1918-05-15

BILL TO AMEND INSURANCE ACT WITHDRAWN.

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Mr. M. Steele, for Sir Herbert Ames, presented the fourth report of the Select Standing Committee on Banking and Commerce :
Tour Committee have had under consideration Bill No. 62 to amend the Insurance Act, 1917, and have agreed to recommend that the said Bill be not proceeded further with this session, owing to the fact that it affects British and foreign insurance companies and that such companies have not had sufficient time to consider and express their views on the proposed measure.

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Return showing food destroyed in Toronto between April the 4th arid April 29th, 1918, and the action of the Food Controller in regard thereto.-Hon. Mr. Burrell. .
Names of persons employed in preparing the Votes and Proceedings, Orders of the Day, and Journals of the House of Commons (English and French).-Hon. Mr. Burrell.
Names of persons employed in reporting and translating the Proceedings of the House, and cost of printing and binding

Debates; also cost of reporting the translating, typing and printing of proceedings before Parliamentary Committees.-Hon. Mr. Burrell.

Right Hon.   S@: Sir Charles Fitzpatrick has
asked me to read to the House a statement with regard to some criticisms which have been made in the House. The memoran-*dum is as follows:



SIR CHARLES FITZPATRICK AND PRIVY COUNCIL.

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Fiscal Year, 19113-14.-Vote:-Travelling expenses of Sir Charles Fitzpatrick attending sittings of the Judicial Committee of the Privy Council, ?2,500.00. No claim for this amount and no payment made.
Fiscal Year, 1914-15.-Vote :-Travelling expenses of iSir Charles Fitzpatrick attending sittings of the Judicial Committee of the Privy Council, $2,500.00. This amount [was paid as Sir Charles Fitzpatrick attended sittings of the Privy Council in August or September, 1914.
Fiscal Year, 1915-15.-Vote :-Special allowance to Sir Charles Fitzpatrick to cover expenses in connection with Judicial Committee of the Privy Council, $i2,5'0'0.00. Claim was made for this amount, in monthly instalments, by the department having charge of the vote and as attendance at the sittings of the Privy Council had been omitted as a necessary condition of payment, the claims were allowed as in other cases of special allowances.
Fiscal Year, 1916-17.-VoteSpecial allowance to Sir Charles Fitzpatrick to cover expenses in connection with the Judicial Committee of the Privy Council, $2,500.00. This amount was paid for the same reason as in l'915-16i	.
Fiscal Year, 1917-18.-Vote:-Special allowance to Sir Charles Fitzpatrick to cover expenses when attending the sittings of the Judicial Committee of the Privy Council, $[2,-500.00. No claim was made for payment of this amount as .Sir Charles Fitzpatrick did not attend the sittings of the Privy Council.


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Right Hon.Sir ROBERT BORDEN (Prime * Minister): I deem it my duty to make a statement to the House with-respect to an item which has appeared in the press of the country touching a despatch received from the Secretary of State for the Colonies at the end of last week, which was given out to the press in the ordinary course.
Sir SAM HUGHES:: Received from and by whom?


Sir ROBERT BORDEN:: Received from the Secretary of State for_ the Colonies. About the middle of January last I suggested to the British Government, through the Secretary of State for the Colonies, that

it would be desirable to have a weekly resume, Or summary, of the war situation, which should be issued under the authority of the War Cabinet, and which might be published. We had been receiving for some time secret reports, which, of course, could not be made public, and the information set forth in those_ weekly reports was communicated only to members of the Administration, and in some cases to the Prime Minister alone.
We received a reply intimating that the matter would be taken into consideration, and about the end of March we were informed that such a despatch for publication would be sent to us weekly in the early future. These despatches began t-o come in about the end of March, or a little after, and when received they were published as was intended. They were not sent in code, and they were marked as official news for publication. It is understood that one of the Dominions of the Empire made a suggestion about two or three weeks ago that these news summaries were not as valuable as they might be for the reason that they set forth for the most part matters that had already been published in the press of the country. On Saturday last, one of those official news despatches was received in the ordinary course through His Excellency the Governor General, signed, as all these despatches are signed, by the Secretary of State for the Colonies, the Eight Hon. Walter Long. It was handed out to the press and published in the usual w>ay. Yesterday a further despatch correcting it in one respect was received in the same manner from the same source, and signed in the same way. That also has been given to the press. In communicating to the British Government in January last, we asked that these despatches might be sent to us under the authority of the War Cabinet. 1 do not know, of course, whether or not this particular despatch was sent out under the authority of the War Cabinet. I am content to accept the statement of Lord Beading in that behalf; he doubtless has more information on the subject than I have. What I desire to .make clear to the House and to the country is that the despatch in question was received in the ordinary course under the arrangement alluded to, and purported to be signed by the Secretary of State for the Colonies'. It was received through His Excellency the Governor 'General, and the despatch which corrected it was received in the same man-125
ner through the same source and signed in the same way. My purpose in making this statement is to assure Parliament and this country that if there has been any mistake or misapprehension with regard to this official news despatch it has not occurred here at Ottawa; it has occurred somewhere else.



QUESTIONS.

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(Questions answered orally are indicated by asterisks).
Mr. W. P. McKAY.

Mr. PEOULX:: 1.	Are the following persons employed in the War Trade Board: Messrs. Trower, Wilkie, Forrest, Russell and Murphy?
2.	If so, what duties are they performing, what salary is paid to each, and by whom were they recommended for employment?
3.	Did the Civil Service Commission under the provisions of the Order in Council authorize their employment? If not, why not?
4.	On what dates were the above named persons employed?


Sir GEOEGE FOSTER:: 1.	Yes.'
2.	Mr. W. K. Trower, general secretary, $500 per month; Mr. J. H. Wilkie, assistant secretary, $250 per month; Mr. T. M. Forrest, in charge of Statistical and Information Departments, $208.33 per month; Mr. E. M. Russell, expert on metals, $175 per month; Mr. W. P. Murphy, in charge of Filing Department, $125 per month. These men were selected by the board



as being competent for the duties they are now performing and the board were satisfied with their credentials and they are now performing the duties assigned to them in an efficient manner.
3.	Yes.
4.	Mr. W. K. Trower, February 25, 1918; M*r. J. H. Wilkie, March 1, 1918; Mr. T. Mr. Forrest, March 13, 1918; Mr. E. M. Russell, April 8, 1918; Mr. W. P. Murphy, February 14, 1918.


EMPLOYMENT AT VICTORIA, B.C.
Mr. BOURASSA:: 1.	Has the Government been informed that in the spring of 1912* men were hired to go to Victoria, British Columbia, and wrork there as lumbermen, carpenters, painters, etc., at the rate of $3, $4, and $5 per diem, travelling expenses prepaid and lodgings gratuitously provided for?
2.	Has the Government been made aware of the fact that, when the said workmen and mechanics had reached Victoria, all travelling expenses were deducted from their wages ; that they were paid only $2 and $2.50 per day, and that they had to pay for their lodgings?
3.	Is it the intention of the Government to pay for these men's travelling expenses so as to enable them to return home?


Hon. Mr. CROTHERS:: We have no information concerning this question. I intimated some days ago that if the hon. member would give further particulars we would look into the matter. I have not received any particulars. As the question now stands, the answer to the first question will have to be no, and the answer to the second and third questions: Answered by No. 1.


MILITARY SERVICE REGISTRARS, QUEBEC.
Mr. MICHAUD:: 1.	Is Mr. Ant. Gobeil, lawyer, ex-deputy minister of the Public Works Department, still registrar, under the Justice Department, for the operation of the Military Service law? Has he put in an application to be relieved from such function?
2.	Has he been asked to send in his resignation? In what way has he been required to resign?
3.	What were the number of women or girls, and the number of men, under his employ, on the 15th March last?
4.	What is the name of the new registrar?
5.	What are the names of the assistant registrars?
6.	Are the offices in the Chateau Prontenac temporarily leased, or are they leased for a fixed term?
7.	What were the number of lady employees on the pay-list, on the 20th instant?
8.. What were the number of men employees on the said pay-list on the 20th instant, or on the preceding week ?

9. What are the duties of Mr. Alleyn Tasche-re.au, K.C., in the said office?


Hon. Mr. DOHERTY:: 1.	No.
2.	Relieved by Order in Council, 3rd April, 1918.
3.	56 men, 49 women..
4.	Alleyn Taschereau, K.C.
5.	First Assistant, J. F. Belanger.
6.	Leased temporarily to the 1st June.
7.	107.	[DOT]
8.	32.
9.	The duties of the registrars and deputy registrars are those of recording, indexing, and notifying the men affected by the Act so as to give effect to the conclusions arrived at by the tribunals and medical boards. They are also charged with the duty of obtaining the equal application of the principles governing the disposition of claims for exemption by causing appeals to be entered when it appears that any tribunal has come to a conclusion the validity of which is doubtful, whether such conclusion is in favour of or adverse to exemption being granted, and with the obtaining of such information as will assist tribunals to perform their functions intelligently and with despatch.


APPOINTMENTS TO PRINTING BUREAU.
Mr. BALL:: 1.	How many appointments have been made in the Printing Bureau since October 1, 1911, to the present date?
2.	How many of them are English?
3.	How many of them are French?


Hon. Mr. BURRELL:: Nos. 1, 2 and 3.
uiiiucr of employees as per list of October
12th, 1911	 837
Number of employees
on May 1st, 1918 .. 1,235
Increase	 398
Number of appointments since October 1st, 1911	 765
Deaths since October
10th, 1911 ..'... 102
Resignations since October 10th, 1911..	229
Dismissals since October 10th, 1911	 36


MILITARY SERVICE ACT-QUEBEC APPEALS TO CENTRAL APPEAL JUDGE.
Mr. CURRIE:: 1.	How many cases for exemption under the 'Military Service Act were appealed to the
French. English.
320	517
615	620
295	103
452	313
47	55
120	109
19	17
186	181

Central Appeal Judge from the province of Quebec ?
2.	How many of these appeals from the province of Quebec were disposed of by the recent Order in Council refusing all exemptions to men 20 to 23?
3.	How many appeals for exemption from the province of Quebec were disposed of by the Central Appeal Judge, of others than those called up by Order in Council, during the month of April, 1913?
4.	How many appeals from Quebec under the Military Service Act are still pending?


Hon. Mr. DOHERTY:: 1.	Up to May 10th, 11,657 appeals to the Central Appeal Judge from the province of Quebec have been received.
2.	3,645.
3.	Up to May 13th, 3,211 appeals for exemption from the province of Quebec have been disposed of by the Central Appeal Judge, other than those called up by Order in Council. The records are not kept by months.
4.	4,155.


NATIONAL WAR MUSEUM.
Mr. McGIBBON (Muskoka):: 1.	Is it a fact that representatives of the National War Museum about to be established in London have taken possession of the war trophies captured from the enemy by the Canadian Army, and are retaining the most interesting specimens for the said War Museum of London?
2.	If so, has it -been done with the consent of this Government?
3.	Does the Government contemplate making any representations to the Imperial Authorities with the object of having these returned to Canada?


Hon. Mr. BUBRELL:: 1.	All trophies captured by the forces of the British Dominions are assembled1 under the control of the Imperial authorities. A register is kept of all these captures, specifying in each case the name of the claimant thereto. Many of the trophies, captured are still effective and have been put into service. The final disposal of trophies remaining at the close of the war will then be decided. It is understood that the National War 'Museum intends to form a Canadian section in that museum, and that certain Canadian trophies will be requested for that purpose.
2.	The Canadian army has a representative on the Committee of the National War Museum.
3.	A considerable number of interesting trophies havie already been sent to Canada and others will be sent shortly. The interests of Canada have not, and will not, be neglected1.
125|


CANADA REGISTRATION BOARD.
Mr. DUFF:: 1.	What Department of the Government is the Canada Registration Board responsible to?
2.	What is the street address of said Board?
3.	What is their telephone number?
4.	What are the names of the officials of said Board and the amount of their respective salaries ?
5.	What are their duties?
, 6. Have Superintendents been appointed for the registration of man and woman-power for Nova Scotia, New Brunswick, and Prince Edward Island?
7.	If so, by whom were they recommended?
8.	What are their names and addresses, and what remuneration will they receive?
9.	What are their duties?
10.	Have Registrars been appointed for the different constituencies in Nova Scotia, New Brunswick, and Prince Edward Island?
11.	If so, what are their names and addresses ?	.
.12. By whom were they appointed?
13.	Who recommended them?
14.	What remuneration are they to receive?
15.	Do they appoint the enumerators for the different polling sections?
16.	What remuneration will said1 enumerators receive?


Mr. McCURDY:: 1.	The Canada Registration Board is a subcommittee of the War Committee of the Cabinet.
2.	Regal Building, O'Connor street, Ottawa.
3.	Queen 4026.	>
4.	The members of the board are: Hon. G. D. Robertson, chairman; E. McG. Quirk, vice-chairman; Mrs. A. Plumptre, G. M. Murray, Philemon 'Cousineau, K.C., Thomas Moore, F. B. McCurdy, E. L. Newcombe, ,T. D. McGregor; ' secretary, Henry C. De Wolf. Only the secretary receives compensation; amount $300 per month.
5.	To effect a registration of persons in Canada over 16 years of age.
6.	Yes.
7.	Selected by the board.
8.	For Prince Edward Island, I. J. Trainor, Charlottetown, P.E.I.; for Nova Scotia, George E. Corbitt, Annapolis Royal, N.S.; for New Brunswick, Charles- Comben, Woodstock, N.B.; $8 per die-m for time actually given to the -work.
9.	To recommend suitable persons to act as registrars in each of the electoral districts, and generally supervise the detailed organization necessary for the successful carrying out of the registration.
10.	Yes.
11.	For Nova Scotia:	Annapol-is-Digby,
W-m. E. VamBlaroo-m, Digby, N.S.; Antigon-ish-Guysboro, D. D. Chisholm-, Antigonish, N.S.; Cape. Breton North and Victoria, Malcolm A. McLeod, Bad-deck, N.S.; Ca-pe Bre-


UNION STATION AT QUEBEC CITY.
Mr. PARENT:: 1.	Is the so-called Union Station at the Palais, Quebec city, owned by the Canadian Pacific Railway and the Government or by one of the two?
2.	If by the Canadian Pacific Railway, has the Government made any arrangement with this company regarding the reni for the accommodation of the Government railway trains in the said Union Station?
3.	If so, when did such agreement take place, and how much has been paid the company per year since the agreement was entered into?


Mr. J. D. REID:: '
1.	The new Union station building was erected and is owned by the Canadian Pacific Railway. Part of the lands comprising the terminal yard is owned by the Government and part by the Canadian Pacific Railway.

2.	An arrangement between the Government and the Canadian Pacific Railway has been made regarding the rent for the accommodation of the Government railway trains in the said station and terminals.
3.	The agreement is dated January 1,1915, $1,104.83 was paid the company in 1917, and $19,347.08 in 1918. Accounts to the amount of $203,056.88 are held pending adjustment of contra accounts.


APPOINTMENTS FROM Y.M.C.A. AND SALVATION ARMY.
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*Mr. CASGRAIN.
1.	How many persons formerly in the employ of the Y.M.C.A. are now in the employ of the Government? What are their names?
2.	How many former officers or employees of the Salvation Army are now in the employ of the Government?
3.	Were all these appointments made on the recommendation of the President of the Privy Council?
Martin Burrell: I would point out
that it is absolutely impossible to answer a question of this kind, considering the thousands there are in these two organizations and the thousands of employees of all kinds in the Government. Unless the question is made more explicit, I may say that the Government has no information.


SUPREME COURT REPORTS.
*Mr. McKENZIE:: 1.	Did the ten-year contract under which the Canada Supreme Court reports were printed by the Canada Law Book Co., Ltd., expire in June, 1915?
2; If so, were tenders called for in connection with the printing; of said reports or was the old contract continued with the Canada Law- Book Co., Ltd.?
3.	Did the Carswell Co., Ltd., write the Department of Justice on the 16th June, 1915, offering to pay $500 per volume for the privilege of printing the reports for the current ten-year period commencing from June, 1915?
4.	Would $500 per volume net the department from $8,000 to $10,000 in ten years?
5.	Did the Carswell Co. also offer, if awarded the contract, to supply free for the use of the Government from 300 to 100 copies of the reports?
6.	Under what contract or arrangement are the reports now being printed by the Canada Law Book Co., Ltd.?
7.	Is the department receiving any monetary consideration from said company for the privilege they are enjoying? If so, how much?
8.	If nothing is paid by the Canada Law Book Co., why was the offer of the Carswell Co. not accepted?
9.	Is it a fact that the Carswell Co. is capable of complying with all the conditions imposed by the department in connection with the printing of reports?
10.	Did the Minister of Justice before the expiration of the contract with the Canada Law Book Co. which was due to terminate in June, 1915, promise to invite tenders from both the

Carswell Co., Ltd., and the Canada Law Book Co., Ltd., before making a new contract? If so, why was that course not taken?


Mr. DOHERTY:: 1.	Yes.
2.	No, except as stated in answer to No.
10.	.
3.	Yes, for a period of ten years.
4.	It would depend upon the number of volumes issued. For the past ten years sixteen volumes have been issued.
5.	Yes.
6.	Under a contract dated 10th February,
1917.	[DOT]	<
7.	Yes. $500 per volume.
8.	The Canada Law Book Company does pay $500 per volume as just stated. The offer of the Carswell Company was not accepted, because the service for the previous ten years had been conducted in a most satisfactory manner by the present contractors, the Canada Law Book Company, and it was not deemed advisable, in view of this consideration, to experiment with another publisher.
9.	It is so represented, but the Government is not otherwise informed.
10.	Yes, and offers were received from both companies accordingly.


MR. PHILIPPE FUROIS.
Mr. BROUILLARD:: 1.	Did Mr. Philippe Furois, of Quebec, offer the Department of Trade and Commerce a vessel for the purpose of performing the service between Quebec and the northern shore?
2.	What is the name of this vessel?
3.	Is Mr. Furois the owner of said vessel?
4.	What subsidy did Mr. Furois ask for?
5.	Was he awarded a contract?
6.	Was Mr. Philippe Furois the Unionist candidate in Ronaventure County at the last general elections ?


Sir GEORGE FOSTER:: 1.	Yes.
2.	Schooner " St. Onloine
3.	Mr. Furois did not -state whether he owned the vessel or not.
4.	$5,000 or $6,000. '
5.	No. No definite information was obtained from Mr. Furois as the department was negotiating for a better ship.
6.	The hon. gentleman can satisfy himself by reference to the public records of the elections.


CONNAUGHT RIFLE RANGE.
Mr. BOYCE:: 1.	What are the names of the parties who have Connaught Rifle Range rented; for pasturing cattle?
2.	What is the amount paid for rent?
3.	What is the duty of -Mr. Holbrook, who lives on the Range?
4.	What salary does he receive?
Major-General MEWBURN:
1.	Robert Richardson.
2.	$925 per annum.
3.	Caretaker.
4.	$90 per month, with free house and grounds.


COLONEL LABATT.
Mr. BROUILLARD:: 3.	Do the above quoted letters form part of the printed record of the proceedings now in progress before the Pensions Committee of the House of Commons?
4.	Have the statements contained in Mr. Stevens' letter been inquired into, and will the Committee make an interim report thereon prior to the conclusion of its labours?


Hon. Mr. ROWELL:: 1.	Yes.
2.	Yes., and also by letter of May 1st, as follows:
Dear Mr. Stevens:
Re Pensions Committee.
I duly received your letter and laid it before the Pensions Committee. The matter you mention had already come before the Committee, and it is their intention to deal with the questions raised in the course of their deliberations.
With reference to the personal matter mentioned in the letter, I understand from Dr. Reid that he was not consulted regarding the appointment of Colonel Babatt to the Board of Pension Commissioners and had nothing whatever to do with it. So far as General 'Mewburn is concerned, as you are aware, Colonel Dabatt was appointed many months before General Mewiburn became a minister. There is, however, a question of principle . involved, which is a very proper matter for consideration.
(Sgd.) N. W. Rowell.
3.	The following is the extract from the printed records of proceedings of the committee on May 1st relating to this matter:
The Chairman read a communication received from Mr. H. H. Stevens., M.P., dated April 23, re the case of Colonel Labatt's disability pension; also a communication received from Mr. F. S. Scott, M.P., dated April 23, re the revision of pension regulations in respect to dependents of British Reservists-said communications were ordered filed for records and for further consideration.
4.	The matters referred to in Mr. Stevens' letter are being enquired into and the committee will report .in due course.


MR. J. A. DBNIGER.
Mr. ARCHAMBAULT:: 1.	Is Mr. J. A. Deniger employed by the Post Office Department in Montreal?
2.	If so, what are his duties?
3.	What is his salary?


Hon. Mr. DOHERTY:: 1.	Yes.
2.	Field officer in connection with rural mail delivery work.
3.	$1,200 a year.



QUESTIONS PASSED AS ORDERS FOR RETURNS.

Mr. THOMAS POSTER:: 1. What amount has been expended by the Government on Toronto Harbour since Confederation?

2.	What is the initial cost of such protection as has been placed on the south shore of the Island; also cost of repairs to same?
3.	To what extent has the Island been reduced since Confederation due to erosion?
4.	What part or parts of the harbour front are controlled by the Dominion Government?


Mr. BROUILLARD:: 1.	Wlrat was the total amount paid to the Journal Publishing Company of Ottawa, Dimited, during the fiscal years 1912-13-14-1516-17 inclusive, for (a) rentals; (b) printing?
2.	Were the official cheques of the Government for said rentals and printing jobs issued directly in favour of the above company, or to P. D. Ross, Esq.?



THE IMPERIAL CONFERENCE.

Mr. JOSEPH ARCHAMBAULT (Chambly and Vercheres) moved:: For a copy of all correspondence between the Imperial Government and the Government of Canada in relation to the proposed visit of some members of the Canadian Government to Bondon this sprang.


Sir GEORGE FOSTER:: The motion may be adopted with the proviso that it shall not cover such documents, if any, as may be confidential and which it is not in the public interest to bring down.


Sir WILFRID LAURIER:: That is understood. M,ay we have this return at an early date?


George Green Foster: I should think so.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the Orders of the Day:
Mr. J. W. EDWARDS (Frontenac):: I
desire to rise to a question of privilege. Yesterday's Ottawa Citizen contains the following article, headed "Absolutely Untrue; Chief Justice on Dr. Edwards' Charges in the Commons":
"I do not know that I have very much to say about the charge of Dr. Edwards, except that it is absolutely untrue," stated Sir Charles Fitzpatrick, chief justice of Canada yesterday.
"I do not receive any such salary," stated Sir Charles. "The amount voted by parliament now is for travelling expenses when I go to Bondon as a member of the Judicial Committee. When I don't go I do not draw the allowance. There was one year when I drew it. At that time the amount was voted expressly without reference to expenses. It was a statutory allowance in connection with the position, the same as the amount allowed in my capacity as deputy of the Governor General. Afterwards the statute was changed to make the vote cover travelling expenses. When I don't go to Bondon why, of course, I do not receive the money."
My statement, to which exception was taken, may be found in Hansard of May 13, andi is as follows:

$2,500 a year was voted to a certain gentleman, whom I am not permitted to mention, for a specific purpose, which that gentleman did not carry out. The money was voted and taken. The next year the money was again voted and taken for that specific purpose, although that specific purpose was not carried out. The third year the money was voted for the same specific purpose, which purpose again was not carried out, but the money was taken.
. That is the statement which the gentleman in question says is absolutely untrue. The Appropriation Act and the Auditor General's Report show that for the year 1915-16 a vote of $2,500 was put through in these words :
Travelling expenses of Sir Charles Fitzpatrick when attending the sittings of the Judicial Committee of the Privy Council.
The Auditor General's Report, page U3, shows that that amount was drawn. The next year the vote was similarly worded, and the Auditor General's Report, page U3, shows that the amount was taken. The next year, 1917-18, the wording was slightly changed to read:
Special allowance to Sir Charles Fitzpatrick to cover expenses when attending the sittings of the Judicial Committee of the Privy Council.
That amount was not drawn. According to the Appropriation Acts and the Auditor General's Report, the amount was drawn in two of the three years. My statement cannot be characterized as absolutely untrue; at least it is two-thirds true, while the assertion	in the press of the
gentleman in question can only be taken as fifty per cent true. I am willing to place my veracity on that basis against that of the Chief Justice of Canada, at all events, so far as principle is concerned -and that is the point wherein my veracity is called to question. The amount was taken for services which were not performed, and that is what I stated in the House. That was the principle involved, and admission has been made to that effect. As a matter of principle, it does not matter whether the amount wrongfully taken was $5,000 or $7,500. It has been admitted that $5,000 has been taken for which-


Mr. SPEAKER:: Order.


John Wesley Edwards: -no services were rendered.



SHORTAGE OF SALT.

[Stage Direction]
On the Orders of the Day:
Hon. RODOLPHE LEMIEUX (Maison-neuve):: I have received a letter from the
firm of Robin, Jones and Whitman, a large fishing firm in the Maritime Provinces operating on the coast of Gaspe, with regard to the shortage of salt. Perhaps I may read the letter, which I have received from the general manager of this firm, in order that I may induce the Government to do something towards bringing cargoes of salt to Canada; otherwise serious losses will result to the fisheries this year.


Edgar Nelson Rhodes: I suggest that the hon. gentleman summarize the letter; otherwise, it would be in the nature of an argument.


George Green Foster: If the hon. gentleman puts a question, I will answer it.


Rodolphe Lemieux: I would ask the Minister of Trade and Commerce to help the fishermen to get the necessary supply of salt, which is absolutely lacking this year on the coast of Gaspe, on the north shore, and,
I am told, in the Maritime Provinces generally. My correspondent urges on the Government the necessity of asking the Imperial authorities to send a vessel from the Mediterranean to Canada with a cargo of salt.


Edgar Nelson Rhodes: Order.


George Green Foster: A shipment of 5,500 tons of salt is on its way, which, I am informed, will carry the trade in Canada up to the 1st of July. I am in communication with the Admiralty as to a further shipment, and I am ascertaining how much will be required for the remainder of the season. My hon. friend will see, therefore, that the help has already been rendered.


Rodolphe Lemieux: I hope that I shall not have to take my hon. friend's answer with a grain of salt.



POST OFFICE DEPARTMENT-MR.


[Stage Direction]
On the Orders of the Day:
Mr. H. C. HOCKEN (Toronto West):: With regard to the revelations made by the member for Kingston (Mr. Niokle) the other night, is it the intention of the Go-ernment to dismiss Mr. Fowler from the service?


George Green Foster: That matter will be brought to the attention of the Prime Minister, and a further answer-will be'given to my hon. friend.



PAYMENTS TO SIR CHARLES FITZPATRICK.

[Stage Direction]
On -the Orders of the Day:
Mr. H. B. MORPHY (North Perth):: In view of the reference made on Monday night and this morning by the hon. member for Frontenae (Mr. Edwards) to Sir Charles Fitzpatrick, does the Government purpose allowing Sir Charles Fitzpatrick to retain the money which he admits he improperly received?


George Green Foster: I shall have to answer that question in the same manner as I answered the question of the hon. member for West Toronto (Mr. Hocken).


Edgar Nelson Rhodes: I would suggest to the House that such questions should more properly be put upon the Order Paper. They are not of such urgency as to require their being brought up on the Orders of the Day.


Hugh Boulton Morphy: Some time . ago I put a question on the Order Paper, and I received an evasive answer.



FARMERS' DELEGATION.

[Stage Direction]
On the Orders of the Day:
Mr. THOMAS VIEN (Lotbiniere):: May I ask you, Mr. Speaker, if you have received a communication from the delegation of farmers now in session at Ottawa, and if so, if it is your intention to communicate, it to the House?


Edgar Nelson Rhodes: Since I entered the chamber I received a voluminous communication. I obviously have not had time to read it. I cannot communicate it to the House until I have read it. When I have read it I shall take what action I deem proper.	1


Thomas Vien: Are we then likely to have
this document communicated to us, while delegates are still in this city?


Edgar Nelson Rhodes: I have already stated
to the hon. member that I shall, if I think proper, communicate it to the House the moment I have had an opportunity of reading it.


Rodolphe Lemieux: Is it a communication from the Ontario farmers?


Edgar Nelson Rhodes: I have not yet had an opportunity of reading it.
RURAL MAIL CARRIERS' CONTRACTS. On the Orders of the Day:


Mr. DONALD SUTHERLAND (South Oxford):: Is it the intention of the Govern-[Slr George Foster.]
ment to afford an opportunity for a discussion of the resolution moved by the hon. member for West Peterborough (Mr. Burnham) on March 21 last) relating to the difficulties experienced by rural mail carriers and the salaries received by them? The Prime Minister on that occasion asked that the resolution should be withdrawn in order that the Government might consider the matter, and he stated that an opportunity to discuss it would be given at a later date.
Sir GEORG'E FOSTER: When the Estimates of the Post Office Department are under consideration there will be full opportunity of discussing that matter.



HEREDITARY TITLES IN CANADA.

[Stage Direction]
On the Orders of the Day:
Wilfrid Laurier: May I remind my right hon. friend that the motion of the hon. member for Kingston (Mr. Nickle) in regard to titles was to be further discussed?


George Green Foster: I thought we
had heard a good deal about titles.


Wilfrid Laurier: We have not heard the last of them yet.
'Sir GEORGE FOSTER: I shall draw the attention of the Prime Minister to the matter.



THE INLAND REVENUE ACT AMENDMENT.

[Stage Direction]
On motion of Hon. A. K. Maclean (Acting Minister of Finance), Bill No. 82, to amend the Inland Revenue Act was read the second time, and the House went into committee thereon, Mr. Boivin in the Chair.
On section 1-duties of excise on manufactured tobacco:
Mr. BUREAU:: Does this include the
whole section?


Mr. A. K. MACLEAN:: Yes.


Jacques Bureau: Will the minister give an explanation of the difference between clauses (a) and (b)? Clause (a) enumerates a number of tobaccos such as fine-cut, cavendish, plug or twist. Clause (b) says:
(b) On common Canada twist, when made solely from tobacco grown in Canada, and on the farm or premises where grown, by the cultivator duly licensed therefor, or in a licensed tobacco manufactory, twenty cents per pound, attua! weight.
If it is manufactured into chewing tobacco or otherwise the duty is 20 cents per

pound. I do not -quite understand the distinction that is drawn here.


Alexander Kenneth Maclean: This is tobacco twist made from the.'Canadian grown leal. The duty has been raised from ten to twenty *cents.


Jacques Bureau: What is meant by the words " on common Canada twist when made solely from tobacco grown in Canada?"


Alexander Kenneth Maclean: That is a Canadian tobacco.


Jacques Bureau: It -goes on to say " when made on the farm or premises where grown." Surely, it would not be grown in ,a factory.


Alexander Kenneth Maclean: The twist may (be made in a factory. It is also frequently made on the farm.
. iMr. McOOIiG: Is there any provision covering the point I raised the other day as to the duty being remitted on tobacco damaged by frost or otherwise?


Alexander Kenneth Maclean: There is nothing in the Bill which specifically covers that point, but there is a regulation now in force which provides that the duty shall not be exacted where the leaf has been destroyed.


Jacques Bureau: Does this section mean that a farmer who grows tobacco and makes it into twist for himself and his family is exempt from paying the duty?


Alexander Kenneth Maclean: Thirty pounds are allowed to the grower for every male adult of his family.


Mr. TOBIN:: Does the minister think it is fair to charge a duty of six dollars a thousand on cigars regardless of quality? That duty would be all- right on cigars costing seventy-five or a hundred dollars a thousand, but on the cheaper cigars costing from eighteen to forty dollars a thousand, does the minister not think the duty is too high?


Alexander Kenneth Maclean: The increased
duty upon cigars amounts to two-thirds or a cent per cigar. In the case of the five cent cigar the profit of the rfrtailer now is forty per cent. With the increased duty it will (be twenty per cent,, or a little over. There is some objection, possibly fair, from the trade in respect to the duty on the cheaper cigar. In the United States the duty is based on the" selling price, but that has not been the practice in Canada; we
have always charged on the quantity. If the tax is too onerous in the case of the cheaper cigar, we will reconsider the matter before the next session of Parliament.


Edmund William Tobin: I think the minister should increase the duty on the more expensive cigars selling at $150 per thousand', we will say. The margin between the wholesale and retail price on the five-cent cigar is so small that with the duty it will have to sell at six or seven cents; that is the cigar the workingman and the farmer smokes.
I think the minister would get more duty if he increased the tax to ten dollars per thousand on the higher-pricedi cigar and decreased it to two or three dollars per thousand in the case of the cheaper cigar.


Alexander Kenneth Maclean: The purpose of the tax is to raise revenue, and if we impose too high a tax, consumption will cease and there will be no revenue.


Edmund William Tobin: I do not admit that. I am sure the minister when he goes into a store does not buy the five-cent cigar of the workingman, selling at six for .a quarter, but a brand selling at three for fifty. If he chooses to smoke that quality of cigar, let him pay for the luxury. He is better able . to pay the duty than the workingman. I again repeat, the minister should increase the duty on the higher-priced cigar, and reduce it on the lower-priced, cigar.


Alexander Kenneth Maclean: I can promise my hon. friend that before the next session of Parliament we will reconsider the duty on the five-cent cigar.


Edmund William Tobin: The minister admits I have good grounds for my appeal to him. Why not reconsider the duty now? This is the proper time when we are passing the Bill. If the minister will not meet the farmers in the House, at least he should allow them to get .a cigar at a reasonable price.


Mr. McMASTER:: Would it not be well for the Acting Minister of Finance to consider the advisability of putting excise duties on an ad( valorem instead of on a specific basis? I believe we are going to have very high taxation in this country in the future. In the past the excise and other duties have all been of .a more or less trifling character, except the tax on liquors, but now we have to face the practical inevitability of heavy taxation all along the line. Reasoning by analogy, a duty of ten cents per pound on tea is equivalent to a duty of twenty-five per cent on the tea used by working people, selling at around thirty cents a pound, hut it only works out

to about twenty per cent, in ,the case of the higher-priced1 tea. I am merely arguing by analogy, but it seems to me the principle ;s a correct one, and I would join with my hon. friend from Richmond and Wolfe in urging on the Acting Minister of Finance the advisability of starting out right in regard to these taxes, because, after all, it is new conditions we are called upon to meet. I think it was the Acting Minister of Finance himself who said the other day that it was a condition and not a theory that confronted us. Being confronted with new conditions, I would urge on the Government the advisability of meeting those conditions by starting the new regime of taxation on a just and reasonable basis. I believe the House is with me entirely when 1 say that the principle and1 the practice of ad valorem duties is more reasonable than specific duties. Specific duties usually work out so as to place the heavier burden on the poorer people of the country.


Mr. LALOR:: Does my hon. friend advocate an ad valorem duty on tea?


Andrew Ross McMaster: I am not advocating any certain ad valorem duty. I am not attempting to advise the Acting Minister of Finance as to the amount of any duty that he should place upon any article. I am -laying down a principle and it is a just and right one. That principle is that we should have our duties apportioned on an ad valorem basis and not on a specific basis.	[DOT]


Mr. McOOIG:: Possibly the acting minister did not understand my point in reference to a damaged crop. A damaged crop very frequently sells for about one-quarter of what the crop would have sold for had it not been damaged. The argument of the hon. member for Brome (Mr. McMaster) would apply to a very large extent to the point I was trying to make. If the producer had to depend upon selling his tobacco, a duty of five cents a pound would have a discouraging effect on the industry.


Alexander Kenneth Maclean: Under subsection 6 of section 2 of the Bill we are taking power to make regulations which will cover the point my hon. friend has mentioned, as well as other possible conditions which may arise to reduce the value of the home grown tobacco below the market price. We will keep this point in mind when the regulations are being framed.


Archibald Blake McCoig: If the minister assures the producers of tobacco that there will be regulations governing those cases, it will

largely assist in increasing the acreage which may be put under tobacco in Ontario this year.


Alexander Kenneth Maclean: I can assure my hon. friend that due provision will be made to cover the case he points out, and I would
be obliged if he would write a letter covering the point fully, to the Minister of Excise and .Customs.
On section 2-license to grow tobacco; fee; excise duty; exemption if tobacco grown for personal or family use; limited quantity free of duty; regulations; penalty:


Mr. COPP:: I would like to draw the attention of the minister to subsection 6. He stated that regulations would be made in regard to the point raised by the hon. member for Kent (Mr. McCoig). I doubt if he has power under that subsection to make those regulations. The subsection says:
The Minister charged with the collection of the tax imposed under this section shall have power to make such regulations as he deems necessary or advisable for carrying out the provisions of this section.
I do not think he has any general power to make regulations.


Alexander Kenneth Maclean: It says:
The Minister charged with the collection of the tax imposed under this section shall have power to make such regulations as he deems necessary or advisable for carrying out the provisions of this section.


Arthur Bliss Copp: I do not think that is definite enough to give the minister power.


Andrew Ross McMaster: The point is that the tax of 20 cents a pound is imposed under section 279 of the Inland Revenue Act.


Alexander Kenneth Maclean: The tax of five cents per pound is under subsection 3, of section 2, of the Bill. I think it is clear enough.


Andrew Ross McMaster: Under section 279 of the Act, subsection lb, on common twist tobacco, Canadian grown, there is an excise duty, or tax, of 20 cents a pound actual weight. The hon. member for Kent has drawn the attention of the Committee to the fact that often the tobacco which is grown is so much damaged that the crop will only realize five or ten cents a pound, which would be half the amount of the tax. The minister says that he can obviate that injustice by availing himself of the power under subsection 6 of section 328a; but subsection 6 of 328a only allows him, according to my reading of the provision, to make regulations regarding the collection

of. the taxes imposed under this section, 328a, while the tax of 20 -cents a pound on common Canada twist is imposed under section 279.


Alexander Kenneth Maclean: Yes, but that is manufactured tobacco, and that could not relate to tobacco that had been damaged. One refers to the tobacco leaf and the other to common twist tobacco that is manufactured. I read it so; I do not think there would toe any damaged Canadian leaf in it.


Andrew Ross McMaster: I do not think there should be any doubt about this. It seems to me that the tax which is referred to in subsection 6 of -section 328a is the tax imposed by subsection 3:
There shall be levied, collected and paid an excise duty on all tobacco grown in Canada for consumption therein of -five cents per pound, computed according to the standard of leaf tobacco as hereinbefore established.
That appears to be the tax that is referred -to in subsection 6 of -the same section, and not the tax that is referred to in subsection b of section 279.


Alexander Kenneth Maclean: That is quite correct, but -the hon. member for Kent was referring to Canadian leaf tobacco under subsection b of section 279.
Mr. McMASyEK: I do not think he was.


Mr.  A. K. MAOLEAN@: The hon. gentleman (Mr. M-oCoig) referred to the Canadian grown leaf, which is subject to the excise tax of five cents a pound, and he inquired if, when the leaf was damaged or destroyed, there might be a remission or rebate of duty, ail-d I answered him that the regulations would contain such power. The Inland Revenue Act, which, however, I have not before me, contains a stronger provision even than this, also enabling the department to make regulations which would cover the point.
(Mr. DEMERS: Does subsection 6 of section 328A apply to section 279?
*Mr'. A. K. MACLEAN: No.


Mr. DEMERS:: So, th-ere is no answer to the question asked by the member for Kent?


Mr.  A. K. MAOLEAN@: The tobacco to which the hon. member for Kent (Mr. McCoig) referred had reference to Canadian tobacco leaf, on which there is imposed a tax of five cents a pound. That is what is referred -to in -section 328A.


Arthur Bliss Copp: The point I wish to make is this: Paragraph 3 of section 328A provides:
There shall be levied, collected and paid, an excise duty on all tobacco grown in Canada for consumption therein of five cents per pound, computed according to the standard .of leaf* tobacco as hereinbefore established.
Subsection 6 provides:
The Minister charged with the collection of the tax imposed under this section shall have power to make such regulations as he deems necessary or advisable for carrying out the provisions of this section.
Now the section which I have quoted provides that five cents a pound must be collected on leaf -tobacco, -and the power given under subsection 6 to make regulations has to do with the collection of that tax. The minister has no power to- make a regulation for granting a rebate on damaged -tobacco. That i-s the point I make.
I have no particular interest in the subject because my province does not grow tobacco, but (I -submit -that the minister is not authorized by subsection 6 to make such a regulation as he suggests can be made.


Alexander Kenneth Maclean: I am advised by the officials of the department that the Inland Revenue Act contains a section which, beyond doubt, gives power to the department to frame regulations covering that point.


Arthur Bliss Copp: If -there is some other provision, all right.


Mr. LAFORTUNE:: The tax of five cents a pound to be imposed under subsection 3 of section 328A is a general tax. Now I am raising tobacco, which I sell for fifteen or twenty cents a pound, and my neighbour raises a higher quality of tobacco for which he receives thirty-five cents a pound, it is not fair that I should be called -upon to pay the same amount of tax as he does. There should be a distinction made, and in my opinion it would be -more just to base the tax upon the value of the tobacco. The Quesnel tobaco raised in the county of Montcalm -brings thirty-five or forty cents a pound, whereas Blue Briar, or Comstock fetches much less. There should be a difference in the scale of taxation based on the selling price. I drew the minister's attention to that fact.


Alexander Kenneth Maclean: I am instructed that there is no country in the world where there is an ad valorem duty on tobacco. I do not -quite see how you could impose taxation of that kind.


Marie Joseph Demers: What about cigars?


Alexander Kenneth Maclean: The duty is specific. I do not see how you could fix a rate of duty upon the selling price.


Rodolphe Lemieux: In the Customs Department you have gaugers who test the wines and liquors. Could you not have experts to determine the quality of tobacco?


Alexander Kenneth Maclean: I am afraid we would have to have tobacco tasters. [DOT]


Rodolphe Lemieux: My hon. friend knows there are tobacco expertsvall over the country.


Alexander Kenneth Maclean: I suppose the
manufacturer has persons to determine values.


Rodolphe Lemieux: There are experts in
the United States also.


Mr. RICHARDSON:: The hon. member for Jacques Cartier (Mr. Lafortune) raises an inferior quality of tobacco on which he pays so much a pound. Perhaps he raises more of that inferior quality than his neighbour.


David Arthur Lafortune: No.


Robert Lorne Richardson: If not, why does not the hon. gentleman take a leaf out of his neighbour's 'book and go in for growing tobacco of better quality, which will realize a higher price.


David Arthur Lafortune: The reason I am not raising tobacco of better quality than my neighbour is because the soil is not the same. His soil will produce Quesnel tobacco, mine will not.


Robert Lorne Richardson: That is a fair
answer.


David Arthur Lafortune: Therefore I have to raise another quality of tobacco.


Mr.  A. K. MAOLEAN@: I do not think that anybody can complain of this tax upon Canadian grown leaf tobacco. It is a very email excise tax indeed, and I think there will be no complaint. The producer of the Canadian leaf enjoys very high protection, and it is only fair that he should pay something in the nature of an excise tax.


David Arthur Lafortune: We do not complain of the. tax of five cents. We have been fairly treated in this instance by the Government, and I tender them my best thanks on that account. But is it just that I should be required to pay the same tax as my immediate neighbour, who produces a much superior quality, and gets a higher price for it? It is generally recognized that there 
must be some sacrifice, and that the duty of five cents a pound is a fair one, but there should foe a distinction made in the rate of duty paid as between the man who realizes thirty-five or forty cents a pound on his tobacco, and the man whose tobacco only brings him in from fifteen to twenty cents a pound.


Archibald Blake McCoig: Tobaccos are graded into
classes 1, 2 and' 3, so it can be easily determined by any one making an adjustment what amount of tax different sections of the country should ibe required to pay. A6 to one farmer having a better crop than another, to which my hon. friend from Jacques Cartier (Mr. Lafortune) referred, let me draw his attention to the trouble that is experienced' on account of frost. Frost may be experienced in one particular section, and half a mile away there may be no frost. One man's crop of tobacco may be seriously affected toy frost, whereas another man's crop may not receive any damage at all from that cause.
(That is where the injustice would come in. It would not be the fault of the owuer, but that his crop happened to be damaged on account of the peculiar situation of the land or the quality of the soil, which might attract frost -more quickly than would other sections close to the water or to the lake in my district, and whose crops would not be damaged by frost, while those further inland would be. It is no reflection on the farmer who has his tobacco frosted so far as his ability as a farmer is concerned,, but it is due to where he is situated. If the acting minister will give us some assurance that his regulation will cover such cases I feel satisfied that it will be some encouragement to producers to go into the tobacco industry.
Mr. DuTREMiBLAY:	I drew the attention of the acting minister the other day to the effect of the tax on tobacco. I asked if the tax of 5 cents per pound- was to be paid by the manufacturers of cigars, and I understood 'the minister to reply that it was. The manufacturers already pay an excise tax of 20 cents a pound, and if they have to pay the additional 5 cents they will be taxed 25 cents a pound.


Alexander Kenneth Maclean: 
David Arthur Lafortune: In answer to what the hon. gentleman has just said, I am in principle opposed to the tax of 5 cents upon farmers who grow tobacco. I remember when the tax of 28 cents per pound was imposed on foreign raw leaf tobacco that the eastern and western tobacco growers sent a very important delegation to the Capital asking for a further duty of 10 cents a pound on American leaf to protect the Canadian growers. We discussed the matter with the Prime Minister (Sir Robert Borden), the Minister of Finance (Sir Thomas White), and the Minister of the Interior, and they were convinced at that time that an additional duty of 10 cents was necessary to protect the Canadian grower. We left the Capital fully satisfied that we had made, our point, but on the following day the cigar manufacturers came to Ottawa and did their utmost to induce the Government not to impose the tax of 10 cents that we were asking. Our contention then, as to-dav, wTas that the 28 cents per pound tax
on American tobacco was not sufficient. But in the new tariff the Government has raised the excise on American tobacco from 28 cents up to 40 and to 60 cents per pound. That leaves a margin of 12 cents in our favour, and we are only called upon to pay a tax of 5 cents. The difference between 12 and 5 cents is 7 cents, therefore the tobacco growers have an advantage now in their favour of 7 cents. It being admitted that all must do their duty, I am satisfied that the 5 cent tax should be imposed upon Canadian tobacco growers, because there is now a very large difference in our favour. That is why I do not oppose the new tax of 5 cents, because really we now have 35 oents per pound protection against American tobacco, and our growers are able to compete with it. Of course, it would be better still if we had no tax to pay at all, but everybody must bear his share of taxation at this time.


[Stage Direction]
Section agreed to.
The CHAIRMAN:: Shall I report the Bill?


Mr. McKENZIE:: Before you report the Bill, Mr. Chairman, I wish to direct the attention of the Minister of 'Customs to the fact that complaint has been .made in various parts of the county from which I come that since the importation of liquor has been prohibited the Department of Customs has not taken much interest in the protection of the community generally with regard to the manufacture of liquors in illicit stills. It is said that officers of the department have been withdrawn, that these liquors are being illegally manufactured and sold in a great many places1 and that considerable damage and disturbance is resulting. I am sure that the minister will not be less vigilant in suppressing this illegal manufacture simply because its suppression will not bring any money into the coffers of the country. Active steps should be taken to suppress this evil. Complaints also come to me from my own county and from other parts of Eastern Canada about the indiscriminate granting of customs warehouse licenses to people who have liquors. No man who is engaged directly or indirectly in the sale of liquors should be given a license to store liquors on his premises. No matter how innocent he may be, the temptation thereby put in his way is extraordinary and should not exist. I have no personal knowledge of it, but I understand that a great many licenses have heen granted within the last two months to persons in eastern Nova Scotia who are engaged in the sale of liquor. I have not

closely followed the different Orders in Council which have heen passed-


Mr. SIFTON:: Does my hon. friend refer [DOT]to persons engaged in the legal sale of liquor under license from the Provincial Government?


Daniel Duncan McKenzie: No liquor is legally sold in the province except by a few vendors who are specially appointed in different places.


Arthur Lewis W. Sifton: My hon. friend does not refer to these vendors?


Daniel Duncan McKenzie: No. There is only one vendor in the Island of Cape Breton-I know him .personally-and he has no warehouse. But a great many of these warehouses in eastern Nova Scotia have been stored largely with liquors within the last few weeks. A good deal of agitation prevails among the people of eastern Nova Scotia on this account. I have not the reputation of being much of a temperance man-


Arthur Lewis W. Sifton: I am sorry to hear it.


Daniel Duncan McKenzie: -although I may be a temperance man in a general way. But this Government should do everything in their power to co-operate with local governments in enforcing the law. When a local Legislature and the local Government has done everything possible to stop the sale of liquor, no assistance to the contrary should be given by any department of this Government.


Mr. J. H. SINCLAIR:: I am afraid the minister has not given sufficient consideration to the objection made to subsection (c) of 279 regarding the tax on cigars. It is provided that the tax on cigars of all descriptions made from raw leaf tobacco or .any substitute therefor shall be $6 per thousand. It is not reasonable that all cigars should be included in the same class. I have no expert knowledge of the matter, but I assume that all cigars are manufactured from r.aw leaf tobacco either imported or grown in the country. The price of cigars varies from 5 cents to $1 each. I never smoke the $1 cigars, but I have no doubt that some hon. gentlemen on the front benches opposite do so. The tax on these $1 cigars is just the same as the tax on the poor man's cigar, which sells at 5 cents or even less. Unless the minister amends this clause, I wish to enter my protest against its being past in its present form.


Arthur Lewis W. Sifton: The matter mentioned by the member for North Cape Breton and

Victoria (Mr. McKenzie) has already come to the attention of the Government through telegrams from the temperance associations and other organizations in Nova Scotia. Attention has been given to it, and a telegram recently received from the mayor of Sydney stated that the regulations now being carried out are entirely satisfactory. Instructions were immediately given that no liquor of any kind or description should be removed from an Inland Revenue bonded warehouse or a Customs warehouse in Nova Scotia except for export purposes under the supervision of an officer of the department; and it was pointed out that if these instructions w'ere not observed, a change would be made of .all the officials in Nova Scotia.


Alexander Kenneth Maclean: I have already given consideration to representations similar to those which have just been made by the member for Antigonish and Guysbor-ough (Mr. Sinclair).
In order to impose upon tobaccos an excise tax according to the selling price, it would be necessary to revise all our excise resolutions upon cigars and tobaccos. That principle has never been adopted in this country, and I do not deem it wise, at least at the present time, to introduce any such change. The tax upon cigars, as I have already stated this morning, amounts to two-thirds of a cent for each cigar.


John Howard Sinclair: My point is that it should be an ad valorem tax in place of a specific tax..


Alexander Kenneth Maclean: I do not .see how you could have an ad valorem duty upon tobaccos. You might have a specific duty upon the selling price.
Mr. DuTREMBLAY: In the United States there is a specific duty" upon quality, not upon quantity.


Alexander Kenneth Maclean: 
Georges Henri Boivin: Before the Bill is reported, I wish to draw the attention of hon. -members to the fact that the motion to report a Bill is not debatable, and, therefore, the final debate which has just taken place has, as I understand it, taken place with the unanimous consent of the committee. I do not wish it to be taken as a precedent, because hon. members, on reading rule 17 (a), will see that while the preamble or the title of a Bill is debatable, a motion that the committee rise and report is not debatable.	.
Bill reported, read the third time and passed.



WAR REVENUE ACT, 1915, AMENDMENT.

[Stage Direction]
On -motion of Hon. A. K. Maclean, Bill No. 83, to amend the Special War Revenue Act, 1915, was read the second time, and the House went into committee thereon, Mr. Boivin in the Chair.
On section 1-tax on berths and parlour car seats increased:
Mr. MURPHY:: How are these amounts collected by the Government?


Alexander Kenneth Maclean: From the Tailways.


Charles Murphy: Monthly?


Alexander Kenneth Maclean: Quarterly.


Charles Murphy: What revenue was derived last year?


Alexander Kenneth Maclean: 


Andrew Ross McMaster: I would direct the attention of the acting minister to a mistake which, I think, underlies all these specific taxes. There is, for instance, no attempt made 'by this tax of ten cents for a chair in a parlour car to differentiate between the man who travels twenty-five miles and the man who sits in the car all day and travels three- hundred miles. They each pay ten cents. There should be some difference. The difference between five and ten cents seems trivial; but the principle is something, and it would be well to start right in regard to these taxes, because I do not contemplate the removal of any of these taxes for many years to -come. This kind of taxation will have to -exist for years, and it should be started on a just and fair basis. It is neither just nor fair to charge one man ten cents for travelling 25 miles in a parlour car and another man ten cents for travelling 300 miles in a parlour car.
Section agreed to
On section 2-proprietary and patent medicines:


Mr. STEELE:: I should -like to bring to the attention of the minister a matter which has been the cause of a good deal of trouble and confusion amongst the manufacturers of a certain line of medicines -and the medical profession of the country. I feel that those who drafted the original Act which was passed in 1915, were not very familiar with the drug business. There is a line of preparations which are very largely manufactured to-day and which do not strictly come under the definition of proprietary or patent medicines. They are not patent medicines; they are not strictly speaking, proprietary medicines, but they are termed pharmaceuticals-


Alexander Kenneth Maclean: Are they mentioned in the pharmacopoeias?


Michael Steele: They are preparations made by the manufacturers for the convenience 0-f the physici-ans. The old style of preparing medicines in the doctor's office, using the crude drugs, and preparing them and the noxious mixtures that most of us received when we were younger, has largely passed away, and the preparation of medicines is now largely in the hands of those manufacturers who -prepare them under the term " pharmaceutical preparations." They prepare them under -scientific methods, and they have succeeded in presenting preparations which are fairly palatable, yet using just the drugs -that would -be used by the	doctors if	they were following the old method of preparation.
This is -a development for the convenience of the medical profession. The medicine iis put up in pound lots, half-gallon, gallon, or five-gallon lots, according to the requirements of tihe -individual physician. It was generally understood for a time after the passing of the Act in 1915 that these did not come under that Act, and many manufacturers sold them under the impression that they were not included. I might add that on the labels of these preparations the dose and the purpose of the medicine is generally shown. 1-t was held by the department that the fact o-f the dose and the purpose of the medicine being given brought the medicines under the Act. There is no quarrel on the part of the manufacturers or the physicians as to the payment of taxes. What they desire is a clear understanding on this point so that the confusion which has hitherto existed m-ay be removed. An effort has been made in the

Bill now before the House to correct that to some extent, but even now I do not think it is going to make it very clear. For instance, the new definition of consumer is, "*Consumer means any person who uses or purchases." Now, this difficulty will arise. The physician purchases from the manufacturer and therefore, as I understand it, he will be a consumer and will have to pay the tax as he prescribes these medicines. He may fill an eight-ounce bottle from a half-gallon jar and1 give it to the patient; the patient then becomes the consumer and the user, and will also be liable to a tax on the same preparation. If my impression is not correct I should be 'glad to hear from the minister. Paragraph 2 does not make clear the point which has caused confusion in the past. It ' says:
Any preparation manufactured for sale exclusively for the medical profession and on the labels of which no claim is made that the preparation has medicinal or curative powers or any directions with respect to the amount that constitutes a proper dose.
It is almost necessary for the manufacturer to put the dose on tlhe label. It is also very convenient -for the label to state whether the remedy ils a diuretic or stomachic, telling what the preparation is useful for. If the words " intelligible to the public " were inserted after " claim " it might remove tlhe difficulty which has .arisen in the past and which I feel will arise under the Bill as now drafted. I only desire to clear up the confusion. The physicians of Ontario have been bothered a good deal by inspectors coming around and taking samples of medicines from their offices which the physicians considered exempt from the tax. This confusion exposed the physicians to the danger of being fined $50 and costs for violation of the law I merely draw these matters to the attention of the .minister, hoping that some change may be made to clarify the whole matter and relieve the manufacturers and the physicians from the dangers to which they were exposed under the old law.


Mr. FOURNIER:: I believe the whole
tax on patent medicines is wrong. I happen to know something about the drug business, and 1 think it is a shame to make the consumer pay the tax. I should like to know how much revenue has been obtained from this source during the last year.
I Mr. Steele.l


Alexander Kenneth Maclean: It is impossible to tell, 'because ordinary postage stamps may be used.


Charles Alphonse Fournier: The manufacturer
should pay 'the tax. At present he goes scot-free, and so does the wholesaler and the retailer. I think the tax should have been divided amongst them. We have an army of men going around the country now to see that stamps are put on- patent -medicines and drugs of different kinds, and these men cost the country 196,000 last year. I think the manufacturer should put the 6tamp on the bottle.


Alexander Kenneth Maclean: He would have to break open every package in his warehouse to do that.
Mr. M-cMASTER: Put the stamps on in the first place before the packages are made up.


Alexander Kenneth Maclean: Due consideration was given to that point long ago. When this Bill was introduced in 1915 it originally provided that the- tax' Ibe paid in the manner suggested by my hon. friend, but after consideration of the Bill in the -House the Minister of Finance felt obliged to amend it, -and adopted the procedure found in the present Bill.


Charles Alphonse Fournier: I think the present
system is very unbusinesslike. The manufacturer should put the stamp on the bottle. Then we would have revenue from three different sources, from the manufacturer, from- the wholesaler, and from the retailer.


Alexander Kenneth Maclean: That might be
worked out so far as the manufacturer is concerned, but not in the case of the importer.
Mr. J. H. -SINCLAIR: Did the stamp tax on patent medicines bring in more than $96,000 last year?


Alexander Kenneth Maclean: Very much more than that, but it is impossible to tell- exactly.


Charles Alphonse Fournier: I speak for the druggists. They are bothered to death with men coming into their stores to see that the stamps are put on. What has been the revenue from the druggists under the old law? I think about $26 was collected- in fines last year for violations of the law. How much was paid to the lawyer who prosecuted? It i-s a shame; it is unbusinesslike. When the law was- put in force every bottle of patent -medicine should have- had a stamp put upon it. This would have done away with the army of men who are spending

the country's money. An expenditure of $96,000 foT this .purpose is ridiculous. My hon. friend would have had three sources of revenue then and such a system would have been preferable. I call the minister's attention to the fact that the druggists are complaining. They are bothered with it.	They would much prefer to buy
the bottle already stamped. Naturally we know that	the consumer would
pay for it. The manufacturer could put the stamp on the bottle.
At one o'clock the committee took recess.
At three o'clock the committee resumed.


Georges Henri Boivin: When the committee rose at one o'clock we were considering Bill No. 83 to amend the Special War Revenue Act, 1915, and clause 1 had been adopted. Clause 2 had been read and was being discussed. Shall clause 2 carry?


Charles Alphonse Fournier: When the committee rose I had not concluded my remarks. I have stated that this tax was unbusinesslike nenause the Government cannot state how much money it expects to derive from these sources. As hon. gentlemen are aware, it is the consumer who will ultimately pay this tax, and he is the one who has to pay always. I suggest that the Acting Minister of Finance reconsider the form in which this tax has been proposed before it goes into operation, that instead of four per cent the tax he made one per cent and that the manufacturer be required to pay it. It is the manufacturer we should endeavour to reach because he makes the largest profits. At present there is an army of men going round the country endeavouring to find out whether "pain-killer and other preparations are properly stamped, and these men are entailing an expenditure to the public of about $96,000. Now that prohibition is in force I think we should endeavour to save this big amount. The Acting Minister of Finance, who used to be so straightforward and fair in his criticism of taxation when he sat on this side of the House, is, I am afraid, learning had tricks and instead of getting after the manufacturer seems to want to protect the big interests. The manufacturer should be made to shell out a little money; should be made to pay his ishaTe of taxation and not let the burden fall upon the consumer. I make that suggestion to my, hon. friend because I think it is a fair one.


Alexander Kenneth Maclean: From the standpoint of administration my hon. friend (Mr. Fournier) is perfectly correct, and in the
preparation of the amendments to the Special War Revenue Act I was personally very much impressed with the same view. I want to assure imy hon. friend that I tried in every possible way to devise amendments to the Act along the lines which he suggests, but I was unable to do so. It would be infinitely cheaper to collect the tax from the importer and the manufacturer, but there were difficulties in the way, such as I pointed out this morning and I could not see any way of overcoming them. It is unfortunate that we are unable to determine exactly the amount of revenue which will be derived from this particular source. That is largely due to the fact that the Special War Revenue Act, when first introduced, was amended upon the suggestion of Parliament to permit the use of postage stamps as well as inland revenue stamps. It is quite possible to devise a particular stamp to be used in the sales of drugs, but it would be very inconvenient to the public at many points. It is not always easy to obtain inland revenue stamps, whereas in all sections of the country postage stamps are available to the public. It was in the interest of the public generally that the amendment was made at the time of the introduction of the Bill in 1915, and permission given to use postage stamps as well as inland revenue stamps, but I think that now it will be inconvenient to the public to restore the Bill to its original form in so far as this particular point is concerned.


[Stage Direction]
Section agreed to.
On section 3

tax on matches and playing cards:
Andrew Ross McMaster: I rise again to draw the attention of the Acting Minister of Finance to the way in which this tax of eight cents on playing cards will work out to the prejudice of the poor. Now the people who are accustomed to buy inexpensive cards, and can afford none other, at from fifteen to twenty cents a package, will find they will be paying a tax of about fifty per cent, while those who buy more expensive play-ipg cards will escape with a comparatively light tax. This is a matter as to which I may tire the ears of the minister, but he may hear me on account of my importunity, as in the case of the widow in the Scriptures. I do press very strongly upon the Government the advisability of placing these small taxes-these small direct taxes -on an equitable basis, in which the ad valorem principle will einteT. The answer may be that these are only



trifling taxes, that they amount to very little in. each individual ease. I grant it is a small tax, but if we are going to have a large number of these taxes, in the aggregate they will amount to something, and should be baked on the principle of justice. I am sure the Government of this country would not wish those blessed with a very small portion of this worlds goods to have a feeling of injustice against the Government, and I fear that feeling may he created if a large number of these small taxes are imposed which will operate to the disadvantage of the poor as compared with the rich. And where you have such a tax as is found in this section,-of eight cents a pack on playing cards, that is a heavy tax on a cheap pack of cards and it is a light tax on an expensive pack.
Mr. A. K. MAlCJLEAN: You can lose the same amount of money with a cheap pack as with an expensive one.


Andrew Ross McMaster: The Acting Finance
Minister is wrong. The man earning fifteen dollars a week is unable to lose as much money on cards for which he has paid but a small amount, and which will be required to pay eight cents tax, as the man of large means.


Some hon. MEMBERS:: Oh, oh.


Andrew Ross McMaster: Of course, the acting minister means that as a joke. We all understand that. But I am not joking; I am perfectly serious, in bringing this matter before the House, that these specific taxes work out unjustly, and an attempt should be made by the Government to place these small taxes on an ad valorem basis, so that the people will be taxed in proportion to their means. That is the principle on which even these smaller taxes should be based.


[Stage Direction]
Section agreed to.
Mr.  A. K. MLACLEAN@: In order that the Prime Minister may make his statement in connection with railway matters, I move that the committee rise and report progress.
Progress reported.



SENATE BILLS.


[Stage Direction]
Bill No. 97, respecting the Halifax Relief Commission.	.
Bill No. 98, to amend the Canadian Patriotic Fund Act, 1914.
Bill No. 99, to amend the Act of the present session intituled an Act to amend the Supreme Court Act.


[Stage Direction]
On the Order:
House in committee on Bill No. 87, an Act supplementary to chapter twenty-four of the Statutes of 1917, respecting the Canadian Northern] Railway system.-The Minister of Finance.-Mr. Boivin in the Chair.	.
Robert Laird Borden: It seems desirable in connection with this Bill to make a statement of a more or less general nature with regard to the whole railway situation in Canada at the present time, and especially as- it has developed during the past fifteen years.
I need not do more than refer to the proposals brought down by the Government of the day in 1903, and amended by a subsequent Act in 1904, under which the National Transcontinental railway and the Grand Trunk Pacific have been constructed. At that time the Canadian Northern railway had attained considerable development in the Prafrie Provinces, and had begun to feel the necessity of some connection with the East, or some expansion in the East, in order that it might gather up eastern traffic for its western lines, and in order that its western traffic might be transferred to lines in the East which it owned or with which it had connections.
It seems beyond question-and I am not saying this by way of criticism-that if an arrangement at that time could have been consummated between the Grand Trunk railway in the East and the Canadian Northern lines in the West, if they could have been connected by a new railway passing north of lake Superior, the combined railway system thus created would have been in a splendid position to-day. During the past four or five years it would, if it were necessary, have been able to lend money to Canada instead of coming, both in the East and in the West, to Parliament year after year for the purpose of obtaining such aid as would prevent these roads from going into liquidation. However, that course was not adopted. Possibly on account of the conflicting views of those who were entrusted with the management of those two railway systems, it may have been impossible to adopt it. As to that I do not know.
The project of the National Transcontinental railway, including the Grand Trunk Pacific, proceeded after the legislation of 1903 and 1904, and shortly afterwards the

Government of the day extended to the Canadian Northern railway such aid as was designed to enable it to have the desired connection in Eastern Canada. By chapter 11 of the Act of 1908, a guarantee of bonds by this country to the Canadian Northern railway was authorized at the rate of $13,000 per mile in respect of 609 miles of railway in the Prairie Provinces. By chapter 6 of the Acts of 1910, Parliament authorized the guarantee of bonds for 150 miles to be constructed by the Canadian Northern Alberta Company, 50 miles at $13,000 per mile, and the remainder at $25,000 per mile. By chapter 6 of the Acts of 1911, Parliament authorized a guarantee of bonds for the Canadian Northern Ontario Railway Company at the rate of $35,000 per mile for 1,050 miles, which were to connect the western lines of the Canadian Northern railway with the lines which it had acquired in the East.
There was a new Administration in 1911. Very shortly after that Administration had been formed, it became abundantly evident, not only to Parliament but to the people of this.country, that neither one nor the other of these two undertakings could be carried to completion unless the country granted further aid.
The Government had then to decide whether these railways should be permitted to go into liquidation, with all the consequent confusion and apprehended1 detriment to the public interest, or whether the Government and Parliament should evidence strong confidence in the future . ability of the. country to 'sustain those railways when completed. After very careful and anxious consideration, it was determined to give such aid as would enable the two undertakings to be carried to a conclusion. In 1912 and 1913 certain aid was given to the Canadian Northern Railway company, and in 1913 and in 1914 certain aid was granted to the Grand Trunk Pacific Railway company. I shall, however, at a later date, go more in detail into the aid afforded to the latter railway.
By chapter 7 of the Acts of 1912 the Canadian Northern Railway company was gj-anted a guarantee of bonds at $35,000 pel mile for 115 miles. By chapter 10 of the Acts of 1913 a subsidy was granted on 250 miles from Toronto to Ottawa at $6,400 per mile, on 910 miles from Ottawa to Port Arthur at $12,000 per mile, and on 260 miles from Edmonton to the British Columbia boundary at $12,000 -per mile. In consideration of the subsidies so granted the Canadian Northern Railway company was
126i
called upon by .the terms of the statute to transfer $7,000,000 of its capital stock to the Government. By -chapter 20 of the Acts of 1914, founded upon evidence presented to Parliament of the inability of the Canadian Northern Railway system to complete its undertaking without a further guarantee of bonds, it was provided that a guarantee of $45,000,000 should be made, in consideration of which $33,000,000 of -the capital istncK ot tne company was to be transferred to -the people. The capital stock at that -time was increased to $100,000,000, and the net result of the transaction, apart-from the guarantee itself, was that for the future the former proprietors of the railway were to own $60,000,000 of the stock and the people of Canada $40,000,000.
I expressed the opinion at that -time-and I think my colleagues concurred in it- that under ordinary conditions that guarantee of bonds would enable the Canadian Northern Railway company to complete its system, and that there would be no further application to Parliament for assistance. But the war broke out in the beginning of Augus-t, 1914, and it became apparent in the following two or three years that the Canadian Northern and- the Grand Trunk Pacific would require further assistance if they were not ,to be forced in liquidation. We had before us the same consideration as that previously presented to us, and, taking into account all the elements entering into the situation at that time, we reached the conclusion that the road should be sustained; that there should1 not be liquidation. Ultimately, that view-which, if 1 remember correctly, was shared on both sides -of the House-was confirmed by the report of the commission of inquiry, to which I shall call attention later. So by chapter 4 Of the Acts of 1915 a loan of $10,000,000 was made to the -Canadian Northern Railway Company and by the Appropriation Act No. 2, page 36 of the s-tatutes of 1916, a further loan of $15,000,000 was made to the same company, a total of $25,000,000.
The conditions induced by the war; the very greatly increased cost of fuel, material, and labour; the consequent falling off of net earnings; the inability to market securities which had been guaranteed' by the Parliament of Canada and by provincial Legislatures, made it impossible for the Canadian Northern Railway Company to complete its undertaking, and to meet its fixed charges, even with the assistance to which I have referred. Consequently, -at the last session of Parliament, we were once more faced with the problem in respect to

in that regard. I have conferred with those who have been present at the arbitration; I know what has been communicated to us by counsel in charge of the case on behalf of the Government, and I desire to assure not only the hon. member for Russell but every hon. member of this House that there has been the fullest and most absolute freedom to the Government of this country to have all information of every .kind respecting that road, its properties, its assets, its earnings and its liabilities, that could have been afforded under any circumstances whatever. As a matter of fact I am told that the information prepared by those who were the proprietors of the Canadian Northern railway until the stock was vested in the Government has been submitted to counsel for the Government even before it was presented to the arbitrators.


Charles Murphy: I do not like to interrupt, buf; I hold in my hand a newspaper item giving effect to a complaint from Mr. Tilley that he .had not received information.


Robert Laird Borden: X am informed by an officer who was present at the arbitration that that particular complaint was made by reason of the fact that the infor- -mation which had been asked for required considerable time to prepare; it was on its way to Mr. Tilley .at the time he made the complaint, and it has been received by him in due course.
The time for making the award was originally limited to the first day of March last. It has since been extended, I think, on two occasions, and it is now extended io the first day of June. It is believed that the argument will be completed and the award made before that date shall have expired.
In the meantime the management of the Canadian Northern Railway has been left undisturbed to this extent. Three men nominated by the Government' have been appointed to the board of the Canadian Northern Railway. They have been elected as directors of the road and have the fullest possible access to the proceedings of the directors and take part in their proceedings, and without their knowledge nothing can be done by the board of management of the railway. The reason for leaving the management undisturbed in this way until after the award has been made .is that the Government has in the meantime absolutely full and complete access to all the documents and records of the company, and every opportunity for
ISir Robert Borden.]
necessary information has been available to the officers and counsel of the Government. That being so, it was not considered desirable that during the progress of the arbitration the Government should make itself responsible for the management of the railway; the reasons for this will, I think, occur to any hon,. gentleman in this House upon reflection. Until the arbitration had reached a conclusion it would be desirable that the management of the company, as heretofore existing, should be held responsible for the condition and operation of the road during the period of investigation. There was no advantage in changing the management in the meantime, as all the books, documents and records of the company were fully available. Moreover, it was considered, and this conclusion was reached after very careful consideration, that >any change made in the meantime might demoralize the staff, and that a permanent change ought not to be made until the Government would be in a position to make a permanent arrangement with the staff. On many occasions during the past six or eight months we have had deputations from the railway organizations of this country, representing the employees not only of the Canadian Northern, but of all the railways of this country. Representations have been made by these delegations to the Government as to the conditions under which that road ought to be carried on and operated by the Government, as to the continuity of e'ertain arrangements made between the Canadian Northern Railway and its employees in the past, as to provision for pensions and the continuance of the arrangements already made in that regard. Various matters of this kind have been taken up and on the whole it was thought desirable that the Government should not make itself directly responsible for the management and operation of the road by appointing an absolutely new board of directors until after the -award had been made and the proposals in that regard carried out. I cannot better express the view of the Government as entertained at the last -session of Parliament than by quoting the words of the Minister of Finance on the first day of August, 1917, as follows;
As to the Board we shall have to get in the stock first and complete the transaction, and then it will be open to the Board to determine what is the best course, having regard to the public interest, to pursue with regard to the

board of Directors and the general administration of the Canadian Northern Railway Company.
It is proper, however, to observe, as this question seems to have excited .some interest in the minds of hon. members on both sides of the House, that it is not intended that Sir William Mackenzie and Sir Donald Mann shall be members of the board as reconstituted. As a matter of fact, Sir William Mackenzie and Sir Donald Mann have expressed their desire to be relieved from further responsibility with respect to this railway after it passes into the hands of the Government, and after the amount of the award, whatever it may be, shall have been determined. They have also said, Sir William Mackenzie in particular has said, that he is very intimately acquainted with the development of the road, with its operation and everything [DOT]connected with it from the very first, and if at any time he can be of any service to the board of directors without remuneration or compensation by giving advice or otherwise, he will be very happy to make his services available to them in any way that they may determine.
Now with regard to the operating of the road. Hon. gentlemen of this House will understand that this is a very large question indeed. On more than one occasion in the past I have spoken of the difficulties which confront a Government after the capital stock of a great railway enterprise ' such as this has passed into the ownership of the people of Canada. I think hon. gentlemen on both sides of the House, and I know we all have a common purpose in this, will agree that a great railway system such as that which is now being acquired ought not to be administered directly by any department of the Government.
I think we may start with that.
Another proposition which undoubtedly will be accepted by hon. gentlemen on both sides of the House is this. While a road under the ownership of the people of Canada must be subject to the direction and control of the people in the highest sense, in the larger political sense; nevertheless, it is absolutely essential and vital that political influence in the lower sense-party political influence-shall be completely absent from the administration and operation of the road. These are two perfectly sound propositions. It is easy to lay down such propositions, accepted on both sides of this House, but it is a somewhat different problem to devise a scheme by which those two desiderata can be absolutely secured in the future operation of the State railways
of Canada. That is the problem with which this Government has been confronted and with which it is now confronted. That is the problem which this Government and this Parliament must solve .at the earliest possible .moment. The problem is not concerned with the Canadian Northern railway alone. It is concerned also with the	Intercolonial	Railway,	with the
Transcontinental Railway, and, more than that, it is extremely likely that, in the not distant future, it will be concerned with the Grand Trunk Pacific and with the Grand Trunk Railway itself. Thus, it is a very comprehensive problem in its scope and it is. exceedingly difficult for the Government and Parliament to find an adequate solution.
As to the immediate future, I have already said that we do not intend to operate the Canadian Northern Railway system directly under a department o.f the Government; it is our intention to operate it for the present through the corporate machinery by which it has been operated in the past. There will he a reconstituted hoard of directors. We shall endeavour to get the best men we can and we shall not interfere with them. We shall leave the administration and operation of that road to be carried on absolutely under that board of directors and we shall use every means available to the Government (and if necessary, we shall come to Parliament for that purpose) in order that anything like political influence, political patronage, or political interference-I am using the word political in its narrower sense-shall be absolutely eliminated from the administration of that road.
But, more than that, we have under consideration the .question as to whether it may not be possible in the immediate future to bring the Transcontinental Railway, which is the property of the people of Canada, and the Intercolonial and Prince Edward Island Railways, which are also the property of the people of Canada, under corporate management. I do not desire to commit the Government to what I am mentioning just now, because we have had no opportunity in the very great stress and hurry of this session to give the proposition mature consideration. It may he possible, and, more than that, it may be desirable, to bring the Transcontinental and the Intercolonial and Prince Edward Island Railways under the ownership of the corporation which will control the Canadian Northern. The people of Canada will own absolutely the entire stock of the Canadian Northern

Railway system. If the Transcontinental railway, the Intercolonial railway and the Prince Edward Island railway were amalgamated into one system with the Canadian Northern railway and were operated with it as one system and under one corporate management, it might, and doubtless would be, very greatly in the interest of efficient administration and operation. That suggestion is before the Government. It is a suggestion upon which I invite an expression of opinion from hon. gentlemen in this House. As far as- I have 'been able to give it consideration, it commends itself very much to my judgment.
Now, I come to speak of some matters upon which my right hon, friend (Sir Wilfrid Laurier) desired information in connection with the Canadian Northern railway. I shall go into that first, and afterwards I shall have to say something about the financial position of the Grand Trunk and the Grand Trunk Pacific. But just one word before I deal with that.
_ It is only right to explain that conditions in regard to railway operation, expenditure and income which have prevailed in Canada since this war and which have necessitated frequent applications for aid by the Canadian Northern and the Grand Trunk Pacific are to-day finding their parallel in some portions of the United States. The Pennsylvania Railway system in the United States is one of the greatest railway systems in the world. Under ordinary conditions it has a net revenue over operating expenses of from $50,000,000 to $64,000,000.
I have learned from authoritative sources that during the month of January last the Pennsylvania Railway system failed to meet its operating expenses by $2,816,900.76, and that in the month of February last it failed to meet its operating expenses by $3,354,258.56.


Wilfrid Laurier: What percentage would that be?


Robert Laird Borden: I really could
not tell but I am pointing out that this road, which ordinarily has a revenue over operating expenses of about $60,000,000 a year failed, in January and February last to meet its operating expenses by the amounts mentioned. In the month of March it recovered somewhat and had a surplus of $1,428,526.28. The conditions with which the Pennsylvannia system has been confronted during the winter months have been pretty general among the railways of the United States east of the Mississippi, as I am informed. 
There has been a difference between the East and the West because of the very great congestion which has prevailed in the Eastern States, partly by reason of priority orders as to freight, which have led to great delays. The United States Government has stated, through a circular sent out on the first of May, 1918, that up to the 30th April, 1918, it has been obliged to assist the railways of the United States- I think practically all of them are eastern railways, to the amount of $90,614,000, and that all these advances were in the shape of loans excepting $13,000,000 advanced, on account of rentals for the first quarter of the current calendar year, to the New York Central lines, including the. New York Central, the Michigan Central, the C. C. 'and St. Louis, and the Pittsburgh and Lake Erie, and $1,300,000 similarly advanced to the Wabash railway.
Now, I am coming to some item of information respecting which inquiry was made yesterday when this Bill was under consideration. Information was asked as to the use that had been made of $25,000,000 provided by Parliament at its last session for the purpose of sustaining the financial affairs of the Canadian Northern. An Order in Council was passed on the 15th of November. 1917, upon a report of the Minister of Finance, and it is as follows:
The Committee of the Privy Council have had before them a report, dated 15th November, 1917, from the Minister of Finance, representing that, pursuant to the provisions of Chapter 24 of the Statutes of Canada for the year 1917, an agreement has been entered into between His Majesty the King, represented by the Minister of Finance and the Minister of Railways and Canals, and the Owners and Pledgees, of not less than five-sixths of the 600,000 shares of the Capital Stock of the Canadian Northern Railway Company, as referred to in the said Act.
The minister further represents that an application has been made by the Canadian Northern Railway Company for the assistance authorized in Section Three of the said Act, for the purpose of settling indebtedness incurred or to be Incurred in the Canadian Northern Railway System, or for postponing the payment thereof.
The minister recommends that for the purpose of giving the assistance provided in the said Act, he be authorized on and after the transfer of the shares above mentioned, to make advances out of the Consolidated Revenue Fund, up to and not exceeding the sum of Twenty-five Million Dollars ($25,000,-OOO.O'O), such advances to be for such amounts, and to be made from time to time to such company or companies included in the said system and for such purposes as may be certified by the Financial Comptroller of the Department of Railways and Canals as correct and approved by the Minister of Finance.
Further, such advances are to be for the purpose of paying and settling any indebted-

ness of any company comprised in the system, including principal of outstanding loans, interest on securities, instalments of principal of equipment securities, also, including betterments and new equipment and construction ; the whole of said advances to be secured by a mortgage or charge upon the undertaking and properties of the Canadian Northern Railway Company; and so much of said advances as may be applied for the benefit of any other company included in the system to be additionally secured by a mortgage or charge upon the undertaking and properties of such company; all such mortgages and charges to be respectively in such form and to contain such terms and conditions respectively as the Minister of Finance may approve^.
The minister further recommends that he be authorized to approve from .time to time on behalf of the Government of any additional arrangement made or desired to be made by the directors of the Canadian Northern Railway Company for the purpose of obtaining renewals of existing loans to any company included in the Canadian Northern Railway System, whether such loans have heretofore been or hereafter are obtained by or in connection with the issue of collateral trust notes of the said Railway System, or otherwise.
The Committee concur In the foregoing and submit the same for approval.
So authority was taken by the Minister of Finance upon the report and recommendation of the Financial Controller of the Department of Railways and Canals to make advances from time to time out of the sum of $25,000,000, authorized by Parliament, and the amounts have been paid out under three heads, as follows:
First" head, on account of construction loans-loans that were effected by the Canadian Northern railway for construction purposes, which had to be repaid or reduced,-there was paid:
To the Central Trust Company of New York, in full repayment of loan, $1,750,000.
To the Guarantee Trust Company of New York, in reduction of loan, $300,000.
To the Columbia Trust Company of New York, in reduction of loan, $1,500,000.
Then, coming to the rolling stock securities, there was paid in the first instance: On account of principal of equipment bonds, $4,976,500, and for interest on equipment bonds, $1,075,002.50.
Then there were, of course, the fixed charges to be met-interest upon the funded debt of the company and upon loans secured by the deposit of the company's securities. In that respect there were paid for interest and sinking fund on mortgage securities, ranking prior to Canadian Northern railway four per cent debenture stock guaranteed by the Dominion Government the following amounts:
Canadian Northern Railway.... Canadian Northern Pacific Railway	 [DOT]
Canadian Northern Alberta Railway	
Canadian Northern Western Railway	
Qu'Appelle, Long Lake and Saskkatchewan Railway	
Duluth, Winnipeg and Pacific
Railway	  [DOT]
Canadian Northern Ontario Railway	
Central Ontario Railway	
Bay of Quinte Railway	
Mount Royal Tunnel and Terminal
Co., Ltd	  [DOT]
Canadian Northern Quebec Railway	  [DOT]
Quebec and Lake St. John Railway	
Halifax and South-Western Railway

These amounts, making in all $25,000,000, were paid out upon reports of the Financial Controller of the Government Railways of
Canada as follows:
November 19, 1917 November 28, 1917 December 10, 1917. December 27, 1917. January 9, 1918... January 18, 1918.. January 24, 1918.. January 30, 1918.. February 4, 1918..

Total

I should observe that in respect of every one of these payments the financial comptroller of the Department of Railways and Canals visited Toronto, investigated the purposes for which the proposed payment was to be made, and thoroughly satisfied himself by the clearest possible evidence that the purpose to which the money was to be applied was within the terms of the statute. More than that, he saw also that the money, when paid over, was applied to that purpose.
Now, I come to the need of making a clear statement of just what the Canadian Northern Railway system does owe at the present time. I am bound to confess-and doubtless I share this feeling with a great many hon. members in this House-that balance sheets made up according to the methods of expert accountants are not always absolutely clear to me. Therefore, I desired to obtain a statement with regard to the liabilities of the Canadian Northern Railway system in such form as I could myself understand, and I felt thoroughly confident if it were so made that every hon. member in this House would be able to grasp its meaning without the slightest difficulty. So I have had such a statement


Robert Lorne Richardson: What is the amount per mile?


Robert Laird Borden: I have not
. figured that out; but the financial comptroller informs me that it works out, without interest, at about $65,000 per mile. With added interest it would, of course, run to at least $100,000 per mile. The Grand Trunk Pacific railway consists of the Mountain Section from Prince Rupert to Wolf Creek, 833 miles, and the Prairie Section from Wolf Creek to Winnipeg, 915 miles, a total of 1,748 miles. I have under my hand a statement of the expenditure upon the road itself and for rolling stock. The last available, that of Sir Collimgwood Schreiber, is $135,698,615.64, but that does not include equipment and rolling stock. If you add what has been expended for equipment and rolling stock, you will find that it brings the expenditure for construction and for equipment and rolling stock (which I have included in the liabilities of the Canadian Northern) up to about $180,000,000, a capitalization for the Grand Trunk Pacific of $100,000 per mile, instead of $44,000 or $45,000 per mile, the capitalization for the Canadian Northern railway.


Robert Lorne Richardson: Would that include the hotels and all the terminals?


Robert Laird Borden: It includes the hotels and terminals, and so does the capitalization for the Canadian Northern.
The capital expenditure on the Transcontinental railway should next be considered. That line has a mileage of 1,811.28 miles from Moncton to Winnipeg. The actual cash paid out, without including one dollar for interest, is $163,797,783.66, and if you add interest, it will bring the amount considerably over $200,000,000 for 1,811.28 miles.


Robert Lorne Richardson: What is that per mile without interest?


Robert Laird Borden: Without interest, it works out to $92,000 per mile, and with interest it would work out, the financial comptroller tells me, at about $110,000 per mile. I thought it desirable to give these comparisons to the House and to the country in order that they might realize that we are not buying a pig in a poke in acquiring the Canadian Northern railway, and that, so far as property owned by the State is concerned, the future holds out greater prospects for the Canadian Northern Railway system than for any other railway that is to-day within the control and dis-'position of the Government of Canada.
I come now to the Grand Trunk Pacific. I regard it as inevitable that, for many reasons, that road should Ibe taken over by the Federal Government. It is a national enterprise to which the credit of the Canadian people has been committed, and, in my judgment, it is expedient.to sustain it and not permit it to go into liquidation. It is intimately connected with the Grand Trunk Railway system in the East. The Canadian Northern branch lines in the West can, in many instances, as I am informed, be made available as feeders for the Grand Trunk Pacific without great expenditure. The road, as it is at present, is not self-sustaining. It pays a little more than operating expenses, although I am hound to .say that, during the past eight or twelve months, it has rather exceeded anticipations in the return which it has made. The House and the country will he glad to know that the prospects of its traffic seem to he improving, and I very sincerely hope that they will improve still more in the early future. That railway cannot be successfully operated without suitable arrangements with the Canadian Northern Railway and with the Grand Trunk-Railway in the East. It cannot pay its interest charges, and it is utterly impossible for the Grand Trunk to meet the obligations which it has undertaken in respect of the Grand Trunk Pacific. That has been publicly stated. It is stated in the Drayton-Acworth report. Therefore, as the Grand Trunk Pacific is not self-sustaining, as it pays little more than operating expenses, and as it cannot be expected, for many years to come, to pay its fixed charges, especially if it is divorced from co-operation and association with other railways in the West, it is manifest that only one 
of two courses is open. The Government must either year after year ask Parliament to vote seven or eight or ten million dollars in order that the fixed charges of the road may be paid, or it must take over the road, connect it up as effectively as possible with the Canadian Northern and with the rest of the Government railway system, and endeavour to make it part of a profitable system of Government railways in the early future. I think, therefore, it is absolutely inevitable that the Grand Trunk Pacific must be acquired. As to the terms of its acquisition, I can only say that the Grand Trunk would no doubt be willing to hand it over to us today if we would relieve the Grand Trunk of all its obligations in respect to the Grand Trunk Pacific; it would hand over to us the capital stock and he glad to get out of its own obligations in respect to the Grand Trunk Pacific. But there are several conditions to ibe taken into account before any such proposal can be entertained, and so we are at the present time discussing the whole situation with the Grand Trunk management. As an additional reason, which I did not previously mention, if we permitted the Grand Trunk Pacific to go into liquidation, we should have to take care of all those obligations which are prior to our own, and that would in the end mean that we would simply have to take care of all the obligations of that railway. Thus, there is no object whatever in permitting it to go into liquidation. It would merely mean additional expense, dislocation of traffic and the exciting of public alarm, without any good result that I can anticipate.
Now it seems if we tdke over the Grand Trunk Pacific, that practically involves the taking over of the Grand Trunk Railway as well. I am of that opinion for this chief reason, that the Grand Trunk Pacific and the Canadian Northern, both in the West, if acquired by the Government would otherwise lack eastern connections, and the Canadian Pacific Railway would dominate the whole situation. In the second place, the Grand Trunk might have a great deal of difficulty in carrying on unless it should be released from its obligations to the Grand Trunk Pacific. Further than that, while the present condition of the Grand Trunk is not prosperous for many reasons, some of which doubtless it could not control, I believe that it would have reasonable -prospects for the future if amalgamated into one system with the Canadian Northern and the Grand Trunk Pacific. I would further emphasize the consideration that,

while the Grand Trunk cannot carry out the obligations necessary for its retention of the Grand Trunk Pacific, on the other hand it has no bright future prospects without that connection. Hon. members of this House who recollect the report of Mr. Hays, upon which the National Transcontinental enterprise was largely founded, will remember that he pointed out the anomalous situation in which the Grand Trunk found itself. It gathered up traffic all over Eastern Canada and handed it over to the Canadian Pacific Railway, which earned very large carrying charges for transporting that traffic to the West. The same condition would confront the Grand Trunk to-day unless it had that western connection to which Mr. Hays, then general manager of the . Grand Trunk Railway, looked forward with so much anticipation of good results.
It is very easy to say that this country ought to acquire the Grand Trunk Railway, but when one comes down to the practical proposal of how it is to be acquired the problem is not quite so simple. Of course we might take advantage of a situation which to some extent has developed out of the disturbed conditions of the world, and say to the management of the Grand Trunk Railway, "We have you in our power in certain respects, and you must do precisely what we insist upon." But on the other hand, we must remember not only in this connection but in many other connections, that Canada is a country which for many years to come will require to borrow large amounts of capital from other countries. If the Federal Government or any provincial government in Canada lays itself open to the reasonable charge of acting unfairly or unjustly towards those who in good faith have invested their capital in business enterprises of this character in Canada, the country in the end will pay much more than it will gain by any sucn injustice; there is absolutely no doubt about that in my mind. So we must acj^ reasonably with the Grand Trunk railway, and we have endeavoured to act reasonably with them. But more than that, if we undertake to force the situation against the Grand Trunk railway, we must also remember that a considerable portion of that system lies in the United States, with two great terminals in the West, I believe, and one great terminal in the East. The ownership of these lines is vested in United States companies, of which the Grand Trunk controls the stock, and that makes their acquisition even with the consent of the Grand Trunk railway, a matter of no little difficulty and
complexity. So I think the acquisition of the Grand Trunk railway must depend upon negotiation. We could, of course, cut these lines off at the border and expropriate them, dislocating the system; but we would do ourselves no good and the Grand Trunk railway irreparable harm by attempting such a course.
I may say that we have negotiations outstanding with the Grand Trunk railway. For the present they are confidential. We have made what we regard as a reasonable offer, somewhat along the lines suggested in the Drayton-Acworth report, but somewhat more favourable to the Grand Trunk than the proposal made in that report. They have replied to us by making a counter offer, which was of such a nature that we did not consider we could ask Parliament to accept it. For that reason we had to decline it, and we then made the suggestion to the management that, failing any agreement between the Government and the company, we would be prepared to submit the amount of the annual payment to arbitration, and we would do that without fixing any limit as we did in the case of the Canadian Northern railway. It seemed to us that the two cases were distinguishable in that respect, and that we ought not to insist upon a maximum as we did in the case of the Canadian Northern. We proposed to follow the Drayton-Acworth report in this respect, that whatever sum should be paid by the Government of this country for, let us say, a lease of the Grand Trunk Railway lines, should be distributed among the holders of the various stocks of the Grand Trunk Pacific by the directors of the Grand Trunk themselves, and that we should not attempt to interfere with or control that matter. It is anticipated that some members of the Government will have the duty of proceeding to Great Britain during this summer. A sub-committee of Council has been appointed, and during the past six months has been dealing with general railway problems in this country, assisting in that regard the Minister of Railways and Canals, who is primarily responsible, and who had asked me to have such a sub-committee appointed in order that he might, without a formal meeting of Council, have the advice of some of his colleagues in respect of matters of importance. Two members of that sub-committee of Council will be in England during the summer. They have given attentive study to the questions which are involved, and I have some reasonable hope that when Parliament its again summoned, the Govern-

ment may be in a position to place before it proposals which will involve the constitution into one State-owned system, the chief railways of Canada, except the Canadian Pacific. It may be possible, indeed I think it is probable, that at some later date, but not in the immediate future, all the land transportation facilities of Canada in the shape of railways may, so far as operation is concerned, be amalgamated into one system carried on under one management. The enormous waste and duplication, which have proved to be such a burden upon this country in the past, would be eliminated, for the future at least, in that way; and they have been eliminated to some extent during the past six or eight months as I shall demonstrate by a report which I propose to read before I sit Mown.
I should also say to the members of the House, before I leave that branch of the subject, that the Government have not been unmindiful of their duty to see that adequate rolling stock and motive power should be provided for all the railways of Canada as far as possible during the past twelve or fifteen months. The Department of Railways and 'Canals, during that time, assisted the Grand Trunk in the matter of motive power to a very considerable extent. They provided for them 47 Mikado engines. 'The department has at the present time under order for the Grand Trunk railway 75 Mikado engines, 20 switching engines and 15 Pacific type passenger engines. The total outlay for these engines *is as follows:
No. Type. Cost Per Engine.	Total.
47 Mikado	$48,750	$2,281,25075 Mikado	
&2,C00	4,650,00020 Switching	
41,000'	820,00015 Pacific type passenger	
60,000	1,000,000Total	$8,751,000
Hon. gentlemen will observe the remarkable jump in the price of these engines. The 47 Mikado engines which we secured .at $48,750 each were ordered about six months before the 75 Mikado engines which are to cost us $62,000 each. It is necessary to have these engines to keep the railway systems of the country up to their full power for transportation purposes, [DOT] and while providing- very amply for the railways under the direct control and administration of the department, we have also found it necessary to come to the assistance of some other railways in such matters. The Grand Trunk pays ,a reasonable charge for the use of these engines.

I spoke a moment ago of the necessity of avoiding waste and duplication. We have made, I think, a reasonable and, certainly, a bona fide effort, to bring that about during the pas^ year. The report which I am about to read is lengthy; but I think it worth while- to read it so that hon. members and the. people generally may know that something substantial has been accomplished under .the direction of my hon. friend the Minister of Railways and Canals (Mr. Reid) in avoiding waste and duplication during the past year. One report is dated the 26th day of March. I asked my hon. friend the Minister of Railways and Canals early in that- month to get for me a statement from the Canadian Railway Association for National Defence of what they had accomplished during the eight or nine months in which they had been in operation. From reports which had reached me I came to the conclusion that they had accomplished a good deal but I was equally of the opinion that not only the people of the country but the. members of this House were largely ignorant of what had been done. Mr. W. M. Neal, by whom this report has been prepared, is the secretary of this association. The association itself is composed of representatives of the Canadian Pacific railway, the Grand Trunk railway, the "Grand Trunk Pacific railway, the Canadian Northern railway, *the Government 'System of railways and the New York 'Central. It has organized its work under six heads. There is a; special committee on war and national defence, an administrative committee, a commission on car service, a committee on passenger transportation, a committee on tariffs and .statistics and a'committee on materials and supplies. The report is as follows:
In addition to the information embodied in our communication of the 21st inst., relative to the work of the Canadian Railway Association for National 'Defence, it will no doubt be of interest to you to learn of the details of the organization of the Association itself.
In accordance with arrangements which were made at preliminary meetings of representatives of the Dominion Government and the railways, an invitation was issued to railways operating in 'Canada to attend a conference at Montreal on October 23rd, 1917, for the purpose of formulating a Central Railway Organization and outlining its working policies. This conference was held on the date mentioned in the offices of the Canadian Pacific Railway, Windsor Street Station, Montreal, all of the principal and a number of the smaller lines being represented.
After. explaining what was desired in the way of co-ordinating the facilities and efforts of the various lines so as to permit of the efficient handling of the extremely 'heavy volume of traffic which it was expected the railways would be called upon to move during

the winter and conservation of fuel, motive power and man power, it was decided to appoint a Committee composed of the executives of some of the larger lines who would direct the policy of the new organization, which was to he known as "The Canadian Railway Association for National Defence."
A Special Committee on War and National Defence was formed, with the following per-, sonnel:-
The Right Honourable Lord Shaughnessy, K.C.V.O., President, Canadian Pacific Railway ; Sir William iMacKenzie, President, Canadian Northern Railway; Mr. Howard G. Kelley, President, Grand' Trunk Railway; Mr. Ai H. Smith, President, New York Central Lines.
Under the Executive Committee was appointed an Administrative Committee, ' whose duties include general supervision of the operations of all railways in Canada embracing such matters as Distribution of cars and engines amongst the various lines, Diversion of Traffic from one line to another. The railways elected the following as an Administrative Committee:-
Mr. U. E. Gillen, Vice-President, Grand Trunk Railway; Mr P. P. Backus, General Manager, Toronto, Hamilton & Buffalo Railway ; iMr. J. H. Walsh, General Manager, Quebec Central Railway; Mr. D. B. Hanna, Third Vice-President, Canadian Northern Railway; Mr. C. A. Hayes, General Manager, Canadian Government Railways ; Sir George Bury, VicePresident, Canadian Pacific Railway; Mr. E. Dt. Bronner, Vice-President and General Manager, Michigan Central Railway.

The Administrative Committee was authorized to appoint Sub-Committees to handle the details of the work of the Association, analyse local conditions, deal with complaints or suggestions of the public and make recommendations to the Administrative Committee. The following Sub-Committees were appointed:-
Commission on Car Service, composed of;- Mr. A. Hatton, General Superintendent Car Service, Canadian Pacific Railway; Mr. J. E. Duval, General Superintendent Transportation, Grand Trunk Railway; Mr. W. N. Rippey, Superintendent Car Service, Canadian Government Railways ; Mr. A. E. Lock, Superintendent Car Service. Toronto, Hamiliton & Buffalo Railway ; iMr. W. S. Moy, Car Accountant, Quebec Central Railway; Mr. E. Crawford, Superintendent Car Service, Canadian Northern Railway; Mr. W. A. Griffin, Superintendent of Traffic, Temiskaming & Northern Ontario Railway.
The duties of the Commission on Car Service are to supervise in detail the handling of freight traffic, car movements and car supply; to see that all lines and districts receive a fair proportion of the available equipment; to watch the interchange of freight cars as between Canada and the United States with a view to establishing and maintaining equalization. It was also allotted to this Committee to increase freight car efficiency by bringing about heavier loading of cars and more expeditious movement, elimination of practices such as the avoidable light running of freight
trains, which has a tendency to increase the consumption of coal.
Committee on Passenger Transportation, whose personnel is:-Mr. C. S. Sims, Resident Vice-President, Delaware & Hudson Railway ; Mr. G. T. Bell, Passenger Traffic Manager, Grand Trunk Railway; Mr. J. E. Duval, General Superintendent Transportation, Grand Trunk Rail way; Mr. H. T. Malcolmson, Superintendent, Toronto, Hamiliton & Buffalo Railway ; Mr. G. C. Martin, General Freight and Passenger Agent, Toronto, Hamilton & Buffalo Railway; (Mr. H. H. Melanson, Passenger Traffic Manager, Canadian Government Railways ; Mr. A. C. Barker, Assistant to General Superintendent, Canadian Government Railways ; Mr. A. Price, Assistant General Manager, Canadian Pacific Railway; Mr. O. B. Foster, Assistant Passenger Traffic Manager, Canadian Pacific Railway; Mr. J. Balkwill, Superintendent, Michigan Central Railroad; Mr. L. W. Landman, General Passenger Agent, Michigan Central Railway; Mr. W. A. Kingsland, General Superintendent, Canadian Northern Railway; Mr. R. L. Fakbairn, General Passenger Agent, Canadian Northern Railway; Mr. J. T. Reid, Superintendent, Que-bee Central Railway; Mr. G. D. Wadsworth, General Freight and Passenger Agent, Quebec Central Railway.
This Committee was directed to analyse passenger services on all railways in Canada with a view to cutting off duplicate or other unnecessary services so that coal might be saved and more motive power made available for handling of freight.
Committee of Tariffs and 'Statistics, composed of 'following:-Mr. Guy Tombs, Assistant Freight Traffic Manager, Canadian Northern Railway; Mr. R. J. Foreman, Assistant to Vice-President, Grand Trunk Railway; Mr. H. E. Macdonell, Assistant Freight Traffic Manager, Canadian Pacific Railway; Mr. D. A. Storey, Freight Traffic Manager, Canadian Government Railways ; IMr. G. C. Martin, General Freight and Passenger Agent, Toronto, Hamilton & Buffalo Railway; Mr. George H. Clark, General Freight Agent, Ottawa & New York Railway; Mr. N. J. Ferguson, General Freight and Passenger Agent, Quebec, Montreal & Southern Railway.
This Committee supervises questions of rates arising from diversions of traffic from one line to another, re-adjusting system of advices to the public as to the movement of freight, elimination of delay to cars at junction points, where it had been the practice to hold shipments for rebilling, and similar matters.
It was the original intention to appoint a Committee on Materials and Supplies, but subsequent developments showed it to be unnecessary to appoint a permanent committee to look after this branch of the work, conferences of the Officers of the lines interested being held for the discussion of matters such as the supplying of fuel, rails, ties and labour, about some of which the Association has corresponded with you.
The Organization in Eastern Canada was practically duplicated in the West, where an Administrative Sub-Committee was appointed reporting to the Administrative Committee at Montreal. The duties of the Sub-Committees in the West conform to those of the Eastern Committees, as outlined above. The personnel of the Western Sub-Committees is as follows :-
Administrative Sub-Committee :-Mr. Grant Hall, Vice-President and General Manager,

Canadian Pacific Bail-way; Mr. P. P. Brady, General Manager, Canadian Government Railways ; Mr. W. P. Hinton, Vice-President and General Manager, Grand Trunk Pacific; Mr. M. H. MacLeod, General Manager, Canadian Northern Railway; Mr. C. E. Dafoe, General superintendent, Midland Railway; Mr. J. M. Gruber, Vice-President, Great Northern Railway ; Mr. Geo. T. Slade, Vice-President, N. P. Railway; Mr. J. W. Mulhern, General Superintendent, Kettle Valley Railway; Mr. W. R. Smith, General Manager, Edmonton, Dunvegan & British Columbia Railway.
Sub-Committee on Freight Traffic:-Mr. W.
B.	Lanigan, Assistant Freight Traffic Manager, Canadian Pacific Railway; Mr. Geo. Stephen, Freight Traffic Manager, Canadian Northern Railway; Mr. A. B. Rosevear, General Freight Agent, Grand Trunk Pacific; Mr. P. H. Burnham, General Freight .Agent, Great Northern Railway; Mr. W. C. Hartnett, General Agent, N. P. Railway; Mr. O. E. Fisher, Traffic Manager, Kettle Valley Railway; Mr. C.	Dowlinig, Traffic Manager, Edmonton, Dun-vegan & British Columbia Railway.
Sub-Committee on Oar Service:

Mr. J. P. Driscoll, Superintendent Car Service, Canadian Northern Railway; Mr. T. P. White, Superintendent Car Service, Grand Trunk Pacific Railway; Mr. E. D. Cotterell, Superintendent Car Service, Canadian Pacific Railway; Mr. P. B. Robb, Car Service Agent, Canadian Government Railways; Mr. C. E. Dafoe, General Superintendent, Midland Railway; Mr. A. G. Sutherland, Superintendent Car Service, E. D. & B. C. Railway.
Sub-Committee on Passenger Transportation:- Mr. H. H. Brewer, General Superintendent, Grand Trunk Pacific; Mr. D. C, Coleman, Assistant General Manager, Canadian Pacific Railway; Mr. Geo. A. Walton, General Passenger Agent, Canadian Pacific Railway; .Mr. W. El Duperow, General Passenger Agent, Grand Trunk Pacific; Mr. R. Creelman, General Passenger Agent, Canadian Northern Railway; Mr. C. E. Dafoe, General Superintendent, Midland Railway; Mr. C. Dowling, Traffic Manager, Edmonton, Dunvegan & British Columbia Railway.
'Offices were opened -by the Association in the Eastern Townships Bank Building, Montreal, and a general secretary and staff appointed to look after the routine work of the Association
Very full and -complete information as to what has been accomplished is. contained in the report of March 21, 1918, to which I shall now give attention. It is addressed to the Minister of Railways and is as fob lows:
"" As requested in your letter of 18th inst., following is statement of the operations of the Canadian Railway Association for National Defence :-
Summary of work done by Canadian Railways working under the direction of the Canadian Railway Association for National Defence.
October 23rd, 1917, to March 20th, 1918.
I invite the attention of hon. gentlemen to what has been accomplished, because it strikes me that the result really does indicate that this association, and the methods which it has followed, have been of great

advantage to us during the past autumn and winter.
Fuel conservation.-Saving through reduced passenger services and heavy loading of cars and trains during ensuing year under practices now in vogue (estimated), -500,000 tons.
Increased movement of freight by diversions during congestions arising from unusually severe winter weather, 516,565 tons.
Increase in delivery of empty box cars from United States to Canada under arrangements made by association, 14,260.
Estimated increase -in car efficiency during current year through improved handling and heavier loading of cars equivalent to 300,000 car trips.
Freedom from serious- congestion in both eastern and western Canada such as was experienced ini the winter of 1916-1917 and in the United States during the winter now coming to a close.
Prompt filling of requirements of overseas transports at ports served by Canadian Railways.
Increase in coal deliveries to Canada from United States, 285,000 tons.
Increases in freight traffic by diversion of cars from over-burdened routes.
On orders issued by the Canadian Railway Association for National Defence and arrangements made with the railways interested, a total of fourteen thousand seven hundred and fifty-nine loaded cars have been diverted from congested routes to others which were comparatively free. These cars, many of which were loaded with grain and coal contained approximately five hundred and sixteen thousand five hundred and sixty-five tons of freight.
Included in the diversions wrere twenty-one hundred and eighty cars which were billed eastbound via the Canadian Pacific Railway through Fort William for points in Ontario and Quebec and diverted via the Soo Line from Emerson to Sault Ste. Marie, being returned to the Canadian Pacific Railway at the latter point, thus relieving the heavily taxed line east from Fort William.
Diversions of freight routed via' Canadian Pacific Railway from Fort William for Eastern Canada points and overseas were made to the Canadian Northern Railway at Port Arthur, the cars being returned to the Canadian Pacific Railway at Sudbury and Ottawa. These diversions via Port Arthur total up to date four hundred and throe oars and the arrangement calls for continued diversion as necessary up to forty cars per day.
On-e result of these two switches in the movement of eastbound freight is an increase in the movement of grain by rail from the head of the lakes of approximately three and one half million bushels, in addition to avoiding congestion at the terminals in that territory, and expediting the general movement of cars through that gateway.
The handling of traffic from the Niagara Frontier to Ontario points during the winter months, when the entire burden is thrown upon the railways operating between Buffalo and Toronto owing to the suspension of ferry service across Lake Erie, up to this year caused a great deal of delay to freight and cars and interfered with the requisite coal deliveries for consumption in Ontario to such an extent as to have been partly responsible for the fuel short-

age in that province during the winter of 19161917.
This year, at the first hint of trouble, the Administrative Committee of the Canadian Railway Association for National Defence, after going over the situation in detail, delegated one of their members, Mr. F. F. Backus, General Manager of the Toronto, Hamilton and Buffalo Railway, as the representative of the Association to take full charge of operation of lines between the Frontier and Toronto, with authority to switch traffic and engines from one line to another as the conditions day by day might demand.
Under Mr. Backus' direction, cars were diverted from the overburdened Grand Trunk railway route to the joint line furnished by the M.C.R.R., T.H. & B., and Canadian Pacific railway, to the number of five thousand and eighty-one, which means that the total movement of freight from the United States to Canada via the Niagara gateway was increased to that extent. These diversions extended over the period from January 6th to March 6th when conditions became practically normal and the necessity for further transfer of cars from the routing prescribed on the billing disappeared.
About sixty per cent of the five thousand and eighty-one cars by which the movement from the Frontier was increased as described above contained coal so that the coal receipts in Ontario during the two months mentioned were increased by approximately one hundred and fifty thousand tons.
Arrangements were made with the United States railway authorities at Washington whereby empty box cars ordered to Canada to assist in making up the number of cars due us on the interchange with United States lines were diverted to the Delaware and Hudson railway where they are loaded with coal, principally for points in the province of Quebec, thus increasing the coal receipts in this province, as well as providing box cars for the movement of exports to the United States. Under this arrangement five thousand eight hundred empty box oars were turned over to the Delaware and Hudson railway, and up to date three thousand eight hundred and thirty-five have been loaded with coal as above, containing approximately one hundred and thirty-five thousand tons of coal. It is the intention to continue this arrangement as long as empty cars are being sent to Canada as at present.
During the past few weeks the movement of shipments from points in Ontario to Quebec and the Maritime Provinces has been increased by the diversion of 1,641 carloads from the Canadian Pacific railway and Grand Trunk railway to the Canadian Northern railway at Toronto, in order to relieve the lines of the former between Toronto and Montreal and hasten recovery from conditions arising from the series of severe storms from which the railways suffered in Ontario during January and early February.
Another object sought by the Association was the avoidance of a repetition of the shortage of foodstuffs which existed in the Maritime Provinces during the winter of 1916-1917 owing to the heavy movement of overseas supplies which had to be given preference over the lines east of Montreal and tended at times to crowd out domestic shipments. With this end in view cars were transferred from the heavily burdened Canadian Pacific railway route from Montreal to St. John to the Canadian Government railways at Quebec and Ste. Rosalie, the movement
of freight to the Maritime Provinces being increased in this way by 1,565 carloads or approximately 45,000 tons of freight.
Diversions of cars from one line to another similar to those given in detail above were made a't Sudbury, Ottawa, North Bay, Winnipeg and Saskatoon.
Handling of Grain, Flour and Coal, Western Canada.
In Western Canada the activities of the Canadian Railway Association for National Defence, or the "Railways War Board" as it has come to be popularly known amongst the shipping public, were directed chiefly to keeping up the deliveries of grain andi flour to the East, both for domestic consumption and shipment overseas and maintaining the requisite movement of cars from the mines in Alberta. It is admitted that, in the face of a winter of operating conditions of almost unprecedented severity, when engines froze up on the road, water supplies disappeared overnight and at times the men remained on duty only at greatest hardship, the demands of the transports and Eastern millers were met and coal was delivered to the prairie cities and towns with a regularity and promptness that could hardly have been expected by the uninitiated had they been able to foresee the obstacles which had to be overcome. Preparations which are being made in the west now for improvements during the coming summer it is anticipated will permit of .a still better service being provided next winter.
The views of the western public on the accomplishments of the railways in Western Canada, are, perhaps, voiced in the following extract from an editorial appearing in the Moosejaw Evening Times of March 11th, in referring to one of the bulletins issued by the Railways War Board:
This winter we (The Canadian Railway Association) are determined to keep Canada's traffic rolling smoothly and with speed even though last year's conditions repeat themselves, (extract from bulletin).
Well, last year's conditions did repeat themselves with a vengeance and Canada's traffic has been handled more smoothly and efficiently in spite of even a greater scarcity of labour.
The arrangements made by the Western Committee of the Association included the distribution of grain and coal cars between lines as they were required regardless of ownership and the same action was taken in the case of water cars when water supplies failed on account of the severe weather and water for locomotives had to be hauled long distances.
Car Supply.
When the Canadian Railway Association for National Defence was formed on October 23rd, 1917, one of the first tasks with which it was confronted was the recovery from the United States railways of some 20,679 Canadian owned freight cars located in the United States in excess of the number of cars of United States ownership in this country, that is, the Canadian lines had less than ninety per cent of the number of cars owned by them and required to handle traffic currently. The railways individually had been pressing their American connections to return their cars but had been unable to make satisfactory progress.


Right Hon.   S@: Mr. Chairman, my right hon. friend the Prime Minister, in his exposition of the railway situation of the country as it is at the present time, went back to the initiation of the policy of the Transcontinental railway in the year 1903. To be exact he should have gone much further, because the situation that we have to face to-day is very serious, not on account of the policy which was adopted in 1903 for the creation of a. second transcontinental railway, nor the policy that was adopted of having a third transcontinental railway, but, as the right hon. gentleman .from his very remarks showed, the situation is serious on account of one o.f 'the oldest-in fact, the oldest railway-that we have, the Grand Trunk railway itself. The Prime Minister, in his re. view of the situation, should have gone as far back as the year 1850, when the Grand Trunk railway was introduced in Canada. At that time railway construction in the world was still comparatively new, in fact,

to say that settlement is going in these very rapidly; indications are 'that the traffic in that district will become more and more extensive.
The Transcontinental railway has not been as great a success as it might have been, and one of the reasons why the traffic on that road has not expanded more rapidly 'than it has is found in the death of Mr. Hays, the late general manager of the Grand Trunk railway, to whom is due the credit of the initiation of the enterprise. He was a man of great energy, resource and ability, and had he lived the railway would he more prosperous than it is at present. Indeed, his death was a national calamity.
The construction of the Canadian Northern^ railway was not entered upon as a national enterprise; it grew from a local undertaking until it matured into a transcontinental system. The Prime Minister said a moment ago that that railway had as great a future as any railway in Canada.
I say that it has as great a future as any railway on the continent of America. That may be a broad assertion, but it is to be remembered that there is no better land on the whole continent than that between the cities of Edmonton, and Winnipeg; every foot of the Canadian Northern line between those cities is revenue-producing. From Winnipeg to the head, of the lakes, the rai'-way, after leaving the city of Winnipeg, passes through a marshy land which may not be productive now, but which will be productive later on. Then it enters the valley of the Rainy river, one of the best sections of country on the continent. Leaving the head of lake Superior the line does not follow the lake, because of the district being barren and rocky, hut enters the clay belt, which will probably he productive. From Sudibury to Ottawa, from Ottawa to Montreal and. from Montreal to Quebec the line passes through a good country. Undoubtedly, therefore, the Canadian Northern railway system has* a great future. I am not disposed to criticise the promoters of this enterprise, Mackenzie and Mann. They displayed great energy and great enterprise, and I firmly believe that but for the war they would have brought the road to satisfactory completion. When the Government proposed to acquire the road I did not object, because I thought that the property was a good one; the only question was as to the terms under which it should be acquired. That is the view which I take of the whole situation..

The Government now proposes to launch into a new enterprise, that of acquiring the Grand Trunk railway itself. The history of the Grand Trunk Tailway is not a satisfactory one. The Grand Trunk has been in existence about sixty years. It passes through one of the best parts of the American continent, undoubtedly through the Ibest part of Ontario; it ought to he and it is productive. If it is not as profitable or prosperous an enterprise as it should have been, that is due to. two things. First, the management has always been in London, England. In my judgment, no greater mistake could have been made. It is inconceivable that the management of -a great railway system, covering almost the whole of this continent, could be satisfactorily carried on from the city of London. Second, the system has been overloaded with bad securities. That the Grand Trunk railway system can be made a profitable enterprise I have no doubt. I do not pretend to be an expert in these matters, but, applying the ordinary principles of common sense; looking on the advantages enjoyed by this railway, its splendid location, its line from the great centre of Chicago to the fine harbour of Portland, I think that the Grand Trunk railway system should be productive of good results and profitable returns. For the present I do not condemn the idea of taking this railway over; everything depends on the terms. But I warn the members of the Government that if they acquire that property they will find it loaded with absolutely unproductive and utterly worthless securities. In this condition may be found the great danger of such negotiations as my Tight hon. friend has suggested. But since the .Government contemplate taking this step, I shall not condemn it at this time. The idea is one which deserves consideration, and I, therefore, would not go further than that.	'
The only thing as to which I am disappointed in the statement made by my right hon. friend is that the has been very vague in regard to the organization under which he is going to place the present Canadian Northern railway. We heard yesterday that the Government, before re-organizing the Canadian. Northern railway, were waiting for the receipt of the report of the arbitrators as to the price to- be paid for the stock of that enterprise. Why wait for that? What more information than the Government has to-day will it have when it receives the award of the arbitrators? To-

day, under the terms of the Act which was passed last year, the Government is the absolute owner of the Canadian Northern railway. We purchased the stock. The purchase price was not paid because the amount had not been fixed. The question as to the amount of the purchase price was referred to arbitration by the two parties, to the contract. But the contract was made by the two parties, and, therefore, to-day we are the absolute owners of the Canadian Northern, and the question whether the amount that we have to pay for the stock be large or small, is of no concern whatever. Aa the owners of the Canadian Northern railway, if we are to make full use of it, we ought immediately to re-organize and operate it. I cannot see that it is good or sound policy to wait until we know how wre stand as to the price we have to pay. We should go on with the reorganization at once. The Prime Minister, in speaking of the re-organization, [DOT]spoke upon a subject which everybody has in mind, that is to say, that we should keep that enterprise free from political patronage. Political patronage has been the bane of railway administration in Canada.
1 do not blame one party more than the other , for that. The former Liberal Government did their best to eliminate political patronage, and while I do not say that we succeeded completely in eliminating it, we made a good deal of reform. If political patronage is to be eliminated from railway administration in Canada-and my right lion, friend has particularly insisted upon that point,-the plan which he has suggested does not seem to be conducive of that result. If you have any board of directors whicb is appointed by the Government, you will not eliminate political patronage.
May I -make a suggestion to my right hon. friend, and to the other members of the Government, as to a method of eliminating patronage? The city of Washington, district of Columbia, is federal property; it is not a state. It does not form part of the Union; it is independent territory. It is, I understand, extremely well administered. I have never heard of graft of any kind, nor have I heard of political patronage, in the administration of the city of Washington. In years past I frequently had to visit that city, and my right hon. friend has in recent years had to go there very often, but I have not heard, and I do not think he has ever heard anything but commendation of the
administration of the city of Washington, D.C. How is it administered? It is administered by a commission composed of three commissioners, one appointed by the party in office, the second by the party in opposition, and the third is an officer of the army. The Uunited States army_ was never a very numerous body, hut it is well known that its staff of officers is a very highly cultured and fine body of men with a high sense of honour and absolutely honest. I do not know by whom the third commissioner, an officer of the army, is appointed. I think he is appointed by the President. Be this as it may, this is a body which is absolutely non-political. As to the elimination of patronage from railway administration in Canada, if patronage is to be eliminated-and every hon. member in this House either wants or, because the opinion of the people behind him is so strong, at least pretends that he wants to eliminate patronage,-I do not know of any system which would come nearer to the elimination of patronage than such a system which I have just suggested.
I have this observation to make in regard to the financial part of the information which has been given by my right hon. friend. He stated that he wanted to have a balance sheet which he could understand. Balance sheets of every kind are always somewhat difficult to understand by those who are not initiated into the business, but I do not believe the balance sheet that my right hon. friend has laid before us gives us much more enlightenment than the balance sheets we have had before. They may be understood by the initiated, but I do not understand them. The figures which have to-day been given by my right hon. friend may perhaps agree with the figures which have been given before, but I see some discrepancies which I cannot reconcile, and which, I hope, will, in the course of this debate, be reconciled. The other day the Acting Minister of Finance (Mr. A. K. Maclean) gave a statement as to the necessity of the Bill, which we now have before us for our immediate consideration, to provide for the payment of passing liabilities which are maturing during the present year. The Acting Minister of Finance makes this statement which is to be found at page 1772 of Hansard:
I have already given a list of the short term maturities for this year, but in order that it may he before the House in a complete and' consecutive form, I shall read the list of securities of the railway maturing this year:

Canadian Northern Railway System, Statement of Short Term Loans, ' March 1st, 19118.
Loan made by No. Maturity. or through.
1.	Demand. Dominion Government, Canada ....
2.	Demand, Can. Bank of Commerce, Canada	
3.	Demand. Can. Bank of Commerce, London	
4.	Demand. Can. Bank of Commerce, Canada	
5.	Demand. National Trust Company, Ltd., Canada. .
6.	Demand. Dom. Sec. Corporation, Ltd'., Canada..
7.	March British Empire Trust
31.1918.	Co., London	
[DOT]	8. April
9,1918.	Lazard Bros., London
9.	April.
15.1918.	Lazard Bros., London
10.	April
15, 1918. Lloyds Bank, London
11.	June
9,1918r Nat. Bank Scotland, London	
1-2. July
10, 1918. Wm. A. Read & Co., New York	
13.	July
10, 1918. Wm. A. Read & Co., New York	
14.	Sept.
1, 1918. Wm. A. Read & Co., New York	
15.	Jan.
10.1919.	Wm. A. Read. & Co.,
. New York	
Amount.

>5,889,066
10,074,498
1,259,0-00
115,009
150,090
9129,533
1,472,167
2,919,026
5,201,407
486,667
2,700,009
3,000,090
10,090,000
1,250,000

These are short term loans, I understand, coming due this year. I have not studied very closely the blue book that was laid on the Table last year entitled "Financial Statements respecting the Canadian Northern Railway System and the Grand Trunk Pacific Railway" but in a cursory examination of it I have not been able to find any amount owing to Lazard Brothers, Read & Company, and so on. Are these new loans or old loans, and when do they fall due? Have they been contracted within the last year or before that?


Robert Laird Borden: They are old loans. Some of them have been renewed. The indebtedness is the same.


Wilfrid Laurier: I repeat, I am unable to find in the statement of liabilities of the Canadian Northern any amount due to Lazard Brothers or to Read & Company. If I am mistaken, I should like to be corrected. Yesterday I complained that the information we had was very insufficient. It has been supplemented to a certain extent, but we require more yet. In the Bill that passed this House last year the same CSir Wilfrid Laurier.]
authority was given to the Government that is now sought, of
Paying and settling any Indebtedness of such company or postponing the payment thereof on such terms as may be agreed upon, and for such purposes may make advances out of the Consolidated Revenue Eund ; Provided, however, that until authorized by Parliament, the total of such advances shall not exceed the sum of twenty-five million dollars.
But no limit is set in the Bill before us this year. We are told that $55,000,000 is to [DOT]be provided in the way of renewals or payment of loans, but there is no hint of this in the Bill. Let me read the clause:
The five-sixths of the shares mentioned in section three of chapter twenty-four of the statutes of Canada for the year 1917, having been transferred as required by said Act, the Governor in Council may from time to time assist the Canadian Northern Railway Company or any Company included in the Canadian Northern Railway System in renewing or postponing the payment of any indebtedness of any such company, on such terms as may be agreed on, by guaranteeing in whole or part the payment thereof with interest on the notes or obligations given for such renewal or postponement : Provided that the amount of principal to be so guaranteed from time to time shall not exceed the amount of the indebtedness the payment of which is from time to time renewed or postponed.
That sets no limit on the amount the Government is authorized to pay.


Robert Laird Borden: It does not authorize us to pay anything.


Wilfrid Laurier: It authorizes the renewal of notes or the postponement of the payment of indebtedness. What are the liabilities which are to be renewed or postponed? Are there others beyond what are mentioned in the statement I have here?


Robert Laird Borden: Liabilities which come due between now and -tlhe next session of Paiiiament.


Wilfrid Laurier: What are
they?


Robert Laird Borden: They are given on page 1772 of Hansard of this year.


Wilfrid Laurier: That is all?


Robert Laird Borden: There is nothing more, I understand. The liabilities amount to $67,000,000 altogether.


Wilfrid Laurier: The Bill then simply provides authority for renewals on terms that may he agreed upon?


Robert Laird Borden: Upon the best terms that we can make.


Wilfrid Laurier: I understand that all these items are contained in the statement given by the Minister of Finance, and that t'he total amount of the shortterm loans to 'be renewed is $55,437,274.


Siir ROBERT BORDEN:: My right hon. friend will find that some further maturities are mentioned just after that statement, bringing the total up to $67,360,607.
Sir WILFRID LAUR1ER: That is not quite clear. What is it that we are committing ourselves to? The first item on the list is a loan made 'by t'he Dominion Government of $10,000,000. There will be no renewal of that, I suppose. I want to take exception to a statement my right hon. friend made in the course of his observations, when be said that we had limited the award to be made by the Board of Arbitration inquiring into the value o.f the Canadian Northern Railway stock to a maximum of $10,000,000. I would observe that that statement was not accurate. There is nothing to -that effect in the statute, which simply provides that we shall pay the amount determined by the arbitrators.


Robert Laird Borden: But not more than $10,000,000.


Wilfrid Laurier: That is not in the statute. My right hon. friend has since had an Order in Council passed limiting the amount to $10,000,000, but no such provision appears in the statute and my right hon. friend had no authority to pass such an Order in Council.


Robert Laird Borden: That provision is in the arbitration agreement.
Sir WiJLFID LAURIER: That may be, hut I was going on to say that we had not been informed of ithat. I have seen the Order in 'Council limiting the maximum to $10,000,000, but by what authority did the Government arrive at that figure? What right had the Government to say that the award shall be for $10,000,000 or less than that? The stock may be worth $20,000,000 or only $5,000,000. I repeat, the Government had no authority whatever to pass that Order in 'Council or to make such an agreement as that. It was a violation of the statute by which the Government was bound to accept the award of the board of arbitration. If the Government thought the award should be limited to $10,000,000, they should have received authority to set that limit, and I submit very respectfully that under the statute
they had no authority whatever to fix any limit at all.


Robert Laird Borden: I think it was a very wise thing to fix a maximum beyond which the country should not be called upon to pay. I might observe to my right hon. friend that we fixed it at just one-third the amount he proposed four years ago.


Wilfrid Laurier: Nothing of the kind. That is an old story.


Robert Laird Borden: An old story, hut a true one.
Mr. LEMiIEUX: What about the Drayton report which said the stock was valueless?-


Mr. CAHILL:: In the statement of liabilities of the Canadian Northern given by the Prime Minister he quoted among other items $25,000,000 of debenture stock. I understood him to say that the country was not liable for that amount if the railway company was not earning interest on it. Am I correct in that assumption?


Robert Laird Borden: That is correct. When fhere are surplus earnings they have to he paid.


Frank S. Cahill: That is, not a direct liability of the company?


Robert Laird Borden: It is noit cumulative.	,


Frank S. Cahill: What would be the meaning of this:	In addition to the maturities
just mentioned there are securities maturing in August and' January amounting in all to $12,000,000 debenture stock. The debenture stock, included in this item is as I understand to be paid out of earnings unless there is some provision about which we do not know.


Robert Laird Borden: That is a different stock.
'Mr. CAHILL: Where does this different stock appear in the balance sheet?


Robert Laird Borden: In the funded debt.
'Mr. CAHILL:	What is the difference
between the stocks? Why is one put in the funded debt and the other not in the funded debt?	[DOT]


Robert Laird Borden: One is a liability and the other is only a liability in the sense that I mention.


Frank S. Cahill: Of course, it is a liability in every sense. If it is not cumulative as to the interest obligation it comes in

prior to the common stock and, therefore, if the Dominion Government own the common stock of the Canadian Northern railway, they naturally are liable for this $25,000,000.


Robert Laird Borden: If they earn it.


Frank S. Cahill: If they do not earn the
interest on that $25,000,000 the holders of that stock, unless there is some special arrangement, which I doiubt very much, would become the proprietors of the road if they so desired. They have a first lien ahead of the common stock of the company and in that case they would (become owners of the road. .Am I correct in that?


Robert Laird Borden: I thought I
made the matter pretty plain. Of course, that stock is ahead of the common stock; it is perpetual stock. The interest on it is payable if there are earnings sufficient for the purpose. If there are not earnings sufficient for the purpose then it is not cumulative.


Frank S. Cahill: Is there provision made to pay the interest on this stock now:	Has
the interest been paid? If it has not been paid, of course it is understood that the holders of this $25,000,000 worth of stock would control the road if they so desired. They either demand payment from! the common shareholders, or they take control of the road unless the stock has some special contract attached to it.


Robert Laird Borden: I am informed that up to two years ago the interest was paid, because the earnings of the road were sufficient.


Frank S. Cahill: So that the Government,
as owners of this road, will have to take care of the interest on this $25,000,000, or pay off the debt; otherwise these people will come back on the owners of the road and say: "If you do not pay the interest we will take the road."


Robert Laird Borden: I do not understand what my horn, friend means by saying that they will become the owners of the road. If the Government fulfils the conditions upon which this stock was issued, the persons who hold it have no complaint. If the earnings are enough to pay the interest, the interest must 'be paid. If the earnings are not enough, then the interest is not paid. The persons who own the stock have no remedy. Further than that the interest is not cumulative, as I have explained more than once.


Frank S. Cahill: If the interest is not paid, as prior stockholders, they must come in as owners of the road.
tAt six o'clock the committee took recess.
After Recess.
The committee resumed at eight o'clock.


Frank S. Cahill: We were discussing the relative value of debenture stock when the House rose at six o'clock. I have here a statement of the annual meeting of the shareholders of the Canadian Pacific Railway Company, in which the president, Lord Shaughnessy, says:
In order to avoid this undesirable situation the Company decided, with the consent of Parliament, to utilize consolidated debenture stock for the purchase or conversion of existing bonds, and to provide funds for building or acquiring such additional mileage as might appear to be required from time to time for the advantage of the country and the company. ' This consolidated debenture stock is perpetual and irredeemable, differing from a mortgage bond in that it gives no right of foreclosure in the event of default. The holders have a first claim on the revenues of the company for their semi-annual dividends after the working expenses and taxes or fines have been paid, and the contract demands of existing bondholders have been satisfied. If by any chance the company failed to pay, within a fixed period, the dividend accrued on the consolidated debenture stock the holders of that stock would become the Shareholders of the company and would control its affairs until the default was made good, when the property would automatically pass back to the preference and ordinary shareholders.
Now, Mr. Chairman, it may be in this case that there is an agreement between the makers of this debenture stock and the holders on some special basis, or some special arrangement may have been made, but there is no question but that the debenture stock is a liability of the company, and such being the case the total liabilities of'the Canadian Northern Railway Company would stand at $438,000,000. The Prime Minister this- afternoon, if I heard him aright, made the statement that the road was valued by the Dray-ton-Acworth Commission at $497,000,000. I have here the report of that commission and it is strange that we can find so many conflicting figures in the same report. The Prime Minister explained this afternoon that he is not familiar with figures, and had a statement prepared which is practically the same as the one I gave to the House yesterday as to the liabilities of thS Canadian Northern Railway Company, hut he did not quite agree with me as to the cost of the road. The Drayton-Acworth report states:

The property investment of the Canadian Northern Railway System is stated in the balance sheet of June 30, 191*6, at $494,112,489.34. This figure admittedly has been written up to include $100,000,000 of capital stock. And this stock, as we have already said, was issued without any cash consideration. We have endeavoured to ascertain the actual cost of the system. From the company's official reports and special statements supplied to us we have ascertained that the actual cash investment that can have been made in the property is $383,302,451.33.
From this total maximum of $383,302,451 we deduct the following items, which the company has included in cost of road and equipment, but which do not represent investment in property:
1.	Advance to controlled companies to pay indebtedness for interest . subsequent to construction and operating deficits which were capitalized when the system was
put together, not less than . .	$10,000,000
2.	Interest during 1916 overcharged
to construction, not less than. 3,000,000

dian. Pacific railway from the head1 of the Lakes westward has a thousand miles of double track. It has magnificent hotels, excellent terminal facilities, ample yard room at [Quebdc, Ottawa, (Montreal and other cities; there is no- comparison between this, railway and the others in the matter of terminals, road/beds or rails. Yet we are .asked to assume a liability equal to the capitalization of the Canadian Pacific; we are asked to assume $46,000 per mile.
I do not believe members of this committee wish to go back into the political history of the railroad situation in 'this country. We have a situation here to face. The previous Parliament assum'ed obligations of $437,000,000, and there is a farce being carried on in Toronto- to-day, -called an arbitration board, to arrive at the value of a worthless stock, a stock that is not only worthless, but which carries with it a liability o-f something like $147,000,000 of unguaranteed securities. We have been asking for the names of the people who are getting this money. It would appear from the statement that there is a profit of $140,000,000 to the promoters. There .is also over $140,000,000 of unguaranteed securities. We are furnished with a -statement of the $25,000,000 which was paid last year to the 'Canadian Northern. That furnishes no information, whatever to this *Committee. We paid out of one pocket into the other. But we want to know' where this money finally landed, who got it, who are the people holding the unguaranteed securities; what relation do they stand in to- the promoters of this road, to the Mackenzie and Mann people. It is not furnishing information to the Committee to say that we paid to the -Canadian Northern $25,000,000, and paid it out in amounts of $2,000,000,	$12,000,000 or $15,000,000.
That is simply pl-aying the same old game. The Canadian Northern paid to Mackenzie and Mann, and Mackenzie and Mann to the Northern Construction, Company, and the Northern Construction- Company back to Mackenzie and Mann.	We do not
want that -condition to continue. If we have -assumed, the liabilities of . the Canadian Northern Railway system, let us put the cards- on- the table, take our loss, and proceed to have this railroad organized in a business way, so that we can run the road to the best possible advantage to the country and to the railroad itself. Mackenzie and Mann can-. not possibly have any interest in the propel operation of this road; they have no interest whatever in making dividends on this road now. 1 cannot- conceive how the 
Government are taking away from a certain syndicate a railroad system, and at the same time leaving the same people in charge of its management. We are told we have acquired the stock and the ownership. The question of the -details of settlement of what we are to' pay, not exceeding $10,000,000 for 600,000 -shares of stock, lias nothing whatever to do with the management of the road. If the Government are sincere in the matter, the first thing they should consider is the management. The question of arbitration has nothing whatever to do with Mackenzie and Mann. As soon as the decision to take it over was arrived at, there should have been put in control of the road independent people, who wo-uld take it and develop it for the benefit of the country. I do not know what the directors of this road get, but I can easily understand that the Mackenzie and Mann ring would be willing to pay not less than $1,000,000 a year to be left in charge of it, for the side issues, the subsidiary companies. Where do they buy coal? Who is doing the construction? We were told there was $11,000,000 expended last year in extensions. There was no mention made of that until to-day.
We were told Iby the Minister of Railways that there were no extensions and no new undertakings. The cost of the road to the country has increased from $13,000,000 to $15,000,000 within the last year. It would have been 'better if iwe had paid the Mackenzie and Mann outfit $10,000,000 last year and got rid of them and put some person, in charge of the road to manage it as a going concern. If the Prime Minister thinks that the people -are willing to maintain Mackenzie and -Mann in control of that road he is very much mistaken. There is great value in the road; it runs through good territory and can he made a paying concern, hut if we leave it in charge of men who exploit it for their own personal gain the country will have to stand the loiss. I cannot understand why we should wait for an arbitration board to determine whether we are to pay $9,000,000 or $10,000,000 for this road, and still leave the same people in charge of it. Before any -member of this committee would make an investment in any undertaking he would want to know who the management were and what their policy was. In, this case we are paying out money and taking no interest whatever in the management of the undertaking. As a matter of fact, I do not know what we are voting this money for; no explanation has been given. The first item is for a payment to the Dominion

Government, and there is another item for payment of debenture stock. I always understood that debenture stock was not redeemable; that it was perpetual. If there is an understanding iwith the owners of the stock that $12,000,000 of it is to be redeemed this year we should know who these owners are, what their relation is to the Mackenzie and Mann outfit, and on what terms this money is being paid. I do not believe that a cent has ever been paid for this debenture stock; most likely it has been given as a bonus to some bondholders, who should be willing to wait for the interest on their investment. Let us work this proposal out to the best possible advantage on behalf of the people. Let us quit trying to fool ourselves o.r any person else with regard to our obligation in the matter. It is useless for us to say that this is not a direct obligation; of course, it is an obligation on the country, which will add just so much to our debt. We should have a full detailed report with regard to the company and its liabilities and with regard to the subsidiary companies and their liabilities, so that we shall know what we are doing.
Mr. 1H. A. MACKIE:	il believe that I
voice the feelings of the men from the West when I say that we received with a great deal of satisfaction the declaration of the Prime Minister this evening. We regret, however, that he was not more pronounced in certain respects. We should have been better pleased had he stated outright that it was the policy of the Government to adopt the principle of public ownership, not only of railways but of all other great means of transportation. We regret that we must wait until a time which is not defined for the Government to take control and operation of the road in question. I do not doubt that these matters have received serious consideration and that the ministers must be worried about them, but the people are also worried; they are wondering what the end of it all will be. Instead of waiting for any commission to declare that the stock of these gentlemen is worth $10,000,000 or less, I would declare that they are entitled to a ten-year penitentiary sentence. I do not know why they should be retained in the service of the country for any great length of time, unless it be for the benefit of succeeding ages; that is, to allow these gentlemen sufficient time for their financial morality to become so corrupt that it will cease to be contagious. We have heard
a number of statements about the calamitous circumstances which have brought about the present railway situation, but nothing has been said in a definite way as to why we should adopt the principle of the public ownership of railways and of the great means of transportation in Canada. We find the railway situation to he deplorable, indeed, and we propose that the Government shall do certain things, not because any principle has. been enunciated because a set of circumstances makes it impossible to do otherwise. I wish to deal this evening with the principle of public ownership. I shall endeavour to show that it is the right principle to adopt for western conditions, and I will defy contradiction so far as the principle is concerned.
I shall, at the same time, endeavour to show that this is the method which ought to be adopted in order to bring 'the East and the West closer together.
First, it is necessary thoroughly to understand the reason there is for the adoption of the public ownership of railways. We are convinced, having regard to the whole economic condition of Canada and the enormous freight and passenger rates which prevail, that the proportion of wealth which passes into the hands of private corporations is altogether too great. That fundamentally underlies the adoption of the principle of public ownership of railways, and it is our duty to examine that principle and see whether it will accomplish 'the object in view.
It is evident that there are two ways of reducing the cost of living, especially to the western people. These two methods differ essentially. The first I call patriotic, and the second I call unpatriotic. The one which I have designated as unpatriotic is the one which was advocated by the Opposition when they were in power, but which they did not dare to carry out during their whole period of administration. I refer to the abolition of protective tariff, upon which the industries of the East exist, and without which they cannot exist. A protective tariff which operates'to the advantage of the eastern manufacturers operates equally to the disadvantage of the western farmers. But there is a compensating advantage to the western farmer. It creates for him a national, a Canadian, market, for his western produce. The removal of the protective tariff system which has been so successful in building up the eastern provinces, would be a betrayal of the confidence of those who have invested their capital in protected industries. What-

ever modification may in the future take place in the tariff, it must be based upon the consideration of existing industries and be fair to the interests of both the producer and the consumer. That, however, would be one method of reducing the cost of living to the western farmer; of increasing the reward paid to the man on the plains who forms the basis and foundation of the growth and progress of the West. That is the method which I have designated as unpatriotic, because it involves the placing of East and West in opposition, and creating economic factors of the people east and west of the Jakes.
The other method of decreasing the cost of living is by cheapening transportation facilities, and it is here that I believe the declaration of the Premier lacks strength. He told us there would be public ownership of certain railways how. He indicated that, at a time not far distant, the Grand Trunk Pacific would become part of the Government Railway system. He also stated that the Grand Trunk would also, at some future time, become part of that system, and he gave us the idea that in the very distant future the Canadian Pacific must also necessarily be one of the railways included in that system of public ownership. The principle of public ownership is the cheapening rates in transportation, both passenger and freight, and I cannot see how, unless we declare for public ownership of all means of transportation in this country, we shall arrive at the object of public ownership of railways. The second method, therefore, of reducing the cost of living, and particularly to the western man, is Government ownership, and Government ownership of the great vehicles of transportation is one Which has for its end a more patriotic and beneficial object than the abolition of the tariff. I want to deal with the principles underlying Government ownership and operation of railways, and to show how a Government is far better situated than a private corporation to supply the transportation needs of a people. Those who have evinced disbelief in public ownership usually speak as though the present operation and control of railways were the most perfect conceivable, and they imply that the utter corruptness and dishonesty of politicians make' the control of a vast number of men and the working of a great department out of the question. All such arguments are against the dishonesty of our politicians and not against the principle of public ownership of railways. Let us first consider this issue. Are our poli-
ticians at Ottawa more corrupt and dishonest than the heads of our great corporations? I deny utterly that they are, and this afternoon the Prime Minister stated that, in order that political patronage might be removed, an independent board would be constituted, and he emphasized the fact that it would be absolutely separate and that there would be no interference with it whatever. I deny that our politicians at Ottawa are more corrupt than the heads of private corporations. We apply to our men in public life tests far more searching than those which we apply to our great so-called captains of industry. If we turned upon the heads of corporations the same light that we turn upon politicians, the result would be something astounding. To digress, I may say that all I have to do is to point to what has happened in the United States in recent months, or in the last year and a half, and you have the answer there- private corporations and scandals. As for the patrons of industries who are supposed to be so honest, their contribution to the advancement of this country has mainly consisted in gazing sleepily through the windows of a private car at the laying out of stations and town-sites by the actual railroad pioneers, and in abstracting profits which rightfully belonged to the people of Canada. In addition to this consideration of their usefulness, there has been a tremendous amount of land subsidies and money subsidies, .and other assistance of one sort or another, and that is what has brought about the condition which exists to-day and which compelled the Premier to make the declaration which he did this afternoon. Consequently the proposition before us is this-had we not better build and operate our own lines of transportation than furnish the financial strength and backing to others to do it, and permit them to rob us unduly and deny us any say as to what the rates Shall be?	*
No one really believes that the operation of railways by .private corporations is a perfect policy. Between cheap freight and passenger rates and large dividends there is a wide divergence, and the creation of a railway commission is sufficient proof that the Government i.s aware that private corporations cannot serve their own interest and that of the people at one and the same time. The creation of the Railway Commission was a virtual declaration in favour of state control of railways.
I wish to give .the- House a few facts as to why we should stop .pursuing the policy

which has b-een adopted by both parties in Canada, and why it is time that we should now adopt a policy of public ownership of railways. Up to June, 1916, assuming that the money represented by bonds and consolidated debenture stock was actually invested in railways in Canada, the total would be $1,045,608,331. This information is to be found at page Xll of the Blue Book for 1916. The figures for 1917 have been prepared, but not printed, and the information which I received from Mr. J. L. Payne, the comptroller, was that the figures for 1917 would not Ibe materially altered, except to increase the bonded indebtedness of railways by about $50,000,000, which is a mere trifle in these days. The amount of common stock outstanding in 1916 was $848,269,448. This information is also to be found at page Xll of the Blue Book of 1916. The total is $1,893,877,819. This is without taking into consideration the $50,000,000 of which I spoke a moment ago. In addition to these sums, the Dominion Government, provincial governments, municipalities and other sources have given cash aid as follows *
The Dominion	
$184,719,627	88The Provinces	
37,437,89'5	68The Municipalities	17,914,836	40Total	
$240,072,359	96
These figures do not take into consideration the purchase of the Grand Trunk Pacific bonds, aggregating $33,116,000, by the Government, nor do they take into consideration that the Dominion has constructed and now operates the eastern division of the Transcontinental railway, upon which, up to March 31, 1916, there had been an expenditure of $156,701,210. It would be interesting to know the difference between these billiohs of capital and the actual cost of the roads, with a fair profit for promotion and construction. Hearsay evidence establishes that about twenty-five per cent goes to promotion; that is to say, that Canadians are paying, in the shape of freight and passenger rates, interest on a tfemendous amount of money which never went into the actual building of railways.
It has been the claim of the Liberal party that competition in transportation facilities is the cure for all evils of rates which appear to be too exorbitant. To this I desire to take exception. Competition only aggravates the existing evils of western transportation. Let me explain. Canada possesses more mileage in proportion to its population than any ether country in the world..
One mile of steel exists , to every twenty-seven inhabitants of this land,, and when we consider that this includes the more densely peopled provinces of the East one naturally wonders what the country consisting of the four provinces of Manitoba, Saskatchewan, Alberta and British Columbia possesses in the way of miles of steel per head of the population. The figures of these provinces is given in this volume of statistics, pages 25 and 26, as follows:-
Miles.
Manitoba	 4,309.59
Saskatchewan	     5,378.33
Alberta	 3,894.18
British Columbia	 3,604.00
Despite these astounding figures, however, the West has less railway mileage to its area than any other part of the country. And'it is right here that the waste of competition is apparent. Great tracks of country lie untapped by railway service while our uneconomic friends, the Liberal party, preach the policy of constructing duplicate tracks paralleling one another for miles. Where the entire country might be served by one line, wre have three, and a difficulty with regard to reasonable freight rates is created by the construction of the Grand Trunk Pacific which will not be overcome for generations. The fault of railway companies in this country has not been alone that they overcharged for their service, it is a fault far more subtle than that, it is the fault that railroads are not constructed [DOT]with a view to supplying the country's needs, but are largely constructed on guaranteed loans or money subsidies with an insane idea as to competition.
Let us consider further this question of competition. Mill, the great English economist in his famous and monumental work Principles of Political Economy, in what is considered the best chapters of that work, The Cost of Production, lays down the proposition that there is a limit, sternly and rigidly defined by economic law, to the extent to which competition can cheapen the commodity. That limit, he declares, is the cost to produce the commodity, paying a living wage to the labourers involved, a rate of interest to the capital invested equal to what the average of the money market will afford, and the cost of the maintenance of the capital involved. Below that economic line it is impossible to go, for should it be exceeded, capital is at once withdrawn from the production of the commodity, and the condition rights itself by the scarcity of the commodity due to that withdrawal.
Now this applies to the transportation cost in the West. The price of freight



Prime Minister has taken a most important step towards absolute public ownership, and I trust it will be a shorter time than he has given us reason to believe before some plan is worked out to take over all the railways in Canada, so that we in the West may be able to live in closer union with the people of the East as a result of cheaper freight and passenger rates.


Mr. LAVTGUEUR:: Mr. Speaker, the Government of Canada, in 1914, lent the Canadian Northern Railway $45,000,000, and took as security $40,000,000 of the common stock of that company, out of its total capital of $100,000,000. In 1917 the Government purchased the balance of the common stock of the company, namely, $60,000,000, at a price to 'be fixed by arbitration, the arbitrators being 'bound not to pay more than $10,000,000. The Government, by thus becoming owners of the whole of the capital stock of the. company, should become absolute owners of the property. But a considerable portion of the mileage comprised in the Canadian Northern railway was acquired by that company through the purchase of the stock, and in some cases only the majority of the stock, of other companies, which had built smaller roads, such as the Halifax and Southwestern, the Quebec and Lake St. John and the Great Northern of Canada.
The hon. Minister of Finance (Sir Thomas White) recognized this situation when he introduced the 'legislation in 1917 to purchase the balance of the Canadian Northern stock. Speaking of the mileage represented by subsidiary companies-Hansard, page 4807-he said that tfie stocks of these companies held by the public, in which Quebec people are interested, included:
Canadian Northern Quebec (including Great Northern of Canada and Northern Consolidated Holding
Company) for	  $2,405,400
Quebec and Lake St. John	Railway. .	521,200
A further examination of this shows:
Quebec and Lake St. John Railway Stock.
The total issue of stock by that company is	$ 4,524,000
Which is held by
MacKenzie and Mann interests	 $4,019,140
City of Quebec	 220,500
English shareholders	 152,800
Quebec people	 131,560

The city of Quebec originally held $450,000 of this stock, for which it paid par, but surrendered 51 per cent of its holdings in 	.
1900 to London people, so as to help the company to obtain new capital.
Great Northern Railway of Canada.
Total capital seems to be 95,500 shares of $100	 $9,550,000
Viz:-
Great Northern	Common	Stock....	$ 913,000Great Northern	Debenture	Stock. .	650,700
Canadian Northern Quebec, Common
Stock	 5,637,000
Canadian Northern Quebec, Statutory
stock	 2,349,300

The holders are:
Northern Consolidated' Holding Company, Toronto	  $5,064,600
National Trust Compariy, Toronto;
British Empire Trust Company,
London	 1,990,00'0
City of Quebec	 200,000
Shareholders in. Quebec, Boston,
New York and other places	 2 295,400

But, of the capital of the Northern Consolidated Holding Company, which holds in trust the majority of the above stock, only 45,759 shares are held by the National Trust Company. The paid up capital of the Holding Company being 61,815 shares, there remain 16,056 shares, which are held by people in Quebec, Boston and other places. These 16,056 shares are 25-97 per cent of the capital of the Holding Cqmpany, so they should he entitled to 25-97 per cent of its assets. Therefore, 25-97 per cent of the $5,064,600 of stock of the Canadian Northern Quebec, held toy the Northern Consolidated Holding Company, are the property of individual shareholders outside of the Toronto interests. This would amount to $1,315,200. If to this we add the stock held by the city of Quebec, $200,000, and that held by individual shareholders not in the Holding Company, $2,295,400, the result is $3,810,600. These figures prove that of the total stock issues of the Great Northern of Canada and the 'Canadian Northern' Quebec, amounting to $9,550,000 of paid up stock, representing the ownership of these .roads, no less than $3,810,600, or nearly 40 per cent, is the property of individual shareholders, outside of the Toronto interests. From the foregoing it would seem to be equitable that the city of Quebec and the individual shareholders who own the minority stock of the Quebec and Lake St. John Railway for $504,800, and of the Great Northern of Canada and Canadian Northern Quebec for $3,810,600, making a total of

$4,815,400, should share ratably, as stated in their /petition, in what the Government may pay or may have paid, tor the common stock of the Canadian Northern Railway, of which these roads now form part. Otherwise the minority shareholders should be entitled to a separate accounting by the Government, and share of annual profits for the mileage of the actual sections represented by their stocks, the mileage being about 500 miles.
It seems to me, Mr. Chairman, a 'very proper question to ask: The Government having purchased the majority shares of the Canadian Northern, why could not they have purchased the minority share for which the citizens and the city of Quebec subscribed? These shares, as it stated in the petition to which I have just referred, were purchased by private individuals and by the city of Quebec, and instead of acquiring them, the Government limited themselves to acquiring the shares held by Mackenzie and Mann. I submit, therefore, that the Government should give the most careful consideration to the request that has been made on several occasions for the purchase of this minority stock.


Mr. MEIGHEN:: In answer to the hon. member for Quebec County (Mr. Lavigueur) I would say that the Act passed last session provides for the acquisition, not only of the majority shares, but of the minority shares as well. * But it is only the majority shares that are included in the purview of the agreement between the holders of them and the Government and that are now the subject of arbitration. However, the Act provides that the Government may pay to the minority shareholders the same proportion which, under the arbitration, they will be held to pay to the majority shareholders. There are outstanding shares of the Canadian Northern Quebec, the Quebec and Lake St. John, and the Duluth, Winnipeg and Western railways that we did not acquire. The minority shares that the horn gentleman refers to are minority shares in the Canadian Northern enterprises which are held overseas, and these minority shares can be acquired under the terms of the statute of last session. As to the minority *shares outstanding in the smaller lines referred to, there is as yet no provision for their acquirement.


Henri-Edgar Lavigueur: I know that no provision has been made to purchase the minority shares of these three subsidiary companies, but why should the Government have purchased the majority shares in other
provinces, and left unacquired the minority shares of the three companies referred to?


Arthur Meighen: The reason is this: The /Canadian Northern Company held among its assets only the majority shares, not the minority shares, in the three companies. Now the $100,000,000 of stock of the Canadian Northern of which we had already acquired $40,000,000, and which we acquired the other $60,000,000 last session, embraces only the property of the Canadian Northern. Consequently what the hon. gentleman refers to, not being the property of the Canadian Northern Railway Company at all, is not within the purview of this legislation. Perhaps later on the Canadian Northern Railway may decide to acquire *those outstanding minority shares, but they have never as yet belonged to that company.


Robert Lorne Richardson: Only the importance of the transportation question ^ould induce me at this late stage of the session to project my.^lf into the present discussion. On the Budget debate I spoke at considerable length with reference to that question, and I crave the indulgence of the House to-night while I present a few figures, and refer in a brief manner historically to the subject of transportation.
I am sure it must have been gratifying not only to the members of the House, but *to the country at large to have the right hon. leader of the House (Sir Robert Borden) make the very important statement which' he made this afternoon. I could not help but think that after all it may have *been due to the pressure that has been exercised-at least to some extent-and undoubtedly to the uneasiness of the House generally with reference to this great question, as well as to the feeling that exists *throughout the country as to the necessity of solving this problem, that the Prime Minister made this speech. Personally, I was extremely gratified, because Canada, in spite of herself, is face to face with the necessity of administering a large system of /railroads under public ownership. As I remarked in the House the other day, I thought the courteous and able Acting Minister of Finance (Mr. A. K. Maclean) probably slipped a linguistic cog when he said that Parliament last session as well as the *country seemed anxious to take hold of the Canadian Northern, I was under the impression. and still am of the opinion, that that Statement on the hon. gentleman's part does not represent the real condition of affairs. .I do not think the House and the country have been anxious to take over the

Canadian Northern, -or to take over any system of railways, in. view of the conditions under which that taking over has to be done. The Prime Minister told ns this afternoon that had! Parliament not come to the rescue the road -would have been forced into liquidation, and he expatiated on the injury that would have resulted to the public credit if this road had been allowed to go into liquidation and into the hands of a receiver. The Prime Minister's speech must have inspired the House with confidence -in his earnestness and good intentions. But I say, with all due deference to him. and to the late Parliament-if Parliament was responsible, but I prefer to put the blame on the shoulders of the late and old governments; I do not think the policy pursued with regard to the Canadian Northern, was the right policy to adopt in the case of that railroad or of any other in a similar situation-it is not because of the action of Parliament or of the country that these roads find themselves in difficulties. The Canadian Northern for the last twenty or twenty-five years, have been applying to this Parliament and to the Provincial Legislatures .for aid to build mileage, and the reason they usually urge for that was that the people were clamouring for this accommodation. In my judgment, whenever a squeak was uttered by a settler for assistance, or for railway accommodation, the (big noise and the real' pressure came from the proprietors of this railroad. They were the ones that were anxious to build these lines of railway; they were the ones that besieged and badgered the federal and provincial Governments. They have been knocking at the doors of the Provincial Legislatures and of the Dominion Parliament for almost two decades and a half, and, in my judgment, the responsibility for the present situation rests with them.
If as the result of their manipulations, or of their failure to make a success of the road, they find themselves in great difficulties, find that they .are unable to meet their obligations, on whom should the blame rest? Not upon this Parliament, not upon the provincial parliaments, not upon the people of Canada, but upon the railroad manipulators themselves. Then should they not have been obliged to take the consequences of their own folly? As a publicist, I have grown pretty tired of that old cry: "We must guard the credit of Canada." When the Byron Walkers and the other great "financiers," and the exploiters get into trouble they hold up their hands

in alarm and say: "Lest the credit of Canada shall suffer, in Heaven's name, come to our rescue." And we, the people of Canada have been coming to their rescue for the last thirty or forty years. I am sure that as the House listened this afternoon to the words of the Prime Minister when he told of the campaign of raids that had been made on the public treasury by these exploiters, we must have almost blushed when we recalled that year after year these exploiters came and raided, and raided, and raided the public treasury. Are WE, therefore, to blame if, as a result of their own folly, they find that they have reached the end of their financial tether? Eather in my judgment would it be better, and I believe it to he the judgment of all thoughtful Canadians who have studied this question, that an example should be made of them, and that they should be obliged to take the consequences of their own folly. Why should this Parliament and this country be obliged to come to the rescue on every possible occasion to bolster up, say, the Bank of Commerce, and to help this or the other corporation to escape from the results of their own improvidence and folly? No. I say that this Parliament and this Government should stand .solid and say: "Gentlemen, you have committed this folly yourselves, you .alone are responsible, therefore you must take the consequences." Canada can take care of its own credit. Canada is a great nation, with marvellous resources, and we can afford to let one of these corporations go into liquidation, take the consequences of its folly, and by so doing we will put ian end to a repetition and to all that kind of thing. We were under no responsibility, moral or legal, to take over the Canadian Northern Railway under the conditions that we have acquired it. Members of this Parliament-and we have not been very long in session-will recall debate after debate on the question as to the liabilities of the Canadian Northern railway. One day we are told that the liabilities-and it is ispoken under your breath-are $300,000,000. A few days later we are told that the liabilities of this corporation have risen to $350,000,000, and, tell it not in Gath, we were supposed to stand aghast when we were informed still later that they were $400,000,000. And now, does the Prime Minister tell us from his seat in this House this afternoon that the liabilities are $300,000,000,	$350,000,000,	$400,-
000,000? No, they have risen in one jump to the astounding figure of $438,000,000. The right hon. leader of the House tells

us that we are to get this system of railroads at a price that will not be more than $44,000 per mile on the ten thousand miles which constitute the system. I can tell the Prime Minister that the system which the people of Manitoba constructed some twenty years ago, and which some years ago was acquired by the Canadian Northern, cost only $9,000 per mile to construct. Y'et we are asked to rejoice over the great bargain that we are going to make in acquiring this system at a capitalization not greater than $44,000 per mile. The Prime Minister gave us figures to indicate that, while the liability was $433,264,377.67, the assets we would receive would amount to $528,427,000. Now, where that argument does not hold water in my judgment is here: If we take over the Canadian Northern system-and we have to take it over- the baby, as I said the other day, has been put on our lap to nurse; we were not the authors of the baby; we did not bring it into existence, yet it is going to sit squalling on our lap for the rest of time, and we must take care of it for all time to come. If we take over this system, as we must, what is the situation? Owing to the folly, the criminal folly of the exploiters who have manipulated railroads in this country for the last twenty-five or thirty years, we find that we have to take over this and other systems with an approximate mileage probably anywhere from a thousand to three thousand miles, which will not be of any practical use to the country at the present time, and which may not be of any practical use for a long time to come, if ever. Take the road built through the Mountains by the Canadian Northern. I suppose some hon. members are here who went over that railroad on that celebrated excursion two years ago. They must have been convinced of the folly it was to build through the Yellowhead Pass a railroad to parallel the Grand Trunk Pacific; at this stage of the country's development. And then to go down to Kamloops, down the valley of the Thompson river and parallel the Canadian Pacific system to the coast. In my judgment some of those duplications will not for a long time, earn enough to pay for the stationery to set down the quantity of axle grease that, will be required on them. Then you have the other railroads built around the north shore of Lake Superior, which, of course, are for the present entirely superfluous, and in the case of the Canadian Northern railway, will not be a productive portion of the road, for, perhaps, years to come. Years ago. when my right hon.
friend the leader of the Opposition was in office and proposed the construction of the Transcontinental railway, I was very strongly opposed to that, and took a constituency and opposed his then Minister of the Interior,	Hon.-now Sir,-Clifford
Sifton, because I felt that that road was entirely premature,-and I hope to come back to that point later on. I then believed in the policy of imy right hon. friend the leader of the present Government (Sir Robert Borden). He then announced, and took that position before the country, that what was required was not another road around Lake Superior or another road through the mountains, but that we should double-track the Canadian Pacific railway, take it over and establish it as a railroad highway, giving all railroads running rights over that portion of the road. You see the prudence of a proposition of that kind is that it would have eliminated the vast expenditure necessary to construct this Transcontinental railway, and while on this point let me call the attention of the House to the fact that the Transcontinental railway which we were assured by the Government of my right hon. friend (Sir Wilfrid Laurier) would only cost the country $13,000,000, has already cost $200,000,000. And while the people had nothing whatever to do with bringing this child into existence, we also were obliged to have it dumped upon our lap, and there it will squall for many decades. So that we have these systems unloaded upon the country, regardless of our desires and of our necessities. That is where the tragedy .of our transportation problem comes in. It would be idle for me to enlarge upon this matter, although perhaps I may a little later on in my remarks refer to the responsibilities of different parties in the country for the unenviable position in which we find ourselves. I listened to a member of the Opposition the other day rail at this Government and at the former Government for the vast mistakes that had been made with regard to our transportation system. I could not help thinking that if hon. gentlemen opposite who took that view would look up the records of the Federal Parliament and of the provincial legislatures, they would find that in the matter of the responsibility for pouring money into the lap of these railroad exploiters and for establishing the present deplorable condition " honours ' have been carried off by the other side. I am not specially referring to this present " other side " because there is not a very important "other side" here; most of the

Liberal party, as I said in a former speech, are indentified with this side. But it is not worth w'hile indulging in recriminations against any particular set of politicians, because	politicians-or " statesmen " if you will-on both sides have been equally responsible for the, pouring of subsidies and subventions into the maw of exploiting corporations.
d should like to refer to one or two points made by the Prime Minister and by the leader of the Opposition. I will not say that the Prime Minister actually defended the arbitration proceedings now going on in Toronto, but he referred to them in a manner that led the House to conclude that he approved of them. At least he shares responsibility with the other side for the Act of the last Parliament under which the reference was made. I referred in a former speech to that arbitration. It did seem to me the height of folly. I could not conceive how public men, representatives of the people, with anything like a knowledge of the circumstances which have surrounded the building up of our transportation system, could agree-for I am sure the country does not agree-to a reference to arbitration of the question as to what amount should be paid to the Canadian Northern people for the crime that they, wittingly or unwittingly, have perpetrated against this country. They have unloaded upon us a system with a liability of $438,000,000-and that is far more than the system cost. They have the audacity-
I do not know whether, Mr. Chairman, by consulting the dictionary you could give me a stronger word; if so, I should like to. use it- to propose that the people of Canada shall contribute to them $10,000,000 as a reward for the outrage which they have perpetrated against the people. Perhaps I hold unusually strong views on this question, but I certainly hold that view, emphatically and unchangeably. If the decision is that they get $10,000,000 for the crime that they have perpetrated against the people, that amount will 'be added to the $438,000,000, making it $448,000,000; and we have only the financial figures, of the Canadian Northern Railway up to last September; if you add interest and everything that may have developed since, God knows where we will be as to the actual liability when we meet in the next session of Par'iament.
I said the other day that we were face to face with an appalling mess; but there it is; we have to face it. We have no option whatever in the matter. The balbs is on our lap and we must nurse it. We must 
proceed in the most businesslike way in order to solve this difficulty. Here is the only way in which we can make any progress and success. We have the Canadian Northern system. We must take the Grand Trunk Pacific and the Grand Trunk. The leader of the Opposition warned us this afternoon that the old Grand Trunk was so loaded, with obligations that we had better be very careful what we do with it. But the Grand Trunk is sponsor for the Grand Trunk Pacific, and we must take that child, because the Grand Trunk Railway cannot itself hold the babe much longer. I suggest that we make this experiment: never mind the credit of Canada and the financiers of Canada-the dozen or so alleged financial big-wigs who live in Toronto and Montreal; let them attend to their own business for a while and let the people who perpetrated this folly on the public take the consequence of their own actions. Let the Grand Trunk Pacific go into liquidation, and if the Grand Trunk cannot hold the babe let us take mighty good care that the Grand Trunk does not unload it on us at anything like the expense with which the Canadian Northern has been unloaded on us or with anything like the consequences. I reiterate this point about the credit of Canada. Personally, I have grown tired' of hearing that oft-reiterated cry, and I think the people who do the paying-not who receive the dividends, mind you-are pretty well tired of it also. We want to settle this thing once and for all, We cannot borrow very much money in the markets of the Old Country now, anyway, because the war is on. We can do only what we are permitted to do by the British Government, and, perhaps, by the United States Government; so we need noi fear anything about the credit of Canada suffering. Let the credit of Canada slide just for once, and let us have one showdown. Is it always to be a case of heads the exporters win and tails the people lose?
I do not know whether the member for Maisonneuve (Mr. Lemieux) is perfectly satisfied. He asked me the other day to use my best endeavours to get the Government to adopt the recommendation of the Dray-ton-Acworth Commission that our national system of railways 'be operated by a commission independent of the Government, free from political interference and responsible only to Parliament, in order that patronage and political control or interference might be absolutely

eliminated. I said that I would use my best endeavour in the matter, and I have done so. I am not saying that because of anything I may have done to induce the Prime Minister to make the reasonably satisfactory announcement which he did this afternoon regarding the mode of management that shall be adopted. He came pretty nearly meeting my view. I hope he came as near to meeting the view of the hon. member for Maisonneuve (Mr. Lemieux). He did not say that the recommendations of the Drayton-Acworth report' with regard to management would be adopted to the letter, but he came pretty close to it. He promised in unqualified terms that the [DOT] Government would provide for a management and administration of that system that would be entirely free from political control or manipulation. I believe the Prime Minister is a man of his word, and I- know this Parliament will hold him to strict enforcement of that statement. We must have no political management of-that railway, no such management as has disgraced the administration of the Intercolonial Railway system ever since Confederation. I sometimes worry about my good friend the able Minister of Public Works (Mr. Carvell). I have a good deal of faith in him. During my election campaign in the West I made strong use of his personality; I -spoke about the stern old covenanter that would never strike his colours to the wrong, and yet, when I come down here, I find-and I hope I am not violating any private confidence-that he is not quite sound on this question of railroad management. I excuse him on the ground that he has lived in the Maritime Provinces probably all his lifetime.


Mr. CARVELL:: I just want to put my hon. friend right. More than twenty times during the last fifteen years I have condemned the management of the Intercolonial railway. It is the most unbusinesslike proposition that I have ever known in my life. If the hon. member will look up the pages of Hansard, he will find I have gone further than he will in regard to the management of 'the road in the last twenty-five years.


Robert Lorne Richardson: The hon. gentleman quite misunderstood me if he thought for an instant that I was impugning his position on the question.. If he had given me time, I would have excited his delight that I had made the reference. I was only pointing out that while he had lived in Sodom and Gomorrah so long, he had, like Lot seen so much of it that he had become
disgusted with the system and felt that it could never be improved under public ownership.


Frank Broadstreet Carvell: No, he has not.


Robert Lorne Richardson: The hon. gentleman says that the Intercolonial Railway has been very badly managed, and he has not scrupled to denounce that management. Of course, it has been badly managed. You could not get anything worse on this side of Hades-if that is a parliamentary term. The whole trouble is this: The Intercolonial Railway was built as a condition of Confederation. When these scattered provinces were formed into Confederation in 1867,. one of the conditions was that a railroad system should be constructed at public expense through the Maritime Provinces, and that it should be linked up with the rest of Canada, at least with Ontario and Quebec. In order, to do that, it was necessary to construct the railway along the coast, touching a village here and there, and this, that and the other town, and it was built, not as ia commercial enterprise, but as a condition of Confederation. Then it remained pretty largely, with an occasional inter-regnum when an effort for improvement was made, in the hands of politicians and under the control of a political department. Need I invite this House to look at the spectacle that was enacted in the last Parliament when the Chief Whip from Nova Scotia threatened to resign because the management, in its best judgment, appointed somebody to a position on that road, and the Whip had not been consulted, and because party considerations had not been paramount, as indeed they have been paramount all these years? Let him resign. We have had, as the Minister of Public Works says, and as everybody who has studied the question knows, about the worst possible mismanagement of the Intercolonial that could be conceived, but it has all been due to political manipulation and control, and that is how my good friend the Minister of Public Works got the idea that public ownership is a failure. The reason why the Intercolonial railway has not been a success is that it has not been managed by business men.


Frank Broadstreet Carvell: It has been a. failure so far.


Robert Lorne Richardson: Yes, but let mo point this out to the House and to the country that, during most of these years, the freight of the people of the Maritime Provinces has been carried over the Intercolonial railway at about one-third of the


Mr. COCKSHUTT:: The railways of the different states have different gauges, and you have to change passenger trains at the boundary lines of the different states.

Air. RICHARDSON;: Just the same as you have different gauges of members in this Parliament, they will cavil at pretty nearly anything you say. But the gauges [DOT]really do not make any difference. Let them standardize their gauges, whether they be large or email, if they choose. I am not referring to gauges here; I am referring to the administration of the system. There is always somebody who can pick a little hole in anything that any one says. Even the great Master, the great law-giver of Nazareth, had holes picked in his utterances, so I do not expect to scape absolutely scot-free in this discussion. I say the system of managing the roads there has *proved a fine success, and if it has proved [DOT]a success in these Australasian colonies, which, of course, are British, why should it not prove an equal success in this great Do-minion, which is also British? I dislike very much to mention the name of 'Germany in this British-Canadian House of Parliament, and yet I am going to state that the railroads in Germany are managed entirely by the State. Do the members of this House know that three-fourths of the people of Germany have travelled for years and years on the German system of railways at a quarter of a cent per mile, while m Canada we pay on an average of three cents per mile, and with the recent addition to rates it may even exceed that? France has public ownership of railroads; so has Austria-Hungary, and so has Italy! and yet we are told even by so good a friend of mine as the Minister of Public Works-he did not actually say it, but I am afraid he sometimes thinks it-that we in Canada have not sufficient inherent honesty in ourselves to manage a Government-owned -system of railroads. I would suppose that on the average we are as honest as the people of other countries, although a great railroad man in this- country once told me that the Canadian people were more dishonest than the .Chinese; he may have been right or wrong, but at all events if we put sufficient guards around ourselves, take away from the Government the power of interfering with the commission, and if we absolutely prevent political manipulation and control, we ought to succeed and surely we can get railway experts like Mr. Shaughnessy-Lord Shaughnessy, I should have said, but as the mover of a resolution to abolish all titles in- this country I -may be forgiven for making that slip-D. -B. Hanna, -Grant Hall, Sir George Bury, and other excellent railway operators now engaged v?ith our big railway systems to work for the country. Surely, if we pro-

tect their positions for them, pay them satisfactory salaries, and give them such assurances that they [DOT]will be satisfied we shall not interfere with them, we can get them to serve us just as they serve the privately-owned roads. I have talked to some of these men as well as many other competent railway operators and I know they would just as readily-some of them have said they would more readily-serve the people of Canada than a private corporation, because most of these men as, indeed, most of our Canadian people, have at heart the idea of service. The average man would like to render service to his country but these men in the past could not be induced to serve publicly-owned roads so long as they were subject? to political manipulation and control, and I do not blame them. But if we adopt the recommendations of the Drayton-Ae-worth report and put our publicly-owned system under the control of a commission of the best available men, and protect that commission from political control, I am satisfied we could get the best railroad .men in the Dominion of Canada to serve us; and well it would be if we could engage such men, because we are bound to embark upon this system, it may not be of our own choosing, but we are nevertheless up against the necessity of embarking on a great publicly-owned system of railways.
In order to make such a system anything like a success, as the Prime Minister said this afternoon, and as I have .already told the House, we shall have to take over certain roads. We have to remember that owing to the absurd competition among these railroad exploiters, subsidy hunters, and manipulators, railroads have been built throughout the country that are entirely unnecessary. Many of you who have travelled over the Canadian Pacific, the Canadian Northern, and the Grand Trunk Pacific in the West know that these roais parallel each other at close range for scores, if not hundreds of miles. Now, if we are to take this great combination of systems over-and we must do so-we must co-ordinate all these roads. We must eliminate every unnecessary mile in the whole system. We must eliminate the mileage that parallels some other road, and in the interests ..f the country we must operate only that mileage that is necessary for serving the people of this country. If we did that, we could probably reduce the mileage of these publicly-owned toads by twenty-five, or thirty. or thirty-five per cent. Then we ' would be face to face with this proposition. The average man may say, "You must
charge rates sufficient to produce interest on the entire capitalization." Are we to charge rates on the Canadian Northern sufficient to produce interest on $528,000,0001 Not so, because we are not going to be able to utilize all that system. We must eliminate at least thirty or thirty-five per cent of the mileage of the roads we take over. Then what must be done? We must strike from the national capitalization at one sweep the entire capital representing the mileage we eliminate. There '? nothing else for it, because in no other way could we make the system pay. If we left the capitalization at the enormous figure which the exploiters would, present to us as the cost of the roads, we could, never pay the operating and maintenance expenses and proper interest on the capital.


Frank Broadstreet Carvell: How are we to eliminate any portion of the $438,000,000 represented by securities?


Robert Lorne Richardson: I can tell my hon. friend in one word-just wipe it off your book.


Frank Broadstreet Carvell: That is a pretty easy
way of paying your debts.


Robert Lorne Richardson: My hon. friend
knows that the people of Canada share to some extent in the responsibility for this folly because they supported Governments and parties who did the wrong. It is the people of Canada through their representatives in the provincial legislatures and in this House who have enabled these exploiters to commit this folly. Then let the people of Canada take their loss, as they will be obliged to take their loss. We shall have to wipe off $100,000,000, or $200,000,000, or $250,000,000 from the books, and that is where the iniquity of this bonusing system through all these years to exploiters comes in. But there is only one way to do it. It will just represent that much loss to the people of Canada, and it serves them right because they have gone on conniving at this' thing. They have been warned many times against it, but they have gone on just the same, and the people of Canada will just have to take their loss great as it may he. Then we shall have a publicly-owned system of railroads in this country with a vast mileage capitalized at what the system would have cost to construct under sane conditions. I know of no other way of solving this great question. When you have reduced the capitalization to what it would have been if the system had been constructed under sane and rational conditions, then

and then only can you establish a rate that will be just to the people of this country. I believe that if we co-ordinated these railroads, if we eliminated waste and duplicate mileage, an<^ reduced the capital to proper proportions, we could establish both freight and passenger rates on this nationally-owned system that would produce operating expenses and maintenance charges, as well as a good return on the capital that was actually required to produce the system'; and in my judgment we could have a very much lower rate than we have at the present time.
My right hon. friend (Sir Robert Borden) contrasted the cost of the Canadian Northern Railway system, which he placed at $44,000 per mile, with the cost of the Grand Trunk Pacific and the Transcontinental. The cost of the Intercolonial railway, he said, was $65,000 a mile, the cost of the Grand Trunk Pacific was at the rate of $100,000 a mile, and the cost of the Transcontinental railway was at the rate of $90,000 a mile. If you add interest up to the present time on the latter it would increase that cost to $110,000 a mile. In connection with the Transcontinental, I would like to put a question to the members of this committee. Do hon. members recall that, after the completion of the Transcontinental railway, the late Government appointed a commission to inquire into the construction of that road? Do hon. members recall that that commission found and reported that there was $40,000,000 of graft money in connection with the construction of the Transcontinental railway? No wonder the cost of the Transcontinental was run up to $90,000 a mile and $110,000 a mile if you add interest. There were many crimes perpetrated in connection with the Grand Trunk Pacific and the Transcontinental. Hon. gentlemen know something of the town of Transcona. If hon. gentlemen go to Transcona they will see something that will almost sicken them of the methods that, were adopted in connection with the manipulation of the townsite terminals and shops there. The town of Transcona is in my riding. I have not time to tell the story, hut there are at that place great shops huilt by the Government led by the right hon. the leader of the Opposition, and I understand that those great shops are not being properly operated at the present time. The tragedy of the town of Transcona is one of the iniquities in connection with railway construction in this country. That is a long story and must be told some other 	*
day; I have not time to tell it to-night. In connection with the construction of the Grand Trunk Pacific, look at the hotels that were built, all at the public expense. It is our money that was used in this folly; it is our money that was used for the construction of these hotels. There is a great hotel in .Edmonton and another in Winnipeg. I saw a report the other day that so great was the loss in the operation of these hotels that the Government contemplate closing them both down.
This country has been on a dreadful spree for the last twenty-five years or more in regard to its railway policy, an orgy that some day will have to be written up. We have had booms in this country and people have been too busy to pay special attention to the great transportation question. As a result these dreadful follies have been committed, and the country is face to face with the consequences and will be obliged to deal with the situation in the
10 p.m sternest fashion. I have observed in this House, within the last few weeks, a feeling of uneasiness on the part of a great many hon. members in regard to the transportation question, and I believe that feeling only reflects- the uneasiness that existsi among the people. No wonder hon, gentlemen have risen in their places day after day and have wanted to know when the Government is going to take control of the 'Canadian Northern! Railway system. No wonder we are anxious to see this road placed in the hands- of an independent board of ekpert railway men, in whose integrity and ability we may have implicit faith. No wonder the country is anxious to see this great system placed under the control of such a board. I believe the people are. beginning to waken up, and to waken up in a lively manner, to the real consequences of the folly that we have been indulging in for the last twenty-five years-. I believe it is because the country is- beginning to waken up that the Government is moving, is ready to acquiesce in, and to comply with, the wishes of the House and the country. It is- because of that feeling in the country that I wish to raise my voice and to bring my influence to bear, to induce the Government to get to this question as rapidly as possible and to find a solution for it. That is the excuse I have for rising in this House as frequently as I have done in connection with this railway situation.
One word in regard to the position which my right hon. friend the leader of the Opposition (Sir Wilfrid Laurier) took in

his address this afternoon. He instituted a comparison between the Dominion of Canada and the great Republic to the South. He said he did not believe that three transcontinental lines were too many for Canada because the people of the United States had seven transcontinental lines. I could not help thinking that there i3 no parallel between these two cases. There is this point of difference, however, that the seven transcontinental lines that stretch across the American continent south of the 49th parallel were built almost entirely, except in one or two cases- in which some land assistance was given in the early history of the -country, at the expense of the owners-the stockholders and the bondholders. That is what has happened down there. In addition to that they have a population that enables them to support these seven transcontinental railway lines. But, Mr. Chairman, the three transcontinental railway lines that -cross this North American continent in -Canada were built by the people of 'Canada. The people of the Dominion- have paid dollar for dollar fo,r every foot of railway that has been constructed within the bounds of the country and yet we do not own these railways. We do not need three transcontinental railway lines. I could go on by the hour telling you about the grass and shrubs growing along the line of the Transcontinental and of various portions of that road which are not even being operated. We have tossed $200,000,000 of the people's money into this Transcontinental railway and of what use is it to us at the present time? It has been built a long way ahead of the time when, if ever, it will be required. I believe that if the policy enunciated by my right hon. friend the Prime Minister years ago of contenting ourselves with only one transcontinental railway around the north shore of Lake Superior, to be taken over by the people and left open to all lines to run their trains over, had been adopted we would not have had an expenditure of $300,000,000 or $400,000,000 to face and grapple with at the present critical juncture of the country's history. We would then have had but one Transcontinental road, and what an enormous saving would have been effected in the operation of only one great system. We do not want a lot of railroad corporations. Let me tell hon. members this-and I have it from some of the best railway authorities that ever entered this country-that notwithstanding all that is said to the politicians, all that is said to members of Parliament, and all that is said to the people
of this country about competition, you get no competition, absolutely none. The railroad companies of this country, and of this continent-in fact, the railroads of all countries-are a solid combination. Their officials meet from time to time and fix the rates absolutely between themselves. If one company's line is forty miles longer than another company's line between two given points, those two companies adopt the same tariff, so that there never is competition, and' there never will be competition. So that the thing to-day is to get as many railroads as you can under one management, and if you have them under one management you save so much in staff, so much in salaries, and so much in administration, that it makes an enormous contribution to the success of a railway.
Just a word while it is in my mind with regard to the Canadian Pacific railway. I notice that my hon. friend the member for South York (Mr. W. F. Maclean) advocated that the Canadian Pacific should be taken over, and there are some people who say, "Let us take all the railroads over." In my judgment that would be the greatest mistake that -the Canadian people could make in connection with the present solution of the issue. The Canadian Pacific railway is an entity in itself. It is a well-managed corporation-no keener or more efficient management can be found on this continent. But the Government/ system, embracing, as it will embrace, the Canadian Northern, the Intercolonial, the Prince Edward Island railways, the Transcontinental, and the Grand Trunk Pacific railways, and the old Grand Trunk railway also, will touch practically all important points in the Dominion. What special object would there be in acquiring the Canadian Pacific also? We do not want two lines of railroad touching at the same points; let the Canadian Pacific go on just as it is. But if we take and co-ordinate this great Government system' of railroads, and if we adopt the advice that I have offered with regard to capitalization, I want to assure the House and the country that we shall be able to adopt rates on the Government system that will compel the Canadian Pacific to reduce its present rates, and we shall be doing an inconceiveable service to the people of Canada. Let me illustrate what I mean: We have had -in the city of Winnipeg for the last twenty years or more, a system of electric light and electric power, owned, by the way, by the same interests that control the Canadian Northern. The water power was developed on the Winnipeg river,

and transmitted some sixty or seventy miles into Winnipeg. Six or seven years ago- and it is worth while that every member should know these facts,-the people of Winnipeg, feeling, as they had a right to feel, that the rates they were paying for power and light were much too high, decided to develop a water power and an electric light system.of their own. They procured from the Dominion Government what is known as the Point du Bois Falls on the Winnipeg river, and they developed that system at a cost of six or seven mil-ion dollars. Now, mark you, they cut the rates to one-third of what the people were paying at that time to the Winnipeg Electric Railway interests. Not only that, but they have had a yearly surplus of from $80,000 to $85,000, after providing for sinking fund and all proper expenses of operation for the last two or three years. They have saved, and are saving, the consumers of light and power in the city of Winnipeg $3,000,000 a year, so that in the last six or seven years the total saving to the people of that city has been over $18,000,000, because the other company was obliged to cut its rates and bring them down to the level of the rates charged by the public owned system. In other words, three times the cost of the entire enterprise has been saved to the citizens of Winnipeg. Now, if we adopt the plan proposed by the right hon. Prime Minister, and co-ordinate all these railroads, if we eliminate the useless mileage and wipe out the unnecessary and criminal waste which the public should not have to pay for, I believe we can duplicate	the experience of the
people of Winnipeg and largely reduce the rates that are in force at the present time. Ard the beauty of the proposition is that the great Canadian Pacific Railway, spleudid read that it is, will be obliged to meet our rates, ard then see what a saving the;e will be to the people.


Mr. McCREA:: 
Mt. CURRIE:: What was the land worth at the time the contract was made?


Robert Lorne Richardson: Never mind what
it was worth; I am telling you what they got out of it. I have not condemned the bargain made; there was a great excuse for it at the time. But I want to explode this absurd notion held bv many
that the Canadian people owe a debt of gratitude to the railroad companies.
Then we gave exemption of duties- on the materials required in the construction of that road, which was a -concession of enormous value at the time. In addition we gave from the public treasury large loans whenever the company asked for them. The time was when it was not the Canadian Northern which was rapping at the doors of Parliament; it was the Canadian *Pacific, and this Parliament always came to the rescue of the Canadian Pacific when it required assistance. Here is something the people of this country perhaps never think of, or have no realization of. We gave the Canadian Pacific exemption from taxation upon all its possessions until Gabriel blows his trumpet. Based on the rate of taxation which exists in the United States, this concession amounts to the appalling approximate sum of $500,000,000 every thirty years. Just think of it. Perhaps you do not recollect all these things, Mr. Chairman, but the exemption from taxation on every dollar's worth that this company owns is worth to them $500,000,000 approximately every thirty years if you take the average rate of taxation prevailing in the United States.
I want to deal with a matter whi-ch I am- sure wiH interest the House. When a company receives, a grant in the old country it is a statutory grant, and a grant toy statute is just as good as if the patents were issued for the land. When the contract was -made in 1881, a clause was- placed in it that:
Notwithstanding any Act of any legislature or ainy municipality all the possessions of the company-
Now -mark this.
-all the possessions of the company, its roadbed, rolling stock, capital stock, station houses and station grounds, shall be exempt from taxation forever
Forever! That is a long time, Mr. Chairman. Now mark what follows:
And the land grant shall be exempt from taxation for twenty years from the grant thereof from the Crown.
It was the understanding of Parliament at the time that while the appurtenances and possessions of the company would be exempt forever, the land1 -grant would -only be exempt from taxation for twenty years from the grant thereof from the Cro-wn. I have explained to the House that when the bargain was ratified, the Government set aside the best agricultural areas through-

out the Northwest, from which the company might select their land grant. But the company did not take out their patents for this land grant at once. I was in Parliament the year before the expiration of this twenty years, and I had learned that the company had not taken out their patents, and had further learned that they proposed to contend that their exemption period should begin with the issue of their patents and not with the statutory grant from the Crown. Learning that, I introduced a Bill in the House of Commons some twenty years ago to interpret that clause. I read from speeches of hon. gentlemen who were in the House of Commons at the time the contract was ratified to show that it was the understanding of Parliament that the exemption of taxation on the land grant should only last for twenty years from the time of the ratification of the contract. I read from the remarks- of Sir Hector Lange-vin, Minister of Public Works in Sir John A. Macdonald's Government. He said:
Therefore in a very short time, the parish or municipality will be settled, and the exemption of taxation on these lands will not be felt, because the land remaining to be sold will remain there only until the settlement can be extended in that direction. So that after the twenty years what will remain exempted from taxation will be just the 100 feet in width on the length of the municipality. [DOT]
It is clear that Sir Hector Langevin understood that the land grant would be taxable in twenty years and that the exemption from taxation would be only the 100 feet of roadbed.
Hon. Edward Blake, the greatest tribune of the people who ever sat in this House, spoke as follows:
They have perpetual exemption-
He was referring to the Canadian Pacific.
from taxation on their enormous property, a monstrous provision, in my opinion; and this monstrosity is not to last merely twenty years, which is the period of bondage in other respects but it is to last forever.
Sir John A. Macdonald, in connection with the ratification of this contract, expressed the view that the Canadian Pacific, owing to the vast subsidies given to it by the people, would be able to carry freight at a very much lower rate-I think he said one-third

than that charged by privately-owned railroads. At that time I introduced an Act to interpret that land-tax exemption clause. I pointed out that the ink was scarcely dry on that contract giving the company a statutory grant of 25,000,000 acres of land when the company borrowed $25,000,000 in land grant bonds, and that [Hr. Richardson.]
the grant was as available for all the purposes of financing of the company as it ever was. But the twenty years expired, and when I introduced an Act to interpret that clause I was met, forsooth, with the most strenuous opposition on the part of leading politicians of this House. I regret to say that the present leader of the Opposition I think at that time, certainly on one occasion-characterized me as a Socialist fcr daring to introduce an Act interpreting a clause in a charter and interfering with vested rights. I. was prompted during my speech in the House by the late Hon. J. G. Haggart, member for Lanark, former -Minister of Railways in Sir John A. Macdonald's Government, and I was able to state to the House that he had introduced an Act for the purpose of interpreting a clause in the Canadian Pacific charter, when it suited the interests of the Canadian Pacific Railway company that that interpretation should be made. It happened that they wanted certain remission of duties on material that they had imported, and the Government of the day introduced an Act interpreting a clause in their charter arjd enabling them to make off with a large sum of money. But when I, in my humble capacity as representative of the people, asked that a clause in this charter should be interpreted in order that the interests of the public should be protected, I was denounced as a Socialist. The late Sir Charles Tupper, who was leading the Opposition, also denounced me m the grandiloquent language so characteristic of him, -so that I met with opposition on all sides and was voted down. It was then that I was discovered to be a pestilent fellow, a danger to vested interests, and a menace to the country. As a matter of fact,
I suppose that-I was a menace to the big interests. But-I hope the House will forgive me this personal word-after the next election I was the only member of the entire 213 against whom a petition to unseat was pressed;. All the other protests were sawed off and a conspiracy to drive me from public life was formed by the corrupt manipulators of the two parties who put their heads together to commit the crime.
I had run as an independent candidate in the 1900 election. The Conservatives did not put up a candidate against me and supported me pretty largely. I served one session in that parliament, the protest could not be brought to trial before the House met. At that session I opposed a Bill-a Mackenzie and Mann Bill which was backed by the Conservatives-because I thought it was my duty to do so. That

act of mine was used for my political undoing at that time. The so-called Liberals -that is not Liberalism at all-put up the money, and the Conservative manipulators got the evidence to prove that teams had been hired in my election. Although my entire election expenses were sworn to as being less than $600 in a riding 125 miles long by 100 miles wide, I was unseated, forsooth, on the ground of bribery and corruption. While the judges who sat on that petition were considering their verdict, a bribe was flaunted before them by the "kept" press of that day in the shape of an offer of a seat on the Supreme Court bench of this country for one, and the position of Chief Justice of Manitoba for the other.


Some hon. MEMBERS:: Order.


Robert Lorne Richardson: Hon. gentlemen need not worry about my reference to the judiciary. Both the judges are dead, and if they are looking up to-night from where they are they will know the truth of what I say. The sequel is that I was unseated, and they both received the jobs suggested in the "kept" press. This is the first time I have ever made any public statement with regard to this matter. It should be a warning to any young member of this House who may ever be tempted to stand up for the right against the power of party so often exercised in the past for evil purposes. But I think the time is past when a conspiracy of that kind can be repeated and carried out successfully. I believe that a better day has dawned in this country. More independence prevails. On this side of the House we have men who belong to different schools of thought, but they speak their minds on public questions with freedom and frankness. What is a free Parliament if it is not a body which giyes to those who sit within it the right to represent the interests of their constituents? But under this system of ours we have witnessed the spectacle for the last forty or fifty years of a solid phalanx sitting to the right of the Speaker-


The CHAIRMAN (Mr. Nesbitt):: My hon. friend is very interesting on the railway question; and I would suggest to him that he adhere to it.


Robert Lorne Richardson: The point which I
' was making was in connection with the railway question. We have on this side of the House a splendid galaxy of men who are united in seeing that the Government does the best it can with this railway question. I was leading up' to that point, but,
perhaps, having been a partisan in the old days yourself, Mr. Chairman, you may be inclined to a little extent to overlook these things. I call the attention of the committee to the fact that the member for North Simcoe has stolen my glass of water. The Minister of Public Works says that my wind is all right; notwithstanding that reminds me of a story. On one occasion the late Hon. George Brown was making a speech in Peterborough. It was very warm; and he was drinking a large quantity of water and was waving his arms about and gesticulating wildly, when an Irishman in the audience said:	" Mr. Chairman, this is the first time that I ever saw a wind-mill run by water."
To conclude that point of my argument abcut the taxation Bill that I was unable to get through the House-I mean my Bill to interpret the tax exemption clause-I think I got six or seven votes to ninety-nine, so that you see the representatives or the " mis-representatives " of the people at that time were pretty solidly lined up with the corporations. We, however, got from' the Government of the day a pledge that they would issue the patents to the railroad companies for their lands, and that they would refer the question to the courts for interpretation as to whether the exemption should date from the ratification of the contracts or from the issue ,of the patents. I pointed out at that time upon the floor of the House that that was a dangerous thing to do; that if the reference were made to the courts of this clause the courts would take cognizance only of the actual wording of the clause, and the last act I performed in Parliament before my undoing 'by virtue of the conspiracy referred to, was to move a resolution that, when the reference was made to the courts, the courts should be requested to take cognizance o.f the understanding of Parliament when the contract was ratified. I think that was a reasonable proposition. My resolution was, however, voted down on that occasion, and the reference was made to the courts-with what result? That the courts did exactly as I predicted they would do; they rendered a decision that the exemption from taxation should bear date from the issue of the patents. Therefore, the Canadian Pacific railway had another twenty years' exemption from taxation on this enormous land grant. Do hon. members realize what this exemption from taxa-. tion has meant and means to the Canadian Pacific Railway Company? The other night

I made an estimate that that taxation would be worth, on an average, $2,000,000 a year, and as it runs, or will run, for forty years, if you compound the interest the exemption in that connection alone would probably amount to $100,000,000. About $50,000,000 at least could have been saved to the people of this country if my advice had been taken on that occasion. There is in the Canadian Pacific Railway charter a clause that is known as the ten per cent clause. Let me read it :	'
The Consolidated Railway Act of 1879, respecting tolls, is hereby extended so that such reduction may be to such an extent that such toils when reduced shall not produce less than ten per cent per annum profit on the capital actually expended in the construction of the railway.
When I was in Parliament in 1896, 1897 and 1898 I was urged by some gentleman in Winnipeg to bring up this question of the ten per cent clause. The company at that time was charging excessive rates in the Northwest- I introduced a resolution that the Government should appoint a commission to find out how much money the country put info the Canadian Pacific and how much money the Canadian Pacific capitalists put in of their own. I made at that time on the floor of the House this argument, which, I believe, is a legitimate one, that in allowing them a profit of ten per cent, we should not allow them ten per cent profit on the tens of millions of dollars that the people put in, but that we should allow them profits only on the money they put in themselves. I need hardly tell the House-it goes without saying-that my resolution was voted down on that occasion by a parliament that seemed to be more considerate of corporations than of public interests. Let me, before I pass from the consideration of the Canadian Pacific, refer very briefly to the position which Lord Shaughnessy, president of the Canadian Pacific Railway, took in the manifesto which he issued the other day to the people of Canada, and which was first presented at the annual meeting of that railway company. He said in that statement that those who held the stock of the Canadian Pacific Railway had paid on an average of $112 for every $100 of stock. When I read that statement, my memory carried me back to the first issue of stock of $20,000,000 which was distributed during the * construction of the road amongst members of the syndicate and their associates at twenty-five per cent of its par value. This twenty million dollars worth of stock realized five million dollars, and this lat-

ter amount was set aside and was paid back to the purchasers of the stock in dividends at the rate of six per cent per. annum par value, so that in four years they .got back their own money and they owned the stock besides. That is pretty good 'financing. In 1883, also before the road was completed, there was another issue of thirty million dollars' worth of stock distributed amongst the members of the syndicate, shareholders and friends, at fifty cents on the dollar. Therefore, out of the first fifty million dollars of stock the company realized only twenty million dollars in capital, cash. This stock was also a paying investment for the shareholders, because even before the road was built, they received their six per cent per annum par value, and they soon received back more than they had paid for the stock, and they owned the stock besides. If hon. members have any desire to make fuller investigation and to check the figures I have given, they might look up the sessional papers of the day.
In addition to the aid granted to the Canadian Pacific railway, which I have already stated, over thirty million dollars were contributed to subsidiary companies. Provincial Governments granted to subsidiary companies of the Canadian Pacific railway twelve million dollars; British Columbia contributed 6,389,000 acres of land, which has netted the company an enormous amount of money, and they still own over 11,000,000 acres. They have realized from the sale of lands and townsites nearly $124,000,000, exclusive of the lands which the company still hoilds, and which cannot be worth less than $115,000,000 or $120,000,000. That makes a total public assistance to the company of $228,500,000. Then if you add $400,000,000 of the value of the taxation exemption, exclusive of land tax exemption for the thirty-five years the company has been in existence, it will bring the public aid up to the appalling sum of $628,000,000. If you add to that $125,000,000 for land, townsites, etc., already unsold, you have the surprising approximate figure of $753,000,000, which almost approaches the valuation that Lord Shaughnessy, in his recent manifesto, places upon the assets of the company to-day; which manifesto was, I think, issued for the purpose of serving notice on the Canadian people that if they nationalize the Canadian Pacific railway they must pay an enormous figure for it. I think the House will agree with me that the Canadian people are' not under any very profound debt of gratitude, as some

would have us think, to the great Canadian Pacific Railway corporation.
I do not want, to go into the figures of the aid given by the country to the Canadian Northern railway. We have had those figures almost ad nauseam. The Prime Minister, this afternoon, in his able resume, gave to the House most comprehensive figures. I have already, earlier in the evening, dealt with that aspect of affairs.
Let us now take up the question of the Grand Trunk railway. It was in the early days when the old Grand Trunk railway was established in this country, and the union between politics and the railway corporations does not seem to have been as close or as direct as it developed later on. The total subsidies to the old Grand Trunk railway were thirteen million dollars. Many years ago the Government loaned this company fifteen million dollars which were never repaid, and this makes a total of twenty-eight million dollars. If you add these two sums and figure out compound interest upon them for the long period, the result will be a huge sum.
I promised earlier in the evening to make some reference to the construction of the Grand Trunk Pacific, or Transcontinental line. The construction of this enterprise is perhaps the most insane upon which the Canadian people ever embarked. My right hon. friend the leader of the Opposition, coupled with others in and out of the House who surrounded him in 1903, are responsible for this monstrosity. If time permitted, I should like to deal fully with the history of this enterprise, but it is not of such distant date that the country is not perhaps pretty well .seized of the facts. In launching the project in Parliament, the right hon. leader of the Opposition, who was then Prime Minister, spoke as follows:
It is not of to-morrow, but of this day, of this hour and of this minute. Heaven grant that it be not already too late; Heaven grant that whilst we tarry and dispute, the trade of Canada is not deviated1 to other channels.
Let me recall to the House, the reply which the late Hon. Mr. Blair, who at that time was Minister of Railways in the Laurier Cabinet, made to the right hon. gentleman. Here are Mr. Blair's words:
What does the right honourable gentleman mean when he says: "The flood of tide is upon hs that leads us on to fortune; if we let it pass, it may never recur again"? What does the right hon. gentleman mean when he says: "If we let it pass, the voyage of our National life, bright as it is to-day, will be bound in shallows?" What does the right hon. gentleman mean when he says: "We cannot wait, because time does not wait?" I think, Mr. Speaker, and I say it with all respect to my right hon. friend, that it would have been as correct if not so poetic, for him to have said:

" We cannot wait, because Senator Cox cannot wait."
I shall not go further 'into the history of the inception of this enterprise. I would recommend h-on. members to read up Hansard of that interesting period and learn what was said on the floor of the House about this preposterous proposition.
I want to repeat the point I made earlier in my remarks, that I do not believe anything is to be gained by indulging in recriminations with regard to the responsibility of this or that party for the condition cf affairs we find at the present time.
, As 1 have already said, all parties are almost equally responsible, and the best thing we can do is to get behind the right ' hon. leader of the Government in endeavouring to evolve a satisfactory national stale-owned system out of the roads that must in a very short time come to us, and some have already come. I believe that that object can be accomplished very much more easily by a Union Government than I believe that the country-is seized of the seriousness of the situation, and I believe seriousness of the situation, and I believe the Government also notwithstanding the stress of work due to its multitudinous and exacting duties also realizes how serious the situation is. 1 believe the speech which the right hon. Prime Minister delivered this afternoon must have convinced the country, as it certainly convinced members of this House, that he at least is fully seized of the importance of the whole question, and that he and his Government propose to solve that problem in the near future in a manner that I trust will redound to the interest and credit of the country. I should like to see the Canadian state-owned system of railways placed at as early a date as possible in the hands of such a management as was foreshadowed by the Prime Minister this afternoon and as recommended in the Drayton-Acworth report. I believe the importance of the question necessitates the earliest possible solution. Speaking for myself, I am very much gratified to find that the Government as represented here this afternoon in the very able deliverance by the Prime Minister is fully alive to the importance of the whole question and has resolved to apply the solution at the earliest possible date.


Mr.   G@: B. NICHOLSON: At this late hour and at a time when we are all anxious to conclude the work of the session and get away as soon as possible, I would hesitate



to rise and say anything on this question but for the fact that I feel, like the hon. gentleman who has just taken his seat, that this is one of the burning questions before the people of this country, and one to which we should all at least endeavour to direct some attention in order that the best possible solution may be found of the railway problem in this country. If I were to follow the remarks of my hon. friend from Springfield (Mr. Richardson) I would be compelled to disagree with many of the arguments' he advanced and with many of the conclusions he reached. But it is not my purpose to deal with his remarks. I (wish to direct my attention to what the actual condition is with regard to the whole railway situation in this coun-[DOT] try and see if I can offer any suggestions that will assist in finding a possible solution. In passing, I might 6ay that I entirely disagree with the gloomy picture my hon. friend from Springfield drew of the future of this country when he left it to be understood that in his opinion the development of this country would never be s-ich as to make necessary the railways we now have projected from one end of the country to the other. I heartily agree with what was said in that connection by the right hon. leader of the Opposition this afternoon, because I believe the time will come, and come very shortly, when three transcontinental lines, properly equipped and operated, will be required to handle the traffic of this country. These roads may have been projected a little too soon, but let me point out this: In the United States they have a population of four hundred people to every mile of railway, whereas in Canada, according to the last census, we have only one hundred and eighty-five people to each mile of railway. Now, in order to bring our population, sparse a6 it is, up to the same standard in relation to railway mileage as prevails in the United States, we need to increase our poulation just up to sixteen million people, and I do not think it is a very far cry to the day when we shall have sixteen million people in this country. I am assuming for the moment that our railway mileage should be proportionate to our population, but when we remember that our population is spread over an area as large as the United States, I think the argument will not hold water that population proportionate to railway mileage is a fair way of determining what our mileage should be. I would point out to- the hon, -member for Springfield that whereas in 1896 the gross earn-
ings of all the railways in Canada serving the territory now being served by the Canadian Pacific, the Canadian Northern, the Grand Trunk Pacific and the Transcontinental was $38,000,000. in 1916, or just twenty years later, they had increased to $160,130,786. I would also like to remind my hon. friend that I had the privilege of running a locomotive on one of these transcontinental railways during the year when the first 1,000,000 bushels of wheat was hauled over the Canadian Pacific, then the only transcontinental railway in existence from the head of the lakes to the seaboard. In the first year when they hauled that 1,000,000 bushels of wheat it was an event in the history of this country. During this last winter 1,000,000 bushels of wheat was moved out of Fort William in one single day. If we had had the facilities to carry the traffic there would have been two or three million bushels of wheat being moved daily at some periods during the winter just passed. I have read a statement by a gentleman, who takes a position very similar to that of the hon. member for . Springfield in regard to this question, that there have been wheat and flour stored in the West for years because there have not been railway facilities to get it out. I do [DOT] not believe that is so, but it is just an evidence of the extreme statements that men will make when they undertake to bolster up a position that requires an extreme statement to support it.
I would like to refer to the position of the railways in this country with regard to what they have cost and what they must earn. The value of a railway property can only be estimated, providing it has been projected with a reasonable degree of common sense and properly -built-, o-n the basis of its mileage cost. We have in Canada approximately 40,000 miles of railway and in connection with these railways the Canadian people have paid $-956,085,581, exclusive of the Intercolonial railway. The Prime Minister gave ns .some figures with regard to the Intercolonial this afternoon and placed'the total investment in that road at $137,184,199.62. My own opinion is that it would be difficult to find a group of chartered accountants in the country who could determine what the Intercolonial has cost this country, if you figured it out on the same -basis as that on which any private institution would figure it out. The question is.: What have we got for the expenditure of this money? Let us take the Intercolonial, the Grand Trunk, the Canadian

Pacific, the Transcontinental, the Grand Trank Pacific and the Canadian Northern, dealing with each separately.
The Canadian Pacific is the most complete, most efficient and the most economically operated railway system in the world. I wonder whether my hon. friend from [DOT]Springfield knows that it is part of the system of railways that gives the cheapest transportation that is given anywhere in the civilized world? The Australian railways were referred to as an example of the success that may be made in
11 p.m. the operation of publicly owned railways, and the question was asked if they could do that in Australia why could not we do it in Canada? It costs the people of Australia two cents per ton mile for every ton of freight that is moved while it costs the people of Canada three-quarters of a cent per ton mile for every ton of freight that is moved. That shows how successful they are in the operation of state railways in Australia. If you refer to . the Drayton^Acworth report you will see that that is the system of railways that is held up by all those who advocate public ownership of railways as the best and most economically operated system of railroads in the world.


Charles Murphy: Does the rate which is just quoted apply only to the Canadian Pacific or is it a general rate in Canada?


Mr. G. B. NICHOLSON:: 
John Allister Currie: Are those figures based
on present-day cost ?


George Brecken Nicholson: These are present-day prices. Another point in connection with this is that, in addition to the railway, the people* of Canada, have in

the Canadian Northern, a considerable amount of valuable assets. They have grain elevators at the head of the lakes, capable of taking care of 10,000,000 bushels,; they have six lake steamers plying on the Great Lakes; there are the' Canadian Northern Telegraph and the Great Northwestern Telegraph companies with 1,500 offices; and a variety of subsidiary assets which go with a railway of that character. Let me repeat again:	you can investigate conditions as
you will, and if you can find another railway on the American continent brought up to that standard at a cost of $60,000 a mile, you will have found something that I have been unable to get any information of. My honourable friend from Pontiac (Mr. Cahill) this evening referred to the Canadian Pacific as having cost $46,000 per mile, and he used one set of figures given Out by the President of the Canadian Pacific in the last annual statement ; but he entirely overlooked in the same statement what was given as the total cost of the road. The cost of the Canadian Pacific, including $131,000,000 of earnings put back into betterments and equipment, was $818,000,000, or $61,000 per mile for the whole system just as it is. The capital stands at $61,000 per mile for the system.


John Allister Currie: Do these figures provide for double-tracking the. Canadian Northern?


George Brecken Nicholson: No, the figures I have given will not double-track the Canadian iNorthem, but will put that road and its equipment on a basis equal to what the Canadian Pacific is on. And it will cost the 'Canadian Pacific $10,000,000 to get its grades between Port Arthur and Sudbury equal to those of the Canadian Northern between the same points. I know what I am talking about, because I have been over both lines; and T know what the Canadian Pacific is figuring on in connection with that line.
A great deal has been said with regard to what the Canadian people have put into the Canadian Pacific and what the Canadian Pacific shareholders have put into it. If we were to judge by the remarks of the hon. member for Springfield (Mr. Richardson) we would come to the conclusion that the Canadian people had built the Canadian Pacific railway and presented the shareholders with many hundreds of millions of dollars in addition. You can investigate the figures from top to bottom if you will, and you will find that what the Canadian Pacific has received by way of cash sub-
sidies and cash from their land grant, and the completed road that was given to them when they started, at a value of about $30,000,000, is $200,000,000 or $14,000 per mile on the total mileage of the road. The old Grand Trunk, which is supposed not to have received anything from the Canadian people, received more than $8,000 per mile as a cash bonus on the total mileage of their railway. As a matter of fact, the assistance granted to all of the Canadian railways is as follows:
jrer mile.
Grand Trunk	 $	8,400
Canadian Pacific	 14,814
Canadian Northern	  31,729
Grand Trunk Pacific	 65,000
National Transcontinental	 110,000
I would like to give the House some comparison between the earning capacity of the Grand Trunk and the Canadian Pacific; because it is worth considering when you have to stop and. determine what the Grand Trunk is really doing for itself. The Grand Trunk has been earning for the last accounting period for which we can get any report, $10,983 on every mile of its road.


John Allister Currie: What date?


George Brecken Nicholson: 1916. The Canadian Pacific is earning $9,593 per mile on every mile. The balance in favour of the Grand Trunk is $1,390 per mile. The Grand Trunk earnings on the Canadian Pacific railway mileage basis would have been reduced by $4,630,090. The Canadian Pacific earnings on the Grand Trunk mileage basis would have been increased by $18,070,000. However, that is beside the point; the question we have to consider is how are we going to deal with this combination of railways and get an efficient transportation system economically operated -with reasonable freight rates. Three proposals have been submitted, one of which is the nationalizing of all Canadian railways. I am opposed in principle to the nationalization of railways, because I do not believe that you can do with the biggest things in the country what you cannot* do with the little ' things. While there is no other way out of it; while we have to make the best of the situation, the solution of the whole problem >if it were possible, would he our getting back to the position we were in fifteen years ago and putting the railways into the hands of privately-owned companies under proper regulations.
It has also been suggested->-in fact the Drayton-Acworth report contains this recommendation-that all the roads be iurned

over to one large private company. I have prepared a group of figures to show what would be necessary both in the case of the present owners continuing as they are and in the case of a new corporation being formed to take over the entire group of railways. If the .Grand Trunk undertook to continue and the sum of $100,000,000 were written off the National Transcontinental to cover the moneys squandered in the enterprise, they would still have to assume ai present liability of $852,416,697 and in addition would have to find at least $100,000,000 in cash to put the system in a position to make even partial operation a possibility. They would continue to be handicapped by lack of traffic-gathering branches throughout the entire 'Canadian West. If the Canadian Northern railway undertook to carry their obligations, they would assume a liability of $400,000,000 and have to find in addition at least $150,000,000 in cash to make the operation of their system possible. If the two were combined in one group or company, as is suggested in the Drayton-Acworth report, the amount of $1,252,416,697 would have to be found, and, eliminating all necessary obligations, at least $150,000,000 to $175,000,000 would have to be furnished for equipment and betterments to put the roads in a position . to make their successful operation a possibility. In other words, the total liabilities of the Grand Trunk, the Grand Trunk Pacific, the National Transcontinental and the Canadian Northern, assuming that the Canadian people wrote off $100,000,000 for what has been wasted in the Transcontinental, would be. $1,252,416,697.


An hon. MEMBER:: How would you
write it off?


George Brecken Nicholson: You cannot do anything else but write it off. You have given it away and you cannot get it back.
Mr. MeMASTER: You will have to pay interest on it.


George Brecken Nicholson: We will have
. to pay interest on it, but we cannot make the railroads earn that interest. If any one can devise a means by which the National Transcontinental as it stands today can earn the interest on $225,000,000, with 1,811 miles of railway in competition and with an overhead of charge of $61,000 per mile, he will find the solution for the whole problem.
Mr. MteMASTER: If the Canadian people ' were the creditors of this amount, they could write it off; but the Canadian people
are the debtors; therefore they cannot write it off.


George Brecken Nicholson: The Canadian people borrowed a certain amount of money and put it into the Transcontinental and the Grand Trunk Pacific. For all practical purposes, they might as well have thrown it into lake Superior. When you come down to operate these railways as a business proposition, the liabilities which I have mentioned will be simply charged to the national debt and the people will pay interest on it, not because they put it into a railway, but because they permitted a group of grafters to get away with it. We are trying to get our railways down to a point where they can be operated as a business proposition, and we have to- bring the capitalization down to a mileage basis in proportion to that of competing lines and to what the actual cost of the railway should be. It is not fair to ask the people who are paiying freight and passenger rates on Canadian railways to pay interest on money that we . deliberately threw away. Take, for instance, the case of the Grand Trunk proper, with liabilities amounting to $475,000,000. The Drayton-Acworth report, page 12, gives as the amount of securities outstanding against the 3,331 miles of the Grand Trunk as $424,169,310, and their experts say that they must have $51,000,000 in order to bring the equipment of the road up to standard. It is my opinion that $51,000,000 will not furnish the necessary equipment.


John Allister Currie: 
George Brecken Nicholson: If my hon.
friend can purchase the Grand Trunk Railway system for $50,000,000, the Government would do well to employ him has their agent- and start him out to do it right at once. I am simply giving the figures of the Drayton-Acworth report as to the outstanding liabilities of this road and the amount the Grand Trunk expert says is required to bring the equipment up to standard. As I have said, one of the


Charles Murphy: The Grand Trunk or the Grand Trunk Pacific?


George Brecken Nicholson: The Grand Trunk.


Mr. NICKLE:: Is it not a fact that, although the Grand Trunk had a greater number of locomotives than the other railways, those locomotives were so old that the drawbar efficiency made them practically inefficient for operating purposes?


George Brecken Nicholson: That may possibly be so, at least to some degree, hut to my mind it is worth while finding out just where all those locomotives are.


William Folger Nickle: In the shops.


George Brecken Nicholson: Some of them may be in the shops, but information brought to me indirectly is that they are not all in the shops. The Grand; Trunk is operating railroads both in Canada and the United States, and my information is that the Grand Trunk in Canada has been robbed for the benefit of the Grand Trunk m the United States. That may or may not be, but it is a matter at least worth investigating. There is another point in connection with that. My hon. friend has said that the reason for the Grand Trunk
difficulty is that their locomotives are obsolete. I shall give the Minister of Railways and Canals a thought in this connection.
Who is it who is designing the locomotives the Canadian Government is purchasing for the Grand Trunk railway? My reason for asking is this: The hon. member for Kingston (Mr. Nickle) has referred to the fact that the Grand Trunk locomotives are obsolete. I may tell' him that the Grand Trunk put new locomotives built by the Canadian Locomotive Company at Kingston into service less than three years ago, that were obsolete before they were turned out of the shops; positively obsolete, because they were of a type and cflass that was discarded twenty years ago by every railway using the modern locomotives. So, if we are purchasing locomotives for the Grand Trunk railway I would say to the Minister of Railways, be sure and find out who is designing them.


William Folger Nickle: The hon. member agrees with me that the locomotives being built for the Grand Trunk have not sufficient draw-bar efficiency to make them up to date, that the designing is bad, that the engineering service is not as it should be.


George Brecken Nicholson: A locomotive may be obsolete and still have draw-bar efficiency. When I referred to a type of locomotive that was obsolete twenty years ago I was not referring to, the draw-bar capacity of the locomotive, but to what it is going to cost to keep that locomotive in a state of efficiency on the road. I repeat that the last locomotive built for the Grand Trunk that I have had the privilege of seeing-and I make a business of watching for all these things-was of a type that was obsolete twenty years ago.
Now a word as to the Canadian. Northern and its equipment. The road is not fully equipped, but from one end of the road to the other what they have got is all modern equipment, and it is due to the fact that they have modern officials, and if the Minister of Railways is purchasing engines there is one man I know of who can. give him sound advice, namely, the General Manager of the Canadian Northern lines east of Port Arthur.


John Allister Currie: Air. Vaughan?


George Brecken Nicholson: No, but a gentleman who learned his business with Air. Vaughan. I ain giving that information because I think the Government should know it. It is only by getting down to details that we shall ever get out of what

the hon. member for Springfield terms " this mess," and that is what I have endeavoured to do in a rambling sort,of way to-night. There is one other matter I want to refer to, and that is how we are going to manage these railways, and the tolls we are going to exact when we do manage them. I have studied the question from every angle, and if the declaration of the Prime Minister means anything, and I am one of those who believe it means just exactly what he said, I can see no better way than to follow the plan outlined in the DraytonrAcworth report. It will be absolutely necessary for the Canadian Parliament or the Canadian Government to appoint the first board of directors, but if the board is to be kept out of politics it should be self-perpetuating, in just the same way that the board of directors of any private-owned railway in Canada is self-perpetuating. I believe hon. gentlemen will agree with me that should the president of the Canadian Pacific retire, or before he retires for that matter, he will practically nominate his own successor, and the man he choses will be accepted by the directors, and the shareholders will back him up, and unless we are to have a new group of political directors for the State-owned system of railways in Canada, every time a change occurs we must find some means of having the members of the board chosen without coming back to Governments and Parliaments, because Governments and Parliaments will always be political so long as they exist.
Mr. MeMASTER: If my hon. friend's suggestion is carried out, how will the railways owned by the people of Canada be controlled in any way by the people of Canada?


George Brecken Nicholson: Place them
under the Railway Commission, as far as control is concerned. As I understand it, the Drayton-Acworth report recommends that the power of nomination should rest with what they term the Dominion Railway Company, but I would term it a board of trustees for the Canadian people. The power of confirmation should rest with the Canadian Parliament or the Canadian Government. That is my idea. If \ some one else can suggest a better, all right, get busy. If we will look at what the Drayton-Acworth report refers to as the most efficient system of government-owned railways in the world, the Australasian experiment, we shall find that they have been changing from commission to board and then back again to commission, back and forth all the time, just because of political appointments. I

say- that if we are going to have political appointments in the operation of a state-owned system of railways, our last condition will be very much worse than the first.
The rates charged on the Government railways should be under the same control as the rates of privately-owned railways. I should like to refer for a moment to something that has been said with regard to the increase of rates granted Canadian railways by the Railway Commission a short time ago. The Government has been severely criticised for not reversing the order of the Railway Commission, but in my judgment if the Government is deserving of censure at all, it is because they took that order of the Railway Commission under consideration even in the slightest degree, and for this reason:	If we are going to have independent control of railways, we cannot possibly set up the principle that every ruling of the Railway Commission is going to be revised by the Government of the day. Reverse the position for a moment, and assume that the Railway Commission orders a reduction of freight rates. Would that be a matter for the Government to revise? Should the Government say the reduction must not take place? The one is just as logical as the other,, and it just comes down to this. I take it that we regard the Railway Commission as we would a court of justice in this country, and I do not think there is a man who would suggest that after a court had given its decision the -case should go for review before a political body. Now as to the merits of the case. The railway companies have to earn increased salaries and an increased cost of all their materials, and I do not think that an increase of fifteen per cent was a large increase in proportion to the increased price they have to pay for everything. The difficulty is that people get a wrong view of what is essential and what is not essential. There are many in this House, for instance, who would say that the railways are not an agency for the production of anything, that they simply stand as a bar between producer and consumer. Now if some of the gentlemen representing a constituency in the West, we will say, will come with me one day next winter and get off the passenger train at White River I will undertake to get him a pass to ride on one of the 210 per cent engines running from White River to Chapleau. I will not ask him to handle a scoopful of coal the whole way, but just keep warm if he can and watch the men who are marketing the farmers' wheat, and I think at the end of the ride he will have a different con-



ID 18

[Stage Direction]
oeption of what production and consumption really mean. The hon. member for Springfield, speaking on this question a few nights ago, said with all the dramatic eloquence of which he is capable that the tragedy of the increase in the. freight rates was not that the freight rates were increased by fifteen per cent, but that on the very day the order went into effect the price of sugar in the West went up one-tenth of one cent per pound. Would he believe that the locomotive fireman who helps to market the western farmers' wheat found that on the day that the wheat commission set the price of wheat 180 per cent higher than it was in pre-war days his wife had to pay 125 per cent more for the bread to make the sandwiches that she put up in his .lunch basket? I have not heard anybody say that there was any tragedy' about that. I have heard people undertake to say that the price of wheat went up too high but I could not agree with them. I believe it was the right thing for the commission to do in order that they might induce greater production of the things necessary to feed the people during the war. I have also heard it said in business circles that, because the price of newsprint. paper went up fifty per cent it was no reason why the daily newspapers should have increased the prices in their job printing departments 200 and 300 per cent. I do not agree with that. I am just repeating these statements but they do not represent my own views. I do not agree with 'the callous-hearted people who make these statements, and the only reason I refer to them is that I believe that when the hon. member undertakes to stage a tragedy based on the fact that one-tenth of a cent a pound has been added to the price of sugar he should at least exercise some little regard in the selection of the costume that the villain is going to appear in. To come back to the main question. Whatever is done with the Canadian railways, one thing that is necessary, if we are going to have efficiency and economy, is to find some means of keeping the overhead charges down to a proper basis and putting the .railways in the hands of men who will operate them independently of any political considerations whatever and just the same as a private company would operate its own railway.
Mr. MANI'ON:	The hon. gentleman
speaks about the Australian railways; what about the German, Belgian, French and Swiss State-owned railways?
George Brecken Nicholson: I stated that I would make no comparison between the
railways of Central Europe and the railways on the North American continent for the reason that it is utterly impossible. A railway must earn a sufficient amount of money to pay for the things it uses. We cannot make any comparison between conditions in Canada and those on the European continent. You can produce anything you like to mention in Central Europe a great deal, cheaper than you can, produce it in Canada. We are not going to ask our people to work for what the people of Europe get. I simply used the Australian railways for the purposes of comparison because the Drayton-Acworth report pointed them out as examples of Government ownership.


William Foster Cockshutt: At this late hour I have only a few observations to make and I shall try to confine myself to about fifteen minutes. I have taken a good deal of interest in the railway question and as I listened to my right hon. friend the Prime Minister (Sir Robert Borden) presenting the case in regard to the Canadian Northern I felt that it was one of the most masterly expositions of the financial side of the railway question that I had ever heard in this House since I have had the honour of a seat in it. The railway situation certainly does not present a rosy appearance. But, in the meantime we must view these things as they are and not as we would like to see them. Both political parties have gone very far astray on this railway business. A third transcontinental railway should never have been built in this country for at least fifty years. But we went into it with our eyes open, or at least a large part of the people did. The first election that I went into as a candidate for this House I won in opposition to the building of the Grand Trunk Pacific and the Transcontinental railway. I got a very narrow majority, it is true, but I fought the election on that issue and I am thankful to-day to be able to say that I was opposed to this project from its inception. I looked upon it as a waste of money. But it went on and the cost has assumed proportions that were never dreamed of in those days. But, we cannot now go back upon it. We are involved in the expenditure, the money has been spent and we have to make the best of the situation. It has, to say the least of it, imposed a staggering, colossal indebtedness upon the people of Canada. The war is looked upon as a tremendous enterprise, and so it is, but my hon. friend from East Algoma (Mr. Nicholson) has shown that in order to nationalize the railways

of Canada we would have to pay practically tw^e as much as we have spent in the war, or twice $1,000,000,000. I think my hon. friend placed the total railway capitalization of the country at
12 p.m. $2,500,000,000. At all events, that is within the mark. It will cost $2,500,000,000 to take possession of all the railways in Canada and to provide for the indebtedness in connection therewith. One thing I give my hon. friend great credit for ;s the statement with regard to the financial position of the railways of Canada which he has placed on Hansard to-night. I think he must be a practical railway man. I have received a great deal of information from the splendid address which he has given. It stands out it- striking contrast to the speech delivered from this side of the House by the hon. gentleman who preceded him. I think the statements placed upon Hansard by the hoc. member for Springfield (Mr. Richardson) are the most lamentable I have neard made in this House on any great question. My main reason ior rising to-night was to try and say a few words to combat what has been placed in Hansard by the hon. member for Springfield. If that hon. gentleman knew one-tenth as much about railways as he thinks he does I should not have spoken to-night, but I feel convinced that the bulk of what he has placed on Hansard will not bear inspection on the part of any business man as being a fair statement of the railway situation.
The Prime Minister has informed us that the Canadian Northern railway has a total 1' ability of $438,000,000. It is said to be worth, according to the figures the Prime Minister gave us, $518,000,000; so that it should have a balance on the right side of about $80,000,000. Of the two propositions, the 'Canadian Northern and the Grand Trunk Pacific, the chances of the former paying are one hundred-fold better than the latter, in my judgment, My hon. friend from East Algoma has shown that it has the lowest capitalization per mile of any railway upon this continent. That is something in its favour. Of course, it is not up to standard. We admit that. My hon. friend has submitted figures showing that $60,000 per mile will bring it up to standard whereas up to the present it has cost -about $45,000 per mile.
It is admitted by all who know the railways of Canada that the best-placed railway, as far as the West is concerned, is the Canadian Northern with its branches. In saying that I am not saying anything
[Mr. Cockshutt. 1
disrespectful of the Canadian Pacific. The first speech I ever made in my public life was in favour of the building of the Canadian Pacific and carrying out the bargain that we had entered into at Confederation- because it must not be lost sight of that the Canadian Pacific was built to redeem the promise made at Confederation that we should link up with British Columbia. That was a bargain just as much as the Intercolonial was a bargain with the people of the East and that must always be borne in mind. The hon. member for Springfield asserted that we paid far more out of the coffets of the Dominion than we -should have paid for the Canadian Pacific. I am not going into that; it is ancient history. But, I do not agree with him in that. We have the finest transportation system in the world, bar none, in the Canadian Pacific. All honour to the men who put it through, all honour to the men who conceived the idea and successfully built that road, and all honour to the present management who are administering it with an .efficiency that few railways in the world have attained.
But we have to face the position as we find it to-day, and the Canadi-an Northern railway is being taken over by the Government, I know that many hon. members, are very impatient because the road is not already administered by the Government, or by some commission appointed by the Government. But we must wait a little, the value of -the stock has still to be adjudicated upon in the courts. You cannot take possession until the price is settled- not very well, or if you do you will be operating at a disadvantage and be liable to further trouble, taking possession of the road before the value is settled. We do know that the $60,000,000 of stock will not cost more than- ($10,000,000-that is the limit set. Now there are a great many people who say, "That is all absurd. We need not have paid a dollar. There has been too much money put into that road already by the people, and therefore we should take possession of it without giving those who own the stock -the slightest advantage in the way of an arbitration-let us just expropriate that stock and take possession*'. That would be a high-handed piece of business, which, in my judgment, would not be at all right. I want to tell the members of the House that -a railroad, the same as- any other property, is always worth the amount it would fetch under the hammer, -at any rate. We have in this country a tremendous railway in the Canadian Pacific. All honour to it, and all

credit, as I have said, for the way it is managed. But I am here to speak as a member of this House, and believing that I speak the feelings of the people of a large part of Canada from east tc, west and from north to south, after having put as much money into railways as we have done, we do not wish to see the whole of our Dominion placed in the hands of one railway company. That is what would have happened in Canada if the Canadian Northern railway had gone under the hammer: There was only one possible buyer of that road in the Dominion and tnat w&s the Canadian Pacific railway, who were anxious to obtain it and would have obtained it, I believe, if that course had been taken. Then the people of. Canada would have shouted, and they would have had a good right to shout, because, after having built three transcontinental lines we are not prepared to put them into the hands of one railway company and have no competition, after all the money that we have spent. Let that never be lost sight of-we could not afford to do that. Even if we lost money in taking the Canadian Northern railway over, I believe when the position is explained thoroughly to the people of Canada, they will say that the Government is right, and that we could not afford to let that system pass into the hands of the Canadian Pacific, as in my judgment, it would undoubtedly have done if it had gone under the hammer. Now that is a point that I think ought to be thoroughly emphasized. We want railway competition in Canada, the West particularly is absolutely set upon competition, and that is the reason, in my judgment-one of the main reasons, at all events- why the Government has taken the course it has and is keeping the Canadian Northern railway as a separate entity and to be run as a separate entity, either by the Government or by a commission.
I myself believe that it is possible, even with the black outlook of the tremendous expenditure that has to be incurred in. connection with the railway situation, to make the railways of Canada still pay a fair dividend upon all the money that has gone into them. It is a big proposition, but I believe it ultimately can be done. Let us look at the situation for a moment. My honorable friend (Mr. Nicholson) who has just spoken has shown you that we are carrying freight, if I remember his figures rightly, at three-quarters of a cent per ton per mile-I think that was his statement. Despite our rigorous climate, despite the tremendous force that we must exert in
winter to run our railways at all, there is no country in the world-barring only the United States, and that country only in certain sections-that has as cheap freight rates as we have in the Dominion at the present time. That is something we ought to recognize, it is something to be proud of, and I think that the administration of our railways has shown that we are prepared to carry freight in a rigorous climate, where the temperature in the winter season goes down to twenty, thirty, forty and even fifty degrees below zero, and there are snowfalls anywhere from five to ten feet deep in our northern country that have to be pushed out of the way-and still in spite of all that we are carrying freights at an infinitesimal rate per mile as compared with the old countries of Europe that have as much population to the square mile as we have in a hundred square miles. We hear a great deal about the splendid administration of European . railways.
I have crossed the Atlantic nearly fifty times, and I have travelled on most of the railways in Europe many and many a time, and there is not a country in the world, in my judgment, that carries passengers in as much comfort, and in as reasonable a way, as do the railways in the Dominion of Canada and in the United States. My honourable friend from Springfield (Mr. Richardson) told us that people travel at a quarter of a cent, I think it was, per mile in Germany. He has more knowledge of Germany than I have if he can make that statement truthfully. I have travelled a great deal in Germany myself, I have visited that country five or ten times, and my experience was that not only did I not travel for a quarter of a cent per mile,, but that it cost me a great deal more per mile to travel than it does on any of the railways of Canada. That was my experience, and if there are any other gentlemen here who have travelled much I think they can state also that they have never travelled in any country in Europe at any such charge as the honourable gentleman has spoken of, it is absurd on the face of it. Nobody who has travelled in Europe can tell me that. People have never been able to buy railway tickets from Cook, Son & Co., who aTe supposed to have the lowest rates that any firm in Europe have for travelling for any ' such price as the honourable member has spoken of.


Mr. MANION:: I think in justice to the honourable member for Springfield it should be stated that in the European

countries-particularly in Germany and Belgium-they have special rates for working men going to and from their work that are very low. I think the honourable gentleman is absolutely right in regard to the ordinary rates of travel, for first:class passage, and so forth, but for the average workingman there are exceedingly low rates in Germany and Belgium.


William Foster Cockshutt: I am very much
obliged to my honourable friend for making that statement. I do not wish to mis-state the position of the honourable member for Springfield, who is not in the House at present. I believe there are tickets sold at low rates that enable you to travel as much as you like between certain points. I know such tickets are issued-that you can get a passbook for thirty days, and that you can travel as much on the road as you like between certain points- but a man is not going to travel any more than he feels necessary, and under those circumstances the rate does not work out at as low a rate as might be looked for. I am speaking of the general rates that would be charged to passengers when travelling, not for a little distance that a workman would have to go between his home and his place of work, and which I do not think is a fair comparison. Certainly I was misled and others were misled listening to the figures given by the hon. member for Springfield to-night.
Some considerable attention has been given to Australia as an example. I have had the privilege of also visiting Australia, but I am not sure that the hon. member for Springfield has visited that country. I can speak candidly of the railway service rendered throughout Australia and the accommodation given, because I was there a few years ago. What did I find? At every boundary line between states you had to get out of bed at night if you were sleeping in a Pullman, and change to . another Pullman, and every state has a different gauge on its roads. The remark was interjected that I was a narrow-gauge man when I asked a question during the hon. member for Springfield's speech, but I would draw that hon. gentleman's attention to the fact that in Australia every state has a different gauge practically on its railways. Moreover, they have to transfer all the freight at these state boundaries, from one car to another. The reason for that is that the labour men say that more labour is rendered necessary than there would be if they only had the one gauge, and they

want the system continued. Therefore, freight is transferred from one car to another at the present time on the state boundary line.


Charles Murphy: Are those railways
operated by the Government?


William Foster Cockshutt: They are stateoperated. These railways were mostly ibuilt by the States before the Commonwealth came into effect. The Confmonwealth has been in existence now upwards of ten years, and up to the time I visited Australia they had not made any attempt to standardize their gauges. When I asked: "How can you possibly continue to have all the passengers change at your state boundaries, and to tranship all your freight from one car to another," they saidi: "Well, we have a large element here upon the railways who say we would be destroying their means of obtaining a livelihood if we allowed these cars to run through; that is why we have not made our gauges uniform." All the rates in Australia are infinitely higher than ours both as to freight and as to passengers, unless they have lately come down, and their cost per mile is infinitely more than ours. So I think the comparison between Australia and Canada does not work out to our disadvantage. I mention this to show that we are not so badly off as we have been made out to be. We are in a better position than many countries considered to be . as bad as we are at the present' time. I admit that some of the roads are unnecessary duplications. But I am sorry I cannot quite agree with my hon. friend from East Algoma (Mr. Nicholson), when he said that the road between Toronto and Napanee should be ripped up. As one who travels frequently between Torontq and Ottawa, I find the Canadian Northern a tremendous advantage, and to rip that line up would be to say that you will have no alternative route from Toronto to Ottawa. It must be remembered that the Grand Trunk does not run into Ottawa from Toronto, unless you go down to Coteau Junction, which is only about thirty miles from Montreal, and which is a most round about way to reach Ottawa. The capital of the Dominion had only one road from Toronto until the Cana-' dian Northern came in. This road, in my opinion, is serving a very valuable purpose in Ontario.
I want to dwell for a moment or two upon the position of the Canadian Northern, relative to the traffic that can be obtained by it. I had the pleasure not two years ago of travelling from one end of that road

to the other. I would not say that it has the best roadbed in the Dominion, but we travelled comfortably from Toronto to Vancouver at the rate of twenty-five miles per hour without .mishap, and the engine was able to haul twelve to fourteen heavily-laden cars over the whole of the road. If I remember correctly it hauled fourteen cars, certainly not less than twelve heavily-laden Pullman cars over the Rocky Mountains. That is something which could not be done, I believe, on any other railway either to the north or to the south of the international boundary. I believe the Canadian Northern has the best grade of any of the roads, and the Grand Trunk Pacific runs over a part of the same tracks. One hon. member has said that we should never have embarked upon aiding the Canadian Northern railway at all. The Canadian Northern is an old line and was begun before the Grand Trunk Pacific was ever thought off. Its chances of paying are infinitely better. It is a well placed road both in the West, and in a good many parts of the East. And it must be remembered that in building this road, we are building for the future, and it was thought that Canada could support at least two transeontinentals. I believe it can. I believe that two transeontinentals can be made to pay and pay well, whether operated by private companies or as Government enterprises under a commission. Por my own part, I want to say that it is war time, and the amount of money required to take possession of all the railways of Canada, or even of the railways leaving out the Canadian Pacific, is so great that we cannot afford to undertake it, and that is my only reason, speaking as a business man, for not advocating the immediate nationalization of all the railways of Canada. I may be wrong, but I venture the opinion, as a business man, that with proper management, and with a thoroughly well trained commission of railway men-not politicians, not statesmen even, but railway men of a practical order, such as we have in Canada -the operation of these roads will be successful. In my judgment, if a board was got together, of five or seven of the best railway men in Canada, as a commission and all the roads of Canada were placed at their disposal, they could make a financial and a business success of that great enterprise, I may be wrong but that is my sizing up of the situation. Knowing the possibilities of traffic in Canada I say that I believe that that can be done, and the Drayton-Acworth report practically recommends that that be done. I can hardly do better
than read that part of their report dealing with how these railways should be operated:
Our formal recommendations are:-	*
1.	That a Board of Trustees be constituted by Act of Parliament and incorporated as "The Dominion Railway Company."
2.	That the ownership of the Canadian Northern, Grand Trunk, and Grand Trunk Pacific railways be vested in this Company.
I presume they mean the Transcontinental, as well as the Grand Trunk Pacific.
3.	That the Government assume responsibility to the Company for the interest on the existing securities of these undertakings.
4.	That the Intercolonial (including the Prince Edward Island) and National Transcontinental railways be also handed over by the Government to the Company.
5.	That the whole of these railways, the Canadian Northern, the Grand Trunk, the Grand Trunk Pacific, the Intercolonial, and the National Transcontinental, be operated by the Company as one united system.
I must say that that recommendation appeals to me as sound common sense. I do not know these gentlemen personally, but after looking over their report, and having seen the basis upon which they make up all their figures, I believe that that finding is the solution of the railway question facing the Dominion at the present time. As far as I am concerned, just as soon as the war is over, I would be prepared to back up this, or any other, government which is prepared to take hold of this railway situation, face it as it is and make a success of it as a great national enterprise. I may be over optimistic, but I believfe we have as good railway men in Canada as there are anywhere in the world, and nobody need tell me that we cannot get five or seven directors or trustees, whatever they may be called, who can operate the railways of Canada and make them a paying enterprise. My only reason for not advocating the immediate carrying out of these recommendations is that the war is on us, and the question is too large. I was favourable last year to the action taken by the Government in taking over the Canadian Northern. I am still of the same opinion, arid it is my judgment that even if some blunders have been 'made in it, and though some of the money probably has been unwisely expended, we have in the Canadian Northern an asset worth all it is going to' cost the people of Canada, whether we have to pay this supposed ten millions of dollars or not. I do not want to shirk any part of my responsibility in advocating that the $10,000,000 should be, paid if the Commission of Arbitration find that it should be paid. I do not believe in confiscating property, even

though you have technically the right to do so, if there is really an equity in it, and the- Arbitration Commission is sitting for the purpose of deciding whether or not there is any equity in that $60,000,000 of stock, with the understanding that it shall not cost us more than $10,000,000. Is it not best to be generous and fair? I do not know who will get this money, I have no more knowledge than any mem/ber sitting in this House as to whom that $10,000,000 will be paid if awarded, and I do not believe all of it will be awarded. But I do not think we are justified in stating that that stock is not worth a dollar, when the question of its value is being investigated in the courts by some of the best brains in Canada.
We ought to possess our souls in patience, realizing that they will make a just finding and that we shall not have to pay any more for it than the equity in it is worth. I believe that had the Canadian Pacific been given the opportunity of getting the road for $10,000,000 or $20,000,000 and assuming all its liabilities, they would not have taken twenty-four hours to decide that they would accept it. Gentlemen in this House wanted to see the road go under the hammer, to see it knocked down to the highest bidder. They knew that the Canadian Pacific was. the only bidder, and that the Canadian Pacific would not have hesitated a moment to take the road. Had we permitted anything like that to happen, we could not have looked the people of western Canada in the face. We have spent a thousand millions in giving the West railway competition, and it is suggested that now, at the final stage, for the sake of $10,000,000 or $20,000,000, we should let this road merge with the other great railway corporations and destroy competition and all possibility of competition in that country for the next twenty-five or fifty years. In my judgment, the Transcontinental will not be run as a paying enterprise within the life of any hon. gentleman in this House. I do not believe it is possible. More than a thousand miles built in the wilderness, without the slightest traffic- without any passenger traffic at all to speak of along the whole of that route; a bridge at Quebec which cost $27,000,000; a railway which, according to the statement of the Prime Minister this afternoon, cost $90,000 per mile without interest or $110,000 per mile with interest, more than double the cost per mile of the Canadian Northern railway and almost double the cost per mile of the Canadian Pacific [DOT] railway.
[Mr. Cockshutt.l
We have every opportunity, I believe, of making the Canadian Northern a paying enterprise. I congratulate the Government on the splendid stand they have taken in this matter. I was elected as a kind of independent, so to speak, and I have criticised the Government; but when they do a good thing I want to give them credit for it. I stand by them to-night in the bargain that they have made with the Canadian Northern railway. They are facing this question like men. The position that the Prime Minister took in this House to-day and the statement that he made with regard to the Canadian Northern railway -has put him up one hundred per cent in my estimation of him as a business man. I never thought that he was a very good business man, but the way he has tackled the railway question and the manner in which he has placed it before the House and the country gives us reassurance. At last the railway question is to be grappled with. We are to have a policy that we need not be ashamed of, the final financial results of which will be satisfactory not only to be members of the House" but to all the people of Canada.


William Folger Nickle: At this late hour of the night-


Jacques Bureau: Let us adjourn. It is
half past twelve.


William Folger Nickle: 

account this sum to meet the discount and commission on debentures they had to sell below par, because their credit had been injured. In other words the bopk value of the railroad was increased almost three-quarters of a million dollars because the company had to sell its debentures at less than par and by an improper system of bookkeeping that amount was charged up to capital account.
As I have said, the problem we have to face is-where are we going and why are we going in that direction? Surely the experience of the last ten years has taught us that private ownership and the exploitation of the credit of the country has led to one of the most unfortunate railroad muddles the world has ever had to solve, and it comes on Canada at a particularly unfortunate time. We are not saying to the promoters of the railroad: We want to take away your property. We are not confiscating the property at all, but time and again they have represented to this Government and to the country at large that, if we made them an alleged sufficient grant or guarantee or a new loan, they would be able to meet their obligations, and Canada would no longer be called upon to supply further aid. There is not one of us who does not know how repeatedly we have been disappointed. I sat in this House in 1911, 1912, 1913 and 1914, and each year there was a fresh claim and an equally emphatic protest that, if Parliament yielded to the exploiters or promoters, if the hon. members like that term better, it would be the last time they would ask for money, and the undertaking would be carried to a successful conclusion. In 1914, my spirit rebelled, and I laid down what I thought was a sound principle of public guidance, namely, that if the people of Canada had'to pay for a railroad, then the people of Canada were entitled to own it. In 1914, I was opposed to giving further aid, and the reason of my entering into this discussion to-night is because the hon. member for Springfield was rather severe on some of us for voting last year for the arbitration in reference to $60,000,000 worth of Canadian Northern stock. In 1914, I was opposed to Canada going into partnership with Mackenzie and Mann interests in the ownership - and management of the Canadian Northern, and I felt that we were going into partnership in 1914 when we took $40,000,000 worth of theiT stock and left $60,000,000 of the stock to the promoters or to the Mackenzie and Mann interests, because my reading of history has told me this-and if the gentle-

men present in this House care to read history-they will realize this-that when any kind of financial difficulty arises in regard to a large national undertaking, the private persons responsible for that undertaking always assert that Canada has a partnership in the undertaking, and that there is a national obligation to protect the credit of those who venture their capital in a speculative undertaking. For that reason I was opposed in 1914 to the partnership, but at that time public ownership was not as popular as it is to-day, and there was not as much cheering in the House of Commons when those of us who were in favour of t public ownership and public operation of the road advocated those principles as now greets those who rise to speak on the subject. Parliament, however, decided that the partnership was to be, and the arrangement was that $45,000,000 of the Canadian Northern bonds were to be guaranteed, for which Canada was to receive $40,000,000 oi the stock, the balance of $60,000,000 remaining with the owners. The probabilities are that if the war had not broken out, the cash on hand in the Canadian Northern treasuries at that time and the guarantee of the $45,000,000 of bonds would have permitted the Canadian Northern railway to work its way to a successful conclusion. Parliament laid down the principle that Canada was prepared to go into the partnership. Some of us voted against it, but then it seemed to me unfair in 1917 that those who had lent money on the stock of the company and those who had made advances on the bonds of the company should have their securities ruined because a war had unexpectedly broken out, and it was impossible for those behind the undertaking to realize what in ordinary times they would have been able to realize from their debentures and to proceed with the work as they would ordinarily have been able to proceed with it. If the Canadian Pacific were willing to say to the Canadian Northern, as I understand they were: " We are prepared to give something substantial for your stock if you are prepared to hand it over to us," and if the Parliament of Canada was not prepared to give the privilege of selling, it would have been confiscation of the rankest and most indefensible kind for Canada to say to the Canadian Northern people: You cannot sell to the Canadian Pacific, and as we are in a position to refuse you the right of selling, and are also in a position to take your property, we are going to ' take it for nothing, although another company is prepared to

give you a substantial price for it. That would be a confiscation and doing a grave injustice and practising a national irregularity in reference to those who, in good faith, had made advances on the stock and other securities of the Canadian Northern. For that reason I feel the vote I gave in 1917 was justifiable; but even if it were not justifiable, upon that ground, I was quite willing to pay a substantial sum to remove from the lobbies of this Parliament men who,exercise a pernicious influence, and to begin what I thought was the nationalization of the railways of Canada, because I cannot as a Canadian .see-and I have faith in this country and am proud of Canadian ability, character and energy-why we cannot develop in. this country just as capable, honest and energetic men as other countries can develop, and if all the rest of the world, with the exception of the United States and Great Britain, can successfully carry on commission operated railways, 1 am utterly at a loss to see why railways cannot be similarly operated in Canada. In speaking of that matter to-night, the hou. member for Brantford (Mr. Cockshutt) reflected sbmewh.at on the Australian railway system. He drew the attention of the House, as an evidence of the mismanagement of that system, to the fact that Australia had different gauges of railways, and he, therefore, from that seemed to argue that the Australian system was a failure.
When the railroads first began in Canada and different charters were granted to different'companies, many of them started out on the same principle :as actuated Australia. They started out with a different gauge of railway, each thinking that in that way it would retain freight originating on its own lines and prevent its transference to another line. Experience very quickly taught us that in a country as widespread as Canada it was absolutely necessary that for facility of transportation the gauges should be standardized and various methods were adopted to bring about that result. Without presenting the matter detail by detail the final result was this: We agreed on a standard gauge of 4 feet 81 inches or 4 feet 81 inches as the proper gauge, and to-day that is practically the gauge adopted throughout Canada. I understand that exactly the same thing is taking place in Australia that took place in Canada. The railways were originally constructed by different states with different gauges but now that they are under the Commonwealth 130J
I was told by a gentleman from Australia whom I had the pleasure of meeting two years ago that they realized that to work out their system they must standardize their gauge and they are doing exactly what Canada did. In the doing of it, of course, there is inconvenience, hut from what I learned from this gentleman with whom I spoke, they are making a success of their roads even under the disadvantages under which they are working at the present time, and they are satisfied that when the work is completed they will work with greater economy and with greater advantage to the Commonwealth at large.
I therefore come to this: we have to face the situation of doing either one of two things. We have got to meet the annual deficits the railroads in Canada are going to have for many years and leave them in the hands of promoters, or we have to take over the roads and run them ourselves. I say that in 1917 we laid down the principle that all Canadian Northern stock was to be acquired by the Canadian people. Having acquired that stock, practically speaking, the people of Canada will own the Canadian Northern. We already own the National Transcontinental, the Prince Edward Island railway, and the Intercolonial railway. The Canadian Northern has a magnificent network of lines in the western provinces, though weak in the eastern part of Canada, particularly in Ontario and Quebec, where the Grand Trunk is strong. Many Canadian Northern lines parallel Grand Trunk lines. I am using " Grand Trunk " in the generic term including various departments of that railway. If we can co-ordinate these roads it is going to cheapen operation by reducing overhead and maintenance charges. Now why not do it? I quite admit that if the situation was this, that the Grand Trunk were able to carry out their undertaking it would be considered confiscation and a breach of the national obligation to interfere arbitrarily with them, but that is not the position in Canada to-day. Canada is not saying to the Grand Trunk Eailway, "We are going to have your road and are not going to pay you for it." But the Grand Trunk management are saying to Canada, "We cannot carry the obligations we undertook by solemn contract. You have taken the National Transcontinental from us and we say we are relieved of all obligation for its operation. We appreciate the fact that the Grand Trunk Pacific is on our hack and we cannot get rid of it. We appreciate the fact that if you insist that we carry out our obligations under the contract of 1903 there

is (bound to 'be an insolvency." You ask me on what I base that statement. I base it on the evidence given by Mr. Chamberlin, set out in the appendix to the Drayton-AowoTth report, where in his examination- and the risk a man always runs when he puts himself on oath is that people will believe him even if it turns out to his disadvantage afterwards to be believed-Mr. Chamberlin said, and surely if we in the Parliament of Canada take Mr. Chamberlin as meaning what he said, he should not complain and say we are doing anything we should not do:
Sir Henry Drayton:	You speak of confiscation, in your letter, Mr. Chamberlin. No person is thinking of confiscating the investment that I know of. if you can afford to carry it, you will be allowed to carry It. That was not really meant, was it? Suppose you are left to yourselves, the thing crashes, no one confiscates it. Isn't that right?
Mr. Chamberlin:	To a certain extent, yes.
Sir Henry Drayton:	To every extent, isn't
it?
Mr. Chamberlin:	To every extent.
There we have Mr. Chamberlin's own evidence that the position, of the Grand Trunk to the Grand Trunk Pacific is this: That if the Government does not come to the aid of the Grand Trunk the whole scheme is going to cOme down in insolvency, not only the Grand Trunk Pacific, but the old Grand Trunk itself. The, reason I allude to this particular point is this: I read an extract cabled a few days ago from one of the English papers to the effect that at the annual meeting of the Grand Trunk shareholders bitter denouncement had been made of the Canadian Government in that the shareholders had been led to believe that the Canadian people were confiscating the Grand Trunk railway, whereas if the facts had been fairly and squarely put before them, they would have known the Canadian people were not confiscating the Grand Trunk, but that the Grand Trunk Railway Company had admitted to the Government and the people of Canada that they were not able to carry out their obligation, and that there was bound 'to be an insolvency if Canada did not go to the rescue. Canada has a right to be put in a proper light before the investers of the Old World, and I sincerely hope that some echo of what is being said here to-night will be heard across the water. The position the Grand Trunk find themselves in to-day is not the fault of the Canadian people, but the fault of the promoters and exploiters of the national credit. The reason I say that is this. They began in 1903 the movement for the establishment

and development of the National Transcontinental railway. The Government of Canada, headed by Sir Wilfrid Laurier, did not go to the Grand Trunk Railway, but Mr. Hays came to Sir Wilfrid Laurier with a proposition. He suggested that the Grand Trunk railway in the eastern part of Canada wanted a western connection,. I am ready to admit that the original proposition took the road only as far as North Bay, and that in Parliament it was extended from North Bay down as far as Quebec, and subsequently the Grand Trunk were compelled to accept an extension of the line from Quebec to Moncton. But the Grand Trunk were not compelled to accept it in the sense that they had to enter into an obligation they did not approve of. They could have said, "If the Parliament and 'Government desire us to go so far we will throw up the whole thing," But they did nothing of the sort. They had the choice of doing one of two things, abandoning the enterprise or carrying it out as Parliament desired. The Grand Trunk accepted the terms of the Parliament of Canada and as Mr. Chamberlin said in his evidence-I shall not give his exact words because it is getting late-the contract was utterly impossible for the company to carry out to a successful fruition, the Grand Trunk eould not carry out the scheme, Mr. Chamberlin did not wish to reflect on those who had gone before hut he was uhable to see how Mr. Hays had ever entered into the contract believing it would be a success. He said " it was always impossible." I therefore say the people of Canada are not responsible for the difficulty in which the Grand Trunk find themselves to-night. The Grand Trunk itself, by its improper contract, by lack of foresight on the part of its officials and lack of business vision put the Grand Trunk in the position it is in to-day, and as a Canadian subject, and as a taxpayer I object, to the offspring of the Grand Trunk Railway Company being put in a basket and left on my doorstep, and the railway ringing the bell and saying: "Take charge of the basket and assume the responsibility." I have every desire to protect the credit of Canada, and I say that the Prime Minister if he carries on negotiations this summer with the Grand Trunk shareholders should make it perfectly clear to them and to the people of England that the obligation of the Canadian people was discharged to the last dollar, that Canada did more than she promised to do, that we agreed to guarantee a certain number of bonds and we did it,

that we agreed to build a road and we did it and more.
One hon. gentleman has said that the people of Canada were primarily re-spopsi-ble for whatever sums were spent on building the National Transcontinental. I dissent from that view. The Grand Trunk Pacific Railway Company, all of whose stock is owned by the Grand Trunk Railway Company, had by their agreement with the Government the right to have their engineers superintend the construction of the Transcontinental, and if for political or other reasons their engineers and directors or their management were supine, it is hot the fault of Canada if the road cost more than it should, and the blame should not be laid at the door of Canada.
I want to direct the attention of the House to another point. Somebody has stated that the Government was to blame because Canada gave aid to the Canadian Northern railway after the arrangement had been made with the Grand Trunk for the National Transcontinental and the Grand Trunk Pacific. The Government was not a partner in the undertaking as the Grand Trunk directors assert. The Government agreed that the people of Canada would do a certain thing in assisting this undertaking. The Government have done everything they promised to do and the Government of Canada are, and have always been, a Governement and not a partner. If the Grand Trunk management were not astute enough to protect themselves against the competition of another national transcontinental railway I do not think that they can lay it to the Government and the people that there has been any lack of faith or any bad faith, in the fact that aid was granted to another railway. I am not defending the giving of aid to the Canadian Northern subsequent to the inauguration of the National Transcontinental and the Grand Trunk Pacific project. I think it was a mistaken policy. It would have been infinitely wiser if the Grand Trunk had purchased the Canadian Northern line. But if the members of this House want some evidence of the money that exploiters and promoters attempt to make out of railway construction let me direct their attention to another portion of the evidence of Mr. Chamberlin. Sir Henry Drayton asked Mr. Chamberlin this question as reported at page 80 of the Drayton-Acworth report:
Sir Henry Drayton: If I am not very much mistaken, negotiations were entered into between your executive and the executive of the
Canadian Northern, looking to the fusion of the systems, so that there would not he this clupU-cation.	.
Mr. Chamberlin: They tried to buy the Manitoba lines, but they could not get together, Mr. Hays told me at one time, and Mr. Wainwright told me also. I asked them why they did not buy out the Canadian Northern, they said they had had meeting after meeting with them, and that the best terms they could get were that they should assume all obligations, all bonds and everything else, and give $2-5,0-00,000 for the common stock for that little bunch of lines up around Winnipeg.
That meant that the Canadian Northern people asked the Grand Trunk to pay them $25,000,000 for the common stock which they held. That will give you some idea of the exploitation that has been attempted in this country. I think it well that the people should realize what private ownership has done in connection with railway promotion. People had hardly come to realize the terrific problem tha-t confronted ue in this country before a private Bill was again introduced into this House in the session of 1915 asking Parliament to grant a charter to another transcontinental railway and it was only because of the
1 a.m. active efforts of those opposed to Canada being loaded up with any further lines that the charter was withdrawn and the promotion stopped. For these reasons I think the time has come for the taking over of those lines. The experience of the world has demonstrated that it is possible to get able, honest men to operate public utilities such as railways. We have demonstrated that in regard- to lighting and power plants and in various other ways. And if these things can be done by other public bodies why cannot the same thing be done in reference to- a railway?
Then, let us regard it from another angle. The main object to be sought is- to procure adequate transportation for the people and commodities of the country. It must be abundantly clear to any person- who has read this report, and who knows anything of the railway situation in Canada-and certainly the , hon. member from East Al-goma (Mr. Nicholson) put a mass of illuminating figures on the record to-night- that the railways have reached the point where they are utterly unable to raise the necessary capital to carry on their undertakings. It is admitted that the Canadian Northern Railway system cannot raise the $100,000,000 that they need in the next five years to bring their road up to the standard necessary in connection with a road seeking to undertake transportation in Canada. What will be required by the


Andrew Ross McMaster: Go on, it is good
stuff.


William Folger Nickle: Well, there are one or
two points I want to clear up, and as honourable gentlemen have expressed the wish for me to go on, perhaps it is just as well that I should touch on those points.
Now in regard to the Intercolonial, that railway is always held up by opposing Canadians as the outstanding example of a failure of Government ownership. But is that fair? The Intercolonial was a political railroad. It was constructed round by the St. Lawrence so that it would be well removed from the American border. It was a political road and it was a military road. Every car mile that is operated on that road costs more money to run in relation to the earnings got than if it were a direct line. What I mean by that is this:	The railroad is
operated on the arc of a circle, but the freight charge must be in competition with the rate charged on the diameter of the circle. That is, for a very much larger mileage the Intercolonial gets only the smaller freight charged on the straight line, and while I have not the figures before me to-night-not intending to speak on this subject-I was much impressed some years ago by an examination of the figures which showed to me conclusively that the car mile freight on the Intercolonial was smaller by far than that charged on the other railroads. And that simply means this: That every extra mile you operate a railroad	to carry freight	means that
much	extra cost that the railroad
has to pay for operation-wages, coal, upkeep, and everything that is included in the operation of a railroad-and if a railroad is unnecessarily long, and only earning freight proportionate to a shorter railroad, certainly it is never going to be comparatively a success. If in conjunction with that fact you take the fact that the people of the eastern provinces have always regarded the Intercolonial as a quid pro quo for the canals in the central part, of the country, and incidentally used for the transportation of the western commodities to the seaboard, I do not think it is surprising that the railroad has not been a great success. Then, too, being a political railway, political considerations have entered into its operation, with the result that the road has not made money. Therefore, I say it is not an outstanding example of the' failure of public operation, 'but is an example of how a badly situated road cannot be a profitable work, and must of necessity be a financial failure, when burdened further as I have explained.
I agree with what the hon. member for East Algoma said, that if after these railroads are taken over-I am talking of the Canadian Northern and the Grand Trunk system-you are going to operate them successfully, you have got to co-ordinate them, you have got to remove all unnecessary overhead charges, you have got to get rid of parallel lines, and you have got to insist that between the Canadian Pacific and these co-ordinated Government lines there shall be co-operation and control of rates through the railway commission. I do not believe the time is ripe for the taking over of the Canadian Pacific Railway system: If I understand the position of the Canadian Pacific railway, they would have a right, if the Parliament of Canada insisted there should be nationalization, that the assets of the Canadian Pacific Railway system be taken over at their value, and men who are in a position to speak-I do not profess to speak of my own knowledge-tell me that if the assets of the Canadian Pacific were taken over at reconstruction value Canada would have to practically pay $800,000,000 for the undertaking, and it would nece3>-sitate an increase in freight rates of twenty to thirty per cent probably on the rates now charged. It would be impossible for Canada to do anything of that sort.
The -Canadian Pacific railway is financially strong, and it is well run, and, as I said in the beginning of my remarks, the object of Canada at this critical time must be the protection of her credit, while securing adequate transportation facilities, and if in competition with Government-owned roads and publicly-managed roads- the Canadian Pacific railway is in a sufficiently strong position to stand the competition and to operate the road as a financial success, then why should Canada load herself up at a critical time like this with $800,000,000 which she can avoid? It seems to me it would be an unwise thing to do, and unwise for another reason: If the Canadian Pacific were taken over by the Government of Canada it would remove that tremendous asset as a borrowing security when fresh capital is going to be required for the development of this country. The Canadian Pacific railway to-day has a great place in the financial markets of the world, her credit is on the soundest basis. But if the road were taken over by the Government of Canada it would not add

one dollar to the credit power of the Canadian people as a people, but would remove that credit power from one of the. greatest combinations thait the world has ever known, as well as scattering abroad the capital represented by the stock and securities. For these reasons I think it would be unwise at the present time to take over the Canadian Pacific railway. Let us take no more steps at the present than we, must take, but let us take such steps as are nationally necessary to secure for the Canadian people the properties that they are going to be called upon to carry in any event. Let us take such steps as will lessen the cost of transportation, that will cut out unnecessary duplication, and that will co-ordinate under one system m Canada these two roads that are at present a financial failure. Let us try to see to it that some scheme of operation is developed by which political interference will be avoided, that the maximum efficiency will 'be secured, and that we at length will take one great forward step in solving the problem that has been forced upon us, not by the choice of the Canadian people, but perhaps through the lack of vision of her statesmen and Parliamentarians. Let us take this step now in the interest of the national life of Canada, but let us make clear to the world that while we are taking this step we are not confiscating the property of other people, but that wre are dealing fairly with them, that we are relieving them, from obligations they have voluntarily entered into, and that if there is difficulty in the administration of their railroads and undertakings, those difficulties have not been brought about by the niggardliness, not by the parsimony, and not by the necessities of the Canadian people, but by the directors and others responsible for the administration of these great undertakings and from their lack of foresight and appreciation of the conditions that prevail in this country.


Charles Murphy: I suggest that the committee rise now and that the House adjourn.


Arthur Lewis W. Sifton: If there is any other hon. member who wishes to speak-
Hon. 'Mr. MURPHY: I understood from the Acting Minister of Finance (Mr. A. K. Maclean) that we were to adjourn at midnight. Later I was informed by the Chief Whip on this side that the Minister of Customs (Mr. Sifton) desired us to go on for an hour or so longer.
[Mr. Nickle. 1


Arthur Lewis W. Sifton: I, said one o'clock. I am quite willing to adjourn if there is no one else desirous of continuing the debate tonight.


John Allister Currie: Many of us have been here since ten o'clock this morning, and I think we should adjourn.


Arthur Lewis W. Sifton: I stated, if anybody desired to continue the debate to-morrow, not to-night, he could do so.
Progress reported.



SPECIAL WAR REVENUE ACT AMENDMENT BILL.

[Stage Direction]
House again in Committee on Bill No. 83 to amend the Special War Revenue Act, Mr. Boivin in the Chair.
Progress reported.
On the motion of Hon. Mr. Sifton the House adjourned at 1.18 a.m., Thursday.
Thursday, May 16, 1918.