1910-01-25

[Stage Direction]
Bill (No. 118) to incorporate the Burrard Inlet Tunnel and Bridge Company-Mr. Cowan.
Bill (No. 119) to incorporate the International Waterways, Canal and Construction Company.-Mr. Conmee.
Bill (No. 120) respecting the Royal Guardians.-Mr. Rivet.
Bill (No.; 121) to incorporate the Saskatchewan Central Railway Company.-Mr. W. M. Martin.

[Stage Direction]
Mr. STAPLES moved for leave to introduce Bill (No. 122) to amend the; Interest Act. He said; The object of this Bill is to make it impossible for a mortgagee, or any person or persons who may have a right to pay off a mortgage, to do so by giving reasonable notice to the mortgagee.
It also provides to prevent the 1 mortgagor or mortgagee from tying up the property indefinitely, and therefore to stand in the way of sale.
Motion agreed to, and Bill read the first time.

Sir WILFRID LAURIER.: The House remembers that under the terms of the Act authorizing the construction of the National Transcontinental Tailwav. it is provided that the portion of the railway from Winnipeg to Moncton is to be constructed by a board of Railway Commissioners under the joint supervision of the chief engineer of the commissioners and the chief engineer of the Grand Trunk Pacific railway. Naturally differences of opinion arose as to the classification of material, between the engineers of the Railway Commissioners and the engineer of the Grand Trunk Pacific. I say naturally, because it would have been extraordinary indeed if in the construction of a road of that magnitude, where there is such a variety of soil, it had not been the subject of some differences of opinion. The Act, however, provided that in case of a difference of opinion, a third person should be appointed as arbitrator. The board of arbitrators therefore was to be composed of the chief engineer of the Transcontinental Railway Commissioners, the chief engineer of the company, and a third arbitrator to be selected by the two, and if they did not agree, by the Chief Justice of the Supreme Court. As there were differences of opinion between the engineers, a third arbitrator was appointed in the person of Mr. Colling-wood Schreiber. After the board of arbitration had proceeded for some time, Mr. Lumsden, the chief engineer of the commissioners, resigned, in a letter which i3 to be found at page 28 of the blue-book which was brought down to the House a few weeks ago. On the 25th of June, Mr. Lumsden addressed the following letter to the commissioners of the Transcontinental railway:
My recent trips over portions of districts ' B ' and ' F ' in connection with the arbitration on points in dispute regarding the classification and overbreak between the chief engineer of the Grand Trunk Pacific Railway Company and myself (which arbitration might have been proceeded with more than eight months ago but for delay on the part of the Grand Trunk Pacific) have led me to the conclusion that neither the general specifications nor my instruction regarding classification have been adhered to, but on the contrary large amounts of material have been

returned as solid rock, which should have heen classified as loose rock or common excavation, and material has been returned as loose rock which was or could have been handled by plowing or scraping, and should have been returned as common excavation. On several residencies there seems to have been no attempt by the engineers to carry out my instructions and measure rock returned, either by showing the same on cross sections, or by measurements of individual pieces, but they simply appear to have guessed at the amount by taking percentage of the total cutting. In some cases where cross sections were prepared showing ledge rock, they proved to be erroneous, resulting in a very much larger amount of the solid rock being returned than actually existed. What is known as overbreak has also been returned in many places where it was caused h.y excessive use iof explosives, and where the material was wasted this should pot have been done. .
Such being the case, I must decline to certify to any further progress estimates in districts ' B ' and r F/ in view of the general disregard of my instructions, and having lost confidence in the engineering staff, I have concluded to resign my position as chief engineer, and have to-day written to the Hon. Minister of Railways and Canals to that effect, inclosing him a copy of this letter.
(Sgd.) HUGH D. LUMSDEN.
And in another letter, written on the following day, Mr. Lumsden says:
Dears Sirs,-Referring to my letter of yesterday wherein I stated that I have lost confidence in the engineering staff, I beg to state that this does not apply to the whole staff, but applies only to a portion of the staff who were responsible for the measurement, classification, supervision and inspection of considerable portions in district ' B ' and east of Rennie Crossing in district ' F' lately gone over by me.
(Sgd.) HUGH D. LUMSDEN.
P.S.-In order to make the matter clear, I may say I assume my resignation as chief engineer also carries with it my resignation as arbitrator in matters of dispute with the Grand Trunk Pacific Railway Company, but as there is a doubt raised by you, I also resign as arbitrator.
(Sgd.) HUGH D. LUMSDEN.
Before proceeding further I 'may say that the vacancy which was caused by the resignation of Mr. Lumsden was filled by the appointment of Mr. Gordon Grant, who has also been acting since as an arbitrator. The arbitration is now going on, the board as constituted being composed of Mr. Grant, Mr. Kelliher, chief engineer of the Grand Trunk Pacific and Mr. Collingwood Schreiber. The House will notice that in the letter of resignation of Mr. Lumsden he states that he has reason to be dissatisfied with the classification which has been made on the road. He thinks that there is a classification to the prejudice of the Sir WILFRID LAURIER.
commissioners and of the government. If this be true, and that is the very thing that is now being investigated by the board of arbitration, the over-classification may have arisen from one of three things. It may have arisen from the negligence of the local engineers in charge, it may have arisen from incompetency on the part of those engineers, or it may have arisen from bad faith on the part of those same engineers. But, whatever was the cause of that over classification, whether it was negligence, incompetence or bad faith, the result is the same so far as it is necessary to ascertain the amount of the over-classification.


Mr. FOSTER.: As to the local engineers to whom did they owe their appointments?


Wilfrid Laurier: To the chief engineer.


George Eulas Foster: Absolutely?


Wilfrid Laurier: As I understand the chief engineer was responsible for the appointment of these engineers and they were appointed upon his recommendation. I say this upon the information of my hon. friend the Minister of Railways and Canals (Mr. Graham) who will be able to give further particulars to my hon. friend. I was saying when I was interrupted that at the present time, if there has been over-classification, it is a matter which is now being investigated by the board of arbitration. It matters not whether it was caused by incompetence, negligence or bad faith. The question whether there was or was not over-classification is now underconsideration by the board of arbitration and, therefore, although it is obvious that it is the duty of this House to look into this matter, at the present time, so far as my own judgment goes, there is no cause to put an investigation over the investigation that is now going on. There i3 no occasion to go deeper into the subject to ascertain what is the amount of over-classification. The House will reserve judgment on that point. Later on the House will determine whether it should go further or not, but at this moment we do not think that there is any occasion to put another investigation on top of the investigation that is going on. But, there is one 'thing in which the House is very deeply interested and as to which we are all of the same opinion. It is the fact that Mr. Lumsden positively alleges something akin to bad faith, if not actual bad faith on the part of his staff of engineers. I call the attention of the House especially to this part of his letter:
In view of the general disregard of my instructions, and having lost confidence in the

engineers staff, I have concluded to resign my position as chief engineer.
That is a very broad, a very general statement. -One perhaps might question the judgment of Mr. Lumsden as to whether he was well advised, if he thought there had been bad faith on the part of his engineers, in tendering his resignation. At all events that is the step he took. He qualified his statement to some extent in a letter which he addressed to the commissioners on the following day in these words:
Referring to my letter of yesterday wherein I stated that I have lost confidence in the engineering staff, I beg to state that this does not apply to the whole staff, but applies only to a portion of the staff who, were responsible for the measurement, classification, supervision and inspection of considerable portions in district ' B ' and east of Rennie crossing in district ' F ' lately gone over by me.
In other words, on the 25th June, Mr. Lumsden had stated that he had not been properly served by the whole of his staff, but on the following ' day he qualified his statement by applying it only to those engineers who had gone over portions of district ' B ' and east of Rennie crossing district ' F '. Such was the position on the 30th December when I received from the chairman of the Transcontinental Railway Commission the following letter:
The Commissioners of the Transcontinental Railway, Ottawa.
Office of the Chairman.
Thursday, 30th December, 1909.
Dear Sir Wilfrid,-A printed copy is before me of the return asked for by the House in regard to our former chief engineer's resignation, forming sessional paper No. 42A.
When his retirement became known, it was the signal for a general attack upon the government as well as the commissioners by a section of the press. Comments and inferences were made most unfair to both, and which a lack of information does not justify.
The matter is one to which we cannot remain indifferent, especially in view of a certain statement regarding his staff contained in Mr. Lumeden's letter, pages 28 and 32. His words conveyed a serious, though vague, imputation on which, however, Mr. Lumsden had not seen fit to enlighten us further. Letters passed betwreen the hon. the Minister of Railways and Canals (pages 48, 49 and 50) and myself on this subject.
In another such instance, the charges made by one of our officers were investigated, with the result that they had to be withdrawn.
So far, we have wailed to see whether an inquiry in this case would also take place, inasmuch as Mr. Lumsden held a still more important office.
Now that the House is possessed of these documencs bearing on the question, I would beg leave to ask, on behalf of our commission, that an inquiry be ordered which will enable parliament, the general public and ourselves, to know what reasons, or facts, Mr. Lumsden had to justify his resigning on these grounds.
The commissioners are satisfied that they have always been guided by public interest in the performance of their duties. If the full investigation court should bring out any facts of which they were not aware, or dispel misapprehensions that might have been created by adverse criticisms, they will consider it to have served a useful purpose and their trouble well repaid.
Believe me to be.
Dear Sir Wilfrid,
You rs sincerely,
(Sgd.) S. N. PARENT.
Chairman.
I think the position is fairly put in this letter and that the House is entitled to know and probe the circumstances which led Mr. Lumsden to take the position he did in regard to his staff. Therefore, I beg to move the following motion:
Whereas it appears by a return made to this House during the present session, being Sessional Paper 42A, that Mr. Hugh D. Lumsden, late chief engineer of the National Transcontinental Railway, in a letter dated 25th June, 1909, addressed to the commissioners, resigning his position as such chief engineer, uses the following language: ' In view of the general disregard of my instructions, and having lose confidence in the engineering staff, I have concluded to resign my position as chief engineer '; and in a second letter, dated 26th June, 1909, addressed to the commissioners, the said Hugh D. Lumsden writes as follows:
' Referring to my letter of yesterday, wherein I seated that I have lost confidence in the engineering staff. I beg to state that this does not apply to the whole staff, but applies only to a portion of the staff, who were responsible for the measurement, classification, supervision and inspection of considerable portions in District ' B ' and east of Rennie Crossing, in District ' F,' lately gone over by me.'
And whereas, while this House deems it not desirable to take any action which might prejudice the position of either of the parties to the arbitration proceedings now in progress between the Grand Trunk Pacific railway company and the said commissioners, yet the said recited allegations of said Hugh D. Lumsden, stated by him as the reasons for his resignation of the said position of chief engineer, are in the opinion of this House of such great public interest and involve such grave charges against a portion of the engineering staff of the Transcontinental rail-wray, as to make it desirable that the same should be investigated by a committee of this Rouse;
Therefore, ic is resolved, that a special committee of five members of the House, to be named hereafter, be appointed to investigate the said charges and allegations of the said Hugh D. Lumsden against a portion of the said engineering staff of the said railway; that such committee have power to send for persons.

[DOT]2336
papers and records, to examine persons on oath or affirmation, and to report from cime to time.


Mr. HAUGHTON LENNOX (South Sim-eoe).: Mr. Speaker, I have listened attentively to the statement of the Prime Minister to ascertain if possible the scope of this investigation, and for some days I have been endeavouring to find, from such records as the government have been good enough to furnish us, whether the resolution introduced by the leader of the government would adequately serve the purpose of giving to he public the infosnation they desire in regard to this railway. I venture to say that this is but a very slight step in the direction of affording the public information. The Prime Minister does not propose, if I understand him correctly, that this investigation shall trench in any way upon the investigation which he says is being made by the three engineers appointed under the Act. The Prime Minister has told us that this investigation is proceeding, and while I understand it may be said to be ' pending ' I am not aware that it is actually proceeding. If I am wrong in that, I would like to be corrected right now.


Mr. GRAHAM.: In one sense it is, and in a strained sense it is not. It is not proceeding, just as parliament is not proceeding between the hour of adjournment and the next day's sitting.


Mr. HUGHES.: Have they started yet?


George Perry Graham: Yes, and they have only stopped work because they are not able to proceed during the winter months. They will begin again early in the spring.


Haughton Lennox: It is just as I anticipated. For two and a half years we have been following this government from season to season; we have been urging them in the spring and in the summer to get to work with the investigation, and in the autumn when these engineers organize and get ready to work they cannot work because it is impossible to proceed during the winter. The statement of the Prime Minister that this investigation is proceeding is absolutely misleading, because while these gentlemen have been brought together into being as a committee of investigation under the Act, not one step wall be taken by them to proceed with the investigation until next spring.


George Perry Graham: I am sure my hon. friend does not wish to make a statement which is not based on fact. They have started and have done some work on the arbitration.


Haughton Lennox: I will be greatly surprised if any return can be brought down by the government showing that they have made Sir WILFRID LAURIER.
any substantial progress in reference to this matter. But, what the country is interested in is, that this inquiry has been tied up since 7th October, 1907, and will be tied up for another six months, and that in the meantime great injury to the public will accrue by reason of this wrong classification- this dishonest classification I am inclined to think, but this wrong classification at all events-being continued to be made and the contractors paid upon progress estimates from time to time. But that is not the only-point; the Prime Minister wants us to understand that he is doing something in the public interest. He wants us to understand that, on his motion he had determined that action should be taken which will result in the public knowing how this matter stands. Now the Prime Minister knows perfectly well that if the instruction which he has given to those who represent the government on this proposed committee is carried out, and it will to the letter, there can be absolutely no investigation under this inquiry. What, are the facts? Mr. Lumsden says:
Neither the general specifications nor my instructions regarding classification have been adhered to but on the contrary large amounts of material have been returned as solid rock which should have been classified as loose rock or common excavation.
He also adds that large quantities of overbreak have been allowed which should not have been allowed, and these are the actual items which are referred under the statute to this arbitration of three experts who are said to be now proceeding with the work. And so we will be confronted with this. It is not a material question whether Mr. Lumsden has lost confidence in the engineering staff; we are not going to have a special committee of this House sitting from week to week to investigate that, when the gist of the whole thing is, not that he has lost confidence, but that he finds that his instructions with regard to classification and overbreak have been disregarded. Therefore, the very essence of the thing, the basic point of the Whole matter, is to ascertain whether or not that over classification has prevailed. Until you ascertain whether as a fact there has been over-classification and whether or not there have been allowances made with regard to overbreak which should not have been made, there can be no judgment come to by the committee as to whether Mr. Lumsden was justified in writing the letter he did. and whether there was a disregard of his instructions which would justify his losing confidence in a certain number of the engineers upon that work. But, Mr. Speaker, the matter narrows itself down a great deal more than that. The country is not concerned, alone, as whether or not there has been over-elassifi-

cation, or too large an allowance upon some other items upon the small section of the road which was investigated by these three engineers at the time to which Mr. Lumsden refers. What the country wants to know, if I understand it, is the methods by which this road has been constructed, the principle upon which it was launched, whether or not, in the original surveys and location, honest methods prevailed, or whether there is need and right to condemn the government, having regard to the enormously increasing cost to which this road is mounting, whether this is to be attributed to ignorance and incompetence on the part of the engineers, to the careless or dishonesty of those in charge of the road, not in an isolated section of 150 miles or so, as referred to in this resolution, but in the 1,800 miles from Moncton to Winnipeg. What the country wants to know is, was the government justified in 1903 in announcing by the Prime Minister and subsequently, in detail figures, by the Minister of Finance, that this road was to cost the country a total of $13,000000?


An hon. MEMBER.: Oh, oh.


Haughton Lennox: My hon. friend may laugh if he likes-a total cost to the country of $13,000,000, whether that mistake was an honest mistake or not, whether it was made with some knowledge of the facts or the government intended at the time to mislead. My hon. friend the judicial gentleman who has laughed, has filled his function very well in that regard, but I want to tell him that we have the statement of the Prime Minister deliberately- made in the House that it would cost $13,000,000 and not one cent more, and it was stated as the heading of the campaign literature on which that hon. gentleman was probably elected, that it would cost $13,000,000, and no more. The members in this House probably did ail mnderstand that the Prime Minister to mean that the total expenditure in the construction' of the road would be $13,000,000, but that it would cost the country, as money they would pay out and not get back, a total of $13,000,000 -yet there is great reason to believe having regard to the subsequent facts and even having regard to the language in which the hon. gentleman employed, that while it was not hoped that it should mislead the house, it was hoped that it would, and it did in fact mislead, and misguide a large section of the electors of this country. The point the people want to know, the point the people ought to know, is whether their money has been squandered or stolen in the construction of this railway or both.
When hon. gentlemen are making election speeches-and no one can make them better than the Finance Minister-I do not wish to tie them down to too narrow a margin, there ought to be some latitude allowed to a gentleman in his position, when he tells the country how much a road will cost, some little margin of 10 per cent or 15 per cent; but when we find that that gentleman told us as a matter of computation and investigation, after having time for inquiry, and after making inquiry, that he came to the conclusion that the total cost would not only not be greater but would actually be less than $13,000,000 and when in 1908 we have the present Minister of Railways and Canals telling the country that upon the same basis of computation and leaving out the Quebec bridge, the eastern division of this railway is actually costing the country $38,000,000 of money which it is never to get back, the public begin to feel that with a Public Accounts Committee stifled and gagged as our Public Accounts Committee is, there should be some method of relief, some method of demonstration to the public, if it can be demonstrated, that the government at the worst have been honestly blundering and have hot been criminally negligent of their duties in re-ggard to the construction of this great public work.
The Finance Minister said on the occasion of the introduction of this Bill on August 12, 1903, speaking of the section from Moncton to Quebec:
I am advised by competent authorities that, from the general knowledge possessed of that country, that road can be built at a very moderate cost. From Quebec or Levis to near the point where the railway will leave the province of Quebec it can be built at a comparatively low cost.
And that comparatively low cost figured out by the Minister of Finance, and he is not a poet, a Finance Minister must be a business man-figured out as he tells us on actual investigation, was a cost for the section from Moncton to Quebec of $25,000 a mile.


Mr. FIELDING.: My hon. friend is conveying the impression that I gave, of my own knowledge or information, estimates of the cost of this road. He knows me well enough to know that I would not presume to give information of that character. I gave the statement upon the authority of an eminent engineer and his name was given to the House.


Haughton Lennox: My hon. friend is not so good a listener as he is a talker. I shall read what he said again:

234U
I am advised by competent authorities that, from the general knowledge nossessed of that country, that road can be built at a very moderate cost. From Quebec or Levis to near the point where the railway will leave the province of Quebec it can be built at a comparatively low cost.
The public want to know what the government meant by that.


William Stevens Fielding: My hon. friend knows what the government meant. It meant the information given by the chief engineer of the Department of Railways and Canals, Mr. Collingwood Schreiber, C.M.G.


Haughton Lennox: I thought probably some thing of that kind.


William Stevens Fielding: Of course.


Haughton Lennox: I have something more for my hon. friend. I hope he is not losing his temper. He is an excellent gentleman until he gets excited, and I have respect for him even more in his calmer moments than when he is excited. He was giving us a judicial statement on that occasion, and he will admit that it is hard to square them with the facts of to-day. He told us that founded upon competent information and high authority-not upon isolated consultation but on many authorities-he had ascertained that the road from Levis to Moncton would cost $25,000 per mile. The section of 1,475 miles from Quebec to Winnipeg would cost a little more, or $28,000 per mile. Taking the two sections together, the cost of the whole road from Moncton to Winnipeg he estimated at $41,300,000. To that, he told us, we must add the interest during construction, which would bring the total cost up to $54,609,675. Then he went again into an elaborate computation and made out that the total interest charge on the country would !be a little over a million dollars per year, and the actual cost ot the country all told less than $13,000,000 for the whole undertaking. Contrast those figures with the figures given by the Minister of Railways (Mr. Graham) in the session of 1908. According to-his figures, the outlay, not taking the Quebec bridge into account, computed upon the sarfie basis as the $13,000,000 were argued or -by the Prime Minister and the Minister of Finance, would he a capitalized interest hearing fund of $38,000,000. And again as the Minister of Railways told us a year and a half ago, the road, instead of costing an average of about $27,000 per mile from Moncton to Winnipeg will actually cost $63,427 a mile.
In view of these facts, and the startling declarations made by Mr. Hodgins-declarations which were not withdrawn, hut were stifled and suspended on the promise that__he would be brought immediately Mr. FIELDING.
before a committee of three experts who were then said to be at work, and give his evidence to them-in view also of the .fact that a gentleman who, out of all the engineers in -Canada, was selected as the one best fitted for the position of chief engineer, and his statement that, after he had been in charge for some years, he found the most glaring disregard of his instructions, and in view still further of the startlingly damaging disclosures made by Mr. Woods, the assistant chief engineer of the Canadian Pacific railway, is it not amazing that the right -hon. the Prime Minister should propose to ms this gold-brick in the form of the resolution we are now discussing. But the Prime Minister is not responsible. He is simply doing what he -has been commanded by__the power behind the throne. There was a time when, in my simplicity, I thought that the right hon. gentleman, as Prime Minister, ruled his party and controlled the destinies of Canada, but I have since learned that there is a stronger hand than his-the hand of the chairman of the Transcontinental. That gentleman could afford to ignore even the Minister of Railways and reject a public document affecting the interests of the people and which should have been suto-mited to that minister. Two years ago that same gentleman demanded that the Prime Minister should have an investigation for the purpose of castigating Mr. Hodgins, and the same gentleman again is file moving power in this matter a.s revealed toy the letter of the 39th of December read by the right hon. gentleman this afternoon. It is an amazing condition of things, but perhaps were it not for that communication, the Prime Minister would not have -been aware of the existence of this Lumsden letter at all. Mr. Lumsden resigned the 25th J*une last. His resignation was published in every newspaper in the country. Tt was considered everywhere a matter of great significance, yet apparently the Prime Minister knew nothing about it. He knew nothing about that resignation until this gentleman -behind the throne said to him: You must have an investigation, you must whitewash me once more. And hence we have the preamble in this resolution:
' Whereas it appears, by a return made during the present session, &c.' Is it not fortunate that there is a leader of the opposition, that there is an-opposition in this House, as otherwise the Prime Minister would probably not have known of the Lumsden letter at all.
I have been moving for returns and they come down very slowly, but we have obtained some. We have succeeded in obtaining material which in -a large degree sub-

stantiates the statements made by Mr. Woods and Mr. Lumsden, corroborated to some extent by Mr. Grant, for Mr. Grant also admits that there has been over-classification to a very considerable degree, and thus refutes the statement made by hon. gentlemen opposite a year ago that there was absolutely nothing of the kind. We have evidence that the discrepancies between the original estimates and the actual returns, as the work was done, aTe so startling, so utterly inconsistent with any hypothesis of honesty or competency, that a most thorough investigation is required land not such a misleading, narrow, hide-bound investigation as the right hon. gentleman proposes. What is required is an immediate, broad, general and thorough investigation of the business on the eastern division of the Transcontinental, which will, show the methods which have been followed in its construction and which have resulted in the enormous expenditure which has startled the country. One would suppose that before letting any work, investigations must have been made by thoroughly competent engineers in order to enable the government to judge whether the tenders were reasonable ot not and which is really the lowest tender; and one can realize that unless the estimates of the engineers are unreasonably accurate, one cannot expect a satisfactory result. It is an absolute farce, a leap in the dark, if these estimates upon which the tenders are based and accepted are not reasonably accurate. I am informed, and by competent engineers, too, that, in this matter of classification, the very most that is to be allowed for margin of error is twenty per cent. If you find that the estimates as tendered upon do not work out within a margin of twenty per cent at most, there is immediate need for investigation, for the result must come either from incompetence-or dishonesty-of the engineers who located and estimated upon the line, or from the incompetency-or dishonesty- of the men who are classitying the progress estimates from time to time as they are put in. Therefore, I hope I need not apologize for referring to some figures, for I am only giving to the House information that I should have been glad had the government given it to us long ago. Now, taking district ' F ' and the McArthur contract extending for 244 miles east from Winnipeg, we find that the estimate of quantities of the engineers who laid out the work represented a total expenditure of $13,010,398. That was the amount that the government led the country to understand the work would cost, approximately. There was a change in the location effected by Mr. Hodgins, as he testified during the Hodgins investigation, which resulted in an estimated reduced expenditure of $1,010,398.92, leaving the estimated cost of the entire contract in round numbers, $12,000,000. Now, compare that with the returns actually made and with the allowancee on which the work was paid for. In the figures I am about to give, 'S.R.' stands for solid rock, 'L.R.' for Loose rock, and 'C.E.' for common excavation:



COMPARISON OF ESTIMATE AND RETURN.

[Stage Direction]
-	Estimate.	Yards returned.	Rate.	Estimated cost.	Actual cost.	Difference.	In- crease.S. R	
L. R	
C. E	
Totals .. 	
Less-Yardage bv '6'S p c. Cost increased by	c. yds. 3,696,336 733,454 11,233,247	c. yds. 6,492,923 2,029,325 2,123,151	$ cts. 1 70 0 60 0 30	$ cts. 6,283,771 20 440,072 40 3,369,974 10	$ cts. 11,037,969 10 1,217,592 00 636,945 30	8 cts. 4,753,898 10 777,522 60 2,733,028 80	p. c. 75 17615,663,037	10,645,399 5,017,638	10,093,817 70 2,798,691 70	12,892,509 40	2,798,691 70	28
15,663,037	15,663,037		12,892,509 40			
This contract has a feature in common with all the other contracts that have been brought down-solid rock grows, loose rock gTows, common earth shrinks. When I was a boy going to school I used tc Tead:
Stones grow; vegetables grow and live; animals grow, live and feel. We are animals; we feel.
The stones handled under these contracts have grown; they have grown enormously. And the memory of the over-classification- aye, and, I believe, the dishonesty-that characterizes this work will live and grow in the knowledge and recollection of the people of Canada. Common excavation shrinks in these cases. It was only worth
[Stage Direction]
thirty cents a cubic yard; it was not woTth keeping. And, though it was estimated to cost about $3,500,000, it actually cost only $636,000. But, though we saved on that about two millions and three-quarters, it was like feeding the peas to the pig in the story-we gained on the pig but we lost on the peas. And the whole thing works out disaster and loss to the people of Canada. Here we had 15,000,000 of a total estimated yardage of material to be moved. In the result only about 10,000,000 has to be moved, an error of upwards of 5,000,000 cubic yards in the total by a 'competent' engineer. And the chairman of the commission tells us with pride that they have upon the line practically the same engineers as they had at the time the line was located. It was to cost about $10,000,000 for the whole 15,000,000 cubic yards; but the actual cost is $12,890,000. That is, while we have a decrease in the quantity of about one-third, we have an increase in actual cost of $2,798,791.
Mr. SPEOULE.: That's the way the money goes?


Haughton Lennox: Yes, that's the way the money goes. And yet the right hon. Prime Minister, in the interests of the public, as he says, would ask us to have an investigation as to whether Mr. Lumsden was right in losing confidence in his staff-but you must not touch the substance of the question, namely, the cause of that loss of confidence. The figures I nave given show that the average rate, according to the classification, was 64 cents a yard, but the average rate as now classified is $1.21 a yard. That is, it was to have cost 64 cents for each cubic yard removed; as a matter of fact it has cost $1.21 per cubic yard. The quantity is five millions less to remove, but it is costing us $2,750,000 more to move it. The whole work, everything of the 103 schedule items which appear in the returns brought down, covering everything, except rails and ties and things of that kind, the total expenditure on the contract was to be, as I said, $12,000,000 foT 103 items; the actual expenditure for three items alone is $12,900,000, or in round figures $900,000 more for these three items than it was to be for the 103 items entering into construction of this whole 244 miles of road. Now, the Minist:-of Finance-I am sorry he has run away-made careful estimates upon competent authority, and he found that this section of the road was to cost on an average $28,000 a mile. What does he think of it? Does he think that an investigation is necessary or not. when I tell him that these three items alone aver-Mr. LENNOX.
age, for this 244 miles, at the rate of $53,000 a mile. Well, that is the McArthur contract, and there is more of it.


Mr. GEO. TAYLOR.: A lot of election fund came out of that.


Haughton Lennox: There is a way of manipulating figures so that the wrong man gets the contract. If you will just place the items unevenly, estimate some of them extraordinarily high and others extraordinarily low, and particularly if anybody gets behind the scene, or the screen, and ascertains how those figures are running, there is a vast temptation and there is a great chance to have dishonest tenders. Now McArthur's contract, I want to state here, Mr. Speaker, was absolutely not the lowest tender. If there had been a competent or honest estimate at the time, and competent and honest returns and classification as the work progressed. The Pacific Construction Company's tender was the next lowest, and there was only a difference of $18,000, and this seeming difference only between those two tenders. It does not take much manipulation to change those figures. Just take half a dozen items which we have on record now, and they wipe that out. Take these items: 4, 5, 6, 8, 12 and 24. Now I need not go into many particulars, but I want to say that, taking the difference in prices in favour of the Pacific Company on those six items alone, they result in this, that Mr. McArthur was not the lowest tenderer but was actually a higher tenderer than the Pacific Company. Endeavouring to shorten this as much as I can, let me give only a few of the figures. Take these items we have been dealing with. On those items, as the estimates were advertised to the public, the Pacific Company appear to be $221,000 lower than the McArthur figures. Actually worked out upon quantities as returned and allowed, the Pacific Company's figures were really $426,112 lower. So you see upon these two items alone, under: the changed conditions of things, more than enough, enormously more than enough, to give the tender to the Pacific Company. There were 2,750,000, in round numbers, more yards of solid rock than was estimated. The Pacific Company was five cents per yard better on the tender than the McArthur Company; that in itself makes $139,000. On loose rock, there was a differnce of 1,250,000 yards; that, at the rate of five cents a yard, makes $64,000. And so on these five items alone there is a difference of only $18,000 to start with, it shows that we would have been $186,000 in round numbers, better off by giving it to the Pacific Company than by giving it to the other company.

Now we come to a very interesting contract, and a very interesting section of the road, and that is from mile 0 to mile 150 west of the Quebec bridge. That contract, 'so far as I can understand, was let to McDonell & O'Brien, or Hogan & Mc-Donell. I have ascertained through Mr. Ryan, the secretary of the board, that there is no confusion as to the particular work in hand, and so we need not trouble ourselves as to which of the contractors handled it. Mr. Ryan explains to me that, by some subsequent arrangement with M. P. Davis, M. P. Davis and J. T. Davis became contractors for the first 50 miles. I am only concerned to show the extravagant, the wholly incompetent or dishonest-estimates in regard to quantities. Now as regards the difference of quantities. We have the estimates showing a little over a million cubic yards, and we have the actual returns allowing for more than 3,500,000 cubic yards. We have the estimated cost, upon the estimates of quantities, at $1,750,000, we have or alleged actual quantity, mark you, on this one item an actual expenditure of $5,512,102.	We have a difference here of
$3,758,377 a startling difference which ought to arouse the Prime Minister's attention, convince him of the necessity of a further investigation and bring him to a keener
sense of his duty. We have an actual difference in this estimate of 214 per cent.


Thomas Simpson Sproule: It is very much like the cost of the Quebec bridge.


Haughton Lennox: 

Common excavation according to McDonald's tender would have cost 21 cents a yard, an excessively low price. It was estimated that there was an enormous quantity of it-6,313,682 yards-and at the rate of 21 cents a yard it cost $1,323,773. By O'Brien and Mullarkey's figures, which were four cents higher, or 25 cents a yard, it appeared to amount to $1,575,000. The result was that upon being figured out on the basis of the estimated quantities Mul-larkey was $177,849 behind.


Mr. JOHN HAGGART.: You mean lower?


Haughton Lennox: Mullarkey appeared to be higher by $177,849.


Mr. R. L. BORDEN.: On the estimated relative quantities?


Haughton Lennox: On the estimated quantities, as put in because of this reason that although he was lower on the smaller quantity he was four cents higher on the larger quantity. If the large quantity had re-manied that would have been just. As a matter of fact it was not so at all. On the actual quantities it worked out in this way. Solid rock grew into 3,674,735 yards which at $1.50 a yard amounted to $5,512,102 and at $1.45 a yard, Mullarkey's price, it amounted to $5,328,365. There was a considerable gain there because the quantity
had increased and the five cents a yard difference counted all the time. The loose rock had again increased and with the same result, common excavation decreased and of course did not count so much against Mullarkey as did the larger quantity that was estimated before and upon which low priced material he had put in a higher price. The result was that McDonald's price was $6,880,408 while Mullarkey's price, on the actual quantities allowed and paid for was $6,695,347. There was an actual difference and there would have been a gain to the country if Mullarkey had got the contract of $185,000. But that is not all. Mullarkey appeared to be $177,000 on the wrong side of the account as I showed a moment ago. The result was that upon the actual figures it would have worked out at $363,000 less if honest estimates had obtained. Deduct from that the difference in tenders and you would still have in favour of Mullarkey and in favour of the country $110,000. If you take a half dozen other items in connection with this same matter, the particulars of which I need not go into, you will find that wherever Mullarkey was low the quantities increased-and wherever Mullarkey was high the quantities decreased strangely enough. Taking only these items at the head of the list and adding them we have another $175,000 in favour of Mullarkey's tender.



COMPARATIVE STATEMENT BY RESULTS.

[Stage Direction]
At McDonald's Prices.	At Mullarkey's Prices.
Solid rock.. 3,674,735 c. yds. at SI.50, $5,512,102.50 Loose rock. .1,736,564 n 0.50 868,282.00 Com. exc. .2,383,166 „ 0.21 593,525.00	Solid rock.. .3,674,735 c. yds. at $1.45, $5,328,365.75 Loose rock . .1,735,564 n 0.45 781,453.80 Com. exc.. .2,382,166 „ 0.25 596,529.00
$6,880,408.86	$6,695,?47,55
McDonald	$6,880,408.86
Mullarkey	6,695,347.65
Difference in favour	of	Mullarkey	$	185,061.31Add apparent balance against him	of	177,949.78A turnover of	$	3G3,011.09Deduct difference in tenders	
252,946.68Net amount in	favour	of	Mullarkey	$	110,064.41
Now I have dealt with the two sections of the road that have been most frequently referred to. We have been told bv hon. gentlemen opposite and far more by the Grit press of the country that the country is perfectly safe because the Grand Trunk Pacific railway will look after this. Why, the Grand Trunk Pacific are con-Mr. LENNOX.
tractors in this matter. When we formed the scheme of building this road-and it was a scheme-the Grand Trunk Pacific said the most they could undertake to do was to build the prairie section, but they did not stick to that. They wanted to make something beyond that. When the country undertook to build the difficult div-

ision, the division that it is said will never pay, then the Grand Trunk Pacific railway company became contractors themselves for the building of portions of this line, and have you heard of any complaint being made by Mr. Woods of over classification upon the portions of the road that these gentlemen are themselves building? I do not think so, and I venture to say, Mr. Speaker, that you will not hear of any such complaints. But, Mr. Speaker, after an investigation of this matter I declare that the same kind of over-classification and the same growth of solid rock obtains down in New Brunswick, and between New Brunswick and Quebec, where these gentlemen are contractors. The same system prevails, and in some instances in almost the same degree under those contracts that obtains in those divisions to which reference is now made. We are told that we can rely for safety upon the action of the Grand Trunk Pacific; this company with its numerous aliases which becomes increasingly dangerous by reason of these aliases. We have the Grand Trunk Pacific Railway Company in this transaction, and as the Minister of Finance told us, we have the old Grand Trunk at the back of it, and we have the Grand Trunk Pacific Branch Lines Company, and we have the Grand Trunk Pacific Construction Company, and we have the Grand Trunk Pacific Town Site and Development Company, and the Grand Trunk Pacific Telegraph Company, and the Grand Trunk Pacific Express Company, and perhaps the Grand Trunk Pacific Steamship Company. And behind them all, and if there were a thousand more of them, I am not prepared to rest the interests of the people of Canada. And why? Perhaps ks far as Mr. Woods is concerned it was all right and I have not referred to the letters of Mr. Woods, nor have I read extracts from the letters of Mr. Lumsden, because hon. gentlemen on this side of the House will deal with these questions; but I call the attention of the Prime Minister to this fact: that a strong fight was put up by the Grand Trunk Pacific; they were fighting for a broad general inquiry and they were hampered and opposed, and by whom? Why, Sir, by the man who should represent the people of Canada, by the chairman of the commission. What should have been his duty? Why should he not have said: We will have this investigation, broad, and generous, and free, and in the interests of the people of Canada. I do not care whether Mr. Woods objected or not, I want to ensure in the interest of the people whom I represent that there shall be no dishonest classification. But no, he fought like a tiger; he fought, I should say, almost like a fiend to prevent the extension of this inquiry, and to confine it within the narrowest possible limits. And the fight went on, 751
and we have the experts resign, and we have the chairman of the commission upon the mere ipse dixit of some local engineers, without one word of investigation, one word of inquiry, without asking for any explanation condemn these three experts. What have we further? We have the master hand; we have one of the great and able men who form the right hon. gentleman's cabinet, we have the master mind of the Minister of Public Works entering the arena. And it was then, and not till then, that the whole situation resolved itself into one of perfect amity and dove like greetings all round. The Grand Trunk Pacific Railway Company, and the old Grand Trunk Company, and the Grand Trunk Pacific Construction Company and the various other companies that represent this one original body, collapsed, and after fighting for a broad investigation, we have in the last pages of the return brought down we have it provided and agreed that the investigation is to be confined to the narrowest limits. Was the chairman of the Grand Trunk Pacific Commission acting in the interests of the public whose interest he had a right to protect, or was he acting in the interest of the contractors when he insisted that the investigation should be so narrowed. Do you think, Mr. Speaker, having regard to the figures I have quoted to you (and you have a mind for figures), do you think we should have this investigation upon the narrow limits the Prime Minister suggests? Let me refer for a moment to the condition of things from Moncton to Quebec, where no complaints have been made, and particularly in New Brunswick, for the purpose of showing you, Mr. Speaker, that the same infamous-I think I am right in using that word-the same dishonest, and the same unfortunate classification that prevails in sections B and F, prevails on this section of the road as well. In other words, from end to end of this line we have this amazing state of things, that the high priced class of materials grow and swell, and the low priced class of materials dwindle and shrink. And the net result is that on this road, in the province of Quebec where, the right hon. gentleman in introducing this measure, described the roses as blooming in the fertile fields, and along the fertile belt in the province of Ontario, everywhere rocks are found where no rocks were expected, and the price of material is doubled and more than doubled, throughout the whole length of the line. I realize, Mr. Speaker, that when it comes to dealing with figures I am not an expert, and that I do not handle them aptly, and my excuse for quoting figures now is that the people should know, and so far as it is in my power, they shall know, what it taking place in regard to the construction of
[Stage Direction]
this railway. We have an hon. gentleman on this side of the House, who, in the interests of the public, is endeavouring to lengthen the day and bring more daylight to the people, but God knows, if there is anything we need in this matter it is not so much the lengthening of the day as a flood of light let in on these transactions so that the people of Canada may know what is happening.
Thomas Simpson Sproule: You want the lime light on it.


Haughton Lennox: You recollect what I said as to the statement of engineers as to reasonable error, a matter of probably twenty per cent.
On the first section from Moncton, fifty miles, the contract for which was, I think, let to the Grand Trunk Pacific, the total estimated cost was almost a million dollars. It was said that there was absolutely no solid rock and only 130,000 cubic yards of loose rock. That would appear to be pretty nice country. Hear how it worked out. The total quantity excavated was 1,460,000 cubic yards. The rates for the three classes of material were $1.50, 55 cents and 25 cents. The section was estimated to cost $531,000. The estimated average rate for excavating was 26 cents a cubic yard. I got returns down to December, 1908, and I found that 5,000 cubic yards odd of solid rock had been taken out and
4,000	odd remained to be removed, making a total of 10,000 cubic yards of solid rock. Where there wa3 to be 130,000 cubic yards of loose rock, it grew into 850,000 cubic yards, and where there was to be 1,900,000 cubic yards of common excavation it shrank to 600,000 cubic yards. The average cost of that, as I said, was 26 cents a cubic yard. The result is that we saved on common excavation apparently $310,000, we removed three-quarters of the total estimated quantity and we added, notwithstanding that, $100,000 to the total cost.


John Graham Haggart: Is that section finished?


Haughton Lennox: I am not aware of that. I asked for a return showing how much work had been done and how much remained to be done. They gave the quantity done and the amount remaining to be done and adding the two it gives this total amount. On this section the solid rock rose from nothing to 10,000 cubic yards, the loose rock from 130,000 into 850,000 cubic yards, an increase in the latter case of 556 per cent. Engineers call anything above common excavation classified material. In that contract we had fifty-two per cent of classified material, whereas the estimate of classified material was Mr. LENNOX.
only seven per cent. We are paying for
1,500,000	cubic yards at 43 cents a cubic yard; we should be paying for the same quantity at 26 09 cents, or we are overpay ing $238,000, or at the rate of 60 per cent beyond what we should pay. The increase on the whole contract is $600,000 or more than 70 per cent.


George Eulas Foster: Who has that contract?


Haughton Lennox: I think it is the Grand Trunk Pacific, but I am not absolutely sure; I did not mark it. I have some Grand Trunk Pacific contracts. Mark you they are returned as Grand Trunk Pacific, not as Grand Trunk Pacific Construction Company. Yes, this is a Grand Trunk Contract.
Mileage from 50 to 58 was contracted for by T. W. McManus. The total estimated cost was $289,000. It was estimated that there would be no solid rock that there would be 58,000 cubic yards of loose rock costing $29,000, and 529,000 cubic yards of common excavation, costing $111,000. It has increased from 58,000 cubic yards of loose rock to 247,000 cubic yards, and that class is costing instead of $29,000, $123,000. Common excavation was estimated at 529,000 cubic yards and it is now 93,000, The result is that while the estimated cost was $140,000, the actual cost is $273,000 for a less quantity. The average cost at the original estimate would be 24 cents per cubic yard. The rate of the expenditure has actually increased by 166 per cent, or, in other words, we are paying at more than two and a half times the estimated rate of expenditure. It works out in this way:
Material.	Estimate.	Actual Quantity.	Estimated Cost.	Actual Cost.Solid rock	c. y. 85,000	$	$ 128,100Loose rock	58,000	247,000	29,000	123,800Common	excavation....	529,000	93,000	111,000	19,000
In other words we have it in this way. The estimate allowed for no solid rock, less than ten per cent of loose rock, and more than ninety per cent of the estimate being for common excavation. As it turns out it becomes twenty per cent solid rock, fifty-eight per cent loose rock and twenty-two per cent common excavation. We were to have had classified material amounting to less than ten per cent. As it works out, we have classified material at the higher

price to the extent of more than seventy-eight per cent.


George Taylor: The whole staff ought to be dismissed.


Haughton Lennox: Yes, but the chairman of the commission is proud of the fact that we have practically the same engineers on the work now as at the time when the contract was let.


Mr. NORTHRUP.: I suppose they are equally proud of him?


Haughton Lennox: Yes, I suppose they are. Take mile 58 to mile 96. There had been expended on that piece of road up to December 31, 1908, $584,000 and there was then to be expended $639,000, making $1,224,000 against an estimate of $767,000, an increase of $456,723, on a matter of twenty-eight miles. The common rock estimate ill that case was 29,000 cubic yards, but it increased to 75,000 cubic yards. The loose rock was estimated at 492,000 cubic yards and was increased to 545,000 cubic yards. Therefore the solid rock was increased by 240 per cent and the loose rock by eleven per cent.
'District ' A ', mile 96 to 164 from Moncton. The contractors are the Grand Trunk Pacific. Estimated cost $1,898,124. The increase in solid rock on that section was ninety-five per cent. That is only one instance in many to show that we cannot depend on the Grand Trunk Pacific to fight our battles in this matter. The increase there was as great almost as on any section of the road, yet naturally there was no kick over that from the Grand Trunk Pacific. What I claim is that it is the duty of the commissioners-and if they neglect it, it is the duty of the Prime Minister-to see that we have an investigation, no matter whether the Grand Trunk Pacific complain or not. In view of the startling increase in expenditure over the estimate, we should have an investigation by a committee of this House, a thorough and exhaustive investigation into every thing connected with the building of the road, so as to determine the cause of this extraordinary expenditure, which bears on its face every evidence of dishonesty on incompetency.
Take the district ' A ', mile 96 to 164 from Moncton. There is an increase of ninety-five per cent in the solid rock under that contract. The result is that on this one item of solid rock out of loose rock we have 68,367 yards at $1, or $63,367 increased expenditure over estimate. We have also an increase of 231,299 cubic yards of solid rock out of common excavation at $1,18, or an increase of $272,983, giving a total increase on this one item alone of $341,300.
Take the contract district ' A ', from 164
mile to 195 mile, let to Willard Kitchen & Company. The estimated cost was $1,646,000. The estimated quantity of solid rock was 253,000 cubic yards, but the actual quantity turned out to be, it is said, 525,850 cubic yards, or more than double. The estimated cost of the solid rock was $376,000 but it actually cost $783,000. There was a decrease in the loose rock and also in the common excavation, but the loose rock was all run into solid rock which is very significant. On the whole 21 contracts, there are only two cases where loose rock decreased, but in each case it went into solid rock. What is the significant point behind this? Take the whole list of tenders and none of them came near this figure of thirty-five cents for loose rock. They ranged as high as 55c. It looks as if this firm of Willard Kitchen & Company-and I believe they are pretty well known to some of the right hon. gentleman's political friends-by some unfortunate accident got inside information. At all events the matter is one which demands investigation. It was estimated that the total quantity to be removed would be two and a half million cubic yards, but the actual quantity was 1,155,137, or a difference of 1,293,000 cubic yards. How do you account for that difference when there was so much competent engineering skill at the service of the government, and when the government had mountains of information, as the right hon. gentleman told us? What was the result? They moved only forty-seven per cent of the estimated quantity, but we paid ninety-seven per cent of the total estimated cost. On one and a quarter million yards less material moved, we saved a paltry $28,000, but we jumped our price from an average of forty-one cents to eighty-five cents per cubic yard, thus increasing the cost to the country by $580,000, and we saved on the part not removed one and a quarter million yards at the rate of two and one-quarter cents per yard.


George Eulas Foster: That is on a thirty-one mile contract?


Haughton Lennox: Yes. Solid rock increased by 107 per cent; the common excavation, which was said to be one and a quarter million yards, becomes 196,000 cubic yards, or an over-estimate by competent and honest engineers of yards, 1,027,599 cubic yards, or at the rate of 522 per cent.


George Eulas Foster: That is fairly accurate.


Haughton Lennox: The net estimate on actual quantity was $1,116,015 and there has been expended $905,000, and there is yet to be expended $1,327,793; or this contract has increased by $1,116,000 or more than double.


George Eulas Foster: What is the total cost?


Haughton Lennox: 


George Eulas Foster: Pretty nearly $75,000 a mile-where is the Minister of Finance?


Haughton Lennox: 
Hugh D.: I/umsden in tendering his resignation as chief engineer of the National Transcontinental Railway has made grave chages touching the expenditure of public moneys in the construction of the said railway, which charges ought, in the public interest, to be thoroughly investigated.
And whereas the cost of the eastern division of the said railway, according to the latest estimates of the government, will be so enormously in excess of the estimates submitted to parliament in 1904 and 1905 as to arouse the most serious alarm and to call for the fullest inquiry.
Therefore be it resolved that a committee of seven members be appointed to investigate the said charges and all other matters connected with or relating to the construction of the eastern division of the said railway and the expenditure of public moneys thereon.
That the said committee shall have power to send for persons, papers and records, to examine witnesses on oath or affirmation and to report from time to time.


George Perry Graham: of work has been done by the Board of Arbitration. Another thing in which my hon. friend I think was in error, was in saying that no exception had ever been taken to any of the Grand Trunk Pacific contracts. I think my hon. friend could not have studied even this 42a closely. I want to call his attention to one item, it is not large, but it proves that exception has been taken to some of the classification on a contract held by the Grand Trunk Pacific. In a letter dated September 14, 1909, to the commissioners, signed by Gordon Grant, engineer, I find this paragraph:
Dear Six',-With regard to m.y recent trip of inspection on the Macdonell & O'Brien contract on district ' B,' mile 50 to 150, west of the- Quebec bridge, and from Mile 150 to Mile 163 on the Grand Trunk Pacific contract, which contract extends from Mile 150 to Mile 200 west of the Quebec bridge, I may say that the deduction I propose making on the 13 miles of the Grand Trunk Pacific contract for excess overbreak and ovex'-classification will be approximately $15,000.
That is a small amount. The contract was for 13 miles, but it verifies what I thought was the case when I raised the point that exception had been taken to at least one case of over-classification on a contract held by the Grand Trunk Pacific.


Haughton Lennox: What I said was that I had not heard that Mr. Woods had taken exception, and that I would be surprised if he had done so. I knew perfectly well about the item that my hon. friend is dealing with.


George Perry Graham: That may have been what was in my hon. friend's mind, but that is not the impression that I, or the House, received, or that, I think the unrevised 'Hansard' will show. Now, the whole question comes down to this, after all my friend has said: Are the people of Canada getting value for the money expended on the Transcontinental railway?


Some hon. MEMBERS: No, no.


George Perry Graham: It is a good thing that hon. gentlemen on the left of Mr. Speaker are not the people of Canada, nor the voice of the people of Canada, because this matter of the cost of the Transcontinental railway has been threshed out thoroughly at least on one occasion before the people, and they have said that they want this road constructed, even at the additional cost, and my hon. friends have put it as high as they possibly could. Just let me for a moment put on record the comparative cost of railways in some parts of the world. While I am not doing this as a justification of the cost of the Transcontinental railway, I want to point out that when hon. gentlemen go into hysterics about the proposed cost of this line from Mr. GRAHAM.
'- Moncton to Winnipeg they certainly have * not studied the construction of railways = in other lands, or even on this continent, x because, while there is some difference, [DOT] there is not any greater difference than the 3 difference in the conditions existing a few 1 years ago and at the present time would >
warrant. The cost per mile of building i railways is as follows:
l	Cost per mile.
South Australia	 $ 37,250
New South Wales	 64,365
Germany	 107,272
France	 126,350
Italy	 109,560
Russia	 83,080
Austria Hungary	 87,816
Great Britain	 272,291
United States	 58,661
Canada as a whole	 55,638
Intercolonial Railway		62,885
This road is estimated, if I remember the figures correctly, at $63,500 a mile from Moncton to Winnipeg. Taking into consideration the cost of everything that goes into the construction of the railway, taking into consideration that for a great distance it is very difficult construction, I say that even at the figures given by my hon. friend, the Transcontinental railway will not cost more than the average cost of railways in the Dominion of Canada, present conditions considered.
But, Sir, my hon. friend referred to a statement about $13,000,000. I shall not detain the House to refute that, because he refuted it himself before he got through, saying that he understood it perfectly but that the people at large would not. I have great faith in the judgment of the people at large and I think they will understand it fully as well as my hon. friend. Let me point out one or two things more. What the people want to know is: Are we getting value for our money? My hon. friend says we are not getting value for our money because the road is costing more than the original estimate. In fact, his charges would resolve themselves into perhaps three divisions; first, an attack on the chairman of the Transcontinental Railway Commission, Mr. Parent; second, an attack on the work of the chief engineer, Mr. Lumsden, and thirdly, an attack on the construction of the road implying dishonesty, or collusion, between the contractors, the chief engineer, the commission and the government. So that nobody might escape, I think he covered the ground pretty well in his own mind.
I want to go over the history of this situation, not with reference to classification particularly, but rather having in view the resolution before the House which the remarks of my hon. friend did not relate to very much. What is the method adopted by any railway company

or by this commission? They have a chief engineer and they have under him a staff of engineers. The Prime Minister of Canada knows no more about classification than the hon. gentleman who has just sat down, but he knows just as much. These men on the commission, the members of the various departments of the government, the men in business on the other side of the House, the great railway companies, depend absolutely 'for their estimates on the engineers they engage to give them these estimates. I admit at once that the original estimate made for the Transcontinental' railway has been largely exceeded. I took up some of the time of the House last session in pointing out what to me seemed good reasons why this increase existed and how it was brought about. I shall not detain the House again, but just let me impress this on the hon. gentleman and on the country that the road to be constructed, known as the Transcontinental railway, cannot be compared with the original construction of any other line on this continent. It can be compared with the present state of other lines that have been practically rebuilt, regraded and reballasted, because when the Grand Trunk Pacific starts to haul traffic in a completed state it will be a line that has not been equalled in its original construction by any other line on the continent of America, That means something, and it is fair to compare the Transcontinental railway, when it begins operations, with other lines that have reduced their grades, reduced their curvatures, straightened their tracks and rebuilt their bridges all over the country. But we depend absolutely on the engineers. If they have made an error in their estimate we accept the situation and do the best we can with it, but that does not affect the people. If the people are getting a line of railway that is worth the money they are putting into it they will be satisfied.
Just let me go over the history of the case leading up to the resignation of Mr. Lumsden, because that is the matter really before the House. In the first place, it was anticipated by this parliament-every man on this side of the House anticipated it as every hon. gentleman on the other side, and I think nobody objected to the proposition -that there would be disagreements as to classification. That opinion was universal, and why?-because such disagreements have occurred between contractors and every company that has ever built a mile of railway in this or- any other country. It was common sense to believe that these differences would arise. They have arisen not only in connection with the construction of railways, but they arise in connection with the construction of all great public works- yes, and works whether they are being carried out by governments, companies, or private individuals. Well, parliament, in its wisdom, knowing that these differences would arise, devised a means by which they could be settled, and that means was through a board of arbitration. That was the wise way. I might have a very strange view of the question. Possibly I might be a political partisan and it would not do to leave it to me. I might see something in it that would be a very great temptation to me, and I might say the same thing with reference to hon. gentlemen on the other side of the House. Possibly some of them might be as weak in that respect as I. Parliament thought that the safest thing to do on behalf of the whole country, was to take it away from us and give it to a board of arbitration. That was consented to, I believe, by every hon. member on both sides of . the House. Let us see what was the basis of the -specifications. After a good deal of discussion between Mr. Wood, representing the Grand Trunk Pacific, and Mr. Butler, representing the Transcontinental Commission, than whom there is no abler man on this continent, it was decided that the specifications for this work -should ibe based on the report of the American Railway arid Engineering and Maintenance of Way Association. After studying the whole question and after getting the best reports of engineers for years, they devised the specification, -and the Transcontinental Commission through Mr. Butler and the Grand Trunk Pacific through Mr. Woods accepted this as the basis of the specification throughout the whole line, not only on the eastern division but on the western division. There was, I believe, -one exception made, -and that was with reference to the cement and concrete work, and originally the -specifications for the cement and concrete work were the specifications of Mr. Butler himself, accepted in toto by the Grand Trunk Pacific. Knowing Mr. Butler as I do, and having had business relations with him for some years, I think that is a sufficient answer to anything that could be said as t-o the specifications in their entirety for the work to be done on the Grand Trunk Pacific and the National Transcontinental. At the risk of wearying the House I -want to put on record some of the provisions made in these specifications. The contracts were under the chief engineer. No matter what my hon. friend (Mr. Lennox) may say, the chief engineer of the Transcontinental Commission had full responsibility for the carrying out of every contract on the eastern division, and no money could be paid without his sanction and no work could be accepted without his certificate. I want to read the interpretation given of the word ' work ' -and of the word ' engineer,' so that we can see where we are at, and that we may know what

great authority the chief engineer had. Now, the word ' work ' is interpreted in the agreement to mean:
Meaning of word ' Work.'
1.	In this agreement the word ' work' or ' works ' shall, unless the context requires a different meaning, mean the whole of the work and materials, matters and things required to be done, furnished and performed by the contractor under this contract.
The term 'engineer' or 'chief engineer' is interpreted to mean:
Engineer, Chief Engineer, defined.
2.	The words 'engineer' or 'chief engineer' when used in this agreement or in the specifications hereunto annexed, shall mean the chief engineer of the commissioners, for the time being, acting as such either directly or through the assistant chief engineer, district engineer, division engineer, resident engineer or inspector, having immediate charge of a portion of the works limited by the particular duties entrusted to him. All instructions and directions or certificates given or decisions made, by any one acting under the authority of the chief engineer shall be subject to his approval and may be cancelled, altered, modified and changed as he may see fit. In all cases where the contractor or the commissioners^ are dissatisfied with the decision of the engineer or inspector in immediate charge of the work, an appeal to the chief engineer may be made.
Section 15 of the agreement says:
15. The engineer shall be the sole judge of work and material in respect of both quantity and quality, and his decision on all questions in dispute with regard to work or material shall be final, and no works or extra or additional works or changes shall be deemed to have been executed, nor shall the contractor be entitled to payment for the same, unless the same shall have been executed to the satisfaction of the engineer, as evidenced by his certificate in writing, which certificate shall be a condition precedent to the right of the contractor to be paid therefor.


John Graham Haggart: May I ask whether the specifications were prepared before the quantities were taken out by the engineers on which the tenders were received?


George Perry Graham: These were the original specifications made before any contract was let.


John Graham Haggart: I understand that, but what I want to know is whether the quantities estimated by the engineers of the department were taken out on the classification that was prepared and agreed to by Mr. Butler and the engineers.


George Perry Graham: In every case they were based I think on the specification thus prepared because these were the specifications agred to by both parties.


John Graham Haggart: In every case?


George Perry Graham: 


George Perry Graham: I think so, that is my information. Now, section 34 of that same agreement I shall read, and this is a point that will be of interest as I go further on:
34. Cash payments equal to about ninety per cent of the value of the work done, approximately made up from returns of progress measurements and computed at the prices agreed upon, or determined under the provisions of this agreement, will be made to the contractor monthly, on the written certificate of the engineer that the work for, or on account of which, the certificate is granted has been duly executed to his satisfaction, and stating the value of such work computed as mentioned, and upon approval of such certificate by the commissioners; and the said certificate and such approval thereof shall be a condition precedent to the right of the contractor to be paid the said ninety per cent or any part thereof. The remaining ten per cent shall be retained until the final completion of the whole work to the satisfaction of the chief engineer for the time being having control over the work; and within two months after such completion the remaining ten per cent will be paid; and the written certificate of the engineer, certifying to the final completion of the said works to his satisfaction, shall be a condition precedent to the right of the contractor to receive or to be paid the said remaining ten per cent, or any part thereof; provided, however, that if and when it is shown by the contractor to the satisfaction of the commissioners that the application of the said ten per cent or any part thereof will enable or hasten the completion of the work, and that the same will be so applied; and if and when, in the opinion of the commissioners it appears that the deposit made by the contractor as security for the performance of this contract is ample security for the completion of the work, the said ten per cent or any part thereof may be released by the commissioners in such instalments as may from time to time be agreed upon. The commissioners shall be at liberty from time to time to take over as completed any portion of the work certified to by the engineer as having been completed, and the contractor shall, thereupon, be entitled to payment in full for the work so completed in like manner, and subject to the same conditions, as if the said completed portion comprised the whole work to be done. The commissioners shall be entitled from time to time to the use of,any portion of the line of railway not theretofore accepted as completed under the terms hereof for the transportation of all steel superstructures or other materials, and no such use of any part of the said railway shall be deemed to be any acceptance or taking possession thereof.
Section 39 is along the same lines and I propose to read it to show the powers held by the chief engineer and the absolute dependence of the public upon his report in every case:
39. The progress measurements and progress certificates shall not in any respect be taken as binding upon the commissioners, or as

final measurements or as fixing final amounts; they are to be subject to the revision of the engineer in making up his final certificate, and they shall not in any respect be taken as an acceptance of the work or release of the contractor from responsibility in respect thereof, but he shall at the conclusion of the works deliver over the same in good order, according to the true intent and meaning of this agreement.
Without going into any further explanation I would like to ask my hon. friend (Mr. Lennox), if he had been the Prime Minister of Canada, if he had been the chairman of the Transcontinental Railway Commission, if he had beeiv the Minister of Railways, what other protection could he have thought of to place in an agreement than is placed in this agreement. Is it not full, ample and secure so far as the people of Canada are concerned. And Sir, if there is any deviation from the terms of that agreement we will be able to find that out. But as to making provisions for the protection of the people of Canada I say that, that protection was made as ample for the people of Canada as is made by any company on the face of the earth for its protection against contractors. Differences were anticipated as I pointed out and the parliament of Canada wisely provided that these differences should be decided not by partisans or by members of this House who might have a political interest in them, but by an independent board, one member of it to be the chief engineer of the Transcontinental Commission. Surely the chief engineer of the Transcontinental Commission ought to be able to look after the commissioners' side which is the public side, ought to be able to defend his own work, the work of which he has approved in the months past, and be able to give reasons for the decisions arrived at. On the other hand, the chief engineer of the Grand Trunk Pacific ought to be able to defend the contention of the Grand Trunk Pacific in placing their objections to any part of the work. These two of course would each be prejudiced in favour of his own view, and a third was to be appointed to decide when these two did not agree. As a matter of fact, under the agreement, the third was not to have a voice until the other two disagreed. It was thought that when the Grand Trunk Pacific Company had to pay the interest and bear the burden of the cost of this line, this was ample protection that they would do their utmost to see that the cost was not too great. It was thought that the chief engineer of the Transcontinental Commission would look after the interests of the commission and the people, as was his duty, and if these two agreed on a certain specification I say now in the face of what my
hon. friends say that the people of Canada would have no cause to object to the decision they arrived at, because, in all probability, it would be just in every respect and a fair compromise between the two extreme opinions they held. If they could not agree, a third was to be appointed, and to follow the line of my hon. friend who has just spoken, in order that the public may understand as he understands, I propose to read to the House a couple of clauses of the agreement made and now forming part of the statute of 1903 in reference to) this matter. Section 4 of the said agreement reads:
4. The said western division is further, for convenient reference, considered as being divided into two sections, one extending from the eastern terminus thereof westerly, to the eastern limit of the Rocky mountains (herein designated as the ' Prairie section/) and the other extending westerly from the said eastern limit of the Rocky mountains to the western terminus of the said division (therein designated as the Mountain section). The said eastern limit of the Rocky mountains shall bo established after the location of the line, and after actual surveys have determined the profile thereof upon such location, and shall be fixed and agreed upon by the chief engineer of the company and the chief engineer of the government as the result of such surveys, having regard to the physical features of the country, and to the cost of construction, and endeavouring as fairly as possible to determine where the more easy and less expensive work characteristic of prairie construction comes to an end, and the more difficult and expensive work characteristic of mountain construction begins, and, in case the said engineers shall differ, the question shall be determined by the said engineers and a third arbitrator, to be chosen by them, and, in the event of their inability to agree on a third arbitrator, the chief justice of the Supreme Court of Canada may appoint the said third arbitrator, and the decision of the majority shall be final.
I admit that that refers to the western section, but when I read section 7 of the same agreement hon. gentlemen will see. that it refers to the section I have already read and makes the clause referring to arbitration in the western division applicable to the eastern section. Clause 7 of the said agreement reads as follows:
7. In order to insure, for the protection of the company as lessees of the eascern division of the said railway, the economical construction thereof in such a manner that it can be operated to the best advancage, it is hereby agreed that the specifications for the construction of the eastern division shall be submitted to, and approved of, by the company before the commencement of the work, and that the said work shall be done according te the said specifications and shall be subject to the joint supervision, inspection and acceptance of the chief engineer appointed by the government and the chief engineer

of the company, and, in the event of differences as to the specifications, or in case the said engineers shall differ as to the work, the questions in dispute shall be determined by the said engineers and a third arbitrator, to be chosen in the manner provided in paragraph four of this agreement.
That was the agreement passed upon by parliament; that is the section under which the work was undertaken, that is the agreement under which the contract was made by which the Grand Trunk Pacific undertook to operate the eastern division of the great Transcontinental railway to be constructed by the government. That is the agreement that this parliament made and now hon. gentlemen ask us to depart from that agreement practically and take it from the hands of the body they themselves have named to arbitrate these difficulties and to give it into the hands of a committee composed of several men from this side of the House and several from the other side.


Robert Laird Borden: On what language does the hon. gentleman rely for that argument?


George Perry Graham: My hon. friend has the amendment, I have not.


Robert Laird Borden: I mean on what language in the statute does he rely as taking away any rights parliament had before, any rights of investigation.


George Perry Graham: That question is clear, the other was not. It can take away no rights from parliament; parliament is paramount and supreme. But this parliament being paramount and supreme, devised a scheme-and it forms part of the contract -by which these differences should be adjusted. Parliament would not be acting wisely if, in its supreme power, it proceeded at this stage of the contract to undertake the settlement of these differences which they have given to another tribunal.


Robert Laird Borden: If there had not been any such arbitration agreement the matters in question would have been decided in the Exchequer Court in the ordinary course. Does the hon. gentleman argue that the substitution of an arbitration agreement places parliament in any different position from that which it would have occupied if the original remedy had been left?


George Perry Graham: To a certain extent it does.


Robert Laird Borden: In what respect?


George Perry Graham: Under the circumstances outlined by my hon. friend parliament would have said:	We will leave it to the
Exchequer Court. Parliament has said they wilt not leave it to the'Exchequer Court but have devised another means of adjust-Mr. GRAHAM.
merit and have consented to it. Parliament having consented to the other means ought to adhere to its own arrangement which forms part of an agreement and contract with the Grand Trunk Pacific Company.


Robert Laird Borden: ^On what principle Joes my hon. friend a"rgue that the substitution of one tribunal for another takes away any rights from this parliament in respect of investigation?


George Perry Graham: I have tx-ied to explain to my hon. friend that -this parliament is paramount and it can exercise its rights now if it likes. Parliament exercised its right to name an independent tribunal, it exercised its right fully.


Mr. BARKER.: Then why has the right hon. gentleman moved his resolution?


George Perry Graham: The right hon. gentleman has moved his resolution to inquire into a charge made by the chief engineer against some of his subordinates, he not having named them or named the crime of which he says they are guilty. But let me follow the hon. gentleman on. If this case were in arbitration or in the Exchequer Court today, being decided, would hon. gentlemen think they should investigate the evidence being taken before the Exchequer Court?


Wilfrid Laurier: Hear, hear.


George Perry Graham: Take it on that ground. This case is now under arbitration.


Robert Laird Borden: The point the hon. gentleman is now referring to is a question between the Grand Trunk Pacific and the government, but there is another question altogether and that is the question between the government and the people or the government and parliament representing the people. I come back to my starting point.


George Perry Graham: My hon. friend the leader of the opposition has evaded my question. I asked him if, taking his view, this case were before the Exchequer Court for investigation and adjudication, he would think it advisable that a committee of this House should undertake to go through the evidence and form a decision on the very case submitted to another tribunal.


Robert Laird Borden: With an expenditure so outrageously in excess of the government estimate in 1903-04, I would say at once that parliament ought to do it.


George Perry Graham: I am glad to get that reply because it may come in useful at some other time.


Robert Laird Borden: My hon. friend is perfectly welcome to it.


George Perry Graham: Let me emphasize this point again. It was not the Prime Min-

ister, or the chairman of the Transcontinental Commission, or the chief engineer, but this parliament which decided that this case should go before a tribunal outside the Exchequer Court and outside of parliament. Parliament passed a statute, they made it part of the contract that this tribunal was to be formed and how it was to be formed, to decide on such questions as those now under discussion. Having exercised its right to take these matters from the Exchequer Court to another tribunal, parliament ought to leave them where it placed them after due thought and consideration.


Mr. MEIGHEN.: Would the hon. gentleman explain how' the Transcontinental Commissioners can be said to represent the people as against the railway company in a case of over-classification, and illustrate his explanation by an example.


George Perry Graham: I submit that that is a little out of my line of argument, but I shall try to satisfy my hon. friend. In the first place the commission represents this parliament and this parliament represents the Canadian people. This parliament said to the commission selected by it: go on and build this railway; a chief engineer is to be appointed, and if there be any difference or dispute between the Grand Trunk Pacific and the Transcontinental Commission, then a tribunal must be formed to consist of our chief engineer, Who is the engineer of the people, and the engineer of the Grand Trunk Pacific, and these two shall select a third; or if they cannot agree, then the Chief Justice of Canada shall select a third on behalf of the people.


Arthur Meighen: Will the hon. minister give us an example to show how the chief engineer of the Transcontinental Commission can represent the people in a dispute with the Grand Trunk Pacific regarding over-classification ?


George Perry Graham: 
Hon.  S. N.@: Parent in the chair.
Correspondence in regard to the request of the vice-president and general manager of the Grand Trunk Pacific Railway Company for certain information to enable that company to, jointly with the Commissioners, supervise the construction of the eastern division of the National Transcontinental Railway, was submitted, and it was
' Resolved that the information requested be furnished to the Grand Trunk Pacific Railway Company, and that their engineer assigned to the eastern division be given access to the records of the commission's district engineers, so as to enable them to become acquainted with the situation.'
The following was also passed on the 25th day of August, 1906:
Resolved that the chief or acting chief engineer be authorized to consult from time to time with the chief engineer or assistant chief engineer of the Grand Trunk Pacific Railway Company, in compliance with clause No. 7 of the schedule of the National Transcontinental Railway Act.
On October 3, 1907, Mr. Morse, in a letter to the chairman, requested that copies of all cross-section notes governing payments that had been made be sent to him, and that hereafter this information be sent monthly together with a copy of the detailed monthly estimates.
The chief engineer, Mr. Lumsden, on October 9, 1907, wrote the board stating that he had instructed district engineers, where construction is in progress, to make duplicate copies of cross-section notes for use of the Grand Trunk Pacific engineers, and discuss fully with them any matters pertaining to the economic and eflicient construction of the line, and to give them every facility to examine the estimates, etc.; and further, that copies of such had been sent to the Grand-Trunk Pacific as soon as received.
Now in so far as carrying out the arrangement for joint supervision, in so far as carrying out the instructioins of parliament were concerned, everything was done by the government that could have been done by any incorporated company to protect itself
Now, let me turn to some points in the history of the case. As my hon. friend (Mr. Lennox) pointed out, Hogan & MacDonell got the first contract west of Quebec, 150 miles. This was assigned to Macdoneli & O'Brien, who assigned fifty miles to the Davis Company. McArthur got the section from Winnipeg to Superior Junction, approximately 245 miles. The work of construction was begun. I find that Mr. Woods, acting chief engineer of the Grand Trunk Pacific, wrote letters on October 7, October 8 and November 4, 1907, discussing the question of classification and objecting to certain things, some on general principles, and some in more detail. I desire to read a part of one of his letters. This was fully dealt with in the Hodgins investigation, but I wish to call the attention of the House


George Perry Graham: to it again, as it forms part of the present record, and to point out one or two things in connection with it to show that Mr. Woods was altogether in error in the assertion he made. I quote from the letter of October 7, 1907:
As before stated, these over-classifications are not made through error in judgment nor upon the decision of the resident or division engineers, who are fully acquainted with the character of the work, but by arbitrary orders from their superior. To such classification as mentioned above, increasing the cost of the work to such an alarming extent, we most seriously protest and respectfully request chat either yourself or the assistant chief engineer visit the work and pass judgment upon the classification as made. Please note that the percentages given above indicate the work done to August 31. We are not advised what the September estimate will be.
Now, the point I wish to refer to in that is that of engineers not being allowed to go on their own initiative or their own knowledge. After I received this return, No. 42a, I sent this message from Brockville to the Secretary of the Transcontinental Commission:
In a letter of II. A. Woods, assistant chief engineer, Grand Trunk Pacific, dated October 7th, 1907, last paragraph, I find these words:
As before stated, these over-classifications are not made through error in judgment nor upon the decision of the resident or division engineers but by arbitrary orders from their superiors. If you have any idea as to his meaning, kindly explain.
In reply to that, I received a letter calling my attention to certain evidence given in the Hodgins investigation, pages 398, 399, 400 and 401. You will find there certain statements over the name of one of the divisional engineers. And, in a letter signed by Mr. Lumsden himself as chief engineer (page 402) occurs the following:
An interview was held on the car after our return at which ourselves, engineers and contractors were present, and, from the conversation which took place and the statements of Mr. Doucet, Messrs. Grant, Heustis and llervey, confirmed by letters from Messrs. Bourgeois, Macthews and Girdwood, it appears Mr. Woods must have been in error when he stated that * the specification had been entirely ignored and an excessive allowance made, not by reason of an error in the judgment, but, as I understand, by special instructions from the assistant district engineer, or, as stated by him in the latter part of his letter, by arbitrary orders from their superiors.
Thus we see that they got together and, after a full conversation and discussion of this point, Mr. Lumsden came to the conclusion-as, I think, was pointed out in the

evidence in the Hodgins investigation- that, whatever Mr. Woods may have thought at that time, he was absolutely incorrect in his statement that these engineers were influenced by their superiors in making their report.
At six o'clock, House took recess.
After Recess.
House resumed at eight o'clock.



SECOND READINGS.

[Stage Direction]
Bill (No. 110) respecting the Algoma Central and Hudson Bay Railway Company.-Mr. Tolmie.
Bill (No. Ill) respecting the Dominion Millers' Association.-Mr. Harris.
Bill (No. 112) to incorporate the Independent Order of Rechabites.-Mr. Verville.
Bill (No. 113) respecting the Manitoulin and North Shore Railway Company.-Mr. Tolmie.
Bill (No. 114) respecting the Richelieu and Ontario Navigation Company.-Mr. Forget.	'
Bill (No. 115) to incorporate the St. Lawrence Power Transmission Company, Limited.-Mr. Pardee.
Bill (No. 116) to incorporate the Toronto and Eastern Railway	Company.-Mr. Fowke.

[Stage Direction]
Bill (No. 33) to incorporate the Northern Mortgage Company of Canada-Mr. A. Haggart.
NATIONAL TRANSCONTINENTAL RAILWAY-CLASSIFICATION OF MATERIAL. _
House resumed debate on proposed mo-ion of Sir Wilfrid Laurier for the appointment of a special committee, and the amendment of Mr. Lennox thereto.
George Perry Graham: When the hour of six o'clock arrived, I had been dealing with certain phases of the contract made with the Grand Trunk Pacific, the specifications, the precautions taken by the government in every detail for the protection of the people of Canada, including a joint supervision by the company and by the -commissioners of the Transcontinental railway on behalf of the government. The hon. member for South Sim-coe (Mr. Lennox), in his remarks, left the inference that there might be collusion between the Grand Trunk Pacific Company and the commission to allow the cost to be very high, for the benefit of somebody not named. Well, Sir, if my hon. friend were in my position for two or three weeks, I think he would
tell the country that there was absolutely no foundation, near or remote, for any such suggestion or insinuation. My experience with the Grand Trunk Pacific Company, and with all railway companies, is that they are quite prepared to take all they can get, and it is no easy task, I assure my hon. friend, to deal with any railway company on behalf of the people of Canada, and give as little as possible to the railway, and guard at eve-jy point possible the interests of the public. Railway companies engage the best men that they can get, and unlike parliaments, they are not bound by any salary limit, they pay as high a salary as is necessary to get the best men, either at home or abroad, legal or business men. It is with these men that the members of the government and their officials have to do business, it is these men we have to meet day after day, and do what we think is right in the interests of the people and not yield one iota that we think is not fair. Now, I want again to impress the House that there is not the remotest foundation for the insinuation; no such idea ever percolated through the mind of any member of the government or any person, that the Grand Trunk Pacific Company and the government are in collusion, or that the Grand Trunk Pacific Company is willing to allow a dollar to be added to the cost of the construction of this road.
Reference was also made to the fact, and it was perhaps the most lengthy part of my hon. friend's remarks, that when contracts were let, the final working out of these contracts did not always substantiate the contention that they had been awarded to the lowest tenderer. To those who have not had some business experience along those lines, that will appear somewhat strong. However, the method adopted by large companies, the method adopted by the best engineers in the world, I think, now, is to let contracts on what is known as schedule rates. They only approximate the -cost, but they put a certain price on every kind of material, so much for earth, so much for loose rock, and so much for solid rock; and although the approximation may seem to a layman very far re>-moved from the reality, the fact remains that the country or the company only pays for the material taken out, and that at the prices named for that material. I discussed the question a good deal with some of my engineers, and other engineers, and they are strongly of the opinion that the fair way to let these contracts, not only on this kind of work, but in all great works, is by .schedule rate; for although they may differ from the approximate cost first worked out, as the quantities may vary somewhat, they do not differ much from the rate named in the contract. These contracts were let in the ordinary way, with the approval of the chief engineer who. with his staff, had the

approximate quantities moneyed out, and they were let to the lowest tenderer in every case.
Now, I come to a point in the discussion which my hon. friend touched upon, and I do not want to be misunderstood at all. We came to a point where the Grand Trunk Pacific itself became a contractor. I discussed this question with Mr. Morse, then general manager, not before they became contractors, because, if I remember correctly, that was before I became a member of the government. But, in discussing the question of the work with him one day, I called his attention to the fact that they had become contractors for the construction of this line. His reason to me was that they had become contractors so that in every case they would tender on work and be prepared to take it at what they thought was a fair value. Any contractor who would accept work at a less rate than the Grand Trunk Pacific offered to do it for would afford fair evidence to the Grand Trunk Pacific Railway Company that they were, getting the work done at a proper value. That was his reason as placed very strongly before me, and I give it to the House and the country. The fact remains that the Grand Trunk Pacific had become contractors. Now, I want to appeal to business men as to the situation as it then struck me and as it still strikes me. Here we found a company that not only was to be the lessee of the line when constructed and to pay the interest on it, but it Was also to be a contracting company, assisting in the building of a line and in addition it was to be the inspector not only of its own work but the inspector of the work of competing contractors. Under these circumstances, a new condition arose altogether. If the Grand Trunk Pacific had not become contractors then I believe there would have been no occasion for the next step that was taken, and was rightly taken as a business step in fairness to all parties. These new conditions having arisen, one can readily understand that the contractors said: We are not only in competition with the Grand Trunk Pacific but we are subjected to the inspection of our competitors as well as that of the government. In order to make it fairer, I and the commissioners too said to the Grand Trunk Pacific: There ought to be some basis arrived at by which you will make the complaints so that no unfairness or injustice may be done to any person. You ought to make your complaints as to classification promptly, you ought to file them so that they can be investigated at once, if necessary, and other contractors besides yourself can settle with their subcontractors without being hindered. If that position were not taken I again appeal to business men if the Grand Trunk Mr. GRAHAM.
Pacific would not have been in the position of being able to hold up every bit of work on the eastern part of the Transcontinental railway. By refusing or neglecting to inspect or pass upon work they could have made it impossible for any other contractor to complete any work that he had undertaken. That would not have been in the interest of the work, that would not have been in the interest of the country and it certainly would have been a great injustice to the men in the Dominion of Canada who invest their money in contracting. So, we did have a conference- nothing secret about the conference. My hon. friend seemed to rather ridicule the idea. It was a straight business proposition, above board and nothing whatever secret about it. We did have a conference, and at that conference, if I remember correctly, were Mr. Hays, possibly his engineer, Mr. Parent, I think Mr. Biggar, their solicitor, and one or two members of the government, including myself. After a good deal of discussion the situation as it existed was pointed out, and I take the full responsibility for pointing it out. I said: We ought to come to some arrangement by which these complaints as to classification, or as to anything else, shall be made promptly and so that in no case can a contractor be held up by the Grand Trunk Pacific as being an interested party, as contractors as well as inspectors. After the discussion on January 10, 1908, this memorandum was drawn up:
Monthly estimates for contractors shall be submitted promptly from time to time by the chief engineer of the commissioners to the company's assistant chief engineer at Montreal for approval. If he has any objection to such estimates he shall promptly file the same with the chief engineer of the commissioners, and any objections from time to time filed shall thereupon be considered, and, if possible, determined by the said engineers, and in case of their failure to agree, may then or at any time before or at the time of the final payment, at the option of either party, be considered and determined by arbitration as provided in the agreement of the 29th July, 1903, but in no case shall the payment of monthly estimates be delayed except with the consent of the commissioners.
In case the chief engineer of the commissioners and the assistant chief engineer of the company disagree as to the final payment, the same shall he withheld until the matter is determined by arbitration, as provided in the said agreement of 29th July, 1903.
This memorandum was initialled by Mr. C. M. Hays, Mr. Lumsden and the Hon. Mr. Parent. After this memorandum was agreed to, the progress estimates were sent to the Grand Trunk Pacific at Montreal, and objections were subsequently filed by Mr. Woods on behalf of the company as to classifications in districts ' B ' and ' F and ' over-break ' in the latter district.
January 25, 1910
After this memorandum was agreed to, progress estimates were sent to Montreal and objections were subsequently filed by Mr. Wood on behalf of the company to classifications in districts 'B' and 'F,' and to the over-break in the latter district. They adopted that memorandum, and I want again to call the attention of the business men of the House to the absolute fairness of the arrangement as to the protection of all parties that it afforded. That did not look, as my hon. friend suggested, as if the government were in collusion with the Grand Trunk Pacific. If such had been the case no such memorandum would have been drawn up, because we would have done just what the Grand Trunk Pacific wanted, or they would have done just what we wanted. But in order that all parties might get fair play this memorandum was drawn up, agreed to and the objections made to the work were afterwards made according to that agreement.
A good deal has been said as to classification. I do not intend to go into the classification in detail, but only to mention it in passing. In January, 1908, questions having arisen as to the methods of work, and after Mr. Lumsden had made a journey over the sections of the railway, he gave his interpretation of the specifications to the various engineers. Had Mr. Lumsden given that interpretation without the concurrence of the Grand Trunk Pacific Company we would have said at once that the Grand Trunk Pacific had a right to object, but I find that the interpretation given by Mr. Lumsden was concurred in by the Grand Trunk Pacific engineer, although in fairness he pointed out later on that the interpretation given by Mr. Lumsden was not adhered to by the engineers, and that largely is the" question before the arbitrators now, as both parties were agreed absolutely to the interpretation. With the permission of the House I will read the correspondence in reference to this so that there will be no mistake. On February 14, 1908, the following letter was written to Mr. Lumsden:



RE-CLASSIFICATION.

[Stage Direction]
Dear Sir,-Referring to correspondence and conversation on this subject, I understand that you have recently issued instructions to your district engineers relating to same. Will you be good enough to send me a copy of these instructions, so that my assistants may know just what to expect with regard to classification while going over the work.
From reports received from our district engineers on districts ' B ' and ' F ' we understand that, in their judgment, the work in places is largely over-classified, particularly in borrowed material, where no ledge exists. Would it not also be possible that resident engineers, in returning estimates, should show in cuttings the amount of ma-76
terial ^ found in ledge, also the amount of material classified as solid rook and boulders and what, I understand, you term. ' assembled rock/ If this could he done I think it would be of advantage not only to us, but would give you information in your office, which would be of great use to you in questions arising between this company and the commissioners.
H. A. WOODS, Assistant Chief Engineer.
On February 17, Mr. Lumsden wrote the following letter:
Ottawa, February 17, 1908.
H. A. Woods, Esq.,
Assistant Chief Engineer, G.T.P. Ry., Montreal, Que.
Dear Sir,-In reply to yours of the 14th instant I inclose herewith copy of my interpretation of clauses 34, 35 and 36 of our general specifications, with blue print and explanation of same.
I have instructed my engineers as follows:
You will please at once go over these carefully and say whether the classification in your district conforms to such interpretation. If it does not, steps must at once he taken by you to have your division and resident engineers, who are personally acquainted with the work, take up the matter, and as far as now practicable, have an estimate prepared showing the difference such classification would make with that which has heretofore been used by you. In future all classification must be in conformity with my interpretation. Measurements must be made and full notes kept showing such classification on cross-section where rock or other classified material is met with in large quantities, or by measurements made by an assistant of rook, or loose rook in boulders. In short, actual measurements shall be made of all classified material returned, and not by percentages, except in oases where measurements are impracticable in the judgment of the engineer in charge.
I also stated in another letter that it must be understood that actual measurements (a record of which are kept either by crosssections or measurements) must be made as a rule of all work, and if at any time you find it necessary to put on an extra man for this purpose, you can do so.
Yours truly,
(Sgd.) HUGH D. LUMSDEN,
Chief Engineer.
Here are the specifications:

[Stage Direction]
Chief Engineer's Interpretation of Clauses 34, 35 and 36-General Specifications.
Clause 34-Solid Rock Excavation.
' Solid rock excavation will include all rook ' found in ledges or masses of more than one ' cubic yard, which, in the judgment of the ' engineers, may he best removed by blasting/
I am of the opinion that rock found in ledges or masses as specified must (firstly) be rock, and (secondly) it must be in ledges, conglomerate form (known as plum pudding
[Stage Direction]


stone),- boulders or ledge rock displaced (in pieces each exceeding one cubic yard in size), rock assembled, also shale rock, such as in the judgment of the engineer may be best removed by blasting.	_
I attach a diagram in explanation of the above, which, in my opinion, is all that is included under clause 34-solid rock.
Clause 35-Loose Rock.
' All large stones and boulders measuring ' more than one cubic foot and less than one ' cubic yard, and all loose rock whether in ' situ or otherwise, that may be removed by ' hand, pick or bar, all cemented gravel, in' durated clay and other materials that can-' not, in the judgment of the engineer, be ' ploughed with a 10-inch grading plough, 'behind a team of six good horses properly 'handled; and without the necessity of blast' ing, although blasting may be occasionally ' resorted to, shall be classified as loose rock.'
Under this heading I would include:
(1)	All large stones and boulders more than one cubic foot and less than one cubic yard:
(2)	All loose rock in situ or otherwise that may be removed by hand, pick or bar.
(3)	All cemented gravel, indurated clay and other materials that cannot, in the judgment of the engineer, be ploughed with a 10-inch grading plough behind a team of six good horses properly handled, and without the necessity of blasting, although blasting may be occasionally resorted to.
Clause 36-Common Excavation.
' Common excavation will include all earth, ' free gravel or other material of any charac-' ter whatever not classified as solid or loose * rock.'
(Sgd.) HUGH D. LUMSDEN,
Chief Engineer.
Ottawa, January 14, 1908.
Now here are the interpretations:
On February 20, 1908, Mr. Woods writes this letter:
February 20, 1908.
Mr.   H@: Lumsden,
Chief Engineer, Eastern Division,
National Transcontinental Railway, Ottawa, Out.
Dear Sir,-I beg to acknowledge receipt of your favour of the 17th instant, file 7787, giving your interpretation of clauses 34, 35 and 36 of our specifications, with blue prints, and explanation of same, also copy of your instructions to your engineers.
We are quite satisfied with your interpretation of the specifications and with your instructions, which are explicit. I do not know the date of those instructions or when they are supposed to have become effective, but, from reports from my assistants at Winnipeg and Quebec, there does not seem to have been any change in classification of work previously reported, the percentage of classified material being steadily increased.
We are satisfied that on some parts of the line the work previously estimated was not classified according to your recent instructions, being overestimated in both loose and solid rock. The attention of your District Mr. GRAHAM.
Engineers has been called to this fact, but apparently without effect. If your instructions were effective when the January estimates were made we certainly will have to object to the classification as rendered on certain parts of the work.
H. A. WOODS, Assistant Chief Engineer.
The reason I am reading these in detail is to point this fact out: That when it came time for the carrying out of this in its detail and when difficulties arose the interpretation of the specifications had to be agreed upon. The interpretation by Mr. Lumsden as chief engineer was made, sent to a staff of engineers along the line and was approved by the engineer on behalf of; the Grand Trunk Pacific. Therefore up to this point we have the Grand Trunk Pacific and the Transcontinental Commission agreeing on a memoranda as to the method by which they should promptly make their complaints as to the classification, and further, a month later we have them agreeing as to the interpretation of the specifications made by Mr. Lumsden, and therefore any difference as to detail which came after ought to be judged along the line of these two documents. On April the 21st and 23rd, 1908, Mr. Woods for the Grand Trunk Pacific made definite complaint. On April the 24th, the very next day, Mr. Lumsden asks for arbitration on these complaints. He feels that he will not agree with the engineer of the Grand Trunk Pacific and he immediately takes steps under the Act and under the contract and asks for a board of arbitration. So that there may be no mistake, allow me to read the letter written by Mr. Lumsden then chief engineer of the Transcontinental:
Ottawa, April 24, 1908.
The Commissioners of the Transcontinental Railway, Ottawa, Ont.
Sirs,-I beg to submit three letters from Mr. H. A. Woods, assistant chief engineer of the Grand Trunk Pacific Railway, the first dated the 21st instant, in which he takes exception to the classification on about 153 miles of district ' F,' and gives a list of 196 points at which the classification is claimed to be excessive; the second letter, dated the 23rd instant, in which he objects to-the classification generally in district ' B,' east of the St. Lawrence river, and especially mentions five cuttings at various points and also refers to the classification in borrow pits between miles 15 and 23; the third letter is dated March 24, and in this he makes a general complaint as to the classification in both districts ' B' and ' F,' but gives no definite points at which these objections are raised.
As he has now taken objection in a definite form to our classification in both districts ' , and ' F,' and as, in my opinion, these are questions which it was intended should be settled under the agreement made between

you and the Grand Trunk Pacific on January 10 last, in conformity with clauses 7 and 4, chap. 71, 3 Ed. VII, I am writing Mr. Woods to appoint a day at as early a date as possible where we could have a conference either here or in Montreal so as to arrange dates for arbitrating the points in dispute promptly and for the appointment of the third arbitrator.
HUGH D. LUMSDEN, Chief Engineer.
So far as Mr. Lumsden is concerned, so far as the commission is concerned, the moment the Grand Trunk Pacific placed these complaints in proper form and made them definitely Mr. Lumsden wrote a letter asking that he and the chief engineer of the Grand Trunk Pacific should meet to go over the matter and if necessary appoint a third arbitrator. Apparently, this not having been done, I find that on May the 11th, the Prime Minister wrote this letter:
Ottawa, May 11, 1908.


Hon.  S. W.@: Parent,
Chairman, Transcontinental Railway Commission, Ottawa.
My Hear Parent,-It is very desirable, in my opinion, that the commission should at once, by formal letter, instruct Mr. Lumsden to proceed with the arbitration contemplated by section 7 of the Transcontinental agreement, and arrange for a conference with the chief engineer of the Grand Trunk Pacific. By so doing, the tribunal, which is to determine the correctness of the engineers' classification would be constituted, and all matters of differences would properly be before them and be dealt with and decided upon by them.



WILFRID LAURIER.

[Stage Direction]
On October 8,	1908, for reasons
given in this letter Mr. Lumsden suggested that the chief justice appoint a third arbitrator. I am not going now to enter into any discussion as to the reasons why it seemed difficult to get along with the appointment of the arbitrator; I leave that correspondence to speak for itself. But, Mr. Lumsden in all his correspondence takes the ground strongly that he tried time and again without success to have the chief engineer of the Grand Trunk Pacific agree to a third arbitrator and if necessary - proceed with the work of settling these difficulties promptly. On October the 8th, Mr. Lumsden writes:
Ottawa, October 8, 1908. The Commissioners of the Transcontinental Railway, Ottawa, Ont.
Sirs,-On July 22, last, I wrote to Mr. H. A. Woods, assistant chief engineer of the Grand Trunk Pacific Railwav stating that I could not agree with him re classification, and suggesting the names of the following as a third arbitrator under clauses 7 and 4 of the agreement in 3rd Ed. VII, chap. fl.
Henry McLeon, C.E., Ottawa, Ont.
Wm. McCarthy, C. E., Winnipeg, Man.
T. E. Hillman, C.E., Hamilton, Ont.
To this I have had no definite reply, though on July 28, August 18 and September 10, I have asked for same by letter or wire, and verbally on October 5.
I am given to understand that Mr. Morse is at present in the west, but suggest if this matter is not settled immediately after his return, application be made to the Chief Justice of the Supreme Court of Canada to appoint the third arbitrator in accordance with clause 4 of the agreement above referred to, so that disputes may be settled promptly and not held over until the contracts are completed.

[Stage Direction]
Chief Engineer.
Hon. gentlemen will agree with me that Mr. Lumsden urged strongly and did his best to see that that board of arbitration should be formed and that the work of settling any difficulties be proceeded with.
On November 16, after it was suggested that the Chief Justice of the Supreme Court should be requested under the Act to appoint the third arbitrator, the chief engineer of the Grand Trunk Pacific, Mr. Kelliher, suggested the name of Mr. Collingwood Schreiber. On March 16, Mr. Schreiber accepted and was appointed to that position. The terms of the submission are all in that correspondence and I shall simply trouble the House by reading the letter appointing Mr. Schreiber so that there may be no mistake to its contents. That letter is as follows :
Ottawa, March 16. 1909. Collingwood Schreiber, Esq.,
General Consulting Engineer to the Government, Ottawa, Ont.
Dear Sir,-By clause 7 of the agreement between the government of Canada and the Grand Trunk Pacific Railway * Company, dated the 29th July, 1903, being schedule to 3 Edward VII, chapter 71, in regard to the construction of the eastern division, it is provided, that the work shall be done according to the specifications approved of by the Grand Trunk Pacific Railway Company, and shall be subject to the joint supervision, inspection and acceptance of the chief engineer appointed by the government and the chief engineer of the railway company, and in the event of differences as to the specifications, or in case the said engineers shall differ as to the work, the questions in dispute shall be determined by the said engineers and a third arbitrator to be chosen by them.
Some such differences having arisen as a result of objections filed by the company, we hereby beg to choose you as third arbitrator for the determination of the questions now in dispute, and on which we have failed to agree after visiting the work, and shall be pleased if you are agreeable to accept the office. In the event of your acceptance, a formal sub-
[Stage Direction]
mission will be prepared and handed to you later.
HUGH D. LUMSDEN, Chief Engineer, Transcontinental Railway.

[Stage Direction]
Chief Engineer, Grand Trunk Pacific Ry.
I hereby accept the above appointment.

[Stage Direction]
March 22, 1909.
We now come to a point in the discussion of this question where difficulties seemed to arise. It had been a rather strenuous undertaking to get this board of arbitrators formed and if my hon. friend who spoke so strongly this afternoon had been a party to getting it formed he never would have made the insinuation he did this afternoon that there was any chance of collusion by the government with the Grand Trunk Pacific in reference to this board.
I may mention here a certain memorandum of agreement to which my hon. friend referred this afternoon as having been sent by the Grand Trunk Pacific to the commissioners for their signatures. It was quite a lengthy document and purported to be an agreement to be signed by the minister or the commission, I forget which, and already signed by the Grand Trunk officials, pointing out how this work of arbitration was to be carried on. The chairman of the commission declined to sign that memorandum of agreement prepared by the Grand Trunk officials, and said that the work would be carried on under the terms of the statute and the agreement. That was not an agreement, it was a piece of paper on which certain things w'ere written by the Grand Trunk Pacific and signed by them and which they asked to have made an agreement by having attached to it the signature of the government or the Transcontinental Commission, which was never done.
_ The board went west and started to work, just after Mr. Schreiber's appointment. In a short time they returned from the west, certain objections having been made to their work. I had better leave it to Mr. Lumsden himself to state why he returned and resigned rather than explain, because I wish to be absolutely fair to all concerned in the matter. The board started to work and immediately there were protests from the engineers in charge. I want to ask hon. gentlemen one question. I do not know whether the board of arbitration were carrying out their work properly or not, I am not here to judge, but I ask hon. gentlemen to say, if they were in the position of these engineers-and my remark is fully substantiated by my hon. friend's words this afternoon-whose reputation as engineers, whose characters for honesty, and ability were at stake in this work being performed, if these gentlemen had been in the position of these engineers and thought their work was not
George Perry Graham: ~
being fairly arbitrated upon would they not have done just what the engineers did? I am free to say that I would have done the same thing. Were I in charge of a work and did I believe I had performed the work honestly and when it came to be adjudicated upon by a tribunal appointed by parliament I thought they were not doing me justice or giving me a chance to show my side of the case, I would have appealed to some power to change the mode of procedure. That is what the engineers did. The board as then constituted, returned home and Mr. Lumsden resigned. His letter of resignation is as follows:
Ottawa, June 25, 1909. Hon. George P. Graham,
Minister of Railways and Canals,
Ottawa, Ont.
Sir,-Herewith I beg to inclose copy of a letter written by me to-day to the Commissioners of the Transcontinental and for the reasons therein mentioned, I beg to resign my position as chief engineer of the Transcontinental Railway, and trust that I may be relieved of the duties connected therewith at as early a date as may be convenient.



HUGH D. LUMSDEN,

[Stage Direction]
Chief Engineer.
Then Mr. Lumsden wrote the letter giving his reasons, which was read this afternoon by the Prime Minister, and I shall not detain the House by reading it again. He added to that letter in which he said certain things about his officials, another letter dated June 26, 1909, as follows:
Ottawa, June 26, 1909. The Commissioners of the Transcontinental
Railway, Ottawa, Ont.
Dear Sirs,-Referring to my letter of yesterday wherein I stated that I have lost confidence in the engineering staff, I beg to state that this does not apply to the whole staff, hut applies only to a portion of the staff who were responsible for the measurement, classification, supervision and inspection of considerable jrortions in district ' B ' and east of Rennie crossing in district ' F ' lately gone over by me.

[Stage Direction]
P.S.-In order to make the matter clear, I may say I assume my resignation as chief engineer also carries with it my resignation as arbitrator in matters of dispute with the Grand Trunk Pacific Railway Company, hut as there is a doubt raised by you, I also resign as ai'bitrator.

[Stage Direction]
In order to have the record complete I shall insert my replies to these two letters. They are as follows:
Ottawa, June 30, 1909. Hugh D. Lumsden,- Esq.,
Chief Engineer, T. C. Ry. Commission, Ottawa.
Dear Sir,-I have the honour to acknowledge the receipt of your letter of the 25th

instant, inclosing correspondence sent by you to the Transcontinental Railway Commissioners and also proferring your resignation as chief engineer. It will be considered in due course.

[Stage Direction]
Ottawa, June 30, 1909. Hugh D. Lumsden, Esq.,
Chief Engineer, T. C. Ry. Commission, Ottawa.
Hear Sir,-I beg to acknowledge yours of the 26th instant, inclosing a letter of explanation sent by you to the commissioners in reference to the reasons given for your resignation.

[Stage Direction]
I find that on July 14, 1909, there is this minute in the records of the Board of Transcontinental Railway Commissioners.
On July 14, 1909, I find this minute in the minutes of the Board of Railway Commission :
The chief engineer reported verbally that ic would he impossible to give an estimate of the amount of money involved in the disputes as to classification owing to the fact that where cross-section notes of the engineers disagree with the present appearance of the work, re-measurements will be necessary, and that the engineers who classified the work were not examined or requested to produce their books showing the monthly classification of the work as it progressed and that he is still of the opinion that the resident engineers who see the work from day to day, are in the best position to make the classification, if they are capable and honest; as far as their knowledge is concerned they are the best men, and everything being equal they are the best men to judge the work, seeing it done day by day.
I come now to the objections raised by the engineers. I have referred to their objections before and do not propose to go into them at any length because they are all in the correspondence brought down to the House; but several of the divisional engineers did make certain complaints and placed them before the commissioners. They did so, I think, on the same day that Mr. Lumsden resigned, but before his resignation was submitted to the board, if I remember correctly. The summing up of their objections is to be found in these paragraphs:
(a)	That they were based in whole or in part on the said draft agreement of May 14th, 1909, which bad been rejected, and which had no existence in fact;
(b)	That the examination of the work was
of a liascy, insufficient and superficial character ;	'
(c)	That the engineers on the line who classified the work were not afforded a sufficient hearing and an opportunity of presenting evidence;
(d)	That the contractors were not afforded an opportunity of showing cause: and further to say that the commissioners insist, in the
public interest, that the proceedings of the arbitration tribunal shall be exhaustive, final and conclusive; shall cover all the objections filed on behalf of the Grand Trunk Pacific Railway Company, and that the report of the arbitrators, when made, shall be supported by substantial evidence, including details of quantities, &c., which will safeguard the position of the commissioners in any litigation which may arise with the contractors as a result of any action which may follow the report of the board of arbitration.
Sir, whatever differences there may be among us, if the board of arbitration finally bring in a report according to clause (d) of these objections, that wifi cover everything that could be covered by any board of arbitration or by any tribunal. The question was put to me before recess how it could be possible that the commissioners could in any way represent the people and I was asked to give an illustration. It is possible that a case might arise, if the engineers in charge were not given full opportunity to make their side of the case clear and give reasons for their classifications, if the fullest evidence were not taken and placed on record a case might arise in which the contractor could collect from the government and the government could not get the interest from the Grand T'-unL-Pacific. The Grand Trunk Pacific and tn~ government have a contract which provid'd for an adjustment of any differences between them by a board of arbitration and under which the government, would collect interest on the amounts established by the board as the cost of construction. But if the evidence were not sufficiently complete to substantiate the findings of the board, a condition might easily arise under which the contractor could collect a greater amount from the government than the gov eminent could compel the Grand Trunk Pacific to pay interest on; and that is where the commissioners would stand for the interests of the people in making the Grand Trunk Pacific pay interest on the amount .the government might be compelled to pay under the contract. My hon. friend from North Ontario (Mr. Sharpe) saw the point at a glance the other day because he put a question on the order paper to this effect: Does the government intend to hold the contractors responsible for any reduction in classification and if so are the contractors to be represented on the board of arbitration? The hon. member for North Ontario with his legal acumen, saw exactly the situation. He saw that it might be possible for the contractors to collect from the government an amount greater than the amount on which the government could collect interest from the Grand Trunk Pacific, so that in order to protect the people it is absolutely necessary that every finding of the board of arbitration shall be sub-
[Stage Direction]
stantiated by evidence that could be taken in the Exchequer Court in support of the government's contentions.
John Graham Haggart: Is the defence of the engineers published in their evidence?


George Perry Graham: There are two or three letters in sessional paper 42a.


John Graham Haggart: Did they give evidence before the arbitrators?


George Perry Graham: No, what they complained of is that they were not allowed to give any evidence before the board, and they protested that they should be allowed to give evidence to show why they made their classifications.


John Graham Haggart: Have they not done that at any time since?


George Perry Graham: Not that I am aware of. I do not know just all the details, but some adjustment work has been done. The chief engineers have come to an agreement concerning some of their differences. In one division in one contract, they have practically settled all the differences between them-that is after the new board was constituted and Mr. Grant became chief engineer.
As regards Mr. Lumsden's resignation, I would not criticise a man of his intelligence, ability and integrity. Mr. Lums-den has been known in this country a great number of years, and I have the utmost respect for him, but I think his friends will not find it amiss if I make this comment. Had I been chief engineer, and had my instructions not been carried out, I would never have resigned but would have seen that the other men, who did not carry out my instructions, were forced to resign. After all, whatever deviations from duty occurred, if any there were, they all come back to this, that the chief engineer was responsible, not only for the instructions he gave, but also for the carrying out of his instructions. Had I been chief engineer, no combination of circumstances would have driven me from my post, but I would have stayed and insisted on the dismissal of any engineer who disobeyed my instructions. About the time of the resignation, I was absent from the country, and during my absence another chief engineer was appointed; but on my return from the old country, I wrote this letter, which it may not be necessary to quote, but which I think it is just as well to put on record.
Office of the Minister of Railways and Canals, Ottawa, August 31, 1909. Hon. S. N. Parent, ICC.,
Chairman,
Transcontinental Railway Commission, Ottawa.
Dear Mr. Parent,-As I was leaving for Europe some time ago the resignation of the Mr. GRAHAM.
chief engineer of the commission, Mr. Lums-den, was received, and I left it with my colleagues for consideration. I find on my return that in his letter of resignation Mr. Lumsden intimated that he had lost confidence in certain of his staff.
I have no doubt that his intimation is unnecessary, but wish to emphasize the government's attitude in this matter. Should it be found that any member of the staff has been dishonest or wilfully negligent in the performance of his duty, he should be summarily dealt with.
AVhat you desire and what we all desire is justice to all parties and the fullest protection of the public interest. Any employee who has forgotten this, or has failed to act on this principle cannot be retained for a moment.



[Stage Direction]
On September 2, 1909, I received this letter:
Ottawa, September 2, 1909.
The Honourable
Geo.   P.@: Graham, P.C.,
Minister of Railways and Canals.
Dear Mr. Graham,-The views expressed in your letter of the 31st ultimo coincide exactly with our own, and I need hardly say that we are prepared at all times to act along these lines in the matter of our staff and any other within our control which might affect public interest.
Should any reasonable proof be brought that employees in our service had been guilty of serious negligence or wrong-doing, you can rest assured that Commissioners would deal prompt justice, as we have done already in several cases.
It is not a vain word to say that our engineers in the field can bear comparison with those on any other railroad. Most of them have been connected with the National Transcontinental railway since its earliest stage, when comprehensive surveys had to be carried on from one end of the year to the other, through a rough and distant region, amid great hardships. They are men of good professional standing and experience, appointed by, or with the approval of Mr. Lumsden, and there is nothing before us to show that a single one of those retained proved deficient or dishonest, otherwise it would have been his duty to call to account the men in whom he had lost confidence, or at least to report them with the facts to the board. As no such step was taken by him, it must be inferred that the real point at issue lay elsewhere.
From a consideration of these facts and of what took place before he resigned, I should incline to understand the intimation you refer to as meaning that Mr. Lumsden had lost confidence in his ability to direct his men and exercise the authority incumbent on his position, rather than in any one's integrity or faithfulness. The lack of further explanation, under the circumstances, should not be enough to condemn engineers who had apparently up to that moment, been found worthy by him of the trust placed in them.
Still, we did not wish to leave room for the least doubt. When Mr. Grant assumed his new office, it was therefore thought proper to have him make at once a direct and careful

inquiry into the situation to see whether i there could have been anything wrong.	!
As you are now aware, Mr. Lumsden came i to resign after our board had taken strong . exception to the manner in which the arbitrators had conducted their proceedings. The ' ground covered by them was sections in dis- 1 tricts 'I" and 'B,' which were taken in an advanced state, if not partly completed.
Having been on the work several times while it was in progress, as inspecting engineer, there is no doiibt that Mr. Grant was better acquainted with its character and aspect than his predecessor. There is nothing, however, in Mr. Grant's opinion, to show that the imputation cast by Mr. Lumsden is justi-fled. His report on district 'F,' of which 1 inclose a copy, brings this fact out beyond doubt. He is now making a similar inspection in district 'B,' and I shall be pleased to let you know the result of it as soon as put before our board in writing. A thorough investigation has not, in the first case, revealed any actions on the part of the engineers to show that they had not acted in good faith, to the best of their ability and judgment. If some figures need revision, it is the duty of the chief engineer to correct them, but it does not follow that there has been any deliberate and calculated disregard of Ins instructions.
For the safeguard of public interest as well as our own protection, every care has been taken so far, and will be in the future, to have the closest supervision exercised oyer all employees from head down. The appointment of a general inspecting engineer and later of residency inspectors is proof that oui constant aim has been to render this control as effective as it could possibly be made.
A letter from chief engineer Grant to his colleague, Mr. Kelliher, of the Grand Trunk Pacific, in regard to disputed classification, written on his return from the first part ot his trip, may further help you to understand clearly the position, as it has a direct bearing on this matter. A copy of it is therefore attached, together with copy of some recent correspondence between Mr. Hays and my self relating to the same subject.
S. N. PARENT, Chairman.


John Graham Haggart: Before the hon. minister pases from that, may I be allowed to ask a question? Has he a letter from any engineer or any evidence of an engineer in which he differs from the interpretation of the subsection of the specification given by Mr. Lumsden?


George Perry Graham: No, I have no knowledge of such a letter.


John Graham Haggart: Or any evidence?


George Perry Graham: No, so far as my knowledge goes, there is none. The Graipd Trunk Pacific accepted the interpretation. The difference that exists between them now is as to the carrying out of the interpretation on which they both agreed.
Now, Mr. Speaker, on my return, I found that Mr. Gordon Grant had been appointed chief engineer. I wish to place on Tecord a letter written by Mr. Grant, and referred to, I think, in some of the correspondence. He was appointed on July 21st, and he showed business ability by, that day, getting right down to work and taking hold of his job with enthusiasm and judgment, that, I think, will be productive of good-yes, has already been productive of good. So far as I am aware, since he was appointed chief engineer no objection has been raised to the classification of any of the divisions under his supervision. Here is his letter written on the very day on which he was appointed:
Ottawa, July 21, 1909.
H. A. Woods, Esq.,
Assistant Chief Engineer,
Grand Trunk Pacific Railway Company. Dear Sir,-My predecessor in office of chief engineer of the eastern division of the National Transcontinental railway before resigning stopped the payment of the estimates of the contractors in districts * F ' and ' B ' owing to his having differed with the engineers in those districts on the matter of classification. It therefore becomes necessary for me to immediately visit the work in dispute in these districts, to see for myself the classification which has been allowed.
The work under the McArthur contract in district ' F ' being of such pressing urgency,
I propose visiting that district at once and 1 to-day informed the commissioners of my intentions in this respect. They then directed me to advise you of my intended trip, and as their agreement with your company dated January 10, 1908, is still in force, that I request you to accompany me, so that pursuant i to that agreement we may go into this matter on the ground and if possible, adjust these | disputes to our mutual satisfaction, and ; arrive at an understanding as to any differ' ence that may have to be arbitrated so that ; such arbitration, if any, may be proceeded E with without delay.
I need not point out to you the absolute necessity of straightening up matters in district ' F ' so as to insure the completion of this necessary link between your western divi-' sion and your Fort William branch, so that >
your company may be in a position to parti-r cipate in the transportation of this season's r crop.
i As stated before, I intend to start at once i to district ' F' and will therefore be glad if you will telegraph me a reply on receipt of this letter.
5	GORDON GRANT,
Chief Engineer.
This shows that on the very day on which - Mr. Grant was appointed, he wrote to the i chief engineer of the Grand Trunk Pacific . asking that gentleman to accompany him i over the line where these matters were in [DOT]- dispute, and, according to the Act, see if they could arrive at a mutual understand-I ing, and, if not, appoint a third arbitrator, i- I may say, in passing, that Mr. Woods, of n the Grand Trunk Pacific, did not accorn-d pany Mr. Grant, so Mr. Grant, as chief *- engineer of the Transcontinental, himself

went over the line to inspect the classification of these sections in dispute.
,T7Mr:	A. CURRIE. Why did not Mr. Woods accompany Mr. Grant?


George Perry Graham: The explanation given me, as I recollect it, is that Mr. Woods was m the far west, at Prince Rupert, I think, and said he did not get the letter in time to accompany Mr. Grant.


Mr. J. A. CURRIE.: Was not Mr. Grant aware of that fact when he wrote so peremptory a letter?


George Perry Graham: I do not know that. I would tell my hon. friend (Mr. J. A. Currie) if I could, but I cannot. I should imagine that Mr. Grant was aware of it, but, if Mr. Woods were in Prince Rupert, there might be some other engineer, Mr. Kelliher, "or somebody _ else, possibly, who might have accompanied Mr. Grant. I am not prepared to give an opinion on the matter.


Mr. MIDDLEBRO.: Was it not because the matter was under adjudication of the arbitrator, and so Mr. Woods took the position that there was no occasion for this inspection?


George Perry Graham: I do not know. I merely state that Mr. Woods did not accompany Mr. Grant and that Mr. Grant went over the line alone. But the terms of the agreement are that, in case of a dispute arising, if possible, a settlement shall be arranged by the chief engineers, and only such things are referred to arbitration "as the chief engineers fail to agree upon. If the chief engineers agree, then, even if the third arbitrator were on the ground, there is no need for him to give advice in the matter. But, if the chief engineers come to a section where they cannot agree, the third arbitrator steps in and makes a decision for them. Now, there was a reduction, I think, of $370,000 altogether on the McArthur contract, and it is only fair to say that all this was not made by Mr. Grant, There was an amount made before Mr. Grant became chief engineer of this division, and it reduced the amount of the reduction made to $202,402. I think it is not unfair to say that it may be, when the final adjudication comes, that Mr. Grant made too great a reduction, possibly; or it might transpire he had not made reduction enough. But this is the amount, in order that the commission might be on the safe side.


George Eulas Foster: That action is final, is it not?


William Sora Middlebro: Let me call the minister's attention to a letter written by Mr. Woods to Mr. Grant, dated July 22,' 1909, in which he says:	'


George Perry Graham: ' ifl arbitrators have been over the line, and while their report has not been made, or at least has not been seen by the writer, I do not consider it advisable that I should visit, the work and personally agree with you on the points which may have been caken under consideration by the board of arbitrators, and might, to a certain extent, impair such report when made.


George Perry Graham: Then I will retract what I said that Mr. Wood was at Prince Rupert, he was in _ Montreal and did not go. However, I think I am quite clear that that position was shortly afterwards abandoned by the company. Now I want to read the_ letter signed by Mr. Gordon Grant which explains these reductions:
Ottawa, September 20, 1909. The Commissioners of the Transcontinental Railway, Ottawa, Out.
With reference to my letter of the 14th instant re my_ recent inspection of district ' F/ and in which I stated that I was deducting $370,000 from the progress estimates now due Mr. McArthur. Since writing that letter I have revised my figures, and the amount to be deducted now is $359,488.96, and my construction accountant has since informed me that Mr. Lumsden had previously deducted $140,086.80 from McArthur's March estimate, .and $17,000 from the April estimate, but for what reason I do not know, though I presume it was for overbreak, but he has left no record or memorandum showing from what residency, sub-contractor or cutting he %vished the above amount deducted.
Consequently, as I am satisfied that, for the present purposes, and until the arbitration has taken place, the above mentioned amount is sufficient to hold back. I have signed McArthur's estimates to date, after deducting the $359,488.96, less the amount previously deducted by Air. Lumsden, viz., $157,086.80, which will amount to a deduccion on my part of $202,402.16.
I may say here that there is another deduction made on the Grand Trunk Pacific of $15,000. Now Mr. Grant and Mr. Schreiber went to Winnipeg to meet Mr. Kelliher, on September 30, 1909. I may explain, as my hon. friend from North Grey (Mr. Middlebro) intimates in his contention, that the Grand Trunk Pacific contended that there was no need to appoint a new: board of arbitrators, that the resignation of Mr. Lumsden 'did not necessitate a new appointment of a board of arbitrators, but that the appointment of Mr. Grant as chief engineer of the Grand Trunk Pacific merely filled the vacancy, and consequently any work done by the board of arbitrators stood as the work of the board, and the mere; change of the personnel did not make any change in the situation. Well, as against that, as against the contention of Mr. Chamberlain, who also took that ground, and there is no doubt Mr. Woods was acting under the instruction of Mr. JANUARY 25, 1910
Chamberlain in not going to , the west, I wish to put on record the opinion of Mr. Newcombe, the deputy minister:
Ottawa, September 28, 1909. The Deputy Minister of Justice, Canada,
I am of opinion, upon perusal of the annexed correspondence and of sections 7 and 4 of the agreement, that, Mr. Lumsden having resigned, it is necessary, or at least advisable, for Mr. Grant, his successor and Mr. Kelliher to join in a new appointment of Mr. Schreiber as third arbitrator.
E. L. NEWCOMBE, Deputy Minister.
Consequently the position of the commissioners, the position of the government, and the position of Mr. Grant, was upheld by the deputy minister of justice, and on his advice they were acting in saying that it was wise, if not absolutely necessary, that Mr. Schreiber be reappointed chairman by the new board as constituted including Mr. Grant, the new chief engineer. They went to the west to meet Mr. Kelliher to join in a new work of arbitration, or to proceed with the work. Now it will be said, and fairly said, that there was a great deal of dispute as to the methods to be adopted by this new board of arbitrators when they got to the west. The board of commissioners contended, and I think wisely, acting on the advice of the deputy minster of justice, first, that Mr. Schreiber had to be appointed anew, or, as the lawyers would say, de novo. They contended also that the work of arbitrations so far done ought to be recommended, or that the work ought to be started and done all over again under conditions that would meet the objection, namely, that all the evidence ought to be placed on record, and every fact stated, so that the finding of the arbitrators would be a finding upheld by the Exchequer Court in case of a suit between the contractors and the Transcontinental Railway Commission.


John Graham Haggart: Did the Minister of Justice agree to that?


George Perry Graham: The Minister of Justice was in London at the time, and the deputy acting for him gave his opinion.


John Graham Haggart: Not in that direction.


George Perry Graham: It was merely as to the methods to, be adopted, as to the mode of procedure which was to be taken on the arbitration. Mr. Kelliher refused altogether at first to sign the appointment of Mr. Schreiber anew. But after discussion, these disagreements as to the scope of the arbitration, as to whether it should be confined to the agreement made by the Grand Trunk
Pacific with the commission, the other agreement made by the Grand Trunk Pacific and the commission as to the filing of complaints promptly, as to the interpretation of classification agreed upon between them, they did not agree, and Mr. Kelliher, I understand, refused to sign the appointment of Mr. Schreiber. No one can claim that the refusal was the fault of the commission, because that appointment was in the identical language of the appointment signed before by Mr. Kelliher. But it was upon that point, and I am not going to argue as to the right of the Grand Trunk Pacific to take it. They contended it was not necessary to reappoint him, and refused to sign his reappointment. They returned again without doing anything; and as my hon. friend said this afternoon, it seemed as if it was impossible to have anything done. But I submit in all fairness that it was not the fault of the government or of the commission that these arbitrators did not proceed, it was the fault of neither that it did not proceed months before it did, because, in all Mr. Lumsden's correspondence he complained that he could not get an arbitrator appointed. But in so many circumstances and so many details, it is not a matter of great surprise that strong opinions might be formed. But after the return of these commissioners from the west, it seemed there was only one way to proceed to get a third arbitrator appointed. Now the question was raised: Should Mr. Schreiber be reappointed to the position? I took the position strongly, and my colleagues upheld me, that Mr. Schreiber was an able and intelligent man, of uprightness and integrity, and the government having appointed Mr. Schreiber, they were satisfied to have him reapp_ointed anew as the third arbitrator in these proceedings.
But, Sir, as I have pointed out nothing was done and that without any fault either of the government, or of the commission, or of the new chief engineer of the commission. When the arbitrators returned from the west I think one or two conferences were held between the Grand Trunk Pacific railway and the commission to see if they could not arrive at some conclusion to proceed with this arbitration. It seemed impossible to arrive at such a conclusion, and the commission, acting under the statute, applied to the Chief Justice on November 11, 1909, to appoint a third arbitrator. This will be tedious for the House to listen to but it will have to bear with me while I read it as it forms part of the record which would be incomplete without it:
Memorandum of agreement made the seventeenth day of November, A.D. 1909, between The Commissioners of the Transcontinental Railway, hereinafter called the commission-
COMMON ri
ers, of the first part, and The Grand Trunk Pacific Railway Company, hereinafter called ' the company,' of the second part.
Whereas by paragraph 7 of the agreement bearing date the 29th day of July, 1903, and entered into on behalf of His Majesty the King and the company, respectively, a copy of which agreement forms the schedule to chapter 71 of the Statutes of Canada, 1903, it is provided as follows:-
7. In order to insure for the protection of the company as lessees of the eastern division of the said railway, the economical construction thereof in such a manner that it can be operated to the best advantage, it is hereby agreed that the specifications for the construction of the eastern division shall be submitted to and approved of by the company before the commencement of the work, and that the said work shall be done according to the specifications, and shall be subject to the joint supervision, inspection and acceptance of the chief engineer appointed by the government and chief engineer of the company, and in the event of differences as to the specifications, or in case the said engineers shall differ as to the work, the questions in dispute shall be determined by the said engineers and a third arbitrator, to be chosen in the manner provided in paragraph i of this agreement.
And whereas a memorandum was on the 10th of J anuary, 1908, initialed by S. N. Parent and H. D. Lumsden, on behalf of the commissioners and Charles M. Hays, on behalf of the company, as follows:-
Monthly estimates for contractors shall be submitted promptly from time to time by the chief engineer of the commissioners to the company's assistant chief engineer at Montreal for approval. If he has any objection to such estimates, he shall promptly file the same with the chief engineer of the commissioners and any objections from time to time filed shall thereupon be considered, and, if possible, determined by the said engineers, and in case of their failure to agree, may then or any time before or at the time of the final payment, at the option of either party, be considered and determined by arbitration as provided in the agreement of the 29th July, 1903, but in no case shall the payment of monthly estimates be delayed, except with the consent of the commissioners.
In case the chief engineer of the commissioners and the assistant chief engineer of the company disagree as to the final payment, the same shall be withheld until the matter is determined byr arbitration, as provided in the said agreement of 29th July, 1903.
And whereas, on the sixteenth of March A.D., 1909, the chief engineer of the commissioners and the chief engineer of the company, in consequence of certain differences having risen between them as a result of objections filed by the company, did appoint Collingwood Schreiber as third arbitrator for the determination of the said differences, by letter, in the words and figures following:- Ottawa, March 16, 1909. Collingwood Schreiber, Esq.,
General Consulting Engineer to the Government, Ottawa, Ont.
Dear Sir,-By clause 7 of the agreement between the government of Canada and the Mr. GRAHAM.
Grand Trunk Pacific Railway Company, dated the 29th July, 1903, being schedule to 3 Edward VII., chapter 71, in regard to the construction of the eastern division, it is provided that the work shall be done according to the specifications approved of by the Grand Trunk Pacific Railway Company, and shall be subject to the joint supervision, inspection and acceptance of the chief engineer appointed by the government and the chief engineer of the railway company, and in the event of differences as to the specifications, or in case the said engineers shall differ as to the work, the questions in dispute shall be determined by the said engineers and a third arbitrator to be chosen by them.
Some such differences having arisen as a result of objections filed by the company, we hereby beg to choose you a third arbitrator for the determination of the questions now in dispute, and on which we have failed to agree after visiting the work, and shall be pleased if you are agreeable to accept the office. In the event of your acceptance, a formal submission will be prepared and handed to you later.
HUGH D. LUMSDEN, Chief Engineer, Transcontinental Railway.



B. B. ICELLIHER,

[Stage Direction]
Chief Engineer, Grand Trunk Pacific Railway.
And whereas, the said Collingwood Schreiber did accept the said appointment by memorandum upon the said letter as follows:-
I hereby accept the above appointment.
22nd March, 1909.

[Stage Direction]
And whereas, after entering upon the work of such arbitration, but before the said arbitrators had made any report thereon, the said Hugh D. Lumsden had resigned the position of chief engineer of the Transcontinental Railway, and one Gordon Grant has since been appointed in his place as such chief engineer ;
And whereas the said Gordon Grant, as such chief engineer, and B. B. Kelliher, chief engineer of the company, have by memorandum bearing even date herewith, a copy of which is attached hereto, appointed the said Collingwood Schreiber as third arbitrator for the purpose of dealing with de novo and determining, irrespective of any investigation heretofore made by the said Hugh D. Lumsden, B. B. Kelliher and Collingwood Schreiber, the said matters in difference between the said chief engineers as a result of or arising by reason of such objections filed on behalf of the company;
Now this agreement witnesseth that it is agreed that the said Gordon Grant, B. B. Kelliher and Collingwood Schreiber, as such arbitrators, shall proceed to deal with and determine all questions and differences between the commissioners and the company arising or as a result of objections filed on behalf of the company with the commissioners previous to the lOtli day of January, A.D 1908, and also all questions and differences arising out of or as a result of objections filed on behalf of the company with the commis sioners up to the date hereof under and pursuant to the terms of the said memorandum of the tenth of January, 1908, it being under-

stood that questions and differences not covered by or arising out of such objections shall not be' dealt with by the said, arbitrators.
It is understood that the said third abitra-tor is to be called upon to act in the adjustment of such questions and differences only when the said Gordon Grant and the said B. B. Kelliher, the two respective chief engineers, fail to agree.
Each party shall have the right to produce evidence before the said arbitrators as to the matters in dispute.
Except as herein expressly agreed, neither the making of this agreement nor anything herein contained or done in pursuance hereof shall be deemed to operate as a waiver of or in any respect alter, limit, abridge or modify any of the rights of His Majesty the King, or of the company, under the said agreement of the 29th July, 1903, or under any term or provision thereof.
In witness whereof the said parties hereto have executed these presents on the day and year first above mentioned.

By Chas.   M.@: Hays,
President.



HENRY P. PHILIPS,

[Stage Direction]
Secretary.

[Stage Direction]
Chairman.

[Stage Direction]
Secretary.
Just before proceeding farther I want to revert for a moment to what took place when the arbitrators returned. The arbitrators returned from the west under the circumstances that I indicated a few moments ago. They reported to the commissioners, and in consequence the chairman of the board of commissioners decided to appeal to the Chief Justice to have a third arbitrator appointed. The case came up and it was postponed for a week. In the meantime the Grand Trunk Pacific, on consideration, decided that it was but carrying out the spirit of the arrangement, also the spirit of the contract and absolutely the letter of the contract, and an agreement between the Grand Trunk Pacific and the commissioners that the board of arbitration should be formed and proceed as quickly as possible was made. They came to an arrangement by which they agreed to appoint a third arbitrator and he was appointed by the document as read by me a few moments ago. In addition to that document I want to place one or two others on the file. I have one sent by the chief engineer and Mr. Kelliher, in addition to those in the return brought down by the House:

[Stage Direction]
Ottawa,
Collingwood Schreiber, Esq.,
General Consulting Engineer to the Government, Ottawa, Ont.
Dear Sir,-By clause 7 of the agreement between the government of Canada and the Grand Trunk Pacific Railway Company, dated the 29th of July, 1903, being schedule to 3 Edward VII, chapter 71, in regard to the construction of the eastern division, it is provided that the work shall be done according to the specifications approved of by the Grand Trunk Pacific Railway Company, and shall be subject to the joint supervision, inspection and acceptance of the chief engineer appointed by the government and the chief engineer of the railway company and in the event of differences as to the specifications or in case the said engineers shall differ as to the work, the questions in dispute shall be determined by the said engineers and a third arbitrator to be chosen by them.
Some such differences having arisen as a result of objections filed by the company, we hereby beg to choose you as third arbitrator for the determination of the questions now in dispute, and on which we have failed to agree after visiting the work and shall be pleased if you are agreeable to accept the office. In the event of your acceptance, a formal submission will be prepared and handed to you later.
The annexed correspondence marked 'A,' 'B/ 'C,' 'D,'	'E,' and 'F,' and blue print
marked 'G' are to be made a part of the record in the matter for your determination.
Yours truly,
(Sgd.) GORDON GRANT, Chief Engineer, Transcontinental Railway.
(Sgd.) B. B. KELLIHER, Chief Engineer, Grand Trunk Pacific Railway. I hereby accept the above appointment.
(Sgd.) COLLINGWOOD SCHREIBER.
Then there is this telegram:	1
Montreal, November 5, 1909.
B. B. Kelliher,
Grand Trunk Pacific Railway,
Winnipeg, Man.
Are you not satisfied with Lumsden's interpretation of the specifications concurred in by Woods in February last year. If not, please explain why.

[Stage Direction]
That was written by the chief solicitor of the Grand Trunk because the commission Tightly insisted that the Grand Trunk Pacific Company, after having accepted the interpretation of Mr. Lumsden's interpretations and having the work conducted under them, could not well sa.v: We will not abide by the classification we have adopted ourselves and ask for an arbitration on some other lines altogether. Mr. Biggar sent that telegram to Mr. Kelliher,
[Stage Direction]
chief engineer of the Grand Trunk Pacific, and Mr. Kelliher replied:
Winnipeg, November 5, 1909.
W. H. Big^ar,
Montreal.
In the absence of correspondence cannot say what items your telegram refers to. If to diagrams January tenth, nought eight, have no objections to Lumsden's interpretation, but both he and I very much object to the erroneous application of his interpretation to the work in the field.

[Stage Direction]
That proves conclusively what I said earlier in niy remarks that the Grand Trunk Pacific had fully concurred in the interpretation by Mr. Lumsden, they had concurred in it away back in 1908, and that concurrence is reaffirmed by Mr. Kelliher in his message, and all there was to arbitrate between them so far as their dispute was concerned was as to whether the interpretation made by the Grand Trunk Pacific and the Transcontinental Commissioners had been lived up to on the work. I referred a moment ago to the reasons why it was necessary that the greatest and strictest care be taken in the work of these arbitrators so that their finding might be based on evidence which w^ould be sufficient td protect the government against contractors being able to collect from them an amount greater than the amount they could 0001-" pel the Grand Trunk Pacific to pay interest on under their lease. What is the situation? I have pointed out as rapidly and as clearly as I could the different steps that have been taken along the line in reference to this work. I submit that the government and the commission has done its best to get these difficulties settled, because it was in the interest of all parties before the sub-contractors were settled with and the final acceptance of the work by the Grand Trunk Pacific should be accomplished-I don't mean the taking over of the road for leasing purposes, but the acceptance of it by their engineers as completed work-that such adjustment should take place. The point has been raised somewhere by somebody at some time, that the government might be responsible to the sub-contractors, or rather to the contractors themselves for the payment to the sub-contractors. That is far from being the case. The commission has no contract with any persons but the chief contractors, or the contractors in the first instance, and any arrangement these contractors may have with the subcontractors, or with the secondary sub-contractors is no concern of the commission' so far as the .settlement goes. If the contractors themselves have settled in full .with the sub-contractors and an amount is deducted from the chief contractors, they have to bear the loss and look out for any, reimbursement they can get from the subcontractors. Personally, I am inclined to think, notwithstanding anything that has been said, that the chief contractors have likely looked out all along the line and have probably protected themselves largely from any such thing as the sub-contractors being over-paid. But if they have not, that is their concern not ours. The commission deals only with the chief contractors and not with the sub-contractors. But, Sir, is the country protected? As my hon. friend from Lanark (Mr. Haggart) will understand perhaps better than any one in the House-no doubt better than I do, he-f cause he has had such great experience- in all_ these contracts a certain amount of deposit is required when the contracts are let, and in addition to that undeT the terms, of the agreement which I read this afternoon, ten per cent of the amount actually expended is deducted monthly and held, back from the contractors and repaid tq them after two months if it be found that the money can be used properly in a more rapid prosecution of the work. In addition to that, all the plant belonging to these companies forms part of the security for the completion of the work on the ground.
I want to call the attention of the House and the country to the fact that notwithstanding all that has been said, there is a large amount of money in the hands of the government to-day to protect the government against"any over-classification that may be found along the line of the Trans-, continental railway. In this, as in other parts of the contract, the government has been very careful to guard its position. I have tried to get these figures into such form that they will be applicable to the situation and be a conclusive argument on that point, and as such I present them to the House.
George Perry Graham: 



THE COMMISSIONERS OF THE TRANSCONTINENTAL RAILWAY.

[Stage Direction]
STATEMENT OF AMOUNT OF 10 p. c. WITHHELD ON CONTRACTORS' PROGRESS ESTIMATES TO DECEMBER 31, 1909 ; ALSO AMOUNT OF SECURITY DEPOSIT.
3 ^ O
9
11
14
15
[Stage Direction]
19
20 20a 21
[Stage Direction]
' C\, 'D\,
Name of Contractor.
Grand Trunk Pacific Railway	
J. W. McManus & Co	
Grand Trunk Pacific Railway	
Willard Kitchen Co., Ltd	
Lyons & White	
Total	
M. P. & J. T. Davis	
Macdonell & O'Brien	
Grand Trunk Pacific Railway	
Macdonell & O'Brien	
Total	
Grand Trunk Pacific Railway	
Grand Trunk Pacific Railway	
E. F. & G. E. Fauquier	
Total	
E. F. & G. E. Fauquier	
O'Brien, Fowler & McDougall Bros..
Total	
O'Brien, Fowler & McDougall Bros.
J. D. McArthur	
Total	
Grand total	
* Deposit receipt. f Deposit returned.
It will be seen from this statement that a grand total of $4,915,742.69 remains in the hands of the government as security. That is the amount now held by the government as against anything that can be found wrong with the classification. But, as 1 pointed out, there also stands as security to the government the very large plants which these men owned, which would approximate, at a guess my hon. friend would say, at least half of that amount, which would leave nearly $7,000,000 in cash and plant value in the hands of the government as security for any finding the arbitrators can make as to wrong classification.
I have gone over this question fully. I have arrived at the conclusions, I think fairly, first, that the government have taken
Net amount of the 10 per cent, retained.	Amount of security of deposit.	Total security.$ cts.	S cts.	$ cts.166,441 01 33,606 76 80,841 02 169,020 11 233,382 95 81,372 96	t 28,919 00 75.000	00 100,000 00 75.000	00 90.000	00	166,441 01 62,525 76 155,841 02 269,020 11 308,382 95 171,372 96764,661 81	368,919 00	1,133,583 81151,966 85 197,138 02 67,825 59 252,759 94 220,04S 51 36,570 00	100,000 00 225.000	00 *225,000 00 t 75,000 00 150.000	00	251,966 &5 422,138 02 292,855 59 252,759 94 295,048 51 186,570 00926,308 91	775,000 00	1,701,308 9112,942 90	SeeNo.l4'D'	12,942 90133,756 13 147,911 94	225.000	00 150.000	00	368,756 13 297,911 94281,668 07	375,000 00	656,668 i 793,060 79 34 36	100,000 00	193,060 79 31 3693,095 15	100,000 00	193,095 15143,126 19 31,439 43 65,340 39 753,237 84	200,000 00 | 25,000 00 t	343,126 19 / 56,439 43 \ 65,340 39 753,237 84993,143 85	225,000 00	1,218,143 853,071,823 69	1,843,919 00	4,915,742 69
every precaution to protect the people; secondly, that they have let this work exactly on the same conditions and under the same restrictions that any company would have let the same work; thirdly, that they have done their best to have any differences that arise arbitrated upon under the Act and under the agreement passed by this House and by the tribunal selected by this House after due deliberation for the settlement of differences, and above it all and backing it all they have provided for and have in their hands now, an amount of security approximately, and 1 think more than approximately, enough to cover any things that might be found wrong under the classification by any board of arbitration that could be selected. That being the case, what is the whole difficulty? My hon.
[Stage Direction]
friend's chief difficulty was that the work has cost more really than the estimates made by the engineers, that the quantities have not worked out as estimated by the engineers when letting their contracts. I have endeavoured to answer all these suggestions and all these complaints but I come back to the original proposition that what the people of Canada want to know is: Are they getting a railway that will be worth the money they are putting into it in connection with the transportation problem of this country?
Thomas Simpson Sproule: No matter how much stealing there may he.
_ Mr. GRAHAM. My hon. friend interjects: No matter how much stealing there may be. This government has not protected, and does not protect, and does not want to protect any man who is guilty of stealing one dollar from the public treasury of this country. This parliament, including my hon. friend with his wisdom, for which I always have great respect, decided that they would refer the differences on which payment of cash hung-because after all it comes back to the question of classification; if there has been stealing, it is on account of over-classification; if there has been too much money paid it has been on account of over-classification-to a special tribunal. My hon. friend assisted, every member in this House assisted in naming a tribunal, not of partisans in this House, but of expert engineers who would decide for the country, independent of party, what was the right thing to do between the Transcontinental Commissioners, the Grand Trunk Pacific Company, and the contractors, on the question of classification.


Thomas Simpson Sproule: If that was their main aim and desire, I would ask how it went on so long since the first charges were made by Major Hodgins, and why the government have striven so strenuously ever since to prevent that inquiry that would bring out these allegations of fact or otherwise.


George Perry Graham: I am sorry I spent half an hour explaining that, and I have convinced myself at least that the government was not causing delay. I thought I had produced documents which were sufficient evidence that the government had been endeavouring to refer this matter to arbitration for months and months and were not able to get the desired result until they appealed to the Chief Justice for the appointment of the third arbitrator and then the Grand Trunk Pacific agreed to the appointment of a third man who was appointed and the commission has the work m hand.
As I said, the whole thing comes back to the question of over-classification, and parliament, I want to repeat, in its wisdom, Mr. GRAHAM.
without any objection, decided, and wisely, that any cases, whether of classification oi differences of opinion as to work of this kind which should come up, should be referred to three expert engineers, who are better judges than any Committee of this House or even the Exchequer Court, and it is no disrespect to say that concerning the Exchequer Court, because if this had been left to the decision of the Exchequer Court the judge would probably have referred it to the Board of Engineers to decide, and on their report he would have acted. That has been done time and time again, as my hon. friend knows.
As I said, the people want to know about the cost of this railway, and eventually, they shall know all about it, the details, everything will be examined, investigated and sifted by the tribunals appointed for that purpose. As I said to Mr. Parent returning from Europe: If it be found that, any engineer or employee of the Transcontinental railway has been guilty of wrong conduct I will be the first to ask that he be dismissed and dismissed summarily, but I never ask that to be done with a man until he has had a proper opportunity to show whether or not he is deserving of that treatment.	,
As I said, what the people want to know is about the value of this work. I may, I think, without offence, recall to my hon. friend from South Sinicoe the fact that all the horrible details that could be conceived by the most fertile imagination as to the cost or presumed cost of this railway were placed before the people of Canada in 1908. Every exaggeration that could be imagined, as to what would be the ultimate cost was preached from every platform in this province and, I think, in every province of the Dominion. What was the verdict of the people? The verdict of the! people was: We want the road, and we want the party who are friends of the road, to finish it in the interests of the people. Hon. gentlemen opposite, while pretending to be in favour of this road, give it what my countrymen would call the Irishman's affection, they give it a kick first and then expect to be considered its friend. This road has been projected by the Prime Minister of the Dominion of Canada, and his name will be connected with it, and I say, notwithstanding all that has been urged against the project, that when history becomes to be written, the name of Sir Wilfrid Laurier and the Grand Trunk Pacific will be upon its pages to the credit of both, and that this road will work a wonderful development in the transportation problem of this Dominion, which is now the great question before the people. It has its difficulties, it has its troubles, no one knows the difficulties surrounding a work of this kind under government man-

ageinent better than I do myself. I do not ask for sympathy from any man living on account of the difficulties, I do the best I. can, I grapple with them, honestly and fairly. If I make mistakes, they are not made wilfully, they are made with honesty of purpose, and I challenge any hon. gentleman to point to a single act of mine in ' connection with this road that will not bear the utmost scrutiny from the public standpoint.
This work has been undertaken by the Liberal party, it is a work for the national benefit, it is something not contemplated by any party before, because hon. gentlemen opposite when constructing one of the same kind spent nearly as much and did not own a foot of railway when it was completed.


Mr.   POSTER@: Does this government own any of it?


George Perry Graham: I think my hon. friend can answer that himself. This government will own 1,804 miles under lease to the Grand Trunk Pacific for fifty years. I am willing to leave this case to the country. Parliament itself has named the tribunal and provided for its formation. The government and the commission are willing to leave the decision to the tribunal appointed by this parliament. If, after they have concluded their labours, it be found that parliament or the country are not satisfied with their findings, parliament is supreme to do whatever it chooses; but I submit as a business man to business men, I submit to men of legal learning and experience, that it would not be wise, it would not be expedient, it would not be carrying out the terms of our contract with the Grand Trunk Pacific, if we proposed now to go into an investigation of a matter which is-already before a tribunal selected for that purpose by us.	.
Mr, FOSTER. Might I put a question? Will the hon. minister be good enough to explain just what this committee, which is to be appointed under this resolution, is to investigate? We have heard what it is not to investigate. Would the hon. gentleman give us an idea now as to what it is going to investigate? If he would, he will certainly enlighten me and other members.


George Perry Graham: It is rather wearisome, but I shall read again the resolution for the benefit of my hon. friend.


George Eulas Foster: I would ask the hon. minister to dispense. What I want from him is an explanation of that resolution. Any man ean read it, but we do not all grasp what it means.


George Perry Graham: My hon. friend from Lanark (Mr. Haggart), with his usual precision, puts the hon. member for North Toronto (Mr. Foster) right. He says the last paragraph explains it. I will read that.


George Eulas Foster: I have read that and understand it.


George Perry Graham: I do not see that I can use any plainer language:
Therefore, it is resolved, that a special committee of five members of the House, to be named hereafter, be appointed to investigate the said charges and allegations of the said Hugh D. Luinsden against a portion of the said engineering staff of the said railway; that such committee have power to send for persons, papers and records, to examine persons on oath or affirmation, and to report from time to time.
Mr. Lumsden has made certain charges and they are to be investigated.


George Eulas Foster: What are the charges?


George Perry Graham: My hon. friend will find them in Mr. Lumsden's letter read by myself and by the Prime Minister.


George Eulas Foster: Would my hon. friend tell us what they are in his own language?


George Perry Graham: I would not like to detain the House longer recapitulating what is so plain. I submit that the charges made by Mr. Lumsden should be investigated by a committee, and that the Board of Engineers, as regards the classifications, should be allowed to complete its work, as provided by the agreement embodied in the statute. In my opinion, the people have confidence in the government, they have confidence that the building of the Grand Trunk Pacific is for the benefit of Canada, that it is being constructed as economically as possible, and that their interests are safe in the hands of the Liberal party. The government, on its part, is prosecuting this undertaking to its ultimate conclusion so that the people may have the benefit, outlined by the Prime Minister, when he first introduced the resolution, and that is the solving of the transportation problem from east to west and from west to east. I submit therefore that the amendment to the resolution should not be carried, but that the motion of the Prime Minister should pass.


Samuel Barker: I rather congratulate my hon. friend from North Toronto (Mr. Foster) on the question he put a moment ago to the Minister of Railways because he drew from that hon. gentleman, in the last five minutes of his long speech, the only words he addressed to the subject matter of the resolution. For two hours we had the hon. minister addressing us upon every matter connected with the Transcontinental except the subject brought before the House by the Prime Minister. He discussed the contract, the specifications, the amended specifications, the arbitration, the correspondence of the arbitrators-everything which has no rela-

turn whatever to the resolution, and it was only during the last five minutes that he said anything about the resolution itself. With all respect to the Minister of Railways (Mr. Graham) and without any desire to be in the least degree offensive, I would like to say that, in order to take up as little as possible of the time of the House unnecessarily. I shall not at all refer to the nineteen-twentieths of the speech he has just delivered.
The subject before us is a very simple one. It has nothing whatever to do with the arbitration. If the Grand. Trunk railway had accepted every certificate, if they had agreed to every expenditure, if they made not the least objection to any expenditure by the commissioners, that would have nothing whatever to do with our objection to the narrow scope of the reference proposed by the Prime Minister. My hon. friend the Minister of Railways has told us over and over again that the people of this country want this railway and mean to pay for it. I do not suppose that any one say's the contrary. We want the railway and we intend to pay for it, and no doubt we shall be made to pay for it. But is that any reason why we should be swindled? Is that any reason why the country should be robbed? Is that any reason -why there should be malversation, misconduct, incompetence or criminal negligence? Are we to be silent and make no inquiries when we are told time and again that there has been conduct in the management and construction of this railway amounting to fraud. Are we to be content with a long speech from the Minister of Railways about arbitration and specifications and not one word in reproba-tion-if the charges be true-of what Mr. Lumsden has alleged in his letter of June last. Surely whatever questions or disputes there may be between the Grand Trunk Pacific Company and the commissioners of the government, no one will pretend for a moment that the existence of such disputes can justify or exercise any neglect to investigate the misconduct charged by Mr. Lumsden. My whole object in rising is ito add something to what has been said by the Prime Minister and my hon. friend from South Simcoe (Mr. Lennox) as to the gravity of this matter. The Prime Minister, in his resolution, says that the charges are grave and demand investigation. We agree with him, but we say that the charges are so serious that they demand investigation beyond the scope indicated in the resolution. That is the whole question. There is no other question between the two sides of this House. We are all agreed' that there should be an investigation; but whether that investigation shall be confined to a few staff officers and a few engineers and to certain portions of certain districts, or


Samuel Barker: whether it shall go to the bottom and find out whether such wrong doings as are complained of exist anywhere and who are responsible, is the question at issue. We on this side say that the investigation should not be confined to the question whether a few subordinate engineers have done wrong. The question is, has any wrong been done and who is responsible?
I listened with a good deal of attention to the Minister of Railways and Canals. I hoped he would, somehow or other, get to the question, but I failed to see that he has shown himself able to appreciate the position he occupied as Minister of Railways towards these commissioners. The hon. gentleman set out, at the very beginning, with a glorification of the position- there were contracts entered into between these contractors and the government; we had the commission there with its chief engineer, and the chief engineer had great and important duties to perform. We all know these things, but these are not matters in the question. It comes down to this -that since Mr. Hodgins made his charges there have been like complaints of improper conduct, yet no adequate investigation has been made on the part of the government. The hon. minister complimented my hon. friend from South Simcoe (Mr. Lennox) on the work he had done in going carefully through these contracts and the moneys that nad been paid on them and on the ability he displayed in 'criticising the acts of those in authority. Sir, we know that if the Minister of Railways had been doing his duty, every figure that the hon. member for South Simcoe worked out today would have 'been in his department month by month since the. time these contracts were entered into. There is not a railway company in the world that, entering into such contracts as these based on surveys and rough estimates-more or less precise-and finding as they would soon have found, that the outlay was more than they had anticipated, but would have checked these payments by the specifications and estimates laid before the contractor in order to learn the explanation of this enormous and unexpected increase. Where do we find the first attempt on the part of the minister, with his great staff of skilful and able officers, to check these estimates month by month as they came in. If that had been done, as it would have been done in any business office, the minister would have known that things were going wrong and would not have had to wait for two or three years and until millions had been squandered before he made an attempt at investigation.
I wish to point out as briefly as I can

a few things which will indicate how negligent the Railway Department has been, how little alive to what is going on, and how little careful to forestall any improper practices. To appreciate the gravity of this question, you have only to go over some of the figures back to the year 1907-8. It was in 1908 that Mr. Hodgins made his charges, almost identical even in wording with the later charges of Mr. Lumsden, and almost identical with the complaints made by Mr. Woods, of the Grand Trunk Pacific. The words are almost copied from each other-they refer to the same specifications-and you find, if you read the letter of Mr. Lumsden of June 25th last, that he declares to be going on at that time just what Mr. Hodgins said was going on in March, 1908.
Now, let us see how much has been expended on the construction of the two sections ' B ' and ' F,' which are the two indicated by Mr. Hodgins, frequently referred to by Mr. Woods and more recently referred to by Mr. Lumsden, In the report of the Transcontinental Commissioners for 1908, page 41, you find that the commission expended for the year ending March 31, 1908, on section 'B,' $8,467,124. Then there is the 'contract reserve,' arid I give this figure now because of the boastful language of the minister when he was speaking of the amount they had in hand. This reserve is shown by the Transcontinental Commission to be only $299,569. This leaves the cash paid out for one year on section ' B,' $8,167,554. In the same year, as stated at nage 46, the amount paid out on district 'F' was $8,155,864. That is, on these two districts, which have been subject to such charges as compelled the Prime Minister to ask for a committee, they spent in one year-the year which was the period of Mr. Hodgins charges-$16,323,419. In the next year up to March 31, 1909, they expended on sections 'B' and 'F,' $17,920,992. For these two years there was spent on districts 'B' and 'F' the enormous sum of $34,244,411. Now, we are within two months of the completion of another year, on March 31. If you add another year at the same rate as these others, you find that in the years 1908, 1909 and 1910. we shall have spent about $51,000,000 on these two sections. That is, in these three years, taking no account of what was spent before 1908, or of what will be spent in the year that is soon to open, they have expended fully as much as the Minister of Finance said would build the whole railway from Moncton to Winnipeg.
I take those figures as showing in a manner that cannot be disputed, in clear and concise way, the enormous amount that is being expended beyond anybody's anticipation. Here we find that, in three years only of the five or six years it is 77
going to take to build that road, we have spent on districts ' B ' and ' F ' where these charges apply, more than we were assured by the Finance Minister would build the whole eastern section of 1,800 miles. Now when you look at that, and when you consider that Mr. Hodgins made the specific charge in 1908, that the Grand Trunk Pacific engineer confirms that charge in letter after letter, and on that on June 25 of last year, Mr. Lumsden, the chief engineer, repeats the charge specifically, and rather than submit to the degradation and shame of assisting in such misconduct as he refers to that he throws up a valuable appointment and	goes out	of the	servicesurely you cannot imagine any stronger reason for	an	inquiry. There cannotbe the slightest dispute on that point, it seems to me. I do not care to go into all these details. What the hon. member for North Simeoe has worked out so elaborately ought to be in the office of the minister; he ought to have had that information	month by	month	since thework began. The engineers in his department could do that, and should have done	it.	They	should	have therecords at hand, and ought to be able to confirm or dispute every word the hon. gentleman recited here.	,
Now where are we on this question? Are we to submit, because we are building a railway, to robbery? because it is robbery, and nothing short of robbery. When we take that letter of Mr. Lumsden where he says his orders have been disobeyed; where he charges specific improper acts, and that these have been going on, and that in consequence he has lost all confidence in the engineers on a certain portion of the railway, can we doubt that it is our duty to insist on a thorough and complete inquiry?
But the Prime Minister says: Oh, we will inquire into the conduct of these few men, these few officials, who axe charged specifically by Mr. Lumsden. He assumes, apparently, that Mr. Lumsden having recently gone over ' B ' and ' F ' and seeing these things, and in his indignation, having resigned, that he forsooth acquits all others on the whole railway. What an absurdity. If a commission were investigating this matter, and they got up to a certain mile post and discovered such things as are here charged, would they stop and say: We assume the mischief didn't go beyond that mile post, or would they say: We will go on and see what has occurred beyond. Surely a business man would. Surely if this was the case of a great corporation, and they had found peculation and robbery, and shameful misconduct among their staff, they would not think of dismissing only two or three caught, as you may say, in the act,


Mr. E. M. MACDONALD (Pictou).: Mr. Speaker, in all candour I think the House will agree after the statement of hon. members on the other side who addressed the House on this subject to-day that they never expected, never hoped and knew that they had no right to expect or to hope that the resolution which they have proposed would be adopted. The hon. member for Hamilton (Mr. Barker) has said that- Mr. Lumsden went up, inspected sections ' B ' and ' F,' got mad with some body and apparently mad with himself, went off in a pet and came home and resigned. Because Mr. Lumsden stated in his letter to the commission that he had lost confidence in some of the engineering staff, whom he had himself appointed, because they disobeyed his instructions, not on the whole line of the

Transcontinental, not on the whole line of the eastern division, not on the whole of sections 'B' and 'F,' but simply on a small portion of these sections, because he was in a pet according to the hon. member for Hamilton, as against some of his own engineers, therefore, hon. gentlemen opposite say that we mu3t appoint a roving commission and investigate this whole Transcontinental railway from one end of it to the other. That is the logic and argument of hon. gentlemen on the other side of the House. I think we ought to understand what may be called the fair ground for parliamentary investigation. I think it is not stating it improperly to say that if a prima facie case is shown parliament should investigate any wrong-doing or any abuse where such an investigation would result in any advantage or have any purpose. But parliament should not lend itself to purposeless or resultless investigation, or where matters are sub judice, or where an investigation is proposed without ground or warrant and solely for political purposes. I submit that that statement of the duty of parliament is absolutely correct, will be found to be based upon precedent, and is manifestly adaptable to the present occasion. This matter is now sub judice in the hands of the very tribunal to which parliament said it should go five years ago and to which my hon. friends sitting on the other side of the House-and I have read the debate upon this subject and they certainly discussed the Transcontinental Railway Bill at length enough-agreed. The hon. gentlemen who are to-day raising this issue agreed to the passage of this section 7 without any question whatever. That tribunal was created after all the deliberation and all the discussion that took place as to which was the best way to settle technical questions which might arise as to the correctness or incorrectness of engineering views and as to classification. That tribunal has been appointed, it is now dealing with the matter and although the question is sub judice my hon. friends ask this House-I say it not without the most absolute confidence-solely for political purposes to take the matter out of the hands of that tribunal which has been created for that purpose and to engage in a purposeless investigation. That is the situation as it exists to-day. What is the occasion for this debate? Mr. Lumsden, who was the chief engineer of the Transcontinental Railway company, in resigning his position, said that certain engineers, whom he himself had appointed, had disobeyed his instructions and acted in bad faith. My right hon. friend the leader of the House (Sir Wilfrid Laurier) asks this House to investigate that statement and to ascertain whether it is a fact or not. That 77i
is how it has come here. If all this great necessity for an investigation with regard to the operation and construction of the Transcontinental railway existed that these hon. gentlemen have conjured up with solemn faces and deep intonations and which according to their story has existed for the past two years. We have been sitting for nearly two months and these gentlemen have sat inert and have not attempted before to save this country from the terrible catastrophe that they would like us to believe is threatening. This government come with thi3 motion in the proper way, according to the rules of parliament and ask parliament to investigate a statement of the chief engineer to ascertain whether it was bad faith, whether there had been a breach of instructions to which these gentlemen, employing that large amplitude of adjectives which they always bring forward whenever they smell a scandal, propose an amendment. What do they say? They say:
H. I). Lumsden, in tendering his resignation as chief engineer of the N. T. Ry., has made grave charges-
Grave charges, say they.
-touching the expenditure of public moneys' in the construction of the said railway, which charges ought, in the public interest, to be thoroughly investigated.
Is there anything in that language or in that paragraph which involves a single thing in any degree greater or wider than the words stated in the government resolution? Not a single thing. We have a lot of superlatives there put in for effect in order that our Conservative friends may furnish material to their newspapers throughout the country, all those adjectives are supplied for that purpose, but when you come down to analyse it, when you come to the final analysis as the hon. member for North Toronto (Mr. Foster) says, you will find that this section of the resolution amounts to nothing more than the plain Anglo-Saxon which is adopted by the resolution in respect to the statement made by Mr. Lumsden.


George Eulas Foster: May be the hon. member will tell us what it does mean?


Edward Mortimer Macdonald: My imagination is hardly vivid enough to cope with my hon. friend's or to enable me to say what is meant by this motion.


George Eulas Foster: It is the Prime Minister's declaration that I am asking the hon. gentleman to cope with.


Edward Mortimer Macdonald: My hon. friend is not obtuse. Whatever else he may be charged with, nobody has yet charged him with being obtuse and I do not intend to assume that he is guilty of any lack of

qualification that his friends have never suspected of, and even his enemies have never found him guilty of.


George Eulas Foster: You never can be guilty of that which nature does not endow you with.


Edward Mortimer Macdonald: We are told that we must fear the Greeks even though they bring gifts and my hon. friend (Mr. Foster) is so lamb-like of late that I am disposed to regard him as a gentleman whom we need to watch. Now, the statement in the first part of this amendment is nothing but a reiteration in superlatives of the statement contained in the first part of the resolution of the Prime Minister, and that being so we may remove it from the controversy. But as to the second part there is a new element introduced. It says:
The cost of the eastern division of the said railway according to the latest estimates of the government will be so enormously in excess of the estimates submitted to parliament in 1904-5 as to arouse the most serious alarm.
That is a splendid phrase.


George Eulas Foster: It is almost like the 1903 Liberal platform.


George Perry Graham: It won't be nearly so successful.


Edward Mortimer Macdonald: My hon. friends opposite are getting in training to lay down their platform next June, and I suppose that some of those glittering phrases are being prepared by the lesser members of the opposition. My hon. friend (Mr. Lennox) goes on to propose in his motion that parliament should investigate ' said charges '. What charges?
To investigate the statement made by Mr. Lumsden in his letters and all other matters connected with or related to the construction of the eastern division of the said railway and the expenditure of public moneys thereon.
Just fancy imposing on this House the task of investigating every thing connected with the railway since its inception; every dollar that has been spent on it, not in connection with its construction or the classification or the payments to contractors, but every dollar expended on the railway from 1903 to the present. - Is there any connection between that and the utterances made by Mr. Lumsden in his letters as to the engineers on sections 'B' and 'F' ? Not at all, the two things are irrelevant one to the other. Let us see what Mr. Lumsden has said. His statement is that he was dissatisfied with the failure to carry out his instructions on the part of certain gentlemen who were connected with sections 'B' and 'F'-not the whole staff, for he took good care to correct any misapprehension on that point by writing the very day after


Edward Mortimer Macdonald: he wrote that first letter that his statement did not refer to the whole staff on the system or to the whole staff on sections 'B' and 'F,' but only to a certain number of these gentlemen. Now, I find according to the estimate in the annual report of the commission for 1909, that the total mileage under construction is something like 1,800, and, giving the widest possible range to any complaint made by Mr. Lumsden it would only apply to about 500 miles. He acquits the engineering staff on the other 1,300 miles from any possible criticism; he stands by what they have done, he recommended the appointment of every one of them and he limits his criticism to the engineers working on less than one-third of the whole line. The government now propose to investigate his statements made with reference to these gentlemen. As to all other engineers Mr. Lumsden gives them a certificate of character.


Arthur Meighen: Will the hon. gentleman read the certificate of character which Mr. Lumsden gives to the other engineers?


Edward Mortimer Macdonald: I have read the statement of Mr. Lumsden that his complaint only applies to certain engineers who were responsible for the measurement, classification, supervision and inspection of considerable portions in district 'B,' and east of Rennie crossing in district 'F.'


Arthur Meighen: Is that a certificate of character for the others.


Edward Mortimer Macdonald: If Mr. Lumsden had any complaint to make about the others he would have made it, but he expressly limited his complaint to the men on these sections he has described. Now, in order to consider whether the House should adopt the second portion of the resolution of my hon. friend (Mr. Lennox) for that is the only point in controversy, let us look for a moment at a few general principles. My hon. friend from Hamilton (Mr. Barker) has not complained much about the government. In fact I notice that hon. gentlemen opposite who usually discuss the government with the most reckless disregard of facts are very careful to confine their complaints in this matter to the fact that the Minister of Railways did not have some one in his office to check off the statements that the commission sent over, but surely that is not a very grave thing. Under the statute the commissioners are responsible, and the Minister of Railways is simply the mouth piece in the House for the commission.


Samuel Barker: So he thinks.


Edward Mortimer Macdonald: So the statute says and the statute confirms his judgment in that regard. But, my hon. friends oppo-

site know very well that if there has been any error in regard to the question of cost the man solely responsible for that is Mr. Lumsden. My hon. friend from Hamilton is too old a railway man not to know that the Minister of Railways or the commission is no more responsiole for an engineer who in the northern wilds classifies common excavation as solid rock than would Sir Thomas Shaughnessy be for a wrong classification made by an engineer in the far west. And yet every Conservative newspaper in the country will be talking about the government and its malversation in connection with the management of the construction of this railway and of the millions of dollars of the peoples money that have been thrown away. A government or a company finds the money with which a railway is built. The contractor builds it. the engineer inspects it and determines the amount of money the contractor receives. The government or the company pays that money when the engineer certifies it. If stone develops where the estimate indicated clay, are the government or the directors of the company to be blamed? If the engineer when he comes to decide what is to be paid to the contractor for an excavation, has allowed for loose rock ot solid rock instead of common excavation, would you talk about the government or the directors of the company being turned out because the engineer has made a mistake? A company or a government is absolutely helpless if the engineers are dishonest in regard to their classification, all they can do is to dismiss the engineers. The hon. member for South Lanark (Mr. Haggart) knows that the man who settles what a contractor is to receive is the engineer, not the directors of the company or the government or the commission.


John Graham Haggart: The member for South Lanark does not know that. He always has heard, and especially from the other side of the House, of ministerial responsibility, that the party who is responsible to this House is the minister.


Edward Mortimer Macdonald: That is true. The minister is responsible for the acts of his immediate officials, upon whom he must depend, but my hon. friend has been a minister, and he wpuld have thought it very hard if he haa been constructing a railway as a government work and an engineer on the north shore of Lake Superior had classified wrongly for a contractor, if his opponents had asked that he be condemned because of that.


John Graham Haggart: He has been in that position several times. Some of the engineers and contractors stole money and the opposition held the minister responsible.	'


Edward Mortimer Macdonald: And you disclaimed responsibility, certainly.


John Graham Haggart: Not at all. I did not disclaim the responsibility. I made the excuse that the minister could hardly be responsible for the act. But the principle laid down is that the minister is responsible for everything done in his department and he must show the reason why.


Edward Mortimer Macdonald: Perhaps my hon. friend will tell me whether or not he was right in his contention?


John Graham Haggart: I knew the principle was a right one.


Edward Mortimer Macdonald: But did you think you were right yourself?


John Graham Haggart: I thought I should not be held responsible and it is the same in England. If the hon. gentleman will allow me a moment, if there is stealing in a department, say from the Navy Department, the minister who represents the government in the House is responsible. The excuse may be made that if the superintendence was as direct as the minister could possibly exercise, the party should be punished and the minister excused. Of the responsibility there is no doubt.


Edward Mortimer Macdonald: I am at a loss to understand where my hon. friend stood as a minister, whether he assumed a certain position or whether he stood where he is now in opposition, taking any kind of position if it will hurt the government. If Mr. Lumsden had communicated to the commissioners the names of the men whom he said ought to be dismissed and had recommended their dismissal, and if the minister or commissioners, on investigation, had found the statement was correct, and did not dismiss them, then the minister or the commissioners, as the case might be, should be condemned, but as Mr. Lumsden has not indicated the names of the men in whom he has lost confidence, who the men were who disobeyed his instructions, the Prime Minister is proceeding by this inquiry to find out who these men are, and to deal with them when they are found out. My hon. friend will agree with me that even on his stand of strict ministerial responsibility the government are not and cannot be held responsible until they know the men who have done wrong, if there has been wrong.
The hon. member for Hamilton (Mr. Baker) himself discussed this question of responsibility in the House two years ago, in the debate on the report of the Hodgins Committee. He discussed these letters of Mr. Woods in the following language:
The hon. member also comments upon the fact that in putting in before the committee the various letters that have been referred

to to-day. I have said that those letters did not charge or prove fraud against the commissioners; I say so still. There is nothing in those letters that indicate any fraudulent conduct on the part of the commissioners That has never been pretended.
My hon. friend did not pretend then, he cannot pretend now, that these statements in regard to excessive classification in any way, if true, would reflect on the commission or the minister, and the result is that we get down to this question as to whether or not there have been mistakes in classification, whether or not Mr. Lumsden was correct in his statement that there was disobedience of instructions and failure to record what he had told these men should be done. These are proper subjects for the committee. The question as to . whether there was proper classification is a matter entirely for the tribunal constituted by parliament in 1903. I need not read to the House again section 7 of the agreement, in which that matter was especially provided for. There is another section of the agreement, section 47, which expressly provides for another and final arbitration in the event of there being any further difference in regard to matters affecting the construction. So clear and definite was parliament in making this agreement in 1903, that they have declared in those two sections that all matters of difference in regard to construction shall be dealt with by arbitration boards.
I was surprised to hear my hon. friend the leader of the opposition (Mr. R. L. Borden) say to-day that if this matter was before the Exchequer Court, he would still have thought they should move for a committee. The statement of the member for East Hamilton in 1908 that this complaint in regard to classification did not reflect upon the commissioners and only dealt with questions as to whether the engineers did right or not, shows conclusively that it was a matter to be determined by a technical board, and if this had come before an Exchequer Court judge it is against every precedent here or in England for parliament to intervene and take out of the hands of a tribunal of the country and to itself determine a question that had been committed to a tribunal. My. hon. friend will search in vain for such a precedent. The issue is surely one for engineers to determine. My hon. friend the Minister of Railways, in his admirable speech, pointed out section 15, which provides that the chief engineer shall be the sole judge of the work as regards quantity and quality. He is the man who has to certify for every dollar of money paid to any contractor. Neither the Transcontinental commission nor the government had anything to do with certifying to these payments, "if there be anything wrong, if there be any unduly increased cost, Mr. Lumsden was the man Mr. E. M. MACDONALD.
responsible because he certified for every dollar of money paid anybody, and the other engineers had nothing to do but act under his direction. Where could you find a tribunal so well qualified to deal with the classification as that created by the agreement? The engineers who compose that tribunal are the best judges one could select. Does my hon. friend from South Simcoe (Mr. Lennox) or my hon. friend from Hamilton (Mr. Barker) think that any committee of this House, composed of men without any engineering training, would be able to form any better judgment on a question of classification than men specially trained to that work? Just imagine my hon. friend from South Simcoe (Mr. Lennox), with all his judicial knowledge, taken out into the wilds of Lake Superior and asked to. decide whether or not certain material was loose rock or only common excavation. Yet that hon. gentleman would like to have himself and other members of this House, equally inexperienced, constituted a tribunal to determine whether or not the classifications arrived at were right, and actually would have us believe that a tribunal of that kind would be more competent than one composed of engineers of eminence such as Messrs. Schreiber, Grant and Kelliher. Yet that is the proposition embodied in the amendment of my hon. friend. Of course, we could subpoena the engineers who made the classification and who had seen the work done, and we could hear their testimony and weigh the balance of evidence pro and con. If there v>'as more evidence on behalf of the Transcontinental engineers than on behalf of the Grand Trunk Pacific, and the evidence of these gentlemen was not shaken in any way by cross examination-my hon. friends from Simcoe and Hamilton, if they were going to be absolutely judicial, would 'be bound to find in favour of the Transcontinental engineers. But what a practical tribunal that would be, and how much light would they not throw on the question5 How convincing their judgment would be in contradistinction to that of a tribunal composed of men who have practical experience and who know all about classifying, who have had daily reports ever since the inception of the work and who have been over the road and have studied every aspect of the question* I think no one, who is not blinded by party, will fail to recognize that the latter tribunal is by far the more competent of the two. And the Minister of Railways has shown us how well the government are protected against any payments being made to the contractors which ought not to be made. Of course, our hon. friends opposite, despite their experience of two years ago, will continue to ring the changes on the cry of scandal, and will argue that the object of the government is to prevent investigation. But what

the government is doing is sending the question to the only tribunal whose verdict will be worth something as compared with that of a committee of this House. In the one case you have a body of men who can decide from practical knowledge and experience as well as from the evidence, and in the other you would simply have a committee which could only give a decision based on the evidence without having the competence or practical experience to estimate, as engineers would, the value of that evidence.
I pointed out some time ago that Mr. Lumsden had only complained with regard to two divisions. But even with regard to section ' F,' I have a letter in my hand which shows how all these imaginary charges disappear on investigation. There is a letter written 'by Mr. Woods, chief engineer of the Grand Trunk Pacific, on the 21st of January:
January 21, 1910.
Gordon Grant, Esq.,
Chief Engineer, N.T.R.,
Ottawa, Ont.
Dear Sir,-Referring to my letters of July 27 and October 12 last, re classification on O'Brien, Fowler and MacDougall contract, district ' F ' to which our district engineer, Mr. Heman made objections, and particularly to my letter of October 12, wherein I specified many instances in which we objected to returns as made, I am pleased to say that since that time a further examination of the work has been made by your district and inspecting engineers, together with our district engineer, and an agreement made as to classification and other matters, satisfactory to both parties.
I am to-day in receipt of a letter from Mr. Heaman in which he states that he has written a letter to district engineer Poulin, approving the classification and other matters on the above work, as agreed by your inspecting engineer and himself, providing Mr. Balcom's assurances are carried out.
This being the case, please consider my letters referred to above, as being withdrawn.
Yours very truly,
(Sgd.) H. A. WOODS, Assistant Chief Engineer.
So that once these engineers, who thoroughly understand these matters, come to deal with them, they have no difficulty in reaching an adjustment; and I say that when you come to the genesis of this question, when you come to analyse the arguments of my hon. friend from Simcoe (Mr. Lennox) and Hamilton (Mr. Barker), you find that because certain engineers on districts ' B ' and ' F ' may have made wrong classifications, the suggestion is made that they did so deliberately. That, Sir, is an unfair assumption. These men, who went into this engineering work, are not all Liberals. A great many of them are Conservatives. They belong to a profession just as honourable as that of the law and they
realize that their great asset is their honourable name and the reputation that, in dealing with questions commited to their care, they will deal with them honestly. So that every presumption we can make that is at all reasonable would go against the theory that these engineers would deliberately make wrong classifications. To lay themselves open to such an imputation would be to destroy their prospects in their profession for all time. Instead of assuming that, because there were disputes and differences between engineers representing different interests in that northern country, there was wrong-doing on the part of either or both of them, it would have been only tair and reasonable to assume that these men, or some of them, might have come to wrong conclusions, but that, whether they did or not they acted honestly in regard to the matter and believed they were doing what was right. All this shows that the whole question is one that can only be dealt with by the tribunal which parliament constituted especially to deal with it. I was surprised when the hon. member for South Simcoe (Mr. Lennox) who had spent a great deal of time on this question, and had made an argument which might be dignified with the statement that he had made the best oE a bad case, talked about this old story of tbe government having spoken about this railway being built at a cost to the country of $13,000,000. My hon. friend had delved in the figures a great deal, but had he made this further calculation, he would have seen that the conclusion was one that nobody would believe, for it would mean that the country was to get this road at a cost of $866 per mile. To say to me or to any man that any minister of the Crown said that it was possible to build a road through that country at a cost of $866 a mile shows that the proposition was merely a ludicrous one and one that will not appeal to anybody. I do not think that anybody believed it, the hon. member himself was candid enough to say that he did not believe it. But I thought that, in referring to it, the hon. gentleman used an argument not at all necessary in what was otherwise, as I have said, about the best argument that could be made for a bad case. Nor did I take it kindly that the hon. gentleman spoke of ' stifling the Hodgins charges.' He and I sat on that committee together, and he knows that wo dealt with the question when it came before us fairly and honestly. The charges made by Mr. Hodgins were all abandoned, and the differences of opinion as to quantities were found to turn on the same question as in this case-the question whether there had been proper classification or not. And the position taken in that first case is the one to be taken now that the proper tribunal ought to deal with the sub-

ject. That was done with the Hodgins charges, and I feel sure that the hon. gentleman (Mr. Lennox) believes in his heart that, had we attempted to determine that question of classification, we would have realized that we were a poor body to engage in such a duty in comparison with the tribunal appointed by the government for that purpose.
I shall not speak at greater length. I do not think hon. members opposite are very serious about this matter. They realize that the question involved is the determination of the proper amount to be paid to the contractors, and that that question is in the hands of the proper tribunal. Parliament can deal with it when that tribunal makes its report. And, if contractors have received any money that they should not have received as the result of the determination of the engineers, there are ample funds in the hands of the government to guarantee the country against loss on this account. Every interest demands the consummation of this great enterprise in the. way desired by the men on this side who have stood for it from its inception-as many men who vote Conservative stand for it to-day. There is a great revolution in public opinion on this subject since 1904. Many of those who opposed the Grand Trunk Pacific at that time are now standing for it as strongly as those who originally agitated it. The mistake hon. gentlemen opposite make is in fancying that they sire going to gather strength by appealing to the Bourbons of their party, the men who never learn and never forget. They will do better by appealing to the patriotism of all Canada, whose people look upon this as a worthy enterprise to be undertaken by this country at the beginning of the twentieth century. If they would forget their carping criticism and realize that this enterprise is going along proper lines, it would be better for themselves and better for Canada.
Mr. MIDDLEBRO moved the adjournment of the debate.


William Stevens Fielding: It is rather early. I think we might go on until midnight.


William Sora Middlebro: A great number of those on this side were up until one o'clock this morning, and would appreciate it greatly if the adjournment were allowed.


William Stevens Fielding: I had a discussion with the Whip at an early stage and I thought that, while we could not conclude to-night, we might sit for a considerable time longer. I think we might, therefore, sit until midnight. Of course, if hon, members (opposite will not address the House we cannot compel them to do so.


Edward Mortimer Macdonald: 


Edward Mortimer Macdonald: I shortened my remarks, thinking that we would go on.


William Sora Middlebro: As hon. members on this side were up so late last night-


William Stevens Fielding: This habit of sitting up late the night before is much to be regretted. But I have no objection to the motion.


[Stage Direction]
Motion agreed to, and debate adjourned.
Mr. FIELDING moved the adjournment of the House.
Thomas Simpson Sproule: Will this debate go on to-morrow?


William Stevens Fielding: No, it is private members' day.


[Stage Direction]
Motion agreed to, and House adjourned at 11 p.m.
[Stage Direction]
Wednesday, January 26, 1910.