: Then every dollar of this may be for money that has gone towards the purchase of equipment for the
Grand Trunk Pacific that the Grand Trunk are now using.


William Stevens Fielding: If it be possible that that would happen, they never could get a dollar back under this Act.


William Sora Middlebro: If that is so it has taken to that extent the credit of the Grand Trunk from the Grand Trunk Pacific and has made it necessary for the Grand Trunk Pacific to come here for a further loan. If the Grand Trunk had not advanced this money to purchase rolling stock which they are now using at four per cent, irrespective of the cost of repairs and maintenance, it seems to me they would have $7,000,000 more to apply to the construction of the road bed and it would not be necessary to come here for a loan of $10,000,000.


Mr. CROTHERS.: Would the minister make it clear whether this $10,000,000 is all to be used on work yet to be done or materials yet to be supplied, or whether any part of it is to be used to pay for work already done or material already purchased.


William Stevens Fielding: If any application were made for payment of money for work already done or materials already furnished as respects which they have already received money why certainly they could not get it, but if work has been done by advances from the Grand Trunk or from anybody else which has not passed into _ the accounts and been approved and certified by the engineer, unquestionably they would have a right to draw a portion of this money for that purpose.


Mr CROTHERS.: I want to ascertain whether the whole $10,000,000 is to be used in payment of work done so that there will be nothing left to continue the line to the mountains..


William Stevens Fielding: If the Grand Trunk have advanced money and it has gone into the road they would have a right to recover from the Grand Trunk Pacific, and if $7,000,000 has thus been put into the road there would be only $3,000,000 available from this fund to continue the work.


Thomas Wilson Crothers: Then is it the case that $7,000,000 may have been spent in construction and road bed for which my hon. friend has no report from his engineers?


Mr FIELDING.: Our engineers know the condition of the road. We know that considerable sums of money have gone into it as respects which the statement of the Grand Trunk is probably correct, but we must know that the work is done and must have the engineers certify it before money is paid oveT.


Thomas Wilson Crothers: Does my hon. friend understand from the statement of the Grand Trunk that they have put $7,000,000 into

the road for which he has no report from his engineers? If the government have reports from their engineers they ought to know how much of that $7,000,000 has already been expended and how much of that expenditure has been reported on by the engineers. Is it possible the Finance Minister does not know within one, two, five or seven millions how much money they put in for which he has no report from his engineers?


William Stevens Fielding: We chiefly require reports from our engineers when a demand is made on us for money. If the Grand Trunk Pacific say: 'We want you to pay so much money,' that is when we insist on the reports and certificate of the engineers. As respects the condition of our work generally the chief engineer has one or two officers along the road who are in constant touch with him and he is kept generally informed of the condition of the work; but we are only concerned from a financial point of view when the company come to us and want so much money. Then when they are to get that money from a particular fund with which we have anything to do, we must be satisfied that the work has been done and the money expended.


Thomas Wilson Crothers: We ought to have the information asked for.


William Stevens Fielding: If the information is not covered by what is before the House and my hon. friend will draw my attention more specifically to what is lacking I will endeavour to get it if it is within my reach.


John Graham Haggart: I want a specific statement that this sum is to be expended upon the road bed or stations of the prairie sections.


William Stevens Fielding: Yes.


John Graham Haggart: It cannnot be applied to the payment of any equipment of the road or anything of that kind.


William Stevens Fielding: No. I understand that not a dollar of this can be applied to any other purpose than the construction of the road on the prairie section. ,


Mr. PERLEY.: In what section of the schedule is that provided?


William Stevens Fielding: My hon. friend will find that provision in the mortgage. I think on page 18.


George Halsey Perley: The minister has said that the furnishing of money to the Grand Trunk Pacific in respect of equipment has nothing to do with that.


William Stevens Fielding: No, I did not quite say that.


George Halsey Perley: If that is the case we are entitled to be assured that this money Mr. CROTHERS.
is not to be applied to a purpose with which we have nothing to do. We are entitled to know that $7,000,000 of the $10,000,000 is not going to pay for equipment which the Grand Trunk is bound to furnish to the Grand Trunk Pacific, but that the $7,000,000 will be actually expended, every dollar, on the road bed.


William Stevens Fielding: I say without hesitation that this money is designed, as my hon. friend will see by the mortgage, to assist in the construction, not the equipment, of the prairie section.


William Sora Middlebro: If it has been expended on rolling stock, then this company is asking for $7,000,000 sooner than it should, because they do not require it for the purpose for which it is supposed to be expended.


William Stevens Fielding: I give the assurance, without any equivocation, that not a dollar of this money can be applied to any other purpose than the construction of the prairie section, as provided in the mortgage.


William Sora Middlebro: That does not answer the question. The question is whether this money is to go in repayment of money which has been expended already for rolling stock with which we have nothing to do.


William Stevens Fielding: Not a dollar of it can go for equipment. The equipment is provided for by a different method.


William Sora Middlebro: The hon. minister does not know how much of this $7,000,000 is to be used to pay the Grand Trunk Railway for the rolling stock.


William Stevens Fielding: We are not going to pay the Grand Trunk Railway one dollar We will pay the Grand Trunk Pacific, on the engineers' certificates, as much of this $10,000,000 as they can show has gone into construction and only into construction; and the $7,000,000, while it is an interesting item of information to the House, has actually no bearing upon this at all. For every dollar anybody claims, we must know it has gone into the construction of the prairie section and not for equipment or anything else will we pay it.


William Sora Middlebro: The difference is this. There may come a time when you may be able to get an engineer to certify that $7,000,000 more has been expended on the road than really has been. I want to know if that money has been expended now or whether you take the money from the Grand Trunk Pacific to pay the Grand Trunk Railway.


William Stevens Fielding: We are not going to hand the Grand Trunk Railway money for equipment or anything else. The Grand

Trunk Railway in that respect, practically act as the bankers of the subsidiary company. If the Grand Trunk Pacific get the $7,000,000 to help them out, whether they get it from the parent company or the bank or anywhere else is not a matter that concerns us, and it does not enter into our calculations as to the paying out of this money. Before any of this $10,000,000 can be paid the engineer must certify that it is represented by work gone into the road. The money for this road is drawn from two sources, in the first place, from the proceeds of the government guarantee, and in the second place from the proceeds of the Grand Trunk Railway guarantee, in certain proportions. Before we can establish these respective proportions, we must know what money has gone into the road or the total cost of construction. Having ascertained that, we assign to each of these funds its proper proportion; and before one dollar of the fund can be drawn out, we must have the certificate of the engineer that the work is there to represent it.


William Sora Middlebro: Suppose the Finance Minister sent out to-morrow his engineer to find out how much money has _ been expended in the road bed, and his engineer gave it as a certain amount and that all the moneys received by the Grand Trunk Pacific had been sufficient to pay that work up to date, and that the $7,000,000 would not be required until $7,000,000 more of work had been put into the road, would he be justified in handing that $7,000,000 over now to pay for future work. Does it not look as if the Grand Trunk Pacific were getting that $7,000,000 to pay for the equipment?


William Stevens Fielding: As regards the equipment I can give the most positive assurance that nothing of the kind is contemplated or is possible under this agreement.


William Sora Middlebro: I find that in answers given by the Finance Minister to the leader of the opposition that there has been expended on the prairie section $27,031,000, and that there is yet to be expended on that section $5,166,000, and we have to pay the Grand Trunk Railway $7,000,000. That makes $12,200,000 to be paid on a loan of $10,000,000, Where are the other $2,000,000 to be had to complete the prairie section?


William Stevens Fielding: We are not paying the Grand Trunk Railway that money at all.


Mr. NORTHRUP.: While the Finance Minister has made it quite clear that it is not the intention of the government, ostentatiously and publicly, to hand over any cash to the Grand Trunk Railway for the rolling stock, possibly the same result is to be obtained in another way. If we take
the information given in this most instructive statement brought down by the Finance Minister, a couple of facts seem quite clear. The first is that the Grand Trunk Pacific had plenty of money to complete its work. If this $10,000,000 is sufficient to complete it, then they had enough, bet-cause they have spent $8,000,000 on rolling stock. If the Grand Trunk Pacific had been willing to go on and finish their road they apparently had enough money to do so. Would the thing not work out this way according to this statement? The Grand Trunk Pacific, having the money on hand to complete this road save pos-i sibly the difference between $8,000,000 and $10,000,000 said: 'No, we will not complete the road, but we will put this money into rolling stock which we do not require but which the Grand Trunk Railway require and which the Grand Trunk Railway would have to pay its own money for.' Then, they hand this $7,000,000 over to the Grand Trunk Railway to buy rolling stock, and then declare that the money went into the read bed. In this way the Grand Trunk Railway is able to take $8,000,000 of the Grand Trunk Pacific and put it into rolling stock, and then loan to the Grand Trunk Pacific at four per cent the money required for construction. If that Is wnat has been done, and if the Grand Trunk Railway comes and says to the Grand Trunk Pacific: 'You have $10,000,000 on hand, pay us back the money we put into the construction of the road,' and the government has to aid to that extent, the only reason the government has to pay is because the Grand Trunk Railway, instead of paying for its own rolling stock, chooses to advance the money to the Grand Trunk Pacific to supply rolling stock for their use.


William Stevens Fielding: I do not think that is possible.


Mr. BLAIN.: I desire information concerning the estimates that were made when this project was proposed to the House on August 11, 1903. At that time, Mr. Blair was Minister of Railways and Canals, and. in placing his statement before the House, he estimated that the direct and indirect liability of this country on account of thi3 project would be $139,000,000. We have had various estimates as to the cost of the work within the last two or three days during which this matter has been under discussion. The estimate has now reached, I think, in the neighbourhood of $250,000,000, an amount greatly in excess of the estimate of Mr. Blair as "Minister of Railways and Canals, and he was looked upon by the government at that time as very extravagant. I assume that the government has looked over the estimates which were given at that time on which Mr. Blair based his conclusion that the cost would be ,$139,000,-

000. May I ask if these statements have been* gone over by the present Minister of Railways and Canals (Mr. Graham) or by the Finance Minister (Mr. Fielding) or by any person appointed to represent the government? For, it is important to know upon what data the present estimates are based.


William Stevens Fielding: These things may be interesting in themselves and proper subjects of discussion, but I Cannot see that they have any bearing on this loan. Therefore, I have not given attention to the matter referred to. I am aware that the Minister of Railway^ and Canals (Mr. Graham) recently gave the House the best information he could as to the probable cost of the road. I know that the estimate is very much greater than we ever anticipated, and to that extent it is a matter of regret, but there seems to be no help for it. If the cost of the eastern division, as it is called, which has very often been spoken of, had been much greater than our anticipations and every other railway whose cost was estimated at the same time had been constructed -without increased expense, I should have begun to feel that, perhaps, there was some room for criticism of the government or their commissioners as to the cost of the eastern division. But, when we find that railways everywhere are costing more than the estimates made at that time, when we find that the Grand Trunk Pacific Railway Company, with all the experience and skill at their command-for they have the benefit of the experience and skill of the engineering staff of the Grand Trunk-is obliged to pay so much more than the estimate for their part of the road, we can look more charitably upon the results of the efforts of the commissioners who are charged with the duty of directing the con [DOT] struction of _ this eastern division. These are interesting and important questions, but I think that the answer given by. the Minister of Railways and Canals on a recent day covers prettv much the question of my hon. friend (Mr. Blain). At all events, I do not see that this has a very important bearing upon the question o'f this loan. It is a question of loaning the company so much money, as a banker would loan it; and whatever the cost of the road, be it large or small, it is not affected by this except for the explanation that it is because of the increased cost of the road that the company is obliged to come and ask for the loan.


Richard Blain: Would there be any objection on the part of the government to laying upon the table estimates upon which Mr. Blair at that time based his statement of the cost of the proposed railway? I have the right to assume that, as he was Minister of Railways and Canals at that
.Mr. BLAIN.
time, and giving to the House and the country the estimated cost of the construction of this important national highway, he would only speak after having had estimates on which to base his statement. The Minister of Finance (Mr. Fielding) may say that it has .no bearing upon the proposed loan and that it is important to * separate one from the other. But we have the right to criticise the government in this matter. They drove out a gentleman from the government because he was extravagant and his estimate was largely in excess of what other ministers led the the country to believe the road would cost. Surely we have the right now, even though the Minister of Finance may venture to say it is not apropos, to ask that he. lay on the table at some future day the estimates on which Mr. Blair, then Minister of Railways and Canals, based his statement of the cost of the road, that statement being the direct and indirect liability of the country would be $139,000,000.


William Stevens Fielding: I will have to leave my hon. friend the Minister of Railways (Mr. Graham) to deal with that. I do not know whether Mr. Blair had estimates of an official character; I could not say the source of his information. If there are official estimates that were made by the department at that time, I imagine that my hon. friend (Mr. Blain) would have the right to have them brought down. I do not know, and I will have to leave it to the Minister of Railways.


Mr. LANCASTER.: I think that the matter brought forward by the hon. member for Peel (Mr. Blain) is not only strictly in order, but that it is most pertinent in view of that which is before us. Referring to the schedule of this Bill, page 6, paragraph 2, I find the following:
And whereas owing to the high standard of the railway being constructed by the Pacific Company, as well as the increased cost of labour, material and supplies, the cost of completing the construction of the prairie section will considerably exceed that estimated.
Now, I do not think that we should lightly say that the increased cost over the estimate has nothing to do with this case, which is the excuse the Minister of Finance puts forth. Like the preamble of any other document, this is the part which is to be used for the most particular manner of construction that can be applied to the document as a whole. It is stated that the people of Canada are making this loan solely because there has been a mistake in the estimated cost of the prairie section. Surely, we ought to know how that mistake arose, whose fault it was, whether we were deceived by the Grand Trunk or the Grand Trunk Pacific, or how it hap-

pened, and what we had better do about it. All that information is most pertinent, and I do think we ought to have the very best light possible thrown upon the subject in view of the fact that we are basing a contract on this preamble.


William Stevens Fielding: Referring to the previous section, mention is made of the mortgage to guarantee certain advances by the Grand Trunk. An estimate was prepared by the Grand Trunk people in respect of these bonds that they were to guarantee. The mortgage sets forth the facts of the case in a manner the hon. gentleman will appreciate.


Edward Arthur Lancaster: But the hon. minister will not say, as representing the country, that he is going to take the estimates of the other party, the party with whom he is supposed to deal at arm's-length. Mr. Blair had to resign because he did not think the country would stand for a transaction of that kind, and his remaining colleagues thought that his estimate was too great. There must surely, then, have been some, estimate made on behalf of the people. Surely the Minister of Finance would have to have an estimate from his own standpoint to see whether he is being misled or deceived. This loan is necessary because the cost will considerably exceed the estimate, but surely that estimate must have been made on behalf of the government.


William Stevens Fielding: Not necessarily on behalf of the government; the government has no direct concern with that. The Grand Trunk were guaranteeing the moneys required for the completion of the enterprise, and we were concerned in having the mortgage express that estimate correctly. It was their estimate, and I do not think it is of very much importance to us whether it was a correct estimate or not. What we are concerned about is that if we are going to pay one dollar out of any fund contributed by the government of Canada, or by guarantee of the government of Canada, or by loan of the government of Canada, we must see that the money is paid out on evidence of bona fide cost. The question of estimates is not by any means as important as my hon. friend argues.


Edward Arthur Lancaster: The country was guaranteeing 75 per cent of the cost. We have two deals with these people, and we are asked to give $10,000,000 more to them. We are asked to do that by a document drawn up by the government because there was a mistake in the estimate, or an error; at any rate, the estimate was not correct. Surely we are concerned in that. If the country was guaranteeing 75 per cent of it, then it was of importance to us.


William Stevens Fielding: This estimate has reference to the balance, not to the 75 per cent.


Edward Arthur Lancaster: The words are: 'Whereas the cost of the prairie section will exceed that estimate'.


William Stevens Fielding: When the mortgage was being prepared the Grand Trunk people knew they had to guarantee whatever the balance might be, and they made an estimate for themselves and for their investors. It was not our guarantee, it was not our money; it was to be their guarantee.


Edward Arthur Lancaster: You had to 'act on it.	.


William Stevens Fielding: They had to raise that money themselves, and they found it necessary to express in their first mortgage, what amount they would assign to Ithe prairie section. They made an estimate, and they assigned a certain proportion of that mortgage fund to the prairie section. Now it turns out (that it was not enough.
I do not think we are very much concerned as to whether a mistake was made there or not. It was not made with any funds of the government; it was made as respects the Grand Trunk share of the obligation.


Richard Blain: You must take some cognizance of the estimate that was made, for it, is plain to the committee that if the proper estimate had been made the company would not now be here asking for a loan of $10,000,000. That is clearly of importance to us and the minister cannot cast it aside in that way.


William Stevens Fielding: It is quite clear that the estimate, while it may have been proper at the moment, according to the information they had, has turned out to be an insufficient estimate; that owing, as they allege, to the increased cost of material and various other causes, the money is not. enough, and they want more. But that does not necessarily prove that the estimate was an improper one. It was an estimate in which they had no interest to mislead, it was an estimate of what they themselves have to provide for their share of the obligation, and they made it with the best information they had, I have no doubt, made it all in good faith, made it intelligently. But it proves to be not sufficient; that is all.


Edward Arthur Lancaster: Supposing the estimate given by this company to-day turns out to be equally incorrect. How do we know that the estimate they make to-day is a correct estimate, and that next session we will not be asked for $10,000,000 more, and the session after foT $30,000,000 more?


William Stevens Fielding: I do not know the future. If I believed this $10,000,000 was

not enough, in all probability I would be asking the House to make it $11,000,000 or $12,000,000. But I accept the assurance of our engineers that it is probably enough, and I believe it will be enough.


Edward Arthur Lancaster: We are to-day being asked to finance them again to the extent of $10,000,000. What we did then is the only excuse for us now to pay out $10,000 -000 more.
loan $10,000,000, and we want you to make us a mortgage which is a guarantee, so far as a mortgage can be a guarantee.'


Edward Arthur Lancaster: This eminent legal authority did not imagine what I have just read; some officer or some minister gave him these facts to put in that document.


William Stevens Fielding: The document carries the estimate on its face.
Mr. FIELDING, what they did.
Not what we did, but


Edward Arthur Lancaster: It shows the company's estimate was wrong.


Edward Arthur Lancaster: Didn't we do any thing?	J


William Stevens Fielding: Not in that transaction.


Edward Arthur Lancaster: We made a transaction in regard to building a National Transcontinental Railway; and it is not what we did, it is what they did not do that makes the trouble. How do we know to-day that we are not going to be told a year from now that this present estimate is incorrect? Are we any safer to-day than we were then?


William Stevens Fielding: We had no reason to be safe then because we were not asked to loan them the money, or to do anything else. They were borrowing the money from the money market, and they settled it with the people who were loaning them the money.


Edward Arthur Lancaster: Then it. is true that that estimate, which we acted upon and which is recited in this document was not true at the time.


Mr. GOODEVE.: The answer given by the Minister of Finance to the hon. member for East Grey (Mr. Sproule) was that the government guaranteed 75 per cent of the prairie section, and the Grand Trunk Pacific undertook to guarantee whatever might be necessary for the balance to complete that section. Following out that, it is clear from the Bill before us that the Grand Trunk guaranteed certain bonds to enable them to raise the amount of money. Out of that money so raised they expended $7,100,000 on rolling stock which was not needed by the Grand Trunk Pacific at that, particular time and possibly would not be needed for two or three years. But, they expended that money, raised under their contract, on rolling stock, and afterwards leased it back to the Grand Trunk Railway Company. If that money had been put into the actual construction of the road we would not have had the Finance Minister coming here to-day and asking us to sanction a loan of $10,000,000.
,,^r- FIEI,DIRG. The document says that the indenture at that time fixed a certain sum as the amount that might be used on the prairie section of the road But now the company find that they fixed it at too low a sum.


Edward Arthur Lancaster: Will the minister tell us why he puts that recital in there?


William Stevens Fielding: I did not draft the mortgage.


Edward Arthur Lancaster: Do not repudiate it.


William Stevens Fielding: I do not repudiate it I always accept due responsibility. But sometimes the responsibility of endorsing all the lawyers say is serious. All I know is that we instructed counsel that we were making a loan of this $10,000,000, and we requested that the mortgage might be prepared in the usual form to protect us so far as the mortgage might do. I have already said that for the immediate purpose I do not myself attach much importance to the mortgage, though it is in some respects important. But it was prepared by eminent legal authority, and I have every reason to believe it was prepared in the proper form. The instructions were; 'Wo are going to


William Stevens Fielding: That argument is based on the assumption that they did spend this $7,000,000 on equipment. I cannot say they did not; I do not know. I do know that the contract clearly contemplated that the Grand Trunk should not advance out of their treasury $7,000,000 for equipment or anything else. There was a provision in the contract for the issue of equipment bonds, and I would take it for granted that the rolling stock was procured in that way. However, I do not think it is important. I cannot say, but if they have spent it on rolling stock they cannot get a dollar of that $7,000,000 back out of this $10,000,000.


Arthur Samuel Goodeve: If the Grand Trunk Pacific had had that $7,000,000 to put into the' construction of the road bed they would now only require between $2,000,000 and $3,000,000, according to the minister's own statement, to complete the contract, and I do not think they would have come to us for additional assistance. That is the reason that my hon. friend from South Lanark (Mr. Haggart) asked the same question. It is essentially important to know whether they put the money into rolling stock or not.


William Stevens Fielding: 


William Stevens Fielding: I do not think they could have done so, because the equipment is a separate transaction. Equipment bonds are provided for, and I should be rather surprised if it turns out that they have spent that $7,000,000 in that way. If they have they would have to be recouped out of the proceeds of the equipment bonds. They could not be recouped out of this issue.


William Sora Middlebro: Does the minister think it is an unreasonable request that we should procure a statement from the Grand Trunk showing exactly how the $7,000,000 was expended? If it was expended on the road bed I will throw up my hands and say that there is no impediment in the way of the loan so far as that aspect of the case is concerned. But if that $7,000,000 was used for the purpose of buying rolling stock I think they have come back to this government prematurely for a loan.


William Stevens Fielding: If that should be so what good would it be to the company to get it? They cannot get a dollar back out of this appropriation.


Edward Arthur Lancaster: That would be a reason why we should not lend them the money.


William Sora Middlebro: We are led also to believe that this money is required because the $7,000,000 had gone into the road and not into rolling stock. If it turns out that the money was used to buy rolling stock they are not justified in asking the government for a loan of $10,000,000.


William Findlay Maclean: Before this clause passes the committee I would like to enter my protest against any further loan of the people's money for the building of a road that, while it is called a great transcontinental system, is not and cannot be, under this legislation, the property of the people. A great national undertaking ought to be controlled by the nation, especially when the nation supplies the money and credit for the construction of the road. Government ownership can never be realized in connection with this great national undertaking. It has not been in the past and it will not be in this case. It has not been in regard to the Canadian Pacific Railway. The German empire to-day is dominating the world because it has nationalized its railways. We have been told in this House and our delegates to Great Britain have told the people of the empire that the great contribution that Canada has made to the empire has been the building of a transcontinental railway, which makes an intercontinental railway between Europe and Asia. That may be so as a statement, but, as a fact, this road is not owned or controlled by the nation, is not built from
a national standpoint, but is built by a private corporation in such a way that the control of the National Transcontinental Railway may, any day, pass into the hands of those hostile to this country. One can imagine at the very crisis of the empire that it might be disclosed that this Grand Trunk Pacific system is owned and controlled by German capital, and so manipulated for years ahead that the system would absolutely fall down, and, as far as being a factor in or a portion of the imperial defence is concerned, so many points of weakness would develop that the road would not be of any use from an imperial or business point of view. Any day this so-called transcontinental railway, built by the money of this nation, may be owned by a foreign corporation, who might use it to the detriment of the country and of the empire. Any day it is possible that Mr. Jas. J. Hill, who has a rival transcontinental system in the United States, or a still greater magnate in the railway world, Mr. Harriman, may secure the absolute control of this so-called transcontinental railway system which the people have built so far and which they must see through. We are bound to see this road through, and we are bound to see it through as a nation. If we do see it through as a nation, why should not the nation control it? The United States to-day are building the Panama canal, but they are building it themselves as a state proposition. It is a national undertaking and it is even being constructed by engineers in the service of the state. There is no contractor in that case. They are moving on the lines of nationalism and they are making the Panama canal, which is a great transcontinental proposition, the property of the state. We are building a great system, but we are allowing it to pass into the possession of a private company, whose stock is kicked about in the money market of the world. A great mistake has been made and this mistake ought now to be corrected. The opportunity has presented itself at this crisis to recover the control of this Transcontinental Railway and to make it a great national asset, as it ought to be for the benefit of the country and of the empire. We have had experience of great transcontinental railways being in the hands of private corporations, and I am prepared to assert here to-day and prove that the Canadian Pacific Railway, which was largely subsidized by this nation, which was said to be a national proposition, is administered absolutely in the interest of the shareholders and of the men who have the control of that railway, and without any regard for the nation. The Grand Trunk will be exactly of the same kind. I am further prepared to assert that as a matter

of fact the Grand Trunk and Canadian Pacific railways treat the people of the United States better, in the way of passenger and freight rates, than they treat the people of Canada. This has been going on year after year. Yet, in spite of that fact, in spite of the way things are moving in the world, in spite of the fact that the essential theory of nationality is to control all the national highways, we are continuing to build these railways and to find the money without having the control of them. There is no way we can have the control of them, to use them for the benefit of the nation, and to make them a great government proposition.
Of course we will be told that the Canadian people are such an inferior lot that they are not able to administer and construct and own a great national highway, but I do not subscribe to any such doctrine as that. I have every confidence in my fellow countrymen that they are quite competent to undertake such a project and that all they want is the opportunity to do it. I believe that the people of this country want to see the Intercolonial Railway developed as a national enterprise by taking it absolutely out of politics and by running it for the benefit of the nation and not of a party. I believe that the people of this country are competent not only to construct and operate profitably a line between the provinces, but a great national highway across the Dominion. And, Sir, within the next five years, within the next ten years, the whole energy and resources of the Canadian people, I venture to predict, will be devoted to securing the control of the great national highways of the country. Public feeling is running in that direction, public feeling is antagonistic to the legislation we are passing here to-day in relation to the Grand Trunk Pacific, public feeling is in favour of recovering the ground we have lost. I have- no hesitation in saying that the movement in favour of the nationalization of our railways will continue to grow, and that before the next election it will become the real issue before the people. It would have been the easiest possible thing for this government to have obtained in the London market the control of the common shares of the Grand Trunk which control the Grand Trunk Railway system and now are to control the National Transcontinental Railway. These shares have been kicked about in the London market, they can be obtained for a comparatively small sum of money and they should be taken possession of by the government. The only way we can retrieve the blunder we are making today; the only way we can recover this National Transcontinental Railway for the people and make it truly national will be to buy the controlling shares of the Grand Trunk Railway Company in the London money market. I believe at this stage of the Mr W. F. MACLEAN.
proceedings the people of Canada would indorse any proposition of the government which would tend towards securing the Grand Trunk Railway and the Grand Trunk Pacific. The Grand Trunk Railway, the Grand Trank Pacific, and the Intercolonial Railway together would have been a great national system. Their amalgamation under national control would have been of immense service to the country, and while the system would be a rival to the Canadian Pacific Railway, its benefit in that respect would not be so great as in the fact that it would widen and broaden out the railroad service of this country and provide transportation facilities where further facilities are badly needed. There is an unnecessary duplication of railways in this country, and the solution of the railway problem is not the building of one line alongside of another so much as the broadening out of the service and the extension of it where it is most needed. My protest may be in vain; many a protest made by me in this House has apparently been in vain, but I will try to retain my seat in the House so as to be here on the day when the mandate of the people of Canada will go from this parliament insisting on the nationalization of our railway systems, and insisting that this great railway which we are to-day building with the money of the people and giving to a private company shall be restored to its rightful owners. We know that this National Transcontinental Railway may be controlled by outsiders, may be controlled by rival railroads in the United States, may even be controlled by capitalistic interests that are hostile to Canada and hostile to the empire. And, when the right hon. the Prime Minister goes to England again and tells them that Canada is doing something for the empire in the building of a Transcontinental Railway system, I hope he will be able to say that he has regained control of it for Canada and for the empire. I reiterate my protest against any further giving of the credit of this country to build and complete a system that will be owned by private corporations. The people of Canada came to the aid of the Canadian Pacific Railway because of the vicissitudes of that company, and they will have to come to the aid of this National Transcontinental Railway because of its vicissitudes, but we should take advantage of the opportunity to recover control of that road and make it a great national system. You may rest assured that if we do not do so now we will have to do it some day, and all the agitation which is bound to ensue towards that end could have been avoided if we had had the wisdom to nationalize this railroad in the beginning. I conclude by protesting against granting any more of the money of the country for a proposition of this kind which does not lead to the nationalization of that railway.


William Sora Middlebro: In reply to a question put by the leader of the opposition the following answer was given by the government:
The company state that the total amount invested by the promoters in the undertaking is $9,597,149 and that the total amount invested in the rolling stock is $8,273,454.
Assuming that the rolling stock is included in the $9,597,000, then the difference amounting to $1,323,000 can be the only money invested by the company in the roadbed. Taking that from the $7,000,000 which is owing to the Grand Trunk Railway Company, have we not the right to assume that practically $6,000,000 is going to pay for the rolling stock?


William Stevens Fielding: I do not so understand it; I do not think it possible.


William Sora Middlebro: Before the Bill passes will the Minister of Finance lay before the House the statement of the Grand Trunk Railway Company showing exactly in respect to what matters the indebtedness of $7,000,000 was incurred?


William Stevens Fielding: I do not quite see what bearing that has upon the question. However, the information I have goes to show that on the 31st "December, 1908, the company had represented that the road had to that date cost something over $27,000,000, and that the auditor in examining the accounts admitted that about $26,250,000 of that was composed of items which he would approve of. At the same time, at that date there has been paid out of the government guaranteed funds $10,335,000 and out of the bonds guaranteed by the Grand Trunk Company itself $9,601,000, making a total of $19,937,408. Observe that while there was work done at that time which the company represented to be worth $27,000,000 odd, and which the auditor of the department was willing to pass on the basis of $26,250,000, the actual amounts drawn from the two funds -that is the proceeds of the government guarantee and the proceeds of the company's guarantee-was only $19,937,000, although there was $26,250,000 of work actually done on the 31st December, 1908. My hon. friend will see, therefore, that the difference does not represent rolling stock. I think he will see on reflection that it is not possible that the rolling stock could be paid for in the way described.


William Sora Middlebro: How is it that in answers brought down it appears that the promoters have only invested $1,338,000?


William Stevens Fielding: Everything depends on what you call an investment.


William Sora Middlebro: The returns show that the total amount invested by the promoters is $9,000,000 odd; the total amount
for rolling stock is about $8,000,000 and the difference must be the amount the promoters have invested in the road.


William Stevens Fielding: The rolling stock is obtained from an issue of bonds and would not be regarded as an investment in that sense.


William Sora Middlebro: Does the minister say that the $8,000,000 of rolling stock is not included in the $9,000,000 invested by the promoters?


William Stevens Fielding: I would hardly consider the rolling stock as an investment by the company; it is rather an investment by the men who buy the bonds.


William Sora Middlebro: Is the rolling stock not included in this $9,000,000?


William Stevens Fielding: The company must speak for themselves and I do not wish to interpret their words, but I do not so understand it.


William Sora Middlebro: I think, from an answer given to the leader of the opposition that it is included.
Mr. FIELDING I do not think it is. On these questions we have to take the information furnished by the company.


William Sora Middlebro: When the Finance Minister introduced the resolution preceding this Bill he said he did not think the rentals which the Grand Trunk were paying in respect of certain lines which they had leased were a prior claim to the proposed guaranty. I would ask him now if he is still of the same opinion?


William Stevens Fielding: I think I gave my hon. friend a later answer in which I stated that the rentals would probably come before the guaranty. It is a very complicated matter and I would not like to answer off-hand. I would refer my hon. friend to the ' Hansard ' of March 31. If the information then given was not sufficient I shall try to supply further information later.


William Sora Middlebro: The information the minister then gave me was that these figures of the Grand Trunk included the amount of these rentals. So far as I know he did not give the information definitely that the rentals themselves formed a prior lien to this security. Perhaps he could say now whether they are a prior lien to this security.


William Stevens Fielding: 
William Sora Middlebro: Then the Finance Minister now admits that this is a prior charge.


William Stevens Fielding: I am advised that it is.


Mr MIDDLEBRO.: Will the Finance Minister also say whether the $12,000,000 worth of stock authorized under Bill 13 of the present session will also take precedence of the proposed lien?


William Stevens Fielding: Yes, if it is debenture stock. I have not the Bill, but the debenture stock certainly does take priority.


William Sora Middlebro: That is a little at variance with the statement of the Minister of Finance when he placed the prior securities at about $21,000,000.


William Stevens Fielding: But these are not issued.


William Sora Middlebro: But when they are issued they will take precedence of this guaranty.


William Stevens Fielding: That is another question; I answered with respect to issues outstanding.


William Sora Middlebro: That will make $31,000,000 more of prior claims than we were given to understand.


Mr. FOSTER.: As I understand, the hon. member for North Grey (Mr. Middlebro) read the minister's answer that they had invested, we will say in round figures, $9,000,000, and then his answer to another question that they had invested $8,000,000 in rolling stock. The hon. member asked whether that $9,000,000 was their total investment including rolling stock or whether they had invested $9,000,000 in one way and also invested $8,000,000 in rolling stock. I think this is a very important question and the Finance Minister ought to give us something more definite with reference to it.


William Stevens Fielding: I can only give my hon. friend the company's answer in these things. I gave in both cases the answer furnished by the company. I would understand rolling stock not to be an investment of the company. The rolling stock is obtained by an issue of equipment bonds and I would assume that they are not treated as an investment by the company.


George Eulas Foster: Then the assumption would be that they had invested $17,000,000 altogether?


William Stevens Fielding: No, because I do not treat the rolling stock as an investment.


George Eulas Foster: Supposing you treat the rolling stock as an investment


William Stevens Fielding: Then you can treat every bond as an investment.


William Stevens Fielding: 


George Eulas Foster: I am dealing with one simple thing, it is a question whether the $8,000,000 invested in rolling stock is part of the $9,000,000 of total investment. The Minister of Finance seems to favour the idea that, treating the rolling stock as an investment, they have $17,000,000 invested and that the $9,000,000 is an investment entirely outside of rolling stock. The rolling stock, as I understand, was to be provided in a certain way by an issue of equipment bonds. Has the minister any statement of the Grand Trunk Pacific as to how much rolling stock it has got and as to the way in which the money was raised to provide for the rolling stock?


William Stevens Fielding: No, I could not give it off-hand. It was not among the questions concerning which I was asked to obtain information. I do not know that there was an issue of bonds to provide for the rolling stock.


George Eulas Foster: Does the hon. minister know the amount?


William Stevens Fielding: 
George Halsey Perley: The question of the exact position of this guarantee which was alluded to again this afternoon is very important. There is no doubt in my mind that the rentals of the leased lines come in ahead of this guarantee because they are classed as working expenses according to an answer of the Finance Minister. But a question has arisen also as to whether this guarantee comes ahead of the first preference stock, for instance. From the answer to the question which I asked some days ago, I see that Mr. Shep-ley takes decided ground that this guarantee does come ahead of the preference stock, so I suppose we are bound to accept that statement although I would call the attention of the House to the fact that this preference stock was originally bonds and the bonds were changed by this House from the status of bonds to stock, and that in the Act providing for this preference stock it is stated that they are entitled to certain specific dividends. The word ' entitled ' is a pretty strong word and when you say a stock is entitled to a specific dividend it seems to me to be a question whether there is not some charge on the road in connection with it, although Mr. Shepley takes strong ground that this guarantee comes ahead of even the first preference stock.
I want to call the minister's attention

to another case in order to show how much more careful some peonle are to guard the interests of bond holders than he has been in this instance with regard to the money of the people. In 35 Victoria, Chapter 64, there is an Act concerning the Grand Trunk Railway and the Montreal and Champlain Railroad Company. In that Act there is a guarantee of bonds much the same as this guarantee of bonds of the Grand Trunk Pacific. Section 5 of that Act provides that the Grand Trunk Railway guarantees the payment of the interest and the principal of these bonds. Then it goes on to say that the interest shall form part of the working expenses of the Grand Trunk Railway as defined in the Grand Trunk Railway Arrangements Act. In other words the interest on the bonds of the Montreal and Champlain Railroad Company, which were guaranteed by the Grand Trunk Railway, formed part of the working expenses of the Grand Trunk, which, under the Grand Trunk Railway Arrangements Act, as is the case in every other railway, are a first charge on the receipts of the road. Why was not the government as careful in this instance?


William Stevens Fielding: There are prior bonds in this case, and anything we would do by way of creating a lien ahead of these bonds would certainly be a breach of faith, which my hon. friend would not' ask us to commit. If there were no bonds outstanding, we could make any conditions apply we chose respecting a new issue, but you cannot make exceptional conditions apply to a new issue to the disadvantage of outstanding securities.


George Halsey Perley: I am not advocating that in this instance, but I call attention to the fact that there is a case in which the responsibility of the Grand Trunk Railway for interest is made a first lien on its traffic receipts, and there may be lots of other cases. The question is where the guarantee of the Grand Trunk Railway, in this instance, comes in reference to their stocks and bonds, &c. Perhaps the government does not understand exactly in what position that guarantee is and how far the other responsibilities of the Grand Trunk Railway come ahead of that guarantee.


Robert Laird Borden: I would like to draw the attention of the Minister of Railways to a point which I Taised the- day before yesterday. The hon. gentleman was inclined to think that the operation of the line from Winnipeg to Moncton might be forced upon the Grand Trunk Pacific, under the agreement of 1903-4, even although the Quebec bridge were not finished and the government had provided no crossing over the St. Lawrence river for this railway. I would like to draw his attention to the provisions of the statutes and contracts in that regard. In the Act of 1903,
the eastern division is described as extending from the city of Moncton to the city of Winnipeg. Then we find it provided in section 2 of the agreement that the eastern division shall comnrise the portion of the said railway to be constructed from its eastern terminus in New Brunswick to the city of Quebec, and thence westerly through the northern parts of Ontario and Quebec, to the city of Winnipeg.
The said eastern division shall be constructed by and at the expense of the government, upon such location, and according to such plans and specifications as it shall determine, having due regard to directness, easy gradients, and favourable curves.
Section 8 provides:
The construction of the said eastern division shall be commenced so soon as the government has made the surveys and plans and determined upon the location thereof, and shall be completed with all reasonable despatch.
And section 20 provides:
When completed the said eastern division shall be leased to and operated by the company for the period of 50 years, at a rental, payable as follows.
Then follow the conditions of the said lease. When you come to the Act of 1904, vou find, in the first place, a reference to the eastern division in section 10 which is not very material:
Section 3 of the agreement of 1904 provides :
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 be from time to time 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.
There is a contract embodied in that statute and in the agreements which are made part of it, by which the government undertakes to build its line of railway from Moncto'n to Winnipeg. I understand perfectly that at that time a bridge was under construction across the St. Lawrence. That bridge was then being constructed by the Quebec Bridge Company, and I have no doubt that the government proposed to utilize it in order to provide the missing link necessarv between the south side of

the St. Lawrence and the north. But that was a mere accident and did not in any way relieve the government from the obligation of carrying the railway by some means across the river-.	That river
could be no more omitted in that line from Winnipeg to Moncton than any other river on the line between those two points. Therefore the government is face to face with this situation. It cannot regard the line between Moncton and Winnipeg as completed until some means has been provided of carrying the railway across the St. Lawrence. It is perfectly apparent that that was what was intended by the contract. Then let us look for a moment at what the conditions will be. _ I have already alluded to the difficulties with regard to the line between Moncton and Quebec-I do not intend to repeat this afternoon what I said the day before yesterday-but much the same difficulties will arise in respect of the line between Quebec and Winnipeg. Now what will be the condition of affair during the five or six years before the Quebec bridge is completed, and after the line otherwise has been completed between Quebec and Moncton? Let us look for a moment at the obligations of this contract on the part of the Grand Trunk Pacific; let us look also for a moment at the object of this agreement as defined in legislation, and the contracts to which I have alluded. I will read sections 42 and 43:
42.	It is hereby declared and agreed between the parties to this agreement that the aid herein provided for is granted by the government of Canada for the express purpose of encouraging the development of Canadian trade and the transportation of goods through Canadian channels. The company accepts the aid on those conditions, and agrees that all freight originating on the line of the railway, or its branches, not specifically routed otherwise toy the shipper, shall, when destined for points in Canada, be carried entirely on Canadian territory, or between Canadian inland ports, and that the through rate on export traffic from the point of origin to the point of destination shall at no time be greater via Canadian ports than via United States ports, and that all such traffic, not specifically routed otherwise by the shipper, shall be carried to Canadian ocean parts.
43.	The company further agrees that it shall not, in any matter within its power, directly or indirectly advise or encourage the transportation of such freight by routes other than those above provided, but shall, in all respects, in good faith, use its utmost endeavours to fulfil the condition upon which public aid is granted, namely, the development of trade through Canadian channels and Canadian ocean ports.
There you have a distinct and emphatic declaration of the objects for which this enormous aid was given to this railway company, namely, the development of Mr. R. L. BORDEN.
trade through Canadian channels and Canadian ocean ports. Now as there are some hon. members of this House who are not familiar with the discusions which took place in 1903 and 1904, I may recall to the committee that in the discussion of this agreement we on this side of the House took the ground that sections 42 and 43 would absolutely fail of the purpose indicated therein, for the reason that those provisions were not made binding upon the Grand Trunk Railway Company, but were made binding upon the Grand Trunk Pacific Company alone; and we pointed out what must be obvious to any hon. member, that the Grand Trunk Railway Company could send its agents and canvassers through western Canada and arrange that shippers upon the line of the Transcontinental Railway would route their traffic, not through Canadian channels and to Canadian ports, but through other channels and to ports in the United States. It was perfectly well understood then, it was admitted by members of the government over and over again, that the interest of the Grand Trunk Railway Company, which after all absolutely controls the Grand Trunk Pacific Company in every way, and for every-practical purpose-the interest of the Grand Trunk Company would lead them to carry that traffic to Portland and not to Canadian ports-I am speaking more especially of the winter months. Now the government declined our proposals in that regard; they did not think it desirable in the interest of the company that the Grand Trunk Company should be bound by any such stipulations as those to which I have alluded.
May I point out to my hon. friend the Minister of Railways and to the Prime Minister, that the condition of affairs that has been brought about by the fall of the Quebec bridge and the necessary delay in rebuilding that structure, is exactly what the Grand Trunk would desire for the purpose I have indicated? I think that is abundantly plain. Trade will be gathered up in the west of Canada all along the line of the National Transcontinental. What was the object and the purpose of this legislation? What was the object and purpose of the enormous public aid which the people of this country have devoted to the construction of that railway? It was that the traffic gathered up in western Canada, in constantly in creasing quantities year after year, should go through Canadian channels and to Canadian ocean ports. What will be the result to-day? I estimate five years as a moderate period during which the Grand Trunk Company, pending the completion of the Quebec bridge, will not be bound to accept any lease of the line from Winnipeg to Moncton; in the meantime, as I under-

stand it, they are entitled to demand a.nd receive a lease of that portion of the line between Winnipeg and the junction of the Port Arthur branch of the main line. I understand that this portion of the eastern division is nearly completed now, and *will be completed "considerably in advance of any other portion of the eastern division.
If I am wrong in that the Minister of Railways will correct me, I have no. official information on the subject. But that traffic gathered upon the National Transcontinental Railway by the Grand Trunk Pacific in the west of Canada, must have some outlet, and there will be no other outlet except by the Port Arthur branch. The Grand Trunk Pacific will therefore route the traffic via Port Arthur. Well, when it has been carried to Port Arthur, where will it be transported, by what route will it go?
The Grand Trunk to-day controls the whole of the common stock, and a majority of the entire stock of the Grand Trunk Pacific; and, while that condition obtains, it can and will control the policy of the Grand Trunk Pacific. In other words, as my hon. friend on the other side of the House said in 1904 and 1905, the Grand Trunk Company is in this contract, and of it, and forms the whole thing; it will control absolutely the policy of the Grand Trunk Pacific Railway Company in that regard. So I think that I am not pushing the probabilities too far when I venture the prophecy that the traffic gathered up in the west will be brought to the junction of the Port Arthur branch, and will be carried via the Port Arthur branch to Port Arthur. Into whose hands then will it fall? It will naturally fall into the hands of the company that _ absolutely controls the Grand Trunk Pacific, and it will go by steamer to some port in the Georgian bay, where it will be handed over to the Grand Trunk Railway Company and will be carried, during the winter months at least, to Portland in the United States, instead of to any winter port of Canada.
Now, I do not see any escape from that conclusion; if there be any escape, I would be glad to hear it. It is a result which I am sure every one of us would deplore, and it is a difficulty which does not seem to have impressed itself largely upon the minds of my hon. friends on the treasury-benches. How can it be remedied? Could it not be remedied at the present juncture by the government, giving proper heed to the interests of this country, and insisting that the Grand Trunk Railway Company, during the winter months when the ports of Montreal and Quebec are closed shall carry their freight over the Intercolonial Railway to the ports of Halifax and St. John? Is not that the purpose for which this aid was given? Is not that the pur-167
pose which is declared in most distinct terms to be the object for which this enormous aid was given, and for which these agreements were made and these statutes passed? When the government realizes that the interests of the_ people of this country are so seriously involved, should they not insist that the Grand Trunk Railway Company, who come here under the guise and in the name of the Grand Trunk Pacific Railway Company for further aid, should consent to some such amendment of this contract and will absolutely prevent any such result as that being brought about?
The Minister of Railways and myself have had some discussion about grades on the Intercolonial. I admit that in a discussion of this question there are two matters to be kept in view. One is as to the haulage of these heavy train loads over the Intercolonial, and the other concerns a fair and reasonable agreement between the Intercolonial and the Grand Trunk for the purpose of effecting the object which I have just pointed out as most desirable. Well, so _ far as grades are concerned, the Minister of Railways did not seriously controvert, as I understood him, the statement which I made the other day, that by means of employing pusher engines to assist freight trains over certain difficult graces it would be practicable to carry much the same load over the Intercolonial as over the National Transcontinental between Quebec and Moncton. My hon. friend, speaking on Wednesday last, used this language in regard to the Intercolonial:


William Barton Northrup: Are there any pusher grades on the intercolonial?


Mr. GRAHAM.: There would be if we had the very large trains these are intended to haul, when they have the western traffic of the Grand Trunk Pacific. There are three very steep grades, as my hon. friend has remarked, on the Intercolonial Railway. There is one at the Bedford grade, 1:80, at Folleigh, 1:22 and at Metis, 1:29. These might be called pusher grades, after the description of the Bedford grade.
Might I inquire of the Minister of Railways whether the Bedford grade he alludes to, is a grade about 10 miles from Halifax?


George Perry Graham: It is near Halifax.


Robert Laird Borden: That is what I understood. Then the Minister of Railways will observe that two of these grades, namely, that of Folleigh and that of Bedford, are between Moncton and Halifax. Export freight must be hauled over the National Transcontinental to Halifax and St. John, because we know that Moncton is not an ocean port. The trains over the Transcontinental Railway will equally meet with two of the grades which he has mentioned. Therefore the only grade that re-



mams is that at Metis, which is a grade of 1:29, while the grade which I mentioned upon the National Transcontinental between Quebec and Moncton, is a grade of 1:10. Now suppose that if, by means of pushers, you can haul one of these long trains over the 12 mile grade of 1:10, you can by similar pusher engines haul practically similar trains over the grade at Metis of 1:29. For that reason I did not observe, so far as I am able to understand reply of the hon. gentleman, any great difficulty in carrying out what I have suggested.


Mr. LENNOX.: Is the only difficulty on the Intercolonial a long grade?


Robert Laird Borden: Is the grade at Metis a long grade?


George Perry Graham: I am inclined to think it is, I think it is a long grade of three or four miles.


Robert Laird Borden: Then my hon. friend will observe that there is just this difference, that on the Transcontinental betwee" Moncton and Quebec you x L gr?;de a2alnst western traffic of Wnfm2;1"!68 ln length, of 1:10, or about 5a or 59 feet; you have on the Intercolonial a grade I do not knew whether it is Metis eastern or western traffic, that at


William Stevens Fielding: going east.
It is against traffic


Robert Laird Borden: Then it is not grade against western traffic at all.


George Perry Graham: It is against eastbound tratnc.


Robert Laird Borden: I think I used a wrong expression, the grade on the Transcontinental is against eastbound traffic also.


George Perry Graham: There is one each one is 10 and the other 12 miles.
way;


Haughton Lennox: The one going east is 12 miles.


Robert Laird Borden: Then if I am correct in my premises-and I say all this sub-jeet to the correction of my hon. friend the Minister of Railways-you have upon the -National Transcontinental between Quebec and Moncton a grade as against eastbound traffic of 12 miles in length, a grade of 1 -10, and you have at Little Metis a grade as against eastbound traffic of three or four miles in length, of 1:29. Now, one would think and I speak with the humility of a person who is not very much acquainted with questions of this kind-I -would think that under those conditions the carriage of this traffic upon the Intercolonial would encounter no greater grades and entail no greater cost than the carriage of traffic upon the National Transcontinental after Mr. R. L. BORDEN.
it is completed. It seems to me therefore to be a very reasonable condition to impose upon the Grand Trunk Company at this time, that the freight gathered up inj western Canada upon this road, completed practically by the people of this country, should be carried over the Intercolonial to the ports of Halifax and St .John in the winter months, and not be carried to Portland in the United States. I admit that the Intercolonial must make reasonable conditions with the Grand Trunk Company for that purpose, and the management of the Intercolonial should be prepared to agree to an equitable and reasonable division of the freight; and if that division of freight could not be arrived at in any other way, I am sure it could be arrived at by a reference of the matter to the Arbitrament of persons familiar with questions of this kind; it might for example be referred to the arbitrament of the Railway Commissioners of Canada, who in all such matters, and upon all lines of railways in Canada except the Intercolonial, have the right of adjudication as to the apportionment of rates. Now would my hon. friend the Minister of Railways tell me where .he thinks this traffic will go? It must reach the sea coast somewhere, it must leach the sea coast, not only in the summer months, but in the winter months as well. When that traffic has been gathered up, when it has reached the junction point of the Port Arthur branch, and when it has been carried over the Port Arthur branch to the town of Port Arthur, then it will be practically under the control of the Grand Trunk Railway Company, and all the interests of the Grand Trunk Railway Company will lead them to carry that traffic to Portland in the United States instead of to Halifax and St. John, unless the government see fit, at this favourable juncture, to avail themselves of the opportunity which is now afforded to make a condition with the Grand Trunk Company that that suit shall not obtain, but I invite them to suit would be that the people of Canada will have spent many millions of money and pledged their credit to enormous sums for the purpose of constructing a railway through western Canada which shall gather up traffic solely for the purpose of carrying it to a port in the United States and building up that port. I cannot credit my hon. friends on the other side of the House with any desire that that result shall obtain. I am willing to concede at once that it is their desire that such a result shall not obtain, but I invite them to tell me now what stands in the way, under conditions such as I have described, of exactly that result being brought about. If nothing stands in the way is it not time that the government should do something at this juncture, before this loan shall be

made, and see to it that the resources of the people of Canada shall not be employed for the purpose of building up a great seaport in the United States. This is a subject of very great importance indeed. I trust that the Minister of Railways will be able to give us a firm assurance that this opportunity will not be allowed to pass and that the interests of the people of this country will be safeguarded in some way by a provision in this statute, or in the agreement attached to it, by which the maritime ports of Canada, which are capable of very great development indeed, which are as fine ports as can be found in any part of the world, shall be safeguarded and shall receive that due consideration to which they are entitled in the creation of this great transcontinental line.


George Perry Graham: I am sure that my hon. friend will believe me when I say that the object of this government, as has been outlined in its policy, has always been the development of our own national ports This object has been attained as far as possible in the recent French treaty. One of the objects of the building of this transcontinental railway was to give us an all Canadian line which would lead to the development of our Canadian ports on the Atlantic seaboard. It must be borne in mind at the present juncture, however, that every dollar or every cent we j,dd to the rate of freight on the products of the west will reduce the price of those products to the producer. The object of building a high class road all the way through to our own ports was" to get the minimum of rate freights. If the situation were just as my hon. friend has outlined it his conclusion would be correct, but, unfortunately, the comparison made between the proposed Grand Trunk Pacific line and the Intercolonial Railway cannot be borne out. Not having an engineer's knowledge of this line I would have made the same error that my hon. friend has made. Of the three steep grades I mentioned on the Intercolonial Railway, two are west of Moncton, and there is one each way on the Transcontinental Railway. Consequently, it might be assumed that the same load could be drawn over each. But, when you come to work it out practically that is not the result at all. The fundamental principle is that the ruling grade controls the load. A pusher grade does not interfere with the load at all because you use a second engine to get over that grade, and the load which can be carried is limited only by the ruling grade. The ruling grade on the Grand Trunk Pacific to Moncton is 4:10 of one per cent and a train load can be carried up to the capacity of a 4:10 of one per cent grade. The pusher obviates the difficulty which would otherwise be experienced in getting over the steep grade
in one place. On the Intercolonial Railway, although only three grades were mentioned of a steep character the standard is a one per cent grade east and west all over and no train load can be carried that exceeds the capacity of the ruling grade which just makes the carrying capacity of the Intercolonial Railway practically one half the carrying capacity of the Grand Trunk Pacific.


Mr. HUGHES.: Has the minister any data to show how many individual grades there are on the Intercolonial Railway of [DOT]one per cent or over? I will go further. How many grades are there on the Intercolonial Railway of 4-10ths of one per cent and over?


George Perry Graham: I have a copy of the profile of the Intercolonial Railway.Tasked my chief engineer to-day to give me something along that line and he tells me the grades are practically so common east and . west that the standard or the ruling grade of the Intercolonial Railway is one per cent, and we cannot load our trains to any higher capacity than one per cent. I have had a little calculation made to show that, as a matter of fact, from Montreal east the train loads on the Intercolonial Railway would practically be only one-half as great as the train loads that could be carried over the Grand Trunk Pacific. That would be a serious disadvantage. It would mean possibly, even if we made the best arrangement we could, that the freight rate would be considerably higher over that portion of the line at least than it would be on a road with a ruling grade of 4-10ths of one per cent, because the cost would nearly double in the carrying. Take a locomotive, of the consolidated type, 107 tons, or, as we say, 53 tons on the drivers, "which really is the test. This is not the largest type of locomotive. What I propose to show is the net tonnage whidh it could haul on a practically level track, an almost impossible condition because there are very few really level tracks. But, it would haul, on a level track, 3,868 tons, on a 4-10ths of one per cent grade it would haul 1,596 tons, and on a one per cent grade 810 tons. While an engine of this type could haul 1,596 tons on a 4-10ths of one per cent grade, on the prevailing grade of the Intercolonial Railway, it could only haul 810 "tons, or a very small amount over half what it could haul on the easier grade.


Samuel Hughes: At how many points has the intercolonial Railway a grade of one per cent? I will venture to say there are not ten grades on the Intercolonial Railway between Halifax and Montreal of one per cent. At that rate would the minister maintain ten pushers as he is going to maintain them at half a dozen places


Mr. GEAHAM.: Not half a dozen.


Samuel Hughes: Well, I am only giving you the figures that have been given to me. There is another point I would direct the attention of the minister to. The Intercolonial Railway at its highest point is 700 feet above sea level, whereas the National Transcontinental Railway at two points is 1,400 feet above sea level. Now, no matter whether that height is crossed at a four-tenths per cent grade or on the dead level, does the minister pretend to say that the unit of power necessary is not as great one way as the other. He will use just as many tons of coal in carrying the load up that hill of 1,400 feet no matter what the grade may be, or whether he comes to the foot of the hill and raises it up in an elevator.


George Perry Graham: I would not care to go into engineering technicalities with my hon. friend because one of us would be apt to get lost.


Samuel Hughes: That is not an engineering question; every child knows that.


George Perry Graham: I have stated that the one per cent grades are so numerous that the ruling grade on the Intercolonial Railway is one per cent and trains can only be loaded to the capacity of a one per cent grade going either way. That is the test which we must take as the hauling capacity of an engine on the Intercolonial Railway. The hauling capacity of the same engine on a 4-10th grade is practically double, so that the capacity of the National Transcontinental is practically double that of the Intercolonial Railway.


George Eulas Foster: What is the ruling grade of the Grand Trunk Railway from the lakes down to Montreal ?


George Perry Graham: I cannot say.


Robert Laird Borden: Well, that is a most important thing. The reply of the minister if it means anything means that this traffic must all go to Portland in the winter months. I am not at all inclined to agree with that, however, because the ruling grade between Midland and Montreal must be a determining factor, and further than that, even if the Intercolonial Railway carried that grain from Montreal to St. John and Halifax at a slight loss it would be better to do so in the meantime than to let this traffic be routed to Portland in the United States, and to establish a channel of communication during these five years which it would be very difficult indeed to break up in the years to come after the line from Winnipeg to Moncton has been completed.


George Perry Graham: I was not dealing with that part of the question; I was merely dealing with the argument that the Inter-Mr. HUGHES.
colonial Railway with its one per cent grade was as capable of having a load transported over it as the Transcontinental with its 4-10th grade; and consequently that nothing would be lost in transportation if we used the Intercolonial Railway and did not build the Transcontinental.


Robert Laird Borden: The case is worse than I thought.


William Findlay Maclean: Would it cost any great sum to alter the grades on the Intercolonial Railway?


George Perry Graham: It would cost a very large amount of money but we are not discussing that.


Robert Laird Borden: The ruling grade on the Grand Trunk from Midland to Montreal would be an important thing to consider in this connection.
At six o'clock, the House took recess.
After Recess.
House resumed at eight o'clock.



PRIVATE BILLS.


[Stage Direction]
House in Committee on Bill (No. 34) to incorporate the Ontario and Michigan Power Company.-Mr. Conmee.
On section 1,
Mr. CONMEE.: Notice has been given of a number of amendments. It is proposed to strike out sections 2 and 13, also 15, and 'to substitute other sections. The notice given by the hon. member for Algoma (Mr. Boyce), which denied powers of expropriation so far as the Nipigon river is concerned, has been accepted and embodied in the amendments. As we discuss the Bill, section by section, it will be seen that the amendments have met, I think fairly, all the objections that were raised the -other evening when the Bill was under discussion.


Haughton Lennox: I do not know what the hon. gentleman means by certain sections being struck out and others substituted and certain matters being agreed to. I suppose that is all a matter for this committee and not for any one else to arrange, and I do not think anything is struck out or substituted as yet. I would be glad if the hon. gentleman would make it clear to us at this stage just what is proposed.


James Conmee: The first amendment is that section 2 of the Bill be struck out. Section 2 provided for the declaration that the works were for the general advantage of Canada. In order to satisfy my hon. friend it is proposed to strike that out.

In order to make it clear that the company will not be permitted to export power from Canada except subject to the Electricity Inspection Act and the Electricity Exportation Act, 1907, this clause is inserted in place of sections 13 and 15:
The provisions of the Electricity Inspection Act, 1907, and of the Electricity and Fluid Exportation Act shall apply to the company and its undertakings.
2. The company shall not export any electrical power until it has obtained a license to do so under section 4 of the last mentioned Act, and such license may provide that the quantity of power to be exported shall be limited to the surplus after the company has supplied for distribution to consumers for use in Canada power to the extent defined by such license at prices and in accordance with conditions, rules and regulations, prescribed by the Governor in Council.
Speaking generally that clause is practically a copy of section 4 of the Electricity Exportation Act embodied in the Bill. Section 5 of section 19 is to be struck out and the following substituted for it.
The expropriation powers hereby conferred upon the company shall not ibe exercised by it until the plans mentioned in section 18 of this Act shall have received the approval therein ^provided for; and with respect to any lands upon the Nipigon river shall not be exercised, except as to such lands as may be required for the purposes of its transmission lines.
That cuts out entirely the powers of expropriation in regard to any water-power upon the Nipigon river and confines it under other sections of the Bill entirely to the Pigeon river, which is the purport of the notice of motion given by the hon. member for Algoma (Mr. Boyce). I may say that in section 18 the word * Nipigon ' will have to be struck out. Then there is a clause that was agreed upon and does not affect the powers of the company, but is merely for the protection


Haughton Lennox: Will the hon. member explain what he means by 'agreed upon'? -agreed upon, in what way?


James Conmee: Agreed upon between the promoters of this BUI and the Arrow river people,-but I will read the clause:
The said expropriation powers shall not be exercised as to any dams for the storage of water now constructed or that may hereafter be constructed by the Arrow River Tributary Slide and Boom Company.
This company is a lumbering concern with certain dams for storage areas on tributaries of the Pigeon river, but not on the Pigeon river. Under the Bill of last year introduced in the Senate, this company was asking for powers for the storage of water, that is, they were asking to go out, upon the tributaries of the rivers and create storage for power purposes, and, in
that way, their interest would clash with that of this lumbering company. That, clause was agreed upon last year between the representatives of the lumbering company and this company. It is not necessary here, for this Bill does not give power to the company to extend any of its works for storage purposes or to touch any water, except one on the Pigeon river, and one on the Nipigon river if they can acquire it. But, though the section is unnecessary, they having agreed to it last year, and the lumberihg company not being here, I think it is only fair to put it in, that they may have the protec- . tion agreed upon. Therefore, I desire to have that clause stand. I might, for a moment, call the attention of the committee to the provision of section 14 of the Bill.
I think that hon. gentlemen will find that goes a good deal farther in public protection than any legislation heretofore passed by this House has gone. It first provides that the rates to be charged to consumers should be fixed from time to time by the Railway Commissioners of Canada. When the Bill was under discussion before the committee last time, an hon. member, Mr. Fowke, said he had two objections to it. One was that he was not in favour of permitting the company to export any portion of the power from the Canadian side without control. He was not satisfied with the provisions under section 15 as it then stood in the Bill, which, I pointed out, was put there for the purpose of giving that protection. But he had another objection,-and he was not speaking particularly against this Bill, he was announcing a principle. He was opposed to a perpetual franchise. I think that this section 14 does not give a perpetual franchise, it gives the company only a limited opportunity, under restrictions., to utilize a natural resource. If the idea of a lease, if that was advanced by the hon. member, were to prevail, what would be the result? Let me take the water-power regulations of the Ontario government. They provide for a twenty-year lease in dealing with a water-power. I have one of the leases here, and can send it to the hon. gentleman if he wishes to see it. It provides for a lease of twenty years and a renewal after twenty years, the rental to be paid may be increased, or the rates to consumers reduced, and if they cannot agree with the company on these points they may arbitrate.


Haughton Lennox: Is the government absolutely bound to renew the lease at the ; end of the twenty-year period, or may it ' exercise its judgment as to that?
:	Mr. CONMEE. The government is bound
to renew the lease at the end of the twenty-[DOT] year period, subject to the conditions I i have named, or to expropriate the property,

paying the company under arbitration if they cannot agree upon the price.


Haughton Lennox: Is the value of the franchise excluded?


James Conmee: I cannot answer that question, I do not know the exact regulations as they stand to-day ; I -speak of them as they appear in a lease which I have, the regulations as I knew them a few years ago. If my information is correct, the present government does not agree to arbitrate as to the value of the property, but only as to the rental to be given to the government as to the rates they may charge the consumer. They take the power under their commission, the Hydro-Electric Commission, to regulate the rates. Section 14 provides much better protection. Twenty years is a long time. This does not limit it to twenty years, or ten, or five years. It provides that rates may be fixed ' from time to time.' Any consumer may make application, and the rates may he reduced. But it goes much further than that. It provides that the board shall regulate the conditions of the service. What does that mean? It means the hours of service, the facilities that shall be given to the consumer to utilize the power, the delivery of the power not at a station, and then to be stepped down by the community that wants to use it, but the delivery, if the board so orders, to the premises of the consumer, the board having full control over all the circumstances. There is no kind of dispute, I submit, that can well arise between the consumer and the company that the board will not have absolute control over and power to regulate from time to time. I do not know that any better protection for the public interest could be worked out. I submit also that this Bill and this company, like all others, are subject to the general law of the country. If, in the future, it is the policy of this government, or of any future government, to pass a general law regulating the use of water-power, making conditions by which it will be taken from the company, the power exists to do it, that is, general legislation would do it. But there is special power under our constitution which gives us this right. These works can, at any time, either before or after their construction, be declared to be works for the general advantage of Canada, and the government can impose any conditions they please. They can take over the works on any method that may to them seem fair and satisfactory. So, I submit, this' Bill h^s gone a long way to settle what is a pretty intricate question as to the best conditions for the protection of the public interest. I think it goes much further than previous legislation.
Then, if hon. members will examine the Bill, they will see that municipal interests


James Conmee: are protected. First, the company cannot enter within the limits of any municipality without the consent of that municipality, and not its consent merely but its consent expressed by by-law. It must be a formal act of the corporation to admit the company to carry any of its works or lines within that corporation's borders.


Haughton Lennox: What section is that?


James Conmee: I have not the Bill before me, but I think it is section II. It goes further as to cities and towns, which are, perhaps, more important. The company cannot enter a city or town, cannot have any rights there, until a by-law is carried, not by the corporation, but by the qualified electors, that is, those entitled to vote on money by-laws. I do not know what possible conditions could be drawn to better safeguard the public interest in this respect than these clauses of the Bill. If hon. gentlemen will glance them over, I am satisfied that they will say that they go about as far as they ought to go. I may say that I have more at stake, as a representative, in this Bill than any other hon. member. I represent the community that is most deeply interested in the Bill. If the Bill is not what I can, as such -representative, iustify before the community, I shall be damaged, no doubt.


Haughton Lennox: Might never come back.


James Conmee: Might never come back. But the reason I am here is because I was an advocate of this Bill. If the hon. member will look at my majorities this year and four years ago, he will see that my majorities four years ago were obtained in the western portion of the constituency- and that this time my majorities were in the east.


Richard Blain: Bribery did not help my hon. friend?


James Conmee: No, we conduct our elections on the square in that riding. I have no protest pending. My opponents thought I did not win my previous elections fairly, and on four different occasions they put me to the test in the courts, and every time the judges said that I won fairly. Now, my hon. friend read the resolution that was adopted by the assembly at Toronto. I have it here and he said it was carried unanimously.


Haughton Lennox: Isn't that right?


James Conmee: No, that is not right. I do not like to accuse my hon. friend of misleading the House, therefore I assume that, although the counter resolution was on the opposite pages of the ' Votes and Proceedings ' that he had in his hand, as it is in the one now before me, he failed to see it. I shall not detain the committee on this question fur-

ther than to read the last paragraph of the resolution moved by Hon. Mr. Mackay, the leader of the opposition, and for which the members of the opposition voted against the resolution which my hon. friend read the other evening:
And this House recommends that a conference between the government of Canada and the governments of the several provinces be held with a view to arriving at a reasonable solution or settlement of matters in doubt as to the respective jurisdictions of the government of Canada and that of the various provinces, and that, if necessary, imperial legislation be obtained.
The purport of that resolution is a conference to settle the difficulty as to what is and what is not a navigable stream, or, if you choose to put it in other language, what is under Dominion control exclusively, and what is under provincial control exclusively. Now, I think that was a fair and reasonable suggestion, and I hope, some day or other, the Dominion and the provinces will convene such a conference, and that a solution of this more or less vexed question may be arrived at.


Haughton Lennox: As to this amendment which my hon. friend thinks I had in the paper from which I read the other day, what page is it on?


James Conmee: According to mine-and I suppose his must be the same-the resolution which the hon. gentleman (Mr. Lennox) read appears at pages 351 and 352, and the resolution to which I refer at page 353.


Haughton Lennox: The resolution I had begins at page 5 and goes to page 6. I do not see anything of what my hon. friend (Mr. Conmee) has just read.


James Conmee: I will send it across to my hon. friend.
Mr. ' LENNOX. I am perfectly satisfied, but I wish my hon. friend to know that I did not refuse to read what was before me.


James Conmee: I take the hon. gentleman's word for that; I assumed there must be something of that kind. I do not dispute that there is something to be said on both sides of the question so far as the Nipigon river is concerned, because it is a river entirely within the province of Ontario. I do not recede from the position I took that, notwithstanding that fact, it was a navigable river and subject to the exclucive legislative control of the parliament of Canada. No other parliament can authorize any company to carry out works of a character such as these promoters seek to obtain. That was my position when I spoke before, and that is my position still. I do not recede from that position. I give way to the views of others. I think the
powers asked by section 2, a reasonable provision to have in this Bill, and that it ought to be there, but, as other hon. members think differently, and as it is not vital to the Bill, I am prepared to have it struck out. Had that provision been in the Bill with regard to the Rainy river improvements, there would not be the confusion there is to-day, with the community most deeply interested compelled to go to the courts to get redress which they ought to have had and which was afforded them at the hands of this parliament and in the Act passed by this parliament. However, I am not discussing that question; that is past and gone for the present. I hope that with the amendments proposed the Bill will commend itself to the judgment of the House.


Richard Blain: Since my hon. friend (Mr. Conmee) has given us a very full explanation of the Bill and the proposed amendments, I would suggest that he allow it to stand for further consideration, particularly as my hon. friend from Algoma West (Mr. Boyce), who took such an active part in the discussion of this Bill when it was before the House some time ago, is absent.


James Conmee: If the hon. gentleman will allow me. I met the hon. gentleman (Mr. Boyce) yesterday and showed him my amendments and discussed them with him.
I understood him to say that he was satisfied. There is only one point of difference, and that is on this point-I will be fair about it. The hon. member's amendment would strike out the word ' three ' in section 8 and substitute the word ' two.' That would mean that the company shall commence operations within two^ years instead of within three years. I pointed out that this company had to get legislation from Washington before it could proceed with its works-it had to go to another country to obtain the privilege of carrying_ on these works on the Pigeon river. I pointed out that it was more or less a difficult undertaking and that the company ought not to be hampered by narrow conditions, but ought to be allowed a reasonable time, and I do not think that three years is unreasonable. I understood the hon. gentleman to say that he would not press that point.


Richard Blain: In reply I might say that I have before me a note from the hon. member from West Algoma (Mr. Boyce) to the effect that although my hon. friend had submitted some of these changes to him, he had agreed to nothing, and does not wish to give his consent to the Bill in its present state. I will send that note over to my hon. friend if he wishes. However, there are so many changes in the Bill now submitted, it is important the committee should have an opportunity of studying it, particularly as, in my opinion, it is a matter which ought

to be dealt with entirely by the Ontario legislature.


Thomas Simpson Sproule: There is another reason why this Bill should be delayed. It affects very materially the policy of the provincial government. That government believes that it is entitled to use these water-powers foT the purposes of revenue if necessary. Some of them at least they are renting at an annual rental, and such leases are renewable, subject to the provision that the rentals may be increased if necessary from time to time. I apprehend that the Ontario government has not been notified of these proposed changes, nor have we heard from it. Probably it would be as much opposed to the Bill in its present form a? in its original shape, because it thinks that it has a right to control these water-powers. For that reason, if for no other, the Bill ought to be delayed. As regards the nature of the changes, we have only just received them and have not had time to consider them carefully. The hon. gentleman has put forward a strange doctrine on the _ question of the right of this Dominion to control a stream. This government has the right to control navigable streams, but I put a question to the hon. gentleman in that connection to this effect: Suppose some 20 or 25 miles of a stream are navigable, say at its mouth, and all the rest of the way, some 400 miles, it is not navigable; does he contend that because a small portion is navigable, the whole stream is under the federal authority? I think he said it is. That is about the situation in the case of the Nipi gon river. Only a small portion of that river is navigable, and for that reason my hon. friend contends that the Dominion parliament has the right to control tha stream throughout its whole length. But the provincial government thinks differently, and there is a good deal of reason in its contention.


James Conmee: This Bill, as amended does not give the company anv rights on the Nipigon at all.


Thomas Simpson Sproule: I was speaking of my hon. friend's contention and applying it to that stream, which is one of the streams in question. There are many changes in this Bill, and we have not time to consider them, and it would not be possible to understand them at this sitting. He had better allow the Bill to stand over until we hear fiom the Ontario government.


James Conmee: If we cannot legislate without the consent of the Ontario government, we will not be able to legislate on a great many subjects.


Edward Arthur Lancaster: If we legislate with regard to provincial interests?


Richard Blain: 


James Conmee: Are we to have no opinions of our own? There can be no provincial question as regards the Pigeon river, because it is a boundary stream, and the land passed out of the possession of the Crown more than 50 years ago, so that there can possibly be no provincial interests in that river.


Edward Arthur Lancaster: Perhaps if the hon. gentleman was representing the province of Ontario he would think differently.


James Conmee: I shall not debate that question with my hon. friend. But the proposition that this Bill should stand over until we can learn the views of the Ontario government is one to which I cannot consent. I do not want to unduly press the Bill, but of course if hon. gentlemen choose to take a hostile course, we cannot accomplish very much just now, as the hour for private Bills is nearly up. But I do not see what good purpose will be served by putting it off. The Bill should be dealt with on its merits. If the majority of the House are opposed to it and will vote that way, the Bill will fall to the ground.
Mr;. LENNOX. As regards what the hon. gentleman said about our being opposed to this Bill, I hope he does not take that view of the matter. When it was called a little after eight o'clock, I asked him to explain, and he gave a very elaborate explanation which has taken up most of the time down to this moment. We certainly have no time to consider it now. If he prefers that we should discuss it for the quarter of an hour left within which it can be discussed, we shall do so, but we cannot dispose of the Bill to-night and he might just as well move that the committee rise and report progress.


Sir WILFRID LAURIER.: There are some amendments to which there can be no possible objections. For instance the amendment striking out clause 2, which clause was objected to and is now removed. Surely that can be passed.


Edward Arthur Lancaster: But we do not know how far we may be dealing with provincial rights until we get through. We might commit ourselves to some legislation by passing clauses which we would not pass in the light of what may come afterwards. What strikes me is that we are straining here to find excuses for doing what we ought to do only if we were in the Ontario legislature. I cannot see how we can gain anything by attempting to do that. We have enough business of our own to attend to federally in regard to matters that appertain to the Dominion without bothering to be a court of appeal or advisory board to any provincial government.
I have not taken any part in the discussion so far, but I have listened every time this Bill has been discussed. My hon.

friend is not lacking in astuteness or knowledge of legislative procedure and, although not a lawyer, he is just as well able as lots of lawyers to discuss this matter even from a legal standpoint. I am sorry he has not told us of some reason why the Ontario legislature cannot do all that he wants done and provide all the safeguards he says he is now willing to provide in this Bill. Why can they not provide them? Why not allow the legislature of Ontario to deal with provincial matters ? We are not competent to deal with matters that appertain solely to the people of Ontario and we are not the judges of what they should do. They are the sole judges. We have no right to think that we can do as well as they can and we are not insulting ourselves if we say we cannot do as well as they can in regard to provincial matters. I do not doubt that a good many of us would vote one way on this Bill in this parliament and an entirely different way upon a similar Bill if we were in the provincial legislature. What troubles me is that we are dealing with this matter as a federal matter without being sure that there is any need whatever for federal legislation. We have no right to exercise jurisdiction here unless the province cannot deal with the matter.


Wilfrid Laurier: My hon. friend knows that the argument which he has presented does not apply. We do not commit ourselves to the Bill until the preamble is accepted. Until that is done there is nothing done. There are some provisions in the Bill to which he took exception and which are to be eliminated by my hon. friend from Thunder Bay and Rainy River (Mr. Conmee). To this certainly he cannot object. This Bill, as it is amended by my hon. friend, contains nothing as to which there should be any debate except as to the power of expropriation. My hon. friend has eliminated from the Bill that part which deals with the Nipigon river as to which I was against him. Now, the powers of expropriation are confined to a river which is international. There is a good deal to be said against the proposition of my hon. friend from Lincoln and Niagara (Mr. Lancaster? that the powers there are vested in the province of Ontario, and there is a good deal to be said in favour of the other proposition that the powers are vested here. That is a question which can be discussed at the proper time, but, it seems to me we would be advancing the work for which we are here if we accepted this cart of the Bill and reserved the discussion for the part which is really contentious.


Thomas Simpson Sproule: My reason in suggesting what I did was partially the statement of the hon. gentleman himself that the Bill, as it was proposed to be amended, he felt quite satisfied, would not be objectionable to the Ontario government if they were consulted.


James Conmee: I did not make that statement.


Thomas Simpson Sproule: That was the impression I had from the language he used. I thought, therefore, if it was submitted to them and we had information to that effect from them it would very much simplify it here and that while we might still think that they had acted unwisely, if they did not desire to exercise control over these water-powers, there are some members of this House who would not oppose the Bill very strongly. My own opinion is that these water-powers belong to the provinces. They are the assets of the province and they should be used as such. They are at the present time renting them from year to year and getting a very considerable income from some of them. They have announced to the world that their policy is to take the whole of them under their control and to develop them on provincial lines. Since what they have done has inured to their benefit, they using their own property and making money out of it, why should we take to ourselves the right to expropriate, or rather to deprive them of a part of the property that belongs to them? It is taking from them a right which they possess. I do not think we should do it.


George Halsey Perley: The notice regarding these amendments states that they will be proposed on Monday next. I suppose they were put in too late to take effect to-day. Therefore, my hon. friend from West Al-goma (Mr. Boyce) is perfectly justified in considering that these amendments should be taken on Monday. Instead of continuing the debate it would be much better to defer the consideration of the matter until Monday.


James Conmee: I gave the notice for 'Friday.5


George Halsey Perley: The hon. gentleman must have been too late to give the notice for this evening, because the notice says 'Monday.'


James Conmee: This discussion, I submit, is irregular. The Bill should be taken up clause by clause and discussed, whereas the committee has been allowed to discuss it generally. The notice of my hon. friend from West Algoma (Mr. Boyce) is practically the same as this notice, so that there has been lots of time as far as the notice is concerned. Let me say a word in answer to the hon. member who spoke a few minutes ago (Mr. Lancaster) and who desired to know my reason why this parliament has been asked to pass this legislation instead of the provincial legislature. All I can say is that I thought I did give in the discus-

si on of that question when the Bill was up for its second reading and again in committee, the very best reasons. I gave the judgment of the Privy Council that this parliament and this parliament alone should create this company.


Edward Arthur Lancaster: To do what?


James Conmee: To carry out the undertaking which this company is asking to be allowed to carry out.


Edward Arthur Lancaster: Did that court have this Bill before-it? It depends on what you put in your Bill.


James Conmee: If my hon. friend is going to make a Bill for these promoters, or if he is going to dictate to them what they shall put in their Bill, I do not know where he will land them.


Edward Arthur Lancaster: No, I am not going to do that. But no court can ahead of time, say that a certain Bill which is afterwards brought in to parliament is a Bill that can only be passed by the Dominion. If you put a stated case to them, the answer to which you must know will be in the affirmative, saying that the Dominion can do this or that you can get that answer from the court, but the court could not say that a Bill to be introduced by my hon. friend at a later date is a Bill which this parliament can alone pass.


James Conmee: The best authority we have in this land has said so. The courts have decided that point.


Edward Arthur Lancaster: What have they decided?


James Conmee: I could give my hon. friend no less an authority than that of Sir Oliver Mowat. I was brought up in the school of provincial Tights in which Sir Oliver was the teacher. I am still sound on that question. Here is the language of that gentleman dealing with a Bill intros duced under similar circumstances:
The only authority conferred upon a provincial legislature to incorporate companies is for the incorporation of companies with provincial objects. The undersigned construes this authority to mean objects provincial as to the province creating the company.
Then he goes on to give cases in which the courts held a similar view, and he uses this language:
It would seem to follow that the statute in question which confers upon the company authority to acquire, cultivate, improve, and sell land Dot only in the province of Nova ocotra but also in the province of New Brunswick and elsewhere, is not limited to provincial objects in the sense in which that expression is used in the British North America Act, and therefore the enactment is ultra vires.


James Conmee: 


Edward Arthur Lancaster: That is not this case.


James Conmee: No, but it is a case which is similar. He then commends Sir John Thomson's rulings with regard to a Quebec case in which Sir John Thompson recommended disallowance because the company undertook to divert a navigable stream, and Sir Oliver himself applied this tuling to tiie case of the Kaministiquia river for the same reasons. We have also had the opinion of the Minister of Justice given on the floor of the House that this parliament can alone confer the power which this company asks.


Edward Arthur Lancaster: I am afraid I will have to withdraw the compliment I paid my hon. friend on his legal attainment; it was paid out of politeness and I regret to have to take it back. Everybody knows that when a company operates in different provinces it is not a provincial work, but this company is going to, as I understand, is going to operate entirely within Ontario.


James Conmee: The trouble is that you don't understand it.


Edward Arthur Lancaster: The decision given by the learned and much respected authority quoted by the hon gentleman is based upon the ground that the company referred to in that case was going to operate in two different provinces, and not being confined to the one province it was of course a work for the general advantage of Canada.


James Conmee: Does not the hon. gentleman see in this Bill that the company is not confined to one province?


Edward Arthur Lancaster: That is not the effect of this Bill.


James Conmee: The company operates not only in Ontario but in the United States.


Edward Arthur Lancaster: You might say it would operate in Mexico or Australia, but that does not help you.


Richard Blain: When this Bill was first introduced it was considered of such importance by the Ontario government that they sent a special counsel to object to it in committee. The hon. gentleman since that time has made many changes in his Bill, and the Ontario government should certainly have an opportunity of considering these changes. The hon. gentleman (Mr. Conmee) is rather hostile to the Ontario government, but that is his right and privilege.


James Conmee: The hon. gentleman should not impute motives to me. I am not unduly hostile to the Ontario government; I have no personal quarrel with them.
xtPRIL 30, 1909


Richard Blain: But the hon. gentleman refuses to wait until the Ontario government is consulted. In my opinion the Ontario government is just as anxious to develop the water-powers of that province as this parliament can be, and if the hon. gentleman has a proper project to submit to them he will no doubt receive their cooperation.


Thomas Simpson Sproule: Nine o'clock.
The hour for private Bills expired.



GRAND TRUNK PACIFIC LOAN.

[Stage Direction]
The House resumed in Committee of the Whole on Bill (No. 128) to authorize a loan to the Grand Trunk Pacific Railway Company.
George Perry Graham: At six o'clock I was trying to correct a wrong impression which seemed to prevail as to a comparison of the grades on the Transcontinental and on the Intercolonial Railway from Levis to Moncton. The leader of the opposition suggested that an arrangement might be made by which grain from Midland could be carried to the sea board by the Grand Trunk and the Intercolonial Railway. From the Intercolonial Railway standpoint I would approve of that provided no injury were done to the shippers. But, the hon. gentleman also suggested that we might do that even if the Intercolonial Railway carried the grain for the present at a loss, and as head of the Railway Department I must dissent from that proposition. I think the Intercolonial Railway as a government road should be treated in the same way as other roads. If the government came to the conclusion that the Intercolonial Railway should carry the grain at a loss then it would be the duty of parliament, after ascertaining what that loss was, to pass a special vote to compensate the Intercolonial Railway and not charge it with the whole burden. In Australia, if the government asks the government railway to carry goods at a nonpaying rate then the government passes an appropriation to compensate the railway, and under similar circumstances, a like provision should be made in Canada. I have not been able to consult with any per-so so as to get accurate information on the point, but my opinion is that the grade on the Intercolonial from Montreal to Moncton is no higher than the ruling grade on the Grand Trunk Railway from Midland to Montreal.


Edward Guss Porter: No higher?


George Perry Graham: My own impression i that they are about on an equal footing.


Robert Laird Borden: The hon. gentleman has not yet dealt with the real difficult which I raised.


George Perry Graham: The right hon. the Prime Minister was about to speak.


Wilfrid Laurier: The difficulty suggested by my hon. friend, if I understood him aright, is as to what will become of the traffic between the west and the east during the interval which must elapse before the bridge at Quebec is completed. I need not say that the accident which has befallen the bridge is a very serious interference with the contract. We had expected when we entered into the contract that the bridge, which had been in progress for some time, ivould be completed about the same time as the road itself, and but for the unfortunate event which has taken place our calculations, I think, would have come out about right. The bridge has been down now for eighteen months and the plans for the reconstruction will not be ready for some time, probably not before the end of the year. I believe the leader of the opposition (Mr. R. L. Borden) was about right when he said that on the most favourable estimate the bridge could not be completed ready for traffic before 1915. After the lesson which we have received, after having plans prepared by engineers whom we had reason to believe were the most competent engineers on the continent, and whose efforts have proved so fatal, we have felt it necessary to take every possible precaution. We have confided the preparation of the plans for the new bridge to a board composed of the most eminent engineers to be found in Europe and on this continent. They are proceeding with the work but I do not know yet when the plans will be prepared, perhaps they will take the best part of the year. In the meantime how are 'we to connect the two branches of the railway, the sections from Winnipeg to Quebec and from Quebec to Moncton? I will not surprise the House by saying that the Minister of Railways and myself and the cabinet have given some attention to that question. We thought that perhaps it would be possible to place a ferry on the river. I am informed that this project will not be expensive and is quite feasible. As t<3 this I venture no opinion at all, this is simply the information given to me, and I give it for what it is worth, I do not cite it as accurate or definite. But let us take the worst view of the case and let us suppose that it is not possible in the meantime to have a connection between the two sides of the river at Quebec. Then we are faced with the question: What are we going to do in the meantime? I am not prepared to say at this moment what we should do and what action might be taken, if indeed any action can be taken. But I take issue with the hon. the leader of the oppositon (Mr. R. L. BoTden) on his statement that this was an opportunity to exact from the Grand Trunk Pacific some modification of the contract that we have

with them. I take issue also upon his statement repeated during this debate that this transaction as to which we are asking the assent of parliament is a modification of or departure from the terms of the contract. I say on the contrary that the present loan which we make to the Grand Trunk Pacific is no departure whatever from the terms of the contract. The contract is not changed, it remains just as it was, there is no modification, this is simply an advance which we make to the company and which is to be recouped within a certain time. It is on all fours with the similar transaction of 1884 between the government and the Canadian Pacific Railway. It was not suggested at that time or since that the loan of $30,000,000 made by the government to the Canadian Pacific Railway in 1884 implied any modification of the contract made in 1881. If it wms any modification, the changes were not material and the essence of the contract was certainly not modified. In this matter, so far as we are concerned, we intend to have no modification of the contract. It may be that in order to provide for the traffic which will originate in the west we may have seriously to consider how it is to be taken to the sea, but what I have to propose to niy hon. friend is that this was not the occasion or the opportunity to do so. The one thing in which we are concerned at this moment is to have the prairie section constructed with all speed so that the grain of the western country can be taken to the lakes this fall if possible My hon. friend rather suggested to us that we should take advantage of the dire necessity of the company to impose conditions upon it which it might or might not be prepared to accept. I must say that we did not think that this was an occasion to put such a condition upon the company. We felt on the contrary that the only thing we had to do at the present time was to see that the prairie section was completed in the shortest possible time._ At a later time we will have to discuss with the company and make some arrangement with them in reference to the matter which my hon. friend has brought up, but we. have simply to submit that this was not the occasion nor the opportunity to do so.


Robert Laird Borden: I very greatly regret that the importance of the difficulty,
I might say of the misfortune which seems imminent, so far as the Canadian ports are concerned, has not impressed itself more strongly upon the mind of my right hon. friend the Prime Minister. He seems to have a very tender regard indeed for the Grand Trunk Railway Company, but he does not seem to have an equally tender nund for the interest of Canadian ports for whose benefit ostensibly this contract was made and these statutes passed. The Grand Trunk Railway Company undertook the financing of this road to a certain ex-Sir WILFRID LA DRIER.
tent. The government has performed its part of the contract, the government, the country, has not asked any modification of the contract so far as I am aware. There has been a modification, not a formal modification of the contract but a practical modification-I repeat it notwithstanding the disclaimer of the right hon. gentleman. According to his view if this country made a contract with the Grand Trunk Railway by a separate agreement to provide every single dollar of the money for the completion of that road there would be no modification of the contract. Would any man in his senses say that such is a practical view of the situation? Of course there is a modification of the contract from a practical standpoint. I think that this contract has beeen drafted and this Bill prepared in order that my hon. friends on the treasury benches may be enabled to-say : ' There is no modification in the contract/ We are providing for $10,000,000 more to be raised on the credit of this country and yet there is no modification of the contract! How is it there is nomodification of the contract when this country, by the passing of this statute, will be obliged to raise $10,000,000 more than it would otherwise have been obliged to raise for the construction of this railway? How is it possible for any reasonable man to say under these circumstances that there is no practical modification of the contract? There is not a formal modification I admit, but from a practical standpoint there certainly is a modification to this extent. Canada is raising $10,000,000 more for the construction of this railway than it would have been obliged to do if this statute had not passed.
What does my hon. friend Sir Wilfrid haulier say? He says that he regrets the Quebec bridge has fallen and admits it cannot he reconstructed before 1915. But in the meantime where is the traffic to go? Well, it is to go apparently wherever the interests of the Grand Trunk Railway will take it; and that, according to admissions of the right hon. gentleman, which I have under my hand and can quote if desired, must go to Portland, and the absolute purpose and intent of this parliament will thus be defeated during those five years at least. My right hon. friend says no, we cannot move a finger, this is not a favourable opportunity. When does he expect a favourable opportunity, if this is not one? What is to be done about it? I have his own statement that if traffic goes to North Bay, that traffic will go to Portland. I have the statement made at a Grand Trunk Railway meeting in 1903 or 1904 that the object and design of the Grand Trunk Railway was to carry that freight by the lake ports. Well, if freight reaching North Bay must be carried to Portland, can any reasonable man say that freight going to Midland

will not go to Portland also? There is absolutely no answer. Yet my right hon. friend says we must not take advantage of the dire necessity of the Grand Trunk Railway, and that this is not a favourable opportunity. But what about the dire necessity of this country? What about the necessities of the Canadian seaports of St. John and Halifax? Does regard for the interests of the Grand Trunk Railway bulk so largely in the minds of my hon. friends on the treasury benches that there is absolutely no consideration for our maritime ports? I think that the answer given by the Prime Minister is a most remarkable one, if you can dignify it by that name. There is in it not one suggestion for avoiding the imminence of the danger to which I have alluded and of which there is absolute proof.
My hon. friend the Minister of Railways and Canals (Mr. Graham) said that the carriage of this freight over the Intercolonial Railway at a small loss would not be in the interests of the people. Perhaps I do him an injustice, but at all events he said it would not be in the interests of the bookkeeping of the Intercolonial Railway.


George Perry Graham: I did not say that. What I said was this: My hon. friend said the Intercolonial Railway ought to carry it even at a loss. I replied that if the government decided to make an arrangement to carry that traffic that way, the country as a whole ought to stand the loss and not charge it directly to the Intercolonial Railway.


Haughton Lennox: That is the same thing.


George Perry Graham: Pardon me, I made the further plea that something which is donei for the country as a whole ought not to be charged to the Intercolonial Railway particularly, but the Intercolonial Railway ought to be paid as any other railway would be, -for carrying goods for the country.


Robert Laird Borden: The net result is that it would be a mere matter of bookkeeping, and I would like to point out that experiments have been made in this, connection already. Experiments were made in 1904, during the six months preceding the 1st of March, 1904, and the net result was this:	There were five
cargoes of grain carried by the Intercolonial Railway for delivery in the elevators for export. One shipment of 16,000 bushels of wheat was carried from Depot Harbour to Halifax at the rate of 5 15 cents per bushel. Another shipment of 31.836 bushels was carried at the rate of 4 -90. Another of 39,990 bushels was carried at a rate of 5-40 cents per bushel. Another of 25,718i bushels of corn was carried at 4-94 cents per bushel. And still another of 33,892) bushels of corn was carried at 5 cents per bushel. The Intercolonial received a very small proportionate part of the rate. It did not rceeive a portion of the rate commensurate with the length of its haul. The Intercolonial Railway carried that grain 828 miles, the Grand Trunk Railway 34 miles, and the Canada Atlantic Railway, 346 miles. The percentages are given of the different shipments which I need not go over, but the net result was that the Intercolonial Railway received 2-25 cents per bushel for a haul of 828 miles and the other roads received 2-75 per bushel for a haul of 380 miles. In answer to a question put by Mr. Kemp, then member for one of the Toronto divisions, the Minister of Railways said:
The estimate of the cost per bushel for the service performed by the Intercolonial Railway was 2-27 cents and the amount received was 2:25. There was thus a slight loss on the export business; but having regard to inward cargoes and passengers obtained for the Intercolonial Railway, the business was not considered unprofitable.
Well, my hon. friend the Minister of Railways will observe that if there had been a proportionate mileage division of the rate in respect of those shipments, the Intercolonial Railway would have received 3-4 cents and the other roads 1-6 per bushel. Then as the cost of hauling to the Intercolonial Railway was 2'27 per bushel, and the proportionate amount which ought to have been received, under a fair division was 3-4, there would have been a fairly reasonable profit to the Intercolonial Railway on that haul. I am not suggesting that the Intercolonial Railway ought to make any profit upon such business, but that the interests, not of the maritime provinces alone, but of the entire Dominion, would require that the Intercolonial Railway should carry that freight to the maritime ports during the winter months at a low rate in order to prevent channels of trade being created for our western traffic to Portland and the other ports in the United States. This will be a subject of such transcendent importance during the next four or five years following the completion of the Port Arthur branch and the western division of the Transcontintal, that it was the duty of the government to have faced that difficulty just as the Grand Trunk Railway and Grand Trunk Pacific are facing their difficulties by making this application to the government. I know of no more favourable opportunity in which to press for an agreement such as I suggest. Are the interests of the country not to be considered at all? Are the interests of the Grand Trunk Railway to be always paramount? The interests of these railway corporations are entitled to just treatment on all points, but when the

government, owing to conditions over which it has at present no control-and I shall say nothing as to any default of theirs in that regard-sees that traffic gathered up in the west upon a road practically built by this government is to be carried to Portland and possibly other ports in the United States instead of to our own ports, should it not follow the example of these corporations and face that difficulty in order that some reasonable, fair and just agreement might be arrived at to safeguard the interests of our Canadian seaports ? Our only answer is in the words of the Prime Minister that we must not take any advantage of the dire necessity of this company, and that this is not a favourable opportunity for introducing this subject to their attention. Again I ask, if this is not a favourable opportunity, when does the government anticipate, in the ordinary course of events, that a favourable opportunity will arise, and what do they propose to do about it?


Wilfrid Laurier: When I spoke of ' opportunity ' and ' occasion ' I did not say the occasion was favourable or unfavourable. I said this was neither the occasion nor the opportunity. I stated a moment ago that this loan which we are making involves no .modification of the contract we have with the Grand Trunk Pacific Railway Company. My hon. friend cannot dispute that, but speaks of a 'practical modification.' Even to that extent, I think, he is in the wrong; there is no practical modification of the contract. The contract is there. We ask parliament to authorize us to make a loan of $10,000,000 to the Grand Trunk Pacific. I assume that the terms of the loan will be acceptable to the company. With the exception of that loan, the government and the company will remain as they are, just as when, in 1884, the parliament authorized the government of that day to make a loan of $30,000,000 to the Canadian Pacific Railway Company, which loan was recouped before the time it was due. There is no change of relation between the government and the company; they remain the same as if the loan had not taken place. If the loan is recouped as intended in the contract, and as I assume it will be, the relations of the government and the company will remain just as if the loan had not taken place; there is no modification of the contract whatever. But, though there is no modification of the contract, my hon. friend (Mr. R. L. Borden) says: 'You should have taken advantage of the company and should have forced upon them a modification as to the routing of the traffic that is to be developed in the Northwest.' I have simply this to say: This is not the occasion. The object at the present time, the paramount thing to do, the paramount Mr. R. L. BORDEN.
duty of the government and the country, is to see that the prairie section, which is the most important part of the road, shall be completed this year, so that the settlers who are now flocking in may have the advantage afforded by the carrying capacity of the railway. But my hon. friend in his remarks pointed out that that would be an opportunity and an occasion for the discussion of these matters. He pointed out that the contract we made in 1903 provides that when the road is completed it is to be leased to the Grand Trunk Pacific Railway Company. But in 1904 we put in another provision, to the effect that the commissioners who are to build the eastern section may lease some portions of the road as they are completed. They can lease the section between Moncton and Quebec or the section between Quebec and Winnipeg, and, earlier than all this, they can lease to the company the section between Winnipeg and the junction with the branch of the Grand Trunk Pacific Railway Company connecting with Lake Superior. If we are to make a lease of that kind, that will be the opportunity and the occasion to make the arrangement which we think ought to be made for the routing of the traffic. That will be the time and the opportunity. I repeat that it would have been bad policy and bad politics to endanger the possibility of building the prairie section this year in order to make the modification in the contract which may take place later on.


Robert Laird Borden: Surely the Prime Minister remembers that the very section to which he has alluded contains these words:
Pending the completion of the eastern division by the government, the company shall he entitled to lease from the commissioners, to be appointed under the said Act, and to operate such portions of the 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 commission, which terms are not to be more onerous than those of the lease of the whole division by the said contract provided for.
Then, if they are not to be more onerous, how is he to insert such a stipulation as he speaks of? What will be the nature of that stipulation? If you frame that lease according to the provision of the statute, and the agreement, you will not advance the position one iota. Because, I repeat, what some hon. gentlemen in this House have forgotten, that this government deliberately voted down our proposal to compel the Grand Trunk Railway Com-'pany to be bound by those provisions of this contract which prevent the routing of traffic to ports other than Canadian ports. What hold will the government have upon the Grand Trunk at that time? It will not

be dealing with the Grand Trunk, but with the Grand Trunk Pacific. They are in effect, but not in form dealing with the Grand Trunk at this time, because $7,000,000 of this loan, said to have been advanced by the Grand Trunk to the Grand Trunk Pacific is to be paid out of the proceeds of the loan now proposed. Make that lease in the terms provided by that statute and when the traffic gets to Port Arthur, it will go on to Midland, and at Midland the condition which the right hon. gentleman has described with regard to North Bay will prevail-that traffic must go to Portland, and it will not go to a * Canadian port during the winter months at least. If the right hon. gentleman will explain how, on the occasion to which he has referred, he can obtain any hold upon the Grand Trunk to compel them to do that which is not only just, having regard to this whole enterprise, but which is absolutely necessary in the interests of the country as a whole, I shall be, glad to hear that explanation. But, in the light of the contract and the provisions of this contract which the government mus-tj observe, I, for one, do not know in what better position the government will be at that time than at present.


Haughton Lennox: Is that only an option of the Company?


Robert Laird Borden: Yes, my hon. friend (Mr. Lennox) is right. I pointed that out before, and did not think it necessary to emphasize it again. It is the company that lias the option of leasing, and the govern-1! ment have no power to compel a lease.


Mr. DEPUTY SPEAKER.: Shall section 1 carry?


Wilfrid Laurier: Carried.


Robert Laird Borden: If my right hon. friend's answer to this is simply ' carried,' I do not think the country will be satisfied with that answer.


Haughton Lennox: I have great respect for the right hon. Prime Minister (Sir Wilfrid Laurier) and his statement, but for the life of me I cannot see on what reasonable basis he argues that there is no modification of this contract. He says that there is no modification, because we are only lending money to the railway company. We made this bargain in 1903. The country was to carry out a certain part of the building of the Tailway and the company was to do a certain other part. They came to us in 1904 and obtained modifications. I do not think the right hon. Prime Minister will say that those were not important modifications. The result of those two contracts is that, so far as the western division is concerned, we were to guarantee three-fourths of the ex pense of building the prairie section, not exceeding $13,000 per mile; the Grand
Trunk Railway Company-because it was the Grand Trunk Railway Company that was invariably put forth as being the substantial contractor-was to do all the rest; absolutely, according to the Minister of Finance, and according to the leader of the government, the old Grand Trunk Railway Company was practically to do all the Test. We were to put our guarantee to three-fourths of the necessary money, and nominally the Grand Trunk Pacific was to finance the rest of the scheme, and to have its bonds endorsed by the Grand Trunk Company. Have they dene that? No doubt we have done our part, every iota of our bargain has been fulfilled; and if they were not now asking for a modification of the bargain, would they be coming here at all? It is because the Grand Trunk Railway Company has not endorsed the bonds that it was to guarantee, according to the bargain that they entered into with the Dominion of Canada, that they are coming here to-day.


William Stevens Fielding: They will endorse those bonds.


Haughton Lennox: That is not the bargain. The Minister of Finance will recognize that he cannot blow hot and cold on this matter. He says this contract is entirely separate from the old contract, and therefore they are not carrying out the old contract in endorsing these bonds, they are not guaranteeing them under that contract. The reason they are coming here is because, instead of guaranteeing those bonds, they have gone into some other scheme. In some way oi other the Grand Trunk Company has, for the time being, obtained a temporary loan, and they have put $7,000,000 into this road. They do not want to endorse those bonds because it would impair their credit. But they thought they would form some scheme by which to tide over until after the elections, and then they would come to us and ask this parliament to provide funds, and so modify the agreement entered into in 1903 and 1904, instead of endorsing those bonds according to agreement. Is it not idle to talk about modifications under such circumstances? If the Grand Trunk Railway Company were carrying out the agreement they solemnly entered into with parliament, there would be no application here at all, there could not be any application here, because the bonds would be endorsed, the money would have been obtained, and this loan would not be- required. The Minister of Finance says: 'Oh, we have nothing to do with the Grand Trunk Company; it is not the Grand Trunk Company we are dealing with at all. it is the Grand Trunk Pacific Company we are dealing with, and we do not need to pay any attention as to where this money is to go, we have only to ascertain that it has gone into the road.' But up to this time he has not found out whether it has gone into the road or not.


William Stevens Fielding: It has not gone anywhere yet.


Haughton Lennox: Yes it has, if the statements presented to parliament are true, because we have it in black and white that $7,000,000 has actually been put into the road, that is now required to be paid to the Grand Trunk Railway Company. You cannot conceal the fact from the members of this House nor from the people of this country, that it is the Grand Trunk Company that is coming forward to get this loan at the present time; it is not the Grand Trunk Pacific, that is only a name. It has been suggested here to me that it is one and the same red-headed boy; the Grand Trunk Company is going to be the red-headed boy, and always has been. Now not only has this contract been modified in the way I have pointed out, but the right hon. gentleman will have to admit it has been modified in a much more substantial way. Not only was the Grand Trunk Company to stand behind this scheme, and be of it, and in it, and the whole thing, but as to the $25,000,000 of stock they were to hand over was every dollar of it to go into this enterprise before we could be called upon to pay a dollar. I am talking, not upon what anybody on the back benches has said, I am talking of the language of the Prime Minister himself. . When the hon. member for Hamilton complained of the fact that we were making no provision to prevent the Grand Trunk Railway Company getting this stock for nothing, the Prime Minister pointed out, after being not too complimentary in his allusions about quibbling and petty-fogging on this side of the House-he pointed out that every dollar of that $25,000,000 of stock had to go into the building of this road if it were required. Has that $25,000,000 gone into the building of this road? If it has not, I would like to ask the right hon. gentleman if he does not think that is a modification of the contract. Will he say he did not give this House explicitly to understand in 1903 and 1904 that every dollar of that $25,000,000 of stock was to go into the building of the road, if it was necessary for the building of the road? The right hon. gentle man does not claim the right to reply. I will therefore take the liberty of giving the language he used on that occasion. He says, on page 11222 of the ' Hansard ':
My hon. friend from Hamilton says that the two companies are one, and that the stock is to be taken by the Grand Trunk Railway; and he asked, How is the value to be determined between them? Well, the value is to be determined by the means of the Grand Trunk Pacific Railway. The Grand Trunk Pacific Railway will require money to carry on its enterprise.
It requires it now, according to the proposition before the House.


Haughton Lennox: If it needs the whole $25,000,060, the amount of this capital stock at par, it will have to get it, and it can only get it from the Grand Trunk Railway. In such a case, the value of that stock will be its par value, because that will the amount which the Grand Trunk Pacific Railway requires in return for its stock and which the Grand Trunk Railway will have to pay. The value of the stock will 'be fixed by the needs of the company, and cannot be fixed in any other way.
Any modification of the contract? Today we are told, if I understand the answers that are brought down, that the Grand Trunk Railway Company got that stock for a matter of $205,200, or got upwards of $24,000,000 of it. They have not put that $24,000,000 odd into this enterprise; the Prime Minister promised us that they would, if required, put it into this enterprise. Does he want to tell this committee and this country that there is no modification of the contract, when we are asked to-day to put this $10,000,000 more into this enterprise, and the Grand Trunk Railway Company has not guaranteed those bonds and has not accounted for that $24,000,000 of stock?


George Eulas Foster: Yet holds it all.


Haughton Lennox: Yet holds it all. It is not modification, but repudiation. It is an absolute denial of the contract. It is treating the members of this House as if they were a lot of children rather than treating them as if they were independent, reasonable men desirous of doing their duty to the people. I am amazed at the failure of the leading members of the government to appreciate the gravity of the situation we are confronted with at the present time. I need not read-my honoured leader read them this afternoon-the forty-second and forty-third sections of the contract by which it was expressly stipulated that, as a paramount consideration that we would obtain the development of Canadian ports and receive an absolute guarantee that the great products of the west would be shipped outwards by Canadian ports. I am amazed at the fact that in face of that condition of things the government have to come down and acknowledge that they have not taken the first step, that they have not uttered the first syllable in order to try and implement the promise made to the people by that agreement, the main plank in the proposition that the right hon. gentleman launched in this House in the summer of 1903. It was for the purpose of developing Canadian ports and seeing to it that Canadian products were carried entirely on Canadian soil and upon an all-Canadian line that we were asked to pledge our credit and enter into what was said to be, great enterprise. In face of the fact that it has become absolutely impossible that we can hold the

Grand Trunk Pacific to their contract, as contained in section 20, -which provided that they should take a lease of this line when it was entirely completed, and in face of the fact that it is manifest that until 1915 we cannot make the connection necessary to complete the line, the Prime Minister, the Minister of Railways and Canals and the Finance Minister have not risen to the opportunity which they have now, and which they lost before. Having another opportunity presented to them, they have been recreant to their duty to the people. They have not seized the occasion to obtain a inodification of the agreement. It is not for the Prime Minister to boast that there is no modification of the agreement, but he should have been proud to say:	'We have obtained a modification by which we secured the traffic down to Canadian ports, which otherwise, by reason of the disaster of the Quebec bridge, would necessarily have been diverted to Portland.' It was not only the duty of the government upon this occasion to have made it absolutely clear before we undertook to give this money that some arrangement would be made with the Grand Trunk Pacific Company by which substantially the original contract would be carried out; but it was the duty of the government to have done more than that. It was the duty of the government, when that bridge fell and when they realized that it would he years and years before it could be restored, to have taken steps to see that we would not have millions of money lying idle in that road for yeaTS to come, the road depreciating from year to year and the government and the people absolutely helpless to compel the Grand Trunk or the Grand Trunk Pacific to take over any portion of the line. As has been pointed out, it is manifest that subsection 3 of the new contract of 1904 is a fug-handled arrangement, just like the British preference. It is ail on one side-option to the company, an option which gives the government no power to compel the Grand Trunk Pacific to take over any portion of this line, unless they will it, until every part of the line is absolutely completed. I have no hesitation of charging the government in the most explicit and definite way with a neglect of duty not only on the present occasion, but 'neglect of duty' dating farther back than that, namely, to the time when they had the right to foresee that by reason of the fall of the Quebec bridge some new terms ought to be sought, and in the absence of the making of a satisfactory arrangement with the Grand Trunk Pacific the building of a portion of the line should have been suspended for such a time that its completion would be about coincident of the completion of the new bridge. To what purpose 168
are we spending our millions on the extreme eastern portion of the line if until 1915 we cannot possible use it? Is it to the benefit of the country; is it to the benefit of the people of the maritime provinces, because if it were I would not complain? Is it to the benefit of any one that the line should, as the government practically propose now, absolutely remain idle for five years, paying large amounts of interest, not less than $10,000,000, during the time it is idle, or would it have been common sense, common prudence, for the government first to have seen what arrangement they could make with the Grand Trunk Pacific, and, failing this arrangement, to have said:	'It is idle for us to invest our
money; we will not break faith with the maritime provinces, but we will suspend operations and so arrange the work that the completion of the bridge and the completion of the eastern end of the Transcontinental Railway shall be, as nearly as possible, coincident?' But for the fact that I want to emphasize that we should not be called upon to advance this money at this time, I do not like to quote what has been so often quoted in this House-the language of the Prime Minister and the.Finance Minister in particular as to the position of the Grand Trunk in this matter. * On second thought, and I think it is the best thought, I will not do it now. If I hear much more of this repudiation I will be compelled, in justice, to do so. Let me just say at this .moment that I will only refer to the expression used a few moments ago by the Prime Minister when he said: 'What was the paramount duty of the government?' The paramount duty of the government was to see to the early completion of this line and of the prairie section so as to bring the grain from the west to enable it to be transported to the sea and then to the markets of the world. Yes, that is a duty, but the paramount duty in this case was to impress upon the Grand Trunk Company that they should keep their contract with parliament. By reason of the laxity of the government in not securing tht transportation of this freight over the Intercolonial Railway, instead of having more western freight brought over an all-Caradian line to Canadian ports, moTe of it than ever will go through American channels, and the declaration which the Prime Minister made with such gusto in 1903 in that respect will be altogether falsified.


William Sora Middlebro: How does the Minister of Finance reconcile the statement that the Grand Trunk are applying for this loan because they do not desire to place their bonds on the market, with the fact that $7,000,000 has already been raised and is owing bv the Grand Trunk Pacific to the Grand Trunk Railway? I would further



ask, if the Grand Trunk do not desire to place their bonds in the market at the present time, why is it that between the date of the letter written by Mr. Hays and the present time they have applied for power to borrow $12,000,000?


William Stevens Fielding: I have no doubt that
the loan which they have obtained power to raise will not be placed on the market until a later date when the conditions will be deemed favourable. I do not know how the Grand Trunk Railway obtained the $7,000,000, but I would suppose it was either from the ordinary revenue of the Grand Trunk or through their bankers in the ordinary process. If that be the case, they would have to recoup the bankers by selling the bonds; and tojdo that they will have to place them on the market at a sacrifice. I do not see any difficulty in reconciling the two things.


William Sora Middlebro: I assume the company would not ask for power to- borrow $12,000,000 more unless they were going to place that loan on the market in the near future.


George Eulas Foster: 
Wilfrid Laurier: The correspondence speaks for itself.


George Eulas Foster: That is a reply which is open to the right hon. gentleman; and it is open to the House and to the country to interpret it and to draw their own inference.


Wilfrid Laurier: This is a free country.


George Eulas Foster: The right hon. gentleman prides himself on his frankness, and the very fact that he is unable to say that the first intimation came on the 16th of November, tells its own tale. Will the Minister of Finance or the Prime Minister be frank enough to answer this question-when the $10,000,000 loan was mooted between the parties, did the government know or did they try to find out how the money put Mr. MIDDLEBRO.
into the construction before the 16th of November was raised by the Grand Trunk Company?


Wilfrid Laurier: The Minister of Railways might be able to inform my hon. friend, but I certainly cannot.


George Eulas Foster: It is a great pity the Minister of Railways is not here when we are discussing this very important question. VVill the Prime Minister or the Minister of Finance answer another question- did any member of the government or the government as a whole assist the Grand Trunk Railway Company in getting, as accommodation or as an advance, that large amoun of money from the bank to tide them over until this legislation could be put through?


William Stevens Fielding: I do not think there was any such understanding. We were aware that the Grand Trunk Company, no being ready to issue the bonds, was advancing money to assist this enterprise. As to the particular method they took to raise the money I never had any information, nor did I think it necessary to inquire. I cannot answer in any other terms.


George Eulas Foster: You cannot answer more explicitly?


William Stevens Fielding: No. If I could have done anything to help them I would have been very glad to do so, but there was no need. The Grand Trunk raised the money, but as to the particular manner in which they raised it I have no information. I would gladly assist the Grand Trunk if it were necessary, but so far as I know they got it on their own credit entirely.


George Eulas Foster: Are we to understand then that the government, the Prime Minister and the Minister of Finance, knew nothing about this, had entered into no arrangement and no agreement at an earlier date than is shown by this correspondence? The government know whether they did or not.


William Stevens Fielding: There was no obligation to raise this money and there is not yet; it is an absolutely onen matter for parliament to determine whether we shall raise this money now or not. It was a subject of conversation between representatives of the Grand Trunk and ourselves, and we were aware that they were temporarily raising money and assisting in the prosecution of the work, and we understood they would have to issue bonds to raise the money. The question whether they should issue the bonds, going on the market themselves, or we should do it was discussed and it was decided to bring down this resolution.


George Eulas Foster: How long before the 16th of November was that quasi-arrangement with the company made?


William Stevens Fielding: I would not consider it a quasi-arrangement. There is no obligation yet which is binding on any one. It this is not a good transaction we are free not to complete it.


George Eulas Foster: Could the minister tell about what time the negotiations commenced which ended in this arrangement and the bringing before parliament of this legislation?


William Stevens Fielding: I could not tell.


George Eulas Foster: The minister could not tell?


William Stevens Fielding: No.


George Eulas Foster: Is money so small a thing, does the minister take so little stock *of it and of the obligations which he is placing on the country that a $10,000,000 transaction slips out of his mind and that he does not remember when it was broached?


William Stevens Fielding: There has been no $10,000,000 transaction. Had we assumed an obligation for $10,000,000, there would certainly be some record of it, but that obligation does not yet exist.


George Eulas Foster: If a neighbour came to my hon. friend and asked him for a loan of $1,000 or $10,000 it would have impressed itself on his memory sufficiently to make a mark and he would be able to tell a month afterwards about what time the friend asked him for the loan. Here comes another friend, a pampered friend, and asks for a $10,000,000 loan. Is he so accustomed to dealing with the country's millions that this made no impression on .his great mind and that to-day he cannot tell when it occurred?


William Stevens Fielding: I have told my hon. friend all about it.


George Eulas Foster: Of course if the Prime Minister had forgotten it is his duty to forget, but it is the duty of the man who has the finances of the country in his charge to remember.


William Stevens Fielding: We still have the money, so there is no barm done.


George Eulas Foster: I would not say that that is quibbling, because the chairman might object, hut it is mightly close to quibbling.


William Sora Middlebro: I notice in a letter of the manager of the Grand Trunk Pacific that he says the Grand Trunk has already guaranteed bonds of the Grand Trunk Pacific to the extent of $30,000,000. Will the minister say whether or not the guaranty of the present loan will stand on the same footing as the guaranty by the Grand Trunk of the Grand Trunk Pacific bonds as against the Grand Trunk Pacific? Will we have a greater right to payment from the 1681
Grand Trunk Pacific than the Grand Trunk will have against the Grand Trunk Pacific?


William Stevens Fielding: I do not like to answer these questions off-hand, but my ipipression is it will stand in the same position as other guarantees by the Grand Trunk Pacific.


William Sora Middlebro: So the position we are in so far as the Grand Trunk is concerned is that we have $121,000,000 of guaranteed bonds ahead of us, $19,000,000 of rentals capitalized at 4 per cent and $12,000,000, which we granted them power to issue this year, all of which will be prior to our guaranty, and after that we only stand in the same position as the Grand Trunk Pacific do in respect of their $30,000,000 which the Grand Trunk has guaranteed.


William Stevens Fielding: T presume my hon. friend's figures are correct. I have not made the additions.


William Sora Middlebro: I understand there-are also some $6,000,000 equipment morh, gage bonds outstanding against the Grand Trunk which are also a prior lien to the-present loan or guaranty.


William Stevens Fielding: I think all these securities are included in the sum which I mentioned at a previous stage of the debate, as the amount which would come ahead of our guaranty and which will leave, as we claim, a surplus which will be ample to protect our guaranty.


William Sora Middlebro: I do not know whether the $121,000,000 will be sufficient to cover the bonds of the Grand Trunk or not but that certainly does not include the) $19,000,000 of rentals capitalized nor the $12,000,000 we have allowed them to borrow this year. That makes $152,000,000 ahead of this guaranty and then we only stand to take our share of anything that re mains with the other 30 million bonds that are guaranteed by the Grand Trunk.


William Findlay Maclean: I do not see why five years should be consumed in building even the great bridge at Quebec. I believe that bridge can be built in two yeajs or perhaps less. Then other means can be adopted, a ferry can be built and it must be remembered that the Intercolonial is an important factor in the situation and that nothing must be done with the Intercolonial that will prevent it from being utilized. Then it may be possible to cross the river further to the west and so keep the traffic in this country. I would emphasize that we can never depend on private enterprise for the realizing of a great national policy. We have put ourselves, as I have said this afternoon, in the hands of a private corporation to realize a great national policy, a policy that is to build up our own ports and our own country, and to

keep our own traffic in Canada. I repeat that this is bad policy, it is not a true national policy and yet this road was supposed to be built on national lines. The government must find a way to build this bridge in less than five years. Of course if you give it to a commission, and the commission wish to prolong their tenure of office they can extend it over for quite a while. But great bridges now are being built in a year and two years. The river at New York has been spanned twice now by enormous bridges costing $20,000,000 in a great deal less than two years and the same thing can be done in this case. It is imcumbent upon the government to find a way to overcome the situation in the shortest possible time.


George Perry Graham: I fully agree with my hon. friend. In reference to the New York bridges I might suggest that one of them was built but has not yet been used, unless it was within the last week or two, as itl was found to be defective.


William Findlay Maclean: It was opened the other day.


George Perry Graham: The investigation into the fall of the Quebec bridge led to investigations into that bridge, and it was not accepted, unless very recently. I may say that while I have not taken exception to the suggestion of the leader of the opposition as to the time for the building of the Quebec bridge, the building of the Quebec bridge is under the Railway Department and will be pushed with all possible speed, commensurate with getting a safe substantial bridge. We want a bridge that will stay there when constructed. If it can be completed in two years it will be.


Mr. BURRELL.: Is the government aware of the currency of a story that a considerable proportion of the indebtedness of the Grand Trunk Pacific to the Grand Trunk Railway arises out of the fact that material is supplied by the latter to the former? I ask that because it has a bearing on the representations that we are to get a road of exceptionally high standard. But if 80 lb. rails have been taken off the line of the Grand Trunk Railway, to be replaced by 100 lb. rails, and if these old rails are placed on the Grand Trunk Pacific, of course we are being deceived as to the character of the road.


George Perry Graham: I am glad my hon. friend has mentioned that. The only transaction that could give rise to that story is this: I believe that the Grand Trunk Pacific has taken for its sidings some 80 lb. rails, which are in good condition, from the Grand Trunk Railway. The 80 lb. rails are practically just as good Mr. W. P. MACLEAN.
as the others for the purposes of sidings. The Grand Trunk Railway is replacing its 80 lb. rails on its main line by 100 lb. rails, and is furnishing the Grand Trunk Pacific with these 80 lb. rails for the purposes of sidings only in a limited quantity.


William Sora Middlebro: Is any part of the purchase price a part of that $7,000,000?


William Stevens Fielding: I could not say that.


Mr. J. D. TAYLOR.: Has this reason been advanced to the government as a reason for making this loan, that the Grand Trunk Railway were embarrassed by the fact that they have undertaken to pay the government upon the cost of the Winnipeg and Moncton division 3 per cent per year, and that since this division is to cost a great deal more than twice the sum they were led to believe it would, their liability is now 6 per cent instead of three per cent on the sum originally estimated, and on which they depended owing to the confidence with which the government made that estimate. It would be impossible for any railway company to pay a rental of 6 per cent on a road when their expectation was that they would only have to pay 3 per cent, when there is no expectation that the traffic will be increased by one ton by this additional cost. Have they come to the government representing that that they are burdened by a liability which they foolishly assumed without knowing the actual cost, and so consequently do not wish to issue bonds upon their own responsibility, but want the government to issue bonds for them. This leads to the further supposition that it must be clear to the government that never will the Grand Trunk Pacific pay the 3 per cent that now stands as part of the contract. We ought to know definitely whether it is contemplated that at a future day we shall be asked to relieve the company of that three per cent.


William Stevens Fielding: No member of the government has ever heard any suggestion or proposal such as my hon. friend has indicated.


James Davis Taylor: Is it the expectation of the government that the Grand Trunk Pacific will, at the proper time, commence the payment of the three per cent?


Mr FIELDING.: That is what the contract calls for, and I have never heard them question their obligation. They entered into the contract; it was a pretty hard one. Hon. gentlemen opposite pretended that it was a most favourable contract for the Grand Trunk Railway, and I have never heard that company make any suggestion regarding shirking any obligation under it.


George Eulas Foster: My hon. friend the Finance Minister says that not a dollar will

be paid for any work done until he has the certificate of his chief engineer. But how far back will the engineer go? Suppose a claim be made for $7,000,000, what kind of a certificate is the engineer going to give? Take the ties, for instance, that go into the road. The engineer is told that so many ties have gone into it and he satisfies himself that that number of ties has really gone into the road. The company say that these ties have cost, let us say 60 cents, and lay the vouchers before the engineer. Does the engineer go any further back or does he simply take these vouchers and base his certificate on them as regards the cost? It might happen that these ties went through three or four hands before being placed on the road. The first contractor might have got the contract at 60 cents. Then he sublets that contract say at 50 cents. The sub-contractor goes a little further down and gets them supplied at 40 cents. Then away down at the bottom, the man who takes them off the stump is paid, say 30 cents. Has the engineer the right to go back and find out what the ties cost from the stump?


William Stevens Fielding: I understand that the ties are obtained by public tender and contract. If tenders were advertised for and contracts awarded after public competition, it would not be the business of the engineer to follow the ties back to the woods. That which is obtained in open competition may fairly be taken as a standard price. Besides, the chief engineer has several assistants who live along the line of the railway and who watch its whole construction and report as often as is necessary. These would know and the chief engineer, even at this distance would, from his long experience, know the value of the ties. In the first place the company present their statement. Then there is an audit made of the vouchers and the books, and the auditor must be satisfied that these amounts are correct, as a mere matter of accounting. If there be an item which should not properly be charged to that service, the auditor from his experience and knowledge criticises that item, and certifies to what is correct. Then comes the question whether the charges are fair and reasonable. The chief engineer, through his general knowledge of railway construction and the information he is continually receiving from his assistant engineers, has to decide that point. He has to decide on the value of the ties, the cost of the rails, the cost of labour, the cost of moving so many yards of earth, and he certifies whether these charges are fair and reasonable. That is the method of auditing and certifying.


Joseph Elijah Armstrong: Did the hon. minister say that the sidings were being laid with old rails taken from the Grand Trunk Railway?


George Perry Graham: The statement made was, as I understood, that a certain quantity had to be used in that way.


Joseph Elijah Armstrong: Second-hand rails?


George Perry Graham: They might be secondhand rails, strictly speaking, and be absolutely as good for the sidings as new rails. They would have been used for many years if the Grand Trunk had not taken them up to make way for 100-pound rails. For all purposes, they will last longer on the sidings than new rails on the main line.


Joseph Elijah Armstrong: But are they secondhand rails? And are they first-class secondhand rails, or wha.t quality are they?


George Perry Graham: I understand that they are rails in first-class condition.


Mr. LAKE.: In connection with the statement made by the Finance Minister (Mr. Fielding) just now when questioned as to whether the prices were fair and reasonable, I would remind the committee of a little matter that came before this House a couple of years ago in regard to one of the contracts made by one of the contractors of the Grand Trunk Pacific Railway Company. During the discussion of the Robbins irrigation case, it was shown that an English company had taken over the assets of the company and also the assets of the Grand Forks Cattle Company. Amongst these assets appeared a contract for the supplying of meat to the contractors of the Grand Trunk Pacific Railway Company. When the assets were valued, the valuator spoke of this contract in the following terms:
I am prepared to say that a very moderate estimate of the value of this contract would be from $50,000 to $75,000.
And the Southern Alberta Land Company actually paid to the Grand Forks Cattle Company $50,000 for the benefit of this contract which they took over, and, I suppose, carried out. It seems to me that that shows that very extravagant prices were being paid at that time. The gentlemen who composed the Grand Forks Cattle Company were Messrs. J. D. McGregor, Brandon; D. A. Ross, Vancouver; A. E. Hitchcock, Moosejaw, and others.


William Stevens Fielding: Was this contract for the construction of a section of the road?


Richard Stuart Lake: It was for supplying meat to the contractors of the Grand Trunk Pacific.


William Stevens Fielding: It would not, then, touch the company itself. Assuming that the contract is let by tender, whether the contractor pays a high price or a low price for his supplies cannot affect the railway company. We are not concerned in following the case back to find out what the

contractor paid for his supplies. The sum of $50,000 would not necessarily be a large amount of money to make out of a contract in connection with the construction of a railway. Everything would turn on the volume of the business done.


George Halsey Perley: Have the government discussed with the Grand Trunk Pacific in any way the idea of transferring to the government the stock of the Grand Trunk Pacific to be held by the government until the loan is paid?


William Stevens Fielding: In my judgment, the taking of the stock as additional security would be of no value, as at present the stock has little or no' commercial value itself. The common stock 'of a company building a railway that is only one-half, or less, completed can hardly be regarded as, at the moment, a very valuable security. It may become valuable in time. But should it .become valuable, it can only be when the company's obligations have been met, and the meeting of the company's obligations would make our holding of the stock unnecessary. The fact that this stock has become valuable would be the best evidence that the obligations which the company have incurred were paid and the whole concern in a flourishing condition. Therefore, we should not get anything of value to us by taking the common stock.


George Halsey Perley: I would not suggest that the common stock would now be any security to the government in connection with the loan. At the same time, I do not agree with the Minister of Finance in what he has said. This stock at present has no market value to the government in case these bonds are not paid, hut we all know the difficulty there is when there is a default on the bonds of a railway. Proceedings would have to be gone through in order to get possession of the road. That case has arisen many times. The agreements made by parliament, especially in 1904, are very bad in that respect. That agreement provides that if the bonds guaranteed by the government are not paid, a receiver is to be appointed, and the receiver, if he has any money left after he pays the working expenses of the railway, simply has to divide that money pro rata between the holders of the first mortgage bonds and the holders of the second mortgage bonds so-called. In this case, the government is providing further money for this railway, and I do not suggest their taking this stock as security, but as a mere matter of proper care on the part of the government. The fact that, as the Minister of Finance said, the stock is of no present value is no reason, it seems to me, why it should not be transferred to the government to be held until the bonds are paid. Many not only in this House but in the country think that, as the people of Mr. FIEBDING.
Canada have to pay so much, they should have some of the stock of this company, to own it in perpetuity for themselves. That is one question that has been raised. But the question I raise is simply that of taking this stock and holding it until the debt is paid, so that, if there is a default the government may own the stock of the railway subject, of course, to the other liabilities, and may be able to administer it without going through the long course of litigation and trouble in case of default.


William Stevens Fielding: We are of opinion tha^ the machinery to protect the government is all that is necessary, and that the proposition to take over the common stock is of no value to us.


George Halsey Perley: Would the hon. ministei argue that, in case there is default in thf payment of these bonds, this $10,000,000 which the government is advancing, the government would not be in a better position to deal with the difficulties and to handle the road if it had this stock in its own name, rather than go through the process of law necessary to have the road foreclosed?


William Stevens Fielding: There are many interests involved in the road, and I think that if we take the usual method of protecting these respective classes of investors, we shall not go wrong. I think the hon. member magnifies the difficulties of enforcing the lien. I have no doubt that under the machinery provided, we can exercise as effective control as we could by the possession of the common stock. Anyhow, the Grand Trunk Company, by statute, is the owner of that stock. I do not think any advantage could come to us by asking the common stock to be put up as an additional security.


George Halsey Perley: Is the minister right in saying that the Grand Trunk is by statute the owner of that stock ?


William Stevens Fielding: Yes. Originally we required the Grand Trunk to acquire and hold that stock, we stipulated that they should hold it. One criticism that was offered was that it was a scheme by which individuals could get possession of this common stock, and put it on the stock market and speculate in it to their own personal gain, and we stipulated that the Grand Trunk should acquire and hold that stock.


Haughton Lennox: In 1904 we stipulated something else. The statute of 1904 pro vided that the Grand Trunk Railway Company could dispose, I think, of more than half of it.


William Stevens Fielding: I had forgotten that.


Robert Laird Borden: The agreement of 1904 modified that of 1903. That of 1904

merely required that they should hold a majority of the stock; therefore they could dispose of more than $12,000,000.


William Stevens Fielding: Would my hon. friend
quote the section?


Robert Laird Borden: Section 9 of the agreement of 1904.


George Halsey Perley: The intention at that time was that the Grand Trunk should pay for this stock. The Grand Trunk paid almost nothing for the stock. I submit that the minister should not endeavour to make the distinction between the Grand Trunk and the Grand Trunk Pacific in this matter. There is no difference, so far as we are concerned. The Grand Trunk Pacific Railway undertakes to build this road, and the Grand Trunk undertakes to guarantee it and see it through. Whether this stock is in the hands of the Grand Trunk or the Grand Trunk Pacific, matters not, as we are doing a favour to both of these corporations. I may say that the taking of this stock in the name of the government, in the meantime, does no harm whatever to either the Grand Trunk or the Grand Trunk Pacific. It hurts nobody, because it could be transferred to the government, and at the same time the rights of the Grand Trunk Railway to vote on this stock would be protected, so they would have full control of the enterprise in the meantime. It seems to me therefore that if that stock were transferred to the government it would be a good thing for the government and do nobody any harm. If the government are not prepared to make some such arrangement, I give notice now that I propose to move an amendment on the third reading.


George Eulas Foster: I would like to ask the Minister of Finance with reference to that stock that the Grand Trunk was to pay for. A small portion of that has gone to the directors, and they have paid a percentage upon it, some $200 or $400 each' on the shares they hold. The rest is held by three gentlemen in trust, I suppose, for the Grand Trunk Company. Now it has been stated that $205,000 has been paid. I see that $5,000 was paid by the directors in percentages on their total stock. But I see it stated in certain places that $205,000 has been paid on the bulk of the stock, the 249,000 shares. Does the Finance Minister know how that was paid, on what basis? Is it a percentage on the whole stock, and did that go into the road or into the treasury of the Grand Trunk Company? That is an important thing. The stock was not to go into the pockets of the Grand Trunk for nothing, its proceeds were to go into the road.


William Stevens Fielding: If any money was paid it would go into the treasury of the Grand
Trunk Pacific for that purpose. We gave the House the information furnished us by the company, and I presume it is on1 that my hon. friend is speaking. But I' could not tell by what process he reached; that basis. It was not covered by the, question, and I did not inquire closely into it.


George Eulas Foster: Then will the Finance Minister, in the audit of what has gone into the road, include that sum?


William Stevens Fielding: Unless there was_ work to represent it we could not include it.


George Eulas Foster: Then the minister does not know whether that $205,000 said to have been paid by the Grand Trunk for its stock, went into the construction of the road or not?


William Stevens Fielding: I could not say.


George Eulas Foster: Should we not have that information?


William Stevens Fielding: It may have a bearing on the question; I have not thought of that.


George Eulas Foster: I would like the Finance Minister to take that idea up, and have the certificate of the engineer if that $205,000 went into the actual construction of the road. For all we know, it may have gone into the coffers of the Grand Trunk, and we never made them take $25,000,000 of common stock to put into their own treasury, we gave them that stock to be used for the construction of the Grand Trunk Pacific. Then I think we have a perfect right to know whether that $205,000 represented so much cash, or so much material which absolutely went into the construe tion of the Grand Trunk Pacific. I think we should have that information.


William Stevens Fielding: If the information is accessible. I did give all the information that seemed called for. If the information can be obtained I will be happy to get it.


George Eulas Foster: The Finance Minister has laid down the principle that none of the money which is provided in the contract, from whatever source it came, was to be idly spent, it was all to go into the construction of the road.


William Stevens Fielding: And for other purposes in connection with it, whatever might be the general expenses of management.


George Eulas Foster: They have not been managing the operation of the road, they have been constructing it. It is in accord with the legislation that whatever money was paid on that stock, realized from any portion of that stock, should go into the construction of the road. Now, does the government know that it did, or has it taken any means of finding out whether it did or not? Would the minister give instructions

to the chief engineer to see whether that $205,000 went into the construction of the road or not?


William Stevens Fielding: The information I received I gave to the House. I will consider the matter.


James Davis Taylor: With respect to this common stock, what liability attaches to that stock in the possession of the Grand Trunk Railway Company? We are familiar with the ordinary conditions under which a joint stock company may hold its stock on which all the calls have not been paid. If the company get into financial difficulty their creditors can come back on them for the difference between what they paid and the face value. Now, parliament made this arrangement about the common stock on the solemn assurance of the Minister of Justice, as quoted by my hon. friend from Yale-Cariboo yesterday, that this common stock should not be parted with except for value. We find it has passed from the Grand Trunk Pacific for no value. The question occurs to me: What would hannen in future if the government or any other creditors wished to realize on their claims against the company, whether they could go back to the Grand Trunk as the owners of this stock and ask them to contribute the difference between what they have paid and the face value or whether they are exempt from that?


William Stevens Fielding: No, I think that if my hon. friend will turn to the Act of 1904, chap. 80, he will find that it is provided that the Grand Trunk shall receive that stock in return for certain services rendered and particularly for their guarantee. I have always thought that the guarantee which the Grand Trunk has given to the Grand Trunk Pacific is the chief service that it renders. The question which my hon. friend puts to me may be a legal one that I am not competent to answer, but my impression is that the stock would be held to be non-assessable and paid up and the chief consideration that the Grand Trunk gave for it was that they guaranteed the bonds of this subsidiary company. A man who undertakes to endorse his neighbour's notes for many millions of dollars, such as are involved in this transaction, renders a very valuable service. The Grand Trunk for the moment gets no advantage from that, because, as the hon. gentleman admits, there is no immediate value in the stock, but if in the process of time the stock should become valuable that is the compensation which the Grand Trunk will receive for the tremendous aid it is granting to the younger enterprise.
Mr, BURRELL. Surely the Finance Minister would regard it as singular that we, who have guaranteed three times the amount, cannot hold that stock as collateral.	*


George Eulas Foster: .


William Stevens Fielding: The Grand Trunk like every other railway company is a soulless corporation and is looking not for glory but for dollars and cents like every other business man.


An hon. MEMBER.: And they are getting them.


William Stevens Fielding: In reference to that criticism I would just say that no contract that was ever made for a great enterprise in the Dominion of Canada contains so many severe restrictions upon the contracting company as will be found in this contract. Instead of being of great profit to the company I do not hesitate to say that this is a contract which imposes a great burden upon them, and they will have to wait for the progress of years and the growth and prosperity of the country before they will find their reward. But, they are looking for their reward, as all corporations and financial men are looking for it, in the tangible form of profits, if not to-day, to-morrow or a future day. But, the government is not in this enterprise for the purpose of obtaining dividends. The government is in this enterprise for the purpose of aiding in the development of the country and the gain to the government representing the country is not to come in the form of a small percentage upon some common stock, but it is to come from the development and progress of the country.


George Eulas Foster: That is all very eloquent.


William Stevens Fielding: I did not think it was; I thought it was very sensible.


George Eulas Foster: I must pay my hon. friend the compliment of saying that it was very eloquent and, as it was intended, it brought a cheer from his followers and turned them away from the very pertinent question that my hon. friend asked. I want to ask the Prime Minister what he thinks of the statement made by the Finance Minister?


Wilfrid Laurier: I thought it was very eloquent and very true.


George Eulas Foster: I agree with my right hon. friend in saying that it was veTy eloquent but what did he think of it before the Finance Minister went on with his eloquent periods? What the Finance Minister seemed to say was that this stock belonged to the Grand Trunk and that they could do what they liked with it. They were given that stock because they guaranteed or promised to guarantee certain bonds. Having promised to guarantee certain bonds and having guaranteed certain bonds this was the reward, not now realizable, but at some time in the future. How does the Prime Minister reconcile that view of the case with his own solemn statement made to this House and reiterated everywhere,

that every dollar of the stock was, if it were required, to go into the road for the building of the Grand Trunk Pacific ? Is there anything like consistency and business integrity and straightforwardness in making the investment of $180,000,000 to $200,000,000 in this property as to the basis upon which you induced the country to go into it? Was not that the very prime part of it? The Prime Minister himself, who is supposed to keep his word, who is supposed to have his government in control, who is supposed to be superior even to a corporation, pledges his word as the Prime Minister that every dollar of the stock would go into the building of the road if required, and then, a year, or two, or three years afterwards, we have the statement of the Finance Minister that the stock is not to go into the road but that it is simply the possession of the Grand Trunk Railway Company and that it was given to them in payment for their guarantees in certain directions. The Prime Minister must see that these two positions are diametrically opposed. What does he think about it?


Wilfrid Laurier: I do not think they are at all.


George Eulas Foster: I had supposed that.


Wilfrid Laurier: No, my hon. friend will agree with me. I stated in 1903 that this stock would go to the building of the road. The Grand Trunk would put it to the payment of the road. The Grand Trunk have been advancing money for the carrying on of the enterprise. My hon. friend knows that we are in stringent times financially and that it is difficult to finance the bonds. The company therefore have had to come here in order to do their financing. What took place in 1884? I remember the speech which was made a few days ago by my hon. friend from North Grey (Mr. Middlebro). He presented a very eloquent statement and he made a comparison of the securities of the Canadian Pacific Railway Company in 1884 when they came here for a loan of $30,000,000 and the securities which are offered to-day by the Grand Trunk Pacific Railway Company. He stated that on that occasion the Canadian Pacific Railway Company had offered securities which he valued at $200,000,000, consisting of the land grant, 3,000 miles of railway completed, ships and subsidies. I do not think ;that my hon. friend exaggerated when be stated that in 1884 the Canadian Pacific Railway had securities to the value of $200,000,000 to offer to bankers and financial institutions in order to get the money necessary to complete that enterprise. Yet they could not get a dollar upon those securities. It is a matter of history that the Canadian Pacific Railway at that time went to the banks and financial institutions in Canada, to the banks
and financial institutions in New York, London and Amsterdam, offered $200,000000 of securities to get $30,000,000 and they could not get one dollar. It is a matter of history also that the men who were at the head of the enterprise, George Stephen and Donald Smith, offered their own personal notes to the banks and that they got money upon their own personal notes while the banks would not take the $200,000,000 of securities. Why was that?-because it is well known that the public will not invest in such big enterprises until they have reached a certain stage when they can command confidence. That is the position in whidh we are today. The' Grand Trunk Pacific cannot without loss realize upon their bonds at present and that is why the government had to come to the aid of the company, exactly as the government came to the aid of another company in 1884. The Grand Trunk has that stock; it will become valuable, it will be worth more than par and then they will get their profit out of it, and it is only fair and reasonable they should have whatever profit may attach to the enterprise. Is it for profit or glory that men go mto an enterprise of that kind? It is for profit, and therefore I see no contradiction between my statement and the statement of the Minister of Finance.


George Eulas Foster: I thank the Prime Minister for his eloquent period, but what I wanted him to do was to reconcile his position with the position of the Minister of Finance. Now let him pay attention to the plain English of what he did say, and then let him ask himself whether he meant anything or whether he was simply getting oil an eloquent period then as he has done to-night. It was at a time when he should have meant something and when he should not have let one word escape him which did not have its definite meaning and its pledge of the honour of the leader of the government behind it.


Wilfrid Laurier: Let me have your reading of it now.


George Eulas Foster: Yes; this is what the right hon. gentleman said:
My hon. friend from Hamilton says that the two companies are one and that the stock is to be taken by the Grand Trunk Company, and he asked how is the value bo be determined between the two companies. Well, the value is to be determined by the needs of the Grand Trunk Pacific Railway. The Grand Trunk Pacific Railway will require money to carry' on its enterprise. If it needs the whole $25,000,000 the amount of the capital stock at par, it will have to get it and can only get it from the Grand Trunk Railway. In such a case the value of the stock will be the par value because that will be the amount which the Grand Trunk Pa-

cific requires in return for its stock, or which the Grand Trunk Railway would have to pay. The value of the stock will be fixed by the needs of the company and cannot be fixed in any other way.


Wilfrid Laurier: I do not think that was badly put at all.


George Eulas Foster: I think it was very straightly put.


Wilfrid Laurier: Hear, Hear.


George Eulas Foster: It is not that I quarrel with the right hon. gentleman that he has not put things straight; I quarrel with him because he does not keep straight to the straight way in which he puts things. That is what I have been trying to impress upon him for a great many, years, but I have absolutely failed. The *debt hon. gentleman will get up to-day and he will put a thing as straight as the English language ean put it, so that you can take but one meaning out of it, but he does not keep to that. There is no other meaning to be taken from this language than that this stock being in the hands of the Grand Trunk Railway its value was to be determined bv the needs of the Grand Trunk Pacific; if the Grand Trunk Pacific needed $25,000,000, par was to be the rate, and it was to be given by the Grand Trunk Railway. The Grand Trunk Pacific needed $9,000,000 of that now. According to the statement of the right hon. gentleman who is the father of the scheme, when the Grand Trunk Pacific needed that money it was to go to the Grand Trunk Railway who had that stock, and on the basis of par it was to demand it. It got its $10,000,000, or nearly so, from the Grand Trunk Railway, but the Grand Trunk Railway has a halter round the neck of my right hon. friend, metaphorically speaking, and the Grand Trunk Railway proposes to keep this stock and to make the government do its financing, and so it pulled the string a little tight at a peculiarly opportune time, with the result that to-day we are finding the money and the Grand Trunk Railway keeps the stock. Why will not my right hon. friend, when he has such shining virtues of expression not add to them the still more sterling virtue of keeping to his word after he has pledged it?


Wilfrid Laurier: The Grand Trunk was to supply the money to the Grand Trunk Pacific I admit, but does the hon. gentleman believe that under present circumstances this stock could be placed on the market and its value realized? He knows it cannot.


George Eulas Foster: I will answer my Tight hon. friend.


Wilfrid Laurier: What is the answer?


George Eulas Foster: The answer is this. Suppose you say to the Grand Trunk Company: Mr. FOSTER.
' Such was the basis on which you received the $25,000,000 stock, and now you must give to the Grand Trunk Pacific at par th" $10.000,000 which it needs.' If the Grand Trunk Railway would say: 'We are not able at this time to do that "and we would like you to do our hanking,' then the answer of the Prime Minister should be : 'If you cannot put out par for that stock to the extent of the necessity of the Grand Trunk Pacific for this $10,000,000, we will put up the $10.000,000, but you must give us $10,000,000 of that stock.'


William Stevens Fielding: How much better off would we be when we had it?


George Eulas Foster: How much better off?


William Stevens Fielding: Not a dollar.


George Eulas Foster: The Minister of Finance is .magnificent in his utter disregard of the value of money and security when he is at work for those he wants to help-and who have helped him. In the second place the Minister of Finance is magnificent as a spender.


Haughton Lennox: The Prime Minister has asked if we expected that the Grand Trunk Railway could realize upon this stock at the present time. I will read the language of the right hon. gentleman to be found at page 7688 of ' Hansard,' and then the committee can construe its meaning. The Prime Minister said:
It may be asked, if the aid of the government is to be given only to secure the construction of 75 per cent of the road, where is the company going to get the other 25 per cent. The answer to that is this: that it is provided in the contract that the company shall be authorized to issue a second series of bonds which are to be guaranteed not by the government by the old Grand Trunk Railway Company of Canada. May I read here to the House this section, which is an important one.
The Prime Minister read the covenant and followed with this exposition of it:
I need not dwell upon the importance of that covenant on the part of the company. It practically takes away from the guarantee of the government all risk. There is not a dollar to be advanced by the government. We give our credit and nothing else, and our guarantee of 75 cer cent of the construction of the road is to be supplemented by the credit and all the backing of the Grand Trunk Railway Company itself.
As the hon. member for North Toronto says, if they cannot turn that stock over to advantage, let them hand it over to the government or give the government half of it and let us turn it over.


William Stevens Fielding: To whom?


Haughton Lennox: Let us guarantee it and sell it.


William Stevens Fielding: Guarantee the stock?


Haughton Lennox: Yes, guarantee it and sell it. Don't we often guarantee the stock of railway companies? If you do not want to dispose of it and raise money on it, raise the money as is now proposed, but let us have a majority of this stock and so let us control the policy of the company so that we can direct the routing of freight as we cannot now. The Prime Minister pointed out then that not only had we the absolute contract that every dollar of that $25,000,000 would be available for constructing the road from time to time as required, but also that the Grand Trunk would guarantee all the bonds beyond the three-quarters guarantee that we were to give and that the country would not be called upon for one dollar.


George Eulas Foster: I wish to read to my right hon. friend another very clear passage, because line upon line and precept upon precept may impress these things on the right hon. gentleman's mind with some force. At page 2483 of the ' Hansard ' of 1904, in regard to the leader of the opposition (Mr. R. L. Borden), he says:
The reason for inserting this condition of the contract last year a as that we wished to prevent speculation in the stock. Well, Mr. Chairman, the Grand Trunk Railway Company must raise money to carry out this enterprise. They cannot build the section from Winnipeg to the Pacific ocean simply upon the guarantee of the government, for that will cover only three-quarters of the cost of constructing this part of the road.
Remember that what the Prime Minister said was that the Grand Trunk Company must raise money to carry out this enterprise, not the Grand Trunk Pacific, but the Grand Trunk, which was in it and of it and the whole of it.
And then the equipment of the road is also to be raised from the public, and there are only two manners in which that can be done, either by the issue of bonds, or raising money on their stock. The methods we have adopted will enable them to go into the money market and obtain some money with which to carry on the work. Unless we had done that we would have put them in a position in which they would encounter greater difficulties than they should have to encounter in carrying on an enterprise of this kind.
That carries out exactly the doctrine that was enunciated in the other extract I read to the House, and the country took it so. Now neither the House nor the country can take it so.


Wilfrid Laurier: Why not?


Martin Burrell: I noticed that twice in this discussion to-day the Prime Minister has harked back to the parallel of the Canadian Pacific Railway. In his last remark he said it was a parallel case and he fully recognized the position of the member for North Grey (Mr. Middlebro) acknowledging that in the case of the Canadian Pacific Railway all these securities were placed in the hands of the government, a first mortgage on the line, the equipment, the steamships, the land and everything they had. These securities were worth nothing in the world's market at that time, but the government advanced money on them. He claimed that this was a parallel case. Let me point out that it would be if his government had not put these most valuable securities, these very branch lines and terminals, out of our power to touch. Every one knows that the Lake Superior branch line and the terminals, and more especially the town sites and other things which this does not cover, would be good securities and that the Canadian Pacific Railway put up securities of that kind. But the right hon. gentleman's government has specifically, in the contract of 1903, exempted all these very things which made the securities put by the Canadian Pacific Railway a real and tangible asset. On his own admission the personal notes and security of the gentlemen interested in the Canadian Pacific Railway were placed at the disposal of the government, whereas here we have the Grand Trunk Townsite Company, formed of Mr. Hays, Mr. Chamberlin, Mr. Wainwright, Mr. Baker and Mr. McHugh, yet none of these gentlemen have offered notes or securities. If we had all these securities there would be no criticism from this side of the House, and, therefore, it becomes all the more necessary that we should at least press for a reasonable share of this stock which hon. gentlemen on the other side of the House think is of no value, but which we think might be of some value.


William Sora Middlebro: The legislation of 1904, section 11, to which the Prime Minister referred, as as follows:
The directors of the company elected by the shareholders may make and issue as paid up stock, shares of the common stock of the company, whether subscribed for or not, and may allot and hand over in payment for plant, rolling stock, docks, elevators, wharfs, warehouses, vessels or materials of any kind, or as considerations for rights, powers, guarantees and privileges acquired, or services rendered, other than promotion services, and also for the bona fide claims of contractors and engineers, such an amount of such common stock as is a fair and bona fide value for the propery purchased, or for the rights, powers, guarantees and privileges acquired.
I would point out that the whole section appears to be clouded purposely as though to lead us to assume that the Grand Trunk was going to give valuable consideration in the shape of plant, rolling stock) docks, elevators, wharfs, warehouses, vessels, materials of any kind for the $25,000,-

000 common stock which they got from the Grand Trunk Pacific and the only consideration they exacted for that was the guarantee. That is to say they cloud the whole situation by putting in all these words, when no doubt the only intention) was to do as they subsequently did, take over the whole common stock in consideration of guarantees alone. That fully bears out the contention of the hon. member for North Toronto and since that company has got the whole of that common stock-because this section gives the right to transfer the whole of the common stock and I understand they have transferred it for the alleged consideration of $203,000-1 would ask the Finance Minister whether or not he knows if that $203,000 includes any promotion services because this section expressly forbids promotion services being a consideration.


William Stevens Fielding: I gave the House the information I got from the company.


William Sora Middlebro: Does the minister know?


William Stevens Fielding: I could not answer.


William Sora Middlebro: If there is, it is an express contravention of this section. I think the suggestion of the hon member for Argenteuil (Mr. Perley) is a very good one, especially in view of the fact that the company have paid at the most only $203,000 for this $25,000,000 worth of stock. The Finance Minister does not think that this is a valuable security but I point out that under the present arrangement, in case default is made in payment of the bonds which the government have guaranteed, the only remedy we have under that section is to take possession of the road, and when it becomes a paying concern hand it over to the Grand Trunk Pacific again. So soon as it becomes a bankrupt concern and does not pay its way, it is: saddled upon the country. If we have the common stock we can pay the bonds of the company and being the owner of the common stock we would be the Grand Trunk Pacific and have control of the whole situation. In that way we could become the absolute owner of the road subject only to the payment of interest. If we become owners of the common stock and control the company we get a tangible security because we get rid of this onerous condition of having to hand over the road when it is paying. If we had the stock we would be masters of the situation, and if the road did not pay could become absolute owners of it.


Joseph Elijah Armstrong: Could the Finance Minister give any definite knowledge of what the Grand Trunk Pacific were offered for these bonds which they could not sell?


William Stevens Fielding: A price offered by whom?


William Sora Middlebro: 


Joseph Elijah Armstrong: By the brokers.


William Stevens Fielding: I expressed the opinion that the bonds could be placed at about 90, and did not base it on any actual transaction, but on my knowledge of the money market.


Joseph Elijah Armstrong: If the sole purpose of this Bill is to relieve the money situation of the Grand Trunk Pacific to the extent of $10,000,000, why would not the Finance Minister take up $10,000,000 of their bonds as part security and give them the money?


William Stevens Fielding: I am happy to have that suggestion. That is the exact purpose of this legislation :
On section 3,
The issue of bonds to be made by the company hereunder shall be for a principal amount not exceeding ten million dollars, and shall be secured, subject to any prior lien or charge, by a mortgage or deed of trust by way of mortgage of the said prairie section and of the undertaking, equipment and property, tolls, rights and franchises of the company described in the said mortgage, and shall be guaranteed as to the payment of the principal and interest thereof by the Grand Trunk Railway Company of Canada (hereinafter called the ' Grand Trunk Company').


Robert Laird Borden: The security of that guarantee is a very remote one, as has already been pointed out more than once. The company has other securities which it might give. I shall not allude again to what has been said just now with regard to the advisability of securing stock of the company to be held until its loan is repaid; but there are other assets of the company which might very well be included in the mortgage. Let me allude to two of them. One is the interest of the Grand Trunk Pacific in a corporation which has secured a great number of town sites, namely, the Grand Trunk Pacific Townsite and Development Company. I understand that the Grand Trunk Pacific practically owns the whole of the stock in that company which has received very favourable terms from the government having been permitted to acquire a very large amount of land in .western Canada at an exceedingly low rate. There is no reason why that stock, aggregating about $3,000,000, should not be pledged as security for this loan. Then there is another asset which might be very well pledged to the government, particularly in view of the discussion which we have had this evening, and that is the interest of the Grand Trunk Pacific in the Port Arthur branch. No doubt that branch is already covered by a mortgage and of course I would not suggest that we should do anything which would in the slightest degree displace the security of that mortgage. But the Grand Trunk Pacific has

an equity in that branch as I understand it. It has an interest subject to that mortgage. Why should we .not take security upon that branch? I understand it is practically completed. A hen upon it would be of the greatest possible benefit to the government. Why is it that these two items of very considerable value- more partcularlv. perhaps, future than present value, although the interests in the town sites must be very valuable even at present,-are not included in the mortgage?


William Stevens Fielding: Our judgment is that that mortgage upon the property, remote thotigh it may be, and the guarantee of the Grand Trunk Railway, which has an established value on the market, are adequate security for this loan, and additional securities are not required to protect the public interest.


Robert Laird Borden: This is a fourth mortgage.


William Stevens Fielding: Not exactly a fourth mortgage, but a fourth lien. There is one intervening, but not in the form of a mortgage.	-


Robert Laird Borden: What will be the total value of the liens ahead of it?


William Stevens Fielding: I could not say now, but I gave it at an earlier stage, to the best of my judgment.


Robert Laird Borden: Well, in making a loan, it is desirable to have the security absolutely unquestioned. The pledging of these securities to make good this loan would be no detriment to the company and it would be of importance to the people.
On section 4,
4. The company, in addition to any powers which it now has in such behalf, is empowered to make such mortgage or deed of trust, and to create and issue the bonds contemplated by this Act, and the power of the company in such behalf shall not be deemed to be limited by the provisions of section 13 of chaper 122 of the statutes of 1903.


Robert Laird Borden: My hon. friend the Finance Minister referred to the enormous assistance which the Grand Trunk Railway had given this enterprise. We know that in consideration of that assistance, the Grand Trunk Pacific has handed over to the Grand Trunk Railway $25,000,000 in common stock. If the assistance given by the Grand Trunk Railway is large, that given by the country is enormously larger. My hon friend spoke of this contract as if it were somewhat an unfavourable one to the Grand Trunk Pacific. Let me point out that his own colleague, the Minister of Trade and Commerce, Sir Richard Cartwright, said in 1903, page 9361 of ' Hansard
I believe that a really good bargain may be one which is to the ad -antage of both parties. I think this is undoubtedly an instance of that sort.
He thus makes the distinct statement that this contract was eminently to the advantage of the Grand Trunk Pacific and the Grand Trunk Railway as well. In 1904 that contract was modified. Let me read what Mr. Alfred Smither who is a very able and influential member of the directorate of the Grand Trunk Railway, said:
Comparing the agreement of 1904 with that of 1902-3, that which we present to you to-day is a much more favourable agreement.
Therefore, the agreement of 1903, according to the declaration of the Minister of Trade and Commerce was one to the advantage of both parties, and the agreement of 1904, according to Mr. Smither, was still more favourable to the company. It cannot then be well said that this is a particularly burdensome agreement so far as the Grand Trunk Railway is concerned. The Grand Trunk Railway gets $25,000,000 of common stock of the Grand Trunk Pacific in consideration of the assistance which it gives to this enterprise. The country is giving to the same enterprise ten times as much assistance. Why not declare at this juncture. that, in consideration of the assistance this country is contributing to the enterprise, we shall have an absolute transfer to the government, in trust for the people, of not less than $10,000,000 of the stock of that company. The common stock has already been issued, the preference stock still remains. One is more valuable for investment purposes, or will be in the future, and the other for purely speculative purposes. But, if the assistance given by the Grand Trunk Railway Company calls for a transfer to them of $25,000,000 of the common stock, why does not the assistance given by the country, which is tenfold greater, justify handing over to the country $10,000,000 of the preference stock? The Minister of Finance says it is of no value. Put on the market to-day it may be of no value. Twenty-five million dollars of the stock of the Canadian Pacific Railway had no value in 1882 or 1884. But, if the government had, even with the conditions of the western country at that time, asked that in consideration of the assistance given, twenty or twenty-five million dollars of the common stock of the Canadian Pacific should be handed over to the government, cannot we see what a tremendous asset that would be in the coffers of the government at the present time? So, looking to the future, and not to the immediate present, and realizing that the security of the government in respect of this loan and these guarantees rests upon the success of this enterprise, realizing that we

are taking so great a share of the risk, whatever it may be of this enterprise, are not the people of this country honestly entitled to some share in its success if it shall be, as we hope it may be, a great success in the no distant future.


William Stevens Fielding: The hon. member is going over the same ground as my hon. friend from North Toronto (Mt. Foster). I can only repeat the argument


Robert Laird Borden: That was with regard to pledging it, I undei stood.


William Stevens Fielding: It is as to the profit to be derived from this common stock. The hen. gentleman says that, as we are contributing much more than the Grand Trunk Railway Company, we should have an interest in the common stock. I think that the contribution of the Grand Trunk by way of aid is enormously greater than the proportion he has occasionally indicated. However, we need not dwell upon that now. Whatever the grant is, they get for it only a second mortgage, while the government, for every dollar it puts in by way of its own guarantee, gets a first mortgage and is en-tirc-ly protected.


Robert Laird Borden: I do not understand that the Grand Trunk get a second mortgage.


William Stevens Fielding: Yes.


Robert Laird Borden: The hon. minister is describing the case precisely as it was under the contract of 1903, but he has not described the conditions of the contract of 1904. Under the contracts of 1904, if default of interest shall be made, the government stand precisely on the same footing as the Grand Trunk. A receiver is to be put in charge, the road operated and the surplus earnings given to the government and to the Grand Trunk in proportion to the bonds they are guaranteeing.


William Stevens Fielding: The effect of the legislation of 1904 was not to vary our first mortgage, but to provide that we might postpone the remedy for a certain time. We have, as I understand it, a first mortgage, whereas the Grand Trunk has only a second mortgage.


Robert Laird Borden: The only remedy provided under the legislation of 1904 is to put a receiver in charge, operate the road and hand over the surplus earnings to the two parties according to the amount of bonds they have guaranteed. I am speaking of the condition in case of default of interest; but that is the essential point, for if the road is operated for fifty years, or whatever the term may be, without default of interest, there would be no question as to first or second mortgage. The essential feature is, what is to be done in case of default of interest ? In that case, the Mr. FIELDING.
Grand Trunk is on precisely the same footing as the government. So, while the government has nominally a first mortgage, it has not a first mortgage in fact.


William Stevens Fielding: For a limited time there would be that distribution. But I think the hon. member will find that, while reserving to ourselves a first mortgage, for a limited time the receiver is appointed and the net receipts distributed pro rata. But our first mortgage remains. The hon. member's argument is that our remedy is only in default of interest and that practically we do not have a first mortgage. But that is only for a limited time-we postpone foreclosure for the time. I speak from recollection.


William Sora Middlebro: The effect of the legislation is that, for the first seven years, they do not pay interest at all. For three years thereafter they are allowed to capitalize it, and then we are not allowed to do anything for a period of five years. All mortgages are alike until there is default. But, under the 1904 contract 'with the Grand Trunk Pacific on default, the Toad is put into the hands of a receiver and the net receipts are divided between the parties in proporton to their claims against the road- 75 per cent to the government in respect of its guarantees and 25 per cent to the Grand Trunk. What does that mean? It means that we have no preference. If we had a first mortgage, we could take everything and the Grand Trunk get nothing. But as the net receipts are divided * pari passu,' it is not a first mortgage because other mortgages would not be entitled to one cent until our claim was paid in full if it were a first mortgage.


Robert Laird Borden: What the minister (Mr. Fielding) has in mind is that for a period of five years no rights shall be ex-exercised-default for less than five years does not entitle the goverinment to take action. But, if there is default for over five years, then the government may enter into possession and a receiver be appointed, and, in that case, the government and the Grand Trunk stand upon the same footing.


George Perry Graham: I think that, to a large extent, my hon. friend (Mr. R. L. Borden) is right. The other day, in discussing the matter, an hon. member left an impression on my mind that by the legislation of 1904 we placed ourselves in such a position that during the whole of these five years the holder of the second mortgage could practically step in and do anything he liked. I looked it up, and I find that that is an erroneous view. At no time can the second mortgagee step in ahead of our mortgage. But, after five years, the division will be on the basis of 75 per cent to the government and 25 per cent to the Grand Trunk.


Haughton Lennox: Practically we were turned into trustees by the contract of 1904. We had an ordinary first mortgage, but in 1904 it was provided that, in default'of interest, a receiver should be appointed who should distribute the proceeds in the way mentioned. As soon as they caught up on the interest, the property would go back into the possession of the company. As a matter of fact, we can never take possession of the road permanently.


Robert Laird Borden: I would like the Bill to remain in committee, in case we should have any further suggestions.
Progress reported.



REGISTRAR OF THE EXCHEQUER COURT.

[Stage Direction]
Bill (No. 98) to amend the Exchequer Court Act-Mr. Aylesworth-read the second time, and House went into committee thereon.
On section 1,
Hon. A. B. AYLESWORTH (Minister of Justice).: The whole purpose of this Act is to define anew the status of the registrar of the Exchequer Court. Two years ago an Act was passed with regard to the salary of the registrar of the court, fixing the salary of the present incumbent of the office at $3,000 per annum. As that was a special piece of legislation, it has been considered in accordance with the ordinary rule of interpretation of statutes that the provisions of the special Act would have force and effect instead of the provisions of the general Act with Tegard to the Civil Service which was passed last session, and the result would be that the position of the registrar of the Exchequer Court would be defined by the terms of the special Act of 1907 instead of falling under the provisions of the general Act with regard to the Civil Service of 1908. The whole purpose of this Bill is to place the present registrar and any future registrar of the Exchequer Court, under the provisions of the general Civil Service Act of last session. It will be observed that in the second subsection of section 2, it is provided that the registrar shall rank as an officer of subdivision A of the first division of the inside service, in or under the Department of Justice. That would be the position to which, in virtue of his salary of $3,000 per annum, the registrar would have been placed in the classification under the Act of last session if that statute had applied to his case. The whole purpose of this legislation, as I say, is to accomplish that result, and have the general provisions of the Civil Service Act apply to the registrar of the Exchequer Court instead of the provisions of the special Act of two years ago.
Bill reported, read the third time and passed.



DEPARTMENT OF LABOUR.

[Stage Direction]
House went into committee to consider the following proposed resolution:
Resolved, that it is expedient to establish tlie Department of Labour as a separate department of the Civil Service of Canada, with a Minister of Labour in charge of such department, who shall be paid a salary of $7,000 per annum; and that the Governor in Council may appoint in addition to the present staff of the Department of Labour one adi-tional clerk in the said department at a salary of $1,000 per annum, and a private secretary to the minister at a salary of $600 per annum.-Sir Wilfrid Laurier.
Wilfrid Laurier: That all the words after ' per annum J in the 3rd line be omitted.


[Stage Direction]
Motion agreed to.
Robert Laird Borden: As this is merely preliminary to the Bill I have no objection in letting the resolution pass on the understanding that any discussion which might ordinarily take place will take place upon the Bill in committee.


Wilfrid Laurier: Yes.
Resolution reported, read the first and second times and agreed to.
Sir WILFRID LAURIER moved for leave to introduce Bill (No. 165) to establish the
Department of Labour as a separate department of the government of Canada.


[Stage Direction]
Motion agreed to, and Bill read the first time.
Sir WILFRID LAURIER moved the adjournment of the House.
Robert Laird Borden: What may we expect on Monday if government orders are reached?


Wilfrid Laurier: On Monday, if we reach government orders, we will continue these Bills that are on the Order Paper, and I desire to move the House into Committee of Supply in order to give my hon. friend from Maisonneuve (Mr. Verville) an opportunity to speak upon the eight hour labour question.


[Stage Direction]
Motion agreed to, and House adjourned at 11.50 p.m.
[Stage Direction]


Monday, May 3, 1909.