1914-05-14

PRIVATE BILL.


[Stage Direction]
Bill No. 195, to incorporate the Canadian General Council of the Boy Scouts Association.-Mr. Currie.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. SINCLAIR:: 1.	Is the Department of Public Works constructing an armoury at Amherst, N.S. ?
2.	If so, were tenders called for?
3.	Who was the lowest tenderer, and what was the amount of said' tender?
4.	After tenders were received, were any changes made in the plans? If so, were new tenders called for?
5.	TO whom was the contract awarded, and at what price?


Mr. ROGERS:: 1.	Yes.
2.	Yes, by Militia Department.
3.	Rhodes Curry, Limited, $81,100 for a stone front building.
4.	No; lowest tenderer was asked to quote price on suggested changes.
5.	Rhodes Curry, Limited, for $81,100.


BARRIEFIELD CAMP.
Mr. EDWARDS:: 1.	Were tenders invited for the plumbing arrangements at Barriefleld camp? If so, by what officer and when?
2.	From whom and when were tenders received and what was the amount of each tender at the time it was received?
3.	To whom was the contract awarded, and for what amount?
4.	Was the contract price lower than the original tender? If so, by how much?
Mr. SAM. HUGHES:
1.	Yes. Major Hughes, Royal Canadian Engineers, on or about March 20, 1913.
2.	Lemmon Bros., tender received March 23-$170. Simmons Bros., tender received March 2-1, 11.15 a.m., but did not comply with notice for tenders in that they should have been in by the first mail delivery at 9 a.m., March 24-$165.
[DOT]3. Lemmon Bros.-$170.
4. Contract price same as original tender.


HALIFAX FLOUR CONTRACT.
Mr. A. K. MACLEAN:: ,
1.	Was John Outhit and Son of Halifax, N.S., awarded the contract for the supply of flour to the permanent force at Halifax, for the year beginning April 1, 1914?
2.	If so, has the said contract been terminated, and if it has, under what authority and upon what grounds?
3.	Has the contract for the supply of flour to the permanent force been since awarded to any other person or firm for the year beginning April 1, 1914? If so, to whom and at what price?-
Mr. SAM. HUGHES:
1.	Yes, for patent flour.
2.	By authority of the Minister of Militia and Defence, Messrs. Outhit and Son, were notified by letter dated April 21, 1914, that the contract would terminate on the 24th day of May next following, by virtue of paragraph 9 of the conditions of the contract, reading as follows:
The Minister of Militia and Defence may terminate this contract at any time by giving one month's notice to the contractor to that effect; or immediately, at any time, should the contractor become insolvent, or in the event of repeated irregularities by, and complaints against, the contractor.
3.	A contract for the supply of patent flour to the permanent force at Halifax for

the period beginning May 24, 1914, and ending March 31, 1915, was made with the St. Lawrence Flour Mills, Limited, of Montreal, by letter of acceptance dated April 21, 1914. The contract price is $2,424 per sack of 98 pounds, Outhit's contract price was $2,544 per sack of 98 pounds.
When tenders for flour for 1914-1915 were first called for by public advertisement, in February last, the Halifax representative of the St. Lawrence Flour Mills, Limited, was furnished by some one in the Militia offices, Halifax, with an obsolete form of tender containing no reference to Patent flour, which is exclusively used at Halifax. In accordance with the terms of this obsolete form, the St. Lawrence Company submitted a tender for Strong Bakers flour only, at $2,324 per sack of 98 pounds, which was accepted, being the lowest received for Strong Bakers flour. On their communicating with the military authorities at Halifax, they learned that only Patent flour, and no Strong Bakers flour whatever, was used, and that the contract for Patent flour had already been made.
As they had thus been debarred from tendering, in the first place, upon the supplies actually required, they immediately communicated the facts to the minister and quoted $2,424 per sack for Patent flour. This being the lowest tender received, Outhit's contract was cancelled, and the Sf Lawrence Company's tender accepted.


LUNENBURG FISHERY GUARDIANS.
Alexander Kenneth Maclean: Who are the fishery wardens and the guardians for Lunenburg county, NS., and what amount is being paid to each annually?


Mr. HAZEN:: Fred Emeno, $25; S.
Volger, $75; Otis Bowers, $37; Solomon Teal, $37; Chas. Watters, $25; Henry Eums, $25; Alex. Joudray, $1.50 per day; Joshua Berringer, $75; W. A. Conrad, $75; Jos. Reinhardt, $75; Jas. Kaulbach, $25; Benjamin Ramey, $1.50 per day; Timothy Lantz, $40; J. W. Langille, $40; Wm. Mosher, $50; John >Croft, $40; Moran Hatt, $15; Richard Russell, $25; Emanuel Veinot, $25; Wilson Hennigar, $25; Freeman Lantz, $40; Zenas Meisner, $40; Warren Pearl, $25; Edward Publicover, $25; Albert Setters, $25; Geo. E. Jollymore, $25; Benjamin Wagner, $25; Abram Fein-del, $25; Joshua Feener, $40; Wallace Thompson, $25.


LAPRAIRIE RETAINING WALD.
Mr. LANCTOT:: Referring to an answer given by the Minister of Public Works on the 20th of April
regarding the construction of the protection wall at Laprairie as follows:
Schedule of prices for material approximately $70,000.
Earth filling, 40 cents a cubic yard.
Reinforced concrete $10.
Stone rip-rap, $1.50 a square yard.
Bed road, stone foundation, $1 a square yard.
Roadway, broken stone, 25 cents a square yard.
Roadway, gravel 25 cents a square yard.
Does that $1.50 per square yard for the stone rip-rap cover the work only, or are the contractors obliged to supply the stone for the price mentioned?


Mr. ROGERS:: The contractors supply the stone.


WATROUS POSTMASTER.
Mr. NEELY:: 1.	Who is the present postmaster at Watrous, Sask. ?
2.	When was he appointed and has he held his position continuously since his appointment?


Mr. PELLETIER:: 1.	Mr. Wm. E. Wright.
2.	On the 12th January, 1914: yes, so far as the department is aware.


SHERBROOKE POST OFFICE INSPECTION.
[Stage Direction]
On the Orders of the Day being called:
Mr. PELLETIER:: Yesterday I promised to answer a question put to me in Tegard to the discrepancy between two answers given by the department as to the Post Office Inspection Department at Sherbrooke. The first answer given was to the effect that the salaries of that office amounted to $4,752 a year, and the second answeT made it appear that the total _ salaries were larger than that amount. 'This morning I called the attention of the officers of the department, who compared these two answers. After careful investigation, they say that the two answers are perfectly correct. The first question referred only to the new employees, and stated so specifically, and it was.answered that the new- employees' salaries were so much. The second question asked for the salaries of all the employees. There were three employees who were not new employees, and so the second question was answered giving the salaries of all the employees, old and new. Thus the two answers are absolutely correct.


STEAMER CANADA.
[Stage Direction]
On the Orders of the Day being called: Mr. MARCIL:	In the absence of the
Minister of Trade and Commerce (Mr Foster) perhaps the Postmaster General
[Stage Direction]
(Mr. Pelletier) can tell me whether it is probable that the trips of the steamer Canada will be resumed. This is about the season when navigation opens, and the movements of this vessel are a matter of great importance to the Gaspe coasit people. If she is not yet in a condition to be removed from the dry-dock, perhaps the hon. minister can tell me what progress is being made.
Louis-Philippe Pelletier: I know that an inspection has been made, and I think the report is favourable. If so, I have no doubt the steamer will go into commission. I cannot speak definitely.


Mr. MARCIL:: I would press upon the
hon. minister the importance of this matter.


Louis-Philippe Pelletier: I fully realize it. I
was under the impression that the steamer had entered upon her work for the season. But I will draw the attention of the Minister of Trade and Commerce to the matter.


SUPREME COURT JUDGE, SASKATCHEWAN.
[Stage Direction]
On the Orders of.the Day being called:
Mr. KNOWLES:: Is the Minister of
Justice (Mr. Doherty) able to give us any information as to when he will fill The vacancy, a long standing vacancy, in the Supreme Court Bench of Saskatchewan?


Mr. DOHERTY:: There is now before the House a Bill providing for additional district court judges. When that Bill is passed, I hope, to deal with the whole matter.


APPOINTMENT OF HIGH COMMISSIONER.
[Stage Direction]
On the Orders of the Day being callefd:
Mr. KYTE:: May I ask the Prime Minister when he expects to fill the position of High Commissioner, which has been vacant now for a good many months?.


Mr. BORDEN:: When any announcement becomes necessary I will make it to the House.


George William Kyte: Pardon me, but I venture to think an announcement is necessary when a member representing a constituency in this country asks for an announcement. Whether the Prime Minister is prepared to give a definite answer or not is another question.


Robert Laird Borden: I stated to the hon. gentleman that when an announcement 
became necessary in the ordinary course it would be made. I hope he does not think it is incumbent upon me to make it merely because an hon. member rises and asks me to do so. I may not be prepared to make an announcement at the moment.


Sir WILFRID LAURIER:: The question is, when will it become necessary?


Robert Laird Borden: That will be announced in due course.


Wilfrid Laurier: And the announcement will make it necessary.


THE UNEMPLOYED IN MONTREAL.
Mr. LEMIEUX:: I desire to ask the Prime Minister if he has received the following letter:
To the Right Honourable R. L. Borden,
Prime Minister,
Ottawa.
Honourable Sir,
No doubt you are aware of the conditions which actually prevail in Montreal. There are thousands of men applying to the city for work and although we have done all we possibly could do, we cannot supply them with what they want.
I appeal to you as head of the Government of the Dominion to help the city in relieving the present conditions by hastening the works which the Government intends to carry out in the city in the course of the next summer.
I beg to remain, Honourable Sir,
Yours faithfully,
Mdderic Martin,
Mayor of Montreal.
Has the right hon. gentleman received that letter, and if so will he say what he intends to do?


Robert Laird Borden: I have received that letter,
_ but I judge that I did not receive it as soon as my hon. friend did, for it only reached me at half-past ten this morning. I understand that the Mayor of Montreal has already professed his ability to provide employment for all persons who should make application to him. Apparently, he may have overestimated his ability in that-regard, hence the letter which has been addressed to me.
I have already-although, as I say, the letter only reached me at half-past ten this morning-dictated a reply in which I informed him that his communication had been submitted to the heads of the several departments.


Wilfrid Laurier: In justice to the Mayor of Montreal, my right hon. friend should correct his statement. The Mayor of Montreal did not pTofess his ability to provide work for the unemployed, but his desire to do so, and I hope my right hon. friend is animated by a similar desire.


Robert Laird Borden: The statement appeared in the public press, but if I have misapprehended it, I desire that my statement should be corrected. My recollection of it when I spoke was, and is now, in effect what I have stated, though I have not seen it for some time.


THIRD READINGS.
[Stage Direction]
Bill No. 84, to amend the Export Act-Mr. J. D. Reid.
Bill No. 138, to amend the Irrigation Act. -Mr. Roche.

[Stage Direction]
Hon. C. J. DOHERTY (Minister of Justice) moved the third reading of Bill No. 180, to amend the Canada Temperance Act. He said:
With regard to the question that arose as to the applicability in Alberta and Saskatchewan of the provision of the Temperance Act under which cities are not included in the county in which they are situated, I find, upon looking into the matter, that there is no room for question that that provision will apply in Alberta and Saskatchewan without any amendment to this Bill being necessary.
Motion agreed to, and Bill read the third time and passed.

[Stage Direction]
Consideration of the proposed motion of Mr. Borden that the House go into Committee to consider certain resolutions respecting the Canadian Northern railway, resumed from Wednesday, May 13.
Mr. G. H. BOIVIN (Shefford):: lutely nothing, because the Canadian Northern Railway Company possesses absolutely nothing to-day. And what is his answer to the objection urged by the right hon. leader of the Opposition with regard to clause (b) of section 6 of the third schedule, concerning the control of the Railway Commission over freight rates? His answer is that the Canadian Northern Pacific railway is situated in one end of Canada and the Government railway in the other, and that consequently there is no danger of any agreement ever being made between those two companies. But in the same breath he is obliged to admit that if any such agreement or arrangement were made between those two companies, the right hon. leader of the Opposition's contention would be absolutely correct. Is it possible that an agreement may be made between the Government railway and the Canadian Northern Pacific railway? I contend that it is. I contend that freight may be shipped from British Columbia to points on the Government railway in the Maritime provinces, that freight may be shipped from points in the Maritime provinces on the Government railway to British Columbia, and that, therefore, such an agreement may possibly be made between the two companies. If any such agreement is made, the Railway Commission will be able to assert its powers only in so far as they will not contravene that clause of the resolution which says:
Provided always that every agreement respecting the interchange of traffic shall be subject to the agreements now existing with any other company or companies.
But, Mr. Speaker, before reviewing in detail the attempted answer of the Solicitor General to the able address delivered by the right hon. the leader of the Opposition, let us see why this resolution has been placed before this House and what this discussion is about. The people of Canada, informed through the Conservative press before this resolution was laid upon the table of the House, were under the impression that the Canadian Northern railway had come rapping at the door of Parliament and begging for aid. Since the very beginning of this session it has been no secret that Sir William Mackenzie, Sir Donald Mann and their friends have been frequent visitors to Parliament Hill, they have frequently called at the offices of the members of the Government in power seeking aid for the Canadian Northern Railway Company from the Dominion of Canada.

Time after time members on this side of the House have asked the Minister of Finance if any request had been made, if any aid was to be given; and every time the Minister of Finance has replied; ' no request has been made, mo aid is to be given.' It was rumoured that the Minister of Finance was unable to arrive at any understanding between the Government and these gentlemen and that he finally was obliged to give up the task and pass it on to our good friend the Solicitor General. Then the Conservative press published throughout the length -and breadth of this land the statement that an agreement had been arrived at, that there was to be an amalgamation of all the Canadian Northern railway companies, that there was to be a reduction of the stock to $100,000,000, that Canada was to receive $40,000,000 of common stock for the guarantee of -a loan of $45,000,000 and that $15,000,000 of common stock would be placed in the hands of a trustee, to revert to Canada if the Canadian Northern railway did not carry out their obligations. That is the agreement which was heralded from one end of Canada to the other. That is the agreement that was published in all the Conservative papers of Canada. That is the agreement the party in power tried to impress on the minds of the Canadian electors before they dared place this resolution on the table of the House-and that is not the agreement at all. There is absolutely nothing in this agreement which says that the Canadian Government will have $15,000,000 of common stock placed in the hands of a trustee which will revert to the Government of Canada if the Canadian Northern railway does not carry out its obligations, absolutely nothing. The Canadian Government gets $40,000,000 worth qf common stock, and what is the common stock worth to-day? Absolutely nothing. $40,000,000 of water is given to the Government for the guarantee of a loan of $45,000,000 of cold cash. The position is this: Messrs. Mackenzie and Mann come to the Canadian Government and they ask for further aid to this railway. They hand us a statement showing how much money has been expended, showing how -much money has been received from the Dominion of Canada and from the different provinces, showing how much more xnoney they require to complete their road. They placed this statement upon the

table of the House and the Government said to them: All right, we will take that statement as the absolute truth, we will give you $45,000,000, or we will guarantee a loan of $45,000,000, which means absolutely the same thing, because in the long run it is the people of Canada who will have to pay the $45,000,000. I find in the statement the ajnounts of money received from the different provincial Governments by the Canadian Northern Railway Company and the subsidiary companies, I find the amount of money received from the Dominion of Canada by the Canadian Northern Company and the subsidiary companies. I find the amount of money expended and I find the amount of money still due. But what I do not find in that statement is the amount of money that Sir William Mackenzie and the amount of money that Sir Donald Mann took out of their own pockets and put into this enterprise. That is not mentioned in the statement, and I fear, that if it was to be mentioned the page which would bear that heading would be absolutely blank. These gentlemen, it is true, deserve something from Canada. They have foresight, they have ability, they have skill, they have courage; I am willing to admit all that. But before attempting to build a railway which is to be a transcontinental railway and extend from one end of Canada to the other, they should have had more than skill and more than courage and more than ability-they should have had a few dollars in money. Instead of that they form a company known as the Canadian Northern Railway Company. Who is the Canadian Northern Railway Company? Messrs. Mackenzie and Manin. In order to get aid from this country they form eighteen or more companies, called subsidiary companies and who are the principal stockholders in the subsidiary companies? Messrs. Mackenzie and Mann. They come to the Canadian Parliament, they go to the different legislatures, and they get money for these different companies; and in getting this money they are getting money for Mackenzie and Mann. They then form a construction company under the name of Mackenzie, Mann and Company, Limited, and the money they have received from the federal Government and the Governments of the provinces for Mackenzie and Mann acting as the Canadian Northern Railway company they pay over to Messrs. Mackenzie and Mann acting as Mackenzie, Mann and Company, Limited, construction agents. So that all the money that is paid out still remains in the pockets of Messrs. Mackenzie
and Mann. Of course Messrs. Mackenzie and Mann, construction agents, get rich and make money, but the Canadian Northern Railway Company gets poor because it gives all its money to Messrs. Mackenzie and Mann. Messrs Mackenzie and Mann, as the Canadian Northern company, come back to Parliament and ask for more aid. They should tell us, if they want to be absolutely fair: We have two money bags at home, one belongs to the Canadian Northern Railway Company, the other to Messrs. Mackenzie, Mann and Company, Limited. We have taken all the money out of the money bag belonging to the Canadian' Northern Railway Company and we have placed it in the money bag belonging to Mackenzie, Mann and Company, Limited. There is no more money in the first bag, it is all in the second; kindly fill up the first. And the Government says: Give us a statement of youT affairs. Did the Government say: We will have an investigation of your affairs, we will find out who got this money, we will find out if your contracts have been given at a reasonable figure, we will find out whether Messrs. Mackenzie, Mann and Company, Limited, when they got these contracts, got them by means of a tender and whether they were the lowest tenderers? Oh, no.
The statement is laid upon the table of the House, and so they print the copies which were handed to the different members two or three days before the resolution was brought down. In that statement, we find that Messrs. Mackenzie and Mann did not get any actual profits; but that they did get common stock in lieu of profits. That is the statement contained in this blue book,
' Documents relative to Government Guarantee ' (printed by order of Parliament). But where is the proof that they did not get any money? Where is the proof that every cent they received-and nobody denies that they received money to pay their labourers and to pay for the material, ties, rails; etc. -was paid out? There is no proof in this blue book. Where is the proof that Mackenzie and Mann did not get any cash profits? There is none at all. There is the affidavit of Mr. Alfred J. Mitchell, who is the comtroller of the Mackenzie-Mann Company, Limited. In that affidavit, he says that according to the books and to the best of his knowledge and belief Mackenzie and Mann received nothing but common stock in lieu of profits. Then there is also the affidavit of another Mr. Mackenzie, and another Mr. Mann of the Northern Construction Company of British Columbia, to the effect that under cover of this company

Messrs. Mackenzie and Mann did not get any cash in lieu of profits. Both of the declarations just mentioned may be absolutely true, but I ask the Prime Minister to-day where is the affidavit of Sir William Mackenzie, and of Sir Donald Mann, that they made no money out of those enterprises? They say they require $41,000,000 more to complete the road. Where is the proof that they can complete it for that amount? There is absolutely none. Every one agrees that the cost of construction of railways in this country has increased and is - increasing by leaps and bounds. They give us a statement, found on page 10 of the blue book, that to complete the railway ' will cost $100,000,000, but that they can raise $58,473,982 by proceeds of securities which will be issued in respect to he above expenditures, and cash in trust accounts, for construction, leaving a balance of $41,905,117 still required. Where is the evidence that they can complete the road for $100,000,000? Where is the proof that they can obtain $58,000,000 from the proceeds of these securities? Parliament is asked to accept the statement of the two men that come begging at the door, and who tell us that they need the money; and we are asked, to give it' without any further investigation. I claim-and I am speaking for myself only, I do not pretend to express the views of my party-that an investigation should have been held to ascertain exactly what these gentlemen have received, and why Canada is obliged to give them more-an investigation where they could have been called as witnesses and examined . under oath, and where the evidence of their employees could also have been taken under oath. Parliament would then have known what was required in the way of aid, and would have been justified in making an agreement to provide the aid required. But, even if every statement in this blue book is absolutely correct, even if the Canadian Northern railway needs the sum of $45,000,000 to complete the construction of their road, Canada is not getting any security for the guarantee which we are asked to give. Let us see what that security is. First of all, it is a mortgage upon the stock of eighteen constituent companies-a mortgage not upon all the stock of these companies, but upon only a certain part of the stock of the companies detailed in the first part of the schedule attached to the resolution. We would like to know who owns that stock to-day, and how it i? that this stock [Mr. Boivin.1
can be placed in the hands of the Canadian Northern Railway Company? Who is going to give that stock to the Canadian Northern? Messrs. Mackenzie and Mann, Limited?-perhaps. Sir William Mackenzie?- perhaps. Sir Donald Mann?-perhaps. Nobody knows. And a very curious thing is that the stock which is mortgaged to the Dominion of Canada as security for this guarantee is worth very little on the market, at the present time; in fact, it is worth nothing to-day. Messrs. Mackenzie and Mann own other stock, they are interested in other companies. Why do they not give us a mortgage on stock of other companies which are worth something, and which are paying dividends to-day?-the Toronto Street Railway Company, for instance. There are many other paying companies in which these two gentlemen are interested, but they will not give a mortgage on the stock of those companies because it is worth something. Another proof that these companies are worth nothing was given by the hon. Solicitor General himself last . night, when in answer to the argument of the right hon. leader of the Opposition that this was no amalgamation, he said:
' No, it is not an amalgamation, and it is a great deal better for Canada that it should not be an amalgamation; and the first, reason is that perhaps some of these companies are worth nothing and may never pay their running expenses; perhaps some of them will be left to rust and decay, and in that case we will not be obliged to keep them; we can cast them off.' But still the Government takes a mortgage upon the stock of those companies, without knowing whether they will ever be worth anything or not. His other argument against the amalgamation was that in order to amalgamate these companies, to make one great system which would reality be a factor in the commercial life of Canada, it would toe necessary to enact confiscatory legislation. Then, in the next breath, he says that it is not necessary that any shares should be deposited in the hands of a trustee, because, if, in three or four years, the companies do not pan out well and the Canadian Northern Railway Company is unable to pay its interest on its bonds, Canada can take it over, confiscate everything it has, form a new board of management or turn the road over to some other corporation. If there is to be confiscation in three years from now why not confiscation to-day? What is the difference? The Soli-

citor General knows very well that this is not the 'last request that the Government will receive from Mackenzie and Mann. My right hon. friend the leader of the Opposition showed us yesterday very clearly that within a year from now they will be obliged to come back here, knock at the door and ask us for the $7,000,000 which is not provided for. In answering that argument the Solicitor General only makes the case a great deal stronger; he says there is also an item on page 43 of $21,262,000 for construction, equipment, terminals and. branch lines which is still due, which must be paid and which is not included. So that next year, instead of it being $7,000,000, there will be $28,000,000 more that the Canadian Northern Hailway Company wild come and ask us to guarantee our loan to them.


Mr. MEIGHEN:: The $21,000,000 is inincluded in the statement.


Georges Henri Boivin: It is not included in the
statement given on page 10 of the blue book distributed to the members of this House.


Arthur Meighen: Yes, it is included in
the amount of $100,000,000 for their requirements.


Georges Henri Boivin: If the $21,000,000 is included in the $100,000,000 for their requirements, will the Solicitor General tell me how the Canadian Northern railway will be able to spend that $45,000,000 on entirely new lines and still pay a debt of $21,000,000?


Arthur Meighen: There is $100,000,000 to be 'expended. The hon. gentleman has not even given casual consideration to what has been laid on the table. The sum of $58,000,000 will be available as it is earned and the $45,000,000 will be available as it is earned, and these will take care of the $21,000,000 along with all the rest.


Georges Henri Boivin: The $58,000,000 is still to be earned? In order to get the $58,000,000 the $45,000,000 has to be spent.


Arthur Meighen: The work has to be
done.


Georges Henri Boivin: And it is precisely
because they have not the $45,000,000 at the present time to do the work with that the "Canadian Northern railway cannot get the $58,000,000. To earn the $58,000,000 the Canadian Northern railway must spend the $45,000,000 which they are asking from Parliament to-day. Even if the $100,000,000 comprises this $21,000,000, and I maintain that it does not, the argument advanced yesterday that there is still
$7,000,000 to be provided for, holds good. The argument of my right hon. friend the leader of the Opposition that they will have to come back and ask for more money, still remains. The Solicitor General says we are getting 40 per cent of the common stock, and that we are leaving $60,000,000 to Messrs. Mackenzie and Mann to pay them for their eighteen years of work for the development of the railway system. When the leader of the Opposition said yesterday that Canada should get more than $40,000,000 of the common stock, and that Canada should have a controlling interest in this road, I do not think it was in his mind that we should get more than $40,000,000 worth in money, because we all know that the common stock is now worth absolutely notning. We know that the common stock may never be worth anything, but we claim on this side of the House that Canada should have a controlling interest in this road, so that we may have something to say when it comes to letting the contracts for the balance of the construction of the road. We want to have a word to say in the management of the road in order that the contracts shall not be given by Mackenzie and Mann and the Canadian Northern Railway 'Company to Mackenzie and Mann, acting as the Mackenzie and Mann Construction Company, Limited, without tender and without competition. We claim that this road has been carried on as a feeder for the Mackenzie and Mann interests long enough, and that the time has come when the Canadian Northern railway should be administered, as other up-to-date railway companies are, in the interest of its shareholders and of the country generally, rather than in the interest of the promoters alone. Canada is becoming a shareholder in this road, and is advancing $45,000,000 in cold cash, or its equivalent. Canada backs the note of the company to the extent of $45,000,000. We claim that we should be able to protect our interests by having a say in the management and in the awarding of contracts; in order to see that these contracts shall be given to the lowest tenderer. It is not so much the proprietorship of the road that we are interested in as the right to have a word to say in the administration, in order to protect the interests of the people and to protect the guarantee which we have given.
I would like to call the attention of the Solicitor General to another part of this contract. In the definitions I find that:
372?

the table, had not even consulted the maps - and were discussing the matter without knowing where the road was going to. We consulted the books and documents and one thing we do know is that the road is going into bankruptcy, and that $45,000,000 will not save it; more will have to be given if it is to be saved. The Canadian Northern Tailway is going into bankruptcy and that is where this country will go if the party now in power remains there much longer, because when it comes to handing out money to assist corporations it is always ready to a,ct, and the Minister of Finance is always ready to borrow.
The Prime Minister, when he submitted these resolutions to Parliament, laid great stress upon the fact that he was able to read tc the House an editorial taken from the Journal of Commerce, published in Montreal, edited by the former Minister of Finance of Canada, Hon. Mr. Fielding. If the Prime Minister can get any great consolation out of that editorial he is welcome to it. The former Minister of Finance. Mr. Fielding, admits in that editorial that it would be a disastrous thing for Canada if the Canadian Northern railway went into liquidation. He admits that the loan necessary to avoid that must be guaranteed by Canada. He does not discuss this agreement or say that these resolutions are good resolutions or the best that could have been made. He merely says that the money or credit must be given. That is what the Prime Ministers of the different provinces say in the letters and telegrams they have sent to the Prime Minister of Canada. We all agree that the Canadian Northern railway must have assistance. The money has all gone from the moneybag labelled ' Canadian Northern Railway' into the moneybag labelled ' Mackenzie and Mann and these Canadian Northern Railway moneybags must be refilled. But what we do not agree upon is the manner in which that loan is to be guaranteed. It is because we consider the guarantees insufficient, it is because we consider that we should have a controlling interest in this road, it is because we consider that we should receive all the securities that Mackenzie and Mann can give, that we do not favour this agreement. If Messrs. Mackenzie and Mann have confidence in their enterprise, if they really consider that with the money advanced by Canada at this time they can make a success of this undertaking and make millions out of it besides, they should at least give us security upon all they possess, and not

merely a mortgage upon the stock of companies that are worth nothing. If this were done it might be wise for the Dominion of Canada to give a guarantee or loan. Now, talking about editorials in newspapers, I have an editorial here that I would like to read to the Prime Minister. It is taken from the Montreal Gazette-and nobody will tax that with being a Liberal paper-of date February 27, 1914:
The Government of Canada is being asked to loan the Canadian Northern railway a sum of money, said to be $20,000,000 or $25,000,000.
They made a mistake; it is $45,000,000. At that time the amount was not known and people did not think they would dare ask for so much.
The grounds are peculiar. The company voluntarily undertook to construct a great system of railway lines, some of them in close competition for a limited traffic with other roads. It has been liberally treated by Parliament and legislatures of the provinces traversed by its tracks. The cost of the construction to December 31 last was given the other day as $303,319,000. Included in this amount is $20,000,000 of cash subventions from the treasuries of Canada, of the provinces and the municipalities, besides the proceeds of $24,000,000 of land grants bonds issued and on the security of land given to certain of the component lines of the system. Even with the free way the legislative provinces of Canada have of voting away public money and resources, this was not illiberal. Then, in order that the company or its subsidiaries should be the better able to borrow money, the guarantee of the Government of Canada, as to principal and interest, was given to some $62,000,000 of bonds. It is after this that the demand is made for a direct loan, which, if it is made to the company, can only be made after the Government itself borrows the money. The proposition is not businesslike. The Government of Canada is not an institution financing private corporations. What it has done in the connection, because of the folly of Parliament, has cost it much already and will cost it more, has compelled it to borrow heavily, swollen the annual interest charge on the public debt and made it impracticable to reduce the customs taxes. The reasons advanced in support of the request are not strong. One is that if the loan is not made some other company may get control of the Canadian Northern property. This is not a thing to be afraid of. Parliament in the Railway Act has done all it could to ensure that there shall be no competition in rates between railway points and railways.
The Railway Commission fixes rates, which may neither be exceeded nor cut. It does not matter, so far as cost of service is concerned, whether the railways of the country are owned by ten or a hundred companies. Another statement is that unless the loan sought is made, provinces which have guaranteed bonds of the company and its associated organizations may be embarrassed. Some of them would certainly be embarrassed if they were called upon to meet the obligations they have assumed. They have backed railway notes with a recklessness that has made the process useless. This, however,

is not the business of the Parliament of Canada, whose duty it is to consider first and only the credit and financial strength of Canada and the interests of the federal taxpayers. These will not be helped by continuing the bad practice of making the national treasury responsible for the debts of companies or individuals in any line of activity.
That is the opinion of the Montreal Gazette, a good Conservative newspaper; an opinion expressed, by the way, just about the time when the hon. Finance Minister said that no further loan would be given. Whether or not the Gazette still has the same impression 1 do not know, but I do know that the Montreal Gazette is a reputable newspaper. I consider it to be one of the best Conservative newspapers published in Canada and I read its editorials with much interest. I find that it strives as much as possible to be consistent, at least with itself, and for that reason, I presume, it cannot approve the arrangements made at the present time by this Government for a guarantee of $45,000,000 worth of bonds for the Canadian Northern Tailway.
I do not propose to take up the time of the House any longer; I merely wish to say that I am at one with the leader of the Opposition in this matter. I believe that the Canadian Northern railway should be assisted, not so much for the company itself as for the credit of Canada and for the necessity of building a third transcontinental railway. As other speakers have said before me, the question of whether the third transcontinental railway should be built to-day or to-morrow is a question which cannot be discussed at the present time; that question has already been decided in the affirmative. I have confidence in the future of my country and I really believe that in a very few years Canada will be in a position to furnish traffic for this third transcontinental railroad. I cannot say, however, that I approve the resolutions as they stand at the present time upon the Order Paper of this House and I hope that they will be amended in such a way as to provide that more security will be given to the people of Canada. I hope that an amalgamation of the different companies will be brought about. Amalgamation should not be a difficult task, although I quite realize that it could not be brought about without notice to and protection of the shareholders in the different companies. But I do think that all these constituent and subsidiary companies should be incorporated into one large company known as the Canadian Northern Railway of Can-235
ada, instead of retaining their own identity and being known as the Canadian Northern system, a definition which says much but means very little.
I think I have shown to you, Mr. Speaker, and to other hon. gentlemen of this House that the right hon. leader of the Opposition yesterday really found the weak points in this agreement, that he very ably pointed them out and that the hon. Solicitor General was unable to refute the objections which were urged. I regret that the Solicitor General, having devoted two or three months of his time to the drawing of these resolutions, should not have taken the trouble and the time yesterday to explain them to the House in all their details. I admit that they are complicated; I admit that for members of Parliament who are not accustomed to high finance they are difficult to understand and that we may make mistakes in interpreting them, but I do say that they certainly should be understood by the hon. gentleman who drafted them, and that he should have explained them fully to the House instead of attempting merely to refute the objections which were levelled against them. The hon. Solicitor General promised us at one time in this House this year, when a certain resolution was moved by an hon. member on this side of the House concerning the reduction of the duty on agricultural implements, that that was not the proper time to make such a motion; that the matter would be considered in the Budget speech, and that when the Budget speech was delivered he would rise in his place and explain his position. When the Budget speech came before the House he did not r;se in his place and did not explain his position. Further, he was so busily engaged in drawing up these resolutions that he was not even in his place when the vote was taken. After neglecting his other duties for the purpose of preparing these resolutions, he certainly could have done more, in making his speech yesterday, than to accuse the right hon. leader of the Opposition with not knowing what he was talking about. Although he proceeded to show the members of this House and the people of Canada that the right hon. leader of the Opposition was absolutely right, and that Ins objections could not be successfully refuted.
Mr. H. B. AMES (St. Antoine, Montreal). Mr. Speaker, after the full and careful explanations of these resolutions that were



given yesterday to the House by the Prime Minister (Eight Hon. E. L. Borden) and by the Solicitor General (Mr. Meighen) very little can be added at this stage of the discussion. But some of us who are endeavouring to give careful and conscientious consideration to the problem now before us	and who have tried to
bring into somewhat stronger light the main features of the arrangement which is	being made, are desirous
of stripping the question, to some extent, of its technicalities and of throwing upon the screen a few of the salient features connected with this arrangement and the steps that have led up to it.
I think it is generally admitted that no prime minister and no government in Canada has for many years been called upon to face a more difficult situation than that which this Government has had to meet in connection with this question.
It would not have been at all unnatural for the right hon. the Prime Minister and his colleagues to have declared themselves not responsible for the situation that has arisen and, having reference to the fact that this organization, the Canadian Northern railway with all its subsidiary companies, was born about 1896 an>d has grown to full maturity under a regime for which the present Government is not responsible, to have said: We did not create this position, we do not propose to become responsible for this affair; we will allow matters to take their natural course. But that position, while it might be defended from a political point of view, did not appeal to the statesmanlike mind of the Prime Minister. He felt that in inheriting the power of carrying on this Government he inherited also the responsibilities of government and that he had to face all situations that might arise, whether they were situations easy of solution or difficult to deal with. This is one of those questions that he has had to face and make the best of conditions for which he was primarily not in any way responsible. And so we should consider this question without political recriminations, without personalities, with the elimination even of the personal factors in connection with the people with whom we have to deal.
The fact is perfectly apparent that a third transcontinental railway has nearly reached completion, that in order to complete that railroad obligations to the extent of $300,000,000 have been incurred, that the rail-
[Mr. Ames. 1
road cannot be completed without additional assistance, that if it be not completed it cannot pay, that if it does not pay the obligations alreafdy incurred will be repudiated and the credit of Canada, will, in consequence, suffer; that, therefore, the only chance that the expenditure already has of being made good is that the system be completed and that the railroad, as a going concern, be permitted to earn what is necessary to meet the charges upon its obligations.
There is given in the blue book of information placed in the hands of members of Parliament a statement by Mr. Hanna, the third vice-presMent of the Canadian Northern railway, which may by some be regarded as an optimistic statement. Mr. Hanna states that by 1918 the fixed charges on the system would be about $16,000,000, and he proceeds to show that by that time he would consider that the earnings would be ample to meet not only the fixed charges but to create a surplus of some extent. Whether we altogether agree with his prognostications I do not know. They do not, however, seem unreasonable. At all events, it can be urged that the line then in operation will have upon it an obligation which will not be more than one-half of that which the Grand Trunk Pacific have assumed in undertaking to operate the National Transcontinental railway. If the Grand Trunk Eailway Company can expect to succeed, it is not unreasonable to imaging, that a railway with one-half the obligations to carry can also succeed. However, we have to admit the fact that this company in its time of extremity can turn to no other source than the 'Canadian Government. It has no other friend in the world, and however we may feel towards- it, the responsibility rests on us of determining whether we shall or shall not be the only friend that that company can possibly have.
We cannot escape the fact that the Government of 'Canada and the provincial governments and the municipalities to some extent have frequently recognized this undertaking. They have declared that the primary intention of the promoters, the building of a transcontinental railroad from the Atlantic to the Pacific, was timely and was a laudable intention. They have frequently committed themselves to that contention. They have done so by granting frequent and generous aid. It is not perhaps inopportune to review what we -have done, very briefly. The

Dominion has given to this undertaking in cash $21,378,534; the provinces have given in cash $3,877,000 by way of subsidies. These companies have been able to earn lands amounting to 4,100,000 acres which were originally in the possession of the Dominion Government. They have entitled themselves to select 2,000,000 acres of land in the province of Ontario, now belonging to that province, and some 500,000 acres of land in the province of Quebec, now the property of that province. In addition their obligations have been guaranteed by the Dominion to. the extent of $58,000,000, and by the provinces to the extent of nearly $77,000,000; and the public, taking cognizance of the fact that the Dominion and the provinces have both recognized this institution, and that the people of Canada, in Parliament and Legislature, have declared that it was a laudable undertaking, the general investing public of the world, of Europe and of America, have put their savings also into this undertaking to the extent of some $175,000,000 or $178,000,000 without government guarantee. Canada's investment in this undertaking is large. Our endorsement of this undertaking that may become an obligation is still larger, and the moral obligation which rests upon us of having encouraged other investors is larger still. Therefore, on these three heads, it seems to me that we cannot allow this undertaking to go by default.
There are three alternatives that have been urged in reference to the situation which confronts us, each of which has its advocates and each naturally has its objectors. The first alternative is what we may call laisser faire, allowing matters to take their course, with the inevitable understanding that collapse will follow. That has been declared to be unthinkable. It is admitted on both sides of the House that it is unthinkable. It therefore is of no advantage that we should dilate upon the disaster that might result from a condition of affairs which none of us have any intention of allowing to come to pass.
The second alternative is that of immediate Government possession. I have found it a little difficult to understand what is the policy of the right hon. leader of the Opposition in this respect. But as nearly as I can judge, his contention is that we should take a majority of the stock at present owned by Messrs. Mackenzie and Mann and hold a majority of the stock in the new Canadian Northern amalgamation. That is 235i
equivalent to our assuming a controlling interest, which is practically the same as our taking immediate possession. The other method of taking immediate possession, if I understand aright, is that proposed by the hon. member for Kingston (Mr. Nickle), whose method would be the taking over of the physical assets of the whole system. Just how that would be done was not fully explained by the hon. member. So that the second alternative, and if I am right it is what the leader of the Opposition favours, is that the Government should at this time assume control or possession of the entire undertaking.
The third method is that proposed by this' Government, namely to grant what may be called an extension of time, one final and 'last opportunity to the promoters of this grea t enterprise to make good, with the understanding that this is the last time that the pitcher goes to the well, that if it ever comes back again it will most assuredly be broken. I do not think that we in this House should indulge ourselves to any considerable extent in considering the personality of the two men whose names are primarily connected with this great undertaking. I am quite free to admit-and I think this feeling is shared on both sides of the House-that there are many members of Parliament who have just cause to feel that they have not always been fairly dealt with in respect to the demands that have been made by Messrs. Mackenzie and Mann upon the Parliament of Canada. Those of us who remember the legislation of last session, when we were given to understand that the aid then granted would bring ft bout the completion of the road and that nothing further would be demanded, while we feel that those who made those representations in this House were sincere in believing that the evidence laid before them was in accordance with the facts, yet we cannot help feeling that to some extent they were deceived, and purposely deceived, and that this House acted on a supposition which further events have shown to be unfounded. Therefore, we cannot altogether get away from a feeling of annoyance at the way in which we have been treated, In the matter of the stock that came into the possession of the people of Canada one year ago, it was repeatedly stated in this House that the Canadian people were henceforth the owners of one-tenth of the capital stock of the company. If I remember rightly, the Minister of Finance in four separate paragraphs of his speech made that statement, and I have no doubt whatever that


Mr. AMES:: Mr. Speaker, before the House rose at one o'clock, I had been dealing briefly with the various alternatives open to this Government in meeting the difficult situation, and I had endeavoured to show that of the several alternatives there was none which seemed to be so free from objection as a method somewhat similar to, if not identical with, the one that is covered by the resolutions which have been introduced by the Prime Minister. I shall now take a few moments of the time of the House in dealing rapidly with some of the prominent features of this agreement with the view of pointing out wherein, in my judgment, that agreement is commendable and should receive the support of the House and of the country. When the Government approached this problem they found that they had to deal with a very tangled web of allied companies. The proposition would have been comparatively simple if they had been dealing with one completed railway system. But they found a score and a half of different companies each having a separate entity and organization. The first task that presented itself was that of unification, not the task of amalgamation which would require extensive legislation and much time. Under present circumstances all that was necessary was to form a unification and to bring these various component parts of this system together so that they could be controlled from one centre. My hon. friend the Solicitor General showed last night what were the advantages of this method and the many obstacles that were in the way of such an amalgamation as had been hinted at by the Opposition. It is proposed to bring these twenty-nine undertakings into one system so that they can be centrally controlled.
These undertakings, if united, contain all the essentials to the successful operation of a railway system. They include a main line of railway from the Atlantic to the Pacific, the necessary terminals in all of the chief centres of traffic, a number of branch lines and feeders, telegraph systems, express companies, even steamship lines, and care
has been exercised in bringing into the unification every essential feature which might be necessary were the Government, or another company, to be called upon to operate it as a completed Canadian transcontinental railway system. Henceforth there is to be a central control-not a central control as heretofore by Mackenzie and Mann, Limited-but the Canadian Northern Railway 'Company are to hold all, or a majority, of the stock of every one of these subsidiary companies that go to make up this general unification. In order that these provisions may be observed these stocks are to be in the hands, not of the Canadian Northern Railway Company itself, but of trustees who will see that the agreement is carried out in its fullest particulars. Moreover, further issues of stock are prohibited, so that we know just where we stand in our enumeration of the stocks involved.
With this new unification the Government has made a bargain. Some people think that it is a hard bargain. There are people who believe that the Government has exacted really more than it should have taken out of the companies and the people who compose this unification. Hitherto it has been customary for the Government of Canada to present the railways with large assistance considering that the only return necessary was that the roads, when completed, would be successfully operated and would indirectly be a benefit to the people of Canada. But, for the first time, the Government has sincerely insisted that a bargain should be made in which there is a large quid pro quo in return for aid rendered. [DOT]
This undertaking is about three-quarters completed and it has been represented to the Government that it will require an expenditure of another $100,000,000 to bring the system up to a full operative basis. That $100,000,000 can be made up in this way: There are $58,000,000 worth of securities which are already legislatively possible but which can only be realized as the work, of construction continues. The other $42,000,000 of aid, the promoters are expecting to realize by the sale of new securities guaranteed by this Government and it is claimed that with $42,000,000 they can easily realize the $58,000,000 and therefore, the whole $100,000,000 will be available ifor the completion of this system. The Government gives-or I might rather say-lends	its
credit to this enterprise to the extent of guaranteeing an additional $45,000,000 worth

of bonds. These securities are to be issued for twenty years at four per cent and the Government becomes, in the last resort, responsible for the principle and interest. That is the main assistance that the Government gives.
But the Government gives further assistance than that which must be taken into consideration when we are examining this bargain. The Government says:	For the
first three years of the operation of this system it will be very difficult, if not impossible, for the company to pay interest on these bonds; consequently the Government undertakes to advance-that is to lend-the interest of six semi-annual payments, amounting, it is estimated, to $5,400,000 and this loan shall be repayable in 1934 when the guarantee securities fall due, and this loan shall be covered by the same security. So that the Government is giving an additional guarantee to the extent of $45,000,000 and practically a cash loan of $5,400,000. This makes the total assistance that the Dominion Government has given to these allied enterprises:
Cash	 $ 21,400,000
Guarantees	 103,000,000
Loaned in cash		5,400,000
or a total of about one-third of the entire $400,000,000 which at the time of completion shall have been invested in this road. The Government has taken a large interest and is entitled in return to very marked consideration.
What does the Government get in return? I propose to classify the benefits which are to accrue to the Government under several different heads. In the firs<-place, the Government is to get forty per cent of the common stock of the reorganized Canadian Northern Railway system. That forty per cent of stock, or that $40,000,000 worth of stock if it remains at par, is to be the absolute property of the Government for all time.


Alexander Kenneth Maclean: There was an
apparent discrepancy as to the cash and other aids alleged to have been given to the Canadian Northern between the member for Kingston and the Solicitor General. Has the hon. gentleman had an opportunity of investigating the difference and can he give any reply?


Herbert Brown Ames: I have not had an opportunity of investigating the difference, and I am giving what is set forth in the official papers laid before the House.
To resume, let me state that this $40,000,-
f Mr. Ames ]
000 par value of stock of the reorganized Canadian Northern Railway system is to be the absolute property of the Government for all time. The Government is already a partner to the extent of $7,000,000 worth of stock, or one-eleventh of the present stock of the Canadian Northern. The Government is now to become a partner to the extent of two-fifths of the entire capitalization of the undertaking. I take it that the Government is not so particularly anxious that this should become a revenue bearing stock as it is interested in the fact that the stock should be controlled by the Government in order that, in that way, it may to a large extent be able to guide the future policy of this gTeat organization. It is well known how this matter is to be arranged. The Canadian Northern at the present time have a capital of $77,000,000 of which we own $7,000,000. They are authorized to increase that capital to $100,000,000, and all the stock of all the constituent or subsidiary companies will become the absolute property of the Canadian Northern Railway Company, and no further stock will be permitted to be issued by any of these subordinate companies. In order to secure the carrying out of that arrangement, these stocks will be placed in the hands of a trustee who will act for all the parties to this agreement. Therefore to control the Canadian Northern in the future will be to control the entire system, including all these subsidiary. companies; and if two-fifths of the control of the entire system rests in the hands of the Government, two-fifths of the control of all the component parts of the system will be with this .Parliament and those whom we appoint for that purpose.
There are further conditions to be imposed upon the Canadian Northern and the subsidiary companies. The Government, in making this arrangement, have thought of other people besides themselves; they have thought of those people w'ho have made short term loans for this undertaking and of those who have in good faith sold goods or rendered services on construction account. All these people will be protected by this agreement. As far as the temporary loans are concerned, all represented probably by short term notes, I understand that they represent $20,703,865, and to secure the payment of that amount securities valued at $24,324,000 have been lodged under the trust deed of 1903. This agreement proposes to say that these securities shall be regarded

as pledged for that loan; that they will not and cannot be interfered with in aDy other way or for any other purpose than for the satisfaction of these temporary loans. Therefore, it gives to the persons who have loaned that money the feeling that they need not worry; that while there may be delay, they will eventually be paid, and they are thus relieved from the necessity of pressing for immediate attention.
As to current indebtedness-that is to say the floating liabilities for work on construction, for supplies given and for services Tendered, scattered throughout Canada from one end to the other, many of them owed to Canadians, some for large amounts, some for small amounts, some which would ruin the man to whom they were owed if they were not paid-the Government undertake to make a prior condition to this guarantee that Messrs. Mackenzie and Mann, Limited, shall reduce those claims from $10,500,000 to about the normal amount, namely, $3,000,000. In other words, in one year Mackenzie and Mann must reduce those claims by $7,500,000 or arrange for that indebtedness in such a way as may be satisfactory to the persons who have supplied the goods or performed the services. This is protecting, of course, our own people, and will undoubtedly Ibe received throughout Canada with great satisfaction by many who have passed anxious days and nights while this subject has been under consideration.
There are certain other conditions which by this bargain are imposed upon the Canadian Northern; and it is well that we should see all that the Government of the day has seen fit to exact, shall I say, before bringing this bargain before the House. In order to secure oversight and accurate information, and in order to make it certain that hereafter we shall know down to the last detail how this company is getting along and how all the constituent parts are thriving, we are to have first of all a director who will sit, not only on the board of the Canadian Northern, but on all the other boards that are kept alive in connection with this system. He can attend every meeting; he can demand that a meeting be called if it is not called at the regular time, and he is protected in many ways in performing the duties for which he is appointed. He is on guard and will be on guard to see that the Government interests are in all ways protected, and to notify the Government in case any of the stipulations covered in this agreement are not lived up to by the Canadian
Northern Railway Company or any of its secondary or constituent parts.
There is also to be brought down yearly a consolidated balance sheet, which will show the financial condition of the entire system. If that is in any way unintelligible or does not contain a statement which the Government is prepared to accept, there cannot be the slightest difficulty in the Government having an outside independent auditor appointed, such a firm for example as Price, Waterhouse and Company, to go thoroughly through that statement and find out whether it represents accurately in every particular the position of the company. We have the further right that the books shall always be open to inspection, and that any person appointed by this Government shall have full right to in- [DOT] spect all the details. Therefore the Government will always have accurate information; and with such precautions, even if the company were to try to hide some things, I contend that it would be impossible for them so to do, because this Government will always be completely and accurately informed as to all that is going on.
We may subsequently require again to deal with this great question in some form or another; and I contend that, if from this time forward every detail of these transactions is open to inspection and can be filed on record and can be known and understood by the Government of the day, when we have again to deal with these people, we shall be in a position far better than we are in to-day adequately to meet the situation.
There are further conditions that are imposed on the Canadian Northern that carry with them indirect benefits to the Canadian people and to the Canadian Government railway system. First of all it is stipulated that Canadian routes and Canadian ports will always have preference. I would point out that this railway company has no American terminus, and this agreement does not encourage private and independent routing of freight. The companies agree in these arrangements that they will follow Canadian routes and that they will utilize Canadian ports. Further, they agree to enter into an arrangement whereby the export traffic, viz., goods, that may originate in the Northwest intended for export via Montreal, Halifax or St. John, shall be carried to those ports, and the rates shall not exceed those which the American railroads are at that time prepared to give. So we are assured that we shall have in Canada as fr'nd rates as are given on the

continent on such goods as we may desire to export. Then again there is interchange of traffic which may be possible with the Intercolonial railway which involves, of course, apportionment of rates. And finally it is stipulated that they shall consent to give to the Intercolonial railway, that is to the Government railway system, running rights over the whole Canadian Northern Railway system. Now, as I look at that-and the point has not yet been dealt with to any great extent-it seems to me that that is a consideration which carries with it very great benefits. For example, under that .arrangement Intercolonial railway trains might be expected to travel to Winnipeg and Canadian Northern railway trains.to arrive at Halifax; and if it should happen at any time that none of the three great companies gave satisfactory railway rates across the central portion of Canada, nothing need hinder the Intercolonial railway from taking advantage of these running rights into the heart of the northwest and instituting their own rates for the relief of those citizens of Canada who may be affected by the situation. So, there are further considerations which certainly bring indirect benefits to the people of Canada and to the Canadian Government railway system.
Now, there are some conditions which have been imposed upon Messrs. Mackenzie and Mann, which, it seems to me, might have been left entirely out of the agreement haJd not the Government felt that they were anxious to make that agreement so good that there would be no chance of it being rejected by Parliament and the country. Messrs. Mackenzie and Mann have been connected with the system ever since 1606. During that time they have acted in the double capacity of contractors and financial agents. As contractors they would naturally be entitled to contractors' profits, and as financial agents to commissions for the loans and financial dealings that they put through. It is stipulated by the Mackenzie ankl Mann Company, Limited, and by Messrs. Mackenzie and Mann, individually and collectively, that all claims of this character shall he considered as satisfied up to the time that this agreement is signed, and that they will not be presented hereafter. There is, therefore, no undisclosed liability in this connection, and we feel that we have all the cards on the table before us. Hereafter doubtless they may still perform services for which they will expect
[Mr. Ames. 1
remuneration, but in that case these services will be performed with the knowledge and consent of the directors of the new company, which directorate will contain a representative of the Canadian Government, and unless these agreements are in advance accepted by the representative of the Canadian Government, it is not probable that they will be permitted to hold. So that in this case also the Government were freed from liability of having claims made upon them-should the road prove eventually successful-that it -would probably require a very large sum of money to satisfy.
Now, without in any way impugning the good intentions of the contracting parties, it is customary in an arrangement like this to exact large security that shall be placed in impartial third hands, and shall be forfeitable in case either of the contracting parties should fail to fulfil the terms of the agreement. In this case securities to a considerable amount are to be placed in the hands of impartial trustees. I do not intend at this time to go to any great extent into an examination of those securities. That was done very thoroughly last nigiht, and will be further done wnen we reach committee. It is hardly necessary to do more than enumerate: First, there is the physical mortgage on the entire Canadian Northern road, an undertaking having 5,300 miles of railway, an undertaking which, at the present time, I understand, is able to meet the fixed charges that are upon it, and which we have every reason to believe will become, if it has not already become, a profitable undertaking.	In the second place
there are the eighteen lots of stock enumerated in schedule 2, part 1, which at present are owned by Messrs. Mackenzie and Mann Company, Limited, free from all prior claims save the mandatory charges.	These, with four exceptions, are all the stock either issued or that can be issued. They become what might be called the second line of defence, the second item in the list of securities. Then, we have the equity, which is alleged to be considerable, in a list of bonds and stocks which are held under the trust deed of 1903 which, with that trust satisfied, it is expected would realize a certain sum of money available for the satisfaction of our guarantee. And finally we have the Broekville and Westport railway on which we shall hereafter have the first claim.
There is also security which Messrs.

Mackenzie and Mann Company, Limited, have been asked to put up which does not really directly belong to this railway system, and the putting up of which they would have been justified in refusing to consider had they not been anxious to meet this Government. I refer to their equity, their beneficial interest, in their townsite properties. We understood from what the Solicitor General told us last night that the townsite properties together with the prairie lands were covered by certain securities which, if satisfied, would practically leave the townsite property free of all indebtedness. And the $10,000,090 of capital stock, and $10,000,000 of debenture stock which Messrs. Mackenzie and Mann Company, Limited, have as their share in this town-site property are placed in escrow for us and come into the list of securities which are given as pledges for the purposes of this undertaking.


Rodolphe Lemieux: Will the securities in
townsites include the townsite near Montreal?


Herbert Brown Ames: No, those I refer to are town-sites throughout the Northwest. Now, securities have a dual value in an arrangement of this kind. They have their instrinsic value, the value that may be there to satisfy any financial loss which may be involved through foreclosure. But they have also the value that they are to the pledger who may be presumed at least to be very anxious to resume possession of what he has pledged. If my hon. friend from Algoma, for example owned a property worth $10,000 and I loaned him $10,000 on that property, he would naturally feel that, having already obtained the full value he would not need to pa'y the interest and need not care whether the mortgage were foreclosed or not. But if, on the other hand, I had loaned $6,000 and he felt that the property was worth $10,000, he would pay the interest promptly and would be anxious that the mortgage should not be foreclosed as he would look forward to the day when he might step back into his possession of the whole $10,000. It is the same in the matter of driving the bargain that we are making here; if you take from the party with whom you are dealing so large a share of what there is in it that he feels he has practically already received full value he has no incentive to endeavour to recover his possession. One of the features of this arrangement that I think should commend themselves to the House is that Messrs. Mackenzie and Mann individually
and collectively will have a very great incentive which will call forth their very best endeavour to bring this great enterprise through, because if it is a success there is , still enough left in it for them to amply repay them for all they may have done.
If you took from them practically everything, they would be, just as other human beings naturally would be, far less liable to put forth their every endeavour to get back into the position that they were in in the first place. So I think that when we come to consider the value of the securities, we may take into consideration both their instrinsic value and their value as an incentive to those who are putting them up fo redeem them and to put themselves hack into their former position.
There is another feature of this matter which, I think, is well worthy of consideration. What is to happen in case of default? We have hitherto been dealing with the situation in case of success; the Government has very carefully looked ahead in regard to what might happen in case of failure. Ordinarily it is a very slow process to foreclose a railroad and for the bondholders gradually to take possession of the physical assets thereof. The Government in this case, however, has supplied a method of quick procedure whereby the axe drops instantly and whereby there can he no coming back for further assistance. It is definitely stipulated in this undertaking what shall constitute any event of default; it is so clearly defined that there can be no possible misunderstanding. Should the Canadian. Northern railway fail to pay interest on the securities which are to be issued in connection with the guarantee which we are now authorizing, or should they fail to carry out any of the conditions contained in the trust deed as accompanying that guarantee, they would commit an event of default. Should the Canadian Northern on any of the previously guaranteed securities or hereafter guaranteed securities fail to pay the interest, they would * commit an event of default. If any part of the system goes into the hands of a receiver; if any branch of the whole tree shows signs of decay, that is an event of default and in any of these events the Government can drop the axe without delay. I have heard this agreement described somewhat as a case where the culprit has confessed judgment and has been let out on suspended

sentence. Some elements of the agreement certainly can be compared with such a case. 'The trial is over. The applicants for aid admit that without our help they cannot complete the road. We have undertaken to give them a last chance, and it will never be necessary for them again to come here, nor will it be necessary for this Parliament to listen to another discussion such as is taking place this session. They have been tried; I may almost say Urey have been found guilty and let out on suspended sentence. If there is an event of default; if they fail to perform the obligations that by this new trust deed are placed upon them, the axe drops and that is all there is to it. There is a summary method, therefore, by which the Government steps in and takes possession of the whole enterprise. The Government can replace the directors by Order in Council; the new board of directors will have all the rights that would be given by a board of directors elected by the shareholders, and they can deal with the physical property as they see fit. Then, the Government can declare the mortgage foreclosed and can enter into the benefit of the equities, subject, of course, to the consent of Parlial-ment. If the Government, in such an event, enters into control, it may become the owner of the system by assuming the responsibilities and powers as provided by this proposed legislation. The Government could then arrange the whole financial system involved so as to protect all concerned. The Government can operate; the Government can lease, or the Government can create a new railway company to manage the road and enter into ownership, if so desired.
It has been advocated in this House that the Government should immediately take possession of this system. The right hon. leader of the Opposition practically recommended that when he said that we should demand and receive a majority of the stock. If you have a majority of the stock you have control of the system, and to control the system means to assume the majority of the responsibility and practically let the other fellows out, if they care to go out. That is one way of doing it. The other way is that explained by the hon. member for Kingston, who proposes that we should immediately allow the road to go to smash and then step in and take over the physical assets and become absolute owners of the system. I endeavoured to point rnt. before luncheon

that there were many difficulties in the way, but if we now give, by this new arrangement, what practically amounts to four or five years' extension of time; if we permit Messrs. Mackenzie and Mann to make one more effort to put .this thing into shape and bring it through; if, with the information which will hereafter be always at our disposal, we can see that they are not succeeding, this Government will then have ample time to consider the matter and provide ways and means whereby we can, in due course, take possession of the road if we so have to do.
To conclude, I will simply summarize in a word what I have been endeavouring to demonstrate. This is a bad situation, at. the best, but it is a situation in respect of which a government in which we have fconfidenee has no intention of lying down or shirking responsibilities. This arrangement wil1 be either a success or a failure. It gives to the promoters of the road one more chance; it still leaves them with a considerable status and if they regain their original position the people of Canada will benefit to the extent of being the owners of $40,000,000 worth of stock, which wall be then of value. If, however, the promoters cannot succeed, this legislation provides a simple and effective method of foreclosure and a short cut whereby the people of Canada can take, without expense, possession of the physical assets of the road. The Canadian Government would then be the owners of a transcontinental system which has been built at lower cost than any other; a system which ought to be able to pay if any of them can be made to pay. If it is to be sold or to be leased or to be operated we will in the next few years have time to consult the people and ascertain what their wishes may be in regard t the matter. I feel, Mr. Speaker, that the Government, having had to face an extremely awkward situation, has acted with courage, with foresight and with skill and has made the best possible arrangement that under the circumstances could be made, and therefore, deserves the support of this House.


Mr. R. B. BENNETT (Calgary):: Mr
Speaker, I confess that I rise with some diffidence to address this House at this time. I am not unconscious of the fact that in rising to address the House on a measure which has been submitted by a Government that I have supported, I am inviting not only criticism, but something worse; and yet I cannot by any system of reason-

ing that I can adopt bring my mind to support the proposals that are now submitted for our consideration. I am, however, a firm believer in party government. I have always believed that under democracy as it now exists the interests of the people can best be safeguarded by party government; I have not changed that view, nor have I any apologies to offer for my party affiliations. I am proud of the fact that during my manhood, since I have been able to think for myself, I have served one party. I have expended some time, some energy and what little ability Providence gave me, on behalf of that party. In doing that, I believed that I was best serving the State of which I am a unit, and I cannot better express the views which I held and which I now hold than to quote to thia House the sentiments from Macaulay with which I closed the annual address that I gave to my constituents last fall. Lord Macaulay, in his farewell address to his constituents at Edinburgh, used these words:
I acknowledge great errors and deficiencies but I have nothing to acknowledge inconsistent with rectitude of intention and independence of spirit. My conscience bears me this testimony : that I have honestly desired the happiness and prosperity and greatness of my country; that my course, right or wrong, was never determined by any selfish or sordid motive, and in troubled times and many vicissitudes of fortune, in power and out of power, through popularity and unpopularity, I have been faithful to one set of opinions and one set of friends. I see no reason to doubt that those friends were well chosen or that those opinions, were, in the main, correct. I
I still hold that the friends with whom I have been associated were well chosen and that the opinions which I have held were, in the main, correct; but I venture to say that in this new democracy in this Canada of ours there must be room, in the party to which I belong, for independent spirit and independent thought, and that I must be permitted to exercise the intelligence that Providence gave me, in arriving at a conclusion as to whether or not this measure commends itself to my judgment; and if it does not commend itself to my judgment, as it does not, I purpose to give to this House and to this country some reasons for the faith that is in me. That being so, let us frankly for a moment contemplate the transportation system in Canada. There is no problem so serious, there is no problem that offers so many (difficulties, there is no problem that so vitally affects the well-being and interests of the people of Canada, as does the transportation problem; and in the solution of that problem the measure which this House is now asked to consider must bear always an ever increasing importance, for what we do here to-day with this measure must have a vast and vital effect and influence upon the well-being not only of this generation but of generations of men and women yet unborn who in time to come are to occupy the great fertile plains of Canada. That being so, what is the position that confronts us? I am not concerned about the argument of how much better we are doing than some one else did. The argument that I am holier than thou is getting rather played out, if I may use a common expression.


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: I sdid not say that to gain any sympathy from my hon. friends opposite. If they read history aright they will be so ashamed of their record with respect to transportation matters that they will offer apologies to the generations yet unborn. What was the condition with which this country was confronted? A vast territory, one of the vastest unoccupied and fertile countries that the world knew, was being joined and united into a great dominion. By contract we undertook to provide for transportation between the two seaboards. We undertook that the far off seaboard of the Pacific should be united with the seaboard of the Atlantic, and in the strength of that undertaking the people of Canada, numbering but a few millions, commenced a task of a magnitude such as the same number of people never undertook before and in less than fifty-five months they carried it forward to a successful conclusion. But they did not carry it through to a successful conclusion without facing great difficulties and overcoming enormous obstacles. For, only thirty years ago last month, that great enterprise now known as the Canadian Pacific railway was faced with destruction, and the right hon. gentleman who leads the Opposition is, I think, the one survivor of this House who will remember the circumstances under which as-sistence was sought by and given to that undertaking. After the Canadian Pacific railway was constructed the people of the West began to demand additional transportation facilities. They cried out against the monopoly that had been created alike by statute and by agreement. They said that adequate transportation facilities had not been given to them and that the pro-

visions in the contract made with the Canadian Pacific railway were such as to preclude new lines of transportation being opened with the United States, and therefore they were deprived of the rights which they claimed as citizens to transport their products to the markets of the world at the cheapest possible rates. It became necessary for a readjustment of the contract to take place. A readiustment took place. Then it was that the Dominion Government looked towards that other means of transportation, the Hudson bay railway, and I thought it was after all a commentary upon the slow way in which human movements are accomplished when I heard the hon. member for Kingston (Mr. Nickle) reading the offers that had been placed upon the statute-book, month after month and year after year, in order that we might have a Hudson Bay railway thirty-five or forty years .ago. There is no Hudson Bay railway yet. Despite the offers, and the genius and the vision of the men of thirty years ago, the road is still not an accomplished fact. These land grants were offered but there were no takers; and then it was, as has been said, that certain pioneer contractors, James Ross, one of the greatest minds in that direction this country has produced; H. S. Holt, now president of the Royal Bank; Mackenzie and Mann, then contractors of ambition and energy, and with some wealth behind them, because they had large means for those days as contractors, conceived the possibility of being able to make some money oat of these enterprises. They were then not empire-builders or merchant princes; they were ordinary contractors seeking to make money out of the building of railways. They conceived the possibility of making money, and took up these charters. These roads xan largely from nowhere to nowhere, and when it is said in this House that the land grants that attached to these roads were land grants that were available to these men as contractors, on the very threshold I controvert that argument. Why? Because those grants were given to a road to Hudson bay, and the lands that were to be given were lands that had no value as fertile prairie lands, but lands which lay along the railway, not valuable in any large sense. But when, in 1907, in the month of May, after the Canadian Northern railway had been formed, certain Orders in Council were passed, then this country said: Because this company has shown some sighs of becoming a national trans-
portation system, a transportation system in the larger sense, we will allocate and allot to it certain fertile lands in the valley of the Saskatchewan, and in the Goose lake country. Hundreds of thousands of acres of land were thus made available by that Order in Council to the Canadian Northern Railway Company, not to Mackenzie and Mann, not to the men who owned the road, but to this system as such, as an assistance to enable it to prosecute the construction of the road for the benefit of the people of Canada, and especially of western Canada. That is the reason that the Hudson Bay railroad was not prosecuted with the subsidies or aids proposed to be given to it. That is the reason the Canadian Northern emerged from the position it then occupied, of a short road running from nowhere to nowhere, offering no adequate facilities, into a road stretching out, branching out, reaching out, extending, if you will, ultimately to Edmonton. This road at that time had not become a national undertaking. It was, however, a road offering some transportation facilities to the people. It had not offered great facilities, as my friend from Kingston said yesterday -and in order to shorten my address I desire to adopt in its entirety the statement made by him yesterday, for which I accept absolutely as much responsibility as he^-I accept full responsibility for the accuracy of his statement because you will find that every word and figure he used in reference to the history of aids given and subsidies granted and guarantees of securities are absolutely borne out by the statutes of this country. Every line has been checked and rechecked and I accept with him full responsibility for their accuracy. He pointed out that it was because the little province of Manitoba was demanding more transportation facilities that we now have the Canadian Northern system. He referred to the part taken in that enterprise by my hon. friend the Minister of Public Works (Mr. Rogers). I would say in all seriousness, to the people of this country and the members of this House, that I think we little realize just how large a debt we owe to that hon. gentleman in regard to transportation matters in the West.


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: My hon. friends who
applaud perhaps do not know the facts. I know something of the facts. I think no man knows them all because they are locked in the hearts of many men; but there are one or two solicitors, one or two lawyers,

one or two great counsel in St. Paul to-day who will tell you that, almost repudiated by the Government to which he belonged and by those who held high place and office, the Minister of Public Works assumed the responsibility of signing a contract by which Manitoba acquired the branch lines of the Northern Pacific railway in that province, and after Manitoba acquired the ownership of the lines he had to look for and found somebody to operate them.
It is true the Canadian Pacific offered the province of Manitoba $1,000,000 on their bargain and a reduction in freight rates. It is also true that the contract then made for a reduction in the rate on wheat to the head of the Great Lakes secured to the people of western Canada a reduction in freight rates that has since amounted to not less than fifteen or twenty million dollars. I point that out, Mr. Speaker, because it seems to me right that it should be pointed out, and that honour should be paid where honour is due. Such was the beginning of the career of two men, if not three, that challenges its parallel in the history of the world. I appeal to every man in this House and say that if he will take the time to read the history of the operations of Mackenzie and Mann from that time till now, he will find nothing but a long trail of parliamentary corruption, of lobbying, of degradation of parliamentary institutions, of the lowering of the morale of public life, and the degrading of those standards by which public life should be truly measured. Both sides of the House have been to blame. Look to the statute books for the aid that has been given to this company. Just a few days before a general election, one party proposes and the other acquiesces. They are bound to ask a few questions in order that the contribution to party funds may be large enough. Let us look the business squarely in the face. The time has come when we must take stock of the conditions, and now faced as we are with conditions such as we never met before, we must decide whether we will continue to add to the predatory wealth of promoters or whether we shall strike a blow for the people of this country. That is the condition that confronts us at the present time, and it is to that question I propose to direct my remarks. No man occupying a high position has ever had greater problems and difficulties confronting him than the present Prime Minister. My right hon. friend the leader of the Opposition had no such problems to solve when he came into power. This Government inherited difficulties sufficient to stagger any government. We realize, Mr. Speaker, the difficulties this country is confronted with, and they are not entirely undue to the party opposite and the men I have mentioned. My hon. friend who has just taken his seat (Mr. Ames) says we are not concerned about the men. In all the history of transportation there has never been an enterprise before where two men, or three, have endeavoured to control a transcontinental system. When the Canadian Pacific Bailway Company was launched, its stock was placed on the markets of the world. When other enterprises were launched the stock was placed upon the markets of the world. But these men conceived an ambition greater than any man in this country had hitherto conceived, greater even than that of Huntington and his associates in the case of the Central Southern Pacific. These two men conceived the ambition of having the people of Canada build a transcontinental system which they would control and own. That is the position, and that is what we must face. When the Northern Pacific line fell into their hands, they extended it on to Edmonton with a line to Port Arthur. They then had a complete system that extended from Edmonton to Port Arthur comprising now with many branches nearly 5,000 miles of track. I regard J. J. Hill as a man of some genius in transportation matters; yet in his wildest dreams he never conceived the idea of carrying the Great Northern down to New York. Gould conceived the possibility of carrying his rails across the continent but was unable to do it. Huntington conceived the idea of carrying the rails of the Southern Pacific from the Atlantic to the Pacific coast, and joined the Gulf of Mexico with the Pacific coast. He accomplished that with the aid of governments, and of those who invested in the securities of the road. But Mackenzie and Mann conceived the ambition of uniting the Atlantic and the Pacific oceans at the expense of the people of Canada, while they owned the road. That is the position; we cannot get away from it.
The Prime Minister said that the Canadian Northern railway in 1903, by reason of the threatened construction of the Grand Trunk Pacific and the National Transcontinental railway, was confronted with the difficulty of getting traffic. That was the moment the people of this country should have decided that there was not room for three transcontinental railways. There are always two reasons why men do not vigorously oppose certain things. Men are

human. I have been in politics long enough to know that the mainsprings of human action are not always in accord with the highest moral ethics or the teaching of the Sunday school. After the Government of the right hon. leader of the Opposition had committed itself to the construction of the Transcontinental from ocean to ocean, the Canadian Northern enterprise was threatened with extinction. The genius of a man, who is now no more, foresaw that there was not room in Canada for three transcontinentals. My right hon. friend the leader of the Opposition believes that there is room in Canada for three transcontinentals at the present time. I am not a pessimist; I am an optimist, hut I take issue with him at once on that point. The history of transportation is simple; there is a limit to the producing and consuming power of the people. It all, therefore, depends on the population of the country and I say that not in history, in the most fertile territory where traffic is produced by the hundreds of thousands of tons to the mile has it been possible for 10,000,000 people to support three transcontinental railways. Do you realize, Mr. Speaker, that we have over 30,000 miles of railway under operation in this country. That is exceeded only by the United States, and by the Empires of Bussia and Germany, and by British India. Canada, with less than 10,000,000 of people, has at the present time, or will have at the end of this year, more miles of railway under operation than any country in the world except those I have mentioned. Is it possible for a single moment to conceive that this country can support three transcontinental railways under those conditions where the earnings, to make possible the payment of the fixed charges on the roads to pay the interest upon the outstanding securities, must reach the enormous sum mentioned by Mr. Phippen in his argument before the Bailway Commission and quoted to this House last night. The mandatory charges that must be paid by the Canadian Pacific railway are relatively small because they have converted bonds and debentures into ordin-4 p.m. ary stock, so that four per cent consolidated perpetual debenture stock and ordinary stock have taken the place of bonds, and the bonded indebtedness is becoming smaller and the mandatory charges are therefore becoming less. The Canadian Northern has fixed charges amounting to over $12,000,000, but I shall deal with that later. The National [Mr. R. B. Bennett.1
Transcontinental Bailway system, when completed from Prince Bupert to the Atlantic will have fixed charges that I will not venture to mention for I do not know nor do I think does any one else. But, Sir, it is not possible for 10,000,000 people to produce and consume sufficient traffic to pay those fixed charges unless a miracle happens, unless the country changes entirely, and the population is suddenly increased. Ten million people cannot do it. That is the condition confronting this country. The late Government, doubtless inspired by splendid motives, desired to build a line from Prince Bupert to the St. Lawrence wholly in Canadian territory. They have built a line the cost of which has become so enormous as to stagger one's imagination, and the fixed charges on which will be so large that I cannot conceive the possibility of the road ever earning them. What is the position to-day? A partially completed Grand Trunk Pacific, and a partially completed Canadian Northern railway. Then you have the Canadian Pacific railway being extended, rebuilt and made stronger day by day, so strong in fact that what is the greatest asset of the country, in my judgment, is also its greatest menace as far as transportation is concerned.
The late Government gave the Canadian Northern a guarantee to enable it to build _ from the head of the lakes down to the St. Lawrence. In some countries that may be called statesmanship; but if I were to undertake to characterize it I would be obliged to describe it in harsher terms. I have no doubt that the men who granted that guarantee believed that it was essential that this road should be built. But all it meant was that the boundless ambition of two promoters obtained control and overturned the sanity of the Government.
That is the situation which this Government had to meet. They did not create it, but we must face it. Difficulties belong to governments and they must be grappled with by the men who hold power. On that statement of facts, what must be done? Last year and the year before we were induced to grant extensive aid-I am sorry . to say it-to this Canadian Northern system. I voted for it on a statement of facts that, I am bound to say, I did not believe.
I voted for it on a certain statement of facts which was presented to me as being true, which I did not believe to be true,

but fortunately, or unfortunately, I voted for it. I was negligent as far as that is concerned. I failed in my duty as a member of this House last year. My duty last year was to point out what I am going to point out this afternoon. I failed in my duty then, but I am not going to fail again. I did point out then-although I did not do it in this House-that it would take $100,000,000 to finish that system. That statement was laughed at. I knew that these men would be back here. Some people describe them as empire builders, wizards of finance, merchant princes, etc., but if I were asked to describe them I would describe them as Mackenzie and Mann, mendicants. Ever since I have been in this Parliament all they have done has been to get down on their knees and beg. That is a beautiful sight, is it not? Is that uplifting, is that elevating, is that calculated to advance the interests of democracy? Is that the kind of thing that should be going on in these legislative halls? Yet that is what has been taking place since I have been here. I have in my hand an article written by a Washington correspondent in 1896, and this is what he says:
The most pitiable and at the same time the most disgusting spectacle that now offends the national capital is the Huntington lobby. The list of paid lobbyists and attorneys now number twenty-eight, and their brazen attempt to influence Congress to pass the Pacific Railroad refunding bill have become the disgrace of the session.
It only means that there is a change of time and a change of place-1912, 1913, 1914! We have listened to the voice of the tempter. We granted aid to these men at last, and we are confronted with a difficulty the most serious that has ever confronted the people of Canada. This is the greatest problem of domestic politics that we have ever had to consider.
Before we consider what this country should do, I ask the hon. members of this House to go with me on an imaginary trip from Montreal to Vancouver via the Canadian Northern railway-system, they call it, but I would call it a lack of system. You commence at Montreal at the terminal, in the tunnel. Mr. Speaker, have you read the advertisements in the newspapers regarding the exploitation of the townsite there? My friend the ex-Postmaster General (Mr. Lemieux) asked yesterday: Who got the money out of it?


Rodolphe Lemieux: Hear, hear.


Richard Bedford Bennett: My hon. friend may
well say ' hear, hear.' I do not know
whether my hon. friend means by that that he benefited, but 1 do not think he [DOT]did. I cannot conceive that he did. I think it might perhaps equally well be said ' hear, hear ' and ' there, there,' because I suppose many benefited who bought lands and sold them. Who owns these terminals?-the Canadian Northern Railway Company of Canada-no; the Canadian Northern Quebec?-no; the Canadian Northern Ontario?-no. In the railway committee we had a Bill for consideration providing that the Canadian Northern, the Canadian Northern Quebec and the Canadian Northern Ontario should lease these terminals. On what basis? On the basis of paying the interest on the capitalization in bonds of the terminal company and the providing of a sinking fund. When that sinking fund has paid the bonds, of course the capital stock would have some value. I do not know at the present time, because that Bill has been held up, what the exact condition is, but this I do know, that there is a terminal company bonded to death about which there has been a real estate exploitation which made millions, not for the terminal company or the railway company but for many-I do not know whom-and this country is now asked to come to the relief indirectly of this terminal company. That is what it means.
The hon. Solicitor General (Mr. Meighen) said last night that it was generally regarded as good railway practice that the terminals should belong to one company and the railway to another. I would not like to join issue upon any statement that he might make except that I might point out to him that the greatest terminals that have been built in America in recent years -those of the Chicago and North Western railway in Chicago and those of the Pennsylvania railway in New York city-are examples to the contrary. Who owns the Pennsylvania terminals? The genius of Cas-sett, who was then president of that great railway system whose earnings at times amount to one million dollars a day, did not think it good business to create a terminal company to control the New York terminals and as a result those terminals are owned by the Pennsylvania Railway Company. The Chicago and North Western system terminals in Chicago, which challenge your admiration by reason of their beauty and the facilities that they provide for the public, belong to the North Western system. The New York Cen-

tral Railway terminals belong to the New York Central and Hudson River railway, the Canadian Pacific Railway terminals at Windsor street, Montreal, belong to the Canadian Pacific Railway Company and the Bonaventure station, the poor terminals of the Grand Trunk, belong to the Grand Trunk Railway Company and are used jointly by the Intercolonial railway. When we were getting another great terminal in the city of Montreal provision should have been made for the joint use of that terminal by the Government railway, the Canadian Northern railway and also the Grand Trunk railway, because, if you can get union terminals for traffic, you reduce the fixed or rental charges against the railway and you thereby render it possible to reduce the carrying charges to the people. We advocate joint terminals and union stations because in these days of high values of city real estate and enormous cost of construction the only way in which charges can be lessened is by having a large number of railways running into one terminal. I, therefore, join issue when it is stated that it is sound railway finance to have separate companies to own and operate the rai'way and the terminals. It is sound finance for the promoters. It affords one more opportunity-


Arthur Meighen: Would my hon. friend say who owns the Mount Royal Tunnel and Terminal company?


Richard Bedford Bennett: The Mount Royal Tunnel and Terminal company.


Arthur Meighen: The Canadian Northern railway owns all the stock in that company.


Richard Bedford Bennett: If so, so much the worse because it affords an opportunity for an exploitation to the extent of a few million dollars for the benefit of the promoters. I am glad to see that the Solicitor General has become the advocate of these two men. Before I finish he will regret that he has become their apologist. The Canadian Northern may own the stock of this terminal company but, why could it not own the terminal in the first instance without creating another company? Why, these companies within companies; why these interlocking companies?


Arthur Meighen: I explained that.


Richard Bedford Bennett: against this Parliament declaring the Canadian Northern Pacific to be a work for the general advantage of Canada under this Act, because by turning to section 17 of the British Columbia Act, I find clearly stated:
The Northern company agrees that the Pacific company will agree that the Pacific company shall not, and the Northern company agrees that it will not, at any time apply to be declared a work for the general advantage of Canada.
How, in face of that statutory agreement by the Canadian Northern Railway Company and the Canadian Northern Pacific Company with the people of the province of British Columbia, are we to do this thing? I say there is no point more clearly established than that provincial rights must be maintained. The autonomy of a province is quite as much to it constitutionally, when it is in the wrong financially, as the autonomy of a province is to it when it is in the right. The province of British Columbia is not asking us to do this thing, because it cannot do it without breaking this solemn contract. In any event the legislature and not the Government must act. The Canadian Northern Railway Company cannot do it and the Canadian Northern Pacific Railway Company cannot do it without breaking this solemn contract.
Then, why should we do something which the covenant of two railway companies says we shall not be asked to do, and which the Government of British Columbia said should not be done? That is the first question. I am against this measure so far as it declares this work to be a work for the general advantage of Canada, because it is an interference with provincial rights, because it interferes with the autonomy of provinces, and because it is a violation of a contract made between a railway company and the representatives of the people, which contract has since been approved of and validated by the people themselves in a general election.
Now, leaving that, we come to the Canadian Northern Alberta, and that road's bonds are guaranteed by this Dominion. We must do something to take care of them. The main line guarantee need not give us any concern, because our guarantee is only $13,000 a mile, annual charges less than $550 per mile, which is not a matter of great concern or importance-we know they will take care of themselves.
Then, from Port Arthur to Ottawa we have the Canadian Northern Ontario. The bonds of that company also are guaranteed by the Dominion, and Mackenzie and Mann

say they cannot build the line. Now, I ask my hon. friends, why should we interfere with the guarantees of provinces, whether they be Liberal or Conservative in their administration? Why should not we concern ourselves with our liability under our own guarantees? In other words, I say we have no right to interfere with Alberta, Saskatchewan or Nova Scotia. What interest have I, living on the prairies, in the Halifax and Southwestern railway? An hon. gentleman near me suggests I am a Canadian. But I have no interest as a Canadian financially in that railway, because this Government is the trustee for Canadians as Canadians, hut the Government of Nova Scotia is the trustee for the people of that province. The Government of British Columbia, when they made their bargain, were the trustees for the people of that province, and so with the Government of Alberta for the people of Alberta. My hon. friend from Kingston (Mr. Nickle) pointed out the extent of the guarantees given by the various provinces and by the Dominion. I say that guarantees have been given recklessly, absolutely recklessly, in western Canada. The only province absolutely free from peril in that regard is the province of Manitoba, because on the old lines the guarantees were only $8,000 and $10,000 a mile and because of the lease of the Northern Pacific lines. But west of Manitoba there is danger and peril to the body politic by reason of the recklessness of the guarantees that have been given. I ask, what is going to happen if the Dunvegan road (defaults? There are other roads there, besides the Canadian Northern railway and the Grand Trunk and the Canadian Pacific. There are two lines of road whose bonds are guaranteed for $20,000 a mile, or $1,000 a mile per annum fixed charges. Is this Government going to save these also? And if so, if we are going to pay the piper, why should not we exercise some control and some discretion? The Chairman of the Railway Commission pointed out a few days ago that one of the greatest evils in Canada to-tday was the duplication of lines, and he said that would have to be dealt with. If that be so, why should we put ourselves behind the guarantees of all these provinces for this road forgetting that there are other roads in the same position? I say that as a matter of law it is unsound; as a matter of policy it is unsound, in every way you view it it is

unsound. Why? Because it is bringing upon this Parliament untold responsibilities with the creation of which we had nothing to do and with respect to the carrying out of which we know nothing. I wish to make that clear at the very threshold of this matter. That is to say, if I am correct-and I do not think you can possibly get away from it-on the 1st of January of this year, this Dominion and this Parliament was confronted with a liability under our guarantees for the Canadian Northern Alberta, the Canadian Northern Ontario and the main line of the Canadian Northern railway. The main lines will take care of themselves as I have indicated and will provide for the underlying guarantees in some cases Dominion and in some cases provincial. So far as we are concerned we need be apprehensive only of the ability of the contractors to finish the two lines the Canadian Northern Alberta and the Canadian Northern Ontario. Now, these companies are solvent, or they are insolvent. The Solicitor General told us last night they were insolvent. The Government has investigated the matter and finds that they are unable to carry out their undertakings. If that be so, what follows? A receivership follows; .and this Parliament is sitting here to-day to advance money practically as though we were advancing it to a receiver. What is a receiver? He is an official appointed by the court to stand between the security-holders on the one hand and the property on the other; to see to it that the property is maintained and operated for the benefit of those who advanced money to make its construction possible. We have a road in a forward state of completion, but it is insolvent-* they tell us absolutely insolvent; they cannot raise money, they cannot finish the road, and they come to you and me sitting here as the high court of Parliament and ask us to advance money practically to somebody as receiver. But the road is under contract. Who are the contractors? Mackenzie and Mann Company, Limited. Are they insolvent as contractors? Where is the statement of their liabilities and assets? Reports say that they have $50,000,000 at least of assets. If so, let them pay their debts and build the road as contractors. I put this proposition before you, Sir, and this House, as a legal proposition: Either there is a contract to build this road or there is not. If there is a contract 2361
let us call upon the contractors to finish their work and if they cannot finish their work let us take an assignment of their assets as security for the money we shall advance. Let us put this position squarely: John Smith contracts to build your house. After construction has proceeded a certain distance, John Smith comes to you and says:	I cannot finish my contract.
John Smith goes to the bank and says: I cannot finish my contract; but I have a lot of assets that will come into value very shortly, a very large number of assets; I do not know exactly where I am at, but I must have some money. The banker says: Assign me your contract, assign me your assets, and I will see what I can do to find money to finish your contract. Is not that what would happen ? But what we are doing is handing out to these men money, true under certain restrictions and reservations, but without inquiry as to their ability to fulfil their contract. I say with all deference, how are you going to get away from that ? Either these men are contractors or they are not contractors. They are spoken of as contractors, and I want to emphasize this: If they are contractors we must have evidence why they are not finishing their work; and if they are unable to finish their work, we as bankers should demand an assignment of every security they have before we give them a dollar. Is not that a banker's business ? Take the other horn of the dilemma. Say that the company is building its own road and is insolvent. What follows ? If the road is insolvent, it must go into the hands of a receiver. But, for reasons mentioned by the Prime Minister, and with which I agree; for reasons mentioned also, by the leader of the Opposition, and with which I also agree, this country cannot afford to let the road get into the hands of a receiver. If so, then let us act the part of a receiver. That is all I ask. Why should we depart from well known legal principles, from well known legal rights, from well known legal positions, merely to please two promoters ? I leave that to the House. Let us get on. The Government says: We propose to grant $45,000,000 to these men at four per cent on certain well defined principles, and they lay them down. My friend the Solicitor General says: Here is the mortgage we are going to take; and the mortgage has certain constituents and factors that constitute the security that is to be given. I agree with that; it is perfectly clear that he has taken all the

[DOT]security he could get, except the security of the men who are responsible for this disaster.	That security	has not been
taken, I ask that it should. Surely my hon. friend was wrong when he said that first of all, on entering into this matter, he reduced the capital stock of this company. If he will turn to page 34 of the blue book he will find that he has not reduced the capital stock of the Canadian Northern in any way, shape or form. We find on page 34 that there is vested in the Canadian Northern Railway Company or in persons who hold it for them in trust, $45,000,000, and $45,000,000 subtracted from $145,000,000 leaves $100,000,000 of stock of the Canadian Northern railway and constituent companies that is now to be represented by the capital of the Canadian Northern. You are exchanging that for $100,000,000 of water in the proprietory companies. You forget to recognize that the Canadian Northern already owns part of this stock and that $8,000,000 of it belongs to other people whom we cannot get at. So that on page 34 of the blue book you find the facts stated as follows :
Issued capital stock of the Canadian Northern Railway System, $145,778,500.
Issued Canadian Northern Railway stock $77,000,000.
The stock of the Subsidiary Companies is the difference between these two sums, viz., $68,778,500.
From the third column you will observe that $45,000,000 of the $68,778,500 is already held by or in trust for the Canadian Northern Railway, so, that when that company acquires $23,000,000 more stock in the subsidiary companies, it will own all the capital stock of the subsidiary companies. The purchase price for this $23,000,000 of stock in the subsidiary companies is to be $23,000,000 of Canadian Northern Railway stock, whose capital will then be increased from $77,000,000 to $100,000,000. Instead of a reduction of capital stock, there has been an increase; instead of taking water from it, you have put water into it.
But that is not all, Mr. Speaker; let me proceed a step further. I want hon. gentlemen to turn to the schedule of the resolution itself, and to examine closely the kind of stock we are getting. The first company mentioned is the Bay of Quinte Railway Company. One would think that is a rather valuable company. Let us refer to Poor's Railway Manual, page 1657, and see what we are getting. I find that instead of getting an asset, we are get-
[Mr. R. B. Bennett 1
ting a liability. This manual says that since 1908 the road has had a deficit. Here are the figures:
Capital account and income, Bay of Quints railway. Mileage, 86 miles. Deficit for the year 1913, $32,000; 1912, $10,000; 1911, $5,000 ; 1910, $27,000; 1909, $36,000; 1908, $38,000.
Rather a good thing to exchange the stock of a company worth nothing for stock in the Canadian Northern, is it not? The Bay of Quinte railway, the first company mentioned of the Canadian Northern Railway system, has had a deficit-could not pay its fixed charges-since 1908. According to the returns published in Poor's Manual, that stock is valueless. There is something else I am going to point out further on in the agreement which this has an effect upon, because this company is in default before you start to sign the agreement. Is it not a beautiful thing to say that you have the right to exercise the power of foreclosure and take control when the very documents you sign show default before you sign them. That is perfectly absurd. But that is not all; let us go a step further.
Not only is it a fact that the Bay of Quinte railway has had a deficit all these years, Ibut if hon. gentlemen will be good enough to look up the figures, which may be found in sessional paper No. 269c, they will find a statement of the floating liabilities of the railway companies embraced in the Canadian Northern Railway system and that the floating liability of this small company amounts to $173,114.58. That is, the floating liability of that road really represents accumulated deficits. The capital stock of the Bay of Quinte Railway Company, $1,395,000-and it is not worth anything-is converted into Canadian Northern stock of the par value of $1,000,000 and over. Surely the Government docs not intend to do that. The Prime Minister was good enough yesterday to say that he would listen to any suggestions that might be made. The first suggestion I have to make is that the Bay of Quinte railway stock be wiped out of this transaction as quickly as possible because you are being asked to take over the stock of a road which is already in arrears in its Interest charges, on which there is a deficit, and the stock of which, amounting to $1,395,000, is being exchanged for over $1,000.000 of Canadian Northern stock. Speaking as a man from the West, I do say this: The constituency which I represent will object to their freight rates being based

upon the payment of any dividends upon that $1,000,000 of Canadian Northern stock.
Let us now take the next road, the Canadian Northern railway. I have here the annual reports of the Canadian Northern system since it became such, and turning to the last report, what do I find? I find ever the signature of Mr. Hanna and Sir William Mackenzie a statement of the financial position of the road. I find that on June 30, 1913, they had a cash surplus of $6,778,384.65 and a land account surplus of $16,930,835.01, a total alleged surplus of $23,709,000. Where is it, Mr. Speaker, that is what I want to know? Before I vote for this measure I want to know where that surplus is. Perhaps some of my friends will be able to tell me now; it will afford me much, gratification and pleasure and make it easier for me to know just where it is.
Mr. MJS1GHEN; If the hon. member had listened to me last night he would have heard me say that this money was drawn on equipment trust, practically a payment on capital expenditure.


Richard Bedford Bennett: I am going to deal with that. Unfortunately, that is the story they tell, but it is not true. The difficulty with my hon. friend is that he is taking the statements of these men as facts, when I know they are not facts, as I am going to show before I finish. I want to ask this question here and now. Last year we were told that the $15,000,000 which we were giving to the Canadian Northern would finish the road. It has not done so. We have been told that continuously, year after year, and this is the question I ask the Solicitor General: Since when did a fraudulent representation constitute a basis or foundation for an application for further aid? Since when did bogus surpluses and false accounts constitute a groundwork and foundation upon which to lay a claim for the use of the collective credit of the people of this country?
The floating liabilities of the Canadian Northern Railway Company are said to be $6,565,652.61. After paying the floating liabilities, there will still be a surplus of over $100,000, outside of the land grant surplus of $17,000,000. Are they insolvent or solvent? If they have a surplus of $23,000,000, obviously they are not insolvent. If they have floating liabilities of $6,500,000, obviously they are insolvent. ' You pays your money and you takes your choice,' as they say at auction sales. There is their annual report sent to investors
in England. HeTe is the report made to the Parliament of Canada. Here is the report you make to those you get money from; here is the report to those you want money from. Here is the mendicant, there is the promoter. What are you going to do about it? I want to know what this House is going to do about it? There, stripped of everything, is- the story. I am going to deal with this notorious and nefarious Equipment Trust in a moment, because I should like to remind the Solicitor General that, this surplus of railway operations is not for one year but is the accumulated surplus of the system, and there are ten reports showing that the surplus was carried forward from year to year and had reached the amount of $6,778,384.65, after paying eveTy equipment trust bond that was due. Let that sink into my friend's mind. I direct the attention of the Solicitor General to the fact that of the fixed charges that were paid by that company as set out on page 14 of this statement, they paid equipment trust securities in full and still had a surplus left according to that. How does he make that out?


Arthur Meighen: All right.


Richard Bedford Bennett: How do you make it
out? There is the story written broad upon the face of that report and I say-


Arthur Meighen: That is just what I said. I did not contradict that. That is absolutely true.


Richard Bedford Bennett: Then my hon. friend
contradicts himself.


Arthur Meighen: No, I contradict you.


Richard Bedford Bennett: This is a matter which might as well be threshed out now. The Canadian Northern Railway Company issued its eleventh annual report on October, 1913. In its statement of income for -the year ending 30th of June, 1913, it shows its total revenues and expenditures to have been upwards of $30,000,000. It shows that the company carried forward from the previous year a surplus on operating account, leaving a credit balance of $5,986,553.29 on the 30th of June, 1912. It says it met every equipment obligation that year. It shows that after paying all these epuipment, trust and other charges the company had left a surplus on operating account of nearly $1,000,000 which they carried forward, making a total surplus at the end of the year, after paying all equipment trust and other obligations of $6,778,384.65. Is that true or false?


Arthur Meighen: It is true.


Richard Bedford Bennett: If it is true, then how could the payment of equipment bonds have exhausted the surplus which they had in June last?


Arthur Meighen: You have only the interest there.	*	.


Richard Bedford Bennett: That was all the payments that were made.


Arthur Meighen: Oh, no, that is where
you fall down.


Richard Bedford Bennett: I shall turn up the report and read it in order that there may be no misunderstanding about it. I have been too long at this business to be fooled with that story. Here is the report:
Deduct fixed charges as per statement on page 17.
And you will. find there a complete statement of all the payments for fixed charges and equipment securities. The fixed charges are stated upon the mortgage securities, the consolidated debenture stock, the Qu'Appelle, Long Lake mortgage securities, and the land grant securities. My friend knows better than I that equipment trust securities are payable annually out of the income of the Company and that this method of acquiring equipment is one largely adopted by railways in all parts of the world.


Arthur Meighen: It meant the fixed
charges as it says. Does my hon. friend think that the fixed charges include payment of capital?


Richard Bedford Bennett: 
Arthur Meighen: That is not what the
book says at all, that is what my hon. friend says.


Richard Bedford Bennett: I shall read from the
book.


Arthur Meighen: The book does not say -I do not wish to be obnoxious to the hon. gentleman and would not interrupt him had he not invited me to do so-the book does not say at all that payments on equipment trust are in lieu of depreciation. They are payments on capital.


Richard Bedford Bennett: They are not payments on capital. I am going to argue this matter as if I were in a court. This is the high court of Parliament. There are three ways in which equipment is purchased. Equipment, comprising railway locomotives and cars, is bought outright, sometimes charged against capital when capital can be obtained cheaply and sometimes not. Then, second, you have equipment purchased on what is called the lease system. Any member of the House who goes to Montreal tomorrow on the Grand Trunk, if he walks up to the locomotive will find a strip of brass on that locomotive reading. ' The property of Blair and Company.' If you go on the Wabash to Chicago and look at a locomotive you will find a tag of the same character. On cars you will find tags indicating that a car trust has been established or that the property has been leased. The provisions of the lease ensure the payment of an adequate rental over a period of years; the upkeep of the equipment, its insurance, and at the expiration of the lease the property usually passes to the Railway Company, but in the meantime it is of course owned by the lessor. Then there is the system by which equipment trust bonds are issued secured by a mortgage on the equipment. This differs from the lease system in that in the one case the equipment is the property of the lessors, in the other case it is the property of the railway company subject to the equipment trust mortgage. After the initial payment on account is made the balance is usually paid over a period of years representing the lifetime of the equipment I shall now turn

to what the Imperial Railway Stock Company itself says.


Arthur Meighen: You have not read that out of Poor's Manual.


Richard Bedford Bennett: No, because it would
take a long time to deal with it.
The Philadelphia plan is the one I first mentioned. Let us turn to Poor's Manual, page 1666:
Car trust obligations outstanding, June 30, 1913 (total, $19,501,500) :
All equipment series as described above are issued by the Imperial Rolling Stock Company, Limited, and are unconditionally guaranteed as to principal and interest by the Canadian Northern Railway Company. The Imperial Rolling Stock Company, Limited, holds the title to all of the equipment for the partial payment of which each series is issued, until the railway company has paid off the last bond of said series, assigning and pledging the titles to the trustee of the mortgage to be held in trust for the bond-holders. Trustee of all series: National Trust Company, Limited, Toronto, Ont. The bonds are in coupon form, and are registerable as to principal. Interest is payable at office of the Canadian Bank of Commerce, Toronto, New York and London, Eng. Principal is payable at Toronto, Ont., and New York, N.Y.
Bear in mind that the total outstanding liability amounts to $19,000,000, payable in instalments extending over periods of eight, nine and ten years. It is idle to say that the whole surplus of $6,000,000 has been exhausted in buying the securities since June, 1913.
I want this House and the country to know the story about the rolling stock of this railway and to thoroughly understand its history. To-day we are confronted by a lobby of creditors who are interested. The Canada Car Company is a creditor for one and a half million dollars for equipment; the National Steel Car Company, two or three hundred thousand dollars. Whose needs have they supplied ? Mackenzie, Mann and Company Limited, gave their notes for that equipment. What did they buy the equipment for ? Did they sell it to the railway ? Not they, they sold it to the Imperial Rolling Stock Company Limited. Let us just understand who they are. I hold a prospectus in my hand describing an issue of first mortgage five per cent gold bonds, class ' B.' They started class 'A' in August, 1903, and have proceeded with the series ever since. The paid-up capital is $300,000. Directors, Sir William Mackenzie, president, Sir Donald Mann, vice-president, ?!. A. Lash, K.C., Frederic Nicholls, J. M. Smith. Let us analyse that. Mackenzie, Mann and Company Limited buy the rolling stock and give
their notes to the Canada Car Company. The Imperial Rolling Stock Company takes the equipment and sells it to the Canadian Northern. Do they make a profit ? We are told they do not. Do they do it just for the love of the thing ? Then why do they want $300,000 of paid-up capital ?


Arthur Meighen: If my hon. friend really wants to know, I will tell him, although I thought he would understand it himself. The Imperial Rolling Stock Company is formed for the purpose of buying the rolling stock. Were it not purchased through the agency of such a company, the rolling stock so purchased would immediately become subject to all the prior encumbrances of the Canadian Northern railway. The same thing applies to other railways as well as to the Canadian Northern. In order to avoid subjecting the rolling stock to all the prior encumbrances of the road by the mere act of purchase, a rolling stock company is formed through which the rolling stock is bought. The rolling stock is then sold to the Canadian Northern or whatever the railway may be. This practice is not confined simply to the Canadian Northern; it is common to all companies.


Richard Bedford Bennett: On this prospectus the following statement appears:
The Imperial Rolling Stock Company has been incorporated with the object of purchasing rolling stock from manufacturers and leasing it to railway companies in good standing. The railway companies agree to pay for the rolling stock in instalments, which instalments are more than sufficient to pay the interest on and retire the bonds as they mature. This plan has been used extensively in Great Britain and the United States and has proved advantageous to the railway companies and profitable to the rolling stock companies, and has recently proved most successful in Canada.
Do I understand that a com-
5 p.m. pany created for the purpose of buying rolling stock from manufacturers and selling it to railways, is a. philanthropist when it sells to the Canadian Northern?


Arthur Meighen: The rolling stock company is merely an agency.


Richard Bedford Bennett: It says it is profitable.


Arthur Meighen: No, it does not. It does not refer to the Imperial Rolling Stock Company at all.


Richard Bedford Bennett: Then, I-m-p-e-r-i-al does not spell Imperial.


Arthur Meighen: The Imperial Rolling
Stock Company does not exist for profit. It

exists as an agency between the makers of the equipment and the railway company.


Richard Bedford Bennett: Will my hon. friend
say that Mackenzie and Mann make no profit out of it?


Arthur Meighen: Our auditors have investigated the mattter, and have so reported.


Richard Bedford Bennett: Show me the report.


Arthur Meighen: I think it is in the
report that has been filed.


Richard Bedford Bennett: No, it is not. I had that report here purposely to look up that point. I cannot help the way they keep their hooks, but two and two make four, and I say that Messrs. Mackenzie and Mann positively cannot be trusted after the statement they have given to this House and to the people. The prospectus says:
The Imperial Rolling Stock Company has been incorporated with the object of purchasing rolling stock from manufacturers and leasing it to railway companies in good standing. The railway companies agree to pay for the rolling stock in instalments, which instalments are more than sufficient to pay the interest on and retire the bonds as they mature. This plan has been used extensively in Great Britain and the United States and has proved advantageous to the railway companies and profitable to the rolling stock companies.


Arthur Meighen: In the United States.


Richard Bedford Bennett: It does not say so.


Arthur Meighen: It does.


Richard Bedford Bennett: I will read it again:
And has proved advantageous to the railway companies, and profitable to the rolling stock companies, and has recently proved most successful in Canada.


Arthur Meighen: Read the whole sentence.


Richard Bedford Bennett: I have.


Arthur Meighen: You did not; you
started with the word 'and '.


Richard Bedford Bennett: I will read it again.
This plan has been used extensively in Great Britain and the United States and has proved advantageous to the railway companies and profitable to the rolling stock companies, and has recently proved most successful in Canada.


Mr. BOYCE:: Successful, but not profitable.


Richard Bedford Bennett: The hon. member for
Algoma (Mr. Boyce) says that what is meant is that it has been successful but not profitable.


Arthur Meighen: It does not say the Imperial Rolling Stock Company has been successful. There are other rolling stock companies. .


Richard Bedford Bennett: There are; I know many of them. But does my hon. friend think the people are so gullible as to believe that men are going to issue securities for $300,000 of paid-up capital for nothing? Why did Messrs. Mackenzie and Mann sell to the Imperial Rolling Stock if it was not created for that purpose? Why is it their notes, and not the notes of the Imperial Rolling Stock Company, that the Canada Car Company holds? Why do the Canada Car Company hold the notes of Mackenzie and Mann and not of the Imperial Rolling Stock Company? Whom do they buy the rolling stock from? From Mackenzie and Mann Coy., Ltd., the go-between the manufacturers and the railway company, who sell it to the Imperial Rolling Stock Company themselves by another name, and who, in turn, sell it to the various railway companies, being Mackenzie, Mann & Coy., Ltd., still another name. These companies could pay for this rolling stock and the people who made these cars and engines are whistling for their money while Mackenzie and Mann will not pay. My hon. friend the Solicitor General says that this is done in order that the stock may not be charged with the payment of the securities under the trust deed. I will read the trust deed and show him that it is charged with it. Let us see what the charges are.


Rodolphe Lemieux: Read it all.


Richard Bedford Bennett: I am not going to read all of the trust deed. Section 10 says:
The company for further securing payment of the principal moneys and Interest and other moneys aforesaid hereby grants and conveys to the trustee a specific charge upon and over the whole of the undertakings and railways of the company present and future including rights of way, station grounds and all real estate and interests therein, buildings and other structures and improvements, rolling stock and equipment, plant, machinery, supplies, material and other personal property present and future acquired for the purposes of the said railways and in connection with operating, repairs and maintaining the same and the tolls, incomes and revenues of the company arising and to arise from the said railway and the rights, privileges, franchises and powers of the. company now or hereafter held in respect to and in connection with the said railways and the operation, maintenance thereof (except as hereinafter expressly declared) such charge to rank next after the existing charges thereon as hereinbefore recited but to be subject and without prejudice to the powers hereinafter reserved to the company of creating further charges

thereon ranking in priority to the charge hereby created.


Arthur Meighen: Now, then, the hon,
gentleman can understand why the rolling stock company intervened and the means that were found necessary in the purchasing of the rolling stock. The Canadian Northern Railway Company pay for it by instalments, it becomes their property and then it becomes subject to the trust deed.


Richard Bedford Bennett: Absolutely.


Some hon. MEMBERS:: Oh, oh.


Richard Bedford Bennett: Hon. gentlemen pound
their desks, but they do not understand what they are doing. Why, then, if that be so, are Mackenzie and Mann's notes outstanding for these unpaid oars and engines?


Arthur Meighen: I presume because the makers of the oars and engines like their notes better than those of the others.


Richard Bedford Bennett: Then that is the story. Let us have it in all its miserable character. Here are oars and engines bought from manufacturers in Canada, Canadian workmen made them and Canadian materials were used for their construction, Mackenzie and Mann think they are the right people to intervene and as they buy this equipment they must expect to make a profit out of it. Why should they have done so if that were not the reason?


Arthur Meighen: They have bought a lot of other things for the Canadian Northern Railway Comp'any besides that and given their notes.


Richard Bedford Bennett: Are they the contractors of the Canadian Northern Railway Company?


Arthur Meighen: They are carrying on
the construction department of the Canadian Northern railway.


Richard Bedford Bennett: But, this being new
equipment for the Canadian Northern Railway Company, why should they give their notes?


Arthur Meighen: I presume that the
makers of the cars asked for further security and got it.


Richard Bedford Bennett: This is not further security. The company only have their notes; there is no lien.


Arthur Meighen: Is the hon. gentleman
sure they have not a lien on the cars.


Richard Bedford Bennett: I regret to say that they have no lien. The Imperial Rolling Stock Company has the lien upon the cars.


Arthur Meighen: I presumed that they
had a lien.


Richard Bedford Bennett: My hon. friend's presumption and his thoughts had better be revised. These are the cold facts of the case, and if the hon. gentleman had fortified himself with facts rather than presumptions he would have made out a better case.


Arthur Meighen: Did not the hon. gentleman say they had $50,000,000 of assets?


Richard Bedford Bennett: Yes, and they will not pay their debts and want the Dominion of Canada to pay for them. My whole argument is that these men have assets, that they will not use their assets and that they want us to pay their debts for them. I protest in the name of the people of Canada against paying their debts.


Arthur Meighen: Why do you say that
their notes are no good?


Richard Bedford Bennett: Because they have refused to pay them until this legislation is put through, which will compel the people of Canada to pay them. Look at the contractors who have been swarming around tbe hotel corridors in Ottawa. Why have these contractors come here? Because these men would not pay them. They said : Sue us, and they were sued the other day in connection with a piece of property near Toronto, My hon. friend (Mr. Meighen) touches the point exactly; these men will not pay if they can avoid it. They want the people of Canada to pay their debts, and I protest against the people of Canada paying their debts. If these men are contractors, then let us exhaust our remedies against them before this country pays their debts. Every citizen in my part of the country, I know, will say:	If these two
men have contracted for the building of this road, and if they have got the money, let them pay their debts. I hold in my hand a copy of a letter which is to be found in the Library from Mr. George Stephen-


Arthur Meighen: As far as I know there is no contract by which they are bound to build the road between them and the Canadian Northern Railway Company at all, but if there was, under what rule of law would anybody say that they were bound to do it if the Canadian Northern cannot pay them for doing it?


Richard Bedford Bennett: My hon. friend has no evidence that the Canadian Northern cannot pay them for doing it, but if they have entered into a sub-contract they are bound to pay for the work.


Arthur Meighen: If they have the money.


Richard Bedford Bennett: Now, I have my hon.
friend exactly where I want him. He says: As far as I know there is no contract with Mackenzie and Mann to build this road. This release of the contractors' claims is lovely.


Arthur Meighen: These men have acted as financial agents, and have financed the construction of the road on their own credit and on their own responsibility. It is for services in that connection that they have a claim. There is no outstanding, binding contract, as far as I know, but, inasmuch as they -have performed such services, ,as a court in this country, not many years ago, adjudged, they have a claim.


Richard Bedford Bennett: Of course, there is a rule in our Railway Act which says that men shall not contract themselves with companies of which they are directors. That is a statutory provision in the Railway Act. Doubtless my hon. friend is aware of it, and in order to get around and about it they have made it Mackenzie and Mann, Limited, when it used to . be Mackenzie and Mann. Now, if it is true, as my hon. friend said, that there was no contract with these men to build this road, what right have we to pay this money?


Arthur Meighen: I have just told my hon. friend.


Richard Bedford Bennett: Because they were the fiscal agents?


Arthur Meighen: This is the money of the men who actually dug the dirt and built the road, and of the banks who supplied money.


Richard Bedford Bennett: Who got the money? My hon. friend knows that it is not a fact that the men who did the work got the money, but Mackenzie and Mann, whom they directly contracted with. I asked three contractors who was the contractor on the Canadian Northern Ontario, and they said Mackenzie, Mann and Company were the only people they knew.


Arthur Meighen: I think that is correct; they simply acted as intermediaries in the construction of the Canadian Northern.


Richard Bedford Bennett: Why were they not the contractors?


Arthur Meighen: As on every other railway there is a construction company, and Mackenzie and Mann, Limited, act as the contracting company in connection with the Canadian Northern railway, just as another company act in connection with the Canadian Pacific railway.


Richard Bedford Bennett: In the case of the Canadian Pacific railway, construction is not under another company.


Arthur Meighen: What is the harm in a separate entity?


Richard Bedford Bennett: The harm of the
separate entity is that the claim that these men have is against Mackenzie, Mann and Company, and not against the railway company.


Arthur Meighen: This is a liability which they have incurred, for which they get no compensation, and out of which they get no profit.


Richard Bedford Bennett: I took the trouble to look up the contracts for the Canadian Northern Ontario, and I learned that the contracts call for the construction of the telegraph lines. Then, who got the telegraph lines?


Arthur Meighen: The Canadian Northern own them.


Richard Bedford Bennett: What did they pay for them?


Arthur Meighen: The Canadian Northern paid nothing for them. They were turned in.


Richard Bedford Bennett: My hon. friend has been misinformed and misinstructed.


Some hon. MEMBERS:: Hear, hear.


Arthur Meighen: I accept all challenges;
I have accepted them all so far, and I will accept this one. My hon. friend will remember that just yesterday he made a similar statement during the speech of the hon. member for Kingston (Mr. Nickle).


Richard Bedford Bennett: I did.


Arthur Meighen: He said that the Canadian Northern railway had paid Mackenzie and Mann $3,000,000, the value of the $3,000,000 bonds which they took from the Canadian Northern Express Company. I challenged the statement at the time. I repeat that now, in this connection, that

the Canadian Northern railway never paid them one dollar, and that those bonds were turned in absolutely free of charge and as compensation to the Canadian Northern. The Canadian Northern raised money on them and used every dollar of it in their undertaking. I would like you to prove that what you said yesterday is correct.


Richard Bedford Bennett: I am going to do it.


Arthur Meighen: Very good.


Richard Bedford Bennett: 
Arthur Meighen: Have you read it all?


Richard Bedford Bennett: Wait a moment. I have here the prospectus on which the first money was raised and I want to read it in order that there -may be no misapprehension about the matter. The fact of the matter is that there is so much in connection with this enterprise that one gets rather confused in one's endeavour to state exactly what the facts really are. I have now in my hands the prospectus upon which the first money was raised to buy these securities. This is what it says:
The money provided by the present issue-
500.000	00
800.000	00
500.000	00
300.000	00
100.000	00
437.000	00
750.000	00
250.000	00
420.000	00 483,393 55


Arthur Meighen: The hon. gentleman
will have noticed, as he read his figures, the very wide divergence between the amounts paid -and the value of the bonds. The fact is that these bonds were turned into the Canadian Northern Railway Company. I can illustrate the process by these two examples. The Winnipeg Land Company owning property in Winnipeg had certain indebtedness on it for purchase price on property bought in the early days. That land is worth some millions more than the land company is bonded for. Those bonds were turned into the Canadian Northern. The Canadian Northern on the strength of those bonds and its other assets issued its four per cent perpetual debenture stock, out of which it paid first that indebtedness against the Winnipeg Land Company and nothing more, not one dollar going to Mackenzie and Mann. The same is true of the Express Company, in which some few thousand dollars only was invested.
It was bonded for some $3,000,000. These bonds were turned in, and out of the perpetual stock raised thereon, enough was paid back to pay the $5,000. Or rather, I am not sure that that $5,000 was paid, hut I do know that not a dollar more was paid. The only moneys out of that 4 per cent perpetual debenture stock given to these companies was paid in discharge of the liabilities against them to get a title, but not any of it came to Mackenzie and Mann.


Richard Bedford Bennett: My hon. friend says that Mackenzie and Mann did not get any money out of these enterprises. Ail I can

say is that I take this prospectus for what it says, and it says that this money was raised in London to purchase these securities. If they paid, they paid it to the peoole who owned these securities, and if the hon. gentleman will say who owned, I know who got the money. All I can say is that the record in the investigation of the express matter shows that in this case these men owned that stock

Mackenzie, Mann, Lash, R. J. Mackenzie and Mackenzie and Mann Company, Limited. It follows that the people who sold the property got the purchase price. And if the people who sold it were Mackenzie and Mann and their asso-ciates, then they received the purchase price.


Arthur Meighen: It was enough to p-ay the indebtedness and nothing more.


Richard Bedford Bennett: All I say is that that is the statement that these men have made from one end of Canada to the other. The hon. gentleman may know more about their affairs than I do-I think he does. A'll I have is the records. And the records show that the Canadian Northern Railway Company has paid $5,000,000 cash to acquire securities upon which the people of this country are paying 4 per cent interest. They must have bought them from the people who owned them, and the records show that the owners were Messrs. Mackenzie and Mann and others connected with them.


Arthur Meighen: They were of far more value than $5,000,000, but all that was paid was the indebtedness against them, none of which came to Mackenzie and Mann. The record shows that.


Richard Bedford Bennett: When they got these companies together to incorporate them, why did they create a lot of watered stock and bonds, if the Canadian Northern railway was to get all?


Arthur Meighen: Does the hon. gentleman wish an explanation?


Richard Bedford Bennett: I know in advance what the explanation will be; but the hon. gentleman might as well state it.


Arthur Meighen: The Canadian Northern Express Company had a large revenue. As a means of raising more money they bonded the Canadian Northern Express Company at $3,000,000-the revenue justifying a large issue. They turned that bond issue into the Canadian Northern railway.

and by reason of that being there they were able to raise more money.


Richard Bedford Bennett: But why create bonds and stock if the Canadian Northern railway only was to get the return?


Arthur Meighen: Because they found it
more convenient to raise the money on them.


Richard Bedford Bennett: And the money passed through the conduit pipe-


Arthur Meighen: That is the point-it did pass through.


Richard Bedford Bennett: It doe3 not get through -that is the point exactly; and the records show it.


Arthur Meighen: The hon. gentleman
cannot establish that.


Richard Bedford Bennett: Show me the case of any system, except the Frisco, where such a situation occurred without a public investigation. And that leads me to my second objection to this measure, the one I have raised from the start: I demand that there should be a public inquiry under oath in order that I may know whether the facts alleged are facts or not. I demand to know on behalf of the people of Canada whether these statements are true or false. The Solicitor General knows no moTe about this matter than anybody else. He has been instructed and he believes the instructions he has received-though a lawyer is not bound to believe the instructions contained in his brief. I do not say that offensively, for the Solicitor General has been making the best case he could, as he is bound to do, on behalf of the Government, and the Government probably believe it to be true. But I do not know whether the story is true or not. I know that in the town-sites matter which was referred to this morning, you have $20,000,000 of stocks and debentures as the value of these townsites, and that was in the end of 1913. Where did the money go during the preceding years, during the fat years, when they were dealing in townsites right and left? Mackenzie and Mann owned the townsites which must have netted them millions, for the country only got $3 an acre for the land. And municipalities have been oppressed through lands having been exempt from taxation in some of the provinces. I defy any member of this Government or of the House to state accurately the facts with relation to this
enterprise; and I demand that there should be a full and complete investigation that the facts may be made known. I have here a book upon the subject of great railway enterprises in which the story is told of the Huntington-Hopkins contract. If you were to ask me upon what Mr. Lash patterned his whole enterprise I would tell you it was upon the Southern and Central Pacific with Huntington and Hopkins as contractors. They were subsequently incorporated. Their dealings with the company seemed perfectly fair. The auditors went over the figures year by year, and adding two and two together, always made four- they showed that the company was getting the benefit of everything. But, seventeen years after, an investigation was held. The President of the United States appointed a commission to investigate the affairs of the Southern and Central Pacific and such scandal was stirred up as caused the ruin of the reputations of the men engaged in it and made it impossible that any such exploitation of the country should again be carried on. I say that we have in this enterprise at this time a duplication of that very story. What happened last year? We passed a statute by which we were to get $7,000,000 of stock? And what did we get? Why they set the printing presses to work and ground out $7,000,000 paper. The Minister of Finance referred to 'the -one tenth of the capital'' which we owned; the ex-Minister of Railways spoke of the same. What did we get? We got $7,000,000 of added water. Here is the language of the book to which I have referred:
To own a construction company, a railroad company, and a good reliable printing press is better than to own a mint. Nothing can limit your fortune but the extent of your greed.
There is the story of the Southern Central Pacific, and the same thing took place with relation to this. Here is what is said with relation to the way the Central Southern Pacific dealt with politics and parties:
This great political machine was much more efficient than Tammany's or any other machine that ever existed, because it was non-partisan; it dominated the Democratic organization as easily as the Republican. Political manipulation is reduced coldly to the exact principles of science and business. It made politics a matter of scientific corruption and perfect organization, and by this means it secured astonishing results.
Here is a duplication of it. And it is because I say the people ought t-o know the facts that I have led my hon. friend the Solicitor General into the discussion that is now taking place. I am delighted to

have had that discussion because it accentuates the argument I desire to make. The hon. gentleman says such and so is the fact; I say the record says that the facts are such and so. He says the records should be read in the light of knowledge which he possesses; I say they should be read as they are. He has information that I have not; he knows what is in the minds of these men and what took place; I do not. I read the records in the cases referred to to show that not one dollar ever went back to the company. On the contrary the records show that every dollar received from the sal^ of terminals, telegraphs and express companies went to the people who owned them, and so far as the records before this Parliament are concerned the owners were Messrs. Mackenzie and Mann. Therefore, I ask before we enter upon so hazardous a policy, before we undertake so vast an enterprise, before we stand responsible for such enormous liabilities, this country should have a Parliamentary Committee or a Royal Commission to investigate this enterprise from its inception, in order that the Solicitor General may know, in order that I may know, in order that every man and woman in Canada, the taxpayers who will bear the burden of these rates, may know, exactly what the facts are in connection with this nefarious undertaking. That is what 1 ask, and that is what I demand. Would anybody ask more; should anybody ask less? A man would be unfaithful to his trust as a member of this Parliament to ask less, and I ask no less than that. What about all these figures that run up into the hundreds of millions, which are now made the subject of cavil and thrown aside as though they were baubles, but which represent real money that must some day be paid by the people of this country? I ask that you and I; that the man in the street, the business man and every man in Canada shall know the facts about this enterprise. If gentlemen can stand out in the broad light of day and show these men to be the paragons of virtue and angelic perfection that they say they are, I shall be pleased and the people of the country will be pleased, but all I can say is that you will find it hard to make the public believe it. I am delighted that the discussion of this matter has made it possible, as it went on from time to time, to develop the point I wanted to make as strongly as I could: that precedent to any action on the part of this Parliament the House should know just how the mattter stands. That is all I ask. The fact that the Soli-
citor General, who has forgotten that independence that characterized him in days gone by and who should be the first man to say that we should have this knowledge; the fact that he possesses information obtained not under oath, compiled by men who are not merely interested and prejudiced but who are interested as no men are interested; the fact that he believes this information to be the truth does not do violence to his reason nor yet to his understanding-it may do violence to his imagination, but not otherwise-the fact that he does believe these things does not detract from his position or from the position of the Government. My hon. friend has asked for suggestions. May I make the suggestion that first of all, before we move a hand permanently to commit ourselves, have an investigation of everything connected with this project, lock, stock and barrel, from the time to two contractors stood upon the banks of the Red river up to the day when they stood upon their terminals in Vancouver and looked upon the blue waters of the Pacific. Seventeen years went by in the United States after the completion of the Southern and Central Pacific lines during which just such discussions took place in legislatures and in parliaments as are now taking place here. During those seventeen years the people were thwarted in their efforts to obtain information and no investigations were held. At last, yielding to the clamour of public opinion, a president issued a commission and that commission of 1887, sitting practically until Huntington died, laid before the people a great mass of evidence, volume after volume-you will find it in the Congressional library-exposing corruption and degradation of public life and the destruction of the morals Of Congress and legislators; disclosing a trail of corruption commencing at the gulf of Mexico, wandering to San Francisco and Sacramento and finding its way to Congress at Washington. Here we have the same state of facts. I am no prophet, but there will arise a race of men in this country who will demand that this Parliament investigate under oath everything connected with this enterprise. Why were these facts not given to us last year? Why were they kept back, if they were true? Why were they not given to us the year before, if they were true? Why were they not given in years gone by, if they were true? Why? Because the alleged facts would not stand the criticism of public opinion. In these days

of hard times, when money is tight, when the	public credit is strained;
when it is convenient to say that we are up against our last resources; when town lots are not selling; when you cannot exploit the whales of the Pacific or the fisheries of the Atlantic; when the natural gas of the prairies can no longer be watered, these two men who have promoted and exploited the natural resources of Canada from the whales of the Pacific to the last thing they could get in the province of Nova Scotia, come here with statements which I challenge; with statements which are not borne out by the records, if the records be true, and which are not shown by their annual reports, if their annual reports be true.
What is the history of the Frisco system? Year after year their books were audited; year after year they showed that two and two made four and that three and two made five, but when the receivers tore it to pieces, when the great audit firm of Price, Waterhouse & Company, trained and skilled men, who knew their business, went down to the bottom of the iniquitous enterprise, they were able to expose to the shareholders of the Frisco system conditions that astounded the public. Men who were thought to be highly respected had degraded their high offices for their own enrichment and aggrandizement, and the people had to suffer. It may not be so here; I (do not know, but I challenge any man in this House to give a straight and complete statement 'of the condition of the affairs of this company. It cannot be done. You may tell me what Sir William Mackenzie tells you or what Sir Donald Mann tells you; I want none of that. I want the truth, under oath, given by men who are trained to ascertain the facts; by men who will lift the lid and get under it. I want the facts shown to the people of Canada before I put the collective credit of our people behind this enterprise.
Am I interested? Do you know, Sir, that over 1500,000,000 of the collected credit of the people has been put behind transportation enterprises in this country during the last few years? I Idisagree with some of my friends that it has been done largely because of the growth and development of eastern Canada. We must have an outlet for our grain and other products. The great seaports of Halifax, St. John and Vancouver and the great ports of Montreal and Toronto must be developed, but must they be developed by the collective credit of the
people of this country, for the purpose of gratifying the boundless ambition of two railroad promoters and gratifying their greed far wealth? It is not yet too late. I would be content with any investigation the Solicitor General would conduct on behalf of the people of this country, through a Royal Commission, whose duty it would be to get the facts; to cross-examine, to riddle out all falsifications and subterfuge. The British Empire Trust Company, which is trustee for nearly all these securities, has Sir William Mackenzie as director. Who gets the underwriting profits? Are all these things to be known, or are they not? Are we to get to the bottom of them, or not? It is not yet too late. Hon. gentlemen on this side, when in opposition, criticised the Government of my right hon. friend the leader of the Opposition because he was in too great a hurry about the Grand Trunk Pacific. His Minister of Railways raised his voice against the project, saying that the Government was too precipitant. Time has vindicated the prophesy of Andrew GeoTge Blair. Sir, I am not worthy to loose the shoestrings of a man like Blair, but I do say, in all seriousness and solemnity, that it is not yet too late.
I urge upon this House that this Government should pause before we are committed to a proposition involving $300,000,000; before we are made fourth mortgagees in this enterprise; before we are made partners with men whose misrepresentations have brought upon us this iniquity. Sir, we can investigate; we can still save the credit of Canada. All we have to do is to pass a short statute authorizing the Governor in Council to appropriate such a sum of money, not exceeding a sum mentioned, for the purpose of carrying forward the construction work on the lines in which we are interested, the Canadian Northern Atlantic and the Canadian Northern Ontario, for the purpose of paying the contractors; for the purpose of paying the equipment people and of subrogating this country, in right of the Crown, to the position which they as contractors or otherwise, would occupy in respect of this enterprise. If the road went into a receiver's hands, the first question would be: show me the report of the physical condition of the property. What is the physical condition of this property?
What is the physical condition of this property? I suppose the Solicitor General

has been told that the physical condition of this property is so splendid that it challenges the admiration of every traveller. All I know is that last spring in Winnipeg there sat a board to determine what price should be paid to the men who worked on the road, and they had to get more pay because the road was so bad that it took longer to get between points than on other roads. I have perused a tail-end report of every mile of that system, not made by a Canadian Pacific Railway man nor by any man connected with that company and that tail-end report shows that the road from Port Arthur to Yellowhead Pass is a system unworthy in some respects of being called a railway-dirt ballast, dirt track, poor ties, mostly fifty-six and sixty-pound steel, sharp curves, heavy grades, everything that goes to constitute what is called a minimum cost road. What would happen if you went to a receiver and asked for a receiver's certificate for $45,000,000? He would say:	Show
me your physical reports and show me your financial position, and I shall give the certificate. But no such .thing is done here; it is go in blindly-


Arthur Meighen: If the hon. member will look on the files of the Railway Department at Ottawa he will see official reports there to the effect that his report is absolutely false.


Richard Bedford Bennett: In answer to that I would ask my hon. friend if the train known as the Saskatoon express has not been described by an eminent engineer as one which is unsafe to carry human traffic.


Arthur Meighen: I cannot tell you what engineers say.


Richard Bedford Bennett: My hon. friend does not know what engineers say, and I do. I am not an engineer myself but I do say that the track of the Canadian Northern railway-and I have travelled over miles of it for the purpose of seeing myself, and I speak whereof I know-may be described as unfit to carry human traffic. It will carry freight traffic. It is a matter of record that the road was so bad that it had to pay larger wages to its employees.


Arthur Meighen: The road carried three million people last year without one being hurt.


Richard Bedford Bennett: Quite so, I quite agree that it carried three million people, because they had no other means by which they could get transported. My

learned friend says that none of them were hurt; but I know that .at least one man consulted me who had been hurt during the last year. Perhaps that was overlooked in preparing the report, as many other things were. The road carries a large amount of freight traffic, because it is the only avenue by which'this freight could be carried. I may be wrong as to that; I do not know, but I do say that this country has the right to know. That is all I ask, and I plead with the Government to appoint a commission or a committee that will enable this House to know, first, the physical condition of this property, and, second, the financial position of the company, in order that we may thoroughly understand the enterprise we are getting behind and what we are putting money into. I make a further .suggestion before I deal shortly with the agreement. If we cannot appoint a commission, do not let us permit this money in any way to be controlled or spent by the men responsible for the chaos, the men who have brought about this condition. Mackenzie, Mann and Company, either as contractors or railroad builders, were the men who have made this condition possible. Now, if we are going to lend these men money, let us be receivers in every sense of the term. My friend says we are going to put this money in the bank and keep it ' to the credit of the Receiver General, and will have progress certificates. He explained how it was to be dealt with. I come from the province of Alberta. That province guaranteed bonds on one of the lines of this company from Edmonton to Calgary. The money was placed to the credit of the provincial treasurer? It was to be paid out on progress certificates. But this I know, the records shows that in July, 1912, every dollar but one had been paid out-and the first train came into Calgary in February, 1914. That is your safeguard. What are you going to do here, if these men receive more money than they are entitled to? If the road was to be completed before the last dollar of the proceeds of guaranteed securities was paid out, how is it that there still remains so much uncompleted line and the money is all gone, for practically that is what it amounted to in the provinces? As far as the Dominion is concerned, these progress estimates indicate that the line is-three-quarters completed, some have said two-thirds completed. I do lay down this principle of law, that no receiver or court

would ever permit the organization which had brought about the chaos to have the money and to get a receiver's certificate. What are you going to do with this money? Are you going to pay the contractors? Are you going to pay the notes that are out? The notes of Mackenzie and Mann are out for equipment and cars. Are they going to he paid? I would like to know, and there are a lot of people in Canada who would like to know this. Some people say that this agreement means that that is a floating debt and will not be paid. Is that true? The Imperial Rolling Stock Company has the rolling stock, it has its brass tag on it. The bonds have been sold, the money has gone to the Canadian Northern railway and the people who built the equipment are looking to Bill and Dan for the money. That is putting it roughly, but that is the fact. Is this money to go for that purpose? Is it to go to pay the contractors or the sub-contractors? I understood my hon. friend to say that the subcontractors would be paid, that the men who built the Canadian Northern Railway Ontario and the Canadian Northern Railway Quebec were to be paid for that work. Is this to be paid out of the $45,000,000? Then I find there are large sums for equipment. Is this equipment to be purchased by these men in any way they like and are they to be allowed to pay for the equipment on long term bonds or not Are they to be permitted to buy from the Imperial Rolling Stock Company in the same way? Are they to roll up obligations that some day will have to be met? I would like to know, you would like to know, Mr. Speaker, this House would like to know what are the safeguards as to what these men are to do and what we are to do. It is all right to say that you will put the money to the credit of the Receiver General. We all know that once you get that money in there the men running the road are the men who will create the obligations and, they creating the obligations, your business will be to pay. We know what history is on that point.
My third suggestion is: Eliminate Mackenzie and Mann from this road. That is very drastic you say. I say that if a contractor had charge of an enterprise and he ran it into difficulties and into an insolvent condition, you would not keep him on the job and pay him the money. I ask that these men foe eliminated. I ask that this item, the whole $100,000,000, if you have arrived at that, be pooled in the hands of a 237
trust company, that a man who has had experience in operating Government railroads in Australia or some other place, a man like Sir Thomas Tait be put in charge of that enterprise to operate it, because Mackenzie and Mann are no more operating officials than children on the street. They are contractors pure and simple. They have not the ability, the capacity, or the men about them to operate a railway. With two or three exceptions, they have no operating officials. I ask that these men be eliminated from the enterprise and that it be put in the hands of men who operate railroads and understand their operation, that the stock be put in the hands of a trust company and that we operate the road as a receiver until we ascertain where we are at and until the Government can determine Whether or not it is wise, on behalf of the pople of Canada, to take this road over. I do not think that is an unreasonable thing to ask.
At six o'clock the House took recess.
The House resumed at eight o'clock.


Richard Bedford Bennett: When the House rose at six o'clock I was drawing attention to the fact that I had been diverted from the main portion of my argument by a discussion as to whether or not Mackenzie, Mann & Company, Limited, or the individual parties constituting that firm had been beneficiaries from this railway company. I had also asked what had become of the surplus earnings of this company as shown by their last annual report. The Solicitor General had directed attention tc the fact that he was privately advised that the report issued by this company was false. I am quite content to leave it at that, and let it be known to the country, and the shareholders in England who have invested largely in this company, that the reports issued from time to time over the signature of	its president	and
third vice-president were absolutely and ineontrovertibly false, and that a surplus which was said to oe on hand was not on hand.	It 'had been disbursed and not shown. The statements of that company should show what the disbursements are, and if the money has been disbursed and not shown, obviously those reports are untrue and misleading. I am content it should be said the report^ are untrue and misleading, and that private information given to the members of this Government or a law officer of the Crown establishes that fact. I leave my hon.



friend the Solicitor General with that *dilemma. There is another point to which I wish to direct attention, and which I think conclusively establishes the observation I have just made. If this House has before it the report of the Canadian Northern Railway Company for the year ending 1910, it will find published there a statement showing that among the securities1 which the company has acquired is $483,000 worth of Canadian Northern Prairie Lands Company stock. Obviously a company cannot Ibe very hard up that goes out and invests in land company stock, and it is rather interesting to know just how the Canadian Northern Prairie Lands Company came into existence. We heard much last evening of the history of the land grants to the Canadian Northern railway. The hon. member for Kingston (Mr. Nickle) made that quite clear. But if any gentleman here is curious and will go to the department at Toronto he will find that on the 23rd March, 1910, the Canadian Northern Prairie Lands Company, Limited, filed a return showing that it had a capital of $5,000,000 in X>ne million shares of $5 each, 300,000 shares of which had been subscribed for and allotted in payment of 500,000 acres of land, acquired oilt of the Canadian Northern subsidy lands. This company is referred to in the London Stock Exchange Year Book for 1914 under the proper heading, which indicates that there was one and a half million of capital stock issued, to this company and that the 500,000 acres were acquired at $3 an acie. The report filed at Toronto states that the Canadian Northern Prairie Lands Company, Limited, was organized by a number of young men in the office of the general solicitor of the company, including Gowans, Lovell, Mitchell, Annesley and a few other employees.


Arthur Meighen: Would the hon. gentleman oblige me by repeating what he said about me before I came in?


Richard Bedford Bennett: I would really like to
oblige the hon. gentleman, but that is quite impossible.	[DOT]


Arthur Meighen: Is the hon. gentleman
afraid to repeat it?


Richard Bedford Bennett: If the gramaphone of
Mackenzie and Mann thinks that I consider that as other than as an insulting remark, he is mistaken. I should like him to understand that I am perfectly prepared that he should hear anything I have said,

but obviously I cannot take up the time of the House in repeating something he did not hear. If he was not here it is not my fault, but if he thinks I fear to make any statement before him he misjudges his man. The statement I made was this: that among the assets of the Canadian Northern Railway Company there will be found to be $483,000 worth of Canadian Northern Prairie Lands Company stock.


Arthur Meighen: I was not referring to
that. I understand the hon. gentleman stated that I had said some report was false.


Richard Bedford Bennett: I made no such statement. I do not propose to be diverted from my argument again this evening, as is apparently the desire of the Solicitor General, but I am ready to answer any fair question he may ask. What I said was this:	If the Canadian Northern Railway
Company as a company over the signature of its president and its third vice-president states that it makes certain disbursements, and certain only, for a year, and that at the end of the year it had a surplus of $6,000,000 and now the Solicitor General comes in and says that he knows from private information furnished from private records-which nobody in this country will believe until they are verified by oath-that that surplus has been disbursed, which is not shown in the record over the signature of the president and third vice-president, I say that I prefer the record to the words whispered in the ear of the Solicitor General. I prefer to take the record sent to the shareholders in England who have invested their money in this company and it ill becomes a law officer of the Crown to throw discredit on that record.


Arthur Meighen: I do not throw discredit on it; I believe it is true.


Richard Bedford Bennett: A report that does not show a disbursement that the hon. gentleman says was made, is untrue. What would the hon. gentleman think of his book-keeper whose accounts showed that at the end of the year he had a surplus of $1,000 and who said when asked to show that $1,000: I have made a disbursement of that money; and when asked to show the entry for the disbursement, said: I did not put it down in the books. I wonder how long he would keep that book-keeper in his employ.
I was pointing out that the report of the Canadian Northern Railway Company

for 1910-1911 shows that the railway owns $483,393.55 worth of Canadian Northern Prairie Lands stock. The report says that the Canadian Northern Railway Company bought that stock. How much did it cost. I turn to the record on file at Toronto and I find that the par value of a share of that stock is $5. The land company got 500,000 acres of subsidy land in consideration of $1,500,000 fully paid up shares. But the shares did not go to the railway company. Who did get them? The names of at least some of the gentlemen interested in the Prairie Lands Company will remind the Solicitor General of his new-found friends. For instance, Brouse Mitchell, 1,000 shares; D. B. Hanna, 902 shares; A. J. Mitchell, 540 shares; L. W. Mitchell, 660 shares; W. H. Moore, 600 shares; G. G. Ruel, 500 shares; A. -D. McRea, Winnipeg, 700 shares; Noel Marshall, 750 shares; A. J. Hills, 752 shares, Angus Sinclair, Parry Sound, 730 shares; Hugh Sutherland, Winnipeg, 902 shares; Mackenzie & Mann, 105,777 shares; Canadian Northern Railway, 38,986 shares. It is apparent from the records that the land company was incorporated on the 30th May, 1905. The report of the Canadian Northern Railway Company for the year ending 30th June, 1905, shows that it owned no stock in this land company. For the year ending 30th June, 1906, the report shows that it owned no stock in the land company. For the year ending 30th June, 1907, the report shows that it owned no stock in the land company. For the year ending 30th June, 1908, the report shows that the company owned stock in the land company of the value of $492,006.61. That report at page 8 shows that perpetual consolidated debenture stock of the par value of $2,000,000 was sold during the year and that the proceeds as far as received were applied to the general purposes of the railway ' and the purchase of securities of companies whose business is incidental to the traffic of the railway.' In the report for the year ending 30xh June, 1909, the shares in the land company are shown to be valued at $483,393.55. For the years 1910 and 1911 the same. In the report filed at Toronto it is shown that at this period of time the Canadian Northern Railway Company held 38,986 shares. The par value of the shares is $5, which would show that the shares were worth at par $194,930. From the records it is clear that these shares were acquired at least three years after the incorporation of the land
2374	:.'Wa8?
company and their apparent cost to the railway was over $12 per share. The railway company is hard up but it can afford to buy shares in.the land company at $12, and from whom? Poor insolvent company, dependent upon the hand-out of the people of Canada! Yet for the purpose of enriching the coffers of Mackenzie, Mann and Company, they can their own shares at $12. I have the report of the Canadian Northern Prairie Lands Company, Limited, underneath my hand which shows that its shares are worth $13.70 apiece. A few years afterwards these shares were worth $13.70, having gone from $5, and the moment these men get hard up they sell to this rich Can-au-an Northern Railway Company 38,896 shares and get $483,000.


An hon. MEMBER:: When was that?


Richard Bedford Bennett: On March 23, 1910. What did these shares cost Mackenzie and Mann? They were issued to them for what? They manipulated 500,000 acres at $3 an acre. The reports they put in show that the land they bought from themselves cost $3 an acre in addition to the 100,000 acres they took for themselves first for nothing. Then, when they are hard up, when money is a little tight, they say: We will go to the milch cow, the Canadian Northern Railway Company, and sell to them stock for $12.50 a share, and that company paid them, according to this report, $483,000. In the light of that transaction, which is proved to the hilt, will any man for a single moment believe that these wizards of finance handled all this money all these years for nothing, that the Imperial Rolling Stock Company handled $32,000,000 merely for the sake of drawing their cheques? Go to the people of the country and tell them that these noble patriots, these splendid philanthropists, handled $200,000,000 for nothing, just for the satisfaction of the thing, just for the sake of writing their names and signing their cheques, and ask them to believe such a story. We may presume upon the credulity of the people to a certain extent, but if there is any man so credulous as to believe that statement he is unworthy to direct the law operations of the Crown. Now I shall leave that transaction.
I wish to say a word more about the Canadian Northern Express Company. The chief railway commissioner reduced the rates of that company because they showed an operating surplus of $152,000. They had padded the accounts in order to make this showing in anticipation of a bond

issue, and next year, when the surplus had been reduced to $48,000, Mr. Hanna said:	That is all right. Certainly, if you
pad your earnings up to $152,000 and then consent to a reduction to $48,000, you are easily satisfied. Then they tell us that these people made no money out of their telegraphs and they want the people of the country to believe it. These operations are all in line with the prairie land transaction -something for nothing; that is the motto, and the House and the country are asked to believe that these men handled these enormous sums of money day after day for nothing. It is the height of insanity to presume that the people of the country, with all their credulity, will, for a single moment, believe it. Now I have finished that phase of the matter.
These gentlemen, they say, are illy paid. They say that they have received nothing. They were contractors for the railway and they built it. At what price were they contractors? The Solicitor General says that they were not contractors in the proper sense of the term. Either they were or they were not. To whom were the cheques paid for the services .rendered? They drew the subsidies and they received them in the capacity of contractors or they had no right to them at all. It follows that these people fixed the prices which they themselves would get for their work. I do not know as to this, but I will give the Solicitor General and this House the benefit of some information I have and it is that eminent engineers, who worked for them and who are no longer in their employ, tell me that the prices that were given for handling rock and earth on the line between Kamloops and Victoria were forty per cent more than people would have put them at if they had been asked to tender.


Arthur Meighen: Will the hon. gentleman-


Richard Bedford Bennett: I will not be diverted from my argument by the impertinent interruptions of this young man. I listened to his speech and I listened to it with care.


Mr. SPEAKER:: Order.


Some hon. MEMBERS:: Order, order.


Thomas Simpson Sproule: The expression 'impertinent interruptions ' is scarcely permissible in parliamentary debate.


Richard Bedford Bennett: If the use of the word
' impertinent ' is unjustified I certainly withdraw it. But, having listened to the speech of the Solicitor General with care and hav-

ing asked no questions, I do not propose that the thread of my argument, as is obviously his intention, shall be broken merely by the hon. gentleman standing ;n his place and repeating the record that he has received from the gramophone.


Arthur Meighen: It is official from the
Department of Railways and Canals.


Richard Bedford Bennett: I know it is official from the Department of Railways and Canals, but one of the most eminent engineers in charge of this work wrote me and told me personally that the work cost 40 per cent more than it could have been done for by tender and contract. Name a single contractor who was asked to tender for tills work. If tenders had been called for, this work would not have been in the position it is.
The same question arises too. in connection with the marketing and sale of these securities. I do not care as to what may be the observation of somebody in the Railway Department; the Railway Department work on the theory that the total cost will be so much and that so much has been done. That may be true, but when it comes down to taking section after section I say, lay upon the table of the House the price per yard that was paid for that work, then ask for competitive bids and let the people of Canada say whether the prices were fair or not. It is stated that these two men, in their capacity of contractors, have taken from themselves in their capacity as owners sums of money from 25 to 40 per cent more than the amount for which the work could have been done. We have the right to know whether this is true or not. I demand an inquiry under oath that we may know. You *may talk till kingdom come and you may say that somebody whispers this or that somebody tells you that, that the record shows this or the record shows that, but there is one record, the record that the people would like to have, and that is the record resulting from the opportunity of examining these men before a competent Canadian tribunal and finding out from them what the facts are. Since when has it been a crime to seek for information? Since when has it been a crime foT people to want to know what the facts are? Since when are the facts to be regarded as statements made by one of the parties to the issue? Has it come to this, in this free country, that the men who are on trial are to be believed though not on oath and that nobody else is to have a chance to say anything? I prefer to take the attitude of a

common layman, a highly cultured gentleman, the hon. member for Montreal, St. Antoine (Mr. Ames) who was much more guarded in his statements this afternoon. He considered the evidence an)d found the contractors Mackenzie and Mann ' guilty.'
I say to my hon. friend the Solicitor General, do not, in the enthusiasm of your desire to serve the Government, be carried away in the defence of men whose nefarious transactions have made this Dominion a byword and the trail of whose corruptions extends from Victoria to Halifax.
We have been told that the stock of this company had been reduced by $45,000,000, but I shall show this House that such a statement is obviously untrue and absolutely false according to the records which have been brought down. If you will turn to page 34 of the blue book which has been distributed you will find that the sum total of the capitalization of the Canadian Northern Railway Company and of its auxiliaries was $145,000,000 and of that $145,000,000 there is already resting in the treasury of the Canadian Northern Company over $45,000,000 leaving outstanding a sum total of capitalization for the Canadian Northern railway and its subsidiaries and allied companies of $100,000,000. Of that $100,000,000 you will observe that $77,000,000 is now issued stock of the Canadian Northern proper, so that as I have already said, $23,000,000 of new stock is to be issued to enable the parent company to acquire and hold in its treasury $23,000,000 of useless watered stock of subsidiary and allied companies.
Who would not make such a deal? Let us look at the value of the $145,000,000. I started with the Bay of Quinte railway, and I pointed out, according to Poor's Railway Manual-and I gave the page to you this afternoon and I will repeat it- at page 1657, that road has had a deficit and has not paid its fixed charges since 1908. Yet these men have the hardihood and the effrontery to come to this Parliament and say that part of the floating liabilities of the Canadian Northern system is this $173,114.58 of the Bay of Quinte Railway Company, which represents the sum total of its accumulated deficits. This stock, which is subject to foreclosure and to be absolutely wiped out because the road is in default and not paying its fixed charges, is exchanged for over a million dollars of Canadian Northern stock. The voice is the voice of the Government, but the hand is the hand of Zebulon. That is all I can say. It is so obvious, so plain that he who runs may read. The idea of
saying that the stock of a company, which is in default under its securities, which may be foreclosed to-morrow and over which a receiver may be appointed, should be exchanged for over a million dollars of Canadian Northern stock is so absurd that it is surprising that a man would come to Parliament and ask any one to take it. Why? Because on the million dollars you ask the East and the West, and more particularly the West, to pay freight rates. If the evidence of Mr. Muller given before the Board of Railway Commissioners is correct, then that stock should earn $60,000 per annum, which means that that amount would have to be taken out of the farmers and grain growers of western Canada to pay interest as a fixed charge. Is it a reasonable thing to ask the people of Canada to pay $60,000 per annum on $1,395,000 of water in the Bay of Quinte railway, a railway which should be in the hands of a receiver and which has an accumulated deficit of $173,114.58?
We go to the next one-the Canadian Northern Alberta, alf page 1673 of Poor's Railway Manual. You will see that the issued capital stock is $3,000,000. Did it cost one dollar? No; it cost the price of lithographing the plate and grinding it off on the printing press. As I said this afternoon of the authors of the Canadian Northern system: Your greed is the only limit to your wealth, if you have a printing press a contracting and a railway company. My hon. friend from Edmonton (Mr. Oliver), who has known what it was in times past to vote against his party, knows that we in the West will have to pay, according to the economic theories that now prevail upon that $3,000,000 for all time a minimum of six per cent or $180,000 each year. This water is exchanged now, par for par, dollar for dollar, for Canadian Northern stock.
Then we go to the next-the Canadian Northern Western Railway Company. My hon. friend from Edmonton will bear me out-my hon. friend from Lethbridge (Mr. Buchanan) knows that it was incorporated against our protest with a fictitious capital -a capital that represents all water. At the present time this railway company is building branch lines in the province of Alberta and has built a completed line to the Brazeau coal fields, which are controlled by a German syndicate and our friends Mackenzie and Mann. It is right and proper and fitting that these gentlemen should have interests in coal mines and other things as well. When this House

was told that these men were being fairly compensated! by common stock, because they had devoted their time and energies principally to the Canadian Northern railway, surely we overlooked the London Stock Exchange year book for 1914. There is nothing in which these gentlemen do not find scope for their activities or for the development of their splendid exploiting genius. As I said this afternoon, the fishes in the sea, the cattle on the hills, the timber on the plains, the splendid prairies, all pay toll to them, because whenever they saw something that seemed to be worth something, that would pay something; that it seemed possible to exploit with profit, these gentlemen were there for the purpose of exploiting it. I quote once more from the history of great railways to show the historical parallel:
* Year after year the interests of these men spread in many directions. They went into banking, politics, legislation, land-owning, navigation and newspapers; and with particularly unfortunate results to the public, went into street railroads. They increased their investments and power; and turned their profits made from one greedy enterprise into power to secure more greedy enterprises to gain more profits and more power.'
Those are not my words; they are the words of a great author describing conditions in the United States during and after the construction of the Central and Southern Pacific. Could words more aptly describe what has happened in this country?
Not content with putting the $3,000,000 of water into the Canadian Northern Alberta, they launched into the enterprise known as the Canadian Northern Western in connection with the Brazeau coal fields. They were able to induce this year, by that insidious* lobbying to which I shall again refer before I resume my seat, the legislature of the province of Alberta to guarantee the bonds of the Canadian Northern Western Railway Company to the Brazeau coal fields for $25,000 per mile at four and a half per cent, a completed road, after the bonds of this road guaranteed by the Canadian Northern had not been sold. It is in this enterprise, provincial in its character, local in its nature, intended for one purpose alone, that I am asked to see the people of Canada become partners-and I protest.
We go to the next line-the Canadian Northern Ontario Railway Company, dealt with in Poor's Railway Manual at page 1673. As this road is only in the construction stage, its inability to meet the fixed charges is what one might naturally expect; and during its construction, interest accounts are charged up against the 
proceeds of the bonds. Next year, when that road is completed, the fixed charges on it must be met. The Canadian Northern Ontario has a sweet story behind it. Let me tell you what the capital of that company was. According to Poor's Manual at page 1673, when this Parliament rose in 1912, the capital issued stock of the Canadian Northern Ontario was $250,000 of water. I will tell you how it was done: The directors of Mackenzie & Mann, Ltd., meet together as railway directors and say: We will give you all the stock and all the bonds, if you will build the road. Sir William Mackenzie and Sir Donald Mann and Mr. Zebulon A. Lash said: We will make a little deal with ourselves as contractors, and you will have all the stock and all the bonds and all the monies if you will build the road. When you go to Parliament, there is no contract, you are merely financial agents, looking for money. So they issued the capital. Here is Poor's Railway Manual, page 1674, showing Canadian Northern Ontario's capital account in 1912 as $250,000, all paid up; but after last session, learning a lesson taught by the Parliament of Canada, they rushed to the printing press, and what do you think the capital is to-night-$10,000,000. They added Ofnly '$9,750,000,	because
the owners of the printing press and the contracting company and the railway company-their greed being the only limit to their wealth-agreed to add $9,750,000 to the capital stock. Only $9,750,000 of	the ocean let in-and
Lake Superior still boundless and the sluice gates still to be opened. Mr. Speaker, for this $10,000,000 of water, my hon. friend the Solicitor General has reduced the stock of the Canadian Northern railway by giving them $10,000,000 for this stock. Six per cent on $10,000,000 is $600,000, the amount that the people of the prairies must pay every year in freight rates, in order to afford opportunity to show the matchless powers of the printing press when properly oiled and directed.
I proceed to the next company that is to be reduced in circumstances, the Canadian Northern Quebec Company. I turn to Poor's Manual for this year, page 1674, and I find that that beautiful aggregation has a deficit. Its capital in 1913 was $9,550,000. Last year it had a deficit of $189,136; the year before, a. deficit of $124,336, and the year before that, a deficit of $268,963. And so, nearly $10,000,000 of stock with the deficits I have given is to be given


MA&quot;S 14, 1914
[Stage Direction]
life, force and vitality by exchange for $10,000,000 of Canadian Northern railway stock. The farmers of the West must earn $600,000 a year more to pay for the exchange. I find also that the Canadian Northern Quebec Railway Company has a floating liability of a million and a quarter -to be exact $1,250,490.67, representing the accumulated deficits of the road, and the people of Canada are to pay to get a chance to have more deficits. The people of Canada are asked to exchange that for Canadian Northern railway stock-and you are told you have reduced the stock.
Then we come to the next one-the Canadian Northern Railway Express Company, Limited. I do not know what it earned last year; I have not been honoured with a report. But I know that the Canadian Northern Transfer Company, the next company named belongs to the Canadian Northern Railway Express Company. Then, we come to the Canadian Northern Railway Steamships, Limited. The steamships are bonded for large sums and are capitalized for large sums, and my hon. friend says that they all belong to the Canadian Northern railway. Certainly, that was the intention at the start. He might make the capital stock $100,000,000 as well as what it is because no money passed. I do not know what these boats are worth, but I know what they were offered for. They were built for the MediteTanean trade, and I know that they were offered to two gentlemen who are known to me at very much less than the sum at -which they stand upon the books. I assume that the price of boats has gone up in the meantime, and so we have an explanation as to the capital stock and the guaranteed securities. Of course, the boats are very much improved because they were built for the Mediter-anean traffic and had to be changed for the Atlantic route-I wish to state that in fairness. Then we have the Canadian Northern Railway Telegraph Company, with which I have already dealt. The next is the Canadian Northern Railway System Terminals, Limited.
I do not know anything about that, except that its capital stock does not represent anything in money, it represents the splendid services that these gentlemen have rendered to the state-the state being, of course, the contracting firm of Mackenzie and Mann. Do not confuse the issue when you refer to these stocks and what the Government is going to do; the Government is not doing this for the benefit of individuals, but for the benefit of the state, but the trouble is that while we spell 'state' one way, these men spell it another. Then follow the Lake Superior Terminals Company, Limited, the Irondale, Bancroft and Ottawa Railway Company, the Halifax and South Western Railway Company. If you will take the trouble to refer to Poor's Manuel for this year, page 1748, you will find that the Halifax and South Western, unfortunately, has not been earning very much money. In fact, they showed last year a deficit of $54,000. Well, we in the West are not very particular. Add that company, at a capital, as I observe from the statement before me, of $1,000,000. That is not much. Just exchange that for the Canadian Northern Tailway stock and the people who will pay the freight rates and taxes would not be much bothered and that is all about it. So goes another million-$'60,000 a year in freight rates taken from the people is a mere bagatelle. The Irondale, Bancroft and Ottawa last year showed a small surplus-$3,000. Then we have the Minnesota and Ontario Bridge Company, and the Minnesota and Manitoba Railway Company. At page 1,669 of Poor you will find that that concern has a deficit-not a heavy one, of course, but it just happened to be a deficit. And the capital stock of that road, which hon. members w'ill see from the statement amounted to a considerable sum, is to be handed to us to be exchanged for Canadian Northern stock. Then you have the Marmora Railway and Mining Company, the Mount Royal Tunnel and Terminal Company, Limited, the Quebec and Lake St. John Railway Company, whose deficit is only $152,000-we take them at par. Then there is the Qu'Appelle, Long Lake and Saskatchewan Railway and Steamship Company, with capital stock outstanding of only $201,000, which seems to be fairly reasonable having regard to the importance of the road-much less in proportion than the other companies. But, as a matter of fact the explanation is that they were a little late in getting their hands on it; they bought it as a road established, the stock of which had been issued. The Quebec and Lake St. John has $4,524,000 capital outstanding, some of its bonds are guaranteed by the Canadian Northern railway. Its deficits since 1911 are over $150,000. The fact that it is subject to the appointment of a receiver is a matter of supreme
COMMOLe
indifference. Then there is the St. Boniface and Western Land Company and the Winnipeg Land Company, Limited. But there is also the Northern Consolidated Holding Company. You gentlemen who read the daily press of Montreal will remember a pro-spectus published last year with regard to this company. It had the backing of the names of enterprising bankers in Boston and New York. The prospectus is a rather interesting document. I have a copy of it before me, but have not time to read it all. It is spoken of as one of the Mackenzie and Mann undertakings. I observed in the press yesterday or the day before, that this enterprise, is in a rather precarious position and, in fact, they propose to appoint a receiver. Here is the prospectus that appeared in the Montreal papers last year, in which a well known brokerage firm offered the securities of this company for sale:
The Canadian Northern Quebec railway whose lines afford the Canadian Northern railway with access to Montreal and Quebec, and ultimately to the Maritime provinces, is one of the most important units of the system. atFilehy°Perties	controlled and dominated by the Canadian Northern railway form an estate so extensive that the outlines of this Xf*nt!c corporation can be but faintly eompre-" a"d ltS fUtUre can °n'y visualized imagination	°f a considerable degree of
I should think that aptly described th situation. And we are taking that con pany, too, and of course we are doing little something in the way of issuing stoc for that. We are getting all these, and, i: exchange, you are giving Canadian North ern railway stock, whose future th most brilliant flight of imagination ca: hardly picture.
[DOT] ^ , ^ave	with the list of companie
in the first and second schedule. Fo these things, and the present $77,000,000 o issued Canadian Northern capital there i; to be issued $100,000,000 in Canadiai Northern stock. Hot/ much of that is n< good? How much of it is absolutely use less? Remembering, as I hope you do, Sir that at the present time $45,000,000 of thii [DOT]water is held by the Canadian Northern we propose to take the other $100,000,001 of these companies-1 have pointed out tha while all of it is watered, most of it is nov useless-and we are going to put behind i the security of this great Dominion, th<
,°L nMs great Dominion th< name of the Crown in right of all the peopl< of Canada, through a fourth mortgage, anc give the stock strength, life and vitality. ] 
venture to think that when the people of Canada understand that they will pause; I venture to think that the people whom I have the honour to represent, the people of western Canada, will hesitate; they will want to know what this $100,000,000 means, and I want to know. I am here only as trustee for the many thousand people whom I represent, and they demand of me what i mean by standing in Parliament and giving to $100,000,000 of water a value when it possesses none? I want the answer, bat I am unable to get it.
So much for the $100,000,000; so much for the reduction in the capital stock. I challenge any man in this House, in the face of these documents and in the face of the reports published in Poor's Railroad Manual, to say that we have reduced the capital stock of the Canadian Northern. On the contrary, what we have done I have just described. Sessional paper No. 269 c, which I think, is not printed, shows that the floating debt of the Canadian Northern Railway Company anu other allied companies amounts to over $10,000,000. The identities of these companies are to be preserved; their corporate existence is to be assured, but there is to be substituted for their stock-not, mark you, a substitution in the sense that there is to be an exchange, but the purchase price to be paid in respect of that stock by the treasury of the Canadian Northern railway is the difference between $77,000,000 and $100,000,000, $23,000,000. But that is not all. Did you ever hear tell of five per cent income charge convertible bonds? The genius of these men as financiers I do not desire to underestimate. There is no scheme known to the wit of man; there is no device that ever financial acumen knew of which they have not resorted fo. I desire to pay tribute to the colossal brain and intellect that is behind it all: that there is not in this great Dominion a man with the intellect, the keen perception and the financial acumen of Mr. Z. A. Lash. But his great powers of intellect and mind and his great legal knowledge are used for this corporation's advancement at the expense of the people of this country. And that is his business, mark you, but his viewpoint is constantly the viewpoint of a man who acts for the company of which he is a director, for the interests which he serves and serves so well. He has been able to create schemes and systems that almost, but not quite, dazzle the intellect, confuse the mind and prevent their being understood. These five per cent convertible

bonds that were issued from time to time amounted to $25,000,000. The first issue was $7,500,000; the second issue was $7,500,000 and the next was $10,000,000. When the first block was put on the London market, they sold at less than par. When the next block was put on the London market, they sold for less than par. When the last block was placed on the London market, by a clever system of financing indicated in a special letter which was sent to a syndicate of which the British Empire Trust Company was a part, of which Mr. Horne Payne is the managing director and of which Sir William Mackenzie is also a director; the British Empire Trust Company and a few men in high finance in London conceived the possibility of taking an option from the first upon this convertible stock in order that they might be able to sell it at more than par. And so, according to the prospectus I have under my hand under which these bonds were launched upon the London market, they w?ere placed at 106 and the premium amounted to $600,000, of which $250,000 only found its way into the coffers of the Canadian Northern. At least, the report says so; perhaps everything is not told in the report, but it says that that is all the railways put in. They issued a prospectus in which they stated to the people who invested, that this rioad would soon he another Canadian Pacific and the English investors bought at 106 these convertible certificates, payins a premium of $600,000. When they issued the trust deed under which these bonds were secured, the capital stock of the company was only $55,000,000. I commend the attention of the House to this paragraph in exhibit No. 269a, the trust deed for the five per cent convertible stock. These are the words:
And whereas the company represents that the capital stock of the company is now $70,000,000, divided into shares of common stock of $100 each, of which $55,000,000 has been issued and is outstanding and fully paid up.
$70,000,000 authorized, $55,000,000 outstanding and income certificates tobeissued amounting to $15,000,000. It was necessary, as these were convertible, to put into the hands of the trustees $15,000,000 worth of stock. It is stated, as I pointed out, in the prospectus that as this company's stock in the first instance had not been increased and was only $55,000,000, it would be necessary to increase the capital to $70,000,000. . They increased the capital; they put the $15,000,000 up and now they want us to do it over again, because in this
agreement the right is reserved to this company to increase its capital to another $25,000,000. My friend the junior member for Halifax (Mr. Maclean) yesterday directed attention to that point. So not only was the capital increased from $55,000,000 to $70,000,000 between June 30,. 1909, and June 30, 1910; not only was there $15,000,000 not issued on May 6, 1910, the date of the trust deed, but the $15,000,000 having been deposited for the purpose which I have stated, it looks to be an easy chance to do the people again, and so we take the right to add another $25,000,000 to the capital whereby the capital becomes $125,000,000 although, according to the trust deed, $15,000,000 of that has already been taken care of. But Sir William Mackenzie and Sir Donald Mann say: oh, no, we did not take care of that; all we did was this: we put our stock up with the trustees only in the meantime and until the opportune time came to change it for treasury stock. Now is the opportune time, they say. Evidently they believe in the old doctrine: 'now is the appointed time.'
The hon. Solicitor General told us, as did other members who spoke on the subject, and as did the hon. member for St. Antoine, that we were going to get security upon these various debentures and stocks mentioned in the second part of the second schedule. Why, Sir, we have them now. The company has borrowed all the money it could upon them by debenture stock issues, and these are not redeemable. The stock is irredeemable and perpetual. Why fool us with stories like that?
Why tell us there is equity in something that is mortgaged for all time, perpetual, irredeemable? What does perpetual mean if not irredeemable, for all time? Can they talk about an equity of redemption in a perpetual stock? That is a contradiction of terms, an abuse of language. The fact is that the securities are held in perpetuity by the Trust company for the four per cent perpetual debenture stock and in the prospectus on which they were sold these words appeared:
This stock is perpetual and irredeemable.
Then we pass on to the next point. The agreement has been said to involve absolutely a reduction of stock, and an improvement in our security. There is another thing said about this agreement that I should like to discuss. They say: We are getting forty per cent of the stock of this company and you should 'be satisfied; and we are going to get one director and a right to look at the
[Stage Direction]
books and make an inspection and as my hon. friend besides me says, to have a balance sheet. That is a large concession. According to my appreciation of the Railway Act, railway companies have to render balance sheets anyway, but perhaps I am mistaken. In the facts I have stated as to how this capital is made up, as to how it has been constituted, the people of this country want no such partnership as that for their guarantee. You ask me why. Well, the fact is that one director can do nothing but create trouble. Do you realize that on the railway in Quebec to which I referred the city of Quebec had the right to name a director and the Government has a director on the board of the Grand Trunk Pacific even as the old Government of Canada had on the Grand Trank Board. I have heard of the enormous control exercised over the line. I have heard how he has cut down the cost of construction and reduced the cost of betterments! My hon. friend the ex-Minister of Railways (Mr. Graham) will know what ia stupendous power the Government director on the Grand Trunk Pacific was in connection with that enterprise. There is only one thing for us to do, we must not permit the men who have created this condition to control and dominate and operate this road. One director is to add insult to the injury that has already been done to the Canadian people. I do not want any man representing me, as one citizen of this country, to sit at the board of this company and become a recording machine for a brute majority. What power would he have? He would have tire power to look at the books. According to my understanding of the law, any director may look at the books; and we have an absolute right, through the machinery of the Railway Act, to know about these things. The Government now says that we are going to have the right to look into the books, to inspect them, and to put a director on the board of an enterprise that bias been cursed with incompetency in operation, with inefficiency in upkeep, that is not a railway in a proper sense of the term-and we are to become partners in that and have one nuan on the board and a look in at the books. Why, Sir, it is monstrous, absolutely.
You may say that any man can be destructive in criticism and ask me what I offer against that. That is a fair question.
I offer this: I say that the stock
9 p.m. of that company should not be in the hands either of the Govern-

meni or of these men, that it should be in the hands of a trust company; and I would put a man in charge of the operation and completion of the construction of that road who was a railway man and not a contractor. Is it right that men occupying the dual capacity of owners and contractors should carry forward an enterprise on which they have brought disaster? I ask my hon. friend, would he do it in his business? Is there any man in this House who would do it in his own business? Would any reasonable business man in this House for a single moment entrust the administration of his estate and affairs to a man who had so mismanaged it as to bring about the crisis that now exists? The.first thing you would do would be to remove the incompetent servant or manager. There is a man who left this country and with great distinction administered the Government railways in Australia; that was Sir Thomas Tait. I *would get a man. of that type to administer this road, to give us a report on its physical condition. Let us know where we are at before we start on this toboggan slide that will land us we know not where. Am I not reasonable? I ask you to apply to this matter those intelligent precepts of business that govern every man in his own affairs. I appeal to the business men on each side of the House, to the men of large affairs-and there are men sitting in this House who have administered the affairs of great and vast enterprises, men who have had to do with great business undertakings, men who are the directors and managing directors of vast industrial concerns. These men would not for a moment entrust an insolvent concern in the hands of the bankrupt who had brought about its insolvency. Would the courts? For five of the companies I have named are to-day in a position where a receiver could be appointed and the courts could intervene. These men come to the House and say:	We have floating debts,
we have liabilities which we cannot now readily discharge, but can discharge in a year: But in the meantime we are going to have these men in charge of our property, because we are making it ours, putting ourselves behind it. I ask this Government not to enter upon so perilous an enterprise, so hazardous an undertaking, an undertaking so fraught with disaster to the body politic, so dangerous to the generations that are yet unborn upon our western plains. Let us be trustees for posterity in the proper sense of the term.	Let us
care for the race that comes after us and not damn them and place them in a

position where they cannot help themselves, in a position where they will have excessive fixed charges and heavy freight rates. I ask this House to consider, I ask this Government to pause and consider before entering upon this matter. I do not believe that the calm, astute, reasonable judgment of men of affairs would for a single moment direct them along that channel. The next distinctive feature referred to by my hon. friend this afternoon, and one which has been much relied upon by others, is the power of foreclosure. I wonder where the hon. member for Peterborough (Mr. Burnham) is who places such reliance upon this power. Let us look at it. May I ask you to turn your attention to sections 22, 23 and 24 of the proposed Bill. Let us carefully consider what they mean:
That upon the happening of any event of default and at any time or times while the same shall continue, it shall be lawful for the Governor in Council after such notice to the Canadian Northern as the Governor in Council may direct, to declare to be vacant the offices of the directors of the Canadian Northern, and to appoint a board or boards of directors in lieu thereof.
Is that foreclosure? Oh, no.
Mr. GERMAN:: Semi-ready foreclosure.


Richard Bedford Bennett: It is not even semiready foreclosure. I know that if one man appreciates my position to-night, it is the hon. member for Welland. He knows what it is to stand up on his own side against his own party, and I hope the results will be no more disastrous to me than they were to him. That is not foreclosure, that is taking possession as a receiver. I want to make that clear. In other words the Governor in Council sits down and says: Under the advice of my ministers I wipe out the board of directors and appoint a new board which has supreme control over this system to operate and run it. That is a receivership after the money is spent. Just look at the folly of that provision, so far as we are concerned. If the company, or one of the subsidiary companies, makes default we may take possession. Did you observe from the Teturns I read that twb of these companies have already made default for four years running? Therefore, it follows that the receivership is dhie to-night. We are going to do the nonsensical thing; provide for a contingency in order that these men may get their securities out of hock. That is what it amounts to, when stripped of everything. We are going to put $45,000,000 in their hands to spend and while they are spending it these roads may
continue to run at a deficit. What assurance have you that these roads having made default for four years running are not going to continue to do so? The default then has arisen, the receivership is diue to-night, but we are going to go through the formality in order that they may get their hands on the money, not in a literal sense you know, but in order that they may direct, order more rolling stock, make new contracts, Ibuiid more roads at no profit! No, Sir, in order that the boundless ambition and greed of these men may be satisfied, that is all. Let us go a step further. The receivership being due and the receiver appointed, what is the next step? It has been sent broadcast throughout Canada that this railway can be taken possession of and these men put out of business. Here is something I want this House to please attend to. I beseech hon. gentlemen with all the power I have to look at clause 24:
That if authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe, at any time while any event of default shall exist and be continuing, by order declare the equity of redemption of the Canadian Northern and of all other persons whomsoever in the mortgaged premises to be foreclosed, and thereupon the equity of redemption of the Canadian Northern (and of such other persons) in the mortgaged premises and every part thereof shall he and become absolutely barred and foreclosed.
They talk about the slow machinery of the courts, hut look at this:	' That if
authorized by the Parliament of Canada,' You have to come back to Parliament to foreclose. To foreclose what? About $60,000,000 of stock outstanding in the hands of Mackenzie and Mann. Our $40,000,000 is there too, and the $25,000,000 of convertible securities, which may not be converted, are also there. We are going to foreclose our interest, but we have to come back to Parliament to do it. Mr. Speaker, those loyal devoted Canadians who believe that democracy's mission is not fulfilled, and that popular government is upon trial, know what that means-a long protracted lobby as to how much we are going to pay to get rid of Mackenzie and Mann. Do not you think you see that lobby, do not you think you see that session of Parliament and the corridors black with the lobbyists moving to and fro, trying to see that the Government does not foreclose unless it pays this much or that much. Is that the way we are 'going to deal with this matter? What about your unpaid contractors then-and these men are still free to contract. What about

the unpaid labourers then; and the unpaid equipment men? This company, and these men, are still free to run into debt, still free to create further obligations, to pledge the credit of the company, and they come to us when this Parliament is asked to authorize foreclosure-maTk you, it says: ' that if authorized by the Parliament of Canada'-and they say: behold what'we have done; you must not foreclose us unless you take care of this man, that man and the other; look what we have done; all we got was common stock; do not wipe us out without something; give us something; we are the champion mendicants of our day, per-adventure, we starve if you do not give us something. That is absurd. Let me read once more from the book to which I have already referred. The chapter and verse are indifferent, but the sentiment is important. It is speaking of the lobby Huntington carried on. You know the United States guaranteed the bonds of Huntington's road at 6 per cent and he got a land grant besides. He went down to Congress for thirty odd years and carried on the finest lobby ever known in the world, barring, of coutsc, the not feeble imitation we have had here in the last few years. This author says:
The money cost, of course, was great, but as the cost was saddled directly upon the people, this was not a matter of importance to the company. It was equipped with funds to buy whatever was needed, and it had very active support in ways and from men that cost little or nothing.
This at first seems strange, hut on reflection will he found to be true and to represent a universal condition in this country. The railroad company took and still takes advantage of the following elements that exist in every community:
1.	Men that can be fooled by party loyalty.
2.	Men that are eager for political careers and know there is no chance except by serving the money power.
3.	Merchants that can be controlled through their banks, or terrorized, or brought into line with rebates.
4.	Men that believe the railroad company and all great corporations to be part of 'our set' and feel a class-conscious satisfaction in allying themselves against the rifraff and the ignorant rabble 'envious of us of the better orders.'
5.	Men that are fooled by the purchased press.
6.	Men that can be had for a pass or two.
Beyond these remains the class that must he
secured with money, including bosses, heelers, professional politicians, repeaters, colonizers, floaters, lodging-house keepers, the keepers of such dives and disorderly houses as cannot be controlled through the police, the saloon keepers that cannot be controlled through the breweries.
All of these were fully utilized by the polit-

ical department and secured for the railroad company through the control of the state legislature.
Now I ask that wo think of those words when we are considering the provision of this Act which will lead to one of the greatest lobbies ever known. I have had some experience in the practice of my profession and it has been my privilege, sometimes my unhappy lot, to foreclose mortgages, and sometimes under trust deeds.
Sometimes I have gone to the courts, when an appearance has been entered in behalf of those who orwn the property. I have head a pitiable tale of repeated efforts and failures and the judge has been asked to fix a long time hence in order that there might be a redemption. Sometimes a delay of six months, sometimes twelve months and sometimes longer is given depending upon the ability with which counsel has presented his case or the pressure of circumstances. Here these gentleman are putting up a claim and we are the mortgagees in possession responsible more strictly than in any other capacity that possibly could be created. I need not say to any lawyer in this House that a mortgagee in possession is held to more strict account than: any other man in the world. As receivers and mortgagees in possession we are to be asked in this Parliament to fix the terms of foreclosure and at the bar of the high court of Parliament these gentlemen cannot-will not-be heard in person. That is the insidious provision to which I have referred. That is the champion deceptive clause of this agreement.
But that is not all. During the 'Course of my study of this matter I tried to ascertain what, thirty years ago, the Parliament of Canada did. My right hon. friend the leader of the Opposition (Sir Wilfrid Laurier), with his forty years' experience, will remember what it did and it will be no new story that I repeat to him. But there are men who have had less experience in this Parliament and they will not remember the circumstances which occurred at that time. I refer to the position which was then taken by Parliament in relation to the assistance which was given to the Canadian Pacific Kailway Company to enable it to pay its floating debt of $7,500,000 and to meet other obligations to the amount in all of $30,000,000. There will be found in the records of the Library a letter of Sir 'George Stephen in which he said:
' I regret that we have not been able to sell our stock, although its dividends have been guaranteed by the Parliament

of Canada for a term of years, but in the city of Montreal the directors of this company have put up their personal securities in order that the enterprise may be continued.' Is Sir William Mackenzie a less rich man than was Sir George Stephen? Are Sir William Mackenzie and Sir Donald Mann less rich than Duncan McIntyre and Donald Smith of that day? There are men who say the richest man in Canada is Sir William Mackenzie. Why does he not lend something to his own enterprise? . I commend this House to the consideration of that letter of Sir George Stephen, now Lord Mount-Stephen. What did this Parliament do then about foreclosure? Let us look at the sections of the Act. The arrangement with the Canadian Pacific railway will be found in the statutes of 1884, chapter 1. This is now nothing more perhaps than a reminiscence; but is known that the caucus of that day rejected the proposals of Sir John Macdonald in the first instance to aid the Canadian Pacific Railway Company, but later on a modified proposal met with the approval of the caucus and it was enacted into law. What does that statute provide with reference to foreclosure? It provides, first, by section 3, that the time for payment of certain obligations shall be extended; it authorizes a loan of $22,500,000; it provides for an immediate advance of $7,500,000 and it provides as security, under section 5, the following:
As security for the repayment of the said loan, with interest as aforesaid, and as additional security for the payment of the said sum of seven million three hundred and eighty thousand nine hundred and twelve dollars and interest, falling due on the seventh day of November, one thousand eight hundred and eighty-eight, the Government shall have a first lien and charge upon the entire property of the company, real and personal, now owned or hereafter to he acquired or owned by them, including their main line of railway, the extensions thereof, their branch lines of railway, the whole of their equipment, rolling stock and plant and all their steamers and vessels, and also upon the land grant of the company, earned and to be hereafter earned; saving always, however, the rights of the holders of the existing mortgages on the extensions of the line of the railway from Callander to Brockville and Montreal, as security for the unpaid balances of the purchase money of the lines constituting the said extensions, and subject to the mortgage upon the land grant, executed by the company to secure their issue of land grant bonds; and, the Government shall continue to hold and retain the entire amount of land grant bonds now in its custody or possession, subject to redemption under the terms of the said land grant mortgage, and with all remedies as to interest, voting power and ail other matters in respect thereof, which would be held or possessed, or could be exercised by any purchaser of the said bonds; and all moneys received by the Government from the trustees of the land grant bonds in redemption of such bonds shall be applied as follows, that is to say:
There follows a statement as to what is to be done. Then, they are to build the line within a certain time and here is the section providing for the default, subsection 2 of section 6:
That upon default for twelve months in the payment of any half-yearly instalment of interest upon the said loan, or any part thereof, or of interest upon the said sum of seven million three hundred and eight thousand nine hundred and twelve dollars, or any part thereof, or in the payment of the principal of either of the said sums or any part of either of them when the same shall become due, in accordance with the provisions hereof, the right of the company under their contract hereinbefore mentioned, to demand or receive any further cash or land subsidy shall cease and determine, and the said railway and extensions thereof, branches, equipment, rolling stock, plant, including steamers, and all lands and property of the company and all land grant bonds then in the possession of the Government-
Remember the Government was then holding land grant bonds of the Company which could not be sold.
-shall vest in Her Majesty, and shall forthwith, thereupon, be taken possession of by the Minister of Railways and Canals, on behalf of the Government of Canada; and each and every employee of the company shall, from and after the expiry of the said period of twelve months, become and he the employee of the Government during pleasure, and shall hold and possess any matter or thing apertaining to the said company then in his custody, as and for the Government; and the rates of interest, and the terms of payment, hereby fixed, shall not be disturbed or altered by the terms of such agreement.
Then it goes on further:
The said company Is hereby authorized to execute an agreement of the nature and purport hereinbefore provided for, and to charge its entire property and assets, in manner and form as hereinbefore described; and in such agreement to agree upon such further and other conditions as the Government may prescribe; provided, that authority to the board of directors of the company to accept the provisions of this Act and to execute an agreement containing the charges upon the said railway and property and the other conditions required or authorized by this Act, shall be granted by the shareholders of the company, either by a resolution passed at a special general meeting of such shareholders called for the purpose, by a vote of at least two-thirds in value of such of the shareholders as shall be present or represented at such meeting, or by an instrument or instruments executed by at least two-thirds in value of the whole of the shareholders of the company, in person or represented by their attorneys or proxies, respectively, duly authorized in that behalf.
What does that mean ? That means that the shareholders agreed that their interest in the property as shareholders must, and

should be, lost, if they failed as shareholders to make good the conditions mentioned in the statute. What have we here? [DOT]-not any such thing as immediate foreclosure, and not any agreement by the shareholders by which their stocks may be forfeited. But having regard to the decisions of the Privy Council in cases that came from the province of Nova Scotia, it has been clearly and definitely stated and laid down that, unless the Crown states positively beyond question that it intends to destroy that which belongs to the private individual, as far as possible it shall not he destroyed without -adequate compensation. This $60,000,000 of stock, that may be scattered broadcast throughout the world, will stand at the door of Parliament and say: We paid eighty cents on the dollar for it when we bought it. It is true there is a statute, but we did not know about the statute; and because we did not know, we ask Parliament to listen to the greatest lobbying of our time and to postpone foreclosure until Parliament has passed and settled the terms. I ask the Government to adopt the terms of the Canadian Pacific statute and I say: If you are going on with this, then do not let Parliament again be disgraced by that which is referred to, in the history of the Huntingdon lobby, as the worst of its time. I am weary and sad to see the men who wander around and threaten and cajole and coax, and sometimes do one thing and sometimes another, in order to get us to do what they want. We are not here to discharge a public trust for this set of men or for any other set of men that may ever arise; and when we say that these men ought to be foreclosed,
I ask that they be foreclosed as it is provided that the Canadian Pacific railway may be foreclosed, namely, by a contract arranged between the shareholders and the Crown, by which the shareholders will say that,	if	default he made, thestock will be	wiped	out. Do	not
let us wait a year and permit this thing to happen. If you must do this thing, please do it at least in the manner I have mentioned-my hon. friend from St. Antoine (Mr. Ames) says if they make default, then the axe will fall. It is not the axe; it was only the invitation that will be sent out- the invitation to an execution that might never take place; that might be postponed, and, after all, instead of being -an execution, might turn into a wedding.
One word more in relation to the question of interchanging traffic. Great credit was taken by the Administration because it said: We are going to have an interchange 
of traffic-and the statement did not contain the words 'as far -as possible.' I w-as taught to believe, in the school of law in which I had my training, that 'as far as possible' was always understood; -and, if you are going to say that a man who ships his goods cannot choose the route by which he is going to ship them, -something new has happened in -Canada. It surely is not contended by this Parliament that a man who ships his goods from Calgary cannot say: I am going to ship them via lake and rail, or via so-and-so or so-and-so. Surely it is not contended that you are going arbitrarily to say to every shipper in Canada: You must make a contract to ship your goods by such and such a railroad. If a shipper sees fit to choose a certain route, why, of course, by the Railway Act, he has the right to do so. I suppose you are going to amend the Railway Act -and declare that hereafter no shipper, at any point served by the Canadian Northern, will have the right to choose the route by which he shall ship his goods after they reach a point which may he served by one of the roads in the agreement. That is all there is in- it, and I leave the matter for th-e consideration of the House.
The question that is of vital importance to our country is the duplication of existing transportation facilities. I hold in my hand the judgment of the Board of Railway Commissioners in the western freight rate,? case. Might I offer this suggestion to the Government, that they have this document printed and distributed to every member of this Parliament, because, while there may be on the board men who differ from me, I would like to say this for the board, that it has expended an amount of industry -and care and patience and attention to the details of the transportation problem that -will astound those who take the trouble to read through theix report. I find on looking at this report that Mr. Drayton, at great length, at pages 53, 54 an-d 55, d-eal-s with the question of transportation facilities in Alberta and Saskatchewan, and alludes to the need for facilities that will serve the territory within ten miles of either side of the railways. He finally turns to the consideration raised by Mr. 'Muller, the expert, and points out that the real difficulty that has to be met is the question of the duplication of transportation -facilities. At pages 54, 55, 56 and 60 he deals with the whole question, and finally concludes as follows at page 67:
For the reasons already pointed out, the board, does not pass any opinion as to how

much of the duplication shown was or was not necessary. The criticism of Mr. Pitbiado, however, is at least in part well founded, and the necessity for a business control by the Government which will prevent the unnecessary duplication of transportation facilities in the future as urged by Mr. Bicknell, is established.
There I rest again. No provision in that regard has been made in this agreement. These men may continue, as they have been doing in days gone by, to push work out here and there, to get the bonds guaranteed, the bonds sold, the proceeds paid into the bank, and year after year no facilities created, year after year the time gone by and no road built. They give us facilities that parallel existing ones, and give the people no better transportation opportunities, because there can be no lessening of the rates, they being fixed by the Railway Commission. Where rates are fixed by the Railway Commission and are uniform, the duplication of existing transportation facilities is one of the worst grievances the people of the West have to contend against. I ask: Has any man looked into the transportation problem of western Canada in the light of existing conditions? You have the Grand Trunk Pacific railway, built to a standard never before seen on this continent, with eighty pound steel rails, with splendid grades and easy curves, a great artery capable of handling great traffic, but with few branch lines. Then you have the branch lines of the Canadian Northern scattered here and there, that might be made tributary to a great artery; and by some working agreement between these two systems, you might prevent the duplication of existing lines and offer to the people some effective transportation facilities. There is the opportunity. This $45,000,000 that we talk about so glibly to-day, wit hthe present cost of transportation, would give to western Canada thousands of miles of cheap roads. What we want is branch lines-surface roads, if you will-cheap feeders to great arteries, in order that the traffic of this country may be carried to the seaboard at a small cost. Mr. Drayton, in the judgment to which I have referred, points out that the cost to the farmer of getting his product to the railway is what destroys his profit. He points out that the cost is enormous- 20 cents a bushel in some instances, more than that in others. You will find it all dealt with at length between pages 50 and 60 of the judgment. It shows what is demanded is transportation facilities within ten miles
of the farmer that will enable him to get his crop to the market, whether it be cattle, or pigs, or butter, or eggs, or dairy produce, or wheat, or whatever it may be, so that he may be afforded the opportunity of getting the products of the soil and the produce of his toil carried to the markets of the world cheaply. This is what the West demands. This is what the Canadian Northern has failed to do. Its promoters have given vague promises-promises that have not been kept. They have made promises marked in black upon maps, which were calculated to mislead and which did mislead intending settlers.
North of the city of Edmonton there is a great fertile empire that is now being developed; and if the facilities now under construction are completed, there is a duplication, and the money so expended will not be used in giving to other sections of that vast empire the facilities that it so much requires and demands. That is the case in the province of Alberta and in the province of Saskatchewan, perhaps less so in the province of Manitoba; but what we require and demand is some policy of vigorous construction that will make possible the bringing of transporation facilities to the men who are building this empire.
That is what we demand, that is what we require. This partnership will not do. Since when did the loyalty of this country, since when did the intelligence of this country, permit the Crown to enter into partnership with men guilty of the misrepresentation of which we were the victims last session and which I have mentioned. Something was said of national disgrace. Certainly, it would be a national disgrace for the Crown to enter into partnership with the men from whom we have obtained $7,000,000 of watered stock ground out by the printing press. That was taken at two hundred cents on the dollar. It had a high value last year. This year, of course, the price is less. We get the $33,000,000 more and are giving a guarantee to pay $45,000,000 and putting ourselves behind over $200,000,000 besides. I guess the stock is going down, or up-but nobody can tell unless it were a receiver or mortgagee in possession. But are we warranted in going into such partnership? I say, nay.
In conclusion:
1.	We have been in times past the victims of base deception;
2.	The reports published abroad by this company of its undertakings, its payments and receipts are apparently untrue, be-

cause the payments alleged are not shown to have been made, and moneys claimed to be on hand are now said not to be there.
3.	TMe stocks of the companies it is proposed to bring into this system are in many cases already partially held by the Canadian Northern railway, and the securities are now held in their entirety. These things are plain and obvious.
4.	By the alleged reduction of capital,
it is proposed to give life and vitality so far as can be given to water by this legislative action-to exchange stock that has no value for that which, according to the eminent authority whom we heard last evening will shortly reach par value. Imagine, for instance, $1,395,000 par value of Bay of Quinte stock being exchanged for shares of an equal value in the Canadian Northern railway to be, in a few years, worth par!	.
5.	We become mortgagee, receivers in possession, without any adequate provision for immediate foreclosure.
5. We become mortgagee-receivers in the people of the West will secure better or cheaper transportation facilities.
7. And lastly, it means a partnership which, for the reasons I have given, we cannot tolerate.
Then, you say, what do you offer in place of this arrangement? I answer at once: Instead of what is here proposed, first, the stock of this company should be vested in a trust company. Second, these men should be removed from their position of direction of an enterprise they have made insolvent. Third, a statute should be passed to enable the Governor in Council to advance money to pay the artisans, the contractors, the equipment builders-the men whose money and labour are in the enterprise and to subrogate us to the rights they have against the men with whom they have contracted-the Mackenzie and Mann Company, Limited.
Then, I ask that we should make the fullest possible inquiry as to the condition of this road. There is a difference of opinion on that subject. The enterprise of these men may be surrounded with the halo which was pictured for us this afternoon. They may be the most slandered men in the world; they may be angels in, disguise. They are said to be poor men who left their native towns with little and are now worth millions; and it may be that these millions came to them even as the manna came from Heaven. It may be that this represents their honest toil as railway contractors to which for eighteen years they have given

their time. This may all be. If so there are no men so much interested in having it known as they. And it is necessary that the people of this country should know and understand, for we are to put ourselves as fourth mortgagees behind an enterprise of waterlogged securities and watered stock, and we demand that we should know what the end will be before we enter upon an undertaking so vast, a policy so hazardous.
But more-and with this I conclude. We ask that an opportunity be given to those who toil to get the produce of their land, the product of their toil, to the market at the least expense. My hon. friend from Kingston gave me great joy as he spoke last evening of the wants of the West and of the bond which lies between the Bast and the West: I ventured, at various Canadian clubs in this eastern country when first I came here, to point out some of the grievances, or alleged grievances, under which the people of the West labour. They complain of many things, but nothing strikes them so hard, nothing pinches them so cruelly, as undue railway tolls-the twenty cents a bushel that must go to get the crop to the railway on which there is but little profit. Nothing makes them more disconsolate, more unsettled and more discontented, than to think that the produce of their lands and their hands has gone merely to carry that produce to where it may be sold. We hope to develop the West.
I am an optimist; and I believe that in the West we have the greatest land under the British Crown potentially. But it requires strong hands, vigorous minds, great enthusiasm, much optimism, the expenditure of Capital, and beyond all that, a common feeling for a United Canada, to build in that West a great land. That is not going to be done rapidly; our population is not so easily to be assimilated. Here to-night upon this issue rests largely the future of the West. When they tell me what this road is going to earn, I refer to the figures, and I have under my hand a volume on the earning power of railways. Neither Mr. Hanna nor anybody else can tell me that they are going to earn fixed charges with the traffic that it will be possible for them to develop. They know it, I know it, the country knows	it.	Shall we, then,
take this road and operate it as a Government enterprise? I cannot say until we have had a report and physical valuation. The people of the United 'States have found that freight rates must be based on

physical valuation-that water has no value. That physical valuation will show what the property is worth. The long ten-years' struggle in the United States came to an end last year, and the Inter-State Commerce Commission commenced its labour of physically valuing every road in the United States, and on that valuation they will base the freight rates of the country. Let us begin right. We aire putting upon the people of western Canada especially a burden. Let us pause before we go forward lest it be said of us that we have made progress too swift and have not considered the end from the beginning. They are the statesmen, who in public affairs forecast every phase of a proposed policy and understand what it means. It is for us to look at this enterprise in that way, and not to he deterred from our duty because the action which that duty lays upon us seems temporarily unpopular.
iSir, I have to thank the members of this House for the patience with which they have listened to me. There are many other matters I should like to have said but I shall be able to deal with them on the second reading. One word, and this is my final one. In this city recently we have had a visit from a great English poet. What this poet said with regard to empire builders seems to me to be strictly applicable to this situation in view of the contention that has from time to time been heralded abroad that wre should be generous to Mackenzie and Mann as empire builders:
Who are the Empire-builders?
They whose desperate arrogance demands A self-reflecting power to sway A hundred little selfless lands?
Lord God of battle, ere we bow To these and to their soulless lust,
Let fall thy thunders on us now And strike us equal to the dust.
Leaders unknown of hopes forlorn Go past us in the daily mart With many a shadowy crown of thorn And many a kingly broken heart;
Though England's banner overhead Ever the secret signal flew,
We only see its cross is red
As children see the skies are blue.
For all are Empire-builders here
Whose hearts are true to Heaven and home And, year by slow revolving year,
Fulfil the duties as they come;
So simple seems the task, and yet Many for this are crucified ;
Aye, and their brother-men forget
The simple wounds in palm and side.
But he that to his home is true,
Where'ere the tides of power may flow,
Has built a Kingdom great and new Which time nor fate shall overthrow.
[DOT]238
These are the Empire-builders, these Annex where none shall say them nay,
Beyond the world's uncharted seas,
Realms that can never pass away.
On behalf of these true and real empire builders who have made the West what it is, and who have done something to make this Canada what it is, I give voice to a protest against the measure that has now been submitted for the consideration of this Parliament.


Hon. FRANK OLIVER (Edmonton):: I
think that the hon. member who has just sat down is entitled to be congratulated on the independence of spirit which he has shown and the House is indebted to him for the study which he has given to the very important subject that is now under discussion. I am not. altogether able to agree with the view that he expressed in the beginning of his remarks, however, that this Canadian Northern enterprise was beyond the scope and necessities of the Dominion of Canada. He strongly took the ground that Canada is not big enough for three transcontinental railways. I will admit that, but we want three transcontinental railways to make Canada bigger; we think that is one of the ways by which Canada's greatness may be advanced. As to the possibilities, let me point out that there are to-day three railways from Chicago by way of St. Paul to Puget Sound passing through a territory absolutely similar to that in our country between Winnipeg and the coast, absolutely similar and of like extent, and that these three railways find great business, large traffic and satisfactory profits from the carrying of freight and passengers through the tier of states that lie alongside the Canadian boundary.


Robert Laird Borden: What are the roads to which my hon. friend refers ?


Frank Oliver: The Northern Pacific, the Great Northern and the Chicago, Milwaukee and Puget Sound. I say that what has been done south of the boundary can be done north of the boundary, and that what has been necessary south of the boundary is or will be necessary north of the boundary. I note that when the right hon. Prime Minister was making his presentation of this case he took occasion to remind the House that it was the Liberal Government, by their action in 1911, that committed Canada to the Canadian Northern system as a transcontinental enterprise. I think I saw in the allusion something more than the desire to give credit to the late Liberal Government. I am rather of the view that



the right hon. Prime Minister was laying the foundation for the argument that such difficulties as surround the Government of the day in dealing, with the Canadian Northern are measurably due to the late Government, and that for them the present Government is not entirely responsible. For what the late Government did the late Government must assume the responsibility, and I believe the members of that Government are entirely willing to assume full responsibility for everything that they did in connection with this Canadian Northern enterprise, as well as with regard to other matters. But while they are prepared to assume full responsibility for what they did, let there be a sharp distinction drawn between what they did and what they did not do: between the responsibilities of the late Government and the responsibilities of the present Government, which began in the fall of 1911, two and a half years ago. It is true that the Liberal Government gave important aid to the schemes of railway transportation that now constitute the Canadian Northern system, and it is true that in the year 1911, when they made provision by guarantee for connection of the eastern with the western sections of that system, they did use the argument that a transcontinental system was desirable. But let me point this out: that while they said then, and I say now, that a third transcontinental railway system such as that undertaken by the Canadian Northern is an ultimate necessity for this Dominion of Canada, it does not by any means follow that it was then or is now an immediate or pressing necessity. Let me make my point clear. The Canadian Northern, as the House has already been informed, had its inception in the province of Manitoba as a local project. It was then extended to connect the province of Manitoba with lake Superior. That having been done, a guarantee was given by the Liberal Government to enable the company to extend its lines from Grandview, in Manitoba, to Edmonton, and from the Manitoba boundary to Prince Albert, a guarantee of $13,000 a mile for the respective distances, some six hundred miles in one case and two hundred miles in the other. These lines were built. Following upon their construction the provincial Governments of Saskatchewan and Alberta saw fit to make provision for extensions of branch lines from the main line for the accommodation of the people of those provinces, for their greater	development, and	for the
[Mr Oliver.]
benefit and welfare of the Dominion of Canada. A great transportation system was built up in those western provinces, extending from lake Superior practically to the Rocky mountains, on the joint responsibility of the Dominion and of the three prairie provinces. At the same time enterprises were entered npon in the eastern provinces by the Canadian Northern Railway Company, and by 1911 railroad connections had been established under control of the Canadian Northern railway between the cities of Quebec, Montreal and Ottawa, and between Toronto and Sudbury. For reasons that have been given to the House, it seemed to the Government of that day desirable that the important commercial and industrial centres of eastern Canada touched by the Canadian Northern railway should be directly connected with the system of the same company operating in the three prairie provinces, so that, on the one hand, that .system operating in the prairie provinces would have independent and competitive access to the eastern seaboard and the eastern commercial centres, and, on the other hand, that these commercial centres should have direct, independent and competitive access to the prairie West. That action by the Liberal Government of that day has been condemned by the Solicitor General. As a member of that Government, I have no apology to offer for the action that was taken, for the purpose of the action or for its result. It was a necessity of the case arising out of conditions as they had been created. It was essentially for the welfare of eastern and western Canada, and to bind eastern and western Canada in a common interest as they could not have been so thoroughly bound without it. It may have been that the enterprise could have been delayed for a year or two years, but, at any rate, under the conditions as they then were, that part of the project was favoured by the late Government, and to-day the rails are connected between Toronto and Winnipeg, and are within measurable distance of being connected between Montreal and Winnipeg. Had the enterprise been confined to the area between the city of Quebec and the foot of the Rocky mountains, as it was confined so far as the assistance given by the late Liberal Government is concerned, there would not have been facing this Government and this country to-day that condition which has been characterized here as

a railroad, as a financial, and, as it may develop, possibly a political crisis.


Arthur Meighen: No danger of that.


Frank Oliver: While we give this company all credit for enterprise it is possible for this or any other company to be enterprising beyond the limits of good business, and it is perfectly clear to-day that it is owing to the fact that this company undertook to establish its connection from the prairies to the Pacific ocean before it had - established and built up a pro-
10 p.m. Stable connection between the prairies and the eastern seaboard that the difficulties of this company and of this Government have arisen and for that condition this Government must take its full share of responsibility. When Mackenzie and Mann or the Canadian Northern Railway came to the late Government and said: We want to have a transcontinental line, we want to build through British Columbia, we have the guarantee of the British Columbia Government, and we want assistance from you to enable us to complete our line through British Columbia to the Pacific coast, they were specifically and definitely refused that assistance, and until the present Government came into power their expenditures upon that part of the project were of a minor character. But as soon as this Government came into power, the first session of Parliament saw a demand by the Canadian Northern Railway for $6,000,000 to be used in building from the Yellowhead Pass to Vancouver, and it was given to them without a question, without a condition of any kind. It was this Government that committed the people of Canada to the building of that part of the transcontinental line prematurely and because of that commitment, for which this Government must take the responsibility, the Canadian Northern railway and the Government and the country find themselves in difficulties to-day. Up to the present time there has been expended, according to the return, a matter of some thirty odd million dollars upon that section of the road. It still calls for an expenditure of $23,000,000 to complete, a matter of approximately $60,000,000 required for the British Columbia section of this enterprise. All that the company requires to borrow, so it says, is $45,000,000. If it had not undertaken to carry that load of the extension through British Columbia before the time was ripe, this difficulty would not have arisen. For this difficulty the Government must take the full re-2384
sponsibility and cannot lay any portion of it upon the late Government.
I do not wish to weary the House by traversing the terms of the resolutions, as they have already been dealt with so fully, but I do say that when a serious financial situation came up for consideration, when the credit of the country and its welfare were seriously concerned, when the matter had tc come before Parliament, it was a most unfortunate thing "that there should have been sent broadcast throughout the country, upon the stated authority of this Government, an absolute misrepresentation of the facts in regard to the resolutions to be submitted to the House. It is most unfortunate that this should have taken place. The night the resolutions were brought down there was put upon the wires-it must be presumed with the authority of the Government-a series of statements in regard to these resolutions that are not borne out by the facts. There was a statement that $15,000,000 worth of the stock of the Canadian Northern was to be placed in trust to become the property of the Government in order to give them control of the stock of the -company in case of default. There is no such provision in the resolutions.


Arthur Meighen: That was in the Liberal press.


Frank Oliver: The Conservative press.
That statement was made in an editorial of the Ottawa Journal this week.


Arthur Meighen: You put too much stock in the Liberal press.


Frank Oliver: I do not wish to get entangled in an argument with my hon. friend, tout that is a childish suggestion). This statement went on the Associated Press wires, and it went out, I take it, on the authority of the Solicitor General.


Arthur Meighen: I think I can be excused for interrupting now. It did not go out with my authority, either directly or indirectly. I never heard of it until I read, it in the newspapers, nor do I think it went out on the authority of any member of the Government.


Robert Laird Borden: I desire to say that so far as I am aware no such statement was put out on behalf of the Government, or by any member of the Government.


Frank Oliver: It is a fact that it went
out. My hon. friends have seen it, and up

to this moment they have never seen fit to contradict the statement and to put the public right in regard to the facts.


Mr. FOWLER:: The resolution contradicts it.


Frank Oliver: The public have not had the benefit of seeing the resolutions in the press. It is a most unfortunate thing, I repeat, that this rank misrepresentation should have been sent out in regard to this very important matter. I make this allusion for the purpose of bringing the point home, that when our friends opposite find they are criticised in regard to the subject matter of these resolutions for not having acted, apparently, in good faith they must blame [DOT] themselves, or their friends, because they have already prejudiced the court of public opinion against them.
The particular feature that I wish to bring to the attention of the House, however, in connection with these resolutions is following up certain questions that I placed before the Prime Minister some days ago. I had hoped that he would make some allusion to those questions in his address, but he did not do so.


Robert Laird Borden: I may say that I was not quite -clear as to the exact meaning of at least one of the questions, and it was not through any lack of courtesy that I did not allude to -them yesterday, but merely with the view that I could perhaps give my hon. friend more satisfactory answers when we are in committee than I could in the course of my address'.


Frank Oliver: I am not finding any fault at all; I am merely stating the facts.


Robert Laird Borden: I propose to give that
information when we are in committee.


Frank Oliver: I desired to have the information as a -basis for the views I had to place place before the House in regard to the resolutions. However, this is the aspect of the question to which I wish to draw special attention, and which, except for a side remark by the Solicitor General, has not been dealt with in any way in the discussion up to -date. I have already said that the provinces of Alberta and Saskatchewan, and other provinces, have joined with the Dominion Government in- carrying forward the Canadian Northern railway enterprise by guaranteeing the bonds of branch lines. This is a matter of intense importance to the people of those provinces and to their governments. I need not spend time in explaining the situation. We have there a
[Mr. Oliver..!
vast area of country into which population rushed at a most unprecedented rate. Those Settlers scattered all over the great provinces, were in absolute need of railroad communication. Although the responsibility for providing that railroad communication properly rested upon the Dominion Governments the Dominion Government felt that it was doing all that it was warranted to d-o in providing the main lines of the Canadian Northern and the Grand Trunk Pacific, and the (provincial governments therefore either had to take measures to provide further railroad communication, or settlement in those provinces would have come to a standstill or retrogressed. For good and sufficient reasons, those provinces have guaranteed the bonds of branch lines of the Canadian Northern to the extent of many millions of dollars, and of many hundreds of miles of railway. I am interested in knowing on behalf of those provinces what part the interests, there existing, are to have in the project under the impetus given to it by the proposed guarantee. In the province of Alberta some 1,400 miles of line have been guaranteed. The guarantees amount to about $22,000,000. Some 500 miles have been- constructed, some 200 miles are under construction and some 400 oir 500 miles still remain guaranteed but to be constructed. I am a member of the Parliament of Canada and I am called upon to vote to give the Canadian Northern Railway Company a guarantee of $45,000,000. It is, of course, interesting to me what the security is going to be, what the terms are going to be, but it is very much more interesting to me to know how far, and to what extent, the completion of the branch line enterprise, undertaken in the provinces of Alberta -and Saskatchewan, is going to be promoted by the vote I give. If I am to vote $45,000,000 to the Canadian Northern Railway Company and if the people I represent are to be left without the railway communication that they have been expecting to get from the Canadian Northern Railway Company, I will not be here in the next Parliament; that can be taken for granted. I want to know very definitely, for my own information, but still more in the interests of these provincial governments, how far this -proposed aid is going to promote the railway enterprises in these provinces which these provinces have guaranteed and whose completion is an -absolute necessity for the further development of these provinces and for the welfare of the

people already occupying the laud. Men who are from the West know perfectly well that when a line has been laid out, a guarantee given and a part of the line constructed, people have occupied the country for the whole length of the proposed line in the full confidence and expectation that the line would be completed. Work on a number of these lines has been at a standstill during the last two summers. The people have been told: the company is hard up, they cannot raise the money, you cannot get the line. But if the company is going to get $45,000,000 at the hands of this Government, the people will want to know why these lines are not completed; and that is what I want to know from the Government.


An hon. MEMBER:: They will not build branch lines with that.


Frank Oliver: Then, if they do not, I certainly would isay that they cannot have my vote for the loan.


Mr. HANNA:: Your view is very sectional.


Frank Oliver: Well, I will have to stand the criticism. I 'was elected to represent the people in the part of the country from which I come and I am bound to represent them in this House. I was under the impression that that was what Parliament was for. However, I will have to accept the criticism.
There is another question I want to discuss with the Government in this connection. I notice that the resolutions make provision that a very considerable amo.unt of money that is owing by the Canadian Northern Railway Company is not to be paid out of this $45,000,000. I have listened to the discussion and I must say that I view the matter from a different angle from that from which it is viewed by some hon. gentlemen. I do not know why this Parliament is voting money unless it is to see that the money that is owing by the company is paid. It seems to me that this is the very first purpose to which this money ought to be devoted. I am at a loss to understand the reason behind the arrangement that especially stipulates that some $15,000,000 or $20,000,000 which is said to be owing to-day by this company is not to be provided for out of this money that is being voted by Parliament. If bills are owing in that part of the country from which I come, certainly the creditors will want to know why they do not get paid
377f
if Parliament has voted the money. I cannot understand the reasoning which caused the agreement to be so drawn as to provide that the money to be voted is not to be used to pay accounts that are already due.


Mr. BLAIN:: Does my hon. friend think they will not be paid?


Frank Oliver: I do not know whether
they will be paid or not.


Mr. MACDONALD:: They are not to be paid out of the $45,000,000.


Frank Oliver: If they are not to be paid out of the money the hon. member (Mr. Blain) and myself are voting, if we have' voted the money on the understanding that it will not be used for the payment of these debts, and if, perchance, they are not paid, I want to know what we will say to those to whom that money is owing.


Richard Blain: What would likely happen if the Parliament and Government of Canada refused to help them?


Frank Oliver: That is not the question that is before the House. That is a matter that we would be quite willing to take up and consider in other circumstances, but we are dealing with a proposal to ask Parliament to guarantee $45,000,000 in aid of the Canadian Northern Railway Company. I cannot understand how, if the Canadian Northern Railway Company need that money to pay their debts, it should not be used for the purpose of paying their debts. If they are insolvent, if they cannot pay, are these people to be left without their money? If they are not insolvent why are they owing that money to-day?
I want to know to what purpose this money is going to be devoted. Is it going to be used to pay the debts of the company, and is it to be used to complete the project now undertaken on the responsibility of the provincial Governments of the prairie provinces? In my constituency there is a settlement in the grand prairie of the Peace river. It is 200 miles from the nearest railway point. Some eight or ten townships there have been settled. The Canadian Northern have a line projected for a distance of 300 miles from Edmonton. They have a guarantee from the provincial Government of 100 miles. They have built some forty miles, and have laid steel. They have done grading on the balance, I believe, of the 100 miles. I certainly want to know whether that 100 miles is to be completed or not.


William Manley German: Agility.


Frank Oliver: Yes, and agility-he was arguing with great cleverness that a third or fourth mortgage on what he himself has given to be understood was a presently bankrupt institution, was a more valid security than a first mortgage on the same identical project. He set himself a heavy task, and I must say he acquitted himself with credit; yet I do not think he quite proved his point.
This resolution is difficult to deal with. It has been the occasion of a great deal of eloquence both to-day and yesterday, and I do not think that the subject is exhausted by any means. I have given the matter some study, and my conclusion is that this resolution is a purposely involved attempt to establish a controlling junior partnership with an insolvent debtor. It is not remarkable if such an attempt should lead to difficulty in demonstrating absolutely what is meant by what is said.
I object to this resolution because it is improvident, and it is improvident because it is inefficient. What is the purpose of this aid that we are giving? It is to preserve the credit of the country, to secure the completion of the system and to insure the permanence of the Canadian Northern as a competitive railway system. Are any of these purposes served under the terms of the resolution? The credit of the country is not preserved-provision is made that the money that we provide shall not be used to pay the company's debts; their debts are still to be left unpaid. Will this money that is to be voted complete the system? The claim was made last year that the $15,000,000 of cash that we then voted

would secure the completion of the system. But it did not, and there is no more reason to-day, on the showing that has been placed before the House, to believe that the $45,000,000 will secure the completion of the system than there was to believe that the $15,000,000 of last year would secure its completion. With $58,000,000 to raise on securities not yet earned, it is a grave question if the money can be secured to complete the system. But our hon. friends say that they have security on everything that the company has, and that they have made provision for taking over the company's belongings. Is it for the sake of the security that they are advancing this money? I fancy that if it were merely for the security, they could advance the money for other purposes and get much better security. They are advancing the money to prevent the system from going into bankruptcy and to secure its permanence, and when they have advanced the money they will have not one dollar's worth more of valid security than they have to-day, before they advance the money. That, I think, has been demonstrated to-day. All the security that they will have when they have put this marvellously and wonderfully-worded resolution into effect; all the security they will have of any value, they have to-day. This resolution is merely a form of words to cover up the fact that the Government are advancing $45,000,000 to the Canadian Northern, without security, to enable the company to avoid bankruptcy. A year from now, when the money has been spent and the $58,000,000 that is expected to be raised has not been raised, and the company is again unable to pay its debts, every reason that my hon. friend has given for not foreclosing the mortgage that we have on the Canadian Northern to-day will exist then, reinforced by the amount of money that we have voted in the meantime. To-day we do not dare to foreclose, because the company owes too much money; yet we give them $45,000,000 more, and we are going to foreclose if they are not then in a position to carry on the enterprise. Surely if we are not going to foreclose now, when we have put $45,000,000 more into the enterprise, we are not going to foreclose then.


Mr. MORPHY:: The hon. gentleman argues as if he were of the opinion that we should foreclose now. Is that the state of the hon. gentleman's mind?
	.


Frank Oliver: I am not giving my opinion at the present time; I will deal with that later. I am arguing on this point, and I would like the hon. gentleman's careful attention to it. It is this: we to-day hold a first mortgage on the Canadian Northern enterprise in its most important parts. We can foreclose that mortgage to-day if we see fit, but we do not want to do it. Why? Because of the reasons that have been given to the House. We are going to give the company $45,000,000 and we are not going to be in any better position when we have given that $45,000,000 than we are now. We cannot foreclose any quicker and if we will not foreclose now, are we going to foreclose then? I say, certainly not. The whole of this resolution is for the purpose of exchanging a preferred creditorship for a junior partnership in a practically defaulting enterprise. I am not saying that that is not necessary in the interests of the country; I am not arguing either one way or the other. What I am arguing is that this Government has absolutely deceived or attempted to deceive the public in regard to their position towards this company and with regard to the result of the action that is to be taken. They have told Parliament and they have told the country that they arc getting security when, as they have been informed this afternoon, they are actually increasing their, liability without increasing their security.


Arthur Meighen: Do you think that as
well?
Mr. OLIVER; I do not merely think it; I know it. Does my hon. friend not know it?


Arthur Meighen: Indeed I do not.


Frank Oliver: I am not of the legal profession, but I think that that is elementary and that even I can demonstrate it. There is to-day on the line from Grand View to Edmonton a first mortgage held by this Government for $13,000 a mile. Superimposed upon that are certain bonds issued by the Canadian Northern-I do not know how much a mile, but I venture to say that they covered everything they could get. Upon that my* hon. friend is going to superimpose another mortgage as security for this $45,000,000. Supposing the company defaults and he forecloses; how is he going to collect his equity of redemption in the mortgage that he is putting on now if he does not assume responsibility for the second mortgage that the Canadian Northern have given on that road?


Arthur Meighen: That is right.
,Mr. OLIVER: Very well. If he does not lend the $45,000,000 to-day and does not put on his third mortgage and the company defaults, he has the first mortgage and he can collect on that first mortgage without paying off the second mortgage. Is that not so? My hon. friend admits that instead of getting security on that section of the line he is incurring a liability up to the amount of the mortgage given by the Canadian! Northern. Well, my hon. friend will not admit anything?


Arthur Meighen: I misunderstood what
the hon. gentleman said first. There is no doubt at all that by the present resolutions we incur greater liability. What .1 thought the hon. gentleman said was that by taking, the other companies in we had not added to our security and had added to our liability. I knew that he had more sense than to believe that.	,


Frank Oliver: I was not dealing with
that. Now that my hon. friend has mentioned the taking in of the other companies, 1 may say that I heard several speakers here to-day and yesterday declare that the stock of these subsidiary companies has been reduced; that the water has been squeezed out of these companies. That is the way, at any rate, the pdblic were given to understand the matter; that this Gov-* ernment had driven a hard bargain with Mackenzie and Mann; that they had put them right up against the wall and had taken these stocks from them, squeezed the water out of them and reduced everything down to a basis of $100,000,01)0. Now, is there any foundation for that statement ? Absolutely none whatever. What is the idea of watering stock? It is that there shall be shares of stock which shall draw dividends, if dividends there be, and if you reduce the number of the shares then there will be a lesser number to draw dividends on. Take the Canadian Northern Ontario Railway with its $10,000,000 of stock. Suppose the Canadian Northern Ontario railway earns dividends a year from now or ten years from now, will it be paying dividends on anything less than $10,000,000 of stock? Not one cent less. It is true -that the Canadian Northern railway will get the benefit of the dividends, but the dividends will be paid on $10,000,000 of the Canadian Northern Ontario Railway stock, and so right along the line. I would be sorry to accuse our hon. friends of intentionally misleading; they may have believed when they made the statement that they were actually squeezing water our of this stock. They were not doing anything of the kind, they were putting the stock up as security, but they were not squeezing the water out of it; and as the hon. member for Calgary to-day pointed out, they were giving the Canadian Northern) stock in addition to it.
They have also given out a statement that the Canadian Northern Railway stock has been reduced to $100,000,000. Now, the Canadian Northern Railway stock a year ago was only $70,000,000. The Canadian Northern Railway Company afterwards increased it to $77,000,000, so that when this Parliament met the common stock of the Canadian Northern Railway Company was $77,000,000. This resolution states that it is to be increased to $100,000,000 and that difference is .to be handed over to Messrs. Mackenzie and Mann; and yet they have sent the statement throughout all Canada that they had decreased the stock of the Canadian Northern railway. It is not $100,000,000 it is $125,000,000. There was $77,000,000 of common stock at the beginning of this session and $25,000,000 of debenture stock which this resolution provides can be converted into common stock, so while they have been spreading word all over Canada that this company's stock had been reduced to $100,000,000, as a matter of fact it has been increased from $102,000,000 to $125,000,000 and Messrs. Mackenzie and Mann have been made a present of $23,000,000 absolutely without consideration.


Mr. W. T. WHITE:: How much stock of the Canadian Northern railway do Mackenzie and Mann own to-day and how much will they own after this resolution is adopted?


Frank Oliver: This legislation says they will own $100,000,000.


William Thomas White: No, they will own $60,000,000. Did not Mackenzie and Mann and Company own $70,000,000 before and will they not own $60,000,000 after? How much of the stock of the subsidiary companies did they own before and how much do they own now.


William Manley German: You have not told us that yet.


William Thomas White: I am asking my hon. friend.


Frank Oliver: Whatever stock of the subsidiary companies they owned before they

have turned into the Canadian Northern railway.


William Thomas White: Very good, who will own that?


Frank Oliver: After the resolution goes through the Government of Canada will own $40,000,000 and Mackenzie and Mann, or those to whom they sold their debenture stock, will own $85,000,000.


William Thomas White: 


Frank Oliver: 


William Manley German: Who will own the
$25,000,000 of redeemable debenture stock?


Arthur Meighen: The bond-holders have the debenture stock.


Frank Oliver: And who got the money for that?


William Thomas White: The Canadian Northern
railway.	.


Frank Oliver: Yes. We do not need to dispute about the facts. The point is that this Government has sent out word to the people of the country that they had reduced the stock of the Canadian Northern railway to $100,000,000, when
11 p.m. there is no foundation in fact for that statement.


William Thomas White: Do you not believe it.


Frank Oliver: It was an absolute misrepresentation to the people of Canada.


William Thomas White: Nothing of the kind.


Frank Oliver: They intended to make them believe that a bargain was being made in their behalf when, as a matter of fact, the bargain was against them and not in their favour. To-day the country is being given to understand that the Government has been given $40,000,000 of the Canadian Northern Railway stock formerly held by Messrs. Mackenzie and Mann. This House knows, after the calculations that have been made to-day that Mackenzie and Mann owned last year $70,000,000 of Canadian Northern Railway stock.


William Thomas White: And what else?


Frank Oliver: And to-day they own
$60,000,000 of Canadian Northern Railway stock and the Government have $40,000,000. Now, there is frenzied finance for you. The Government gets $40,000,000 and Mackenzie and Mann only lose $10,000,000.


William Thomas White: What about the subsidiary companies whose stock they own?


William John Macdonald: They were not worth anything. Mr. Bennett showed that you are giving them something for nothing.


Wilfrid Laurier: The Solicitor General told U3 yesterday that there was no such thing now, that it was all wiped out.


Arthur Meighen: I did not say that.


Wilfrid Laurier: Oh, yes, you did again and again.


Thomas Simpson Sproule: The hon. member for
Edmonton has the floor.


Frank Oliver: I maintain that this proposal should either be a loan on terms that, failing substantial security, wrould ensure proper expenditure of the money in payment of indebtedness and completion of the enterprise, or a definite, controlling interest in the company.


Mr. McKAY:: The hon. member referred to the question of what was to become of the loans and indebtedness of the company. Has he read clauses 4 and 5 of the resolution?


Frank Oliver: Yes.


James McKay: Does that not give some explanation as to how these debts are to be paid?


Frank Oliver: I do not think this explanation would satisfy me if I was a creditor. It is really one of the most remarkable provisions ever put on any statute book. If my hon. friend were a creditor he would not think that the provisions of that section protected him.


William Manley German: How would you prevent a man from suing a company if he had a claim against them?


Frank Oliver: And how is it going to be guaranteed that these claims, which are to be paid only out of certain securities, will be paid if those securities do not realize the required amount?


Mr. MURPHY:: By the promise that they will get more money next year.


Frank Oliver: That is the only way. These securities are existent to-day, and if the amounts are not paid out of proceeds of the securities, it means that the securities will not bring a sufficient amount, and they will not bring any more to-morrow than they will to-day.


James McKay: They still look to the company.


Frank Oliver: Of course, and the company has no money.


James McKay: As I take it, these people advance money on certain securities, and the recourse to the company is postponed till the system is completed. That is the meaning of the section.


Frank Oliver: That means that it does
not mean anything at all, effectively. I must admit that I do not understand it myself, nor do I think that the man who framed it understands it.


William John Macdonald: Lash knows what it
means.


Frank Oliver: If he drew it up, I guess he understands it. I certainly do not see in this section any assurance of the maintenance of the credit, either of the company, or the country by the passing of a resolution containing such a very remarkable provision. I think quite the contrary. I see in the section, and in the resolution containing that section, a disregard of the credit of the country, and of the company, and if I were a creditor of the company I would certainly think that my interests were not being safe-guarded by such a provision embodied in a statute. Section 5 reads:
That covenants or undertakings of the contractors and such other covenants or undertakings as may he required by the Governor in Council shall be given that the current indebtedness of the Canadian Northern and of the said constituent and subsidiary companies will within one year from the passing of the Act to be based upon these resolutions be reduced to the normal or usual current amount to be determined by the minister and that meanwhile all such current indebtedness other than such as may be the subject of bona fide dispute, will be either paid or arranged in such a manner that no proceedings for the enforcement of payment thereof will be taken or pressed.


Mr. ROSS:: Who gives the covenant?


Frank Oliver: The contractors give undertakings that they will reduce the current indebtedness to an amount to be fixed by the minister. Now Mackenzie and Mann, it is said, are not able to pay their debts to-day; that is why they are here, and yet we are taking a covenant from them that they will pay their debts if we give them this money.


William John Macdonald: But we have no guarantee.


Frank Oliver: Why in the world should we take a covenant from them that they will pay the money we give them over ic somebody else, instead of providing that there shall be an accounting, and that die
money shall be paid to the people to whom it is owing.


William Manley German: Allow me to correct my hon. friend. It is not asserted that Mackenzie and Mann cannot pay their debts, but that the Canadian Northern cannot. Mackenzie and Mann have got all the money, and the Canadian Northern railway has none.


James McKay: That is just the point. The Canadian Northern railway has not the money. Mackenzie and Mann are paying the debts.


Frank Oliver: I am delighted to hear
that. If my hon. friend will induce the Government to insert the words Messrp. Mackenzie and Mann-


James McKay: Mackenzie, Mann and
Company, Limited.


Frank Oliver: If it is provided that
Messrs. Mackenzie and Mann are to be responsible themselves, we should know who we are looking to. But as the section ^is drawn up, no man can tell its meaning. No responsibility is placed on any one.


Hugh Boulton Morphy: The interpretation clause .makes it plain.
Mr.' OLIVER: I maintain that if this resolution has a pui*pose at all, it is to see that the debts of the company are paid, and it is not making that provision; it is to see that the enterprises of the company are completed, and it is not making that provision; it is to see that the property of the company, in case of default, becomes the property of the people of Canada, and it is not making that provision; in none of these particulars does it meet the requirements of the case. I object to these resolutions because they establish a junior, partnership with an insolvent debtor. They, in effect, compel further aid to prevent future bankruptcy. While professing to take security they establish a largely increased liability. Although they lay an enormous additional burden on the credit of the country they do not provide for outstanding liabilities. They do not secure completion of the enterprise; they do not protect provincial interests; they do not provide for minimum freight rates; and in case of foreclosure, they do not provide for Government ownership of the property.
On motion of Mr. Bristol, the debate was ajourned.

On motion of Mr. White, the House adjourned at 11.12 p.m.
Friday, May 15, 1914.