1917-08-15

PRICE OF BRAN-SHIPMENTS TO THE UNITED STATES.

[Stage Direction]
On the Orders of the Day:
Mr. E. W. NESBITT (North Oxford):: Before the Orders of the Day are called I would like to ask the Minister of Trade *and Commerce if he has had any notices from farmers' clubs or otherwise about the millers selling bran on the other side of the line cheaper than they are selling here. I have a letter from the secretary of the Kintore Farmers' Club, of Ontario, enclosing a clipping from Farm .and Dairy to the effect that the Montreal millers had sold three hundred car loads of bran to. go to the United States at $25 a ton, and more recent inquiries revealed that the millers generally are shipping immense quantities of bran to the United States at prices ranging from $25 to $27.50 a ton. At the same time, prices in Canada have ranged from $30 to $32 a ton, and are going higher. Has the minister heard anything of the kind, and has he taken any steps to correct the trouble, if the statement is true?


Sir GEORGE FOSTER:: I have not officially any information with reference to the matter. I have seen statements in the newspapers. The market in the United States is open, for the sale of such products and the millers appear to be simply availing themselves of a market which is open to them. They are selling at such prices as they choose to sell.



RECRUITING FOR CANADIAN AND BRITISH FORCES IN THE UNITED STATES.

[Stage Direction]
On the Orders of the Day:
Hon. CHARLES MURPHY (Russell):: I would direct the attention of the Minister of Militia and Defence (Sir Edward Kemp) to this despatch from New York, dated , August 11th, which appeared in the Montreal Gazette:
More than 5,000 men for Canadian and British forces have been recruited in this country toy the British recruiting commission, it was announced here to-day. About 4,400 of these have already gone forward to the depots in Canada, it was stated, the other 600 having been granted time to arrange their affairs.
I desire to ask my hon. friend if the numbers mentioned in this despatch were included in the statement given by him to the hon. member for Halifax (Mr. A. K. Maclean) a few da3rs ago.


Sir EDWARD KEMP:: I could not say whether that would agree with the report I gave the member for Halifax. I have not had the United States returns for a week or so. I .asked for them this morning. I have not the figures in my mind at the moment.



RUMOURED PEACE PROPOSADS.

[Stage Direction]
On the Orders of the Day:
Charles Murphy: May I ask the Prime
Minister a question.? There is a rumour current to the effect that proposals for peace have been made to all the belligerent countries. Has any such proposal come to this Government?


Sir ROBERT BORDEN:: I have not heard of anything of the kind.



CANADIAN EXPEDITIONARY FORCE.


[Stage Direction]
On the Orders of the Day:
Sir SAM HUGHES:: In view of the delay attending the publication of Colonel Bruce's report on the Babtie commission, I would like to ask the First Minister if he will be good enough to tell us what changes have been made in general in the Medical Service in England and at the front within the last twelve months, and whether any further changes are in contemplation, and if so, what is their nature? I do not want the data to-day. I would like to .give the Prime Minister an opportunity to make a statement on the question. The reason I ask

is while we are aware that certain changes have been made along the lines recommended by Colonel Bruce, nevertheless there are other matters of very serious import. I want to give the Government an opportunity of taking charge of the question without any inquiry, but if it does not do-so there will have to be some statement in justice to the soldiers and in justice to all concerned, and I will ask for a day to discuss the question. I would like to let the Prime Minister prepare a statement on it at some convenient time.


Robert Laird Borden: I will see that the information is available.



CANADIAN RAILWAY SITUATION.


[Stage Direction]
Hon. Sir THOMAS WHITE (Minister of Finance) moved the second reading of Bill No. 125, providing for the acquisition by His Majesty of the capital stock of the Canadian Northern Railway Company.
He said: In introducing this legislation to the House, I made so complete a statement as to the reasons actuating the Government to acquire the whole of the capital stock of the Canadian. Northern Railway Company, that I deem it unnecessary to say anything further in that connection. I shall, therefore, confine my remarks upon this, the occasion of the second Teading of the Bill, to the principal features of the criticism that was offered to the resolution in committee. The criticism was mainly along three lines. First, it was suggested by certain hon. gentlemen opposite that the Dominion Government, instead of acquiring the capital stock of the Canadian Northern Railway Company, should expropriate the physical undertaking of the company and of the constituent and subsidiary companies constituting the system. Under the legislation which we are adopting, the Dominion Government, by acquiring the capital stock of the Canadian Northern Railway Company, preserves the entities of the Canadian Northern Railway Company 'and of the constituent and subsidiary companies. If we adopted the suggestion that was made that we should acquire the physical properties of the several companies in the system, we should own the assets of all those companies as the Government now owns the Intercolonial and the National Transcontinental from Moncton to Winnipeg.
In passing, I may say that such a policy would be in direct contravention of the
recommendations of the Drayton-Acworth report, and of the report of the chairman of the commission, Mr. Smith, president of the New York Central Railway Company. Apart, however, from that consideration, there is a great and manifest advantage in maintaining the corporate identity of the Canadian Northern Railway Company, and of its subsidiary and constituent companies. Particularly is this so with reference to the question of the financing of these companies. I pointed out to the House, when we were in committee upon the resolution, that the Canadian Northern Railway Company had in addition to a large funded debt a considerable short term and floating indebtedness, amounting to about $98,000,000. If the Dominion Government acquired by expropriation the physical assets of the Canadian Northern and the other railways in, the system, it would be obliged to find the -money to take care of the short date and other indebtedness I have mentioned, or if it failed to find the money to take care of that indebtedness, it would follow that the creditors of the company in respect of the short term and floating indebtedness, would be in a position to appoint a receiver, with the result that the funded indebtedness would at once become due, as to the principal owing under several trust mortgages securing it. The result would be chaos so far as the financial condition of the system is concerned.
I point out to the House that the short term and floating indebtedness is such as to be of some concern to the Government, if it had to be provided for forthwith even in ordinary times; but by reason of the fact that we have entered on the fourth year of the war, with the enormous expenditures which we have in connection therewith, it would be a most serious matter for us to take over the physical properties and assets of -this system and find the money to meet not only the floating and short-term indebtedness, but other indebtedness if it should become due Iby reason of litigation affecting these companies. We take over the system by acquiring its common stock. That will enable the companies, as companies, to continue to finance. So far as concerns the short-term obligations of the company, the Canadian Northern can, in the future, a-s it has in the past, endeavoured to extend these obligations as they mature, or make fresh issues under its corporate powers in that behalf. The result is that the Dominion Government should not be called upon to
[Stage Direction]
[DOT]14GB
[Stage Direction]
any considerable extent to immediately pledge its credit in the raising of loans for the Canadian Northern system. The same remark will apply to the financing of the purchase of rolling stock which may, and will, be required for the Canadian Northern system and its subsidiary companies. There is great need of rolling stock on the part of all the railways of Canada with the exception possibly of the Canadian Pacific. Taking over the Canadian Northern Railway Company as we do by acquiring its stock and preserving as we do the corporate entity of the company, there is no reason why the Canadian Northern should not continue to issue rolling-stock bonds as it has in the past. I think the House is quite familiar with the character of those securities. If the Dominion Government took over the physical properties of the system it would Ibe obliged not only to take care of the large indebtedness which of necessity would become due, but also would be obliged to find the money to. purchase equipment, because I cannot conceive of the Dominion Government issuing debentures secured by the pledge of rolling stock.
So much for that phase of the criticism which was offered to the resolution in the committee stage. The other criticisms were, first, that on account of the findings of the Drayton-Acworth report, there was no value in the common stock which we proposed to 'submit to arbitration, and, secondly, it was suggested that instead of arbitration there should be ia reference to the Exchequer Court. I shall deal briefly with these two features of the criticism to which the legislation has been subjected. It has been .stated by hon. gentlemen opposite that the Drayton-Acworth report expressly finds that there is no value in the property of the shareholders of the Can)ad,an Northern Railway Company. On page 44 of the report they reached this conclusion.
We conclude, therefore, that the shareholders of the company have no equity either on the ground of cash put in, or on the ground of physical reproduction cost, or on the ground of the saleable value of their property as a going concern.
Some hon. gentlemen opposite, resting upon that finding, have submitted that there is no value in the common stock which could be submitted to the decision of arbitrators. Sir Henry Drayton and Mr. Ac-worth, in reaching their conclusion, deal, first, with the question of the cash investment, page 41 of the report, and their finding under that heading is that $370,000,000 is the maximum possible cost of the Cana-
[Slr Thomas White.]
dian Northern system as at present existing. They deal, secondly, and this is one of the most important portions of their report, with the physical basis. At page 43 of their report they say:
But money cost is not all. We decided also to ascertain the approximate value, on the basis of reproduction cost, of the property as it exists to-day. And we rely on Professor Swain's valuation for this purpose.
After adverting to his valuation they find that the value on the basis of reproducing the entire physical Canadian Northern system in its present condition is $402,749,663. They go on to say:
Now the outstanding liabilities (bonds, debentures, notes, and bank and other loans) of the company exceed $400,000,000.
On page 44 they refer to the valuation upon the basis of the company as a going concern and they state that:
Calculating on this basis, in the light of the figures set out above, it is evident that no purchaser would offer for the property a sum amounting to the total of its liabilities.
Upon this finding some hon. gentlemen opposite have argued that there should be no submission to arbitration because of the calculations of the commissioners as to the value of the assets, the amount of the liabilities of the company and their opinion of its value as a going concern. But, I would point out to the House that there are certain important omissions in the Drayton-Acworth .report. Professor Swain himself overlooked in his valuation the land owned by the company amounting to 3,000,000 acres, of which 2,000,000 are in the province of Ontario, 400,000 in the province of Quebec, and, speaking from memory, about
800,000	in the West. He also overlooked the deferred payments on lands sold amounting, according to the statement of the company, to $7,000,000 and cash in land sales trust account of $2,400,000.
The position then is that Professor Swain, in his valuation of the undertaking, overlooked a substantial body of assets. In his report, on page 43, he calls attention to the working capital and cash on hand, his statement 'being:
In an estimate of physical valuation on the cost of reproduction basis, it is usual to add to the value of physical elements a certain sum for working capital, for the reason that a company beginning operations with only the physical elements in its possession, and no working capita], would be unable to do business. For this reason, the addition of a certain sum for working capital has been frequently approved by, courts and commissions. Cash on hand, is, of course, a physical asset.

He goes on to say-and when he says "your attention" he means the attention of the commissioners:
Tour attention is called to these two matters ror the reason that neither have been included in the present valuation, and it may be desirable for you to inquire as to the cash on hand and to take account of it as well as of a proper allowance for working capital, in whatever use you may wish to make of the results of this valuation.
Messrs. Drayton and Acwo-rth, in their report, inadvertently overlooked that recommendation of Professor Swain's.
Charles Murphy: Was Prof. Swain's attention brought to these omissions and did he admit that he made them?


Sir THOMAS WHITE:: I am unable to make a statement about that. It is clear the omissions were made; there seems no doubt that Messrs. Drayton and Acworth inadvertently overlooked this recommendation of Prof. Swain that they should consider cash and working capital, and, as a result, cash to the amount of $25,000,000, and current accounts to the amount of $8,700,000 were not included in their valuation of the assets of the Canadian Northern system. On the other side of the account, the commissioners overlooked the income charged convertible bonds amounting to about $25,000,000, so that the findings of the Acworth-Drayton Commission, namely that the outstanding liabilities of the company exceed $400,000,000 and that the assets are represented by the sum of $402,000,000, is not quite accurate. I do not mean to say for a moment that this- common stock is worth the difference between the liabilities and the assets of the company.


Mr. PUGSLEY:: In the statement of liabilities which Prof. Swain has found to be $400,000,000, are the land debenture bonds included?


William Thomas White: mentioned, would undoubtedly be able to reach a fair conclusion as to what was the equitable or reasonable value to place upon the common stock of the Canadian Northern Railway Company which we propose to acquire. Therefore, in so far as criticism of the arbitration proposals is founded upon the statement in the Drayton-Acworth report, it would seem to me not to be conclusive. Such a considerable body of assets has been overlooked on the one hand, and such a considerable amount of liability on the other hand, that undoubtedly the findings of the commission, through inadvertent mistake, are not entitled to be regarded as conclusive.
Another objection which was made by some members was that the value of this stock should be determined by the Exchequer Court. I may say that the Government concluded against this course for the reason which I think I indicated when we were considering the resolutions in committee, namely on account of the time which would be taken in litigation of this kind before a Court of Record- a court bound by hard and fast rules of procedure and by the technical laws of evidence. I think any lawyer in the House will agree with me that, having regard to the magnitude of this system, the expert evidence which could be called on both sides, the determination by accountants of liability, and generally the litigation of so large a question, the determination of this issue before a court of record, which has other business to transact might take two years, and I am sustained in that view by the opinion of the Department of Justice. On the other hand, it occurred to us- and this was the principal reason for determining upon arbitration-which, I might say in passing, was recommended by the Drayton-Acworth report as a mode of settling the differences between the Canadian Northern Railway Company shareholders and the Dominion Railway Company-that arbitrators could proceed in summary fashion. They will not be bound to the same extent, under the language of this legislation, by the hard and fast rules of evidence, but can proceed expeditiously to the determination of the question of what is the fair value of the stock of the Canadian Northern Railway Company. We therefore thought it would be fair to all parties concerned if the value of this stock which we are about to acquire was determined by a Board of Arbitrators, one to be appointed by the (Dominion Government, one by the owners and pledgees of

the stock, and the third to be agreed upon by those two, or, failing agreement, to be appointed by the senior judge of the Exchequer Court. For the information of the House I might say that the arbitrator whom we have had in view, and whom I am able to say will act for the Dominion Government, is Sir William Meredith, Chief Justice of Ontario. I am sure all members of the House will agTee with me that the interests of the people of Canada in so important a transaction as this could not be confided to more capable or more trustworthy hands.
' Mr. DEVLINS: What experience in railway matters has Sir William Meredith had? This matter is not to be referred to the Exchequer Court but to arbitrators- arbitrators, presumably, who have some knowledge of railway matters. What knowledge of railway affairs has Sir William Meredith?


William Thomas White: The judicial experience oif Sir William Meredith, Chief Justice of Ontario, ,to say nothing of his long experience as a lawyer of the highest standing, is such as to eminently qualify him for a position such as this, in which he will represent the Dominion Government in determining the vaflue of this stock.


Charles Murphy: That is hardly an answer to the question of my hon. friend (Mr. Devlin).


William Thomas White: It would appear to me to be a very complete answer. My hon. friend says: Why not refer the matter to the Exchequer Court? If I used the same argument as my hon. friend I might ask what experience has the judge of the Exchequer Court had in practical railway matters? Judges are men who acquire an immense amount of information in connection with their judicial duties. Apart from that, evidence will be submitted to these arbitrators by the Dominion Government and 'by the owners and pledgees of the stock as to its value. It would appear to me, -therefore, that the interests of the people of Canada could not be entrusted to more capable or more trustworthy hands than to tho.se of the Chief Justice of the province of Ontario.


Charles Murphy: Has my hon. friend determined on counsel, as well as an arbitrator, to represent the Dominion Government?


William Thomas White: No, we have not considered that.


William Pugsley: Section 4 says that the arbitrators., in determining the value of the shares, may apply their own judgment. Does the minister think there would be an appeal to the Supreme Court of Canada with respect to the exercise of that judgment?


William Thomas White: I think there
would, beeause we have been careful in the wording of that section to provide that there-shall 'be an appeal to the Supreme Court of Canada on questions not only oif law, but of.' facts. 1 do not desire to elaborate, but I do not think it would be possible to secure as arbitrator for the Dominion Government in this important transaction .a man having-actual Tailway experience who would have-tbe *qualifications possessed by the gen-tl'*-maa whom I have mentioned.


Mr. GRAHAM:: If the Bill now before the-Senate should pass, would it be possible-for Sir William Meredith to act?


William Thomas White: I have the consent, of Sir William Meredith to act for the Dominion Government as arbitrator, and I anticipate no difficulty in connection with, the legislation my hon friend mentions or any other legislation.
It is not my intention to take up further the time of the House because, as I stated at the outset, this matter was very fully discussed during the committee stage. In concluding, I just wish to say further that by acquiring all the capital stock of the Canadian Northern Railway Company the-Government obtains the ownership and control of the entire system-a system of 9,500 miles of railway, with the appurtenances of telegraph, express, steamship, elevator, storage and other facilities. The system cannot render the service which it should to the people of Canada unless it is financially able, not only to pay its fixed charges and provide for betterments and improvements, but also to provide for needed extensions. If we brought down, as was suggested by some hon. gentlemen opposite, legislation providing assistance of a temporary character this year, such as was brought down last year, that would only be postponing the problem. Next year there would be the same application for assistance and the same need of relief. The same may be said of the following year; in fact, it is not too much to state that for the next three or four or five years, the Dominion Government would be compelled each year to make provisions for further assistance to the Canadian Northern Railway Company if we proceeded upon the basis of our action of last year. But that, as I
stated last year, is not to be thought of-We appointed a commission for the purpose of finding if possible a permanent solution of the question, and with regard to the assistance which the Dominion Government will be called upon now to furnish to the Canadian Northern Railway system, we can say this: The benefit of the expenditure from the funds so granted by way of assistance, whether employed for the purpose of providing betterments and improvements or acquiring rolling stock or making extensions, will inure to the new owners, the people of Canada, who will own the entire $100,000,000 of the capital stock of the Canadian Northern Railway, and thus control the entire system.
I move the second reading of the Bill,
Hon. GEORGE P. GRAHAM (South Renfrew) : Mr. Speaker, we are in a somewhat-peculiar position regarding this Bill; it cannot be said that the situation is absolutely clear. Three parties seem to be concerned in this proposal: first, the Government of Canada; second, a group of financiers,, bondholders and others; "and, third, Mackenzie and Mann. From the information so far brought down we have no documentary evidence that the Canadian Northern Railway Company has -asked for this legislation; neither have we any documentary evidence that Mackenzie and Mann have asked for aid. On the contrary, the statements presented to the House by the Canadian Northern Railway Company rather indicate that Mackenzie and Mann believe that they could swing this enterprise without legislation. It looks as if the financiers behind! the owners, not the owners themselves, have-asked the Government to pass this legislation and to take over the enterprise.
It can readily be seen that to the bondholders Government ownership of the Canadian Northern would be much more attractive than private ownership of the: system under existing conditions. Should this Bill become an Act of Parliament, at once the holders of those securities will find themselves the possessors of a value that they never anticipated and never would have realized had this legislation not been introduced. To them it will be a wonderful and a very profitable piece of financing. However, this Parliament has to do what is best for the country rather than what is best for private individuals. Regard for the interests of the financial group or for the interests of Mackenzie and Mann must, in the minds and acts of members of Parliament, take a secondary place to- what

is considered to be in the best interests of the people as a whole.
My hon. friend has discussed the arbitration provision and the proposal to have a reference to the Exchequer Court. It is unnecessary for me to reply to this portion of my hon. friend's 'argument, because I propose to move an amendment that will require neither arbitration nor Exchequer Court proceedings.
The Minister of Finance has rather repudiated the Drayton-Acworth report. I am not going to argue whether that report be correct or incorrect. A great deal of work was done in connection with it and a great deal of industry was displayed; but I am going to brush that to one side; I am not going to ask the House to consider whether the Drayton-Acworth report is reliable or unreliable. It does seem peculiar, though, that a report made by such eminent gentlemen, appointed by the Government, should contain a mistake of so many millions and that that mistake should be discovered only to-day. I do not say that the mistake did not occur; but if it did occur-then the Lord deliver us from the findings of commissions. After all, though we may read reports and statements, we have to come back to our own judgment and take the responsibility of what we do, regardless of what commissioners may find. I am sure that the Minister of Public Works (Hon. Robert Rogers) agrees with me in that respect.
My hon. friend has referred to the short term liabilities. If my memory serves me correctly, these short term liabilities carry with them collateral of Government securities. As a matter of fact, if the Canadian Northern were able to renew its short term notes, the Government of Canada would find the securities which it had guaranteed put up as collateral for these short term notes. So that the situation in reference to these short term notes remains practically the same whether the Government owns the road or whether it is left in the hands of the Canadian Northern Railway Company.
I suggested a few moments ago that it was the group of financiers interested, not Mackenzie and Mann, who were urging the Government to take over this enterprise. The Finance Minister has brought down to the House a statement made by his own department which indicates that, at least in certain respects, Mackenzie and Mann have not defaulted. I refer to the provision in the statute of 1914, under which the Government agreed to advance
[Mr. Graham. 1
the interest on the $45,000,000 guarantee for three years, divided into six semiannual payments. This interest was to become part of the capital loan to the Canadian Northern, and was to be repaid when the $45,000,000 were repaid, but the company agreed to pay regularly the interest on this advanced interest. The statement brought down by the Finance Minister shows .that the Government has advanced to the Canadian Northern under .this section of the statute $2,634,500.01, and that the Canadian Northern has paid interest on this interest to the apiount of $35,952.04. The next payment of interest becomes due on September 1; therefore they cannot be said to be in default.
I have intimated that the statement presented to the Government and by the Government to the House rather lead one to the conclusion that Mackenzie and Mann or the Canadian Northern Railway Company believe that the enterprise could get along without any legislation by this Parliament at this time. I have before me a statement made by the assistant to the vice-president, Mr. Mitchell; it is an interim condensed general balance sheet of the Canadian Northern Railway system at April 30, 1917.


Mr. CURRIE:: Has that been tabled?


George Perry Graham: Yes. This includes a
statement of estimate of cost to complete lines and terminals under construction and financial provision for the same; statement of contractors' and other construction accounts outstanding, June 30, 1917; memorandum re unsold lands; estimate of amount required for betterments and rolling stock for three years. This would seem, although it is an interim report up to April 30, 1917, to cover everything in connection with the Canadian Northern. I will not weary the House by reading this statement, 'but I will merely point out that, in the statement of assets and liabilities, 'Mackenzie and Mann claim a surplus of $37,49(4,870.71,


Mr. R. B. BENNETT:: What value is
placed upon the lands?


George Perry Graham: I will come to that in a moment.


William Pugsley: That is over and above the common stock of $100,000,000.


George Perry Graham: There is another statement showing the estimate of cost to complete terminals and lines under construction and financial provision for same, June 30, 1917. In fairness I should add that the

statement from 'which I have just quoted is made up only to April 30, 1917; it is impossible to get the detailed returns up to June 30, 1917, but the estimate I am now reading and the other facts in this statement are all of June 30, 1917. That would be a year later than the date of the statement in the blue-book now in our possession. I might give some of the details:
Western lines	$1,612,005
Eastern lines	 1.10,000
Total	$1,722,005
Estimate cost Ito complete terminals already under construction:
(Montreal terminal	$ 578,000
Toronto terminal	 338,094
Pacific Coast terminals ..	1,500,000
Total	$2,466,094
or an estimate of the total requirements for construction of $4,188,099.


Mr. GLASS:: Are those the estimates of the company's engineers?


George Perry Graham: Those are the estimates presented to the Government by the company and presented to the House by the Government. The company/claim to have
made financial provision for all this construction as follows :
Cash in Trust Accounts applicable
to above construction	$3,683,831
Government Guaranteed Securities	 217,160
Canadian Northern 4 per cent Debenture Stock	 287,108
Total	$4,188,099
In other words, the company presents to us a statement showing that they have made ample provision, without any further aid from this Government, for the completion of the construction now undertaken, and for the lines that they con-4 p.m. sider ought to be constructed during the war. It is only fair to say that this does not include all the construction work or all the proposed construction work of the Canadian Northern, but only that portion of it which the company deems necessary should be undertaken and completed even if war be in progress. I will read the note at the bottom of this statement so that there will be no misunderstanding:
The above does not represent the complete construction programme of the company, but only that portion of same which it is desirable should be proceeded with. Arrangements could
be made to defer the balance till after the war, when same will be subject to such changes as conditions may necessitate.
It will be observed that for the present, and for the term during which the war is likely to last, the Canadian Northern submit to the Government a statement showing that they desire no aid for this purpose, as they have made complete provision for it in the manner outlined in the statement I have read. Then we have a statement of outstanding accounts. I will not give the entire statement, but will intimate to the House that the outstanding accounts amount to $999,566.95, or about $1,000,000. My hon. friend (Mr. R. B. Bennett) asks me what value the company places upon the land. So that there may be no error, I will read the whole statement.
Price per
Lands unsold.	Acres. Acre Amount
Manitoba and Saskatchewan		843,127 $15 $12,646,905
Ontario	
2,000,000	3	6,000,000Quebec	
402,860	3	1,208,580or a total value placed on the unsold lands in these four provinces of	$19,855,485Deferred payments, payments receivable with accrued interest to date	$ 7,140,996 59Cash in hand, National Trust Company, Ltd., 1899 and 1909 bonds	- [DOT] .. .. 2,408,683 57Or a total Of	$29,405,165 16
Mortgages outstanding-
4 per cent Land Grant Bonds,
1899	 $ 2,000,000 00
4	per cent Land Grant Bonds,
1909	,	
2,217,740 005	per cent Land Mortgage Debentures, 1913.. - -	
17,033,333 33Total	$21,251,073 33
Or a credit balance, if this statement be correct-and .it is presented by the company- of something over $8,000,000. There is a note here which I will read:
1913, selling price western lands, average, $15.36 per acre; 1914, $15.23; 1915, $15.53, and 1916, $16.37.
Hon. gentlemen will see from that that the company itself, in its statement presented to the House, indicates that it is not in a bad financial position; that it has money to carry on its undertakings. That

forces the conclusion, at least upon me, that it is not the company that is pressing for this legislation, but it is some people behind the company who advanced money to the company and who feel that not only would their investment be more secure were this railway in the possession of the Government, but its value would 'be enhanced by millions upon millions of dollars.
I have here another statement-estimate of amount required for betterments and rolling stock:
1918	$6,590,000
1919..	[DOT][DOT]	
8,355,0001920	*	
8,317,500
I have Tead those statements 'by the company to prove what I have stated once or twice before, namely, that there seems to be three distinct parties to this proposal- the Government, the group of financiers, and the bondholders of the Canadian Northern Railway.
I am not sure that these lands will bring the value the company places upon them, but, apparently the company thinks they will.
I am rather going to take the viewpoint of the Minister of Finance that something should be done. What is it? I am of the opinion that the time has come when the people demand that we cease giving further annual or semi-annual aid to the Canadian Northern Railway Company. There are only two ways toy which this can toe obviated, one would be the purchase of the Canadian Northern by some other corporation. This has not been discussed at length in the House, and I will not intrude it. The other way is for the Government of Canada, on toehalf of the people, to get possession of the Canadian Northern in a manner that will be equitable. The Government proposes to take dver the road to become the possessor of the $60,000,000 remaining common stock, leaving the value of that stock to be fixed by arbitration. I shall not hark back to the Drayton-Acworth report again, because the Government has rather put. it out of business. I shall en-Geavour to prove my contention as to what should be done, without reference to the Drayton-Acworth report, or to the report made by Mr. Smith, president of the New York Central Railway.
There is a method provided for the taking over of the road under the statute of 1914. and such a step was fully contemplated by the Government, and by Parliament, and its decision only three years ago was embalmed in a statute. This Parliament made

a contract with the Canadian Northern Railway, and under that contract, and based upon its terms, we in this House were induced to vote further aid in the way of a guarantee of $45,000,000 of bonds. I contend that if there be default-and that is the condition under which this statute can be made operative-then not by new legislation, not by expropriation, not by the purchase of stock, should this property be acquired, but it should be acquired under the contract made between the parties in 1914.
Let me read one of the clauses in the statute. It will be found in Chapter 20, George V, section 24:
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 Canad.an No. them and of all other persons whomsoever in the mortgaged premises to be foreclosed, and thereupon the equity of redemption of tha Canadian Northern (and of such other persons) in the mortgaged premises, and every part thereof, shall be and .become absolutely barred and foreclosed, and the same shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment or any rule of law or equity to the contrary notwithstanding.
That is the basis on which we in. this House consented to give Mackenzie and Mann a further assistance to the extent of the guarantee on $45,000,000 bonds, in the year 1914. Now, I ask you, Sir, and I ask the members of this House, and I ask the country, what has happened that would justify a deviation from .that plain contract made with the company? Is there any Teason? If there be, it has not been presented to the House. I will quote from the Minister of Finance, to see if under that statute we are now in a position to take over the property as indicated in the section I have just read. Has the condition arisen by which this section can become operative? In other words, is there default, present, or premeditated, or anticipated? It may toe remembered that in 1914 the Finance Minister, and, I think, the Solicitor General, spoke very strongly concerning the stringent terms of this statute, and assured the House that they could take over the road without any process of law, by Order in Council, and left us with the impression, at least, that when we were assenting to the passage of that statute, if default should arise they would act under statute. That was the real reason the House consented to the paesase of the Act.


Mr. BURNHAM:: Is not that the very
weakness of the hon. gentleman's argument" There has to be a smash-up, or a breakdown, before this comes into effect?


George Perry Graham: I would not like to say
a "smash-up" or a "break-down," but I think I know what the hon. gentleman means. I will refer him to the Minister of Finance to show that the conditions have arisen which were provided for an this statute.


John Hampden Burnham: But "premeditated" and "actual" are two different things.


George Perry Graham: I will probably have it
"actual" before I am through. When the Minister of Finance introduced the measure in 1914, he assured us that this statute was so framed that in the event of any default the road would practically automatically come into the hands of the Government. On August 1, 1917, the minister said -and it is evidence that the conditions have arisen when this Act should come into force, or if they have not arisen why the legislation now before the House?


John Hampden Burnham: That is easily answered.


George Perry Graham: It may be for people who are not particular about the answer. Let me read what the minister said-
The position of the Canadian Northern today is this:	The company has a certain
amount of net earnings. Its revenues are such that, after paying all fixed charges, it has a surplus. On that statement one might ask: Why should the Canadian Northern require any aid from the Government of Canada? The answer is very simple. Any railway system requires continually to make expenditures of a capital nature, not only on needed extensions- and I believe very few of these are being made at the present time-but on betterments, and requires to expend vast sums in the purchase of rolling stock in order that the public may be served and that the business may be carried on profitably. The essence of the situation, in so far as the Canadian Northern is concerned, is that, although the company makes net earnings, any surplus cash it has on that account it requires to pay for betterments and rolling stock.
The result is that the company is short of* cash for the purpose of paying interest upon its underlying securities. If the cash is used for betterments and for the purchase of rolling stock, it is obvious that it is not available for the payment of the underlying interest charges. Put it the other way. If it is used for the payment of underlying interest charges, the necessary betterments to the road cannot be made nor can rolling stock be purchased. It is not possible for the company, as it would be if the war was not on, to issue further securities for the purpose of paying for these betterments and acquiring rolling stock. That is what a company does in peace times when conditions are such that it can float its securities, but the prolongation of the war has made it impossible for the Canadian Northern to float any additional securities, to issue any further debenture stock, and consequently it has to take its earnings to pay for betterments and the purchase of rolling stock and to meet the instalment payments on account of principal maturing on rolling stock. It is therefore unable to pay its underlying interest charges.
That would seem to be default.


John Hampden Burnham: That is so declared; that is different.


George Perry Graham: If I had my hon. friend's powers of reasoning I would be delighted with myself.


Richard Bedford Bennett: There is a section in t'he 1914 statute which declares what default is.


George Perry Graham: I am going to refer to that in a moment. Then the minister goes on to say:
In addition to this, the company has had to do a great deal of short date financing. There is outstanding, secured, for the most part, by Dominion or provincial guaranteed bonds or debentures, short-term loans floated in New York or London. The amount of that ordinary, shortterm liability is about $100,000,000, extending over a period of two years or more. It is not possible for the company, by the issue of permanent securities, to fund that debt. Therefore, it is obliged from time to time to renew these short-term securities, and to carry on as best it may from year to year. The company have, in the past, come to the Government and asked us, as they did last year, to make them a loan of a sufficient amount to take care of the underlying . interest charges and to meet the maturing instalments of principal upon rolling stock.
The minister states clearly that the company cannot pay interest on its underlying securities. Let us see if it is in default.
I have read the minister's statement in the House to show that the Canadian Northern has not been able, and is not now able, to pay interest on its underlying securities. Section 21 of the statute of 1914 tells us what default means. It says:
21. The following shall be events? of default within the meaning of this Act. viz:-
(a)	If the Canadian Northern shall make default in payment of the principal or interest of the guaranteed securities or any part thereof, or default in observing or performing any of the provisions of the New Trust Deed, and the security constituted by the New Trust Deed shall thereby become enforceable ;
(b)	If while any of the guaranteed securities are outstanding in the Canadian Northern or any Constituent or Subsidiary Company shall make default in the payment of the principal or interest or any other part thereof, of any securities heretofore or hereafter created or issued under the existing trust deed or mortgage securing the same, or under any future trust deed securing securities having priority to the guaranteed securities, or default in observing or performing any of the terms of any such existing

or future trust deed or mortgage, and the security constituted by any such trust deed or mortgage shall thereby become enforceable ;
(c)	If, while any of the guaranteed securities are outstanding, an order be made by any court against any company in the Canadian Northern System for the appointment of a receiver or for possession, or if a receiver be otherwise appointed or possession be otherwise lawfully taken of the whole or part of the undertaking.
That indicates clearly that if they at any time default in the payment of interest or principal then this section 21 becomes enforceable and we surely should not run away from the enforcement of our own statute passed only three years ago to cover the case that arises to-day and the existence of which was contemplated when we passed the statute.


John Hampden Burnham: That has not been so found.


George Perry Graham: Well, my hon. friend does not accept the minister's statement.


Richard Bedford Bennett: There was a default in addition to that because of the non-payment of a demand loan last year.


George Perry Graham: My hon. friend from Calgary says there was a default because of the non-payment of a demand loan last year. But, let me point this out: I see what is in the mind of my hon. friend (Mr. Burnham), or I think I do. He says there is a statement showing that the interest has been paid and that certain other interest has been paid. But, who paid it? Did the Canadian Northern? They made default, or they would have made default, if the Government had not come to the rescue, and it will have to do the same thing again. The Minister of Finance said so plainly in his remarks. I think there can be no question that-unless my hon. friend is revolving his ideas around a technicality- the Canadian Northern is in default in so far as the company itself is concerned, and that it will only be saved from a second default 'by the action of the Government and by another payment to it.


John Hampden Burnham: What is .the difference between this case and ordinary foreclosure proceedings to enforce the payment of a debt?


George Perry Graham: There is a particular statute covering this case. This is not an ordinary foreclosure case, but a summary forefclosure by Order in Council. Let me give the statement made by the Finance Minister. It is patent, for the reason stated by the Finance Minister, that in 
order to save the company from a real default last year we advanced $15,000,000 with which to pay interest. Now we are asked again to do something else. I want to refer to what the Finance Minister said a moment ago. He said that if we were to take expropriation proceedings it might be possible that the whole system would be thrown into the hands of a receiver by the action even of a subsidiary company, and that would possibly necessitate the Government taking up all the outstanding securities for the payment of which demand was made, and would involve the payment of six per cent interest on these securities which were running at three and a half and four per cent, and which, under the proposal made by the Government, would not have to be taken up until maturity. I am assured on high authority that under the proposal outlined in this statute there would be no such situation arising as that which has been suggested by the Finance Minister.


William Thomas White: If you foreclosed under the statute, would you not have to take the equity of redemption in the physical property of the Canadian Northern?


George Perry Graham: If you foreclosed under this Order in Council the Government would become the proprietor of the Canadian Northern in place of the present proprietors.


William Thomas White: And would own *all the physical properties of the Canadian Northern?


George Perry Graham: Would own everything
in connection with it except the $60,000,000 of shares and these would not have any value.


William Thomas White: You would acquire the physical property?


George Perry Graham: You would acquire the ownership of the Canadian Northern under the statute. When we passed that statute in 1914 we surely understood what we were doing and what it will do to-day is the .same thing that we knew it would do when the Government asked us to pass it in 1914. I see no reason why the Government should not act upon that statute by Order in Council. That would do away with the trouble about the common stock.


Richard Bedford Bennett: No, the section
provides that that has to be paid for.


George Perry Graham: Section 24?


Richard Bedford Bennett: On such terms
and conditions as may be fixed by Parliament.


William Pugsley: H any.


George Perry Graham: If any. I had better read section 24 again?
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 be and become absolutely barred and foreclosed, and the same shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment, or any rule of law or equity to the contrary notwithstanding.


Richard Bedford Bennett: Is that not exactly what Parliament is now doing-providing for an arbitration by which the terms to be paid for the stock will be settled.


George Perry Graham: This present legislation
contemplates paying a certain amount for the common stock.


Richard Bedford Bennett: If any.


George Perry Graham: It contemplates it or makes provision for it because it gives tacitly a value to the common stock by saying that we are going to .appoint arbitrators to ascertain what it is worth. I submit that the statute of 1914 never contemplated the legislation we have before us now. It contemplated taking over this property by Order in Council and it so stated. I can see no reason under all the circumstances why the Canadian Northern should have any exceptional treatment.


Mr. LABOR:: Is it not a fact that in the former case the Parliament of Canada were to be the arbitrators and now we are appointing arbitrators in place of the Parliament of Canada.


George Perry Graham: I said the other day
that if the 'Government proposed to give them money for their common stock, let them have the courage to say so and let Parliament have the courage to carry out this statute and say what, if anything, we will give them. Then we will discuss it. But the Government is getting around it by the appointment of another commission, and I am not sure but that the Finance Minister, when the findings of that commission come in, will say: We do not believe in our commission; they made some errors.


Mr. MIDDLEBRO:: You said that Parliament should have courage to say what amount if any the Canadian Northern Railway are entitled to. Would that not be assuming, in the same way as this, that they are entitled to some consideration?


George Perry Graham: Parliament might say
that they had no equity, or that the equity was worthless; and, if the Government think they have some equity, why not put it in the statute and not send the question to arbitrators?


William Sora Middlebro: We did not want to commit ourselves as was done in 1914.


George Perry Graham: My hon. friend is learning by experience. He does not want to commit himself. That is a safe course to take before an election. He does not want to commit himself as Parliament did in 1914 to $45,000,000, out of the conditions of which commitment the Government is now trying to squirm. I am not going to be driven from this, even if I am questioned by every member in the House. We made a contract with the Canadian Northern Railway in 1914. They made a distinct contract with us. That contract provided that if that company defaulted, then, automatically, this property would become the property of the Dominion of Canada. Now we are trying to get around that by new legislation to buy the stock. The [Minister of Finance says that the country does not take the property but becomes the possessor of $60,000,000 of stock and leaves it to arbitration, not to say, under this agreement, that the property is ours but to say what we shall pay as the value of its common stock, over and above the value of the property itself. Believing that, if this property is to be taken over. I think we ought to take ilt over-


William Thomas White: Hear, hear.


George Perry Graham: I move the following
amendment, seconded by Mr. Nesbitt:
That all the words of the question after the word "that" be struck out and the following substituted therefor:
"Whereas in the year 1914 this Parliament was induced to guarantee the securities of the Canadian Northern Railway Company for $45,000,000 on the representation that with that amount the said railway could be completed and operated without further aid from Parliament. which arrangement is contained in Chapter 20 of 4-5 George V.
And whereas by section 24 of the said Act it is enacted as follows:
"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 be and become absolutely barred and foreclosed, and the same shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment or any rule of law or equity to the contrary notwithstanding."
And whereas the Minister of Finance in introducing this measure stated that the company is unable to pay its underlying interest charges and continue the proper operation of the road;
And whereas the report of the Commissioners appointed by the present Government to investigate and report upon the condition of the Canadian Northern Railway states that there is no value either actual or potential attaching to the capital stock of the Canadian Northern Railway Company:	It is therefore resolved
that in the opinion of this House Parliament should proceed to take over the said railway for the benefit of the people of Canada under the said provision of the said Act and that the capital stock of the said Canadian Northern Railway Company should be considered in the said foreclosure order as possessing no value and that nothing should be paid therefor.


Right Hon.   S@: Mr. Speaker, my hon. friend from South Renfrew (Mr. Graham) has a habit of crediting every one in the world except himself with lack of courage and he was not free from that habit to-day, because he said that if the Government had courage they would come down to Parliament and state an amount which they regarded as the fair value of the $60,000,000 common stock of the Canadian Northern Railway Company and propose to Parliament that such amount should be paid. I ask hon. gentlemen opposite to imagine what a shout would have gone up from the hon. member for South Renfrew if we had done anything of the kind. He knows perfectly well the 'attitude he would have taken with regard to such a proposal coming from the Government. He knows perfectly well, in speaking of courage, that no hon. gentleman in this House has had more courage in the proposal of inconsistent policies with regard to the Canadian Northern Railway than he has had. I shall come to that in a moment, after making a few observations respecting his criticism of the proposals of the Government, and respecting the proposal which he himself has put forward.
In the first place, he finds fault with our proposals because the Canadian

Northern Railway, he says, do not want this legislation, and they do not want any aid at all. Almost in the same breath with which he announced that conclusion, he informed the House and the country that the Canadian Northern Railway Comnany is actualy or potentially in default. Which statement shall we take-* the statement at the commencement of my hon. friend's observations, or the statement at the conclusion) Is he able to say now on which ground he stands? I do not think my hon. friend has yet reached a conclusion as to that.


George Perry Graham: Oh yes, he has, and he stated it distinctly.


Robert Laird Borden: He stated distinctly the two inconsistent nronositions I have just mentioned. I am simply asking which of these two inconsistent propositions he will eventually stand for.


George Perry Graham: I have made my statement.


Robert Laird Borden: More than that, he has made two statements, and more than that, he has made two inconsistent statements, and I have asked him which of these two he intends to stand for.


George Perry Graham: My right hon. friend must have been nervous, or he did not hear me for some reason or another. I first stated the Canadian Northern attitude and quoted their statement as presented by the Government, to show their view point. Then I expressly stated that I agreed with the attitude of the Minister of Finance who said in his speech, that the company were in default.


Robert Laird Borden: The attitude of the Canadian Northern in regard to the matter does not support my hon. friend's position at all, and he knows that perfectly well. The attitude of the Canadian Northern is precisely that which the Minister of Finance has described, namely, that they have ^ a great railway system built up in Canada but which is not yet completed, which has not yet had a fair opportunity to demonstrate what its earnings may be. In order to carry that boad on to completion, and, more particularly, for the purpose of operating it, for providing betterments, and rolling stock, and everything else that is necessary, and besides all that, meeting fixed charges, it is necessary for the company to have a certain capital which they are unable to procure without the aid of the Government. The Government came to the aid of this

road in 1914, and again in 1916. It also came to the aid of the Grand Trunk Pacific (an enterprise for which it was not responsible) in 1914, and again in 1916. So far as the Canadian Northern Railway is concerned, t'he Government has reached the conclusion that if, in order to prevent receivership or liquidation, further aid is necessary, that aid ought to be given to a road, the whole of whose capital stock is vested in the people of Canada, so that the people of this country may receive any benefit and advantage which would be derived from the aid thus given. That is a very plain statement of the Government's proposal on this occasion. It is perfectly obvious the Canadian Northern Railway cannot carry on and must face receivership or liquidation unless something is done. Some hon. gentlemen opposite have said that we should come to the aid of the road in 1917 as we did in 1916 and in 1914. We have reached the conclusion that further aid to the road ought not to be provided by this country unless the entire ownership of the road is vested in the people of Canada through the acquisition of the balance of the stock.
My hon. friend (Mr. Graham) went further and said not only that the Canadian Northern did not want aid, but that the aid had been asked for by financiers behind the road. I take absolute exception to that remark, for which there is no foundation whatever.
My hon. friend said further that the holders of securities would find this transaction a very profitable thing as far as they were concerned. Will my hon. friend inform me whether they will find it more profitable than they would have found it under the proposals which he supported in 1914, looking to the acquisition of the capital stock of the Canadian Northern Railway Company by this country at a valuation ns high as $30,000,000? I think that proposal would have delighted the holders of these securities much more than the very modest proposals that the Government of the day is now putting forward. I would also point this out. In any event, the amount which must come out of the road, if it does not go into liquidation or into the hands of a receiver, is the amount of the securities with the added interest from year to year. In either the one case or the other, that is all that the holders of the securities can get, and therefore I am unable to appreciate my hon. friend's argument in the sense in which he placed it before the House
He stated further that the Minister of Finance has repudiated the Drayton-Acworth report. According to my understanding of what the Minister of Finance said, he did nothing of the kind. He pointed out that in Professor Swain's report, certain elements of value which would have to he taken into account by arbitrators determining either the value of the road or the value of the capital stock, had been inadvertently overlooked by Sir Henry Drayton and Mr. Acworth.	, _
I do not propose to accept the valuation of the Canadian Northern Railway Company as to the lands. I do not propose in this House to build up any argument which could be used by the Canadian Northern Railway Company before the arbitrators. But it is perfectly proper to point out, when it is set up 'by hon. gentlemen on the other side of the Ho-use, that there is absolutely no value in this stock or in the road, that these items were inadvertently omitted, and that the company itself puts forward certain claims in respect of other items which it alleges have been omitted, and as to which they are at least entitled to a hearing. The Drayton-Acworth Commission was not appointed for the purpose of determining the value of the Canadian Northern Railway system, nor for the purpose of determining the value of the stock of that road. Would any hon. gentleman in this House say that the interests of this country would be advanced 'by any action in this Parliament that would take away from any man or any group of men in this or any other country, his property against his will without giving him a reasonable hearing for the purpose of determining its value? We cannot do that, and I shall come in a moment to the statute of 1914 and shall demonstrate very clearly, if not to my hon. friend, to any reasonable man in this House, that the proposal which we are placing before Parliament is based on precisely the same principle that Parliament would have been obliged to follow under the legislation of 1914.
My hon. friend (Mr. Graham) read certain statements which have been tabled by the Minister of Finance, and he spoke of the needs of the company as to rolling stock and other requirements. He agreed that something must be done at this stage, and he agreed also, if I understood him correctly, that no more annual applications for aid should be entertained. Then he came down to the legislation of 1914, upou which he bases his chief argument. He endeavoured in the first place to distort the

statements of the Minister of Finance into a declaration that default has actually occurred. The statements of the Minister of Finance bear no such construction, and if my hon. friend examines them carefully I am sure he will agree with that. His principal allusion was to sections 21 and 24 of the Act of 1914. Let us look once more * at section 24, and ascertain whether or not the necessary procedure under that section would be different from that which we are now proposing to Parliament. Section 24 is as follows:
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 be and become absolutely barred and foreclosed, and the same /shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment or any rule of law or equity to the contrary notwithstanding.
In the first place, I invite the attention of the House to this: sections 22 and 23 provide that in certain events, the Governor in Council may declare to be vacant the offices of the directors of the Canadian Northern and of any of the constituent or subsidiary companies and that the Governor in Council may thereupon appoint directors to the offices so vacated and proceed to assume the management of the Canadian Northern railway system. Then comes section 24, which provides that if any such default has taken place, the Governor in Council, upon such terms and conditions as Parliament may prescribe, shall declare the mortgaged premises to be foreclosed. The effect of that would be to take out of the ownership of the Canadian Northern, Railway Company the physical properties now vested in that company and to transfer them to the Crown in the right of the people of Canada. The Canadian Northern Railway Company would cease to own the physical properties that were vested in it. The Canadian Northern Railway Company would cease to be the holder of the stock of the subsidiary and constituent companies; and the physical properties to which I have referred, as well as the stock in the constituent and subsidiary companies, would be vested in the Crown, in the right of the people of Canada. The road then being vested in the Crown, its operations would have to

be provided for. We should either have to bring it under the administration of a department of the Government, under a minister of the Crown, or provide some machinery by which the operation of the road could be carried on on behalf of the people. But the member for South Renfrew seems to take it for granted that all this can be done by Order in Council. It cannot be done by Order in Council until the authority of the Parliament of Canada shall have first been obtained. Let me emphasize the language of section 24 in that regard:
If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe, etc.
What would be the duty of a government in this or in any other country if it came to Parliament with a proposal that certain property subject to a mortgage should be foreclosed, and that the title to that property should be vested absolutely in the mortgagee? Would it be a proper course for the Government to invite Parliament to confiscate that property without regard to the claims of the owners that the equity of redemption had some value? Even if the Government or Parliament were absolutely convinced that the property had no value, would it be according to the ordinary dictates of justice as administered in this country at all times in the past

and as it will, I hope, be administered in the future-that the right of hearing as to the value of the property should be denied to the persons in whom that property was vested? I venture to say that neither this Government nor any Government that could be formed on the other side of the House would come to Parliament and say: Although this claim as to value is put forward, we shall disregard it; we shall pass a resolution of this Parliament vesting in the Crown without compensation the equity of redemption which is now held by the persons who own this property subject to the mortgage. What, therefore, would be the proposal that a government, having reasonable regard to these considerations, should make to Parliament? It would ask Parliament to establish and define some tribunal before which the persons in whom the equity of redemption was vested should have reasonable opportunity of putting forward their claim, if any, and of supporting it by such evidence as might be available. That, it seems to me, would be'the result if we proceeded under the statute of 1914, and that

is precisely the .method which we are adopting in .presenting to the House the proposals that are now under consideration. The only distinction, therefore, between the procedure under the Act of 1914 and the procedure proposed by the Government at this time is simply this:	in the one
case we acquire absolutely the ownership of the road by foreclosing the mortgage and vesting the title to the physical properties in the Government; in the other case we vest the ownership in the Government by the absolute acquisition of all the stock, maintaining the corporation as an entity and using the corporate machinery for the purpose of operating the road in order that it may not be brought under the direct administration of the Government itself. That is the difference between the one proposal and the other. I will Tepeat that in order that I may make my remarks perfectly clear to the House and to the country. In the one case, we should acquire, by arbitration or by reference to some sinlilar tribunal, the equity o.f redemption in these properties, and having acquired that equity of redemption we should either have to administer those properties under the direction of the Government itself, or provide some machinery by which they could be administered without the direct intervention of the Government. In the other case, we do not take away from the company the ownership of the physical properties; we leave them in the company as they are at present, but we proceed to acquire the entire balance	of	the
capital stock so that the road, to all intents and purposes, is vested and will remain vested in the ownership of the people of this country. To my mind, the advantage of that is obvious. By acquiring the stock without taking the property out of the ownership of the company we still use the corporate machinery, the staff of employees, all the organization that has been built up during fifteen or twenty years; we utilize all that; we operate the road by means of that; we avoid the evils and dangers which would attend the administration and operation of this road under a department of the Government. That is the difference between what is possible under the legislation of 1914, and under the legislation of to-day. The only distinction of any importance is one that I am prepared to maintain and support as obviously in the interests of this country; that is, in the operation of this road and in the administration of its affairs we shall use the corporate machinery; we shall not bring the road directly under the administration of a Government department.
Having regard to what I have said and the explanation I have made, what remains of the amendment of my hon. friend? I have shown, that, so far as principle is concerned, we have acted absolutely in accord with the statute of 1914, but we have modified it in this respect, that, under this proposal, we can use the powers of the corporation, the organization which it has built up and the machinery at its disposal, and we could not have done that if we had pursued in every respect the method embodied in the legislation of 1914. Therefore, when my hon. friend, with something of a flourish at the commencement of his speech, said that he had a method that would avoid any inquiry, any arbitration, and any delay, he was speaking without his book, unless he is prepared to say that he will support legislation which will deny to any .man or any group of men in this country the right to Come forward and support by evidence, if they can, the reasonable value of property taken from them. I do not think it would be in the interest of this country, which for many years to come must be a great borrowing country, if its resources 'are to be developed, that the Parliament of Canada should adopt any such method as that. It would be exceedingly unfortunate that it should go abroad to the United States of America, to Great Britain, or to any of the other great lending countries of the world, that the people of Canada are represented in Parliament by men who are disposed, on occasion, for one purpose or another, to deny to those whose property is taken against their will, the right and the opportunity to make good their Claim as to its value 'before an impartial and properly constatuted tribunal.


William Pugsley: What did the Government mean by asking Parliament to enact by section 24 that the Government may by Order in Council bar and foreclose the equity of redemption without 'any condition?


Richard Bedford Bennett: It says: if authorized by Parliament.


Robert Laird Borden: In the first place, the Government did not ask Parliament to do anything of the kind, and in the second place the Government meant precisely what the statute sets forth. The section reads:
If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe.
44.?2

I will repeat my statement, for the information of my hon. friend, if he did not understand me before: No Government of whatever political party would, as I believe, ask Parliament to confiscate any man's property without giving him the right to put forward and support his claim as to its value. In the Expropriation Act of this country, it is provided that when any man's property is taken, he shall have the right to make good his claim in the court.
5 p.m. Suppose we expropriated property of my hon. friend from St. John (Mr. Pugsley), and suppose the Government had reached the firm conclusion that that property was really of no value; that it was not being used by the hon. member for St. John; would he consider that he was being fairly treated or justly dealt with if the Government of this country, in pursuance of a power obtained from Parliament, should take his property away from him and at the same time deny him the right to make good his claim as to its value?


William Pugsley: Yes, if we had so agreed.


Robert Laird Borden: In this case there has been no such agreement, because the section of the statute reads:
If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe.
My hon. friend realizes, I am sure, that if some such procedure as that to which I have alluded had not been in the mind? of members of Parliament, they would not have alluded to terms and conditions as a condition precedent before this property should be foreclosed. Does my hon. friend place importance upon the words "if any"?


William Pugsley: Yes.


Robert Laird Borden: My hon. friend places importance upon the words "if any," and he apparently construes them as if the section had read:
If authorized by the Parliament of Canada, the Governor in Council may, without any term or condition whatever, . . . declare the property to be foreclosed.
If my hon. friend is prepared to say that the language which appears in the statute is the equivalent of that which I have just-described as his interpretation of it, then I cannot agree with him at all.


William Pugsley: What effect does -the
Prime Minister give to the words "if any "?


Robert Laird Borden: Precisely the
meaning which they have, namely, that if it were perfectly apparent and admitted by

the owners of the property that the equity of redemption had no value whatever, then Parliament need not establish any tribunal. That is the meaning of the words " if any ". If that were perfectly apparent, and admitted by the owners of the property, it would be an idle thing for Parliament to fix any terms and conditions. Does the hon. gentleman deduce from that the argument that, when the owners of the properties claim vehemently and persistently that their equity of redemption has a value, we should by reason of the words " if any " deprive them of the right to appeal to any properly constituted tribunal in this country? If my hon. friend is prepared to take that view, then all I have to say-


George Perry Graham: Will the Prime Minister allow me to suggest


Robert Laird Borden: Will my hon.
friend allow me to finish my sentence? Then, all I have to say is that, if my hon. friend from St. John has reached that -conclusion, he has reached a very advanced stage in his political development. There may be circumstances in which Parliament need not prescribe any terms or conditions, because the matter would be so obvious. But I ask any reasonable man in this House or in this country whether we are to deduce from the words "if any" the conclusion that persons, who claim, with some show of reason, that their equity of redemption has a certain value, shall be debarred from putting that claim forward and supporting it by any evidence that may be available for that purpose.


Mr. GERMAN:: Can the Prime Minister suggest any reason, if there be an equity of redemption, why the senior Judge of the Exchequer Court should not settle what the equity of redemption is?


Robert Laird Borden: My hon. friend is coming to a different -point -altogether from that which I was discussing. The hon. gentleman from St. John (Mr. Pugsley) says:	There should be no inquiry.
My hon. friend from Welland (Mr. German) says:	There should be an inquiry,
but it should be before the Exchequer Court. As I will show in a moment, this is very much along the line of what we encountered in dealing with this matter in 1914.


William Pugsley: You put in section 24
which -apparently is of no value.


Robert Laird Borden: I did not say
that it was of no value.


William Pugsley: We are not acting upon it.


Robert Laird Borden: We are not acting directly upon it for reasons I have stated. If my reasons have not yet reached the inner consciousness of the hon. member for St. John (Mr. Pugsley), that is my misfortune, but certainly not my fault.


William Pugsley: It is certainly not your fault.	i


Robert Laird Borden: No. Let us
look for a moment at the constitution of the tribunal, because that is the point to which the hon. member for Welland (Mr. German) has directed my attention.
What was the position taken by hon. gentlemen opposite who put forward views on this question in 1914? All the leading men among them who spoke, said that the Canadian Northern Railway Company and the Grand Trunk Pacific Railway Company could not be allowed to go into liquidation. I have their statements under my hand, but I will not trouble the House to quote them. If my statement is challenged I can give the date and the page of Hansard where such utterances appear. They said the road should not be allowed to go into liquidation and then they proceeded to show their sincere belief in that declaration by voting for a proposal to have the measure of the Government postponed for six months, which meant it would not be acted upon during that sesion and that liquidation would ensue. First they said: "We must give aid." Then they said	"We must not
give aid." That is the literal meaning of the two positions they took. Then they asked Parliament to declare that there was not sufficient or reasonable information on which to base aid, and they proceeded to declare, although they said they had no such reasonable or sufficient information, that the road was bankrupt. They then advocated the acquisition of the whole of the capital stock of the Canadian Northern railway, by arbitration, at a value not exceeding $30,000,000. I think it might be worth while for me to refer my hon. friend from Welland (Mr. German) to these passages, in order that he may reach a conclusion as to why in 1914 arbitration was proposed instead of a reference to the judge of the Exchequer Court, because it is as fair for me to put that question to him as it is for him to put the question which he has just now proposed to me. Let us look at the record. On May 28, 1914, as reported at page 4391 of Hansard, my hon. friend 284	>
from St. John (Mr. Pugsley) put forward this proposal:
(e) To provide that the Governor in Council shall have the option at any time within such period of five years to acquire the absolute ownership of the said stock and of the said Canadian Northern Railway system, and of all the constituent and subsidiary companies mentioned in the said resolution or proposed agreement, subject to existing encumbrances and to said arrangements regarding the conversion of said income charge convertible debenture stock, for a price to be fixed by arbitration, but not to exceed the sum of $30,000,000, being the par value of such stock so to be reduced as above provided.


William Pugsley: Does my hon. friend
think it fair to read only one clause of a resolution which contains four clauses?


Robert Laird Borden: I am explaining the other clauses. In the previous clauses my hon. friend had proposed that the stock of the Canadian Northern Railway Company should be reduced to $30,000,000, and he proposed to secure that $30,000,000 of capital stock at a price to be fixed by arbitration, but not to exceed $30,000,000.
!Mr. PUGSLEY:	Will my right hon.
friend allow me to correct him. That was not the resolution. The resolution was that the whole of the stock should be reduced to $30,000,000, that it should be transferred to trustees, to be held for His Majesty, to become the property of His Majesty, and if the company should pull through for a period of five years, if Parliament decided to take the stock, we should have the right to take it.


Robert Laird Borden: I will come to something more direct later on. My hon. friend did not propose that the stock should be owned by His Majesty but that it should be held by His Majesty, so that His Majesty should have control over the affairs of the road in the meantime. So far as the actual acquisition of the stock is concerned, I repeat what my hon. friend proposed on that occasion, and on another occasion as well, was to acquire the capital stock of the entire Canadian Northern Railway at a price to be fixed by arbitration, but not to exceed $30,000,000, and he succeeded in inducing his leader to adopt that view. On the second day of June, 1914, the right hon. the leader of the Opposition made this proposal, seconded by the hon. member for St. John (Mr. Pugsley), who supported it in a strong speech-.perhaps I had better read the concluding portion of the remarks of my right hon. friend (Sir Wilfrid Laurier), because he stated that



in what I am about to quote he summarized the whole argument from the standpoint of his supporters in the House. At page 4634 of Hansard my right hon. friend said:
I said a moment ago that my intention was simply to summarize the views and the policy which we have laid before the people on this question, and summarize them in a few words. We must carry on this enterprise; we cannot allow it to go by default; we cannot allow anybody or anything to come in which would imply anything detrimental to our credit in England ; this enterprise has to be carried out; but instead of carrying it out in the way proposed, we propose that we should carry it out by other means-that we should take absolute control of the enterprise; and for that purpose X beg to move, seconded by my hon. friend from St. John (Mr. Pugsley) :
'That the said Bill be not now read a third time, but that it be resolved that under existing circumstances no assistance should be given to the Canadian Northern Railway Company unless at the same time it is provided that the Government have power, within a reasonable time, to acquire the ownership of the entire stock of the company at a price to be fixed by arbitration, but not to exceed thirty million dollars.'
My hon. friend the member for Welland (Mr. German) vioted for that resolution. I see his name recorded in the division. My hon. friend from South Renfrew (Mr. Graham) was not here, I believe, 'but he was paired as voting in favour of that resolution. My hon. friend, the member for St. John (Mr. Pugsley), in speaking on the subject-	.


George Perry Graham: Did not the Prime Minister vote against it?


Robert Laird Borden: Yes. We did
not propose to vote for it with the suggestion contained in the resolution that the stock was worth $30,000,000. My hon. friend die member for South Renfrew in the course of his speech to-day criticised us because in proposing a reference to arbitration he declared we were attributing a certain value to the equity of redemption in this property or in this stock. What does he think of the effect of the motion which he supported in 1914-a motion moved by his leader, which attributed a possible value of $30,000,000 to the stock of the Canadian Northern Railway Company.
My hon. friend (Mr. Graham) has usually a pretty fair memory but I am afraid that his attitude on this question in 1914 must have escaped his recollection when he made the remark which I have just quoted.
But my hon. friend from St. John (Mr. Pugsley) emphasized the exceedingly fair nature of the proposal made by his leader.

He .said it was fair to the proprietors of the Canadian Northern; it was fair to the people of this country; it was fair to the Government; it was fair to Parliament; it was fair to everybody. Here is his language as found on page 4641:
My right hon. friend (Sir Wilfrid Laurier) moves as an amendment that as a condition of granting this aid the Government shall be allowed to take control of this stock and control of the enterprise until it is completed, and that the country shall have leave to take over the entire stock of the Canadian Northern railway within a reasonable time at a price to be fixed by arbitration hut not to exceed the sum of $30,000,000. Is not that a reasonable proposition? Is not that a proposition which is fair to the people of this country who are called upon to assume this enormous liability? Is it not fair to Mackenzie, Mann, and Company who are asking this country, for the fourth time, to help to complete this enterprise? It is fair to Mackenzie, Mann and Company, and it is a fair and reasonable proposition on behalf of the people of this country.
Yet my hon. friend to-day is horrified at the idea of giving any hearing to the proprietors of the Canadian Northern stock or any hearing to the company in which is vested the equity of redemption subject to the mortgages which have been placed upon the property for the purpose of constructing the railway. I do not think that my hon. friends, in view of the attitude which they took in 1914, can expect that the country will give a great deal of weight to their affected horror at the very reasonable proposals of the Government.
I would like to say further in conclusion, that I expected hon. genlemen on .the other side of the House to adopt a somewhat different attitude from that which they have assumed, because, after all, it is perfectly plain and clear, not only to this Parliament but to the people of this country, that it is they who are responsible for the existing conditions.
My right hon. friend the leader of the Opposition brought down his proposals for the construction of the National Transcontinental Railway in 1903 and he modified them in 1904. He introduced those proposals by a preamble which read:
"Whereas, having regard to the growth of population and the rapid development of the production and trade of Manitoba and the Northwest Territories, and to the great area of fertile and productive land in all the provinces and territories as yet without railway facilities, and to the rapidly expanding trade and commerce of the Dominion, it is in the interest of Canada that a line of railway, designed to secure the most direct and economical interchange of traffic between Eastern Canada and the provinces and territories west of the great lakes, to open up and develop the northern

zone of the Dominion, to promote the internal and foreign trade of Canada, and to develop commerce through Canadian ports, should he constructed and operated as a common railway highway across the Dominion, from ocean to ocean, and wholly within Canadian territory."
That was the preamble to the schedule of the agreement ratified 'by the Transcontinental Railway Act, 1903. The preamble of the Act itself is:
"*Whereas by reason of the growth in population and the rapid development in the productiveness and trade of Canada, and especially of the western part thereof, and with a view to the opening up of new territory available for settlement, both in the eastern provinces and in the West, and the affording of transportation facilities for such territory, and for other reasons the necessity has arisen for the construction of a National Transcontinental railway to be operated as a common railway highway across the Dominion of Canada from ocean to ocean and who.ly within Canadian territory."
1 will come back in a moment or two to the consideration of (the conditions, as to information and otherwise, which were before my right	hon. friend when
he embarked on this scheme. What I want to call attention to at the moment is that in the Act of 1911, under the administration of my hon. friend (Mr. Graham), then Minister of Railways, almost identical	language-practically
identical language-was used in regard to the 'Canadian Northern as a great transcontinental system. Here is the preamble to the Canadian Northern Railway statute of 1911, which provided for subsidies and assistance to that road:
"Whereas having regard to the growth of population and the rapid development of the production and trade of that portion of Canada lying west of the Great Lakes, and to the rapidly expanding trade and commerce of Canada generally, it is in the interests of Canada as a whole, that another line of railway designed to assist in the direct and economic interchange of traffic between the eastern and western portions of Canada, to open up and develop portions as yet without railway facilities, to promote the internal and foreign trade of Canada, to develop commerce through Canadian ports, and to afford the Government system of railways in Quebec, New Brunswick, Nova Scotia and Prince Edward Island an interchange of through traffic, should be constructed from the Pacific ocean to the city of Montreal."
Let hon. gentlemen consider the position in which the present Administration found itself when we came into power in October, 1911. We found two transcontinental railway systems under construction, both of them declared by Parliament, under the administration oif my right hon. friend (Sir Wilfrid Laurier) to be great national transit
continental railway systems and both supplied with subsidies and guarantees to the end that their construction might be assured. What did we do when we came into power and when it bad become evident that the arrangements made by hon. gentlemen opposite when they held the seals of office were not adequate for the purpose of carrying through these two projects which they had initiated?
What position confronted us? Two possible courses were open to ns: either to let those national highways of Canada go to the wall, go into liquidation, to the discredit of Canada, to the great detriment of the public interest, as we thought, or, to implement the legislation that had been passed under the administration of my right hon. friend by such further aid and such further provisions as, having regard to the interest of the people of this country, might be necessary to ensure the completion of these roads. And so we have come to Parliament from time to time as it seemed necessary and asked Parliament to deal with the situation.
So far as the Canadian Northern Railway is concerned, we are now coming to Parliament for the last time, because we have reached the conclusion that it is imperatively necessary, in the interests of the people of this country, that that road should not be allowed to go to the wall, but that, if further aid is to be granted by the people of Canada, such aid should be for the benefit and advantage of Canada as a whole and not for the benefit an$ advantage of the proprietors of the road.
I should like to point out to my right hon. friend (Sir Wilfrid Laurier) that he has a considerable responsibility for the situation that has thus developed, because I think that his best friends will admit, and he himself should be disposed to admit, that he embarked upon the project of the National Transcontinental railway without adequate information as to its cost or its possibilities. If he is not prepared to make that admission to-day, I do not know how he can square himself with the facts as they have since developed. There was a very simple course open to my right hon. friend in 1903 and 1904. What was the position at that time? There was an old and strongly established road in the east of Canada, the Grand Trunk Railway Company, which has afforded great service to the people and deserves consideration for the service so rendered; and what was its position? It was

gathering up traffic in Eastern Canada to be carried to the West, and it had no western connections. As Mr. Hays pointed out, in one of his addresses to has shareholders, the road was in an extraordinary situation. It had the best means of gathering up traffic in Eastern Canada that any railway possessed, and it was gathering up that traffic for the benefit and advantage of another system. What was the position in the West. Besides the Canadian Pacific railway, there was another railway possessing [DOT]a position of great advantage in the western provinces, the Canadian Northern Railway Company, getting (access to the best territory there, reaching out to rapidly developing communities, and possessing in Western Canada the exact complement of the Grand Trunk in Eastern Canada. Here was the Grand Trunk Railway in Eastern Canada with no western connections; here was the Canadian Northern Railway in Western Canada with no eastern connections, each gathering up traffic in its territory and handing it over to a rival system. What should have been the obvious course to be pursued by my right hon. friend under those circumstances? It seems to me that he should have insisted that the Grand Trunk Railway Company in Eastern Canada, and the Canadian Northern Railway Company in Western Canada, each possessing facilities that were the complement of the other, should join forces, and that he should have created out of those two companies one railway system. I venture to say that if he had done that, instead of these companies-coming, both of them, year after year, and asking the Government of Canada for aid to prevent their going into liquidation or into the hands of a receiver, we would have had a railway undertaking in Canada that would have been strong beyond question and would have been able, if necessary, to lend money to the people of Canada in this time of emergency instead of asking for aid. So that my right hon. friend has great responsibility; he has, indeed, the chief responsibility, for the existing railway situation in this country.	_
I do not for one moment repudiate the responsibility which the present Administration has in this matter. We had before us just two alternatives: One was to let these roads go to the wall, to injure the credit of this country beyond measure, to bring about grave detriment to the public interest, to discourage the public sentiment of Canada, to make it appear to the world that all this development in this [Sir Robert Borden.1
country rested on no sure foundation, and ,to put Canada back a quarter of a century. That was one alternative.
The other alternative was to go forward, ,and, having regard to the lack of information evidenced by my right hon. friend when he undertook these proposals, having regard to his lack of foresight, to sustain these undertakings as best we could, in the hope and, more than that, in the belief, that they would eventually become self-sustaining. That is our responsibility in the matter. That is a responsibility which I unhesitatingly accept.
I believe that the proposals which we now submit to Parliament are thoroughly in the interest of the people of thiscountry, and that, in the years to come, when that assured development which awaits Canada shall have had its fulfilment, the Canadian Northern Railway system, acquired by the people of Canada under these proposals, will be one of the greatest assets in the ownership of our people.


William Pugsley: Mr. Speaker, I think that if we required any evidence of the fact that the Prime Minister recognizes the weakness of the proposal which is now before this House, it would be found in the endeavour he has made to create, in some way, a prejudice against the Liberal party, by reason of ,its action in connection with the construction of the Canadian Northern Railway and the * Grand Trunk Pacific Railway. It is quite characteristic of my right hon. friend, when he cannot defend or justify what is presently before Parliament, to go back to ancient history and trust to throwing dust in the eyes of the people by, in some way, creating a prejudice against his political opponents. He talks about everything but the subject which is immediately under consideration, which is, whether it is in the interests of the country to pass the Bill which is now before Parliament. What does it matter as to the responsibility for what occurred fourteen years ago in connection with the building of the Grand Trunk Pacific Railway? What has that to do with the consideration which is to be given to this Bill? Nothing in the world. Yet my right hon. friend has sought, in connection with the discussion of this Bill, to throw responsibility upon my right hon. friend who leads the Opposition (Sir Wilfrid Laurier) for the arrangement which was made some years ago. If I were to follow the example of my right hon. friend, I might challenge the wisdom of this Gov-

ernment in granting aid for the building of the Canadian Northern Railway through the canyons of the Rocky Mountains, where a road was not needed, an enterprise which has proved and which will continue to prove a great burden. I might have said that it was by reason of the encouragement which was given by this. Government to the construction of the line through the Rocky Mountains, that the Government of British Columbia, led by the late Sir Richard McBride, involved that province also in an enormous expenditure. I might call attention to that, but what would, be the good of it? What has it to do with the con-consideration of the Bill, the second reading of which is asked, and of the amendment which has been moved by the hon. member for South Renfrew (Mr. Graham)? What I think we ought to do is to endeavour to consider the Bill upon its merits, consider it in the light of circumstances to-day, and consider whether or not it is desirable to pass the amendment moved by the hon. member for South Renfrew. That is the question to which I propose to direct my attention, and it is a question that will be of most interest to the people of this country at the present time.
My right hon. friend says: Oh, there would be great objection to acting upon the provisions of the statute of 1914. He refers to section 24 and says that if that were acted upon an injustice would in some way be done to the Canadian Northern Railway Company, to the present shareholders in that company, and to those to whom the stock is pledged. He says it would also result in the necessity of the Government becoming the owners of the physical system of the Canadian Northern Railway Company and operating the road under Government ownership and control.


Robert Laird Borden: I do not want to be understood as acquiescing in my hon. friend's statement. II did not argue that.


William Pugsley: I understood my right hon. friend to say that if section 24 were acted upon, the Government would 'be obliged to become the owners o'f the system and .to operate it under Government control by .a department iof the Government, .and he pointed out the very great advantage it would be to preserve the entity of the Canadian Northern Railway Company. Well, Sir, what does the Commission appointed by this Government .say with regard to that? As I understand it, they do not recommend that the Canadian Northern
Railway corporation should be preserved especially, but that a company should operate the road, and that it should not be done directly by the Government as a Government; that is, that there should not be direct Government operation as in the case o.f the Intercolonial. Where would be the objection or the difficulty if the Government acted under section 24 and foreclosed the equity of redemption? Where would be the difficulty or the inconvenience in asking .this Parliament to incorporate a company, or to give the Governor in Council power by Letters Patent to incorporate a company, to take over the actual title .from the Crown and issue stock to be held by the Minister of Finance in trust for His Majesty, the road being carried on and operated by the company so organized. You will remember, Sir, that when the Canadian Pacific Railway Company was organized, it was incorporated by Letters Patent. The charter is contained in Letters Patent issued by the Governor in Council. This Government could have asked Parliament to give it authority on the very day the equity was foreclosed to have a company incorporated under Letters Patent which would take over the title and the operation of the road. It seems to me, therefore, that the argument that my right hon. friend has made, that there would be some great advantage from the standpoint of the public in preserving the entity of the Canadian Northern Railway, falls to the ground.
But if it would be undesirable to act to-day under section 24, was it not equally undesirable when the legislation was passed? If the Government did not intend to act upon the section, if they thought it would be inconvenient and injurious to the public interest to act upon it, why did they put it in the statute? When they asked the authority of this Parliament to enable them to pledge the credit of Canada to the enormous sum of $45,000,000, why did they tell this Parliament and the people of this country that under section 24 the interests of the people were thoroughly safeguarded, and that this Parliament, in case any default should be made, had the power immediately to take possession of the road free from all conditions if Parliament should so desire? And why did they tell the people of this country that the Canadian Northern had agreed to this as a condition of receiving this enormous aid? Why did they embody this section in the statute iif they knew that it would be against the public interest to act upon it should occasion for action arise?

My right hon. friend says that if an individual-and he instanced my unworthy self-was the owner of property upon which the Government had a mortgage I might seriously object if my equity of redemption were to be taken away without some pfo-vision for having its value arbitrated upon. But, that would entirely depend upon what the agreement was. If I had been coming to the Crown year after year for aid, first getting my bonds or notes guaranteed by the Government, and afterwards saying to the Government, " I misled you, I cannot get on as I told you I could, I want you to lend me some more money; I have already induced the Government to give me a lot of money, but I agreed that in case I made default in the payment of interest or in any other respect set out in my agreement, the Government should have the power to foreclose my equity and take over the property and become its absolute owner"-if I had done that, what right should I have to complain? If that was the bond which I gave, if that was the agreement which I solemnly entered into, it would not lie in my mouth to raise my voice against the Government acting'upon the agreement which I had made. All that my hon. friend from South Renfrew (Mr. Graham) asks by this amendment is that the agreement shall be carried out as made.


Mr. MEIGHEN:: The section referred to says that Parliament shall previously fix the terms and conditions, if any. Under what circumstances would the hon. gentleman say that Parliament should fix terms and conditions, and under what circumstances should Parliament not fix any terms and conditions?


William Pugsley: I would say that my hon. friend can'explain those conditions, as his leader has utterly failed to explain what was meant.


Arthur Meighen: I am asking my hon. friend to state his opinion.


William Pugsley: I will state my opinion of the case where no conditions should be fixed-


Arthur Meighen: State the other case.


William Pugsley: I will state the case we have to-day. This company came to Parliament in 1914 and said-and the Minister of Finance pledged his word to this House as to the truthfulness of their statement and asked this Parliament to act upon it

that if they could get their bonds guaranteed to the extent of $45,000,000, they had ample resources beyond that to complete

the road and put it in operation, and they would not be obliged to come back to Parliament for any further assistance. Upon that understanding, Parliament entered into this vast obligation on the part of the people of Canada. But the company came back again in 1916 and got $15,000,000 more of the money of the people of this country. I would say that conditions had arisen today under which Parliament has a right, without attaching any conditions whatever to it, to act upon the authority vested in it by section 24 of the statute of 1914.


Arthur Meighen: Why will not the hon. gentleman describe the conditions under which we were to be justified in fixing terms and conditions?


William Pugsley: I cannot tell why the Government put that in. I assume they put it in, in order to remove the objections which Parliament and the people of this country might otherwise have towards granting this enormous aid. I presume they had some reason for putting it in; I presume they intended to act upon it. But the Government did not leave it alone to the statute. When the Bill was introduced, my hon. friend the Solicitor General took a very active part in urging the legislation upon the favourable consideration of the House, and on page 3693 of Hansard, he said:	[DOT]
We know we have the ordinary right which any mortgagee has, and the right which any guarantor of a mortgage has, the right by subrogation of getting into the shoes of the lender and in the event of default exercising the rights of a mortgagee ar.d taking possession of the road as a receiver ; we know we have that right, but we have the additional summary remedy of proceeding by mere Act of Parliament to take over the road as the property of the people of this country and eliminate once and for all, all other parties interested in that railway. And we have not ohly so arranged it that the interests of the Canadian Northern and all other persons whatsoever in the Canadian Northern system shall be eliminated, and that in the event of default all shall be the property of the Canadian people.
That, Sir, was what my hon. friend sought to induce this House and the people to believe was the splendid arrangement that was being made for the security of the people. He said: We all know that under the law His Majesty in case of default would be able to go into the courts of the country and foreclose the mortgage, but we are not going to ask the Crown to incur that delay; we are not going to ask the Crown to undertake that expense; we are not going to ask that ordinary foreclosure proceedings be taken; we provide by this Bill a

summary mode of foreclosure under which if the Canadian Northern Railway Company fails to fulfil its obligations, an Order in Council may be passed with the authority of Parliament declaring the equity of redemption foreclosed and vesting the absolute title in His Majesty on hehalf of the people of Canada. That, Sir, is all we ask the Oovernment to do to-day; we ask them to carry out the solemn agreement which they made and which is embodied in an Act of Parliament. The Canadian Northern having received the aid provided by that Act, are bound by its terms, and if it is acted upon they have no reason to complain.	'	1	i
We should do this without any condition, for another reason. It appears from the report of this commission that the stock is of no value; therefore we shall be doing the Canadian Northern Railway people no harm if we simply carry out the arrangement which was made in 1914.
At six o'clock the House took recess.
After Recess.
The House resumed at eight o'clock.


William Pugsley: Mr. Speaker, before recess, I had been referring to the provision of section 24 in the Act of 1914, which provides that, in case of default the Governor in Council may, if authorized by Parliament, and upon such terms and conditions, if any, as Parliament may prescribe, declare the equity of redemption of the Canadian Northern Railway company and of all other persons to be absolutely foreclosed, notwithstanding any rule of law or equity to the contrary. I regard that as a very important provision. It created a new relation between the company and the Crown. Upon the one side the company said in effect: If you will give us the aid for which we are now asking, that is, if you will guarantee our bonds to the extent of $45,000,000, we shall be able to get along without any further assistance. As horn, members are aware, there was very strong opposition on the part of many hon. gentlemen to burdening the country further in connection with the Canadian Northern Railway company. That company had received large grants of public money in the past; it had been aided by guaranteed bonds, and, in addition, the various provinces had been contributing very extensively to the construction of the road. It was, therefore, universally recognized that no money from any private source had been put into the construction of the railway. This Honse
knew as well then as it knows to-day, after the reports of the Government commission that the road had been constructed entirely out of public moneys. In order to remove as far as possible any objection to the bonds of the company to the extent of $45,000,000 being then guaranteed, the Government asked Parliament to provide certain safeguards, amongst which was this provision in section 24 to which I have referred. The company, when it consented to accept that aid was a party to the contract contained in the statute. The company received its aid upon that condition, and it is hound just as much as if a separate agreement had been entered into under which it had stipulated that in case it should make default in the future the Government and Parliament would not he bound to recognize that there was any value whatever m its equity of redemption, bu1 could at once take steps by Order in Council to foreclose. We are here under circumstances very different from those that existed prior to 1914. We are here in the face of a certain condition created by that statute. We are here as trustees of the people, as guardians of the rights of the people, and we should he acting contrary to our .duty if we in any way attempted to alter those rights, or if we refused to recognize the rights and obligations upon the part of the Canadian Northern, and Mackenzie and Mann Limited and the other holders of the stock in the Canadian Northern and the subsidiary companies. I am, therefore, unable to see any excuse whatever for the Government not taking advantage of the powers which Parliament granted to them under the Act of 1914.
At first it was stated by one or two hon. gentlemen opposite, that the course the Government intends pursuing is the same thing as acting under section 24. In iact, however, it is an entirely different thing. If section 24 were acted upon, the Government, on the authority of Parliament, would have the right, without the payment of a single dollar more of the people's money, to become the owners of this entire railway system. But it is proposed by this arrangement to treat this company as a solvent-concern, and to appoint arbitrators for the purpose of valuing the common stock of the company. I very much mistake the meaning of figures and of statements if I do not see in the statement, which hag been submitted to the Government by the Canadian Northern Railway Company and laid before this House by the Government as containing reliable information, a delib-

erate laying, upon the part of Messrs. Mackenzie and Mann, of a foundation for an enormous valuation of the stock of this company.
The Minister of Finance has said that this company require a large amount of money to carry on their work. He has not offered to this House any request in writing from the Canadian Northern nor from Messrs. Mackenzie and Mann. He has not presented a single statement from them showing what they require or that they require any amount. He has stated that it will take some $20,000,000 to meet, in the immediate future, their interest indebtedness and to provide for necessary rolling stock, and that it will require great financial effort in order to wipe off those shortterm obligations which have been incurred against securities, largely in the city of New York. But there is not the scratch of a pen from Messrs. Mackenzie and Mann, Limited, or the Canadian Northern Railway Company corroborating the statement of the Minister of Finance. It is, therefore, open to those gentlemen, when they come before the arbitrators to say: We are not bound by the opinion expressed by the Minister of Finance; we presented to the Government a statement showing our financial position; we showed that we had a surplus of $37,000,000 after making provision for our common stock at its face value; the Minister of Finance presented that statement to the House of Commons as a statement that could be relied upon; surely, therefore, we are and can be bound only by the statement which we have presented to the Government and which the Government has presented to Parliament. They will be able to say to the arbitrators: So far from our requiring any large amount of money, all that we owe in the way of outstanding accounts with construction is $999,566.95, and they can well show that before the arbitrators in black and white among the statements laid by the Minister of Finance before this House. Then if it is said: Oh, thirty million dollars is required immediately to purchase rolling stock and put the road in good condition, before the arbitration, they will say: In the statement we submitted all that is required up to the 30th June, 1918, for rolling stock and for betterments, as we showed in black and white, is the sum of $6,950,000 instead $20,000,000. Will it not be open to them to say:	This stock has been represented by
absolutely valuable assets at $100,000,000 and our statement shows a surplus of $37,000,000 above that, and who will dare to 
say we are bankrupt? Who will dare to say we cannot go on? The opinion of the Minister of Finance will not be evidence. It will be upon the statements of the accountants such as we have before us, that these arbitrators must aot, because they will be sworn to discharge their duty- in accordance with the evidence which will be presented before them. This statement was prepared evidently with the intention of showing that the company is solvent and perfectly able to go ahead. If you take it as true, it shows they are not insolvent, and shows they do not require any financial aid from, the Government. It lays the foundation for them to submit to the arbitrators that they have a most valuable property. With a surplus of $11,000,000 of revenue over and above operating expenses, and with the prospective earnings-which always will be taken into consideration by arbitrators unless they are expressly excluded from their consideration-Mackenzie and Mann, by these statements which they have submitted to this Parliament through the Minister of Finance will be in a position to urge before the arbitrators that they should receive full par value for the stock issued by the company. Will not that be a condition of affairs to which the people of the country will look forward with a great deal of anxiety? As I have said, this road was built with the money of the people of this country. The commission has declared that the common stock has no present value, nor is it of any potential value. Since the year 1914, when this 'bargain was made, as set out in section 24 of this statute, the Government has been compelled to give Mackenzie and Mann an additional sum of $15,000,000. Last year when that amount was given, the Minister of Finance .stated it was given for the purpose of preventing the company from making default. And we are faced to-day with the extraordinary condition that this Government is actually endeavouring to prevent the conditions under which the provisions of section 24 can be invoked. They have, by giving money to Mackenzie and Mann, prevented the default taking place, which would enable the Government, with the authority of Parliament, to take over this entire system without putting any more money into the enterprise. Whether that Act on the part of the Government can be defended or not, I leave it to the House to say. I do not think it can be defended, and I do not think the people of this country will be disposed to tolerate such a con-

dition of affairs. It is proposed now that arbitrators should value this property, in the face of the fact that the Minister of Finance tells us that the Company is bound to become bankrupt if it is not assisted; in the face of the fact that the Prime Minister stated this afternoon in effect that it is perfectly evident that unless further aid is given the company cannot carry on, and a receiver must be appointed. If that condition of affairs exists to-day, all the Government has to do, and all it has to ask Parliament to do, is to invoke the powers contained in section 24, and take over the road, foreclose the equity of redemption absolutely, without the payment of a dollar.
My right hon. friend says that would be contrary to one's sense of justice. If that be so, I would like to know why it was put in the statute. Was it put in to deceive the members of this House? Did the Government not know what it meant when it was put in? Did they not intend it to be acted upon? They said if default should be made Parliament would have the right, without any terms or conditions whatsoever and without providing for a single dollar to be paid, to foreclose the equity of redemption without resorting to a court of law. Will any member of the Government explain why that was put there if it was not intended to be acted upon? Why it was put there if it meant nothing? Surely, Mr. Speaker, it is impossible for any one to suggest that it was not intended by the Government, and was not taken seriously by this House. I have already called attention to the great weight that was placed upon that provision by my hon. friend the Solicitor General, who made a very able and forcible speech in presenting the matter to the House. I well remember how strongly, and with what force and eloquence, he dwelt upon the provisions of section 24. They were new legislation, he said;-ordinarily, the holder of a mortgage would be compelled to resort to a court of law, and go through the proceedings of foreclosure, but he spoke with pride and very grealt gratification of the fact that the Government had been able to evolve a scheme original with itself and containing powers which would be most beneficial to the country in case any default were made. That statement impressed many members of the House. My hon. friend from St. Antoine (Sir Herbert Ames), a very thoughtful gentleman, took the view, as piany gentlemen upon the other side of the House did, that almost too great aid had *already been granted to the Canadian
Northern, and accepted the proposal of the Government with great reluctance. Let us see what that hon. gentleman said in regard to this proposal. His remarks will be found at page 3733 of Hansard:
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.
And, Sir, when the time comes that the Prime Minister says that, notwithstanding the $15,000,000 we granted last year, failure looms right ahead, the Government draws back, and refuses to act upon this wonderful section, the preparation of which must have taxed its ingenuity 'to the utmost, and which appealed to the favourable consideration of members on the other side of the House at all events. The Government draws back and says: We will not allow default to take place.
We have given over $15,000,000 to prevent default, and before the time shall come when the company must make default, we will pass this Act, we will buy out the common stock from the company as a going concern, treat it as perfectly solvent and pay to these gentlemen whatever the arbi-. trators may choose to determine, whose judgment will be final, over whose judgment this Parliament can exercise no supervision, no control, and from which it will have no appeal. The Government will be bound to pay out of the public funds whatever amount these gentlemen may find this stock to be worth, without any appeal to this Parliament or to any court, even to the Supreme Court of Canada. That is acting upon the provisions of this wonderful section with a vengeance. Let me proceed with the remarks of my hon. friend from Montreal, St. Antoine. He said:
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 be 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.

Just as my hon. friend from South Renfrew (Mr. Graham) stated this afternoon. Then my hon. friend from Montreal, St. Antoine, proceeds:
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 certainty can be compared with such a case. The trial is over.
Mark the words, Mr. Speaker. All this in the face of the facts that the arbitrators are to value this equity of redemption, that lawyers, witnesses and expert accountants are to be heard, and that Mackenzie and Mann are to be allowed to prove that because of the prospective earnings this common stock has an enormous value even although the company to-day, as the Prime Minister .says, is actually upon the eve of bankruptcy. The hon. member for St Antoine .says:
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-[DOT]
We have undertaken to give them a last chance.
-and it will never be necessary for them again to come here, nor will it he necessary for this Parliament to listen to another discussion such as is taking place this session. They have been tried; I may almost say they 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.
How my hon. friend the Solicitor 'General (iMr. Meighen) must have laughed in his sleeve at the innocence of the hon. member for Sit. Antoine when he took his word in 1914 as to the effect and intention of this section and when he said that it would be acted upon when the time arrived !


Arthur Meighen: Would the hon. gentleman read the words that he took from my speech in 1914?


William Pugsley: I cannot conceive that the hon. member for St. Antoine misinterpreted the 'Speech of the Solicitor General. At all events, I read the speech of the Soli-tor General. It will appear in Hansard tomorrow .and I think it entirely justified

the hon. member for St. Antoine in believing that in case of default the axe would fall-that the trial was over-that the last chance had been given, and that if default was made automatically Parliament would be asked to agree that the equity of redemption in the Canadian Northern Railway Company and all other persons interested should be foreclosed summarily by Order in Council. Just let me read this _ last sentence over again:
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.
That is the interpretation that the hon. member foir St. Antoine places upon it, that is the interpretation that any reasonable man would place upon it, or else why put it in the statute book in such clear, unmistakable language? The hon. member for St. Antoine proceeds to say:
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 hoard 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 '.lie equities, subject, of course, to the consent of Parliament. 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. "
Using, in Teg.ard to the organization of a new railway company, almost the very language which I used in the early portion of my remarks. The Solicitor General, from whom I might quote, did not use the very language which was used by the hon. member for St. Antoine. Perhaps not the very language, but members of the Government sat in their places and heard that hon. gentleman give that as the interpretation of the statute and what could be done under it. No one ventured to say that he had not interpreted the meaning of the statute correctly; no one suggested any idea of that kind. When the Government got that legislation through and induced this House to impose that enormous obligation, upon the people of the country they knew that the members oif this House and the people believed that, in case this company could not carry on its business with the guarantee

which was then given, it would have no right to make 'any claim for this equity of redemption in the road and that Parliament should have the right to become the owners of the entire system and then carry it on either as a Government work or through a company which the Government could be given power by Parliament to create, and with respect to which they might appoint the necessary officers and managers.
,In some remarks which the Minister of Finance made when the resolution was before the House, he objected to expropriation because he said that if the system were expropriated the Government might have to pay, under the circumstances which would then arise, -cash for all the outstanding obligations, and he rather intimated that, even although they might be acquired at their present market value, which, in a great many cases, amounting to many, many millions of dollars, is not over fifty per cent of their par value, it would be an advantage to allow the securities to run on for their full term because they had been placed at a comparatively low rate of interest
Well, Sir, under the provisions of section 24, as the Government well knows to-day and as they knew when they presented the section for the approval of this House, that same result would follow. The Government would not be obliged to pay off these securities until their due date; they would simply foreclose the equity of redemption and all outstanding securities would remain just as they were, subject to the payment of the interest upon them and subject to the payment of the principal when the date of maturity arrived. Therefore, there is every advantage, from the public standpoint in carrying out the provisions of section 24, while no disadvantage can be suggested. And as I have said, these are the rights which the people of Canada have to-day. They have the right, through this Parliament, to foreclose the equity of redemption of the Canadian Northern Railway Company and everybody else upon these securities in case of default occurring. This Government is. committing a crime against the people of this country if they further assist this company financially in order to prevent default. It is the duty of the Government to the people of Canada to let the company carry on as best it can. If it can meet its interest, if it can avoid default through its own efforts and those of the financial men interested in the enterprise,
well and good; this Government and Parliament have nothing further to say about it. But if they cannot carry on, if they must make default, then let them make default; and I would say that this Parliament should be ready with its legislation, and this Government should be ready through the authority of this Parliament, to exercise immediately the powers given to them by section 24 to foreclose the equity of redemption, take possession of the property, organize, if they should think it 'better to do so, a new company, appoint the board of directors, and carry on all the operations of the Canadian Northern system. They would be able to carry them on without any delay, without disorganizing the system and without running the risk, as they are doing to-day, of involving the people of this country in an enormous liability, the amount of which no man can foresee, but the amount of which depends on the arbitrary will of three gentlemen who may be appointed to arbitrate the value of the common stock as between the Government and the gentlemen interested in the securities.
I should like to answer the statement of the Prime Minister (Sir Robert Borden) this afternoon that it did not lie in our mouths to object to this system of taking over the stock on a valuation by arbitrators. My right hon. friend quoted from a resolution which I moved in 1914. But surely, Sir, it scarcely lies in the mouth of the Prime Minister to claim that arbitration is the right thing to do in regard to taking over this stock when he himself voted against arbitration in 1914, even with the limitations which my resolution placed upon that mode of procedure. My right hon. friend voted against it and called upon all his supporters to stand with him in voting against arbitration, and they did all manfully and loyally standing up as one man and denounce this method of taking over stock on valuation by arbitration. Let us see what I proposed and what hon. members voted against. I moved
That all the words after "that" be struck out and the following words be inserted in lieu thereof: "That said resolution be not now concurred in but that it be referred back to the Committee of the Whole House with instructions to amend the same in the following particulars :
(a)	To provide for the reduction of the issued capital stock of the Canadian Northern Railway Company to $30,000,000 par value, subject to the right to make provision for an addition thereto of an amount not exceeding $25,000,000 if it should at any time become necessary for the purpose of exchange of the

income charge convertible debenture stock mentioned in paragraph 12 of the said resolution.
(b)	To provide for the transfer of such stock (with the exception of sufficient shares to qualify the directors) to the Receiver General to be held by him in trust for His Majesty.
(c)	For the holding of the said stock by His Majesty for the period of five years.
(d)	To provide that in case no default is made by the company in the payment of interest on the bonds of the company to be guaranteed by His Majesty as provided by said resolution, and in case the conditions of the said resolution and the agreement therein provided for shall be in all other respects carried out during such period of five years, the said stock shall be transferred to Mackenzie, Mann and Company, Limited, or their nominees, unless His Majesty through the Governor in Council should exercise the option hereinafter mentioned.
(e)	To provide that the Governor in Council shall have the option at any time within such period of five years to acquire the absolute ownership of the said stock and of the said Canadian Northern Railway system, and of all the constituent and subsidiary companies mentioned in the said resolution or proposed agreement, subject to existing encumbrances and to said arrangements regarding the conversion of said income charge convertible debenture stock, for a price to be fixed by arbitration, but not to exceed the sum of $30,000,000, being the par value of such stock so to be reduced as above provided.
Now, what did that provide for? It made no provision whatever, and did not contemplate; that the stock should be taken if there was any default. It provided that if the company should be able to carry on for five years successfully, if it made no default, paid its interest, these, at any time before the expiration of these five years, the Government would have the right to take over the stock by arbitration. That would be in the casp of a concern that was able to meet all its obligations, not of a concern that was bankrupt, not of a concern that had to come back in 1916 and get $15,000,000 more; not of a concern of which the Prime Minister says to-day that it is unable to go on, that unless it gets aid it must stop, must make default and go into the hands of a receiver. The proposition which I made contemplated an entirely different condition, It provided only that the Government might act and take over the stock by .arbitration in case the company should prove successful and should be able to demonstrate its ability to be .successful by being able to look after its interest for the full period of five years. In the meantime, as a condition of granting this aid, the stock was to be reduced to $30,000,000, and was to be handed over and held in trust under the control of His Majesty until such time as the company demonstrated its ability to carry on and per-

form its obligations. That resolution was voted down by a party vote. Then, later on, I think when the Bill name up for third reading, my right hon. friend the leader of the Opposition (Sir Wilfrid Laurier) moved the resolution to which also the Prime Minister has referred. But it must be borne in mind that in interpreting that resolution reference must be had to the previous resolution which had been moved by myself and had been voted down by a majority of this House. Under the rules ef the House the same resolution could not be moved a second time, and that is why the language of the second resolution, in amendment to the third reading of the Bill, was changed; it was necessary to do it in order to comply with the rules of the House. But it must be interpreted in the spirit of the resolution which had been moved previously and voted down, and when the word "reasonable" was used by the right hon. leader of the Opposition, it must he regarded as having reference to what is set forth, namely five years, in the resolution which was previously before the House.
There is one other matter I wish to refer to 'briefly, and that is the question of the lands. I said the other day-and my argument has not been answered-that whatever may he said with reference to the railway system, it seems to me utterly unpardonable for the Government to ask .this country to assume the vast obligation involved in these land debentures. We have a statement before the House that the lands remaining unsold consist of 2,000,000 acres in the province of Ontario, about 400,000 acres in the province of Quebec, and something like 1,000,000 acres in the three western provinces. There are also some sales agreements. The Government is asking Parliament to stand behind these land debentures, just as they are asking Parliament to stand behind and give .a par value to all these underlying securities which to-day are not selling upon the markets of the world at over fifty, sixty, or seventy per cent of their face value, and the Government is asking Parliament to do that without giving us any information by experts as to the value of these lands. Taking, first, the 2,000,000 acres in Ontario, I would ask my hon. friend if these are covered by the land debentures? I do not think they are.


William Thomas White: Offhand, I think not, but they are an asset to the company.


William Pugsley: I do not think they are covered, because if they were covered they would not be put up as security for short-

term obligations, and we find on page 10 of the statement brought down by the Finance Minister that these 2,000,000 acres of lands unsold in Ontario, as well as the land gTant in the province of Quebec, are both pledged as collateral for obligations of the Canadian Northern Railway system.


William Thomas White: I think my bon. friend is incorrect. If he will look at page 10 he will see that the first part says:
" Securities pledged as collateral," then " Guaranteed securities," and then " Unguaranteed securities." It is possible these are pledged, but I do not think so.


William Pugsley: If my hon. friend will look again he will see that page 10 is intended to give a statement of all securities pledged as collateral, and it gives, first,
" Guaranteed securities," then " Unguaranteed securities," and then " Land grants." All of these are pledged as collateral.


William Thomas White: I will inquire into that.


William Pugsley: people. In the very constituency which the Minister of Marine and Fisheries represents, I know and he knows,-because he has had petitions in respect to it-that a very important railroad which serves many thousands of people and contributes a very large business, is upon the eve of being dismantled because this Government will not come to the rescue and take it over and make it a part of the Intercolonial system. These people, suffering all these inconveniences, obliged to face the breach of pledge upon the part of this Government, are told by the Minister of Railways and Canals that no matter how deplorable their position may be he can do nothing for them because there is no money in the treasury to take over and repair these roads. These people, compelled as they will be to suffer hardships by reason of going back to the condition of affairs of twenty, or thirty or forty years ago, when they had no railroad accommodation, are obliged to look on and see millions upon millions of their money [DOT] as well as the money of the rest of -Canada, paid over to Messrs. Mackenzie and Mann -millions and millions which these gentlemen have never earned, and to which they are in no way entitled.
They are obliged in this time of stress to put their hands into their pockets, pay taxes, make various contributions, do their bit towards carrying on the war. They see the Government plunging the country into an obligation to the extent of unknown millions to meet the views of Mackenzie and Mann and of the financial magnates of Toronto who are standing behind them and who are pressing the Government to put through this most iniquitous measure -a measure iniquitous at any time, but a thousandfold more iniquitous when brought forward in such a time of stress as that through which we are now passing. The people, as I have said, are compelled to bear very heavy burden in order to do their part in carrying on the war. They see this measure being pushed through at a time when the credit of this country is strained to the utmost. The Minister of Finance, the head of a department which not many years ago could go into the markets of the world and borrow money at two and a half or three per cent, is compelled to-day, by reason of the fact that the financial men of Canada are not able to assist him, to go to the financial centres of the country to the south and pay the enormous rate of interest of six per cent upon direct Government obligations. Is this the time to engage in such an undertaking as is now proposed? Is this the time to involve 
our country in obligations which may run into $10,000,000, perhaps $20,000,000, perhaps $50,000,000, perhaps $60,000,000 when the result of this arbitration is known?


Mr. J. E. ARMSTRONG (East Lambton):: Mr. Speaker, the Prime Minister (Sir Robert Borden) and the Finance Minister (Sir Thomas White) this afternoon must have anticipated the remarks of the member for St. John (Mr. Pugsley) in the first part of his speech. They so completely answered his remarks that it would be folly for me to take up any more time by entering into a discussion of them.
My hon. friend, however, has called attention to a statement with regard to the value of the lands in Northern Ontario, especially those along the line of the Canadian Northern railway. It was my privilege to spend some fifteen days in a tour of inspection of the Canadian Northern railway some two years ago, in company with a number of members from both sides of the House. We passed through hundreds of miles of valuable pulp lands right alongside the Canadian Northern railway in the northern part of Ontario. I was informed by the officials of that road that the bulk .jf these limits were owned by the Canadian Northern Railway company. If the hon. gentleman would take the trouble of going over that splendid railway he would come to a very different conclusion in regard to this matter; he would not talk about $1 an acre when speaking of such valuable lands as these.
We have been listening to a discussion of the legal and financial sides of this question; let us discuss it for a few moments from the business standpoint. This is the largest undertaking excluding matters pertaining to the war, that this Parliament has had to deal with since Confederation, and it is necessary that hon. gentlemen on both sides of the House should give it their most careful attention. It is the greatest public ownership proposal ever presented to the people of Canada, and its success or failure will mean either life or death to public ownership in Canada, so far as the Dominion Government is concerned.
Some few days ago half a dozen hon. gentlemen opposite suggested five or six different methods of dealing with this question. They emphasized especially the fact that we should not allow politics to creep into the administration of this enterprise. I am satisfied, from the statements made by the Finance Minister, the Prime Minister, and the Minister of Railways (Hon. Frank

Cochrane) that no political interference will creep into the management. It certainly would be a most serious state of affairs ii politics should in any way interfere. The member for Edmonton (Mr. Oliver) the other day asserted that politics would interfere in this case as they did in connection with the administration of the Intercolonial railway. I think that
9	p.m. he did not deal fairly with the Minister of Railways. To my mind, no Minister of Railways has ever more carefully guarded his department in that respect. The hon. gentleman (Mr. Cochrane) has been most careful not to allow politics to interfere with the management of the government railways.
Government ownership operation and control are to receive a serious test. Every man, woman and child in Canada is interested in this proposal. This will be the people's railroad; they will own and control it. All our people recognize the importance of transportation. One of the greatest elements in the price of food and manufactured products is transportation. Railway rates are in effect public taxes, and we should see to it that the management of this road, as well as the management of all the other transportation facilities of our country, is carried on in such manner as to secure to the people the greatest possible benefit at the lowest possible cost.
Hon. gentlemen opposite argue that we are not going to receive value for the money to be invested in this enterprise. I wonder if they have taken into consideration the actual cost of this road. If they will add to the actual cost of the enterprise the additional cost of the rolling stock, rails, and everything connected with it, they will find that this proposal is a most advantageous one for the people of Canada. Take, for example, the rolling stock. It is estimated that $56,000,000 has been paid for the rolling stock on the Canadian Northern railway system. They have taken off $11,000,000 for depreciation, leaving $45,000,000 as the present value of the rolling stock. I have made inquiries of men who are thoroughly acquainted with the handling of railway equipment and its value, and they inform me that the Canadian Northern Railway rolling stock is to-day worth well over $60,000,000.
Further, let us compare the investment in road and equipment in respect of the Canadian Northern railway system with that of other railroads in Canada. It is important that the people should know what this road has actually cost ai*d how it compares in certain respects with other railroads in this country. At the close of the year ending June 30,1916, the investment in road and equipment as carried on the books of the companies or of the Government was as follows:
Canadian Pacific railway, $68,233 per mile. Canadian Northern railway, $54,961 per mile.
Grand Trunk, $127,340 per mile.
Grand Trunk Pacific, $98,018 per mile. Transcontinental, $88,332 per mile. Intercolonial, $76,733 per mile.
The actual average cost per mile of the Canadian Northern was nearly one-third less than the average cost per mile of these other railroads. The average cost of all the railroads was $75,524 per mile, while the actual cost of the Canadian Northern amounted to $54,961 per mile.
Another advantage in taking over this road is that the Intercolonial will through it be connected up with the West. Up to the present time the Intercolonial has been up against a very stiff proposition as to its connections at Montreal and Quebec, but under this proposal it will become part of a great transcontinental railway system.
Let us look at the enormous value of the different terminals owned, controlled and operated by the Canadian Northern Railway company at Montreal, Toronto, Winnipeg and Edmonton, and the 300 acres it owns in the heart of the city of Vancouver, and we shall be able to realize what tremendous terminal advantages this company possesses in those great cities.
This is a most opportune time to take over the road, as hon. members will see if they investigate the financial statements which have been submitted. I congratulate the Minister of Finance and the Minister of Railways upon placing in the hands of members of this House such complete statements bearing on the finances and the general management of the road. This railway has borrowed enormous sums of money at 3J and 4 per cent, whereas if we had to go into the market for money to-day we would be compelled to pay over 6 per cent. In addition to that, the securities run for ten, twenty, thirty and forty years, and at the end of those periods I am sure the people of Canada will be in a position to meet the obligations of the road, which will then, I believe, be one of the greatest assets of our Dominion.

There is no question that this railroad has developed Canada as no other great enterprise has done within the last fifteen years. No enterprise has developed the natural resources and the great mining interests and industries of our country to anything like the extent that the Canadian Northern railway has. It was my privilege to spend fifteen days on that railway on a tour of inspection, and it was of great advantage to me to have the opportunity to investigate the enormous resources along its right of way. If one takes into consideration, not only the thousands and thousands of homesteads, but the many manufactories located along its main line and branches in the Northwest, one can readily understand the enormous benefits this road confers on the people of Canada. On the train I travelled a 35 per cent engine drew twelve or fourteen pullman cars from Montreal all the way to Vancouver. I will give to the members of this House a statement in regard to the grades on that road so that the people of Canada may know what a valuable asset they have in this great railway.
'"The Canadian Northern Railway Company's transcontinental line is superior in grades and alignment to any of its competitors, having been built to five-tenths of one per cent westbound grades and to four-tenths of one per cent eastbound grades, with the exception of 28 miles of seven-tenths of one per cent eastbound grade on the western slope of the Rocky mountains, and with the further exceptions of about 327 miles of short momentum or pusher grades which can be reduced later on when necessary. Of this 327 miles of grades in excess of five-tenths of one per cent westbound and four-tenths of one per cent eastbound, there are only six miles of one per cent grade and less than one mile of 1.15 per cent grade. All other temporary grades are less than one per cent. This places the Canadian Northern Railway Company in a very strong position. At the present time it is handling about one-third of the total grain moved in Western Canada, and with the opening up of Vancouver as a grain shipping port, it will have the advantage of being able to handle grain equally as well to the Pacific coast as to Port Arthur. In other words, it can handle from the prairies an equal tonnage with one engine for delivery at Vancouver or at Port Arthur. The Canadian Northern Railway Company has handled a 16-car passenger train through the mountains with one engine.
This merely goes to show the splendid 
grades and curves on that line of railway. There are also enormous possibilities in water-powers along its right of way in Ontario and in British Columbia. Cities, towns and villages, have sprung up along its line. For the last two years it has been able to handle, for several months in the year, over 45 per cent of the grain coming out of that western country, and it has 6,000 miles of branches serving the most productive districts in the western provinces.
The policy now proposed by the Government is progressive and businesslike. By it, the people will own, control and operate 9,648 miles of railway including branches in all the provinces except New Brunswick and Prince Edward Island. Not only i? this railway connected up with the most important cities, but there are many other advantages in connection with it. I have here a small plan showing that if a short branch line were constructed between Fort William and Titania on the Transcontinental by way of Long lake, a distance of sixteen miles, it would shorten the distance on the Canadian Northern between Fort William and Montreal by over 100 'miles. That would be of enormous advantage during the winter months in connection with the back haul of the grain by way of lake Superior Junction down to Montreal and the back haul of the coal for the operation of the road by way of Superior Junction along the Transcontinental east of Titania. The proposed link would make a composite line composed of the Transcontinental from Winnipeg to Titaqia, a proposed line to the Canadian Northern at Long lake and thence by the Canadian Northern to Montreal, a total distance of 1,347.7 miles as against the present routes; Canadian Pacific railway, 1,411.6 miles; Canadian Northern railway, 1,455.7 miles; the Grand Trunk Pacific railway and National Transcontinental railway, 1,425 miles Then it would keep the traffic east and west, instead of north and south.
Let us look at the mileage of some of the government railways in this country, when you connect up the Canadian Northern with this proposition. The Intercolonial, 1,514 miles; the Prince Edward Island Railway, 275 miles; the Transcontinental, now operating, 1,810 miles, making a total mileage of 13,247 miles, when you include the Canadian Northern. The mileage of the Canadian Pacific is only 12,900; that of the Grand Trunk Pacific, 1,964; that of the Grand Trunk, 3,556, and the other roads, such' as the Pere Marquette, the Great Northern, the Michigan Central, and so on, make the balance, until we have in Canada

about 40,000 miles of railway. After this proposition is finally closed the people of Canada'will own, control and operate practically one-third of the railway mileage of the Dominion.
What other advantages are to he derived from taking over this road? To-day we have government-owned telegraph lines to the extent of 11,792 miles, 330 miles of which are cables. Add to that the telegraph system of the Great North Western, taken over by the Canadian Northern, together with the lines along the Canadian Northern, and you have 55,364 miles of single wire, of government-owned telegraph, telephone, and cable lines in this country. This proposition includes the Canadian Northern Telegraph Company's lines, and the telegraph system operated by the Great North Western Telegraph company, having 1,570 offices in Canada. An exclusive traffic agreement, renewable from time to time, exists with the Western Union Telegraph Company, and under it the Great North Western company have connection with the thousands of offices of the Western Union in the United States, and also with the Atlantic and other cable lines owned or controlled by that company. Those of us who in years gone by strongly advocated an Atlantic cable between Canada and the Motherland will find in this a very favourable outlook, because the Great North Western Telegraph system is connected up with the cable system, and for a very small expenditure a government cable could be connected up with the Motherland.
Then let us take into consideration the advantage we shall derive from a government-owned express company in this country. I have been strongly advocating that on the Government lines of railway we should have a government-owned express company. This we will have when the Canadian Northern Express company is connected up with the Intercolonial and the government-owned railways. I hope when this proposition is consummated the Minister of Railways will see that the Canadian Express company, and the American Express company remove their agents and offices from the Government lines of railway, and that the Canadian Northern Express company will extend its business throughout the government railways.
What else do we find in connection with this scheme? There are six Canadian Northern steamships running from Montreal to Port Arthur on the Great Lakes. These steamships are estimated to be worth double the figure at which they appear on the books of the railway company. I have been advocating that vessels on- our inland waters should come under the control of the Railway Commission. We are starting out, under this proposition, with six government-owned boats. They will be an enormous advantage in investigating the needs of the shippers, both east and west., Then we have the government elevators. We have to-day one government-owned elevator at Moosejaw, with a capacity of 3,500,000 bushels ; one at Saskatoon with a capacity of 3,500,000 bushels; one at Calgary vdthacapacity of
2.500.000	bushels; one at Vancouver with a capacity of 1,250,000 bushels; one at Port Arthur with a capacity of 3,250,000 bushels; one at Port Colborne with a capacity of
2,000,000; one at Montreal with a capacity of 4,000,000 and another with a capacity of
2.600.000	bushels; one at Quebec with a capacity of 1,000,000, and one at Halifax, on the Intercolonial railway, with a capacity of 500,000 bushels-making a total of ten government-owned elevators, with a capacity of 24,100,000 bushels. Take the five Canadian Northern elevators that will now be government-owned, with a capacity of ten million bushels, and you have fifteen government-owned elevators with a capacity of
34.100.000	bushels.
To impress upon the House the enormous possibilities- of this road, especially in the West, let me show the number of elevators located along the rights of way of this system, first licensed elevators and warehouses in the province of Alberta on the Canadian Northern, 70 stations, 154 elevators, capacity
4.946.000	bushels; second licensed warehouses and elevators in Saskatchewan, 239 stations, 593 elevators, capacity 17,-
790,000	bushels; third, licensed warehouses and elevators in Manitoba, 136 stations, 237 elevators, capacity 6,474,000 bushels, making a total of 999 elevators with a capacity of 63,310,000 bushels, which will be located along the rights of way of the Government-owned roads. If you take out the government-owned elevators, you still have a capacity of 29,210,000 bushels in the elevators located along the rights of way of this road. The total capacity therefore of the elevators located along the rights of way of this road in the western provinces will be over 60,000,000 bushels.
Surely this is worthy of consideration in the taking over of this enterprise. Then, we must remember that in taking over this rail-



way the Government is not assuming any responsibility that they are not compelled to assume in the public interest. The interest on the securities must be met. Receivership is impossible. The public will surely suffer ii the roads go into liquidation. Our credit would be impaired. Betterment/ are needed. Rolling stock is needed. The company cannot possibly meet the interest charges, and keep up and improve the roadbed and the rolling stock. The Government must either advance money or take over the road. The Finance Minister has placed before the House so much information in regard to the finances of the company that it would serve no purpose for me to enlarge upon what he has said.


Mr. McKENZIE:: Will the hon. member, as a railway expert, permit me a question?


Joseph Elijah Armstrong: That is not very generous on the part of my hon. friend.


Daniel Duncan McKenzie: I am in good faith.
Beyond doubt the hon. gentleman is quite an expert, in the theory of it anyway.


Joseph Elijah Armstrong: I am afraid the hon. gentleman is saying that with rather a cynical smile on his face.


Daniel Duncan McKenzie: Not at all. The hon. gentleman is not one of those with whom I am cynical. He has described a magnificent property. What explanation does he give for the fact that it is not paying its way? He explains a magnificent heritage which is evidently on the verge of bankruptcy. Can it not pay its way?


Joseph Elijah Armstrong: 
Edward Walter Nesbitt: Mr. Speaker, in seconding the amendment of my hon. friend from South Renfrew (Mr. Graham), to the motion for the second reading of the Bill, I wish to assure you that 1 did not do it with a view of confiscating any value that the Canadian Northern directors or owners may have in the property.
I would be the last one in the world to confiscate anybody's property, no matter in what form it was, without giving him value. I have no hesitation in agreeing with my hon. friend who has just sat down (Mr. Armstrong) in all his premises, practically speaking, that is, that the road has a considerable property value, that it has been an influence in opening up the country, that it has subsidiaries connected with it that are valuable, and that it is a good proposition for the Government to assume control. I absolutely agree that the Government should take over the control in place of extending more loans to the company. I do not know that, as a general rule, I am in favour of government operation of anything, but my hon. friend the Minister of Finance, when he introduced this Bill, in answer to a question by myself, said that this railway would be operated by a corporation or company that would be entirely independent of the Governor in Council, that is ts say, it would be operated by a company answerable only to Parliament. I see nothing in the Bill as introduced that would show that ts be the-case, but the Bill as introduced simply contains a provision to take over the stock now owned by the company. Therefore, I have not any hesitation in taking the word of my hon. friend the Minister of Finance that when he as-

sumes control of the stock he will operate the railway through an independent company, not on the same basis as that on which the Intercolonial is operated at the present time, and again-not that I doubt the ability of the present Minister of Railways to do what it is possible to do under such circumstances-I have to say that the government operation of railways, so far as the history of this country has gone, has not tended to encourage us in taking over more operations of the same kind.
The question now is not as to the value of the physical properties of the road; the question is whether it would be .better to refeT the value of the $60,000,000 worth of stock to arbitration or to foreclose under the statute of 1914, by which we loaned $45,000,000 under our guarantee of bonds to the Canadian Northern. That, I understand, is the question now before the House.
There is one thing in which I do not agree with my hon. friend from East Lamb-ton, and that is that the physical properties of the road are worth what we are paying / for them. So far as I can make out, we are paying about $540,000,000- that is, we are assuming about $540,000,000 of indebtedness-for the physical properties of the road. Sir Henry Drayton and Mr. Acworth, who, together with Mr. Smith, were given authority to investigate the best means of operating the railways of Canada, have arrived at certain conclusions as to the value of this property. The Prime Minister said this afternoon that this commission was not appointed for the purpose of arriving at a valuation of the road. I do not see how the Prime Minister can justify this statement, because, as a matter of fact, they were appointed to find out what would be the best means for the Government to take to operate the railways of Canada, and in doing so, if they were going to recommend government control, they would necessarily have to find out what it should cost the Government to obtain that control; so that I cannot appreciate why the Prime Minister should say that it was not within the jurisdiction of the commission to find the values of these roads. The majority of that commission, Messrs. Drayton and Acworth, find that there had been expended on the Canadian Northern, of actual money, $383,302,451.33. They deducted certain amounts, about $13,000,000 net, for advances to controlled companies to pay indebtedness for interest subsequent to construction and operating deficits capitalized when the system was put together not less than $10,000,000; and interest during 1916 
overcharged to construction, not less than $3,000,000; and placed the amount at $370,302,451. They employed a professor in the TTnited States, Professor Swain, for the purpose of arriving at the physical value of the road. Professbr Swain goes at it in two different ways. He places the value, as has been stated before, at about $400,000,000. That is a replacement value. He deducts a certain amount from that for depreciation. My hon. friend from East Lambton (Mr. Armstrong) eulogized very highly the value of the rolling stock. I think he said it cost $56,000,000 and would be worth $80,000,000. It is well known that last winter the Canadian Northern engines were not capable of doing their work. The hon. member is the first man I ever heard who increased the value of any plant in the form of machinery after it had been in use for some years.


Joseph Elijah Armstrong: The experts informed me that rolling stock such as is used on the Canadian Northern railway is worth double to-day what it was worth previous to the war. That is, if you should go out and attempt to buy cars or engines or anything in the way of rolling stock you would pay more than double.


Edward Walter Nesbitt: I imagined that was what the hon. member meant, that if the same material had to be purchased at the present day it would cost probably $80,000,000. But he must remember that it was not purchased at the present day and depreciation must be allowed for, and the depreciation would amount to a great deal more than the increase in value would amount to.


Joseph Elijah Armstrong: I deducted $11,000,000 for depreciation.


Edward Walter Nesbitt: Professor Swain finds in the summing up that the property in its present condition would be worth $357,409,678. This, however, does not include equipment, and he adds $56,000,000 to that, which comes to four hundred and two millions odd, and he puts it roughly at $400,000,000.
We are assuming a liability of more than that amount for the physical value of the property. The Minister of Finance this afternoon said that Professor Swain in valuing the property had forgotten to put in the value of the realty, and he placed the value of the realty at $28,000,000 or $29,000,000.


William Thomas White: I placed no value upon it. I mentioned the fact that the lands had been omitted.


Edward Walter Nesbitt: Somebody mentioned the amount, and said that altogether $25,000,000 or $30,000,000 had been omitted.


William Thomas White: Cash assets on hand to the amount of $23,000,000 were omitted.


Edward Walter Nesbitt: They value their "cash on hand, accounts receivable, material, sup. plies, etc.," at $14,446,152. The items are all put together, and we cannot tell what each separate item amounts to. Accounts receivable, for instance, may be very poor. Material and supplies is simply a matter of stock taking. I would not like to say that these items would be worth altogether $14,000,000 in cash. However, Professor Swain, I understand, left out the lands. My own idea is that Professor Swain meant to say he left out the equity in the lands; that is, the amount over and above the mortgages against the lands, and not that he left out the total value of the lands. As the company themselves value the land at $28,000,000 or $29,000,000, with mortgages against it of $21,000,000, it is very questionable whether there would be much equity left in the land. It all depends, of course, upon when and how they were sold. At a forced sale, for instance, I have no doubt that there would be no equity in the lands at all, judging by how lands depreciate on such an occasion.
My hon. friend the Minister of Finance and the Prime Minister this afternoon said that if we were to acquire the equity in the stock under foreclosure proceedings we would take over the physical property. My hon. friends say that under their proposition, leaving the value of the stock to arbitration, the company would be left in its entity and would operate the road and still be responsible for its liabilities. Now, that	is	the	first time	in	my lifethat	I	ever	heard of	a	company
acquiring the stock of a corporation and not acquiring the property of the corporation. I must confess that I am learning something every day-and I have learned a good deal to-day if it is possible for me, for instance, to take over the entire stock of a company and not acquire the company and not be responsible for all its liabilities. I think the Minister of Finance in discussing this matter the other day told us that we would be liable for all the liabilities of the road. In taking over the stock, no matter how it is taken over, I certainly think we shall assume all the liabilities of the Canadian Northern. Surely then, when we are taking over the liabilities, my hon. friend would not say that we were
not taking over the assets as well. When we take over the stock we acquire the property just as much as if we acquired it under foreclosure proceedings. I may be wrong, I frequently am; but it would take a great deal of effort to prove to me that when we acquire the stock of a company we do not acquire the physical assets and the liabilities of the company also.
As to whether the company is in default or not, the Minister of Finance this afternoon did not claim that they were not in default. He did say that unless the Government took over the property in the way that he proposed, the company would have to come to the Government for advances again next year, and, to use his own words, " for the next two or three or four or five years to come." Since 1914, when the guarantee was made and the Government were authorized under section 24 to take over the road in case of default, the company have applied for assistance again, and if the Government had not loaned them $15,000,000>
in 1916 to help them meet their liabilities,, the road would certainly have defaulted.
My right hon. friend the Prime Minister stated this afternoon that surely nobody in this House would confiscate the property. He used a very harsh word when he talked about confiscation. When we take over the equity in the stock, if there is any, by foreclosure proceedings, we certainly are not confiscating anything that the managers of the Canadian Northern have at the present time. Had it not been for our loan of 1916 they would have defaulted. They could not possibly have carried on until now without somebody taking foreclosure proceedings. Supposing they had borrowed this money from a trust corporation or a bank and given the same security that they gave to the Government, and put the same clauses in an agreement that were contained in the statute of 1914-would anybody say that if the trust company or the bank took over the corporation it was con. fiscating the property in the interests of the trust company or bank? I do not think so; nobody would find any fault with that. Suppose I mortgage my property and cannot pay the interest on the mortgage, nobody would ever dream of saying that the mortgagee confiscated the property because he foreclosed. I had the opportunity of carrying out my agreement and I failed.
A great many people do that under certain circumstances. Nobody finds fault with the mortgagee for foreclosing; neither should the owners of the Canadian Northern do so. I have nothing to say against the en-

terprise of Mackenzie and Mann; indeed, I have much pride in the enterprise they have shown as Canadians in building this road. The building of a great deal of it, however, was a great mistake. For. that matter, a great deal of the railway construe-tion work that has been done throughout Canada has been far in advance of the time. Roads are even now being built that, I think, are horrible mistakes; I have spoken about that in the House on frequent occasions. However, these people proceeded with the work, and they were encouraged in it not only by the Dominion Government but by practically all the Provincial Governments as well. They acquired a great property, but I am sorry to say that they have lost out. If I in,vest some money in a stock margin and the stock goes down, nobody comes to my assistance; I lose out. If I mortgage my property and cannot pay the principal or interest upon the mortgage, I lose the property; nobody says that my property has been confiscated. "Confiscation" is a rather harsh word to use in referring to foreclosure of the stock of this company and the taking over of the railway system. They have had every opportunity; we lent them $15,000,000 more than we promised "to lend them when the statute to which I have referred was passed. Moreover, we have paid some three or four million dollars by way of interest upon the guarantee made in 1914 besides the $15,000,000 loan. It is hardly right, therefore, to say that we have treated them unfairly.
I do not see any reason why the stock should not be taken over under foreclosure proceedings. If under this amendment we should take it over, the Government could appoint a commission or a committee to manage the road just as it proposes to do now. An independent commission could be appointed to deal with the matter-I hope,that any commission that is appointed will be really independent. I do not see why this could not be done.
I am not going to discuss the merits or the demerits of the corporation, or its value any more than to say-and this is why I am supporting the amendment-that it is proposed to give the company more than the road is worth. I do not think we should take into consideration what the company may earn ten, fifteen, or twenty years from now if the country is prosperous. Many things may tend to cause our country to prosper in the future. The whole energy of the people, not particularly the work of the Canadian Northern, the Grand Trunk

Pacific, or any other Canadian railway, tends to increase the prosperity of this road and of every other road in Canada. Why, then, the people should pay in advance for ' what they are going to do themselves is more than I can understand. As a matter of fact, the present owners of the Canadian Northern should be grateful to the Government for taking over the road and releasing them from their liabilities without payment in respect of the prospective value of the stock. The Government appointed a commission to find out what would be the best system to adopt in connection with the operation of the various railways in Canada. That Commission took upon itself to value this particular road. They have valued it in two or three different ways and in each case they have arrived at the conclusion that there is no equity in the stock. Take the other side of it: suppose we did not lend them the $15,000,000 in 1916; they certainly would have had no equity in the stock by this time because some of the mortgagees or bondholders would have foreclosed. " For the life of me, therefore, I cannot see that we should be doing anything unfair in taking over the stock under foreclosure proceedings as provided in the agreement and in the statute of 1914 when we guaranteed their bonds to the extent of $45,000,000.
As.to the general principle of the Government's taking over the road, I cannot see that they could do anything else which would be equitable and in the interests of the country. I am sorry that
10	p.m. they did not go further and take over the Grand Trunk Pacific as well. I think I understood the Minister of Finance, however, when he introduced the resolution upon which the Bill was to be founded, to say that eventually the Grand Trank Pacific would be taken over. The Grand Trunk should be very much pleased to hand over the Grand Trank Pacific, even though they may lose what money they have invested in it. They should also be very glad to make running or feeding arrangements with the Government if they are relieved of the Grand Trank Pacific, because this $7,500,000 that it is proposed to lend them now is already used up in losses in operation and interest on bonds. There is no probability that in other years the road will be in any better position. Although it is a dead horse, therefore, a great deal of money would be saved in the way of duplications and terminals if this road were taken over. Per-

haps we might break even in the whole transaction.
However, that is not the question before the House at the moment; we can discuss that when we come to it. The simple question now before the House is not what this road has done for Canada or what Canada has done for it; the question is, what is the better way of acquiring the stock, by submitting the matter of valuation to an arbitration as is proposed, or by foreclosure proceedings? There is no doubt that no matter who the arbitrators are they will take it for granted that Parliament has presumed that there is a value in the stock; otherwise Parliament would not have referred the matter to them for arbitration. That is one good reason why the matter should not be referred to a board of [DOT] arbitration, and it is a good reason in favour of foreclosure proceedings so far as the equity of the stock is concerned. I am strongly in favour of foreclosure proceedings.


Hon. FRANK OLIVER (Edmonton):: I
understood it was arranged that a speaker on the other side was to follow my hon. friend for North Oxford (Mr. Nesbitt), but if not, I desire bo make some remarks in this connection. I agree with my hon. friend from North Oxford that the question before the House relates to the taking over of $60,000,000 of Canadian Northern stock which has been declared on good authority to have no value. I have not had the privilege of listening to the arguments brought forward by the Government in behalf of what I may characterize as a most remarkable transaction, but, it does not appear to me that any argument can be evolved in support of taking an unstated amount of money, which .may be $60,000,000 or thereabouts, out of the treasury of Canada, at the present time, under the circumstances in which we find ourselves and handing that over except for value received. I cannot understand how the Government of the day, charged with the financial and other responsibilities that rest upon it, can come before Parliament and the country with a proposition to pay an indefinite amount, which may be $60.000,000 or thereabouts, for something that is on record as having no value, and which, if it has a va]ue,'already belongs by statute to the Dominion of Canada. 'It would be impossible to express in isoiitable terms that disregard for the public interest for the financial situation of the country, that is involved in such a proposal. It is to me unthinkable that such a proposal should
be made. The worst enemy that this Government has in this country, I am sure, never would have accused the Government of being willing to bring such a proposal forward.
It has Ibeen said that the opposition to the Bill before the House involves a suggested confiscation of the property of the *Canadian Northern Railway Company. My hon. friend from North Oxford has already dealt with that question. He has shown, in terms that cannot be controverted, that there is no right and that, therefore, there can be no confiscation. But let us assume if you please, that there is a right and a value in this stock. Surely, in that case, it was the business of the Government to come 'before Parliament with a definite proposal as to how much should be paid by the country for that stock if it were desired to acquire the ownership of this road. On what pretense can the Government come before Parliament and the country with a proposal that, in the terms of this Bill, binds Parliament to pay money of an unknown amount? The Minister of Finance has a high reputation as a business man; he had a successful business career before he gave his talents to the service of his country. But I venture to say that, in all his long and successful business career, he never made such a proposal as a business proposition on behalf of any business interest with which he was connected. I certainly say, with all due re'spect to the Minister of Finance, that he is not, in this transaction, showing due regard to the welfare of Canada and to the interest of its people when he comes before Parliament with an indefinite proposition such as this involving the possibility of the payment of so many millions of dollars. I do not wish to use harsh language id this connection. I am and have always been willing to give the Minister of Finance credit for the highest motives, for using his best endeavours in the interest of his country as he sees that interest, although he and I do not see the interest of the country in the same light; but I cannot give him or the Government credit on this occasion for honesty of purpose in bringing before Parliament this proposal as it has been brought. If that stock be worth money, there are means of coming to a conclusion as to what amount of money it is worth, and it is the business of the Government first to arrive at that estimate and then to present it to Parliament. If it be a just estimate, it will be supported by Parliament and no one will find fault; but if it

be a fact that this Government cannot come to a conclusion as to what is a fair value for that stock, then when the Government comes with a proposition such as this, it is evidence of anything but good intent.
We are staggering under financial burdens which are increasing from day to day because of circumstances not under our control. We must bear those burdens, and if this Government has any duty to perform in the interest of the cause for which these burdens are being borne, its duty is to see that not a dollar goes out of the treasury of Canada except for good value. By this Bill, we are made subject to the possibility of having to pay out of the public treasury a sum aggregating $60,000,000 for the common stock of the Canadian Northern Railway Company, which stock already belongs to us because of the default of the company under the statute. And if it did not so belong to us, the Government still should not come to Parliament except with a definite proposition as to how much we should pay for that stock.
But that is only a small part of the liability that is being assumed by the country under this Bill. Section 3 says:
-the Governor in Council may assist the Canadian Northern Railway Company, or any company included in the Canadian Northern Railway system, in paying and settling any indebtedness of such company, or postponing the payment thereof, on such terms as may he agreed upon, and for such purposes may make advances out of the Consolidated Revenue Fund, may guarantee payment in whole or in part, and may give the obligations, or securities of the Government in connection therewith.
It may be- that the Government has already informed the House as to the extent and nature of the obligations that will be assumed under this section of the Bill. I have not heard any such statement, and I do not think it has been made. If it is wrong to ask the country to become committed to the payment of an unknown amount for stock that is of no value, it is an outrage to commit the country to an absolutely unknown and indefinite amount in payment of obligations incurred or to be incurred, and that responsibility to be imposed upon the country, not by Act of Parliament, but simply by order of the Governor in Council. Canada never saw such legislation before. There never was such a proposal in kind or in amount ever brought before the Parliament of this country. I cannot believe that such an extraordinary and remarkable proposition-involving so many hundreds of millions of dollars- 
can be brought forward with good intentions. It has not the appearance and it has not the character of a measure with good intentions. I claim the right to condemn the Government for their proposal because of its terms, but even more because of the lack of good intent as evidenced by those terms.
There is involved in this the general question of railway policy of our country. I alluded to that policy when the resolutions were before the House, and I will again give my views in regard to it. Possibly my views may not agree with those already expressed by others. If that be so I am sorry, but I think the responsibilities are so great that it is only right I should give the views which I hold and hold very ' strongly. I have stated that judged by the experience of Canada this Government, under the most favourable circumstances, cannot operate the Canadian Northern Railway system either as efficiently or as economically as does the company now operating it. There is no evidence to lead us to believe for an instant that the Government can do so. There is no evidence to lead us to believe that they want to do it, or that it is any part of their intention to do it, or that they could do it, if it was their intention to do it- and I say this with all due respect to the Minister of Railways (Mr. Cochrane). I am not here as a champion of the Canadian Northern Railway Company, either in its inception or in its management, but if the people of Canada have to make a choice between government operation of this railway and its operation by the company, the interests of the Dominion of Canada demand that the present company shall continue to operate it. We have government operation of the Intercolonial and we have government operation of the Transcontinental. There is nothing in the operation of these roads to show either superior economy or superior efficiency over the operation of the Canadian Northern Railway Company. I am not blaming my hon. friend in the matter: It is a condition he has to deal with. There is a condition surrounding the government operation of railways in this country which makes their efficient and economic operation impossible. In taking over and operating 9,000 miles of railroad, we are assuming a responsibility so terrific in its magnitude that I think very few of us understand it or realize it.
There are the three points-the payment of possibly $60,000,000 for stock that is of

no value; the payment of an unknown and uncalculated amount of indebtedness of the company, on the authority of the Governor in Council; and the management of a vast system of transportation, comprising 9,000 miles of railway, by the Government, which has proven itself not as efficient as the company in railway management. Surely these are conditions that should cause us to look much more carefully than we have yet done on this transaction which we are facing so light-heartedly.
It has been said here and elsewhere that Canada has a railway problem on her hands, and the problem is that she has too many railways, and because she has too many railways we are to reduce the number by combining the systems. I absolutely take issue with that view. I maintain that Canada has not too many railways; that ehe needs the railways she has; that she will need more railways in the future, and that she can get better service and better -value from these railways under competitive management than she can in any other way. It is true that the Grand Trunk Pacific and the Canadian Northern were just completed at the outbreak of the war, and the outbreak of the war prevented that further development of [DOT]the country along their lines which would have brought them traffic and would probably have made them- financial successes before now. Still, we did not create the war, and they did not create it; it is a condition which has overtaken us all, and it is childish to, speak of either the country or the railways being discredited .because of conditions having arisen which no wisdom could have foreseen, and which in the nature of things cannot last much longer.
When those conditions have passed away the railways will be needed for the development of the country. The Canadian Northern is supposed to be a failure as a business proposition because it is not able to pay the interest on its securities. I find from the statement placed before the House that it had the following net earnings:
1915	$ 6,600,000
1916	 9,373,000'
1917	 11,500,000
These were net earnings available for the payment of interest on bonds, betterments, etc. I submit that a railway showing such progress in net earnings under present conditions ought not to be written down as a failure. It is true it is not able to meet its obligations; it is true it is in default; it is true we are entitled to foreclose it to-
morrow if we so desire and that we have no right to pay a cent of money for the common stock; but it is also true, as shown by the statement which has been laid before the House, that so far from its being ill-advised and foredoomed to failure, with the assured growth of our country and of our railways it cannot help but be an abounding success in due time. But, of course, it will have to be carried until that time arrives. Speaking for myself individually, and only individually, I would be strongly in favour of dealing with the Canadian Northern exactly as we are dealing with the Grand Trunk Pacific. So long as we are satisfied that the railways are being economically and efficiently managed, and that the money they earn is going where it should go, the country would be justified in carrying these railway companies over the difficulties of the present time by loans, well secured and at interest, as is being done in the case of the Grand Trunk Pacific. No. reason has been placed before the ' House why the same should not be done in the case of the Canadian Northern.
If this action proposed to be taken is taken in the belief that the people are crazy on the subject of the government ownership of railways, and that any sort of a proposition that will put into their hands
9,000	miles oi railway is going to be pleasing to them, I am one to take the view that the people are not fools and that the Government which makes its calculations on the basis that the people do not realize what is in their own interest is making a huge mistake. There is no charm in government ownership unless government ownership means economy and efficiency.
A government ownership that means extravagance and inefficiency is surely not a business proposition which will appeal to the people. When, in addition to that, we eliminate the principle of energetic individual competition in our railway services, and in addition that again, we are paying an unknown and vast amount of money for something for which there is no value, I think I am warranted in saying that this is the most unjustifiable transaction that was ever brought before the Parliament of Canada.	.
On motion of Mr. Middlebro the debate was adjourned.
On the motion of Sir Thomas White, the House adjourned at 10.30 p.m.

Wednesday, August 15, 1917.
TJie House met at Three o'clock, the Speaker in the Chair.
(Questions answered orally are indicated hy asterisks.)



MR. G. O. AIKEN.

George Perry Graham: July 25-1. Is G. O. Aiken in the employ of the Government in Kingston?
2.	If so, what are his duties and his salary?
3.	When was he retired from the position of guard, and why?
4.	What was the date of his new appointment?
5.	Who previously performed the duties of the position to which Mr. Aiken has now been appointed
6.	Why was not a returned soldier given this position?


Mr. SEVIGNY:: 1.	Yes.
2.	Sanitary Inspector of Military Buildings in Kingston at >a salary of. $100 per month.
3.	October 30th, 1916, by voluntary resignation.
4.	October 19, 1916, and took up his duties on November 1, 1916.
5.	No one.
6.	Not known.



MR. E. BRYDON JACK.

*Mr. LEMIEUX:: July 2S-1. Has a Mr. Brydon Jack, of Winnipeg, been recently appointed superintending engineer for the West, in the Public Works Department?
2.	If so, was he recommended by the Civil Service Commission?
3.	What is his salary?
Mr. REID (for Minister of Public Works.)
1.	Yes, Mr. E. Brydon Jack has been appointed, on 3rd July, 1917, superintending engineer for the provinces of Manitoba, Saskatchewan and Alberta, with headquarters at Winnipeg.
. 2. The Civil Service Commission has no jurisdiction over appointments to outside staff of Public Works Department.
3.	$3,000 per annum



FARMERS' BANK.

Rodolphe Lemieux: '
July 28-1. Is any action being contemplated by the Government with a view to reimburse the shareholders of the defunct Farmers' Bank?
2.	Has any petition been received during this session by any member of the Government concerning this matter?
3.	If so, by whom?


Mr. SEVIGNY:: Finance Department:	1. Answered on
January 31, 1917, as follows:
It is not the intention of the Government to introduce legislation for the purpose during the present session.
2.	No.
3.	Answered by No. 2.
jetna explosive company.


Mr. BROUILLARD:: 1.	Is the Government aware as to whether or not the NUtna Explosive Company of Drum-mondville has closed its doors?
2.	Is the Government aware as to how many men this company employed?
3.	Is the Government aware as to whether or not the said establishment was closed in consequence of any action of the Imperial Munitions Board?


Sir THOMAS WHITE:: 1.	The Government is informed that the Aetna Chemical Company, of Drummond-ville, is in the hands of a receiver.
2.	The Government is informed that the said company employed in the neighbourhood of 1,500 people.
3.	The Government is informed that the above-mentioned company failed to make deliveries of nitrocelluose powder according to its contract with the Imperial Munitions Board and finally advised the board that owing to financial difficulties, operations would have to be suspended unless the contract price was materially increased.
The Ministry of Munitions was unwilling to amend the contract and pay an increased price. Meanwhile the company went into the hands 'of a receiver and the Imperial Munitions Board arranged to take from it such powder as it could produce from the raw material it had on hand and to release it from the unfinished portion of the contract.
(The above information has been received from the Imperial Munitions Board.)



CAPT. G. H. CAMPBELL.

*Mr. J. J. HUGHES:: 1.	How long has Captain G. H. Campbell been engaged in recruiting or other work of a like military character in Prince Edward Island?
2.	How long has Major T. F. Fullerton been engaged in recruiting or other work of a like military character in Prince Edward Island?
3.	How long has Lieutenant W. A. McQueen been engaged in recruiting or other work of a like military character in Prince Edward Island?


Sir EDWARD KEMP:: 1.	Captain G. H. Campbell, a returned officer, was employed from 9th February, 1917, to 31st July, 1917.

2.	Major (Rev.) T. F. Fullerton has been employed since 21st November, 1916.
3.	Lieutenant W. A. McQueen, D.C.M., has been employed since 20th October, 1916.



LIEUT. M. R. HARDY.

Mr. J. J. HUGHES:: 1.	Is Lieutenant M. R. Hardy employed in recruiting or other work of a like military character in Prince Edward Island?
2.	If so, how long has he been so employed, and what pay or remuneration is he receiving?
3.	How much has he received up to the present time?


Sir EDWARD KEMP:: 1.	and 2. Lieut. M. R. Hardy was employed as recruiting sergeant from March 28 to May 31, 1917, at S1.50 per day.
3. $97.50.



ST. LAWRENCE FLOUR MILLS CO.

Mr. CARDIN:: 1.	What are the various contracts, if any, and their respective amounts and dates, between the St. Lawrence Flour Mills Company and the Government?
2.	What are the names of the president and general manager of the said company?
Mr.% SEVIGNY: It is undesirable in the public interest to give information on such matters at the present time.



FORESTRY BATTALIONS.

Mr. McKENZIE:: 1.	How many Forestry Battalions were formed in Canada, and how many of them went overseas?
2.	What rate of wages is paid to the men of the Forestry Battalions?
3.	Are they all paid at the same rate?
4.	If any of them are paid extra, what is that extra for, and what is the nature of the work which entitles one to the extra pay?


Sir EDWARD KEMP:: 1.	List of Forestry Battalions formed in Canada and which have proceeded overseas:
Battalion.	Officers. Ranks.
224th	Forestry	Battalion. . .	. 47	1,536230th	Forestry	Battalion. . .	. 30	1,038238th	Forestry	Battalion. . .	. 44	1,084242nd	Forestry	Battalion. ..	. 44	1,006Total 	. 165	4,664
4,829
Drafts
Drafts from the various dis-
		109	3,567
Drafts from 230th Forestry			
Battalion Depot	and not in-		
eluded in 230th	Battalion. .	40	913
122nd Battalion	(converted		
upon arrival in	England) .	26	686Total 	175	5,1665,341-	10,170
In addition to the above, a large number of men already overseas were formed into Forestry Companies.
2.	$1.10 per day in Canada.
3.	No.
4.	The following special rates of pay are given specially qualified men, after arrival overseas; these rates include regimental pay and field pay of 81-10 per day:
Consolidated rate of pay.
Millwrights, 2 per Co. of 250	 $3 00
Mill sawyers 2 per Co. of 250....	3 00
Edgenmen,	2	per	Co.	of	250	
2	25Saw filers,	2	per	Co.	of	250	
2	25Engineers,	2	per	Co.	of	250	
2	25Log setters, 2 per Co.	of	250	
1	75Cooks, 2 per Co. of 250	
1 75
Saw hammerers, 1 per 3 companies 5 50



MEDICAL OFFICERS AT RIMOUSKI.

Mr. LANCTOT:: 1.	Are medical officers on duty at the port of Rimouski, and are they paid by the Government?
2.	If so what are their names and respective
salaries?
3.	Upon whose recommendation were said medical officers appointed?


Albert Sévigny: Department of Agriculture.
1.	Yes.
2.	Dr. L. F. Lepage, $1,200 per annum; Dr. Philip Lord, $1,200 per annum.
3.	Minister of Agriculture.
Department of Marine and Fisheries.
1.	2 and 3. In the event of sick mariners, entitled to relief, arriving at the port of Rimouski, the Collector of Customs is authorized by the Department of Marine to employ a medical doctor, who is paid for each individual case treated.



KENTVILLE ARMOURY-CARETAKER.

Mr. MACDONALD:: 1.	What is the name of the caretaker of the armoury at Kentville, N.S. ?
2.	When was he appointed?
3.	How much is he paid?
4.	How much pay has he received since the date of his appointment?
5.	What are his duties?
6.	How much time does he devote to care of the armoury or contents?
7.	Has he ever had any militia training?
8.	What is his civil occupation?
9.	Will the Government appoint a returned
soldier caretaker of the armoury at Kentville, N.S. ?	,


Sir EDWARD KEMP:: 1.	William Shupe.
2.	4th May, 1912.
3.	$1 per day.	*
4.	Answered by No. 3.
5.	Care of arms, clothing, equipment, building and grounds.

6.	Whatever time is necessary.
7.	Not known to have had military training.	,
8.	Teamster.
9.	Returned soldiers are appointed, if suitable and available, to vacancies. KENTVILLE ARMOURY-MILITIA STORES.


Mr. MACDONALD:: 1.	Are there any militia stores in the armoury at Kentville, N.S., in addition to stores belonging to No. 8 Company, C.A.S.C.?
2.	What amount was formerly paid to the officer commanding No. 8 Company, C.A.S.C., annually for care of stores and arms belonging to that unit?


Sir EDWARD KEMR:: 1.	The clothing and stores of "B" Squadron, 14th Hussars, are stored in the armoury -at Kentville, in addition to those of No. 8 Company, C.A.S.C.
2.	$80 per annum before the arms, etc.,
were kept in a government-owned armoury. These arms, etc., are now cared for by the caretaker of the Kentville armoury, who, in addition, to these duties, is in charge of the clothing, etc., of "B" Squadron, 14th Hussars, and responsible for the care of the armoury building and grounds.	[DOT]



MR. I. GOLDMAN.

Mr. TURGEON:: 1.	Is the Minister of Militia and Defence aware that since the outbreak of the war, members of the overseas battalions organized in Montreal have availed themselves of the services of Mr. I Goldman, surgeon-chiropodist of that city?
2.	Is the Minister of Militia and Defence aware that Mr. Goldman has been treating returned soldiers who are inmates of the different convalescent homes In Montreal during the past three years?
3.	Is the Minister of Militia and Defence aware that at no time since the outbreak of the war, and notwithstanding several thousand treatments, has Mr/ I. Goldman asked for or accepted payment for the valuable services he rendered?
4.	Is the Minister of Militia and Defence aware that It has been suggested that in recognition of the very valuable services rendered by Mr. I Goldman, and his refusal to demand or accept payment, an honourary commission in the Canadian Militia be extended to him, in order that he may still continue to give those urgently in need of same, the benefit of his services and skill?
5.	Is it the intention of the Minister to extend Mr. I. Goldman such honourary commission?


Sir EDWARD KEMP:: 1.	Mr. I. Goldman, chiropodist, has performed services in chiropody for the soldiers in Montreal.
2.	Answered by No. 1.
3.	Mt. I. Goldman has rendered an account for his services.

4.	Mr. I. Goldman was desirous of being granted an honorary commission. The Director General of Medical Services states that:
There is no precedent that he is aware of for granting commissioned or honorary rank to chiropodists, and that officers who join the Army Medical Corps require a University degree, and that there would be serious objection to giving those not qualified as officers in the Army Medical Corps commissions.
5.	Answered by No. 4.



MR. HORMISDAS LAPORTE.

Mr. LANCTOT:: 1.	Is Hormisdas Laporte, wholesale grocery merchant, of Montreal, in receipt of a salary as a member of the War Purchasing Commission ?
2.	If so, what is the amount of such salary?
3.	What amount has he received since his appointment for living and travelling expenses respectively?
4.	Has he a private secretary? If so, who is he and what is his salary?
5.	How many clerks has he working immediately under him?


Sir EDWARD KEMP:: 1.	No.
2.	Answered by No. 1.
3.	Since his appointment in. May, 1915, he has drawn $3,810 on account of living expenses and $752.90 on account of travelling expenses.
4.	No.
5.	None. All clerks are subject to the direction of the commission.



DESPATCH PROM GENERAL CURRIE.

Mr. GAUVREAU:: 1.	Has the Government (taken cognizance of the following despatch addressed, on the occasion of the third anniversary of the war, by Windermere, from London, in the Montreal Star newspaper?



KEEP UNITED IN CANADA.

[Stage Direction]
Prom Lieutenant-General A. M. Currie. "Editor of The Star:
"London, August 4-General Currie, who is now well-established in command of the Canadian Corps, tells me he feels diffidence in sending a message to Canada at this particular moment, for as a soldier, he takes no part in matters of possible political controversy, but my intercourse with General Currie since his advent here with the 1st Canadian Division justifies me in saying that if he felt free to express his views at this critical juncture his message would read as follows:-
"It is my job to fight the troops placed at my disposal to the very best advantage. It is the duty of others to supply me with the necessary troops. I hope the successes of this corps, only possible on account of the united efforts of every officer and man in it, will serve as an inspiration to those at home.
"I hope that, appreciating what we do in the field through uniting all our efforts, they

will do their utmost to remain united In Canada. News from there does not make pleasant reading to men in the field here. Orangemen and Cathohcs, Anglo-Saxon and French-Canadian, Whig and Tory, fight side hy side, and dying are laid side by side in the same grave fully satisfied to give their lives for the cause they know to he just." ,
Windermere.
2.	Was that despatch passed by the Government censor?
3.	Did the Government inquire of General Currie about the breach of confidence or of faith committed and admitted in the above publication?
4.	Is it the intention of the Government to instruct its Censor Bureau to forbid the publication of any official or public message from overseas military officers or from correspondents stating they represent the views of the latter on matters of possible political controversy?
Robert Laird Borden: 1 and 2. No telegraphic despatch is permitted to leave the British Isles without the permission of the British censor. Presumably, therefore, the despatch in question was passed by that censor.
3.	No. The Government do not consider [DOT]that any such inquiry is called for.
4.	The Government are not aware of any circumstances which render it necessary or desirable to issue special instructions as to the subject alluded to.



SENATOR L'ESPERANCE.

Mr. GAUVREAU:: 1.	Has Mr. D. O. L'Esperance, of Quebec, been appointed a Senator?
2.	If so, what division does he represent?
3.	Is he qualified in the division for which he has been appointed according to Section 23 of the British North America Act. 1867?
4.	If so, on what property is he qualified?


Sir ROBERT BORDEN:: 1.	Yes.
2.	Gulf.
3.	Mr. L'Esperance has made and subscribed a declaration of qualification in accordance with section 23 of the British North America Act.
4.	Section 23 of the British North America Act does not require a senator to designate the property upon which he qualifies.



QUESTIONS PASSED AS ORDERS FOR RETURNS.

Mr. FORTIER:: 1.	Has a Rev. Dr. Burke been appointed a Chaplain in the Canadian Expeditionary Forces, and did he at any time since his appointment go to Rome?
2.	If so, when, and for what purpose?
3.	How many trans-Atlantic trips has the said Dr. Burke made since the Government appointed him a Chaplain?
4.	Is the Government aware as to whether or not he spent much of his time in England discussing politics in clubs and hotels? -
5.	If so, were any complaints made to the Government in this respect?
6.	Is Dr. Burke at present in Canada,, and
do his duties necessitate his presence at Ottawa or Murray Bay or elsewhere in the Dominion?	.
7.	Has the Government received any representation or complaint regarding Rev. Dr. Burke's expenses?
8.	Since his appointment as Chaplain in the
Canadian Expeditionary Forces, did Dr. Burke visit Chicago?	,	. .
9.	What amount has Dr. Burke received for pay and how much for expenses?
10.	Is he still under pay? If so, at what rate per diem?
11.	What duties are performed in Canada by Rev. Dr. Burke at the present time?
12.	How much longer does the Government intend to keep Rev. Dr. Burke on the pay-roll?


*Mr. BROUILLARD:: 1.	Was Rev. Dr. Burke, Editor of the Catholic Register of Toronto, appointed a Chaplain in the Canadian Expeditionary Forces with the rank of Colonel?
2.	Did any Bishop or Bishops ask for his appointment? If so, who?
3.	Did Rev. Dr. Burke officiate at the front in France or Flanders as a Chaplain? If so, where, and for what length of time?
4.	Did the Government or any member thereof receive any complaints abouit Rev. Dr. Burke, or requests for his removal?
5.	Was he removed from the position first assigned him and replaced by Father Workman or Father French?
6.	If so, since his removal has he continued in uniform and in receipt of pay?



INQUIRY FOR RETURNS.

[Stage Direction]
On the Orders of the Day:
Mr. LANCTOT (translation):: On the 7th instant, I asked the Government to lay on the Table a return in connection with the losses which some members of this House might have met with when the Parliamentary buildings were burnt down.
I should like to know when the Government will bring down that information, I have no doubt that the acting Secretary of State (Mr. Sevigny) has had this report in his hands for many days past and I want to know why he should defer laying it down on the Table.
I would further say that in May last, I had a question on the Orders of the Day as to pure-bred stock being distributed by the Minister of Agriculture in the county of Dorchester, upon the Minister's own recommendation, the question was put down as an order for a return. As for the preceding question, I must suppose these documents are now with the Secretary of State, I should like to have these documents as early as possible.


Albert Sévigny: In reply to the hon. member for Laprairie-Napierville, I may inform him that there is no report

as to the two questions referred to in the Secretary of State department. As soon as these papers have (been sent, they will be duly submitted to the House.


Roch Lanctôt: It take a long time to get those papers. The reason might be that the Acting Secretary of State is personally interested in th9 matter.



WHEAT REGULATIONS. ' TELEGRAM FROM NON-PARTISAN LEAGUE.

[Stage Direction]
On the Orders of the Day:
Frank Oliver: I desire to ask a question of the Government and in order to do so I shall read a telegram dated Calgary, August 14. This is a copy of a wire which was sent to the Prime Minister:
We, the Alberta executive of the non-partisan league strongly resent order Board Grain Supervisors in prohibiting Canadian farmer selling his wheat in United States market, particularly in face of the fact that your Government was good enough to remove the duty so that he might have the advantage of that market. We further seriously question the wisdom and fairness of having a predominating number of grain men on the Board and insufficient representation of the producing farmer class. Further resolved that we are convinced of the injustice of fixing a price on a staple commodity as wheat unless there is a corresponding fixed price on flour, bacon, machinery for productive purposes, and other staple articles of food and manufacture.
(Sgd.) H. L. Wilson, Chairman. J. H. Ford, Secretary.
In view of the fact that cash wheat is quoted in Winnipeg to-day at $2.40 for No.
1 Northern, in Minneapolis at $2.85 to $2.90, and in Duluth at $2.83 to $2.90, is it the intention to maintain the present maximum price and at the same time to maintain the prohibition of export?


George Green Foster: A telegram
similar to that was sent to the Prime Minister, as stated. The Prime Minister referred that to my department, and I am now dealing with it. If it is considered best I will make a short statement in the House in reference to the whole matter, probably not later than to-morrow.



UNITED STATES LABOUR FOR CANADIAN HARVEST.

[Stage Direction]
On the Orders of the Day:
Mr. PIUS MICHAUD:: I see by the morning papers that Canada has accepted reciprocity in regard to labour with the United States. The article reads that the immi-tMr. Sevigny. ]
gration regulations may be suspended to permit labour to be sent across the bordeT. I would ask the Minister of the Interior (Mr. Roche) if any person living in Canada and desiring to go to the United States will have to report to the immigration agent' as in the past?


Robert Laird Borden: A statement in regard to the arrangement entered intp was made in the House several weeks ago, when negotiations with the United States Government resulting in an agreement were completed. Nothing new has developed since that time as far as I am aware. The Minister of the Interior is not in his place at the moment. I shall direct his attention to the question of my hon. friend.



CANADIAN RAILWAY SITUATION.


[Stage Direction]
The House resumed debate from Tuesday, August 14, on the motion of Sir Thomas White for the second Teading of Bill No. 125, providing for the acquisition by His Majesty of the capital stock of the Canadian Northern Railway Company.
William Sora Middlebro: 
George Perry Graham: Three, is it not?


William Sora Middlebro: Yes, three cars. I ask hon. gentlemen of this House, in what position is a railway desiring to compete with a company like the Canadian Pacific Railway, with cars in proportion of seven to three? I think it goes without saying that something must be done, in order to provide the Canadian Northern with further rolling stock, in order that it may, at least, compete and give proper service to the people of the country, and, after all, it is the people of this country in whose interests we are acting. It was for the benefit of the people of the country, that we gave assistance, and only for their benefit, and if it were not for the benefit of the people of the country, we had no justification in advancing the money. Having loaned the money which we did for the benefit of the people of this country, it is our duty to see that that benefit is preserved to them, even if it costs more than we anticipated.
As to the question of receivership, I do not know that any man in this House has directly said that he is in favour of the company going into receivership. I do not think any man will say that, but the idea seems to be abhorrent to pretty nearly every one I have met. The Drayton-Ac-worth report sums up the question of receivership in this way:
Under a, receivership the holders of the junior securities have to submit to compound their claim, and the fixed charges are reduced to an amount that the net revenue from operation suffices to meet. Ought this drastic course to be adopted here? We think not. We think the security holders of the companies have to some extent a moral claim on the Government. Their schemes of extension have been matters of public knowledge for many years. So far from discouraging them, the governments, both of Dominion and of the Provinces, have by subsidy and by guarantee, by loans and cash advances, encouraged them to go on.
But there is more than this. The bonds and debentures of the Grand Trunk Pacific and Canadian Northern have been placed in the main through London with non-Canadian holders. And these holders in subscribing have unquestionably been influenced by the fact that the companies were backed by the Canadian Government. Technically, of course, the Government has no responsibility beyond that of meeting its own guarantees. But if the two companies went into the hands of receivers, we cannot doubt that investors outside Canada would believe, however erroneously, that the Dominion Government had treated them badly, and that the result would be serious injury to the credit of the Canadian Government, and indeed of all Canadian enterprises. And this result is one that, putting



it on pecuniary grounds alone, the Canadian people should in their own interest spend a good deal of money to avoid. We therefore consider that Canada should assume the responsibility of seeing that the interest on these securities is met.
And then my right hon. friend the leader of the Opposition, speaking in this House, in reply to the Premier, at page 3677 of the Hansard of 1914, said:
My right hon. friend said, and I altogether agree with him, that we cannot allow this enterprise to fail. We have too much money in it-not only the money of the country, hut of the provinces and of the bond-holders themselves.
Later on he says:
We require this railway. My right hon. friend said he would not let it go into liquidation. It must not go into liquidation, tout we should have the control of it. Since we must go into partnership with the Canadian Northern Railway, let us see that we are the master, not the servant.
Under this measure we propose to be the master, not the servant. As I have said, we have assisted to the extent of $151,000,000, and- the provinces to the extent of $107,000,000, in the way of guarantees. We are the last mortgagees; our claim comes last, and we must either come to the rescue of this system or let it go by default and thereby forfeit what interest we have in it. What does the Dr ayton-Ac worth report say in summing up the situation with regard to the Canadian Northern Railway system? This is the opinion of the commissioners?
We sum up the Canadian Northern situation as follows:	The company is not at present
able, and will not for some years to come be able,: to meet its fixed charges. It will, we doubt not, increase its net earnings as the years go by. But the increased net earnings will be fully absorbed for some years to come by the interest on new capital, which must be put in, if the system is to render efficient service. The company has not now, and as far as we can see will not have in the near future, such credit as to enable it* to raise the necessary capital. As we have already shown, the public investment, direct and indirect, in the Canadian Northern system amounts to $298,000,000. We do not recommend further public investment in the system, as at present constituted.
The people of Canada do not want this Government or any other Government to grant further assistance to the Canadian Northern Railway system while the owners are either Mackenzie or Mann or any other private interest. The Finance Minister very neatly summed up the situation in the following words:
The true policy would seem to be that which will ensure not only the best public service but a substantial degree of public ownership

in order that the benefit of the large financial assistance granted from the public exchequer during the critical period of the development of these roads shall enure to the benefit of the public when the enterprises reach a period of fruition. If the public does the financing, the public should enjoy the ultimate reward.
That is a sound summing up of existing conditions, and which are amply provided for in the Bill now before the House.
I now come to the question of the value of the equity. The member for South Renfrew (Mr. Graham) introduced an amendment which, apparently, he thought was something new; something not contained in the Bill before the House. But if he will examine his amendment closely he will find that to all intents and purposes we have acted under section 24 of the Act of 1914, although we have eliminated its dbjection-able features. This section says:
If authorized by the Parliament of Canada, the Governor in Council may on such terms and conditions (if any) as Parliament may prescribe-[DOT] '
The whole section rests upon that sentence.
-at any time while any event or 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 be and become absolutely barred and foreclosed, and the same shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment, or any rule of law or equity to the contrary notwithstanding.
There seems to be ta great divergence of opinion on the other side of the House in regard to what action we should now take in this matter. For instance, the member for Welland (Mr. German) does not deny that Mackenzie and Mann have some interest in the stock iof this company. He goes so far as to say that he is willing that the judge of the Exchequer Court should determine the value, if any, to be placed upon the equity of Mackenzie and Mann in the $60,000,000 worth of stock. Well, we are with him in that respect. He says that some court should determine the value of that stock. The only difference, therefore, between our opinion and his is whether the matter should he decided by a judge of the Exchequer Court or by a board of arbitration, as proposed in this measure. But a judge is an arbitrator; if the matter were submitted to a judge he would he the sole arbitrator in respect of the value of the equity in the Canadian Northern stock. Per-

son-ally, I would -rather trust to the judgment of three gentlemen than to the judgment of one. Under the method proposed, one arbitrator is to be appointed by the railway -company, one by the Government, and the third by the two arbitrators -so appointed. If the arbitrator -appointed by the Dominion Government comes to the conclusion that the other two -are, to use a vulgar expression, trying tlo " put it over " him, he may, under the provisions of this proposed measure, refuse- to agree to the arbitration and then an appeal may be had to the 'Supreme Court of Canada. If the Government cannot trust such -a matter to the Supreme Court of Canada, why should it be willing to trust to that court cases in which any other persons are interested? It seems -to me that that argument cannot be refuted.	_
Then we come to- the member for Carle-ton (Mr. Carvell). I do not say that these hon. gentlemen have not come honestly to these conclusions, but the fact that they differ emphasizes the difficulty of the problem with which we are dealing. If I interpreted -aright the remarks of the member for Carleton, he took the ground that we should not take this road over; that we should give the Canadian Northern Railway Company another loan; that we should continue the -plan that we have hitherto been following. He believed that in a short time the Canadian Northern would be able to finance successfully its own operations. He expressed himself as not being in favour of public ownership. Here iwe have another difference of opinion.
Then we come to the member for South Renfrew (Mr. Graham). If I interpreted his remarks aright, he is in- favour of foreclosing under section 24 of the Act of 1914, but as to the value of McKenzie and Mann's stock says: Let us have the courage to state definitely what the stock is worth. Well, if we had taken that stand if we had said that the Canadian Northern stock was worth $100,000, $5,000,000 or $10,000,000, the member for South Renfrew would have said: why did you not leave this matter to arbitration? You have come to some sinister understanding with Mackenzie and Mann as to the value of the stock, knowing that a board of arbitration would not find the stock to have that value. I think we took the proper course when we provided that tlm matter of value should be referred to a tribunal for determination.
What does the member for St. John say? Give them nothing at all; foreclose under
286*
the mortgage and deny them -the right to have any value that may be in the stock determined by any tribunal. It seems to me that that would be a sort of star chamber proceeding. We should be saying to them: you are guilty; we condemn you; we give you no opportunity of saying whether the stock is worth one dollar or ten million dollars. We will just take it and there is nothing coming to you. I do not think anybody would support such a proceeding as that.
Then, what does the member for Edmonton (Mr. Oliver) say?
He says: Let the road go on as it is; let it continue to be operated by the present management, and I have no doubt that in time it will be able to finance itself. We cannot follow the advice of all these hon. gentlemen (because of the diversity of their views. We must act on our own views. We are, in effect, acting under section 24, in that we are taking -advantage of those features of -section 24 which are favourable to ourselves, and following the Drayton-Acworth report as to the balance. Is not the effect of what we are doing to-day this? We are asking Parliament to authorize us to become the owners of the stock and the road upon the prescribed condition that the value of the stock or equity, if any, shall be determined by arbitration. That is practically following -the wording of section 24. That is the first thing we are doing. We are, however, eliminating certain features of that section of the Act. If we acted altogether under section 24, we would become the owners of the physical property of the Canadian Northern, and when one becomes the owner of any physical property, one immediately has- to control and operate it. If we acted according to the provisions of section 24 exactly as it stands to-day, the Minister of Railways would have to operate the Canadian Northern railway. I have aheady bad an application from a man- for an appointment as trainmaster on the Canadian Northern, and my hon. friend from St. Antoine (Sir Herbert Ames) has had a similar -application. That shows that if we carried out the provisions of section 24 and became the owners of the physical property of the Canadian Northern, every hon. member would be hounded by applicants for positions on that road, and I for one will not consent to any such -course being adopted. By the course we purpose adopting, we preserve the entity of the Canadian Northern as a corporation. We become -the owners of the stock of the Can-

adian Northern, ,and as owners of that stock we consequently become the owners of the railway, but we leave the operation, control and management in a body still called the Canadian Northern, but operated by directors appointed by this Government. I hope, in their operation, they will be as entirely free from political control and party patronage as is the Board of Railway Commissioners for the Dominion of Canada.
In addition to that, by the course we purpose adopting, we eliminate the possibility of having to renew all those bonds and agreements outstanding against the Canadian Northern. We eliminate anything in the nature of a financial crisis, because the Canadian Northern, so far as its operations are concerned, goes on just as it is to-day, but under our direction and ownership. We follow the Drayton-Acworth report in this respect. If we acted under section 24, we would become the owners of the physical property of the Canadian Northern railway. The Drayton-Acworth report says that this country should not become the owners of the physical property of that road, and in order to avoid that, they recommend a scheme of a Dominion Railway company, the stock of which should he owned by the Dominion of Canada, but the physical property of which should belong to the Dominion Railway Company. In that way they endeavour to divorce the operation of the railway from politics and political control. We follow that recommendation by means of the present Bill, because we simply buy the stock, and in that way become the owners of the road.
I do not know whether we are very much concerned with the question as to whether or not the stock has any value, because the Bill purposes leaving that question to arbitration. As, however, allegations have been made in this House that the stock has no value and that therefore we should not appoint arbitrators and thereby give the company an opportunity to claim any value, I will read what the Drayton-Acworth report .says on the matter. It did not occur to. me that it was within the jurisdiction or the province of the Drayton-Acworth Commission finally to fix and determine the value of the equity of the railway or of the stock of the Canadian Northern Railway. I read from the commission appointing them. They were to inquire into:
2.	The status of each of the three transcontinental railway systems, that is having special reference to the following considerations:-
(a)	The territories served by each system

and the service which it is capable of performing in the general scheme of transportation:
(b)	Physical conditions, equipment and capacity for handling business;
(c)	Methods of operation;
(d)	Branch lines, feeders and connections in Canada;
(e)	Connections in United States;
(f)	Steamship connections on both oceans;
(g)	Capitalization, fixed charges ,!and (net earnings having regard to (i) present conditions, and (ii) probable future development with increase of population.
3.	The reorganization of any of the said railway systems, or the acquisition thereof by the State; and in the latter case, the most ef-ffective system of operation, whether in connection with the Intercolonial railway or otherwise.
4.	Generally speaking, all matters which the members of the Board may consider pertinent or relevant to the general scope of the inquiry.


Mr. ROSS:: How would the hon. member interpret what is submitted to the commissioners under paragraph (g) of section 2, and under section 4?


William Sora Middlebro: I would admit that paragraph (g) of section 2 comes nearest to the question of determining the value of the equity, but it says "capitalization."


James Hamilton Ross: How about section 4?


William Sora Middlebro: That is a general clause. If. the Drayton-Acworth Commission were arbitrating for the purpose of determining between the Government and Mackenzie and Mann as to the value of the equity of the latter, surely Messrs. Mackenzie and Mann would have the right to appoint one of the arbitrators on the board to determine the value of the stock. I mean that, as between the Government and Mackenzie and Mann and the Canadian Northern, we surely would not have the right to appoint all three arbitrators, giving Mackenzie and Mann or the Canadian Northern no voice in the appointment of one of them, and to say: Now this absolutely fixes and determines the value of your stock.


James Hamilton Ross: How does my hon. friend account for the fact that so much of the report on the Canadian Northern relates to this question? Does he suppose that the commissioners were not able to judge as to the scope of their commission?


William Sora Middlebro: I do not suppose that Messrs. Drayton and Aeworth assumed that whatever value they put on the stock of the Canadian Northern would be the final determination of the value. I might just as well appoint three members on this side of the House as a commission to

determine the value at which my hon. friend should sell his farm to me. It was never intended by this House that the Government should have that power. The only thing intended by this commission was to give this House some general information upon which it might base future action, and then it was for the House to act upon it or not as they saw fit. It is true that Messrs. Drayton and Acworth in their report say that they do not think the common stock is of very much value, but nevertheless they say this:
We think that, on the whole, the equity of the case would be met, if the Canadian Northern shareholders were permitted to retain a moderate portion of the $60,000,000 of shares which they now hold.
Then under the heading of "arbitration recommended/* they go on to say:
But under the scheme we propose, the Trustees will operate the Canadian Northern lines as part of a combined system. It will be impossible, therefore, for the Canadian Northern Company, as such, ever to earn a dividend on its separate stock. We suggest that, if it is decided to permit the present shareholders to retain a portion of their holding, the Act of Parliament constituting the Board of Trustees, shall contain a provision for arbitration between the Trustees and the Canadian Northern Company establishing an arbitration board to act forthwith. The Trustees should appoint one arbitrator and the Canadian Northern shareholders the other, and the two arbitrators should agree on the appointment of an umpire; failing agreement, an umpire should be appointed by the Chief Justice of the Exchequer Court; and the decision of the board should be final.
The arbitrators should be empowered to decide two questions:
(1)	What proportion of the Canadian Northern common stock may fairly remain the property of the present holders?
(2)	What proportion of the earnings of the Dominion Railway Company may fairly be regarded as attributable to the Canadian Northern lines?
To illustrate our meaning, we will assume that the arbitrators decide that 5 per cent of the Canadian Northern shares shall remain the property of the existing holders, and further decide that one-half of the total earnings of the Dominion Railway Company will be fairly attributable to the Canadian Northern lines. Then their decision will mean that, out of any dividend declared in future by the Dominion Railway Company, 2i per cent (one-half of 5 per cent) will be payable to the existing Canadian Northern shareholders or their transferees.
What I want to point out is this. The commissioners themselves confess that Mackenzie and Mann had some interest at least in that equity of $600,000,000-1 do not care whether it is $1 or $1,000,000-and they recommended arbitration for determining the value. That is exactly what we are proposing to do. We do no-t want to
commit ourselves as my hon. friend from South Renfrew and his followers did in 1914, by setting a maximum price upon the stock of the Canadian Northern, because to do that suggests that you are willing to pay any amount, up to that maximum, and it might induce the arbitrators to come to the conclusion that the stock is worth more than what it is. So we say that the arbitrators shall determine the value of the stock, whatever it may be.
Then there is this other point-and I am sure my hon. friends will admit the justice of this. It has been proved by the Minister Oif Finance that when the Drayton-Aoworth Commission came to the conclusion that the stock of the Canadian Northern might not be worth anything, or that its liabilities were practically equal to its assets, they omitted to take into consideration some very valuable assets of the company. For instance, they omitted 3,000,000 acres of land the value of which I tlhink was put at $3 an acre; that would give $9,000,000. They also omitted $7,000,000 of deferred payments on lands which have been actually sold.
In my humble opinion that would be the best kind of an asset, because if the lands have been sold no- doubt a very 4 p.m. substantial payment has been made on account, and the balance would therefore be properly secured. The commissioners also omitted $2,400,000 in trust account in respect of lands sold. That -gives something like $18,000,000 of assets thalt the commissioners apparently did not take into consideration when they stated that the stock was not worth anything. I do n-ot want to -suggest for one moment that the Canadian Northern Railway are entitled to any such sum as $18,000,000, because that .mistake was made. I do not -want them to get -one dollar more than the stock is worth, but I am not prepared to stand up here and approve of any -Star Chamber method o.f taking a man's property for the benefit of the Crown and saying that he shall not have the right to prove that it is worth something. What would hon. gentlemen think of a municipal council that went to a man and said: " We want your land for the purpose of a park. We find there are $4,500 encumbrances against it. We do not think your property is worth more than such a figure, and we are not going to give yoti anything for it. You shall have no opportunity of going before a court and .proving thalt your property is worth more than the figure we set." That is the position hon. gentlemen opposite take, because section 24, under which my hon. friend moved his amend-

ment, expressly states that it shall he upon such terms us Parliament m>ay prescribe. Now Parliament may do anything. Parliament may prescribe that they may take my property and not give me a cent. Parliament is .all-powerful. But this Parliament says: "We are going to take your property, but its value shall be determined by arbitration."
The .most remarkable thing about this whole discussion is that in 1914 hon. gentlemen opposite were in favour of this very principle of arbitration. When we were proposing to guarantee the bonds of the company to the amount of $45,000,000, the hon. member for St. John seconded, and the right hon. leader of the Opposition moved, the following resolution:
That the said Bill be not now read a third time, but that it be resolved that under existing circumstances no assistance should be given to the Canadian Northern Railway unless at the same time it is provided that the Government have power within a reasonable time to acquire the ownership and the entire stock of the company at a price to be fixed by arbitration but not to exceed $30,000,000.
When we were proposing to guarantee the bonds hon. gentlemen opposite said: " No, you should not do that. You should do what we propose in that resolution." That is the resolution they voted for in 1914. Now the common stock of the Canadian Northern Railway is worth just as much to-day as it was worth in 1914, if not more, because every dollar of the $45,000,000 has gone into the road, and the net earnings of the railway are increasing from time to time. Yet 'hon. gentlemen opposite in 1914 were willing to give as high as $30,000,000, provided the arbitrators decided upon that amount. Among those who voted for that resolution were Messrs. German, Lemieux, .Macdonald, Maclean (Halifax), McKenzie, Murphy, Nesbitt, Oliver, Pugsley, and Sinclair. The very fact of fixing a maximum price of $30,000,000 for the stock presupposes that you think it might be worth $30,000,000; otherwise you would have no right to fix that maximum price. A day or two after that resolution was moved, we got $40,000,000 of that .same stock for nothing, or as part of the terms of the 45 million loan. Therefore, we got $12,000,000 of a possible value in that stock immediately the Act went through, as the 40 million is two-fifths of the whole stock.


Daniel Duncan McKenzie: Does the hon. member still regard that $45,000,000 as a loan, or as money which Mackenzie and Mann got, and which we will never get back.

Mr. MIDD'LEBRO:	It does not matter
whether it is a loan, or a mortgage, or a subsidy, or a grant, or anything else. Whatever it was, it went into the road. Every dollar of that $45,000,000 was expended under the Government's supervision, and everything that went into the road we are now getting back, because we are taking the road over. My hon. friend from St. John, who seconded the resolution I have just read, to-day takes this position:	" Not a
dollar. No arbitration at all. Foreclose them out. Give them no hearing whatever." Why did not hon. gentlemen opposite not move this amendment in 1916, after default had been made and when the company asked the Government for a loan of $15,000,000 more? There was one gentleman who so moved in 1916, but he forgot it in his speech the other day, and that was the hon. member for St. John. As late as 1916 I find that the hon. member for St. John was still in favour of paying the Canadian Northern Railway 'Company something for their stock. When the loan for $15,000,000 to the Canadian Northern Railway was proposed in 1916 he moved the following amendment :
Before making any such loan the Governor in Council shall require the company to give to His Majesty the King an option to acquire at any time within 5 years from the date thereof the railway's other properties included in the Canadian Northern Railway System at such price as to the Governor in Council may seem reasonable under existing circumstances.
In speaking on this motion he said (Hansard, 1916, page 3582):
If I remember rightly, I moved a resolution at that time fixing the amount at which the country would be entitled to take over the road, at a maximum of $30,000,000, and that resolution was put to a vote of the House.
Further on he said:
Are we going to advance this at present bankrupt concern $15,000,000 in addition to the $45,000,000 guaranteed in 1914 and to the other assistance which has been given, so as to tide it over until a day when prosperity again may come to it, and then be obliged, in order to acquire the system and to nationalize the railway, to give Mackenzie and Mann, not $30,000,000, but practically whatsoever they choose to ask?
Does not the Minister of Finance think this is the time to fix the terms upon which this country may take over the Canadian Northern railway should we decide to do so? I submit this for the consideration of my hon. friend. While it is true he does not give us a very great opportunity to present amendments, yet I think that is an amendment which he himself ought to propose, so that if the country should decide to take over this system, it may know that the system will be taken over on reasonable terms.


An hon. MEMBER:: Who said that?


William Sora Middlebro: The hon. member for St. John. A little later on, speaking of the Minister of Finance, he said:
I do not charge him with deliberately treating the House unfairly, but he should have submitted to us a statement of the earnings and operating expenses of the different railroads that go to make up the entire Canadian Northern Railway System, and he should have acquired from these companies an agreement under which at any time within the next three years or the next five years, if the country desires to take over the system, the Government shall have the right to do so at a stated maximum price.
It is only last year that the hon. member for St. John was willing to take the Canadian Northern railway over at a stated maximum price and he did not ask that the price should be left to arbitration or any thing else. But that is not all. Further on in the same debate he said:
Now, does it not seem that the company having been obliged to come again to the Government for an additional $15,000,000, the Government ought to take an option from the company, on reasonable terms, for a reasonable amount, which option could be exercised or not as Parliament in the future might determine. I would not suggest that any injustice whatever should be done to the company. I should think that it ought to be recognized that these two gentlemen, Sir William Mackenzie and Sir Donald Mann, notwithstanding what may be said by their critics, are deserving of a large measure of praise, a large degree of credit, for the enterprise and foresight they have shown.
In 1914 I moved a resolution, the effect of which would have been that the Government would have the right to take over the equity of Mackenzie and Mann, Limited, which means Sir William Mackenzie and Sir Donald Mann, at a sum not exceeding $30,000,000.
But the time has arrived when with the company coming back again for assistance, for the enormous sum of $15,000,000, the Government should come to an understanding with Sir William Mackenzie and Sir Donald Mann, and have it clearly understood that if, within a reasonable period, say within five years, the Government and Parliament should, in the interests of the people of Canada, take over this road they will affix to it as a condition a reasonable sum at which the equity of these gentlemen should be acquired for the country.
Even as late as last year the hon. gentleman was willing to enter into an agreement with the Canadian Northern to buy the stock of the company, because the equity in the stock, at a reasonable sum provided it should not exceed $30,000,000. Yet to-day he objects to arbitration for any amount. In conclusion, let me say that I think the measure before the House is the only solution of one of the most difficult and complex problems that has presented itself for the
consideration of Parliament in the railway and financial history of Canada. I have looked at the matter in many ways and f cannot see any better solution. As far as I am personally concerned, I would vote against any solution that was not in the interest of Canada at the present time. I claim that the proposal as contained in the Bill should receive our support because:
1.	We become the owners of the road.
2.	We become the masters and not the servants of the Canadian Northern railway.
3.	The arrangement preserves the entity of the company and avoids physical ownership and consequently political partisanship in the operation of the road and the appointment of the servants and agents thereof.
4.	It does not disturb existing securities.
5.	It avoids further loans to private owners.
6.	It prevents receivership and financial panic at a critical period.
7.	Any benefit or increase in the value of the road in future, due to our efforts and assistance will enure to the public benefit and not of Mackenzie and Mann.
8.	It will permit operation ' and control by an independent board of directors free of political control.
9.	It will enable a better public service to be given through proper provision for adequate rolling stock and betterments.
10.	So far as the Canadian Northern Railway is concerned, it is in line with the recommendations of the Drayton-Acworth report in that it avoids receivership, assumes liabilities, avoids further aid under old conditions, and gets the ownership of the road through the ownership of the common stock. All these considerations have been recommended by the Drayton-Acworth report.
11.	If this suggestion is any good, it carries out Sir Wilfrid Laurier's resolution of 1914 which proposed that we should become the owners of the stock, and be the masters of the situation, and which was supported by his followers.
As far as I can see this is the only reasonable solution during these strenuous times and the only one that is fair not only to the people of Canada but to the Canadian Northern Railway as well.


Daniel Duncan McKenzie: Mr. Speaker, I have listened attentively to the address of the hon. member for North Grey (Mr. Middlebro). As far as history of this enterprise is concerned, I have no fault to find with the way in which he put the different steps in connection with the Canadian Northern Railway

before the House. But I do say the usual results will follow from his speech; that is that when one starts with wrong data, and takes for granted certain premises that are wrong, he is bound to reach a wrong conclusion. The hon. member has argued throughout as if the agreement of 1914 had not been made at all and as if it were open to us to maire an altogether new agreement to-day. I propose, Mr. Speaker, to prove to you, and to any reasonable man in this House, before I get through that an agreement was made in 1914 with the Canadian Northern Railway Company and that all those who had anything to do with it directly and indirectly know that it vested in this House, in the country and in the Crown, absolutely, every vestige of property belonging to the company and that we have nothing to do under that agreement with any further considerations if we follow the text as properly interpreted of the agreement we made on that day; That being absolutely the case, I submit, Sir, that the premises upon which my hon. friend from North Grey argued are defective and that his conclusions must be of the same character.
It was rather strange that the hon. member should start out to make evidence and argument for those who hold the stock. He is certainly not counsel at present for the people who hold the stock, but if I would gather anything from his argument, it is that he was making out a case for those who will eventually go before the arbitrators and say that this stock has some money, some intrinsic value in it. That was the trend and drift of his argument. The hon. gentleman gave several reasons why the road owned by this company had not paid during the past two years. He said that the war is on. Unfortunately, the war is on and we all deeply feel and regret that fact, but as far as the West is concerned, I think it will be admitted that the war, instead of decreasing prices, instead of financially crippling that country, has put prices to heights which they never before reached. It will not be said that the staple products of the West will soar up to 200 and 300 per cent more than they were before, and that at the same time the people who own the transportation facilities in that country will not be in a position to make earnings commensurate with the advance in the price of the products which they carry. That may be so, but ordinary men like myself would not think so. I do not believe that the war has been of any disadvantage to the railways of Canada, but rather the contrary.
fMr. McKenzie.]
They have made money out of the war, more than they would have made if it had not broken out and become the sad reality that it is. I therefore submit that the argument that the war has prevented this company from making money is not well founded.


Mr. WRIGHT:: Is not the great product which they handle in the West grain, for hauling which the railways have received no more since the outbreak of the war, while wages and expenses have arisen?


Daniel Duncan McKenzie: I am not in a position to speak on that, but the ordinary course would be for the railways to charge more for the hauling of the grain when the farmers receive higher prices while the railways have to pay higher wages. The hon. member for Grey (Mr. Middlebro) was trying to make a point against this side of the House, that when the company was before Parliament asking for a loan, which turned out to be a gift or a grant to them of $45,000,000, we on this side said: No, we will not give you $45,000,000 but we will take over the property absolutely and we are willing to ascertain the value that you should get for it, that value not to exceed $30,000,000. Hon. gentlemen opposite did not accept that proposition, but gave the Canadian Northern Railway that $45,000,000. Now they pride themselves on saying that we were willing to give $30,000,000. Suppose we did give $30,000,000, would not that have been a better bargain than giving $45,000,000? If they had accepted our proposition they would have paid something less than $30,000,000, but they would have owned the property and there would have been an end to the matter. I submit that we are not subject to any criticism because we made that proposition at that time for the taking over absolutely of the property in this road.
We are also criticised because we were willing to leave it open to ascertain the value of the road up to an amount not exceeding $30,000,000. Are we in the same position to-day as we were then? Surely not. A commission was appointed by the Government, consisting of three of the most capable men they could get in Canada, Great Britain, and the United States. These men were experts in all matters relating to railways, and they had the assistance of all the engineers they required. After due consideration and investigation, that commission brought in a report in which they put certain values on the physical assets of this road, such as rolling stock, terminals, rails,

etc. But these three men, representing the wisdom of three countries, say: Whatever the value of the physical assets, the $60,000,000 of stock has absolutely no value and is worth nothing. That is the evidence before the House to-day; that is what we are dealing with, and what is the sense of men, members of this House, representing the ordinary, every-day man of this country, saying here: Oh, before the case was tried, before you heard the evidence, before the jury brought in the verdict, you were willing to do a certain thing; why do you not do it now? We say in answer, and say logically and clearly: It does not matter in the world what we said betore this case was tried, before your great commission or court investigated this case. W7e say now that we base our position on the facts as found by that commission and those facts are that this stock has no value at all.


John Hampden Burnham: Does the hon. member say that the statement which they made some years ago was not made upon evidence at all and that if they had had the information contained in this report they would have taken a different course?


Daniel Duncan McKenzie: W7hen the people of this country are dealing with the verdict of a court or of a jury they do not go through the evidence, but take the verdict as given by a competent court. This commission was a competent court. It went up and down the land and all over the road with an army of engineers and experts, all the assistance it wanted, and it got all the evidence that a competent court might require.
They arrived at their decision and handed at to the Government. The Government laid their report on the Table, and it. was printed and published and given to the members of the House. That is the position and if the hon. gentleman from Peterborough (Mr. Burnham) wants to adopt any procedure that is different from that, in order to ascertain the value of the railway, he must be wiser than the Government. We have the fact, in the most conclusive way, that the $60,000,000 of stock has absolutely no intrinsic value of any kind whatever. That should be the end of it, so far as this Government is concerned.


Richard Bedford Bennett: My learned and
hon. friend will agree that the fact that Sir Henry Drayton left out the land grant values would add, at least, some little value to the stock, however little it may be. That was overlooked, ae the hon. gentleman will observe. He cannot get away from that fact.


Daniel Duncan McKenzie: I am not a second commission to try Sir Henry Drayton. My learned friend, who is the subdued, converted, proselyte of this Government-


Richard Bedford Bennett: Wait till you hear him.


Daniel Duncan McKenzie: -has been sitting
meekly at the foot of Gamaliel since this discussion took place, and I congratulate him on his conversion since the previous discusion on this great subject.


Richard Bedford Bennett: You have not
heard him yet.
Mr. McKenzie : I hope I will hear him in the same strain, and in the same mood as I did with some interest three years ago, but so far he has not shown any great anxiety to be seen around in connection with this matter. I would not, for one moment, pretend to raise my own puny voice to criticise the findings of these three great men, representing the railway wisdom of three nations. If I did, Mr. Speaker, and the hon. gentleman from Calgary came after me, I would expect to be fed to the crows.	.	.


Richard Bedford Bennett: You are in a good humour to-day, anyhow.


Daniel Duncan McKenzie: I am putting this forward as the sound position which we, on this side of the House, occupy. Whilst it is true that the same old avenue and the same old back door of another commission is open to the Government, yet, so far, the evidence we have is fixed, determined and final, and until the Government appoint another royal commission to investigate Sir Henry Drayton and those who sat with him, we must accept their findings, and those findings are that the stock is of no value whatever. That should be the end of the stock question.
My observations so far have been in the direction of a reply to the hon. gentleman from North Grey (Mr. Middlebro). I did think, and I still think, that I should give some attention to what was said yesterday and last night in connection with this bargain. I approach this question, Mr. Speaker, not as a novice, but as an old lawyer, dealing with material in which the training of a lawyer comes (to one's help. We have to deal with statutes and with bargains, and with the interpretation of speeches and evidence in connection with this whole matter. For that reason. Sir.

before I sit down I propose to deal, as briefly as I can, with the -salient points of this transaction from 1914 down. I take it that it is logical and proper for me to take for granted that the bargain of 1914 gathers up and crystalizes all the dealings between the Government and the road up to that time, and that with that, and that only, we have to deal. But there it is an agreement reached, confirmed and solemnized by a statute of this House. Whatever took place before that we may be concerned about, but there is no use talking about it, because the conclusion was reached then, and we might as well begin there. Before I deal with that, I wish to call attention to the observations which the Prime Minister addressed to this House yesterday. He was replying to the hon. member for South Renfrew, and although the hon. member for South Renfrew is not entitled to wear a gown, and although he does not profess to be a lawyer, it was to me, at all events, a great -satisfaction to hear the masterful argument that he put forward yesterday, and the masterful way in which he put the salient points of this agreement. No man in this House or in Canada better appreciates a legal argument than the Prime Minister. I would be very sorry indeed to say anything that would tend to detract from his ability as a lawyer, but he realized, as a good lawyer would, that the argument that was advanced, and the points that were arranged and marshalled before him by the hon. gentleman from South Renfrew, were unanswerable. There was no use trying to controvert that argument and so the Prime Minister devoted his talents to trying to be funny, -and trying to play the role of a comedian, which a big lawyer does not often do well. The right hon. gentleman is not a comedian, and he did not make a success of his comedy yesterday in trying to draw the attention of his followers from the great question that was before the House, in order to get them to laugh and to forget what we were really dealing with. We were dealing with a question involving, according to the figures of those who looked it up, $620,000,000. To the ordinary man that is a very large amount. The ordinary man that we have to deal with among our electors finds $620,000,000 a little larger amount than he can really comprehend, but when you come to define it, and say that $620,000,000 means $77.50 for every man, woman and child in the Dominion of Canada, and that it means $387.50 for every family of five in this country, putting our

population at 8,000,000 people, he may realize whiat it means. The hon. gentleman from North Grey placed our population at 7,500,000. For the purposes of being absolutely fair in this calculation, I put the population at 8,000,000, and that is what it figures out. That is the kind of proposition we are dealing with, and the Prime Minister should hiave dealt with the proposition seriously, and in a businesslike way, and should have endeavoured to answer the hon. member for South Sim-coe-


George Perry Graham: South Renfrew.


Daniel Duncan McKenzie: I am sure the hon. gentleman for South Renfrew should be representing more than one county. He would do honour to any county in Ontario which he might represent.


Richard Bedford Bennett: Even Nova Scotia.


Daniel Duncan McKenzie: Yes, even Nova Scotia. Perhaps it would not be out of the way to say Calgary. We could not do better than have the member for South Renfrew represent Calgary-it is in the -air. that the hon. gentleman who now represents that constituency is disgusted with politics-


Richard Bedford Bennett: There is a very considerable measure of truth in that.


Daniel Duncan McKenzie: -and that he is disgusted with the party to which he belongs. I was dealing with the observations of the Prime Minister yesterday. The right hon. gentleman made quite a detour into ancient history. Going back to the establishment of these railway lines, he criticised severely the railway policy of the right hon. gentleman who is now leader of the Opposition. The Prime Minister should not forget-he will have reason for not forgetting it- the people's approval of the railway policy adopted in 1903 by the then Prime Minister. In that year, the policy was, in the main, put before the people in this Parliament. In 1904 the Prime Minister went to the country upon his railway policy and the then leader of the Opposition opposed it. What happened is generally known; that railway policy was .almost unanimously ratified by the people from the Atlantic to the Pacific. What happened in Nova Scotia, from which province the distinguished Prime Minister comes? Every constituency in that province, by overwhelming majorities, favoured the railway policy of the then Administration. At that time the leader of the Opposition, like Noah's dove, could not find a place to rest, politically speaking, in Nova Scotia. Indeed, he was poorer than those foxes and

fowls to which reference is made in sacred history. Accordingly, he was obliged to take refuge in Ontario, where they opened the door and kindly took him in. He had no part or place in his own province, because the people were overwhelmingly in favour of the railway policy of the right hon. gentleman who now leads the Opposition. Four years afterwards the people had an opportunity of passing judgment upon the railway policy of the then Administration, but very little was said about it. I ran the election in 1904 and in 1908. In 1904 the railway question was the great issue, but in 1908 nothing was said about it, because the people accepted as the proper one the policy which had been laid down, and set themselves to work to carry it out. The Prime Minister said that when he took office he was obliged to take over	certain burdens and difficulties.	There were no complaints about
burdens and difficulties while we were in power and while a competent government was administering the affairs of this country. We had burdens, but we had backbone, talent, and ability to bear them. The Government of to-day seems to feel keenly the weight of burdens; but it has no capacity, no backbone, or anything else which would enable them properly to bear those burdens. To-day, plenty of burdens and no backbone; when the present leader of the Opposition was in charge of affairs, some burdens, with much backbone and great ability. When we were in power we did not find it difficult to deal with these matters, but when men unequal to the task came into office-men who did not know the ropes, who did not know how to deal with the burdens imposed upon them; who did not know how to handle properly the finances of this country-the country went sadly adrift. I shall refer later to the financial conditions that prevailed when this Government came into power, as set forth by gentlemen who were members of this Government for quite a number of years. The position in which we left the country-


Mr. WILLIAM SMITH:: With a broken back.


Daniel Duncan McKenzie: Not at all. I will give my hon. friend evidence concerning the anatomy of the former Administration-evidence which he will not be able to treat lightly. I shall read part of a speech made by the Minister of Finance who, I suppose, is just as capable of handling financial matters as the member for South Ontario. I shall always, with pride, carry this speech with me. It was the first speech
made by the minister in the House, and it was listened to with great interest. He was a new man in a new role of great importance. The speech was one delivered by a man of whom much was expected; the man among the millions behind the Tory Prime Minister who was selected as the only man to whom with any degree of safety the keys of the treasury could be entrusted. I suppose the Tories believed that if you trained a man early in the way he should go, when he was old -he would not depart from it, The minister looked for trouble, diligently, earnestly and energetically, from the time he took office until February, 1912. Then he said: there is no use putting this thing off any longer; I might as well bring down my Budget. He found things all right. This is the closing part of a very eloquent -speech:
It will, as I have said before, be gratifying to all that the material prosperity with which we have been so highly favoured still continues to be our portion. Despite the serious vicissitudes through which the western wheat crop has passed and the unusual heat experienced in the province of Ontario during the past summer, the field crops of Canada show a bountiful yield and with the high prices prevailing for practically all its produces the great basic industry of agriculture continues in a flourishing condition. Almost every department of trade and commerce shows expansion. Our mines are wonderfully productive. Our coast fisheries, notably the Atlantic, have enjoyed a good catch and Jiigh prices. Our manufacturers are thriving and new industries are springing up throughout the whole Dominion. Railway construction-
I wish to direct this to the attention of the member for South Ontario to. this further from the Minister of Finance:
Railway construction, especially in the West, proceeds apace, preparing a way for settlement in districts not yet opened up and for trade with other markets than we now enjoy. Our increased bank deposits, clearings and circulation, the amount of public and private building evidenced in municipal and business structures, extensions to manufacturing plants and residences in almost every part of the country, all attest that the general prosperity of Canada at the present time is very great.
Our Dominion continues to be the land of hope and promise to the home seeker. During the last year, as before shown, our immigration from Europe and the United States reached an average of nearly a thousand a day, bringing -their capital, their intelligence and their energy to assist in the great task of developing the resources of Canada and building up her nationality. Much has been said in the past with which I am in accord as to the selection of immigration as far as possible with an eye to the quality and character of our future citizenship. Notwithstanding the large stream of immigration, labour conditions are good and extreme poverty, from any reason other than incapacity or direct misfortune, is hardly known.

Under the favourable conditions- which X have described, and with every prospect for their continuance, the future of Canada looks bright indeed. In the enjoyment of peace, plenty and prosperity her energetic, loyal and patriotic people look forward with hope and Expectation to an ever great and greater future.
To my hon. friend from South Ontario (Mr. Smith), I would point out that condition of the anatomy of the finances and business conditions of the country when they were placed in the hands of my worthy friend the Minister of Finance, and I would ask him if that is the condition of a country with its back broken, would it not be well for it always to have a broken back?
I am now -going to depict the other -side of the shield, calling the attention of hon.
' gentlemen opposite to it. In this case I will give the House the evidence of that Tory of Tories, Lieutenant-General Sir Sam Hughes. No one will question his fidelity to the Tory party and his desire to tell the truth about them -and to -put them on the highest pinnacle on which he can possibly place them. But, -speaking in this House (not -speaking elsewhere), on the 9th day of July, 1917, only a short time ago, he was obliged to tell the truth. His speech may be found on pages 3268 and 3269 of Hansard. He is dealing with the financial conditions as they existed three years -after my hon. friends came into power, qfter, I suppose, they had tried to mend the back of the country. This is what he -says: I
I need make no apology here, or elsewhere regarding my loyalty to the business interests of Canada. When the hon. the Finance Minister had Canada on the verge of financial ruin, at the beginning of the war, my loyalty to their cause was then shown by my actions in establishing industries in Canada which resulted in placing her industries of every class on a sound financial basis; hut I have never made any pretence of placing anything on a par with the soldiers in the trenches. They stand first in the heart of every honest Canadian. The Finance Minister's letter in every reference places them secondary.
Considerable interest is evidently manifesting itself on the general aspect of this case.
The rest of this speech .has in it references which are rather of a personal character in a way, attacking the Minister of Finance, and I am not going to read it. The evidence, however, given here at least according to a gentleman who was for a long time a minister, and who is to-day a strong follower of the Conservative party, is that the Minister of Finance has brought the country to the verge of ruin. I have read to the House a glowing picture of the con-
TMr. McKenzie.l
dition of this country in February, 1912, and the quotation which I have just read is from a speech delivered this year but having reference to conditions existing during the year 1914, at all events, up to the time of the breaking out of the war, because the remedy which the ex-Minister of Militia suggests for conditions then existing is to start industries in connection with the war. That was the condition in which the country was found and into which it was brought by hon. gentlemen opposite, -according to the testimony delivered in this House on the responsibility of an exminister and member of the party now in power. I am, therefore, accepting as the truth the statement made by that hon. gentleman. Such extreme conditions as the hon. gentleman has described did not exist in the days when my right hon. friend (Sir Wilfrid Laurier) was in power, and I believe they would not have come into existence had the people thought proper to continue my right hon. leader in office.
I wish to deal as -briefly as -possible with the main question now before- the House, that is: What shall we do in connection with this railway? There is not much doubt now as to what will be done. The Government of the day have their majority. 1 suppose they held a caucus on this question, and that after that they drafted this measure, and this measure is now 'before ns with, I presume, the understanding that n will receive a majority support from the Wends of the Government. Consequently, we have before us in crystallized form in this Bill what the Government purposes doing. I -criticise the Government for the opportunity they are giving to the holders of the stock of the Canadian Northern Railway to give that stock a fictitious value. If it has any value at all, it should have the value -it had on the date the Government received that report from Sir Henry Drav-ton and his associates. What do the Government do? They say in this Bill that the value of the stock is to be as of the date of an agreement to be made after this measure becomes law, after it is fixed and irrevocable that we are to take over this stock, and when the whole world knows that. Is that reasonable? If you are going to expropriate land for a railway, the value fixed by the arbitrators, is not. the value it may have after the railway goes through it; it is the value that it had -before the railway was constructed at all, because, if it has a higher value after the railway goes through it, that is due to the railway

and not to the intrinsic value of the land itself.
They have taken, the most extraordinary course of saying: "We are going to take over this property by Act of Parliament. We must have it. Messrs. Mackenzie -and Mann may be worth nothing, and their property behind this stock may be worth nothing, but we are taking it over and the Dominion of Canada is now behind it."
I ask the Minister of Finance and the business men on the other side of the House if that is good business. I submit that it is not. They have given this stock a fictitious value by placing themselves in the position where they are going to buy it themselves. Everybody knows that this Bill is going to pass, and I suppose now that some of this stock is being sold to establish a value. Everybody will be willing to pay a big price for it, and evidence will be established as to the value of the stock. I say it is poor business the way this thing has been handled.
But I go back to my first proposition, that there was not the slightest occasion for dealing with the company in this way at all. It may be said that I have no business to be talking about this matter, and that I am simply taking up the time of the House, as hon. gentlemen to whom millions mean nothing-evidently $600,000,000 means nothing to them-have made up their minds in the caucus that they are going to vote for this Bill, and that is the end of it. But, Sir, if any measure ever came before Parliament that deserved careful thought and consideration, it is this proposition involving the expenditure of this vast amount of money. Therefore, I make no apology for taking up a little of the time of the House in setting forth my views and quoting from the records. The carrying out of the agreement that was solemnly entered into in 1914 should be the confession of faith of every honest man in this House; it is the basic principle of the action that should be taken here. I submit that under the agreement of 1914 we absolutely own this property, and there is no need of saying another word about it. The Government cannot say that this company is not in default; they are estopped from saying that. The company must be in default under the agreement of 1914 or they would not be here, and I base my argument upon that assumption. The Government would not be presenting these proposals to Parliament if the Company had not made default. Section 21 of the Act
of 1914 for giving assistance to the Canadian Northern Railway system says:
The following shall be events of default within the meaning of this Act, viz,-
(a)	if the Canadian Northern shall make default in payment of the principal or interest of the guaranteed securities or any part thereof, or default in observing or performing any of the provisions of the New Trust Deed, and the security constituted by the New Trust Deed shall thereby become enforceable ;
(b)	if while any of the guaranteed securities are outstanding the Canadian Northern or any Constituent or Subsidiary Company shall make default in the payment of the principal or interest or any part thereof, or any securities heretofore or hereafter created or issued under the existing trust deed or mortgage securing the same, or under any future trust deed securing securities having priority to the guaranteed securities, or default in observing of performing any of the terms of any such existing or future trust deed or mortgage, and the security constituted by any such trust deed or mortgage shall thereby become enforceable;
(c)	if, while any of the guaranteed securities are outstanding, an order be made by any court against any company in the Canadian Northern System for the appointment of a receiver or for possession, or if a receiver be otherwise appointed or possession be otherwise lawfully taken of the whole or part of the undertaking-
In the event of any one of those conditions arising, the Government could step in and take possession of the property. Section 22 says:
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 of any of the Constituent or Subsidiary Companies "which may he subject to the legislative authority of the Parliament of Canada, and to appoint a board or boards of directors in lieu thereof respectively (any former director being eligible for appointment).
2. The power of appointment herein conferred upon the Governor in Council shall be a continuous power and shall be exercisable from time to time and so often as any event of default may exist and be continuing.
23.	The directors so appointed by the Governor in Council shall hold office during the pleasure of the Governor in Council, and any such director may be removed and another appointed in his place. Vacancies occurring from
^ time to time may be filled by the Governor in Council. The said boards respectively shall have all the powers of a board of directors elected by the shareholders; and acts of the board requiring the authority and approval of the shareholders shall if authorized or approved by the Gorvernor in Council be as valid and effectual as if authorized or approved by the shareholders.
24.	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 whom-

soever 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 be and become absolutely barred and foreclosed, and the same shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment or any rule of law or equity to the contrary notwithstanding.
Those are the powers which this Parliament took to itself in 1914, and I submit that they are absolute and conclusive. I am not going to read section 25, as it is rather long, but it provides for the appointment of directors-an absolute board without any representation of Mackenzie and Mann, and empowered to do the very thing that has been held up as a bugaboo by the Minister of Finance in this House. Under this Act they have power to avoid those very difficulties. The Minister of Finance frightened us the other day by saying that if we took over the physical as-5 p.m. sets and the whole material property of the road we should have to pay off the securities and should have tp borrow money at six per cent to pay the interest on bonds that may run for a number of years at a very much lower rate of interest. Now, under section 25, the Government is empowered to take over those securities. The Government is authorized to take the place of Mackenzie and Mann in every way, and to continue the securities just as they are now. What is the good of the Minister of Finance or anybody else trying to frighten this House into a bad bargain by saying that we may be obliged to pay off all those securities and borrow money in the markets of the world at a high rate of interest to pay off the low rate of interest on these bonds that may run for many years to come, when, in 1914, some good man on the Government side had the prescience to incorporate in the statute a provision by which we could take over all these bonds and not disturb them in the slightest degree, but go on paying the interest on them just as the company is doing now, or would do if it had the means.
I am sure that I can appeal to the business men of this House and of the country and that they will lall say that they would be glad to take the credit of the Canadian people instead of that of Mackenzie and Mann or of any private individual or concern. That is what will happen under the provisions of section 25. Mackenzie and Mann go out, we take the property and the credit of Canada goes, in their place, behind those bonds. Will anybody say that those who will hold those securities-doubt-
ful securities, many of them-will force them to foreclosure and sale if they have the backing of- the Canadian people behind them? That is what has been held out to us as the bugaboo reason why we should jump at the course of action which this Government is taking. Those are the terms of the agreement that we made in 1914.
I am now going to -give you an explanation of how the bargain was understood by the Government of that time, and I am going to give you the way in which my hon. friend the Solicitor General (Mr. IMeighen) understod the statute. If anybody understood that .statute or ought to have understood it, it was the Solicitor General. He drafted it or helped to draft it. He had the full responsibility of preparing that measure, of getting it through 'Council and of bringing it before this House. When it was before this House he gave an explanation of it which will '->e found .at page 3687 of Hansard, May 13, 1914. I 'seriously invite the attention of hon. gentlemen in this House, and particularly of hon. gentlemen on the other side, to the language of the Solicitor General and I would ask them to say if they can find any loophole for Mackenzie and Mann, or .anybody else, to come here for consideration after they had made default. (He makes it as clear and distinct as the English language can make it that the moment they make default that is the end of it. He says further that everybody is made a party to 'this agreement who has any interest whatever in the company. All persons who hold stock in the .company are, .according to the Solicitor General, made parties to the agreement. The agreement is -binding and conclusive and these men cannot find fault if they do not keep their part of it and we keep ours. This is what the hon. gentleman said:
Under the present Bill-
That- is the Bill which is now the twentieth chapter of the Acts of 1914.
-we have a summary method of taking over the road, a summary method which in effect gives us as security the other sixty per cent of stock.
That is the 60 per cent that we were talking about buying. The Solicitor General tells, us that it is under the mortgage and that we have it. He continues:
We know we have the ordinary right which any mortgagee has, and the right which any guarantor of a mortgage has, the right 'by subrogation of getting into the shoes of the lender and in the event of default exercising the rights of a mortgagee and taking possession of the road as a receiver; we know we have that right, but we have the additional summary remedy of proceeding by mere Act of Parliament to

take over the road as the property of the people of this country and eliminate once and for all, all other parties interested in that railway. And we have not only so arranged it that the interests of the Canadian Northern and all other persons whatsoever in the Canadian Northern system shall be eliminated, and that in the event of default all shall he the property of the Canidian people, but furthermore, the ten million dollars of stock in the townsite and the ten million dollars bonds are put into hotchpotch, although they are the property of Mackenzie and Mann, and although Mackenzie and Mann alone made investment in them, and in the event of our foreclosing and taking over the enterprise we ourselves get the whole benefit of the townsite. That summary method is given us. It is true Parliament has to act. The Government did not think it wise to in any way tie the hands of Parliament in days to come. We provide though that Parliament in days to come, should there be default, shall have in its own hands the power to put in directors of the road, and we clothe the directors so appointed with full power to sell that road to any corporation established by the Parliament of this country for the purpose of taking over the road. Or, if we choose, we can ourselves, by Act of Parliament, legislate that that road is the property of the people of this country and that the interests of all persons whatsoever outside of the people of Canada are eliminated, the idea of that is that we are at this time making the interested parties and all the stockholders, parties to this contract, and we say to them-
I wish to point out that all the parties who are interested are made parties to the statute and that, to use a vulgar expression, they will have no kick coming if they are ruled out.
The idea of that is that we are at this time making the interested parties and all stockholders parties to this contract, and we say to them: We now and here bind you that should the day of default come you shall not appeal to the Parliament of Canada on the ground of your road being confiscated in any way whatever, but you here and now leave the Parliament of this country free from any such question and untrammelled in every way to deal with the property of the Canadian Northern as it may be advised in the interests of the people of this country. That is the summary procedure outlined here for taking over the road.
I want to ask where any loophole is left in this for anybody to look for any -consideration. Mackenzie and Mann had given several mortgages and entered into several obligations before which it was hoped they would redeem. They came at last to 1914 and the -Government said to them: You 'have come often enough, you have come -again, but if we -are going to give you any money now there must not be any talk of foreclosure or any round-about methods of that kind; you must sign a bond, which shall be embodied in a statute, providing that if yo-u make default the Canadian people shall be entitled to take the whole thing over. I can not conceive of
any stronger language that -a learned counsel like the Solicitor General could use to make it clearer or more distinct than he used in that speech. Taking his speech, with the language of the statute, and taking the circumstances of the case, can there be any question that at that lime we had the right to believe that we were getting everything that this company had under the agreement of 1914 and that if they made default they could not complain if we should take over the whole thing?
Mow, we find that there is to be another deal altogether. This stock has value, the Government say. The Solicitor General says in his speech and the Act -says in its language that whether it has value or not it belongs to the people of this country. Whose business is it whether it has value or not? It belongs to us absolutely and conclusively. But now it turns out that this stock is in the -hands of some friends of the Government influential millionaires who have taken it as security for money advanced to Mackenzie and M-ann, I suppose, and now they -say: Whatever else may be forfeited, do not forfeit this stock, because the money for it will go into our pockets. The hon. member for North Grey told us that the $45,000,000 we gave them went into the road. If they get the par value for this stock, how much of it will go into the road? Not one farthing; it will go into the pockets of the millionaires who now hold the -stock. I object to the line of procedure in picking out this stock any more than anything else, and I object to disturbing the agreement which, taken together with the speech of the Hon. Mr. Meighen, -makes it clear beyond controversy that the property belongs absolutely and conclusively to the people of Canada once the company has made default. This effort to find value in this stock, or to direct -the blood currents once more into the reins of this stock and give it life, is simply for the purpose of gratifying and paying off the holders of the stock, whoever they may be.
I am not in favour of public ownership; I am against it. But if we are down to the position when we have to take over the ownership of this road, let us take it clean-cut, let us take everything in connection with it that will be of benefit and service to the people. It has been found by a court, representing, as I said, the wisdom of three nations in railway matters, that the common stock which we are taking over has no value, yet we -are going to over-rule their judgment and say it has got value, and we are making an agreement under which

it will be possible for the owners of this stock to say it has more value than it ever had before. The whole course in trying to give value to this stock is absolutely wrong. It would be in every way better to refer this matter to a judge of the Exchequer Court, a man of vast experience and known skill in dealing with matters of this kind, than to refer it to three arbitrators, who may or may not be experienced in dealing with matters of this kind. In entering upon any arbitration you have, in practice, although not in theory, one-third of the court against you, and if he can persuade the other two members of the court to his way of thinking, ihe is able to obtain a verdict against you. It is much better to leave it in the hands of one experienced, skilled and just man than to a court of three arbitrators. If a man had to undergo a surgical operation, he would place himself in the hands of an eminent and experienced surgeon rather than in the hands of a clinic of three doctors, one of- whom he knew would not desire to do anything to save his life, but would be glad to kill him if he could.


Mr. MORPHY:: Did not the hon. member, in 1914, vote for a resolution moved by Sir Wilfrid Laurier, seconded by the Hon. Mr. Pugsley, advocating the principle of appointing arbitrators to fix the value which should be handed over for this very road?


Daniel Duncan McKenzie: There are cases where a man is not doing justice to himself by saying yes or no to any question. I did vote for that proposition, but in the early part of my speech to-day I explained the position and circumstances, and if the hon. gentleman cares to know my attitude and position he will see my remarks in Hansard and I shall not need to go over the same ground again. In brief, I say that we were willing perhaps to pay an amount at that time not exceeding $30,000,000 for the whole thing.
But the Government at that time, instead of paying something less than $30,000,000, paid $45,000,000, and are willing to pay more now. They are taking chances on having to pay $60,000,000 more. We were willing to pay something ranging under $30,000,000. That is a very much better .bargain than paying $45,000,000, and taking chances of paying $60,000,000 more. I explained that matter before, and I think the hon. gentleman understands my position. I certainly did vote for that resolution, and I have nothing to apologize for, or take

back, because we did not even have the advantage of the conclusive evidence that is now before us in the report of that commission, that that stock is worth nothing. I am sure if in 1914 we had had the report of such eminent men as those three gentlemen who have gone over this matter and reported to us that this stock has no' value, the hon. gentleman from St. John (Mr. Pugsley) would not have moved that resolution, and if he did he would never have got anybody on our side of the House to support it. We had not the evidence then, but we have it now.


Francis Ramsey Lalor: The hon. gentleman was
iu favour of the principle of arbitration.


Daniel Duncan McKenzie: I really forget. It is
three years ago. Supposing we were in favour of arbitration three years ago, as dealing with something we thought had value, it is a different proposition to-day. Now we have discovered that the subject matter of our deliberation at that time has no value at all. It is a dead horse.


Mr. SEXSMITH:: Does that change the principle of arbitration any?


Daniel Duncan McKenzie: It does not matter what my opinion is. Hon. gentlemen opposite would not follow it if they could help. We have the opinion of a court in this country appointed for the express purpose of doing this kind of work, absolutely unbiased, a third of which is not against us at the start. Even if I did ask for an arbitration, why should hon. gentlemen follow my advice, inasmuch as they voted against it before?
Hon. gentlemen opposite then thought that arbitration was wrong and they voted it down, and now we say there is only one other course open to them, namely, to go to the Exchequer Court. A year ago this spring we discussed a similar question in this House in connection with the values of railways. What did hon. gentlemen opposite do? They passed an Act of this Parliament to ascertain the value of the Quebec 'Central Railway. Did they appoint 'an arbitration? No; they selected the Exchequer Court, the very tribunal which we suggest in this instance. What is the difference between ascertaining the value of stock and railway equipment in Quebec and ascertaining the value of stock and railway equipment in the West? Why not get the benefit of the experience of that very learned court as to the value of this Canadian Northern Railway? I will point out to hon. gentlemen opposite what may be the

reason for their changed course. I have had the honour of reading the reasons for judgment of the judge of the Exchequer Court in the Quebec-Saguenay Railway valuation. I find he did not live up to the expectations of those who expected to make a carcass for the delectation of the prairie birds of the Quebec and Saguenay Railway. He did not fall into their ways of thinking. He was a clean-cut business man, and I would commend any lawyer or any layman in this House to read his decision and see the masterful way in which he dealt with that question. They will find that one item alone which he rejected consisted of a million and a quarter dollars. The Government, represented by a lawyer, said it was all right to let the million and a quarter go through, but the judge of the Exchequer Court said: It is not right; it is all wrong, and I will not allow it.


Rodolphe Lemieux: Hear, hear.


Daniel Duncan McKenzie: A claim for a million and a quarter of money in one transaction was disallowed by the judge. If we want a man in this country to deal with a like subject, do hon. gentlemen not think it is a recommendation for him, that he should take that view in the very same sort of case? It commends itself to me, and I think it would commend itself to any ordinary man. I submit, therefore, that if we must have arbitration, we should take the very best kind of arbitration we can get, refer it to the judge of the Exchequer Court, and let him deal with this matter. I am willing to refer to any unbiased lawyer that agreement of 1914, interpreted in the light of the speeches made in explaining it to the House by the Solicitor-General, and I am convinced that any unbiased judge or lawyer will reach the conclusion that there should never be a word said about any further consideration of values in this business, and that we should take the railway over and do the best we can with it. I -submit there is no reason for any consideration of the value of the stock. If it is to be considered, it is because there is some power behind the throne, holding this stock, which has some sinister influence with this Government, and which is trying to put life and value into a dead horse. We have paid enough for the road, and it should be ours. The commissioners say the property is not worth more than about $400,000,000. We are taking over with it obligations to the extent of $620,000,000, and why
should we pay more? For these reasons I will vote for the amendment of the hon. gentleman (Mr. Graham) and against this Bill, if an opportunity be given me to vote against it.


Mr. W. F. MACLEAN (South York):: I have listened to the remarks of the hon. gentleman from Cape Breton (Mr. McKenzie), and I do not say that I am in a position, from a legal point of view, to answer his arguments. He said that, as a member of this House, he did not believe in public ownership. I am a believer in public ownership of railways, and I intend to justify that belief, as well as I can, on this occasion. I may foe, to use an old phrase, a lone pine in this House in favour of public ownership, although I do not admit even that. But though I should be, I am not ashamed to declare myself in favour of public ownership. I have been in this House a good many years, and for many years I have favoured that policy, and have advocated legislation to carry it into effect. I have addressed the people all over this country on this subject, and, as an ordinary, everyday journalist, I have discussed the question in print, and I am convinced, not only that public ownership is right and in the public interest, but that the people of all countries are already believers in it, or are rapidly becoming such. The thing that marks this century more than anything else is the progress made by the doctrine of public ownership, which has had more to do with the recovery of public rights and the promotion of public welfare than any other factor. The regeneration of Canada and other countries, after this war, will depend almost absolutely on carrying out this principle.
Public ownership is not a new thing; it prevails all over Europe. In every country in Europe, with the exception of Great Britain, they have had public ownership of railways. Germany, all-powerful in this war, has public ownership of railways and she overran Belgium, and got into France, and her allies got into Turkey, all of which was accomplished because of their organization of railways under state control, first for purposes of defence, and, second, for the development of trade and industries, Germany is all-powerful in this contest, largely 'because she has had public ownership of railways. The railways of France are under state control; the same may be said of Russia and of Italy. Russian trade to-day can reach the Pacific only through a national railway; the mission that went



to Russia from the United 'States went by a national Russian railway that had reached out to the Pacific coast through a territory where no private company would (build. Australian and New Zealand have public ownership of railways; so has India, a dependency of the British Crown. Sixty or seventy years ago England made the mistake of deciding that the steel rails which up to that time had been owned by the public should not be kept as the King's highway. So great a man as 'Gladstone allowed to slip by the opportunity then afforded of nationalizing the railways and of retaining them as the King's highway. Rivers and canals have always been kept as the King's highways, though their administration has been changed to some extent by the 'interposition of private corporations. The doctrine, however, in England was that the King's highway should be public property and that principle prevailed in connection with everything but the railways. After the declaration of war the first thing that England did was to take possession of the eighteen or more private companies engaged in Tailway transportation; to consolidate them; to put them under the control and direction of the State. The moment that was done, a splendid service was afforded, not only in transportation connected with the army, but in the promotion of trade generally. Only yesterday I picked up a copy o.f that great enemy of public ownership, the Railway Age, published in New York, the editor of which came to Canada to speak as an opponent of publjc ownership, but in his paper last week he has an article which shows how England consolidated her railways with the distribution of coal to the great benefit of the whole country. This, then, is what happened in England since the war began; with a view to the welfare of the Empire and to the winning of the war, the railways, of England were mobilized and put in a position to render the greatest possible service to the state. The war has been on for three years, and no complaint has been made in England against this nationalization of the railways. But something else happened in England: they .mobilized the coal mines also. These works are now controlled absolutely by the state, for two purposes: the winning of the war, and the promotion of trade and industries. In order to get the best service at a minimum cost, it is provided that coal may be ordered through a national board, and that national board designates the mine from which the coal 
shall come and the nailway over which it must be transported. The result is a maximum of co-operation and co-ordination between the coal mines and the railways. The handling of the coal is, as a consequence, much more economically accomplished. If you live in the north of England your coal must be obtained from the nearest mine and must be transported over the railroad that runs nearest the mine. In this way you get the cheapest, the shortest,, the quickest, and, therefore, the best service. In other words, these public utilities have been pooled in the public interest and for the welfare of the state; they are not being used for the benefit of shareholders who fry to get as much as they possibly can out of the enterprises in which they are interested.


John Hampden Burnham: Is it not true that those people who oppose public ownership must necessarily oppose public control?


William Findlay Maclean: I would think so.


Mr. KNOWLES:: Is it not true 'that in the matter of public ownership a great deal depends upon the manner in which public affairs are .administered in the jcountry concerned? Does it necessarily follow that in Canada the administration of public utilities would be as honest or as efficient as it is in England?


William Findlay Maclean: As a Canadian, I say yes. I am not afraid to trust the Canadian Parliament; I am not afraid to trust my fellow-men in 'the constituency of South YoTk, in regard to this matter.


William Erskine Knowles: Has the experience in connection with the Intercolonial railway brought the hon. gentleman to that conclusion?


William Findlay Maclean: No. I am not
afraid of public ownership in respect to the Intercolonial, nor do I apologize for the application of the' principle to that public utility. Public ownership of the Intercolonial has been a good thing. True, it can be made better-and that it has not been better in the past hon. gentlemen on both sides may be more or less responsible for. What can be done in other countries can be done in Canada, and what is good for any other country is good for Canada. Public ownership has vindicated itself the world over. If any hon, gentlemen will show where public ownership has failed, or give reasons of its having failed, he may be able to make out a case against the adoption of that policy. But 1 believe in public own-

ership, though I may be almost alone in that belief; perhaps not many representatives of the people believe in public ownership.


Daniel Duncan McKenzie: The great chief of
the Conservative party, Sir John A. Macdonald, was opposed to public ownership.


William Findlay Maclean: No, he was not; I know as much about Sir John A. Macdonald's views as my hon. friend does.


Daniel Duncan McKenzie: Hv, is on record as
being opposed to it.


William Findlay Maclean: Granted that he was; he lived fifty years ago; we are in the twentieth century. We are living; Sir John A. Macdonald is dead. We have to deal with this matter not from the viewpoint of what Sir John Macdonald thought fifty years ago, 'but from the viewpoint of the real value of public ownership to-day. Twisting and turning may have been practiced in the past-indeed, I saw a good deal of twisting and turning here to-day that rather surprised me. But I still say that the experience of nations the world over is favourable to public ownership.
I now come to the United States, which is going to be a great factor in the settlement of this war. Immediately upon war being declared by the United States, the railways of the country were mobilized, and the people who, as shareholders and bondholders, have their money in those railways to-day, would like to see that mobilization go forward still further. The United States will, I believe, embark on a policy of public ownership of railways, especially after they see that Canada has decided that public ownership is to obtain in this country. The United States have adopted a policy of public ownership of railways in Alaska, because they are constructing there a national railway to make connection with our railways in British Columbia. They have come to the conclusion that there the principle of public ownership ought to be adopted. They are mobilizing and nationalizing their railways to-day in order to handle their troops, to ship their munitions, to send supplies to their army, which is in France now, and which will be there for a long time to come. They are doing that because it is good public policy, and they are, in that respect, simply following the example of the rest of the world.
I desire to state two or three reasons why I believe in public ownership of railways. I believe in it, not because other nations have adopted that policy, but because of
287J
the advantages and economies that it brings about. Where you have a number of privately-owned roads, you have much unnecessary duplication of .stations, terminals, sidings, and so on, and that means a great deal of unnecessary expense. With public ownership-and we are on the way to it now in Canada-all this unnecessary duplication ceases. In Montreal, the Canadian Northern Company has most expensive terminals, a tunnel, a station, sidings. If there was public ownership, there would be no need of that.


Rodolphe Lemieux: There are three railway stations in Montreal.


William Findlay Maclean: My hon. friend's statement makes my argument three times as strong as I made it. You have all this waste and unnecessary expense, and you do not get the service; you do not get coordination, and co-operation. By public ownership you get co-ordination of the system, you do away with unnecessary duplication; you get co-operation; you have fewer terminals and sidings, and every siding is available for every citizen of the country. I know siding after siding , on which you can put a freight car only, by the pressure of the Board of Railway Commissioners, but with public ownership, every man will be able to use every siding and every terminal. He will form part of the ownership; the railway will be his, and he will not have to ask the permission of any railway magnate or company to use a siding. The railway will be for the service of the country.


William Erskine Knowles: In Australia there is public ownership of railways. Does the hon. gentleman think the condition of things in Australia, where there is a multiplicity of gauges, where the same car cannot he used on different railways, is better than the system in Canada where there is one gauge?


William Findlay Maclean: That, of course, is a great mistake.


William Erskine Knowles: Still, the hon. gentleman says that public ownership brings about co-ordination.


William Findlay Maclean: Yes, it does. I remember when the Grand Trunk and the Great Western had different gauges, and they had a third rail on those railways. We have an instance of that in Toronto where the street railway has what is called a bastard gauge. But when you have public ownership of railways, you can standardize everything in connection with them;
4534

you can bring about great economies, and you can give a better service.
In America and in England, railways have been constructed by private companies, ostensibly for the purpose of giving good service, but the real object in most cases has been to make profits for the shareholders. The difference between public ownership and private ownership is that the former seeks to give service and the latter to make profits for the owners, and service and profit do not go together; they have never gone together in this country. No railway in this country has been constructed wholly with the idea of giving service; the men who operate it devote all their energies to meeting the fixed charges and earning profits for the shareholders. That is their duty. They always think of profit first and service second. With public ownership good service is the main thing to be considered, and the orders to those who administer the road should be to see how good a service they can give to the public without regard to the profits. Of course, the fixed charges in connection with the road must be provided for. Public, ownership will put an end to this idea of running a railway to make magnates. We have had some of them in this country and they have had them in the United States, Ithe Vanderbilts., the Goulds and the Hills. The late Mr. J. J. Hill gave an excellent .service in. the northwestern states and in some portions of Canada, but he had in mind one thing more than anything else, and that was to make J. J. Hill a great railway magnate and to leave his sons great railway magnates, and the service they gave to the people was a secondary consideration.
We are not going to make any more railway magnates in this country; we are going to build the railroads by the people, for the people, and with the people's money, on the principle of giving service and not making money for any one, or making great families and consolidating wealth and putting it into the hands of the few. It will not be permitted in future to any body of men or any company or any board of directors to discriminate, as they have done in the past, against individuals or localities. The view that the welfare of the nation is of more importance than the wealth of individuals is in the direction of public ownership. That view is spreading throughout the minds of the people of this country, and go where you will in Canada, you will see that the people are in favour of public ownership. That is especially true of the

West. The farmers of the West, at their conventions, and in particular, at a convention of a political party that met at Winnipeg the other day, voiced the views of the people of the West, declaring in favour of public ownership. I say, therefore, that the verdict of the people of this country is in favour of public ownership, because that is based on the principle of service and not of profit-on the principle of the "welfare of all and not of the wealth of a few. They have before them the fact that public ownership has vindicated itself in Europe. Great Britain resorted to public ownership when she found herself at war. The United States resorted to it in the development of Alaska and in the mobilization of railways and in connection with the war. Japan, China, Australia, New Zealand- the whole world to-day, with the exception of England and the United States, is in favour of public ownership, and these two countries are also accepting it in a measure. We, too, are accepting it', and I thank God I am living in this year 1917 when 9,000 ot
10,000	miles of railway actually pass out of private ownership into the hands of the people, and will be ultimately joined up in creating a great national system of railways owned by the people and devoted to the development and welfare of the nation, and not to the profits of individuals.
I just wish to say a word on the question of discrimination, which public ownership overcomes. Instance after instance can be found in the history of the United States where roads have discriminated against an individual or an interest-the farming interest, for instance-or even against a state. Certain places have been ruined because railway magnates of private-owned roads have discriminated against a certain town or locality, or against a certain interest. Public ownership, on the other hand, is based on the principle of no discrimination; equality of treatment for all. You cannot find a private-owned road that is not open to the charge that they have unjustly discriminated. We have created a railway commission in this country, as they have in the United States, to prevent this discrimination and unfair treatment. The other point in this connection which I wish to emphasize is this: My father often told me, when talking over political questions, that the great mistake the peoiple made in England many years ago in connection with railways and other matters was in thinking that the least government was the best. Now the teaching of this country and of this day, with the advance of civilization

in all its complexity, is that the duty of doing something and protecting the public interest rest more and more upon the State. Therefore, with the complexities of civilization as we know it to-day, and with the questions that are now before us as to the reorganization of our country, there is nothing ahead of us but public ownership of railways in order to fully protect the welfare and the interests of the nation.
At six o'clock, the House took recess.
After Recess.
The House resumed at eight o'clock.


William Findlay Maclean: Mr. Speaker, the next point I want to make in favour of the public ownership of railways is that it will help to solve the problem of the motive power with which our railways are to be run. There is a great scarcity of coal in various portion of Canada. In my own province of Ontario we have no coal, and there is no coal in Quebec. There is a large store of coal in the Maritime Provinces, but you have to go pretty far west before you come to any large deposits of coal. Therefore, we are largely dependent on distant coal beds, situated in a foreign country, for the coal supply for our railways. The public ownership of railways removes one great difficulty in connection with transportation in this country, namely that if we have not the coal, we have the greatest water powers in the world, and the modern thing in railroading to-day is to get your motive power for transportation from the streams. We have rivers that will produce enough hydro-electric energy to give us an unlimited supply of motive power to operate all our railways and make us independent of the coal companies in foreign countries who ship coal to us. These water powers, if properly controlled, will provide us with motive power which will probably give Canada the finest transportation system in the world. They are largely owned and controlled by the provinces and the Dominion. It is not too late for this Parliament, by its own action and co-operation with the provinces, to declare that every water power in this country must be conserved, kept, owned and controlled by the State. If we are foolish enough to allow < ur water powers and rivers to pass info the control of private corporations, as the coal beds in the United States have passed into the hands of corporations, then the question of coal becomes of supreme importance to the
people of Canada and to those who have charge of transportation.
There are water powers enough in Canada to draw every train and every car we shall ever have. If we nationalize the railways, which I favouT, and if we nationalize our water powers, as we ought to, and use them for the solution of the transportation problem, Canada will have the best railway system in the world. So far, we have made great headway in nationalizing our water powers. In Ontario to-day the work is largely done. We have the Hydro-Electric Commission, publicly owned and controlled by the municipalities of Ontario in conjunction with the Provincial Government, and. we are steadily moving in the direction of the nationalization of all these water powers and the development of power for manufacturing industries as well as for transportation. What is being done in Ontario can be done in every part of the country. What we have done with the Niagara river-can be done in connection with the St, Lawrence. There is enough power on the Niagara river, and enough power can be generated on the St. Lawrence, to drive every car and every train, to run every factory and every industry, and to light all the factories and all the cities and towns and houses in the country.
Right at Cornwall, at the Long Sault, there is an immense quantity of power, and it nearly passed out of the hands of the people of Canada. It was proposed in this very Parliament, since I have been a member of it, to alienate that great water power at Cornwall and to turn it over to a company partly American and partly Canadian in its organization, which would have monopolized the power and sold it to the people and to the railways at the highest price. The railways to-day have to pay the coal owners in the United States a high price for the coal which is used as motive power to run the railways. The two Governments controlling the two sides of the river, could develop the water power on the St. Lawrence, as our Government is developing it on the Niagara, and with these two rivers alone we would have control of the motive power in Ontarid and Quebec, and run every train on the Grand Trunk, the Canadian Pacific and Canadian Northern.
Then, back in the province of Quebec, they have immense, unlimited, water power which can be developed. By reason of the improved system of transmission, notrouble is experienced in sending power to.

a distance of 400 or 500 miles without any great percentage of loss, and that power can be used for driving trains.
The only way to develop this water-power to the greatest public advantage is by State ownership of railways and of water-powers. In that way alone can we provide for the farmer the cheapest and best possible transportation for his products. That idea is spreading in my own province of Ontario where, largely through the development of water-powers on the Niagara river, we are moving our street cars in Toronto, Hamilton, Brantford and London by power transmitted over long distances. The Canadian Pacific has a great scheme for the development of local traffic in Ontario if it oan get the power. Some of the railroads have not the capital necessary to develop power in this direction. The Canadian Pacific may have it, hut the Grand Trunk has not the money necessary to develop water-powers in Ontario and on the St. Lawrence to operate its trains. Once such a system is installed we shall for all time be secure as to our motive power for the operation of our railroads. There is enough waterpower in Northern Ontario, in the drainage basin that goes to Hudson bay, coupled with the power that could be developed in Southern Ontario and on the St. Lawrence and in the valleys of Quebec, to drive every train that carries grain from Winnipeg to the seaboard. Upon the great rivers in the West power can be developed, with a proper system of storage, to make our western railroads absolutely independent of coal fuel. Thus the whole country will be independent of American coal and the owners of mines in Canada.
'To show how this idea of State ownership of railways.and of power supply is spreading, let me quote an item I clipped the other day referring to the proposed national railroad to be built for the development of Alaska. One of the first -things the United States Government did was to acquire coal beds in that country. They realized that in order to have a first-class, cheap system of transportation for Alaska they must not only build a national railroad, but must buy coal beds. The item reads:
The commission will develop the property without delay. Sumner 6. Smith, inspector for the Federal Bureau of Mines, will be in immediate charge of operations, and Geo. W. Evans, district mine engineer of the Bureau of Mines, will act as consulting engineer. Mr. Evans is now in Seattle, arranging for the purchase and shipment of the necessary machinery and equipment.
The purpose of the commission in purchasing the mine is to secure an adequate supply of coal for the construction and operation of

the Government railroad. This object was attainable only through the operation of the mine on a larger scale and by the installation of proper facilities. A washer for cleaning the product will be erected, and other modern equipment added to the plant, to insure the necessary tonnage and the economical handling of the output.
The commission will also take steps at once to open a mine at another point.
The American nation thus finds it necessary, in building a great national road, to acquire a supply of motive power.


John Allister Currie: Are they going to pay the Canadian' bondholders of that road, who built it?


William Findlay Maclean: I am unable to answer that question. I know that the United States Government are building that road themselves.


John Allister Currie: Freezing out the Canadian bondholders.


William Findlay Maclean: I am not speaking about the Canadian bondholders, but about the transportation problem. The United States are to-day building this great railroad, and they -are getting control of coal that will supply the motive power.
When the Bill now before this House passes, the people of Canada will own sixteen thousand or seventeen thousand miles of railroad. And if we -are faced with the problem of motive power, as we are to-day in Quebec and Ontario, in order to satisfactorily solve that problem we must not only own the railroads, but also control the motive power and the rivers that supply it. If we do that we shall have the best and cheapest transportation system of any country in the world. Our people see it now in Ontario, where we have a splendid system of radials, and we have already arranged for public ownership of water-powers and the control of the rivers. We are going to develop that power and transmit it throughout the province, and the same system should be extended to the whole Dominion. Privately-owned companies should not be permitted to control these water-powers, and those who believe in public ownership should endeavour now to- secure the development of these water-powers for the public good so that we shall be absolutely independent for all time in respect to motive power to operate our railroads.
That is why there is a good deal of opposition to public ownership to-day-they see it coming. There is often a danger that there will be a coal famine through shortage o-f railway equipment, but there is no

way that I see of getting cheaper rates on railways other than 'by public ownership of the railways to begin with, public ownership of the waterways thereafter, and by mobolizing both 'together the people of Canada will have better and cheaper transportation than they ever had. Compared with other countries, it will give them the best transportation in the world.
I will give another reason why public ownership commends itself to me. A modern word in economics is " valorization," and you can, perhaps, valorize railway rates. That statement may surprise members of this House, but it does not surprise many thinking men. The great question in Canada should be what is best for 'the farmers. We yet do not know the possible resources of that great Peace River district. All that great western country is engaged, and will be engaged for many years, in the production of grain for the use of our own people, and for export, and one of the standing objections to settlement in the farthest west is that the freight rates are higher, that they have to pay more in Alberta to get a bushel of wheat to the seaboard than they have to pay in Manitoba, and still more than they have to pay in Ontario. The day is coming in the new order of economics, I hope, when the freight rates on a bushel of wheat to the seaboard will be valorized; that is, that in order to give equality to the producers it ought to cost no more to ship a bushel of wheat from Alberta to Pacific or the Atlantic seaboard than it costs to ship that same bushel of wheat, say, from Ontario. That is rather a far-fetched idea, and many people would not believe in it, but if you can show the people of the West that by public ownership of railways you can valorize the freight rate on a bushel of wheat so that it will be the same all over the country, then you have a great argument for public ownership. I know that this argument will be met with a great deal of objection, but the valorization of freight rates must come some day, and the country that adopts it first will give the best and fairest transportation to its people.


Hugh Boulton Morphy: Would you apply the
same argument to electric power?


William Findlay Maclean: I do not know
why you should not. The great argument against the Hydro Electric Commission in Ontario was that while the people owned that power those who lived further away from it had to use it-
Mr. HANiNA: And pay bigger rates for it.


William Findlay Maclean: I see no way of valorizing freight rates except by public ownership, so that the man who lives a long distance from the centres of population would at least have the advantage that he would not be under the disability of excessive freight rates, as compared with other localities nearer to the consuming centres. But whether we can valorize freight rates or not, I say that public ownership will cove the best possible Tates, and absolutely fair rates without any discrimination. You cannot attain that in any other way than by public ownership of the railways. We have made some headway in Ontario in public ownership of energy distributed for water-power. If you have public ownership of railways, you will have public ownership of express business, of telegraph business, and, perhaps, some day of the telephone system. That will do more than anything else to uplift the people all over this country. If you have public ownership of railways, telephone, telegraph, express and parcel post, the post office, and the money order system in connection with it, you can extend them all in the smallest village of Canada, and night and day, every day in the year, the people of that smallest community will have access, in one public office, where you can arrange your business, make inquiries about railways, send telegrams, arrange for parcel post and get express service. You will have all these great public utilities which ought to be for the service of the public and not for the profit of private companies, concentrated in every community, be it large or small. By this acquisition of the Canadian Northern System we get a telegraph system to-day, and that, I hope, will soon be turned over to the post office of this country, and will be expanded and extended. It will be the beginning of the naturalization of our telegraph system as they have it ip every other country in Europe. Even Great Britain, although she has not nationalized rai'ways, by reason of her experience of nationalization of telegraph and telephone, will come to a nationalization of her railways, if, for no other reason.
Public ownership of railroads will be absolutely necessary in those countries that have not it when the problem of reconstruction after the war-a problem that is even now before us-comes up for determination. The problem is now being considered in Europe: how are the countries affected by the war to be reconstructed?

To them it is an immense problem, and it will be equally vital in this country. If we mobilize our wealth-a great many gentlemen in. this House have committed themselves to the principle of the mobilization of wealth, of industries, of everything that goes to make our nation strong and great -then we have to nationalize the railroads too. The best possible reconstruction cannot be secured in this country or in the United States unless the railroads are taken over. The world has to be rebuilt and reorganized after this great war, and to my mind nothing will contribute so much to speedy reconstruction and readjustment as public ownership of railroads.


Hugh Boulton Morphy: Will the hon. gentleman apply his argument to the shipment of industrial manufactures from Ontario to the West, having in mind the lower cost of shipment from Winnipeg?


William Findlay Maclean: That has to be worked out. I am not going into the details; I am setting forth the general principle that, in my opinion, should be adopted. It ought to be worked out so that the western farmer shall not pay a higher freight rate upon his plough than the Ontario farmer does. It may be alleged that that is visionary; I do not think that it is.
I see the truth of it; I think that a great many people see it.
It has been charged against me that I am ahead of my time in some of the principles that I advocate. But I have not advocated anything this afternoon that is in advance of the times, or anything, with the single exception of the valorization of freight rates, that has not already been adopted and successfully worked out in other countries.
What shall we get if we take over the Canadian Northern Railway system? We have over 2,000 miles in the Intercolonial and over 2,000 miles in the Transcontinental. We shall get about 9,000 miles in the Canadian Northern. We shall be starting public ownership, therefore, with about 14,000 miles of railway. At the beginning you cannot line them all up under one organization. We are to keep-so I gather from the Bill-the present company organization of the Canadian Northern. But it is going to be owned by the people, and in a very short time it will he co-ordinated with the Intercolonial and the Transcontinental. The Intercolonial railway will run its cars into Toronto. Sidings will be available there for the purpose of loading and receiving freight moved between Ontario and the IMr. W. F. Maclean. 1
country served by the Intercolonial. The Intercolonial will get a new stimulus from this connection with Ontario and the West; freight will, as a matter of course, go over the Intercolonial. The Transcontinental will be worked into the system, and, with the Canadian Northern, we shall have a great system of 15,000 or 16,000 miles. Great economies can be effected. The Canadian Northern will be helped, because all the freight 'that goes to Toronto can go over the Canadian Northern, a government-owned road. Through this co-ordination and co-opera'tion there will be great reduction in expenses. Of course, that will not come iat the start, because of circumstances which I cannot explain here to-night.
We ought to have acquired the Grand Trunk under this measure. Now that we have the Canadian Northern, the Transcontinental, and the Intercolonial, we ought, to take over the Grand Trunk. The Government have given reasons why they have not taken it over; they say that the financial commitments would be too great, having regard to present conditions.' But I would be prepared to-day to support any measure for the acquiring of the Grand Trunk Railway system, because, when you get the Grand Trunk you get the real benefit of national ownership. Between Toronto and Montreal the Canadian Pacific runs three or four express trains a day. The Grand Trunk runs the same number. The Canadian Northern has two running to Ottawa; they purpose to go on to Montreal. If we had public ownership, with the coordination and co-operation that Would result, we could reduce the number of these trains running between Montreal and Toronto, get a better service and save a lot of money. That could be done ad over the country. Almost immediately there can be consolidation between the Grand Trunk in the West and the Canadian Northern. Out of Toronto every week three trains now go to the West over the Transcontinental line and three over the Canadian Northern. As soon as these two systems are linked up it will be possible to have a daily service over the better line. If you ask me what would be the national line from Halifax to Vancouver, I would say: Take the Intercolonial at Halifax, the Canadian Northern at Montreal, the Canadian Northern to Sudbury, the Canadian Northern to a place called Long Lake, near lake Nipigon, which is 25 miles from the Transcontinental; then take the Transcontinental to Winnipeg, and

the Canadian Northern from Winnipeg to Vancouver. That would give a line superior to any line operating to-day. If, some day, we get the Canadian Pacific Railway-it may come-the suggestions which I have made could be adopted in respect to it and its connections w'ith the other lines.
As I pointed out this afternoon, by public ownership and control of the railways and mines in England, the shortest and most economical service has been secured. Public ownership will give you less haulage; it will give you the best grades for the moving of freight. There are all kinds of grades in different parts of this country that obstruct freight. Where I live, near Toronto, I am on a one per cent grade-a grade that is an obstruction to traffic for all time. That grade is called the Scarboro grade on the Grand Trunk, and the Wexford grade on the Canadian Pacific. The Canadian Northern have a grade between the two, a half per cent grade. We should get rid of all these expensive one per cent grades that are found all over the country. One of the merits of the Canadian Northern Railway system is the splendid grades that they have in many parts of the country. It has excellent grades between Toronto and Sudbury and thence to the West. It has very good grades in the West, but with public ownership those grades could be standardized and used in such a way as to give the best possible service. In sections where those good grades are to be found, an engine can haul a larger number of cars, and with public ownership you get the best grades and no money is wasted on unneces-sary^ competition. Public ownership will ensure cheap motive power, and in every way public ownership does more than anything else I know of towards the solution of the transportation problems of this country.
Many people are opposed to public ownership. Two hon. members who spoke today said that they did not believe in it. Missionaries from the United States have come into my own city to tell the people that public ownership is a curse, that political corruption will bedevil it, and that it can never be worked out successfully. When men, who believe in democracy and who come from a democratic country say that they are afraid to trust the people in the operation of a railway, and that corruption will creep in, my answer is that I will look into that question very carefully. When there is corruption in a country-and there *has been a good deal of corruption in one
way or another in Canada-it comes mainly from public utility corporations which exert their influences in the political affairs of the country. When you remove that private ownership and have public ownership, you go a long way towards remedying the situation. As a Canadian, I have every confidence in my fellow-citizens; I do not say that they are corrupt; I am in favour of removing the source of corruption, and I believe the Canadian people are capable of owning the railroads and of handing them over to non-partisan boards to, operate. When you take politics out of the administration of those roads you will get good service. We have public ownership in Ontario in connection with the distribution of power, and there is not a better example of public ownership than the Ontario Hydro-Electric Commission in its methods of administration. There is no corruption in the operation of that commission, and the people of Ontario are satisfied with its administration. If the people of Ontario are capable of handling that public service, why cannot the people of Canada carry on public ownership successfully? I have every faith in my fellow-countrymen; I believe they are competent to see that the railroads of this country are administered without corruption, and that political influence is kept out of their administration. Public ownership of railways has been carried on in different countries throughout the world. Australia, New Zealand, France, Russia and Japan have public ownership, and surely what they can do, we can do; what is good for them is good for us. I, therefore, disagree with those who say that, with public ownership, you run the danger of getting poor administration and political corruption. The post office of this country is well managed, although the criticism is made that there is some political interference in its administration. I am willing to vote at any time in favour of politics and political influence being done away with in connection with appointments in the post office. I am in favour of all appointments being made after competitive examination; and after a man has been appointed to a position in the post office, he should be permitted to rise on his merits, without any politician interfering in the matter. That system is being carried on in England and in the United States, and it is being carried on here in Canada. I do not like to hear a public man in Canada-to whatever party he may

belong-say on a public platform that the people are corrupt; that they cannot manage their own affairs, and that politics will creep into the administration of great public services such as our railways. I take no stock in such an argument. I believe that the members of this Parliament, when this railway and the railways we now have are consolidated, will evolve a method by which we shall have a businesslike and sound administration through a commission appointed by Parliament or by a responsible Government, and that the necessary legislation for protecting the public interest will be passed. If the doctrine that the people are corrupt and that we cannot get rid of political influence is true, then why does it not follow that you cannot get justice in this country from the courts? If under our present parliamentary institution you can pick out good judges who will administer law impartially, you can surely get good men who will operate the railroads in the same manner. I regret that the nation to-day has not in its service men like Lord Shaughnessy, Sir William Mackenzie, Mr. Hanna, or Sir George Bury. If the people gave any one of these men charge of a government railway, does any one mean to say that he would not operate it just as well as he operates the railway of which he has charge at the present time? These are splendid men; they are trained now to serve their shareholders, and they would be just as willing to serve +>e nation. When we have public ownership we shall have the pick of the best men o,f the country to run our railways. In a very short time we shall get the nucleus of a high-minded board of men who will be glad to devote their lives to the administration of the publicly-owned railways. We can secure them. All we want to do is to say that there shall be no interference with them. And we are gradually eliminating political interference in *connection with the administration of certain public affairs. There is no political influence in -connection with the -administration of justice, and there is none in connection with the administration of the Hydro-Electric Commission, -and they are giving good results. The people are capable of carrying on public ownership successfully, and they are -able to judge as to the men who shall have control of publicly-owned services. This great -system of 16,000 miles of railway that we shall have will gradually be put under one commission, -and we -shall soon have the Grand Trunk and later on the -Canadian Pacific. When 
we get those railways, we shall -have a great public service linked up with -it and co-ordinated and consecrated to service and not to profit. That is my argument-that all these public utilities should ibe consecrated to service and not to profit.
Can you ever, -as things are now. get a privately-owned company to extend its lines, unless it receives a bonus and a profit on construction? When there is public ownership, the telegraph lines, the telephones, the express business, -and the railway lines will toe extended as they are required, and fair treatment will toe meted out. District after district in the -Canadian West cannot get a railroad service to-day for one reason or another. A truly impartial board intrusted with the -administration of our railways would see to it that railway lines were constructed where they were required, and that there was no unnecessary duplication. Is it not a shame to see the duplication that exists between Montreal and Toronto, railways paralleling each other for mile after mile? The same thing is to be seen in the West. That duplication, is unnecessary.
Is it not a shame that the Grand Trunk Pacific should run so close to the Canadian Northern -and the Canadian Pacific? Yet that is what we have got under private ownership. The greatest waste that was ever permitted in this country by unnecessary duplication of lines, of bridges, of officials, and all the other paraphernalia that goes with private ownership, will be got rid of under public ownership, when all the roads are brought under one organization. That may not come in a year or two, but we are making a start and the people of this country see that the thing can be done. This question is being discussed in political gatherings wherever the people see the advantage of political organization. Out in the West the grain growers and the farmers see the importance of political organization, and the importance of acquiring, through political organizations, control of all these public utilities, -and to-day they are demanding that there shall be public ownership of the railways. They are sick and tired of this unnecessary duplication of lines, sick and tired of not -being able to get railways where they ought to get them. They know that public ownership will prevent this unnecessary waste and get the railways where they are wanted. It is true that public ownership will not come in a day, but it is making headway, and the longest step in the direction of public ownership that has ever been taken in this country is the introduction of the measure

we are discussing here to-day. It may have its defects; holes could no doubt be bored into the arguments that all the lawyers in the House have made on both sides of ibis question. But I am not at all influenced by these appeals. I am only concerned with this: that no more than a fair price should be paid for what is taken over.
I have listened to the argument that it would be rather an expensive proposition.
I >am not going to argue to the contrary, but I say that in Sir William Meredith, the arbitrator who is to represent the Dominion, we have a man who has given the best portion of his life to public ownership in Ontario, and it is largely to his assistance and to that of the politicians associated with him that we owe the Hydro Electric movement in Ontario to-day, which some people seem to be so sore on, but of which so many of us in the province of Ontario are justly proud. I remember when public ownership first came up in the province of Ontario. I was a little identified with it myself. I remember the first resolution that was passed in favour of public ownership of the water-powers and the development of power at Niagara falls. I was one of two or three who drafted the short resolution in that direction, which we managed to get one of the private members to move at the tail-end of the session? The Conservatives happened to take 9 p.m. it up, and the resolution was put through the House as a party measure, but not one member got up and made a speech in favour of it; the resolution just slipped through. That was the beginning; of the public ownership movement in Ontario. From that day to this the people of that province have daily become more strongly in favour of public ownership. They see that by public ownership of power, for light, heat and energy, by public ownership of radial roads, and now of steam roads, they can make Ontario the greatest manufacturing province in all Canada. The nationalization of the railways, together with the other benefits that go with it-the consolidation of the express business with the telegraph, parcel post, and perhaps the money order business connected with the post office-will facilitate the development of industry and of transportation, and make this country great. You can make the provinces in the West great if you give the farmer the lowest possible freight rate, instead of following the practice of privately-owned roads of making the traffic pay the highest rate it can bear,-
and this is the only rule that has guided the owners of privately-owned roads up to to-day. Public ownership will get rid of all that, and will build up our great public services both here and in the West. It will improve farming in the West and manufacturing in the East, and improve the life of the people all over the country. Public ownership is coming, and the proposals now before the House, while they may have their defects, are on the whole a move in the right direction. They are, in fact, the greatest move that has yet been made in the direction of public ownership.
I hope we shall soon follow up our taking over of the Canadian Northern by taking over the Grand Trunk, which is the necessary complement of the Canadian Northern in the West. We want feeders in the East for the Canadian Northern in the West, just as much as we want feeders in the West to bring freight down to the Atlantic seaboard. We have not got the Grand Trunk yet, but I hope we shall have it next year.
I hope the proposals for giving relief to the Grand Trunk in its present emergency will ensure our getting control of the road in the public interest. Somebody may say:	If you are in favour of public
ownership, why don't you acquire the Canadian Pacific and take over the whole system? Some newspapers have made quite an argument out of that, contending that if we got the Canadian Pacific the problem would be much easier of solution. So it would. The Canadian Pacific revenue to-day is such that if that road were consolidated with the Canadian Northern, the Grand Trunk Pacific, and the Transcontinental, it could take care of all the fixed charges and operating expenses, give a far better service to the people, and still have a large surplus for improvements and betterments. But we cannot do that just yet; it may be harder to get the Canadian Pacific than any other road. But the Canadian Northern has come into our hadds, and we shall soon get control of the Grand Trunk, and I shall never be satisfied until we do get it. We shall have a fair chance of getting the Canadian Pacific on better terms when we have a well-established system of our own. I believe the shareholders of the Canadian Pacific would be glad to be guaranteed 7 per cent on their stock if the country took over the road. When the Canadian Pacific was here as a suppliant some years ago, on four or five different occasions asking for authorization to increase its stock, I opposed it on every occasion and was laughed at in this House.

I said that if the Canadian Pacific wanted more money it should get it by the issue of 4 per cent bonds, and it could have got the money, for it is paying 10 per cent on that stock now. I said that the greatest danger in authorizing the company to increase its stock issue was that when we came to take over the road we should have $300,000,000 of capital stock to take over, on which they would want 10 per cent. I w.as laughed at for making that statement, but now it has come true. If we want to get the Canadian Pacific to-day and consolidate it with the other railways, using the earnings of them all-and the earnings of them all will maintain the roads if they are consolidated-we shall have to take over this great amount of stock. We are getting wise to that, and hereafter we shall exercise greater control and supervision over stock issues which railroads may make. If there is any difficulty to-day in acquiring the Canadian Pacific, which is an excellent road and would help to carry all the others, it is because we have been improvident in the past in allowing it to make the stock issues it has made. But in spite of that, we shall some day be able to take over the road and then we shall have what the people o;f this country want-a publicly-owned system.
I notice that the people of the Maritime Provinces do not wish to give up their publicly-owned road, for that, road, the Intercolonial, has been of great service to them.
I listened with a great deal of interest the other day to the argument that that road should not come under the jurisdiction of the Railway Commission. Now, if public ownership is good for the Maritime Provinces it is good enough for Ontario and the West, and we have seen that for a long while. We have helped in paying the interest on the construction of the Intercolonial, but have never objected to doing that; we are glad the road has been kept independent and the autonomy preserved. It is now to be linked up with the Transcontinental and the Canadian Northern, and in this way we are making a beginning with a great transcontinental service owned by the people of this country .and passing from Victoria, on the West, through the different provinces right down to the Atlantic seaboard.
The only portion of the country, I am sorry to say, that has not the benefit of public ownership is that part of Ontario that lies west of Toronto. The Canadian Northern, at present, only goes to Toronto 
and runs from there northwesterly to Winnipeg. We have not public ownership of railways in Ontario. That is the reason why the .present proposition, without the inclusion of the Grand Trunk Pacific, is rather a hard thing for us to justify in Ontario. But we accept it in the hope that in a short time we shall have the Grand Trunk Pacific taken into this national system. When we have that, we shall have every city and towm, almost, of any account from ocean to ocean on a publicly owned railway, and we hope that these railways will be so administered for the welfare of the people that the Canadian Pacific will be wise enough, in the interest of its shareholders, to come in and join us. We shall have no trouble in getting men to administer this publicly owned railway. We can get the pick of the railway men of this country. Whoever has the administration of this new departure in connection with the Canadian Northern is bound to take the best men, and there are some good men on the Canadian Northern. Take them over and give them a free hand. Put them under a board of directors and they will give real service.
Without referring at all to political criticism, I want to recognize what the Minister of Finance (Sir Thomas White) and the Minister of Railways (Mr. Cochrane) have been doing in the direction of public ownership. The mind of the people has been moving in the, direction of public ownership. You can see it. It is on the way; it is coming. We are getting 10,000 miles of road and this, joined up with the others that I have mentioned, will give us
15,000	miles. I came into this House an advocate of public ownership. I never thought I should live to .see the day when it would become a reality. I have been laughed at and jeered at in the last few years when I proposed public ownership in this House, and in my own city of Toronto as well, but notwithstanding the laughs and jeers, the idea is taking firm hold of the minds of the people. They see what it can do and they are backing it up in the province of Ontario to-day. Every man in the Government of Ontario who is administering these publicly-owned services is a believer in public ownership. We have not got it here yet in Ottawa. The man who believes in public ownership is thought to be an enthusiast or a madman who should be in the asylum. The late Sir James Whitney made a great reputation for himself by his advocacy of public ownership

in connection "with the Hydro-Electric power scheme. But he was at times afraid of it, and he thought that probably some of his colleagues were going too far. We remember the attitude of Sir John A. Macdonald in connection with the National Policy. He thought it was something that we should not go too fast with and he was always checking up those who advocated it. But, nevertheless, it swept the country. The principle of a National Policy in connection *with the tariff swept the country then, and the question of a National Policy in connection with industry and with the nationalization of our railways is sweeping the country to-day. The people of Ontario believe in it and the people of Quebeo have their own Intercolonial railway and they do not want to surrender it. I have seen assaults made on that road in this House since I have been a member of it, and plots of all kinds to turn it over-at one time to the Canadian Pacific, at another time to the Grand Trunk, and at another time to some other company. But, they have not been able to carry out those schemes. The whole trend of thought in this country is in the direction of public ownership, and it is going ahead.
There are impediments and obstructions, in the way. Some people say that they do not believe in it; that it has been a failure; that our people cannot work it out; that there will be political corruption. And yet the mind of the people of Canada is consolidating, forming, mobilizing, if I may use a modern expression, in the direction of public ownership. It is coming; it is here to-day; it is before us in this measure. With public ownership under the HydroElectric Commission you get good service, there is no loss, there are no unnecessary bonds tbat have to be protected and no dividends to pay on unnecessary issues. You find that in Ontario to-day -under the public ownership of hydro-electric energy. What can be done there can be done in connection with the railways.
For these reasons I have no hesitation in -saying that the measure, with any weaknesses it may have, is in the very best direction and I think the people would approve of it. As to the commission that is to fix the value, it is open to discussion as to how this should be done. Probably there ought to be a limitation of the finding, but I believe that the Government is in the way of obtaining a commission which will arrive at a fair valuation for the stock. It may not be worth a great deal. Various
o-pinions have been expressed by members of this House a-s to what that value ought to be, and the parties have more or less committed themselves to it. -Certainly these people -have some kind of an equity in the proposition and a reasonable amount might be fixed by the- board of arbitration. I think there is no doubt that with a commission composed of men like -Sir William Meredith a fair price will be fixed. Then, we shall have the beginning of a great national system of railways, taking in 15,000 miles of road, and which will soon include the Grand Trunk and in a few years may include the Canadian Pacific. If we can get that we will have -the best transcontinental railway that any country has. It will be publicly owned and administered. There will be no waste due to unnecessary duplication, and no unnecessary overhead charges. And at the proper time, probably after the war, a system of refunding of the whole outstanding liabilities can be worked out. Any way, we are making headway, and we are making i-t in the right direction. I compliment the Government on taking over the road, irrespective of whether there -may be -some question in connection with settling the value. It is a step in -the right direction, it is for public ownership, for public service, for the welfare of the people; it is not for making wealth ot profits for private individuals; it is to put the railway magnate out of existence, and it is putting before the youth of this country the splendid idea that the best thing they can do is to make a reputation in the administration of some public -service and to work for the public welfare. That is a new thing to aspire to. Hitherto men like Sir William Mackenzie, Sir Donald Mann and Sir William van Horne, unfortunately, have given their best energies to -the service of corporations. We still have the same kind of men in this country.


John Hampden Burnham: Is it not true that the great argument in favour of public ownership of the Canadian Northern is the fact that private ownership has proved a complete failure?


William Findlay Maclean: That may, be.
Private ownership may have built .a lot of unnecessary lines, may have oaused any -amount of duplication; they may have come to grief owing to that fact. Public ownership would not have come to grief in the -same way. Any way, the bulk of the arguments are in favour of public ownership, and I stand here to-night, for myself,

for my province, for the people I represent, for the thinking men of this country and for the farmers, to say that they are in favour of public ownership of the railroads of this. country, and the sooner it comes the better it will be for the nation, for the people, .and for the welfare of all.
Mr. E. iM.. MACDONALD (Pictou): Mr. Speaker, I do. not .intend to follow my hon. friend along the lines on which he has just spoken so. ably .and at such length. I assume that he is to be congratulated and that he should be pardoned for having claimed for himself the honour and distinction of having had his views adopted by the Government. I would not pretend to enter upon all of the lines o;f discussion which my hon. friend has taken up, hut I may point out that there is a delightful absence all through his discussion of any such material and important matter as the question of what all these things are going to cost. My hon. friend has entirely eliminated, both from the consideration of the proposition before the House and everything he has mentioned in the course of his speech, any such thing as money. Money is a very important thing, it is a very essential thing. And now, when the credit of this country is at the lowest ebb it has ever been, with demands for commitments greater than at any time previously, we have submitted to us a proposition iby which the Government undertake to commit themselves and the country to .a liability which is totally unnecessary. This proposition involves the payment of at least $100,000,000 on the lines laid down by the Minister of Finance. I say that at this moment the one serious thing for the Canadian people to consider is whether or not this Government is doing right in paying out $100,000,000-or rather committing themselves to the payment of that amount-'when they do not have to pay a single cent, and when all that my hon. friend (Mr. Maclean) claimed as ideal and proper could be obtained for the country by this Government simply taking .advantage of their own bargain made three years ago and incorporated in a statute.
The Minister of Finance, when he presented his resolution, instead of intituling it "An Act to provide for the acquisition by His Majesty of the capital stock of the Canadian Northern Railway Company" should have intituled it "An Act to reform the statute passed in 1914 with reference to the Canadian Northern Railway Company and to amend section 24 of that Act so as to destroy its full effect and operation."
That is exactly the effect of this Bill. fMr. W. F. Maclean.!
I should like to ask the minister, either at the conclusion of this debate or when the Bill goes into committee, to inform the House who the real owners and pledgees of the stock of the Canadian Northern Railway are. My hon. friend has that information but has not yet given it to the House. In other words, this House and the country do not know with whom this arbitration is to be carried on. We have been discussing it as if Messrs. Mackenzie and Mann, whose names are well known throughout the country, are the people who are to .get this money. I do not know if that is so. No one knows whether it is so. The other parties to the arbitration have not been disclosed to the House or to the country. I ask the minister to let us know whether Mackenzie and Mann own the five-sixths of this stock, and if they are the parties with whom this agreement is made. If not, who are the parties, and with whom has this stock been pledged, and for how much has it been pledged? It would be absurd, ridiculous, for Parliament to consider seriously the passing of a measure involving the purchase of a large quantity of stock which we do not have to purchase, involving the pledging of the credit of the country to an amount in the vicinity of $100,000,000, for the purpose of getting stock from certain people whose names are known to the Government but are not given to the House. My hon. friend should also, tell us who are the owners of the one-sixth of the stock in regard to whom special provisions are made in the latter part of the Bill. This information is essential if the House is to pass upon this measure with any degree of intelligence.
My hon. friend from South York (Mr. Maclean) in his enthusiasm for government ownership, evidently has not taken the trouble to read this Bill, because if he did so he would not find a single provision how this road is to be operated after it is obtained-not a line. All we have here is authority given td the Government to purchase a certain quantity of stock from some person or persons unknown, without a line of declaration of policy as to how that railway is to be operated. The Bill might well be called "An Act to reform Chapter 20 of the statutes of 1914, .and to amend the agreement and stipulations in that Act which provide for the people of Canada getting the Canadian Northern Railway and all its belongings without their costing the Canadian people a cent"-and I propose to prove that beyond the shadow of a doubt. There is but one issue before this House in regard to this measure, that is whether the

amendment of the hon. member for South Renfrew (Mr. Graham) is one which rightly states the previous law and the facts in this case. If it does, there is no justification for this measure, for the creation of a board of arbitrators or for the provisions under which the country is to be committed to a large payment of money. Are the statements in the amendment of my hon. friend true? Every one has assumed in this discussion that the Canadian Northern Railway is in default in its payments. What does that mean? In 1914, after a previous grant had been made to the Canadian Northern Railway the year before of fifteen millions, my hon. friend came to this House with a proposition that there should be loaned to the Canadian Northern the sum of $45,000,000. And there was submitted to the House for ratification an agreement which was made and entered into between the Canadian Northern Railway and Messrs. Mackenzie and Mann who were described as the contractors, and the Government of Canada. It was represented that when the country provided for its guarantee of $45,000,000, the whole railway question, so far as the Canadian Northern Railway was concerned, would be solved, and we would not be called upon for any more money.
We all remember how, when that proposal was made, the hon. member for Calgary (Mr. R. B. Bennett) attacked the proposition in the most aggresive and energetic way. My hon. friend from Kingston (Mr. Nickle), discussing the question at that time, declared that every dollar of the so-called stock of the Canadian Northern was watered stock and that the whole was not worth a cent. The ^energe tic opposition o,f these gentlemen did not avail with the Government, and they proceeded to ratify that proposition and put through the arrangement. What was the attitude of hon. gentlemen on this side? I had the honour of moving, on behalf of the opposition, the six months' hoist to the whole measure. Later on, in the discussion upon the question, my hon. friend from Middlesex (Mr. Ross) moved what was a reasonable proposition-that before Canada should commit herself to any such arrangement as proposed, there should be a complete and full investigation into the affairs of the Canadian Northern. That was voted down by 'hon. gentlemen on the other side. Supplementary to that, the hon. member for St. John (Mr. Pugsley) proposed to amend the proposition, so that, in addition to taking over the portion of the stock which
the Government were taking at that time, which was only 40 per cent of that stock, the whole stock should be taken over, and become the property of the Dominion, the matter to be determined by arbitration. That was voted down. What answer did my hon. friends opposite make in regard to that proposition of the hon. member for St. John? Every one of them went on record, the Prime Minister and all the others, to the effect that the provisions of the statute contained in sections 22, 23 and 24 were so apt, so definite and certain that, if the Canadian Northern ever were in default, automatically, under the provisions of section 24, the title to all the assets and property of the Canadian Northern could simply by this Parliament passing legislation declaring that it was done, become the property of the Canadian people without it costing them a single cent. If that statement is true, then this legislation is entirely unnecessary. Section 22 provides as follows:
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.
My hon. friend (Sir Thomas White) told us, when he moved this resolution, that a very important advantage in getting this stock was that we would be able -to turn out the present directors and get new ones. But he forgot to inform the House on one Very important point-and were it not for the hon. gentleman from South Renfrew (Mr. Graham) dealing with this question, and pointing out what the law was in 1914, the House and the country might have forgotten that the Government of Canada has greater power under the statute of 1914 than it will have under this proposed measure. In the event of default this Government can at once declare to be vacant the offices of the directors of the Canadian Northern and of any of the constituent or subsidiary companies. That power existed beyond all question. Why was it not exercised in the interests of the Canadian people? I ask the hon. Minister of Finance, or any other hon. gentleman on that side of the House, to tell me why it was not exercised last year when they gave the Canadian Northern $15,000,000 more? Why was it not exercised this year, when my hon. friend has to go to New York and pay the highest rate for money, and sell his securities at the lowest rate at which securities have been sold?

Why should my hon. friend ignore that provision, and ask the Canadian people and this Parliament to provide for the payment of money when they need not do so? Section 23 provides:
The directors so appointed by the Governor in Council shall hold office during the pleasure of the Governor in Council, and any such director may be removed and another appointed in his place. Vacancies occurring from time to time may be tilled by the Governor in Council.
My hon.. friend from South York could have sung his paeans of joy just as well without cost to the country, if the powers conferred upon us by chapter 20 of 1914 were exercised. But further let me call attention to section 24, which has been read to the House. The marginal note, epitomizing what the effect of the section was, reads as follows:
Equity of redemption foreclosed on default and vested in His Majesty.
The section provides that, on default, the equity of redemption in the Canadian Northern Railway is automatically foreclosed by order of this Parliament and becomes vested in His Majesty. That is the law. I venture to say that no hon. gentleman in this House who has any regard for his status as a lawyer will venture to declare that, under the provisions of section 24, ample power of the most radical kind was not conferred on the Government by which automatically, and simply by resolution of Parliament, the whole property of the Canadian Northern would .become vested in the Canadian people, withoui costing them a single cent. That that >vas the meaning of the law hon. gentlemen have shown by some of the statements made by various hon. gentlemen at that time. In the light of the rather casuistic argument made by the Prime Minister (Sir Robert Borden), I want to refer particularly to what he said that clause meant in 1914. I quote from page 3674 of Hansard:
It is also provided by clause 24 that, if authorized by the Parliament of Canada, the Governor in Council may, in case of default, declare that the interest of Mackenzie and Mann in the Canadian Northern Railway system is absolutely barred and foreclosed, and that all the properties and assets thereof,' subject to any outstanding obligation, shall thereupon vest in the Crown, in the right of the people of Canada,
Either that meant what the right hon. gentleman said it meant, and what every hon. gentleman who reads it knows it meant, or it did not. If it meant what the Premier said at that time, then the Minister of Fin-fMr. Macdonald.]
ance knows, as does every hon. gentleman that this legislation, is totally and absolutely unnecessary, and it is intended to divprt from the treasury of Canada at least
5100,000,000 which ought to be there in this time of stress and war. My hon. friend from Calgary ventured to 'question the effect of that, and in, an able speech which he delivered at that time this is what hg said about it:	.
They talk about the slow machinery of the courts, but 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 there also. 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.
Now, what was going to happen? We have not had the lobby with members of Parliament, hut there has been some influence working from the owners of that stock, whom the people of Canada do not know, upon this Government, as the result of which they have been induced to forego the effect of section 24 of this Act, and to bring down this measure, taking from the treasury of Canada $100,000,000 which ought to be left there.
What did the Minister of Finance say in reply to the member fir Calgary when he raised that very question? The minister pointed out the ridiculousness of dealing with the stock of the company. I need not delay the House by setting forth the long argument made by my hon. friend to show that the stock was no good. He said that we were getting a better thing-the assets -something that really belonged to the company. He went on to say
If I have a mortgage on a company's undertaking I do not care very much for the stock' as security except that it is advisable to have the stock in order that I can take possession of the company, put in my own receiver, and operate the company with my own board of directors. That is the only advantage. The stock does not give any higher security, but it makes the realization of the security a little more convenient. What security have we? I have seen a good deal of financing in my time, and I know something of law although my hon. friend from Pictou (Mr. Macdonald) does not think so, and I want to say this: I have never seen as effectual a means of entering into possession of a property upon which a mortgage is held as has been devised by the Solicitor General In connection with this transaction.


An hon. MEMBER:: Who said that?


Mr. MACDONALD:: The Minister of
Finance, speaking in the House on May 18, 1914, after the member for Calgary had spoken. He said further:
I take off my hat to the Solicitor General tor the way in which he has performed the legal work in connection with this transaction. . . .
I was dealing with the question ot remedy upon default, and was pointing out that we have a much better control than would be afforded by the security of a majority or all the stock of the Canadian Northern.
Although he wants to commit the Canadian people to-day to the paying of $100,000,000 for the purchase of $60,000,000 of par value stock of the Canadian Northern, he said two or three years ago that he then had a better security than could be afforded by the security of a majority of or all the stock of the Canadian Northern.


William Thomas White: I do not follow my hon. friend in his reference to the $100,000,000.


Edward Mortimer Macdonald: In introducing the Bill and in moving its second reading, my hon. friend elaborated the theory that the board of arbitration to be constituted would not be confined to determining the present value of the stock; that they could take into consideration the prospective value also. He indicated that he objected to the judge of the Exchequer Court dealing with this matter, suggesting that Judge Cassels was not as competent as Sir William Meredith. My hon. friend has forgotten what he said. He will permit me to call his attention to what he said on that point:
My hon. friend says: Why not refer the matter to the Exchequer Court? If I used the same argument as my hon. friend I might ask what experience has the judge of the Exchequer Court had in practical railway matters? Judges are men who acquire an immense amount of information in connection with their judicial duties. Apart from that, evidence will be submitted to these arbitrators by the Dominion Government and by the owners and pledgees of the stock.
My hon. friend intimated that the judge of the Exchequer Court did not have any special qualifications for dealing with questions of valuation.


William Thomas White: My hon. friend will pardon me; I do not wish him to misquote me on a matter of that kind.


Edward Mortimer Macdonald: I quoted what my hon. friend said.


William Thomas White: The hon. member for Wright (Mr. Devlin) asked me what
special qualifications Sir William Meredith had for the position of arbitrator. I said that he had had long judicial experience; that he had been in high standing as counsel; that he was eminently qualified for the position. I stated further th^t if the argument was to prevail that a judge was not qualified-which I did not admit-it would apply also to the judge of the Exchequer Court. I am the first to admit that any judge, whether of the Exchequer Court or of the High Court of Justice, would be a suitable arbitrator in this case.


Edward Mortimer Macdonald: My hon. friend put it in interrogative form; he wanted to know from the House what experience the Judge of the Exchequer Court had had in practical railway matters that would fit him for the performance of this task. I mention that to point out that the Judge of the Exchequer Court is far better qualified than Sir William Meredith to act in this matter.


William Thomas White: I instituted no comparison.


Edward Mortimer Macdonald: I am instituting a comparison. I am pointing out that my hon. friend was wrong when he put these two gentlemen on a parity. Every man who has had any practice in the Exchequer Court knows that thesenior judge of the Exchequer Court, during his years of experience, has passed upon the value of property of various kinds, railway property included, in connection with cases that have come before him for determination. The rules that obtain in determining the methods of appraising values are the rules that have been laid down by the Exchequer Court. An hon. gentleman mentions the fact that the matter of the Quebec and Saguenay was referred to Judge Cassels. However, I do not want to stray too far from my argument. With all due deference to Sir William Meredith, those of us who have come from other provinces can speak rather freely in regard to him. In view of the statement made by a minister of the Crown in regard to judges sitting upon commissions, we should not forget that Sir William Meredith has been engaged in all kinds of commissions. Moreover, he seems to be the favoured associate of the Ontario Government, as well as of this Administration. Nor do we forget that during the sitting of a certain commission last year, Sir William Meredith took one course with regard to compensation and the other judge took another. Although my hon. friend puts Sir William Meredith on a parity with Judge Cassels, in the estimation of the Bar of this country they are not on a parity.



The one is a man whose daily occupation has been that of determining the fair valuation of property of all kinds; the other is not.. If any criticism is to be made in regard to the employment of judges upon commissions, that criticism can be directed with the greatest possible force against the gentleman whom my hon. friend puts forward as being, par excellence, the one who should deal with this matter.
In answering the member for Calgary, my hon. friend (Sir Thomas White) said:
Upon default, the Order in Council at once becomes a rule of court, and is absolutely beyond question so far as its authority is concerned. We can displace the board of directors of any or all of the companies by directors of our own choice, who are given power to carry on the road as provided in the resolutions, and it is open to the Government through Parliament to deal with that road by way of sale or otherwise, as may be expedient and in the public interests.
My hon. friend declared that there was nothing in the suggestion of the member for Calgary that there might be some question about that mode of foreclosure. He expressed his admiration for the Solicitor General, who had introduced a clause that would have such a wonderful effect. Such a provision was better, he said, than if the Government had the whole of the stock of the company. Nothing further needed to be done to complete the transaction, except that Parliament should act upon the intimation of the Government whenever default occurred.
The Solicitor General (Mr. Meighen), who was quoted by my hon. friend fro-m North Cape Breton (Mr. McKenzie) this afternoon, spoke along practically the same lines. We have, therefore, the Prime Minister, the Minister of Finance and the Solicitor General, all declaring that beyond the shadow of a doubt section 24 of the statutes of 1914 was so definite and positive in its character that all that was needed to be done in case of default was to pass an Act and automatically everything in connection with the Canadian Northern passed into the hands of the people of Canada, without any arbitration at all. My hon. friend's speech upon that point was so emphatic that my hon. friend from West Peterborough (Mr. Burnham) was carried away completely. He spoke after the Minister of Finance, and for the edification of the House, I will read the remarks he made. He said:
I venture to say that if Mackenzie and Mann and the Canadian Northern come back here next year seeking anything further, if they are not given the foreclosure-
This wonderful weapon of the Minister of Finance.

-but are given any further assistance, there will be not a riot but a revolution in this country.


William Thomas White: There has been a war since then.


Edward Mortimer Macdonald: My hon. friend sees what his change of front has produced.


William Thomas White: It was the Kaiser.


Edward Mortimer Macdonald: My hon. friend does not require to shelter behind the Kaiser. He must admit he is up against the fact that automatic foreclosure, after direction of this Parliament on default of the company, would give to the Canadian people the title to this railway >and all that belongs * to it without costing Canada one cent. The minister need not shake his head. He need not make any specious argument to-day about the matter. He told us that the Solicitor General had performed a wonderful feat in creating this section and producing that result-and in the belief that that would be the result, his friends behind him supported him, in spite of what was stated by my hon. friend from Calgary (Mr. Bennett) on the best of authority


William Thomas White: What does the clause mean, " upon such terms as Parliament may prescribe," in the .section which my hon. friend has just read? Why was that put in, if not because the equity of redemption must be considered?


Edward Mortimer Macdonald: It was put in because Parliament would have to be satisfied that there was default, and they could then decide that the road should be foreclosed.


William Thomas White: Why was the phrase "upon such terms" inserted?


Edward Mortimer Macdonald: That is in regard to the sale or otherwise. It was open to Parliament to hand the road over to some other railway. The discretion of Parliament was not fettered in any way; Parliament could impose any terms or conditions in regard to the whole thing. The minister cannot escape from the position he took at that time, when he emphatically declared to the House that, when Parliament spoke, everything was wiped out. That is the position of the Prime Minister, of the Solicitor General, of all hon. gentlemen opposite who discussed the legal phase of the question.
There is another phase of this matter. There appears in the Schedule of the Act an agreement entered into between Mackenzie, Mann and Company, Limited, Sir William Mackenzie and Sir Donald Mann and His

Majesty the King, under which certain covenants were made by Sir William Mackenzie and Sir Donald Mann as contractors. This is one of the covenants:
That the contractors will not at any time make or seek to enforce any claim for contractors' profits, commissions or otherwise against the Canadian Northern, or against any of the constituent or subsidiary, companies upon or in respect of any express or implied contract, understanding, agreement, or stipulation of any kind, heretofore or hereafter made, whereby or whereunder they, or any one or more of them, may now or hereafter be entitled to receive from the Canadian Northern, or from any of the constituent or subsidiary companies any construction profits, in respect of work heretofore undertaken, or as consideration for transfers of properties, rights or franchises, already transferred, or to be transferred under sub-clauses (a) and (b) of this clause, or for commission or remuneration for services in financing, or for any other services heretofore rendered, and all such claims are hereby by them and each of them absolutely renounced and released.
The importance of that release on the part of Messrs. Mackenzie and Mann, made jointly and severally, must be remembered at this time in the light of the fact that so far the Government have not told us who are the owners or pledgees of this stock. When the Government have given that information 'to the House, and stated whether those gentlemen are the owners who, in 1914, absolutely released all their claims of any kind whatever-in addition to which the abolition of their equity of redemption by this Parliament is provided for by section 24 of the statute of 1914- then we can discuss, as we shall at greater length in committee, what the full significance of section 24 is.


Richard Bedford Bennett: It is perfectly obvious, I think, from the statute that, in view of what was said in 1914, Mackenzie and Mann and Mackenzie, Mann and Company, Limited, were the owners of this stock, and anybody who takes it, whether by pledge or contract, must have taken it subject to those covenants, and, therefore, they are in no better case than are Mackenzie and Mann.


Edward Mortimer Macdonald: I was simply deferring any comment in regard to that until we were able to obtain from the Government definite information as to who are the owners of the stock. At that time Mackenzie and Mann were the owners of the stock. They disposed of forty per cent of the stock to the Government. They made the bargain for the transfer of it. If the stock is not now in their hands, the parties who hold
288J
the stock now are subject to the same conditions as those to which Mackenzie and Mann are subject and have no more rights than they had. Hon. gentlemen opposite fail to appreciate the full significance of the point I make in regard to- this matter, and the result and effect of the legislation of 1914, which, in plain words, is this-that when the (Canadian Northern Railway, being in default, as it is conceded they are in default, come to Parliament, Parliament can pass a statute declaring that the equity of redemption in all the property franchises and rights of the Canadian Northern Railway Company and of all their subsidary companies is absolutely debarred and forever foreclosed and become forfeit to the Crown. There is no manner of doubt about that. The Minister of Finance declared in 1914 that the Government had a better remedy than they would have if they owned the whole of the stock.
In the light of that, what do the Government do to-day? They say to Parliament: Although that is a fact, yet because the words " upon such terms and conditions, if any ' aTe in the statute, although we said in 1914 that they did not *mean anything, and that they did not affect the right of Parliament to bar the equity of redemption, yet the door is left open. And the door being left open, the lobby of which my hon. friend from Calgary (Mr. R. B. Bennett) has spoken, has taken place- not with hon. members in this House, but with the Government. Mackenzie and Mann have succeeded in getting the Government to introduce this legislation under which the country is committed to an arbitration with the owners and pledgees of the stock, the effect of which arbitration, according to the statement by the Minister of Finance as to the lines upon which it should be conducted, will, in my judgment, cost this country a hundred million dollars. I say, therefore, that this legislation is absolutely unnecessary. It is a crime, under existing conditions, during the war, when taxation is being levied on sources that have never been touched before, to ask this Parliament to create new conditions* amending the solemn compact entered into in 1914 and declared to be the last and final contract, opening the door to arbitration, wide in its extent and ramifications, which will commit this country to the payment of such a huge amount.
What apology is made for it? The Prime Minister took the very curious ground that the Drayton-Acworth report was not to be

considered, because, he said, they had no authority to make an investigation as to the value of the property. I was dumbfounded to hear him make that statement. Even supposing the Order in Council appointing these gentlemen did nor contain that authority, there is not a man in this House but knows that the commission could not make an investigation on which they might base a report that would be of any value to this House and country unless they procured some data in regard to the value of the property involved. That was the very essence of the whole inquiry. The reference expressly states that the commission were to make full inquiry as to the status of each of the three transcontinental railway systems. Now could any commission make an inquiry into the status of the Canadian Northern Kailway Company that would be worthy of the slightest possible consideration by this Parliament without ascertaining whether or not the assets of the company had a value equal to the lia-biliities? How else could you determine the status of the company? In addition to that, the commissioners were directed to have special reference to "capitalization, fixed charges and net earnings . . . and generally speaking, all matters which the members of the board may consider pertinent or relevant to the general scope of the inquiry." That was the power conferred upon the commission by the Order in Council, and I think the Prime Minister was drawing greatly upon our credulity when he ventured to ask this House to believe that we should not attach full weight to the statements of the Drayton-Acworth report in regard to value, as they were not authorized to inquire into that matter. I was astounded also at the attitude of the Minister of Finance who never mentioned this matter in speaking to the resolution or on the first reading of the Bill, but told us on the second reading that on looking over Professor Swain's report, he discovered that Messrs. Drayton and Acworth bad emitted in their report some items in regard to assets and liabilities. With all deference, I would say that the House and the country ought to hear from the commissioners, Messrs. Drayton, Acworth and Smith as to whether or not the items that were omitted would seriously affect the value of property. [DOT] I think we are entitled to know whether they agree with the view that their report is incorrect and misleading in that respect, and whether this House and the country should not therefore have 
regard tO'" their recommendations as to the value of the property.
The commission discussed seriatim the various bases that might be considered. They say:
A purchaser would not consider either original cost or reproduction cost as of much importance. The price he would pay would he based on earning power, present and potential. On this basis he would consider how far the Canadian Northern is at present short of covering its fixed charges, how long it will take to reach equilibrium, how much new capital will have to be spent, how soon a dividend may be expected and at what rate. Calculating on this basis, in the light of the figures set out abovf. it is evident that no purchaser would offer foi the property a sum amounting to the total of its liabilities.
In other words, the commissioners, disregarding altogether the question of the physical value, say that no purchaser of the railway would pay except upon the basis of the road's earning power, present or potential. They say further:
We conclude, therefore, that the shareholders of the company have no equity either on the ground of cash put in, or on the ground of physical reproduction cost, or on the ground of the saleable value of their property as a going concern. If, then, the people of Canada have already found, or assumed responsibility for, the bulk of the capital; if they must needs find what further capital is required; and if they must make up for some years to come considerable deficits in net earnings, it seems logically to follow that the people of Canada should assume control of the property.
The ground upon which these gentlemen suggest arbitration was not that there was any potential value in the road. They said: These people who were originally connected with the Canadian Northern have done a lot of work and you might take into consideration the question of giving them something ex misericordia. As far as paying the stockholders for the value of the road, the commissioners say that there was no value to be paid for.
Now where do we stand? We have the statute of 1914. We have the declarations of the Prime Minister, the Minister of Finance, and the Solicitor General, that that statute provided for this Government taking over the equity of redemption in the property automatically-there would be no question of confiscation. As the hon. member for St. Antoine said in discussing the efficacy of this provision, "the axe would drop." Now why does not the "axe" "drop"? We have in addition to that, the report of Messrs. Drayton and Acworth, who declared there is nothing to arbitrate about, apart entirely from the question as U, the right of Parliament to deal with

this matter under the equity of redemption. Notwithstanding that, my hon. friend provides for the constitution of this tribunal. And he quoted from Professor Swain's report which dealt academically with questions of value, and said that
10 p.m. these were elements which it would be proper for the arbitrators to take into consideration in determining the value. Further on he said:
They will not be bound to the same extent, under the language of this legislation, by the hard and fast rules of evidence, but can proceed expeditiously to the determination of the question of what is the fair value of the stock of .the Canadian Northern .Railway Company.
It is simply another case of a commission on a commission. The history of this Government in dealing with all matters of public responsibility is simply being repeated. Instead of taking the initiative, instead of the Government dealing with the problems that come before them with force' and courage, a commission is appointed, and if it makes a report that does not suit them, they appoint another commission to investigate the commission. And so, in spite of the statute, in spite of their statements, and in spite of the Drayton-Acworth report, we are to have a new commission which is not to be bound by rules of evidence, and which can decide as it pleases. There is to be an appeal to the Supreme Court of Canada from the Board of Arbitration on questions both of law and of fact. I would submit this question: How is the Supreme Court of Canada to be permitted to set aside the findings of a board of arbitrators who are not to be bound by the laws of evidence in coming to conclusions? How is the Supreme Court of Canada to determine whether or not the findings of the arbitrators in the first instance is one that can be sustained? The arbitrators would be able to say in regard to the admissibility of evidence here, and its exclusion there, "We were not bound by the rules of evidence and could listen to anything we wanted to." Of what use is an appeal made under those conditions?	-
Our situation is this: This Government, notwithstanding our financial position, notwithstanding all the commitments of this country in connection with the war, coolly comes to this Parliament and to the Canadian people and proposes to open the door, which was closed by themselves. The Minister of Finance initiates this proceeding and, to some people whom we do not know, says: I will give you an arbitration which will not be bound by the rules of evidence. And he puts this burden on the
Canadian people in the face of the condi-dition3 I have shown. I believe that when the people of Canada know the full effect of this measure-and I trust they will learn it-they will realize that the proposition of my hon. friend from South Renfrew (Mr. Graham) is one worthy of their support. We, on this side of the House, would be recreant to our duty to the people if we did not insist upon its being presented to this Parliament. Every hon. gentleman who has the best interests of Canada at heart will support that proposition when the vote comes.
Mr. FRANCIS N. McCREA (Sherbrooke): Mr. Speaker, the question that is now engaging the attention of the House appears to me to be one of very great importance. It is a question that requires more information than we have to enable us to deal with it properly. A question involving some $620,000,000 appears to be treated by the Government about as I, when a boy at school would trade jack knives with a companion. They do not seem to think it is serious enough to give the people the necessary information. Local and federal governments combined, representing the people of Canada, have contributed to the construction of this road, and what the obligations are that we are now supposed to assume in addition to the money already advanced is something that it would be interesting to know. It appears to me that it would require a very complete and thorough accounting to show what we have already expended, what we are expected to expend further, and what we are going to get for it. if my information is right, we are not getting all the terminals and everything else connected with the Canadian Northern. The model city, the tunnel through Montreal mountain and the terminals on Dorchester street, I understand are not included.


Richard Bedford Bennett: The terminals are included.


Mr. McCREA:: Two years ago the Canadian Northern ran a special train from Quebec to Vancouver and invited all the members, senators and others to join in the excursion for the purpose of examining the road and the country. I considered it my duty to myself and to the country to take that trip, not for my own pleasure, but for the information I might get out of it. I am bound to say, the 'Canadian Northern is a well built road with extremely easy grades and good curves. But I am also bound to say that whoever are responsible for two transcontinental railways being

built, east of Port Arthur and west of Edmonton, were very much lacking in judgment. It is not to their credit. Whilst the road was well constructed, and with very easy grades, for the life of me I cannot see where the traffic is coming from to maintain three transcontinental railways in this country for some time to come. I think that the promoters of this road, Mackenzie and Mann, were too bright and too intelligent to have constructed a road paralleling two other roads in the hope that it was going to be a paying proposition. If the effort of Mackenzie and Mann had "been confined to the prairie country, and if one transcontinental railway had been built in addition to the Canadian Pacific, I think there would have been business for two. But I do not think there is business for three. However, the three roads are built and the question is now: what is to be done with them? The Canadian Northern Railway company came to this Parliament on three different occasions since 1911. On the first occasion they got $7,000,000, the next time $15,000,000, and the next time $45,000,000. The understanding was when they got the last assistance, or guarantee, of bonds to the extent of $45,000,000, that that would be sufficient and that they would never come back. They were to be satisfied for the rest of their lives and were to carry on the road. I was talking with some representatives of Mackenzie and Mann and they still say that they are prepared to carry on the road, and that this Government are doing them a great injustice in taking it over. I do not know whether they are sincere when the say that. I doubt it myself.
We have reached .a point where the Canadian Northern Railway Company cannot finance the road themselves and where they must have more money. It is proposed that instead of taking over the system under legislation passed in 1914. there shall be% submitted to arbitration the question of the value of stock that has no value and never cost anything. It is water, and water is pretty cheap. I do not believe the system is right. The/people believe that the country has put all the money into the road that it is worth. We have the report of gentlemen who were appointed to inquire into the matter that the road is not worth the amount of money that the country has spent on it. It has been stated on both sides of the House that all the money voted by the Governments of Canada has not gone into the construction of the road, but has, in many cases, been diverted. The gentlemen who constructed the Canadian North-

ern own a fishing outfit on the Pacific coast, coal mines, copper mines, and other things. Where did the money come from that went into these things outside the railway?
I am not here to accuse those gentlemen of dishonesty. I have great admiration for any men who have the energy and ability that Messrs. Mackenzie and Mann have shown in the construction of this road and other things. But I am not terribly taken with all .their methods of doing this business. I think that when any man or corporation or company goes to the Government of this country, either local or federal, and seeks .aid, if that aid is granted the Government should see to it, and the applicants should be in honour bound to see to it, that every dollar voted is put into the road and not diverted to other uses.
The question before us is what the road will cost the country and what the country is getting for its money. There is not a man on the other side of the House who will not say that the country has spent as much money as it is worth. The wise and proper way to deal with it is to allow it to go into the hands of a receiver, and then, if there is any value in the stock, let the men who hold the stock get their value after the Government have got part of their money back. Outside of the stock there is about $100,000,000 of outstanding liabilities which .this country wall be expected to become'responsible for when they take this road over. I ask any fair-minded man if it is reasonable for this Government to legislate for the people of Canada to become responsible for debts owed by this road, when the promoters of the road have already got more money from the Government than the road is worth. If a banker had loaned to a man or a combination of men all the money the banker was justified in letting them have, and if the banker then found that the assets of that man or company were not worth the money already advanced, would the bank undertake to pay the stockholders for their common stock, practically all water, and, furthermore, would they undertake to pay the oustanding liabilities of the borrower? No banker would act in that way. Yet, that is just what the Government are doing. Although they have advanced all the money that this road is worth or ever cost, they are prepared to arbitrate the value of its stock, which, it is a pretty well-known fact, has never cost anything.
It if said by the Government that if we were to allow the road to go into the hands

vit a receiver it would be detrimental to the credit of Canada. I do not know why that should affect the taxpayers of Canada so much. This would not be the first road on this continent to go into ttie hands of a receiver. There is scarcely one of them that has not gone into the hands of a receiver at some time, and if the present owners of this one, the promoters, are unable to carry it on and cannot find financial means to carry it on,
1 do not see why, especially at this particular time when the people are being taxed and doubly taxed to carry on the war and to meet other expenses, they should be asked to contribute further to the carrying on of a railroad that cannot pay its_ own way. The financial statement prepared by Messrs. Mackenzie and Mann, whether it is correct or not, shows that their earnings are more than sufficient to pay their running expenses, but they claim that there is not enough to purchase the necessary rolling stock and equipment and at the same time do the necessary repairs. Let me tell the minister that if he had millions of dollars to spend for rolling stock, he could not get it just now anywhere, and at this time of storm and stress, when the Government has difficulty in raising the necessary money to meet its obligations, I do not see any logical or sound reason why we should be asked to take over a road and to arbitrate the value of its stock. It is admitted by this report that the stock has no value. The very fact of the Government consenting to arbitrate for that stock is an admission that it has a value. They invite a value in the face of a report made by competent men who say there is no value. The Government say: We shall arbitrate and fin'd out. The moment you admit that you will arbitrate, you admit there is a value.
As to public ownership. I do not quite agree with the hon. memner for South York (Mr. Maclean), and J think the experience of this country will go to show that it is useless to tell what foreign countries are doing. The experience of this country shows that government ownership of railways is not very desirable. The Government own a road that should be a good road and a paying one, and it would pay a good rate of profit if it were handled on business principles. If the Minister of Railways had the right to handle the road unmolested and not interfered with, and if he handled it on business principles, it would be a paying investment and he would have much less trouble. But when members of Parliament can tell him whom
he should employ and whom he should discharge, when appointments are made through members of this House who want to get jobs for their friends, it is impossible to secure economical operation. If the Minister of Railways were asked he would say that he had more trouble from political interference than ne has with the legitimate operation of his roads-and I do not imagine that the taking over of the Canadian Northern Railway will detract from his troubles in that respect. If such roads as the Government control could be placed under a commission, not of politicians, but of gentlemen appointed for their ability, who would be held responsible for the good management of the road, it would be possible to make that road pay, and to operate it as it should be operated-but there will have to be a very material change from anything that has taken place in the past.
But I do not understand how this Government are going to get away from the legislation passed in 1914, which appears to be plain and explicit. The terms specify just what is to be done in case of default, which has now taken place. I cannot see any reason for the legislation in the interest of the people of Canada, and that is what we are supposed to be here for-the Government is not supposed to be legislating for personal ends or for their friends. I want to say there is not a man in this House or in Canada who can sit down and calmly read over this legislation passed in 1914 and get away from the fact that we have no right to arbitrate or anything else, but only to take over this road according to the terms of the agreement if default has been made. I notice the minister questions one of the articles in connection with taking over this road. Though he made it very plain in 1914, not only in the Act, but in the explanation to the House, now he appears to put an interpretation on it entirely different from hm previous statement. I should like to know whether the minister was trying to deceive the people of this country in 1914, or whether he is trying to deceive them now. It must be either one or the other. I am absolutely opposed to government ownership of anything bandied as the present railway system of Canada is handled, and I am also absolutely opposed either to arbitration, or to reference to the exchequer Counrt to put any value on this stock. It has no -value, and if the people who hold consider the stock has any value let them pay off the Government and they will own the road and the stock both.
.COMMONS
It is not up to the Government of Canada, who have advanced the cash and taken proper security, to throw aside their security and take care of the people who are not secured. There appears to be about *100,000,000 of outstanding liability, but the creditors of this road did not have any guarantee from the Government of this country that they would be protected; neither did the stockholders. They have taken the common stock as collate! al, I presume. The Government did not guarantee that the stock was worth a cent.
The people who hold that stock took it, probably, because they could not get anything else, and, if they can get the Government to take over the road and become responsible for all the debts, undoubtedly they have made a good trade. But what kind of trade has the country made? A very bad bargain, and the Government of the day will be responsible for it. I trust that the good sense of the Government will induce them to reconsider what they are doing. If the Canadian Northern have reached the limit, where they cannot finance their own business, let them turn the road into the hands of a receiver, and let him take care of it. If the outstanding debts and stock are worth anything, all right, but if not, the taxpayer of Canada should not be called upon to contribute any further to a matter of this kind. We have enough to take care of without that.


Rodolphe Lemieux: After the very able speech which has been delivered by my hon. friend from Sherbrooke (Mr. McCrea), and the cogent arguments which have been advanced by the hon. gentleman from Pictou (Mr. Macdonald), I do not know that I should delay the House any longer. Yet, Mr. Speaker, as one representing a constituency, composed of a large majority of farmers, who will be called upon to pay further taxes in order to meet the added liabilities which this transaction brings on the people of Canada, I feel that I cannot let this legislation pass without protesting against it. First of all, I think I should characterize this transaction as a most extraordinary if not indefensible one, and I cannot do other [DOT] wise than blame my hon. friend the Minister of Finance (Sir Thomas White) for having introduced this legislation at the close of a long session, and at the end of a long Parliament. This legislation will involve the country in millions, in fact in hundreds of millions, and it is thereby impairing the credit of the country, when the

credit of the country is so essential to enable it to face the present crisis. I am surprised that the Minister of Finance should countenance such a piece of legislation in the midst of the greatest war which humanity has ever seen or will ever see, when Canada is involved in that war, and when all the resources of the country are needed to meet the exigencies of the war. The least we might have expected from the hon. gentleman, if he was in such a rush was that he would wait until the election had taken place, when new legislators had been elected with a fresh mandate, taking into consideration the fact that this House is far from being complete, as at least one-fourth of its membership re not here, and in the next Parliament there will be fourteen new seats in this House. Of course, we have had many instances where the Government, in the course of its administration, has paid little respect to the people of Canada. In the present instance, I do not hesitate to say that Parliament is being treated with contempt by the Government. First of all, we have presented to us the biggest transaction since the Canadian Pacific and the Grand Trunk Pacific contracts, that has ever been brought before the House, involving the credit of the country to the extent of six hundred millions of dollars.
Yet, Sir, in answer to the inquiry whether they would lay on the table of the House the correspondence exchanged between the Government and the parties who are to profit by this transaction, the right hon. leader of this House (Sir Robert Borden) and the Minister of Finance answered, with a bland smile: "There is no such correspondence." Who in this House or in the country will believe- that no correspondence has been exchanged in regard to this matter between the Government and the Canadian Northern Railway Company? You can fool some of the people all of the time; you can fool all of the people some of the time, but you can't fool all of the people all the time. There is a limit to the credulity of the people. The first documents to be laid on the Table should have been the correspondence exchanged between Mackenzie and Mann-or, if you please, the Canadian Northern Railway Company-and the Government.
Not later than yesterday-this legislation not having been fully examined, passed upon, or disposed of-my hon. friend (Sir Thomas White) announced to Parliament and to the country that he had already appointed the arbitrator who was to act on
r

behalf of the Government I have the honour of knowing Sir William Meredith, the Chief Justice of the province of Ontario.
I have nothing to say against the character, the integrity or the ability of that eminent jurist. But it was stated this afternoon by the member^or North Cape Breton (Mr. McKenzie) that one-third of the board of arbitrators was committed to value being given to the $60,000,000 worth of stock. The member for North Cape Breton should have eaid that more than one-third was so committed. The Canadian Northern Bailway Company will appoint one arbitrator; surely that arbitrator will be for the Canadian Northern Railway Company. The Government has already appointed Sir William Meredith and instructed him through the Minister of Finance that there is value in that stock, which, however, according to the report of Messrs. Drayton and Acworth, is valueless. Therefore, two-thirds of the commission is already committed to the declaring of a value in respect of stock so referred to in the Drayton-Aoworth report.
On each occasion upon which the Canadian Northern Railway Company came to Parliament for subsidies, financial aid, or Government guarantee, we were told that they were coming to Parliament for the last time. But many times they have been here for the last time; now they are again before us. I followed with some interest the remarks made by the member for South Renfrew (Mr. Graham) yesterday. He is somewhat of an expert in railway matters, having presided for several years over the Department of Railways. According to his statement, the Canadian Northern has a credit balance of $8,000,000. Mackenzie and Mann, or the Canadian Northern Railway Company, therefore, do not require aid from the Government at this time. I believe that the member for South Renfrew was right in his remarks; I do not believe that the real claimants or the petitioners in the present instance are Mackenzie and Mann. As was stated by the member for South Renfrew-and the circumstantial evidence, in my judgment, proves it conclusively-the proposal which is being considered by the House, and which will be passed to-morrow, has been cleverly devised by bondholders, pledgees and financiers who wish to make secure their investments in an enterprise which, perhaps on account of the circumstances connected with the war, might not be altogether safe. Is it the function of Parliament to come to the
rescue of financiers, bondholders and pledgees who have staked their all on a private enterprise? Is that the duty of the hour? I appeal to my hon. friends who claim to be the only loyalists in this country, is there not something more pressing than this legislation? Every morning I read in the press about meetings that are being held from one end of the country to the other, especially in those highly imperialistic centres, Toronto, Winnipeg, Vancouver, and elsewhere, where the Round Table is so predominant. 'I read about win-the-war meetings, at which resolutions are being vociferously passed demanding of the Government that a win-the-war cabinet be formed and that a union Government be established in order to carry us through the present dire emergency. I notice that when those meetings are held in Toronto they are generally presided over by the pledgees, financiers and bondholders of the Canadian Northern Railway Company. They are the Warwicks of the present Government; they are the makers and maybe the unmakers of this Administration, and this explains, perhaps, why the Prime Minister, the Minister of Finance, and their' majority behind them, are so anxious to obey their dictates.
When I see men playing with patriotism, with Imperialism, as the financiers and backers of the Canadian Northern Railway Company are doing, I am reminded of that little episode in the French revolution. When the famous Madame Roland was approaching the scaffold she saw the statue of Liberty, and she exclaimed as she was passing by: " O, Liberty, how many crimes are committed in thy name!" I say, Mr. Speaker: O, Great War of 1917, O, Imperialism, O, Patriotism, how many crimes are committed in thy name in Canada ! Whilst the financiers, the 'bondholders and the pledgees of the Canadian Northern Railway Company are agitating the country from the Atlantic to the Pacific, in order, -as they say, to win the war, whilst they are thus diverting the attention of the public from the real facts of the case, I regret to say that the press of Canada is unfaithful to its great traditions. I stated the other day, when this resolution was introduced into the 'House,' that the press of Canada appeared to be chloroformed on this question. I repeat that statement., The press of Canada is being chloroformed on this question; it does not rise in its might to protest against the greatest piece of villainy that was ever perpetrated by a Canadian Government.


Richard Bedford Bennett: I rise to a point of order.


The ACTING SPEAKER (Mr. Davidson):: Order.


Richard Bedford Bennett: I should think the expression "villainy" is out of order, having regard to a remark made by me yesterday, and the point of order then raised by my hon. friend. My hon. friend should abide by the rules of the House.


Rodolphe Lemieux: I accept the correction of my hon. friend, but if I had time to delve into the language used in the memorable speech delivered by my hon. friend in this House a few years ago against the Canadian Northern Railway Company, I should possibly find an expression even more severe than the one I have just used. Did not my hon. friend say, in 1914, that Parliament was legislating in order to make richer the wealthiest man in Canada, Sir William Mackenzie? 1 remember how my hon. friend branded him on that occasion, and his speech, whioh, in some respects, is a classic, inspired me at that time, and if I spoke and voted as I did in 1914, I give my hon. friend credit for convincing me, I ''will not say of the villainy, but of the audacity of the Government thus to give to men who had already received millions of dollars from the various governments an additional subsidy of 45 millions. The press of the country is silent on this transaction. I listened some days ago to the speech delivered by the ex-Minister of Militia (Sir Sam Hughes), and he hinted that the Minister of Finance had sweetened the press for a certain purpose. That was denied, it is true, by the Minister of Finance. We have the word of denial, but we have also the accusation as between two compeers who sat in the same council. I have so far found only one paper which has dared to express its opinion on the present transaction. It is an old paper, and I do not hesitate to state this evening that in my judgment it is the most sound of all papers.
I refer to the Montreal Weekly Witness, edited by Mr. J. R. Dougall, a man who, for the last fifty years, has closely followed political events in Canada. Speaking of the Canadian Northern and referring to the Minister of Finance,, he says:
Sir Thomas White has announced that he is going to buy for the country the Canadian Northern Railway, and make dt a government railway, but keep it separate from the other government railways. We would like to have a great deal more information than we have about this railway and its history, so as to be able to judge of the fairness of the bargain which Sir Thomas White proposes. There are
fMr. Lemieux.]
signs that it needs very careful consideration, and * that Sir Thomas White himself has not gfiven it the kind of consideration that the country would like to give it if the information was accessible. In the purchase of the railway Sir Thomas White is acting as financial agent for the people of Canada, and only a day or two after he has committed the people to the purchase of a railway worth a few hundred million, he stands up and admits in the House of Commons, without a blush, that he does not know whether the Model City Company is a part of the Canadian Northern Railway or whether it is not. Now the Model City near Montreal is representative of a very great deal in this transaction. There are subsidiary properties everywhere. In fact the enterprise is a vast network of subsidiary properties. This particular property became so valuable that*it sold for a price equal to many times the cost of the tunnel under Mount Royal, owing to the magnificent entrance made possible by it to the heart of the city. Here is a company worth millions of dollars and our financial agent does not know whether it is included in the deal which he has completed or not. We might ask for instance whether Sir Thomas White knows whether the Tunnel Company is part of the purchase or whether we must pay toll to it also forever. If any individual had such a financial agent working for him, would that financial agent not. lose his position the moment he acknowledged such singular inadvertence. If Sir Thomas White does not know whether the Model City property belongs to the Canadian Northern Railway or not we have no reason to suppose he knows whether a hundred and one other subsidiary companies of the system, which are really the cream of the whole business, belong to the company bought out or not. It looks very much like as if he might be allowing Messrs. Mackenzie and Mann to get away with all the cream and leave the country with an appalling-
There is something missing here.


Richard Bedford Bennett: iSkimmed-milk.


Rodolphe Lemieux: merely since yesterday, but for many years past. It has engrossed the attention of the Parliament of Canada ever since I came here.
There are people who believe that we have overreached ourselves, that we have built too many railways. But I am one of those who believe with my hon. friend the ex-Minister of Railways and Canals (Mr. Graham), that the transportation necessities of this country require as many and perhaps more railways than we already have. At all events, the Government thought it wise last year to appoint a commission composed of the best men in Canada, the United States and Great Britain. They selected three experts, Sir Henry Drayton, Mr. Smith and Mr. Acworth. For weeks and months, accompanied by engineers, they travelled from one end of the country to the other. They delved into the books of the various railway systems and they were helped in that task by auditors of ability. They made a report as a result of their long and painstaking investigation. Now, this report is discarded. The Government knows that report created an impression on public opinion and that Sir Henry Drayton and Mr. Acworth have some weight with the thinking people of this country. For a few months we w8re told that the Government might perhaps accept the recommendations of the majority report. Then there was silence in the press and mystery in the Government councils. After this session had been called, and when the people had nearly forgotten the Drayton-Acworth report, the Government all of a sudden boldly discards it and now propose to take a step in another direction.
It is strange, Mr. Speaker, how the Government takes little stock in its own commissioners. Some years ago it appointed a judge in Winnipeg on the recommendation of the hon. Minister of Public Works (Mr. Rogers). The appointee had had a long and brilliant career at the Bar and was a man of legal acumen. This judge was appointed by the Manitoba Government to preside over an investigation concerning some of the activities of the ex-ministers in Winnipeg. He made his report and immediately the Government, knowing full well that the conclusions of that report were damaging, if not mortal, to one of the Cabinet ministers, appoints another commission to revise the report of Mr. Justice Galt. Later on a gentleman appointed by the Prime Minister in the Department of Justice, Mr. O'Connor, K.C.,
TMr. Lemieux.]
of Halifax, is entrusted with another mission. He is asked to report on the cold storage system of Canada. Innocently, I must say, but honestly-you will notice, Mr. Speaker, that innocence is always honest-he reports the most damaging conclusions against some of the financiers, some of the trusted friends of the Administration. The Government hastens to appoint another commission to revise the damaging report of its nominee.
As I stated a moment ago, it appointed a commission to report on the railway situation of Canada. The report has been published, and it is one which carries weight. But the Government suddenly finds that the report will not come to the rescue of those who, in 1911, formed a league to defeat the late Government and install in office the gentlemen who are now at the head of affairs. I should compare the Government to Saturn devouring his own children. Nearly every report ordered by the Government has been discarded, thrown into the waste basket; and with regard to the railway situation we are now to expect fuller information from another commission. I remember that in the old Parliament, when the Grand Trunk Pacific project was being considered by the House, the slogan invented by the late Mr. Blair against the late Mr. Cox was: "Cox cannot wait." That slogan created considerable merriment. The Tories repeated it from one end of the country to the other. Yet the late Mr. Cox, then a member of the Senate, offered on many occasions, and his offer was not accepted, to adduce proof of the untruthfulness of the slogan. But, Mr. Speaker, if it was true then that Cox could not wait, it seems ten times truer that certain buccaneers cannot wait to-day in the year of our Lord 1917. In these days of stress, when even the national credit of Canada is imperilled by the dire necessities of war, they must secure at the expense of the treasury the investments which they have made in a private enterprise. This war, with all its sorrows, has made in Canada a crop of millionaires. That explains to a certain degree the unrest of the country. The O'Connor'report has lifted a veil from certain profits which in my judgment are of a nature to sow the seeds of rebellion in any country. You will remember that the French Revolution started at the bakeries in Paris. There were in those days some Flavelles who kept the corn which came from the fields of France

and who allowed that corn to come in only in small quantities and by night into Paris in order to maintain high prices.
The poor people understood that there were men mean enough to speculate on the hunger of the consumers. They invaded the streets of Paris, they broke loose, and that was the beginning of the revolution. If you read the recent history of the Russian revolution, you will find that it started at the bakeries of Petrograd and Moscow. The millionaires and profiteers of this war in Canada are also, I make bold to say, sowing the seeds of revolution. The Government in this present transaction propose to arbitrate the valuation of a stock which has been declared valueless. Shall I read again, for the information of the House, the conclusions arrived at by the commissioners:
A third basis of estimate is the value of the property for sale as a going concern. A purchaser would not consider either original cost or reproduction cost as of much importance. The price he would pay would be based on earning power, present and potential. On this basis he would consider how far the Canadian Northern is at present short of covering its fixed charges, how long it will take to reach equilibrium, how much new capital will have to be spent, how soon a dividend may be expected and at what rate. Calculating on this basis, in the light of the figures set out above, it is evident that no purchaser would offer for the property a sum amounting to the total of its liabilities.
We conclude, therefore, that the shareholders of the company have no equity either on the ground of cash put in, or on the ground of physical reproduction cost, or on the ground of the saleable value of their property as a going concern.
If then the people of Canada have already found or assumed responsibility for the bulk of the capital; if they must needs find what further capital is required; and if they must make up for some years to come considerable deficits in net earnings, it seems logically to follow that the people of Canada should assume control of the property. We return later to the Canadian Northern Company in order to set out our recommendations as to its ownership and management in the future and as to the returns to be offered to the existing shareholders.
Can there be any question as to the conclusions of the commissioners? They declare here that the Canadian Northern Railway have no equity whatever and, in their recommendations, they state further:
We do not recommend that further public aid be given to the Canadian Northern as at present constituted.
The Canadian Northern common stock represents no cash investment, and has no present value, either on the basis of the cost of reproduction of the property, or on the basis of its earning power.
So, basing myself on the report of the majority of the commission, I say that the
Canadian Northern Railway has no claim to have any value put on its stock or to have an arbitration to fix a value. The Minister of Finance has already discredited completely that report. He has ignored its contents. Indeed he has given to Sir William Meredith his brief, because in the speech which he delivered only yesterday he showed Sir William Meredith how value could be given to the common stock. First of all he does what the Minister of Public Works did with the Galt report, he begins by abusing the men he has appointed. He says:
Upon this finding some hon. gentlemen opposite have argued that there should be no submission to arbitration because of the calculations of the commissioners as to the value of the assets, the amount -of the liabilities of the company and their opinion of its value as a going concern. But, I would point out to the House that there are certain important omissions in the Drayton-Acworth report.
Here is a report which has been prepared after long elaboration and searching investigation and my hon. friend, finding that this report goes against his friends, proclaims that very important omissions have been made. It is a pretty strong hint given to Sir William Meredith that he must find out those omissions, and he adds:
In other words, none of these things are conclusive; they are only elements in the question of what is the fair value in connection with a system such as this, which would, I think, be proper for arbitrators to take into consideration in valuing the assets and liabilities-not as determining factors but as elements in the determination of what is a fair value.
There will also be the question of the earnings of the Canadian Northern Railway Company, present earnings and prospective earnings.
Mr. Speaker, with such a brief given to Sir William Meredith, I say that two-thirds of the commission are already committed in favour of the Canadian Northern Company.


Richard Bedford Bennett: The difficulty I experience with relation to the matter is that neither the Canadian Northern Railway nor Mackenzie and Mann were heard, and if those omissions were made, is it fair that they should be given no chance to be heard in person or by counsel before the Drayton-Acworth Commission?


Rodolphe Lemieux: I will refer my friend to the legislation passed by this House in 1914, which he eloquently, and myself modestly, opposed. In 1914, when the bargain was made with Mackenzie and Mann or the Canadian Northern Railway, Parliament agreed to aid it to the extent of $45,-

000,000 On what conditions? A cavenant was made between the people of Canada, as represented by the Government, and the Canadian Northern Railway system. I want the Government to live up to that covenant, and I want the Canadian Northern to be made to live up to it. It was agreed that $45,000,000 of common stock should be handed to the Government. It was further agreed that the Government was to have% the right to take over the road in event of default. It was set out by section 21 what would be a case of default by the Canadian Northern system. And if there was default, a certain summary procedure was to be taken and the agreement was thereby to be carried out. What does section 21 of the statute say? It reads as follows.
The following shall be events of default within the meaning of this Act, viz.:
(a) If the Canadian Northern shall make default in payment of the principal or interest of the guaranteed securities or any part thereof, or default in observing or performing any of the provisions of the new Trust Deed and the security constituted by the new Trust .Deed shall thereby become enforceable.
I shall not proceed further. I will take the admission that I find in the speech delivered the other day by the hon. Minister of Finance (Sir Thomas White). He is my witness. He declared, when he introduced the resolution, that the company is not financially able to meet its liabilities. He said:
The result is that the company is short of cash for the purpose of paying interest upon its underlying securities.
And further on he repeats:
It is therefore unable to pay its underlying interest charges.
A little further on he says:
In addition to this, the company has had to do a great deal of short date financing. There is outstanding, secured, for the most part, by Dominion or provincial guaranteed bonds or debentures, short term loans floated in New York or London. The amount of that ordinary, short term liability is about $100,000,000, extending over a period of two years or more.
It is not possible for the company, by the issue of permanent securities, to fund that debt. Therefore, it is obliged from time to time to renew these short-term securities, and to carry on as best it may from year to year. The company have, in the past, come to the Government and asked us, as they did last year, to make them a loan of a sufficient amount to take care of the underlying interest charges and to meet the maturing instalments of principal upon rolling stock.
Sir, my best witness that the Canadian Northern Railway is to the wall at the present time, and unable to meet its liabilities,

is the hon. Minister of Finance (Sir Thomas White). Therefore I say, according to section 21 of the Act passed in 1914, the company is in default, and if the company is in default foreclosure follows, by section 24. The marginal note of that section reads as follows:
Equity of redemption foreclosed on default and vested in His Majesty.
And section 24 itself reads:
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 be and become absolutely barred and foreclosed, and the same shall thereupon be vested in His Majesty in right of the Dominion of Canada, any statutory enactment or any rule of law or equity to the contrary notwithstanding.
Is it'possible to find a sanction so clear, so precise and so much to the point as the one which is enacted by section 24? I repeat again, if there were a free press in Canada to-day the people would revolt, because the people would know what plot is being hatched at the present moment. Hon. gentlemen in this House have been quibbling, when discussing whether the company is in default or not. First, I have the definition given by the statute. Then I have the corroboration given by the very words uttered by the Finance Minister. But, Mr. Speaker, we have the description of the nature of the sanction enacted by section 24, in the speech delivered in 1914 by my hon. friend the member for St. Antoine (Sir Herbert Ames). That hon. gentleman enjoys the respect of this House and of the community. I do not share his views on-all political matters; I find him rather narrow in many things. But let us be frank; the hon. member from St. Antoine (Sir Herbert Ames) enjoys the respect and the confidence of the business community. He himself, is a business man. He is one of the captains of industry in the city of Montreal. When the Government are in a quandary, when they are in a bad corner, as in 1914, when they were being assailed by my hon. friend from Calgary (Mr. Bennett) and by my hon. friend from Kingston (Mr. Niekle), they go to the member for St. Antoine, and he generally finds the plausible explanation to save them. In 1914, after

the speeches delivered by the two hon. members to whom I have alluded, the Government appealed to the member for St. Antoine to placate public opinion in Canada, because the business men were rather struck by the audacity of the Government when they came forward with a legislation by which the Canadian Northern Railway Company was again receiving such a large amount of public money. The hon. member for St. Antoine undertook to explain how easy it would be to get control of the Canadian Northern Railway system, and to brush away all pretenses they might have, if, perchance they should attempt to exact some value for their stock. Let me quote the language of my hon. friend from St. Antoine. I think it is very important that we should hear it. He said:
What is to happen in case of default?
We were discussing then section 24. He continues:
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.
Failure was not prophesied, but failure haunted the minds of many, and, therefore, the member for St. Antoine said:
The Government has very carefully looked ahead to what might happen in case of failure.
Ordinarily, it is a very slow process to foreclose a railroad and foi' 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 be 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. [DOT]
Then, comparing the action that could be taken under this .section to the axe that chopped off the head of Charles I, the member for St. Antoine declared that in case of default the axe would fall upon the necks of 'Mackenzie and Mann. I do not see the member for St. Antoine in the House; I suppose we shall not see him during the course of this debate. I hope he will not appear to register his vote in favour of this proposal.	y
Our clear duty is to foreclose forthwith; to act under .section 24 of the statute of 1914. We have .a right to take .possession of that property which the Government of Canada created with moneys out of the public treasury. The Canadian Northern Railway Company have mortgaged their property; they cannot meet the interest charges; under section 24 the Canadian people have the right to exercise foreclosure.
We should take over the road; the Government should appoint a commission to administer it. I see the Minister of Railways and Canals (Mr. Cochrane) in his seat. Speaking for myself personally, I should not be averse to the hon. gentleman's taking charge of the administration of the Canadian Northern as he has taken charge of the administration of the Intercolonial railway. Some people have found fault with him, but on the whole, .although he has a blunt way of speaking, his dealings with the people of the country have been generally fair, and, as I say, I would not be opposed to entrusting to him the administration of the 'Canadian Northern. At any rate, that would be a lesser evil than that which is proposed under this measure.
You can describe this transaction in one sentence:	Canada will be burdened with
the liabilities of Mackenzie and Mann, and Mackenzie and Mann will continue to run the road. Enough assistance has been given to that system; enough millions have been handed to it. I say -in .all sincerity and earnestness that the .financial condition of the country should make the Minister of Finance, the watch-dog of the treasury, pause and think. We are staggering under the burdens of the war. I am surprised that some hon. gentlemen opposite .smile when I make that assertion. Is.it not a fact that this country is staggering under the burdens of the war? 'Is it not a fact this burden is felt by every man, woman and child of this generation, and that many other generations will feel it? Yet hon. gentlemen smile when I speak of the burden under which we .are staggering. It is a national crime at this moment to increase the financial burden of Canada. The Minister of Finance knows that the increase of that financial burden amounts in round figures to $600,000,000. In the course of his Budget speech the minister said:
While our national saving during the war has been gratifyingly large, it is not so great as it should have been and to-day no better advice can be offered to the public than to exercise the strictest thrift and economy.
What example is the Minister of Finance giving to the people? He preaches one

doctrine and practises another. He preaches thrift and economy to the people who are overburdened by the war, and yet he spends lavishly. The Government of which he forms a part has appointed a Food Controller who, very wisely preaches economy and thrift. The Government should set the example. Speaking of the financial conditions of Canada and of our war expenditure, my hon. friend said:
Coming next to the question of our direct war expenditure, we find that with our increasing military effort it also is continually increasing. Since the beginning of hostilities our total war outlay, including estimated and unadjusted liability to Great Britain for the maintenance of our troops at the front and inclusive of withheld pay, totals, so far as we can calculate, about $600,000,000. As the result of this large war expenditure, the net national debt of Canada, which was $336,000,000 before the outbreak of war, has risen to over $900,000,000.
And if I were to ask my hon. friend this evening what the total war debt of Canada is at this date, I am sure he would have to *admit that it has passed the billion-dollar mark. Speaking further, he said:
During the recess we successfully floated the third Canadian War Loan, an issue of $150,000,000 five per cent, twenty year bonds at 96	It is my present intention to arrange then for an issue of notes or treasury bills and if conditions are favourable offer another war loan in the early fall.
Since the outbreak of the war we have floated in Canada domestic loans aggregating $350,000,000 and have in addition furnished $150,000,000 through our chartered banks to the Imperial Treasury to meet its commitments for munitions and supplies purchased in Canada.
Sir, we have a war debt of over $1,000,000,000, to meet which for the present we have issued war loans. For the first time-and I wish I could say for the only time in the financial history of Canada-we find the Minister of Finance, hat in hand, going to Washington to ask the American authorities to give him a slice of the Liberty Loan. Canada is paying a usurious rate of six per cent, with our bonds selling at 98. Is not my hon. friend afraid of the financial status of our country? Is he not staggered at the position we occupy to-day on this continent? When the republics of the South can borrow at par; when the Government of the United States is lending money to the warring nations of Europe, which are already restless and who have proportionately much greater loans to carry than Canada; when those loans are being issued at low rates, is the Minister of Finance not afraid of the financial position of our country? Is he not at times affrighted when he thinks of the financial obligations of

the future? I will not say that such transactions as those which are being considered by the House at the present time spell bankruptcy, but they bring us very near to the verge of bankruptcy. When the Minister of Finance contemplates adding to our war debt liabilities which he could well ignore to the amount of $600,000,000, he is living in a fool's paradise. Our war debt is huge. Our expenditures are increasing every day; our taxation bills are becoming more and more exacting; yet the ordinary expenditures are still on the increase. The Minister of Finance has been brought up in a school of financiers who do not seem to know where to stop in their financial vagaries. The expenditures on Consolidated Fund Account amounted, in round figures, in 1910, to $79,000,000; in 1911, to $87,000,000; in 1912, to $98,000,000, and in 1916, after deducting interest charges caused by pensions and war necessities, to $107,000,000. I have already stated, in the course of another debate, that the Minister of Finance should, during the war, reduce the ordinary expenditures of this country by 50 per cent. If he cannot or will not do that, I beseech him to come back to the figure of our times of prosperity of 1911 or 1912 when we were not exceeding $98,000,000 of ordinary expenditure. I am sorry that I have spoken at such length-


Some hon. MEMBERS:: Hear, hear


Rodolphe Lemieux: More sorry however for the vote that will be given by the superloyalists who say: "Hear, hear," by the " win-the-war " members, who exploit the sentiments of the people at the present juncture in order to make it easy for Mackenzie and Mann to raid the Canadian treasury.
It was stated a moment ago that the Minister of Finance might, at least, have referred the whole matter to the Exchequer Court. I will not enlarge on that subject, but the reason why the matter is not referred to Sir Walter Cassels is no doubt, because, during recess, a matter quite similar to the present one was referred to him by the Minister of Railways and Canals (Mr. Cochrane). Every one will remember the raid made on the public treasury by the Quebec and Saguenay Railway. The matter, fortunately, for Canada, went before Sir Walter Cassels, the senior judge of the Exchequer Court, and what happened there? Although a limit had been fixed by the present Government as to the amount that should be paid to the Quebec and Saguenay, the Lotbiniere and Megantic, and the Que-

bee and Montmorency railways, although the attorney appointed by the Government, was ready to let go, Sir Walter Gassels- and I have his judgment in my hand- refused to let go and did not accept the conclusions of the Government attorney. He took the law into his own hands and declared what was the value of the Quebec and Saguenay and of the Quebec and Montmorency railways, and, with one stroke of the pen, he saved millions of dollars for the country. That explains why the same people are coming again with implementing legislation to get, by other means, what they could not get before honest Sir Walter Cassels. Sir, let it 'be known that the people who are to-day raiding the Canadian treasury in this transaction are the very same people who are interested in the Quebec and Saguenay railway and who will, in a few days ask the Parliament of Canada to pay them whatever money they have invested in that losing concern. The very same people were also the pledgees, the bondholders, the financiers of the Quebec and Saguenay, and it is to them that the Minister of Finance will shortly ask this Parliament to hand over another J arge sum of money out of the public treasury.
I repeat, if we had a free press in this country the people would know of these damnable transactions and would rise in revolt against a Government which is raining them whilst playing on their noblest sentiments. Conscription ! Win the war! Union Government!-those are but a ruse to facilitate the conspiracy of the buccaneers and rovers who are anxious to once more lay their hands on the Canadian treasury.	.
On the motion of Mr. R. B. Bennett, the debate was adjourned.
On the motion of Sir Thomas White, the House adjourned at 11.58 p.m.
Thursday, August 16, 1917.