1919-10-24

ADULTERATION ACT-AMENDMENT.

[Stage Direction]
(Bran and Shorts or Middlings).
Mr. R. C. HENDER/S (Macdonald) presented the first report of the Select Committee on Agriculture and 'Colonization on Bill No. 7, an Act to amend the Adulteration Act (respecting Bran and Shorts or Middlings), as follows:
Tour committee having had under consideration Bill No. 7, an Act to amend the Adulteration Act (respecting bran and shorts or middlings), beg leave to recommend the same to the House without any amendment.

[Stage Direction]
Hon. HUGH GUTHRIE (Solicitor General) moved for leave to introduce Bill No.

36, to amend the Public Printing and Stationery Act.
Mr. D. D. McKENZIE:: Explain.


Mr. GUTHRIE:: Mr. Speaker, this amendment is introduced at the instance of the Board of Civil Service Commissioners. It refers to the Stationery Department of the Printing Bureau, and provides for a certain limited amount of reorganization, with the object of better co-ordinating the work of that department.
Motion agreed to and Bill read the first time.



DOMINION FINANCES.

[Stage Direction]
On the Orders of the Day:
Daniel Duncan McKenzie: 
Mr. SPEAKER:: If the error is in the transcription of the document by Hansard, I shall see that it is corrected; otherwise it must go as printed.


Daniel Duncan McKenzie: As the question appeared on the Order Paper it is all right; but in Hansard it is all wrong.


Edgar Nelson Rhodes: X will have inquiries made, and if the facts are as stated by the hon. member the necessary correction will be made.



GRAND TRUNK RAILWAY SYSTEM.


[Stage Direction]
House again in committee on Bill No. 33 respecting the acquisition by His Majesty of the Grand Trunk Railway system.-Mr. Boivin in the Chair.
The CHAIRMAN:: Last night the committee adopted clause 1, namely, "Short title."


Mr. CAHILL:: Mr. Chairman, clause 1 was not adopted last night.


Daniel Duncan McKenzie: There was nothing
adopted last night.


Georges Henri Boivin: It was carried. However, we will take it up again.
Short title.


Frank S. Cahill: Before clause 1 carries, I think the Government should give to this committee a statement of the total liabilities that are to he assumed by this undertaking.


Georges Henri Boivin: If the hon. member wishes the title of the Bill to be changed in any way, he would be in order in moving accordingly, but in committee the discussion must be strictly relevant to the clause immediately under consideration, and he is certainly not in order in referring to the total liabilities of the undertaking on clause 1, which is merely the Short Title of the Bill.
Section 1 agreed to.
On section 2-Government empowered to enter into agreement with Grand Trunk Railway Company for acquisition of entire capital stock of company except 4 per cent guaranteed stock.


Frank S. Cahill: I would ask the Government now to state what are the total liabilities to be assumed by the country.


Mr. J. D. REID:: 
Mr. H. A. MACKIE:: Does that include the arrears of dividends upon the preferred stock?


John Dowsley Reid: No, we pay no arrears on any of the stock. Whatever award is made as to what interest, if any, we shall pay will be effective from the date that the award is made. The arbitrators, then, will, value this $63,841,201.23 of stock, and on, that valuation we will pay four per cent interest in perpetuity, with this exception: we have the right to purchase it after thirty' years.


Daniel Duncan McKenzie: In reckoning the liabilities, why does the minister take out the $60,000,000 of guaranteed stock? Are we not assuming that liability?


John Dowsley Reid: I have stated that upon the $173,558,544.62, which is the funded debt, we pay interest in perpetuity. The interest on the guaranteed stock of $60,000,000 we pay also in perpetuity, except that we have the right to take it over at the end of thirty years.


Mr. J. H. SINCLAIR:: Have we not the right to take over the debentures? Are they not redeemable?


John Dowsley Reid: If my memory serves me correctly, these bonds are in perpetuity, and we have not the right to take them up. The rate of interest is very low.


Daniel Duncan McKenzie: Bonds are not usually in perpetuity.


John Dowsley Reid: They are in this case.


John Howard Sinclair: Some of these debenture stocks are at five per cent and some at four.


John Dowsley Reid: It is only the guaranteed stock, as I understand it and the stocks that the award is made on that we have the right to take up at the end of thirty years.


John Howard Sinclair: I do not understand the intimation of the minister that there will be no.arbitration of the value of

the debenture stock, because we are assuming that liability. The Minister says that we have the option of wiping out the guaranteed stock after thirty years; I understand him to say also that in the case of the debenture stock we have not that right; we must continue to pay interest at five per cent, or whatever the rate is, in perpetuity.


John Dowsley Reid: That is as I understand it at present. We are allowing the debenture stock, which is in perpetuity, to remain; we are not taking that right at the present time. In that I am subject to correction, and if I am wrong, I will correct my statement later.


John Howard Sinclair: I would like to be clear on that point. I understood the minister to say a minute ago that there was to be no arbitration on the $60,000,000; that we have assumed that and the arbitrators will have nothing to do with it. The minister now says-


John Dowsley Reid: 
Mr. BURNHAM:: Is this transaction subject to the rate of exchange?


John Dowsley Reid: Thirty years from now there may not be any question about the rate of exchange. In any case, the matter of exchange does not come into it at all.
Then we come to the common stock, $116,583,124.44, upon which no dividend has ever been paid. That also will be valued by the arbitrators, and upon the valuation arrived at, if any, we shall pay interest at four per cent in perpetuity unless we decide after thirty years to purchase it outright.


Daniel Duncan McKenzie: In calculating the possible cost to the country of this white elephant which we shall have upon our hands, has the Government made any general estimate of what valuation will be placed upon these stocks by the Board of Arbitration?


John Dowsley Reid: It would be difficult for me to make any statement of that kind.

The Drayton-Acworth report stated that these companies had paid $3,600,000 peT annum by way of interest on these several stocks that I have just mentioned, the Government felt justified in recommending the annual payment of $2,500,000 as a minimum, this to be added to from time to time so that at the end of seven years they would pay the $3,600,000. The Government decided that these stocks were of such a value that they were justified in paying $1,100,000 per annum in perpetuity in respect to them. That, of course, is in addition to the $2,500,000 interest on the guaranteed stock. In other words, the Drayton-Acworth report recommended, and the Government considered that they were justified in offering the payment of an annual amount, whether you call it rental or dividend, on the guaranteed stock and all other capital stocks-that is, the preference and common stocks-equal to $3,600,000 per annum. The amount of $1,100,000, therefore, could be applied on the three preference stocks and the common stock. The Grand Trunk railway claimed that that was not a sufficient amount, having regard to the value of the road.
We must remember that the Drayton-Acworth report made that recommendation of $3,600,000 after the Government relieved the Grand Trunk of liabilities and responsibilities that it might be subject to on account of its guaranteeing the Grand Trunk Pacific, and also after taking into consideration the fact that the Grand Trunk railway was used to operate the Transcontinental built by the Government between Winnipeg and Moncton, and the Grand Trunk thought that they should have an amount first, I think, of $5,600,000 per annum, which was later reduced to, I think, about $5,100,000. I have not the exact figures in my mind at the moment. Therefore, the Grand Trunk, rather than accept the amount offered of $3,600,000, decided to accept the offer of arbitration. That is the only way in which I could place any value on the stock in reply to the question asked by the hon. member.


John Howard Sinclair: That offer was not $3,600,000; the offer was to assume the liabilities and to pay $3,600,000 in addition. The offer is contained on page 8. This is the Government proposition:
1. The Government to take over the Grand Trunk Pacific railway and branch lines and the Grand Trunk Railway Company; to acquire all assets, and to assume all obligations of both companies.


John Dowsley Reid: That is right.


John Howard Sinclair: That includes the debenture stock, and as I understand it, it includes the guaranteed stock.


John Dowsley Reid: Let me correct the hon. member there. That offer was on this basis: The Government to pay $3,600,000 per annum, and in addition to that the Government would, of course, pay the interest on the funded debt, that interest amounting to about $7,000,000. therefore, according to that offer, we would have to pay $7,000,000 interest on the funded debt, plus $3,600,000 interest on the other stocks.


John Howard Sinclair: The minister, if I understood him aright did not tell us when he made his explanation, that we were to assume the fixed charges in the first place, and then we were to pay the $3,600,000 on the common stock and the three preference stocks.


John Dowsley Reid: And the guaranteed.


John Howard Sinclair: This goes on further to show that the stock may be redeemed on paying twenty-five years' rental at once, which would amount to $90,000,000. The letter capitalizes the total at $90,000,000. That is to say, the Government offers to assume all the fixed charges of the Grand Trunk Railway system and the Grand Trunk Pacific, and to pay in cash $90,000,000. Am I right there?


John Dowsley Reid: No.


John Howard Sinclair: The Government agreed to pay $3,600,000 a year, and the letter goes on to say:
The Government to have the option of purchase on the basis of and during- the term of the final rental at the end of any year and on one year's notice at twenty-five times the annual final rental.
If you multiply $3,600,000 by twenty-five, you get $90,000,000.	'


John Dowsley Reid: That is right.


John Howard Sinclair: That is how I arrive at the $90,000,000. The Government them agreed to pay $90,000,000 for the preference stock and the common stock.


John Dowsley Reid: No, I will tell the hon. member where he is wrong, and perhaps I can put him right. The Government agreed to pay $90,000,000, if the hon. member wishes the matter put in that way, at the end of thirty years. What for? For what the $3,600,000 interest represents, and I will tell the hon. member what it represents, and he will see at once, because this has been explained .so many times. It was to pay first $2,500,000 for the guaranteed
stock. You have to add the $60,000,000 of guaranteed stock.


John Howard Sinclair: That is common stock.


John Dowsley Reid: No. It is to pay $90,000,000 for $241,257,658.27, or in other words, the $3,600,000 was the annual interest for ten years on the four per cent guaranteed stock amounting to $60,833,332.51, and the first, second and third preference stocks, the four of them added together amounting to $124,674,533.74. In addition to that the common stock amounts to $116,583,124.44 on which no interest has ever been paid. The Government therefore said, no interest having ever been paid on the common stock, we will not take that into consideration at all; we will allow you $3,600,000, the annual amount you have been receiving on your guaranteed and first, second and third preference stocks. If you will accept that and hand us over the common -stock as well, on which $30,090,000 has been paid, we are wiling to pay you that $3,600,000 in perpetuity, or $90,000,000 at the end of thirty years. The matter would sum up in this way. Take the amount as $90,000,000 if you wish to look at it in that way; deduct the $60,833,332.51, and you are left with a valuation of $30,000,000 to apply to the $64,841,301.23, that the first, second and third preference stocks added together, plus the $116,583,124.44 common stock, or in round numbers, $190,000,000 which that $30,000,000 would represent.


John Howard Sinclair: In what part of the Drayton-Acworth report, does the minister find justification for offering that $90,000,000?


John Dowsley Reid: On page 88, section 41 says:
We recommend that the entire share capital of the Grand Trunk, guaranteed, preference and ordinary stock-
That would be $241,257,658.27.
-be surrendered to the trustees in exchange for an annuity based on a moderate but substantial proportion of $3,600,000, the average sum paid as dividends in the last ten years; and that this annuity should increase by forty or fifty per cent after the first seven years.
That is where we get that recommendation, and as this Bill provides, we are taking over the guaranteed, the preference and the ordinary stocks in the way that I have just stated, subject, of course, to the award that may be given by the Board of Arbitrators.


Frank S. Cahill: The minister has wandered far from my question. We are undertak-
[DOT] 1336

ing the purchase of the Grand Trunk Railway system including several railways, as well as the ownership of the stock of the Grand Trunk railway itself-What is the total amount of the liabilities we are assuming (by the purchase of the Grand Trunk Railway system? I am not speaking merely of the Grand Trunk railway or any one portion of the system, but of the system -as a whole. l


John Dowsley Reid: I was giving the items when I was interrupted. I explained that we were assuming the total funded debt. I cannot say what the liability will be in connection with the first, second, and third preference and common stocks until the arbitrators make their -award. All that hon. members can do in the meantime is to place their own valuation upon it. The interest of $1,100,000 would represent a valuation of about $25,000,000 or $30,000,000.


Mr. MICHAUD:: The minister -must have an idea of the total amount of the liabilities.


John Dowsley Reid: They are given in detail on page 39 of this blue-book. I quite understand what hon. members desire, 'but I would not for one -minute undertake to say that we are assuming a liability of $116,583,124.44 in connection, with the common stock, for instance, -as was stated by the leader of the Opposition the other evening. There may be no valuation placed on this stock at all by the arbitrators. We did not consider it as of any value when we -made the offer. We cannot s-ay what the stock is worth until the award is made. I can-only say that -we assume liability for the total funded debt a-m-ounting to $173,558,544.62, and the guaranteed stock amounting to $60,833,322.51, and for the valuation placed on the preference and common stocks by the arbitrators. Then we have in our books a loan of $15,142,633.13 which was advanced to the Grand Trunk -many years ago. While the Grand Trunk are liable for -that amount, the Government has never regarded it as a liability. The understanding, I believe, was that the company would never be asked to pay back that sum or the interest on it until they h-ad -paid interest on their common stock. That $15,000,000 was all the Grand Trunk got iby way of subsidies or assistance in any shape or form from the Dominion: Government during the sixty-five years it has been in operation.


Mr. EULER:: Was there an agreement that that $15,000,000 ishould never Ibe repaid?


John Dowsley Reid: I have not the data here, but the Grand Trunk have never

been asked to pay even interest on that amount, and I think we will have to take it for granted that the Government would not insist that it really was a liability which we could deduct from the assets in-this transaction.


Daniel Duncan McKenzie: Was the amount not
always carried forward in our books as an asset of the Dominion of Canada, and is it not there to-day?


John Dowsley Reid: It certainly is there, or it would not appear in this list of liabilities.


Daniel Duncan McKenzie: Then what right have you to say that the amount is going to be wiped out?


John Dowsley Reid: I am not saying that. It is an asset of the Dominion. What I say is that the Government have never taken any action to collect either principal or interest.


Daniel Duncan McKenzie: In determining the net debt of Canada, the minister would deduct that amount of $15,000,000, and as long as he does that, he has no right to say that this amount is going to be wiped off.


John Dowsley Reid: I say that the arbitrators must take that amount into consideration when making their award, as well as every other liability against the road. I am not saying it would have a very serious effect on their decision.


Mr. FIELDING:: Does the minister expect the arbitrators to treat that amount as a liability after he has stated he wants the amount wiped off?


John Dowsley Reid: I am only stating the facts. My hon. friend was Minister of Finance for very many years, and if that amount was considered a liability it was his duty to collect the interest, and not let the loan stand in the .position it did stand in for so many years. The hon. member knows the situation better than I do. I am sure he knows exactly on what terms and conditions that $15,000,000 was given to the Grand Trunk, and if I have not given the facts correctly, now is the time for him to give the information.


William Stevens Fielding: I think $15,000,000 is a good deal of money even in these days, and when there is an item of that amount concerned in thi-s matter I think my hon. friend should bring forward more information than he has given -so far as to the precise position with respect to that sum. If1 we did not collect it from the Grand Trunk and it should have been col-

lected, all governments from Confederation down are responsible. To-day we are only concerned in knowing precisely how the matter stands. I am not anxious to press things against the Grand Trunk, but I think we should have full information in connection with all these matters. One of my objections to proceeding with the legislation this session was that we had not time to get full information. Here is an item of $15 000,000, and my hon. frienl has not thought it necessary to bring forward a precise statement of the terms under which that liability was created. I am not arguing whether or not it should be collected, but the minister should give us more information than he has, instead of simply saying he did not think it was ever intended that we should get back this money. We should know the precise terms and conditions under which that loan was made.	.


John Dowsley Reid: The board of arbitrators will consider all the liabilities against the Grand Trunk on their merits. They are not going to base their award upon what I or any other member of the House may say; otherwise they should not be appointed. They will take every item into consideration on its merits. I cannot imagine that any of the arbitrators are going to read Hansard and base their award on statements made by hon. members of this House. If they do, they will have a nice time making the award. The arbitrators who will be appointed will be men of honour and will take every item into consideration on its merits, regardless of any statements I may make in the House or anywhere else.


Frank S. Cahill: The Canada Year Book,
1918, in the statement of the Dominion Bureau of Statistics, Ottawa, says:
The actual Increase was greater by $15,142,633, but this sum, representing a Government loan to the Grand Trunk railway, which had for years been returned) as part of the company's capitalization, was eliminated in 1917.
That would be done with the knowledge of the Government.


John Dowsley Reid: What book is that?


Frank S. Cahill: It is the (Canada Year Book.


John Dowsley Reid: I do not know that I can give any further explanation than the statement I have already made. The sum of $15,000,000 has been advanced to the Grand Trunk, and'-


Frank S. Cahill: How was it eliminated?


John Dowsley Reid: I did not say it was eliminated. If it was eliminated it would not be in this book.


Frank S. Cahill: This authority says so.


John Dowsley Reid: The Canada Year Book surely is not more reliable than the official records of the department.


Frank S. Cahill: Who is responsible for the publication of these statistics? Is it not the Department of Railways?


John Dowsley Reid: I am taking the statements as obtained from the official records in the department.


Frank S. Cahill: We must have the official records.


John Dowsley Reid: I am giving them to you here.


Sir GEORGE FOSTER:: It is well sometimes to have two authorities.


Daniel Duncan McKenzie: Will the minister say what there is to arbitrate in this $15,000,000? The Canadian dollar is worth a dollar, and they are not going to arbitrate the value of our money. We have loaned this company $15,000,000, and the minister tells us now that we shall appoint arbitrators to ascertain the value of that sum. Why, it is $15,000,000.


John Dowsley Reid: Let me tell my hon. friend what they will arbitrate, although it is hardly necessary that I should do so, for he must, by the nature of his profession, be better acquainted with these things than I am. The arbitrators are going to ascertain the value of the Grand Trunk Railway system and how much we should pay for it, taking into consideration all of the liabilities. First of all, the assets will all be added together and the liabilities will be deducted from them, what is left being the value of the stock.


Daniel Duncan McKenzie: The Minister of the Interior told us the other night-and incidentally he poked a good deal of fun at myself in connection with the matter-that the sixty million dollars that we paid to the Canadian Northern had nothing to do with what we should pay for the stock. Was that sound logic? It was thrown across the floor, and a battalion of ministers applaudingly supported him in his contention that 'the moneys we lent to the company had nothing to do with the amount at which the stock should be valued. If that was sound financial logic, then the $15,000,000 lent to this company has nothing to do with the value of the stock.


Mr. ROWELL:: My hon. friend, inadvertently no doubt, has stated quite inaccurately what the Minister of the Interior said.


Daniel Duncan McKenzie: What did he say? Hansard is available.


Mr.   EOWELL@: As the Minister of Eail-ways has pointed out, in ascertaining the value of the stock the arbitrators will no doubt take into consideration both the assets and the liabilities as well as the earnings, because upon those two considerations mainly must the value of the stock depend. The point that was under discussion the other night, as I recall it, was this: At a certain period the maximum of $30,000,000 was fixed in a resolution moved in this House as the amount that might be paid for the stock of the Canadian Northern railway, and my hon. friend in commenting on that made the statement that subsequently the company borrowed a sum of money- $15,000,000, I think;- and my hon. friend contended, as I recollect, that the fact of the borrowing changed the value of the stock.	[DOT]


Daniel Duncan McKenzie: I did not say that. I said that it certainly should reduce the amount we would pay for the stock.


Newton Wesley Rowell: Then my hon. friend (Mr. Meighen) challenged that statement for the reason that if the money borrowed went into the road the road would be increased in value to that extent. The value of the stock would not be diminished by that amount if the money went into the road. You simply have a borrowing on one side of $15,000,000, and on the other side you have an investment in the road and an increase in your assets of $15,000,000. That transaction does not change the value of the stock; it might improve its value under certain possible conditions. If the company were on the verge of liquidation or were in financial difficulties the $15,000,000 would tide it over and enable it to discharge urgent obligations or make improvements essential to its operation. If it were relieved of its immediate distress or were enabled to make improvements absolutely indispensable to its operation, the company would be in a better position than before. Only in that sense might it be improved, but in the other sense it would not change the value of the stock if the money went into the road or was used to pay off liabilities.


Daniel Duncan McKenzie: Suppose we said to the Canadian Northern, "We are willing to

give you $30,000,000 provided you pass over to us every earthly thing you own," and they said they would not do that. Then we lent them, say, $45,000,000 or $50,000,000 and in the meantime they decided to throw up the sponge and give us the road. Does thfe minister mean to say that we would not take into consideration and balance up against the Canadian Northern that $50,000,000 we gave them? Would we not say: "It is true that four years ago we were willing to give you $30,000,000, but since then you have borrowed $50,000,000. You are indebted to us and are entitled to nothing. We have paid for the property already more than it was worth. Your physical property is what we are looking for. We have more than paid for it and don't care about your stock because it is worth nothing."


Newton Wesley Rowell: If that $40,000,000 or $50,000,000 did not go into the road or into the discharging of liabilities, then there would be some point in my hon. friend's contention. If, on the other hand, it went into the road or discharged liabilities, it improved the position of the company by the amount of the obligation that was incurred. To illustrate: Suppose the company had* $40,000,000 or $50,000,000 of urgent obligations to meet. They come to the Government and say: "We are not able to finance ourselves. Will you loan us $40,000,000 or $50,000,000?" The Government agrees to do this, and the company with that sum discharges urgent liabilities to that extent. The company is no worse off. It has only changed its creditors. Its stock is worth just as much as before, the only difference being that the creditor is the Government instead of the former holder of the liabilities. In that sense I would say that it was not a question that would effect the value of the stock one way or the other. That is with respect to another road, however, and does not touch the immediate matter under consideration.


Sir SAM HUGHES:: Would not the road have increased in value in the meantime?


Newton Wesley Rowell: It might have increased in value.


Samuel Hughes: It did increase.


William Daum Euler: It seems to me that we are entitled to a definite answer from the minister as to whether this $15,000,000 is or is not an asset of the Dominion of Canada. I cannot see that there is any force in the contention that the amount itself is subject to arbitration. The $15,000,000 is money

that the people of Canada gave to the Grand Trunk Railway Company as a loan. If that is the case they owe it to the Dominion of Canada. If it is true we do not expect to receive that money back we ought to know it. I do not see how the amount itself can be subject to arbitration. It is Either $15,000,000 or it is nothing, and it seems to me that this liability of the Grand Trunk to the Government is just as much a liability as any other item they may owe to anybody else. I would like to know whether,' in the opinion of the Government, or whether, as a matter of fact, this is a real asset of the Dominion of Canada owed by the Grand Trunk Railway Company,


Newton Wesley Rowell: I do not think much can be added to what my hon. friend the Minister of Railways has already said about it. The facts are that it was an advance made fifty or sixty years ago, iperhaps more, which was not intended to be repaid at the time.


William Stevens Fielding: My hon. friend says
that it was not intended to be repaid. There ought to be a record of that. I do not contend against the hon. gentleman's argument, but I say that we ought to have the record of it. We ought to have what the bargain actually was from the document itself and not what somebody thinks it was.


Newton Wesley Rowell: Quite so, and the Minister of Railways will bring down whatever record there may be.


William Stevens Fielding: It was before Confederation.


Newton Wesley Rowell: Quite so. Whatever the record is it will be placed before the House. As I understand no interest was to be paid upon the loan until the company had really paid a dividend on the common stock. No dividend has ever been paid on the common stock, and therefore no interest has ever been Charged on this $15,000,000. But it has been carried in the books of the Government as an obligation of the Grand Trunk Railway Company to the Government. The Government has never written it off its books, but it has never demanded payment. In preparing the statement for the information of the House, the officials of the department brought this item into the account showing it in that way. The actual document relating to it, whatever it may be, my hon. friend will bring down.


John Dowsley Reid: Yes, I will bring it down.


William Daum Euler: Will the minister say
whether, in his opinion, the amount is arbitrable?


Newton Wesley Rowell: I have not seen the document, and I therefore would not care to express an opinion offhand. It is arbitrable in this sense, that the arbitrators, in endeavouring to arrive at the
4 p.m. amount of the assets and liabilities, must consider all these items. If the arbitrators consider that this i? a real liability of the company then this stock is more worthless than if it were not a liability of the company.


William Daum Euler: By whom was this item of $15,000,000 brought into this statement? Is it a recognition by the Grand Trunk of a liability?


Newton Wesley Rowell: No, it is brought in by the Government. I am not aware that there is any dispute between the Grand Trunk and the Government as to the conditions under which that loan was originally made, or as to the conditions upon which interest is payable upon it.


William Stevens Fielding: Might I call the attention of the minister to another point bearing on the question of the arbitration? Considerable interest has been expressed1-not entirely on this side of the House-regarding the possibility of the outcome of this arbitration, especially in regard to the enhanced advancement of values in the London market. I am not sure whether it was the Minister of Railways or the Minister of the Interior, hut I think one of them assented to the view that this arbitration should be in that respect limited, that there should be a date fixed and that in so far as-gust how far it would be proper to go is another point1-market values may have any proper bearing on the result of the arbitration, these market values should be taken as of a date substantially before the introduction of this measure. I understood that the Minister of Railways, or the Minister of the Interior-I will not say " promised1 ''-but gave us to understand that such a provision would be made. I would like to call the minister's attention to it because if there is to be such a limitation it ought to go into this Bill.


John Dowsley Reid: My hon. friend the Minister of the Interior, in his remarks a day or two ago, made reference to this very matter, and stated that a date would be fixed on which the value of these stocks would be based. I think some hon. member suggested as the date August 31, which would preclude the possibility of any speculative value being given to the stock. The Minister of the Interior assured ihe House that

that would be protected in some way and I also gave an assurance last night.


William Stevens Fielding: Does my hon. friend propose to deal with it in the Bill?


John Dowsley Reid: No, I had not any intention of dealing with it in the Bill but I will give the assurance that it will be protected in some way.


Daniel Duncan McKenzie: On this subject of the date, when the letters in connection with the negotiations were introduced here the other night, I brought the matter up with the Minister of the Interior and not knowing that the negotiations had gone away hack for over a year, and believing that these were new negotiations, I stated that perhaps the last day of August, 1919, would be a suitable date. I said that believing that we were on new negotiations altogether but since then, from speeches and information gathered from the other side, it turns out that these were continuous negotiations from the 24th January, 1918. The negotiations were first opened by the Prime Minister's cablegram on the 24th January, 1918. I went back on my date of the 31st August when it was disclosed that the negotiations had been going on since January. My contention is that the date to be fixed with regard to the value of the stock should be the 23rd January, 1918, the day before the Prime Minister's cable was sent to the old country.


John Dowsley Reid: I would not like to agree to any particular date at the present time, and I think that my hon. friend, when I mention the facts to him, will agree with me. Due to the fact that the Government were entering into negotiations with the company I believe that the stock was much higher in January, 1918, than it was in August, because the hon. member, reading in the press, would see that there was quite an issue taken in London as to the amount the Government were offering. The stocks, in August, in my opinion, were about as low as they ever were and therefore I think it is well to let the question of the date remain until we come to take up the agreement and decide the thing. I have said that we will protect the situation if there is a possible chance of the stock being inflated on account of the decision of the Government to take over the road.


Henry Arthur Mackie: Will the agreement he before the House?


John Dowsley Reid: No, the agreement will not be before the House. After the Bill goes through it will take some time to pre-

pare the agreement. There will be a great many details which will have to be placed in the agreement, which will have to be gone into and which could not be embodied in the Bill before the House.


Henry Arthur Mackie: I agree with my hon. friend from Cape Breton North and Victoria (Mr. McKenzie) that a date ought to be fixed or some assurance given to the House that a date will be fixed so as to enable the House to be satisfied that more shall not be paid for the stock than should he paid.


Mr. RUCHARBSON:: I regarded that
point as of such essential importance that I took the earliest opportunity on my return from Winnipeg a few days ago to ascertain from governmental sources whether this alleged inflation would affect the arbitration, and I was assured from sources that were satisfactory to me that it was the Government's intention to see. that this inflation would have no bearing whatever on the amount that the arbitrators might award. Hon. gentlemen will remember that when I addressed the House on Wednesday I mentioned that matter. I did not like to give the source of my information, because I did not want to betray any confidence. But inasmuch as it has been stated on behalf of the Government that it is the intention to take that precaution, it is my judgment that it would be well, if possible, to have the date fixed in the Bill, and I therefore agree with the suggestion of the hon. member for Edmonton East (Mr. Mackie). The (people are exceedingly suspicious and anxious about this matter.


Daniel Duncan McKenzie: They have a right to be.


Robert Lorne Richardson: I do not agree with my hon. friend that they have any right to be. But there is such a feeling of doubt about everything-even about my hon. friend-that I think it would be well to fix the date now. While I am on my feet, I would like to ask with regard to the $90,000,000 obligation of the Grand Trunk to the Government under the Grand Trunk Pacific contract. I was also given an assurance that that would be taken care of in the arbitration. Consequently, feeling that these two important points were to be provided for in the interests of the public, I had no difficulty in endorsing the proposal to purchase the Grand Trunk.


Samuel Hughes: It is a very simple matter to discover the market quotations of this stock. Why not get them for the last three or four years, and see if there

has been any great inflation or not? If there has been, then let us take the lower figure.


Henry Arthur Mackie: When the arbitrators are establishing the value of the stock, neither my hon. friend (Sir Sana Hughes) nor I will be present to discuss the manner in which they are to proceed; but if we now fix a date on which the value of the stock ought to be considered, we are convincing the public that we are protecting them.


Samuel Hughes: That would be my
idea too. I think the lowest market quotation should be selected in arriving at the value of the stock.


William Stevens Fielding: It must be understood that the stocks we are talking about are the three preference stocks and the common stock, which are the subject of arbitration. To my mind the more serious question is in regard to the guaranteed stock, and as to that 1 am afraid we have no protection.


Robert Lorne Richardson: I would like to
make a suggestion to my hon. friend (Mr. Fielding) that, inasmuch as he raised the issue on the debate, he state what in his opinion should be the date to be adopted in arriving at the value of this stock.


William Stevens Fielding: I would not like to answer that question definitely. I am prepared to accept the assurances of the ministers that they will select a date; but I would like to see them select the date and put it in the Bill. I am inclined to study the Stock Exchange reports before I attempt to answer my hon. friend's question, and I am not anxious to be over-critical. On the question of the guaranteed stock, it is well to remember that what we are talking about does not touch that stock, which has advanced to 45 and, I believe, will reach 90 before the business is concluded. But that is another story, and perhaps it is not in order to debate it at this stage.


Newton Wesley Rowell: The hon. member (Mr. Fielding) has stated the situation correctly. The Government will see, as it properly should, that in this agreement the holders of the stock which is being arbitrated do not receive any higher value because of any appreciation of their stock due to the arrangement made between the Government and the company to take it over. It would be most improper that they should receive any enhancement in value under the circumstances, and whatever is the best form to guard against that will be provided for in the agrement, as the Minister of the Interior (Mr. Meighen) stated when this point was first brought up.


William Stevens Fielding: But my hon. friend will admit that that will not apply to the guaranteed stock.


Newton Wesley Rowell: 
Mr. KING:: If it is the Government's intention to do as the minister advises us, what is the objection to stating that intention in the Bill in a form which will help establish confidence throughout the country in the Government's intention.


Newton Wesley Rowell: I should not think anything would be necessary to establish confidence in the Government's intention with reference to the matter. But there is this feature to be considered: First, without an examination of the stock exchange returns, it is not at all clear what would be the best date to take; secondly, if we are negotiating an agreement, it is a proper matter for conference with the other matters to the agreement. However, the Government has given assurance that a date will be fixed which will safeguard this particular matter.


Mr. STEVENS:: I would like to interject a suggestion here. I think we are on rather dangerous ground if in this Bill we fix a stated date at which this stock shall be valued, such a date being based apparently from the discussion upon a study of the market price of the stock. If we do that we are indicating to the arbitrators that this Parliament recognizes the market value of that stock at a given date. My . opinion is, viewing this balance sheet somewhat carefully, that we would be exceedingly unwise to guarantee to pay to the Grand Trunk shareholders the value of their stock as represented on the market. What we want to do is to so arrange tins arbitration that the arbitrators will ascertain the intrinsic, not the market, value of the stock, as represented by the surplus of assets over liabilities. Therefore, Mr Chairman, I do suggest very earnestly to the House that we should not fix a date which has any bearing whatsoever upon the market value of that stock, for we are by that very act recognizing the market value as against the intrinsic value.


Mr. CAMPBELL:: My hon. friend's suggestion would involve ascertaining the physical value of the property, would it not?

_ Mr- STEVENS: My hon. friend is quite rig'ht, and we have two methods of doing that. Probably I have no right to speak with any authority, and I am now merely giving my own opinion. We have the Dray-ton-Acworth report, and that commission engaged the most expert engineers available to examine and report on the railways of this country. If that report is not satisfactory, it is open to the arbitrators, or to either party to the arbitration, to demand a new physical valuation. But the point I am making is that we would certainly be treading on very dangerous ground to introduce into this Bill the element of market value as a basis rather than the element of intrinsic value.


William Stevens Fielding: I think there is some force in the point raised by the hon. member for Vancouver (Mr. Stevens). I certainly did not contemplate that we should recognize the market value as a vital element in the matter. The words which I used were, " that if the arbitrators admit the market value as an element for consideration, such market value should be as of an earlier date." There is considerable force in what my hon. friend says. I know that in the case of the Canadian Northern arbitration, in my individual judgment the putting a limit on the value was a mistake, because it was an invitation to the arbitrators to go to that amount. But I think in this case we might provide that if in the judgment of the arbitrators market value enters into the question at all, it must be such market value as at an earlier date.


Daniel Duncan McKenzie: We cannot examine
the market quotations from year to year, or from month to month, and select some date when the stocks of this company are very low. That would be illogical and improper, and would not be sustained for one moment. But we can very well say to any person holding this stock: You have no right to profit by any inflation or advancement of the stock which took place because of the fact the Government decided to buy. I think it would be quite fair to draw the line at the day v.'hen it first became officially known that the Government of Canada contemplated the purchase of this property and of the material that was giving value to this stock. If January 24, 1918, was the day when that official announcement was made, then the holders of this stock should be entitled only to the value of the stock as it stood not later than

January 23, 1918. Of course, if there were earlier negotiations which might have influenced the value of the stock, the Government are aware of them. But if there was no earlier public announcement, I would fix the day as I have suggested, and I would say: "You cannot come this side of that line, because it is quite probable that any inflation of this stock is the result of our decision to purchase."


Newton Wesley Rowell: I think my hon. friend will see, if he reflects a moment, that the date which he suggests would not be a wise one to select and that it would be much wiser to leave the matter open so that the Government can take care of the situation in the agreement. I intimated the other evening that in my view the market value of the stock, viz: what it happened to be selling .for at any particular day on the exchange, should not influence the arbitrators in fixing value. I gave my reasons then for that view, and I shall not repeat them. But since January, 1918, some very important events have taken place in the history of the Grand Trunk and the Grand Trunk Pacific which would, I think, have a much greater effect upon the stock than the initiation of negotiations on the part of the Government. One of these events was the confession of the Grand Trunk of its inability to continue the operation of the Grand Trunk Pacific. Then there was the further fact that when it confessed its inability to operate the Grand Trunk Pacific the Government had to appoint a receiver. There is also the fact that the Grand Trunk has since found itself unable to continue operation without receiving certain other assistance. All these matters have . quite an important bearing upon the value of the stock, and we would not be wise to fix a date as far back as my hon. friend has mentioned, because the stock is really of less value because of these events than it was on January 24, 1918. I agree with my hon. friend1-and the Minister of the Interior made it clear the other evening that this would be provided for in the agreement-that if the question, of the quoted market, value of the stock is a factor in the situation, then there should, be no enhancement of the amount of the award by reason of any enhancement of the value of the stock due to the fact that the Government had entered into this agreement.


John Dowsley Reid: I want to interject a little statement here; some one has started a story in connection with this matter which I want to dispose of now. The story has

been circulated throughout the country that on account of this road being taken over by the Government no taxes will be paid by it to municipalities throughout the Dominion. I want to correct tha't statement. There is nothing in this Bill which permits the Government to depart from the position which the Grand Trunk has always been in with regard to this matter. Whatever taxes they paid in the past, or were liable to pay to any municipality or otherwise, they will be subjected to when this Bill passes. As I am getting telegrams from many parts of the country with regard to this story, I think it is well that I should make this correction now.


William Stevens Fielding: If it is Government property, will it be liable to taxation? I am not'arguing whether or not it should be ; I am simply putting the question.


John Dowsley Reid: The position I take is this: It is still a private company, but the Government owns the stock. It is not the same as if the title of the property was in the Government. But it is not the intention of this Bill to make the Grand Trunk free from taxation as was the case with the Intercolonial. In the case of the Intercolonial, a deed in fee simple is passed to the Crown for every part of the right of way. In this case we have the stock and the road is to be operated as a private company; so that the conditions will be the same so far as any requirements of the municipalities are concerned.


William Stevens Fielding: Is not the Intercolonial, by reason of our recent legislation, to-day the property of the Canadian National Railway Company?


John Dowsley Reid: Only so far as operation is. concerned,


William Stevens Fielding: They are'not the owners?


John Dowsley Reid: No, they are not the owners. In the case of the Canadian Northern, of course, there is power to issue debentures, and the position might be different, but so far as the Intercolonial is concerned the management was simply ^transferred to the Canadian National Railway Company and there is no right on the part of that company to, issue' bonds or mortgages in respect of that part of the Government railway system-not, at all events, without the consent of Parliament. Of course, that is true of the other end of it; the Board of Management would not on any account issue bonds without the consent of the Governor in Council.


William Lyon Mackenzie King: Does not what the minister has just said bear out exactly the contention I made yesterday, namely, that when the Government talks about this proposal involving the government ownership of railways they are misleading the House and the country? The minister has just stated that it is not government ownership; therefore these properties will remain liable to taxation.


John Dowsley Reid: So far as the Grand
Trunk or the Canadian 'Northern are concerned, when we buy the; stock we are the owners of the road.


William Lyon Mackenzie King: Then if it is Government
property and therefore exempt from taxation, why do you allow the municipalities to impose taxes upon it?


John Dowsley Reid: As I understand it, Government property in fee simple, owned and registered in the name of the Crown, is, under the British North America Act, free from taxation. In this case the title to the property is registered in the name of the Grand Trunk Railway Company of Canada, a private corporation of which we own the stock.


Mr. MACKENZIE:: KING: A private corporation.


John Dowsley Reid: And owning the stock, we own the company. We own the property of the company, and, therefore, we must be the sole owners of the company.


Mr. McOOIG:: If it is the case as the hon. minister explains it, what would be wrong in having a clause inserted in the Bill so that there would be no possible question about this road being subject to taxation? Some other minister in some future year might interpret the Act in an entirely different manner. If it is set out now and clearly established by a clause in the Bill that the road is subject to taxation, the municipalities would be satisfied that what the minister says is absolutely true.


John Dowsley Reid: I do not like to load the Bill up with anything that is unnecessary, and if any other minister comes into this House at any future time, or if the Government of the day at any future time should change its mind and decide that it is going to collect taxes from every municipality in the Dominion of Canada, because these roads run through almost every municipality, and to depart from a system that has been in existence since the Grand Trunk was built and that has been continued by the Government-


William Stevens Fielding: The minister is reversing the matter. It is not because the Grand Trunk collects taxes.


John Dowsley Reid: -then I say the minister of that day must assume the responsibility and have the support of the members of this House to justify him in departing from the system and allowing the railway companies to stop paying taxes.


William Daum Euler: Surely it is not a contention of the minister that the Government is going to tax the municipalities for the privilege of having the railways pass through them. I think he has reversed the argument.


John Dowsley Reid: What I meant to say was to allow the municipalities to collect taxes.


William Lyon Mackenzie King: Are the positions identical in regard to the Intercolonial and this railway as it will exist after this measure has gone through? In the case of th.e Intercolonial at the present time, does the Government pay any dividends on stock to any stockholders?


John Dowsley Reid: There was no stock issued.


William Lyon Mackenzie King: I know. The Government owned the railway from the outset. That is the difference. That is government ownership. This is not government ownership; this is private ownership, with the Government taking over certain of the stock, giving other stock in return and paying dividends on the latter.


John Dowsley Reid: There is no use in myself and the hon. member arguing this. I would suggest to him that When he has time he should get the other members on his side into some room and endeavour to convince them that they are wrong. Every other hon. member apposite is arguing that this is complete government ownership, and I am not endeavouring to change their opinion; but the leader of the Opposition is arguing directly against every other hon. member on that side of the House.


Daniel Duncan McKenzie: That is not the point.


William Lyon Mackenzie King: I think there is a distinction which perhaps has not been kept clearly enough in mind by the minister in his remarks, that is the distinction between government ownership and government operation. I am prepared to say that the measure which the Government is putting through at the present time is a measure in the nature of effecting government

operation of railways. It is a transfer of the management of the Grand Trunk Railway Company from the Grand Trunk to a commission composed of the Government's own appointees to manage the road. That is the nature of the transaction. I will admit that it is a transfer from private operation to public operation, and as such I think the ultimate value of it is very doubtful. There are certain merits that private management has when there are stockholders Who have an opportunity of -watching the efficiency of management and who avail themselves of their opportunity in order that the dividends may increase through efficient management. All that advantage is going to be taken away by this arrangement, because the Government in taking away the voting power from the shareholders gives them a guaranteed rate of interest which they will get from year to year irrespective of how inefficient the management may be.
Government ownership and Government operation are two distinct things. The minister sipeaks of this measure as one of Government ownership and operation. I will admit that it is a measure of Government operation, but I decline to admit that it is Government ownership. The Intercolonial is Government-owned, but this is not.


Newton Wesley Rowell: My hon. friend fails to distinguish between things that differ. A man may own property in two ways; he may own a property by having .it stand in his name, as a man owns a house, or a factory, or a farm, or any other property, but he may own. it in a different way. He may have the title to that vested in a corporate entity, and he may own the stock of the corporation. He owns it in all the elements of ownership just as much in the one case as in the other. It is a different method of holding. The corpoiate entity, it is true, is entirely distinct from himself; but he owns the stock, and he has the ownership ini all its plentitude and in all its power, except that he must carry on the work of the corporation, in the manner in which the law requires a corporation to carry on its work. The two methods of ownership are illustrated in the Intercolonial and in the Canadian Northern. In the Intercolonial the title to the road is actually vested in the Government. The Government owns it in the first way I have mentioned.. In the case of the Canadian Northern, the Government owns the road by owning the stock of the Canadian Northern Railway Company. It owns the one just

as much as it owns the other, tout it owns it in a different way. My hon. friend is quite mistaken when he says that the Government does not own the 'Canadian Northern railway. The Government owns and operates in both cases, but in one case it owns and operates directly, that is, it did before the operation was turned over to the Canadian National railways. In the other case, the Government owns and operates through a corporate entity. This is a matter of convenience, because it is believed to be wiser to ido so.


William Lyon Mackenzie King: I should like to point out this distinction which I see in the difference to which the hon. minister has just drawn our attention. Let us assume that the Government wishes to dispose of the Intercolonial railway at any time. It is free to do so of its own initiative; it has not to go to some shareholders and buy up their shares at the end of a period of thirty years; it 'has complete ownership at the present time. There is nothing more to be paid out; the Government has full possession of the title. That is not the ease in regard to the Grand Trunk proposition. The Government cannot dispose of the Grand Trunk railway until it acquires the outstanding stock, which outstanding stock it can purchase at the end of thirty years. Until that stock is purchased and held .in the name of the Government, the road is not government-owned. In the case of the Canadian Northern, which has been referred to, the Government owns the stock. In the case of the Intercolonial, it owns the railway. In the case of the Grand Trunk, it owns neither'the property nor the stock, to a very considerable percentage of it at least.


Newton Wesley Rowell: My hon, friend there is under a misapprehension again.


William Lyon Mackenzie King: No misapprehension.


Newton Wesley Rowell: Take the three roads. In -the case of the Intercolonial, the Government owns it without any obligations outstanding against it; it paid for it at the time. In the case of the Canadian Northern, it owns the stock subject to obligations outstanding against the road, debenture stock and bond issues, just the same as a man owns a house subject to a mortgage. As I think I mentioned the other night, I have always believed that I owned a house. I have lived in it for many years; I have never had anybody question my ownership, but 1 have never held it free from a mortgage.
That does not change my ownership of the property. I still own it, subject to the mortgage. Now, that is the position of the Government in relation to the Canadian Northern Railway. It owns the stock, but there are obligations outstanding against the road. It will! own the Grand Trunk in just the same way, with this difference, that instead of the securities outstanding being called bonds they are called debenture stock. They are a mortgage charge upon the property, as I am informed. Next to that oomes the .guaranteed stock. That is not an express charge upon the property of the company, but it is a prior charge to the preference and common stocks in this sense, that it is entitled to .a dividend out of the earnings in priority to the other .stocks, and in case of liquidation is entitled to he paid in full before the other stocks get a dollar.
As to the preference and common stocks, the -Government might buy that stock and pay cash or give securities in return. At the present time we are getting the stock on a basis which is much more in the interest of the country than to pay cash for it. Instead of paying cash, we give what is called a stock, which has no voting rights, no control whatever. It is a kind of government * security, perpetual in- its character, bearing interest at 4 per cent, but which we can redeem at the end of thirty years. That is dene because it is a good thing in the interest, of the country to do it. If we did not do that we would have to pay cash .and we could not raise the money at less than 51 per cent.
We are selling our Victory Loan bonds at 51 per cent to-day. Now, what would be the wisdom of endeavouring to get the people of this country to buy government securities at 5} per cent to pay an obligation which we * can discharge by a so-called government stock bearing interest at 4 per cent? The method we have adopted is in the interest of the Government and the country, and means a saving, if the award is a substantial sum, of many hundreds of thousands of dollars per annum to'the people of Canada.


Daniel Duncan McKenzie: Provided always you are getting value.


Newton Wesley Rowell: Assuming that the arbitrators fix a fair value, of course. I am only dealing with the method of paying the award.


William Daum Euler: In various parts of the Bill it is mentioned that the preference and the common stocks shall be submitted to arbitration and that to the holders of these stocks a new guaranteed stock shall be issued to the amount of the award, the old



stock being transferred to the Government. What is the status of that stock which will come into the hands of the Government? Is it upon the ownership of that stock that the Government rests its claim to ownership of the road itself?


Newton Wesley Rowell: It is.


William Daum Euler: Is that stock'still in force?


Newton Wesley Rowell: Yes, it is the stock which controls the road. The Government owns it absolutely.


William Daum Euler: It will be watered stock, because you will have already given its value, as determined by the arbitrators, to the Grand Trunk stockholders.


Newton Wesley Rowell: It is not watered stock. It is stock got and paid for by issuing what is called a new 4 per cent guaranteed stock. That is the government security which we issue in payment, rather than paying cash. The stock which we take in and deposit in the treasury is the stock which controls the roiad, and it will retain the standing it has to-day.


William Daum Euler: But it would have no actual and inherent value, because new stock to the actual inherent value of the system, as determined by the arbitrators is to be issued to the present holders.


Newton Wesley Rowell: It has whatever value
we pay for it, presuming, of course, that the arbitrators fix a fair value. We pay for that stock by issuing a new security. Let me carry it a step further. This security bears interest at 4 per cent, and we have the right to redeem it at the end of thirty ^ ears. Whether we would redeem it or not 'at the end of that period will depend on the value of money in the market. ^ If thirty ./ears hence Canada is in a position to go into the money market to borrow at 3J per cent, as she was many years ago, when money was cheaper, then undoubtedly we would go into the money markets of the world, and issue our bonds, raising the necessary money at 3| per cpnt to pay off this security bearing interest at 4 per cent.


William Daum Euler: That is not my point. There is something like $180,000,000 of preferred and common stock. The arbitrators may fix the value of that stock at $50,000,000, $60,000,000 or $100,000,000, although I hope they will say it is worth nothing. Let us suppose the award is $50,000,000. You then issue $50,000,000 of guaranteed stock. You would then have $230,000,000 of stock where you had only $180,000,000 before, and you have not in-
IMr. Euler.]
creased the assets of the company by one dollar. Therefore, I say that stock is water.


Newton Wesley Rowell: I thought my hon. friend, in speaking of watered stock, was referring to the stock we get.


William Daum Euler: Exactly.


Newton Wesley Rowell: The stock we get is not watered. You may say the stock we issue is watered, if you like. The Bill declares it shall be considered paid-up stock bearing interest at four per cent. In the hands of the holder it carries interest at, four per cent guaranteed by the Government of Canada, but it has no voting power whatever.


William Daum Euler: It is watered stock because you have more stock than you had before and no greater assets. Is not the whole object of the Government in acquiring that stock to get control and ownership?


Newton Wesley Rowell: The object in taking over the stock is to give us the control and ownership.


William Daum Euler: That is all.


Newton Wesley Rowell: Still, that is everything.


William Lyon Mackenzie King: Assuming that the stock which we may call the exchangeable stock to distinguish it from the other stock, which we may call the retained stock, because it is retained in the possession of the stockholders, is worth $50,000,000, the Government takes that $50,000,000 of stock and regards that as its possession. Is that right?


Newton Wesley Rowell: No. The Government
takes the $180,000,000 of stock. It gets in every dollar of stock that is outstanding and gives in exchange, if you wish to put it that way, $50,000,000, if that is the award of the arbitrators, of this new stock bearing interest at four per cent, and guaranteed by the Government, but without any voting power.


William Lyon Mackenzie King: What the Government takes is what the arbitrators express to be the value of the exchangeable stock.


Newton Wesley Rowell: They take the whole of it.


William Lyon Mackenzie King: But what they get in value is the value the arbitrators put upon the stock. Is it not the case that the Government gives in exchange an equal amount of guaranteed four per cent stock to the holders of this exchangeable stock?


Newton Wesley Rowell: No, we give stock to the amount of the award.


William Lyon Mackenzie King: That is what I say: $50,000,000, if that was the amount of, the award.


Newton Wesley Rowell: For the sake of illustration, let us suppose the amount is $60,000,000, which is just one third of $180,000,000.


Frank S. Cahill: Make it ten millions.


Newton Wesley Rowell: Well, let us split the difference and say twenty, with the advantage on our side.


An hon. MEMBER:: Always.
. Mr. ROWELL: Say twenty millions, that is, one-ninth of the stock outstanding. Let us assume that it is all of equal value, although as a matter of fact it is not. It would mean that a man for nine shares of stock surrendered of the par value of nine hundred dollars would receive one share of one hundred dollars of non-votable stock, on which the Government guarantees to pay four per cent interest half-yearly. That is the situation.


William Lyon Mackenzie King: The Government gets nothing that he does not get the equivalent of.


Newton Wesley Rowell: The Government only
gives him in return what the arbitrators find to be the value of the stock, and the one share should represent the value of the nine.


William Lyon Mackenzie King: Exactly.


Newton Wesley Rowell: The value of the one should be equal to the value of the nine, with this difference, which is an important one:	At the present time, if we paid in
actual value, having regard to what money is worth, we would have to pay more than on the basis of four per cent. On the present value of money we would have to give him a security bearing, say, five and a half per cent. But we do not discharge it in that way. ^ We discharge it by a four per cent security, so that he does not really get the value. It is a very great saving to the country. It is one of the important features oi the agreement that we are able to discharge our obligation by a four per cent security instead of five and a half per cent at the present rate.


William Stevens Fielding: If that point is disposed of I should like to bring another to the attention of the committee. Some one owns this railroad. Apparently it is not the Government but the Grand Trunk Railway Company, which is to continue to own it. Am I right?


An hon. MEMBER:: No.
85)


William Stevens Fielding: Don't answer too hastily. The Government do not own it.


John Dowsley Reid: The shareholders own it, and the shareholders will be the Government of Canada. They will own it the same as they do the Canadian Northern.


William Stevens Fielding: Will not the Grand Tiunk Railway Company of Canada remain an entity?


John Dowsley Reid: Certainly, but it cannot exist without shareholders, and all the stock being transferred to the Canadian Government, the Government are therefore the owners of the railway.


William Stevens Fielding: I am not discussing that point; I am endeavouring to ascertain how this matter will work out. There are one or two things which we know very well. For instance, we know that we shall have the elephant, and secondly we know that we shall have to feed him; but I am not sure that we all know how he is to be handled. If the Grand Trunk Railway Company remains a corporate entity, of course it will have shareholders. There is going to be $180,000,000 of these several classes of preferred and common stock which are to be arbitrated on and called in. Are they to be cancelled, or do they still remain stock of the Grand Trunk Railway Company? There is going to be $60,000,000 of guaranteed stock which will remain outstanding. There is no question about that; and there will be ten, twenty, thirty or fifty millions of new guaranteed stock issued. Do all the stocks called in remain in the Treasury of Canada? Are we to have the Grand Trunk Railway Company? Is my hon. friend the Minister of Railways to be president of the Grand Trunk Railway Company, and are we to have an annual meeting for the proper conduct of the business? The Government do not own the road, but some one must own it. The Government do not own it except as stockholders, and they can only be stockholders in a corporate body. I am not complaining; I am only trying, in the calm serenity of this sunny afternoon, to learn something. It seems to me that we are perpetuating the Grand 'Trunk Railway Company. Is my hon. friend (Mr. J. D. Reid) to be president, and the President of the Privy Council (Mr. Rowell) to be vice-president of the company, with all the paraphernalia of the Grand Trunk Railway Company kept in existence?


Newton Wesley Rowell: That is exactly the point I made in answer to my hon. friend the

leader of the Opposition. There are two methods of ownership, one by holding stock in the company, and the other by owning the property. In this case we own it by stock in the company. The $180,000,000 is not to be cancelled. Whatever may be decided in the future, at the present time it is the intention to preserve the corporate entity of the Grand Trunk, which carries all the franchises and privileges and agreements with it. But the management, as .my hon. friend has pointed out, will be in the reorganized Board of the Canadian National railways which will operate all the Government railways as one system. Probably in time it may be wise to bring about actual consolidation: it may be wise to bring about a practical merging. That is a question of policy that will have to be settled according to the developments of the situation from time to time.


William Stevens Fielding: I am not trying to argue against my hon. friend, or to determine what is Vight. We are all anxious to ascertain where we are at, to use the popular slang expression. It is perfectly clear that the Grand Trunk Railway Company is to be perpetuated; it is to own this property. We are the shareholders in the Grand Trunk Company; I admit the force of that statement. But it is well that the public should understand that the Grand Trunk Railway Company is not to be wiped out. It is to exist; all its franchise, powers and authorities are to remain, and they are to be exercised by my hon. friend the Minister of Railways and others. If the Government do not own the road it is clear enough that the Grand Trunk Railway Company, no matter who owns the shares, are still to be the owners, and we are to be shareholders in it. Let us clearly understand that this is a Bill to perpetuate the Grand Trunk Railway Company, and that we are to be its shareholders.


John Dowsley Reid: My hon. friend knows that the Canada Atlantic Railway was takqn over years ago.


William Stevens Fielding: Before the minister proceeds further, am I right or wrong?


John Dowsley Reid: The hon. member is right in that the Grand Trunk Railway Company is to be continued in existence.


Samuel Hughes: If the Grand Trunk is to he continued as a corporation, where is it to get its revenue?


John Dowsley Reid: I will answer the hon. member in a moment. I was going to say that the Canada Atlantic Company was

taken over 'by the Grand Trunk Railway and although you do not hear of the Canada Atlantic Company now it is still in existence as part of the Grand Trunk system. We are taking over the Grand Trunk Railway system and as shareholders we will own it. It is necessary to keep it in existence, but we transfer the operation of it, the same as the Canadian Northern and the Intercolonial, to the Canadian National Railway system, and they will all be operated as one system. All the revenues from the whole railway system will go into one fund to pay for their operation.


Frank S. Cahill: All of them?


John Dowsley Reid: Under the Bill we passed last year. The stock, having been transferred to the Canadian National Railway system, it ia. owned by the Government, and the whole system will be owned and operated by the Government.


Frank S. Cahill: I am not quite clear in regard to the answer given to the hon. member for North Waterloo as to new issue of stock. The President of the Privy Council is corporation lawyer enough to know that you cannot issue new stock without getting value for it, at least according to Canadian law. You are increasing the stock to some extent by an issue of new stock.


Newton Wesley Rowell: I am lawyer enough to know that this Parliament, which creates a corporation, can authorize it to issue stock in any form that Parliament sees fit. This Bill expressly provides that we may issue this stock and it defines the position of the stock.


Frank S. Cahill: In exchange for the other, but what about the increase?


John Dowsley Reid: The common and the first, second and third preference stock is all transferred to the Government, and it is held by the Government. The Government will issue stock to the value of the award; it may he $10,000,000, $20,000,000, $30,000,000, or whatever it is. We are issuing our stock, note or bond-we call it the Grand Trunk 4 per cent guaranteed stock- to the value of the award. It is not adding another liability against the Grand Trunk. It is what we call issuing stock for the amount of the award for the shareholders to hold as security for the $190,000,000 of stock scrip which they surrender.


William Stevens Fielding: I suppose /the new
stock will be stock of the Grand Trunk Railway Company of Canada?


Georges Henri Boivin: Questions relating to the distribution of the new stock would be

relevant to clause 6 but not to the clause under discussion. If the discussion is limited to clause 2 questions will be in order.


Robert Lorne Richardson: I would like to say a word with regard to an expression that fell from the Minister of Railways. He assured the committee that this company, when it became the property of the Government, would not become exempt from taxation, but that the properties of the company would pay taxes just in the same way as they had done when they were under the control of the Grand Trunk Railway Company. I want to point out. the gravity of that situation. When the Grand Trunk is incorporated with the Canadian National railway system, it will be a system as extensive, and probably possessing as valuable assets, as the Canadian Pacific. The Canadian Pacific is exempt from taxation. Every farthing's worth of property the Canadian Pacific owns is exempt from taxation for ever. The land grant was exempt for twenty years and when that term expired the exemption was extended for another twenty years. It is probable that by the time the second twenty-year term expires the land grant will be disposed of. Hon. gentlemen must see the enormous handicap against the Government system of railways that this taxation question will be in in competition with- the taxation exempt C.P.R.. I gave the figures the other night showing that if you take the amount of taxation that the Canadian Pacific would have paid in the last thirty years it would reach a total of $500,000,000. I think those figures, contained in Poors Manual would indicate


Mr. KEEFER:: What taxation is the
Canadian Pacific exempt from-not municipal?


Robert Lorne Richardson: Roadbed, rolling
stock, station houses, and all appurtenances ere exempt from taxation.


Francis Henry Keefer: They pay taxes in Ontario. I know that when I was city solicitor they were taxed time and again. It may be different in the west; I do not know.


Robert Lorne Richardson: Have you ever read that clause in the charter where it distinctly says that the roadbed, rolling stock, station houses and all appurtenances are exempt from taxation?


Mr. BOYS:: That is certainly not so in Ontario.


Robert Lorne Richardson: The clause in their charter reads that all the land grants shall
be exempt for twenty years; they constitute a grant direct from the Crown. I recall the actual words because I have used them in Parliament, in the press and on the platform for twenty or twenty-five years. However, I will look it up again. .


Henry Arthur Mackie: That is only in so far as the West is concerned.


Francis Henry Keefer: It is not so in Ontario.


Robert Lorne Richardson: I am told that I am all right in so far as the West is concerned, and before the Bill goes through we may find out that I am all right all round. Even in so far as the West is concerned, hon. gentlemen will understand what an enormous handicap it must be to the nationally owned system if it has to pay taxes and the Canadian Pacific is relieved from the payment of taxes. I submit the question for the consideration of hon. gentlemen, but I shall look up the Canadian Pacific charter again and endeavour to ascertain the facts.


William Daum Euler: The hon. member (Mr. Richardson) is most certainly incorrect in his statement if he applies it to Ontario. But surely it is right that the railway company shoulfl pay taxes to the 5 p.m. municipalities just the same as any other institution. Even if it were a handicap to the National railway to pay taxes in competition with the Canadian Pacific, which does not pay taxes, it surely would not be right to saddle that loss on the municipalities rather than upon the country. The municipalities are entitled to these taxes to-day, and I would like to revert again to the request of the municipalities that their rights be preserved so that there can be no question about it. There seems to be a considerable difference of opinion as to whether the Grand Trunk is going to be owned by the Dominion of Canada or by a private corporation. There seems to be -a doubt now, and while the ministers have now no doubt it may happen, and I think will happen, that these hon. gentlemen may not always occupy the seats of authority and they may be followed by others who may view the question in a different light.


Mr. M. CLARK:: Will the hon. gentleman forecast that they will all view it in the same light?	*


William Daum Euler: I speak only for myself. I would like to support what the hon. member for Kent (Mr. McCoig) said, that in order to make it certain beyond any doubt

that the municipalities will be protected a clause should be inserted to the effect that notwithstanding any interpretation which may be placed upon the question as to the ownership of the road, if you like to put it in that way, the municipalities should always be entitled to collect their taxes from the railways upon the properties of the railways within their bounds whether they be the properties of the company or the Government. I do not think any harm can come from that, it does not burden the Bill and it will make assurance doubly sure.


Daniel Duncan McKenzie: The minister himself introduced the subject of taxation and we must deal with it. Gentlemen who are so fond of public.ownership cannot have their cake and eat it. They must take the responsibilities of their love for public ownership. Public ownership means property in the Crown. That property shall become the property of the Crown representing the public. It is public owned property, meaning that it belongs to the Crown. There is no such thing as the Crown owning, and not owning property. It either owns the property or it does not. There is no use of camouflaging about it? It would not'be a fair defence for the Government to say: "We own the property but we have put it in our wives' names" so that our creditors cannot touch it. Is that a fair position for the Government to be in? The Government say that they own the property but to get out of some responsibility or liability they say that they are holding the property in somebody else's name. The courts of the country do not recognize camouflage of that kind. They go direct to the point and say "Who owns this property?" And whoever owns it has the rights and responsibilities incidental to it. If the contention of the Government is right this property belongs to the Crown when we take it over. I do not agree with what they say about stock or shares or bonds or anything else. If they take the bonds they are taking the property with it, and they own the whole thing, if we are to believe them, so that it is the property of the Crown. There is no [DOT] escaping from that conclusion. Now, section 125 of the British North America Act says:
No lands or property belonging to Canada or any province shall be liable to taxation.
We cannot change that, and we cannot put anything in this Bill-we can, but it would be mere child's play, because the courts would not recognize it-we cannot
fMr. Euler.] '
put anything in this Bill which will cor>-flict with the constitution. Now, this property that we are taking over-and the farmers might as well know it-must necessarily be public property, the property of the Crown, and therefore exempt from taxation under the British North America Act. How can it be otherwise? If it is not exempt from taxation it is not the property of the Crown, it is not public ownership. The Government must take one position or-the other. The President of the Council (Mr. Rowell) shakes his head, but I do not know of any Mahommet's coffin position he can take between Heaven and earth about this property: It is either owned privately or it is owned publicly. If it is owned publicly it cannot be taxed; if it is owned privately it can be taxed. The Government state that the municipalities in Ontario along the line of the Grand Trunk can collect taxes on the railway property. Does the President of the Council think that the good people of Quebec, New Brunswick and Nova Scotia are going to tolerate that discrimination against themselves? He will at once have to start paying taxes on the Intercolonial railway, because here is a government road running through the western provinces and the middle of Canada paying local taxes at every stage, but although we in the eastern provinces are supplying our share of the funds to run those railways, where the Intercolonial railway is operated not a cent of local taxes are paid in respect of its property. Is that a system of municipal management that the hon. gentleman thinks will stand for one moment? He is introducing a doctrine that, when applied throughout the country, is going to give him a lot of difficulty. I want to know at this stage: Is he ready to admit that the Government must pay municipal taxes in relation to the Intercolonial and its branches or in relation to any other road that is being operated in conjunction with the Intercolonial railway? If he says, No, then the people of the Maritime Provinces will say: We are furnishing our share of the money to run the Grand Trunk, the Grand Trunk Pacific, the Transcontinental and the Canadian Northern, and if those roads are paying taxes in the West they must pay us taxes in the East. I want to know from the Government if it is their intention to adopt this as a universal rule, that Government owned roads will pay taxes.


Newton Wesley Rowell: I am not quite sure that I clearly understand my hon. friend's viewpoint in reference to this tax question. If

I rightly understand him, however, his argument is that the Intercolonial should be placed in all respects on the same basis as the Canadian Northern is at present and as the Grand Trunk will be under this arrangement. If my hon. friend takes that position, and if the freight and passenger rates on the Intercolonial are raised so as to bring them up- to the full standard charged on the other roads, I think possibly the Intercolonial could afford to pay taxes.


Daniel Duncan McKenzie: The one has nothing whatever to do with the other.


Newton Wesley Rowell: My hon. friend must see that he cannot eat his cake and have it too. My hon. friend is trying to place himself in that position.


Daniel Duncan McKenzie: Not at all.


Newton Wesley Rowell: My friend must be content to say that the Intercolonial was built to serve a particular national purpose, and by reason of that fact the Maritime Provinces are entitled to rates below the normal standard charged on other roads, and therefore the railway property is not taxed; or he must be prepared to take the position that it shall in all respects stand on exactly the same basis as all the other road's. In the latter case I think the Intercolonial could probably afford to pay taxes to the municipalities. However, that question is not now before us.


Daniel Duncan McKenzie: Certainly not.


Newton Wesley Rowell: But my hon. friend introduced it.


Daniel Duncan McKenzie: Not freight rates, not by any possibility.


Newton Wesley Rowell: My hon. friend wants the assets without the liabilities-he wants to eat his cake and have it, too. Coming back to the other point, my hon. friend says that either the Government owns'the road or it does not; the property is subject to taxation or it is not. Does not he realize that the stock of the company is property in the hands of the shareholders; the physical assets of the company are property in the hands of the company? Both are subject to taxation, or the income from them would be so subject. If the holder of stock in the Grand Trunk lived in the province of Ontario and received dividends from his stock, he would be liable to taxation on those dividends while the Grand Trunk would be liable to taxation on its physical assets. Now, what we are buying under this Bill is the stock. That stock is vested
in the Government, and would not be liable to taxation, for being government property it is covered by the British North America Act. But when we come to the question of the physical assets, which are still vested in the corporate entity, that corporate entity being distinct from the shareholders they would still continue liable to taxation by the municipalities. The situation here does not differ in any respect from the Canadian Northern situation. The Government took over the stock of the 'Canadian Northern, and that stock is government property; it is not liable to taxation under the British North America Act. But the physical assets of the railway, which are still vested in the railway corporation, are at the present time taxed in the different municipalities throughout the Dominion. The Grand Trunk will be put in exactly the same position. The argument advanced by my hon. friend is that if the Government owns all the stock, therefore the intervention of the corporation between the stockholders and the Government does not change the real ownership, and the municipality therefore could not collect taxes. That is my hon. friend's suggestion. Well, we have had this practical experience with the Canadian Northern, that the municipalities have taxed the railway, and the taxes have been paid, on the ground I have mentioned, and the same ground will apply to the Grand Trunk.
Coming to the point of my hon. friend from North Waterloo-


Daniel Duncan McKenzie: My hon. friend has not answered my question. I asked him this straight question: Will he pay taxes on the Intercolonial railway if he pays them on the Grand Trunk railway?


Newton Wesley Rowell: That question is not now before us. I asked my hon. friend if he would accept the same freight rates-


Daniel Duncan McKenzie: As I understand it,
under the last Railway Act we placed the whole business of freight rates in the hands of the Railway Board, so it is not a question for discussion here.


Newton Wesley Rowell: Coming to the question of my hon. friend from North Waterloo (Mr. Euler), he appears to think that another Government might get in power which would take a different view and not be so friendly disposed towards the municipalities as is this Government. I can sympathize with my hon. friend's feeling of apprehension on this question of public ownership in the event of a change of Government.
However, the physical assets of this railway could not be transferred to the Govern-

rnent without the necessary legislation. If any government, therefore, decided, to wipe out the corporate entity of the -Grand Trunk and vest all its property in the Government, it would have to come down for legislation to do so, and on that occasion a provision might properly he inserted in the Bill to the effect that notwithstanding the change, local municipalities would stijl be entitled to levy taxes as if the property were owned by a corporate entity, the Grand Trunk But that is not necessary at this time.


Robert Lorne Richardson: The clause in the Canadian Pacific Railway Company charter of 1880-81 to which I have reference is as follows:
The Canadian Pacific railway, and all stations and station grounds, work 6hops, buildings, yards and other property, rolling stock and appurtenances required and used for the construction and working thereof, and the capital stock of the company, shall be forever free from taxation by the Dominion, or by any province hereafter to be established, or by any municipal corporation therein; and the lands of the company, in the North West Territories, until they are either sold or occupied, shall also be free from such taxation for 20 years after the grant thereof from the Crown.	.
Hon. members will see that I was partly right and partly wrong. But in- view of the fact tha-t I am partly right, I contend that if the Canadian Pacific is to go scot-free until the crack of doom so far as taxes are concerned, the minister should not take the view that this new system should pay taxes. It is not right that the Canadian Pacific should -be free from taxes in the West

and the West is a very important part of Canada-while the Government railway system is taxed; the two should be in a position of absolute equality.


William Daum Euler: Does the hon. member believe that municipalities should have the right to tax railway properties?


Robert Lorne Richardson: It is my view that municipalities should have the right to tax railways, as well as farmers or -anybody else.


William Daum Euler: Does the hon. -member think, then, that municipalities should be required to yield up rights which belong strictly to them in order to increase the profits of the National railways?


Robert Lorne Richardson: They would not be yielding up any rights, -because under the constitution of the railway company these properties would be non^taxable. .


William Daum Euler: Why should they shoulder a loss which properly belongs to the National railways?


Francis Henry Keefer: When were these lands
granted to the Canadian Pacific Railway Company? I observe that the exemption is for twenty years after the land was granted -by the Crown, and the land was surely granted more than twenty years ago.
Mr. RI-OHARDiSON: A lot of things have happened in this country that my hon. friend does not know anything about, in spite of his wide knowledge. The clause reads:
The lands of the company .... shall also be free from taxation for twenty years after the grant thereof from the Crown.
But the wily Canadian Pacific Railway Company allowed the twenty years to expire without taking out their patents, and then they claimed th-at " the grant thereof " meant the issue of patents. Of course, all the land-s that had been sold in the meantime became taxable and the burden of the tax fell upon the settler and the purchaser. Well, the Canadian Pacific Railway Company got a judicial decision, which I and other members resisted very strongly, giving them exemption for another twenty years, and by that time all the lands- will he sold.	.


Mr. COCKSHUTT:: This question of taxation is a very important one. As the Minister of Railways has said-, there has been a good deal of apprehension among the municipalities that the physical assets of the Grand Trunk Railway Company will be exempted from municipal taxation. It has been established- by the President of the Council that as long as the -modus vivendi provided in the Bill continues, local taxation will continue. But there seems- to -be an element of doubt whether this will go on forever; it is suggested that at some future time the Government may decide- to vest 'the titles to the real estate in- the Crown, and these lands would, under the British North America Act, then be exempt from taxation.' We should have a definite statement from the Government that if they do vest in the Crown the real estate, lands, buildings and so on, now vested in the Grand Trunk Railway Company, they will see that no injustice is d-one to the -municipalities. There will be a good deal of dissatisfaction on the part of the municipalities if they get the idea that with the Grand Trunk property vested in the Crown it will be free from taxation for all time to corner I believe that under this Bill the property will be vested in the Crown; I can see absolute reason for saying t'h-at it is public property; it remains

public property under a corporation. One of the main reasons why it should be run under a corporation is because it operates in the United States as well as in Canada, and as a railway entity in the United States it might be able to do in the United States what the Canadian Government would find it very difficult to do. But I hope that the President of the Council will give the assurance, if it cannot be incorporated in the Bill, that if the question of municipal taxation does arise in connection with any future transfer to the Crown of the right of way, real estate and buildings pertaining to this system, the rights of the municipalities will be respected.


Newton Wesley Rowell: My hon. friend evidently overlooked an observation I made. There can be no transfer to the Crown of the property and assets of this railway without new legislation. This legislation does not authorize it, and so long as the company continues its corporate entity it cannot dispose of its property and assets except under the terms of the Railway Act. If in the future the property was being transferred to the Crown that would be a proper *occasion upon which to provide, in the legislation then enacted, that the road *should^ be free from taxation. All we are doing in this case is exactly' what is now being done with respect to the Canadian Northern. The Government owns the stock; the Canadian Northern railway continues to pay taxes in the local municipalities through which the railway runs.


Daniel Duncan McKenzie: Who pays the taxes that are now paid in the name of the Canadian Northern?


Newton Wesley Rowell: The Canadian Northern pays them out of the moneys which it receives through its operations.


Daniel Duncan McKenzie: We have to finance the road.
Mr. ROWELL; Yes.


Daniel Duncan McKenzie: Is it not our money that they are paying out in taxes?


Newton Wesley Rowell: I agree that if the Canadian Northern did not have to pay taxes its earnings would be that much more and Canada would receive the benefit.


Daniel Duncan McKenzie: Then Canada is paying the taxes.


Newton Wesley Rowell: Indirectly Canada is paying the taxes; there is no doubt about that.


Daniel Duncan McKenzie: Why should Canada
pay taxes upon public property?


Mr. H. H. McLEAN:: I quite understand the principle; that is, the Government, as I understand it, will continue to pay taxes which the Grand Trunk and the Canadian Northern have been paying to different* municipalities. In the case of the Intercolonial, very valuable property rights were taken over by that railway in the city of St. John, and the municipalities, towns and cities of New Brunswick and Nova Scotia cannot tax the Intercolonial railway property. It seems to me only fair if municipalities, towns and cities in Ontario and the W'est are going to continue to tas these properties and to obtain that revenue, that the same right should be given to New Brunswick and Nova Scotia.


William Lyon Mackenzie King: 
Newton Wesley Rowell: Because the agreement which the Government is proposing to the House does not provide for the immediate acquisition of that stock. The agreement which the Government is proposing is one under which it guarantees the dividend on this stock rather than take it over.


William Lyon Mackenzie King: I understand that the agreement provides that, but why does the agreement make that exception?


Newton Wesley Rowell: Simply because we could not buy it on any other terms.


William Lyon Mackenzie King: Does t(he minister mean to say that the Government of Canada can buy only on the terms that the Grand Trunk proposes?


Newton Wesley Rowell: No, the Government of Canada can buy only on the basis of a negotiated agreement. We cannot go into the United States and expropriate their property;, we have to negotiate. We have negotiated an agreement which we believe to be eminently in the country's interest, but this is one of the provisions which the Grand Trunk required and to which we agreed.


William Lyon Mackenzie King: Is it the Grand Trunk which wishes to sell, or is it the Government -which wishes to buy?


Newton Wesley Rowell: The Grand Trunk is in such a position that it cannot continue to carry on unless the Government relieves it from its obligations. The Government is not willing to relieve it from its obligations, and therefore the Grand Trunk is prepared to negotiate a sale.


William Lyon Mackenzie King: Will the minister say that the Grand Trunk is anxious to sell and that the Government is not able to make terms except on the Grand Trunk's
awn basis?


Newton Wesley Rowell: Certainly not. We have been negotiating for two years. We have refused the Grand Trunk's terms. If my hon. friend would only read the correspondence he would see that the Grand Trunk people have protested again and again and again against what it claims our unfair terms; it claims that we are not treating them fairly; that we are confiscating their stock. My hon. friend will note the agitation in the English press about the matter. In order to reach an understanding, because the situation had to be cleared up in some way, we offered in our letter of the 11th July, 1918, to treat this guaranteed stock in the same way as the debenture stock by our undertaking to pay interest upon it We undertook, in case of an arbitration, to do that, and after negotiating from July, 1918, until October, 1919, the Grand Trunk people finally have accepted that proposal, although during all that time they have been refusing to agree to it, because they thought it was putting them in an unfair position.


William Lyon Mackenzie King: What becomes of the argument, then, that this is a government-owned railway? The minister has told us that the Government cannot purchase this part oi the railway because the Grand Trunk will not sell.


Newton Wesley Rowell: I do not think we shall make any headway by further discussing the point. My hon. friend's difficulty is this: He is not a lawyer; he does not draw-


Mr. JACOBS:: Yes, he is a lawyer.


Newton Wesley Rowell: He is not, I believe, accustomed to dealing with stocks and bonds in relation to corporation and finance, or he would clearly understand that the position he is taking is wholly untenable, and does not touch the question of public ownership at all. But I do not think we shall 
get any further ahead by any effort on my part to convince him that he is wrong, and my hon. friend will certainly not make any headway in endeavouring to convince me that he is right.


William Lyon Mackenzie King: I should not
like to stand in the position of a legal expert for a moment, but I would be prepared to stand in the position of a man of average intelligence who is going to be held responsible for this agreement, when it is carried out, in the way of meeting its obligations, and it is to get an explanation that the average citizen will comprehend that I am putting these questions. Apart from legal phraseology and technicalities of one kind or another, I would ask the minister it what he has just told us does not amount to this, namely, that the Government of the day is negotiating with the Grand Trunk Railway Company, and that it cannot make certain terms because the Grand Trunk is not prepared to accept those terms. Is that not true?


Newton Wesley Rowell: Certainly it is true.
Supposing we offer the Grand Trunk a million dollars for all its property, and they will not accept that. Does my hon. friend want to take the position of saying to the Grand Trunk:	Unless you take whatever
we say regardless whether it is fair or not, we will force you into liquidation. The Government of Canada, exercising its power and control over this situation, with the Grand Trunk in the position in which it is, could force the Grand Trunk into liquidation. Does my hon. friend think it should do that?


William Lyon Mackenzie King: Did the Government not do that in regard to the Grand Trunk Pacific? Did it not set a precedent in that regard?


Newton Wesley Rowell: The Government had to
take over the Grand Trunk Pacific because the Grand Trunk at a critical period, notified the Government that it could no longer continue the operation of the railway. Could the Government stand by and see hundreds of miles of railway ceasing operation with all the loss and inconvenience to thousands of people throughout Canada, the dislocation of business, the prevention of supplies coming into cities, towns and villages? No Government worthy of the name of a Government could face such an alternative; they had to take over the management and to appoint a receiver in order that the transportation of the country might be continued.


Mr. DENIS:: highest authority in this matter. It was not prepared with the object of buying the .Grand Trank or giving direction to anybody with regard to the present transaction, but was prepared by the best railway experts available and signed by a man who is now Minister of Finance and therefore enjoys the confidence of the Government. We are going to stand by the recommendations in the Drayton-Acworth report, and wall give you what they propose, but nothing more. These are our terms and we will submit ,to no other. If you are not satisfied, go to work and carry out your obligations." I would consider that a reasonable businesslike proposition to make to the Grand Trunk, ,and I cannot conceive of a man of the ability of the President of the Privy Council or any other member of the Government coming to Parliament and saying: " These are the best terms we can get from the Grand Trunk." That is not a reasonable answer to our question; it is not convincing; it is not even plausible, and I trust a more satisfactory answer will , be forthcoming.


William Lyon Mackenzie King: Referring to the statement of the' capital stock, there are four stocks that are to be referred to arbitration for the purpose of valuation. Why is it that the same process has not been adopted in regard to the 4 per cent guaranteed stock? Is it because the Grand Trunk was unwilling to have that done, or is there any other reason?


Newton Wesley Rowell: If my hon. friend would permit me to refer for a moment to the question of my hon. friend (Mr. Denis), because the one has a direct relation to the other; what my hon. friend asks is not that we should act on the Drayton-Acworth report tout on his interpretation of that report. We are acting on the Drayton-Acworth report, but not on his interpretation of it.


Samuel William Jacobs: What about the $60,000,000 of guaranteed stock?


Newton Wesley Rowell: If my hon. friend will have patience I will deal with that, too. The criticism of my hon. friend (Mr. Denis) is perfectly legitimate and therefore I wish to answer it. The Drayton-Acworth report said, a moderate but substantial percentage of $3,600,000 increasing by forty or fifty per cent after seven years. The Government's interpretation of that-an interpretation, which is shared by the man who wrote the report-is that a substantial percentage .is $2,500,000.


Daniel Duncan McKenzie: That is extraordinary. How can he be the judge of what the world would call "substantial"? Do not introduce the man who wrote the report; that is childish.


Newton Wesley Rowell: My hon. friend says that it is childish that the man who wrote the report should say what the report meant.


Daniel Duncan McKenzie: It is childish to say that he is to judge what is substantial.


Newton Wesley Rowell: He knows what he meant when he recommended that.
Mr, McKENZIE: He cannot be a judge of that at all.


Newton Wesley Rowell: Then, all I have to say is that we share his view. We are agreed on that point.


Daniel Duncan McKenzie: Take the full responsibility yourself; don't switch it on to him.


Newton Wesley Rowell: We unhesitatingly take the full responsibility.


Daniel Duncan McKenzie: Very well.


Newton Wesley Rowell: We say that a substantial percentage of $3,600,000 is $2,500,000.


Daniel Duncan McKenzie: Very substantial.


Georges Henri Boivin: Order.


Newton Wesley Rowell: If you increase it by forty per cent you get $3,500,000, and by fifty per cent, $3,750,000; or, if you split the difference, and strike a medium between the two, you get $3,600,000. We have therefore taken what we consider to be a substantial percentage, namely, $2,500,000 for the past three years, and have increased this by between forty and fifty per cent, bringing it to $3,600,000, and offered to pay that amount as an annual rental after seven years. We say that in doing that we were oarrying out the Drayton-Acworth report, and we believe that that was a fair proposal to make having regard to all the facts and conditions disclosed in the report.


Daniel Duncan McKenzie: I understand that the Drayton-Acworth report says that after seven years we add this forty or fifty per cent, but do we not begin right away with this large payment?


Newton Wesley Rowell: No. You have to bear in mind the distinction between the cash offer and the offer for arbitration. The cash offer was $2,500,000 for the first three years, $3,000,000 for the succeeding five years,' and $3,600,000 annually thereafter. Then we offered an alternative. We said that if they would not accept that cash offer we would arbitrate. My hon. friend will bear

in mind that that was an offer in addition to the obligations, on the debenture stock. We said that we would arbitrate and in that arbitration we offered, in order to secure a basis for agreement, to treat the guaranteed stock practically as debenture stock and pay interest on it. That was our proposal made in July, 1918.


Daniel Duncan McKenzie: I am afraid miy hon. friend is mixing two things. I understood he was interpreting for the committee t'he meaning of the proposition contained in the Drayton-Acworth report. Now 'he is mixing with that the terms the Government is offering.


Newton Wesley Rowell: I have already interpreted the Drayton-Acworth report and I am proceeding to apply it to the present situation, to meet the question of my hon. friend from Prince (Mr. King) as to why the guaranteed stock is treated differently from the first, second, and third preference. We offered to treat the guaranteed stock the same as bonded obligations, namely, to pay interest on it. That offer made in July, 1918, was not accepted, and you will see the protest against it in the correspondence. I desire to direct attention to one fact in connection with that offer. In a statement issued by the Grand Trunk in which they were protesting against the offer made by the Government they set out their understanding of our proposal. At this point I may say that _ this cash offer was made earlier in the year but was repealed in the letter of the 18th July. They say that this $2,500,000 would mean the payment in full on guaranteed stock immediately. At the end of three years, the payment on first preference five per cent stock at .-the rate of 3.38 per cent. At the end of eight years the full payment of fiTst preference stock and the payment of 21 per cent second preference stock. I mention this for the reason that the Grand Trunk recognized that the $2,500,000 would have to be applied first in paying the interest on this guaranteed stock, and they so state in the publication in reference to it. They accepted the offer of arbitration with the provision that we should treat this guaranteed stock in the same way as debenture stock; that is to say, that we should pay interest amounting to $2,500,000. That we agreed to do. If they had accepted the cash offer, that would have given them the same amount, to pay interest on the guaranteed stock. The leader of the Opposition has suggested that we are undertaking to pay a larger sum. That is not the case. It is for the arbitrators to say how much we
shall pay for the other three stocks and the common stock. The Government will contend as forcibly as possible that the obligations of the company render practically nil the value of the stock. On the other hand, the Grand Trunk will argue that it is of value, and it is for the arbitrators to determine how much. My hon. friend assumes that they will find $50,000,000, but he has no basis for 'that assumption.


Samuel William Jacobs: If they take up the potential value of the property.


Newton Wesley Rowell: My hon. friend has no basis for assuming that they krill find $50,000,000. On that assumption he says that we are going to pay more than the Drayton-Acworth report recommends. We shall not pay more than the Drayton-Acworth report recommends unless the arbitrators find that the property is worth more, and we shall pay less than the report recommends if they find it is worth less. That is the point for the arbitrators to determine.


Some hon. MEMBERS:: Carried.


Daniel Duncan McKenzie: Oh, no, it is far from being carried.


William Lyon Mackenzie King: In order that we may the better understand this agreement I should like to ask the minister again if the Grand Trunk Railway Company are asking the Government to make this purchase? Are they pressing the Government to make this purchase?


Newton Wesley Rowell: I believe at the present time the Grand Trunk railway would -be glad for this agreement to go through.


Samuel William Jacobs: Hear, hear.


Newton Wesley Rowell: My hon. friend says "hear, hear." They are in such a situation that they have to make some arrangement with us or someone else.


Samuel William Jacobs: They are insolvent.


Newton Wesley Rowell: They have to make arrangements with us or somebody else. They might be able to make an arrangement with somebody else. They might even be able to make it with the Canadian Pacific.
"""Mr. FIELDING: Not without legislation.


Newton Wesley Rowell: Quite so, but the hon. member for Shelburne and Queen's would be the last man to say that this House should use its legislative power to deny the Grand Trunk the opportunity to sell if we were not prepared to buy.


William Stevens Fielding: I will consider that when the question is properly raised.


Newton Wesley Rowell: My hon. friend cannot
put it that way. We must buy the property and pay a fair price or we must be prepared to allow them to get out of their difficulties by dealing with other people. That is the situation.


Samuel William Jacobs: The rights of the people
cannot be affected.


Newton Wesley Rowell: The rights of the people are being abundantly protected under the
agreement having regard to the value of the assets.


William Stevens Fielding: My hon. friend did not answer the question of the hon. member for Prince. Does the Grand Trunk seek to get the Government to take it over or is the Government pressing the Grand Trunk? It is not a sufficient answer to say that the Grand Trunk want this thing carried out. Of course theyfrlo, but did the Grand Trunk approach the Government with a desire to sell out? I see no evidence that they ever did.
The Committee rose.
At six o'clock the House resumed and then took recess.
After Recess.
The House resumed at eight o'clock.



' PRIVATE BILLS.


[Stage Direction]
Bill No. 29 (from the Senate), for the relief of Millie Wettlaufer.-Mr. iSheard.
Bill No. 32 (from the Senate), for the relief of Arthur Leroy Eastcott.-Mr. Green.


[Stage Direction]
House again in Committee on Bill No. 33, respecting the acquisition by His Majesty of the Grand Trunk Railway system.
Georges Henri Boivin: When the Committee rose at six o'clock section 2 was still under discussion. Shall the section carry?


Mr. MURPHY:: Mr. Chairman, there was an agreement reached yesterday afternoon in regard to this Bill.


Newton Wesley Rowell: I was just going to mention that. I recall that the Minister of Railways (Mr. Reid) did intimate that the House would sit on the Bill until six o'clock.


Charles Murphy: That is right.


Newton Wesley Rowell: Under those circumstances it is my intention to move that the Com-
[Mr. Fielding. 1
mittee rise and report progress. But before doing so I desire to answer the question put to me by the hon. member for Shelburne and Queen's (Mr. Fielding) just before the Committee rose at six o'clock. As I recall my hon. friend's question, it was this: Were the Grand Trunk Railway Company pressing to sell the system to the Government? That is my recollection of the question.


William Stevens Fielding: It is my question in substance, but it is not the whole question.


Newton Wesley Rowell: My answer to that is: No, the Grand Trunk Railway Company did not wish to sell; in fact, that was the last thing it wished to do. I might state in a few words the position taken by the company. What it wished was additional assistance from the Government for the Grand Trunk Pacific, such as it had been receiving in recent years, the Government advancing to the Grand Trunk Pacific a sum sufficient to enable it to practically pay its deficits and continue operation. The Grand Trunk Company pressed the Government to continue that assistance. The Government took the position that it would not be justified in continuing year after year to advance millions of dollars to assist this road, and that the people of Canada would not approve of its being done. The refusal to continue assistance to the Grand Trunk for the benefit of the Grand Trunk Pacific forced the situation which led to the receivership. The company said it did not have the money to continue operation of the Grand Trunk Pacific and therefore would be obliged to discontinue. It justified the claim for assistance on the ground, that when it undertook in 1903 and 1904 to build the Grand Trunk Pacific, it was to open up and develop a certain territory; that subsequent to that date the Government had given assistance, by way of guarantees, to the Canadian Northern railway to parallel the Grand Trunk Pacific line; that the result of the new construction thus started had greatly increased the cost of construction of the Grand Trunk Pacific, and at the same time had deprived it of traffic which otherwise would naturally have flowed to it ; and that it never would have undertaken to build the railway had it had any knowledge of the course that the Government subsequently pursued. Even on that ground the Government did not feel justified in making further advances. The Grand Trunk not only did not want to sell, but still declined the cash offer the Government made of $2,-$500,000 rental for the first three years,

$3,000,000 for the next four years, and $3,600,000 thereafter, insisting that that was wholly inadequate, and that it would be virtually confiscation to force it to accept that offer. Therefore the company finally accepted the alternative of arbitration.


William Stevens Fielding: The question to which [DOT]ny lion, friend refers was partially as he states it. Let me put it in another form, however. It has been stated freely in this debate as the justification-that is the word my hon. friend would use; as the excuse, I would say-for the pressing forward of this matter at this time that it is one of great urgency. Now, my question, if I may repeat it, is this: Was that urgency on the part of the Grand Trunk Railway or on the part of the Government? My hon. friend talks of some negotiations that took place in connection with the receivership of the Grand Trunk Pacific, but that event happened many months ago and cannot have been the basis of the present proceeding. If the Grand Trunk Railway Company of Canada were coming to the Government and urging them to take over this road, surely we should have some evidence of it in the papers which the hon. gentleman brought down. The beginning of this whole transaction is the effort made by the Government to get possession of the Grand Trunk. There is nothing in this correspondence to show that there was any urgency on the part of the Grand Trunk, for the condition my hon. friend describes was a condition that existed many months ago. Suppose that the arrangement-I am putting the question I put at an earlier stage of the Rebate between my hon. friend and his colleagues and Sir Alfred Smithers had not been come to for a week later, until the understanding-I won't say engagement- that the Government had given the House as to prorogation had taken effect; suppose the House had been prorogued, and then the understanding had been come to between the Government and Sir Alfred Smithers, what would have happened? What distressing situation would have arisen if that had been the position instead of the one we have to-day?


Newton Wesley Rowell: My hon. friend is quite correct in saying that there is nothing in the correspondence indicating urgency from the standpoint of the Grand Trunk. The fact, however, is that the Grand Trunk was in need of additional assistance, and within the past six weeks the Government has had to render assistance to the Grand Trunk to prevent it getting into more serious default-not assistance to the extent of millions, but a few 'hundred thousand dollars. Therefore the situation to be faced is, whether the Government is to continue giving that assistance? If not, it must deal with the purchase at this time. Now, what my hon. friend says is correct. If an understanding had not been arrived at until after the House had risen, naturally the matter would have had to stand until the next session of Parliament.


William Stevens Fielding: And what interest would have suffered?


Newton Wesley Rowell: This interest would have suffered: The Government could not have closed the agreement, because the Government did not feel justified in closing an agreement on so important a matter without the approval of Parliament. The Government, therefore, would have had to let the whole matter stand over. The position of the Government is-and we must deal fairly throughout^-that the Government does not believe it to be in the national interest that the Grand Trunk should dispose of its road to the Canadian Pacific Railway Company or to any other corporation allied with it. My hon. friend (Mr. Mackenzie King) smiles, but it is not a matter of theory; it is a matter of fact. If we afe not prepared to permit the Grand Trunk to deaf with others, then when we come to an understanding with it, I cannot possibly see what excuse there is for delay in consummating it. What reason is there for delay? It has been before the country for nearly two years. Why should we not deal with it? That is one thing, I cannot understand.


Robert Lorne Richardson: I suggest the additional reason: That in operating the white elephant that was unloaded on the country under the policy of our friends opposite, the Grand Trunk Pacific and the Transcontinental, the country is losing enormous sums of money.


William Stevens Fielding: My hon. friend must not ask the President of the Council (Mr. Rowell) to concur in that, because the President of the Council has said, as I have said, that that arrangement was an excellent thing for the people of Canada. He must not try to put the President of the Council in the position of attacking that arrangement. To do that is unfair to the President of the Council and I want to come to his defence.


Robert Lorne Richardson: Does my hon. friend suggest that the President of the Council

has declared that the construction of the Transcontinental and the Grand Trunk Pacific was an excellent thing for Canada?


William Stevens Fielding: Certainly.
Mr. RICHARDSON [DOT] I must differ from my hon. friend.


William Stevens Fielding: The- President of the Council was a member of the Liberal party in good standing at that time, loyally supporting Sir Wilfrid Laurier and the whole of us; and although we differ in some respects to-day I know him too well to imagine that he will repudiate the stand that he took on that occasion.. However, that is only by the way.
It has been stated here day after day that this is a matter of urgency. I think a fair question to put is this: Is the urgency on the part of the Grand Trunk Railway Company, or is it on the part of the Government? Now, if the Grand Trunk Railway Company has been coming to the Government and pressing its demands on it, why in Heaven's name have we not the evidence of that in the correspondence? Why do we have to have my hon. friend saying to us, " Oh, well, the Grand Trunk was hard up; the Grand Trunk would have to do this and would have to do that and would have to do the other thing." The Grand Trunk is a big, well-organized' corporation, and if it made any urgent demand upon the Government surely the Government, as business men, were in a position to ask that this request be put in writing so that it would be in the record. But there is no evidence of urgency here; the plea of urgency put forward in this debate is absolutely unfounded so far as any evidence of it in the correspondence is concerned. The only urgency is with the Government of Canada. The Government- they will say, for good reasons; I am not assailing that-made up their mind that they wanted to grab the Grand Trunk Railway system, and they have been pushing the matter; now they come and say that it was an urgent case. The urgency was on their part, not on the part of the Grand Trunk.


Newton Wesley Rowell: I do not think that there is much to be gained by prolonging this discussion. I was a supporter of Sir Wilfrid Laurier and I believed that the building of the Grand Trunk Pacific was a good thing, but I always had some doubt as to the wisdom of the extension of the road to the East at such a cost to the Country. But let that go. What I did not approve of, what I do not now approve of and what
[Mi. Richardson.]
I think was a colossal blunder, was permitting the Canadian Northern to duplicate these lines as a transcontinental railway. I think that it was a mistaken policy to permit the extension of the Canadian Northern from Western to Eastern Canada, to guarantee its bonds and to commit the credit of Canada to two transcontinental railways. It duplicated lines unnecessarily; it depreciated the value of the Grand Trunk Pacific railway, and it made it more difficult for that company to meet its obligations, and, on the other hand, it imposed immense obligations on the Canadian Northern. But we will gain nothing, as the member for Leeds (Sir Thomas White) said in his address on this Bill, by mutual recrimination with regard to the responsibility for the difficulties which exist in respect of the transportation systems of Canada. We cannot gain anything by doing that; the difficulties are here and we have to meet them.
Now, the Government of Canada believes that it is in the national interest to acquire the Grand Trunk Railway system. We do not offer any excuses for that; we say that the national interest demands it. Nobody on this side has said that there is urgency in the sense that we must proceed without due deliberation. My hon. friend has been told that he can have all the time he wishes to consider it; the Minister of the Interior has repeatedly said: " Stay as long as you like to consider it." But we can see no reason why the propolal which has been before the people for a year and a half and which is in a position to be consummated should not now be carried out with full legislative authority. I do not hesitate to say that one reason why we should not delay is'found in the fact that powerful interests in this country are opposed to the Government's acquiring this road and are seeking to organize opposition to our acquiring it.


Robert Lorne Richardson: They are organizing it.
Mr. ROWELiL: Yes, and we should only be putting a further opportunity into their hand of defeating something that we believe _ to be vital in the public interest. The Government, with knowledge of the hostility that is being organized against that which js in the public interest, would have failed to do its duty had it not proceeded with all due expedition, at the same time giving full opportunity for discussion and consideration of this important matter.


William Stevens Fielding: Translated into the
language of the man in the street, that means that the hon. gentleman is afraid of public opinion; he is afraid that if the Gov-

ernment do not rush this thing through this session there will he an organized effort to defeat him. If public opinion is so strongly in support of this measure, why does the President of the Council fear an organized effort to defeat it? The hon. gentleman's plea is a confession that he is afraid of public opinion and he is rushing this thing through Parliament avowedly with the purpose of preventing public opinion from being heard.
I agree with my hon. friend that there is nothing to be gained by recrimination over the history of the railway question. If my hon. friend will get possession of the Minister of the Railways when he comes in arid pound that thought into him he will be doing a good service. Did not the Minister of Railways last night spend half the evening in denouncing the late Sir Wilfrid Laurier's Government and stating all the awful things that happened to the Grand Trunk Pacific contract? My hon. friend says that a mistake was made in subsidizing the Canadian Northern alongside of-the Grand Trunk Pacific. There is some force in that argument, and I am always prepared to admit an argument made by an opponent when it has some weight. But he should point out also that while the Liberal Government subsidized and assisted that road, the Conservative Government carried it on right through to the coast. When the member for Leeds (Sir Thomas White) said- and I give him credit for it-that the credit or discredit, as the case may be, of this great railway enterprise, any mistakes made in connection with this great railway enterprise should not be ascribed to one party or the other; they should be distributed, over the two parties. In our zeal, having great faith in the future, we were, perhaps, too zealous to build ahead of the times. I have faith enough in the country to- believe that within the lives of the young men of this House, and of some who are no longer young, there will be a justification for these roads, and that in the building up of the country we shall have business enough for them all.
Cooning back to the question of urgency, again and again the statement is made that if we do not do this thing now some awful thing will happen. Is that an exaggeration? That is the substance of half the statements that have come from the other side. Mr. Chairman, I have been trying to find out what this awful thing is. My hon. friend says that the Canadian Pacific Railway Company will get possession of this system. Now, he knows that the Canadian Pacific
cannot get possession-I doubt whether they want to get possession of it, but that is their business-without coming to this Parliament. Then why should this bugaboo about the Canadian Pacific Railway be dragged into this transaction again and again?
Then, he says, if we do not allow the Canadian Pacific Railway to take it, we must take it ourselves. These are large questions for the future. Before this transaction goes through, all these accounts, the complicated accounts of the Grand Trunk Railway system should be examined-it would take a chartered accountant months to understand them. Subsidiary companies, connected interests in Canada and the United States, hotels, steamships, railways -there never was such a complicated transaction submitted to this House. Yet the hon. gentleman is rushing it through on the plea of urgency, and while the correspondence shows that the only people who are under the necessity of urgency are the Government, he is trying to grab this road and to put this thing through Parliament because he is afraid that public opinion will be against him.


Newton Wesley Rowell: My hon. friend is wholly mistaken. I am not afraid of legitimate public opinion of this country. My hon. friend knows the influence of corporations in the past in carrying on organized propaganda opposing or supporting legislation. Members of this House and the people of the country know what has happened in that regard in past years. We have the facts in connection with the Grand Trunk situation before us, and if we are wise men, we will act upon the facts we now have. We know the situation and we can make up our minds. My hon. friend knows to-night that he is opposed to this transaction, and I am not questioning for a moment his right to hold that opinion. My hon. friend has the same right to be opposed to this transaction as I have to be in favour of it. But he will not be any less opposed to it in February next than he is now, and my hon. friends opposite-will not be any less opposed to it in February next than they are now. The members on this side are in favour of this transaction-


William Stevens Fielding: Some of them.


Newton Wesley Rowell: -and they will not be any '.ess or more in favour of it in February next than they are now. The views of both sides regarding this transaction are known. Then let us register our opinion and thus enable the Government to proceed



with the re-organization of the transportation systems of this country for which the Government is responsible.
Progress reported.



THE PEACE TREATY WITH AUSTRIA.

[Stage Direction]
On motion of Hon. Mr. Doherty the House reverted to the Government Notices of Motion.
Hon. C. J. DOHERTY (Minister of Justice) moved:: That it is expedient that Parliament do approve of the Treaty of Peace between the Allied and Associated Powers and Austria, signed at St. Germain on the tenth day of September, one thousand nine hundred and nineteen, a copy of which has been laid before Parliament, and which was signed on behalf of His Majesty, acting for Canada by the plenipotentiaries therein named, and that this House do approve of the same.
He said: Mr. Speaker, it will be remembered that on the 22nd September, in answer to a question put as to the action contemplated by the Government with regard to the Treaty with Austria, it was stated that if a copy of the Treaty which had been signed arrived whilfe this House was still in session, the Treaty would be submitted to this House as was the Treaty with Germany. As the House is aware, the Treaty has been received and copies have been distributed and have been now for some days in the hands of members. This motion is intended to implement the promise so made. It is also within the recollection of the members of the House that, upon an amendment to the Bill coming before the House, giving powers to the Governor in Council to do those things which would be necessary for the carrying out of the Treaty with German^ and the giving effect to its provisions, which amendment was. made in the Senate and which extended the provisions of the Bill so as to include powers for the carrying out of the Treaty with Austria and the fulfilment of its provisions, this House accepted the amendment made, and included in that Bill, which, as I said, conferred the powers that I mentioned, the Treaty with Austria. For reasons which were then given, this House did not assent to the inclusion in that Bill of the conferring of powers in regard to treaties not signed and the giving effect to the provisions of such treaties. We have now before us, as I have said, the Treaty with Austria. As I pointed out when the amendment to which I referred was before the House, the Treaty with Austria, in all essential points, I think I might 
say in all points save where it deals with matters which are necessarily different in the two treaties, such as, for instance, the boundaries that require to be settled with regard to Germany in the one instance and with regard to Austria in the other, is identical in all respects upon lines absolutely similar, and practically with regard to all important measures, with the German Treaty. It was because of that fact that the Government felt justified in making the statement it did, that if the Treaty did not arrive while this House was in session, and if, iri consequence of the House not being in session, it would be impossible to submit it to the approval of the House except by calling a special session, the Government would be warranted, in view of the approval of the House given unanimously to the German Treaty, in advising the ratification of the Austrian Treaty without calling the House together again for that purpose. The Government arrived at that conclusion and made that declaration because, under those conditions, the approval of the German Treaty was naturally tantamount to an approval of the Austrian Treaty, and to have held up the latter Treaty under those circumstances merely until there would be an opportunity to submit that absolutely similar Treaty to the House, would have been holding up the Treaty for the purpose simiply of fulfilling a formality, the substance of approval having already in effect been given. I think I pointed that out at the time I had occasion to say what the Government desired to say with regard to the amendment made by the Senate. The adoption of that amendment, while in a sense it might be taken as implying approval of the Treaty, nevertheless had no further or greater effect than to confer upon the Government power to carry it out and to take such steps as might be necessary to give effect to its provisions. Before that power could come to be exercised at all, the Treaty would have to become binding upon Canada, and it would only have become so binding by reason of the ratification of His Majesty on the advice of the Government of Canada. The only circumstances in which the Government would have felt justified in ratifying the Treaty without special submission to Parliament would have consisted purely-and simply in the fact that in the case of the German Treaty, which in all important respects is identically the same as this Treaty, the Government had acted only after the express approval of this House with the text of the Treaty before them.

However, the Austrian Treaty has arrived and we have been in a position to lay it before the House, and there is now no occasion for the Government basing its action upon that which I have described as the substantial approval, the equivalent of the express approval, by this House of that particular Treaty. The Treaty is now before the House which by this motion is asked to express the same approval of it that the House unanimously expressed with regard to the Treaty with Germany. It is not necessary, I fancy, that I should this evening go into any explanation or exposition of the provisions of this Treaty. The House has had it in its possession for some days now, and I have no doubt that hon. gentlemen who have read it carefully have found that its text fully justifies what I pointed out in connection with the amendment to which I have already referred, namely, that the Treaty is in all important respects identical with, and in all matters substantially the same as, the German Treaty. Certainly it is on the same lines. So, without detaining the House further at the present moment, I ask the House to adopt the motion.


Daniel Duncan McKenzie: I have very little to say upon the motion of the Minister of Justice (Mr. Doherty), because I think his motion and this whole proceeding puts this House in a very extraordinary and unusual position, to say the least. It is about a week or ten days ago since the minister came to this House with an amended Bill. An amendment had been made in the Senate in which the minister asked us to concur, the effect of such concurrence being to ratify this Treaty. Bill No. 3, which we passed this session dealing with the German Treaty, although it is word for word on exactly the same lines as the British Act ratifying the Treaty, did not express our approval or ratification of the Treaty. It was to implement the Treaty by furnishing the money that was necessary to carry out its terms, and to give the Government power to appoint the officials necessary to be appointed under the Treaty. The minister told us then, and quite properly so, that the passing of that Bill necessarily implied our approval of the Treaty.


Charles Joseph Doherty: I do not think I said
that.


Daniel Duncan McKenzie: The minister said the
same thing to-night.
mi


Charles Joseph Doherty: I did not say " necessarily " implied. I said it might be taken in a sense to imply.


Daniel Duncan McKenzie: That is sailing very
close to the wind. If it implies .it in a sense, it implies it.


William Stevens Fielding: Unless there is no
pense in the transaction.
'Mr. DOHERTY:	The hon. gentleman
should repeat my exact words.


Daniel Duncan McKenzie: The British Bill when
it passed the House of Commons in England implied, although it did not mention, approval of the Treaty, because it was for the purpose of furnishing the money for carrying out the terms of the Treaty, and of ,course if Parliament did not approve of the Treaty it would not furnish the means for carrying it out. We, about ten days ago, did everything to approve of the Treaty that is before this House to-night that the British House of Commons did for its approval. They passed an Act furnishing the money and empowering the Government to [DOT]appoint the necessary officials. We have done that already on the word of the minister that the document we were approving was precisely the same as the German [DOT]Treaty. Why, therefore, does the minister come here to-night and ask the House to go through the empty ceremony of re-approving something that has already been approved? I do not admit that there is any necessity for it at all. When we were dis-. cussing this matter ten days ago I read Lord Milner's despatch in this House, which, of course, had reached the minister long before we saw it. Lord Milner on the [DOT]advice of the law officers of the Crown in Great Britain advised the British Government that the approval of the British Parliament was not necessary, nor the approval of this Parliament. On the strength of that I argued that it was not necessary for us to do anything at all except what the British North America requires of us in order to furnish the wherewithal to carry out the Treaty so far as it imposed duties upon us. For that reason, although I am not going to offer any strenuous opposition, I think it would be more dignified for the House to stand by its action. We have already approved this Treaty, because we have passed an Act implementing it. I think it would be more consistent with the dignity of the House- although I suppose it does not in any way detract from our dignity to confirm our action, having done a thing once and believing we have done it right, and in fact

knowing it was right so far as its constitutionality and legality are concerned-to stand by our action of a week or so ago. I do not think we are adding any strength to our position by doing the thing over again in this way.


William Stevens Fielding: When the Minister
of Justice (Mr. Doherty) spoke of the careful consideration and reading which he was sure the members of the House had given to this document, I thought I observed a merry twinkle in his eye. Now I am going to make probably the risky statement that I doubt whether a single man in this House has read this interesting document of one hundred and fifty pages. It might be very wicked to suggest that the distinguished Canadian who signed it had not read it, but even that is a possibility. However, I believe the House is going to pay the Minister of Justice the high complement of approving this Treaty, not because they have ever read it, but simply upon his assurance that the Treaty is in all substantial things the same as the German Treaty. I confess I have not read it myself, but I am going to support the motion, simply on the faith that my hon. friend has spoken correctly in that respect.
It is a technical point, and I do not think of very much importance, but I observe that the resolution speaks of the Treaty being signed by the plenipotentiaries acting for Canada, whereas my hon. friend will see by looking at the Treaty that it is signed by only one plenipotentiary.


Charles Joseph Doherty: I shall be glad to
amend the motion by substituting the word " plenipotentiary " for " plenipotentiaries."


William Lyon Mackenzie King: Before the motion passes I
think it is only fair to the members on this side of the House, as the minister has spoken of the distribution of this Treaty, to say that it appears to have been distributed only to-day, so I think very few members of the House could possibly have had an opportunity of reading it.


William Stevens Fielding: They would not read
it to-morrow either.


William Lyon Mackenzie King: I did not receive a copy until this morning, and I think other members are in the same position.


John Howard Sinclair: There is one point in connection with the Treaty in regard to which I should like to have an explanation from the Minister of Justice. Article 4 of the Covenant of the League of Nations, which 
is part of the Treaty, contains the following provision:
The Council shall consist of representatives of the principal Allied and Associated Powers, together with representatives of four other members of the League. The four members of the League shall be selected by the Assembly from time to time in its discretion. Until the appointment of the representatives of the four members of the League first selected by the Assembly, representatives of Belgium, Brazil, Spain and Greece shall be members of the Council.
On page 11 of the Covenant there are given the thirty-two original members of the League of Nations, who are signatories of the Treaty of Peace, and there is also a list of states invited to accede to the Covenant. In this list of nations that are not now members of the League, but who are to be invited to become members, we find Spain. Belgium is one of the original members of the League, and so is Greece; but Spain is not yet a member. How is it that Spain has representation on the Council when she is not a member of the League of Nations?


Charles Joseph Doherty: Nobody will have representation on the 'Council until the League of Nations is formed by the accepts ance and ratification of the Treaty, so far as the signatory nations are concerned. Spain will have representation on the League only after this has come about, and, of course, when she has accepted the invitation extended to her, and which- whether it was formally announced or not -the Conference, in accepting this Treaty, and the Commission in drafting it, were amply satisfied that Spain would accept. Nobody is a member of the LeagUe yet, because the League will come into existence only when the Treaty becomes effective. And it was in anticipation that, as soon as that should happen, Spain, availing herself of the invitation, would" become a member of the 'League, that all the nations signing this Treaty agreed that among the first four other members to be selected by the Assembly Spain should have representation upon the Council.


John Howard Sinclair: There are twenty-six nations who are already members of the League. Why select a nation not yet a member of the League and one that may never become a member?


Charles Joseph Doherty: I pointed out a moment ago that no nation will be a member of the League until the Treaty i.s ratified.


John Howard Sinclair: They are described as signatories.


Charles Joseph Doherty: They are signatories of the Treaty and as such they become entitled to be members of the League. But the League is created by the Treaty.' The Covenant of the League is part of the Treaty and that part of the Treaty produces no more effect than any other part until the whole Treaty comes into force. When 'the whole Treaty becomes effective, that is to say, when it shall have been ratified by at least three of the great powers, then the provision which says that the signatories of the Treaty are members of the League will become effective with all the other provisions. As I pointed out, it was in anticipation of Spain's acceding to this particular part of the Treaty that the thirty-two signatories decided that it was proper to allow this representation to her. And, while I cannot say what were the motives of all those thirty-two nations, I believe it was considered desirable that at the initiation of the League the representation on its council should not be confined absolutely to the allied and associated powers. It was conceded as a courtesy, if you will, but at all events it was thought desirable, to include a nation which was not one of the allied or associated powers. I can only suggest that as being among the motives that may have impelled the thirty-two nations to that decision. Twenty-seven of those thirty-two nations being the nations who, when tbhe League would come into operation, would be entitled to elect the four other members, thought proper to include among the four one nation who would become a member by acceding to the Covenant, All of the nations are yet to become members, some merely by ratification of the Treaty, and others by acceptance of the invitation to come in, and it was in anticipation of their becoming members in one way or the other that the composition of the first council was decided upon.


William Lyon Mackenzie King: The Labour Convention,
which forms a part of the Treaty, provides for a general conference of representatives of the members to be held once a year. 1 understand that the conference has been called to take place at Washington next week. But there is: a report to' the effect that as the United States is not yet a member of the League of Nations this conference may not be held. As the Government is sending delegates to the conference, may I ask the minister if it has any information as to the exact situation?


Edgar Nelson Rhodes: I must remind the House that under the rules hon. members are
limited to one speech on this motion. The Minister of Justice has already made two, and I think it might 'perhaps be well, in order to adhere closely to the rules, that information in regard to points raised by hon. members be reserved by the- minister until he exercises his right to close the debate.


Newton Wesley Rowell: I rise, Mr. Speaker, simply to answer the question of my hon. friend in reference to the position of the International Labour Conference. That conference is officially called to meet on the 29th of this month-that is to say, on Wednesday next- at noon, in Washington, and it will meet pursuant to that call. But whether it will be able to proceed with the consideration of the matters mentioned in the agenda for the conference is a question which will not be known until the conference meets. So far as I am aware, the Treaty with Germany has not yet been ratified iby the three powers necessary to bring it into operation. The Treaty is not yet in effect. It may go into effect before the conference meets or on the following day. I have no knowledge ir^that respect other than the intimation, which appeared in' the press recently, that the Treaty was likely to he ratified and go into effect about that date. Notice has been issued iby the Secretary of Labour of the United States, intimating that it might be necessary to adjourn the conference in view of the fact that the United States had not-yet ratified the Treaty, and therefore was not in a position to take part in the conference.
Many of the delegates have arrived in the United States from foreign countries. I believe the British, the Spanish, and Japanese delegates, as well as the delegates from a number of other nations have already arrived in Washington for the work of the conference. It is a matter worthy of consideration that Canada takes part in the conference as one of the original members thereof and with the same status as all the other members of the conference. The Government in this case, pursuant to the provisions of the convention, has asked the Canadian Manufacturers' Association, as being the largest group of employers of labour in Canada, to name a delegate representing the employers, and has asked the Trades and Labour Congress of Canada, as being the largest organization representing organized labour, to name the labour representative to the conference. These bodies have named their representatives, and the advisers have also been named as

provided for under the terms of the convention.


Charles Murphy: When the Minister of Justice (Mr. Doherty) ten days ago asked the House to concur in certain amendments to Bill No. 3 made by the Senate, he explained that he did so because it would make unnecessary the submission of the Austrian Treaty separately to the House. As I understood him at the time, and my understanding is confirmed by reference to Hansard, which under the rules of the House I believe I am not allowed to quote, that was the ground on which the House, at the hon. gentleman's request, concurred in these amendments. That being the case, I desire to know whether the proceeding which the hon. gentleman has submitted to the House by his motion is necessary.


Charles Joseph Doherty: Perhaps I might state now if i't is in order-


Henry Arthur Mackie: Mr. Speaker, I did not anticipate that we should be asked this day to consider a matter the importance of which is as great as that of some of the measures which have been discussed within the last ten days in this Plouse. Had I expected that this question would be brought up this evening I should have prepared for the occasion. I find myself obliged to speak extemporaneously on a subject of international importance. We were called together at this time of the year to approve of the Peace Treaty and the League of Nations, on both of which I have already spokfen. Only to-day did I receive the blue-book on the subject of the Austrian Treaty, and by no means did I expect at this sitting of the House, when the representatives of the two adjacent provinces should be at home spending the week end, that this Treaty would be brought up for confirmation.
It is true that I am not a politician and I do not know all tihe devious ways by which the members of this Government may work to their ends, but that this Government should ratify, or confirm, or approve of the Austrian Treaty with the Allied Powers on the basis of what has already been said in the House with reference to the Treaty between the Allied Powers and Germany is difficult to understand. It is going absolutely too far because the conditions which obtain in one case are not the conditions that obtain in the other.
It is true that it is said by the Government in answer to a question by the Opposition, that what obtained in one case obtained in the other except as to terri-
[Kr. Rowell.]
torial limitation. I am not satisfied that that is correct because I have not had the opportunity to read the blue-book which was sent to. me through the mail to-day, and which I only received at three o'clock. But at any rate you have the question of Poland to consider in the Austrian Treaty, you have the question of Galicia to consider in the Treaty between Austria and the Allied Powers, you have many and varied questions. Is this Government so devoid of a sense of responsibility that it must, on a Friday evening, when there is not sufficient representation on the Opposition side or on the Government side, undertake to deal with a matter of international importance in this manner?
For instance, we have had questions put in this House by hon. members on this side of the House as to whether or not Poland guaranteed the liberty of the Ukran-ians in Galicia both as to their religion and as to their civil rights. We received the assurance from the members of the Government that these had been guaranteed. But it is only within the last few days that I had a message from certain Ukranians in the western provinces which I transferred to the hon. Minister of Justice (Mr. Doherty). I understand from the Minister of Justice that a cablegram has been sent overseas dealing with this question but no answer has been received yet as far as I know. There is also the question as to whether or not the Ukrhnians in Galicia will be given a plebiscite
9 p.m. in order to determine whether they shall remain Poles or whether they shall remain Ukranians and form part of the great republic which has been already declared in the southern portion of Russia. We are now asked to ratify, confirm or approve of the Treaty between the Allied Powers and Austria. My hon. friend from George-Etienne Cartier (Mr. Jacobs) has repeatedly brought the question up in the House as to the foreign population in Canada-and let me tell you, Mr. Speaker, that I have absolutely no sympathy with the foreign population in Canada where they have shown no proper desire to serve their adopted country.
I am quite in sympathy -with the policy which has been enunciated by this Government, that that part of our foreign population which has not shown a desire to become assimilated should be deported. But there is also another policy which I believe in-the policy to conserve and improve that which we have acquired. This Government and its predecessors have spent thousands,

if not millions, of dollars to bring immigrants to our shores, and it is therefore the business of the Government of the day to see that these newcomers acquire our own ideas and become good Canadian citizens, rather than to talk of deporting them to their native land, where condition^ are worse than we have even thought of. Instead of presenting a Bill of this importance to a depleted House, I submit the Government should have deferred its consideration until the members absent over the weekend returned, in order that it might be thoroughly discussed.
Furthermore, in relation to Poland and Galicia, I wish to ask the Minister of Justice (Mr. Doherty) if it is not true that during the war the Polish Council in Ontario had the ear and the confidence of this Government as to who should and who should not go overseas with our Expeditionary Force; if it is not true that this Government did receive the assistance of this Polish Council in that very regard; and if it is not true that this Government, while accepting the recommendations of this Polish Council, permitted it to take an affidavit from each and every individual who volunteered for service overseas that he owed fealty to Poland rather than to this country? What right has Poland to interfere in the business of Canada until the terms of the Treaty of Peace have been settled? What right had this Government to permit the Polish Counail in Ontario to take -affidavits of that character? There is no question, about that-it is true. I have seen the affidavits. I have also been requested to ask the Government whether or not this Polish Council was allowed to deal with Austrian cases, and I have submitted the whole matter to the Government. Why, for instance, should 80,000 Galician Jews now in this country be requested to swear that they are Poles, and threatened -that if they do not do so they will be deported or prosecuted? Why should Poland be given the right to dominate Galicia by simply declaring that the predominant element in the population is Polish?
Now, Mr. Speaker, I am quite willing to agree that Canada is not a nation. We have had a great deal of discussion on this point, which I do not intend to repeat, but no matter what may be the sophistical arguments advanced in favour of the contention that Canada is a nation, I assert that Canada is not a nation. In connection with any conference which may be convened in the near future with regard to preserving the peace of the world, I would ask any hon.
member this question: Does Canada represent any such principle of general interest as may compel the great powers of Europe -and the great power of America for that matter-to consider that we have a right to demand any particular remedy? If we are a nation then we must present a status of equality before the eyes of the world. This is denied us by the American nation; it is denied us by Britain; it is- denied us by France-in a word, it is denied us by all the associated powers who had anything to say in the Peace Conference, or who may have anything to say in the League of Nations. Why should we this evening, with so few members present, be called upon to approve a Treaty of Peace between Austria and the Allied Powers without taking into full consideration with those powers all the circumstances and all the facts of this Treaty? We talk about acquiring the Grand Trunk Pacific, we talk about prohibition and the transfer of Federal rights to the provinces -these are as nothing compared with what the Canadian nation is going to do as one of the groat world powers which are going to keep the peace upon earth. And yet I find myself suddenly confronted by a resolution of the Government brought forward at 9.15 on a Friday evening, when most of the Opposition members have gone to Quebec and Ontario over the week-end.


An hon. MEMBER:: There is not much over there.


Henry Arthur Mackie: It is true that there is not much over there, I agree, both in the metaphorical and the literal sense; but there is less on this side-in both senses. I wish the co-operation of the House this evening in my request that this matter shall stand over until we have had an opportunity to study this Blue Book.
I have been flattered by the extent to which our chevelure has been ruffled with pride in the very thought that Canada shall take its place among the nations. It has been difficult for ne at times to comb my hair down in the mornings, with all the lotions that I like to apply, as I think of the tremendous position that Canada is to take among the nations of the world in preserving the peace of the world. But when we come down to actual facts-and I am making no academic speech this evening; I am speaking extemporaneously-we find difficulties for which we have not been prepared and it becomes necessary for us to protest, and I do so with all respect. I am a supporter of the Government-and may I always be permitted to support it rather


Edgar Nelson Rhodes: I hope that the hon.
.member will bring his remarks to bear more closely on the subject that is before the House; he is going very far afield.


Henry Arthur Mackie: Mr. Speaker, I did not intend to go further away than I should go; I had intended from the reference which I made to draw a conclusion which would come more closely to the subject. However, I accede to your request, and say this: The resolution before the House is one that should receive the greatest possible consideration; one that is more important than *the passing of a Grand Trunk Railway Bill; one that is more important to the national life of this Dominion of Canada than any Bill that has been presented; and we are asked in the hours of a Friday evening to pass a matter which, if properly debated; should occupy several weeks, in order to ascertain the proper information upon which the conclusions' are reached in this resolution, in order to acertain the true state of affairs in Europe about which we are legislating, in order to ascertain how we, as a nation or a colony, are responsible for the terms of these things about which we are to legislate. If these are not more important than free trade; if these are not conditions more important than any other matter that has been before the House, I say that we are not paying very much regard to the consequences of those things upon which we are legislating. It is simple, to pass an Act; it is simple to vote upon a resolution; but it is not simple to accept the consequence of our own acts; it is not simple-and I hope I am not wandering far away from the resolution now-that we, as a Canadian people, as a part of the League of Nations, should accept the responsibilities of what may be the voting power within the League of Nations. It is not material to you, Sir, and to me, whether you, I, your children or mine, shall participate in the future wars of this world without being consulted, simiply on the declaration that "when Great Britain is at war we are at war/' It is not material to you or to me that we should accept all our share of responsibility of what is being done by the League of Nations without having had a voice in the matter or having been consulted. That is what we are doing in this resolution when we approve the terms of this Treaty, without knowing what are the particulars of the Bill or the -menu which we are ordering. These are things about w'hich I have a concern. It may be very simple for the Minister of Justice, or the Minister of Customs, or the Minister of Public Works now to say in the House: We have gone; we have come; we have conquered; or we came, we saw and we conquered. It is f very simple thing for these hon. gentlemen paid by the Canadian nation, to perform a duty towards the whole Empire, towards the whole world, to come back and say: This is what we have done. We are entitled to ask them for a bill of particulars. When I was a student at McGill university, and the Minister of Justice (Mr. Doherty) lectured to me on marriage covenants,	I took	heed:	of what hetold	me in	those	days, and I
have been true to the lessons that he gave me. It is true that I am not going to confess to him all my weaknesses, but what he fold me in regard to marriage contracts I have followed religiously in giving advice to others, for which advice I have been paid.


Charles Joseph Doherty: The hon. member should give me a commission.


Henry Arthur Mackie: But I do not accept the dictation of the Minister of Justice as an envoy of the Canadian nation to deal for me in the problems of the world unless he is prepared to show to me that the law that he hands down to me is well founded upon certain commandments or until such time as I find his reasoning is in accordance with the exigencies of the case.


Some Hon. MEMBERS:: Carried.


Henry Arthur Mackie: I am very glad that this note of warning comes from the Opposition. I have sat on this side of the House when I have felt in my heart I should shout "carried." I have been sick at hear often times when the Opposition have started, and before they have gone but a few minutes, I have felt that I should have liked to cry " carried." If they are sickened as much as I have been at times of their oratory, I shall be pleased to take my seat.


Charles Joseph Doherty: Mr. Speaker-


Edgar Nelson Rhodes: Before the Minister of
Justice exercises his right to reply,I wish to remind hon. members that if any hon. members desire to speak, they should do so now; otherwise, the debate will be closed.


Charles Joseph Doherty: I find myself in a
somewhat embarrassing position. Whereas I have to meet, coming from in front of me, the reproach that I am asking this House merely to do what it has already

done, and that, therefore, my proceeding is absolutely futile, there comes from behind me a very grave arraignment for that I am asking the House, without proper information, and saddest of all on a Friday night, to pass this most important resolution. May I point out, to deal first with the observations of the hon. member (Mr. H. A. Mackie), that he in common with all the members of this House has already expressed approval of those provisions which, if I have followed his arguments of this evening, give rise to most doubt and most desire for information, and indeed in some cases to direct opposition on his part. The hon. gentleman spoke of Poland and objected to our expressing approval of this Treaty until we had further explanations with regard to conditions in that country. May I just point out to him that in this particular	Treaty, the	one
reference to Poland is that Austria says that she accepts the boundaries of Poland as already fixed by the Allied and Associated Powers; that is to say, the boundaries were fixed in the Treaty with Germany which the hon. gentleman has already approved. Furthermore, with regard to his observations in connection with the protection of the rights of minorities in Poland, may I point out to him that he has already approved the Treaty with Poland which has been submitted to this House and in which it is expressly stipulated that Poland shall respect all those very rights to which he has so eloquently referred. With regard to his reference to the Ukrainians, there is nothing in this Treaty that bears upon the provisions in regard to the Ukrainians and more particularly upon what questions may arise between certain Ukrainians, native or former inhabitants, I believe, of Galicia and Poland, and this simply because, as I have said, it is in the other Treaty with which we have already dealt that the boundaries of Poland are fixed, and because we have dealt with a special Treaty which imposes upon Poland that she shall respect the rights of minorities of all classes.
As to the Ukrainians to whom the hon. gentleman refers and in connection with whom-I do not think the matter was very relevant-he arraigns this Government for the line of action it has seen fit to adopt in the past in connection with certain Poles as also in connection with certain Ukrainians in this country, let me very briefly state just exactly what the situation is. The hon. gentleman has referred to a Council of Poles whom he says this Govern-

ment have recognized and upon whom he seems to conceive that this Government has conferred some power or authority to compel Ukrainians to swear that they are Poles. The situation with regard to that Council is a very simple one indeed. Poles are nationals of an allied power. We had certain restrictions in this country as to freedom of departure from Canada imposed upon alien enemies, and when people came forward and said that they were Poles we found that it was of advantage in the absence of any particular Polish consulate or consul to be able to have their claims verified by people known to be of that nation and in a position to vertify' whether they were Poles or not, and we did accept from persons claiming to be Poles, as part of the evidence going to establish that claim -not, however, without further verification in cases where it was called for,-the certificates of this Council to persons known to be Poles and respectable and reliable people. I understand that the complaint of the Ukrainians which the hon. gentleman has voiced has been that they were compelled to swear they were Poles. Now it is only natural that when they went to that Polish Council asking for certificates the Council would say to them "The thing that we undertake to certify is that a man is a Pole or not a Pole. If you are not a Pole we have nothing to do with you." I do not know that they required them all to swear they were Poles, but if they did, it was perhaps not an unnatural thing for a body called upon to certify that a certain individual was a Pole to ask him whether he was willing to swear that he was a Pole.


Henry Arthur Mackie: What I said was that they were called upon not to swear that they were Poles, but to swear fealty to Poland.


Charles Joseph Doherty: I think the hon. gentleman will find himself mistaken in that regard, although I do not say that positively. I do not think it involved the question of swearing allegiance to anybody. Certainly the only question in which we were interested and which could have any relation with that Council was whether the .particular individual was a Pole or not. It may be-I am not prepared to say it was not so-that in the process of testing whether a man claiming to be a Pole really was a Pole-and he had no business going to the Council unless he was representing he was a Pole-they called upon him to swear fealty to Poland. Some of these people, and I have had representations from

different ones, seem to have misunderstood the situation, and to have
supposed that in order to get out of Canada they were having imposed upon them through some sort of governmental authority an obligation to say they were Poles. I have explained just to what extent we were interested in the question whether they were Poles or not, and it was not with any idea of inducing people to swear they were Poles so that they might on false representation get out of the country that anybody would have been asked to make an affidavit. There was a misapprehension on the part of these people who do not readily grasp and understand-and quite naturally-the different regulations to which they were subjected.
I may say that on the part of this Government there has been a desire to afford Ukranians who are individually responsible and reliable people and not subject to deportation every means that can be found of enabling them to establish those facts. There certainly has been no desire to discriminate against the Ukrainians. There exists at the present time in the city of Montreal a Ukrainian body to whose certificates with regard to persons claiming to be Ukranians in connection with their respectability and fitness to be allowed to remain in the country great weight is attached by the officers of this Government. Let me assure the hon. gentleman, who, I know, takes great interest in the people of this race, that there is no desire on the part of this Government to discriminate in any way against these people. Of course, for the purpose of assuring ourselves of proper control of persons of alien enemy races within this country it was unavoidable that these people, being, as they were during the course of the war nationals of an enemy country, should be subjected to regulations, but I am quite certain that on the part of this Government in the administration of tnose regulations both towards Ukranians and people of other races there was no desire to do any injustice or act with any harshness.
With regard to the observations in connection with the treaty which the hon. gentleman made, I think I am safe in saying that the different matters that he adverted to are all of them matters which were covered by the provisions of the treaty with Germany, and he is not being asked, in regard to any matters so far as 1 can recall them to which he referred, to approve of anything which he has not already approved in approving the German Treaty. He spoke of
the obligations of the League of Nations. Let me point out that this Parliament has approved the Covenant of the League of Nations as contained in the German Treaty, and we are not binding ourselves any more now because the Covenant is also found in the Austrian Treaty. It is just the same Covenant, and whatever may be the extent of its obligations we have already assumed them in approving the German Treaty. I feel that I have not taken up seriatim, and very possibly have not done full justice to all the representations made by the hon. gentleman. But I have endeavoured to meet them in a general way at all events, and if I have overlooked any of them I trust he will not consider that it was because of any intentional discourtesy on my part. I would be quite incapable of that. I am very touched by his assurance of his recollection and appreciation of valuable lessons which in earlier days it was my privilege to address to him.
With regard to the question of the hon. member for Russell (Mr. Murphy) and some observations made by hon. gentlemen opposite, rather reflecting upon the utility of the present proceedings, I am free to admit that perhaps this is not absolutely necessary, but the other day in connection with the amendment which I moved that this House should accept, there was a good deal of criticism, and it was pointed out that it was not absolutely regular, which I concede, to ask the House to confer t'he powers that were conferred by that amendment, the House not having before it the actual text of the treaty. I think I acknowledged then that it would have been better if the text of the treaty had been before the House, and I supported the suggestion that we accept the amendment upon what seemed to me to be the common sense ground, namely, as the House had already-expressed its approval, in the form of the Treaty with Germany, of all the substantial provisions of this treaty, that, subject to the House being willing to accept the assurance of the Government that this Treaty was similar, it would be a comimonsense action on tlhe part of a body in that situation, having conferred the powers upon the Governor in Council necessary for the implementing of the German Treaty, to consent to confer the same powers, in so far as they might 'be required, for the purpose of implementing and carrying out the Austrian Treaty. And, if my memory serves me, I pointed out that that legislation would never come into practical operation, unless the Treaty with

Austria became binding by its ratification. I then called attention to the assurance *which had already been given to the House by the Government, that it would only advise that ratification without coming back to this House if the Treaty, when it reached us, proved to be so identical with the German Treaty that you could not escape the conclusion that a House that had approved the provisions ^contained in the German Treaty would, consistently with itself, approve the provisions contained in the Austrian- Treaty.
But, fortunately or unfortunately, the session has been prolonged until the Treaty has reached us, and now we put it before the House. It was suggested then that there was something irregular in our not having it before the House. Now we have met that suggestion and have put it before the House, and asked the House to approve it. We do that to meet the suggestions I refer to, and to carry out the promise made on the 22nd of September that it would be done. After all, is it a very grave ground of complaint that we should seek, if you will, to make assurance doubly sure? If we have already, in passing the amendment referred to, approved this Treaty, it can do no possible harm that we should now do it formally and precisely with the Treaty before us, if for no other reason than that we should have the approval of the Treaty absolutely regular in .form, although the approval of the German. Treaty is substantially the approval of the Austrian Treaty.


Henry Arthur Mackie: Will the minister permit me two questions? Will Poland allow the Ukrainians in Galicia to determine whether or not they shall remain part of Poland or become part of the Ukrainian Republic? Secondly, when was the Treaty of Peace between the Allied and Associated Powers and Austria signed? Was it on the 10th day of September, 1919, and was a copy submitted to this Parliament? Further what opportunity has this House had of considering the same?


Charles Joseph Doherty: With regard to what
Poland may do or may be compelled to do in connection with the position of the Ukrainians in Galicia, I may point out again that the question does not arise under the present Treaty with Austria, and perhaps, if the hon. member will reflect a moment, he will realize why. It is a question between the Ukrainian population of Galicia, and Poland; it is not a question between Austria and the Allied and Associated Powers. As to whether or not the 
Ukrainian population of that portion of Galicia which is claimed by, if not allotted to, Poland, in the boundaries fixed in the German Treaty, will be entitled to a plebiscite to determine their allegiance, is a question which, so far as my information at the present time goes, is not yet determined. It is still pending before the Council. As to the question when the copies of the Treaty were distributed, if I am correctly informed, the Treaty was laid on the table of this House some four days ago. I understood that the Treaty was to be distributed yesterday, but the particular hour at which it reached the members I am not prepared to say.


Henry Arthur Mackie: Three o'clock this afternoon. Now, may I ask another question, or at least, may I be permitted to correct an impression which has been given to the House by the minister?


Edgar Nelson Rhodes: The hon. member will
not be in order. He has already exhausted his right to speak and the minister has spoken three times.


Henry Arthur Mackie: I do not wish to make a speech.


Edgar Nelson Rhodes: The minister is quite
capable of giving correctly any impression he desires to convey to the House.


Henry Arthur Mackie: With the permission of the Minister of Justice, may I correct the impression he gave the House?


Edgar Nelson Rhodes: The Minister of Justice cannot give permission for the rules of the House to be broken.


Henry Arthur Mackie: I do not wish to break the rules of the House, Sir.


Edgar Nelson Rhodes: Order.


Henry Arthur Mackie: But if I may be permitted-


Edgar Nelson Rhodes: Order.


Henry Arthur Mackie: May I address the Chair?


Edgar Nelson Rhodes: Order; the hon. member has already spoken.


[Stage Direction]
Motion agreed to.
Charles Joseph Doherty: Mr. Speaker, I beg to move:
That a message be sent to the Senate to inform Their Honours that this House has passed the following resolution:-
"Resolved by the	House of
Commons,
That it is expedient that Parliament do approve of the Treaty of Peace between the Allied and Associated Powers and Austria,

signed at St. Germain on the tenth day of September, one thousand nine hundred and nineteen, a copy of which has been laid before Parliament, and which was signed on behalf of His Majesty, acting for Canada, by the plenipotentiaries therein named, and that this House do approve of the same." and requesting that Their Honours will unite with this House House in the said resolution by filling up the blank therein with the words " Senate and."


[Stage Direction]
Motion agreed to.
Henry Arthur Mackie: May I ask a question, Mr. Speaker? Is it not competent for a member of Parliament to rectify an impression created in the House, that he has said something which as a matter of fact he has not said? Is it possible under any circumstances for a member to correct such an impression?


Edgar Nelson Rhodes: As a matter of courtesy it is quite competent for an hon. member, by leave of the Chair and of the House, to correct an impression that has been falsely gathered in respect of something that he may have said himself. But it is not competent for him to correct an impression which some other member may have created.


Henry Arthur Mackie: Mr. Speaker, I
wish to correct an impression which has been -given this evening about that which I am alleged to have said but may not have said. May I correct that impression?


Edgar Nelson Rhodes: I very much regret the
hon. gentleman would not be in order in doing so now because the occasion on which he could have made his correction, if he had desired to do so, has passed. The motion has been carried.
Mr. H. A- MACKIE: If I have the right to do it on a following occasion may I do it now?


Edgar Nelson Rhodes: There is no subject before the House.



EXCHEQUER COURT ACT AMENDMENT.

[Stage Direction]
Hon. CHARLES DOHERTY (Minister of Justice) moved the second reading of Bill No. 30 to amend the Exchequer Court Act.
Daniel Duncan McKenzie: If I remember correctly the explanation the minister gave it was that this amendment is simply for the purpose of extending the power to the Exchequer Court to deal with some international questions which may have arisen out of war difficulties. If that is the case we have no objection to it.


Charles Joseph Doherty: That is all.
Motion agreed and Bill read the second time, considered in Committee and read the third time and passed.



CIVIL SERVICE ACT 1918-AMENDMENT.


[Stage Direction]
House again in Committee on Bill No. 31 to amend the Civil Service Act, 1918, with respect to the salaries of certain postmasters and assistant postmasters.-Hon. A.
K.	Maclean.-Mr. Boivin in the Chair.
On section 1-revenue from war stamps not to be included in postage collections when determining salaries of city and assistant city postmasters:
Daniel Duncan McKenzie: What is this?


Newton Wesley Rowell: My hon. friend (Mr. A.
K. Maclean) gave a very full explanation on -the second reading of the Bill. I _ can give any further information that is desired. The object of the Bill is to continue the right which has been given under certain Orders in Council, passed under the War Measures Act, to exclude from the salaries of city postmasters who are entitled to be paid a percentage of the receipts from the sale of stamps, the additional amount which it is figured they would have received on account of the war stamp tax. If they *sold a two cent stamp before they now sell a three cent stamp; if they sold a one cent stamp before they now sell a two cent stamp. It was not considered just that the salary should be increased by the percentage derived from the sale of 'stamps the proceeds of which were intended purely for war purposes. This has been in force since the War Measures Act was passed, and by Order in Council, and it is simply to continue it.


Daniel Duncan McKenzie: One difficulty about
this is that it is practically impossible to carry it out except by sheer guesswork. It is not desirable to be dealing with a man's property by guesswork. The salary that a man earns by selling postage stamps and attending to his business in the post office is his property just as much as his house or his horse, and it is a part of the constitution-too old indeed to be mentioning it now-that no British subject shall be affected in his property or rights of any kind except by due process in a court of law. This salary which he earns is his property. We are going to pass an arbitrary Act in this Parliament, which is not a court of law in which this man can give evidence and with no machinery provided to enable him to give any explanation or testimony about his rights in this matter', authorizing some person to say "This is all you are to have; the rest of your earnings go to the Crown." I think this is a most

arbitrary piece of legislation. Besides, it is extremely difficult to know where the line *should be drawn. It was suggested at the time this law came into force that there should be a special stamp for war purposes and ordinary stamps for ordinary postal purposes. It was promised at that time that if we would agree to allow the ordinary stamps to be used promiscuously a special stamp would be provided. But things went on and it was never done; the postage stamps were used for other purposes. I think that it is better in the interest of fair play and in the interest of the country that things should be left as they are. If postmasters, by reason of this laxity got a few dollars extra-it will not be very much -I do not think it is woyth
10 p.m. while to create many sore hearts, a great deal of disappointment and irritation by starting out now to correct what was possibly a mistake. Take the case of the banks; they buy an enormous number of stamps. The banks use a great many postage stamps in their ordinary business. They have to use stamps on all their cheques, notes and drafts. They buy these stamps hut the post office does not lose the two cents nor do the banks; the- man who cashes the cheque pays for the two cents stamp. The postmaster sells these stamps, but how is anybody going to tell how many stamps went on bills, notes and cheques and how many were used in the hank for ordinary mailing purposes? It is absolutely impossible; there is no account kept. A sheet of stamps comes into the bank and these stamps -are used right and left as they are required. There is no attempt made to discriminate between those that go on letters and those that go on the cheques that are cashed for the customers of the bank.
Those are the reasons why I think the President of the 'Council (Mr. Rowell) and thb Government should test it before imposing this power and duty-which I am sure no one wants-upon any one to divide this money equitably between the Government and the postmasters. Therefore I think it would be very much better to leave matters as they are rather than bother with this legislation.
Mr. McQUARRIE': I was under the impression that this Bill would not come up until next week; in fact, I was so informed by the minister (Mr. Maclean) who was originally in charge of it.


Newton Wesley Rowell: If either the Minister of Justice (Mr. Doherty) or I had been aware

of that understanding we would not have taken action. We are endeavouring to dispose of as many Bills to-night as possible. If there is any understanding with the minister (Mr. Maclean) that the Bill should stand over, of course, I do not wish to proceed with it.


Mr. McQUARRIE:: He told me that it would not be proceeded with until he came back. I had some further remarks which I would like to make in connection with the Bill, but I do not care to deal with the matter when he is not here. For instance, he promised to give me information in reply to certain questions which I was not permitted to ask on the second reading. I presume that when he is here he will be prepared to give me that information.


William Stevens Fielding: Is the Bill intended to be retroactive? '


Newton Wesley Rowell: No. This is the present situation, regarding which my hon. friend the member for :Cape Breton (Mr. McKenzie) is under some slight misapprehension. The Government did pass an Order in Council under the War Measures Act fixing the percentage which should be considered as the proceeds of the war stamps from which the postmasters should not receive any return-my recollection is that it was 28 per cent, but I speak subject to correction-and that their salary should be computed on the basis of 72 per cent. As I understand it, the department in fixing that 28 per cent made the best estimate that was possible. Of course, I agree with my hon. friend that you cannot fix the percentage with	exactitude;	but I
am quite sure that the Post Office Department thought that in the percentage they fixed they were not taking any advantage of the postmasters, but were giving them the full measure of the proceeds of sale so far as the former postage would apply. My hon. friend will see that on three-cent stamps it would be a third, on two-cent stamps a half, and on war stamps the whole amount. Now, the object of this Bill is simply to continue in the Postmaster General the power to do what has been done until the new classification under the Civil Service Act goes into effect in April, 1920, when the scale of payment is fixed on a different basis.
With reference to my hon. friend from New Westminster (Mr. McQuarrie), if he would discuss his point on the third reading, it would enable us to advance the Bill a stage; but in view of his understanding

with the minister I certainly shall not press on the Bill now.
Progress reported.



HOUSE OF COMMONS ACT AMENDMENT.


Charles Joseph Doherty: With the permission of the House, I move that we proceed with the order of Public Bills and Orders. The purpose is to take up a Bill introduced by the member .for George Etienne Cartier (Mr. Jacobs) to amend the House of Commons Act, and to provide that polling days at elections shall be public holidays. I notice the hon. member is not present. I may say that the Bill, having passed through the Standing Committee on Privileges and Elections, has come back in an amended form, which is acceptable both to the hon. member who introduced the Bill and to the Government. I promised him that I would give the Bill an opportunity of being passed at the present session, and as the hon. member introducing the Bill and the Government are in. agreement to accept the Bill as amended, subject to a slight alteration to which the hon. gentleman has also agreed, I would like an opportunity of redeeming my promise to him, even though he be absent.


[Stage Direction]
Motion agreed to.
House in Committee on Bill No. 9, to amend the House of Commons Act, and to provide that polling days at elections shall be public holidays-Mr. Jacobs-Mr. Boivin in the Chair.
Georges Henri Boivin: There are several
amendments to the Bill and I will read them.


Mr. COPP:: I rise to state, Mr. Chairman, that the hon. member who is in charge of the Bill received a telegram after six o'clock requesting his presence in Montreal. He asked me to say that in so far as he is concerned he is quite willing that the Bill should go through as amended, but that the hon. member for West Kent (Mr. McCoig) desired to move an amendment. He, however, I find has left for Toronto. I make this announcement for the information of jthe House; I do not know whether the Bill will be proceeded with or not.


Charles Joseph Doherty: Would it not be possible for the hon. member for Kent (Mr. McCoig), if he desires to press his amendment, to move on the third reading to send
the Bill back to the committee for that purpose? In the meantime we could proceed on that understanding.


Georges Henri Boivin: Clause 1 of the Bill
as reported by the special committee reads as follows:
1. The House of Commons Act, Revised Statutes of Canada, 1906, Chapter 11, is amended by inserting the following sections immediately after section eleven :-
11 A. In the event of a vacancy occurring by reason of the death of any member or by reason of his accepting any office a writ shall be issued within six months after the receipt by the Clerk of the Crown in Chancery of the warrant for the issue of a new writ for the election of a member of the House of Commons.
Provided, however, that this section shall not apply where the vacancy in respect of which the warrant has issued occurs within six months of the expiry of the time limited for the duration of the House of Commons, or if Parliament is dissolved after the issue of a new writ hereunder such writ shall thereupon be deemed to have been superseded and withdrawn.
11B. No person shall be eligible as a candidate for election as a member of the House of Commons in more than one electoral district at the same time, and no person shall be nominated or consent to be nominated so as to be a candidate for more than one electoral district at the same time, and if any'person is so nominated for more than one electoral district and consents thereto all such nominations shall be null and void.


Daniel Duncan McKenzie: Is it the intention of this Bill that if a man is nominated in two places both nominations shall be void?


Charles Joseph Doherty: The intention is that .all nominations consented to by the nominee, wherever a man is nominated for more than one constituency, shall be void. If a gentleman, by consenting to be nominated in two places, seeks to obtain a nomination which under this law would be illegal, both nominations shall be void. Of course, generally speaking, nominations without the consent of the candidate are void for want of that consent. But there is an amendment which I desire to suggest to 11B, and which has been accepted by the member (Mr. Jacobs) who introduced the Bill. I move to amend paragraph 11B by striking out all the words preceding the words "ne person " in the third line thereof and by substituting the word "and" for the word "or" in the fourth line. It did not seem fair that a man's absence, he being not in a position to control the thing, his election should be rendered impossible simply because he was nominated in .two places. It was pointed out to me-in my innocence I would never have thought of it-that if the nomination of a man in two places made

all nominations void his friends and supporters might nominate him in a constituency in which they bad every expectation that he would be elected and his opponents could prevent his even having a chance of being elected organizing to get somebody to nominate him in some other constituency. That is a possibility which, I think, should not be created. In the certainly exceptional case where it will happen both that a man is absent from the country and that he is nominated in more than one constituency, he may be elected for more than one constituency. If that does happen, the case is covered by the present provision of the law requiring him to make option, because that provision is not repealed. It is in order to avoid t.he possibility of an absent man being absolutely debarred from election by the mere fact of his absence and of his bein'g nominated in more than one. place unknown to himself that I have moved to strike out these words:
No person shall he eligible as a candidate in more than one electoral district at the same time.
Then the section goes on to provide that where nomination is made and consented to by any person for more than one place, all such nominations shall be void. But the effect of the first words which I have moved to strike out is, without reference to whether the person consents or does not consent, without reference to whether he is absent or present, to declare a person absolutely ineligible as a candidate-not ineligible as a member, hut even as a candidate-in more than one electoral district at the same time; the mere fact of nomination for two places would, therefore, render a man ineligible as a candidate in either. It did seem to me, and the member for George Etienne Cartier quite agreed with me, that that would be a desirable result to produce. But the great bulk of cases are the cases of men who are at home and whose consent is necessary to their nomination; and with regard to them we shall be ensuring that in the future no man will be elected for more than one constituency.


William Stevens Fielding: In the case of nominations of that exceptional character to which the minister has referred, owing to the absence of the candidate, two nominations might be legal?


Charles Joseph Doherty: Yes.


William Stevens Fielding: And if a man attaches importance to running in two constituencies

can he evade this law by simply going away?


Charles Joseph Doherty: That, perhaps, is a possible thing.


William Stevens Fielding: It is more .than possible if he attaches importance to running in two constituencies.


Charles Joseph Doherty: I should be glad to devise a law that it would be impossible to evade. At all events, I think the effect of this law will be to reduce to the lowest possible degree the probability of our having people elected for more than one constituency. The men who are likely'to be nominated for more than one constituency are usually men of prominence in one or the other of the two great parties, men who would not care or who would not think it necessary to run away from the country for that purpose; while such an evasion is possible, 1^ confess that I cannot devise a method of rendering this law absolutely iron-clad.
I may say that the Solicitor General and myself gave some considerable time to trying to devise a system that would be absolutely perfect and render evasions impossible, and I am assured that the 'Committee on Privileges and Elections likewise devoted considerable time to the same purpose, but that they arrived at the conclusion that they could not find a way to make it an absolute certainty that nobody would ever he elected for more than one constituency. This provision, so far -as it goes, diminishes very materially the probability of that happening, and it is, so far as it goes, a distinct improvement to the law. Possibly as time goes on somebody may discover a method of further extending it so as to make it absolutely proof against evasion.


William Stevens Fielding: Had the committee
under consideration the expediency of making the voting absolutely simultaneous in the case of a number of vacancies occurring at the same time?


Charles Joseph Doherty: I was not a member of the committee, and I am not in a position to say whether that matter was considered or not. I do not think that question was dealt with in the Bill1 that was considered by the committee, and it is not impossible that it might have been overlooked.


Mr. DAVIS:: Not having before me a
copy of the Bill as amended, what I may have to say may be irrelevant; but dealing with the point which the hon. member for Shelburne and Queen's (Mr. Fielding) has

raised, that a man has only to leave the country to make himself eligible for two or more nominations, could not that ibe rectified by providing that he shall he held to he nominated in that constituency which stands in the highest alphabetical order, and that, say twenty-four hours being allowed, his other nomination shall be dropped; that he shall he considered not legally nominated in any of the others?


Charles Joseph Doherty: The effect of doing that would be to assure to that man who went out of the country for the purpose that he would be nominated in at least one constituency. It would be a better way to deal with the matter, if that were a practical way, by some provision that if any person leaves the country for that purpose, his nomination shall foe void, but I realize the difficulty of making proof of that. It is true that we might do what the hon. gentleman suggests; tout if we did it, we would be depriving a constituency of the privilege of nominating a man who might foe bona fide absent. If we provided that where a man being absent is nominated for more than one constituency, his nomination shall stand good in that which is in the highest alphabetical order, all that his opponents will have to do when they find out that he is going to be nominated in a constituency that begins with " Z" will be to nominate him in another constituency the name of which begins with a higher letter and in which they know for an absolute certainty that he has not a gfoost of a chance of toeing elected. Then, if we adopt the amendment suggested, he will be a candidate in that place that begins with the highest alphabetical letter, and he will be effectively and assuredly defeated. I realize that it will still be possible under this measure, toy people who are willing to resort to contrivances of that kind, that a man may worm himself into two seats in this House, but it will not be as it is to-day with the door wide open for any man who wants to take the chances and who can get twenty-five people in each of two constituencies to nominate him, to try to get into the House. I think the (hon, gentleman will realize the force of what I point out, that if you choose a constituency for that man, you make it possible for his adversaries to select that constituency for him.


Jean-Joseph Denis: I am finding it very hard to understand just where we are at now. All that there iss. for the convenience of the members is the Bill as originally drafted, and this Bill has been amended in such a 87
way that clause 1 as originally drafted has been practically all changed. I understand that the Minister of Justice has moved an amendment to that clause as amended. Personally I have only a vague understanding of the Bill. No Ihon. member can reasonably (be expected to carry the terms of this Bill in his memory. Without the Bill before us it is hard for us to understand what is going on. We cannot legislate looking in the skies. I would suggest that the Committee rise and that the Bill be reprinted as amended, or that some copies should be provided for the members.


Charles Joseph Doherty: The Bill is really hot a Government measure, and it is not in my charge. I am endeavouring to put it through this evening because the Bill as amended seems to be a very desirable measure and because I had agreed with the hon. member for George Etienne Cartier that he would have an opportunity of passing it. Hon, gentlemen may remember that at one time in the early part of the session there was an adjournment of the debate, and I think some hon. gentlemen were good enough to take it for granted that there was some desire because of that to shelve the Bill. On the contrary, the principle that underlies the Bill seemed to myself and the Government to be sound, and we were desirous that, subject to its being amended in certain details, it should have an opportunity of passing, and that is the reason why I am endeavouring to pass it now that an opportunity presents ltsell. As to the hon. gentleman fully grasping it, the measure coming before us as amended is reduced to such very small compass and is in the terms so little difficult of comprehension that if the Chairman would be good enough to read the Bill, I think the hon. gentleman would follow it without difficulty.


Daniel Duncan McKenzie: Before the Bill is read for the information of members, I am afraid that this taking away the right of running m more than one constituency is going to create a good deal of trouble. As the election laws .stand now, there is no provision for the holding of a poll until two contending parties are nominated, and then there is a poll. Supposing, for instance, that two nominations are made in violation of this measure. They are two illegal nominations. One constituency does not know that the man is nominated elsewhere, perhaps a hundred miles away and both elections are held. The election of the man who has put in his nominations



improperly is void; he was never nominated. But supposing that in both cases he is defeated, it strikes me as a nice question of law if the other man is elected at all even if he gets a majority of votes, because it is perhaps an illegal poll where there was only one legal nomination.


Charles Joseph Doherty: The reason why it would be an illegal poll, if it really were so held, would be that only one man. had been legally and regularly nominated and that there should not have been a poll at all; but the consequence of the fact that there should not have been a poll at all is that the ope man, being the only man legally nominated, would be declared elected.
So you have no complication in the case where it is the adversary of the illegally nominated man who is declared elected. You have, of course, the unfortunate circumstance that an expensive election has been held when it was not necessary. Might I ask the hon. gentleman, does he think it is a probable thing in Canada, does he even think it is a possible thing, that a man should be nominated in two constituencies and that the election should go on and that in those two constituencies nobody should know that that man was nominated in another constituency? Really, it seems to me hardly .possible. At election time our newspapers from one end of the country to the other contain lists the day after nomination of the people nominated in all the constituencies. After all, during an election people are pretty alert to ascertain who is the man that has been nominated on the other side, and I do not think we are running a very serious risk that elections will go on with a man nominated for more than one constituency and that the two constituencies for which he is standing will be quite ignorant of that fact, and will go on and hold the election and vote for the man who is nominated in both places. It might happen, but I think we would all be very much surprised if it did.


Daniel Duncan McKenzie: If there is only one
person nominated the returning officer can declare him elected. If two men are nominated, one of them illegally and the other properly, he declares a poll; that is his duty. He cannot recall anything he has done and the election goes on. An hour after he has declared a poll he may discover that one of the candidates has been illegally nominated and that he never should have declared a poll, but he is absolutely powerless. He cannot declare that the candidate is elected any more than he can recall his having granted a poll. There is 
no machinery, so far as I know, to declare the man elected who was legally nominated and who received the majority of the votes.


Charles Joseph Doherty: I have not the statute before me, but I am inclined to think the hon. gentleman is right in his suggestion that there is no provision for declaring the man legally nominated in such a case to have been elected, but I think I can say without hesitation that in a case of that kind it would be perfectly possible for the man who was the only one legally nominated, if he would take the pains, to give the necessary publicity to the fact of the illegality and nullity of the other man's nomination to claim the seat, whatever was the result of the voting.


Daniel Duncan McKenzie: That would have to be by petition.
' Mr. DOHIERTY: Yes. But if the man legally nominated got the majority of votes,
I do not think anybody would make a petition to unseat him on the ground that the votes given for him were not regularly taken because of the fact that his adversary was not regularly nominated. I think a man who came petitioning on that ground would be asked at the very threshold "What is your grievance? Do you who were illegally nominated feel aggrieved because the only man legally nominated has been declared to have a majority of the votes?" The legally nominated man would be doubly entitled to the seat in such a case. He would be entitled to it because he was the only legally nominated man, though the returning officer was not in a position to declare'it; but the court would be in a position to declare it.


Daniel Duncan McKenzie: I would be very sorry to put a man to that trouble.
Mr. DOHERTYI doubt if there is anybody who would be willing to deposit $1,000 as security for an election petition the foundation whereof was that he or the candidate whom he supported, and for whose failure to be elected he is aggrieved, never had the right to be voted for at all. If anybody is so foolish as to spend $1,000 in support of a petition based on those grounds I think it would be a good thing for the gentleman who happened to defend the man declared elected, because he would have security for the costs and would get^ them paid, and would have no difficulty in defending the seat. I do not think there is much danger of anybody launching a contestation on that ground.


Mr. PROULX:: I see that the provision with regard to the six months does not apply when a member resigns his seat, but only in the case of his death or acceptance of an office of emolument under the Crown.


Charles Joseph Doherty: I understand that the reason which led the committee to exclude that case was that in their judgment it was not desirable that an individual member should have it in his power to force an election in his particular constituency at any time that he might feel like having it done. The purpose of the provision is to withdraw from the Governor in Council the power which, I think, from time immemorial he has enjoyed of fixing, or failing to fix, the date of an election when vacancies occur. I think there have sometimes been, perhaps under all governments, what might be described as abuses of that power, too long a period being .allowed to elapse without the writ being issued. The clause as reported by the committee provides that in cases other than those mentioned there shall be an absolute time limit within which the writ must be issued. In the judgment of the committee it was thought desirable not to put in the hands of every member representing a constituency the opportunity of forcing an election in that constituency at any moment he might think was a good time to bring on that election. If he thinks he ought to resign he is free to resign, but he ought not by his resignation to be able to determine that there shall be a new election in that constituency within a period fixed by statute, whether the public interest be or be nbt served by holding the election at that particular time.


Edmond Proulx: If a member were appointed to an office under the Crown and the Government did not want a by-election to be held in his constituency, he could resign before accepting the office, and then the seat would become vacant by resignation and not by acceptance of office.


Charles Joseph Doherty: It would, of course, be a case of vacancy by resignation and this would not apply. That is apparently true. I suppose it is another case where improvement is possible, although we have improved the law.


William Stevens Fielding: In the case of'a member resigning, the law would be as at present.


Charles Joseph Doherty: Yes.


William Stevens Fielding: It would be in the hands of the Government to determine, and I can see some force in the remarks of my hon. friend (Mr. Proulx). It is not unreason-
874	,
able to say that a constituency should not be deprived of representation for more than six months, no matter how the vacancy occurs. It is not the interest of the individual but of the constituency, and if we provide that the constituency may remain unrepresented for more than six months we are not making much of an improvement in the situation.


Charles Joseph Doherty: We are making an improvement to this extent, that whereas today the period may be indefinite we have now reduced it to a space of six months, not, of course, in the case where a member chooses to resign. Matters will be no worse in that case than they are under the present law. Lhey are not improved; that is to be conceded. I was not a member of the committee that considered this Bill and I do not feel authorized to do more than ask this committee to accept it as it was sent to us. It is true that I did move one amendment, but that was as a result of consultation with the hon. member who introduced the Bill, and with his assent. I would not like to try to extend its provisions further than the committee, with the assent of the hon. gentleman who introduced the Bill, thought proper to go.


William Stevens Fielding: I quite appreciate my hon. friend's point in that respect, and I would not like to see the Bill adversely dealt with in the absence of the member who introduced it. But on the particular point to which attention was directed a moment ago, the Bill is open to objection. What seems to have been in the mind of the Committee was entirely the convenience or the possible aims of the individual. But it is a very grave error to exclude a constituency from representation in Parliament for a period , of six months or longer, and leave the matter entirely at the dictation of the Government of the day. 1 share my hon. friend's aversion to changing the Bill in the absence of the member who introduced it, and I think it might remain in committee.


William Lyon Mackenzie King: At the present time there is a by-election in Assiniboia as a consequence of a vacancy which occurred through a mem, ber resigning nearly two years ago. That constituency has been without representation for a period now of * nearly two years, the Government not having chosen to give the constituents an opportunity to return a member to Parliament. This Act would not alter that condition and would still leave it to the Government to adopt a similar course.


Charles Joseph Doherty: In the particular instance the vacancy was attributable, I

think, to the fact that the gentleman who held the seat was appointed to an office. If X am correct, that particular case would come under this restriction.


William Stevens Fielding: Unless he resigned before he received the appointment.


Charles Joseph Doherty: It is possible the situation might be brought about that way. I have no objection whatever to accepting the suggestion of the hon. member, and I would move that the Committee rise and report progress. I suppose there would be no objection to carrying the amendment I moved.


William Stevens Fielding: I have no objection.


Edmond Proulx: A provision might be made to meet the case of a member resigning to accept office.


William Stevens Fielding: I would suggest that we leave the whole question open.


Charles Joseph Doherty: It is desirable that the committee should have an opportunity to think over what means we might devise to ameliorate this condition. So far as this measure goes, it is an improvement, because it does in certain cases take the power out of the hands of the Governor in Council of indefinitely retarding elections, and possibly on greater consideration, there may be some reason for a further modification. I should be glad to have the benefit of the views of the hon. gentleman who introduced the Bill, and of consultation with the members of the committee who reported it, before assenting to any change.


Daniel Duncan McKenzie: This is a very good
Bill and is a long step to reform. But we are passing a law fixing the period that must elapse between the occurring of the vacancy and the holding of -the election, and I do not think there is any good reason why the cause of vacancy should have any bearing on the question at all. The important question is: How long should any constituency be left unrepresented? We have decided that six months is long enough, and I do not see the force of the suggestion that we should take into consideration how the vacancy occurs. The important point is that the constituency shall not be left more -than six months without proper steps being taken to give it representation In the House. In one case a man is appointed a judge and' the law permits a period of six months before the constituency may be represented. Another man with capricious notions resigns without any conceivable reason, and it is not fair that his constituency should be penalized and

left unrepresented simply because of his idiosyncr.acy.


Charles Joseph Doherty: I recognize the force of my hon. friend's contention, but I have already intimated my willingness to let the matter stand.
'Amendment agreed to.
Progress reported.
On the motion of Hon. Mr. Doherty for the adjournment of the House:


Daniel Duncan McKenzie: Can the minister say what will be done on Monday?


Charles Joseph Doherty: We shall take up on Monday, I expect, the other Bills on the Order Paper, and then of course there is our old friend the Railway Bill.


Daniel Duncan McKenzie: May I remind my hon. friend that the elections are now over in Ontario, and suggest that, everything being pretty well smashed up, we might go on with the Temperance Act?


Charles Joseph Doherty: I was not connecting the two things which my hon. friend has mentioned, but I announced to him just a moment ago that there are two Bills on the Order Paper which happen to be Temperance Bills.
Motion agreed to and the Hoiuse adjourned at 11 p.m.
Monday, October 27, 1919.